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As filed with the Securities and Exchange Commission on March 3, 2014
Registration No. 333-193840

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

C ASTLIGHT H EALTH , I NC .
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	7380	 	26-1989091	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	

Two Rincon Center
121 Spear Street, Suite 300
San Francisco, CA 94105
(415) 829-1400
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Giovanni M. Colella
Co-Founder, Chief Executive Officer and Director
Castlight Health, Inc.
Two Rincon Center
121 Spear Street, Suite 300
San Francisco, CA 94105
(415) 829-1400
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:

Gordon K. Davidson, Esq.
Matthew S. Rossiter, Esq.
Robert A. Freedman, Esq.
Fenwick & West LLP
801 California Street
Mountain View, CA 94041
(650) 988-8500	 	John C. Doyle
Chief Financial Officer, Vice
President and Treasurer
Castlight Health, Inc.
Two Rincon Center
121 Spear Street, Suite 300
San Francisco, CA 94105
(415) 829-1400	 	Eric C. Jensen, Esq.
Andrew S. Williamson, Esq.
Charles S. Kim, Esq.
Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304
(650) 843-5000	

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.   ¨
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

CALCULATION OF REGISTRATION FEE

 	
Title of Each Class of
Securities to be Registered	 	Amount To Be
Registered(1)	 	Proposed Maximum
Offering Price
Per Unit(2)	 	Proposed Maximum
Aggregate
Offering Price(2)	 	Amount of
Registration Fee(3)	
Class B Common Stock, $0.0001 par value per share	 	12,765,000	 	$1 1 .00	 	$ 140,415,000	 	$ 18,086	

(1)	Includes 1,665,000 additional shares that the underwriters have the option to purchase.	
(2)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.	
(3)	The Registrant previously paid $12,880 of the total registration fee in connection with the prior filing of this Registration Statement. In accordance with Rule 457(a), an additional registration fee of $5,206 is being paid in connection with this amendment to the Registration Statement.	
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
Subject to Completion. Dated March 3, 2014.
11,100,000 Shares

Class B Common Stock

This is an initial public offering of shares of Class B common stock of Castlight Health, Inc.
We have two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of our Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. In certain circumstances pertaining to change in control, the sale of all or substantially all of our assets and liquidation matters, and on all matters if and when any individual, entity or “group” (as such term is used in Regulation 13D of the Securities Exchange Act of 1934, as amended) has, or has publicly disclosed (through a press release or a filing with the Securities and Exchange Commission) an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of our Class A common stock and Class B common stock, combined, holders of our Class A common stock are entitled to ten votes per share and holders of our Class B common stock are entitled to one vote per share. Immediately following the completion of this offering, outstanding shares of our Class A common stock will represent approximately 98.6% of the voting power of our outstanding capital stock in these circumstances. In all other circumstances, holders of our Class A common stock and Class B common stock are each entitled to one vote per share, and in these other circumstances the outstanding shares of our Class A common stock immediately following the completion of this offering would represent 87.2% of the voting power of our outstanding common stock. Each share of Class A common stock is convertible at any time into one share of Class B common stock.
Prior to this offering, there has been no public market for our Class B common stock. It is currently estimated that the initial public offering price per share will be between $9.00 and $11.00. We have applied to list our Class B common stock on the New York Stock Exchange under the symbol “CSLT.”
We are an “emerging growth company” as defined under federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements.
See “ Risk Factors ” beginning on page 13 to read about factors you should consider before buying shares of our Class B common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
									
 	  	Per Share	 	  	Total	 	
Initial public offering price	  	$	            	  	  	$	            	  	
Underwriting discount (1)	  	$	 	  	  	$	 	  	
Proceeds, before expenses, to Castlight	  	$	 	  	  	$	 	  	

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

The underwriters have the option to purchase up to an additional 1,665,000 shares from us at the initial public offering price less the underwriting discount.
The underwriters expect to deliver the shares against payment in New York, New York on             , 2014.

 
							
Goldman, Sachs & Co.	 	Morgan Stanley	
					
	  	                   Allen & Company LLC	  		
Stifel	  	                     Canaccord Genuity	  	Raymond James	

Prospectus dated                     , 2014.

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Table of Contents
 TABLE OF CONTENTS

 	  	Page	 	
Prospectus Summary	  	 	1	  	
Risk Factors	  	 	13	  	
Special Note Regarding Forward-Looking Statements	  	 	39	  	
Industry and Market Data	  	 	40	  	
Use of Proceeds	  	 	41	  	
Dividend Policy	  	 	41	  	
Capitalization	  	 	42	  	
Dilution	  	 	44	  	
Selected Consolidated Financial Data	  	 	46	  	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	48	  	
Business	  	 	72	  	
Management	  	 	92	  	
Executive Compensation	  	 	100	  	
Certain Relationships and Related Party Transactions	  	 	111	  	
Principal Stockholders	  	 	113	  	
Description of Capital Stock	  	 	116	  	
Shares Eligible for Future Sale	  	 	123	  	
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders of our Class B Common Stock	  	 	126	  	
Underwriting	  	 	131	  	
Legal Matters	  	 	138	  	
Experts	  	 	138	  	
Where You Can Find Additional Information	  	 	138	  	
Index to Consolidated Financial Statements	  	 	F-1	  	

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
Persons who come into possession of this prospectus and any applicable free writing prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.
 
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 PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our Class B common stock, you should read this summary together with the more detailed information, including our consolidated financial statements and the related notes, provided elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in “Risk Factors,” our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included elsewhere in this prospectus.
Castlight Health, Inc.
Mission
Our mission is to dramatically improve the efficiency of the U.S. health care industry by unleashing the power of market forces through greater transparency and better alignment of economic incentives among employers, health care consumers and their providers.
Overview
Castlight is a pioneer in a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud allows our customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Our comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care cost and quality data transparent and useful. We deploy consumer-oriented applications that deliver strong engagement and integration capabilities. In the last two years, we have signed more than 95 customers, which consist primarily of large self-insured employers, across a broad range of industries, including 24 Fortune 500 companies.
U.S. health care spending is forecasted to total approximately $3.1 trillion in 2014, with $620 billion of this amount to be paid by U.S. employers, according to the Centers for Medicare and Medicaid Services, or CMS. Despite this substantial investment, the U.S. health care system is burdened by significant waste and extreme variations in the cost and quality of care, with limited correlation between the two. Two fundamental causes of these inefficiencies have been the absence of transparent information and the misalignment of economic incentives, which make it difficult for employees and their health care providers to make judicious health care choices.
Employers bear a substantial share of this waste and inefficiency, as they pay on average more than three quarters of their employees’ health care costs according to a 2013 joint survey by the National Business Group on Health, or NBGH, and Towers Watson & Co., or Towers Watson. Over the last two decades, employers have taken various steps to attempt to mitigate this growing burden, including self-insuring and increasingly shifting costs to employees. These measures have failed to solve the fundamental problems that have undermined employers’ efforts to control costs while maintaining competitive health care benefits for their employees.
This failure is due in part to an inability to collect and analyze complex and unstructured health care data, limitations on the feasibility of highly tailored advanced benefit designs and poor integration

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of disparate health care systems, applications and programs. In addition, even as employers have shifted more costs to their employees, they have been unable to engage and empower employees with useful, high-quality information about their health care choices.
We believe that controlling costs and improving quality of care for employees and thereby driving efficiency in the overall health care market can be achieved by introducing a new category of cloud-based technology solutions that are capable of addressing the scale and complexity of the U.S. health care industry.
Our Enterprise Healthcare Cloud offering transforms a massive quantity of complex data into transparent and useful information. These data include external data we obtain from a diverse array of sources, such as health care providers, insurance companies, governmental agencies and quality-monitoring organizations, as well as internal data generated through the usage of our applications. Our team of leading engineers, economists and clinicians applies sophisticated data science techniques, including predictive modeling and epidemiologic analytics, that leverage our database to drive insights such as identification of high-risk patients and estimated future costs of care, thereby empowering employers with the information they need to design and implement advanced benefit plans that address their specific challenges. We deliver this powerful offering through a suite of innovative, consumer-oriented applications that enables employers to engage their employees with actionable information and integrate their other health care applications and programs.
We believe that Castlight is well positioned to leverage its use of large amounts of health care related data, sophisticated data analytics, strong customer portfolio and early-mover advantage to play a role in dramatically improving the efficiency of the U.S. health care system.
Our total revenue was $1.9 million, $4.2 million and $13.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. Our net loss was $19.9 million, $35.0 million and $62.2 million for the years ended December 31, 2011, 2012 and 2013, respectively. Our accumulated deficit at December 31, 2013 was $131.2 million.
Industry Background
Significant Waste .      The health care industry in the United States is the largest in the world, according to the World Bank, and yet health care outcomes are inferior to those of many other countries. Additionally, a 2013 Institute of Medicine report estimates that approximately 30% of U.S. health care spending in 2009 was wasted due to factors such as inflated prices, the provision of unnecessary services and inefficient delivery of care.
Dysfunctional Market .      In addition to these inefficiencies, industry dynamics have led to high variations in the cost and quality of health care services, with limited correlation between the two. Two fundamental causes driving this lack of correlation between cost and quality and the resulting market dysfunction are the absence of transparent data and the misalignment of economic incentives.
Lack of Transparency .      Historically, employers and employees have not had access to clear information about the cost and quality of care as they consider benefit designs and health care treatment options. In some cases, health care providers and other market participants have actively resisted efforts by employers and others to obtain information about the costs and quality of health care services. Despite this resistance, the health care industry generates extensive data that is relevant to determining the cost and quality of health care services. These data reside in myriad formats and disparate databases, without a common infrastructure, and have therefore been of limited value to employers and employees in controlling costs and improving outcomes.

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Misalignment of Economic Incentives .      Historically, employees in the United States have been insulated from direct financial responsibility for much of the cost of the care they choose to receive. On average, employees paid approximately 23% of the total cost of their health care and employers paid approximately 77% in 2012, according to a joint survey by NBGH and Towers Watson. As a result, employees historically have been less sensitive to the costs of health care services than they might have been had their economic incentives been more closely linked to the total costs of care they received.
Growing Problem for Employers .      According to the Bureau of Labor Statistics, health care benefit costs account for approximately 8% of total employee costs in the United States and are increasing rapidly. According to an August 2013 Kaiser Family Foundation survey, in 2013, approximately 61% of U.S. employees who rely on health care funded by an employer are covered by health plans by employers that have elected to self-insure (including 94% of the covered employees of U.S. employers with more than 5,000 employees), which more directly exposes employers to the volatility of health care expenses and the burdens of designing health care benefits. As a result, better managing health care expenses will have a direct impact on financial performance, making employers eager for solutions that can help them manage this growing problem.
Employers Lack a Solution .      Despite intensive efforts to reduce health care expenses and improve value over many years, employers continue to face escalating costs and highly variable quality. Historical efforts to manage costs through benefit design (such as the use of health maintenance organizations, or HMOs) have been largely unsuccessful in preventing the overall growth in health care costs. More recently, employers have attempted to reduce health care costs through use of employee cost-sharing plans, such as consumer-directed health care plans. These plans shift health care expenses to employees and thereby incentivize them to make more judicious health care spending decisions. Progressive employers have also implemented benefit design strategies intended to improve quality of care and thereby lower costs by reducing medical complications and eliminating wasteful treatments. While higher cost-sharing plans and other advanced benefit design strategies have the potential to reduce costs, they are difficult to implement effectively without transparent and actionable information that enables employers and employees to identify options that provide more value for their health care dollar.
Our Opportunity
We believe there is a significant opportunity to offer a comprehensive, technology-based solution to reduce the massive waste and inefficiencies associated with the approximately $620 billion that employers are projected to spend on health care in the United States in 2014. By combining innovations in big data analytics, cloud-based software delivery models and consumer-oriented online and mobile applications, with our deep health care domain knowledge and platform for integrating third-party applications, we believe we are well positioned to play a central role in dramatically improving the efficiency of the U.S. health care system. We estimate, based on the number of people who rely on health care funded by self-insured employers and our estimate of the potential fee opportunity for our current products, that our total available market is greater than $5 billion.
Our Solution
We have developed a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud offering transforms a massive quantity of complex data, which we obtain from a diverse array of internal and external sources, into transparent and useful information for employers, and their employees and families.

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We deliver this powerful offering through a suite of innovative applications that enables employers to engage their employees with personalized, actionable information, implement highly tailored benefit designs and integrate their other health care systems, applications and programs. These applications are delivered to our customers, and their employees and families, via our cloud-based offering and leverage consumer-oriented design principles that drive engagement and ease of use. In addition, as more customers use our applications and our database grows, the depth and breadth of our offering improves, increasing the value we can deliver to employers, and their employees and families.
The key dimensions of our Enterprise Healthcare Cloud offering include:
 
 	Ÿ	 	Extensive Data Foundation.     Our offering integrates, organizes and normalizes data from across the fragmented and complex health care landscape. Our offering has successfully scaled to aggregate more than a billion health care claim transactions from public and private data sources and combine these data with health care benefit information, clinical practice guidelines, user-generated data and the consumer behavior data of our users. We then structure these data, allowing us to map personalized cost information by region and individual service providers for a broad range of health care and physician services and medical products. We combine these pricing data with clinical quality and patient experience information from national, regional and user-generated sources to deliver service-specific quality metrics across a broad range of providers in the United States.	
 
 	Ÿ	 	Sophisticated Analytics .     Our team of leading engineers, economists and clinicians has developed proprietary data science techniques and robust capabilities to process and analyze our extensive data foundation and compute cost and quality data for thousands of health care services and products. In addition, we employ predictive modeling to identify patients at risk for needing particular services and estimate their future cost of care. We also use epidemiologic analytics to personalize recommendations for employers for specific benefits programs in which they should invest based on the health characteristics of their populations. Our offering uses this analytics engine to calculate costs and identify patterns of inefficient behavior for large populations of employees and their families, thereby enabling employers to take actions to optimize benefit plans, reduce inefficient outcomes and foster behavioral change.	
 
 	Ÿ	 	Personalized Cost, Quality and Benefit Information.     We simplify the health care decision-making process for employees and their families by providing highly relevant, personalized information that encourages informed choices before, during and after receiving health care. We utilize a real-time interface to securely aggregate the employee’s latest medical spending information to deliver a highly personalized health care shopping experience that illuminates both the employee’s specific out-of-pocket costs and the portion of the medical expense paid by the employer. In addition, we deliver personalized benefit and clinical information, as well as specific alerts about lower cost medical and pharmaceutical options, avoidance of unnecessary services and preventative care recommendations. By empowering employees and their families with the ability to simultaneously search price, quality and relevant content on health care services and providers, we enable them to make informed “market-based” decisions that avoid excessive prices and low quality or unnecessary care, creating significant value for employers.	
 
 	Ÿ	 	Technology-Enabled Benefit Design.     We deliver significant value to employers by enabling the successful implementation of employee cost-sharing plans and other advanced benefit designs that incentivize employees and their families to consume resources more judiciously. Our offering gives employers who offer these types of plans the tools and information their employees and families need, at scale, to better understand their care options, become more empowered health care consumers and spend their health care dollars wisely. In addition, we also enable and increase the effectiveness of advanced benefit programs including reference-	

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 	based pricing, centers of excellence and incentive programs, which can drive significant savings for employers. Our data, analytics and reporting capabilities allow employers to rigorously design, specify and enforce the parameters of these programs, evaluate their effectiveness and optimize their performance over time.	
 
 	Ÿ	 	Independent and Integrated Platform.     As an independent player in the health care industry, we act as trusted source of unbiased health care cost and quality information. We believe our independence is an important attribute for our relationships with our customers, and their employees and families and allows us to partner with health plans, health care providers and broader health care stakeholders. Furthermore, we designed our offering to seamlessly integrate with other key third-party data sources, programs and applications. These integrations streamline the user experience across a fragmented vendor set. For example, we provide employees with a consistent and personalized experience regardless of geography, plan design or health plan, while at the same time interfacing with all of the employers’ legacy systems that support their health care offerings. This integration capability is a key competitive advantage of our offering for large enterprises with national employee bases and multiple health plans. Additionally, our integration capabilities enable employers to increase use of other complementary vendor applications by capitalizing on our ability to drive high levels of engagement. Over time, we believe our platform will become a key consolidation point for a broad array of third-party health care applications.	
 
 	Ÿ	 	Engaging Interface .     In order for employers and employees to maximize the benefits of transparent cost and quality information and technology-enabled benefit designs, we have designed our offering to be ubiquitously and conveniently accessible, easy-to-use and valuable for consumers. Our applications enable user experiences similar to those of leading consumer internet sites. Our user experience design fosters user engagement and drives utilization. Our focus on an intuitive and simple user experience allows employees to conveniently shop and access information throughout the process of understanding, planning and carrying out their health care decisions. This focus enables our customers to realize higher productivity and generate better business results through broad access to more timely and reliable information. We complement these capabilities with professional services designed to drive initial user registrations and ongoing engagement.	
Our Strategy
 
 	Ÿ	 	Capitalize on Our Leadership.     As a pioneer in the emerging enterprise health care cloud market, we have experienced significant demand from customers in the early commercialization of our offering. We initially targeted, and have already secured, large enterprise customers, which have provided us with data access, enhanced product development and increased scale. We intend to leverage our experiences with these large customers as we continue to build on our momentum. Our current base of 106 customers represents only a small fraction of customers that we believe could benefit from our cloud offering. In order to capitalize on this emerging market opportunity, we intend to continue to leverage our current customer base, expand our direct sales capabilities and invest further in indirect sales channels and partnerships.	
 
 	Ÿ	 	Continue to Invest in Customer Success.     We are intensely focused on driving lasting customer success. We invest early and heavily in customer relationships and work closely with employers throughout the implementation process to configure their benefit plans to meet their specific needs and objectives and continue to help them adapt these plans over time. We also provide integrated communications and implementation programs that help employers execute their benefit plan strategies quickly and effectively. We aim to be the catalyst that drives long-	

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 	term employee engagement and lasting efficiency in health care purchases, and in turn, drive high customer satisfaction, retention and referenceability.	
 
 	Ÿ	 	Further Develop Our Platform Strategy.     We believe there is a significant opportunity to provide complementary software applications and services to our customers to serve their evolving benefit needs. We have only recently begun to offer additional applications to our customers and have experienced positive results. Additionally, we expect third-party developers will leverage our application program interfaces, or APIs, and our database to develop a broad range of value-added applications and services accessed via our platform, thereby further enhancing the value of our offering.	
 
 	Ÿ	 	Leverage Our Health Care Database.     We operate a growing independent database that includes more than a billion health care claim transactions and a rapidly expanding collection of consumer behavior data, making us a trusted third-party source of reference for health care spending. Through algorithmic processing of this aggregated information on provider practices, referral patterns, patient outcomes, patient needs and purchasing trends, we will continue to develop novel offerings that inform the benefit design strategies of our customers.	
 
 	Ÿ	 	Leverage Our Passionate, Mission-Driven Culture.     We believe our team of employees, our corporate culture and our shared passion to change health care that unites us, are key elements of our success. We have assembled a unique multi-disciplinary team of software developers, economists, behavioral scientists, clinicians, health policy experts and enterprise-focused sales and marketing personnel and have created a work environment that stimulates cross-functional innovation to effect fundamental change in health consumption behavior.	
Selected Risks Associated with Our Business
Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. Some of these risks are:
 
 	Ÿ	 	We have a history of significant losses, which we expect to continue, and we may never achieve or sustain profitability in the future;	
 
 	Ÿ	 	Our limited operating history makes it difficult to evaluate our current business and future prospects and increases the risk of your investment;	
 
 	Ÿ	 	The enterprise health care cloud market is immature and volatile and may not develop or may develop more slowly than we expect;	
 
 	Ÿ	 	If our security measures are breached and unauthorized access to a customer’s data are obtained, we may incur significant liabilities, our reputation may be harmed and we could lose sales and customers;	
 
 	Ÿ	 	Our quarterly results may fluctuate significantly;	
 
 	Ÿ	 	If we fail to manage our rapid growth effectively, our expenses could increase more than expected, our revenue could decrease and we may be unable to implement our business strategy;	
 
 	Ÿ	 	We incur significant upfront costs in our customer relationships, and if we are unable to maintain and grow these customer relationships over time, we are likely to fail to recover these costs;	
 
 	Ÿ	 	Our ability to deliver our full offering depends in substantial part on our ability to access pricing and claims data managed by a limited number of health plans and other third parties;	

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 	Ÿ	 	If our existing customers do not continue or renew their agreements with us, renew at lower fee levels or decline to purchase additional applications and services from us, our business and operating results will suffer; and	
 
 	Ÿ	 	Our failure to comply with regulatory requirements, including applicable health information privacy and security laws and other state and federal privacy and security laws, could create liability for us, result in adverse publicity and otherwise negatively affect our business.	
Corporate Information
We were incorporated in the State of Delaware in January 2008 as Maria Health, Inc. In July 2009, we changed our name to Ventana Health Services, Inc. In April 2010, we changed our name to Castlight, Inc., and then subsequently changed our name to Castlight Health, Inc. Our principal executive offices are located at Two Rincon Center, 121 Spear Street, Suite 300, San Francisco, California 94105, and our telephone number is (415) 829-1400. Our website address is www.castlighthealth.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our Class B common stock.
Unless the context indicates otherwise or otherwise noted, as used in this prospectus, the terms “Company,” “Castlight,” “Castlight Health,” “Registrant,” “we,” “us,” “our” and “our company” refer to Castlight Health, Inc., a Delaware corporation, and its subsidiaries taken as a whole.
The marks “Castlight Health” and “Castlight” are our registered trademarks and the Castlight Health logo and all product names are our common law trademarks. All other service marks, trademarks and trade names appearing in this prospectus are the property of their respective owners.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our most recently completed fiscal year, we qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions include:
 
 	Ÿ	 	reduced disclosure of financial information in this prospectus, including two years of audited financial information and two years of selected financial information;	
 
 	Ÿ	 	an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting;	
 
 	Ÿ	 	an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;	
 
 	Ÿ	 	reduced disclosure about our executive compensation arrangements; and	
 
 	Ÿ	 	exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a shareholder approval of any golden parachute arrangements.	
We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We

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would cease to be an emerging growth company upon the earliest to occur of: the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and the last day of the fiscal year ending after the fifth anniversary of this offering.
The JOBS Act also permits us, as an emerging growth company, to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies and thereby allows us to delay the adoption of those standards until those standards would apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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The Offering

		
Class B common stock offered by us	  	11,100,000 shares	
		
Class B common stock to be outstanding after this offering	  	
11,100,000 shares	
		
Class A common stock to be outstanding after this offering	  	
75,469,707 shares	
		
Total Class A and Class B common stock to be outstanding after this offering	  	
86,569,707 shares	
		
Option to purchase additional shares of Class B common stock from us	  	
1,665,000 shares	
		
Use of proceeds	  	We intend to use the net proceeds from this offering for working capital and other general corporate purposes. We may also use the proceeds to acquire or invest in other businesses, products, or technologies, although we have no commitments with respect to any such acquisitions or investments at this time. See “Use of Proceeds.”	
		
Voting rights	  	Each share of Class A common stock and each share of Class B common stock has one vote per share, except on the following matters (in which each share of Class A common stock has ten votes per share and each share of Class B common stock has one vote per share):
 
•    adoption of a merger or consolidation agreement involving our company;
 
•    a sale, lease or exchange of all or substantially all of our property and assets;
 
•    a dissolution or liquidation of our company; or
 
•    every matter, if and when any individual, entity or “group” (as such term is used in Regulation 13D of the Exchange Act of 1934, as amended, or the Exchange Act) has, or has publicly disclosed (through a press release or a filing with the Securities and Exchange Commission, or the SEC) an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of Class A common stock and Class B common stock, combined.	
		
Risk factors	  	You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our Class B common stock.	
		
Proposed New York Stock Exchange symbol	  	“CSLT”	

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The number of shares of Class A and Class B common stock to be outstanding following this offering includes 75,469,707 shares of our Class A common stock and no shares of our Class B common stock outstanding as of December 31, 2013 and excludes:
 
 	Ÿ	 	16,455,404 shares of Class A common stock issuable upon the exercise of options outstanding as of December 31, 2013, with a weighted-average exercise price of $1.22 per share;	
 
 	Ÿ	 	1,441,000 shares of Class A common stock issuable upon the exercise of options granted between January 1, 2014 and February 28, 2014, with a weighted-average exercise price of $7.20 per share;	
 
 	Ÿ	 	115,000 shares of Class A common stock issuable upon the exercise of a warrant outstanding as of December 31, 2013, with an exercise price of $5.00 per share;	
 
 	Ÿ	 	89,943 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $6.76, and 12,786 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $7.93; and	
 
 	Ÿ	 	23,104,918 shares of our common stock reserved for future issuance under our equity compensation plans, consisting of (a) 2,104,918 shares of our Class A common stock reserved for issuance under our 2008 Stock Incentive Plan as of December 31, 2013; (b) 15,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Equity Incentive Plan; and (c) 6,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Employee Stock Purchase Plan. On the date of this prospectus, any remaining shares available for issuance under our 2008 Stock Incentive Plan as Class B common stock will be added to the shares reserved under our 2014 Equity Incentive Plan and we will cease granting awards under the 2008 Stock Incentive Plan. Our 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan also provide for automatic annual increases in the number of shares reserved thereunder, as more fully described in “Executive Compensation—Employee Benefit Plans.”	
Unless otherwise noted, the information in this prospectus reflects and assumes the following:
 
 	Ÿ	 	the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 64,475,633 shares of our Class A common stock effective immediately upon the completion of this offering;	
 
 	Ÿ	 	the filing of our restated certificate of incorporation and the effectiveness of our restated bylaws, which will occur upon the completion of this offering;	
 
 	Ÿ	 	no exercise of outstanding options or warrants; and	
 
 	Ÿ	 	no exercise by the underwriters of their option to purchase up to an additional 1,665,000 shares of our Class B common stock from us in this offering.	

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Summary Consolidated Financial Data
The following tables present summary historical financial data for our business. You should read this information in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes and other information included elsewhere in this prospectus.
We derived the summary consolidated statements of operations data for 2011, 2012 and 2013 and the consolidated balance sheet data as of December 31, 2013 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.

 	  	Year Ended December 31,	 	
 	  	      2011      	 	 	      2012      	 	 	      2013      	 	
 	  	(in thousands, except per share data)	 	
Consolidated Statements of Operations Data:	  				 				 				
Revenue:	  				 				 				
Subscription	  	$	1,569	  	 	$	3,395	  	 	$	11,655	  	
Professional services	  	 	306	  	 	 	759	  	 	 	1,318	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	1,875	  	 	 	4,154	  	 	 	12,973	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenue (1) :	  				 				 				
Cost of subscription	  	 	1,210	  	 	 	3,242	  	 	 	6,246	  	
Cost of professional services	  	 	1,068	  	 	 	5,286	  	 	 	11,058	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenue	  	 	2,278	  	 	 	8,528	  	 	 	17,304	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross loss	  	 	(403	) 	 	 	(4,374	) 	 	 	(4,331	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				
Sales and marketing (1)	  	 	5,978	  	 	 	15,829	  	 	 	33,742	  	
Research and development (1)	  	 	10,157	  	 	 	9,718	  	 	 	15,219	  	
General and administrative (1)	  	 	3,563	  	 	 	5,212	  	 	 	9,047	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	19,698	  	 	 	30,759	  	 	 	58,008	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	  	 	(20,101	) 	 	 	(35,133	) 	 	 	(62,339	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	 	181	  	 	 	129	  	 	 	157	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share, basic and diluted (2)	  	$	(3.27	) 	 	$	(4.44	) 	 	$	(6.28	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used to compute basic and diluted net loss per share (2)	  	 	6,093	  	 	 	7,885	  	 	 	9,895	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Pro forma net loss per share, basic and diluted (unaudited) (3)	  				 				 	$	(0.84	) 	
	  				 				 	 	 	 	
Weighted-average shares used to compute basic and diluted pro forma net loss per share (unaudited) (3)	  				 				 	 	74,371	  	

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

 	  	Year Ended December 31,	 	
 	  	2011	 	  	2012	 	  	2013	 	
 	  	(in thousands)	 	
Cost of revenue	  	$	12	  	  	$	107	  	  	$	125	  	
Sales and marketing	  	 	335	  	  	 	551	  	  	 	919	  	
Research and development	  	 	302	  	  	 	242	  	  	 	603	  	
General and administrative	  	 	333	  	  	 	411	  	  	 	780	  	
 
(2)	Net loss per share is computed by dividing net loss by the weighted-average number of shares of our common stock outstanding during the period, less the weighted-average unvested shares of common stock subject to repurchase.	
(3)	Pro forma net loss per share is computed by dividing net loss by the weighted-average shares outstanding during the period assuming the conversion of all our convertible preferred stock into common stock as of its issuance date.	

 	  	As of December 31, 2013	 	
 	  	Actual	 	 	Pro Forma (1)	 	 	Pro Forma
As Adjusted (2)(3)	 	
 	  	(in thousands)	 	
 	  	 	 	 	(unaudited)	 	
Consolidated Balance Sheet Data:	  				 				 				
Cash, cash equivalents and marketable securities	  	$	67,171	  	 	$	67,171	  	 	$	166,451	  	
Working capital	  	 	54,944	  	 	 	54,944	  	 	 	154,224	  	
Property and equipment, net	  	 	2,631	  	 	 	2,631	  	 	 	2,631	  	
Total assets	  	 	83,517	  	 	 	83,517	  	 	 	182,797	  	
Total deferred revenue	  	 	11,473	  	 	 	11,473	  	 	 	11,473	  	
Total liabilities	  	 	27,444	  	 	 	27,444	  	 	 	27,444	  	
Convertible preferred stock	  	 	180,423	  	 	 	—	  	 	 	—	  	
Additional paid-in capital	  	 	6,885	  	 	 	187,302	  	 	 	286,581	  	
Accumulated deficit	  	 	(131,236	) 	 	 	(131,236	) 	 	 	(131,236	) 	
Total stockholders’ equity (deficit)	  	 	(124,350	) 	 	 	56,073	  	 	 	155,353	  	

 	(1)	The pro forma consolidated balance sheet data as of December 31, 2013 gives effect to the automatic conversion of all our outstanding convertible preferred stock into an aggregate of 64,475,633 shares of our Class A common stock upon the completion of this offering.	
 	(2)	The pro forma as adjusted consolidated balance sheet data above gives effect to (i) the pro forma adjustments described in footnote (1) above and (ii) the sale by us of shares of our Class B common stock in this offering at an assumed initial public offering price of $10.00 per share, which is the midpoint of the estimated offering price range set forth on the front cover of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.	
 	(3)	Each $1.00 increase (decrease) in the assumed initial public offering price of $10.00 per share, which is the midpoint of the estimated offering price range set forth on the front cover page of this prospectus, would increase (decrease) our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets, additional paid-in capital and total stockholders’ equity (deficit) by approximately $10.3 million, assuming that the number of shares offered by us, as set forth on the front cover page of this prospectus, remains the same and after deducting our estimate of the underwriting discounts and commissions and offering expenses payable by us. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of our Class B common stock offered by us would increase (decrease) the amount of our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets, additional paid-in capital and total stockholders’ equity (deficit) by approximately $9.3 million, assuming that the assumed initial public offering price remains the same, after deducting the estimated underwriting discounts and commissions.	
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 RISK FACTORS
Investing in our Class B common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the consolidated financial statements and the related notes included elsewhere in this prospectus, before deciding whether to invest in shares of our Class B common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our stock could decline, and you could lose part or all of your investment.
Risks Related to Our Business
We have a history of significant losses, which we expect to continue, and we may never achieve or sustain profitability in the future.
We have incurred significant net losses in each fiscal year since our incorporation in 2008 and expect to continue to incur net losses for the foreseeable future. We experienced net losses of $35.0 million during the year ended December 31, 2012 and $62.2 million during the year ended December 31, 2013. As of December 31, 2013, we had an accumulated deficit of $131.2 million. The losses and accumulated deficit were primarily due to the substantial investments we made to grow our business, enhance our technology and offering through research and development and acquire and support customers. We anticipate that cost of revenue and operating expenses will increase substantially in the foreseeable future as we seek to continue to grow our business and acquire customers and develop our platform and new applications. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Many of our efforts to generate revenue from our business are new and unproven, and any failure to increase our revenue or generate revenue from new applications and services could prevent us from attaining profitability. Furthermore, to the extent we are successful in increasing our customer base, we could also incur increased losses because costs associated with entering into customer agreements are generally incurred up front, while customers are generally billed over the term of the agreement. Our prior losses, combined with our expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. We expect to continue to incur operating losses for the foreseeable future and may never become profitable on a quarterly or annual basis, or if we do, we may not be able to sustain profitability in subsequent periods. As a result of these factors, we may need to raise additional capital through debt or equity financings in order to fund our operations, and such capital may not be available on reasonable terms, if at all.
Our limited operating history makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.
We were founded in 2008, began building the first version of Castlight Medical in 2009, did not complete our first customer sale and implementation until 2010 and did not make substantial investments in sales and marketing until 2012. This limited operating history makes our current business and future prospects difficult to evaluate.
We have encountered and will continue to encounter risks and uncertainties frequently experienced by new and growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market adoption of our existing and future offerings, competition from other companies, acquiring and retaining customers, managing customer deployments, hiring, integrating, training and retaining skilled personnel, developing new applications and services, determining prices for our applications, unforeseen expenses and challenges in forecasting accuracy. If
 
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our assumptions regarding these and other similar risks and uncertainties, which we use to plan our business, are incorrect or change as we gain more experience operating our business or due to changes in our industry, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
In addition, we may need to change our current operations infrastructure in order for us to achieve profitability and scale our operations efficiently, which makes our future prospects even more difficult to evaluate. For example, in order to grow sales of our Enterprise Healthcare Cloud to smaller customers in a financially sustainable manner, we may need to further automate implementations, tailor our offering and modify our go-to-market approaches to reduce our service delivery and customer acquisition costs. If we fail to implement these changes on a timely basis or are unable to implement them effectively due to our limited experience with the new infrastructure or factors beyond our control, our business may suffer.
 
The market for our offering is immature and volatile, and if it does not develop, if it develops more slowly than we expect, or if our offering does not drive employee engagement, the growth of our business will be harmed.
The enterprise health care cloud market is new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand and market adoption. Our success will depend to a substantial extent on the willingness of employers to increase their use of our Enterprise Healthcare Cloud offering, the ability of our applications to increase employee engagement, as well as on our ability to demonstrate the value of our offering to customers and their employees and to develop new applications that provide value to customers and users. If employers do not perceive the benefits of our offering or our offering does not drive employee engagement, then our market might not develop at all, or it might develop more slowly than we expect, either of which could significantly adversely affect our operating results. In addition, we have limited insight into trends that might develop and affect our business. We might make errors in predicting and reacting to relevant business, legal and regulatory trends, which could harm our business. If any of these events occur, it could materially adversely affect our business, financial condition or results of operations.
If our security measures are breached and unauthorized access to a customer’s data are obtained, our offering may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed and we could lose sales and customers.
Our offering involves the storage and transmission of customers’ proprietary information, as well as protected health information, or PHI, of our customers and their employees, which is regulated under the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, collectively HIPAA. Because of the extreme sensitivity of this information, the security features of our offering are very important. If our security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive customer or employee data, including HIPAA-regulated protected health information. A security breach or failure could result from a variety of circumstances and events, including third-party action, employee negligence or error, malfeasance, computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, and catastrophic events.
If our security measures were to be breached or fail, our reputation could be severely damaged, adversely affecting customer or investor confidence, customers may curtail their use of or stop using our offering and our business may suffer. In addition, we could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other applicable laws or regulations and significant costs for remediation and for measures to prevent future occurrences. In addition, any
 
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potential security breach could result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to customers or other business partners in an effort to maintain the business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants. While we maintain insurance covering certain security and privacy damages and claim expenses we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.
We outsource important aspects of the storage and transmission of customer information, and thus rely on third parties to manage functions that have material cyber-security risks. These outsourced functions include services such as software design and product development, software engineering, database consulting, call center operations, co-location data centers, data-center security, IT, network security and Web application firewall services. We attempt to address these risks by requiring outsourcing subcontractors who handle customer information to sign business associate agreements contractually requiring those subcontractors to adequately safeguard personal health data and in some cases by requiring such outsourcing subcontractors to undergo third-party security examinations. However, we cannot assure you that these contractual measures and other safeguards will adequately protect us from the risks associated with the storage and transmission of customers proprietary and protected health information.
We may experience cyber-security and other breach incidents that may remain undetected for an extended period. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against us, we may be unable to anticipate these techniques or to implement adequate preventive measures. In addition, in the event that our customers authorize or enable third parties to access their data or the data of their employees on our systems, we cannot ensure the complete integrity or security of such data in our systems as we would not control access. If an actual or perceived breach of our security occurs, or if we are unable to effectively resolve such breaches in a timely manner, the market perception of the effectiveness of our security measures could be harmed and we could lose sales and customers.
Our quarterly results may fluctuate significantly, which could adversely impact the value of our Class B common stock.
Our quarterly results of operations, including our revenue, gross margin, net loss and cash flows, may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, our quarterly results should not be relied upon as an indication of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, those listed elsewhere in this “Risk Factors” section and those listed below:
 
 	Ÿ	 	the addition or loss of large customers, including through acquisitions or consolidations of such customers;	
 
 	Ÿ	 	seasonal and other variations in the timing of the sales of our offering, as a significantly higher proportion of our customers enter into new subscription agreements with us or renew previous agreements in the third and fourth quarters of the year compared to the first and second quarters;	
 
 	Ÿ	 	the timing of recognition of revenue, including possible delays in the recognition of revenue due to lengthy and sometimes unpredictable implementation timelines;	
 
 	Ÿ	 	the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;	
 
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 	Ÿ	 	our access to pricing and claims data managed by health plans and other third parties, or changes to the fees we pay for that data;	
 
 	Ÿ	 	the timing and success of introductions of new applications and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners;	
 
 	Ÿ	 	network outages or security breaches;	
 
 	Ÿ	 	our ability to attract new customers;	
 
 	Ÿ	 	general economic, industry and market conditions;	
 
 	Ÿ	 	customer renewal rates and the timing and terms of customer renewals;	
 
 	Ÿ	 	changes in our pricing policies or those of our competitors;	
 
 	Ÿ	 	the mix of applications and services sold during a period; and	
 
 	Ÿ	 	the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies.	
We are particularly subject to fluctuations in our quarterly results of operations since the costs associated with entering into customer agreements are generally incurred up front, while we generally recognize revenue at launch over the term of the agreement. In addition, some of our contracts with customers provide for one-time bonus payments if our offering achieves certain metrics, such as a certain rate of employee engagement, which may lead to additional fluctuations in our quarterly operating results. In certain contracts, employee engagement may refer to the number of first time registrations by employees of our customers and in other cases it may refer to return usage of our applications by employees. Any fluctuations in our quarterly results may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our Class B common stock.
If we fail to manage our rapid growth effectively, our expenses could increase more than expected, our revenue may not increase and we may be unable to implement our business strategy.
We have experienced rapid growth in recent periods, which puts strain on our business, operations and employees. For example, we grew from 156 full-time employees at December 31, 2012 to 287 full-time employees at December 31, 2013. We have also signed more than 95 customers in the last two years, increasing the size of our customer base to 106 customers at December 31, 2013; our revenue has increased from $4.2 million for the year ended December 31, 2012 to $13.0 million for the year ended December 31, 2013; and our total backlog, which we define as including both cancellable and non-cancellable portions of our customer agreements that we have not yet billed, has increased from $44.0 million as of December 31, 2012 to $108.7 million as of December 31, 2013. We anticipate that we will continue to rapidly expand our operations. To manage our current and anticipated future growth effectively, we must continue to maintain and enhance our IT infrastructure, financial and accounting systems and controls. We must also attract, train and retain a significant number of qualified sales and marketing personnel, customer support personnel, professional services personnel, software engineers, technical personnel and management personnel, and the availability of such personnel, in particular software engineers, may be constrained. These and similar challenges, and the related costs, may be exacerbated by the fact that our headquarters are located in the San Francisco Bay Area.
A key aspect to managing our growth is our ability to scale our capabilities to implement our offering satisfactorily with respect to both large and demanding enterprise customers, who currently
 
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comprise the substantial majority of our customer base, as well as smaller customers who are becoming an increasingly larger portion of our customer base. Large customers often require specific features or functions unique to their particular business processes, which at a time of rapid growth or during periods of high demand, may strain our implementation capacity and hinder our ability to successfully implement our offering to our customers in a timely manner. We may also need to make further investments in our technology and automate portions of our offering or services to decrease our costs, particularly as we grow sales of our Enterprise Healthcare Cloud to smaller customers. If we are unable to address the needs of our customers or their employees, or our customers or their employees are unsatisfied with the quality of our offering or services, they may not renew their agreements, seek to cancel or terminate their relationship with us or renew on less favorable terms.
Failure to effectively manage our rapid growth could also lead us to over-invest or under-invest in development and operations, result in weaknesses in our infrastructure, systems or controls, give rise to operational mistakes, financial losses, loss of productivity or business opportunities and result in loss of employees and reduced productivity of remaining employees. Our growth is expected to require significant capital expenditures and might divert financial resources from other projects such as the development of new applications and services. In addition, data and content fees, which are one of our primary operational costs, are not fixed as they vary based on the source and condition of the data we receive from third parties, and if they remain variable or increase over time, we would not be able to realize the economies of scale that we expect as we grow renewals and implementation of new customers, which would negatively impact our gross margin. If our management is unable to effectively manage our growth, our expenses might increase more than expected, our revenue may not increase or might grow more slowly than expected and we might be unable to implement our business strategy. The quality of our offering might also suffer, which could negatively affect our reputation and harm our ability to retain and attract customers.
We incur significant upfront costs in our customer relationships, and if we are unable to maintain and grow these customer relationships over time, we are likely to fail to recover these costs and our operating results will suffer.
We devote significant resources and incur significant upfront costs to establish relationships with our customers and implement our offering and related services. This is particularly so in the case of large enterprises that, to date, have comprised a substantial majority of our customer base and revenue and often request or require specific features or functions unique to their particular business processes. Accordingly, our operating results will depend in substantial part on our ability to deliver a successful customer experience and persuade our customers to maintain and grow their relationship with us over time. For example, if we are not successful in implementing our offering or delivering a successful customer experience, a customer could terminate or fail to renew their agreement with us, we would lose or be unable to recoup the significant upfront costs that we had expended on such customer and our operating results would suffer. As we are growing rapidly, our customer acquisition costs could outpace our build-up of recurring revenue, and we may be unable to reduce our total operating costs through economies of scale such that we are unable to achieve profitability.
Our ability to deliver our full offering to customers depends in substantial part on our ability to access pricing and claims data managed by a limited number of health plans and other third parties.
In order to deliver the full functionality offered by our Enterprise Healthcare Cloud, we need access, on behalf of our customers, to sources of pricing and claims data, much of which is managed by a limited number of health plans and other third parties. We have developed various long-term and short-term data-sharing relationships with certain health plans and other third parties, including most of the largest health plans in the United States. However, we do not currently have a data-sharing
 
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arrangement with UnitedHealth Group, Inc., one of the largest health plans, as well as other smaller health plans, which limits our ability to offer the full functionality of our offering to customers of such health plans.
The terms of the agreements under which we have access to data managed by health plans and other third parties vary, which can impact the offering we are able to deliver. Many of our agreements with health plans and third parties have terms that limit our access to and permitted uses of claims or pricing data to the data associated with our mutual customers. Also, some agreements may be terminated if the underlying customer contracts do not continue, or may otherwise be subject to termination or non-renewal. In addition, in one agreement with a large national health plan, we agreed, in exchange for more favorable terms to access health care claims data and other strategic benefits, to an exclusivity provision that restricts our ability to provide our full offering to customers of UnitedHealth Group, Inc. until January 2015.
The health plans and other third parties that we currently work with may, in the future, change their position and limit or eliminate our access to pricing and claims data, increase the costs charged to us for access to data, provide data to us in more limited or less useful formats, or restrict our permitted uses of data. Furthermore, some health plans have developed or are developing their own proprietary price and quality estimation tools and may perceive continued cooperation with us as a competitive disadvantage and choose to limit or discontinue our access to pricing and claims data. Failure to continue to maintain and expand our access to pricing and claims data will adversely impact our ability to continue to serve existing customers and expand our offering to new customers.
If our access to pricing and claims data is reduced or becomes more costly to us, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results would suffer.
If our existing customers do not continue or renew their agreements with us, renew at lower fee levels or decline to purchase additional applications and services from us, our business and operating results will suffer.
We expect to derive a significant portion of our revenue from renewal of existing customer agreements and sales of additional applications and services to existing customers. As a result, achieving a high renewal rate of our customer agreements and selling additional applications and services is critical to our future operating results.
However, we have a limited operating history, and to date have not yet reached the end of the original term for the vast majority of our existing customer agreements. Accordingly, we do not yet have enough experience with customer renewals to predict our customer renewal rate and may experience significantly more difficulty than we anticipate in renewing existing customer agreements. Factors that may affect the renewal rate for our offering and our ability to sell additional applications and services include:
 
 	Ÿ	 	the price, performance and functionality of our offering;	
 
 	Ÿ	 	the availability, price, performance and functionality of competing solutions;	
 
 	Ÿ	 	our ability to develop complementary applications and services;	
 
 	Ÿ	 	our continued ability to access the pricing and claims data necessary to enable us to deliver reliable data in our cost estimation and price transparency offering to customers;	
 
 	Ÿ	 	the stability, performance and security of our hosting infrastructure and hosting services;	
 
 	Ÿ	 	changes in health care laws, regulations or trends; and	
 
 	Ÿ	 	the business environment of our customers, in particular, headcount reductions by our customers.	
 
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We enter into master services agreements with our customers. These agreements generally have stated terms of three years. Our customers have no obligation to renew their subscriptions for our offering after the term expires. In addition, our customers may negotiate terms less advantageous to us upon renewal, which may reduce our revenue from these customers. Factors that are not within our control may contribute to a reduction in our contract revenue. For instance, our customers may reduce their number of employees, which would result in a corresponding reduction in the number of employee users eligible for our offering and thus a lower aggregate monthly services fee. Our future operating results also depend, in part, on our ability to sell new applications and services to our existing customers. If our customers fail to renew their agreements, renew their agreements upon less favorable terms or at lower fee levels, or fail to purchase new applications and services from us, our revenue may decline or our future revenue may be constrained.
In addition, a significant number of our customer agreements allow customers to terminate such agreements for convenience at certain times, typically with one to three months advance notice. We typically incur the expenses associated with integrating a customer’s data into our health care database and related training and support prior to recognizing meaningful revenue from such customer. Customer subscription revenue is not recognized until our applications are implemented for launch, which is generally from three to 12 months from contract signing. If a customer terminates its agreement early and revenue and cash flows expected from a customer are not realized in the time period expected or not realized at all, our business, operating results and financial condition could be adversely affected.
A significant portion of our revenue comes from a limited number of customers, the loss of which would adversely affect our financial results.
Historically, we have relied on a limited number of customers for a substantial portion of our total revenue. For the year ended December 31, 2013, the Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan represented approximately 16% of our total revenue. In addition, in our years ended December 31, 2012 and 2013, our top 10 customers by revenue accounted for 93% and 61% of our total revenue, respectively. We rely on our reputation and recommendations from key customers in order to promote our offering to potential customers. The loss of any of our key customers, or a failure of some of them to renew or expand user subscriptions, could have a significant impact on the growth rate of our revenue, reputation and our ability to obtain new customers. In addition, mergers and acquisitions involving our customers could lead to cancellation or non-renewal of our agreements with those customers or by the acquiring or combining companies, thereby reducing the number of our existing and potential customers.
Because we generally bill our customers and recognize revenue over the term of the contract, near term declines in new or renewed agreements may not be reflected immediately in our operating results and may be difficult to discern.
Most of our revenue in each quarter is derived from agreements entered into with our customers during previous quarters. Consequently, a decline in new or renewed agreements in any one quarter may not be fully reflected in our revenue for that quarter. Such declines, however, would negatively affect our revenue in future periods and the effect of significant downturns in sales of and market demand for our offering, and potential changes in our rate of renewals or renewal terms, may not be fully reflected in our results of operations until future periods. In addition, we may be unable to adjust our cost structure rapidly, or at all, to take account of reduced revenue. Our subscription model also makes it difficult for us to rapidly increase our total revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable term of the agreement. Accordingly, the effect of changes in the industry impacting our business or changes we experience in our new sales may not be reflected in our short-term results of operations.
 
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Our sales and implementation cycle can be long and unpredictable and require considerable time and expense, which may cause our operating results to fluctuate.
The sales cycle for our Enterprise Healthcare Cloud offering from initial contact with a potential lead to contract execution and implementation, varies widely by customer, ranging from three to 24 months. Some of our customers undertake a significant and prolonged evaluation process, including whether our offering meets a customer’s unique health care needs, that frequently involves not only our offering but also those of our competitors, which has in the past resulted in extended sales cycles. Our sales efforts involve educating our customers about the use, technical capabilities and benefits of our offering. Moreover, our large enterprise customers often begin to deploy our service on a limited basis, but nevertheless demand extensive configuration, integration services and pricing concessions, which increase our upfront investment in the sales effort with no guarantee that these customers will deploy our offering widely enough across their organization to justify our substantial upfront investment. It is possible that in the future we may experience even longer sales cycles, more complex customer needs, higher upfront sales costs and less predictability in completing some of our sales as we continue to expand our direct sales force and thereby increase the percentage of our sales personnel with less experience in selling our service, expand into new territories and add additional applications and services. If our sales cycle lengthens or our substantial upfront sales and implementation investments do not result in sufficient sales to justify our investments, our operating results may be harmed.
The health care industry is heavily regulated. Our failure to comply with regulatory requirements could create liability for us, result in adverse publicity and otherwise negatively affect our business.
The health care industry is heavily regulated and is constantly evolving due to the changing political, legislative and regulatory landscape and other factors. Many health care laws are complex, and their application to specific services and relationships may not be clear. Further, some health care laws differ from state to state and it is difficult to ensure our business complies with evolving laws in all states. Our operations may be adversely affected by enforcement initiatives. Our failure to accurately anticipate the application of these laws and regulations to our business, or any other failure to comply with regulatory requirements, could create liability for us, result in adverse publicity and negatively affect our business. For example, failure to comply with these requirements could result in the willingness of current and potential customers to work with us. Federal and state legislatures and agencies periodically consider proposals to revise aspects of the legal rules applicable to the health care industry, or to revise or create additional statutory and regulatory requirements. Such proposals, if implemented, could impact our operations, the use of our offering and our ability to market new applications and services, or could create unexpected liabilities for us. We cannot predict what changes to laws or regulations might be made in the future or how those changes could affect our business or our operating costs.
If we fail to comply with applicable health information privacy and security laws and other state and federal privacy and security laws, we may be subject to significant liabilities, reputational harm and other negative consequences, including decreasing the willingness of current and potential customers to work with us.
We are subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA established uniform federal standards for certain “covered entities,” which include health care providers and health plans, governing the conduct of specified electronic health care transactions and protecting the security and privacy of protected health information, or PHI. The Health Information Technology for Economic and Clinical Health Act, or HITECH, which became effective on February 17, 2010, makes HIPAA’s privacy and security standards directly applicable to “business associates,” which are independent contractors or agents of covered entities that create, receive, maintain, or transmit PHI in connection with providing a service for or on
 
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behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA’s requirements and seek attorney’s fees and costs associated with pursuing federal civil actions.
A portion of the data that we obtain and handle for or on behalf of our customers is considered PHI, subject to HIPAA. Under HIPAA and our contractual agreements with our HIPAA covered entity health plan customers, we are considered a “business associate” to those customers, and are required to maintain the privacy and security of PHI in accordance with HIPAA and the terms of our business associate agreements with customers, including by implementing HIPAA-required administrative, technical and physical safeguards. We have incurred, and will continue to incur, significant costs to establish and maintain these safeguards and, if additional safeguards are required to comply with HIPAA regulations or our customers’ requirements, our costs could increase further, which would negatively affect our operating results. Furthermore, if we fail to maintain adequate safeguards, or we or our agents and subcontractors use or disclose PHI in a manner prohibited or not permitted by HIPAA or our business associate agreements with our customers, or if the privacy or security of PHI that we obtain and handle is otherwise compromised, we could be subject to significant liabilities and consequences, including, without limitation:
 
 	Ÿ	 	breach of our contractual obligations to customers, which may cause our customers to terminate their relationship with us and may result in potentially significant financial obligations to our customers;	
 
 	Ÿ	 	investigation by the federal and state regulatory authorities empowered to enforce HIPAA, which include the U.S. Department of Health and Human Services and state attorneys general, and the possible imposition of civil penalties;	
 
 	Ÿ	 	private litigation by individuals adversely affected by any violation of HIPAA, HITECH or comparable state laws for which we are responsible; and	
 
 	Ÿ	 	negative publicity, which may decrease the willingness of current and potential future customers to work with us and negatively affect our sales and operating results.	
Further, we publish statements to end users of our services that describe how we handle and protect personal information. If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, we may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims and complying with regulatory or court orders.
We also send SMS text messages to potential end users who are eligible to use our service through certain customer and partners. While we get consent from or on behalf of these individuals to send text messages, federal or state regulatory authorities or private litigants may claim that the notices and disclosures we provide, form of consents we obtain or our SMS texting practices are not adequate. These SMS texting campaigns are potential sources of risk for class action lawsuits and liability for our company. Numerous class-action suits under federal and state laws have been filed in the past year against companies who conduct SMS texting programs. Many of those suits have resulted in multi-million dollar settlements to the plaintiffs.
If our new applications and services are not adopted by our customers, or if we fail to continue to innovate and develop new applications and services that are adopted by customers, then our revenue and operating results will be adversely affected.
To date we have derived a substantial majority of our revenue from sales of our Castlight Medical application, and our longer-term operating results and continued growth will depend on our ability to
 
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successfully develop and sell new applications and services that our customers want and are willing to purchase. In addition to our Castlight Medical application, we have recently introduced a number of new applications, such as our Castlight Pharmacy, Castlight Rewards and Castlight Reference Based Pricing applications, but it is uncertain whether these applications and services will result in significant revenue or comprise a significant portion of our total revenue. In addition, we have invested, and will continue to invest, significant resources in research and development to enhance our existing offering and introduce new high quality applications and services. If existing customers are not willing to make additional payments for such new applications, or if new customers do not value such new applications, our business and operating results will be harmed. If we are unable to predict user preferences or our industry changes, or if we are unable to modify our offering and services on a timely basis, we might lose customers. Our operating results would also suffer if our innovations are not responsive to the needs of our customers, appropriately timed with market opportunity or effectively brought to market.
We operate in a competitive industry, and if we are not able to compete effectively, our business and operating results will be harmed.
While the enterprise health care cloud market is in an early stage of development, the market is competitive and we expect it to attract increased competition, which could make it hard for us to succeed. We currently face competition for sub-components of our offering from a range of companies, including specialized software and solution providers that offer similar solutions, often at substantially lower prices, and that are continuing to develop additional products and becoming more sophisticated and effective. These competitors include Truven Health Analytics Inc., ClearCost Health, Change Healthcare Corporation, Healthcare Blue Book and HealthSparq, Inc. In addition, large, well-financed health plans, with whom we cooperate and on whom we depend in order to obtain the pricing and claims data we need to deliver our offering to customers, have in some cases developed their own cost and quality estimation tools and provide these solutions to their customers at discounted prices or often for free. These health plans include Aetna Inc., Cigna Corporation, UnitedHealth Group, Inc. and WellPoint, Inc. Competition from specialized software and solution providers, health plans and other parties will result in continued pricing pressures, which is likely to lead to price decline in certain product segments, which could negatively impact our sales, profitability and market share. In addition, if health plans perceive continued cooperation with us as a threat to their business interests, they may take steps that impair our access to pricing and claims data, or that otherwise make it more difficult or costly for us to deliver our offering to customers.
Some of our competitors, in particular health plans, have greater name recognition, longer operating histories and significantly greater resources than we do. Furthermore, our current or potential competitors may be acquired by third parties with greater available resources. As a result, our competitors might be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition. In addition, current and potential competitors have established, and might in the future establish, cooperative relationships with vendors of complementary products, technologies or services to increase the availability of their solutions in the marketplace. Accordingly, new competitors or alliances might emerge that have greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, greater financial resources and larger sales forces than we have, which could put us at a competitive disadvantage. Our competitors could also be better positioned to serve certain segments of the enterprise health care cloud market, such as customers that desire a more narrow solution, which could create additional price pressure. In light of these factors, even if our offering is more effective than those of our competitors, current or potential customers might accept competitive offerings in lieu of purchasing our offerings.
 
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Shifts in health care benefits trends, including any potential decline in the number of self-insured employers, or the emergence of new technologies may render our offering obsolete or require us to expend significant resources in order to remain competitive.
The U.S. health care industry is massive, with a number of large market participants with conflicting agendas, is subject to significant government regulation and is currently undergoing significant change. Changes in our industry, for example, towards private health care exchanges or away from high deductible health plans, or the emergence of new technologies as more competitors enter our market, could result in our offering being less desirable or relevant.
For example, we currently derive substantially all of our revenue from sales to customers that are self-insured employers. The demand for our offering depends on the need of self-insured employers to manage the costs of health care services that they pay on behalf of their employees. While the percentage of employers who are self-insured has been increasing over the past decade, there is no assurance that this trend will continue. Various factors, including changes in the health care insurance market or in government regulation of the health care industry, could cause the percentage of self-insured employers to decline, which would adversely affect the market for our offering and would negatively affect our business and operating results. Furthermore, such trends and our business could be affected by changes in health care spending resulting from the Patient Protection and Affordable Care Act, or the ACA, which was enacted in March 2010 and is currently being implemented. For example, the ACA contemplated the adoption of public exchanges in which consumers can purchase health insurance. In the event that the implementation of the ACA causes our customers to change their health care benefits plans or move to use of exchanges such that it reduces the need for our offering, or if the number of self-insured employers otherwise declines, we would be forced to compete on additional application and service attributes or to expend significant resources in order to alter our offering to remain competitive.
If health care benefits trends shift or entirely new technologies are developed that replace existing offerings, our existing or future offerings could be rendered obsolete and our business could be adversely affected. In addition, we may experience difficulties with software development, industry standards, design or marketing that could delay or prevent our development, introduction or implementation of new applications and enhancements.
We may require additional capital to support business growth, and this capital might not be available to us on acceptable terms or at all.
Our operations have consumed substantial amounts of cash since inception and we intend to continue to make significant investments to support our business growth, respond to business challenges or opportunities, develop new applications and services, enhance our existing offering and services, enhance our operating infrastructure and potentially acquire complementary businesses and technologies. For the years ended December 31, 2012 and 2013, our net cash used in operating activities was $29.3 million and $50.1 million, respectively. As of December 31, 2013, we had $67.2 million of cash, cash equivalents and marketable securities, which are held for working capital purposes. Our future capital requirements may be significantly different from our current estimates and will depend on many factors including our growth rate, subscription renewal activity, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced services offerings and the continuing market acceptance of our cloud-based subscription services. Accordingly, we might need to engage in equity or debt financings or collaborative arrangements to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could involve
 
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restrictive covenants relating to our capital-raising activities and other financial and operational matters, which might make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We might have to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to our technologies or offering that we otherwise would not relinquish. In addition, during the recent economic instability, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing, and we might not be able to obtain additional financing on commercially reasonable terms, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.
Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes, any of which could harm our business and operating results.
Proprietary software development is time-consuming, expensive and complex, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible that we discover additional problems that prevent our proprietary applications from operating properly. We are currently implementing software with respect to a number of new applications and services, including our Castlight Pharmacy, Castlight Rewards and Castlight Reference Based Pricing applications. If our offering does not function reliably or fails to achieve client expectations in terms of performance, clients could assert liability claims against us or attempt to cancel their contracts with us. This could damage our reputation and impair our ability to attract or maintain clients.
Moreover, data services are complex as those we offer have in the past contained, and may in the future develop or contain, undetected defects or errors. Material performance problems, defects or errors in our existing or new software and applications and services may arise in the future and may result from interface of our offering with systems and data that we did not develop and the function of which is outside of our control or undetected in our testing. These defects and errors and any failure by us to identify and address them could result in loss of revenue or market share, diversion of development resources, injury to our reputation and increased service and maintenance costs. Defects or errors in our Enterprise Healthcare Cloud might discourage existing or potential clients from purchasing our offering from us. Correction of defects or errors could prove to be impossible or impracticable. The costs incurred in correcting any defects or errors may be substantial and could adversely affect our operating results.
If we cannot implement our offering for customers in a timely manner, we may lose customers and our reputation may be harmed.
Our customers have a variety of different data formats, enterprise applications and infrastructure and our offering must support our customers’ data formats and integrate with complex enterprise applications and infrastructures. If our platform does not currently support a customer’s required data format or appropriately integrate with a customer’s applications and infrastructure, then we must configure our platform to do so, which increases our expenses. Additionally, we do not control our customers’ implementation schedules. As a result, if our customers do not allocate internal resources necessary to meet their implementation responsibilities or if we face unanticipated implementation difficulties, the implementation may be delayed. Further, our implementation capacity has at times constrained our ability to successfully implement our offering for our customers in a timely manner, particularly during periods of high demand. If the customer implementation process is not executed successfully or if execution is delayed, we could incur significant costs, customers could become dissatisfied and decide not to increase usage of our offering, or not to use our offering beyond an initial period prior to their term commitment or, in some cases, revenue recognition could be delayed. In
 
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addition, competitors with more efficient operating models with lower implementation costs could penetrate our customer relationships.
Additionally, large and demanding enterprise customers, who currently comprise the substantial majority of our customer base, may request or require specific features or functions unique to their particular business processes, which increase our upfront investment in sales and deployment efforts and the revenue resulting from the customers under our typical contract length may not cover the upfront investments. If prospective large customers require specific features or functions that we do not offer, then the market for our offering will be more limited and our business could suffer.
In addition, supporting large customers could require us to devote significant development services and support personnel and strain our personnel resources and infrastructure. Furthermore, if we are unable to address the needs of these customers in a timely fashion or further develop and enhance our offering, or if a customer or its employees is not satisfied with the quality of work performed by us or with the offering delivered or professional services rendered, then we could incur additional costs to address the situation, we may be required to issue credits or refunds for pre-paid amounts related to unused services, the profitability of that work might be impaired and the customer’s dissatisfaction with our offering could damage our ability to expand the number of applications and services purchased by that customer. These customers may not renew their agreements, seek to terminate their relationship with us or renew on less favorable terms. Moreover, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers. If any of these were to occur, our revenue may decline and our operating results could be adversely affected.
Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and harm our financial results.
Our customers depend on our support organization to resolve any technical issues relating to our offering. In addition, our sales process is highly dependent on the quality of our offering, our business reputation and on strong recommendations from our existing customers. Any failure to maintain high-quality and highly-responsive technical support, or a market perception that we do not maintain high-quality and highly-responsive support, could harm our reputation, adversely affect our ability to sell our offering to existing and prospective customers, and harm our business, operating results and financial condition.
We offer technical support services with our offering and may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services, particularly as we increase the size of our customer base. We also may be unable to modify the format of our support services to compete with changes in support services provided by competitors. It is difficult to predict customer demand for technical support services and if customer demand increases significantly, we may be unable to provide satisfactory support services to our customers and their employees. Additionally, increased customer demand for these services, without corresponding revenue, could increase costs and adversely affect our operating results.
We depend on data centers operated by third parties for our offering, and any disruption in the operation of these facilities could adversely affect our business.
We provide our Enterprise Healthcare Cloud through computer hardware that is currently located in a third-party data center in Texas, which is operated by one IT hosting company, and two third-party data centers in Colorado and Arizona, which are operated by a second IT hosting company. We expect to transition all of our hardware to the data centers in Colorado and Arizona by the end of 2014. While we control and have access to our servers and all of the components of our network that are located in our external data centers, we do not control the operation of these facilities. The owners of our data centers have no obligation to renew their agreements with us on commercially reasonable terms, or at
 
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all. If we are unable to renew these agreements on commercially reasonable terms, or if our data center operator is acquired, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible service interruption in connection with doing so.
Problems faced by our third-party data center locations could adversely affect the experience of our customers. The operators of the data centers could decide to close their facilities without adequate notice. In addition, any financial difficulties, such as bankruptcy, faced by the operators of the data centers or any of the service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business. For example, a rapid expansion of our business could affect the service levels at our data centers or cause such data centers and systems to fail. Any changes in third-party service levels at our data centers or any disruptions or other performance problems with our offering could adversely affect our reputation and may damage our customers’ stored files or result in lengthy interruptions in our services. Interruptions in our services might reduce our revenue, cause us to issue refunds to customers for prepaid and unused subscriptions, subject us to potential liability or adversely affect our renewal rates.
The information that we provide to our customers, and their employees and families, could be inaccurate or incomplete, which could harm our business, financial condition and results of operations.
We provide price, quality and other health care-related information for use by our customers, and their employees and families, to search and compare options for health care services. Third-party health plans and our clients provide us with most of these data. Because data in the health care industry is fragmented in origin, inconsistent in format and often incomplete, the overall quality of data in the health care industry is poor, and we frequently discover data issues and errors. If the data that we provide to our customers are incorrect or incomplete or if we make mistakes in the capture or input of these data, our reputation may suffer and our ability to attract and retain customers may be harmed.
In addition, a court or government agency may take the position that our storage and display of health information exposes us to personal injury liability or other liability for wrongful delivery or handling of health care services or erroneous health information. While we maintain insurance coverage, this coverage may prove to be inadequate or could cease to be available to us on acceptable terms, if at all. Even unsuccessful claims could result in substantial costs and diversion of management resources. A claim brought against us that is uninsured or under-insured could harm our business, financial condition and results of operations.
We depend on our senior management team, and the loss of one or more of our executive officers or key employees or an inability to attract and retain highly skilled employees could adversely affect our business.
Our success depends largely upon the continued services of our key executive officers. These executive officers are at-will employees and therefore may terminate employment with us at any time with no advance notice. We do not maintain “key person” insurance for any of these executive officers or any of our other key employees. We also rely on our leadership team in the areas of research and development, marketing, services and general and administrative functions. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. The replacement of one or more of our executive officers or other key employees would likely involve significant time and costs and may significantly delay or prevent the achievement of our business objectives.
To continue to execute our growth strategy, we also must attract and retain highly skilled personnel. Competition is intense for engineers with high levels of experience in designing and
 
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developing software and Internet-related services, particularly in the San Francisco Bay Area where we are located. We might not be successful in maintaining our unique culture and continuing to attract and retain qualified personnel. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled personnel with appropriate qualifications. The pool of qualified personnel with Software-as-a-Service, or SaaS, experience or experience working with the health care market is limited overall. In addition, many of the companies with which we compete for experienced personnel have greater resources than we have.
In addition, in making employment decisions, particularly in the Internet and high-technology industries, job candidates often consider the value of the stock options or other equity instruments they are to receive in connection with their employment. Volatility in the price of our stock might, therefore, adversely affect our ability to attract or retain highly skilled personnel. Furthermore, the requirement to expense stock options and other equity instruments might discourage us from granting the size or type of stock option or equity awards that job candidates require to join our company. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.
If we cannot maintain our corporate culture as we grow, we could lose the transparency, courage, community, passion and excellence that we believe contribute to our success and our business may be harmed.
We believe that a critical asset for our business, and a source of our competitive strength, is our unique company culture, which we believe fosters transparency, courage, community, passion and excellence. As we grow and change, we may find it difficult to maintain these important aspects of our corporate culture. Any failure to preserve our culture could also negatively affect our ability to attract and retain personnel, our reputation and our ability to continue to build and advance our offering and may otherwise adversely affect our future success.
If we fail to develop widespread brand awareness cost-effectively, our business may suffer.
We believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread adoption of our offering and attracting new customers. Brand promotion activities may not generate customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses, we may fail to attract or retain customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our offering.
Our marketing efforts depend significantly on our ability to receive positive references from our existing customers.
Our marketing efforts depend significantly on our ability to call on our current customers to provide positive references to new, potential customers. Given our limited number of long-term customers, the loss or dissatisfaction of any customer could substantially harm our brand and reputation, inhibit the market adoption of our offering and impair our ability to attract new customers and maintain existing customers. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
Our success depends in part on our ability to enforce our intellectual property and other proprietary rights. We rely upon a combination of patent, trademark, copyright and trade secret laws,
 
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as well as license and access agreements and other contractual provisions, to protect our intellectual property and other proprietary rights. In addition, we attempt to protect our intellectual property and proprietary information by requiring certain of our employees, consultants and contractors to enter into confidentiality, noncompetition and assignment of inventions agreements. These laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. While we have four U.S. patent applications pending, and we currently have one issued U.S. patent, we cannot ensure that any of our pending patent applications will be granted or that our issued patent will adequately protect our intellectual property. In addition, if any patents are issued in the future, they may not provide us with any competitive advantages, or may be successfully challenged by third parties. To the extent that our intellectual property and other proprietary rights are not adequately protected, third parties might gain access to our proprietary information, develop and market solutions similar to ours, or use trademarks similar to ours, each of which could materially harm our business. Further, unauthorized parties may attempt to copy or obtain and use our technology to develop applications with the same functionality as our offering, and policing unauthorized use of our technology and intellectual property rights is difficult and may not be effective. The failure to adequately protect our intellectual property and other proprietary rights could materially harm our business.
We could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.
In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. Companies in the Internet and technology industries are increasingly bringing and becoming subject to suits alleging infringement of proprietary rights, particularly patent rights, and our competitors and other third parties may hold patents or have pending patent applications, which could be related to our business. These risks have been amplified by the increase in third parties, which we refer to as non-practicing entities, whose sole primary business is to assert such claims. We expect that we may receive in the future notices that claim we or our customers using our offering have misappropriated or misused other parties’ intellectual property rights, particularly as the number of competitors in our market grows and the functionality of applications amongst competitors overlaps. If we are sued by a third party that claims that our technology infringes its rights, the litigation, whether or not successful, could be extremely costly to defend, divert our management’s time, attention and resources, damage our reputation and brand and substantially harm our business. We do not currently have an extensive patent portfolio of our own, which may limit the defenses available to us in any such litigation.
In addition, in most instances, we have agreed to indemnify our customers against certain third-party claims, which may include claims that our offering infringes the intellectual property rights of such third parties. Our business could be adversely affected by any significant disputes between us and our customers as to the applicability or scope of our indemnification obligations to them. The results of any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following:
 
 	Ÿ	 	cease offering or using technologies that incorporate the challenged intellectual property;	
 
 	Ÿ	 	make substantial payments for legal fees, settlement payments or other costs or damages;	
 
 	Ÿ	 	obtain a license, which may not be available on reasonable terms, to sell or use the relevant technology; or	
 
 	Ÿ	 	redesign technology to avoid infringement.	
If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement claims against us or any obligation to
 
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indemnify our customers for such claims, such payments or costs could have a material adverse effect upon our business and financial results.
Our use of open source technology could impose limitations on our ability to commercialize our software platform.
Our offering incorporates open source software components that are licensed to us under various public domain licenses. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code to such software or make available any derivative works of the open source code on unfavorable terms or at no cost. There is little or no legal precedent governing the interpretation of many of the terms of these licenses and therefore the potential impact of such terms on our business is somewhat unknown. There is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our software platform. While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur and we may be required to release our proprietary source code, pay damages for breach of contract, re-engineer our offering, discontinue sales of our offering in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away from our development efforts, any of which could cause us to breach customer contracts, harm our reputation, result in customer losses or claims, increase our costs or otherwise adversely affect our business and operating results.
We may acquire other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and adversely affect our operating results.
We may in the future seek to acquire or invest in businesses, applications and services or technologies that we believe could complement or expand our offering, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
In addition, we have limited experience in acquiring other businesses. If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:
 
 	Ÿ	 	inability to integrate or benefit from acquired technologies or services in a profitable manner;	
 
 	Ÿ	 	unanticipated costs or liabilities associated with the acquisition;	
 
 	Ÿ	 	difficulty integrating the accounting systems, operations and personnel of the acquired business;	
 
 	Ÿ	 	difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;	
 
 	Ÿ	 	difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company;	
 
 	Ÿ	 	diversion of management’s attention from other business concerns;	
 
 	Ÿ	 	adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;	
 
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 	Ÿ	 	the potential loss of key employees;	
 
 	Ÿ	 	use of resources that are needed in other parts of our business; and	
 
 	Ÿ	 	use of substantial portions of our available cash to consummate the acquisition.	
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.
Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer.
If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class B common stock may be negatively affected.
As a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and determine the effectiveness of our internal control over financial reporting and, beginning with our annual report for the fiscal year ending December 31, 2015, provide a management report on the internal control over financial reporting. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We are in the process of designing and implementing the internal control over financial reporting required to comply with this obligation, which process will be time consuming, costly and complicated. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our Class B common stock could be negatively affected and we could become subject to investigations by the New York Stock Exchange, on which our securities are listed, the SEC or other regulatory authorities, which could require us to obtain additional financial and management resources.
We will incur significantly increased costs and devote substantial management time as a result of operating as a public company.
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. For example, we will be subject to the reporting requirements of the Exchange Act and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and the New York Stock Exchange, including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance practices and required filing of annual, quarterly and current reports with respect to our
 
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business and operating results. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the JOBS Act. We may also need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit function.
We also expect that operating as a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. This could also make it more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.
We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class B common stock less attractive to investors.
We are an emerging growth company, as defined under the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Class B common stock less attractive because we will rely on these exemptions. If some investors find our Class B common stock less attractive as a result, there may be a less active trading market for our Class B common stock and our stock price may be more volatile.
We will remain an emerging growth company until the earliest of (i) the end of the fiscal year in which the market value of our Class B common stock that is held by non-affiliates exceeds $700 million as of June 30, (ii) the end of the fiscal year in which we have total annual gross revenue of $1 billion or more during such fiscal year, (iii) the date on which we issue more than $1 billion in non-convertible debt in a three-year period or (iv) December 31, 2019, which is the last day of the fiscal year following five years from the date of this prospectus.
We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could adversely affect our profitability.
As of December 31, 2013, we had federal and state net operating loss carryforwards of $120.7 million and $97.8 million, respectively, due to prior period losses, which if not utilized will begin to expire in 2028 for federal and state purposes. We also have federal and state research tax credit carryforwards of $2.1 million and $2.3 million as of December 31, 2013, respectively, which if not utilized will begin to expire in 2028 for federal purposes. These net operating loss and research tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of
 
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our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. This offering or future issuances of our stock could cause an “ownership change.” Any future ownership change, which could be outside of our control, could also have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
We may be subject to liabilities with respect to sales and use, value added and similar taxes, which could adversely affect our results of operations.
We are typically held responsible by taxing authorities for the collection and payment of any applicable sales and use, value added and similar taxes on the subscriptions and services that we sell. Prior to 2014, we did not collect or remit U.S. state taxes on the charges to our customers for our subscriptions or services. In 2014, we will begin to collect sales tax relating to subscription and services fees. Historically, we have recorded a contingent sales tax liability for sales including estimated penalties and interest. If our ultimate liability exceeds such amount, it could result in charges to our earnings. Each state has different rules and regulations governing sales and use, value added and similar taxes, and these rules and regulations are subject to varying interpretations that change over time. Certain jurisdictions in which we did not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties and interest, or future requirements may adversely affect our results of operations. Moreover, imposition of such taxes on us going forward will effectively increase the cost of our applications and services to our customers and might adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.
Economic uncertainties or downturns in the general economy or the industries in which our customers operate could disproportionately affect the demand for our offering and negatively impact our results of operations.
General worldwide economic conditions have experienced a significant downturn, and market volatility and uncertainty remain widespread, making it extremely difficult for our customers and us to accurately forecast and plan future business activities. In addition, these conditions could cause our customers or prospective customers to decrease headcount, benefits or human resources budgets, which could decrease corporate spending on our applications and services, resulting in delayed and lengthened sales cycles, a decrease in new customer acquisition and loss of customers. Furthermore, during challenging economic times, our customers may have difficulty gaining timely access to sufficient credit or obtaining credit on reasonable terms, which could impair their ability to make timely payments to us and adversely affect our revenue. If that were to occur, our financial results could be harmed. Further, challenging economic conditions might impair the ability of our customers to pay for the applications and services they already have purchased from us and, as a result, our write-offs of accounts receivable could increase. We cannot predict the timing, strength, or duration of any economic slowdown or recovery. If the condition of the general economy or markets in which we operate worsens, our business could be harmed.
The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.
Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this prospectus relating to the size and expected growth of the enterprise health care cloud market may prove to be inaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all. For more information
 
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regarding our estimates of market opportunity and the forecasts of market growth included in this prospectus, see the section titled “Industry and Market Data.”
Natural or man-made disasters and other similar events may significantly disrupt our business and negatively impact our results of operations and financial condition.
Our offices may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, power outages, fires, floods, nuclear disasters and acts of terrorism or other criminal activities, which may render it difficult or impossible for us to operate our business for some period of time. For example, our headquarters are located in the San Francisco Bay Area, a region known for seismic activity. Any disruptions in our operations related to the repair or replacement of our office, could negatively impact our business and results of operations and harm our reputation. In addition, we may not carry business insurance sufficient to compensate for losses that may occur. Any such losses or damages could have a material adverse effect on our business, results of operations and financial condition. In addition, the facilities of significant customers, health plans or major strategic partners may be harmed or rendered inoperable by such natural or man-made disasters, which may cause disruptions, difficulties or material adverse effects on our business.
Risks Related to This Offering and Ownership of Our Class B Common Stock
The stock price of our Class B common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.
The market price of our Class B common stock may fluctuate significantly. These fluctuations could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid in this offering. Factors, many of which are beyond our control, that could cause fluctuations in the market price of our Class B common stock include the following:
 
 	Ÿ	 	overall performance of the equity markets;	
 
 	Ÿ	 	our operating performance and the performance of other similar companies;	
 
 	Ÿ	 	changes in the estimates of our operating results that we provide to the public or our failure to meet these projections;	
 
 	Ÿ	 	failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company or our failure to meet these estimates or the expectations of investors or changes in recommendations by securities analysts that elect to follow our Class B common stock;	
 
 	Ÿ	 	sales of shares of our Class B common stock by us or our stockholders, including upon expiration of market standoff or contractual lock-up agreements;	
 
 	Ÿ	 	announcements of technological innovations, new applications or enhancements to services, acquisitions, strategic alliances or significant agreements by us or by our competitors;	
 
 	Ÿ	 	disruptions in our services due to computer hardware, software or network problems;	
 
 	Ÿ	 	announcements of customer additions and customer cancellations or delays in customer purchases;	
 
 	Ÿ	 	recruitment or departure of key personnel;	
 
 	Ÿ	 	the economy as a whole, market conditions in our industry and the industries of our customers;	
 
 	Ÿ	 	litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;	
 
 	Ÿ	 	developments or disputes concerning our intellectual property or other proprietary rights;	
 
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 	Ÿ	 	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;	
 
 	Ÿ	 	the size of our market float; and	
 
 	Ÿ	 	any other factors discussed in this prospectus.	
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.
Substantial blocks of our total outstanding shares may be sold into the market when lock-up or market standoff periods end. If there are substantial sales of shares of our Class B common stock, the price of our Class B common stock could decline.
The price of our Class B common stock could decline if there are substantial sales of our Class B common stock, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our Class B common stock available for sale. All of the shares of Class B common stock sold in this offering will be available for sale in the public market. Any shares of Class B common stock that may be outstanding as of the date of this offering will be restricted from resale as a result of market standoff and “lock-up” agreements, as more fully described in “Shares Eligible for Future Sale.” These shares will become available to be sold 181 days after the date of this prospectus. Shares held by directors, executive officers and other affiliates will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.
After the consummation of this offering, certain of our stockholders will have rights, subject to some conditions, to require us to file registration statements covering their shares and to include their shares in registration statements that we may file for ourselves or our stockholders. All of the shares held by these holders are subject to market standoff or lock-up agreements restricting their sale until 181 days after the date of this prospectus. We also intend to register shares of Class B common stock that we have issued and may issue under our employee equity incentive and employee stock purchase plans. Once we register these shares, they will be able to be sold freely in the public market upon issuance, subject to existing market standoff or lock-up agreements.
Goldman, Sachs & Co. and Morgan Stanley & Co. LLC may, at their discretion, permit our stockholders to sell shares prior to the expiration of the restrictive provisions contained in the lock-up agreements.
The market price of the shares of our Class B common stock could decline as a result of the sale of a substantial number of our shares of Class B common stock in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares.
There has been no prior public market for our Class B common stock and an active trading market may not develop or be sustained.
There has been no public market for our Class B common stock prior to this offering. The initial public offering price for our Class B common stock will be determined through negotiations between the underwriters and us and may vary from the market price of our Class B common stock following this offering. An active or liquid market in our Class B common stock may not develop upon closing of this offering or, if it does develop, it may not be sustainable. The lack of an active market may impair
 
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the value of your shares, your ability to sell your shares at the time you wish to sell them and the prices that you may obtain for your shares. An inactive market may also impair our ability to raise capital by selling our Class B common stock and may impair our ability to acquire other companies, products or technologies by using our Class B common stock as consideration.
The dual class structure of our common stock will have the effect of concentrating voting control with our executive officers (including our Chief Executive Officer) and directors and their affiliates; this will limit or preclude your ability to influence corporate matters.
Each share of Class A common stock and each share of Class B common stock has one vote per share, except on the following matters (in which each share of Class A common stock has ten votes per share and each share of Class B common stock has one vote per share):
 
 	Ÿ	 	adoption of a merger or consolidation agreement involving our company;	
 
 	Ÿ	 	a sale, lease or exchange of all or substantially all of our property and assets;	
 
 	Ÿ	 	a dissolution or liquidation of our company; or	
 
 	Ÿ	 	every matter, if and when any individual, entity or “group” (as such term is used in Regulation 13D of the Exchange Act) has, or has publicly disclosed (through a press release or a filing with the SEC) an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of Class A common stock and Class B common stock, combined.	
Because of our dual class common stock structure, the holders of our Class A common stock, who consist of our founders, directors, executives, employees and current holders of our convertible preferred stock (and their affiliates), will continue to be able to control the corporate matters listed above if any such matter is submitted to our stockholders for approval even if they come to own less than 50% of the outstanding shares of our common stock. Immediately after this offering, the holders of our Class A common stock, including our executive officers and directors and their affiliates, will own 87.2% and the holders of our Class B common stock will own 12.8% of the outstanding shares of Class A common stock and Class B common stock, combined. However, because of our dual class common stock structure these holders of our Class A common stock will have 98.6% and holders of our Class B common stock will have 1.4% of the total votes immediately after this offering in each of the matters identified in the list above. This concentrated control by our Class A common stockholders will limit or preclude your ability to influence those corporate matters for the foreseeable future and, as a result, we may take actions that our stockholders do not view as beneficial. The market price of our Class B common stock could be adversely affected by the structure. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. See “Principal Stockholders” and “Description of Capital Stock.”
Future transfers by holders of Class A common stock will generally result in those shares converting to Class B common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The conversion of Class A common stock to Class B common stock will have the effect, over time, of increasing the relative voting power of those holders of Class A common stock who retain their shares in the long term. If, for example, our executive officers (including our Chief Executive Officer), directors and their affiliates retain a significant portion of their holdings of Class A common stock for an extended period of time, they could, in the future, continue to control a majority of the combined voting power of our Class A common stock and Class B common stock with respect to each of the matters identified in the list above. For a description of the dual class structure, see “Description of Capital Stock.”
 
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As a new investor, you will experience immediate and substantial dilution in the book value of the shares that you purchase in this offering.
The initial public offering price is substantially higher than the pro forma net tangible book value per share of our Class B common stock immediately following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase shares of our Class B common stock in this offering, which is based on the midpoint of the estimated offering price range set forth on the cover of this prospectus, you will experience immediate dilution of $8.22 per share, the difference between the price per share you pay for our Class B common stock and its pro forma net tangible book value per share as of December 31, 2013, after giving effect to the issuance of 11,100,000 shares of our Class B common stock in this offering. See “Dilution.” Furthermore, investors purchasing shares of our Class B common stock in this offering will only own approximately 12.8% of our outstanding shares of Class A and Class B common stock (and have 1.4% of the combined voting power of the outstanding shares of our Class A and Class B common stock in certain circumstances) after the offering even though the new investors’ aggregate investment will represent 37.8% of the total consideration received by us in connection with all initial sales of shares of our capital stock outstanding as of December 31, 2013, after giving effect to the issuance of 11,100,000 shares of our Class B common stock in this offering. To the extent outstanding options or warrants to purchase our Class A common stock are exercised, investors purchasing our Class B common stock in this offering will experience further dilution.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our Class B common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our Class B common stock would be negatively affected. If one or more of the analysts who cover us downgrade our Class B common stock or publish inaccurate or unfavorable research about our business, our Class B common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class B common stock could decrease, which might cause our Class B common stock price and trading volume to decline.
We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
We cannot specify with any certainty the particular uses of the net proceeds that we will receive from this offering. We will have broad discretion in the application of the net proceeds, including working capital, possible acquisitions and other general corporate purposes, and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could adversely affect our business and financial condition, which could cause the price of our stock to decline. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. These investments may not yield a favorable return to our investors.
We do not intend to pay dividends for the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Consequently, stockholders must rely on sales of their Class B common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
 
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Anti-takeover provisions under Delaware law and in our restated certificate of incorporation and restated bylaws could make a merger, tender offer, or proxy contest difficult, limit attempts by our stockholders to replace or remove members of our board of directors or current management and depress the trading price of our Class B common stock.
Following the closing of this offering, our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. See “Description of Capital Stock—Anti-Takeover Provisions—Restated Certificate of Incorporation and Restated Bylaw Provisions.”
In addition, our restated certificate of incorporation and restated bylaws that will be in effect at the closing of this offering will contain provisions that may make the acquisition of our company or changes in our board of directors or management more difficult, including the following:
 
 	Ÿ	 	our board of directors will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause, which would delay the replacement of a majority of our board of directors or impede an acquirer from rapidly replacing our existing directors with its own slate of directors;	
 
 	Ÿ	 	subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, only our board of directors will have the right to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;	
 
 	Ÿ	 	our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings, which special meetings may only be called by the chairman of our board, our chief executive officer, our president, or a majority of our board of directors;	
 
 	Ÿ	 	certain litigation against us can only be brought in Delaware;	
 
 	Ÿ	 	our restated certificate of incorporation will authorize undesignated preferred stock, the terms of which may be established and shares of which may be issued, by our board of directors without the approval of the holders of Class B common stock, which makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us;	
 
 	Ÿ	 	advance notice procedures and additional disclosure requirements will apply for stockholders to nominate candidates for election as directors or to bring matters before a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company;	
 
 	Ÿ	 	our restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;	
 
 	Ÿ	 	amendment of the anti-takeover provisions of our restated certificate of incorporation require supermajority approval by holders of at least two-thirds of our outstanding common stock; and	
 
 	Ÿ	 	in certain circumstances pertaining to change in control, the sale of all or substantially all of our assets and liquidation matters, and on all matters if and when any individual, entity or group has, or has publicly disclosed an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of Class A common stock and Class B common stock, combined, holders of our Class A common stock are entitled to ten votes per share and holders of our Class B common stock are entitled to one vote per share. Immediately after this offering,	
 
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 	the holders of our Class A common stock will own 87.2% and the holders of our Class B common stock will own 12.8% of the outstanding shares of Class A common stock and Class B common stock, combined. However, because of our dual class common stock structure these holders of our Class A common stock will have 98.6% and holders of our Class B common stock will have 1.4% of the total votes immediately after this offering with respect to the matters specified above. In all other circumstances, holders of our Class A common stock and Class B common stock are each entitled to one vote per share, and in these other circumstances the holders of our Class A common stock will have 87.2% and holders of our Class B common stock will have 12.8% of the total votes immediately after this offering.	
For information regarding these and other provisions, see “Description of Capital Stock.”
 
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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. All statements contained in this prospectus other than statements of historical fact, including but not limited to statements regarding our future results of operations and financial position, our business strategy and plans, market growth, the use of the net proceeds from this offering and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to and we disclaim any obligation to update any of these forward-looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations.
 
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 INDUSTRY AND MARKET DATA
Unless otherwise indicated, information contained in this prospectus concerning our industry and the market in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, including independent industry publications by the Attorney General of the Commonwealth of Massachusetts, Centers for Medicare & Medicaid Services, Institute of Medicine of the National Academies, The Kaiser Family Foundation & Health Research & Educational Trust, Towers Watson & Co., the National Business Group on Health, the World Bank, the Leapfrog Group, Bloomberg, the American Hospital Association and the Bureau of Labor Statistics. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and in our experience to date in, the markets for our offering and services. This information involves a number of assumptions, limitations and estimates. Although neither we nor the underwriters have independently verified the accuracy or completeness of any third-party information, we believe the information from these industry publications that is included in this prospectus is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
Certain information in the text of the prospectus is contained in independent industry publications. The source of, and selected additional information contained in, these independent industry publications are provided below:
 
 	1.	Attorney General, Commonwealth of Massachusetts, “Examination of Health Care Cost Trends and Cost Drivers,” April 2013.	
 
 	2.	Bloomberg Visual Data, “Most Efficient Health Care: Countries,” August 2013.	
 
 	3.	Centers for Medicare & Medicaid Services, “National Health Expenditures Projections 2012-2022,” 2013.	
 
 	4.	Institute of Medicine of the National Academies, “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America,” September 2013.	
 
 	5.	The Kaiser Family Foundation, “2008 Update on Consumers’ Views of Patient Safety and Quality Information,” October 2008.	
 
 	6.	The Kaiser Family Foundation and Health Research & Educational Trust, “Employer Health Benefits, 2013 Annual Survey,” August 2013.	
 
 	7.	The Kaiser Family Foundation, “The Uninsured, A Primer,” October 2013.	
 
 	8.	Towers Watson & Co. and National Business Group on Health, “Reshaping Health Care, Best Performers Leading the Way,” March 2013.	
 
 	9.	Thomas C. Tsai, et al., “Variation in Surgical-Readmission Rates and Quality of Hospital Care,” The New England Journal of Medicine, September 2013.	
 
 	10.	The World Bank, “World Development Indicators: Health Systems,” September 2013.	
 
 	11.	Bureau of Labor Statistics News Release, “Employer Costs for Employee Compensation—September 2013,” December 2013.	
 
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 USE OF PROCEEDS
We estimate that the net proceeds to us from the sale of shares of our Class B common stock in this offering will be approximately $99.3 million, based on an assumed initial public offering price of $10.00 per share, which is the midpoint of the estimated offering price range set forth on the front cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ option to purchase additional shares from us is exercised in full, we estimate that we will receive additional net proceeds of $15.5 million.
Each $1.00 increase or decrease in the assumed initial public offering price of $10.00 per share would increase or decrease the net proceeds that we receive from this offering by approximately $10.3 million, assuming the number of shares offered by us remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease the net proceeds to us from this offering by approximately $9.3 million, assuming the assumed initial public offering price of $10.00 per share remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to create a public market for our Class B common stock, obtain additional capital, facilitate our future access to the public equity markets, increase awareness of our company among potential customers and improve our competitive position.
We intend to use the net proceeds from this offering for working capital and other general corporate purposes, however, as of the date of this prospectus, we cannot specify with certainty the particular uses of the net proceeds for such purposes. Additionally, we may use the net proceeds from this offering to expand our current business through acquisitions of, or investments in, other businesses, products or technologies. However, we have no commitments with respect to any such acquisitions or investments at this time.
Our management will have broad discretion in the application of the net proceeds from this offering to us, and investors will be relying on the judgment of our management regarding the application of the proceeds. Pending their use, we plan to invest our net proceeds from this offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
 DIVIDEND POLICY
We have never declared or paid dividends on our capital stock. We do not expect to pay dividends on our capital stock for the foreseeable future. Instead, we anticipate that all of our earnings, if any, will be used for the operation and growth of our business. Any future determination to declare cash dividends would be subject to the discretion of our board of directors and would depend upon various factors, including our results of operations, financial condition and liquidity requirements, restrictions that may be imposed by applicable law and our contracts and other factors deemed relevant by our board of directors.
 
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 CAPITALIZATION
The following table sets forth our consolidated cash and cash equivalents and marketable securities and capitalization as of December 31, 2013 on:
 
 	Ÿ	 	an actual basis;	
 
 	Ÿ	 	a pro forma basis to give effect to (i) the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 64,475,633 shares of our Class A common stock upon the completion of this offering and (ii) the filing of our restated certificate of incorporation upon the completion of this offering; and	
 
 	Ÿ	 	a pro forma as adjusted basis, giving effect to (i) the pro forma adjustments described above and (ii) the sale by us of 11,100,000 shares of our Class B common stock in this offering at an assumed initial public offering price of $10.00 per share, which is the midpoint of the estimated offering price range set forth on the front cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.	
You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock,” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 	  	As of December 31, 2013	 	
 	  	Actual	 	 	Pro Forma	 	 	Pro Forma
As Adjusted (1)	 	
 	  	(in thousands except share and per share data)	 	
Cash, cash equivalents and marketable securities	  	$	67,171	  	 	$	67,171	  	 	$	166,451	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Convertible preferred stock, net of issuance costs $0.0001 par value: 64,475,662 shares authorized, 64,475,633 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma or pro forma as adjusted	  	$	180,423	  	 	$	—	  	 	$	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Stockholders’ equity (deficit)	  				 				 				
Preferred stock, $0.0001 par value: no shares authorized, issued and outstanding, actual; 10,000,000 shares authorized and no shares issued or outstanding, pro forma or pro forma as adjusted	  	 	—	  	 	 	—	  	 	 	—	  	
Class A Common stock, $0.0001 par value: 95,000,000 shares authorized, 10,994,074 shares issued and outstanding, actual; 200,000,000 shares authorized, 75,469,707 shares issued and outstanding, pro forma; 200,000,000 shares authorized, 75,469,707 shares issued and outstanding, pro forma as adjusted	  	 	1	  	 	 	7	  	 	 	7	  	
Class B Common stock, $0.0001 par value: 95,000,000 shares authorized, no shares issued and outstanding, actual; 800,000,000 shares authorized, no shares issued and outstanding, pro forma; 800,000,000 shares authorized, 11,100,000 shares issued and outstanding; pro forma as adjusted	  	 	—	  	 	 	—	  	 	 	1	  	
Additional paid-in capital	  	 	6,885	  	 	 	187,302	  	 	 	286,581	  	
Accumulated other comprehensive income	  	 	—	  	 	 	—	  	 	 	—	  	
Accumulated deficit	  	 	(131,236	) 	 	 	(131,236	) 	 	 	(131,236	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Stockholders’ equity (deficit)	  	 	(124,350	) 	 	 	56,073	  	 	 	155,353	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total capitalization	  	$	56,073	  	 	$	56,073	  	 	$	155,353	  	

(1)	Each $1.00 increase or decrease in the assumed initial public offering price of $10.00 per share of our Class B common stock, which is the midpoint of the estimated offering price range set forth on the front cover page	
 
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 	of this prospectus, would increase or decrease each of cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $10.3 million, assuming that the number of shares offered by us, as set forth on the front cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions payable by us. Similarly, each increase or decrease of 1,000,000 shares in the number of shares of our Class B common stock offered by us would increase or decrease each of cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $9.3 million, assuming the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions.	
The number of shares of Class A and Class B common stock shown as issued and outstanding in the table above is based on 75,469,707 shares of our Class A common stock and no shares of our Class B common stock issued and outstanding as of December 31, 2013 and excludes:
 
 	Ÿ	 	16,455,404 shares of Class A common stock issuable upon the exercise of options outstanding as of December 31, 2013, with a weighted-average exercise price of $1.22 per share;	
 
 	Ÿ	 	1,441,000 shares of Class A common stock issuable upon the exercise of options granted between January 1, 2014 and February 28, 2014, with a weighted-average exercise price of $7.20 per share;	
 
 	Ÿ	 	115,000 shares of Class A common stock issuable upon the exercise of a warrant outstanding as of December 31, 2013, with an exercise price of $5.00 per share;	
 
 	Ÿ	 	89,943 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $6.76, and 12,786 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $7.93; and	
 
 	Ÿ	 	23,104,918 shares of our common stock reserved for future issuance under our equity compensation plans, consisting of (a) 2,104,918 shares of our Class A common stock reserved for issuance under our 2008 Stock Incentive Plan as of December 31, 2013; (b) 15,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Equity Incentive Plan; and (c) 6,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Employee Stock Purchase Plan. On the date of this prospectus, any remaining shares available for issuance under our 2008 Stock Incentive Plan as Class B common stock will be added to the shares reserved under our 2014 Equity Incentive Plan and we will cease granting awards under the 2008 Stock Incentive Plan. Our 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan also provide for automatic annual increases in the number of shares reserved thereunder, as more fully described in “Executive Compensation—Employee Benefit Plans.”	
 
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 DILUTION
If you invest in our Class B common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class B common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.
As of December 31, 2013, our pro forma net tangible book value was $54.7 million, or $0.72 per share of common stock. Pro forma net tangible book value per share represents the amount of our tangible assets less our liabilities divided by the total number of shares of our common stock outstanding, after giving effect to the automatic conversion of all our outstanding convertible preferred stock into an aggregate of 64,475,633 shares of our Class A common stock upon the completion of this offering.
Our pro forma as adjusted net tangible book value as of December 31, 2013 was $154.0 million, or $1.78 per share of common stock. Pro forma as adjusted net tangible book value per share gives effect to (i) the pro forma adjustments described above and (ii) the sale by us of 11,100,000 shares of our Class B common stock in this offering at an assumed initial public offering price of $10.00 per share, which is the midpoint of the estimated offering price range set forth on the front cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. This represents an immediate increase in pro forma net tangible book value of $1.06 per share to existing stockholders and immediate dilution of $8.22 per share to new investors purchasing shares in the offering.
The following table illustrates this per share dilution:

Assumed initial public offering price per share	  				  	$	10.00	  	
Pro forma net tangible book value per share as of December 31, 2013	  	$	0.72	  	  				
Increase in pro forma net tangible book value per share attributable to new investors	  	 	1.06	  	  				
	  	 	 	 	  				
Pro forma as adjusted net tangible book value per share after this offering	  				  	 	1.78	  	
	  				  	 	 	 	
Dilution per share to investors in this offering	  				  	$	8.22	  	
	  				  	 	 	 	
Each $1.00 increase or decrease in the assumed initial public offering price of $10.00 per share of our Class B common stock, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus, would increase or decrease our pro forma as adjusted net tangible book value per share after this offering by $0.12 and the dilution to new investors by $0.88 per share, assuming that the number of shares offered by us, as set forth on the front cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. Similarly, each increase or decrease of 1,000,000 shares in the number of shares of Class B common stock offered by us would increase or decrease the pro forma as adjusted net tangible book value by approximately $0.09 per share and the dilution to new investors by $0.09 per share, assuming the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions.
If the underwriters exercise their option to purchase 1,665,000 additional shares of Class B common stock in full, the pro forma as adjusted net tangible book value per share after this offering would be $1.92 per share, and the dilution in pro forma net tangible book value per share to new investors in this offering would be $8.08 per share.
The following table summarizes, on a pro forma as adjusted basis as of December 31, 2013, the differences between the number of shares of common stock purchased from us, the total cash consideration and the average price per share paid to us by existing stockholders and by new investors
 
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purchasing shares in this offering, at the initial public offering price of $10.00 per share, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

 	 	    Shares Purchased    	 	 	    Total Consideration    	 	 	Average
Price Per
Share	 	
  	 	Number	  	Percent	 	 	Amount	 	  	Percent	 	 			
Existing stockholders	 	75,469,707	  	 	87.2	% 	 	$	182,539,169	  	  	 	62.2	% 	 	$	2.42	  	
New public investors	 	11,100,000	  	 	12.8	  	 	 	111,000,000	  	  	 	37.8	  	 	$	10.00	  	
	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 				
Total	 	86,569,707	  	 	100	% 	 	$	293,539,169	  	  	 	100	% 	 				
	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 				
Each $1.00 increase or decrease in the assumed initial public offering price of $10.00 per share of our common stock, which is the midpoint of the estimated offering price range set forth on the front cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $11.1 million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and before deducting estimated underwriting discounts and commissions.
If the underwriters’ option to purchase additional shares of our Class B common stock is exercised in full, the number of shares of common stock held by existing stockholders will be reduced to approximately 85.5% of the total number of shares of common stock to be outstanding after this offering, and the number of shares of common stock held by investors participating in this offering will be further increased to 12,765,000 shares, or approximately 14.5% of the total number of shares of common stock to be outstanding after this offering.
The number of shares of Class A and Class B common stock shown as issued and outstanding in the table and discussion above is based on 75,469,707 shares of our Class A common stock and no shares of our Class B common stock issued and outstanding as of December 31, 2013 and excludes:
 
 	Ÿ	 	16,455,404 shares of Class A common stock issuable upon the exercise of options outstanding as of December 31, 2013, with a weighted-average exercise price of $1.22 per share;	
 
 	Ÿ	 	1,441,000 shares of Class A common stock issuable upon the exercise of options granted between January 1, 2013 and February 28, 2014, with a weighted-average exercise price of $7.20 per share;	
 
 	Ÿ	 	115,000 shares of Class A common stock issuable upon the exercise of a warrant outstanding as of December 31, 2013, with an exercise price of $5.00 per share;	
 
 	Ÿ	 	89,943 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $6.76, and 12,786 shares of restricted Class A common stock sold on February 18, 2014 at a purchase price per share of $7.93; and	
 
 	Ÿ	 	23,104,918 shares of our common stock reserved for future issuance under our equity compensation plans, consisting of (a) 2,104,918 shares of our Class A common stock reserved for issuance under our 2008 Stock Incentive Plan as of December 31, 2013; (b) 15,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Equity Incentive Plan; and (c) 6,000,000 shares of our Class B common stock that will be reserved for issuance under our 2014 Employee Stock Purchase Plan. On the date of this prospectus, any remaining shares available for issuance under our 2008 Stock Incentive Plan as Class B common stock will be added to the shares reserved under our 2014 Equity Incentive Plan and we will cease granting awards under the 2008 Stock Incentive Plan. Our 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan also provide for automatic annual increases in the number of shares reserved thereunder, as more fully described in “Executive Compensation—Employee Benefit Plans.”	
To the extent that any outstanding options or warrants to purchase our common stock are exercised or new awards are granted under our equity compensation plans, or we issue additional shares of our common stock or convertible securities in the future, there will be further dilution to investors participating in this offering.
 
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 SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present selected historical consolidated financial data for our business. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes and other information included elsewhere in this prospectus.
We derived the consolidated statements of operations data for 2011, 2012 and 2013 and the consolidated balance sheet data as of December 31, 2012 and 2013 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.

 	  	Year Ended December 31,	 	
 	  	        2011        	 	 	        2012        	 	 	        2013        	 	
 	  	(in thousands, except per share data)	 	
Consolidated Statements of Operations Data:	  				 				 				
Revenue:	  				 				 				
Subscription	  	$	1,569	  	 	$	3,395	  	 	$	11,655	  	
Professional services	  	 	306	  	 	 	759	  	 	 	1,318	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	1,875	  	 	 	4,154	  	 	 	12,973	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenue (1) :	  				 				 				
Cost of subscription	  	 	1,210	  	 	 	3,242	  	 	 	6,246	  	
Cost of professional services	  	 	1,068	  	 	 	5,286	  	 	 	11,058	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenue	  	 	2,278	  	 	 	8,528	  	 	 	17,304	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross loss	  	 	(403	) 	 	 	(4,374	) 	 	 	(4,331	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				
Sales and marketing (1)	  	 	5,978	  	 	 	15,829	  	 	 	33,742	  	
Research and development (1)	  	 	10,157	  	 	 	9,718	  	 	 	15,219	  	
General and administrative (1)	  	 	3,563	  	 	 	5,212	  	 	 	9,047	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	19,698	  	 	 	30,759	  	 	 	58,008	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	  	 	(20,101	) 	 	 	(35,133	) 	 	 	(62,339	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	 	181	  	 	 	129	  	 	 	157	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share, basic and diluted (2)	  	$	(3.27	) 	 	$	(4.44	) 	 	$	(6.28	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used to compute basic and diluted net loss per share (2)	  	 	6,093	  	 	 	7,885	  	 	 	9,895	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Pro forma net loss per share, basic and diluted (unaudited) (3)	  				 				 	$	(0.84	) 	
	  				 				 	 	 	 	
Weighted-average shares used to compute basic and diluted pro forma net loss per share (unaudited) (3)	  				 				 	 	74,371	  	

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

 	  	Year Ended December 31,	 	
 	  	2011	 	  	2012	 	  	2013	 	
 	  	(in thousands)	 	
Cost of revenue	  	$	12	  	  	$	107	  	  	$	125	  	
Sales and marketing	  	 	335	  	  	 	551	  	  	 	919	  	
Research and development	  	 	302	  	  	 	242	  	  	 	603	  	
General and administrative	  	 	333	  	  	 	411	  	  	 	780	  	
 
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(2)	Net loss per share is computed by dividing net loss by the weighted-average number of shares of our common stock outstanding during the period, less the weighted-average unvested shares of common stock subject to repurchase.	
(3)	Pro forma net loss per share is computed by dividing net loss by the weighted-average shares outstanding assuming the conversion of all our convertible preferred stock to common stock as of its issuance date.	

 	  	As of
December 31,	 	
 	  	2012	 	 	2013	 	
 	  	(in thousands)	 	
Consolidated Balance Sheets Data:	  				 				
Cash and cash equivalents	  	$	42,534	  	 	$	25,154	  	
Marketable securities	  	 	77,612	  	 	 	42,017	  	
Working capital	  	 	115,389	  	 	 	54,944	  	
Property and equipment, net	  	 	1,136	  	 	 	2,631	  	
Total assets	  	 	128,148	  	 	 	83,517	  	
Total deferred revenue	  	 	4,205	  	 	 	11,473	  	
Total liabilities	  	 	13,113	  	 	 	27,444	  	
Convertible preferred stock	  	 	180,423	  	 	 	180,423	  	
Total stockholders’ deficit	  	 	(65,388	) 	 	 	(124,350	) 	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our “Selected Consolidated Financial Data” and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those forward-looking statements below. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this prospectus.
Overview
Castlight is a pioneer in a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud allows our customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Our comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care cost and quality data transparent and useful. We deploy consumer-oriented applications that deliver strong engagement and integration capabilities.
Since our inception in 2008, we have been committed to improving the efficiency of the U.S. health care industry. From 2008 to 2010, we focused our efforts on research and development to build our consumer health care database, our analytic capabilities and the initial version of our cloud-based application, Castlight Medical. After its release in 2010, we have continued to enhance that application, as well as release Castlight Pharmacy, Castlight Rewards and Castlight Reference-Based Pricing in 2013. These applications are delivered to our customers, and their employees and families, via our cloud-based offering and leverage consumer-oriented design principles that drive engagement and ease of use.
We market and sell our Enterprise Healthcare Cloud offering to self-insured companies in a broad range of industries and governmental entities. As of December 31, 2013, we had 106 signed customers, including 48 customers that had implemented our offering, which we refer to as launched customers. In comparison, we had 47 signed customers, including 15 launched customers, as of December 31, 2012. Our current customers as of December 31, 2013 included 26 Fortune 500 companies and collectively represent millions of eligible employees and their adult dependents. We sell our offering solely in the United States, and we market to our customers and potential customers primarily through our direct sales force.
We generate revenue from sales of subscriptions, including support, and professional services primarily related to the implementation of our offering, including extensive communications support to drive adoption by our customer’s employees and their families. Historically, we have derived a substantial majority of our subscription revenue from Castlight Medical. Our subscription fees are based on the number of employees and adult dependents that employers identify as eligible to use our offering, which typically includes all of our customers’ U.S. employees and adult dependents that receive health benefits. Our agreements with customers generally have terms of three years. As of December 31, 2012 and 2013, our agreements with customers had a weighted-average contract term of approximately 30.0 months for both years. Our total backlog, which we define as including cancellable and non-cancellable portions of our customer agreements for which we have not yet billed, was $108.7 million as of December 31, 2013, compared to $44.0 million as of December 31, 2012. Our deferred revenue, which consists of billed but unrecognized revenue, was $11.5 million as of December 31, 2013, compared to $4.2 million as of December 31, 2012.
 
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Our costs to implement our offering mainly include personnel-related costs for deployment of our applications that are expensed as incurred. However, the related revenue is deferred until our applications are ready for use by the customer. Revenue is then recognized ratably over the related contract term. As a result, for a typical customer, we generate negative gross margin during the implementation phase and positive gross margin thereafter. Accordingly, during periods of rapid growth, when the proportion of customers that we are implementing is high relative to the number of launched customers, as it was during 2011, 2012 and 2013, we incur significant gross losses. We expect gross margin to be positive and improve over time as the number of our launched customers grows in relation to the number of customers in the implementation phase. Furthermore, in order to grow sales to smaller customers in a financially sustainable manner, we may need to further automate implementations, tailor our offering and modify our go-to-market approaches to reduce our service delivery and customer acquisition costs.
We have incurred significant losses since our inception, and as of December 31, 2013, our accumulated deficit was $131.2 million. We have experienced rapid growth in recent periods. Our revenue has increased from $4.2 million for the year ended December 31, 2012 to $13.0 million for the year ended December 31, 2013. We have also increased our number of employees from 104 at December 31, 2011 to 156 at December 31, 2012 to 287 at December 31, 2013. We intend to continue to invest aggressively in the success of our customers, expand our commercial operations and further develop our offering. We also expect to incur significant additional expenditures as a public company. As a result of these and other factors, we expect to continue to incur operating losses for the foreseeable future and may need to raise additional capital through equity and debt financings in order to fund our operations. If we are unable to achieve our revenue growth objectives, including a high rate of renewals of our customer agreements, we may not be able to achieve profitability.
Key Factors Affecting Our Performance
Sale of Additional Applications.     Our revenue growth rate and long-term profitability are affected by our ability to sell additional applications to our customer base. To date, a substantial majority of our revenue has come from sales of subscriptions to Castlight Medical. We believe that there is a significant opportunity to sell subscriptions to other applications as our customers become more familiar with our offering and seek to address additional needs. For example, 60% of our customers as of December 31, 2013 have purchased a subscription to our Castlight Pharmacy application.
Annual Net Dollar Retention Rate.     We believe that our ability to retain our customers and expand their subscription revenue growth over time will be an indicator of the stability of our revenue base and the long-term value of our customer relationships. Because we typically enter into long-term contracts with our customers, only a small percentage of our customer agreements have reached the end of their original terms and, as a result, we have not observed a large enough sample of renewals to derive meaningful conclusions. Based on our limited experience, we observed an annual net dollar retention rate of 109% for the fiscal period ending December 31, 2013. We calculate annual net dollar retention rate for a given fiscal period as the aggregate annualized subscription contract value as of the last day of that fiscal year from those customers that were also customers as of the last day of the prior fiscal year, divided by the aggregate annualized subscription contract value from all customers as of the last day of the prior fiscal year. We calculate annualized subscription contract value for each customer as the expected monthly recurring revenue of our customers multiplied by 12.
Implementation Timelines.     Our ability to convert backlog into revenue and improve our gross margin depends on how quickly we complete customer implementations. Our implementation timelines vary from customer to customer based on the source and condition of the data we receive from third
 
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parties, the configurations that we agree to provide and the size of the customer. Typically, we complete implementations three to 12 months after entering into an agreement with a customer.
Professional Services Model.     We believe our professional services capabilities support the adoption of our subscription offerings. As a result, our sales efforts have been focused primarily on our subscription offering, rather than the profitability of our professional services business. Our professional services are generally priced on a fixed-fee basis and the costs incurred to complete these services, which consist mainly of personnel-related costs, have been greater than the amount charged to the customer. We also do not have standalone value for our implementation services for accounting purposes. Accordingly, we recognize implementation services revenue in the same manner as the associated subscription revenue. These factors contributed to our gross loss percentage from professional services of (249)%, (596)% and (739)% in 2011, 2012 and 2013, respectively. The increase in gross loss percentage in 2012 was due to non-recurring professional services fees. The increase in gross loss percentage in 2013 was a result of an increase in the number of customers and complexity of our customer implementations. We expect to continue to generate gross losses on professional services for the foreseeable future as we focus on adoption of our subscription offerings.
Seasonality.     A significantly higher proportion of our customers enter into new subscription agreements with us or renew previous agreements in the third and fourth quarters of the year compared to the first and second quarters. This seasonality is related to the employee benefits cycle, as customers typically want to make our applications available at the beginning of a new benefits year, which generally occurs in the first quarter. However, we do not begin recognizing revenue from new customer agreements until we have implemented our offering, which generally occurs three to 12 months after entering into those agreements.
Components of Results of Operations
Revenue
We generate revenue from subscription fees from customers for access to selected applications in the Castlight Enterprise Healthcare Cloud including basic customer service support. We also earn revenue from professional services that we provide to our customers to help them implement our offering.
Subscription revenue accounted for approximately 82% and 90% of our total revenue during the years ended December 31, 2012 and 2013, respectively. Subscription revenue is driven primarily by the number of customers, the applications to which they subscribe, the number of eligible members per customer and the price of our applications. To date, our renewal experience is extremely limited. In future periods, we expect that our annual net dollar retention rate will be an important driver of subscription revenue.
We recognize subscription fees on a straight-line basis ratably over the contract term beginning when our applications are implemented and ready for launch, which is generally within three to 12 months of contract signing. Our customer agreements generally have a term of three years. We generally invoice our customers in advance on a monthly, quarterly or annual basis. As of December 31, 2012 and 2013, the weighted-average billing period of our customer agreements was 4.3 months and 5.4 months, respectively. The weighted-average billing term represents the frequency with which we bill our customers. We calculate weighted average billing terms as the billing frequency, multiplied by the weighted-average contract value. Amounts that have been invoiced are initially recorded as deferred revenue. Amounts that have not been invoiced are not reflected in our consolidated financial statements.
We invoice our implementation services on a fixed-fee basis generally when we commence work. We also provide employee communications services to drive adoption and use of our applications by
 
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employees and their families. We generally invoice for professional services on a fixed-fee basis. We expect professional services revenue to constitute a significant portion of our total revenue in the future.
Costs and Operating Expenses
Cost of Revenue.     Cost of subscription revenue primarily consists of data and content fees, employee-related expenses (including salaries, benefits and stock-based compensation) related to hosting and accounts support costs of our cloud-based services, (including call center support, allocated overhead, the costs of data center capacity and depreciation of owned computer equipment and software). We expect our cost of subscription revenue to decrease as a percentage of our subscription revenue over time because a number of our costs are fixed.
Cost of professional services consists primarily of employee-related expenses associated with these services, the cost of subcontractors and travel costs. The time and costs of our customer implementations vary based on the source and condition of the data we receive from third parties, the configurations that we agree to provide and the size of the customer. Our cost associated with providing implementation services has been significantly higher as a percentage of revenue than our cost of providing subscriptions due to the labor associated with providing implementation services. Customer success is a key focus area for our business and our implementation processes and technologies are at an early stage of development. For these reasons, we expect to continue to generate negative gross margin on our professional services for the foreseeable future. As our implementation processes and technologies mature and our use of automation increases, we expect our gross margin on our professional services to improve.
Our cost of revenue is expensed as we incur the costs. However, the related revenue is deferred until our applications are ready for use by the customer and then recognized as revenue ratably over the related contract term. Therefore, we expense the cost incurred to provide our applications and services prior to the recognition of the corresponding revenue. As a result, during times of rapid customer growth, as was the case during 2011, 2012 and 2013, this has the impact of decreasing our gross margin. We expect gross margin to improve over time as the number of our launched customers grows in relation to the number of customers in the implementation phase. Further, we expect our gross margin to improve over the long term as we realize economies of scale, process improvements and other operational efficiencies. However, our gross margin may fluctuate from period to period depending on the interplay of all of the factors discussed above.
Sales and Marketing.     Sales and marketing expenses consist primarily of employee-related expenses (including salaries, sales commissions and bonuses, benefits and stock-based compensation), travel-related expenses and marketing programs. Marketing programs consist of brand and product marketing activities, field and trade events and corporate communications. Sales and marketing expenses also include employee-related expenses to develop relationships with key industry partners, which include third-party administrators, benefit consultants and brokers, necessary to support our sales activities. Commissions earned by our sales force that can be associated specifically with the noncancellable portion of a subscription contract are deferred and amortized over the same period that revenue is recognized for the related contract.
We expect our sales and marketing expenses to continue to increase in absolute dollars for the foreseeable future as we continue to invest in our selling and marketing activities, building brand awareness, attracting new customers and sponsoring additional marketing events. However, we expect our sales and marketing expenses to decrease as a percentage of our total revenue over the long term. Our sales and marketing expenses may fluctuate from period to period due to the seasonality of our revenue and the timing and extent of our sales and marketing expenses.
 
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Research and Development.     Research and development expenses consist primarily of employee-related expenses (including salaries, sales commissions and bonuses, benefits and stock-based compensation) and costs associated with subcontractors.
We expect to continue to focus our research and development efforts on adding new features and applications, increasing the functionality of our cloud-based subscription services and improving the efficiency of our customer implementations. As a result, we expect our research and development expenses to continue to increase in absolute dollars for the foreseeable future. However, we expect our research and development expenses to decrease as a percentage of our total revenue over the long term. Our research and development expenses may fluctuate from period to period due to the seasonality of our revenue and the timing and extent of our research and development expenses.
General and Administrative.     General and administrative expenses consist of employee-related expenses (including salaries and bonuses, benefits and stock-based compensation) for finance and accounting, legal, human resources and management information systems personnel, legal costs, professional fees and other corporate expenses. We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future as we become a public company and continue to grow our business. However, we expect our general and administrative expenses to decrease as a percentage of our total revenue over the long term. Our general and administrative expenses may fluctuate from period to period due to the seasonality of our revenue and the timing and extent of our general and administrative expenses.
Results of Operations
The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenue for each of the periods indicated (in thousands):

 	  	Year Ended
December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
Consolidated Statements of Operations Data:	  				 				 				
Revenue:	  				 				 				
Subscription	  	$	1,569	  	 	$	3,395	  	 	$	11,655	  	
Professional services	  	 	306	  	 	 	759	  	 	 	1,318	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	1,875	  	 	 	4,154	  	 	 	12,973	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenue:	  				 				 				
Cost of subscription	  	 	1,210	  	 	 	3,242	  	 	 	6,246	  	
Cost of professional services	  	 	1,068	  	 	 	5,286	  	 	 	11,058	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenue	  	 	2,278	  	 	 	8,528	  	 	 	17,304	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross loss	  	 	(403	) 	 	 	(4,374	) 	 	 	(4,331	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				
Sales and marketing	  	 	5,978	  	 	 	15,829	  	 	 	33,742	  	
Research and development	  	 	10,157	  	 	 	9,718	  	 	 	15,219	  	
General and administrative	  	 	3,563	  	 	 	5,212	  	 	 	9,047	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	19,698	  	 	 	30,759	  	 	 	58,008	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	  	 	(20,101	) 	 	 	(35,133	) 	 	 	(62,339	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	 	181	  	 	 	129	  	 	 	157	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	

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 	    	Year Ended
December 31,	 	
 	    	2011	 	 	2012	 	 	2013	 	
 	    	(percentages of revenue)	 	
Revenue:	    				 				 				
Subscription	    	 	84	% 	 	 	82	% 	 	 	90	% 	
Professional services	    	 	16	% 	 	 	18	% 	 	 	10	% 	
Total revenue	    	 	100	% 	 	 	100	% 	 	 	100	% 	
Cost of revenue:	    				 				 				
Cost of subscription	    	 	65	% 	 	 	78	% 	 	 	48	% 	
Cost of professional services	    	 	56	% 	 	 	127	% 	 	 	85	% 	
Total cost of revenue	    	 	121	% 	 	 	205	% 	 	 	133	% 	
Gross loss	    	 	(21	)% 	 	 	(105	)% 	 	 	(33	)% 	
Operating expenses:	    				 				 				
Sales and marketing	    	 	319	% 	 	 	381	% 	 	 	260	% 	
Research and development	    	 	542	% 	 	 	234	% 	 	 	117	% 	
General and administrative	    	 	190	% 	 	 	125	% 	 	 	70	% 	
Total operating expenses	    	 	1051	% 	 	 	740	% 	 	 	447	% 	
Operating loss	    	 	(1072	)% 	 	 	(845	)% 	 	 	(480	)% 	
Other income, net	    	 	10	% 	 	 	2	% 	 	 	1	% 	
Net loss	    	 	(1062	)% 	 	 	(843	)% 	 	 	(479	)% 	
Comparison of the Years Ended December 31, 2012 and 2013
Revenue

 	  	Years Ended
December 31,	 	  	 	 	 	 	 	
 	  	2012	 	  	2013	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Revenue:	  				  				  				 				
Subscription	  	$	3,395	  	  	$	11,655	  	  	 	243	% 	 	$	8,260	  	
Professional services	  	 	759	  	  	 	1,318	  	  	 	74	% 	 	 	559	  	
	  	 	 	 	  	 	 	 	  				 	 	 	 	
Total revenue	  	$	4,154	  	  	$	12,973	  	  	 	212	% 	 	$	8,819	  	
	  	 	 	 	  	 	 	 	  				 	 	 	 	
Total revenue was $13.0 million for the year ended December 31, 2013, compared to $4.2 million during the year ended December 31, 2012, an increase of $8.8 million, or 212%. Subscription revenue was $11.7 million, or 90% of our total revenue, for the year ended December 31, 2013, compared to $3.4 million, or 82% of our total revenue, for the year ended December 31, 2012. The increase in subscription revenue was due primarily to the increase in new customer launches compared with the prior year period.
Professional services revenue was $1.3 million, or 10% of total revenue, for the year ended December 31, 2013, compared to $0.8 million, or 18% of total revenue, for the year ended December 31, 2012. The increase in professional services revenue was driven by new customer launches.
 
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Costs and Operating Expenses

 	  	Year Ended
December 31,	 	 	 	 	 	 	 	
 	  	2012	 	 	2013	 	 	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Cost of revenue:	  				 				 				 				
Subscription	  	$	3,242	  	 	$	6,246	  	 	 	93	% 	 	$	3,004	  	
Professional services	  	 	5,286	  	 	 	11,058	  	 	 	109	% 	 	 	5,772	  	
	  	 	 	 	 	 	 	 	 				 	 	 	 	
Total cost of revenue	  	$	8,528	  	 	$	17,304	  	 	 	103	% 	 	$	8,776	  	
	  	 	 	 	 	 	 	 	 				 	 	 	 	
Gross profit (loss) percentage	  				 				 				 				
Subscription	  	 	5	% 	 	 	46	% 	 				 				
Professional services	  	 	(596	)% 	 	 	(739	)% 	 				 				
Total gross profit / (loss) percentage	  	 	(105	)% 	 	 	(33	)% 	 				 				
Gross loss	  	$	(4,374	) 	 	$	(4,331	) 	 	 	(1	)% 	 	$	(43	) 	
Cost of revenue was $17.3 million for the year ended December 31, 2013 compared to $8.5 million for the year ended December 31, 2012, an increase of $8.8 million, or 103%. This increase in cost of revenue was attributable to an increase of $3.0 million in the cost of subscription revenue and an increase of $5.8 million in the cost of professional services.
Cost of subscription revenue was $6.2 million for the year ended December 31, 2013 compared to $3.2 million for the year ended December 31, 2012, an increase of $3.0 million. This increase was primarily due to an increase of $2.5 million in data and content fees, as we continue to support our growing customer base. Gross margin for subscription services for the year ended December 31, 2013 was higher than the year ended December 31, 2012 due to the increase in subscription revenue resulting from the number of launched customers during the period.
Cost of professional services was $11.1 million for the year ended December 31, 2013 compared to $5.3 million for the year ended December 31, 2012, an increase of $5.8 million. Gross loss percentage also increased year over year. These increases were primarily due to an increase of $5.0 million in employee-related expenses and subcontractor costs to assist with implementation services and an increase of $0.4 million in related travel costs. We expect to increase our reliance on third parties to supplement our professional services staff in the future. We believe that higher utilization of third-party resources is an efficient way to support customer requirements as we grow. The increase in gross loss percentage in the year ended December 31, 2013 compared with the year ended December 31, 2012 was attributable to increase in number of customers and complexity of our customer implementations.
Sales and Marketing

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2012	 	  	2013	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Sales and marketing	  	$	15,829	  	  	$	33,742	  	  	 	113	% 	 	$	17,913	  	
Sales and marketing expenses were $33.7 million for the year ended December 31, 2013 compared to $15.8 million for the year ended December 31, 2012, an increase of $17.9 million. This increase was primarily due to an increase of $11.3 million in employee-related expenses and recruiting costs due to higher headcount, an increase of $2.6 million in brand and product marketing costs and an increase of $1.2 million for travel and entertainment expenses.
 
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Research and Development

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2012	 	  	2013	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Research and development	  	$	9,718	  	  	$	15,219	  	  	 	57	% 	 	$	5,501	  	
Research and development expenses were $15.2 million for the year ended December 31, 2013 compared to $9.7 million for the year ended December 31, 2012, an increase of $5.5 million. This increase was primarily due to an increase of $5.2 million in employee-related expenses and recruiting costs due to higher headcount. The decrease in the percentage of revenue spent on research and development during the current year period versus the prior year period is primarily a function of increased revenue rather than a curtailment of research and development spending.
General and Administrative

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2012	 	  	2013	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
General and administrative	  	$	5,212	  	  	$	9,047	  	  	 	74	% 	 	$	3,835	  	
General and administrative expenses were $9.0 million for the year ended December 31, 2013 compared to $5.2 million for the year ended December 31, 2012, an increase of $3.8 million. This increase was primarily due to an increase of $1.8 million in employee-related expenses and recruiting costs due to higher headcount and an increase of $1.4 million in subcontractor expenses. In addition, the increase was due to an increase of $0.7 million in professional and outside services. The growth in general and administrative expenses during the year ended December 31, 2013 was to support our overall growth.
Comparison of the Years Ended December 31, 2011 and 2012
Revenue

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2011	 	  	2012	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Revenue:	  				  				  				 				
Subscription	  	$	1,569	  	  	$	3,395	  	  	 	116	% 	 	$	1,826	  	
Professional services	  	 	306	  	  	 	759	  	  	 	148	% 	 	 	453	  	
	  	 	 	 	  	 	 	 	  				 	 	 	 	
Total revenue	  	$	1,875	  	  	$	4,154	  	  	 	122	% 	 	$	2,279	  	
	  	 	 	 	  	 	 	 	  				 	 	 	 	
Total revenue was $4.2 million for the year ended December 31, 2012 compared to $1.9 million for the year ended December 31, 2011, an increase of $2.3 million, or 122%. Subscription revenue was $3.4 million, or 82% of total revenue, for the year ended December 31, 2012 compared to $1.6 million, or 84% of total revenue, for the year ended December 31, 2011. The increase in subscription revenue was due primarily to the increase in new customer launches as compared to the prior year. Professional services revenue was $0.8 million, or 18% of total revenue, for the year ended December 31, 2012 compared to $0.3 million, or 16% of total revenue, for the year ended December 31, 2011. The increase in professional services revenue was due primarily to a larger customer base requesting deployment and implementation services.
 
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Costs and Operating Expenses

 	  	Year Ended
December 31,	 	 	 	 	 	 	 	
 	  	2011	 	 	2012	 	 	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Cost of revenue:	  				 				 				 				
Subscription	  	$	1,210	  	 	$	3,242	  	 	 	168	% 	 	$	2,032	  	
Professional services	  	 	1,068	  	 	 	5,286	  	 	 	395	% 	 	 	4,218	  	
	  	 	 	 	 	 	 	 	 				 	 	 	 	
Total cost of revenue	  	$	2,278	  	 	$	8,528	  	 	 	274	% 	 	$	6,250	  	
	  	 	 	 	 	 	 	 	 				 	 	 	 	
Gross profit / (loss) percentage	  				 				 				 				
Subscription	  	 	23	% 	 	 	5	% 	 				 				
Professional services	  	 	(249	)% 	 	 	(596	)% 	 				 				
Total gross profit / (loss) percentage	  	 	(21	)% 	 	 	(105	)% 	 				 				
Gross loss	  	$	(403	) 	 	$	(4,374	) 	 	 	(985	)% 	 	$	(3,971	) 	
Cost of revenue was $8.5 million for the year ended December 31, 2012 compared to $2.3 million for the year ended December 31, 2011, an increase of $6.3 million, or 274%. The increase in cost of subscription revenue of $2.0 million was primarily due to an increase of $0.9 million due to our efforts to increase data center capacity, an increase of $0.8 million for data and content fees and an increase of $0.2 million for outside services to support our increased growth, offset by a decrease of $0.1 million from lower headcount due to moving resources to outside services. Gross margin for subscription revenue for the year ended December 31, 2012 was lower than the year ended December 31, 2011 due to increased costs for additional data center capacity and data and content fees, a portion of which was a fixed annual amount that does not vary with the number of customer launches.
The increase in the cost of professional services of $4.2 million for the year ended December 31, 2012 as compared to the year ended December 31, 2011 was primarily due to an increase in employee-related expenses due to higher headcount. Gross margin for professional services in the year ended December 31, 2012 was lower than for the year ended December 31, 2011, due to increased customer deployments.
Sales and Marketing

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2011	 	  	2012	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Sales and marketing	  	$	5,978	  	  	$	15,829	  	  	 	165	% 	 	$	9,851	  	
Sales and marketing expenses were $15.8 million for the year ended December 31, 2012 compared to $6.0 million for the year ended December 31, 2011, an increase of $9.9 million. This increase was primarily due to an increase of $7.8 million in employee-related expenses and recruiting costs due to higher headcount, a $0.8 million increase in overhead allocations, an increase of $0.6 million in travel-related costs and an increase of $0.3 million in advertising, marketing and event costs. These increases were the result of building out a national direct enterprise sales force, which included higher headcount.
 
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Research and Development

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2011	 	  	2012	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
Research and development	  	$	10,157	  	  	$	9,718	  	  	 	(4	)% 	 	$	(439	) 	
Research and development expenses were $9.7 million for the year ended December 31, 2012 compared to $10.2 million for the year ended December 31, 2011, a decrease of $0.4 million. This decrease was primarily due to a decrease of $2.6 million in employee-related expenses due to lower headcount and contract labor expenses, partially offset by an increase of $0.9 million for use of outside consultants to assist in development of new applications and services and enhance our existing core offering and an increase of $0.8 million from increased overhead allocations. In 2011, certain individuals were utilized to perform development-related services related to our offering. During 2012, these resources were utilized as part of certain customer deployments and were classified as costs of sales.
General and Administrative

 	  	Year Ended
December 31,	 	  	 	 	 	 	 	
 	  	2011	 	  	2012	 	  	% Change	 	 	$ Change	 	
 	  	(dollars in thousands)	 	
General and administrative	  	$	3,563	  	  	$	5,212	  	  	 	46	% 	 	$	1,649	  	
General and administrative expenses were $5.2 million for the year ended December 31, 2012 compared to $3.6 million for the year ended December 31, 2011, an increase of $1.6 million. This increase was primarily due to an increase of $1.0 million in employee compensation and recruiting costs due to higher headcount and $0.3 million from outside services to support our growth.
 
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Quarterly Results of Operations
The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended December 31, 2013. The information for each of these quarters has been prepared on the same basis as the audited annual consolidated financial statements included elsewhere in this prospectus and, in the opinion of management, includes all adjustments, which includes only normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods in accordance with generally accepted accounting principles in the United States (GAAP). This data should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future period.

 	 	Three Months Ended	 	
 	 	Mar 31,
2012	 	 	Jun 30,
2012	 	 	Sep 30,
2012	 	 	Dec 31,
2012	 	 	Mar 31,
2013	 	 	Jun 30,
2013	 	 	Sep 30,
2013	 	 	Dec 31,
2013	 	
 	 	(unaudited)	 	
Consolidated Statements of Operations Data:	 				 				 				 				 				 				 				 				
Revenue:	 				 				 				 				 				 				 				 				
Subscription	 	$	423	  	 	$	619	  	 	$	1,147	  	 	$	1,206	  	 	$	1,739	  	 	$	2,088	  	 	$	3,213	  	 	$	4,615	  	
Professional services	 	 	178	  	 	 	364	  	 	 	95	  	 	 	122	  	 	 	168	  	 	 	237	  	 	 	396	  	 	 	517	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	601	  	 	 	983	  	 	 	1,242	  	 	 	1,328	  	 	 	1,907	  	 	 	2,325	  	 	 	3,609	  	 	 	5,132	  	
Cost of revenue:	 				 				 				 				 				 				 				 				
Cost of subscription	 	 	737	  	 	 	851	  	 	 	745	  	 	 	909	  	 	 	1,204	  	 	 	1,460	  	 	 	1,510	  	 	 	2,072	  	
Cost of professional services	 	 	1,215	  	 	 	1,206	  	 	 	1,250	  	 	 	1,615	  	 	 	2,053	  	 	 	2,373	  	 	 	3,325	  	 	 	3,307	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenue	 	 	1,952	  	 	 	2,057	  	 	 	1,995	  	 	 	2,524	  	 	 	3,257	  	 	 	3,833	  	 	 	4,835	  	 	 	5,379	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross loss	 	 	(1,351	) 	 	 	(1,074	) 	 	 	(753	) 	 	 	(1,196	) 	 	 	(1,350	) 	 	 	(1,508	) 	 	 	(1,226	) 	 	 	(247	) 	
Operating expenses:	 				 				 				 				 				 				 				 				
Sales and marketing	 	 	2,694	  	 	 	3,315	  	 	 	4,349	  	 	 	5,471	  	 	 	5,765	  	 	 	7,108	  	 	 	8,706	  	 	 	12,163	  	
Research and development	 	 	2,234	  	 	 	2,253	  	 	 	2,360	  	 	 	2,871	  	 	 	2,908	  	 	 	3,616	  	 	 	4,138	  	 	 	4,557	  	
General and administrative	 	 	1,067	  	 	 	1,171	  	 	 	1,264	  	 	 	1,710	  	 	 	1,460	  	 	 	1,981	  	 	 	2,571	  	 	 	3,035	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	5,995	  	 	 	6,739	  	 	 	7,973	  	 	 	10,052	  	 	 	10,133	  	 	 	12,705	  	 	 	15,415	  	 	 	19,755	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	 	 	(7,346	) 	 	 	(7,813	) 	 	 	(8,726	) 	 	 	(11,248	) 	 	 	(11,483	) 	 	 	(14,213	) 	 	 	(16,641	) 	 	 	(20,002	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	 	 	18	  	 	 	7	  	 	 	51	  	 	 	53	  	 	 	50	  	 	 	40	  	 	 	38	  	 	 	29	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(7,328	) 	 	$	(7,806	) 	 	$	(8,675	) 	 	$	(11,195	) 	 	$	(11,433	) 	 	$	(14,173	) 	 	$	(16,603	) 	 	$	(19,973	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Quarterly Trends
Revenue
Our quarterly total revenue and subscription revenue increased sequentially for each period presented, primarily as we increased new customer launches. We cannot assure you that this pattern of sequential growth in revenue will continue.
Our professional services revenue fluctuated over the periods as a result of timing of customer implementation but increased overall throughout the eight quarters presented primarily to a larger customer base requesting deployment and implementation services.
Cost of revenue
Our quarterly total cost of revenue fluctuated over the periods as a result of timing of customer implementation but increased overall throughout the eight quarters presented. Cost of subscription revenue increased as a result of higher data content fees and data center costs due to our efforts to
 
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increase data center capacity. Cost of professional services increased primarily due to an increase in employee-related expenses and subcontractor costs as we utilized third parties to supplement our professional services staff for increased customer deployments.
Operating Expenses
Our quarterly total operating expenses, as well as quarterly sales and marketing, research and development and general and administrative expenses, mainly increased for the periods presented, primarily due to increases in employee-related expenses and recruiting costs due to an increase in headcount in each of these functions.
Liquidity and Capital Resources

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
 	  	(in thousands)	 	
Net cash used in operating activities	  	$	(16,608	) 	 	$	(29,325	) 	 	$	(50,064	) 	
Net cash provided by (used in) investing activities	  	 	29,202	  	 	 	(51,504	) 	 	 	32,260	  	
Net cash provided by financing activities	  	 	243	  	 	 	100,083	  	 	 	424	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	$	12,837	  	 	$	19,254	  	 	$	(17,380	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
As of December 31, 2013, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $67.2 million, which were held for working capital purposes. Our cash, cash equivalents and marketable securities are comprised primarily of U.S. agency obligations, U.S. treasury securities and money market funds.
Since our inception, we have financed our operations primarily through private sales of equity securities and to a lesser extent, payments from our customers. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the timing and extent of spending to support development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings and the continuing market acceptance of our cloud-based applications. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.
Operating Activities
For the year ended December 31, 2013, cash used in operating activities was $50.1 million. The negative cash flows resulted primarily from our net loss of $62.2 million, the net increase in deferred commissions of $2.4 million and the increases in accounts receivable of $2.7 million, partially offset by increases in deferred revenue of $7.3 million, accrued expenses and other current liabilities of $2.9 million and accrued compensation of $2.5 million. Non-cash stock-based compensation of $2.4 million also offset the increase in cash used in operating activities.
For the year ended December 31, 2012, cash used in operating activities was $29.3 million. The cash used primarily related to our net loss of $35.0 million and increases in deferred commissions of
 
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$3.0 million and accounts receivable of $2.2 million, partially offset by increases in accrued compensation of $4.6 million and deferred revenue of $3.3 million.
For the year ended December 31, 2011, cash used in operating activities was $16.6 million. The cash used primarily related to our net loss of $19.9 million, partially offset by stock-based compensation of $1.0 million, accrued compensation of $1.0 million and deferred revenue of $0.8 million.
Investing Activities
Cash provided by or (used in) investing activities for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 was $32.3 million, $(51.5) million and $29.2 million, respectively. This was primarily the result of the timing of purchases, sales and maturities of marketable securities of $34.8 million, ($51.2) million and $29.3 million, respectively, during the same periods. In addition, we had capital expenditures of $2.6 million, $0.5 million and $0.1 million, respectively, during these same periods. We expect capital expenditures will be approximately $2.0 million for 2014.
Financing Activities
For the year ended December 31, 2013, financing activities provided $0.4 million, primarily due to $0.9 million in proceeds from the exercise of stock options and warrants.
For the year ended December 31, 2012, financing activities provided $100.1 million as a result of $99.9 million net proceeds from our issuance of the Series D convertible preferred stock and $0.2 million in proceeds from the exercise of stock options.
For the year ended December 31, 2011, financing activities provided $0.2 million as a result of proceeds from the exercise of stock options.
Backlog
We have generally signed multiple-year subscription contracts for our cloud-based subscription services. The timing of our invoices to the customer is a negotiated term and thus varies among our subscription contracts. For multiple-year agreements, it is common to invoice an initial amount at contract signing for implementation work that is deferred followed by subsequent annual, quarterly or monthly invoices, once we launch a customer, which is when our product is usable by the customer. At any point in the contract term, there can be amounts that we have not yet been contractually able to invoice. Until such time as these amounts are invoiced, they are not recorded in revenue, deferred revenue or elsewhere in our consolidated financial statements and are considered by us to be backlog. The amount of our total backlog for subscription and professional services contracts, which we define as including both cancellable and non-cancellable portions of our customer agreements that we have not yet billed, was approximately $44.0 million as of December 31, 2012 and $108.7 million as of December 31, 2013. Our total backlog does not take into account contractual provisions that give customers a right to terminate their agreements with us. The amount of our backlog for subscription and professional services contracts was approximately $19.4 million at December 31, 2012 and $50.9 million as of December 31, 2013, respectively, for the non-cancellable portions of our customer agreements that we have not yet billed. We fulfill backlog associated with a customer contract when the customer implementation process is complete. Our implementation timelines can vary between three and 12 months, based on the source and condition of the data we receive from third parties, the configurations that we agree to provide and the size of the customer and therefore, are subject to
 
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significant uncertainties, which can have a material impact on our total backlog and non-cancellable backlog that we fulfill in the current year. Based on our current implementation forecasts, we expect to fulfill our total backlog as of December 31, 2013 over a period of approximately four years, with the substantial majority expected to be fulfilled after 2014. Similarly, we expect to fulfill our non-cancellable backlog as of December 31, 2013 over a period of approximately four years, with the substantial majority expected to be fulfilled after 2014.
We expect that the amount of our backlog relative to the total value of our contracts will change from period to period for several reasons, including the amount of cash collected early in the contract term, the specific timing and duration of large customer subscription agreements, varying invoicing cycles of subscription agreements, potential customer upsells dependent on our customer agreements, the specific timing of customer renewal and changes in customer financial circumstances. Accordingly, we believe that fluctuations in our backlog may not be a reliable indicator of our future revenue.
Contractual Obligations and Commitments
Our principal commitments primarily consist of obligations under leases for office space and co-location facilities for data center capacity. As of December 31, 2013, the future non-cancelable minimum payments under these commitments were as follows (in thousands):

 	  	Total	 	  	Less Than
1 Year	 	  	1-3
Years	 	  	3-5
Years	 	  	More Than
5 Years	 	
Operating leases for facilities (1)	  	$	3,738	  	  	$	1,021	  	  	$	2,717	  	  	$	—	  	  	$	—	  	
Data center costs (2)	  	 	981	  	  	 	369	  	  	 	612	  	  	 	—	  	  	 	—	  	
Other	  	 	1,400	  	  	 	1,400	  	  	 	—	  	  	 	—	  	  	 	—	  	

(1)	Operating leases for facilities space represents our principal commitments, which consists of obligations under leases for office space.	
(2)	Data center costs represent costs associated with service agreements for our data centers in Colorado and Arizona.	
Our existing lease agreements provide us with the option to renew and generally provide for rental payments on a graduated basis. Our future operating lease obligations would change if we entered into additional operating lease agreements as we expand our operations and if we exercised these options. Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude purchase orders for goods and services. Purchase orders are not included in the table above. Our purchase orders represent authorizations to purchase rather than binding agreements. The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the transaction. Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are therefore not exposed to the financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships.
 
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Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
We believe that of our significant accounting policies, which are described in Note 2 to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies that we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Revenue Recognition
We derive our revenue from sales of cloud-based subscription service contracts, including support, and professional services contracts. We sell subscriptions to our cloud-based subscription service through contracts that are generally three years in length.
Our cloud-based subscription service contracts do not provide customers with the right to take possession of the software supporting the cloud-based service and, as a result, are accounted for as service contracts.
We commence revenue recognition for our cloud-based subscription service and professional services when all of the following criteria are met:
 
 	Ÿ	 	there is persuasive evidence of an arrangement;	
 
 	Ÿ	 	the service has been provided to the customer;	
 
 	Ÿ	 	collection of the fees is reasonably assured; and	
 
 	Ÿ	 	the amount of fees to be paid by the customer is fixed or determinable.	
Our subscription and professional service arrangements do not contain refund provisions for fees earned related to services performed.
Subscription Revenue.     Subscription revenue recognition commences on the date that our cloud-based service is made available to the customer, which is considered the launch date, provided all of the other criteria described above are met. Revenue is recognized based on the terms in our customer contracts, which can provide for (a) a variable periodic fee based upon the actual or contractual number of users that is recognized to revenue based on the actual or contractual number of users or (b) a fixed fee that is recognized to revenue on a straight-line basis over the contractual term of the arrangement.
 
Certain of our cloud-based subscription arrangements include performance incentives that are generally based upon employee engagement. Fees for performance incentives are considered contingent revenue, and are recognized over the remaining term of the related subscription arrangement commencing at the time they are earned.
 
Professional Services Revenue.     Professional services revenue is comprised of implementation services related to our cloud-based subscription service, as well as follow-on professional services to assist our customers in further adopting our cloud-based subscription service, and communications services. Nearly all of our professional services contracts are sold on a fixed-fee basis. We do not have standalone
 
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value for our implementation services. Accordingly, we recognize implementation services revenue in the same manner as the associated cloud-based subscription service, beginning on the launch date, provided all other criteria described above have been met. For follow-on professional services that are sold separately from the cloud-based subscription service, we recognize revenue as the services are delivered. Communication services revenue is recognized over the contractual term, generally one year, commencing when the revenue recognition criteria have been met.
Multiple Deliverable Arrangements.     To date, we have generated substantially all our revenue from multiple deliverable arrangements consisting of multi-year cloud-based subscription services and professional services, including implementation services and communication services. For arrangements with multiple deliverables, we evaluate whether the individual deliverables qualify as separate units of accounting. In order to treat deliverables in a multiple deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have standalone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables do not have standalone value upon delivery, the deliverables that do not have standalone value are generally combined with our cloud-based subscription service, and revenue for the combined unit is recognized over the remaining term of the cloud-based subscription service.
Our deliverables have standalone value if we or any other vendor sells a similar service separately. We have concluded that we have standalone value for our cloud-based subscription service as we sell these services separately through renewals and for our communication services as other vendors sell similar services separately. Conversely, we have concluded that our implementation services do not have standalone value, as we and others do not yet sell these services separately. Accordingly, we consider the separate units of accounting in our multiple deliverable arrangements to be the communication services and a combined deliverable comprised of cloud-based subscription services and implementation services.
When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence, or VSOE, of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence, or TPE, of selling price is used to establish the selling price if it exists. If TPE does not exist, we estimate the best estimated selling price, or BESP. VSOE does not currently exist for any of our deliverables. Additionally, we do not believe TPE is a practical alternative due to differences in our cloud-based subscription service compared to other parties and the availability of relevant third-party pricing information for our cloud-based subscription service and our other services. Accordingly, for arrangements with multiple deliverables that can be separated into different units of accounting, we allocate the arrangement fee to the separate units of accounting based on our BESP. The amount of arrangement fee allocated is limited by contingent revenue, if any.
We determine BESP for our deliverables by considering our overall pricing objectives and market conditions. This includes evaluating our pricing practices, our list prices, the size of our transactions, historical standalone sales and our go-to-market strategy. The determination of BESP is made through consultation with and approval by management. For financial statement purposes, we allocate the fees from our combined units of accounting to subscription and professional services based upon their relative selling price.
Deferred Commissions
Deferred commissions are the incremental costs that are directly associated with the noncancelable portion of cloud-based subscription service contracts with customers and consist of
 
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sales commission paid to our direct sales force. The commissions are deferred and amortized over the noncancelable terms of the related contracts. The deferred commissions amounts are recoverable through the future revenue streams under the noncancelable customer contracts. Amortization of deferred commissions is included in sales and marketing expense in the consolidated statements of operations.
During the years ended December 31, 2011, 2012 and 2013, we deferred $12,000, $3.0 million and $5.0 million, respectively, of commission expenditures and we amortized $0, $10,000 and $2.5 million, respectively, to sales and marketing expense. Deferred commissions on our consolidated balance sheets totaled $3.1 million and $5.5 million as of December 31, 2012 and December 31, 2013, respectively.
Stock-Based Compensation
Compensation expense related to stock-based transactions, including employee, consultant and non-employee director stock option awards, is measured and recognized in the financial statements based on fair value. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The stock-based compensation expense, net of forfeitures, is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four years.
Our option-pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of our common stock, risk-free interest rates and the expected dividend yield of our common stock. The assumptions used in our option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.
These assumptions are estimated as follows:
 
 	Ÿ	 	Volatility.     We determine the price volatility factor based on the historical volatilities of our peer group as we do not have a sufficient trading history for our common stock. To determine our peer group of companies, we consider public enterprise cloud-based application providers and health information systems companies and select those that are similar to us with regards to nature of business, customer base, service offerings and markets served. Furthermore, we also added an additional peer group of companies in the cloud-based application industry to valuations beginning in June 2013. We did not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.	
 
 	Ÿ	 	Expected life.     The expected life represents the period that our stock-based awards are expected to be outstanding. We determined the expected life assumption based on the vesting terms, exercise terms and contractual terms of the options.	
 
 	Ÿ	 	Risk-Free Interest Rate.     We base the risk-free interest rate used in the Black-Scholes valuation model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the options for each option group.	
 
 	Ÿ	 	Dividend Yield.     We have not paid and do not plan to pay cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero.	
 
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 	Ÿ	 	Fair Value of Common Stock.     Because our common stock is not publicly traded, we must estimate the fair value of common stock, as discussed in “—Common Stock Valuations” below.	
The following table summarizes the assumptions relating to our stock options as follows:

 	  	Year Ended December 31,	
 	  	2011	  	2012	  	2013	
Volatility	  	60%	  	60%-63%	  	58%-60%	
Expected life (in years)	  	5.0-6.2	  	5.0-6.5	  	5.0-7.2	
Risk-free interest rate	  	1.5%-2.7%	  	0.6%-1.1%	  	0.7%-2.0%	
Dividend yield	  	—	  	—	  	—	
Weighted-average fair value of underlying common stock	  	$0.83	  	$1.05	  	$3.02	
In addition to assumptions used in the Black-Scholes option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation for our option awards. Our forfeiture rate is based on an analysis of our actual forfeitures. We will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. Quarterly changes in the estimated forfeiture rate can have a significant impact on our stock-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the financial statements.
We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to our estimates, which could materially impact our future stock-based compensation expense.
Common Stock Valuations.     We are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations with the Black-Scholes option-pricing model. The fair values of the common stock underlying our stock-based awards were determined by our board of directors, with input from management and contemporaneous third-party valuations. We believe that our board of directors has the relevant experience and expertise to determine the fair value of our common stock. As described below, the exercise price of our stock-based awards was determined by our board of directors based on exercising reasonable judgment and consideration of numerous objective and subjective factors to determine the best estimate of the fair value of our common stock as of each grant date (see below for those factors). If awards were granted a short period of time preceding the date of a valuation report, we assessed the fair value used for financial reporting purposes after considering the fair value reflected in the subsequent valuation report and other facts and circumstances on the date of grant as discussed below. In such instances, the fair value that we used for financial reporting purposes generally exceeded the exercise price for those awards.
Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including:
 
 	Ÿ	 	contemporaneous valuations performed by unrelated third-party specialists;	
 
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 	Ÿ	 	the prices, rights, preferences and privileges of our convertible preferred stock relative to those of our common stock;	
 
 	Ÿ	 	lack of marketability of our common stock;	
 
 	Ÿ	 	our actual operating and financial performance;	
 
 	Ÿ	 	current business conditions and projections;	
 
 	Ÿ	 	hiring of key personnel and the experience of our management;	
 
 	Ÿ	 	our history and the introduction of new services;	
 
 	Ÿ	 	our stage of development;	
 
 	Ÿ	 	the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our company given prevailing market conditions;	
 
 	Ÿ	 	the market performance of comparable publicly traded companies; and	
 
 	Ÿ	 	the U.S. and global capital market conditions.	
In valuing our common stock, our board of directors determined the equity value of our business generally using the income approach, the market comparable approach and the prior sale of company stock approach valuation methods, or a combination thereof.
The income approach estimates value based on the expectation of future cash flows that a company will generate into perpetuity. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of capital of comparable publicly traded companies in our industry or similar lines of business as of each valuation date and is adjusted to reflect the risks inherent in our cash flows.
The market comparable approach estimates value based on a comparison of the subject company to comparable public companies in a similar line of business. From the comparable companies, a representative market value multiple is determined which is applied to the subject company’s operating results to estimate the value of the subject company. In our valuations, the multiple of the comparable companies was determined using a ratio of the market value of invested capital less cash to each of the last 12 month revenue and the forecasted future 12 month revenue. To determine our peer group of companies, we considered public enterprise cloud-based application providers and health information systems companies. In selecting appropriate market multiples for application in our valuation analyses, we considered differences in our business description, size, stage of life cycle, financial leverage and financial performance between us and the selected peer companies.
The prior sale of company stock method estimates value by considering any prior arm’s length sales of the subject company’s equity. When considering prior sales of our equity, the valuation considers the size of the equity sale, the relationship of the parties involved in the transaction, the timing of the equity sale and our financial condition at the time of the sale.
Once we determined an equity value, we either utilized the option pricing method, or OPM, or a hybrid of the OPM and recent initial public offering pricing data from comparable companies, to allocate the equity value to each of the classes of stock. OPM values each equity class by creating a series of call options on our equity value, with exercise prices based on the liquidation preferences, participation rights and strike prices of dissolution or liquidation events that are not imminent. Recent initial public offering pricing utilizes data from recent initial public offerings of comparable companies. For the OPM method, we applied discounts for marketability to the per share common equity values. The adjustment recognizes the lack of marketability due to the fact that stockholders of private companies do not have access to trading markets similar to those enjoyed by stockholders of public companies which impacts liquidity. For the hybrid method, we applied discounts for marketability to the per share common equity
 
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values calculated under the OPM and calculated the present value of the recent initial public offering pricing data. We then weighted each scenario to arrive at an estimate of fair value for each share as of a current date.
We utilized the OPM pricing model for options granted through September 25, 2013. We utilized the hybrid model for options granted on October 25, 2013.
In all cases, we considered the amount of time between the valuation date and the grant date to determine whether to use the latest common stock valuation determined pursuant to one of the methods described above or a straight-line calculation between the two valuation dates. In determining whether to apply the straight-line calculation between valuation dates, we evaluated whether there was a single event or series of events that occurred during the interim period that would have caused a material change in fair value. If there were no such events, then we concluded that the application of the straight-line calculation was appropriate. This determination included an evaluation of whether the subsequent valuation indicated that any significant change in valuation had occurred between the previous valuation and the grant date.
The following table summarizes, by grant date, information regarding stock options granted from October 1, 2012 to the date of this prospectus:

Option Grant Dates	  	Number of Shares
Subject to
Options
Granted	 	  	Exercise Price
Per Share	 	  	Fair Value Per Share
On Grant Date-
Financial Reporting
Purposes	 	
November 8, 2012	  	 	758,937	  	  	$	1.09	  	  	$	1.10	  	
February 12, 2013	  	 	2,060,020	  	  	 	1.12	  	  	 	1.16	  	
April 9, 2013	  	 	564,877	  	  	 	1.12	  	  	 	1.21	  	
July 24, 2013	  	 	1,344,000	  	  	 	1.29	  	  	 	1.57	  	
September 25, 2013	  	 	646,000	  	  	 	1.29	  	  	 	2.29	  	
October 25, 2013	  	 	3,668,616	  	  	 	2.35	  	  	 	5.00	  	
January 28, 2014	  	 	905,000	  	  	 	6.76	  	  	 	10.00	  	
February 18, 2014	  	 	536,000	  	  	 	7.93	  	  	 	10.00	  	
In addition, on February 18, 2014, we sold an aggregate of 89,943 shares of restricted Class A common stock to certain of our employees at a price per share of $6.76, representing a $1.17 per share discount to the fair value used by us to set the exercise price for the contemporaneously-made option grants. In addition, we sold 12,786 shares of restricted stock to one employee at a price per share of $7.93.
On February 24, 2014 and February 28, 2014, our compensation committee approved option awards for an aggregate of 1,669,500 shares of our Class B common stock that will be issuable upon the pricing date of our offering with an exercise price per share equal to the initial public offering price in this offering.
The aggregate intrinsic value of vested and unvested stock options as of December 31, 2013 was $76.8 million, based on a price of $6.76 per share, the estimated value of common stock based on the respective valuation report as of December 31, 2013.
The following discussion relates primarily to our determination of the fair value per share of our common stock for purposes of calculating stock-based compensation costs since October 2012. A combination of the factors described below in each period led to the changes in the fair value of our
 
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common stock. Notwithstanding the fair value reassessments described below, we believe we applied a reasonable valuation method to determine the stock option exercise prices on the respective stock option grant dates.
November 2012
As of September 30, 2012, we had 27 signed customers. We generated $2.8 million in revenue for the nine months ended September 30, 2012 and $4.2 million of revenue for the year ended December 31, 2012, compared to $1.9 million for the year ended December 31, 2011, representing continuing revenue growth. We also increased our employee headcount to 148. In November 2012, we granted stock option awards with an exercise price of $1.09 per share based on a valuation report as of September 30, 2012. In determining the fair value of our common stock for financial reporting purposes, our board of directors considered the valuation reports as of September 30, 2012 and December 31, 2012. The September 30, 2012 valuation applied a 60% weighting on a discounted cash flow method and a 40% weighting on the prior stock sale method, which considered the price from the Series D preferred stock offering to derive an estimate of the Business Enterprise Value, or BEV, of $249.8 million. The December 31, 2012 valuation applied a 67% weighting on a discounted cash flow method and a 33% weighting on the prior sale of company stock method, which considered the price from the Series D preferred stock offering which occurred in April 2012 to derive an estimate of the BEV of $255.1 million. When applying the prior stock sale method, the valuations as of September 30, 2012 and December 31, 2012 also applied certain market adjustments to take into account market changes between the valuation and transaction dates. We then used the OPM to allocate the equity value to the common stock value with non-marketability discounts of 31.6% and 30.4% as of September 30, 2012 and December 31, 2012, respectively. For our retrospective analysis for assessing the fair value of our common stock for financial reporting purposes, we applied a straight-line calculation using the valuations of $1.09 per share as of September 30, 2012 and $1.12 per share as of December 31, 2012 to determine, with the benefit of hindsight, a reassessed fair value of our common stock for stock option awards granted in November 2012 of $1.10.
February and April 2013.     As of December 31, 2012, we had 47 signed customers while achieving sequential revenue growth, generating $4.2 million of revenue for the year ended December 31, 2012, compared to $1.9 million for the year ended December 31, 2011, which reflected a continuing increase in annual revenue growth. We also increased our full-time employee headcount to 156 as of December 31, 2012. In February and April 2013, we granted stock option awards with an exercise price of $1.12 per share based on a valuation report as of December 31, 2012. In determining the fair value of our common stock for financial reporting purposes, our board of directors considered the valuation report as of December 31, 2012. We then performed a retroactive analysis assessing the fair value of common stock from the valuation report as of June 30, 2013. The December 31, 2012 valuation applied a 67% weighting on a discounted cash flow method and a 33% weighting on the prior sale of company stock method, which considered the price from the Series D convertible preferred stock offering in April 2012 to arrive at BEV of $255.1 million. When applying the prior sale of company stock method, the valuation as of December 31, 2012 also applied certain market adjustments to the prior BEV established in the April 30, 2012 valuation to take into account market changes between the valuation and transaction dates. The June 30, 2013 valuations applied a 50% weighting on a discounted cash flow method and a 50% weighting on the market method, which considered the comparable companies’ respective multiples to our trailing revenue actuals and forward revenue estimates to arrive at BEV of $276.6 million as of June 30, 2013. We then used OPM to allocate the equity value to the common stock value with non-marketability discounts of 30.4% and 30% as of December 31, 2012 and June 30, 2013, respectively. For our retrospective analysis for assessing the fair value of our common stock for financial reporting purposes, we applied a straight-line calculation using the valuations of $1.12 per share as of December 31, 2012 and $1.29 per share as of June 30, 2013 to determine, with the benefit of hindsight, a reassessed fair value of our common stock for stock option awards granted in February and April 2013 of $1.16 and $1.21, respectively.
 
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July and September 2013.     As of June 30, 2013 and September 30, 2013, we had 70 and 88 signed customers, respectively. We also achieved continuing revenue growth, generating $7.8 million of revenue for the nine months ended September 30, 2013, compared to $2.8 million for the nine months ended September 30, 2012. We also increased our full-time employee headcount to 226 and 264 as of June 30, 2013 and September 30, 2013, respectively. In July and September 2013, we granted stock option awards with an exercise price of $1.29 per share based on a valuation report as of June 30, 2013. The valuations applied equal weights on a discounted cash flow method and market comparable approach, which considered the comparable companies’ respective multiples to our trailing revenue actuals and forward revenue estimates to arrive at BEV of $276.6 million and $351.0 million as of June 30, 2013 and September 30, 2013, respectively. We then used the OPM to allocate the equity value to the common stock value with non-marketability discounts of 30% and 20% as of June 30, 2013 and September 30, 2013, respectively. For our retrospective analysis for assessing the fair value of our common stock for financial reporting purposes, we applied a straight-line calculation using the valuations of $1.29 per share as of June 30, 2013 and $2.35 per share as of September 30, 2013 to determine, with the benefit of hindsight, a reassessed fair value of our common stock for stock option awards granted in July and September 2013 of $1.57 and $2.29, respectively.
October 2013. On October 25, 2013, we granted stock option awards with an exercise price of $2.35 per share based on a valuation report as of September 30, 2013. We believe the fair value of our common stock as of October 25, 2013 as determined by our Board of Directors was based upon assumptions that were appropriate for valuing common stock of a private company at that time. We subsequently received a contemporaneous valuation report as of December 31, 2013, which indicated a fair value of our common stock of $6.76. The December 31, 2013 valuation utilized a hybrid approach, utilizing two scenarios: 1) an “IPO Scenario” is the scenario in which we are assumed to achieve an IPO and 2) an OPM for the scenario in which we are assumed to pursue an alternative liquidating event or remain private, deemed the “Non-IPO Scenario”. For the IPO scenario, management and our Board of Directors considered recent IPO pricing data from comparable companies. The Non-IPO Scenario applied equal weights on a discounted cash flow method and market comparable approach, which considered the comparable companies’ respective multiples to our trailing revenue actuals and forward revenue estimates to arrive at BEV of $507.0 million as of December 31, 2013. We applied a non-marketability discount of 20% for the Non-IPO Scenario and a present value discount of 10% for the IPO Scenario. A weighting of 80% was applied to the IPO scenario and a 20% weighting was applied to the Non-IPO Scenario. Based on this analysis, the fair value of our common stock was determined to be $6.76 as of December 31, 2013. In light of the significant differences between fair values of the September 2013 and December 2013 valuation reports, and based upon certain activities that occurred subsequent to October 2013, including the commencement in November 2013 of our initial public offering, we reassessed the fair value as of October 25, 2013 solely for purposes of determining our stock-based compensation expense for the period ended December 31, 2013. With the benefit of hindsight, management utilized the assumptions and methodology in the December 31, 2013 valuation report mentioned above, based on the information as of October 25, 2013. A weighting of 50% was applied to the IPO Scenario and a 50% weighting was applied to the Non-IPO Scenario. Based on this analysis, we have used a reassessed fair value of $5.00 as of October 25, 2013 for purposes of determining share-based compensation.
January and February 201 4 . On January 28, 2014, we granted options to purchase 905,000 shares of Class A common stock with an exercise price of $6.76 per share based on a valuation report as of December 31, 2013. On February 18, 2014, we granted options to purchase an aggregate of 536,000 shares of common stock with an exercise price of $7.93 per share based on a valuation report as of February 15, 2014. In addition, on February 18, 2014, we sold an aggregate of 89,943 shares of restricted Class A common stock to certain of our employees at a price per share of $6.76, representing a $1.17 per share discount to the fair value used by us to set the exercise price for the
contemporaneously-made option grants, and we sold 12,786 shares of restricted stock
 
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to one employee at a price per share of $7.93. The February 15, 2014 valuation utilized a hybrid approach, utilizing two scenarios: 1) an “IPO Scenario” is the scenario in which we are assumed to achieve an IPO and 2) an OPM for the scenario in which we are assumed to pursue an alternative liquidating event or remain private, deemed the “Non-IPO Scenario”. For the IPO scenario, management and our board of directors considered the midpoint of the estimated preliminary price range provided by the underwriters in early February. The Non-IPO Scenario applied equal weights on a discounted cash flow method and market comparable approach, which considered the comparable companies’ respective multiples to our trailing revenue actuals and forward revenue estimates to arrive at BEV of $610.0 million as of February 15, 2014. We applied a non-marketability discount of 20% for the Non-IPO Scenario and a present value discount of 7.5% for the IPO Scenario. A weighting of 85% was applied to the IPO scenario and a 15% weighting was applied to the Non-IPO Scenario. Based on this analysis, the fair value of our common stock was determined to be $7.93 as of February 15, 2014.
We have determined, after consultation with the underwriters, that our anticipated initial offering price range as reflected in this prospectus is $9.00 to $11.00 per share. At the time that the January 2014 option grants, the February 2014 restricted Class A common stock sales and the February 2014 option grants were approved, our board of directors determined that the fair value of the shares of our common stock underlying such equity grants was $6.76 per share for the January 28, 2014 option grants, and $7.93 for the February 18, 2014 restricted Class A common stock sales and option grants, which were based on the valuation of our common stock as described above. In light of the preliminary initial public offering price range on the cover of this prospectus, we have reassessed the fair value solely for purposes of determining share-based compensation expense for equity issuances made on these dates. As a result, we have determined that the deemed fair value of awards made on January 28, 2014 and February 18, 2014 was $10.00 per share, which is equal to the midpoint of the initial public offering price range reflected in this prospectus.
On February 24, 2014 and February 28, 2014, our compensation committee approved equity awards for an aggregate of 1,669,500 shares of our Class B common stock that will be issuable upon the pricing date of our offering with an exercise price per share equal to the initial public offering price in this offering.
We expect to recognize total compensation expense of approximately $13.2 million for unvested stock options as of December 31, 2013, which is expected to be recognized during the years ending December 31, 2014, 2015, 2016 and 2017. We expect to recognize total compensation expense of approximately $7.9 million for option grants and restricted stock sales made subsequent to December 31, 2013, which is expected to be recognized during the years ended December 31, 2014, 2015, 2016, 2017 and 2018. In future periods, our stock-based compensation expense is expected to increase as a result of our existing unrecognized stock-based compensation and as we issue additional stock awards to continue to attract and retain employees.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
 
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Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
We had cash, cash equivalents and marketable securities totaling $120.1 million at December 31, 2012 and $67.2 million as of December 31, 2013. This amount was invested primarily in U.S. agency obligations, U.S. treasury securities and money market funds. The cash, cash equivalents and short-term marketable securities are held for working capital purposes. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes. All our investments are denominated in U.S. dollars.
Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. Our fixed-income portfolio is subject to interest rate risk.
We do not believe that an increase or decrease in interest rates of 100-basis points would have a material effect on our operating results or financial condition. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income and are realized only if we sell the underlying securities.
Recent Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board, or FASB, issued guidance regarding the presentation of unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The new guidance requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when settlement in this manner is available under the tax law. This guidance is effective on a prospective basis for financial statements issued for fiscal years and interim periods within those fiscal years, beginning after December 15, 2013. Retrospective and early adoption is permitted. We expect to adopt this guidance in our first quarter of 2014. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.
In February 2013, the FASB issued guidance on disclosure requirements for items reclassified out of accumulated other comprehensive income. This new guidance requires entities to present (either on the face of the statement of operations or in the notes to the financial statements) the effects on the line items in the statement of operations for amounts reclassified out of accumulated other comprehensive income. The new guidance will be effective for us beginning in the first quarter of 2014. The adoption of the guidance will impact our financial statement presentation and/or our disclosures but will not impact our financial position, results of operations or cash flows.
 
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 BUSINESS
Mission
Our mission is to dramatically improve the efficiency of the U.S. health care industry by unleashing the power of market forces through greater transparency and better alignment of economic incentives among employers, health care consumers and their providers.
Overview
Castlight is a pioneer in a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud allows our customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Our comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care cost and quality data transparent and useful. We deploy consumer-oriented applications that deliver strong engagement and integration capabilities. In the last two years, we have signed more than 95 customers, which consist primarily of large self-insured employers, across a broad range of industries, including 24 Fortune 500 companies.
U.S. health care spending is forecasted to total approximately $3.1 trillion in 2014, with $620 billion of this amount to be paid by U.S. employers, according to the Centers for Medicare and Medicaid Services, or CMS. Despite this substantial investment, the U.S. health care system is burdened by significant waste and extreme variations in the cost and quality of care with limited correlation between the two. A recent study by The Institute of Medicine, the health arm of the National Academy of Sciences, estimates that approximately 30% of all health care spending in 2009 was wasted due to factors such as inflated prices, the provision of unnecessary services and inefficient delivery of care.
Two fundamental causes of these inefficiencies have been the absence of transparent information and the misalignment of economic incentives, which make it difficult for employees and their health care providers to make judicious health care choices. In general, employers and employees have not had access to clear information about cost and quality of care as they consider benefit designs and health care treatment options. Moreover, benefit plans that require only small out-of-pocket costs have led consumers to be largely insensitive to price and have discouraged the pursuit of value-oriented care.
In the United States, employers bear a substantial share of this waste and inefficiency, as they pay on average more than three quarters of their employees’ health care costs according to a 2013 survey by National Business Group on Health, or NBGH, and Towers Watson & Co., or Towers Watson, and are expected to spend an average of $9,248 per employee on healthcare costs during 2013. Over the last two decades, employers have taken various steps to attempt to mitigate this growing burden, including self-insuring and increasingly shifting costs to employees. These measures have failed to solve the fundamental problems that have undermined employers’ efforts to control costs while maintaining competitive health care benefits for their employees.
Employers’ inability to control these costs and improve quality reflects the historical absence of technology solutions capable of:
 
 	Ÿ	 	aggregating and analyzing disparate health care data to deliver highly personalized information that enables employees to be smarter, more value-driven consumers of health care services;	
 
 	Ÿ	 	implementing advanced benefit designs that empower and incentivize employees to consume resources more judiciously; and	
 
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 	Ÿ	 	integrating and maximizing the effectiveness of the disparate health care systems, applications and programs that employers have deployed to manage health care for their employees and families.	
In addition, even as employers have shifted more costs to their employees, they have been unable to engage and empower employees with useful, high-quality information about their health care choices.
We have pioneered a set of technology advancements that enables employers to conquer the complexity of the existing health care system and effectively implement benefit designs that align incentives and drive value for employers, and their employees and families. While this transformation echoes the approach other software providers have used to attack waste and inefficiency in other categories of employee-related enterprise spend such as business travel and procurement, the scale and complexity of the health care industry has historically defied such a solution. We believe that our Enterprise Healthcare Cloud offering, built on our core innovations in data analytics, transparency and employee engagement, represents a fundamental breakthrough in the effort to gain control over health care spending.
Our Enterprise Healthcare Cloud offering transforms a massive quantity of complex data into transparent and useful information. These data include external data we obtain from a diverse array of sources, such as health care providers, insurance companies, governmental agencies and quality-monitoring organizations, as well as internal data generated through the usage of our applications. Our team of leading engineers, economists and clinicians applies sophisticated data science techniques, including predictive modeling and epidemiologic analytics, that leverage our database to drive insights such as identification of high-risk patients and estimated future costs of care, thereby empowering employers with the information they need to design and implement advanced benefit plans that address their specific challenges. We deliver this powerful offering through a suite of innovative applications that enables employers to engage their employees with actionable information, implement highly-tailored benefit designs and integrate their other health care applications and programs. These applications are delivered to our customers, and their employees and families via our cloud-based offering and leverage consumer-oriented design principles that drive engagement and ease of use.
We have experienced significant growth and momentum, and our customers include some of the largest employers in the United States, spanning a wide range of industries, such as education, manufacturing, retail, technology and government. We believe that Castlight is well positioned to leverage its use of large amounts of health care related data, sophisticated data analytics, strong customer portfolio and early-mover advantage to play a role in dramatically improving the efficiency of the U.S. health care system.
Our total revenue was $1.9 million, $4.2 million and $13.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. Our net loss was $19.9 million, $35.0 million and $62.2 million for the years ended December 31, 2011, 2012 and 2013, respectively. Our accumulated deficit at December 31, 2013 was $131.2 million.
Industry Background
The U.S. Health Care Industry Is Large and Inefficient
The health care industry in the United States is the largest in the world, according to the World Bank. According to a 2012 study by CMS, U.S. national health expenditure is forecasted to reach $3.1 trillion, or approximately 18% of the U.S. Gross Domestic Product, or GDP, in 2014, and is expected to grow to approximately 20% of GDP by the year 2022. Despite this tremendous spending, U.S. health care outcomes remain inferior relative to those of many other countries. According to a 2013 Bloomberg report, the United States ranked 46 th in overall health care efficiency based on a weighted-average of life expectancy, relative cost per capita and absolute cost per capita of health
 
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care. Additionally, a 2013 Institute of Medicine report estimates that approximately 30% of U.S. health care spending in 2009 was wasted due to factors such as inflated prices, the provision of unnecessary services and inefficient delivery of care.
Dysfunctional Market with Limited Correlation Between Cost and Quality
In addition to these inefficiencies, industry dynamics have led to high variations in the cost and quality of health care services. For example, according to a 2013 report by the Massachusetts Attorney General, found that prices paid by certain health plans in 2011 varied by up to 3.5 times between the lowest and highest providers. Further, the study also found that price differences were not explained by differences in quality or complexity of care delivered. Moreover, according to a 2013 study in the New England Journal of Medicine, the quality of health care services can vary dramatically. According to the study, risk-adjusted 30-day readmission rates for six surgical conditions at high-volume hospitals ranged between 7.5% and 25.5% in 2009 and 2010.
Two fundamental causes driving this lack of correlation between cost and quality, and the resulting market dysfunction, are the absence of transparent data and the misalignment of economic incentives.
Health Care Data Is Massive, Disaggregated and Lacks Transparency
Historically, employers and employees have not had access to clear information about the cost and quality of care as they consider benefit designs and health care treatment options. In some cases, health care providers and other market participants have actively resisted efforts by employers and others to obtain information about the costs and quality of health care services. Despite this resistance, the health care industry generates extensive data that is relevant to determining the cost and quality of health care services. These data reside in myriad formats and disparate databases, without a common infrastructure, and have therefore been of limited value to employers and employees in controlling costs and improving outcomes. In many cases, information relating to health care services has restrictions on its use, such as contractual agreements that some health plans and providers have historically entered into to not disclose price information. These factors make it challenging for employers and employees to use these data for the purposes of measuring cost and quality and making informed decisions.
In addition, even where these data have been available, they historically have not been delivered in a simple and intuitive format that could empower consumers to make actionable decisions. For example, the U.S. government releases massive amounts of data on hospital performance, such as detailed mortality statistics. However, it is very difficult for consumers to navigate these resources and determine which data and metrics are most relevant for their particular procedure or service, such as heart failure or child birth. According to the Kaiser Family Foundation, less than one in ten Americans say that have seen and used information comparing the quality of health providers in the past year to make health care related decisions.
Misalignment of Economic Incentives Impairs Cost-Effective Decision Making
Historically, employees in the United States have been insulated from direct financial responsibility for much of the cost of the care they choose to receive. This dynamic exists because approximately 149 million people in the United States rely upon health care that is funded by an employer, according to Kaiser Family Foundation. On average, employees paid approximately 23% of the total cost of their health care and employers paid approximately 77% in 2012, according to a joint survey by NBGH and Towers Watson. As a result, employees historically have been less sensitive to the costs of health care services than they might have been had their economic incentives been more closely linked to the total costs of care they received.
 
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Rising Cost of Health Care for Employees Is a Significant Issue for Employers
Employers are forecasted to spend approximately $620 billion on health care in 2014, according to CMS. According to the Bureau of Labor Statistics, health care benefit costs account for approximately 8% of total employee costs in the United States and represent the largest category of voluntary benefits provided by private employers. These costs are also growing rapidly. In 2013, employers contributed 32% more in health care expenses than five years ago, according to NBGH and Towers Watson. In addition, certain provisions in the ACA, such as the requirement to offer insurance to all full-time employees, will result in additional costs to most employers. As part of their strategy to manage their costs, large employers have been increasingly self-insuring, which more directly exposes these employers to volatility in health care expenses, and places the burden of designing health care benefits for self-insured enterprises on the employer. According to an August 2013 Kaiser Family Foundation survey, in 2013, approximately 61% of employees who rely on health care funded by an employer are covered by health plans by U.S. employers that have elected to self-insure (including 94% of the covered employees of U.S. employers with more than 5,000 employees). As a result, better managing health care expenses will have a direct impact on financial performance, making employers eager for solutions that can help them manage this growing problem.
Employers Have Been Largely Unsuccessful in Controlling Costs and Ensuring High Quality Care
Despite intensive efforts to reduce health care expenses and improve value over many years, employers continue to face escalating costs and highly variable quality. Historical efforts to manage costs through benefit design have been largely unsuccessful. For example, during the 1990s, employers increased their use of health maintenance organization, or HMO, plans, which were designed to incentivize health care providers to reduce the spend for the care of an employee population, but restricted employee choice and created considerable employee dissatisfaction with their health benefits. Many employers responded by shifting to preferred provider organization, or PPO, plans, which offer greater choice and access for employees and their families, but reaccelerated increases in health care costs.
More recently, employers have attempted to reduce health care costs through use of employee cost-sharing plans, such as consumer-directed health care plans. These plans shift health care expenses to employees, and thereby incentivize them to make more judicious health care spending decisions. This shift has been profound. For example, in 2013, 43% of employers with at least 1,000 workers offered high deductible health plans with savings option to their employees, up from only 8% in 2005, according to Kaiser Family Foundation. Although these employee cost-sharing plans have had some success in decreasing the rate of growth of employers’ costs, employee dissatisfaction with these plans is high because they lack the tools to shop for care and understand their benefits.
Progressive employers have also implemented benefit design strategies intended to improve quality of care and thereby lower costs by reducing complications and eliminating wasteful treatments. Employers can ultimately reduce their health care costs by directing employees and their families to higher quality service providers that can improve outcomes, reduce medical complications and eliminate wasteful treatments. While higher cost-sharing plans and other specific benefit design strategies have the potential to reduce costs, they are difficult to implement effectively without transparent and actionable information that enables employers and employees to identify options that provide more value for their health care dollar.
Our Opportunity
We believe there is a significant opportunity to offer a comprehensive, technology-based solution to reduce the massive waste and inefficiencies associated with the approximately $620 billion that
 
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employers are projected to spend on health care in the United States in 2014. By combining innovations in big data analytics, cloud-based software delivery models and consumer-oriented online and mobile applications, with our deep health care domain knowledge and platform for integrating third-party applications, we believe we are well positioned to play a central role in dramatically improving the efficiency of the U.S. health care system. We estimate, based on the number of people who rely on health care funded by self-insured employers and our estimate of the potential fee opportunity for our current products, that our total available market is greater than $5 billion.
Our Solution
We have developed a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud offering transforms a massive quantity of complex data, which we obtain from a diverse array of internal and external sources, into transparent and useful information for employers, and their employees and families.
We deliver this powerful offering through a suite of innovative applications that enables employers to engage their employees with personalized, actionable information, implement highly tailored benefit designs and integrate their other systems, applications and programs. These applications are delivered to our customers, and their employees and families, via our cloud-based offering and leverage consumer-oriented design principles that drive engagement and ease of use. In addition, as more customers use our applications and our database grows, the depth and breadth of our offering improves, increasing the value we can deliver to employers, and their employees and families.
The key dimensions of our Enterprise Healthcare Cloud offering include:
Extensive Data Foundation
Our Enterprise Healthcare Cloud offering integrates, organizes and normalizes data from across the fragmented and complex health care landscape. Much of this information has been traditionally difficult to obtain and, in many cases, inaccessible to employers, their employees and families, and benefit providers. Our offering has successfully scaled to aggregate more than a billion health care claim transactions from public and private data sources, which include our customers’ health plans and other third parties, and combines these data with health care benefit information, clinical practice guidelines, user-generated data and the consumer behavior data of our users. We then structure these data, allowing us to map personalized cost information by region and individual service providers for a broad range of health care and physician services and medical products. We combine these pricing data with clinical quality and patient experience information from national, regional and user-generated sources to deliver service-specific quality metrics across a broad range of providers in the United States. Our consumer health care database allows our suite of applications to deliver transparency on cost and quality of health care services to an otherwise opaque market.
Sophisticated Analytics
Over the last four years, our team of leading engineers, economists and clinicians has developed proprietary data science techniques and robust capabilities to process and analyze our extensive data foundation and compute cost and quality data for thousands of health care services and products. Our offering transforms unstructured data from disparate sources into actionable information on price and quality of health care services. In addition, we employ predictive modeling to identify patients at risk for needing particular services and estimate their future cost of care. We also use epidemiologic analytics to personalize recommendations for employers for specific benefits programs in which they should invest based on the health characteristics of their populations. Our offering uses this analytics engine
 
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to calculate costs and identify patterns of inefficient behavior for large populations of employees and their families, thereby enabling employers to take actions to optimize benefit plans, reduce inefficient outcomes and foster behavioral change.
Personalized Cost, Quality and Benefit Information
We simplify the health care decision-making process for employees and their families by providing highly relevant, personalized information that encourages informed choices before, during and after receiving health care. We utilize a real-time interface to securely aggregate the employee’s latest medical spending information. By combining these data with medical claims history, benefit plan information, the available provider network and robust search capabilities, we can deliver a highly personalized health care shopping experience that illuminates both the employee’s specific out-of-pocket costs and the portion of the medical expense paid by their employer. In addition, we deliver personalized benefit and clinical information, as well as specific alerts about lower cost medical and pharmaceutical options, avoidance of unnecessary services and preventative care recommendations. By empowering employees and their families with the ability to simultaneously search price, quality and relevant content on health care services and providers, we enable them to make informed “market-based” decisions that avoid excessive prices and low quality or unnecessary care, creating significant value for employers.
Technology-Enabled Benefit Design
We deliver significant value to employers by enabling the successful implementation of employee cost sharing plans and other advanced benefit designs that incentivize employees and their families to consume resources more judiciously. Our offering gives employers who offer employee cost sharing plans the tools and information their employees and families need, at scale, to better understand their care options, become more empowered health care consumers and spend their health care dollars wisely. In addition, we also enable and increase the effectiveness of more advanced benefit programs including:
 
 	Ÿ	 	reference-based pricing, in which employers set maximum reimbursement levels for specified health care procedures and services;	
 
 	Ÿ	 	centers of excellence, in which employers create incentives to direct employees to preferred high-value providers and facilities; and	
 
 	Ÿ	 	incentive programs, in which employees receive monetary and non-monetary rewards to encourage beneficial health behaviors.	
In each case, technology plays a critical role in the effective delivery of these advanced benefit programs. Our data, analytics and reporting capabilities allow employers to rigorously design, specify and enforce the parameters of these programs, evaluate their effectiveness and optimize their performance over time.
Independent and Integrated Platform
As an independent technology company in the health care industry, we are a trusted provider of unbiased health care cost and quality information. We believe our independence is an important attribute for our relationships with our customers, and their employees and families, and allows us to partner with health plans, health care providers and broader health care stake holders. Furthermore, we designed our offering to seamlessly integrate with other key third-party data sources, programs and applications. These integrations streamline the user experience across a fragmented vendor set. For example, we provide employees with a consistent but personalized experience regardless of geography, plan design or health plan, while at the same time interfacing with all of the employers’
 
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legacy systems that support their health care offerings. This integration capability is a key competitive advantage of our offering for large enterprises with national employee bases and multiple health plans. Additionally, our integration capabilities enable employers to increase use of other complementary vendor applications by capitalizing on our ability to drive high levels of engagement. Over time, we believe our platform will become a key consolidation point for a broad array of third-party health care applications.
Universal and Engaging Interface
In order for employers and employees to maximize the benefits of transparent cost and quality information and technology-enabled benefit designs, we have designed our offering to be ubiquitously and conveniently accessible, easy-to-use and valuable for consumers. Our applications enable user experiences similar to those of leading consumer internet sites. Our user experience design fosters user engagement and drives utilization. Our focus on an intuitive and simple user experience allows employees to conveniently shop and access information throughout the process of understanding, planning and carrying out their health care decisions. This focus enables our customers to realize higher productivity and generate better business results through broad access to more timely and reliable information. We complement these capabilities with professional services designed to drive initial user registrations and ongoing engagement.
Our Strategy
Capitalize on Our Leadership in the Emerging Enterprise Healthcare Cloud Market
As a pioneer in the emerging enterprise health care cloud market, we have experienced significant demand from customers in the early commercialization of our offering. We initially targeted, and have already secured, large enterprise customers, which have provided us with data access, enhanced product development and increased scale. We intend to leverage our experiences with these large customers as we continue to build on this momentum. Our current base of 106 customers represents only a small fraction of customers that we believe could benefit from our cloud offering. In order to capitalize on this emerging market opportunity, we intend to continue to leverage our current customer base, expand our direct sales capabilities and invest further in indirect sales channels and partnerships.
Continue to Invest in Customer Success
We are intensely focused on driving lasting customer success. We invest early and heavily in customer relationships and work closely with employers throughout the implementation process to configure their benefit plans to meet their specific needs and objectives and continue to help them adapt these plans over time. We also provide integrated communications and implementation programs that help employers execute their benefit plan strategies quickly and effectively. We aim to be the catalyst that drives long-term employee engagement and lasting efficiency in health care purchases, and in turn, drive high customer satisfaction, retention and reference ability. We believe we are establishing a trusted brand with our customers as they integrate our offering into their own systems, which in turn will not only foster a lasting relationship, but also drive significant value for our customers and their employees and provide us with ongoing opportunities to deploy additional applications and capabilities.
Further Develop Our Platform Strategy
We believe there is a significant opportunity to provide complementary software applications and services to our customers to serve their evolving benefit needs. We have only recently begun to offer additional applications to our customers and have experienced positive results. For instance, our
 
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pharmacy application, first launched in 2013, integrates prescription drug information into our offering and has been purchased by more than half of our customer base. We are currently developing new complementary applications and services to address additional benefit and engagement needs. We believe these applications will significantly increase the value our customers realize from our offering, enhancing customer satisfaction and loyalty and driving increased adoption of multiple applications by our customers. Additionally, we expect third-party developers will leverage our application program interfaces, or APIs, and our database to develop a broad range of value-added applications and services accessed via our platform, thereby further enhancing the value of our offering.
Leverage Our Growing Independent Health Care Consumer Database
We operate a growing independent database that includes more than a billion health care claim transactions and a rapidly expanding collection of consumer behavior data, making us a trusted third-party source of reference for health care spending. Through algorithmic processing of this aggregated information on provider practices, referral patterns, patient outcomes patient needs and purchasing trends, we will continue to develop novel offerings that inform the benefit design strategies of our customers.
Leverage Our Passionate, Mission-Driven Culture
We believe our team of employees, our corporate culture and our shared passion to change health care that unites us, are key elements of our success. The problem we aim to solve is complex and requires a variety of expertise. We have assembled a unique multi-disciplinary team of software developers, economists, behavioral scientists, clinicians, health policy experts and enterprise-focused sales and marketing personnel and have created a work environment that stimulates cross-functional innovation to effect fundamental change in health consumption behavior. The depth of these skills, our passionate culture and the creativity of our team has enabled a significant early-mover advantage in the market and allowed us to retain and attract the highest caliber talent in the industry.
Our Applications
The Castlight Enterprise Healthcare Cloud is comprised of multiple powerful applications for employers, and their employees and families.
Castlight Enterprise Healthcare Cloud
Key applications available in Castlight Enterprise Healthcare Cloud include:
 
 	Ÿ	 	Castlight Medical:     Castlight Medical is our flagship Enterprise Healthcare Cloud application which simplifies health care decision making for employees and their families by providing highly relevant, personalized information for medical services that enable informed choices before, during and after receiving health care. Castlight Medical enables employees and their families to intuitively search for robust and comprehensive information about medical providers, including personalized out-of-pocket cost estimates, clinical quality, user experience and provider demographic information. Additional features include personalized tips, evidence-based clinical guidelines, educational content, benefit guides and real-time spend and deductible information.	
 
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The following graphics are illustrative screenshots of our Castlight Medical application.

 

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 	Ÿ	 	Castlight Pharmacy:     The Castlight Pharmacy delivers information to guide employees and their families on how to manage their prescription drug spend. Our pharmacy application enables them to easily search for cost estimates for specific medications at convenient retail locations as well as mail order alternatives and presents multiple ways to save including using generic equivalents and therapeutic area alternatives. Additionally, Castlight Pharmacy is capable of driving improved drug compliance through prescription refill reminders and interfaces with other third-party applications to change and fulfill prescriptions.	
Castlight Advanced Benefit Design
Our Advanced Benefit Design applications allow employers to go beyond basic cost and quality transparency by creating incentives and controls to drive behavior change among employees and avoid unnecessary spending. Our applications improve effectiveness of a variety of value-driving benefit designs including:
 
 	Ÿ	 	Centers of Excellence:     Our Centers of Excellence, or COE, application highlights COE options for users, while educating employees on their relative value.	
 
 	Ÿ	 	Reference Based Pricing:     Our Reference Based Pricing application allows employers to set a “fair market” reference price that establishes the maximum amount paid by the employer specified health care procedures and services. Reference Based Pricing allows employers to direct employees to high value care, while still preserving their choice of provider.	
 
 	Ÿ	 	Tiered Networks:     Our Tiered Networks application educates users about the cost impact of using providers of different network tiers and encourages use of cost-effective providers.	
 
 	Ÿ	 	Preferred Providers:     Our Preferred Provider application enables employers to direct employees and their families to preferred providers including onsite clinics, domestic tourism providers and lower-cost providers such as retail clinics and urgent care centers, allowing more cost-effective and convenient care options.	
 
 	Ÿ	 	Rewards:     Our Rewards application let employers motivate employees to utilize high value providers and perform a variety of other desired behaviors.	
Castlight Reporting and Analytics Insights
Our Reporting and Analytics Insights applications allow employers to understand where and how their employees are using the Castlight Enterprise Healthcare Cloud and identify opportunities to drive even deeper engagement and savings. These applications deliver insights into overall savings trends, use of high-quality providers, common search activities, engagement rates and the effects of benefit designs. These applications identify opportunities to increase use of other valuable employer programs that can benefit from promotion using targeted messaging in our Enterprise Healthcare Cloud applications.
Our Services
We provide a range of services to help employers implement and maximize the value of our offering, including:
 
 	Ÿ	 	Communication and Engagement Services .      We offer communications services to drive employee engagement with our offering that span email campaigns, print collateral and employer-specific media. Communications initiatives are typically run during open enrollment, time of product launch and periodically post launch to continue to drive employee engagement and change management. The fees for these services are included as part of our professional service contracts.	
 
 	Ÿ	 	Implementation Services.     We provide implementation services to our customers to ensure successful deployment of our offering, including executing required data feeds, loading	
 
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 	customer data, configuring applications, integrating with third-party and other applications and comprehensive testing. The fees for these services are included as part of our professional service contracts.	
 
 	Ÿ	 	Customer Support.     We offer end user support to ensure effective employee use of our offering. We provide live chat and telephonic support for employees and their families in the area of technical support, clarification support, including answering questions on how to use the online service, and provider search support. We also enable employees who may have limited computer access to obtain their personalized health care information using our customer support personnel. The fees for these services are included as part of our subscription contracts.	
 
 	Ÿ	 	Training.     We offer training for key personnel of our customers, as well as training materials that our customers can provide to employees and their families before and after launching our application. The fees for these services are included as part of our professional service contracts.	
Customers
We completed implementation for our first customer in 2010, and as of December 2013, we have signed 106 customers, of which more than 95 customers were signed in the last two years, encompassing millions of eligible employees and their families. Our customers consist primarily of large self-insured employers, representing a wide range of industries, such as education, manufacturing, retail, technology and government, and including some of the largest employers in the United States. For the year ended December 31, 2013, the Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan, or the Wal-Mart Plan, represented approximately 16% of our total revenue. The initial term of our agreement with the Wal-Mart Plan expires on December 31, 2015 and the Wal-Mart Plan has no obligation to renew its subscriptions for our offering after this term expires. We or the Wal-Mart Plan may terminate the agreement prior to December 31, 2015 under certain circumstances.
Representative Customers
The following table lists many of our largest customers, based on total revenue in 2013, and their industry:

Customer	 	Industry	
Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan	 	Retail	
Carlson, Inc	 	Hospitality	
Cummins, Inc.	 	Manufacturing	
Eaton Corporation	 	Manufacturing	
Indiana University	 	Education	
Indiana University Health, Inc.	 	Health Care	
Indiana State Personnel Department	 	Government	
Liberty Mutual Group Inc.	 	Financial Services	
Microsoft Corporation	 	Technology	
Mondelez International, Inc.	 	Food & Beverage	
Purdue University	 	Education	
Safeway Inc.	 	Retail	
Customer Case Studies
The following are representative examples of how some of our customers have benefited from typical deployments of our application:
Honeywell
Situation :    Honeywell, a Fortune 100 technology and manufacturing company, needed to manage the ever-escalating cost of insuring its approximately 130,000 employees and their
 
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dependents. Honeywell has reported that it’s health care costs were growing approximately 8-10% per year. The company decided to implement a full-replacement, consumer-directed health plan to help contain costs, but recognized that success would require supporting employees with a consumer-centric, cost and quality transparency tool that enabled informed decision-making, supported change management and improved employee engagement.
Solution and benefits :    Honeywell selected Castlight’s Enterprise Healthcare Cloud platform to provide its employees with access to health care cost, quality and education in a user-friendly way. Castlight aggregated data across the company’s insurance carriers, and helped deploy comprehensive employee education and engagement applications. Castlight was first provided to Honeywell in February 2012. Honeywell reported the following benefits:
 
 	Ÿ	 	Castlight developed a health care management platform that connected Honeywell health care vendors in a single integrated solution and offered employees a consistent user experience and message.	
 
 	Ÿ	 	68% of eligible households registered with Castlight’s solution during the first five months after deployment, and 78% of registrants returned to the application by the end of 2012. Honeywell had identified employee engagement as a key indicator that employees were making consumer-driven health care decisions that would reduce Honeywell’s health care costs, and had targeted an initial engagement target of 50% which was achieved on the second day of launch. Honeywell employees and dependents have conducted over 800,000 provider searches on Castlight since the rollout.	
 
 	Ÿ	 	Honeywell employees who used Castlight to shop for laboratory services paid 14% less on average than those who did not search (February 2012 through September 2013).	
Esterline
The Problem :    Esterline is a leading manufacturing company serving aerospace and defense customers. Esterline is based in Bellevue, Washington and offers a high deductible plan to its 5,000 U.S. employees. Esterline wanted to make health care cost and quality information available to the participants in its medical plan before services were scheduled or received. Esterline expected that informed employees would make choices that would drive down costs for the employee and the plan.
Solution and benefits :    Esterline selected Castlight’s Enterprise Healthcare Cloud offering because it believed in Castlight’s ability to help Esterline’s employees attain savings in health care spending and improve quality of care. Esterline launched Castlight in January 2012.
 
 	Ÿ	 	Castlight helped Esterline register approximately 50% of eligible households in the first four months, through a highly tailored and active communications program.	
 
 	Ÿ	 	Esterline employee households using Castlight experienced an approximate 33% drop in medical spending (on average), while all other Esterline employee households experienced an approximate 1% increase in medical spending (on average).	
 
 	Ÿ	 	From January 2012 through September 2013, Esterline employees who searched Castlight prior to receiving services experienced significant savings: Those who searched for labs saved approximately 21% relative to non-searchers and those who searched for MRIs saved approximately 16% relative to non-searchers.	
Wayne Farms
Situation :    Wayne Farms, a vertically integrated poultry producer, places a high priority on offering their nearly 9,000 employees a high-quality, comprehensive benefits package, and needed an
 
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easy to use, technology-based solution to help employees drive value from its heath care benefit programs.
Solution and benefits :    Wayne Farms selected Castlight’s cloud-based transparency platform, and cited as key factors in its decision the easy and consumer-oriented user interface, the differentiated and useful quality platform and Castlight’s demonstrated willingness to accommodate unique needs, such as the development of a Health Savings Account tool. Castlight was first provided to Wayne Farms in September 2012. Wayne Farms reported the following benefits:
 
 	Ÿ	 	As of May 2013, 60% of eligible households registered with Castlight.	
 
 	Ÿ	 	Castlight integrated Wayne Farms’ Health Savings Account program Q3 2013, allowing employees to access real-time HSA information and balances.	
 
 	Ÿ	 	Based on results using Castlight with the company’s salaried population, Wayne Farms decided to purchase Castlight to support its hourly, manufacturing-based and distributed population in addition to adding Castlight’s pharmacy module (contract signed January 2013).	
Employees and Culture
We view our employees and company culture as critical assets for our business and a source of competitive strength. Our leadership team is focused on supporting our employees and fostering our unique culture. We believe this has enabled us to attract and retain some of the best minds in technology and health care to build and advance our offering. Our core values, which we seek to reflect in our work with each other and our customers and partners, are Transparency, Courage, Community, Passion and Excellence. We seek to be transparent in our decision making, courageous in doing the right thing, kind and humble, make our job the one we love and cultivate continuous improvement.
As of December 31, 2013, we had a total of 287 regular full-time employees, all located in the United States. None of our employees is represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Sales and Marketing
We sell our applications and services through our direct sales organization. Our direct sales team comprises enterprise-focused field sales professionals who are organized principally by geography and account size. Our field professionals are supported by a sales operations staff, including product technology experts, lead generation professionals and sales data experts. We maintain relationships with key industry participants including benefit consultants, brokers, group purchasing organizations and health plan partners.
We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs. Our marketing programs target human resource, benefits and finance executives in addition to technology and health professionals, senior business leaders and health care channel partners. Our principal marketing programs include use of our website to provide information about our company and our software services, as well as learning opportunities for potential customers, demand generation, field marketing events, integrated marketing campaigns and participation in, and sponsorship of, user conferences, industry events, trade shows and conferences.
Our Technology
We have designed our technology infrastructure to provide a highly available and secure multi-tenant cloud-based offering. Our multi-tenant platform allows us to use a common data model and
 
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consistent management practices for all customers with multiple possible configurations, while securely partitioning each customer’s application data. This approach provides significant operating leverage and improved efficiency as it helps us reduce our fixed cost base and minimize unused capacity on our hardware.
The following graphic displays our robust technology foundation that supports our applications:

 

*	Development in process. We are in process of building technologies to enable third-party integrations, external developer tools and administration tools for our customers.	
Overall, the architecture, deployment and management of our technology is focused on:
 
 	Ÿ	 	Scalability. We have developed a robust and scalable data architecture infrastructure, which allows for automated loading and normalization of numerous data sources, including more than a billion claim transactions in our data warehouse.	
 
 	Ÿ	 	Standardization. Our technology assimilates unstructured data from disparate sources, and employs unique algorithms to convert these data into user-friendly information for our users. Additionally, we operate using Services Oriented Architecture principles, with a platform of services that serve to deliver the application in a scalable and standardized way.	
 
 	Ÿ	 	Security. We maintain a formal and comprehensive security program designed to ensure the security and integrity of customer data, protect against security threats or data breaches and prevent unauthorized access to the data of our customers. We strictly regulate and limit all access to on-demand servers and networks at our production and remote backup facilities. All users are authenticated, authorized and validated before they can access our system. Users must have a valid user ID and associated password to log on to our services. We require Secure Socket Layer 3 between the user’s browser and our servers to protect data during transfer.	
 
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We have a standard Java and Ruby on Rails based development environment with the majority of our software written in industry standard software programming languages. We develop our native mobile applications for all the other platforms (iOS, Android and Windows Mobile) using a robust java service layer for providing key functionality. Our operating system and databases are open-source including the Linux operating system, MySQL and MongoDB databases and Apache Tomcat for the application servers. We also use Greenplum for our analytics database.
We currently host our applications and serve all of our customers from three data centers, located in Arizona, Colorado and Texas, and expect to transition all hosting to the data centers in Arizona and Colorado by the end of 2014. We rely on third-party vendors to operate these data centers, which are designed to host computer systems that require high levels of availability and have redundant subsystems and compartmentalized security zones. We utilize commercially available hardware for our data center servers.
We apply a wide variety of strategies to achieve better than 99% uptime, excluding scheduled maintenance. We achieved over 99.9% uptime over the last 12 months. Systems are continually monitored for any signs of problems and preemptive action is taken when necessary. Encrypted backup files are transmitted over secure connections to a redundant server storage device in a secondary data center. Our data center facilities employ advanced measures to ensure physical integrity, including redundant power and cooling systems and advanced fire and flood prevention.
Compliance and Certifications
Our software services and data are located at independently managed facilities. We require that those vendors obtain third-party security examinations relating to security and data privacy. Statement on Standards for Attestation Engagements, or SSAE, No. 16, Reporting on Controls at a Service Organization, replaced SAS- 70 Type II examinations as the authoritative standard for reporting on service organizations. Our vendors’ SSAE examination is conducted at least every 12 months by an independent third-party auditor, and addresses, among other areas, physical and environmental safeguards for production data centers, data availability and integrity procedures, change management procedures and logical security procedures. We conduct an annual internal audit based upon ISO 27001 principles and criteria that addresses, among other areas, security, data privacy and operational controls.
Research and Development
Our ability to compete depends, in large part, on our continuous commitment to rapidly introduce new application services, technologies, features and functionality. We deliver monthly service releases, updating our offering to leverage advances in cloud computing, mobile applications and data management. Our research and development organization, which as of December 31, 2013, consisted of 85 full-time employees, is responsible for the design, development, testing and certification of our offering. In addition, we utilize certain third-party development services to perform application development services. We focus our efforts on developing new applications and core technologies and further enhancing the usability, functionality, reliability, performance and flexibility of our offering.
Research and development expenses were $10.2 million, $9.7 million and $15.2 million for the years ended December 31, 2011, 2012 and 2013, respectively.
Strategic Relationships
We have established a number of strategic relationships to deepen and complement our platform and applications. These relationships include health care payers, consulting and implementation services provider and broader health care partners.
 
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Health Plan Collaborations:     We work with health plans and pharmacy benefit managers, or PBMs, to support our mutual customers. Our partners include many national and regional health plans and PBMs. These collaborations provide us with claims and other data on behalf of our employer customers. We have developed technologies in collaboration with several payer partners including real-time integrated APIs and our reference-based pricing application.
Content and Product Relationships:     We have relationships with leading content and product companies that complement our offering by making specialized content and functionality available to our customers. These include a variety of public and private data vendors and organizations. Additionally, we integrate with broader health care partners to provide a more integrated and streamlined experience for our users.
Implementation Relationships:     We work with consulting firms to supplement our ability to provide customer implementation services and supply our communications services.
Competition
The market for enterprise health care cloud solutions is in an early stage of development, but is rapidly evolving and competitive. We currently face competition from independent third-party tool vendors, such as Change Healthcare Corporation, ClearCost Health, Healthcare Blue Book, HealthSparq Inc. and Truven Health Analytics Inc., as well as from health plans, such as Aetna Inc., Cigna Corporation, United Healthcare Group, Inc. and WellPoint, Inc. We expect competition to increase as other established and emerging companies enter our industry, as customer requirements evolve, and as new products and technologies are introduced.
The principal competitive factors in our industry include:
 
 	Ÿ	 	capability for customization through configuration, integration, security, scalability and reliability of applications;	
 
 	Ÿ	 	ease of use and rates of user adoption;	
 
 	Ÿ	 	cloud-based delivery model;	
 
 	Ÿ	 	breadth and depth of application functionality;	
 
 	Ÿ	 	competitive and understandable pricing;	
 
 	Ÿ	 	size of customer base and level of user adoption;	
 
 	Ÿ	 	depth of access to third-party data sources;	
 
 	Ÿ	 	ability to integrate with legacy enterprise infrastructures and third-party applications;	
 
 	Ÿ	 	ability to innovate and respond rapidly to customer needs and regulatory changes;	
 
 	Ÿ	 	domain expertise in benefits and health care consumerism;	
 
 	Ÿ	 	accessible on any browser or mobile device;	
 
 	Ÿ	 	clearly defined implementation timeline;	
 
 	Ÿ	 	financial stability of the vendor; and	
 
 	Ÿ	 	customer branding and styling.	
We believe that we compete favorably on the basis of these factors, but given the longer operating histories, greater resources, broader set of business lines, longer relationships with certain potential
 
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customers and ability to offer lower prices, of some of the companies with which we compete, we may not always compare favorably with respect to certain of the above factors. Our ability to remain competitive will largely depend on our ability to invest across our platform.
Many of our competitors have longer operating histories, significantly greater financial, technical, marketing, distribution or other resources and greater name recognition than we do. In addition, many of our competitors have strong relationships with current and potential customers and extensive knowledge of the health care industry. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sale of their products than us. Increased competition may lead to price cuts, fewer customer orders, reduced gross margins, longer sales cycles and loss of market share. We may not be able to compete successfully against current and future competitors, and our business, results of operations and financial condition will be harmed if we fail to meet these competitive pressures.
Intellectual Property
We rely on a combination of patent, trademark, copyright and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish, maintain and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. In addition, we may not be able to prevent others from developing technology that is similar to, but not the same as our proprietary technology. We generally require employees, consultants, customers, suppliers and partners to execute confidentiality agreements with us that restrict the disclosure of our intellectual property. We also require our employees and consultants to execute invention assignment agreements with us that protect our intellectual property rights.
Historically, despite a substantial investment in research and development activities, we have not focused on filing patent applications, although this may change in the future. As of December 31, 2013, we had one issued patent and four patent applications pending in the United States. Our patent expires on July 27, 2031. We cannot ensure that any of our pending patent applications will be granted or that our issued patent will adequately protect our intellectual property. In addition, third parties could claim invalidity or co-inventorship, or make similar claims with respect to our currently issued patent or any patents that may be issued to us in the future. Any such claims, whether or not successful, could be extremely costly to defend; divert management’s time, attention and resources; damage our reputation and brand; and substantially harm our business.
We own and use trademarks on or in connection with our applications and services, including both unregistered common law marks and issued trademark registrations in the United States. We also have trademark applications pending to register marks in the United States. We have also registered numerous Internet domain names.
Despite our efforts to protect our proprietary technology and our intellectual property rights, unauthorized parties may attempt to copy or obtain and use our technology to develop applications with the same functionality as our offering. In addition, policing unauthorized use of our technology and intellectual property rights is difficult and may not be effective.
We expect that we and others in our industry may be subject to third-party infringement claims as the number of competitors grows and the functionality of applications in different industry segments overlaps. Any of these third parties might make a claim of infringement against us at any time. Any such claim could pose a substantial distraction to the management of our company. A successful claim
 
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of this type may be costly and could require us to spend substantial time and effort in making our offering noninfringing.
Regulatory Environment
Participants in the health care industry are required to comply with extensive and complex U.S. laws and regulations at the federal and state levels. Although many regulatory and governmental requirements do not directly apply to our business, our customers are required to comply with a variety of U.S. laws, and we may be affected by these laws as a result of our contractual obligations. We have attempted to structure our operations to comply with applicable legal requirements, but there can be no assurance that our operations will not be challenged or impacted by enforcement initiatives.
Health Care Reform
Our business could be affected by changes in health care laws, including without limitation, the Patient Protection and Affordable Care Act, or ACA, which was enacted in March 2010 and is currently in the process of being implemented. ACA is changing how health care services are covered, delivered and reimbursed through expanded coverage of individuals, changes in Medicare program spending and insurance market reforms.
While many of the provisions of ACA and other health care reform legislation will not be directly applicable to us, they may affect the business of many of our customers, which may in turn affect our business. Although we are unable to predict with any reasonable certainty or otherwise quantify the likely impact of ACA or other health care reform on our business model, financial condition, or results of operations, negative changes in the business of our customers and the number of individuals they insure may negatively impact our business.
Requirements Regarding the Privacy and Security of Personal Information
HIPAA and Other Privacy and Security Requirements.     There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal health information. In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, collectively HIPAA, establishes privacy and security standards that limit the use and disclosure of protected health information and require the implementation of administrative, physical and technical safeguards to ensure the confidentiality, integrity and availability of individually identifiable health information in electronic form. Our health plan customers, as well as health care clearinghouses and certain providers with which we may have or may establish business relationships, are covered entities that are regulated under HIPAA. The Health Information Technology for Economic and Clinical Health Act, or HITECH, which became effective on February 17, 2010, significantly expanded HIPAA’s privacy and security requirements. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,” which are independent contractors or agents of covered entities that create, receive, maintain, or transmit protected health information in connection with providing a service for or on behalf of a covered entity. Under HIPAA and our contractual agreements with our customers, we are considered a “business associate” to our customers and thus are directly subject to HIPAA’s privacy and security standards. In order to provide our covered entity clients with services that involve the use or disclosure of protected health information, HIPAA requires our clients to enter into business associate agreements with us. Such agreements must, among other things, require us to:
 
 	Ÿ	 	limit how we will use and disclose the protected health information;	
 
 	Ÿ	 	implement reasonable administrative, physical and technical safeguards to protect such information from misuse;	
 
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 	Ÿ	 	enter into similar agreements with our agents and subcontractors that have access to the information;	
 
 	Ÿ	 	report security incidents, breaches and other inappropriate uses or disclosures of the information; and	
 
 	Ÿ	 	assist the client in question with certain of its duties under the privacy standards.	
If we are unable to properly protect the privacy and security of health information entrusted to us, our offering may be perceived as unsecure, we may incur significant liabilities, and customers may curtail their use of or stop using our offering.
In addition to HIPAA regulations, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security and laws that place specific requirements on certain types of activities such as data security and texting. We cannot provide assurance regarding how the various privacy and security laws will be interpreted, enforced or applied to our operations.
While we have implemented a privacy and security program, any perception of our practices as unfair or deceptive, whether or not consistent with current regulations and industry practices, may subject us to public criticism, private class actions, reputational harm or claims by regulators, which could disrupt our business and expose us to increased liability.
Data Protection and Breaches .     In recent years, there have been a number of well-publicized data breaches involving the improper use and disclosure of individuals’ personal information of individuals. Many states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials. In addition, under HIPAA, we must report breaches of unsecured protected health information to our contractual partners within 60 days of discovery of the breach. Notification must also be made to HHS and, in certain circumstances involving large breaches, to the media.
We have implemented and maintain physical, technical and administrative safeguards intended to protect all personal data and have processes in place to assist us in complying with all applicable laws, regulations and contractual requirements regarding the protection of these data and properly responding to any security breaches or incidents. However, we cannot be sure that these safeguards are adequate to protect all personal data or assist us in complying with all applicable laws and regulations regarding the privacy and security of personal data and responding to any security breaches or incidents. Furthermore, in many cases, applicable state laws, including breach notification requirements, are not preempted by the HIPAA privacy and security standards and are subject to interpretation by various courts and other governmental authorities, thereby complicating our compliance efforts. Additionally, state and federal laws regarding deceptive practices may apply to public assurances we give to individuals about the security of services we provide on behalf of our contractual customers.
Other Requirements .     In addition to HIPAA, numerous other U.S. state and federal laws govern the collection, dissemination, use, access to and confidentiality of individually identifiable health information and health care provider information. Some states also are considering new laws and regulations that further protect the confidentiality, privacy and security of medical records or other types of medical information. In many cases, these state laws are not preempted by the HIPAA privacy standards and may be subject to interpretation by various courts and other governmental authorities. Further, Congress and a number of states have considered or are considering prohibitions or limitations on the disclosure of medical or other information to individuals or entities located outside of the United States.
 
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Facilities
Our corporate headquarters are located in San Francisco, California, where we occupy facilities totaling approximately 32,571 square feet under a sublease which expires in 2017. We use these facilities for administration, sales and marketing, research and development, engineering, customer support and professional services. We also lease small sales offices elsewhere in the United States.
We intend to procure additional space as we add employees and expand geographically. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of our management, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
 
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 MANAGEMENT
Executive Officers, Other Key Employees and Directors :
The following table provides information regarding our executive officers, other key employees and directors as of March 3, 2014:

Name	 	Age	 	  	Position	
Executive Officers:	 				  		
Giovanni M. Colella	 	 	56	  	  	Chief Executive Officer, Co-Founder and Director	
Dena Bravata	 	 	47	  	  	Chief Medical Officer and Head of Products	
John C. Doyle	 	 	45	  	  	Chief Financial Officer, Vice President, Treasurer	
Michele K. Law	 	 	43	  	  	Chief Revenue Officer	
Randall J. Womack	 	 	49	  	  	Chief Operating Officer and Vice President	
Other Key Employees	 				  		
Naomi L. Allen	 	 	39	  	  	Vice President, Product	
Nita Sommers	 	 	34	  	  	Vice President, Corporate and Business Development	
Non-Employee Directors:	 				  		
Bryan Roberts(1)(3)	 	 	47	  	  	Chairman of the Board and Co-Founder	
David Ebersman(1)	 	 	44	  	  	Director	
Robert Kocher	 	 	42	  	  	Director	
Ann Lamont(2)	 	 	57	  	  	Director	
Christopher P. Michel(2)	 	 	46	  	  	Director	
David B. Singer(2)(3)	 	 	51	  	  	Director	

(1)	Member of the Compensation Committee.	
(2)	Member of the Audit Committee.	
(3)	Member of the Nominating and Governance Committee.	
Executive Officers
Giovanni M. Colella co-founded our company in 2008 and has served as our Chief Executive Officer and a director since that time. Prior to founding our company, Dr. Colella served as Founder, President and Chief Executive Officer of RelayHealth Corporation, a health care technology company, from 2000 until its acquisition in 2006. Dr. Colella holds an M.D. from the Universita Degli Studi di Milano in Italy and an M.B.A. from Columbia Business School. As our Chief Executive Officer, Dr. Colella is the general manager of our entire business, directing our management team to achieve our strategic, financial and operating goals. His presence as a member of our board of directors brings his thorough knowledge of our company into our board of directors’ strategic and policy-making discussions. He brings his extensive experience in finance and medicine and executive roles in the health care technology industry into deliberations regarding our strategy and operations.
Dena Bravata joined our company in April 2009 as Clinical Content Manager and has served as our Chief Medical Officer since February 2010 and Head of Products since February 2013. Prior to joining our company, Dr. Bravata was a Senior Research Scholar at the Stanford University Center for Primary Care and Outcomes Research from July 2000 to April 2009 and was an internist in private practice for nearly a decade. Before entering private practice, Dr. Bravata worked as an attending physician at Stanford University and the VA Palo Alto Healthcare System. Dr. Bravata holds a B.S. in Biology from Yale University, an M.D. from Columbia University and an M.S. in Health Research and Policy from Stanford University.
John C. Doyle has served as our Chief Financial Officer, Vice President and Treasurer since November 2012. Previously, Mr. Doyle served as Chief Financial Officer and then Chief Operating
 
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Officer of Achaogen, Inc., a biopharmaceutical company, from August 2009 to November 2012. Prior to joining Achaogen, Mr. Doyle was Vice President, Finance and Corporate Planning at Genentech, Inc. from July 2007 to June 2009. Mr. Doyle previously served in various roles at Renovis, Inc., first as Vice President, Finance and Chief Financial Officer from August 2002 to August 2006, as Senior Vice President of Finance and Operations and Chief Financial Officer from August 2006 to January 2007 and as Senior Vice President of Corporate Development and Chief Financial Officer from January 2007 to June 2007. Mr. Doyle has been a member of the board of directors of Achaogen since November 2012. Mr. Doyle is a certified public accountant and holds a B.S. in Business Administration from California Polytechnic State University, San Luis Obispo, and an M.B.A. from the Haas School of Business at the University of California, Berkeley.
Michele K. Law  joined our company as Chief Revenue Officer in October 2013. Ms. Law previously worked at OpenDNS, Inc., a software security company, from October 2008 until June 2013, first as Vice President of Business Development and Sales from 2008 until 2011 and then as Chief Operating Officer from 2011 until 2013. From September 2000 to January 2008, Ms. Law served first as an associate from 2000 to 2003 and then as a principal from 2003 to 2008 at Greylock Partners, a venture capital firm. Ms. Law holds a B.S. in Electrical Engineering from Cornell University and an M.B.A. from Harvard Business School.
Randall J. Womack joined our company as Chief Operating Officer in November 2010. Mr. Womack served as the Chief Information Officer and Vice President, Operations, of SuccessFactors, Inc., a software company, from April 2003 to November 2010. From May 2000 to April 2003, Mr. Womack served as a partner in the Fast Forward Group at Greylock Partners, a venture capital firm. From 1997 to May 2000, Mr. Womack served as Chief Information Officer of Digital River, Inc., an e-commerce company. Mr. Womack attended the University of Texas, Austin, where he studied Finance.
Other Key Employees
Naomi L. Allen joined our company as Vice President, Business Development and Strategy in April 2008 and has served as our Vice President, Product since April 2013. Ms. Allen also previously served as our Vice President, Operations from January 2010 to January 2011, Vice President, Sales and Professional Services from January 2011 to January 2013 and Vice President, Product Strategy and Customer Success from January 2013 to April 2013. Prior to joining our company, Ms. Allen worked at McKinsey & Company, a management consulting firm, from 2004 to 2008, Microsoft Corporation, a software technology company, in 2002 and Deloitte Consulting, a management consulting firm, from 1996 to 2000. Ms. Allen holds a B.A. in International Studies from University of North Carolina—Chapel Hill and an M.B.A. from Stanford University, Graduate School of Business.
Nita Sommers joined our company in December 2009 and has served as Vice President, Corporate and Business Development since that time. Prior to joining our company, Ms. Sommers served as an Associate and then an Engagement Manager at McKinsey & Company, a management consulting firm, from 2007 to December 2009. Ms. Sommers also worked at Athenahealth, Inc., provider of cloud-based electronic health record services from 2000 to 2004 and at McKesson Corporation, a health care services and information technology company, from 2004 to 2005. Ms. Sommers holds a B.A. in Psychology from Harvard University and an M.B.A. from Stanford University, Graduate School of Business.
Non-Employee Directors
Bryan Roberts co-founded our company in 2008, served as a director from 2008 until 2010 and has served as the Chairman of our board of directors since 2010. Dr. Roberts joined Venrock, a
 
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venture capital firm, in 1997, where he currently serves as a Partner. Dr. Roberts currently serves as the Chairman of the board of directors of Ironwood Pharmaceuticals, Inc. and as a director of Zeltiq Aethetics, Inc. as well as several private companies. Dr. Roberts previously served on the board of directors of Athenahealth, Inc. from 1999 to 2009, XenoPort, Inc. from 2000 to 2007 and Sirna Therapeutics, Inc. from 2003 to 2007. From 1989 to 1992, Dr. Roberts worked in the corporate finance department of Kidder, Peabody & Co., a brokerage company. Dr. Roberts received a B.A. in Chemistry from Dartmouth College and a Ph.D. in Chemistry and Chemical Biology from Harvard University. Dr. Roberts’ experiences with facilitating the growth of health care, health care IT and biotechnology companies, together with his historical perspective of our company, make him uniquely qualified to serve on our board of directors.
David Ebersman has served as a director since July 2011. Mr. Ebersman has served as the Chief Financial Officer of Facebook, Inc., a social utility company, since September 2009. Prior to joining Facebook, Mr. Ebersman served in various positions at Genentech, Inc., a biotechnology company, including as its Chief Financial Officer from March 2005 until January 2006 and as Chief Financial Officer and Executive Vice President from January 2006 until April 2009, when Genentech was acquired by F. Hoffmann-La Roche Ltd. Prior to joining Genentech, Mr. Ebersman was a research analyst at Oppenheimer & Company, Inc., an investment company. Mr. Ebersman has been a member of the board of directors of Ironwood Pharmaceuticals, Inc. since July 2009. Mr. Ebersman holds an A.B. in International Relations and Economics from Brown University. Mr. Ebersman brings to our board fifteen years of business, manufacturing, strategic planning and financial experience with Genentech, one of the original biotechnology companies.
Robert Kocher has served as a director since July 2011. Dr. Kocher has been a partner at Venrock, a venture capital firm, since July 2011. Additionally, Dr. Kocher has served as a Senior Fellow at the Schaeffer Center for Healthcare Policy at the University of Southern California since 2013 and a Non-Resident Senior Fellow at The Brookings Institution since 2010. Dr. Kocher served in various positions, including as a principal, at McKinsey and Company, a management consulting firm, from July 2002 to January 2009, where he led the McKinsey Center for Health Reform in 2010, and rejoined as principal from September 2010 to July 2011. From January 2009 to July 2010, Dr. Kocher served as special assistant to President Obama for health care and economic policy and as a member of the National Economic Council. His responsibilities included shaping the Affordable Care Act to reduce cost, improve quality and reform health care delivery systems. Dr. Kocher holds a B.A. in Political Science and a B.S. in Zoology from University of Washington and an M.D. from George Washington University. Dr. Kocher brings to our board broad experience in policymaking in the health care sector.
Ann Lamont has served as a director since August 2009. Ms. Lamont has been with Oak Investment Partners, a venture capital firm, since 1982, serving as an associate from 1982 to 1986, as a General Partner from 1986 to 2006 and as a Managing Partner since 2006. She currently leads the health care and payment services teams at Oak Investment Partners. Prior to joining Oak Investment Partners, Ms. Lamont served as a research associate with Hambrecht & Quist. Ms. Lamont currently serves on the boards of Acculynk, Inc., Benefitfocus, Inc., HCA Holdings, Inc., Independent Living Solutions, LLC, Precision for Medicine Holdings, Inc., Radisphere National Radiology Group, Inc. and xG Health Solutions, Inc. Ms. Lamont has also served on the boards of athenahealth, Inc., Clarient, Inc., NetSpend Corporation and PharMEDium Healthcare Corporation. Additionally, in March 2013, Ms. Lamont completed a five-year term on the Stanford University Board of Trustees, and she has also served on the Executive Board of the National Venture Capital Association. Earlier in Ms. Lamont’s career, she developed a number of successful biopharmaceutical investments, including Cephalon, Inc., ViroPharma Incorporated and Esperion Therapeutics, Inc. Ms. Lamont holds a B.A. in Political Science from Stanford University. Ms. Lamont’s experience analyzing corporate performance as a venture capitalist and managing her firm’s investments in private companies, knowledge of the health care and payment services industries and service on multiple boards of directors bring to our board important skills
 
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related to corporate finance, oversight of management and strategic positioning and qualify her to serve as one of our directors.
Christopher P. Michel  has served as a director since May 2009. Mr. Michel is the founder and managing director of Nautilus Ventures, a venture capital firm, which he founded in December 2008. Prior to Nautilus, Mr. Michel founded Affinity Labs, a software company that builds social networking sites for niche groups, in 2006 and served as its Chief Executive Officer until it was acquired by Monster Worldwide in October of 2008. Mr. Michel also founded Military.com in September of 1999, a website that provides a community and information to members of the military, and served as its CEO and Chairman until it was acquired by Monster Worldwide in 2004. Mr. Michel is a former Naval Flight Officer in the U.S. Navy. Mr. Michel is also currently a member of the boards of directors of Dale Carnegie & Associates, Inc., Kixeye, International Data Group, Inc., Tugboat Yards Inc. and 3D Robotics Inc., each of which is a privately-held entity. Mr. Michel earned his B.A. in Political Science from the University of Illinois at Urbana-Champaign and holds a M.B.A. from the Harvard Business School. Mr. Michel’s brings to our board experience as a venture capitalist investing in a large number of technology and health companies, director on multiple boards of directors, as well as founder of several internet companies.
David B. Singer has held various positions at Maverick Capital Ltd. or its affiliates, an investment firm, since December 2004, including managing director of MCL California, Inc. since March 2014. Mr. Singer is responsible for the firm’s private investment activities globally. Previously, Mr. Singer served as the founding President and Chief Executive Officer of three health care companies. He has also served on the board of directors of Pacific Biosciences of California, Inc. from December 2006 to May 2013, Affymetrix, Inc. from 1993 to 2008, Corcept Therapeutics Incorporated from 1998 to 2008 and Oscient Pharmaceuticals Corporation from 2004 to 2006. Mr. Singer has also served as the senior financial officer of two publicly traded companies. Mr. Singer serves on the boards of several private health care companies. Mr Singer was appointed by the Mayor of San Francisco to be a health commissioner and a member of the San Francisco General Hospital Joint Conference Committee in July 2013. Mr. Singer holds a B.A. in History from Yale University and an M.B.A. from Stanford University. Mr. Singer brings to our board his executive experience and his financial and accounting experience with both public and private companies.
Election of Officers
Our executive officers are elected by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers.
Board of Directors
Subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances, our board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors currently consists of seven members. Our current certificate of incorporation and voting agreement among certain investors, including entities associated with Venrock, Maverick Capital, Fidelity Investments and Oak Investment Partners XII, L.P. and The Wellcome Trust, entered into in connection with our convertible preferred stock financings, provide for one director to be elected by holders of our common stock, one director to be elected by holders of our Series A convertible preferred stock and Series A-1 convertible preferred stock, one director to be elected by holders of our Series B convertible preferred stock and one director to be elected by holders of our Series C convertible preferred stock and three directors to be elected by the holders of the outstanding shares of convertible preferred stock and common stock. Dr. Colella is the designee of our common stock, Dr. Roberts is the designee of our Series A and Series A-1 convertible preferred stock, Ms. Lamont is the designee of our Series B convertible preferred stock, Mr. Singer is
 
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the designee of our Series C convertible preferred stock and Mr. Michel, Dr. Kocher and Mr. Ebersman are the designees of our outstanding shares of convertible preferred stock and common stock.
The voting agreement and the provisions of our certificate of incorporation by which Dr. Colella, Dr. Roberts, Dr. Kocher, Ms. Lamont and Mr. Singer were elected will terminate in connection with this offering and there will be no contractual obligations regarding the election of our directors. Each of our current directors will continue to serve until the election and qualification of his or her successor, or his or her earlier death, resignation or removal.
Classified Board of Directors
Our restated certificate of incorporation and restated bylaws that will be in effect upon the completion of this offering provide for a classified board of directors consisting of three classes of directors, each serving staggered three-year terms. Our directors will be divided among the three classes as follows:
 
 	Ÿ	 	Class I directors, whose initial term will expire at the first annual meeting of stockholders to be held after the closing of the initial public offering, will consist of Dr. Colella and Dr. Roberts;	
 
 	Ÿ	 	Class II directors, whose initial term will expire at the second annual meeting of stockholders to be held after closing of the initial public offering, will consist of Dr. Kocher and Mr. Michel; and	
 
 	Ÿ	 	Class III directors, whose initial term will expire at the third annual meeting of stockholders to be held after closing of the initial public offering, will consist of Mr. Ebersman, Ms. Lamont and Mr. Singer.	
Directors in a particular class will be elected for three-year terms at the annual meeting of stockholders in the year in which their terms expire. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal.
Our restated certificate of incorporation and restated bylaws that will be in effect upon the completion of this offering authorize only our board of directors to fill vacancies on our board of directors, subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances. Any additional directorships resulting from an increase in the authorized number of directors would be distributed among the three classes so that, as nearly as possible, each class would consist of one-third of the authorized number of directors.
The classification of our board of directors may have the effect of delaying or preventing changes in our control or management. See “Description of Capital Stock—Anti-Takeover Provisions—Restated Certificate of Incorporation and Restated Bylaw Provisions.”
Director Independence
Our Class B common stock will be listed on the New York Stock Exchange. The listing rules of this stock exchange generally require that a majority of the members of a listed company’s board of directors be independent within specified periods following the closing of an initial public offering. Our board of directors has determined that none of our non-employee directors has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the rules of the New York Stock Exchange.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of
 
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the audit committee, the board of directors, or any other board committee: accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries. We intend to satisfy the audit committee independence requirements of Rule 10A-3 as of the closing of this offering.
Board Committees
Our board of directors has established an audit committee, a compensation committee and a nominating and governance committee. Each of these committees will have the composition and responsibilities described below as of the closing of this offering. Members serve on these committees until their resignations or until otherwise determined by our board of directors.
Audit Committee
Our audit committee is comprised of Ms. Lamont, Mr. Michel and Mr. Singer. Mr. Singer is the chairman of our audit committee. The composition of our audit committee meets the requirements for independence under the current New York Stock Exchange and SEC rules and regulations. Each member of our audit committee is financially literate. In addition, our board of directors has determined that Mr. Singer is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act. This designation does not impose on him any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board of directors. Our audit committee is directly responsible for, among other things:
 
 	Ÿ	 	selecting a firm to serve as the independent registered public accounting firm to audit our financial statements;	
 
 	Ÿ	 	ensuring the independence of the independent registered public accounting firm;	
 
 	Ÿ	 	discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results;	
 
 	Ÿ	 	establishing procedures for employees to submit anonymously concerns about questionable accounting or audit matters;	
 
 	Ÿ	 	considering the adequacy of our internal controls and internal audit function;	
 
 	Ÿ	 	reviewing material related party transactions or those that require disclosure; and	
 
 	Ÿ	 	approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.	
Compensation Committee
Our compensation committee is comprised of Dr. Roberts and Mr. Ebersman. Mr. Ebersman is the chairman of our compensation committee. The composition of our compensation committee meets the requirements of independence under the New York Stock Exchange rules and regulations. Each member of this committee is an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code. Our compensation committee is responsible for, among other things:
 
 	Ÿ	 	reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers;	
 
 	Ÿ	 	reviewing and approving, or recommending that our board of directors approve, the compensation of our directors;	
 
 	Ÿ	 	administering our stock and equity incentive plans;	
 
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 	Ÿ	 	reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and	
 
 	Ÿ	 	reviewing our overall compensation philosophy.	
Nominating and Governance Committee
Our nominating and governance committee is comprised of Dr. Roberts and Mr. Singer. Dr. Roberts is the chairman of our nominating and governance committee. The composition of our nominating and governance committee meets the requirements of independence under the New York Stock Exchange rules and regulations. Our nominating and governance committee is responsible for, among other things:
 
 	Ÿ	 	identifying and recommending candidates for membership on our board of directors;	
 
 	Ÿ	 	reviewing and recommending our corporate governance guidelines and policies;	
 
 	Ÿ	 	reviewing proposed waivers of the code of conduct for directors and executive officers;	
 
 	Ÿ	 	overseeing the process of evaluating the performance of our board of directors; and	
 
 	Ÿ	 	assisting our board of directors on corporate governance matters.	
Compensation Committee Interlocks and Insider Participation
None of our executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee during the year ended December 31, 2013.
In addition, in April 2012, we sold 345,064 shares of Series D convertible preferred stock for an aggregate purchase price of $2,083,000 to entities affiliated with Venrock. Bryan Roberts, a member of our compensation committee, is affiliated with these entities.
In connection with the sales of our convertible preferred stock, we entered into our investors’ rights agreement that grants customary preferred stock rights to all of our major preferred stock investors, including the entities affiliated with Mr. Roberts. These rights include registration rights, information rights and other similar rights. All of these rights, other than the registration rights, will terminate upon the closing of this offering. For a description of the registration rights, see “Description of Capital Stock—Registration Rights.”
Code of Conduct
Our board of directors plans to adopt a code of conduct that will apply to all of our employees, officers and directors. The full text of our code of conduct will be posted on the Investor Relations section of our website at www.castlighthealth.com. The reference to our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus. We intend to disclose future amendments to our code of conduct, or waivers of these provisions, that are required to be disclosed under the rules of the SEC or the New York Stock Exchange on our website or in public filings.
 
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Director Compensation
From time to time, we have granted stock options to non-employee directors for their service on our board of directors. In 2013 we did not pay any fees to, reimburse any expense of (other than customary expenses in connection with the attendance of meetings of our board of directors), make any equity awards or non-equity awards to, or pay any other compensation to any of our non-employee directors. Dr. Colella, who is our Chief Executive Officer, receives no compensation for his service as a director. The compensation received by Dr. Colella as an employee is described in “Executive Compensation—2013 Summary Compensation Table.”
On February 24, 2014, our compensation committee approved options to purchase 25,000 shares of our Class B common stock pursuant to our 2014 Equity Incentive Plan to be granted on the pricing date of our offering to each of our non-employee directors with an exercise price per share equal to the initial public offering price in this offering. Each option award will have a vesting commencement date of the pricing date of our initial public offering and shall vest in equal monthly installments over 12 months. On February 28, 2014, our compensation committee approved an additional option to purchase 35,000 shares of Class B common stock to be granted to Mr. Michel with an exercise price per share equal to the initial public offering price in this offering. The option award will be fully vested as of the pricing date of our initial public offering.
We have adopted a policy with respect to the compensation payable to our non-employee directors, which will become effective upon the closing of this offering. Under this policy, each non-employee director will be eligible to receive compensation for his or her service consisting of annual cash retainers and equity awards. Our non-employee directors will receive the following annual retainers for their service:

Position	  	Retainer	 	
Board Member	  	$	30,000	  	
Audit Committee Chair	  	 	16,000	  	
Compensation Committee Chair	  	 	10,000	 	
Nominating and Corporate Governance Committee Chair	  	 	6,000	 	
Audit Committee Member	  	 	8,000	 	
Compensation Committee Member	  	 	5,000	 	
Nominating and Corporate Governance Committee Member	  	 	3,000	 	
Lead Independent Director, if any	  	 	15,000	  	
Independent Board Chair	  	 	30,000	  	
Equity awards for non-employee directors will consist of (i) an initial equity award consisting of options to purchase 50,000 shares of our Class B common stock, upon first appointment to our board of directors, and (ii) annual equity awards consisting of options to purchase 25,000 shares of our Class B common stock. The stock option awards will be granted with an exercise price equal to the fair market value of our Class B common stock on the date of grant.
Initial option awards will vest in equal monthly installments over 36 months after the grant date, subject to continued service as a director. Annual option awards will vest in equal monthly installments over 12 months, subject to continued service as a director.
Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our current certificate of incorporation and bylaws, as well as the certificate of incorporation and bylaws that will become effective upon the completion of this offering.
 
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 EXECUTIVE COMPENSATION
Overview
As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. For the year ended December 31, 2013, our named executive officers are:
 
 	Ÿ	 	Giovanni M. Colella, our founder and Chief Executive Officer;	
 
 	Ÿ	 	Dena Bravata, our Chief Medical Officer and Head of Products;	
 
 	Ÿ	 	John C. Doyle, our Chief Financial Officer;	
 
 	Ÿ	 	Michele K. Law, our Chief Revenue Officer; and	
 
 	Ÿ	 	Randall J. Womack, our Chief Operating Officer.	
We refer to these individuals in this section as our “named executive officers.”
2013 Summary Compensation Table
The following table sets forth information regarding the total compensation for services rendered in all capacities that was awarded to, earned by and paid to our named executive officers for the year ended December 31, 2013.

Name and Principal Position	  	Salary
($)	 	  	Option
Awards ($) (1)	 	  	Non-Equity
Incentive Plan
Compensation
($) (2)	 	  	All Other
Compensation
($)	 	 	Total
($)	 	
Giovanni M. Colella
Chief Executive Officer	  	 	200,000	  	  	 	30,542	  	  	 	220,000	  	  	 	11,119	(3)  	 	 	461,661	  	
Dena Bravata
Chief Medical Officer and Head of Products	  	 	241,650	  	  	 	283,681	  	  	 	84,578	  	  	 	—	  	 	 	697,410	  	
John C. Doyle
Chief Financial Officer,
Vice President, Treasurer	  	 	250,000	  	  	 	567,666	  	  	 	96,250	  	  	 	—	  	 	 	1,001,411	  	
Michele K. Law
Chief Revenue Officer	  	 	23,526	  	  	 	3,252,979	  	  	 	—	  	  	 	—	  	 	 	3,276,505	  	
Randall J. Womack
Chief Operating Officer, Vice President	  	 	250,000	  	  	 	155,103	  	  	 	165,000	  	  	 	25,921	(4)  	 	 	746,025	  	

(1)	The amounts reported in the Option Awards column represent the grant date fair value of the stock options granted to the named executive officers during 2013, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 13 to the audited consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the named executive officers upon exercise of the options.	
(2)	The amount reported in the Non-Equity Incentive Plan Compensation column represents the cash incentive bonus paid to Dr. Colella, Dr. Bravata, Mr. Doyle and Mr. Womack under our incentive bonus plan for executive officers. Each of Dr. Collela, Dr. Bravata, Mr. Doyle and Mr. Womack was eligible to receive incentive cash bonuses, based on our achievement of strategic objectives relating to customer acquisition and retention, health plan relationships and customer savings and engagement metrics, as determined by the compensation committee. Based on our achievement of the above objectives, the compensation committee approved a bonus to Dr. Collela of 110% of base salary. Dr. Bravata’s target bonus was 35%	
 
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 	of base salary, Mr. Doyle’s target bonus was 35% of base salary and Mr. Womack’s target bonus was 60% of base salary. Based on our achievement of the above objectives, the compensation committee approved payment of 100% of Dr. Bravata’s target bonus, 110% of Mr. Doyle’s target bonus and 110% of Mr. Womack’s target bonus. Ms. Law was not a participant in the bonus plan because she did not become a full-time employee until January 2014.	
(3)	The amounts reported in the All Other Compensation column represents (i) reimbursement of $3,360 for expenses in connection with attendance at a company event; (ii) a reimbursement of $5,194 for housing rental payments, following Dr. Colella’s relocation to San Francisco from New York; and (iii) tax payment reimbursements of $2,564 in connection with Dr. Colella’s housing rental payments described in clause (ii).	
(4)	The amounts reported in the All Other Compensation column represents (i) reimbursement of $7,721 for expenses in connection with attendance at a company event and (ii) value of $18,200 received by Mr. Womack while staying in the Corporate Apartment equal to the rental and utility payments for 2013, prorated for the number of days that Mr. Womack used the Corporate Apartment.	
Employment Agreements
We have entered into offer letters with each of our named executive officers, except for Dr. Colella. The offer letters generally provide for at-will employment, the initial terms and conditions of employment of each named executive officer, including base salary, target annual bonus opportunity , an initial stock option grant, and eligibility to participate in our employee benefit plans. None of the offer letters provide for cash severance payments upon the named executive officer’s termination of employment with us. Each of these arrangements was negotiated on our behalf by our CEO and the Compensation Committee. The material terms of these offer letters are summarized below. These summaries are qualified in their entirety by reference to the actual text of the offer letters, which are filed as exhibits to the registration statement of which this prospectus is a part. In addition, each of our named executive officers has executed a form of our standard confidential information and invention assignment agreement. Any potential payments and benefits due upon a termination of employment or a change in control of us are further described below in “—Potential Payments upon Termination or Change in Control.”
Dr. Bravata
Dr. Bravata joined us as our Clinical Content Manager in April 2009. Pursuant to an offer letter dated January 27, 2010, Dr. Bravata became our Chief Medical Officer. Dr. Bravata’s offer letter sets forth the principal terms and conditions of her employment, including her annual base salary of $200,000 (for the period beginning June 1, 2010). In addition, her offer letter provides for the grant of a time-based stock option to purchase 461,486 shares of our Class A common stock under our Amended and Restated 2008 Stock Incentive Plan. The option was granted with an exercise price equal to the fair value of our common stock on the date of grant and is subject to a four-year vesting schedule as described in more detail in “—2013 Outstanding Equity Awards at Fiscal Year-End Table” below.
Mr. Doyle
Pursuant to an offer letter dated September 6, 2012, Mr. Doyle serves as our Chief Financial Officer. Mr. Doyle’s offer letter sets forth the principal terms and conditions of his employment, including his initial annual base salary of $250,000, an annual target cash bonus opportunity of 35% of his base salary (which is earned based on our achievement of specified performance goals and objectives, as well as Mr. Doyle’s performance relative to one or more performance objectives established by Mr. Doyle and our CEO, the achievement of which is evaluated by us). In addition, Mr. Doyle was offered a loan of up to $250,000. The disbursement of the loan was not requested by the date set forth in the offer letter and therefore the lending arrangement was not entered into between Mr. Doyle and us. Mr. Doyle’s offer letter also provides for the grant of a time-based stock option to purchase 870,000 shares of our Class A common stock under our 2008 Stock Incentive Plan. The option was granted with an exercise price equal to the fair value of our common stock on the date of grant and vests over four years as described in more detail in “—2013 Outstanding Equity Awards at Fiscal Year-End Table” below.
 
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Ms. Law
Pursuant to an offer letter dated September 6, 2013, Ms. Law serves as our Chief Revenue Officer. Ms. Law’s offer letter sets forth the principal terms and conditions of her employment, including an initial annual base salary of $250,000, an annual target cash bonus opportunity of 60% of her base salary (which is earned based on our achievement of specified performance goals and objectives, as well as Ms. Law’s performance relative to one or more performance objectives established by her and our COO, the achievement of which is evaluated by us). In addition, Ms. Law’s offer letter provides for the grant of (i) a time-based stock option to purchase 810,000 shares of our Class A common stock under our 2008 Stock Incentive Plan and (ii) a performance-based stock option to purchase 90,000 shares of our Class A common stock under our 2008 Stock Incentive Plan. Ms. Law’s time-based stock option was granted with an exercise price equal to the fair market value of our common stock on the date of grant and vests over four years as described in more detail in “—2013 Outstanding Equity Awards at Fiscal Year-End Table” below.
Mr. Womack
Pursuant to an offer letter dated September 28, 2010, Mr. Womack serves as our Chief Operating Officer. Mr. Womack’s offer letter sets forth the principal terms and conditions of his employment, including an initial annual base salary of $250,000 and a target annual cash bonus opportunity of up to 60% of his base salary (based on the achievement of specified milestones established by our board of directors). In addition, Mr. Womack’s offer letter provides for the grant of (i) a time-based stock option to purchase 1,264,864 shares of our Class A common stock under our 2008 Stock Incentive Plan and (ii) a performance-based stock option grant to purchase up to 158,108 shares of our Class A common stock under our 2008 Stock Incentive Plan. Mr. Womack’s time-based stock option was granted with an exercise price equal to the fair value of our common stock on the date of grant and is subject to a four-year vesting schedule as described in more detail in “—2013 Outstanding Equity Awards at Fiscal Year-End Table” below.
Potential Payments upon Termination or Change in Control
Under the terms of our 2008 Stock Incentive Plan, each named executive officer who is terminated other than for cause may exercise any previously-vested stock options that he or she held at the time of termination for a period of three months following the termination date. If a named executive officer is terminated for cause, all options held by such officer terminate as of the date of termination. For more information about the named executive officers’ outstanding equity awards as of December 31, 2013, see “—2013 Outstanding Equity Awards at Fiscal Year-End Table” below.
In October 2009, the board of directors approved a double trigger acceleration policy applicable to all employee stock options, including options granted to the named executive officers. Under the double trigger acceleration policy, if any named executive officer’s employment is terminated without good cause or if the named executive officer resigns for good reason (each as defined in the policy) within three months before or twelve months following the consummation of a change of control (as defined in the policy), any unvested stock options held by such named executive officer will vest as to 100% of the unvested shares of our Class A common stock subject to the options.
 
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2013 Outstanding Equity Awards at Fiscal Year-End Table
The following table presents, for each of the named executive officers, information regarding outstanding stock options held as of December 31, 2013.

Name	 	Grant
Date	 	 	Vesting
Commencement
Date	 	 	Option Awards—
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable	 	 	Option Awards—
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable	 	 	Option
Awards—
Option
Exercise
Price
($)	 	 	Option
Awards—
Option
Expiration
Date	 	
Giovanni M. Colella	 	 	7/12/12	  	 	 	7/12/12	  	 	 	46,500	  	 	 	—	  	 	 	1.09	  	 	 	7/11/22	  	
	 	 	4/9/13	  	 	 	4/9/13	  	 	 	48,000	  	 	 	—	  	 	 	1.12	  	 	 	4/8/23	  	
Dena Bravata	 	 	10/23/09	  	 	 	10/15/09	  	 	 	15,105	  	 	 	—	  	 	 	0.32	  	 	 	10/22/19	  	
	 	 	2/10/10	  	 	 	2/1/10	  	 	 	298,043	  	 	 	19,229	(1)  	 	 	0.32	  	 	 	2/09/20	  	
	 	 	2/14/11	  	 	 	2/14/11	  	 	 	200,972	  	 	 	93,787	(2)  	 	 	0.80	  	 	 	2/13/21	  	
	 	 	4/9/13	  	 	 	4/1/13	  	 				 	 	56,000	(3)  	 	 	1.12	  	 	 	4/8/23	  	
	 	 	9/25/13	  	 	 	4/9/13	  	 	 	26,666	  	 	 	133,334	(2)  	 	 	1.29	  	 	 	9/24/23	  	
John C. Doyle	 	 	2/12/13	  	 	 	11/15/12	  	 	 	188,502	  	 	 	681,498	(3)  	 	 	1.12	  	 	 	2/11/23	  	
Michele K. Law	 	 	10/25/13	  	 	 	10/7/13	  	 				 	 	810,000	(3)  	 	 	2.35	  	 	 	10/24/23	  	
	 	 	10/25/13	  	 	 	(4)	  	 				 	 	90,000	(4)  	 	 	2.35	  	 	 	10/24/23	  	
Randall J. Womack	 	 	11/9/10	  	 	 	11/8/10	  	 	 	974,999	  	 	 	289,865	(1)  	 	 	0.79	  	 	 	11/8/20	  	
	 	 	11/9/10	  	 	 	(5)	  	 	 	158,108	  	 				 	 	0.79	  	 	 	11/8/20	  	
	 	 	2/12/13	  	 	 	1/31/13	  	 				 	 	230,000	(6)  	 	 	1.12	  	 	 	2/11/23	  	

(1)	This stock option vests with respect to 25% of the underlying shares of our Class A common stock on the one-year anniversary of the holder’s vesting commencement date and, with respect to the remaining underlying shares, the holder’s right to exercise his or her stock option vests in thirty-six substantially equal installments upon the completion of each additional consecutive month of service thereafter.	
(2)	This stock option vests with respect to 2.0833% of the underlying shares of our Class A common stock in forty-eight substantially equal installments upon the completion of each consecutive month of service following the vesting commencement date.	
(3)	This stock option vests (a) with respect to 20% of the underlying shares of our Class A common stock on the one-year anniversary of the holder’s vesting commencement date, (b) during the second year following the commencement date, in twelve installments each consisting of 1.667% of the underlying shares of our Class A common stock upon the holder’s completion of each additional consecutive month of service and (c) with respect to the remaining underlying shares, in 24 substantially equal installments upon the completion of each additional consecutive month of service thereafter.	
(4)	This stock option vests on January 31 of each year beginning in 2015, subject to a determination by us of the holder’s achievement of new bookings and customer retention objectives for the immediately prior fiscal year, based on the operation plan for such year, as approved by our board of directors, as follows (i) 25% of the underlying shares will vest if actual new bookings and customer retention in the prior fiscal year equal or exceed 100% of the Operation Plan; or (ii) 12.5% of the underlying shares will vest if actual new bookings and customer retention in the prior fiscal year equal or exceed 90% of the Operation Plan; or (iii) 0% of the underlying shares will vest if actual new bookings and customer retention in the prior fiscal year are less than 90% of the Operation Plan.	
(5)	This stock option vests immediately as to (i) 50% of the underlying shares of our Class A common stock if we achieve $25 million in total bookings prior to January 1, 2015 and (ii) the remaining 50% of the underlying shares if we achieve $50 million in total bookings prior to January 1, 2015. The Compensation Committee determined that effective December 31, 2013, the performance obligation was met.	
(6)	This stock option vests with respect to 4.1667% of the underlying shares of our Class A common stock in 24 substantially equal installments upon the completion of each consecutive month of service following the second anniversary of the vesting commencement date.	
On February 24, 2014, our compensation committee approved the following options to purchase shares of our Class B common stock pursuant to our 2014 Equity Incentive Plan with an exercise price per share equal to the initial public offering price in this offering to be granted on the pricing date of our offering: 450,000 shares of our Class B common stock to Dr. Colella, 150,000 shares of our Class B common stock to Dr. Bravata, 200,000 shares of our Class B common stock to Mr. Doyle and 120,000 shares of our Class B common stock to Mr. Womack. The vesting commencement date of each of these options is the pricing date of our initial public offering and shall vest in equal monthly installments over 12 months.
 
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Employee Benefit Plans  
Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life and accidental death and dismemberment insurance plans, short-term and long-term disability insurance, flexible spending accounts, in each case, on the same basis as all of our other U.S. employees. We do not provide perquisites or personal benefits to our named executive officers.
401(k) Plan
We sponsor a retirement savings plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, containing a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. U.S. employees are generally eligible to participate in the plan on the first day of the calendar month following the employees’ date of hire. Participants may make pre-tax and certain after-tax (Roth) deferral contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax elective deferrals under the Code. Participants who are 50 years of age or older may contribute additional amounts based on the statutory limits for catch-up contributions. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee’s interest in his or her pre-tax deferrals is 100% vested when contributed. The plan permits all eligible Plan participants to contribute between 1% and 90% of eligible compensation, on a pre-tax or Roth basis, into their accounts.
Pension Benefits
We do not maintain any pension benefit plans.
Nonqualified Deferred Compensation
We do not maintain any nonqualified deferred compensation plans.
Equity Incentive Plans
The principal features of our equity incentive plans are summarized below. These summaries are qualified in their entirety by reference to the actual text of the plans, which are filed as exhibits to the registration statement of which this prospectus is a part.
Amended and Restated 2008 Stock Incentive Plan
Our 2008 Stock Incentive Plan was adopted by our board of directors and approved by our stockholders on April 3, 2008 and was last amended on October 25, 2013. The 2008 Stock Incentive Plan provides for the grant of both incentive stock options, which qualify for favorable tax treatment to their recipients under Section 422 of the Code, and nonstatutory stock options, as well as for the issuance of shares of restricted stock. We may grant incentive stock options only to our employees. We may grant nonstatutory stock options to our employees, directors and consultants. The exercise price of each stock option must be at least equal to the fair market value of our Class A common stock on the date of grant. The exercise price of incentive stock options granted to 10% stockholders must be at least equal to 110% of the fair market value of our Class A common stock on the date of grant. The maximum permitted term of options granted under our 2008 Stock Incentive Plan is 10 years, except that the maximum permitted term of incentive stock options granted to 10% stockholders is five years. In the event of our merger or consolidation, the 2008 Stock Incentive Plan provides that awards may be assumed, substituted or cashed-out. Our board of directors, in its sole discretion, may provide in any option agreement for the full vesting of such options. All unexercised options shall terminate upon the consummation of the merger or consolidation
 
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if they are not assumed or substituted. In addition, in October 2009, the board of directors approved a double trigger acceleration policy applicable to all employee stock options, including options granted to the named executive officers. Under the double trigger acceleration policy, if any employee’s employment is terminated without good cause or if the employee resigns for good reason (each as defined in the policy) within three months before or twelve months following the consummation of a change of control (as defined in the policy), any unvested stock options held by such employee will vest as to 100% of the unvested shares of our Class A common stock subject to the options.
As of December 31, 2013, we had reserved 23,321,062 shares of our Class A common stock for issuance under our 2008 Stock Incentive Plan. As of December 31, 2013, options to purchase 5,108,627 of these shares had been exercised (of which 347,887 shares have been repurchased and returned to the pool of shares reserved for issuance under the 2008 Stock Incentive Plan), options to purchase 16,455,404 of these shares remained outstanding and 2,104,918 of these shares remained available for future grant. The options outstanding as of December 31, 2013 had a weighted-average exercise price of $1.22 per share. We will cease issuing awards under our 2008 Equity Incentive Plan upon the implementation of our 2014 Equity Incentive Plan. Our 2014 Equity Incentive Plan will be effective on the date immediately prior to the date of this prospectus. As a result, we will not grant any additional options under the 2008 Stock Incentive Plan following that date, and the 2008 Stock Incentive Plan will terminate at that time. However, any outstanding options granted under the 2008 Equity Incentive Plan will remain outstanding, subject to the terms of our 2008 Stock Incentive Plan and stock option agreements, until such outstanding options are exercised or until they terminate or expire by their terms. Options granted under the 2008 Stock Incentive Plan have terms similar to those described below with respect to options to be granted under our 2014 Equity Incentive Plan.
2014 Equity Incentive Plan
We have adopted a 2014 Equity Incentive Plan that will become effective on the date immediately prior to the date of this prospectus and will serve as the successor to our 2008 Stock Incentive Plan. We reserved 15,000,000 shares of our Class B common stock to be issued under our 2014 Equity Incentive Plan. The number of shares reserved for issuance under our 2014 Equity Incentive Plan will increase automatically on January 1 of each of 2015 through 2024 by the number of shares equal to 5% of the aggregate number of outstanding shares of our Class A and Class B common stock as of the immediately preceding December 31. However, our board of directors may reduce the amount of the increase in any particular year. In addition, the following shares will again be available for grant and issuance under our 2014 Equity Incentive Plan:
 
 	Ÿ	 	shares subject to options or stock appreciation rights granted under our 2014 Equity Incentive Plan that cease to be subject to the option or stock appreciation right for any reason other than exercise of the option or stock appreciation right;	
 
 	Ÿ	 	shares subject to awards granted under our 2014 Equity Incentive Plan that are subsequently forfeited or repurchased by us at the original issue price;	
 
 	Ÿ	 	shares subject to awards granted under our 2014 Equity Incentive Plan that otherwise terminate without shares being issued;	
 
 	Ÿ	 	shares surrendered, cancelled or exchanged for cash or a different award (or combination thereof);	
 
 	Ÿ	 	shares of Class A common stock reserved but not issued or subject to outstanding grants under our 2008 Stock Incentive Plan on the date of this prospectus will be available for grant and issuance under our 2014 Equity Incentive Plan as shares of Class B common stock;	
 
 	Ÿ	 	shares of Class A common stock issuable upon the exercise of options or subject to other awards under our 2008 Stock Incentive Plan prior to the date of this prospectus that cease to	
 
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 	be subject to such options or other awards by forfeiture or otherwise after the date of this prospectus will be available for grant and issuance under our 2014 Equity Incentive Plan as shares of Class B common stock;	
 
 	Ÿ	 	shares of Class A common stock issued under our 2008 Stock Incentive Plan that are forfeited or repurchased by us after the date of this prospectus will be available for grant and issuance under our 2014 Equity Incentive Plan as shares of Class B common stock; and	
 
 	Ÿ	 	shares of Class A common stock subject to awards under our 2008 Stock Incentive Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award will be available for grant and issuance under our 2014 Equity Incentive Plan as shares of Class B common stock.	
Our 2014 Equity Incentive Plan authorizes the award of stock options, restricted stock awards (RSAs), stock appreciation rights (SARs), restricted stock units (RSUs), performance awards and stock bonuses. No person will be eligible to receive more than 5,000,000 shares in any calendar year under our 2014 Equity Incentive Plan other than a new employee of ours, who will be eligible to receive no more than 10,000,000 shares under the plan in the calendar year in which the employee commences employment. No more than 55,000,000 shares will be issued pursuant to the exercise of incentive stock options.
Our 2014 Equity Incentive Plan will be administered by our compensation committee, all of the members of which are outside directors as defined under applicable federal tax laws, or by our board of directors acting in place of our compensation committee. The compensation committee will have the authority to construe and interpret our 2014 Equity Incentive Plan, grant awards and make all other determinations necessary or advisable for the administration of the plan.
Our 2014 Equity Incentive Plan will provide for the grant of awards to our employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors, directors and advisors are natural persons that render services not in connection with the offer and sale of securities in a capital-raising transaction. The exercise price of stock options must be at least equal to the fair market value of our Class B common stock on the date of grant.
We anticipate that in general, options will vest over a four-year period. Options may vest based on time or achievement of performance conditions. Our compensation committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of options granted under our 2014 Equity Incentive Plan is ten years.
An RSA is an offer by us to sell shares of our Class B common stock subject to restrictions, which may vest based on time or achievement of performance conditions. The price (if any) of an RSA will be determined by the compensation committee. Unless otherwise determined by the compensation committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us.
SARs provide for a payment, or payments, in cash or shares of our Class B common stock, to the holder based upon the difference between the fair market value of our Class B common stock on the date of exercise and the stated exercise price up to a maximum amount of cash or number of shares. SARs may vest based on time or achievement of performance conditions.
RSUs represent the right to receive shares of our Class B common stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance conditions. If an RSU has not been forfeited, then on the date specified in the
 
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RSU agreement, we will deliver to the holder of the restricted stock unit whole shares of our Class B common stock (which may be subject to additional restrictions), cash or a combination of our Class B common stock and cash.
Performance shares are performance awards that cover a number of shares of our Class B common stock that may be settled upon achievement of the pre-established performance conditions in cash or by issuance of the underlying shares. These awards are subject to forfeiture prior to settlement because of termination of employment or failure to achieve the performance conditions. No participant will be eligible to receive more than $10,000,000 in performance awards in any calendar year.
Stock bonuses may be granted as additional compensation for service or performance and, therefore, will not be issued in exchange for cash.
In the event there is a specified type of change in our capital structure without our receipt of consideration, such as a stock split, appropriate adjustments will be made to the number of shares reserved under our 2014 Equity Incentive Plan, the maximum number of shares that can be granted in a calendar year and the number of shares and exercise price, if applicable, of all outstanding awards under our 2014 Equity Incentive Plan.
Awards granted under our 2014 Equity Incentive Plan may not be transferred in any manner other than by will or by the laws of descent and distribution or as determined by our compensation committee. Unless otherwise permitted by our compensation committee, stock options may be exercised during the lifetime of the optionee only by the optionee or the optionee’s guardian or legal representative. Options granted under our 2014 Equity Incentive Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us, for a period of 12 months in the case of death or for a period of six months in the case of disability, or such longer period as our compensation committee may provide. Options generally terminate immediately upon termination of employment for cause.
In the event of a merger or consolidation, any and all outstanding awards may be assumed or replaced by the successor corporation. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to participants as was provided to stockholders. Outstanding awards that are not assumed, substituted or cashed out will accelerate in full upon the merger or consolidation. In addition, in the event of specified change in control transactions, our compensation committee may accelerate the vesting of awards (a) immediately upon the occurrence of the transaction, whether or not the award is continued, assumed or substituted by a surviving corporation or its parent in the transaction, or (b) in connection with a termination of a participant’s service following such a transaction. In addition, if any employee, including any named executive officer, is subject to a termination of employment without cause or if the employee resigns for good reason (each as defined in our 2014 Equity Incentive Plan) within three months before or twelve months following the consummation of a corporate transaction (as defined in our 2014 Equity Incentive Plan), any unvested time-based stock options, RSAs, SARs, or RSUs held by such employee will vest as to 100% of the unvested shares of our Class B common stock subject to such award. In the event of a merger or consolidation, the vesting of all awards granted to non-employee directors shall accelerate and such awards shall become exercisable in full.
Our 2014 Equity Incentive Plan will terminate ten years from the date our board of directors adopts the plan, unless it is terminated earlier by our board of directors. Our board of directors may amend or terminate our 2014 Equity Incentive Plan at any time. Our board of directors generally may amend our 2014 Equity Incentive Plan, without stockholder approval unless required by applicable law.
 
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2014 Employee Stock Purchase Plan
We have adopted a 2014 Employee Stock Purchase Plan that will become effective on the date immediately prior to the date of this prospectus that will enable eligible employees to purchase shares of our Class B common stock at a discount following the date of this offering. Purchases will be accomplished through participation in discrete offering periods. Our 2014 Employee Stock Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Code. We initially reserved 6,000,000 shares of our Class B common stock for issuance under our 2014 Employee Stock Purchase Plan. The number of shares reserved for issuance under our 2014 Employee Stock Purchase Plan will increase automatically on the first day of each of the first nine calendar years following the first offering date by the number of shares equal to 1% of the total outstanding shares of the aggregate number of outstanding shares of our Class A and Class B common stock as of the immediately preceding December 31st (rounded down to the nearest whole share). However, our board of directors may reduce the amount of the increase in any particular year. The aggregate number of shares issued over the term of our 2014 Employee Stock Purchase Plan will not exceed 36,000,000 shares of our Class B common stock.
Our compensation committee will administer our 2014 Employee Stock Purchase Plan. Our employees generally are eligible to participate in our 2014 Employee Stock Purchase Plan; our compensation committee may in its discretion elect to exclude employees who work less than 20 hours per week or less than five months in a calendar year. Employees who are 5% stockholders, or would become 5% stockholders as a result of their participation in our 2014 Employee Stock Purchase Plan, are ineligible to participate in our 2014 Employee Stock Purchase Plan. We may impose additional restrictions on eligibility. Under our 2014 Employee Stock Purchase Plan, eligible employees will be able to acquire shares of our Class B common stock by accumulating funds through payroll deductions. Our eligible employees will be able to select a rate of payroll deduction between 1% and 15% of their base cash compensation. We will also have the right to amend or terminate our 2014 Employee Stock Purchase Plan at any time. Our 2014 Employee Stock Purchase Plan will terminate on the tenth anniversary of the last day of the first purchase period, unless it is terminated earlier by our board of directors.
When an initial purchase period commences, our employees who meet the eligibility requirements for participation in that purchase period will automatically be granted a nontransferable option to purchase shares in that purchase period. For subsequent purchase periods, new participants will be required to enroll in a timely manner. Once an employee is enrolled, participation will be automatic in subsequent purchase periods. An employee’s participation automatically ends upon termination of employment for any reason.
The first offering period will begin on a date approved by our board of directors or compensation committee. Each subsequent purchase period will be for six months (commencing each May 1 and November 1).
No participant will have the right to purchase our shares in an amount, when aggregated with purchase rights under all our employee stock purchase plans that are also in effect in the same calendar year(s), that has a fair market value of more than $25,000, determined as of the first day of the applicable purchase period, for each calendar year in which that right is outstanding. In addition, no participant will be permitted to purchase more than 2,000 shares during any one purchase period or such lesser amount determined by our compensation committee. The purchase price for shares of our Class B common stock purchased under our 2014 Employee Stock Purchase Plan will be 85% of the lesser of the fair market value of our Class B common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of each purchase period in the applicable offering period.
 
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If we experience a change in control transaction each outstanding right to purchase shares under our 2014 Employee Stock Purchase Plan will be assumed or an equivalent option substituted by the successor corporation. In the event that the successor corporation refuses to assume or substitute the outstanding purchase rights, any offering period that commenced prior to the closing of the proposed change in control transaction will be shortened and terminated on a new purchase date. The new purchase date will occur prior to the closing of the proposed change in control transaction and our 2014 Employee Stock Purchase Plan will then terminate on the closing of the proposed change in control.
Our 2014 Employee Stock Purchase Plan will terminate ten years from the first purchase date under the plan, unless it is terminated earlier by our board of directors. Our board of directors may amend or terminate our 2014 Employee Stock Purchase Plan at any time. Our board of directors generally may amend our 2014 Employee Stock Purchase Plan, without stockholder approval unless required by applicable law.
Limitations on Liability and Indemnification Matters
Our restated certificate of incorporation that will become effective upon the closing of this offering contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the Delaware General Corporation Law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:
 
 	Ÿ	 	any breach of the director’s duty of loyalty to us or our stockholders;	
 
 	Ÿ	 	any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;	
 
 	Ÿ	 	unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or	
 
 	Ÿ	 	any transaction from which the director derived an improper personal benefit.	
Our restated certificate of incorporation and our restated bylaws that will become effective upon the closing of this offering require us to indemnify our directors and officers to the maximum extent not prohibited by the Delaware General Corporation Law and allow us to indemnify other employees and agents as set forth in the Delaware General Corporation Law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted.
We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers and certain of our key employees, in addition to the indemnification provided for in our restated bylaws. These agreements, among other things, require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties fines and settlement amounts actually and reasonably incurred by such director, officer or key employee in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which the person provides services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.
We believe that these charter provisions and indemnification agreements are necessary to attract and retain qualified persons such as directors, officers and key employees. We also maintain directors’ and officers’ liability insurance.
 
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The limitation of liability and indemnification provisions in our restated certificate of incorporation and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling us, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the executive officer and director compensation arrangements discussed above under “Executive Compensation,” below we describe transactions since January 1, 2011 to which we have been a participant, in which the amount involved in the transaction exceeds or will exceed $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Series D Convertible Preferred Stock Financing
In April 2012, we sold an aggregate of 16,565,721 shares of our Series D convertible preferred stock at a purchase price of $6.03656 per share for an aggregate purchase price of approximately $100 million. Each share of our Series D preferred stock will convert automatically into one share of our Class A common stock upon the completion of this offering.
The purchasers of our Series D convertible preferred stock are entitled to specified registration rights. For additional information, see “Description of Capital Stock—Registration Rights.” The following table summarizes the Series D convertible preferred stock purchased by members of our board of directors and persons who hold more than 5% of our outstanding capital stock.

Name of Stockholder	  	Shares of
Series D
Convertible
Preferred
Stock	 	  	Total Purchase
Price	 	
Entities affiliated with Fidelity Investment (1)	  	 	7,322,048	  	  	$	44,199,982	  	
The Wellcome Trust	  	 	1,656,572	  	  	 	9,999,996	  	
Oak Investment Partners XII, L.P. (2)	  	 	345,064	  	  	 	2,083,000	  	
Maverick Fund II, Ltd (3)	  	 	345,064	  	  	 	2,083,000	  	
Entities affiliated with Venrock (4)	  	 	345,064	  	  	 	2,083,000	  	

(1)	Consists of shares purchased by (i) Variable Insurance Products Fund IV: Health Care Portfolio, (ii) Fidelity Central Investment Portfolios LLC: Fidelity Health Care Central Fund, (iii) Fidelity Advisor Series VII: Fidelity Advisor Health Care Fund, (iv) Fidelity Select Portfolios: Health Care Portfolio, (v) Fidelity Selected Portfolios: Medical Equipment and Systems Portfolio, (vi) Fidelity Contrafund: Fidelity Advisor New Insights Fund and (vii) Fidelity Mt. Vernon Street Trust: Fidelity Growth Company Fund.	
(2)	Ann Lamont, a member of our board of directors, is a Managing Partner of Oak Investment Partners, which has voting and dispositive power with regard to shares held by Oak Investment Partners XII, L.P. The terms of the purchase by Oak Investment Partners XII, L.P. were the same as those made available to unaffiliated purchasers.	
(3)	David B. Singer, a member of our board of directors, is a managing director of MCL California, Inc., an affiliate of Maverick Capital Ltd., which has voting and dispositive power with regard to shares held by Maverick Fund II, Ltd. The terms of the purchase by Maverick Fund II, Ltd. were the same as those made available to unaffiliated purchasers.	
(4)	Consists of shares purchased by (i) Venrock Associates V, L.P., (ii) Venrock Entrepreneurs Fund V, L.P. and (iii) Venrock Partners V, L.P. Bryan Roberts, a member of our board of directors, is a member of the general partners of Venrock Associates V, L.P., Venrock Entrepreneurs Fund V, L.P. and Venrock Partners V, L.P., and as such, he may be deemed to have voting and dispositive power with regard to the shares held by such entities. The terms of the purchases by the Venrock entities were the same as those made available to unaffiliated purchasers.	
Investors’ Rights Agreement
We have entered into our Amended and Restated Investors’ Rights Agreement, dated as of April 26, 2012, or investors’ rights agreement, with certain holders of our convertible preferred stock, including entities with which certain of our directors are affiliated. These stockholders are entitled to rights with respect to the registration of their shares following this offering under the Securities Act. For a description of these registration rights, see “Description of Capital Stock—Registration Rights.”
 
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Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our restated bylaws will require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see “Executive Compensation—Limitations on Liability and Indemnification Matters.”
Equity Grants to Executive Officers and Directors
We have granted stock options to our executive officers and directors, as more fully described in the sections entitled “Executive Compensation” and “Management—Director Compensation,” respectively.
Review, Approval or Ratification of Transactions with Related Parties
Our policy and the charters of our audit committee and our nominating and governance committee to be effective upon the closing of this offering, require that any transaction with a related party that must be reported under applicable rules of the SEC (other than compensation-related matters) must be reviewed and approved or ratified by the audit committee, unless the related party is, or is associated with, a member of that committee, in which event the transaction must be reviewed and approved by the nominating and governance committee. These committees have not adopted policies or procedures for review of, or standards for approval of, related party transactions but intend to do so in the future.
 
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 PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of December 31, 2013, and as adjusted to reflect the sale of Class B common stock offered by us in this offering, for:
 
 	Ÿ	 	each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of Class A common stock or Class B common stock;	
 
 	Ÿ	 	each of our directors;	
 
 	Ÿ	 	each of our named executive officers; and	
 
 	Ÿ	 	all of our directors and executive officers as a group.	
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
Applicable percentage ownership prior to this offering is based on 75,469,707 shares of Class A common stock and no shares of Class B common stock outstanding as of December 31, 2013 and assumes the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 64,475,633 shares of our Class A common stock. Applicable percentage ownership after this offering is based on 75,469,707 shares of Class A common stock and 11,100,000 shares of Class B common stock outstanding immediately after the closing of this offering (assuming no exercise of the underwriters’ option to purchase additional shares of Class B common stock). We have assumed that exercisable stock options as of December 31, 2013 will be exercisable for Class A common stock. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding (as shares of Class A common stock) all shares of common stock subject to options held by that person or entity that were exercisable on December 31, 2013 or that would have become exercisable within 60 days of December 31, 2013. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Castlight Health, Inc., Two Rincon Center, 121 Spear Street, Suite 300, San Francisco, California 94105.

 	 	Shares Beneficially Owned
Prior to this Offering	 	 	% of Total
Voting
Power
Before this
Offering (18)	 	 	Shares Beneficially
Owned After this Offering	 	 	% of Total
Voting
Power After
this
Offering (18)	 	
 	 	Class A	 	 	Class B	 	 			 	Class A	 	 	Class B	 	 			
Name of Beneficial Owner	 	Shares	 	 	    %	 	 	Shares	 	 	    %	 	 			 	Shares	 	 	    %	 	 	Shares	 	 	    %	 	 			
Named Executive Officers and Directors	 				 				 				 				 				 				 				 				 				 				
Giovanni M. Colella (1)	 	 	6,216,023	  	 	 	8.2	  	 	 	—	  	 	 	—	  	 	 	8.2	  	 	 	6,216,023	  	 	 	8.2	  	 	 	—	  	 	 	—	  	 	 	7.2	  	
Dena Bravata (2)	 	 	804,354	  	 	 	1.1	  	 	 	—	  	 	 	—	  	 	 	1.1	  	 	 	804,354	  	 	 	1.1	  	 	 	—	  	 	 	—	  	 	 	*	  	
John C. Doyle (3)	 	 	217,508	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	 	 	217,508	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	
Michele K. Law (4)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Randall J. Womack (5)	 	 	1,267,015	  	 	 	1.7	  	 	 	—	  	 	 	—	  	 	 	1.7	  	 	 	1,267,015	  	 	 	1.7	  	 	 	—	  	 	 	—	  	 	 	1.4	  	
David Ebersman (6)	 	 	256,922	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	 	 	256,922	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	
Robert Kocher (7)	 	 	214,715	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	 	 	214,715	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	
Ann Lamont (8)	 	 	11,917,744	  	 	 	15.8	  	 	 	—	  	 	 	—	  	 	 	15.8	  	 	 	11,917,744	  	 	 	15.8	  	 	 	—	  	 	 	—	  	 	 	13.8	  	
Christopher P. Michel (9)	 	 	362,904	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	 	 	362,904	  	 	 	*	  	 	 	—	  	 	 	—	  	 	 	*	  	
Bryan Roberts (10)	 	 	15,568,571	  	 	 	20.6	  	 	 	—	  	 	 	—	  	 	 	20.6	  	 	 	15,568,571	  	 	 	20.6	  	 	 	—	  	 	 	—	  	 	 	18.0	  	
David B. Singer (11)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
All executive officers and directors as a group (11 persons) (12)	 	 	36,825,756	  	 	 	47.2	  	 	 	—	  	 	 	—	  	 	 	47.2	  	 	 	36,825,756	  	 	 	47.2	  	 	 	—	  	 	 	—	  	 	 	41.3	  	
 
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 	 	Shares Beneficially Owned
Prior to this Offering	 	 	% of Total
Voting
Power
Before this
Offering (18)	 	 	Shares Beneficially
Owned After this Offering	 	 	% of Total
Voting
Power After
this
Offering (18)	 	
 	 	Class A	 	 	Class B	 	 			 	Class A	 	 	Class B	 	 			
Name of Beneficial Owner	 	Shares	 	 	    %	 	 	Shares	 	 	    %	 	 			 	Shares	 	 	    %	 	 	Shares	 	 	    %	 	 			
5% Stockholders	 				 				 				 				 				 				 				 				 				 				
Entities affiliated with Venrock (13)	 	 	15,568,571	  	 	 	20.6	  	 	 	—	  	 	 	—	  	 	 	20.6	  	 	 	15,568,571	  	 	 	20.6	  	 	 	—	  	 	 	—	  	 	 	18.0	  	
Oak Investment Partners XII, L.P. (14)	 	 	11,917,744	  	 	 	15.8	  	 	 	—	  	 	 	—	  	 	 	15.8	  	 	 	11,917,744	  	 	 	15.8	  	 	 	—	  	 	 	—	  	 	 	13.8	  	
Entities affiliated with Maverick Capital (15)	 	 	7,733,386	  	 	 	10.2	  	 	 	—	  	 	 	—	  	 	 	10.2	  	 	 	7,733,386	  	 	 	10.2	  	 	 	—	  	 	 	—	  	 	 	8.9	  	
Entities affiliated with Fidelity Investments (16)	 	 	7,412,898	  	 	 	9.8	  	 	 	—	  	 	 	—	  	 	 	9.8	  	 	 	7,412,898	  	 	 	9.8	  	 	 	—	  	 	 	—	  	 	 	8.6	  	
The Wellcome Trust Limited as Trustee of the Wellcome Trust (17)	 	 	6,568,646	  	 	 	8.7	  	 	 	—	  	 	 	—	  	 	 	8.7	  	 	 	6,568,646	  	 	 	8.7	  	 	 	—	  	 	 	—	  	 	 	7.6	  	

*	Less than 1%	
(1)	Consists of (a) 5,954,856 shares of Class A common stock held directly by the Colella Revocable Living Trust, of which Dr. Colella is a co-trustee, (b) 166,667 shares of Class A common stock held directly by Dr. Colella and (c) 94,500 shares of Class A common stock issuable to Dr. Colella upon exercise of stock options exercisable within 60 days after December 31, 2013. On February 6, 2014, the Colella Revocable Living Trust transferred 850,000 shares to Dr. Colella. 600,000 such shares were then subsequently transferred to The Giovanni Matteo Colella Grantor Retained Annuity Trust - I, of which Mr. Colella is trustee and sole beneficiary and 250,000 such shares were simultaneously transferred to The Giovanni Matteo Colella Grantor Retained Annuity Trust - II, of which Dr. Colella is trustee and sole beneficiary. Following these transfers, Dr. Colella retains voting and investment power over these shares. On February 6, 2014, the Colella Revocable Living Trust also transferred 850,000 shares to Dr. Colella’s spouse, which shares were then subsequently transferred to grantor retained annuity trusts that Dr. Colella’s spouse is trustee and sole beneficiary. Following these transfers, Dr. Colella does not retain voting power or investment power over these shares. The share numbers in the above table do not reflect these transfers.	
(2)	Consists of (a) 216,976 shares of Class A common stock held directly by Dr. Bravata, (b) 7,298 shares of Class A common stock held directly by The Bravata-Petterson Family Trust, of which Dr. Bravata is a trustee, and (c) 580,080 shares of Class A common stock issuable to Dr. Bravata upon exercise of stock options exercisable within 60 days after December 31, 2013. Dr. Bravata also holds 263,056 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(3)	Consists of 217,508 shares of Class A common stock issuable to Mr. Doyle upon exercise of stock options exercisable within 60 days after December 31, 2013. Mr. Doyle also holds 652,492 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(4)	Ms. Law holds 900,000 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(5)	Consists of (a) 81,205 shares of Class A common stock held directly by Mr. Womack and (b) 1,185,810 shares of Class A common stock issuable to Mr. Womack upon exercise of stock options exercisable within 60 days after December 31, 2013. Mr. Womack also holds 467,162 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(6)	Consists of (a) 28,571 shares of Class A common stock held directly by Mr. Ebersman and (b) 228,351 shares of Class A common stock issuable to Mr. Ebersman upon exercise of stock options exercisable within 60 days after December 31, 2013. Mr. Ebersman also holds 32,622 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(7)	Consists of (a) 40,733 shares of Class A common stock held directly by Mr. Kocher and (b) 173,982 shares of Class A common stock issuable to Mr. Kocher upon exercise of stock options exercisable within 60 days after December 31, 2013. Mr. Kocher also holds 86,991 stock options which are subject to vesting conditions not expected to occur within 60 days of December 31, 2013.	
(8)	Consists of 11,917,744 shares of Class A common stock held directly by Oak Investment Partners XII, L.P., as reflected in note 14 below. Ms. Lamont is a Managing Partner of Oak Investment Partners.	
(9)	Consists of (a) 285,515 shares of Class A common stock held directly by Mr. Michel (b) 1,000 shares of Class A common stock held directly by Nautilus Ventures LLC, and (c) 76,389 shares of Class A common stock issuable to Mr. Michel upon exercise of stock options exercisable within 60 days after December 31, 2013. Mr. Michel is the Managing Director of Nautilus Ventures, and as such, he may be deemed to have voting and investment power with respect to these shares.	
(10)	Consists of (a) 14,047,522 shares of Class A common stock, held directly by Venrock Associates V, L.P., (b) 330,053 shares of Class A common stock, held directly by Venrock Entrepreneurs Fund V, L.P. and (c) 1,190,996 shares of Class A common stock, held directly by Venrock Partners V, L.P., in each case as reflected in note 13 below. Dr. Roberts is a member of the general partners of Venrock Associates V, L.P., Venrock Entrepreneurs Fund V, L.P. and Venrock Partners V, LP, and as such, he may be deemed to have voting and investment power with respect to these shares.	
(11)	Maverick Fund II, Ltd. holds 1,147,800 shares of Class A common stock, Maverick Fund Private Investments, Ltd. holds 2,252,252 shares of Class A common stock and Maverick USA Private Investments, LLC holds 4,333,334 shares of Class A common stock. Mr. Singer is a Managing Director at MCL California, Inc., an affiliate of Maverick Capital Ltd., which is an investment advisor registered under Section 203 of the Investment Advisers Act of 1940. While Maverick Capital Ltd. may be deemed to have investment discretion over the shares held by Maverick Fund Private Investments, Ltd. and Maverick USA Private Investments, LLC. in each case as reflected in note 15 below, Mr. Singer does not have voting and dispositive power with regard to these shares.	
(12)	Includes 2,556,620 shares of Class A common stock issuable upon exercise of stock options exercisable within 60 days of December 31, 2013.	
 
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(13)	Consists of (a) 14,047,522 shares of Class A common stock, held directly by Venrock Associates V, L.P., (b) 330,053 shares of Class A common stock, held directly by Venrock Entrepreneurs Fund V, L.P. and (c) 1,190,996 shares of Class A common stock, held directly by Venrock Partners V, L.P. Dr. Roberts is a member of the general partners of Venrock Associates V, L.P., Venrock Entrepreneurs Fund V, L.P. and Venrock Partners V, LP, and as such, he may be deemed to have voting and investment power with respect to these shares. The address of the entities affiliated with Venrock is 3340 Hillview Avenue, Palo Alto, CA 94304.	
(14)	Consists of 11,917,744 shares of Class A common stock held directly by Oak Investment Partners XII, L.P. Ann H. Lamont, Bandel L. Carano, Edward F. Glassmeyer, Fredric W. Harman, Iftikar A. Ahmed, Grace A. Ames, Gerald R. Gallagher and Warren B. Riley collectively serve as Managing Members of Oak Associates XII, LLC, the General Partner of Oak Investment Partners XII, L.P. Such Managing Members have shared voting and investment control over all of the shares held by Oak Investment Partners XII, L.P. The address of Oak Investment Partners XII, L.P. is Three Pickwick Plaza, Suite 302, Greenwich, CT 06830.	
(15)	Consists of (a) 1,147,800 shares of Class A common stock held directly by Maverick Fund II, Ltd. (b) 2,252,252 shares of Class A common stock held directly by Maverick Fund Private Investments, Ltd. and (c) 4,333,334 shares of Class A common stock held directly by Maverick USA Private Investments, LLC. Maverick Capital, Ltd. is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 and, as such, may be deemed to have beneficial ownership of the shares held by Maverick Fund II., Ltd, Maverick Fund Private Investments, Ltd. and Maverick USA Private Investments, LLC through the investment discretion it exercises over these accounts. Maverick Capital Management, LLC is the general partner of Maverick Capital, Ltd. Lee S. Ainslie III is the manager of Maverick Capital Management, LLC who possesses sole investment discretion, including the ability to vote and dispose of the shares, pursuant to Maverick Capital Management, LLC’s regulations. The address for the entities affiliated with Maverick Capital, Ltd. is 300 Crescent Court, 18th Floor, Dallas, TX 75201.	
(16)	Consists of (a) 336,800 shares of Class A common stock held directly by Fidelity Advisor Series VII: Fidelity Advisor Health Care Fund, (b) 700,500 shares of Class A common stock held directly by Fidelity Central Investment Portfolios LLC: Fidelity Health Care Central Fund, (c) 1,325,100 shares of Class A common stock held directly by Fidelity Contrafund: Fidelity Advisor New Insights Fund, (d) 2,070,648 shares of Class A common stock held directly by Fidelity Mt. Vernon Street Trust: Fidelity Growth Company Fund, (e) 1,875,650 shares of Class A common stock held directly by Fidelity Select Portfolios: Health Care Portfolio, (f) 999,300 shares of Class A common stock held directly by Fidelity Select Portfolios: Medical Equipment and Systems Portfolio, and (g) 104,900 shares of Class A common stock held directly by Variable Insurance Products Fund IV: Health Care Portfolio. The address for the entities affiliated with Fidelity Investments, or the Fidelity Entities, is 82 Devonshire Street, V13H, Boston, MA 02109. Fidelity Management & Research Company, or FMRC, a wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of all of the shares owned by the Fidelity Entities as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Edward C. Johnson 3d and FMR LLC, through its control of FMRC, and each of the Fidelity Entities, has sole power to dispose of all of the shares owned by such entity. Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d, Chairman of FMR LLC, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Entities, which power resides with the Fidelity Entities’ Boards of Trustees. FMRC carries out the voting of the shares under written guidelines established by the Fidelity Entities’ Boards of Trustees.	
(17)	Consists of 6,568,646 shares of Class A common stock held directly by The Wellcome Trust Limited as Trustee of the Wellcome Trust. William Castell, Damon Buffini, Alan Brown, Kay Davies, Michael Ferguson, Richard Hynes, Anne Johnson, Eliza Manningham-Buller, Peter Rigby and Peter Smith collectively serve as the Board of Governors of The Wellcome Trust Limited. The Board of Governors have shared voting and investment control over all of the shares held by The Wellcome Trust Limited. The address of The Wellcome Trust is 215 Euston Road, London NW1 2BE, United Kingdom.	
(18)	Percentage of total voting power represents voting power with respect to all shares of our Class A and Class B common stock, as a single class. Generally, the holders of our Class B common stock and Class A common stock are entitled to one vote per share. However, holders of our Class A common stock are entitled to ten votes per share in certain circumstances. For more information about the voting rights of our Class A and Class B common stock, see “Description of Capital Stock—Common Stock.”	
 
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 DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering and the filing of our restated certificate of incorporation, our authorized capital stock will consist of 200,000,000 shares of Class A common stock, $0.0001 par value per share, 800,000,000 shares of Class B common stock, $0.0001 par value per share, and 10,000,000 shares of undesignated preferred stock, $0.0001 par value per share. The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our restated certificate of incorporation and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.
Pursuant to the provisions of our certificate of incorporation all of our outstanding convertible preferred stock will automatically convert into Class A common stock, effective immediately prior to the completion of this offering. Assuming the conversion of all outstanding shares of our convertible preferred stock into shares of our Class A common stock, which will occur immediately prior to the completion of this offering, as of December 31, 2013, there were 75,469,707 shares of our Class A common stock outstanding, held by 131 stockholders of record, no shares of our Class B common stock outstanding and no shares of our preferred stock outstanding. Our board of directors is authorized, without stockholder approval, to issue additional shares of our capital stock.
Common Stock
Dividend Rights
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Class A and Class B common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See “Dividend Policy” above.
Voting Rights
Each share of Class A common stock and each share of Class B common stock has one vote per share, except on the following matters (in which each share of Class A common stock has ten votes per share and each share of Class B common stock has one vote per share):
 
 	Ÿ	 	adoption of a merger or consolidation agreement involving our company;	
 
 	Ÿ	 	a sale, lease or exchange of all or substantially all of our property and assets;	
 
 	Ÿ	 	a dissolution or liquidation of our company; or	
 
 	Ÿ	 	every matter, if and when any individual, entity or “group” (as such term is used in Regulation 13D of the Exchange Act) has, or has publicly disclosed (through a press release or a filing with the SEC) an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of Class A common stock and Class B common stock, combined.	
In addition, the approval of the holders of a majority of our Class A common stock, voting as a separate class, will be required for any amendment to our certificate of incorporation, other than an amendment for the purpose of increasing the authorized number of shares of Class B common stock.
 
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The holders of our Class A common stock and Class B common stock vote together as a single class, except as set forth above, or unless otherwise required by law. Delaware law could require either holders of our Class A common stock or our Class B common stock to vote separately as a single class in the following circumstances:
 
 	Ÿ	 	If we were to seek to amend our restated certificate of incorporation to increase or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposed amendment; and	
 
 	Ÿ	 	If we were to seek to amend our restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.	
We have not provided for cumulative voting for the election of directors in our restated certificate of incorporation. Accordingly, holders of a majority of the shares of our common stock will be able to elect all of our directors, except in the circumstances specified above pursuant to which Class A holders get 10 votes per share. Our restated certificate of incorporation establishes a classified board of directors, to be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
No Preemptive or Similar Rights
Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions, except for the conversion rights of our Class A common stock discussed below.
Right to Receive Liquidation Distributions
Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.
Conversion
Each outstanding share of Class A common stock is convertible at any time at the option of the holder into one share of Class B common stock. In addition, each share of Class A common stock will convert automatically into one share of Class B common stock upon any transfer, whether or not for value, except for certain transfers to affiliates of the holder.
Once converted into Class B common stock, a share of Class A common stock may not be reissued.
All the outstanding shares of Class A common stock will convert automatically into shares of Class B common stock upon the earlier of the ten year anniversary of the closing of this offering and the date that the number of shares of Class A common stock then outstanding falls below twenty percent of the number of shares of Class A common stock outstanding as of the closing of this offering.
 
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Preferred Stock
Pursuant to the provisions of our certificate of incorporation, all of our outstanding convertible preferred stock will automatically convert into shares of Class A common stock, with such conversion to be effective immediately prior to the completion of this offering. As a result, each currently outstanding share of convertible preferred stock will be converted into Class A common stock. All series of convertible preferred stock will convert at a ratio of one share of Class A common stock for each share of preferred stock.
Following this offering, no shares of preferred stock will be outstanding. Pursuant to our restated certificate of incorporation, our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue up to 10,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of our company and might adversely affect the market price of our Class B common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock.
Options
As of December 31, 2013, we had outstanding options to purchase an aggregate of 16,455,404 shares of our Class A common stock, with a weighted-average exercise price of $1.22.
Warrants
As of December 31, 2013, we had an outstanding warrant to purchase an aggregate of 115,000 shares of Class A common stock with an exercise price of $5.00 per share.
Registration Rights
Pursuant to the terms of our investors’ rights agreement, immediately following this offering, the holders of 64,475,633 shares of our Class A common stock will be entitled to rights with respect to the registration of these shares under the Securities Act, as described below. We refer to these shares collectively as registrable securities.
Demand Registration Rights
Beginning 180 days after the completion of this offering, the holders of at least a majority of the then-outstanding registrable securities may make a written request to us for the registration of all or part of the registrable securities under the Securities Act, if the amount of registrable securities to be registered would yield an aggregate offering price to the public of at least $10.0 million. We are only required to file two registration statements that are declared effective upon exercise of these demand registration rights. We may postpone the filing of a registration statement for up to 120 days in a 12-month period if our board of directors determines that the filing would be seriously detrimental to us and our stockholders, provided that we do not register any securities for our own account or any other stockholder during such 120-day period.
 
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Piggyback Registration Rights
In connection with this offering, holders of registrable securities were entitled to, and the necessary percentage of holders waived, their rights to notice of this offering and to include their registrable securities in this offering. If we register any of our securities for public sale in another offering, holders of registrable securities will have the right to include their shares in the registration statement. However, this right does not apply to a registration relating to employee benefit plans, a registration relating to a corporate reorganization, any registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the registrable securities or a registration of only common stock issuable upon conversion of debt securities that are also being registered. The underwriters of any underwritten offering will have the right to limit the number of shares registered by these holders if they determine in good faith that marketing factors require limitation, in which case the number of shares to be registered will be apportioned pro rata among these holders, according to the total amount of securities entitled to be included by each holder, or in a manner mutually agreed upon by the holders. However, in any underwriting not in connection with an initial public offering, the number of shares to be registered by these holders cannot be reduced below 25% of the total shares covered by the registration statement.
Form S-3 Registration Rights
The holders of then-outstanding registrable securities can request that we register all or part of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3 and if the aggregate price to the public of the shares offered, net of any underwriters’ discounts or commissions, is at least $1.0 million. The stockholders may only require us to effect one registration statement on Form S-3 in a 12-month period. We may postpone the filing of a registration statement on Form S-3 once during any 12-month period for a total cumulative period of not more than 120 days if our board of directors determines that the filing would be detrimental to us and our stockholders, provided that we do not register any securities for our own account or any other stockholder during such 120-day period (other than a registration relating to employee benefit plans, a registration relating to a corporate reorganization, any registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of registrable securities or a registration of only common stock issuable upon conversion of debt securities that are also being registered).
Expenses of Registration Rights
We generally will pay all expenses, other than underwriting discounts and commissions, and the reasonable fees and disbursements of one special counsel for the selling stockholders incurred in connection with the registrations described above, not to exceed $25,000.
Expiration of Registration Rights
The registration rights described above will expire, with respect to any particular holder of these rights, on the earlier of the third anniversary of the closing of this offering or when that holder can sell all of its registrable securities in a three-month period without restriction under Rule 144 of the Securities Act.
Anti-Takeover Provisions
The provisions of Delaware law, our restated certificate of incorporation and our restated bylaws, as we expect they will be in effect upon the completion of this offering, could have the effect of delaying, deferring or discouraging another person from acquiring control of our company. These provisions, which
 
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are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Delaware Law
So long as the outstanding shares of our Class A common stock represent a majority of the combined voting power of common stock, the holders of Class A common stock will effectively control any matters requesting approval of a liquidation event that is submitted to our stockholders for a vote, which will have the effect of delaying, deferring or discouraging another person from acquiring control of our company.
After such time as the shares of our Class A common stock no longer represent a majority of the combined voting power of our common stock, the provisions of Delaware law, our restated certificate of incorporation and our restated bylaws may have the effect of delaying, deferring or discouraging another person from acquiring control of our company.
We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date on which the person became an interested stockholder unless:
 
 	Ÿ	 	Prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;	
 
 	Ÿ	 	The interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or	
 
 	Ÿ	 	At or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66.67% of the outstanding voting stock that is not owned by the interested stockholder.	
Generally, a business combination includes a merger, asset or stock sale, or other transaction or series of transactions together resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
 
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Restated Certificate of Incorporation and Restated Bylaw Provisions
Our restated certificate of incorporation and our restated bylaws, as we expect they will be in effect upon the completion of this offering, include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our company, including the following:
 
 	Ÿ	 	Dual Class Stock.     As described above in “—Common Stock—Voting Rights,” our restated certificate of incorporation provides for a dual class common stock structure, which provides holders of our Class A common stock with ten votes per share and holders of our Class B common stock one vote per share in certain circumstances pertaining to change in control matters, giving holders of our Class A common stock the ability to control the outcome of matters pertaining to change in control matters, even if they own significantly less than a majority of the shares of our outstanding Class A and Class B common stock. As a result, our executive officers, directors and their affiliates will have the ability to exercise significant influence over those matters.	
 
 	Ÿ	 	Board of Directors Vacancies.     Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, our restated certificate of incorporation and restated bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management.	
 
 	Ÿ	 	Classified Board.     Our restated certificate of incorporation and restated bylaws will provide that our board is classified into three classes of directors, each with staggered three year terms. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors. See “Management—Board of Directors—Classified Board of Directors.”	
 
 	Ÿ	 	Stockholder Action; Special Meetings of Stockholders.     Our restated certificate of incorporation will provide that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our amended and restated bylaws. Our restated bylaws further will provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our Chief Executive Officer or our President, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.	
 
 	Ÿ	 	Advance Notice Requirements for Stockholder Proposals and Director Nominations.     Our restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws also will specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company.	
 
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 	Ÿ	 	No Cumulative Voting.     The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws will not provide for cumulative voting.	
 
 	Ÿ	 	Directors Removed Only for Cause.     Our restated certificate of incorporation will provide that stockholders may remove directors only for cause.	
 
 	Ÿ	 	Amendment of Charter Provisions.     Any amendment of our restated certificate of incorporation would require approval by holders of at least two-thirds of our outstanding common stock. In addition, the approval of the holders of a majority of our Class A common stock, voting as a separate class, will be required for any amendment to our certificate of incorporation, other than an amendment for the purpose of increasing the authorized number of shares of Class B common stock.	
 
 	Ÿ	 	Issuance of Undesignated Preferred Stock.     Our board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.	
 
 	Ÿ	 	Choice of Forum.     Our restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our restated certificate of incorporation to be inapplicable or unenforceable in such action.	
Listing
We have applied to list our Class B common stock on the New York Stock Exchange under the symbol “CSLT.”
Transfer Agent and Registrar
The transfer agent and registrar for our Class B common stock will be American Stock Transfer & Trust Company. The transfer agent’s address is 6201 15th Avenue, Brooklyn, New York 11219. Our shares of Class B common stock will be issued in uncertificated form only, subject to limited circumstances.
 
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 SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our Class B common stock, and we cannot predict the effect, if any, that market sales of shares of our Class B common stock or the availability of shares of our Class B common stock for sale will have on the market price of our Class B common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our Class B common stock, including shares issued upon exercise of outstanding options, in the public market following this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.
Upon the closing of this offering, we will have outstanding 75,469,707 shares of our Class A common stock and 11,100,000 shares of our Class B common stock, based on the number shares outstanding as of December 31, 2013. This includes 11,100,000 shares of Class B common stock that we are selling in this offering, which shares may be resold in the public market immediately, and assumes no additional exercise of outstanding options other than as described elsewhere in this prospectus. Of these outstanding shares, all of the 11,100,000 shares of Class B common stock sold in this offering will be freely tradable, except that any shares purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below.
The remaining 75,469,707 shares of our Class A common stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated under the Securities Act, which rules are summarized below. In addition, all of our security holders have entered into market standoff agreements with us or lock-up agreements with the underwriters under which they have agreed, subject to specific exceptions, not to sell any of our stock for at least 180 days following the date of this prospectus, as described below. As a result of these agreements and the provisions of our investors’ rights agreement described above under “Description of Capital Stock—Registration Rights,” subject to the provisions of Rule 144 or Rule 701, shares will be available for sale in the public market as follows:
 
 	Ÿ	 	Beginning on the date of this prospectus, all of the shares sold in this offering will be immediately available for sale in the public market; and	
 
 	Ÿ	 	Beginning 181 days after the date of this prospectus, 75,469,707 additional shares will become eligible for sale in the public market, of which 34,269,136 shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below.	
Lock-Up and Market Stand-Off Agreements
We, all of our directors and officers and substantially all of our security holders are, or will be, subject to lock-up agreements that, subject to exceptions described in the section entitled “Underwriting” below, prohibit them from offering for sale, selling, contracting to sell, granting any option for the sale of, transferring or otherwise disposing of any shares of our common stock, options to acquire shares of our common stock or any security or instrument related to our common stock, option or warrant, or entering into any swap, hedge or other arrangement that transfers to another any of the economic consequences of ownership of the common stock, for a period of 180 days following the date of this prospectus without the prior written consent of Goldman, Sachs & Co. and Morgan Stanley & Co. LLC. See “Underwriting.”
In addition to the restrictions contained in the lock-up agreements described above, we have entered into agreements with certain security holders, including our investors’ rights agreement and our standard form of stock option agreement, that contain certain market stand-off provisions imposing
 
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restrictions on the ability of such security holders to offer, sell, or transfer our equity securities for a period of 180 days following the date of this prospectus.
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.
In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up and market standoff agreements described above, within any three-month period, a number of shares that does not exceed the greater of:
 
 	Ÿ	 	1% of the number of shares of our Class B common stock then outstanding, which will equal approximately 111,000 shares immediately after this offering; or	
 
 	Ÿ	 	the average weekly trading volume of our Class B common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.	
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.
Stock Options
As soon as practicable after the closing of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act covering all of the shares of our common stock subject to outstanding options and the shares of our Class B common stock reserved for issuance under our stock plans. In addition, we intend to file a registration statement on Form S-8 or such other form as may be required under the Securities Act for the resale of shares of our common stock issued upon the exercise of options that were not granted under Rule 701. We expect to file this registration statement as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of sale, notice and public information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up and market standoff agreements to which they are subject.
 
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Registration Rights
We have granted demand, piggyback and Form S-3 registration rights to certain of our stockholders to sell our common stock. Registration of the sale of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. For a further description of these rights, see “Description of Capital Stock—Registration Rights.”
 
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 MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF OUR CLASS B COMMON STOCK
This section summarizes the material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of our Class B common stock by “non-U.S. holders” (as defined below) pursuant to this offering. This summary does not provide a complete analysis of all potential U.S. federal income tax considerations relating thereto. The information provided below is based upon provisions of the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions currently in effect. These authorities may change at any time, possibly retroactively, or the Internal Revenue Service (IRS), might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of our Class B common stock could differ from those described below. As a result, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS.
This summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, the potential application of the Medicare contribution tax, or tax considerations arising under U.S. federal gift and estate tax laws, except to the limited extent provided below. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
 
 	Ÿ	 	banks, insurance companies or other financial institutions;	
 
 	Ÿ	 	corporations that accumulates earnings to avoid U.S. federal income tax;	
 
 	Ÿ	 	persons subject to the alternative minimum tax;	
 
 	Ÿ	 	tax-exempt organizations or tax-qualified retirement plans;	
 
 	Ÿ	 	real estate investment trusts or regulated investment companies;	
 
 	Ÿ	 	controlled foreign corporations or passive foreign investment companies;	
 
 	Ÿ	 	persons who acquired our Class B common stock as compensation for services;	
 
 	Ÿ	 	dealers in securities or currencies;	
 
 	Ÿ	 	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;	
 
 	Ÿ	 	persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);	
 
 	Ÿ	 	certain former citizens or long-term residents of the United States;	
 
 	Ÿ	 	persons who hold our Class B common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;	
 
 	Ÿ	 	persons who do not hold our Class B common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or	
 
 	Ÿ	 	persons deemed to sell our Class B common stock under the constructive sale provisions of the Code.	
In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes is a beneficial owner of our Class B common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Accordingly, this summary does not address tax considerations applicable to partnerships that hold our Class B common stock, and partners in such partnerships should consult their tax advisors.
 
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INVESTORS CONSIDERING THE PURCHASE OF OUR CLASS B COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR CLASS B COMMON STOCK UNDER ANY FOREIGN, STATE OR LOCAL LAWS OR UNDER ANY APPLICABLE TAX TREATIES.
Non-U.S. Holder Defined
For purposes of this summary, a “non-U.S. holder” is any holder of our Class B common stock, other than a partnership, that is not:
 
 	Ÿ	 	an individual who is a citizen or resident of the United States;	
 
 	Ÿ	 	a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state therein or the District of Columbia;	
 
 	Ÿ	 	a trust if it (i) is subject to the primary supervision of a U.S. court and one of more U.S. persons have authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or	
 
 	Ÿ	 	an estate whose income is subject to U.S. income tax regardless of source.	
If you are a non-U.S. citizen that is an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For these purposes, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens. Such an individual is urged to consult his or her own tax advisor regarding the U.S. federal income tax consequences of the ownership or disposition of our Class B common stock.
Dividends
We do not expect to declare or make any distributions on our Class B common stock in the foreseeable future. If we do pay dividends on shares of our Class B common stock, however, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a non-U.S. holder’s adjusted tax basis in shares of our Class B common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of our Class B common stock. See “—Sale of Class B Common Stock.”
Any dividend paid to a non-U.S. holder on our Class B common stock that is not effectively connected with a non-U.S. holder’s conduct of a trade or business in the United States will generally be subject to U.S. withholding tax at a 30% rate. The withholding tax might not apply, however, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. You should consult your tax advisors regarding your entitlement to benefits under a relevant income tax treaty. Generally, in order for us or our paying agent to withhold tax at a lower treaty rate, a non-U.S. holder must certify its entitlement to treaty benefits. A non-U.S. holder generally can meet this certification requirement by providing a Form W-8BEN (or any successor form) or appropriate substitute form to us or our paying agent. If the non-U.S. holder holds the stock through a financial
 
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institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.
Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder, and if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States, are not subject to U.S. withholding tax. To obtain this exemption, a non-U.S. holder must provide us or our paying agent with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition to being taxed at graduated tax rates, dividends received by corporate non-U.S. holders that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.
Sale of Class B Common Stock
Subject to the discussion below regarding the Foreign Account Tax Compliance Act, non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of our Class B common stock unless:
 
 	Ÿ	 	the gain (i) is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business and (ii) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment (or, in certain cases involving individual holders, a fixed base) maintained by the non-U.S. holder in the United States (in which case the special rules described below apply);	
 
 	Ÿ	 	the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition of our Class B common stock and certain other requirements are met (in which case the gain would be subject to a flat 30% tax, or such reduced rate as may be specified by an applicable income tax treaty, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States); or	
 
 	Ÿ	 	the rules of the Foreign Investment in Real Property Tax Act (FIRPTA) treat the gain as effectively connected with a U.S. trade or business.	
The FIRPTA rules may apply to a sale, exchange or other disposition of our Class B common stock if we are, or were within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period, a “U.S. real property holding corporation,” or USRPHC. In general, we would be a USRPHC if interests in U.S. real estate comprised at least half of the value of our business assets. We do not believe that we are a USRPHC and we do not anticipate becoming one in the future. Even if we become a USRPHC, as long as our Class B common stock is regularly traded on an established securities market, such Class B common stock will be treated as U.S. real property interests only if beneficially owned by a non-U.S. holder that actually or constructively owned more than 5% of our outstanding Class B common stock at some time within the five-year period preceding the disposition.
If any gain from the sale, exchange or other disposition of our Class B common stock, (i) is effectively connected with a U.S. trade or business conducted by a non-U.S. holder and (ii) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of
 
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residence, is attributable to a permanent establishment (or, in certain cases involving individuals, a fixed base) maintained by such non-U.S. holder in the United States, then the gain generally will be subject to U.S. federal income tax at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. If the non-U.S. holder is a corporation, under certain circumstances, that portion of its earnings and profits that is effectively connected with its U.S. trade or business, subject to certain adjustments, generally would be subject also to a “branch profits tax.” The branch profits tax rate is 30%, although an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence might provide for a lower rate.
U.S. Federal Estate Tax
The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our Class B common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of residence provides otherwise.
Backup Withholding and Information Reporting
The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or failing to report interest or dividends on his returns. The backup withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign, provided they establish such exemption.
Payments to non-U.S. holders of dividends on Class B common stock generally will not be subject to backup withholding, and payments of proceeds made to non-U.S. holders by a broker upon a sale of Class B common stock will not be subject to information reporting or backup withholding, in each case so long as the non-U.S. holder certifies its nonresident status (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied) or otherwise establishes an exemption. The certification procedures to claim treaty benefits described under “—Dividends” will generally satisfy the certification requirements necessary to avoid the backup withholding tax. We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to these dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.
Under the Treasury regulations, the payment of proceeds from the disposition of shares of our Class B common stock by a non-U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies, under penalties of perjury, among other things, its status as a non-U.S. holder (and the broker does not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our Class B common stock by a non-U.S. holder made to or through a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except as noted below. Information reporting, but not
 
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backup withholding, will apply to a payment of proceeds, even if that payment is made outside of the United States, if you sell our Class B common stock through a non-U.S. office of a broker that is:
 
 	Ÿ	 	a U.S. person (including a foreign branch or office of such person);	
 
 	Ÿ	 	a “controlled foreign corporation” for U.S. federal income tax purposes;	
 
 	Ÿ	 	a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or	
 
 	Ÿ	 	a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business;	
unless the broker has documentary evidence that the beneficial owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).
Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of Class B common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act, or FATCA, will impose a U.S. federal withholding tax of 30% on certain “withholdable payments” (including U.S. source dividends and the gross proceeds from the sale or other disposition of U.S. stock) to foreign financial institutions and other non-U.S. entities that fail to comply with certain certification and information reporting requirements. The obligation to withhold under FATCA is currently expected to apply to, among other items, (i) dividends on our Class B common stock that are paid after June 30, 2014 and (ii) gross proceeds from the disposition of our Class B common stock paid after December 31, 2016.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR CLASS B COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
 
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 UNDERWRITING
We and the underwriters named below will enter into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter will severally agree to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Morgan Stanley & Co. LLC are the representatives of the underwriters.

Underwriters	  	Number of Shares	 	
Goldman, Sachs & Co.	  				
Morgan Stanley & Co. LLC	  				
Allen & Company LLC	  				
Stifel, Nicolaus & Company, Incorporated	  				
Canaccord Genuity Inc.	  				
Raymond James & Associates, Inc.	  				
	  	 	 	 	
Total	  	 	11,100,000	  	
	  	 	 	 	
The underwriters will be committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.
The underwriters will have an option to buy up to an additional 1,665,000 shares from us. They may exercise this option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase 1,665,000 additional shares.

Paid by Us	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	                	  	  	$	                	  	
Total	  	$	 	  	  	$	 	  	
We will agree with the underwriters that for a period of 180 days after the date of this prospectus, we will not (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any class of our common stock or any of our securities that are substantially similar to our common stock, including but not limited to any options or warrants to purchase shares of common stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of our common stock or such other securities, in cash or otherwise, without the prior written consent of the representatives; provided, however, that these restrictions do not apply to:
 
 	(i)	the shares of our Class B common stock to be sold in this offering;	
 
 	(ii)	our issuance of shares of our Class A or Class B common stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date of this prospectus;	
 
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 	(iii)	our issuance of shares of our Class A or Class B common stock or other securities convertible into or exercisable for shares of our Class A or Class B common stock, in each case pursuant to our employee benefit or equity incentive plans described in this prospectus;	
 
 	(iv)	the filing of a registration statement on Form S-8 or any successor form thereto with respect to the registration of securities to be offered under any of our employee benefit or equity incentive plans; or	
 
 	(v)	the issuance of shares of our Class A or Class B common stock or other securities convertible into or exercisable for shares of our Class A or Class B common stock in connection with transactions that include a commercial relationship (including without limitation, joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) or any acquisition by us or any of our subsidiaries of the securities, business, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by us in connection with such acquisition, and the issuance of any such securities pursuant to any such agreement; provided that, in the case of this clause (v), the aggregate number of shares issued shall not exceed 5% of the total aggregate number of outstanding shares of our Class A and Class B common stock immediately following the closing of this offering and we shall cause each recipient of such securities to execute and deliver to the underwriters, on or prior to the issuance of such securities, a lock-up letter, and enter stop transfer instructions with our transfer agent and registrar on such securities, which we will not waive or amend without the prior written consent of the representatives, in their sole discretion.	
In addition, our officers, directors and holders of substantially all of our common stock, and securities convertible into or exchangeable for our common stock, have agreed or will agree with the underwriters that for a period of 180 days after the date of this prospectus, they will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of (or engage in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of), or publicly disclose an intention to take any such actions with respect to, any shares of any class of our common stock, or any options or warrants to purchase any shares of any class of our common stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of any class of our common stock (including without limitation shares of our Class A common stock), whether now owned or hereinafter acquired, owned directly or with respect to which the director, officer or stockholder has beneficial ownership within the rules and regulations of the SEC. Notwithstanding the foregoing, these officers, directors and stockholders may transfer shares of any class of our common stock or securities convertible into or exchangeable for shares of any class of our common stock:
 
 	(i)	as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the lock-up restrictions;	
 
 	(ii)	to any member of their immediate family or any trust for their or their immediate family’s direct or indirect benefit, provided that the transferee agrees to be bound in writing by the lock-up restrictions, and provided further that any such transfer shall not involve a disposition for value;	
 
 	(iii)	in transactions relating to shares of our common stock or securities convertible into or exercisable for shares of common stock acquired in open market transactions after the completion of this offering;	
 
 	(iv)	in connection with the exercise of options, warrants or other rights to acquire shares of our common stock or any security convertible into or exercisable for shares of our common stock in accordance with their terms (including the settlement of restricted stock units and	
 
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 	including, in each case, by way of net exercise and/or to cover withholding tax obligations in connection with such exercise, but for the avoidance of doubt, excluding all manners of exercise that would involve a sale of any securities, whether to cover the applicable aggregate exercise price, withholding tax obligations or otherwise) pursuant to an employee benefit plan, option, warrant or other right disclosed in this prospectus, provided that any such shares issued upon exercise of such option, warrant or other right shall be subject to the lock-up restrictions;	
 
 	(v)	by will or intestate succession upon the death of the director, officer or stockholder, provided that the legatee, heir or other transferee, as the case may be, agrees to be bound in writing by the lock-up restrictions;	
 
 	(vi)	pursuant to a court order or settlement agreement related to the distribution of assets in connection with the dissolution of a marriage or civil union, provided that the transferee agrees to be bound in writing by the lock-up restrictions;	
 
 	(vii)	to us pursuant to agreements under which we have the option to repurchase such shares or a right of first refusal with respect to transfers of such shares upon termination of service of the director, officer or stockholder;	
 
 	(viii)	the conversion of our outstanding shares of preferred stock into shares of our common stock, provided that the shares of common stock received upon conversion shall be subject to the lock-up restrictions; and	
 
 	(ix)	with the prior written consent of the representatives on behalf of the underwriters;	
provided that in the case of clauses (i) through (vi) above, no filing under the Exchange Act, or any other public filing or disclosure of such transfer by or on behalf of the director, officer or stockholder shall be required or voluntarily made during the 180-day period (other than a filing on a Form 5 made after the expiration of the 180-day period and, with respect to clause (vi), other than a filing required to be made on a Form 4). In addition:
 
 	(x)	such directors, officers and stockholders may establish a trading plan pursuant to Rule 10b5-1 promulgated under the Exchange Act; provided, however, that (A) such plan does not provide for the transfer of their shares during the 180-day period, (B) no public filing or disclosure of such transfer by or on behalf of them shall be required or voluntarily made during the first 120 days following the date of this prospectus and (C) to the extent a public announcement or filing regarding the establishment of such plan shall be made during the last 60 days of the 180-day period, such public announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the 180-day period; and	
 
 	(xi)	any stockholder that is a corporation, partnership, limited liability company or other business entity may transfer its shares to (A) a direct or indirect affiliate (within the meaning set forth in Rule 405 as promulgated by the SEC under the Securities Act, including any wholly-owned subsidiary or parent entity) and (B) limited partners, members or stockholders of the stockholder; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such capital stock subject to the provisions of the lock-up agreement and there shall be no further transfer of such capital stock except in accordance with the lock-up agreement, and provided further that any such transfer shall not involve a disposition for value.	
At least two business days before the release or waiver of any lock-up restriction on the transfer of our shares by any of our directors or officers, the representatives will notify us of the impending release or waiver and we will announce the impending release or waiver through a major news service, except where the release or waiver is effected solely to permit a transfer of securities that is not for
 
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consideration and where the transferee has agreed in writing to be bound by the same lock-up agreement terms in place for the transferor.
Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of the our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.
We have applied to list our Class B common stock on the New York Stock Exchange under the symbol “CSLT.”
In connection with the offering, the underwriters may purchase and sell shares of our Class B common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our Class B common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of our Class B common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our Class B common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our Class B common stock. As a result, the price of our Class B common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $4.0 million. We have agreed to reimburse the underwriters for
 
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certain FINRA-related and other expenses incurred by them in connection with this offering in an amount up to $40,000.
We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships us, for which they received or will receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly, as collateral securing other obligations or otherwise) and/or persons and entities that we have relationships with. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
Notice to Prospectus Investors in the European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than € 43,000,000 and (3) an annual net turnover of more than € 50,000,000, as shown in its last annual or consolidated accounts;
(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or
(d) in any other circumstances which do not require the publication by our company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of
 
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sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Notice to Prospectus Investors in the United Kingdom
Each underwriter has represented and agreed that:
 
 	(a)	it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to our company; and	
 
 	(b)	it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.	
Notice to Prospectus Investors in Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to Prospectus Investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not
 
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be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
Notice to Prospectus Investors in Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
 
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 LEGAL MATTERS
The validity of the shares of Class B common stock offered by this prospectus will be passed upon for us by Fenwick & West LLP, Mountain View, California. Certain legal matters relating to the offering will be passed upon for the underwriters by Cooley LLP, Palo Alto, California.
 EXPERTS
The consolidated financial statements of Castlight Health, Inc. at December 31, 2012 and 2013, and for each of the three years in the period ended December 31, 2013, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
 WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Class B common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For further information about us and our Class B common stock offered hereby, reference is made to the registration statement and the exhibits filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and in each instance we refer you to the copy of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, NE, Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from that office. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of that website is www.sec.gov.
We currently do not file periodic reports with the SEC. Upon the closing of this offering, we will be required to file periodic reports, proxy statements and other information with the SEC pursuant to the Exchange Act. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above.
We also maintain a website at www.castlighthealth.com. Upon completion of this offering, you may access these materials at our website free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.
 
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CASTLIGHT HEALTH, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	  	 	F-2	  	
Consolidated Balance Sheets	  	 	F-3	  	
Consolidated Statements of Operations	  	 	F-5	  	
Consolidated Statements of Comprehensive Loss	  	 	F-6	  	
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit	  	 	F-7	  	
Consolidated Statements of Cash Flows	  	 	F-8	  	
Notes to Consolidated Financial Statements	  	 	F-9	  	
 
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 Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Castlight Health, Inc.
We have audited the accompanying consolidated balance sheets of Castlight Health, Inc. as of December 31, 2012 and 2013, and the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Castlight Health, Inc. at December 31, 2012 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
San Francisco, California
February 7, 2014
 
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CASTLIGHT HEALTH, INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

 	  	As of
December 31,	 	  	Pro Forma
Stockholders’
Equity as of
December 31,
2013	 	
 	  	2012	 	  	2013	 	  			
 	  	 	 	  	 	 	  	(unaudited)	 	
Assets	  				  				  				
Current assets:	  				  				  				
Cash and cash equivalents	  	$	42,534	  	  	$	25,154	  	  				
Marketable securities	  	 	77,612	  	  	 	42,017	  	  				
Accounts receivable, net	  	 	2,362	  	  	 	5,065	  	  				
Deferred commissions	  	 	1,807	  	  	 	3,648	  	  				
Prepaid expenses and other current assets	  	 	1,331	  	  	 	1,583	  	  				
	  	 	 	 	  	 	 	 	  				
Total current assets	  	 	125,646	  	  	 	77,467	  	  				
				
Property and equipment, net	  	 	1,136	  	  	 	2,631	  	  				
Restricted cash, noncurrent	  	 	101	  	  	 	101	  	  				
Deferred commissions, noncurrent	  	 	1,244	  	  	 	1,821	  	  				
Other assets	  	 	21	  	  	 	1,497	  	  				
	  	 	 	 	  	 	 	 	  				
Total assets	  	$	128,148	  	  	$	83,517	  	  				
	  	 	 	 	  	 	 	 	  				
Liabilities, convertible preferred stock and stockholders’ equity (deficit)	  				  				  				
Current liabilities:	  				  				  				
Accounts payable	  	$	2,223	  	  	$	2,536	  	  				
Accrued expenses and other current liabilities	  	 	783	  	  	 	4,998	  	  				
Accrued compensation	  	 	5,648	  	  	 	8,064	  	  				
Deferred revenue	  	 	1,603	  	  	 	6,925	  	  				
	  	 	 	 	  	 	 	 	  				
Total current liabilities	  	 	10,257	  	  	 	22,523	  	  				
				
Deferred revenue, noncurrent	  	 	2,602	  	  	 	4,548	  	  				
Other liabilities, noncurrent	  	 	254	  	  	 	373	  	  				
	  	 	 	 	  	 	 	 	  				
Total liabilities	  	 	13,113	  	  	 	27,444	  	  				
				
Commitments and contingencies	  				  				  				
Convertible preferred stock, $0.0001 par value; 64,475,662 shares authorized as of December 31, 2012 and 2013; 64,475,633 shares issued and outstanding as of December 31, 2012 and 2013 with liquidation preference of $181,000 as of December 31, 2012 and 2013; no shares authorized or issued and outstanding pro forma (unaudited)	  	 	180,423	  	  	 	180,423	  	  	$	—	  	
 
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CASTLIGHT HEALTH, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except share and per share data)

 	  	As of
December 31,	 	 	Pro Forma
Stockholders’
Equity as of
December 31,
2013	 	
 	  	2012	 	 	2013	 	 			
 	  	 	 	 	 	 	 	(unaudited)	 	
Stockholders’ equity (deficit):	  				 				 				
Class A common stock, $0.0001 par value; 88,000,000 and 95,000,000 shares authorized as of December 31, 2012 and 2013; 9,897,997 and 10,994,074 shares issued and outstanding as of December 31, 2012 and 2013 (including 887,626 and 185,000 shares subject to repurchase, legally issued and outstanding as of December 31, 2012 and 2013); 95,000,000 shares authorized pro forma (unaudited); 75,469,707 shares issued and outstanding pro forma (unaudited) (including 185,000 shares subject to repurchase)	  	 	1	  	 	 	1	  	 	 	7	  	
Class B common stock, $0.0001 par value; 88,000,000 and 95,000,000 shares authorized as of December 31, 2012 and 2013; no shares issued and outstanding as of December 31, 2012 and 2013; no shares authorized or issued and outstanding pro forma (unaudited)	  	 	—	  	 	 	—	  	 	 	—	  	
Additional paid-in capital	  	 	3,631	  	 	 	6,885	  	 	 	187,302	  	
Accumulated other comprehensive income	  	 	34	  	 	 	—	  	 	 	—	  	
Accumulated deficit	  	 	(69,054	) 	 	 	(131,236	) 	 	 	(131,236	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ equity (deficit)	  	 	(65,388	) 	 	 	(124,350	) 	 	 	56,073	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	  	$	128,148	  	 	$	83,517	  	 	$	            	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
See Notes to Consolidated Financial Statements.
 
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CASTLIGHT HEALTH, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

 	 	Year Ended December 31,	 	
 	 	        2011        	 	 	        2012        	 	 	        2013        	 	
 	 	 	 	 	 	 	 	 	 	
Revenue:	 				 				 				
Subscription	 	$	1,569	  	 	$	3,395	  	 	$	11,655	  	
Professional services	 	 	306	  	 	 	759	  	 	 	1,318	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	1,875	  	 	 	4,154	  	 	 	12,973	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenue:	 				 				 				
Cost of subscription(1)	 	 	1,210	  	 	 	3,242	  	 	 	6,246	  	
Cost of professional services(1)	 	 	1,068	  	 	 	5,286	  	 	 	11,058	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenue	 	 	2,278	  	 	 	8,528	  	 	 	17,304	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Gross loss	 	 	(403	) 	 	 	(4,374	) 	 	 	(4,331	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 				 				 				
Sales and marketing(1)	 	 	5,978	  	 	 	15,829	  	 	 	33,742	  	
Research and development(1)	 	 	10,157	  	 	 	9,718	  	 	 	15,219	  	
General and administrative(1)	 	 	3,563	  	 	 	5,212	  	 	 	9,047	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	19,698	  	 	 	30,759	  	 	 	58,008	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Operating loss	 	 	(20,101	) 	 	 	(35,133	) 	 	 	(62,339	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	 	 	181	  	 	 	129	  	 	 	157	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share, basic and diluted	 	$	(3.27	) 	 	$	(4.44	) 	 	$	(6.28	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used to compute basic and diluted net loss per share	 	 	6,093	  	 	 	7,885	  	 	 	9,895	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma net loss per share, basic and diluted (unaudited)	 				 				 	$	(0.84	) 	
	 				 				 	 	 	 	
Weighted-average shares used to compute basic and diluted pro forma net loss per share (unaudited)	 				 				 	 	74,371	  	

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

 	 	Year Ended December 31,	 	
 	 	        2011        	 	 	        2012        	 	 	        2013        	 	
 	 	 	 	 	 	 	 	 	 	
Cost of revenue:	 				 				 				
Cost of subscription	 	$	3	  	 	$	2	  	 	$	5	  	
Cost of professional services	 	 	9	  	 	 	105	  	 	 	120	  	
Sales and marketing	 	 	335	  	 	 	551	  	 	 	919	  	
Research and development	 	 	302	  	 	 	242	  	 	 	603	  	
General and administrative	 	 	333	  	 	 	411	  	 	 	780	  	
See Notes to Consolidated Financial Statements.
 
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CASTLIGHT HEALTH, INC.
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)

 	  	Year Ended December 31,	 	
 	  	        2011        	 	 	    2012    	 	 	    2013    	 	
 	  	 	 	 	 	 	 	 	 	
Consolidated Statement of Comprehensive Loss:	  				 				 				
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
Other comprehensive income (loss):	  				 				 				
Net change in unrealized gains (loss) on available-for-sale marketable securities	  	 	10	  	 	 	27	  	 	 	(34	) 	
Reclassification adjustments for net realized gains on available-for-sale marketable securities	  	 	(8	) 	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	 	2	  	 	 	27	  	 	 	(34	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	  	$	(19,918	) 	 	$	(34,977	) 	 	$	(62,216	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
See Notes to Consolidated Financial Statements.
 
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CASTLIGHT HEALTH, INC.
 CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ DEFICIT
(In thousands, except share data)

 	 	Convertible
Preferred Stock	 	 	   	 	Common Stock	 	 	Additional
Paid-In
Capital	 	 	Accumulated
Deficit	 	 	Accumulated
Other
Comprehensive
Income (loss)	 	 	Total
Stockholders’
Deficit	 	
 	 	Shares	 	 	Amount	 	 	   	 	Shares	 	 	Amount	 	 			 			 			 			
Balances as of January 1, 2011	 	 	47,909,912	  	 	$	80,572	  	 	 	 	 	8,099,237	  	 	$	1	  	 	$	747	  	 	$	(14,130	) 	 	$	5	  	 	$	(13,377	) 	
Vesting of early exercised stock options and restricted common stock	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	4	  	 	 	—	  	 	 	—	  	 	 	4	  	
Exercise of stock options	 	 	—	  	 	 	—	  	 	 	 	 	719,771	  	 	 	—	  	 	 	243	  	 	 	—	  	 	 	—	  	 	 	243	  	
Stock-based compensation	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	982	  	 	 	—	  	 	 	—	  	 	 	982	  	
Comprehensive loss:	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(19,920	) 	 	 	2	  	 	$	(19,918	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances as of December 31, 2011	 	 	47,909,912	  	 	$	80,572	  	 	 	 	 	8,819,008	  	 	$	1	  	 	$	1,976	  	 	$	(34,050	) 	 	$	7	  	 	$	(32,066	) 	
Issuance of Series D preferred stock for cash, net of issuance costs	 	 	16,565,721	  	 	 	99,851	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Vesting of early exercised stock options and restricted common stock, net	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	112	  	 	 	—	  	 	 	—	  	 	 	112	  	
Issuance of restricted stock	 	 	—	  	 	 	—	  	 	 	 	 	22,727	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Exercise of stock options, net	 	 	—	  	 	 	—	  	 	 	 	 	1,056,262	  	 	 	—	  	 	 	232	  	 	 	—	  	 	 	—	  	 	 	232	  	
Stock-based compensation	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	1,311	  	 	 	—	  	 	 	—	  	 	 	1,311	  	
Comprehensive loss:	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(35,004	) 	 	 	27	  	 	 	(34,977	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances as of December 31, 2012	 	 	64,475,633	  	 	$	180,423	  	 	 	 	 	9,897,997	  	 	$	1	  	 	$	3,631	  	 	$	(69,054	) 	 	$	34	  	 	$	(65,388	) 	
Vesting of early exercised stock options and restricted common stock	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	128	  	 	 	—	  	 	 	—	  	 	 	128	  	
Exercise of stock options, net	 	 	—	  	 	 	—	  	 	 	 	 	1,036,077	  	 	 	—	  	 	 	564	  	 	 	—	  	 	 	—	  	 	 	564	  	
Early exercise of warrant issued to third party	 				 				 	 	 	 	60,000	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Stock-based compensation	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	2,427	  	 	 	—	  	 	 	—	  	 	 	2,427	  	
Expense related to issuance of warrant	 				 				 	 	 				 				 	 	135	  	 				 				 	 	135	  	
Comprehensive loss:	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(62,182	) 	 	 	(34)	  	 	 	(62,216	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances as of December 31, 2013	 	 	64,475,633	  	 	$	180,423	  	 	 	 	 	10,994,074	  	 	$	1	  	 	$	6,885	  	 	$	(131,236	) 	 	$	—	  	 	$	(124,350	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See Notes to Consolidated Financial Statements.
 
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CASTLIGHT HEALTH, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 	  	Year Ended December 31,	 	
 	  	        2011        	 	 	        2012        	 	 	        2013        	 	
 	  	 	 	 	 	 	 	 	 	
Operating activities:	  				 				 				
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
Adjustments to reconcile net loss to net cash used in operating activities:	  				 				 				
Depreciation and amortization	  	 	179	  	 	 	231	  	 	 	633	  	
Stock-based compensation	  	 	982	  	 	 	1,311	  	 	 	2,427	  	
Amortization of deferred commissions	  	 	—	  	 	 	10	  	 	 	2,541	  	
Accretion and amortization of marketable securities	  	 	766	  	 	 	558	  	 	 	714	  	
Gain on sale of marketable securities	  	 	(8	) 	 	 	—	  	 	 	—	  	
Expense related to issuance of warrant	  	 	—	  	 	 	—	  	 	 	135	  	
Changes in operating assets and liabilities:	  				 				 				
Accounts receivable	  	 	(134	) 	 	 	(2,228	) 	 	 	(2,703	) 	
Deferred commissions	  	 	(12	) 	 	 	(3,048	) 	 	 	(4,959	) 	
Prepaid expenses and other current assets	  	 	(98	) 	 	 	(696	) 	 	 	(252	) 	
Other assets	  	 	(6	) 	 	 	5	  	 	 	(109	) 	
Accounts payable	  	 	239	  	 	 	1,075	  	 	 	868	  	
Accrued expenses and other current liabilities	  	 	(205	) 	 	 	397	  	 	 	2,892	  	
Deferred revenue	  	 	815	  	 	 	3,340	  	 	 	7,268	  	
Accrued compensation	  	 	963	  	 	 	4,619	  	 	 	2,544	  	
Other liabilities, noncurrent	  	 	(169	) 	 	 	105	  	 	 	119	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in operating activities	  	 	(16,608	) 	 	 	(29,325	) 	 	 	(50,064	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Investing activities:	  				 				 				
Restricted cash	  	 	—	  	 	 	129	  	 	 	—	  	
Purchase of property and equipment, net	  	 	(139	) 	 	 	(458	) 	 	 	(2,587	) 	
Purchase of marketable securities	  	 	(33,841	) 	 	 	(103,552	) 	 	 	(42,288	) 	
Sales of marketable securities	  	 	23,861	  	 	 	19,181	  	 	 	5,000	  	
Maturities of marketable securities	  	 	39,321	  	 	 	33,196	  	 	 	72,135	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) investing activities	  	 	29,202	  	 	 	(51,504	) 	 	 	32,260	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Financing activities:	  				 				 				
Proceeds from the exercise of stock options and warrants	  	 	243	  	 	 	232	  	 	 	864	  	
Payments of deferred offering costs	  	 	—	  	 	 	—	  	 	 	(440	) 	
Proceeds from issuance of convertible preferred stock	  	 	—	  	 	 	99,851	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by financing activities	  	 	243	  	 	 	100,083	  	 	 	424	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	 	12,837	  	 	 	19,254	  	 	 	(17,380	) 	
Cash and cash equivalents at beginning of period	  	 	10,443	  	 	 	23,280	  	 	 	42,534	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	23,280	  	 	$	42,534	  	 	$	25,154	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Noncash investing and financing activity:	  				 				 				
Vesting of early exercised stock options and restricted common stock	  	$	(4	) 	 	$	(112	) 	 	$	(128	) 	
Purchase of property and equipment, accrued but not paid	  	 	—	  	 	 	(581	) 	 	 	(122	) 	
Deferred offering costs accrued but not paid	  	 	—	  	 	 	—	  	 	 	(927	) 	
See Notes to Consolidated Financial Statements .
 
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CASTLIGHT HEALTH, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Description of Business
Castlight Health, Inc. (Castlight) is a pioneer in a new category of cloud-based software that enables enterprises to gain control over their rapidly escalating health care costs. Our Enterprise Healthcare Cloud allows our customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Our comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care cost and quality data transparent and useful. We were incorporated in the State of Delaware in January 2008 as Maria Health, Inc. In November 2008, we changed our name to Ventana Health Services, and in April 2010, we changed our name to Castlight Health, Inc. Our principal executive offices are located in San Francisco, California.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the results of Castlight and its wholly owned U.S. subsidiary.
On December 30, 2013, our board of directors and stockholders authorized a one-for-one exchange of all outstanding Class B common stock to Class A common stock. The Class B common stock is designated for issuance as part of our initial public offering. All share, per share and related information presented in these financial statements and accompanying footnotes have been retroactively adjusted to reflect the impact of this exchange.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to, the determination of the relative selling prices for our services and certain assumptions used in the valuation of our common stock and equity awards. Actual results could differ from those estimates, and such differences could be material to our consolidated financial position and results of operations.
Unaudited Pro Forma Stockholders’ Equity and Net Loss Per Share
In November 2013, our board of directors approved the filing of a registration statement relating to an initial public offering of our Class B common stock. Upon the effectiveness of the Registration Statement, all of the outstanding shares of convertible preferred stock (Preferred Stock) will automatically convert into shares of Class A common stock. The December 31, 2013 unaudited pro forma stockholders’ equity data has been prepared assuming the conversion of the Preferred Stock outstanding into 64,475,633 shares of Class A common stock. Unaudited pro forma net loss per share for the year ended December 31, 2013 has been computed to give effect to the automatic conversion of the Preferred Stock (using the if-converted method) into Class A common stock as though the conversion had occurred on the original dates of issuance.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Segment Information
Our chief operating decision maker, our CEO, reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment, cloud applications.
Revenue Recognition
We derive our revenue from sales of cloud-based subscription service contracts, including support, and professional services contracts. We sell subscriptions to our cloud-based subscription service through contracts that are generally three years in length.
Our cloud-based subscription service contracts do not provide customers with the right to take possession of the software supporting the cloud-based service and, as a result, are accounted for as service contracts.
We commence revenue recognition for our cloud-based subscription service and professional services when all of the following criteria are met:
 
 	Ÿ	 	there is persuasive evidence of an arrangement;	
 
 	Ÿ	 	the service has been provided to the customer;	
 
 	Ÿ	 	collection of the fees is reasonably assured; and	
 
 	Ÿ	 	the amount of fees to be paid by the customer is fixed or determinable.	
Our subscription and professional service arrangements do not contain refund provisions for fees earned related to services performed.
Subscription Revenue.     Subscription revenue recognition commences on the date that our cloud-based service is made available to the customer, which is considered the launch date, provided all of the other criteria described above are met. Revenue is recognized based on the terms in our customer contracts, which can provide for (a) a variable periodic fee based upon the actual or contractual number of users that is recognized to revenue based on the actual or contractual number of users or (b) a fixed fee that is recognized to revenue on a straight-line basis over the contractual term of the arrangement.
Certain of our cloud-based subscription arrangements include performance incentives that are generally based upon employee engagement. Fees for performance incentives are considered contingent revenue, and are recognized over the remaining term of the related subscription arrangement commencing at the time they are earned.
Professional Services Revenue.     Professional services revenue is comprised of implementation services related to our cloud-based subscription service, as well as follow-on professional services to assist our customers in further adopting our cloud-based subscription service, and communications services. Nearly all of our professional services contracts are sold on a fixed-fee basis. We do not have standalone value for our implementation services. Accordingly, we recognize implementation services revenue in the same manner as the associated cloud-based subscription service, beginning on the launch date, provided all other criteria described above have been met. For follow-on professional services that are sold separately from the cloud-based subscription service, we recognize revenue as the services are delivered. Communication services revenue is recognized over the contractual term, generally one year, commencing when the revenue recognition criteria have been met.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Multiple Deliverable Arrangements.     To date, we have generated substantially all our revenue from multiple deliverable arrangements consisting of multi-year cloud-based subscription services and professional services, including implementation services and communication services. For arrangements with multiple deliverables, we evaluate whether the individual deliverables qualify as separate units of accounting. In order to treat deliverables in a multiple deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have standalone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables do not have standalone value upon delivery, the deliverables that do not have standalone value are generally combined with our cloud-based subscription service, and revenue for the combined unit is recognized over the remaining term of the cloud-based subscription service.
Our deliverables have standalone value if we or any other vendor sells a similar service separately. We have concluded that we have standalone value for our cloud-based subscription service as we sell these services separately through renewals and for our communication services as other vendors sell similar services separately. Conversely, we have concluded that our implementation services do not have standalone value, as we and others do not yet sell these services separately. Accordingly, we consider the separate units of accounting in our multiple deliverable arrangements to be the communication services and a combined deliverable comprised of cloud-based subscription services and implementation services.
When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence, or VSOE, of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence, or TPE, of selling price is used to establish the selling price if it exists. If TPE does not exist, we estimate the best estimated selling price, or BESP. VSOE does not currently exist for any of our deliverables. Additionally, we do not believe TPE is a practical alternative due to differences in our cloud-based subscription service compared to other parties and the availability of relevant third-party pricing information for our cloud-based subscription service and our other services. Accordingly, for arrangements with multiple deliverables that can be separated into different units of accounting, we allocate the arrangement fee to the separate units of accounting based on our BESP. The amount of arrangement fee allocated is limited by contingent revenue, if any.
We determine BESP for our deliverables by considering our overall pricing objectives and market conditions. This includes evaluating our pricing practices, our list prices, the size of our transactions, historical standalone sales and our go-to-market strategy. The determination of BESP is made through consultation with and approval by management. For financial statement presentation purposes, we allocate the fees from our combined units of accounting to subscription and professional services based upon their relative selling price.
Costs of Revenue
Costs of revenue primarily consist of data fees, employee-related expenses (including salaries, benefits and stock-based compensation) related to hosting costs of our cloud-based service, cost of subcontractors, expenses for service delivery (which includes call center support), allocated overhead, the costs of data center capacity and depreciation of owned computer equipment and software.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less from the date of purchase. Our cash and cash equivalents generally consist of investments in money market funds, U.S. treasury securities and U.S. government-issued obligations. Cash and cash equivalents are stated at fair value.
Marketable Securities
Our marketable securities consist of U.S. agency obligations, U.S. treasury securities and money market funds, with maturities at the time of purchase of greater than three months. Marketable securities with remaining maturities in excess of one year are classified as noncurrent. We classify our marketable securities as available-for-sale at the time of purchase based on our intent and are recorded at their estimated fair value. Unrealized gains and losses for available-for-sale securities are recorded in other comprehensive loss. We evaluate our investments to assess whether those with unrealized loss positions are other than temporarily impaired. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other income, net in the consolidated statements of operations.
Restricted Cash
Restricted cash consists of collateral for corporate credit cards. Funds held that are related to restrictions in excess of one year are reported as noncurrent.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts is based on our assessment of the collectability of accounts. We regularly review the adequacy of the allowance for doubtful accounts by considering the age of each outstanding invoice and the collection history of each customer to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. For all periods presented, the allowance for doubtful accounts activity was not significant.
Deferred Commissions
Deferred commissions are the incremental costs that are directly associated with the noncancelable portion of cloud-based subscription service contracts with customers and consist of sales commission paid to our direct sales force. The commissions are deferred and amortized over the noncancelable terms of the related contracts. The deferred commissions amounts are recoverable through the future revenue streams under the noncancelable customer contracts. Amortization of deferred commissions is included in sales and marketing expense in the consolidated statements of operations.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective asset as follows:

Software	  	3–5 years	
Computer equipment	  	3 years	
Furniture and equipment	  	5–7 years	
Leasehold improvements	  	Shorter of the lease term or the estimated useful lives of the improvements	
Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations for the period realized.
Deferred Revenue
Deferred revenue primarily consists of professional services and cloud-based subscription services that have been billed in advance of revenue being recognized or the services have not been delivered. Additionally, deferred revenue consists of professional services that have been billed and delivered but the revenue is being deferred and recognized together with a cloud-based subscription contract as a single unit of accounting. We invoice our customers for our cloud-based subscription services based on the terms of the contract, which can be annual, quarterly or monthly installments. We invoice our customers for our professional services and the first year of communication services generally at contract execution. Deferred revenue that is anticipated to be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent.
Internal-Use Software
For our development costs related to our cloud-based service, we capitalize costs incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. We did not incur qualifying costs during the application development stage in any of the periods presented.
Stock-based Compensation
All stock-based compensation to employees is measured based on the grant-date fair value of the awards and recognized in our consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). We estimate the fair value of stock options granted using the Black-Scholes option valuation model. Compensation expense is recognized over the vesting period of the applicable award using the straight-line method.
Compensation expense for non-employee stock options is calculated using the Black-Scholes option-pricing model and is recorded as the options vest. Options subject to vesting are required to be periodically revalued over their service period, which is generally the same as the vesting period.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Income Taxes
We account for income taxes using the liability method, under which deferred tax assets and liabilities are determined based on the future tax consequences attributable to differences between the financial reporting carrying amounts of existing assets and liabilities and their respective tax bases and tax credit and net operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be in effect when the differences are expected to reverse.
We assess the likelihood that deferred tax assets will be recovered from future taxable income, and a valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized.
We recognize and measure uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Significant judgment is required to evaluate uncertain tax positions. We evaluate our uncertain tax positions on a regular basis. Our evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of audit and effective settlement of audit issues.
Warranties and Indemnification
Our cloud-based service is generally warranted to be performed in a professional manner and in a manner that will comply with the terms of the customer agreements.
Our arrangements generally include certain provisions for indemnifying customers against liabilities if there is a breach of a customer’s data or if our service infringes a third party’s intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the financial statements. We have entered into service-level agreements with certain customers warranting defined levels of performance and response and permitting those customers to receive credits for prepaid amounts related to subscription services in the event that we fail to meet those levels. To date, we have not experienced any significant failures to meet defined levels of performance and response as a result of those agreements, and accordingly, we have not accrued any liabilities in the financial statements.
We have also agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request. We maintain director and officer insurance coverage that would generally enable us to recover a portion of any future amounts paid. We may also be subject to indemnification obligation by law with respect to the actions of our employees under certain circumstances and in certain jurisdictions.
Advertising Expenses
Advertising is expensed as incurred. Advertising expense was $45,000, $92,000 and $437,000 for the years ended December 31, 2011, 2012 and 2013, respectively.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Concentrations of Risk and Significant Customers
Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits.
Revenue from significant customers, those representing 10% or more of total revenue for the respective dates, is summarized as follows:

 	  	Year Ended December 31,	 	
 	  	    2011    	 	 	    2012    	 	 	    2013    	 	
Revenue:	  				 				 				
Customer A	  	 	80	% 	 	 	30	% 	 	 	*	  	
Customer B	  	 	16	% 	 	 	*	  	 	 	*	  	
Customer C	  	 	*	  	 	 	13	% 	 	 	*	  	
Customer D	  	 	*	  	 	 	10	% 	 	 	*	  	
Customer E	  	 	*	  	 	 	*	  	 	 	16	% 	

*	Less than 10%	
During the years ended December 31, 2011, 2012 and 2013, all of our revenue was generated by customers located in the United States.
Accounts receivable from significant customers, those representing 10% or more of total accounts receivable for the respective periods, is summarized as follows:

 	  	As of December 31,	 	
 	  	    2012    	 	 	    2013    	 	
Accounts Receivable:	  				 				
Customer E	  	 	*	  	 	 	10	% 	
Customer F	  	 	37	% 	 	 	17	% 	
Customer G	  	 	12	% 	 	 	*	  	

*	Less than 10%	
We serve our customers and users from outsourced data center facilities located in Texas, Colorado and Arizona. We have internal procedures to restore all our services in the event of disasters at the Arizona facility. Procedures utilizing currently deployed hardware, software and services at our disaster recovery location allow our cloud-based service to be restored within 48 hours without significant interruptions during the implementation of the procedures to restore services.
Recently Issued and Adopted Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board (FASB) issued guidance regarding the presentation of unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The new guidance requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward when settlement in this manner is available under the tax law. This guidance is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years,
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
beginning after December 15, 2013. Retrospective and early adoption is permitted. We expect to adopt this guidance in our first quarter of 2014. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.
In February 2013, the FASB issued guidance on disclosure requirements for items reclassified out of accumulated other comprehensive income. This new guidance requires entities to present (either on the face of the statement of operations or in the notes to the financial statements) the effects on the line items in the statement of operations for amounts reclassified out of accumulated other comprehensive income. The new guidance will be effective for us beginning in the first quarter of 2014. The adoption of the guidance will impact our financial statement presentation and/or our disclosures but will not impact our financial position, results of operations or cash flows.
Note 3. Marketable Securities
At December 31, 2012 and 2013, respectively, marketable securities consisted of the following (in thousands):

 	  	Amortized
Cost	 	  	Unrealized
Gains	 	  	Unrealized
Losses	 	  	Fair Value	 	
December 31, 2012	  				  				  				  				
U.S. agency obligations	  	$	66,559	  	  	$	29	  	  	$	—	  	  	$	66,588	  	
U.S. treasury securities	  	 	11,019	  	  	 	5	  	  	 	—	  	  	 	11,024	  	
Money market mutual funds	  	 	35,406	  	  	 	—	  	  	 	—	  	  	 	35,406	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	 	112,984	  	  	 	34	  	  	 	—	  	  	 	113,018	  	
Included in cash and cash equivalents	  	 	35,406	  	  	 	—	  	  	 	—	  	  	 	35,406	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Included in marketable securities	  	$	77,578	  	  	$	34	  	  	$	—	  	  	$	77,612	  	

																	
 	  	Amortized
Cost	 	  	Unrealized
Gains	 	  	Unrealized
Losses	 	 	Fair Value	 	
December 31, 2013	  				  				  				 				
U.S. agency obligations	  	$	35,996	  	  	$	6	  	  	$	(7	) 	 	$	35,995	  	
U.S. treasury securities	  	 	6,020	  	  	 	2	  	  	 	—	  	 	 	6,022	  	
Money market mutual funds	  	 	18,082	  	  	 	—	  	  	 	—	  	 	 	18,082	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
	  	 	60,098	  	  	 	8	  	  	 	(7	) 	 	 	60,099	  	
Included in cash and cash equivalents	  	 	18,082	  	  	 	—	  	  	 	—	  	 	 	18,082	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Included in marketable securities	  	$	42,016	  	  	$	8	  	  	$	(7	) 	 	$	42,017	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Note 4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	  	    2013    	 	
 	  	 	 	  	 	 	
Prepaid expenses and advances	  	$	900	  	  	$	1,242	  	
Security deposit	  	 	230	  	  	 	165	  	
Interest receivable on marketable securities	  	 	193	  	  	 	156	  	
Other current assets	  	 	8	  	  	 	20	  	
	  	 	 	 	  	 	 	 	
Total	  	$	1,331	  	  	$	1,583	  	

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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Note 5. Property and Equipment
Property and equipment consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	 	    2013    	 	
 	  	 	 	 	 	 	
Leasehold improvements	  	$	867	  	 	$	924	  	
Computer equipment	  	 	359	  	 	 	2,024	  	
Software	  	 	179	  	 	 	263	  	
Furniture and equipment	  	 	184	  	 	 	257	  	
	  	 	 	 	 	 	 	 	
Total	  	 	1,589	  	 	 	3,468	  	
Accumulated depreciation	  	 	(453	) 	 	 	(837	) 	
	  	 	 	 	 	 	 	 	
Property and equipment, net	  	$	1,136	  	 	$	2,631	  	
	  	 	 	 	 	 	 	 	
Depreciation expense for the years ended December 31, 2011, 2012 and 2013, was $0.2 million, $0.2 million and $0.6 million, respectively, which is recorded on a straight-line basis.
Note 6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	  	    2013    	 	
 	  	 	 	  	 	 	
Accrued expenses	  	$	725	  	  	$	3,845	  	
Other	  	 	58	  	  	 	1,153	  	
	  	 	 	 	  	 	 	 	
Total	  	$	783	  	  	$	4,998	  	
	  	 	 	 	  	 	 	 	
Note 7. Accrued Compensation
Accrued compensation consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	  	    2013    	 	
 	  	 	 	  	 	 	
Accrued bonuses and commissions	  	$	5,427	  	  	$	6,800	  	
Other benefits payable	  	 	93	  	  	 	1,243	  	
Liability for stock options exercised prior to vesting and restricted Class A common stock subject to repurchase	  	 	128	  	  	 	21	  	
	  	 	 	 	  	 	 	 	
Total	  	$	5,648	  	  	$	8,064	  	

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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Note 8. Deferred Revenue
Deferred revenue consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	  	    2013    	 	
 	  	 	 	  	 	 	
Subscription	  	$	803	  	  	$	3,810	  	
Professional services—implementation	  	 	671	  	  	 	1,835	  	
Professional services—communications	  	 	129	  	  	 	1,280	  	
	  	 	 	 	  	 	 	 	
Total current	  	 	1,603	  	  	 	6,925	  	

Subscription services	  	 	958	  	  	 	1,489	  	
Professional services—implementation	  	 	1,267	  	  	 	2,443	  	
Professional services—communications	  	 	377	  	  	 	616	  	
	  	 	 	 	  	 	 	 	
Total noncurrent	  	 	2,602	  	  	 	4,548	  	

Total	  	$	4,205	  	  	$	11,473	  	
	  	 	 	 	  	 	 	 	
Note 9. Other Liabilities, Noncurrent
Other long-term liabilities consisted of the following (in thousands):

 	  	As of December 31,	 	
 	  	    2012    	 	  	    2013    	 	
 	  	 	 	  	 	 	
Deferred rent—noncurrent	  	$	233	  	  	$	352	  	
Other	  	 	21	  	  	 	21	  	
	  	 	 	 	  	 	 	 	
Total	  	$	254	  	  	$	373	  	
	  	 	 	 	  	 	 	 	
Note 10. Fair Value Measurements
We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
The fair value of marketable securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from a third-party pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established third party pricing vendors and broker-dealers. There have been no changes in valuation techniques in the periods presented. We have no financial assets or liabilities measured using Level 3 inputs. There were no significant transfers between Levels 1 and 2 assets as of December 31, 2012 and 2013. The following tables present information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):

 	  	Level 1	 	  	Level 2	 	  	Total	 	
December 31, 2012	  				  				  				
Cash equivalents:	  				  				  				
Money market mutual funds	  	$	35,406	  	  	$	—	  	  	$	35,406	  	
Marketable securities:	  				  				  				
U.S. agency obligations	  	 	—	  	  	 	66,588	  	  	 	66,588	  	
U.S. treasury securities	  	 	—	  	  	 	11,024	  	  	 	11,024	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	35,406	  	  	$	77,612	  	  	$	113,018	  	

													
 	  	Level 1	 	  	Level 2	 	  	Total	 	
December 31, 2013	  				  				  				
Cash equivalents:	  				  				  				
Money market mutual funds	  	$	18,082	  	  	$	—	  	  	$	18,082	  	
Marketable securities:	  				  				  				
U.S. agency obligations	  	 	—	  	  	 	35,995	  	  	 	35,995	  	
U.S. treasury securities	  	 	—	  	  	 	6,022	  	  	 	6,022	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	18,082	  	  	$	42,017	  	  	$	60,099	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Gross unrealized gains and losses for cash equivalents and marketable securities as of December 31, 2012 and 2013 were not material. We do not believe the unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence as of December 31, 2013.
Sales of available-for-sale securities resulted in a gain of $8,000 in the year ended December 31, 2011 and no gains or losses during the years ended December 31, 2012 and 2013. All of our marketable securities as of December 31, 2012 and 2013 mature within one year. Marketable securities on the balance sheets consist of securities with original or remaining maturities at the time of purchase of greater than three months, and the remainder of the securities are reflected in cash and cash equivalents.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 11.	Commitments and Contingencies	
Leases and Contractual Obligations
We lease office space under noncancelable operating leases in San Francisco, California, Norwell, Massachusetts and Charleston, South Carolina. Contractual obligations relate to our service agreements for our data centers in Colorado and Arizona and other third party service providers. As of December 31, 2013, the future minimum lease payments under non-cancelable operating leases are as follows (in thousands):

 	  	Operating
Leases	 	  	Contractual
Obligations	 	
2014	  	$	1,021	  	  	$	1,769	  	
2015	  	 	1,042	  	  	 	369	  	
2016	  	 	1,075	  	  	 	243	  	
2017	  	 	600	  	  	 	—	  	
2018 and later	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	
	  	$	3,738	  	  	$	2,381	  	
	  	 	 	 	  	 	 	 	
All of the total future minimum lease payments relate to facilities space. The facility lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised. We recognize rent expense on a straight-line basis over the lease period and have accrued for rent expense incurred but not paid. Rent expense for the years ended December 31, 2011, 2012 and 2013 was $0.6 million, $0.9 million and $1.0 million, respectively.
Legal Matters
We may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, we may receive letters alleging infringement of patents or other intellectual property rights. We are not a party to any material legal proceedings, nor are we aware of any pending or threatened litigation that would have a material adverse effect on our business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.
 
Note 12.Convertible	Preferred Stock	
At December 31, 2013, our Preferred Stock consisted of the following:

 	  	Shares
Authorized	 	  	Shares
Outstanding	 	  	Liquidation
Preference	 	
Series A	  	 	8,000,000	  	  	 	8,000,000	  	  	$	1,000,000	  	
Series A-1	  	 	10,000,000	  	  	 	10,000,000	  	  	 	3,000,000	  	
Series B	  	 	15,315,314	  	  	 	15,315,314	  	  	 	17,000,000	  	
Series C	  	 	14,594,598	  	  	 	14,594,598	  	  	 	60,000,000	  	
Series D	  	 	16,565,750	  	  	 	16,565,721	  	  	 	100,000,000	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	 	64,475,662	  	  	 	64,475,633	  	  	$	181,000,000	  	

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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
As of December 31, 2013, the significant terms applicable to our Series A through Series D Preferred Stock were as follows:
Dividend Rights
The holders of Preferred Stock shall be entitled to receive noncumulative dividends, pari passu and prior and in preference to any dividend on the Class A and Class B common stock, at the rate of 8% of the respective original purchase price for each such series of Preferred Stock per annum, when, as and if declared by our board of directors. Any remaining dividends shall be paid to the holders of Preferred Stock and the Class A and Class B common stock on an as-converted basis. We have not declared dividends to date.
Conversion Rights
The holders of Preferred Stock shall have the right to convert at any time into shares of Class A common stock initially at a one-to-one ratio. All shares of the Preferred Stock shall be automatically converted (i) into shares of Class A common stock upon approval of the holders of a majority of the outstanding shares of Preferred Stock (voting as a single class on an as-converted basis) or (ii) into shares of Class A common stock immediately prior to the closing of a firmly underwritten public offering of at least $50 million (Qualified IPO). The conversion price for each series of Preferred Stock will be subject to an adjustment to reduce dilution in the event that we issue additional equity securities (other than certain excluded issuances) at a purchase price less than the applicable conversion price for such series of Preferred Stock. The conversion price for each series of Preferred Stock will initially be equal to the original purchase price for each such series of Preferred Stock.
Liquidation Rights
In the event of any liquidation, dissolution, or winding up of our company (Liquidation Event), first, the holders of Series D Preferred Stock shall be entitled to receive in preference to the holders of the other series of Preferred Stock and Class A and Class B common stock an amount for each share equal to its original purchase price, plus any declared but unpaid dividends. Next, the holders of Series C Preferred Stock shall be entitled to receive in preference to the holders of the other series of Preferred Stock and Class A and Class B common stock an amount for each share equal to its original purchase price, plus any declared but unpaid dividends. Thereafter, remaining assets shall be distributed to the holders of the Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock pari passu with each such holder and in preference to the holders of Class A and Class B common stock, in an amount equal to the respective original purchase price for each such share of Preferred Stock, plus any declared but unpaid dividends. Thereafter, remaining assets will be distributed to the holders of Class A and Class B common stock and Preferred Stock pro rata on an as-converted basis until such time as each series of Preferred Stock has received an aggregate of three times the original purchase price for each such series of Preferred Stock, with any remaining assets distributed to the Class A and Class B common stock. Unless waived by holders of a majority of the outstanding shares of Preferred Stock, a merger, acquisition, or sale of voting control in which our stockholders do not own a majority of the outstanding shares of the surviving corporation or sale of substantially all of the assets shall be deemed to be a Liquidation Event.
Although Preferred Stock is not mandatorily redeemable, a Liquidation Event would constitute a redemption event outside our management’s control. Therefore, all shares of Preferred Stock have been presented outside of permanent stockholders’ equity.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Voting Rights
For all matters other than for the Board, protective provisions, and Liquidation Events, the Preferred Stock votes with the Class A and Class B common stock on an as-converted basis. Immediately upon a Qualified IPO and for so long as at least 25% of shares of Class A common stock outstanding immediately prior to the Qualified IPO are still held by the original holders (or their affiliates), each share of Class A common stock shall be entitled to ten votes with respect to any Liquidation Event and one vote with respect to any other matter, and each share of Class B common stock to be issued by us in and following the Qualified IPO shall be entitled to one vote with respect to any matter.
For so long as 2,500,000 shares of Series A Preferred Stock and Series A-1 Preferred Stock remain outstanding, the Series A Preferred Stock and Series A-1 Preferred stock, voting together as a single class, are entitled to elect one director until a Qualified IPO. For so long as 2,500,000 shares of Series B Preferred Stock remain outstanding, the Series B Preferred Stock is entitled to elect one director until a Qualfied IPO. For so long as 2,500,000 shares of Series C Preferred Stock remain outstanding, the Series C Preferred Stock is entitled to elect one director until a Qualified IPO. Class A and Class B common stock (voting as one class) are entitled to elect one director. The Series D Preferred Stock does not have a separate right voting as a class to elect a director. Preferred Stock, Class A common stock and Class B common stock, voting as a single class on an as-converted basis, are entitled to elect two independent directors.
“Pay-to-Play” Provision
If a holder of Preferred Stock fails to fully participate in a Mandatory Offering (as defined below) on a pro rata basis, then such holder will have a percentage of each series of Preferred Stock held converted to shares of Class A common stock at the then-applicable conversion price. The percentage converted will equal the percentage of such holder’s pro rata share of the Mandatory Offering not acquired. This pay-to-play feature terminates upon a Qualified IPO or Liquidation Event. A “Mandatory Offering” is any equity offering that our board of directors determines must be purchased pro rata by holders of Preferred Stock. No shares of Preferred Stock have been converted to Class A common stock as a result of this provision, as it has not been enacted to date nor is it anticipated to be enacted.
Protective Provisions
If 2,500,000 shares of Preferred Stock remain outstanding, consent of a majority of Preferred Stock, voting as a single class on an as-converted basis, is required to (i) adversely change the rights, preferences, or privileges of the Preferred Stock; (ii) authorize or issue any new class or series of equity security senior to or on a parity with the Preferred Stock; (iii) declare any dividend or distribution; (iv) consummate a Liquidation Event; (v) redeem, purchase, or acquire any shares of Class A and Class B common stock or Preferred Stock (other than (A) pursuant to certain agreements to repurchase such shares at cost or (B) pursuant to the exercise of a right of first refusal); (vi) increase or decrease the authorized number of shares of Class A and Class B common stock or Preferred Stock; or (vii) amend our Certificate of Incorporation
Redemption
The Preferred Stock is not redeemable.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Note 13. Class A and Class B Common Stock and Stockholders’ Equity (Deficit)
Class A and Class B Common Stock
We may issue both Class A common stock and Class B common stock, subject to approval by our board of directors of any issuance of Class B common stock. The directors that are elected by the Series A Preferred Stock (voting as a single class), Series B Preferred Stock (voting as a single class) and Series C Preferred Stock (voting as a single class) each must affirmatively vote in favor of such issuance of Class B common stock. Upon a Qualified IPO and for so long as at least 25% of shares of Class A common stock outstanding immediately prior to the Qualified IPO are still held by the original holders (or their respective affiliates), each share of Class A common stock shall be entitled to ten votes with respect to any Liquidation Event and one vote on any other matter, and each share of Class B common stock shall be entitled to one vote on any matter. Each share of Class A common stock is automatically converted into one share of Class B common stock upon any transfer, assignment, sale or other disposition (other than transfers to affiliates).
In May 2012, our board of directors approved for an institutional investor to sell 500,000 shares of Class A common stock. These shares were accordingly converted to Class B common stock. On December 30, 2013, our board of directors and stockholders authorized a one-for-one exchange of all outstanding Class B common stock for Class A common stock. Therefore, as of December 31, 2012 and 2013 there were no outstanding shares of our Class B common stock. Please refer to Note 2 of these Notes to the Consolidated Financial Statements for more details.
Restricted Class A Common Stock Purchased by the Founders
In September 2009, one of our founders purchased 1,500,000 shares of Class A common stock from us for a total aggregate purchase price of $255,000. These shares were restricted and are subject to our repurchase right at the original purchase price. The repurchase right lapses ratably over a 24-month vesting period that commenced in February 2012. We have the right to exercise the repurchase right upon termination of services of the founder.
The consideration received for the purchase of restricted Class A common stock is considered to be a deposit of the purchase price, and the related dollar amount is recorded as a liability. The related liability is reclassified into equity as the repurchase right expires. For the years ended December 31, 2011, 2012 and 2013, $1,000, $107,000 and $128,000 of the related liability were reclassified into equity upon vesting, respectively. As of December 31, 2012 and 2013, we had a liability of $149,000 and $21,000, respectively, related to 875,000 and 125,000 shares of restricted Class A common stock, respectively, which are subject to a repurchase right held by us. We recognize compensation expense related to the vesting of shares of Class A common stock over the vesting period.
Stock Plan and Stock Options
The Amended and Restated 2008 Stock Incentive Plan (the Plan) provides for the issuance of incentive and nonstatutory options and restricted stock to our employees and non-employees. Options issued under our stock option plan generally are exercisable for periods not to exceed ten years, generally vest over four years and are generally issued at the fair value of the shares of Class A common stock on the date of grant as determined by our Board, which obtains periodic third-party valuations to assist their determination process.
The Plan provides for the early exercise of stock options for certain individuals as determined by the Board. Any stock options exercised prior to vesting may be repurchased by us at the original option
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
exercise price in the event of the employee’s termination. The right to repurchase unvested shares lapses at the rate of the vesting schedule.
Activity under the Plan is as follows (in thousands, except share and per share amounts and years):

 	  	Shares
Available
for
Grant	 	 	Number of
Shares
Outstanding	 	 	Weighted-
Average
Exercise
Price	 	  	Weighted-
Average
Remaining
Contractual
Life in
Years	 	  	Aggregate
Intrinsic
Value	 	
Balance at January 1, 2011	  	 	1,967,107	  	 	 	7,266,989	  	 	$	0.43	  	  	 	9.2	  	  	$	2,688	  	
Increase in Plan authorized shares	  	 	756,755	  	 	 	—	  	 				  				  				
Stock option grants	  	 	(2,866,043	) 	 	 	2,866,043	  	 	$	0.82	  	  				  				
Stock options exercised	  	 	—	  	 	 	(719,771	) 	 	$	0.34	  	  				  				
Stock options cancelled	  	 	380,762	  	 	 	(380,762	) 	 	$	0.71	  	  				  				
	  	 	 	 	 	 	 	 	 				  				  				
Balance at December 31, 2011	  	 	238,581	  	 	 	9,032,499	  	 	$	0.55	  	  	 	8.6	  	  	$	2,981	  	
Increase in Plan authorized shares	  	 	4,404,308	  	 				 				  				  				
Restricted stock issued	  	 	(22,727	) 	 				 				  				  				
Stock option grants	  	 	(4,422,412	) 	 	 	4,422,412	  	 	$	1.03	  	  				  				
Stock options exercised	  	 	—	  	 	 	(1,056,262	) 	 	$	0.28	  	  				  				
Stock options cancelled	  	 	991,039	  	 	 	(991,039	) 	 	$	0.57	  	  				  				
	  	 	 	 	 	 	 	 	 				  				  				
Balance at December 31, 2012	  	 	1,188,789	  	 	 	11,407,610	  	 	$	0.76	  	  	 	8.3	  	  	$	4,125	  	
Increase in Plan authorized shares	  	 	7,000,000	  	 				 				  				  				
Stock option grants	  	 	(8,283,513	) 	 	 	8,283,513	  	 	$	1.71	  	  				  				
Stock options exercised	  	 	—	  	 	 	(1,036,077	) 	 	$	0.60	  	  				  				
Stock options cancelled	  	 	2,199,642	  	 	 	(2,199,642	) 	 	$	0.96	  	  				  				
	  	 	 	 	 	 	 	 	 				  				  				
Balance at December 31, 2013	  	 	2,104,918	  	 	 	16,455,404	  	 	$	1.22	  	  	 	8.4	  	  	$	91,192	  	
	  	 	 	 	 	 	 	 	 				  				  				
Vested or expected to vest December 31, 2013	  				 	 	13,751,550	  	 	$	1.18	  	  	 	8.2	  	  	$	76,786	  	
	  				 	 	 	 	 				  				  				
Exercisable as of December 31, 2013	  				 	 	5,925,756	  	 	$	0.70	  	  	 	7.0	  	  	$	35,926	  	
	  				 	 	 	 	 				  				  				
The total grant-date fair value of stock options granted during the years ended December 31, 2011, 2012 and 2013, was $1.4 million, $2.7 million and $17.0 million, respectively. The total grant-date fair value of stock options vested during the years ended December 31, 2011, 2012 and 2013 was $1.0 million and $1.0 million and $1.7 million, respectively. The total intrinsic value of the options exercised during the years ended December 31, 2011, 2012 and 2013, was $0.4 million, $0.9 million and $1.8 million, respectively. The intrinsic value is the difference of the current fair value of the stock and the exercise price of the stock option.
Stock-Based Compensation to Employees
All stock-based payments to employees are measured based on the grant-date fair value of the awards and are generally recognized in our statement of operations over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
award). We estimate the fair value of stock options granted using the Black-Scholes option-valuation model. Compensation cost is generally recognized over the vesting period of the applicable award using the straight-line method.
Given the absence of a public trading market, our board of directors considered numerous objective and subjective factors to determine the fair value of our Class A common stock at each grant date. These factors included, but were not limited to, (i) contemporaneous valuations of Class A common stock performed by unrelated third-party specialists; (ii) the prices for our Preferred Stock sold to outside investors; (iii) the rights, preferences and privileges of our Preferred Stock relative to our Class A common stock; (iv) the lack of marketability of our Class A common stock; (v) developments in the business; and (vi) the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our Company, given prevailing market conditions.
The assumptions used in the Black-Scholes option-valuation model were determined as follows:
Volatility.     Since we do not have a trading history for our Class A common stock, the expected volatility was derived from the historical stock volatilities of several unrelated public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock option grants.
Risk-Free Interest Rate.     The risk-free rate that we used is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.
Expected Life.     The expected term represents the period that our stock-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options.
Dividend Yield.     We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and therefore, we use an expected dividend yield of zero.
Forfeiture rate.     We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-valuation model with the following assumptions and fair value per share:

 	  	Year Ended
December 31,	
 	  	2011	 	2012	  	2013	
Volatility	  	60%	 	60%-63%	  	58%-60%	
Expected life (in years)	  	5.0-6.2	 	5.0-6.5	  	5.0-7.2	
Risk-free interest rate	  	1.5%-2.7%	 	0.6%-1.1%	  	0.7%-2.0%	
Dividend yield	  	—	 	—	  	—	
Weighted-average fair value of underlying common stock	  	$ 0.83	 	$ 1.05	  	$ 3.02	
As of December 31, 2013, we had $13.2 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 3.4 years.
Warrants
On December 11, 2013, we issued a warrant to purchase an aggregate of 175,000 shares of Class A common stock at an exercise price of $5.00 per share to a third-party service provider. The
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
warrant provides for an early exercise right, has a 10 year term with 70% vesting on March 31, 2014 and the remaining 30% on December 31, 2014. Expense for the warrants is calculated using the Black-Scholes-Merton option-pricing model and is recorded over the service performance period, which is the same as the vesting period. We recorded $0.1 million in expense associated with this warrant. In December 2013, we issued 60,000 shares of our Class A common stock to this third party upon early exercise of a portion of this warrant, and this amount of $300,000 is classified in short-term other accrued liabilities.
Note 14. Income Taxes
The components of loss from continuing operations before income taxes were generated solely in the United States as follows (in thousands):

 	  	Year Ended
December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
United States	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
As a result of our history of net operating losses and full valuation allowance against our deferred tax assets, there was no current or deferred income tax provision for the years ended December 31, 2011, 2012 and 2013.
Reconciliations of the statutory federal income tax rate and our effective tax rate consist of the following (in thousands):

 	  	Year Ended
December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
Tax at federal statutory rate	  	$	(6,772	) 	 	$	(11,901	) 	 	$	(21,142	) 	
State statutory rate (net of federal benefit)	  	 	(1,162	) 	 	 	(2,193	) 	 	 	(1,921	) 	
Non-deductible stock compensation	  	 	260	  	 	 	485	  	 	 	619	  	
Change in valuation allowance	  	 	7,647	  	 	 	13,384	  	 	 	22,184	  	
Other	  	 	27	  	 	 	225	  	 	 	260	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	—	  	 	$	—	  	 	$	—	  	

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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Significant components of our deferred tax assets and liabilities were as follows (in thousands):

 	  	As of December 31,	 	
Deferred tax assets:	  	 	2012	  	 	 	2013	  	
Net operating loss carryforwards	  	$	24,762	  	 	$	45,744	  	
Accrued expenses	  	 	67	  	 	 	239	  	
Deferred rent	  	 	86	  	 	 	160	  	
Accrued bonus	  	 	617	  	 	 	583	  	
Accrued compensation	  	 	409	  	 	 	638	  	
Stock-based compensation	  	 	162	  	 	 	533	  	
Other reserves and accruals	  	 	8	  	 	 	2	  	
Property and equipment	  	 	69	  	 	 	88	  	
Deferred revenue	  	 	122	  	 	 	616	  	
	  	 	 	 	 	 	 	 	
	  	 	26,302	  	 	 	48,603	  	
Valuation allowance	  	 	(26,302	) 	 	 	(48,603	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax assets	  	$	—	  	 	$	—	  	
	  	 	 	 	 	 	 	 	
We have provided a full valuation allowance for our deferred tax assets at December 31, 2012 and 2013, due to the uncertainty surrounding the future realization of such assets. Therefore, no benefit has been recognized for the net operating loss carryforwards and other deferred tax assets.
The valuation allowance increased by $13.3 million and $22.3 million during the years ended December 31, 2012 and 2013, respectively. For the years ended December 31, 2012 and 2013, we recorded no tax benefits related to stock-based compensation.
As of December 31, 2013, we have approximately $120.7 million of federal and $97.8 million of state net operating loss carryforwards available to offset future taxable income. If not utilized, the federal and state net operating loss carryforwards begin to expire in 2028.
The deferred tax asset related to our net operating losses include no amounts relating to the tax benefit of stock option exercises, which, when realized, will be recorded as a credit to additional paid-in capital. As of December 31, 2013, we also had approximately $2.1 million and $2.3 million of research and development tax credit carryforwards available to reduce future taxable income if any, for federal and California purposes, respectively. The federal credit carryforwards expire beginning in 2028 and the California research credits do not expire and may be carried forward indefinitely.
Our ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws. In the event we should experience an ownership change, as defined, utilization of our net operating loss carryforwards and tax credits could be limited.
The American Taxpayer Relief Act of 2012, or the Act, was signed into law on January 2, 2013. The Act retroactively restored several expired business tax provisions, including the federal research tax credit. Because a change in tax law is accounted for in the period of enactment, the retroactive effect of the Act on our U.S. federal research tax credits for 2012 was recognized in the first quarter of 2013.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information.
A reconciliation of the beginning and ending amount of the gross unrecognized tax benefit is as follows (in thousands):

 	  	Year Ended
December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
Gross unrecognized tax benefits at the beginning of the fiscal year	  	$	799	  	 	$	1,823	  	 	$	2,445	  	
Increases for tax positions of prior years	  	 	5	  	 	 	27	  	 	 	—	  	
Decreases for tax positions of prior years	  	 	(4	) 	 	 	(8	) 	 	 	—	  	
Increases for tax positions related to the current year	  	 	1,023	  	 	 	603	  	 	 	2,068	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross unrecognized tax benefits at the end of the fiscal year	  	$	1,823	  	 	$	2,445	  	 	$	4,513	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
At December 31, 2013, all unrecognized tax benefits are subject to a full valuation allowance and, if recognized, will not affect our tax rate.
We do not anticipate that the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months.
Our policy is to include interest and penalties related to unrecognized tax benefits within our provision for income taxes. Due to our net operating loss position, we have not recorded an accrual for interest or penalties related to uncertain tax positions for the years ended December 31, 2011, 2012 or 2013.
Our primary tax jurisdiction is the United States. All of our tax years are open to examination by U.S. federal and state tax authorities.
Note 15. Net Loss per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including Preferred Stock and outstanding stock options and warrants, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.
When shares of both Class A and Class B common stock are outstanding, net loss is allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis. As of December 31, 2011, 2012 and 2013, only shares of Class A common stock were outstanding and therefore no net loss was allocated.
 
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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
The following table presents the calculation of basic and diluted net loss per share for our common stock (in thousands, except per share data):

 	  	Year Ended
December 31,	 	
 	  	2011	 	 	2012	 	 	2013	 	
Net loss	  	$	(19,920	) 	 	$	(35,004	) 	 	$	(62,182	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used to compute basic and diluted net loss per share	  	 	6,093	  	 	 	7,885	  	 	 	9,895	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted net loss per share	  	$	(3.27	) 	 	$	(4.44	) 	 	$	(6.28	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The following securities were excluded from the calculation of diluted net loss per share for common stock because their effect would have been anti-dilutive for the periods presented (in thousands):

 	  	Year Ended
December 31,	 	
 	  	2011	 	  	2012	 	  	2013	 	
Convertible preferred stock	  	 	47,910	  	  	 	64,476	  	  	 	64,476	  	
Stock options and restricted common stock	  	 	10,856	  	  	 	12,295	  	  	 	16,687	  	
Warrants	  	 	—	  	  	 	—	  	  	 	175	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	 	58,766	  	  	 	76,771	  	  	 	81,338	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Unaudited Pro Forma Net Loss per Share
Pro forma basic and diluted net loss per share were computed to give effect to the conversion of the Preferred Stock into Class A common stock using the if-converted method as though the conversion and reclassification had occurred as of the beginning of the first period presented or the original date of issuance, if later.
The following table presents the calculation of basic and diluted pro forma net loss per share (in thousands, except per share data):

 	  	Year Ended
December 31,	 	
 	  	2013	 	
Pro forma net loss	  	$	(62,182	) 	
	  	 	 	 	
Shares:	  				
Weighted-average shares used to compute basic net loss per share	  	 	9,895	  	
Pro forma adjustment to reflect assumed conversion of convertible preferred stock into Class A common stock to occur upon consummation of our expected initial public offering	  	 	64,476	  	
	  	 	 	 	
Weighted-average shares used to compute basic and diluted pro forma net loss per share	  	 	74,371	  	
	  	 	 	 	
Pro forma basic and diluted net loss per share	  	$	(0.84	) 	

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CASTLIGHT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Note 16. 401(k) Plan
We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code covering eligible employees. To date, we have not made any matching contributions to this plan.
Note 17. Subsequent Events
For our consolidated financial statements for the year ended and as of December 31, 2013, we evaluated subsequent events through February 7, 2014, which is the date the financial statements were available to be issued.
 
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11,100,000 Shares
Class B Common Stock

 

 

Goldman, Sachs & Co.	 	Morgan Stanley	

	  	                    Allen &  Company LLC	  		
			
Stifel	  	                     Canaccord Genuity	  	Raymond James	

 
Through and including                 , 2014 (the 25th day after the date of this prospectus), all dealers effecting transactions in those securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

 

Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all costs and expenses, other than underwriting discounts and commissions, paid or payable by us in connection with the sale of the Class B common stock being registered. All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the New York Stock Exchange listing fee:

 	  	Amount
Paid or
to Be Paid	 	
SEC registration fee	  	$	18,086	  	
FINRA filing fee	  	 	21,562	  	
New York Stock Exchange listing fee	  	 	250,000	  	
Blue sky qualification fees and expenses	  	 	5,000	  	
Printing and engraving expenses	  	 	300,000	  	
Legal fees and expenses	  	 	1,540,000	  	
Accounting fees and expenses	  	 	1,250,000	  	
Transfer agent and registrar fees and expenses	  	 	8,000	  	
Miscellaneous expenses	  	 	557,352	  	
	  	 	 	 	
Total	  	$	3,950,000	  	
	  	 	 	 	
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers under certain circumstances and subject to certain limitations. The terms of Section 145 of the Delaware General Corporation Law are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act.
As permitted by the Delaware General Corporation Law, the Registrant’s restated certificate of incorporation to be effective upon the closing of this offering contains provisions that eliminate the personal liability of its directors for monetary damages for any breach of fiduciary duties as a director, except liability for the following:
 
 	Ÿ	 	any breach of the director’s duty of loyalty to the Registrant or its stockholders;	
 
 	Ÿ	 	acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;	
 
 	Ÿ	 	under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases); or	
 
 	Ÿ	 	any transaction from which the director derived an improper personal benefit.	
As permitted by the Delaware General Corporation Law, the Registrant’s restated bylaws to be effective upon the closing of this offering, provide that:
 
 	Ÿ	 	the Registrant is required to indemnify its directors and executive officers to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;	
 
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 	Ÿ	 	the Registrant may indemnify its other employees and agents as set forth in the Delaware General Corporation Law;	
 
 	Ÿ	 	the Registrant is required to advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions; and	
 
 	Ÿ	 	the rights conferred in the bylaws are not exclusive.	
Prior to the closing of this offering, the Registrant has entered into indemnification agreements with each of its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant’s restated certificate of incorporation and restated bylaws and to provide additional procedural protections. There is no pending litigation or proceeding involving a director or executive officer of the Registrant for which indemnification is sought. Reference is also made to Section 9 of the underwriting agreement to be filed as Exhibit 1.1 to this registration statement, which provides for the indemnification of executive officers, directors and controlling persons of the Registrant against certain liabilities. The indemnification provisions in the Registrant’s restated certificate of incorporation, restated bylaws and the indemnification agreements entered into or to be entered into between the Registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification of the Registrant’s directors and executive officers for liabilities arising under the Securities Act.
The Registrant currently carries liability insurance for its directors and officers.
Four of the Registrant’s directors (Bryan Roberts, Robert Kocher, Ann Lamont and David Singer) are also indemnified by their employers with regard to their service on the Registrant’s Board of Directors.
Reference is made to the following documents filed as exhibits to this Registration Statement regarding relevant indemnification provisions described above and elsewhere herein:

Exhibit Document	  	Number	 	
Form of Underwriting Agreement	  	 	1.1	  	
Form of Restated Certificate of Incorporation to be effective upon the closing of this offering	  	 	3.2	  	
Form of Restated Bylaws to be effective upon the closing of this offering.	  	 	3.4	  	
Amended and Restated Investors’ Rights Agreement, dated as of April 26, 2012, by and among the Registrant and certain of its stockholders.	  	 	4.2	  	
Form of Indemnification Agreement.	  	 	10.1	  	
Item 15. Recent Sales of Unregistered Securities.
Since January 1, 2011 and through February 28, 2014, the Registrant has issued and/or sold the following unregistered securities:
(1) Since January 1, 2011 and through February 28, 2014, the Registrant granted to its directors, officers, employees and consultants options to purchase 17,012,968 shares of Class A common stock under its 2008 Stock Incentive Plan with per share exercise prices ranging from $0.80 to $7.93 per share. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
 
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(2) Since January 1, 2011 and through February 28, 2014, the Registrant issued to its directors, officers, employees and consultants 3,507,487 shares of Class A common stock upon exercise of options granted by the Registrant under its 2008 Stock Incentive Plan, with exercise prices ranging from $0.06 to $2.35 per share. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
(3) In April 2012, the Registrant issued an aggregate of 16,565,721 shares of the Registrant’s Series D convertible preferred stock at a purchase price of $6.03656 per share to 35 purchasers that represented to us that they were sophisticated accredited investors and qualified institutional buyers. The securities issued in this transaction were exempt from the registration requirements of the Securities Act in reliance on Rule 506 promulgated under the Securities Act.
(4) In June 2012, the Registrant issued to consultant 22,727 shares of Class A common stock upon a grant of restricted Class A common stock under its 2008 Stock Incentive Plan, with a price of $1.08 per share. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
(5) In December 2013, the Registrant issued a warrant to purchase an aggregate of 175,000 shares of the Registrant’s Class A common stock at an exercise price of $5.00 per share to one purchaser that represented to us that it was a sophisticated accredited investor. In December 2013, the Registrant issued to this purchaser 60,000 shares of the Registrant’s Class A common stock upon exercise of a portion of this warrant. The securities issued in these transactions were exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act promulgated under the Securities Act.
(6) In February 2014, the Registrant issued to its employees an aggregate of 89,943 shares of the Registrant’s Class A common stock upon sale of restricted Class A common stock under its 2008 Stock Incentive Plan, with a purchase price per share of $6.76 and the Registrant issued to an employee 12,786 shares of the Registrant’s Class A common stock upon sale of restricted Class A common stock under its 2008 Stock Incentive Plan, with a purchase price per share of $7.93. These transactions were exempt from the registration requirements of the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the Registrant believes each transaction was exempt from the registration requirements of the Securities Act as stated above. All recipients of the foregoing transactions either received adequate information about the Registrant or had access, through their relationships with the Registrant, to such information. Furthermore, the Registrant affixed appropriate legends to the share certificates and instruments issued in each foregoing transaction setting forth that the securities had not been registered and the applicable restrictions on transfer.
 
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Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.

Exhibit
Number	  	Description of Document	
		
  1.1	  	Form of Underwriting Agreement.	
		
  3.1	  	Amended and Restated Certificate of Incorporation, as amended to date and as currently in effect.	
		
  3.2	  	Form of Restated Certificate of Incorporation to be effective upon closing of this offering.	
		
  3.3*	  	Amended and Restated Bylaws, as currently in effect.	
		
  3.4	  	Form of Restated Bylaws to be effective upon closing of this offering.	
		
  4.1	  	Form of Class B Common Stock Certificate.	
		
  4.2*	  	Amended and Restated Investors’ Rights Agreement, dated as of April 26, 2012, by and among the Registrant and certain of its stockholders.	
		
  5.1	  	Opinion of Fenwick & West LLP.	
		
10.1	  	Form of Indemnification Agreement.	
		
10.2	  	2008 Stock Incentive Plan and forms of stock option agreement thereunder and restricted stock agreement.	
		
10.3	  	2014 Equity Incentive Plan, to become effective on the day before the date the registration statement is declared effective, and forms of stock option award agreement, restricted stock agreement, stock appreciation right award agreement, restricted stock unit award agreement, performance shares award agreement and stock bonus agreement.	
		
10.4	  	2014 Employee Stock Purchase Plan, to become effective on the day the registration statement is declared effective, and form of subscription agreement.	
		
10.5*	  	Job Offer Letter, dated as of January 27, 2010, by and between the Registrant and Dena Bravata.	
		
10.6*	  	Job Offer Letter, dated as of September 6, 2012, by and between the Registrant and John C. Doyle.	
		
10.7*	  	Job Offer Letter, dated as of September 6, 2013, by and between the Registrant and Michele K. Law.	
		
10.8*	  	Job Offer Letter, dated as of September 28, 2010, by and between the Registrant and Randall J. Womack.	
		
10.9*	  	Double Trigger Acceleration Policy.	
		
10.10*	  	2012 Sublease Agreement by and between National Union Fire Insurance Company of Pittsburgh, Pa. and the Registrant, with Consent to Sublease Agreement, dated as of August 9, 2012.	
		
10.11 †	  	Master Services Agreement, dated as of November 28, 2012; First Service Addendum, dated as of November 28, 2012; and Business Associate Agreement, dated as of September 11, 2012, in each case by and between the Registrant and the Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan.	
		
21.1*	  	Subsidiaries of the Registrant.	
		
23.1	  	Consent of Independent Registered Public Accounting Firm.	
		
23.2	  	Consent of Fenwick & West LLP (included in Exhibit 5.1).	
		
24.1*	  	Power of Attorney (see page II-6 of this registration statement).	

*	Previously filed by the Registrant as an exhibit to its Registration Statement on Form S-1 (File No. 333-193840), filed with the SEC on February 10, 2014.	
 
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†  	Registrant has omitted portions of the referenced exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 promulgated under the Securities Act.	
(b)  Financial Statement Schedules .
All financial statement schedules are omitted because they are not applicable or the information is included in the Registrant’s consolidated financial statements or related notes.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on this 3 rd  day of March, 2014.

C ASTLIGHT H EALTH , I NC .
 	
By:	 	/s/ Giovanni M. Colella	
	 	 	
	 	Giovanni M. Colella
Chief Executive Officer, Co-Founder and Director	
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	  	Title	 	Date	
			
/s/    Giovanni M. Colella        
Giovanni M. Colella	  	Chief Executive Officer, Co-Founder and Director
(Principal Executive Officer)	 	March 3, 2014	
			
/s/    John C. Doyle        
John C. Doyle	  	Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)	 	March 3, 2014	
			
*
Bryan Roberts	  	Chairman of the Board of Directors and Co-Founder	 	March 3, 2014	
			
*
David Ebersman	  	Director	 	March 3, 2014	
			
*
Robert Kocher	  	Director	 	March 3, 2014	
 
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Signature	  	Title	 	Date	
			
*
Ann Lamont	  	Director	 	March 3, 2014	
			
*
Christopher P. Michel	  	Director	 	March 3, 2014	
			
*
David B. Singer	  	Director	 	March 3, 2014	

By	  	/s/ John C. Doyle	  	Attorney-in-fact	  	March 3, 2014    	
	  	John C. Doyle	  		  		
 
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EXHIBIT INDEX

Exhibit
Number	  	Description of Document	
		
  1.1	  	Form of Underwriting Agreement.	
		
  3.1	  	Amended and Restated Certificate of Incorporation, as amended to date and as currently in effect.	
		
  3.2	  	Form of Restated Certificate of Incorporation to be effective upon closing of this offering.	
		
  3.3*	  	Amended and Restated Bylaws, as currently in effect.	
		
  3.4	  	Form of Restated Bylaws to be effective upon closing of this offering.	
		
  4.1	  	Form of Class B Common Stock Certificate.	
		
  4.2*	  	Amended and Restated Investors’ Rights Agreement, dated as of April 26, 2012, by and among the Registrant and certain of its stockholders.	
		
  5.1	  	Opinion of Fenwick & West LLP.	
		
10.1	  	Form of Indemnification Agreement.	
		
10.2	  	2008 Stock Incentive Plan and forms of stock option agreement thereunder and restricted stock agreement.	
		
10.3	  	2014 Equity Incentive Plan, to become effective on the day before the date the registration statement is declared effective, and forms of stock option award agreement, restricted stock agreement, stock appreciation right award agreement, restricted stock unit award agreement, performance shares award agreement and stock bonus agreement.	
		
10.4	  	2014 Employee Stock Purchase Plan, to become effective on the day the registration statement is declared effective, and form of subscription agreement.	
		
10.5*	  	Job Offer Letter, dated as of January 27, 2010, by and between the Registrant and Dena Bravata.	
		
10.6*	  	Job Offer Letter, dated as of September 6, 2012, by and between the Registrant and John C. Doyle.	
		
10.7*	  	Job Offer Letter, dated as of September 6, 2013, by and between the Registrant and Michele K. Law.	
		
10.8*	  	Job Offer Letter, dated as of September 28, 2010, by and between the Registrant and Randall J. Womack.	
		
10.9*	  	Double Trigger Acceleration Policy.	
		
10.10*	  	2012 Sublease Agreement by and between National Union Fire Insurance Company of Pittsburgh, Pa. and the Registrant, with Consent to Sublease Agreement, dated as of August 9, 2012.	
		
10.11 †	  	Master Services Agreement, dated as of November 28, 2012; First Service Addendum, dated as of November 28, 2012; and Business Associate Agreement, dated as of September 11, 2012, in each case by and between the Registrant and the Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan.	
		
21.1*	  	Subsidiaries of the Registrant.	
		
23.1	  	Consent of Independent Registered Public Accounting Firm.	
		
23.2	  	Consent of Fenwick & West LLP (included in Exhibit 5.1).	
		
24.1*	  	Power of Attorney (see page II-6 of this registration statement).	

*	Previously filed by the Registrant as an exhibit to its Registration Statement on Form S-1 (File No. 333-193840), filed with the SEC on February 10, 2014.	
†  	Registrant has omitted portions of the referenced exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 promulgated under the Securities Act.	

Exhibit 1.1
Castlight Health, Inc.
Class B Common Stock, par value $0.0001 per share

Underwriting Agreement
[      ], 2014
Goldman, Sachs & Co.
Morgan Stanley & Co. LLC
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
200 West Street
New York, New York 10282
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Castlight Health, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “Underwriters”) for whom you are acting as representatives (the “Representatives”) an aggregate of [              ] shares (the “Firm Shares”) and, at the election of the Underwriters, up to [              ] additional shares (the “Optional Shares”) of Class B Common Stock, par value $0.0001 per share (“Stock”) of the Company. The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are herein collectively called the “Shares”.
1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-193840) (the “Initial Registration Statement”) in respect of the Shares has been filed with the Securities and Exchange Commission (the “Commission”); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to you and, excluding exhibits thereto, to you for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a “Rule 462(b) Registration Statement”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Act”), which became effective upon filing, no other document with respect to the Initial Registration Statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been

initiated or, to the Company’s knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a “Preliminary Prospectus”; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “Registration Statement”; the Preliminary Prospectus relating to the Shares that was included in the Registration Statement immediately prior to the Applicable Time (as defined in Section 1(a)(iii) hereof) is hereinafter called the “Pricing Prospectus”; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the “Prospectus”; any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Shares is hereinafter called an “Issuer Free Writing Prospectus”); any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act is hereinafter called a “Section 5(d) Communication”; and any Section 5(d) Communication that is a written communication within the meaning of Rule 405 under the Act is hereinafter called a “Section 5(d) Writing”;
(ii) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
(iii) For the purposes of this Agreement, the “Applicable Time” is [      :               ].m. (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information listed on Schedule II(c) hereto, taken together (collectively, the “Pricing Disclosure Package”), as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule II(a) hereto does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus and each such Issuer Free Writing Prospectus and each Section 5(d) Writing listed on Schedule II(b) hereto, each as supplemented by and taken together with the Pricing Disclosure Package, as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission
 
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thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
(v) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Pricing Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, that are material with respect to the Company and its subsidiaries considered as one enterprise; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Disclosure Package, there has not been any change in the capital stock (other than as a result of the exercise of any outstanding stock options or warrants, the award of stock options in the ordinary course of business pursuant to the Company’s equity incentive plans that are described in the Pricing Prospectus, or the repurchase of shares of capital stock (subject to appropriate adjustment for stock splits, stock dividends, combinations and the like following the date of this Agreement) in connection with any early exercise of stock options by option holders from employees terminating their service to the Company) or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, consolidated financial position, consolidated stockholders’ equity (deficit) or consolidated results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), otherwise than as set forth or contemplated in the Pricing Prospectus;
(vi) The Company and its subsidiaries do not own any real property. The Company and its subsidiaries have good and marketable title to all personal property (other than intellectual property which is covered by (xxi) below) owned by them, free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or would not, individually or in the aggregate, have a Material Adverse Effect; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under, to the knowledge of the Company, valid, subsisting and enforceable leases (subject to the effects of (A) bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting the rights or remedies of creditors generally; (B) the application of general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether enforcement is considered in proceedings at law or in equity); and (C) applicable law and public policy with respect to rights to indemnity and contribution) with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;
(vii) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and
 
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other) to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (or foreign equivalent, if applicable) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (or foreign equivalent, if applicable) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect; and none of the subsidiaries is a “significant subsidiary” (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Act);
(viii) The Company has an authorized capitalization as set forth in the Pricing Prospectus and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable and conform to the description of the Stock, the Class A Common Stock or the preferred stock of the Company, as applicable, contained in the Pricing Disclosure Package and the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and non-assessable and (except for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;
(ix) The Shares to be issued and sold by the Company to the Underwriters have been duly authorized and, when issued and delivered against payment therefor as provided herein, will be validly issued and fully paid and non-assessable and will conform to the description of the Stock contained in the Pricing Disclosure Package and the Prospectus; and the issuance of the Shares is not subject to any preemptive, rights of first refusal or similar rights pursuant to the Delaware General Corporation Law or the Company’s Certificate of Incorporation or Bylaws or any agreement or other instrument to which the Company is a party, except for such rights that have been complied with or effectively waived prior to the date hereof;
(x) The issue and sale of the Shares and the compliance by the Company with this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (A) any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (B) the Certificate of Incorporation or By-laws of the Company or any of its subsidiaries, or (C) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the cases of (A) and (C) above for such conflicts, breaches, violations or defaults that would not, individually or in the aggregate, have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except for the registration under the Act of the Shares, the approval by the Financial Industry Regulatory Authority (“FINRA”) of the underwriting terms and arrangements and such consents, approvals, authorizations, orders, registrations or qualifications as
 
4

may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is (A) in violation of its Certificate of Incorporation, Bylaws or similar organizational documents or (B) in violation of any other statute or order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (C) in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of (B) and (C) for such violations and defaults as would not, individually or in the aggregate, have a Material Adverse Effect;
(xii) The statements set forth in the Pricing Prospectus and the Prospectus under the caption “Description of Capital Stock,” insofar as they purport to constitute a summary of the terms of the Stock or the Class A Common Stock, under the caption “Material U.S. Federal Tax Consequences to Non-U.S. Holders,” and under the caption “Underwriting,” insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and complete in all material respects;
(xiii) Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company is a party or of which any property or assets of the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;
(xiv) From the time of initial confidential submission of a registration statement relating to the Shares with the Commission (or, if earlier, the first date on which a Section 5(d) Communication was made) through the date hereof, the Company has been and is an “emerging growth company” as defined in Section 2(a)(19) of the Act (an “Emerging Growth Company”);
(xv) The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Pricing Disclosure Package, will not be an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”);
(xvi) At the time of filing the Initial Registration Statement the Company was not and is not an “ineligible issuer,” as defined under Rule 405 under the Act;
(xvii) Ernst & Young LLP, which has certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm as required by the Act and the rules and regulations of the Commission thereunder;
(xviii) The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that complies with the requirements of the Exchange Act and has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision , to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and that (i) transactions are executed in accordance with management’s general or specific
 
5

authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. To the Company’s knowledge, the Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting;
(xix) Except as disclosed in the Pricing Prospectus, since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Company’s internal control over financial reporting;
(xx) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;
(xxi) The Company and its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other technology and intellectual property rights, including the right to sue for past, present and future infringement, misappropriation or dilution of any of the same used by them or necessary for the conduct of their respective businesses as currently conducted and as proposed to be conducted as described in the Pricing Disclosure Package and the Prospectus in all material respects (the “Company Intellectual Property”), and, to its knowledge, the conduct of their respective businesses will not conflict in any material respect with any such rights of others; the Company and its subsidiaries have not received any written notice of any claim of infringement, misappropriation or conflict with any such rights of others in connection with its Company Intellectual Property that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect nor does the Company have any knowledge of any facts that would form a reasonable basis for any such claim; except as described in the Registration Statement, the Pricing Prospectus and the Prospectus, (A) to the Company’s knowledge, there are no third parties who have ownership rights or rights to use any Company Intellectual Property, except for (i) the retained rights of the owners of Company Intellectual Property which is licensed to the Company or the subsidiaries and (ii) the rights of customers and strategic and channel partners to use Company Intellectual Property in the ordinary course, consistent with past practice, (B) there is no pending, or to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s rights or any of the subsidiaries’ rights in or to any Company Intellectual Property, (C) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any Company Intellectual Property, (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any of the subsidiaries infringes or misappropriates any intellectual property or other proprietary rights of others, (E) to the Company’s knowledge, no Company Intellectual Property has been obtained or is being used by the Company or any of the subsidiaries in violation of any contractual obligation binding on the Company or any of the subsidiaries, or otherwise in violation of the rights of any
 
6

persons, except, in the case of each of (A) through (D) above, where the outcome of which would not reasonably be expected to be material in light of all relevant facts and circumstances to the Company and its subsidiaries, taken as a whole;] the Company and its subsidiaries have taken reasonable steps necessary to secure interests in the Company Intellectual Property developed by their employees, consultants, agents and contractors in the course of their service to the Company; there are no outstanding options, licenses or binding agreements of any kind relating to the Company Intellectual Property owned by the Company or any of the subsidiaries that are required to be described in the Registration Statement, the Pricing Prospectus and the Prospectus and are not described in all material respects; the Company and its subsidiaries are not a party to or bound by any options, licenses or binding agreements with respect to any material intellectual property of any other person or entity that are required to be set forth in the Registration Statement and the Prospectus and are not described in all material respects; the Company and its subsidiaries have used all software and other materials distributed under a “free,” “open source,” or similar licensing model (including but not limited to the GNU General Public License, GNU Lesser General Public License and GNU Affero General Public License) (“Open Source Materials”) in compliance with all license terms applicable to such Open Source Materials, except where the failure to comply would not reasonably be expected to be material to the Company and its subsidiaries, taken as a whole; neither the Company nor any of the subsidiaries has used or distributed any Open Source Materials in a manner that requires or has required (A) the Company or any of the subsidiaries to permit reverse engineering of any products or services of the Company or any of the subsidiaries, or any software code or other technology owned by the Company or any of the subsidiaries or (B) any products or services of the Company or any of the subsidiaries, or any software code or other technology owned by the Company or any of the subsidiaries, to be (i) disclosed or distributed in source code form, (ii) licensed for the purpose of making derivative works, or (iii) redistributed at no charge, except, in the case of each of (A) and (B) above, such as would not reasonably be expected to be material to the Company and its subsidiaries taken as a whole;
(xxii) The financial statements, including the notes thereto, and the supporting schedules included in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly in all material respects the financial position at the dates indicated therein and the cash flows and results of operations for the periods indicated therein of the Company and its subsidiaries; except as otherwise stated in the Registration Statement, the Pricing Prospectus and the Prospectus, such financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved; and the supporting schedules, if any, included in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly in all material respects the information required to be stated therein. The selected historical financial data set forth in the Registration Statement, the Pricing Prospectus and the Prospectus under the captions “Prospectus Summary—Summary Consolidated Financial and Other Data” and “Selected Consolidated Financial and Other Data” present fairly in all material respects the information included therein; no other financial statements or supporting schedules are required to be included in the Registration Statement; the other financial and related statistical information included in the Registration Statement, the Pricing Prospectus and the Prospectus presents fairly in all material respects the information included therein and has been prepared on a basis consistent with that of the financial statements that are included in the Registration Statement, the Pricing Prospectus and the Prospectus and the books and records of the Company and its subsidiaries; all disclosure contained in the Pricing Prospectus or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Act, to the extent applicable;
 
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(xxiii) There are no off-balance sheet arrangements (as defined in Regulation S-K Item 303(a)(4)(ii)) that may have a material current or future effect on the Company’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources;
(xxiv) Since the date as of which information is given in the Pricing Prospectus, and except as may otherwise be disclosed in the Pricing Prospectus, the Company has not (i) issued or granted any securities, other than pursuant to employee benefit plans, stock option plans or other employee compensation plans disclosed in the Pricing Prospectus or pursuant to outstanding options, rights or warrants, (ii) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business, (iii) entered into any material transaction not in the ordinary course of business or (iv) declared or paid any dividends on its capital stock;
(xxv) The Company has not sold or issued any shares of Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Regulation D of the Securities Act, other than (i) shares issued pursuant to employee benefit plans, stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, or (ii) as disclosed in the Pricing Prospectus;
(xxvi) Except as described in the Pricing Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with this offering;
(xxvii) Except as described in the Pricing Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company or any subsidiary and any person granting such person the right to require the Company or any subsidiary to file a registration statement under the Act with respect to any securities of the Company or any subsidiary owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act except for such rights that have been effectively waived;
(xxviii) Neither the Company, any of its subsidiaries or controlled affiliates or any director or officer of the Company, nor, to the Company’s knowledge, any employee, agent or representative of the Company or any of its subsidiaries or affiliates, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Company, its subsidiaries and controlled affiliates have conducted their businesses in compliance with applicable anti-corruption laws, including the Foreign Corrupt Practices Act of 1977, as amended, and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein;
(xxix) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening
 
8

America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened;
(xxx) Neither the Company, any of its subsidiaries or controlled affiliates or any director or officer of the Company, nor, to the Company’s knowledge, any agent or representative of the Company or any of its subsidiaries, is an individual or entity (“Person”) that is, or is owned or controlled by a Person that is the subject or target of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan and Syria);
(xxxi) The Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person: to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise);
(xxxii) For the past five years, the Company and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions;
(xxxiii) The Company has not and, to its knowledge, no one acting on its behalf has, (i) taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which would reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company or any subsidiaries to facilitate the sale or resale of the Shares, (ii) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, the Shares, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or any subsidiaries other than as contemplated in this Agreement; provided, however, that the Company makes no such representation or warranty with respect to the actions of any Underwriter or affiliate or agent of any Underwriter acting on behalf of such Underwriter.
(xxxiv)(A) Neither the Company nor any subsidiaries is in violation of any applicable statute, law, rule, regulation, ordinance, code, rule of common law or order of or with any governmental agency or body or any court, domestic or foreign, relating to the use, management, disposal or release of hazardous or toxic substances or wastes or relating to pollution or the protection of the environment or human health or relating to exposure to hazardous or toxic substances or wastes (collectively, “Environmental Laws”), which violation would reasonably be expected to result in a material liability of the Company or any of its subsidiaries, (B) neither the Company nor any of its subsidiaries has received any written claim, written request for information or written notice of liability
 
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or investigation arising under, relating to or based upon any Environmental Laws, (C) neither the Company nor any of its subsidiaries is aware of any pending or threatened notice, claim, proceeding or investigation which might lead to material liability under Environmental Laws, (D) the Company does not anticipate incurring material capital expenditures relating to compliance with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, investigation or closure of properties or compliance with Environmental Laws or any permit, license, approval, any related constraints on operating activities and any potential liabilities to third parties) and (E) neither the Company nor any of its subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended;
(xxxv) The Company has operated its business in a manner compliant in all material respects with all privacy and data protection laws and regulations applicable to the Company’s collection, use, transfer, protection, disposal, disclosure, handling, and storage of its customers’ data; the Company has been and is in compliance in all material respects with policies and procedures designed to ensure the integrity and security of the data collected, handled or stored in connection with the delivery of its product offerings; the Company has been and is in compliance in all material respects with policies and procedures designed to ensure privacy and data protection laws are complied with and takes reasonably appropriate steps designed to assure compliance in all material respects with such policies and procedures;
(xxxvi) The Company and its subsidiaries have filed all material foreign, federal, state and local tax returns required to be filed by them through the date hereof, except for tax returns with respect to state sales taxes disclosed in the Pricing Prospectus, or have duly requested extensions thereof, and have paid all taxes shown as due thereon, except for taxes with respect to state sales taxes disclosed in the Pricing Prospectus, which do not individually or in the aggregate, have a Material Adverse Effect, and all such tax returns are true and correct in all material respects; no deficiencies for taxes of the Company or the subsidiaries have been assessed by a tax authority, except with respect to state sales taxes disclosed in the Pricing Prospectus, and no deficiencies for taxes of the Company or the subsidiaries have, to the Company’s knowledge, been proposed by a tax authority, except for such deficiencies as would not, individually or in the aggregate, have a Material Adverse Effect;
(xxxvii) The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are, in the Company’s reasonable judgment, commercially reasonable for the conduct of its business; the Company and its subsidiaries are in compliance with the terms of such policies and instruments in all material respects; there are no material claims by the Company or any of its subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business;
(xxxviii) No labor dispute with or disturbance by the employees of the Company or any of its subsidiaries exists or to the Company’s knowledge, is threatened, and neither the Company nor any of its subsidiaries has received written notice of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that, if it occurred, would, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;
 
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(xxxix) The statistical and market-related data included in the Pricing Prospectus and the Prospectus are based on or derived from sources that the Company believes are reliable and accurate in all material respects; and
(xl) No debt securities of the Company have been accorded a rating by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act.
(xli) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Code would have any liability (each, a “Plan”) has been maintained in compliance in all material respects with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to, ERISA and the Code, except for noncompliance that could not reasonably be expected to result in material liability to the Company or its subsidiaries; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan excluding transactions effected pursuant to a statutory or administrative exemption that could reasonably be expected to result in a material liability to the Company or its subsidiaries; (iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, as applicable, has been satisfied (without taking into account any waiver thereof or extension of any amortization period) and is reasonably expected to be satisfied in the future (without taking into account any waiver thereof or extension of any amortization period); (iv) for each Plan that is an employee pension benefit plan within the meaning of Section 3(2) of ERISA, the fair market value of the assets of each such Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan); (v) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred that has resulted in material liability to the Company or its subsidiaries; (vi) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any material liability under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC, in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA); and (vii) there is no pending audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental agency or any foreign regulatory agency with respect to any Plan that could reasonably be expected to result in material liability to the Company or its subsidiaries. None of the following events has occurred or is reasonably likely to occur: (x) a material increase in the aggregate amount of contributions required to be made to all Plans by the Company or its subsidiaries in the current fiscal year of the Company and its subsidiaries compared to the amount of such contributions made in the Company and its subsidiaries’ most recently completed fiscal year; or (y) a material increase in the Company and its subsidiaries’ “accumulated post-retirement benefit obligations” (within the meaning of Statement of Financial Accounting Standards 106) compared to the amount of such obligations in the Company and its subsidiaries’ most recently completed fiscal year.
(xlii) This Agreement has been duly authorized, executed and delivered by the Company.
2. Subject to the terms and conditions herein set forth, (a) the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price per share of $[              ], the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto and (b) in the event and to the
 
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extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price per share set forth in clause (a) of this Section 2, that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at their election up to [              ] Optional Shares, at the purchase price per share set forth in the paragraph above, provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares may be exercised only by written notice from the Representatives to the Company, given within a period of 30 calendar days after the date of this Agreement, setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.
4.(a) The Shares to be purchased by each Underwriter hereunder, in electronic form, and in such authorized denominations and registered in such names as Goldman, Sachs & Co. may request upon at least forty-eight hours’ prior notice to the Company shall be delivered by or on behalf of the Company to Goldman, Sachs & Co., through the facilities of the Depository Trust Company (“DTC”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company to Goldman, Sachs & Co. at least forty-eight hours in advance. The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York City time, on [              ], 2014 or such other time and date as the Representatives and the Company may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York City time, on the date specified by the Representatives in each written notice given by the Representatives of the Underwriters’ election to purchase such Optional Shares, or such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the “First Time of Delivery”, each such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the “Second Time of Delivery”, and each such time and date for delivery is herein called a “Time of Delivery”.
(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriters pursuant to Section 8(j) hereof will be delivered at the offices of Cooley LLP, 101 California Street, 5 th Floor, San Francisco, California 94111 (the “Closing Location”), and the Shares will be delivered at the Designated Office, all at such Time of Delivery. A meeting will be held at the Closing Location at [              ] [a.m./p.m.], New York City time, on the New
 
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York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish you with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with electronic copies of the Prospectus, and use its best efforts to furnish the Underwriters with written copies of the Prospectus, in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer (whose name and address the Underwriters shall furnish to the Company) in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the
 
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Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(e)(1) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus (the “Company Lock-Up Period”), not to (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any class of our common stock or any securities of the Company that are substantially similar to the Shares, including but not limited to any options or warrants to purchase shares of Stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Stock or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Stock or such other securities, in cash or otherwise, without the prior written consent of the Representatives, provided, however, that the foregoing restrictions shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the Company of shares of Stock or Class A Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof, (C) the issuance by the Company of shares of Stock or Class A Common Stock or other securities convertible into or exercisable for shares of Stock or Class A Common Stock, in each case pursuant to the Company’s employee benefit or equity incentive plans, provided that such stock plans are described in the Pricing Prospectus, (D) the filing of a registration statement on Form S-8 or any successor form thereto with respect to the registration of securities to be offered under any employee benefit or equity incentive plans of the Company, or (E) the issuance of shares of Stock or Class A Common Stock or other securities convertible into or exercisable for shares of Stock or Class A Common Stock in connection with transactions that include a commercial relationship (including without limitation, joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) or any acquisition by the Company or any of its Subsidiaries of the securities, business, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by the Company in connection with such acquisition, and the issuance of any such securities pursuant to any such agreement; provided further, that, in the case of this clause (E), the aggregate number of shares issued shall not exceed 5% of the total aggregate number of outstanding shares of Stock and Class A Common Stock immediately following the issuance and sale of the Firm Shares pursuant hereto and the Company shall cause each recipient of such securities to execute and deliver to you, on or prior to the issuance of such securities, a lock-up letter as described in Section 8(h) (and with the same date of expiration), and enter stop transfer instructions with the Company’s transfer agent and registrar on such securities, which the Company agrees it will not waive or amend without the prior written consent of the Representatives, in their sole discretion.
 
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(2) If the Representatives, in their sole discretion, agree to release or waive the restrictions in a lock-up letter pursuant to Section 8(j) hereof, for an officer or director of the Company, and provides the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Annex III hereto through a major news service at least two business days before the effective date of the release or waiver;
(3) To enforce all existing agreements between the Company and any of its securityholders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company’s securities in connection with the Company’s initial public offering until, in respect of any particular securityholder, the earlier to occur of (i) the expiration of the Company Lock-Up Period or (ii) the expiration of any similar arrangement entered into by such securityholder with the Representatives; to direct the transfer agent to place stop transfer restrictions upon any such securities of the Company that are bound by such existing “lock-up,” “market stand-off,” “holdback” or similar provisions of such agreements for the duration of the periods contemplated in the preceding clause; and not to release or otherwise grant any waiver of such provisions in such agreements during such periods without the prior written consent of the Representatives, on behalf of the Underwriters;
(f) During a period of three years from the effective date of the Registration Statement, to furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail, provided that no reports, documents or other information need be furnished pursuant to this Section 5(f) to the extent they are available on EDGAR;
(g) During a period of three years from the effective date of the Registration Statement, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission), provided, however that no such additional information shall be required if the disclosure of additional information would result in a violation of Regulation FD; and provided, further, that the Company may satisfy the requirements of this subsection by filing such information with the Commission via EDGAR;
(h) To use the net proceeds received by it from the sale of the Shares pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption “Use of Proceeds”;
(i) To use its best efforts to list for trading, subject to official notice of issuance, the Shares on the New York Stock Exchange (the “Exchange”);
(j) To file with the Commission such information on Form 10-Q or Form 10-K as may be required by Rule 463 under the Act;
 
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(k) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 3a(c) of the Commission’s Informal and Other Procedures (16 CFR 202.3a);
(l) Upon the request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the “License”); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred; and
(m) To promptly notify you if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Shares within the meaning of the Act and (ii) completion of the Company Lock-Up Period referred to in Section 5(e) hereof.
6.(a) The Company represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Act; and each Underwriter represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; any such free writing prospectus the use of which has been consented to by the Company and the Representatives is listed on Schedule II(a) hereto;
(b) The Company represents and agrees that (i) it has not engaged in, or authorized any other person to engage in, any Section 5(d) Communications, other than Section 5(d) Communications with the prior consent of the Representatives with entities that are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a) under the Act; and (ii) it has not distributed, or authorized any other person to distribute, any Section 5(d) Writings, other than those distributed with the prior consent of the Representatives that are listed on Schedule II(b) hereto; and the Company reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Section 5(d) Communications;
(c) The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Company represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show;
(d) Each Underwriter represents and agrees that any Section 5(d) Communications undertaken by it were with entities that are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a) under the Act; and
(e) The Company agrees that, if at any time following issuance of an Issuer Free Writing Prospectus or Section 5(d) Writing, any event occurred or occurs as a result of which such Issuer Free Writing Prospectus or Section 5(d) Writing would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish
 
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without charge to each Underwriter an Issuer Free Writing Prospectus, Section 5(d) Writing or other document which will correct such conflict, statement or omission; provided, however, that this covenant shall not apply to any statements or omissions in an Issuer Free Writing Prospectus or Section 5(d) Writing prepared or authorized by the Company made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein.
7. The Company covenants and agrees with the several Underwriters that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters up to a maximum of $15,000, in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters up to a maximum of $40,000, in connection with, any required review by FINRA of the terms of the sale of the Shares; (vi) the cost of preparing stock certificates; if applicable (vii) the cost and charges of any transfer agent or registrar, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the Shares, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Company and any such consultants and fifty (50) percent of the cost of aircraft and other transportation chartered in connection with the road show; and (ix) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 9 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, any advertising expenses connected with any offers they may make and travel and lodging expenses of the representatives of the Underwriters and fifty (50) percent of the cost of any aircraft and other transportation chartered in connection with the road show.
8. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of such Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon
 
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Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction;
(b) Cooley LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions, dated such Time of Delivery, in form and substance satisfactory to the Representatives, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(c) Fenwick & West LLP, counsel for the Company, shall have furnished to you their written opinion, dated such Time of Delivery, substantially in the form set forth in Annex II;
(d) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex I hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex I(a) hereto and a form of the letter to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex I(b) hereto);
(e)(i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the capital stock (other than as a result of the exercise of any outstanding stock options or warrants, the award of stock options in the ordinary course of business pursuant to the Company’s equity incentive plans that are described in the Pricing Prospectus, the repurchase of shares of capital stock in connection with any early exercise of stock options by option holders from employees terminating their service to the Company or the conversion of a security outstanding on the date hereof) or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, consolidated financial position, consolidated stockholders’ equity or consolidated results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus;
(f) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the NYSE or on the Nasdaq Stock Market; (ii) a suspension or material limitation in trading in the Company’s securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or
 
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New York or California State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(g) The Shares to be sold at such Time of Delivery shall have been duly listed on the Exchange;
(h) The Company shall have obtained and delivered to the Underwriters executed copies of an agreement from each director, officer and certain other holders of the Company’s securities as you may require, substantially to the effect set forth in Annex IV hereto in form and substance satisfactory to you;
(i) The Company shall have delivered to the Underwriters on the date of the Prospectus at a time prior to the execution of this Agreement and at such Time of Delivery a certificate of the Chief Financial Officer of the Company, substantially in the form attached as Annex V hereto;
(j) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company satisfactory to you as to the accuracy of the representations and warranties of the Company herein at and as of such Time of Delivery, as to the performance by the Company of all of its obligations hereunder to be performed at or prior to such Time of Delivery, as to such other matters as you may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (f) of this Section 8.
9.(a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or any Section 5(d) Writing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Section 5(d) Writing, in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein.
 
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(b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any Section 5(d) Writing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any Section 5(d) Writing, in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) of this Section 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such
 
20

amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company) and to each person, if any, who controls the Company within the meaning of the Act.
10.(a) If any Underwriter shall default in its obligation to purchase the Shares that it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Shares, or the Company notifies you that it has so arranged for the purchase of such Shares, you or the Company shall have the right to postpone such Time of Delivery
 
21

for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to a Second Time of Delivery, the obligations of the Underwriters to purchase and of the Company to sell the Optional Shares) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Shares.
12. If this Agreement shall be terminated pursuant to Section 10 hereof, the Company shall not then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason (other than by operation of Section 8(f)(i), (iii), (iv) or (v)), any Shares are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company shall then be under no further liability to any Underwriter except as provided in Sections 7 and 9 hereof.
 
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13. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representatives.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to you as the Representatives in care of Goldman, Sachs & Co., 200 West Street, New York, New York 10282-2198, Attention: Registration Department, and in care of Morgan Stanley & Co. LLC, 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth on the cover of the Registration Statement, Attention: Secretary; and if to any stockholder that has delivered a lock-up letter described in Section 8(h) hereof shall be delivered or sent by mail to his or her respective address provided in writing to the Company; provided, however, that any notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by you on request; provided, however, that notices under Section 5(e) hereof shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to you as the Representatives at Goldman, Sachs & Co., 200 West Street, New York, New York 10282-2198, Attention: Control Room, and at Morgan Stanley & Co. LLC, 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
15. Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.
16. The Company acknowledges and agrees that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company agrees that it will not claim that the Underwriters, or any of them,
 
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has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.
17. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
18. THIS AGREEMENT AND ANY MATTERS RELATED TO THIS TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The Company agrees that any suit or proceeding arising in respect of this agreement or our engagement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Company agrees to submit to the jurisdiction of, and to venue in, such courts.
19. The Company and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
20. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
21. Notwithstanding anything herein to the contrary, the Company is authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.
[Remainder of this page intentionally left blank.]
 
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If the foregoing is in accordance with your understanding, please sign and return to us five counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters and the Company. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof.

Very truly yours,
 
CASTLIGHT HEALTH, INC.	 		
				
By:	 	 	 	 	 		
	 	Name:	 	 	 	 	
	 	Title:	 	 	 	 	

Accepted as of the date hereof:
GOLDMAN, SACHS & CO.

				
By:	 	 	 	 	 		
	 	Name:	 	 	 	 	
	 	Title:	 	 	 	 	
MORGAN STANLEY & CO. LLC

				
By:	 	 	 	 	 		
	 	Name:	 	 	 	 	
	 	Title:	 	 	 	 	
On behalf of each of the Underwriters

SCHEDULE I

Underwriter	  	Total Number of
Firm Shares to
be Purchased	  	Number of
Optional
Shares to be
Purchased if
Maximum
Option
Exercised	
Goldman, Sachs & Co.	  		  		
Morgan Stanley & Co. LLC	  		  		
Allen & Company LLC	  		  		
Stifel, Nicolaus & Company, Incorporated	  		  		
Canaccord Genuity Inc.	  		  		
Raymond James & Associates, Inc.	  		  		
	  	 	  	 	
Total	  		  		

SCHEDULE II
(a) Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package
[None]
(b) Section 5(d) Writings
Company presentation dated February 2014.
(c) Information other than the Pricing Prospectus that comprise the Pricing Disclosure Package
The initial public offering price per share for the Shares is $[              ].
The number of Shares purchased by the Underwriters is [              ].
[Add any other pricing disclosure.]

ANNEX I(a)
FORM OF COMFORT LETTER DELIVERED
PRIOR TO EXECUTION OF THIS AGREEMENT

ANNEX I(b)
FORM OF COMFORT LETTER TO BE DELIVERED
AT EACH TIME OF DELIVERY

ANNEX II
FORM OF OPINION OF
COUNSEL FOR THE COMPANY
 
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Annex III
Form of Press Release
Castlight Health, Inc.
[Date]
Castlight Health, Inc. (the “Company”) announced today that Goldman, Sachs & Co. and Morgan Stanley & Co. LLC, the lead joint book-running managers in the Company’s recent public sale of shares of common stock, are [waiving] [releasing] a lock-up restriction with respect to shares of the Company’s Class B common stock held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on                         , 201    , and the shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
 
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ANNEX IV
FORM OF LOCK-UP AGREEMENT
Castlight Health, Inc.
December __, 2013
Goldman, Sachs & Co.
Morgan Stanley & Co. LLC
As Representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement
c/o Goldman, Sachs & Co.
200 West Street
New York, NY 10282-2198
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, NY 10036
 
 	Re:	Castlight Health, Inc. - Lock-Up Agreement	
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the “Representatives”), propose to enter into an Underwriting Agreement (the “Underwriting Agreement”) on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the “Underwriters”), with Castlight Health, Inc., a Delaware corporation (the “Company”), providing for a public offering (“Public Offering”) of the Class B common stock (the “ Common Stock”) of the Company (the “Shares”) pursuant to a Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission (the “SEC”).
In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period specified in the following paragraph (the “Stockholder Lock-Up Period”), the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, or publicly disclose an intention to take any such actions with respect to, any shares of any class of Common Stock of the Company, or any options or warrants to purchase any shares of any class of Common Stock of the Company, or any securities convertible into, exchangeable for or that represent the right to receive shares of any class of Common Stock of the Company (including without limitation shares of the Company’s Class A common stock), whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the “Undersigned’s Shares”). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction
 
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which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s Shares even if the Undersigned’s Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned’s Shares or with respect to any security that includes, relates to, or derives any significant part of its value from the Undersigned’s Shares.
The Stockholder Lock-Up Period will commence on the date of this Lock-Up Agreement and continue for 180 days after the Public Offering date set forth on the final prospectus (“Prospectus”) used to sell the Shares (the “Public Offering Date”) pursuant to the Underwriting Agreement.
If the undersigned is an officer or director of the Company, (1) the undersigned further agrees that the foregoing restrictions shall be equally applicable to any issuer-directed Shares the undersigned may purchase in the Public Offering, (2) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of shares of Common Stock of the Company, the Representatives will notify the Company of the impending release or waiver, and (3) the Company has agreed or will agree in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this letter to the extent and for the duration that such terms remain in effect at the time of the transfer.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any member of the undersigned’s immediate family or any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the transferee agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (iii) in transactions relating to shares of Common Stock or securities convertible into or exercisable for shares of Common Stock acquired in open market transactions after the Public Offering, (iv) in connection with the exercise of options, warrants or other rights to acquire shares of Common Stock or any security convertible into or exercisable for shares of Common Stock in accordance with their terms (including the settlement of restricted stock units and including, in each case, by way of net exercise and/or to cover withholding tax obligations in connection with such exercise, but for the avoidance of doubt, excluding all manners of exercise that would involve a sale of any securities, whether to cover the applicable aggregate exercise price, withholding tax obligations or otherwise) pursuant to an employee benefit plan, option, warrant or other right disclosed in the Prospectus, provided that any such shares issued upon exercise of such option, warrant or other right shall be subject to the restrictions set forth herein, (v) by will or intestate succession upon the death of the undersigned, provided that the legatee, heir or other transferee, as the case may be, agrees to be bound in writing by the restrictions set forth herein, (vi) pursuant to a
 
6

court order or settlement agreement related to the distribution of assets in connection with the dissolution of a marriage or civil union, provided that the transferee agrees to be bound in writing by the restrictions set forth herein, (vii) to the Company pursuant to agreements under which the Company has the option to repurchase such shares or a right of first refusal with respect to transfers of such shares upon termination of service of the undersigned, (viii) the conversion of outstanding shares of preferred stock of the Company into shares of Common Stock of the Company, provided that the shares of Common Stock received upon conversion shall be subject to the restrictions set forth herein, and (ix) with the prior written consent of the Representatives on behalf of the Underwriters; provided that in the case of clauses (i) through (vi) above, no filing under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any other public filing or disclosure of such transfer by or on behalf of the undersigned shall be required or voluntarily made during the Stockholder Lock-up Period (other than a filing on a Form 5 made after the expiration of the Lock-up Period and, with respect to clause (vi), other than a filing required to be made on a Form 4). For purposes of this Lock-Up Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.
In addition, notwithstanding the foregoing, the undersigned may establish a trading plan pursuant to Rule 10b5-1 promulgated under the Exchange Act; provided, however, that (i) such plan does not provide for the transfer of the Undersigned’s Shares during the Stockholder Lock-up Period, (ii) no public filing or disclosure of such transfer by or on behalf of the undersigned shall be required or voluntarily made during the first 120 days following the Public Offering date set forth on the Prospectus and (iii) to the extent a public announcement or filing regarding the establishment of such plan shall be made during the last 60 days of the Stockholder Lock-Up Period, such public announcement or filing shall include a statement to the effect that no transfer of Common Stock may be made under such plan during the Stockholder Lock-Up Period.
In addition, notwithstanding the foregoing, if the undersigned is a corporation, partnership, limited liability company or other business entity, the undersigned may transfer the Undersigned’s Shares to (A) to a direct or indirect affiliate (within the meaning set forth in Rule 405 as promulgated by the SEC under the Securities Act of 1933, as amended, including any wholly-owned subsidiary of the undersigned or to the parent entity of the undersigned) and (B) limited partners, members or stockholders of the undersigned; provided , however , that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such capital stock subject to the provisions of this Lock-Up Agreement and there shall be no further transfer of such capital stock except in accordance with this Lock-Up Agreement, and provided further that any such transfer shall not involve a disposition for value. The undersigned now has, and, except as contemplated by this Lock-Up Agreement, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned’s Shares, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors, and assigns.
 
7

This Lock-Up Agreement will automatically terminate upon the earliest to occur, if any, of (a) the date the Company advises the Representatives in writing, prior to the execution of the Underwriting Agreement, that it has determined not to proceed with the Public Offering, (b) the date of the termination of the Underwriting Agreement if prior to the closing of the Public Offering, and (c) June 30, 2014 if the Underwriting Agreement has not been executed and delivered by the Company by such date (provided that the Company may by written notice to the undersigned prior to June 30, 2014 extend such date for a period of up to an additional three months).
[signature page follows]
 
8

	
Very truly yours,	

	

Name of Shareholder (Print exact name )	

			
By:	 	 	
	 	Signature	

If not signing in an individual capacity:	

Name of Authorized Signatory (Print )	

Title of Authorized Signatory (Print )	
	
(indicate capacity of person signing if signing as custodian, trustee or on behalf of an entity)	

ANNEX V
FORM OF CHIEF FINANCIAL OFFICER’S CERTIFICATE
CASTLIGHT HEALTH, INC.

Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CASTLIGHT HEALTH, INC.
Castlight Health, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “ Corporation ”), DOES HEREBY CERTIFY:
FIRST: The Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware on January 31, 2008 under the name Maria Health, Inc. An Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on April 4, 2008. Thereafter, an Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on November 6, 2008, which was amended by a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on July 28, 2009, changing the name of the Corporation to Ventana Health Services, Inc. An Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on August 21, 2009, which was amended by a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on April 5, 2010, changing the name of the Corporation to Castlight, Inc., and a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on April 23, 2010, changing the name of the Corporation to Castlight Health, Inc. Thereafter, an Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on June 7, 2010. An Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on April 25, 2012, which was amended by a Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on December 13, 2013, increasing the authorized shares of capital stock of the Corporation, a Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on December 30, 2013, reclassifying each outstanding shares of Class B Common stock into a share of Class A Common Stock, and a Certificate of Correction filed with the Secretary of State of the State of Delaware on February 4, 2014, correcting the spelling of the authorized shares of capital stock (the “ Restated Certificate ”).
SECOND: The Amended and Restated Certificate of Incorporation of the Corporation in the form attached hereto as Exhibit A , which restates, integrates and further amends the Restated Certificate, has been duly adopted in accordance with the provisions of Sections 228, 245 and 242 of the General Corporation Law of the State of Delaware by the directors and stockholders of the Corporation.
THIRD: The Amended and Restated Certificate of Incorporation so adopted reads in full as set forth in Exhibit A attached hereto and is hereby incorporated herein by this reference.

IN WITNESS WHEREOF, Castlight Health, Inc. has caused this Certificate to be signed by its Chief Executive Officer this 3rd day of March, 2014.

By 	 	/s/ Giovanni Colella	
	 	Giovanni Colella
Chief Executive Officer	

EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CASTLIGHT HEALTH, INC.
ARTICLE I.
The name of this Corporation is Castlight Health, Inc.
ARTICLE II.
The address of the registered office of the Corporation in the State of Delaware and the County of New Castle is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 and the name of the registered agent at that address is Corporation Service Company.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV.
A. Classes of Stock .
1. Authorized Shares . This Corporation is authorized to issue preferred stock (“ Preferred Stock ”), Class A common stock (“ Class A Common Stock ”) and Class B common stock (“ Class B Common Stock ” and together with the Class A Common Stock, “ Common Stock ”). The total number of shares of capital stock that this Corporation is authorized to issue is Two Hundred Ninety-Four Million Four Hundred Seventy Five Thousand Six Hundred Sixty Two (294,475,662) shares. The total number of shares of Preferred Stock this Corporation has authority to issue is Sixty-Four Million Four Hundred Seventy Five Thousand Six Hundred Sixty Two (64,475,662) shares. The total number of shares of Class A Common Stock this Corporation has authority to issue is Ninety-Five Million (95,000,000) shares. The total number of shares of Class B Common Stock this Corporation has authority to issue is One Hundred Thirty-Five Million (135,000,000) shares. The Preferred Stock shall have a par value of $0.0001 per share and the Common Stock shall have a par value of $0.0001 per share.
2. Classes of Common Stock . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Incorporation:
a. at no time shall the number of shares of Common Stock issued and outstanding exceed, in the aggregate, One Hundred Thirty-Five Million (135,000,000) shares of Common Stock (assuming full conversion and exercise of all outstanding convertible and

exercisable securities and including shares of Common Stock reserved for issuance but not yet issued under stock option or other equity compensation plans or agreements on terms approved by the Board), provided at no time shall the number of shares of Class A Common Stock issued and outstanding exceed, in the aggregate, Ninety-Five Million (95,000,000) shares of Class A Common Stock (assuming full conversion and exercise of all outstanding convertible and exercisable securities and including shares of Class A Common Stock reserved for issuance but not yet issued under stock option or other equity compensation plans or agreements on terms approved by the Board); and
b. prior to the consummation of the sale of the Corporation’s Common Stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended (the “ Securities Act ”), on the New York Stock Exchange or NASDAQ, which results in gross aggregate proceeds to the Corporation (before payment of any underwriters’ discounts and expenses relating to the issuance) of at least $50,000,000 (a “ Qualified IPO ”), this Corporation shall have authority to issue shares of Class A Common Stock and shares of Class B Common Stock; provided, however, that any shares of Class B Common Stock issued prior to the consummation of a Qualified IPO shall require the approval of the Board of Directors of the Company (the “ Board of Directors ”), including the approval of each director designated and then serving pursuant to Section C.4(d), (e) or (f) below, unless such shares are issued in accordance with Section C.5(g) or Section C.6.
3. Series of Preferred Stock . The Preferred Stock shall be divided into series. Eight Million (8,000,000) shares of Preferred Stock shall be designated “ Series A Preferred Stock ,” Ten Million (10,000,000) shares of Preferred Stock shall be designated “ Series A-1 Preferred Stock ,” Fifteen Million Three Hundred Fifteen Thousand Three Hundred Fourteen (15,315,314) shares of Preferred Stock shall be designated “ Series B Preferred Stock ,” Fourteen Million Five Hundred Ninety-Four Thousand Five Hundred Ninety-Eight (14,594,598) shall be designated “ Series C Preferred Stock ” and Sixteen Million Five Hundred Sixty Five Thousand Seven Hundred Fifty (16,565,750) shares of Preferred Stock shall be designated “Series D Preferred Stock.”
B. [Intentionally Omitted.]
C. The powers, preferences, privileges, rights, restrictions, limitations, qualifications, and other matters relating to the Preferred Stock are as follows:
1. Dividends .
a. The holders of the Series A Preferred Stock, the holders of the Series A-1 Preferred Stock, the holders of the Series B Preferred Stock, the holders of the Series C Preferred Stock and the holders of the Series D Preferred Stock shall be entitled to receive dividends on a pari passu basis at the rate of $0.01 per share, $0.024 per share, $0.0888 per share, $0.32888888 per share and $0.4829248 per share, respectively, per annum (each as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like), payable out of funds legally available therefor (payable other than in Common Stock) prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock) on the Common Stock of this Corporation. Such dividends shall be payable only when, as, and if declared by the Board of Directors and shall be non-cumulative.

b. After the holders of the Preferred Stock have received their full dividend preferences as set forth above, any additional dividends or distributions declared by the Board of Directors out of funds legally available therefor (payable other than in Common Stock) shall be distributed ratably among all holders of Common Stock and Preferred Stock (on an as-converted to Common Stock basis) as of the record date fixed for determining those entitled to receive such distribution.
c. In the event the Corporation shall declare a distribution (other than a distribution described in Section C.2) payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights to purchase any such securities or evidences of indebtedness, then, in each such case the holders of the Preferred Stock shall be entitled to a proportionate share of any such distribution as though the holders of the Preferred Stock were the holders of the number of shares of Common Stock into which their respective shares of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution.
2. Liquidation Preference .
a. In the event of any Liquidation Event (as defined below), whether voluntary or involuntary, the holders of the Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or any type of consideration or funds of the Corporation available for distribution or payment to the holders of the Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock by reason of their ownership thereof, the amount of $6.03656 per share of Series D Preferred Stock (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like) plus an amount equal to all declared but unpaid dividends on such share for each share of Series D Preferred Stock then held by them. If the assets, consideration and funds thus distributed among the holders of the Series D Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets, consideration and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series D Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive under this Section C.2(a).
b. After payment in full of the liquidation preference with respect to the Series D Preferred Stock as provided in Section C.2(a), the holders of the Series C Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or any type of consideration or funds of the Corporation available for distribution or payment to the holders of the Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock and Common Stock by reason of their ownership thereof, the amount of $4.11111 per share of Series C Preferred Stock (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like)

plus an amount equal to all declared but unpaid dividends on such share for each share of Series C Preferred Stock then held by them. If the assets, consideration and funds thus distributed among the holders of the Series C Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets, consideration and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series C Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive under this Section C.2(b).
c. After payment in full of the liquidation preference with respect to the Series D Preferred Stock and Series C Preferred Stock as provided in Sections C.2(a) and C.2(b), the holders of the Series A Preferred Stock, the holders of the Series A-1 Preferred Stock and the holders of the Series B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or any type of consideration or funds of the Corporation available for distribution or payment to the holders of the Common Stock by reason of their ownership thereof, the amount of $0.125 per share of Series A Preferred Stock, $0.30 per share of Series A-1 Preferred Stock and $1.11 per share of Series B Preferred Stock, respectively (each as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like), on a pari passu basis, plus an amount equal to all declared but unpaid dividends on such share for each share of Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock, as applicable, then held by them. If the assets, consideration, and funds thus distributed among the holders of the Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets, consideration and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive under this Section C.2(c).
d. After payment in full of the liquidation preferences with respect to the Preferred Stock as provided in Sections C.2(a), (b) and (c), the entire remaining assets, consideration, or funds of the Corporation legally available for distribution, if any, shall be distributed ratably among the holders of Preferred Stock and Common Stock based on the number of shares of Common Stock (including shares of Common Stock issued or issuable upon conversion of the Preferred Stock) then held by each, until such time as the holders of Preferred Stock have each received in the aggregate (including the amounts set forth in Sections C.2(a), (b) and (c) above) an amount equal to $0.375 per share of Series A Preferred Stock, $0.90 per share of Series A-1 Preferred Stock, $3.33 per share of Series B Preferred Stock, $12.33333 per share of Series C Preferred Stock and $18.10968 per share of Series D Preferred Stock, respectively (each as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like), on a pari passu basis, plus an amount equal to all declared but unpaid dividends on such share for each share of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, as applicable, then held by them. Thereafter, all remaining assets, consideration and funds legally available therefor shall be distributed ratably among the holders of Common Stock based on the number of shares of Common Stock then held by each.

Notwithstanding the foregoing paragraphs of this Section C.2, for purposes of determining the amount the holders of shares of a particular series of Preferred Stock are entitled to receive with respect to a Liquidation Event, each holder of shares of a series of Preferred Stock shall receive an amount per share equal to the amount such holder would receive had such holder converted such holder’s shares of such series of Preferred Stock into shares of Common Stock immediately prior to the Liquidation Event if, as a result of an actual conversion, such holder would receive, in the aggregate for all distributions of proceeds of such Liquidation Event that qualify as Initial Consideration (as defined below), an amount greater than the amount that would be distributed to such holder if such holder did not convert such series of Preferred Stock into shares of Common Stock (an “ Alternative Payment ”). In the event of an Alternative Payment, all shares of Preferred Stock subject to such Alternative Payment shall be treated solely as Common Stock, and shall not be entitled to any preferential distributions that would otherwise have been made in respect of such shares of Preferred Stock pursuant to the foregoing paragraphs of this Section C.2.
e. For purposes of this Amended and Restated Certificate of Incorporation, unless otherwise agreed in writing by (x) the holders of at least a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis and (y) the holders of at least a majority of the outstanding shares of Series D Preferred Stock, voting together as a single class, “ Liquidation Event ” shall mean (i) any acquisition of the Corporation by means of merger or other form of corporate reorganization, in a single transaction or in a series of related transactions, in which outstanding shares of the Corporation are exchanged for, converted into or otherwise represent the right to receive securities or other consideration issued, or caused to be issued, by the acquiring entity or its subsidiary and in which the holders of capital stock of the Corporation hold less than 50% of the voting power of the surviving or resulting entity (or, if the surviving entity is a wholly owned subsidiary and such holders hold less than 50% of the voting power of its parent) (other than a mere reincorporation transaction), (ii) a direct or indirect sale, lease, transfer, exclusive license or other disposition in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, (iii) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of this Corporation’s securities), of this Corporation’s then outstanding securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting stock of this Corporation, or (iv) a liquidation, dissolution or winding up of the Corporation. Notwithstanding the foregoing, a bona fide equity financing for primarily capital raising purposes shall not be deemed a Liquidation Event, provided, that (i) the Corporation receives cash and/or cancels or converts debt in exchange for equity securities of the Corporation in such financing, (ii) the Corporation is the surviving corporation of such financing, and (iii) investors in such financing who were not previously equityholders of the Corporation are not provided the right to nominate or elect, or the right to cause the election or nomination of, a majority of the members of the Board of Directors following such financing.
f. Subject to the stockholder waiver right set forth in Section C.2(e), the Corporation shall not have the power to effect a Liquidation Event referred to in Section C.2(e) unless the agreement or plan of merger or consolidation for such transaction provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Sections C.2(a)-(d).

g. Whenever the distribution provided for in this Section C.2 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors (taking into account, if applicable, any restrictions on the free marketability of such assets, securities or other property, arising under applicable securities laws or otherwise, other than restrictions arising solely by virtue of a stockholder’s status as an affiliate of the Corporation) (such determination, the “ Board Valuation ”). Notwithstanding the foregoing, if a distribution provided for in this Section C.2 is payable in non-cash consideration other than securities traded on a securities exchange or over-the-counter (such distribution an “ Illiquid Distribution ”), then the Corporation shall, within ten (10) business days of the intended date of such Illiquid Distribution (the “ Closing Date ”), notify in writing the holders of Series D Preferred Stock of the Board Valuation of such non-cash consideration (or the formula or method by which such Board Valuation will be determined), which Board Valuation (or formula or method) shall be binding upon and deemed approved by the holders of Series D Preferred Stock unless the Corporation receives, within five (5) business days prior to the Closing Date, written notification by the holders of a majority of the shares of Series D Preferred Stock then outstanding (the “ Requisite Series D Holders ”) containing a reasonable good faith dispute of the Board Valuation (a “ Dispute Notice ”). If the Corporation receives a Dispute Notice within the time period specified in the immediately preceding sentence, then the fair market value of such non-cash consideration shall be determined by an independent appraiser jointly selected by the Board of Directors and the Requisite Series D Holders (the “ Appraiser ”); provided, that, if the Board of Directors and the Requisite Series D Holders are unable to jointly select an Appraiser within two (2) days of the Corporation’s receipt of such Dispute Notice, then the Board of Directors and the Requisite Series D Holders shall each select an independent appraiser (a “ Second Appraiser ”) (and notify the other party(ies) in writing of such selection), and within one (1) day thereafter and the Second Appraisers shall jointly select the Appraiser; and provided, further, that if either the Board of Directors or the Requisite Series D Holders fails to select a Second Appraiser in the two (2) day period described in the immediately preceding proviso, then the Second Appraiser that was selected by the Board of Directors or the Requisite Series D Holders (as applicable) shall be entitled to and shall act as the Appraiser. The Corporation shall make reasonably available to the Appraiser sufficient information regarding the non-cash consideration for the Appraiser to conduct a fair market value determination (the “ Appraiser Valuation ”), and to provide reasonable and appropriate access to the Corporation’s directors, officers and key employees. The Appraiser Valuation shall be final and binding. In the event the Appraiser Valuation is less than the Board Valuation, the Corporation shall pay the fees and expenses of the Appraiser. In the event that the Appraiser Valuation is equal to or greater than the Board Valuation, the Requisite Series D Holders participating in such appraisal process shall pay the fees and expenses of the Appraiser (and such Requisite Series D Holders shall allocate such fees and expenses amongst themselves based on their respective ownership of shares of Series D Preferred Stock). No Illiquid Distribution shall be consummated until a Board Valuation or Appraiser Valuation, as applicable, has been completed in accordance with this Section C.2(g).

h. Notwithstanding any other provision set forth in this Section 2, in the event that any consideration payable to the Corporation or its stockholders in connection with any Liquidation Event is contingent upon the occurrence of any event or the passage of time (including, without limitation, any deferred purchase price payments, installment payments, payments made in respect of any promissory note issued in such transaction, payments from escrow, purchase price adjustment payments or payments in respect of “earnouts” or holdbacks), (i) such consideration shall not be deemed received by the Corporation or its stockholders or available for distribution to such stockholders unless and until such consideration is indefeasibly received by the Corporation or its stockholders in accordance with the terms of such Liquidation Event, (ii) the portion of such consideration that is not subject to any contingencies (the “ Initial Consideration ”) shall be allocated among the holders of capital stock of the Corporation in accordance with Sections C.2(a), C.2(b), C.2(c) and C.2(d) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event, and (iii) any additional consideration which becomes payable to the stockholders of the Corporation upon satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections C.2(a), C.2(b), C.2(c) and C.2(d) after taking into account the previous payment of the Initial Consideration as part of the same transaction.
i. The Corporation shall not consummate any Liquidation Event before the expiration of the applicable notice period set forth in Section C.5(i); provided that any such notice period may be shortened or eliminated upon written consent of the holders of at least a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis. In the event the requirements of this Section C.2(i) are not complied with, the Corporation shall either (i) cause the closing of any such Liquidation Event to be postponed until such time as the requirements of C.5(i) have been complied with, or (ii) cancel such transaction, in which event the respective rights, preferences and privileges of the holders of Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the notice contemplated by C.5(i). Unless otherwise agreed upon by the holders of at least a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, the Corporation shall effect a dissolution of the Corporation under the General Corporation Law within 180 days after the consummation of a Liquidation Event.
3. Redemption . The Preferred Stock shall not be redeemable at the option of the holder or holders thereof or the Corporation.
4. Voting Rights; Directors .
a. Each holder of shares of Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred Stock could then be converted and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly provided herein or as required by law, voting together with the Common Stock as a single class on an as-converted to Common Stock basis) and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation (the “ Bylaws ”). Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be then converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

b. Except as otherwise provided herein or required by law, each holder of shares of Class A Common Stock or Class B Common Stock shall be entitled to one (l) vote for each share of Common Stock held and the Class A Common Stock and the Class B Common Stock shall vote together as a single class. Notwithstanding anything to the contrary contained herein, upon and after the consummation of a Qualified IPO, for so long as twenty-five (25) percent is less than or equal to the percentage determined by multiplying one hundred (100) by the quotient obtained by dividing (i) the number of shares of Class A Common Stock then outstanding by (ii) the number of shares of Class A Common Stock outstanding immediately prior to the consummation of such Qualified IPO, including shares of Class A Common Stock issued pursuant to the automatic conversion provisions of Section C.5(b) and excluding any shares of Class A Common Stock converted into shares of Class B Common Stock prior to the consummation of such Qualified IPO pursuant to this Amended and Restated Certificate of Incorporation, including, without limitation, Section C.6(c) (the “ Twenty-Five Percent Condition ”), each holder of shares of Class A Common Stock shall be entitled to ten (10) votes for each share of Class A Common Stock held on any matter submitted to the stockholders of the Corporation requesting approval of a Liquidation Event.
c. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding plus such amount as is sufficient to effect the conversion of all outstanding Convertible Securities (as such term is defined in Section C.5(d))) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by this Amended and Restated Certificate of Incorporation) the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
d. For so long as at least 2,500,000 shares (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like) of Series A Preferred Stock and Series A-1 Preferred Stock remain outstanding, the holders of Series A Preferred Stock and Series A-1 Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect one (1) member of the Board of Directors at any election of directors, whether at a meeting or otherwise.
e. For so long as at least 2,500,000 shares (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like) of Series B Preferred Stock remain outstanding, the holders of Series B Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect one (1) member of the Board of Directors at any election of directors, whether at a meeting or otherwise.

f. For so long as at least 2,500,000 shares (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like) of Series C Preferred Stock remain outstanding, the holders of Series C Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect one (1) member of the Board of Directors at any election of directors, whether at a meeting or otherwise.
g. The holders of the Common Stock, voting together as a single class, shall be entitled to elect one (1) member of the Board of Directors at any election of directors, whether at a meeting or otherwise.
h. The holders of the Preferred Stock and Common Stock, voting together as a single class on an as-converted to Common Stock basis, shall be entitled to elect the remaining members of the Board of Directors at any election of directors, whether at a meeting or otherwise.
5. Conversion of Preferred Stock . The holders of the Preferred Stock shall have conversion rights as follows.
a. Right to Convert . Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, and without the payment of additional consideration by the holder thereof, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Class A Common Stock as is determined by dividing the Original Issue Price for the relevant series of Preferred Stock by the Conversion Price applicable to such share, determined as hereinafter provided, in effect at the time of conversion. The “ Original Issue Price ,” as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like, shall be (i) $0.125 per share of Series A Preferred Stock, (ii) $0.30 per share of Series A-1 Preferred Stock, (iii) $1.11 per share of Series B Preferred Stock, (iv) $4.11111 per share of Series C Preferred Stock and (v) $6.03656 per share of Series D Preferred Stock. The “ Conversion Price ” shall initially be (i) $0.125 per share of Series A Preferred Stock, (ii) $0.30 per share of Series A-1 Preferred Stock, (iii) $1.11 per share of Series B Preferred Stock, (iv) $4.11111 per share of Series C Preferred Stock and (v) $6.03656 per share of Series D Preferred Stock. Such initial Conversion Price shall be adjusted as hereinafter provided.
b. Automatic Conversion . Each share of Preferred Stock shall automatically be converted into shares of Class A Common Stock at the then-effective Conversion Price applicable to such share upon the earlier of (i) the date specified by written consent or agreement of (A) the holders of at least a majority of the shares of Preferred Stock then outstanding, voting together as a single class on an as-converted to Common Stock basis, and (B) the holders of at least a majority of the shares of Series D Preferred Stock then outstanding, or (ii) immediately prior, and subject, to the consummation of a Qualified IPO.
c. Mechanics of Conversion .
(i) Before any holder of Preferred Stock shall be entitled voluntarily to convert the same into shares of Class A Common Stock, or upon the occurrence of an automatic conversion of the Preferred Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for

such stock (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and a bond or an agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), and shall, in the event of an optional conversion pursuant to Section C.5(a), give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued, and, if applicable, any event on which such conversion is contingent. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, (1) a certificate or certificates for the number and class of shares of Common Stock to which such holder shall be entitled as aforesaid and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (2) cash in lieu of any fraction of a share, and (3) payment for any declared but unpaid dividends on any shares of Preferred Stock so converted. In the event of an optional conversion pursuant to Section C.5(a), such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.
(ii) If the conversion is in connection with an underwritten offering of securities pursuant to the Securities Act, the conversion may, at the option of any holder tendering shares of Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such sale of securities. If the conversion is in connection with automatic conversion provisions of Section C.5(b)(i), all holders of record of shares of Preferred Stock shall be provided a written notice by the Corporation regarding such automatic conversion and such conversion shall be deemed to have been made on the conversion date described in the stockholder consent approving such conversion, and the persons entitled to receive shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holders of such shares of Common Stock as of such date.
d. Adjustments to Conversion Price for Certain Diluting Issuances .
(i) Special Definitions . For purposes of this Section C.5(d), the following definitions apply:
(1) “ Options ” shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (defined below).
(2) “ Original Issue Date ” shall mean the first date on which a share of Series D Preferred Stock was issued by the Corporation.

(3) “ Convertible Securities ” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable or exercisable for Common Stock, but excluding options.
(4) “ Additional Shares of Common Stock ” shall mean all shares of Common Stock issued (or, pursuant to Section C.5(d)(iii), deemed to be issued) by the Corporation after the Original Issue Date, other than shares of Common Stock issued or issuable:
(A) upon the exercise, exchange, or conversion of Options or Convertible Securities outstanding as of the Original Issue Date, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;
(B) upon the conversion of shares of Preferred Stock;
(C) to directors, officers, employees, consultants, advisors or contractors of the Corporation pursuant to stock option or other equity compensation plans or agreements on terms approved by the Board of Directors;
(D) in connection with equipment lease financings, bank credit arrangements, real estate leases or similar transactions entered into primarily for non-equity financing purposes approved by the Board of Directors;
(E) as a dividend or distribution on the Preferred Stock;
(F) in connection with a partnering or licensing transaction or a bona fide acquisition of a business or any assets or properties or technology of or by the Corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, pursuant to agreements approved by the Board of Directors;
(G) in a firm commitment underwritten Qualified Public Offering or upon exercise of warrants or rights granted to underwriters in connection with such Qualified Public Offering;
(H) for which adjustment of the Conversion Price of any series of Preferred Stock is made pursuant to Section C.5(e) or C.5(f); or
(I) as a result of an adjustment of the Conversion Price of any series of Preferred Stock pursuant to this Section C.4 or Section C.5 or C.6.
(ii) No Adjustment of Conversion Price . Any provision herein to the contrary notwithstanding, no adjustment in the Conversion Price of a particular series of Preferred Stock shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Section C.5(d)(v) hereof) for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is less than the Conversion Price for that series of Preferred Stock in effect on the date of, and immediately prior to, such issue.

(iii) Deemed Issue of Additional Shares of Common Stock . In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto and assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability (including, without limitation, the passage of time) but without regard to any provisions contained therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustments in the Conversion Price of a particular series of Preferred Stock shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, or are amended or otherwise modified to provide for any increase or decrease in the consideration payable to the Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of a particular series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities (provided, however, that no such adjustment of the Conversion Price shall affect Common Stock previously issued upon conversion of the Preferred Stock);
(3) if the terms of any Option or Convertible Security, the issuance of which did not result in an adjustment to a Conversion Price of a particular series of Preferred Stock pursuant to the terms of Section C.5(d)(iv) (either because the consideration per share of the Additional Shares of Common Stock subject thereto was equal to or greater than the Conversion Prices then in effect, or because such Option or Convertible Security was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security to provide for any decrease in the consideration payable to the Corporation, or increase in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in this Section C.5(d)(iii)) shall be deemed to have been issued effective upon such increase or decrease becoming effective;

(4) upon the expiration of any such Options or rights, the termination of any such rights to convert or exchange or the expiration of any Options or rights related to such Convertible Securities or exchangeable securities, the Conversion Price of a particular series of Preferred Stock, to the extent in any way affected by or computed using such Options, rights or Convertible Securities or Options or rights related to such Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such Options or rights, upon the conversion or exchange of such Convertible Securities or upon the exercise of the Options or rights related to such Convertible Securities;
(5) if the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to a Conversion Price that would result under the terms of this Section C.5(d)(iii) at the time of such issuance or amendment shall instead be effected at the time such number of shares or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the respective Conversion Price that such issuance or amendment took place at the time such calculation can first be made; and
(6) no readjustment pursuant to clause (2), (3), or (4) above shall have the effect of increasing the Conversion Price of a particular series of Preferred Stock to an amount which exceeds the lower of (a) the Conversion Price on the original adjustment date of such series, or (b) the Conversion Price of such series that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock . In the event this Corporation, at any time after the Original Issue Date, shall issue Additional Shares of Common Stock without consideration or for a consideration per share less than the Conversion Price of a particular series of Preferred Stock in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price of that series shall be reduced, concurrently with such issue, to a price (calculated to the nearest thousandth of a cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued. For the purpose of the above calculation, the “number of shares of Common Stock outstanding” shall be deemed to include all shares of Common Stock issuable upon exercise, conversion or exchange of all outstanding Options, Preferred Stock and other Convertible Securities.

(v) Determination of Consideration . For purposes of this Section C.5(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property : Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of non-cash property or securities, be computed at the fair value thereof at the time of such issue, as determined through Board Valuation; provided, that to the extent that such non-cash consideration does not consist of securities traded on a securities exchange or over-the-counter, then the Corporation shall, within ten (10) business days of the intended date of such issuance of Additional Shares of Common Stock (the “ Issuance Date ”), notify in writing the holders of Series D Preferred Stock of the Board Valuation of such non-cash consideration (or the formula or method by which such Board Valuation will be determined), which Board Valuation (or formula or method) shall be binding upon and deemed approved by the holders of Series D Preferred Stock unless the Corporation receives, within five (5) business days prior to the Issuance Date, a Dispute Notice from the Requisite Series D Holders. If the Corporation receives a Dispute Notice within the time period specified in the immediately preceding sentence, then the fair market value of such non-cash consideration shall be determined by an Appraiser in the manner set forth in Section C.2(f). The Corporation shall make reasonably available to the Appraiser sufficient information regarding the non-cash consideration for the Appraiser to conduct an Appraiser Valuation and to provide reasonable and appropriate access to the Corporation’s directors, officers and key employees. The Appraiser Valuation shall be final and binding. In the event the Appraiser Valuation is less than the Board Valuation, the Corporation shall pay the fees and expenses of the Appraiser. In the event that the Appraiser Valuation is equal to or greater than the Board Valuation, the Requisite Series D Holders participating in such appraisal process shall pay the fees and expenses of the Appraiser (and such Requisite Series D Holders shall allocate such fees and expenses amongst themselves based on their respective ownership of shares of Series D Preferred Stock).
(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities . The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section C.5(d)(iii), relating to Options and Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments

relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein designed to protect against dilution) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.
e. Adjustments to Conversion Price for Stock Dividends and for Combinations or Subdivisions of Common Stock . In the event that this Corporation at any time or from time to time after the Original Issue Date shall declare or pay, without consideration, or fix a record date for the determination of holders of Common Stock entitled to receive, any dividend or other distribution on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or in the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the Conversion Price of a particular series of Preferred Stock in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. In the event that this Corporation shall declare or pay, without consideration, or fix a record date for the determination of holders of Common Stock entitled to receive, any dividend or other distribution on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Corporation shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock.
f. Adjustments for Reclassifications and Reorganizations . If the Class A Common Stock issuable upon conversion of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, or the right to receive cash or other property, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section C.5(e) above or a merger or other reorganization referred to in Section C.2(d) above), provision shall be made so that, concurrently with the effectiveness of such reorganization or reclassification, the Preferred Stock remaining outstanding thereafter, if any, shall be convertible into, in lieu of the number of shares of Class A Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock or cash or other property equivalent to the number of shares of Class A Common Stock or amount of cash or other property that would have been subject to receipt by the holders upon conversion of the Preferred Stock immediately before that change.

g. Special Mandatory Conversion .
(i) In the event:
(1) the Board of Directors determines that it is in the best interests of this Corporation for the holders of Preferred Stock of this Corporation to participate in an equity financing (in which case such financing will be deemed a “ Mandatory Offering ”) and determines the aggregate dollar amount to be invested by all holders of Preferred Stock (the “ Aggregate Investment Amount ”), which amount may be more or less than the amount such holders may have the right to invest in such financing pursuant to a right of first offer, if any;
(2) this Corporation delivers at least ten (10) business days’ prior notice (“ Notice ”) to the holders of Preferred Stock (A) stating this Corporation’s bona fide intention to consummate such financing, (B) indicating the number of securities to be offered, (C) indicating the price and terms upon which it proposes to offer such securities, (D) identifying the Pro Rata Share (as defined below) of each holder of Preferred Stock of the Aggregate Investment Amount, and (E) offering each holder of Preferred Stock the right to purchase such holder’s Pro Rata Share of the Aggregate Investment Amount within the time periods set forth in the Notice; and
(3) a holder or an affiliate or designee of such holder of Preferred Stock (a “ Non-Participating Holder ”) does not acquire at least its Pro Rata Share of the Aggregate Investment Amount (regardless of the total amount actually raised in such Mandatory Offering) within the time periods set forth in the Notice;
then that percentage of each Non-Participating Holder’s shares of Preferred Stock equal to the percentage of such Non-Participating Holder’s Pro Rata Share of the Aggregate Investment Amount not acquired by such Non-Participating Holder shall automatically and without further action on the part of such Non-Participating Holder be converted, effective upon, subject to and concurrently with the consummation of the Mandatory Offering (the “ Mandatory Offering Date ”), into shares of Class B Common Stock of this Corporation at the Conversion Price then in effect and applicable. The “ Pro Rata Share ” shall be a fraction, the numerator of which shall be the number of shares of Common Stock issued or issuable upon conversion of all of the Preferred Stock held by the holder immediately prior to the Mandatory Offering Date, and the denominator of which shall be the total number of shares of Common Stock issued or issuable upon conversion of the Preferred Stock outstanding immediately prior to the Mandatory Offering Date (including, for avoidance of doubt, (i) shares held by natural persons or entities and (ii) shares of Series D Preferred Stock, in each case as described in Section C.5(g)(iv)); provided, that, (i) in connection with the first equity offering of Preferred Stock following the date of original filing of this Amended and Restated Certificate of Incorporation, the Pro Rata Share shall in no event be greater than that amount which the holder of Preferred Stock has the right to invest in such offering pursuant to a right of first offer, if any, and (ii) in any event, the Pro Rata Share shall not exceed the number of shares actually offered to the holder of Preferred Stock by the Board of Directors for purchase in the Mandatory Offering. Notwithstanding the foregoing, a holder may assign the right to participate in any future Mandatory Offering to one or more of such holder’s affiliates or designees, and such holder’s Pro Rata Share shall be reduced to the extent any of such affiliates or designees participate in such Mandatory Offering.

(ii) The holder of any shares of Preferred Stock converted pursuant to this Section C.5(g) shall deliver to this Corporation during regular business hours at the office of any transfer agent of this Corporation for the Preferred Stock, or at such other place as may be designated by this Corporation, the certificate or certificates for the shares so converted, duly endorsed or assigned in blank or to this Corporation (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and a bond or an agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate). As promptly as practicable thereafter, this Corporation shall issue and deliver to such holder, at the place designated by such holder, a certificate or certificates for the number of full shares of Class B Common Stock to be issued and such holder shall be deemed to have become a stockholder of record of Class B Common Stock on the Mandatory Offering Date, unless the transfer books of this Corporation are closed on that date, in which event such holder shall be deemed to have become a stockholder of record of Class B Common Stock on the next succeeding date on which the transfer books are open.
(iii) In the event that a holder of Preferred Stock converts any Preferred Stock into Class A Common Stock pursuant to Section C.5(a) within ninety (90) days prior to the date of closing of a Mandatory Offering, such shares of Class A Common Stock shall automatically, and without further action on the part of the holder thereof, be converted, effective upon, subject to and concurrently with the consummation of the Mandatory Offering, into an equal number of shares of Class B Common Stock.
(iv) Notwithstanding the foregoing, this Section C.5(g) does not apply to (x) natural persons or entities held solely by a natural person or the family or estate of such natural person or (y) holders of shares of Series D Preferred Stock (but only with respect to such shares of Series D Preferred Stock).
(v) This Section C.5(g) shall terminate, and be of no further force or effect, upon the earlier of a Qualified IPO and a Liquidation Event.
h. Certificates as to Adjustments . Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Section C.5, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate executed by the Corporation’s President or Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the Preferred Stock.

i. Notices of Record Date . In the event that the Corporation shall propose at any time: (i) to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; (ii) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or (iii) to effect a Liquidation Event; then, in connection with each such event, the Corporation shall send to the holders of Preferred Stock: (1) at least twenty (20) days’ prior written notice of the date on which a record shall be taken for such dividend, distribution rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (ii) and (iii) above; and (2) in the case of the matters referred to in (ii) and (iii) above, at least twenty (20) days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event).
j. Issue Taxes . The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.
k. Reservation of Stock Issuable Upon Conversion . The Corporation shall at all times reserve and keep available out of its authorized but unissued (i) shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock; and (ii) shares of Class B Common Stock, solely for the purpose of effecting the conversion of the shares of the Class A Common Stock, such number of its shares of Class B Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Class A Common Stock. If at any time the number of authorized but unissued shares of Class A Common Stock or Class B Common Stock, as the case may be, shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock or the Class A Common Stock, as applicable, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class A Common Stock or Class B Common Stock, as applicable, to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Amended and Restated Certificate of Incorporation.
l. Fractional Shares . No fractional share shall be issued upon the conversion of any share or shares of Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board of Directors).

m. Notices . Any notice required by the provisions of this Section C.5 to be given to the holders of shares of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, or by overnight courier, and addressed to each holder of record at such holder’s address appearing on the books of the Corporation. The notice provisions set forth in this section may be shortened or waived prospectively or retrospectively by the vote or written consent of the holders of a majority of the Preferred Stock, voting together as a single class on an as-converted to Common Stock basis.
6. Conversion of Class A Common Stock . Shares of Class A Common Stock shall be converted into shares of Class B Common Stock as follows.
a. Right to Convert . Any holder of shares of Class A Common Stock, at the option of such holder, may convert any share of Class A Common Stock held by such holder at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into one (1) share of Class B Common Stock.
b. Twenty-Five Percent Condition . All shares of Class A Common Stock shall automatically be converted into shares of Class B Common Stock, on a one-to-one basis, on the date the Twenty-Five Percent Condition is first no longer satisfied after the consummation of a Qualified IPO.
c. Transfers to Non-Affiliates . Any share of Class A Common Stock shall automatically be converted into one (1) share of Class B Common Stock upon the transfer, assignment, sale or other disposition of such share by the holder (or any of its Affiliates) to which such share of Class A Common Stock was originally issued by the Corporation to a person that is not then an Affiliate of such original holder. “ Affiliate ” shall mean, (i) in the case of a natural person or entity held solely by a natural person or the family or estate of such natural person, any spouse, grandchild or member of the immediate family (including adopted children) of such person, any custodian, trustee (including a trustee of a voting trust), executor or other fiduciary for the account of any spouse, grandchild or member of the immediate family (including adopted children) of such person or any trust for the benefit of such person; or (ii) in the case of an institutional, private equity, hedge or venture capital investment fund, any partner, limited partner, retired partner, member or retired member of such holder, any affiliated fund, any fund which is controlled by or under common control with one or more general partners of such holder, any fund that is managed and governed by the same management company as such holder, any fund that controls such holder or any fund that is controlled by, under common control with, managed or advised by the same management company or registered investment advisor that controls, is under common control with, manages or advises the fund that controls such holder. For purposes of this Amended and Restated Certificate of Incorporation, the mutual funds, other pooled vehicles and client accounts on whose behalf Morgan Stanley Investment Management Inc. and its investment advisory affiliates (“ MSIM ”), Fidelity Management & Research Company and its investment advisory affiliates (“ Fidelity ”), T. Rowe Price Associates, Inc. and its investment advisory affiliates (“ T.Rowe ”) or Redmile Group, LLC and its investment advisory affiliates (“ Redmile ”), as applicable, purchase shares of Series C Preferred Stock and/or

Series D Preferred Stock, and for which MSIM, Fidelity, T.Rowe or Redmile, as applicable, exercises investment discretion with respect to such shares of Series C Preferred Stock and/or Series D Preferred Stock, shall be considered Affiliates and Affiliated entities of MSIM, Fidelity, T.Rowe or Redmile, as applicable.
d. Mechanics of Conversion . Before any holder of Class A Common Stock shall be entitled voluntarily to convert the same into shares of Class B Common Stock, or upon the occurrence of an automatic conversion of the Class A Common Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, and shall, in the event of an optional conversion pursuant to Section C.6(a), give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Class B Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Class B Common Stock to which such holder shall be entitled as aforesaid. In the event of an optional conversion pursuant to Section C.6(a), such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Class A Common Stock to be converted, and the person or persons entitled to receive the shares of Class B Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class B Common Stock on such date. If the conversion is in connection with the automatic conversion provisions set forth in Section C.6(b) or C.6(c), such conversion shall be deemed to have been made, in the case of Section C.6(b), on the date the Twenty-Five Percent Condition is first no longer satisfied or, in the case of Section C.6(c), the applicable date of transfer, and the persons entitled to receive shares of Class B Common Stock issuable upon such conversion shall be treated for all purposes as the record holders of such shares of Class B Common Stock as of the applicable date.
7. Restrictions and Limitations .
a. For so long as at least 2,500,000 shares (as adjusted for any stock dividends, combinations, reclassifications, recapitalizations, stock splits, reverse stock splits and the like) of Preferred Stock remain outstanding, the Corporation shall not (either directly or indirectly, whether by amendment, merger, consolidation or otherwise), without the vote or written consent by the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, in addition to any other vote required by law:
(i) adversely alter or change the rights, preferences or privileges of the Preferred Stock in any material respect (other than an alteration or change pursuant to the special mandatory conversion pursuant to Section C.5(g));
(ii) authorize or create (by reclassification, merger or otherwise), issue, or obligate itself to issue, any new class or series of equity security (including any security convertible into or exercisable or exchangeable for any equity security) ranking senior to or on a parity with the Preferred Stock in right of redemption, liquidation preference, voting or dividends or any increase in the authorized or designated number of any such new class or series;

(iii) declare or pay any dividend or distribution on any shares of Common Stock or Preferred Stock (other than a dividend or distribution payable solely in shares);
(iv) consummate a Liquidation Event;
(v) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose), any shares of Common Stock or Preferred Stock, provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock (A) from directors, officers, employees, consultants, advisors or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the option to repurchase such shares at cost (or the lesser of cost or fair market value) upon the occurrence of certain events, such as the termination of employment or services, or (B) pursuant to the exercise of a right of first refusal of the Corporation;
(vi) increase or decrease the authorized number of shares of Common Stock or Preferred Stock, or any series thereof (except for decreases of the authorized number of shares of Preferred Stock caused by the conversion of Preferred Stock into Common Stock); or
(vii) amend or waive this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation.
b. Without in any way limiting the ability of the Corporation to authorize or create, issue, or obligate itself to issue, any new series of Preferred Stock on any terms (subject to the restrictions and limitations of Section C.7(a) above), the Corporation shall not (either directly or indirectly, whether by amendment, merger, consolidation or otherwise) amend, alter or repeal any provision of the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences, privileges, or rights of any series of existing Preferred Stock and that disproportionately affects such series of Preferred Stock relative to other series of Preferred Stock without the vote or written consent by the holders of at least (i) in the case of the Series A Preferred Stock, the majority of the then-outstanding shares of Series A Preferred Stock, (ii) in the case of the Series A-1 Preferred Stock, the majority of the then-outstanding shares of Series A-1 Preferred Stock, (iii) in the case of the Series B Preferred Stock, the majority of the then-outstanding shares of Series B Preferred Stock, (iv) in the case of the Series C Preferred Stock, the majority of the then-outstanding shares of Series C Preferred Stock and (v) in the case of the Series D Preferred Stock, the majority of the then-outstanding shares of Series D Preferred Stock.
c. Without the vote or written consent by the holders of at least a majority of the then-outstanding shares of Series D Preferred Stock, the Corporation shall not (either directly or indirectly, whether by amendment, merger, consolidation or otherwise) amend or waive any provision of the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation if such amendment or waiver would alter or change the powers, preferences or

special rights of the Series D Preferred Stock, provided, however, that neither (a) the authorization or issuance of any equity security (including any other security convertible into or exercisable for any such equity security) and/or (b) the inclusion of such equity security in the definition of “Preferred Stock” in the Amended and Restated Certificate of Incorporation or any amendment thereto, shall in and of itself not be deemed to alter or change the powers, preferences or special rights of the Series D Preferred Stock or otherwise require the affirmative vote or written consent of the holders of the Series D Preferred Stock pursuant to this Section C.7(c).
8. No Reissuance of Preferred Stock . No share or shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
D. Common Stock .
1. General . The voting, dividend and liquidation rights of the holders of the Common Stock are as set forth herein, subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.
2. Redemption . The Common Stock shall not be redeemable at the option of the holder or holders thereof.
3. No Reissuance of Class A Common Stock . No share or shares of Class A Common Stock converted into a share or shares of Class B Common Stock shall be reissued, and all such shares of Class A Common Stock shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
ARTICLE V.
A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the General Corporation Law of the State of Delaware; or (iv) for any transaction from which the director derived any improper personal benefit. If the General Corporation Law of the State of Delaware is amended after approval by the stockholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended.
Any repeal or modification of the foregoing provisions of this Article V shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE VI.
Subject to Section C.7 of Article IV, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE VII.
Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII.
The number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by, or in the manner provided in, the Bylaws of the Corporation or in an amendment thereof duly adopted by the Board of Directors or by the stockholders of the Corporation.
ARTICLE IX.
Meetings of stockholders of the Corporation may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE X.
Except as otherwise provided in this Amended and Restated Certificate of Incorporation including Section C.7 of Article IV, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE XI.
The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “ Excluded Opportunity ” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock (or any partner, member, director, stockholder, employee or agent of any such holder) who is not an employee of the Corporation or any of its subsidiaries (collectively, “ Covered Persons ”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.

ARTICLE XII.
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation (or its directors, officers, employees or agents) arising pursuant to any provision of the General Corporation Law or the Corporation’s Restated Certificate or the Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of the Corporation’s Restated Certificate or Bylaws or (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine; except as to each of (i) through (iv) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (where such indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is subject to the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article Twelfth.
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Exhibit 3.2
CASTLIGHT HEALTH, INC.
RESTATED CERTIFICATE OF INCORPORATION
Castlight Health, Inc., a Delaware corporation (the “ Corporation ”), hereby certifies as follows.
1. The name of this corporation is Castlight Health, Inc. The date of filing its original Certificate of Incorporation with the Secretary of State of the State of Delaware was January 31, 2008, under the name Maria Health, Inc.
2. The Restated Certificate of Incorporation of this corporation attached hereto as Exhibit “1” , which is incorporated herein by this reference, and which restates, integrates and further amends the provisions of the Certificate of Incorporation of this corporation as previously amended or supplemented, has been duly adopted by this corporation’s Board of Directors and by the stockholders in accordance with Sections 242 and 245 of the Delaware General Corporation Law, with the approval of this corporation’s stockholders having been given by written consent without a meeting in accordance with Section 228 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, this corporation has caused this Restated Certificate of Incorporation to be signed by its duly authorized officer and the foregoing facts stated herein are true and correct.

Dated:                                                  	 		 	CASTLIGHT HEALTH, INC.	
				
	 		 	By 	 	 	
	 		 		 	Giovanni Colella
President and Chief Executive Officer	

EXHIBIT “1”
CASTLIGHT HEALTH, INC.
RESTATED CERTIFICATE OF INCORPORATION
ARTICLE I: NAME
The name of this corporation is Castlight Health, Inc. (the “ Corporation ”).
ARTICLE II: AGENT FOR SERVICE OF PROCESS
The address of the Corporation’s registered office in the State of Delaware is 2711 Centreville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.
ARTICLE III: PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“ General Corporation Law ”).
ARTICLE IV: AUTHORIZED STOCK
1. Total Authorized . The total number of shares of all classes of stock that the Corporation has authority to issue is 1,010,000,000 shares, consisting of: 200,000,000 shares of Class A Common Stock, $0.0001 par value per share (“ Class A Common Stock ”), 800,000,000 shares of Class B Common Stock, $0.0001 par value per share (“ Class B Common Stock ” and together with the Class A Common Stock, the “ Common Stock ”) and 10,000,000 shares of Preferred Stock, $0.0001 par value per share (“ Preferred Stock ”).
The number of authorized shares of Preferred Stock and/or Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of capital stock representing a majority of the voting power of all the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law; subject, however, to any additional votes of the holders of Class A Common Stock or Preferred Stock that may be required by the terms of this Certificate of Incorporation (including any Certificate of Designation filed pursuant to Article IV, Section 2 below).
2. Designation of Preferred Stock .
2.1. The Board of Directors is authorized, subject to any limitations prescribed by the law of the State of Delaware, to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a Certificate of Designation pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, to fix the designation, powers, preferences and relative, participating, optional or other rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof, and to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series.

2.2 Except as otherwise expressly provided in the last sentence of this paragraph, or in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, Section 2, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board of Directors without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and any such new series may have voting powers, preferences and relative, participating, optional or other rights, including, without limitation, voting rights, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, the Preferred Stock, or any future class or series of Preferred Stock or Common Stock. Notwithstanding the foregoing, without approval of holders of a majority of the shares of Class A Common Stock then outstanding, the Board of Directors is not authorized to fix voting powers for a series of Preferred Stock that provide that such shares of Preferred Stock vote together with the Common Stock or the Class A Common Stock on any matter or vote on (or have nominating rights with respect to) election of directors.
2.3 Except as otherwise required by law, holders of shares of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) or pursuant to the General Corporation Law, provided that such amendment does not provide that shares of the affected series of Preferred Stock vote together with the Common Stock or Class A Common Stock on any matter or vote on (or have nominating rights with respect to) election of directors.
3. Rights of Class A Common Stock and Class B Common Stock .
3.1 Voting Rights .
(a) Except as otherwise provided herein or required by applicable law, the holders of shares of Class A Common Stock and Class B Common Stock shall vote together as a single class on matters submitted to a vote of the holders of Common Stock.
(b) Each holder of shares of Class A Common Stock shall be entitled to (i) except as provided in the immediately following clause “(ii)”, one vote for each share of Class A Common Stock on any matter that is submitted to a vote of the holders of shares of Common Stock or the holders of shares of Class A Common Stock, and (ii) ten votes for each share of Class A Common Stock on any matter that is submitted to a vote of the holders of shares of Common Stock: (A) at any time, if the matter is adoption of an agreement of merger or consolidation; adoption of a resolution with respect to a sale, lease or exchange of all or substantially all of the Corporation’s property and assets; or dissolution or liquidation of the Corporation; or (B) if on the applicable meeting date, (1) any individual, entity or group (as such term is used in Regulation 13D under the Securities Exchange Act of 1934, as amended, or a
 
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successor regulation (a “ 13D Group ”)) has beneficial ownership of 30% or more of the number of outstanding shares of Common Stock or (2) a public announcement has been made that any individual, entity or 13D Group intends to obtain beneficial ownership of 30% or more of the number of outstanding shares of Common Stock, and no subsequent public announcement has been made indicating that such individual entity or 13D Group no longer intends to obtain beneficial ownership of 30% or more of the number of outstanding shares of Common Stock. For purposes of this subsection (b), “public announcement” shall mean disclosure in a press release or in a document publicly filed with the U.S. Securities and Exchange Commission.
(c) Each holder of shares of Class B Common Stock shall be entitled to one vote for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote of the holders of Common Stock, voting together as a single class, or the holders of shares of Class B Common Stock.
(d) The approval of holders of a majority of the shares of Class A Common Stock then outstanding shall be required for the following actions:
(i) the issuance of additional shares of Class A Common Stock, except (A) through a dividend paid in the form of Class A Common Stock, or pursuant to exercise of rights to acquire Class A Common Stock that were distributed through a dividend, to holders of shares of Class A Common Stock as contemplated by Article IV, Section 3.2, (B) through a subdivision of outstanding shares as contemplated by Article IV, Section 3.4 or (C) shares of Class A Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding immediately prior to the Effective Time (as defined below); or
(ii) any amendment, alteration, or repeal of any provision of this Certificate of Incorporation, either directly by amendment or by merger, consolidation or otherwise, other than (x) than any filing of a Certificate of Designation pursuant to Article IV, Section 2 that does not otherwise require approval of the holders of Class A Common Stock pursuant to the last sentence of Article IV, Section 2.2 or (y) an amendment of this Certificate of Incorporation for the sole purpose of increasing the authorized number of shares of Class B Common Stock (and making a commensurate increase in the total number of shares of authorized stock).
3.2. Dividends . Subject to the preferences applicable to any series of Preferred Stock outstanding at the time, the holders of shares of Class A Common Stock and the holders of shares of Class B Common Stock shall be entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property, rights or shares of stock of the Corporation as may be declared by the Board of Directors from time to time with respect any class of to the Common Stock out of assets or funds of the Corporation legally available therefor; provided , however , that in the event that such dividend is paid in the form of Common Stock or rights to acquire Common Stock, the holders of shares of Class A Common Stock shall receive Class A Common Stock or rights to acquire Class A Common Stock, as the case may be, and the holders of shares of Class B Common Stock shall receive Class B Common Stock or rights to acquire Class B Common Stock, as the case may be.
 
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3.3. Liquidation . Subject to the preferences applicable to any series of Preferred Stock outstanding at the time, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, the holders of shares of Class A Common Stock and the holders of shares of Class B Common Stock shall be entitled to share equally, on a per share basis, in all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock.
3.4. Subdivision or Combinations . If the Corporation in any manner subdivides or combines the outstanding shares of one class of Common Stock, the outstanding shares of the other class of Common Stock will be simultaneously subdivided or combined in the same manner.
3.5. Equal Status . Except as expressly provided in this Article IV, Class A Common Stock and Class B Common Stock shall have the same rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters, including as to receipt of consideration in a merger or consolidation.
3.6. Conversion .
(a) Definitions . As used in this Article IV, Section 3.6, the following terms shall have the following meanings:
(i) “ Qualified Stockholder ” shall mean (A) each registered holder of shares of Class A Common Stock that are outstanding as of the Effective Time, and (B) each initial registered holder of any shares of Class A Common Stock that are originally issued by the Corporation at or after Effective Time.
(ii) “ Effective Time ” shall mean [10:00a.m. Eastern Standard Time] on [        , 2014].
(iii) “ Family Members ” shall mean with respect to any natural person, the spouse, parents, grandparents, lineal descendents, siblings and lineal descendents of siblings (in each case whether by blood relation or adoption) of such person, as well as any other category of persons that the Board of Directors determines in good faith by duly adopted resolutions have a relationship that is similar to the relationships expressly described in this paragraph and should be considered “Family Members” of a natural person for purposes of the provisions of the Article IV, Section 3.6 .
(iv) “ Permitted Transferee ” shall mean, with respect to a Qualified Stockholder:
(A) any trust or other legal entity with respect to which the Qualified Stockholder and/or one or more Permitted Transferees of such Qualified Stockholder has Voting Control over the shares of Class A Common Stock in such trust or legal entity;
 
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(B) any Family Member of such Qualified Stockholder, or any trust for the benefit of such Qualified Stockholder and/or Family Members of such Qualified Stockholder;
(C) any person directly or indirectly controlling, controlled by or under common control with the Qualified Stockholder;
(D) if the Qualified Stockholder is a partnership, any general partner of such Qualified Stockholder who at the time of the Transfer is a director of the Corporation; or
(E) if the Qualified Stockholder is a trust or custodial account, the grantor or grantors who transferred shares of the Corporation’s capital stock to such trust or account (each, a “ Grantor ”), any Family Member of a Grantor or any other trust or custodial account for the benefit of a Grantor and/or any Family Members of a Grantor.
(v) “ Transfer ” of a share of Class A Common Stock shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial ownership interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law, including without limitation, a transfer of a share of Class A Common Stock into the name of a broker or other nominee (regardless of whether there is a corresponding change in beneficial ownership), or the transfer of, or entering into a binding agreement with respect to, Voting Control over a share of Class A Common Stock by proxy or otherwise; provided , however , that the following shall not be considered a “Transfer” within the meaning of this Article IV, Section 3.6:
(A) granting of or maintaining a proxy to one or more officers or directors of the Corporation at the request, or with the consent, of the Board of Directors of the Corporation;
(B) entering into or maintaining a voting trust, voting agreement or voting arrangement (with or without granting a proxy) solely with one or more other Class A Stockholders or Permitted Transferees; or
(C) pledging, or maintaining a pledge of, shares of Class A Common Stock pursuant to bona fide indebtedness so long as a Qualified Stockholder or a Permitted Transferee retains sole Voting Control over such pledged shares; provided , however , that a foreclosure on such shares of Class A Common Stock or other similar action by a pledgee that is not a Qualified Stockholder or a Permitted Transferee shall constitute a “Transfer.”
A “Transfer” shall also be deemed to have occurred with respect to shares of Class A Common Stock beneficially owned by (x) a trust or other legal entity that is a Permitted Transferee of a Qualified Stockholder, if there occurs any act or circumstance that causes such trust or other legal entity to no longer meet the definition of a Permitted Transferee, or (y) an entity that is a Qualified Stockholder, if there occurs a Transfer on a cumulative basis, from and
 
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after the Effective Time, of a majority of the voting power of the voting securities of such entity or any direct or indirect Parent of such entity. “ Parent ” of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting securities of such entity.
(vi) “ Voting Control ” with respect to a share of Class A Common Stock shall mean the power to vote or direct the voting of such share of Class A Common Stock by proxy, voting agreement, or otherwise.
(b) Optional Conversion . Each share of Class A Common Stock shall be convertible into one fully paid and nonassessable share of Class B Common Stock at the option of the holder thereof at any time upon written notice to the Corporation or its transfer agent.
(c) Automatic Conversion .
(i) Each share of Class A Common Stock shall automatically, without any further action, convert into one fully paid and nonassessable share of Class B Common Stock upon a Transfer of such share, other than a Transfer by a Qualified Stockholder to a Permitted Transferee of such Qualified Stockholder or by a Permitted Transferee of a Qualified Stockholder to any other Permitted Transferee of that Qualified Stockholder. Such conversion shall be deemed to occur at the time the Transfer of such shares occurs, without the need for any further action by the holder of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent.
(ii) Each share of Class A Common Stock held of record by a Qualified Stockholder who is a natural person, or by a Permitted Transferee who is a natural person, shall automatically, without any further action, convert into one fully paid and nonassessable share of Class B Common Stock upon the death of such Qualified Stockholder or Permitted Transferee, as the case may be, unless, upon the death of such Qualified Stockholder or Permitted Transferee, such Class A Common Stock is Transferred to a Permitted Transferee of the applicable Qualified Stockholder, in which event no such automatic conversion shall occur.
(iii) Each share of Class A Common Stock shall automatically, without any further action, convert into one fully paid and nonassessable share of Class B Common Stock upon the earliest of:
(A) the first time and date on which the number of shares of Class A Common Stock then outstanding represents less than [                      ];
(B) the ten (10) year anniversary of the Effective Time; or
(C) a time and date approved in writing by the holders of at least a majority of then-outstanding shares of Class A Common Stock.
 
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(d) The Corporation may, from time to time, establish such policies and procedures, not in violation of applicable law or the other provisions of this Certificate of Incorporation, relating to the conversion of the Class A Common Stock into Class B Common Stock, as it may deem necessary or advisable in connection therewith. If the Corporation has reason to believe that a Transfer giving rise to a conversion of shares of Class A Common Stock into Class B Common Stock has occurred but has not theretofore been reflected on the books of the Corporation, the Corporation may request that the holder of such shares furnish affidavits or other evidence to the Corporation as the Corporation deems necessary to determine whether a conversion of shares of Class A Common Stock to Class B Common Stock has occurred, and if such holder does not within ten (10) days after the date of such request furnish sufficient evidence to the Corporation (in the manner provided in the request) to enable the Corporation to determine that no such conversion has occurred, any such shares of Class A Common Stock, to the extent not previously converted, shall be automatically converted into shares of Class B Common Stock and the same shall thereupon be registered on the books and records of the Corporation. In connection with any action of stockholders taken at a meeting or by written consent (if action by written consent of stockholders is permitted at such time under this Certificate of Incorporation), the stock ledger of the Corporation shall be presumptive evidence as to who are the stockholders entitled to vote in person or by proxy at any meeting of stockholders or in connection with any such written consent and the class or classes or series of shares held by each such stockholder and the number of shares of each class or classes or series held by such stockholder.
(e) Upon any conversion of Class A Common Stock to Class B Common Stock, all rights of the holder of shares of Class A Common Stock shall cease and the person or persons in whose names or names the certificate or certificates representing the shares of Class B Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class B Common Stock. Shares of Class A Common Stock that are converted into shares of Class B Common Stock as provided herein shall be retired and may not be reissued.
3.7. Reservation of Stock . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class B Common Stock, solely for the purpose of effecting the conversion of the shares of Class A Common Stock, such number of its shares of Class B Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class A Common Stock into shares of Class B Common Stock.
ARTICLE V: AMENDMENT OF BYLAWS
The Board of Directors shall have the power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. For purposes of this Certificate of Incorporation, the term “ Whole Board ” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided , however , that in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation (including any Preferred Stock issued pursuant to a Certificate of Designation), the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to
 
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adopt, amend or repeal any provision of the Bylaws; provided , further , that if two-thirds of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws.
ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS
1. Director Powers . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
2. Number of Directors . Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board.
3. Classified Board . Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “ Classified Board ”). The Board of Directors may assign members of the Board of Directors already in office to such classes of the Classified Board, which assignments shall become effective at the same time the Classified Board becomes effective. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors, with the number of directors in each class to be divided as nearly equal as reasonably possible. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Class B Common Stock to the public (the “ Initial Public Offering ”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the closing of the Initial Public Offering, and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the closing of the Initial Public Offering. At each annual meeting of stockholders following the closing of the Initial Public Offering, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.
4. Term and Removal . Each director shall hold office until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Any director may resign at any time upon notice to the Corporation given in writing or by any electronic transmission permitted in the Corporation’s bylaws or in accordance with applicable law. Subject to the rights of the holders of any series of Preferred Stock to remove directors elected by such holders, no director may be removed except for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the then-outstanding shares of capital stock of the Corporation then entitled to vote at an election of directors voting together as a single class.
 
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In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes who terms of office are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution of the Board of Directors. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
5. Board Vacancies . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, any vacancy occurring in the Board of Directors for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall, unless (a) the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders or (b) as otherwise required by law, be filled only by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned or elected expires, with each director to hold office until such director’s successor shall have been duly elected and qualified.
6. Vote by Ballot . Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE VII: MATTERS RELATING TO STOCKHOLDERS
1. No Action by Written Consent of Stockholders . Subject to the rights of the holders of any series of Preferred Stock, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders by written consent.
2. Special Meeting of Stockholders . Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer, the President, or the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board.
3. Advance Notice of Stockholder Nominations and Business Transacted at Special Meetings . Advance notice of stockholder nominations for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. Business transacted at special meetings of stockholders shall be confined to the purpose or purposes stated in the notice of meeting.
 
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ARTICLE VIII: DIRECTOR LIABILITY
1. Limitation of Liability . To the fullest extent permitted by law, no director of the Corporation shall be personally liable for monetary damages for breach of fiduciary duty as a director. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.
2. Change in Rights . Neither any amendment nor repeal of this Article VIII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VIII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.
ARTICLE IX: CHOICE OF FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (iii) any action asserting a claim against the Corporation (or , its directors, officers, employees or agents) arising pursuant to any provision of the General Corporation Law, the Corporation’s Certificate of Incorporation or the Bylaws of the Corporation; (iv) any action to interpret, apply, enforce or determine the validity of the Corporation’s Certificate of Incorporation or Bylaws or (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine; except as to each of (i) through (iv) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (where such indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is subject to the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX.
ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided , however , that, notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to amend or repeal any
 
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provision of this Certificate of Incorporation; provided , further , that if two-thirds of the Whole Board has approved such amendment or repeal of any provisions of this Certificate of Incorporation, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to amend or repeal any provision of this Certificate of Incorporation.
* * * * * * * * * * *
 
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Exhibit 3.4

 
CASTLIGHT HEALTH, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
As Adopted                      , 2014

 

CASTLIGHT HEALTH, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
TABLE OF CONTENTS

 	  	Page	 	
Article I - STOCKHOLDERS	  	 	1	  	
		
Section 1.1:      Annual Meetings	  	 	1	  	
Section 1.2:      Special Meetings	  	 	1	  	
Section 1.3:      Notice of Meetings	  	 	1	  	
Section 1.4:      Adjournments	  	 	1	  	
Section 1.5:      Quorum	  	 	2	  	
Section 1.6:      Organization	  	 	2	  	
Section 1.7:      Voting; Proxies	  	 	2	  	
Section 1.8:      Fixing Date for Determination of Stockholders of Record	  	 	3	  	
Section 1.9:      List of Stockholders Entitled to Vote	  	 	3	  	
Section 1.10:    Inspectors of Elections	  	 	3	  	
Section 1.11:    Notice of Stockholder Business; Nominations	  	 	4	  	
		
Article II - BOARD OF DIRECTORS	  	 	8	  	
		
Section 2.1:      Number; Qualifications	  	 	8	  	
Section 2.2:      Election; Resignation; Removal; Vacancies	  	 	8	  	
Section 2.3:      Regular Meetings	  	 	8	  	
Section 2.4:      Special Meetings	  	 	8	  	
Section 2.5:      Remote Meetings Permitted	  	 	9	  	
Section 2.6:      Quorum; Vote Required for Action	  	 	9	  	
Section 2.7:      Organization	  	 	9	  	
Section 2.8:      Written Action by Directors	  	 	9	  	
Section 2.9:      Powers	  	 	9	  	
Section 2.10:    Compensation of Directors	  	 	9	  	
		
Article III - COMMITTEES	  	 	9	  	
		
Section 3.1:      Committees	  	 	9	  	
Section 3.2:      Committee Rules	  	 	10	  	
		
Article IV - OFFICERS	  	 	10	  	
		
Section 4.1:      Generally	  	 	10	  	
Section 4.2:      Chief Executive Officer	  	 	10	  	
Section 4.3:      Chairperson of the Board	  	 	11	  	
Section 4.4:      President	  	 	11	  	
Section 4.5:      Vice President	  	 	11	  	
Section 4.6:      Chief Financial Officer	  	 	11	  	
Section 4.7:      Treasurer	  	 	11	  	
Section 4.8:      Secretary	  	 	12	  	
Section 4.9:      Delegation of Authority	  	 	12	  	
Section 4.10:    Removal	  	 	12	  	

					
		
Article V - STOCK	  	 	12	  	
		
Section 5.l:       Certificates	  	 	12	  	
Section 5.2:      Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificate	  	 	12	  	
Section 5.3:      Other Regulations	  	 	13	  	
		
Article VI - INDEMNIFICATION	  	 	13	  	
		
Section 6.1:      Indemnification of Officers and Directors	  	 	13	  	
Section 6.2:      Advance of Expenses	  	 	13	  	
Section 6.3:      Non-Exclusivity of Rights	  	 	13	  	
Section 6.4:      Indemnification Contracts	  	 	14	  	
Section 6.5:      Right of Indemnitee to Bring Suit	  	 	14	  	
Section 6.6:      Nature of Rights	  	 	15	  	
		
Article VII - NOTICES	  	 	15	  	
		
Section 7.l:       Notice	  	 	15	  	
Section 7.2:      Waiver of Notice	  	 	16	  	
		
Article VIII - INTERESTED DIRECTORS	  	 	16	  	
		
Section 8.1:      Interested Directors	  	 	16	  	
Section 8.2:      Quorum	  	 	16	  	
		
Article IX - MISCELLANEOUS	  	 	16	  	
		
Section 9.1:      Fiscal Year	  	 	16	  	
Section 9.2:      Seal	  	 	17	  	
Section 9.3:      Form of Records	  	 	17	  	
Section 9.4:      Reliance Upon Books and Records	  	 	17	  	
Section 9.5:      Certificate of Incorporation Governs	  	 	17	  	
Section 9.6:      Severability	  	 	17	  	
		
Article X - AMENDMENT	  	 	17	  	
 
ii

CASTLIGHT HEALTH, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS
As Adopted March __, 2014
ARTICLE I: STOCKHOLDERS
Section 1.1 : Annual Meetings . An annual meeting of stockholders shall be held for the election of directors at such date and time as the Board of Directors of the Corporation (the “ Board ”) shall each year fix. The meeting may be held either at a place, within or without the State of Delaware as permitted by the Delaware General Corporation Law (the “ DGCL ”), or by means of remote communication as the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.
Section 1.2 : Special Meetings . Special meetings of stockholders, for any purpose or purposes, may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the President, or by the Board acting pursuant to a resolution adopted by a majority of the “ Whole Board ,” which shall mean the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships. Special meetings may not be called by any other person or persons. The special meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole discretion may determine.
Section 1.3 : Notice of Meetings . Notice of all meetings of stockholders shall be given in writing or by electronic transmission in the manner provided by law (including, without limitation, as set forth in Section 7.1.1 of these Bylaws) stating the date, time and place, if any, of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by applicable law or the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”), such notice shall be given not less than ten (10), nor more than sixty (60), days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.
Section 1.4 : Adjournments . The chairperson of the meeting shall have the power to adjourn the meeting to another time, date and place (if any). Any meeting of stockholders may adjourn from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof and the means of remote communications (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided , however , that if the date of the meeting is more than thirty (30) days after the date for which the meeting was originally noticed, then a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting, which record date shall not precede
 
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the date upon which the resolution fixing the record date is adopted by the Board of Directors and, except as otherwise required by law, shall not be more than 60 nor less than 10 days before the date of such adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. To the fullest extent permitted by law, the Board may postpone or reschedule any previously scheduled special or annual meeting of stockholders before it is to be held, in which case notice shall be provided to the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.
Section 1.5 : Quorum . At each meeting of stockholders, the holders of a majority of the voting power of the shares of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business, unless or except to the extent that the presence of a larger number may be required by applicable law or by the rules of any stock exchange upon which the Corporation’s securities are listed. Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with request to that vote on that matter. Shares of the Corporation’s stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided , however , that the foregoing shall not limit the right of the Corporation or any other corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for purposes of determining a quorum.
Section 1.6 : Organization . Meetings of stockholders shall be presided over by such person as the Board may designate, or, in the absence of such a person, the Chairperson of the Board, or, in the absence of such person, the Chief Executive Officer, or, in the absence of such person, the President of the Corporation, or, in the absence of such person, such person as may be chosen by the holders of a majority of the voting power of the shares entitled to vote who are present, in person or by proxy, at the meeting. Such person shall be chairperson of the meeting and, subject to Section 1.10 hereof, shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him or her to be in order. The Secretary of the Corporation shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 1.7 : Voting; Proxies . Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be required in the Certificate of Incorporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, every matter other than the election of directors shall be decided by the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matter that are present in person or represented by proxy at the meeting and are voted for or against the matter.
 
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Section 1.8 : Fixing Date for Determination of Stockholders of Record . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, unless otherwise required by law, the Board may, except as otherwise required by law, fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than sixty (60), nor less than ten (10), days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed by the Board, then the record date shall be as provided by applicable law. To the fullest extent permitted by law, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board may fix a new record date for the adjourned meeting in accordance with applicable law.
Section 1.9 : List of Stockholders Entitled to Vote . A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either on a reasonably accessible electronic network as permitted by law ( provided that the information required to gain access to the list is provided with the notice of the meeting) or during ordinary business hours at the principal place of business of the Corporation. If the meeting is held at a location where stockholders may attend in person, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present at the meeting. If the meeting is held solely by means of remote communication, then the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be provided with the notice of the meeting.
Section 1.10 : Inspectors of Elections .
1.10.1 Applicability . Unless otherwise required by the Certificate of Incorporation or by the DGCL, the following provisions of this Section 1.10 shall apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an interdealer quotation system of a registered national securities association; or (c) held of record by more than two thousand (2,000) stockholders. In all other cases, observance of the provisions of this Section 1.10 shall be optional, and at the discretion of the Board.
1.10.2 Appointment . The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.
 
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1.10.3 Inspector’s Oath . Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability.
1.10.4 Duties of Inspectors . At a meeting of stockholders, the inspectors of election shall (a) ascertain the number of shares outstanding and the voting power of each share, (b) determine the shares represented at a meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.
1.10.5 Opening and Closing of Polls . The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced by the chairperson of the meeting at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise.
1.10.6 Determinations . In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies in accordance with any information provided pursuant to Section 211(a)(2)(B)(i) of the DGCL, or Sections 211(e) or 212(c)(2) of the DGCL, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.10 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.
Section 1.11: Notice of Stockholder Business; Nominations .
1.11.1 Annual Meeting of Stockholders .
(a) Nominations of persons for election to the Board and the proposal of business to be considered by the stockholders shall be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of such meeting, (ii) by or at the direction of the Board or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.11, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 1.11. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “ Exchange Act ”)) at an annual meeting of stockholders.
 
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(b) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to Section 1.11.1(a):
(i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, at the Corporation’s principal executive office;
(ii) such other business must otherwise be a proper matter for stockholder action;
(iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the Corporation with a Solicitation Notice, as that term is defined in this Section 1.11, such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation’s voting shares reasonably believed by such stockholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice; and
(iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 1.11, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 1.11.
To be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the seventy-fifth (75th) day nor earlier than the close of business on the one hundred and fifth (105th) day prior to the first anniversary of the preceding year’s annual meeting (except in the case of the Corporation’s first annual meeting following its initial public offering, for which such notice shall be timely if delivered in the same time period as if such meeting were a special meeting governed by Section 1.11.2); provided , however , that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered (A) no earlier than the close of business on the one hundred and fifth (105th) day prior to currently proposed annual meeting and (B) no later than the close of business on the later of the seventy-fifth (75th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall an adjournment, or postponement of an annual meeting for which notice has been given, commence a new time period for the giving of a stockholder’s notice. Such stockholder’s notice shall set forth:
(x) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors, or would be otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected;
 
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(y) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and
(z) as to the stockholder giving the notice, any beneficial owner on whose behalf the nomination or proposal is made, and any Associated Person (each, a “ party ”), (aa) the name and address of each such party, as they appear on the Corporation’s books; (bb) the class and number of shares of the Corporation that are owned, directly or indirectly, beneficially and held of record by each such party; (cc) a statement whether or not either such stockholder or beneficial owner will deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting power required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting power reasonably believed by such stockholder or beneficial owner to be sufficient to elect such nominee or nominees (such statement of such intent being a “ Solicitation Notice ”); (dd) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “ Derivative Instrument ”) directly or indirectly owned beneficially by each such party, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation; (ee) any proxy, contract, arrangement, understanding, or relationship pursuant to which either party has a right to vote, directly or indirectly, any shares of any security of the Corporation; (ff) any short interest in any security of the Corporation held by each such party (for purposes of this Section, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security); (gg) any rights to dividends on the shares of the Corporation owned beneficially directly or indirectly by each such party that are separated or separable from the underlying shares of the Corporation; (hh) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which either party is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; (ii) any performance-related fees (other than an asset-based fee) that each such party is directly or indirectly entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party’s immediate family sharing the same household; and (jj) any other information relating to each such party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or the election of directors in a contested election pursuant to Section 14 of the Exchange Act.
 
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(c) Notwithstanding anything in the second sentence of Section 1.11.1(b) to the contrary, in the event that the number of directors to be elected to the Board is increased and there is no Public Announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board at least seventy five (75) days prior to the first anniversary of the preceding year’s annual meeting (or, if the annual meeting is held more than thirty (30) days before or sixty (60) days after such anniversary date, at least seventy five (75) days prior to such annual meeting), a stockholder’s notice required by this Section 1.11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation no later than the close of business on the tenth (10th) day following the day on which such Public Announcement is first made by the Corporation.
1.11.2 Special Meetings of Stockholders . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the Board. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of such meeting (a) by or at the direction of the Board or (b) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who delivers a written notice to the Secretary setting forth the information required by this Section 1.11 in connection with annual meetings. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 1.11.1(b) shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation (i) no earlier than the one hundred fifth (105th) day prior to such special meeting and (ii) no later than the close of business on the later of the seventy fifth (75th) day prior to such special meeting or the tenth (10th) day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall an adjournment, or postponement of a special meeting for which notice has been given, commence a new time period for the giving of a stockholder of record’s notice.
1.11.3 General .
(a) Only such persons who are nominated in accordance with the procedures set forth in this Section 1.11 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.11. Except as otherwise provided by law or these Bylaws, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.11 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded.
 
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(b) For purposes of this Section 1.11,
(1) the term “ Public Announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and
(2) the term “ Associated Person ” shall mean with respect to any subject stockholder or other person (including any proposed nominee) (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder or other person, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder or other person, (iii) any person controlling, controlled by or under common control with such Associated Person and (iv) any associate (as defined in Rule 405 under the Securities Act of 1933, as amended), of such stockholder or other person.
(c) Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.11 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE II: BOARD OF DIRECTORS
Section 2.1 : Number; Qualifications . The Board shall consist of one or more members. The initial number of directors shall be seven (7), and thereafter, unless otherwise required by law, shall be fixed from time to time as set forth in the Certificate of Incorporation. No decrease in the authorized number of directors constituting the Board shall shorten the term of any incumbent director. Directors need not be stockholders of the Corporation.
Section 2.2 : Election; Resignation; Removal; Vacancies . The directors shall be divided, with respect to the time for which they severally hold office, into classes as provided in the Certificate of Incorporation, and vacancies occurring in the Board and any newly created directorships resulting from any increase in the authorized number of directors shall be filled, as provided in the Certificate of Incorporation.
Section 2.3 : Regular Meetings . Regular meetings of the Board may be held at such places, within or without the State of Delaware, and at such times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board.
Section 2.4 : Special Meetings . Special meetings of the Board may be called by the Chairperson of the Board, the Chief Executive Officer, the President or a majority of the members of the Board then in office and may be held at any time, date or place, within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally, in writing or by electronic transmission (including electronic mail), by the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, overnight express courier, facsimile, electronic mail or other means of electronic transmission. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting.
 
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Section 2.5 : Remote Meetings Permitted . Members of the Board, or any committee of the Board, may participate in a meeting of the Board or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to conference telephone or other communications equipment shall constitute presence in person at such meeting.
Section 2.6 : Quorum; Vote Required for Action . At all meetings of the Board, a majority of the Whole Board shall constitute a quorum for the transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time without further notice thereof to the fullest extent permitted by law. Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
Section 2.7 : Organization . Meetings of the Board shall be presided over by the Chairperson of the Board, or in such person’s absence by the President, or in such person’s absence by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8 : Written Action by Directors . Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee, respectively, in the minute books of the Corporation. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.9: Powers . The Board may, except as otherwise required by law or the Certificate of Incorporation, exercise all such powers and manage and direct all such acts and things as may be exercised or done by the Corporation.
Section 2.10 : Compensation of Directors . Members of the Board, as such, may receive, pursuant to a resolution of the Board, fees and other compensation for their services as directors, including without limitation their services as members of committees of the Board.
ARTICLE III: COMMITTEES
Section 3.1 : Committees . The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any
 
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meeting of such committee who are not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving, adopting, or recommending to the stockholders any action or matter (other than the election or removal of members of the Board) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation.
Section 3.2 : Committee Rules . Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these Bylaws.
ARTICLE IV: OFFICERS
Section 4.1 : Generally . The officers of the Corporation shall consist of a Chairperson of the Board, a Chief Executive Officer (who may be the Chairperson of the Board or the President), a Secretary and a Treasurer and may consist of such other officers, including a Chief Financial Officer, Chief Technology Officer and one or more Vice Presidents, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided , however , that the Board may empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chairperson of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Each officer shall hold office until such person’s successor is appointed or until such person’s earlier resignation, death or removal. Any number of offices may be held by the same person. Any officer may resign at any time upon written or electronic notice to the Corporation. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by, or in the manner determined by, the Board.
Section 4.2 : Chief Executive Officer . Subject to the control of the Board and such supervisory powers, if any, as may be given by the Board, the powers and duties of the Chief Executive Officer of the Corporation are:
(a) To act as the general manager and to have general supervision, direction and control of the business and affairs of the Corporation;
(b) Subject to Article I, Section 1.6, to preside at all meetings of the stockholders;
(c) Subject to Article I, Section 1.2, to call special meetings of the stockholders; and
(d) To affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the Corporation; and, subject to the direction of the Board, to have general charge of the property of the Corporation and to supervise and control all officers, agents and employees of the Corporation.
 
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The President shall be the Chief Executive Officer of the Corporation unless the Board shall designate another officer to be the Chief Executive Officer. If there is no President, and the Board has not designated any other officer to be the Chief Executive Officer, then the Chairperson of the Board shall be the Chief Executive Officer.
Section 4.3 : Chairperson of the Board . The Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties as provided in these Bylaws and as the Board may from time to time prescribe.
Section 4.4 : President . The Chief Executive Officer shall be the President of the Corporation unless the Board shall have designated one individual as the President and a different individual as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are delegated to the President by the Board.
Section 4.5 : Vice President . Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President, or that are delegated to him or her by the Board, the Chief Executive Officer or the President. A Vice President may be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer or the President in the event of the Chief Executive Officer’s or President’s absence or disability.
Section 4.6 : Chief Financial Officer . The Chief Financial Officer shall be the Treasurer of the Corporation unless the Board shall have designated another officer as the Treasurer of the Corporation. Subject to the direction of the Board, the Chief Executive Officer and the President, the Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of Chief Financial Officer.
Section 4.7 : Treasurer . The Treasurer shall have custody of all moneys and securities of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board, the Chief Executive Officer or the President may from time to time prescribe.
 
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Section 4.8 : Secretary . The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board, the Chief Executive Officer or the President may from time to time prescribe.
Section 4.9 : Delegation of Authority . The Board may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
Section 4.10 : Removal . Any officer of the Corporation shall serve at the pleasure of the Board and may be removed at any time, with or without cause, by the Board; provided that if the Board has empowered the Chief Executive Officer to appoint any Vice Presidents of the Corporation, then such Vice Presidents may be removed by the Chief Executive Officer. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.
ARTICLE V: STOCK
Section 5.1 : Certificates . The shares of capital stock of the Corporation shall be represented by certificates; provided , however , that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock may be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the adoption of such resolution by the Board, every holder of stock that is a certificated security shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairperson or Vice-Chairperson of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares owned by such stockholder in the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. If any holder of uncertificated shares elects to receive a certificate in circumstances where the holder is permitted to do so, the Corporation (or the transfer agent or registrar, as the case may be) shall, to the extent permitted under applicable law and rules, regulations and listing requirements of any stock exchange or stock market on which the Corporation’s shares are listed or traded, cease to provide annual statements indicating such holder’s holdings of shares in the Corporation.
Section 5.2 : Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates . The Corporation may issue a new certificate of stock, or uncertificated shares, in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to agree to indemnify the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
 
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Section 5.3 : Other Regulations . The issue, transfer, conversion and registration of stock certificates and uncertificated securities shall be governed by such other regulations as the Board may establish.
ARTICLE VI: INDEMNIFICATION
Section 6.1 : Indemnification of Officers and Directors . Each person who was or is made a party to, or is threatened to be made a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a member of the Board or officer of the Corporation, or is or was serving at the request of the Corporation as a member of the board of directors, officer or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (for purposes of this Article VI, an “ Indemnitee ”), shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith. Such indemnification shall continue as to an Indemnitee who has ceased to be a director or officer and shall inure to the benefit of such Indemnitees’ heirs, executors and administrators. Notwithstanding the foregoing, the Corporation shall indemnify any such Indemnitee seeking indemnity in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board or such indemnification is authorized by an agreement approved by the Board.
Section 6.2 : Advance of Expenses . The Corporation shall pay all expenses (including attorneys’ fees) incurred by such an Indemnitee in defending any such Proceeding as they are incurred in advance of its final disposition; provided , however , that (a) if the DGCL then so requires, the payment of such expenses incurred by such an Indemnitee in advance of the final disposition of such Proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it should be determined ultimately by final judicial decision from which there is no appeal that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise; and (b) the Corporation shall not be required to advance any expenses to a person against whom the Corporation directly brings a claim, in a Proceeding, alleging that such person has breached such person’s duty of loyalty to the Corporation, committed an act or omission not in good faith or that involves intentional misconduct or a knowing violation of law, or derived an improper personal benefit from a transaction.
Section 6.3: Non-Exclusivity of Rights . The rights conferred on any person in this Article VI shall not be exclusive of any other right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw, agreement, vote or consent of stockholders or disinterested directors, or otherwise. Additionally, nothing in this Article VI shall limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI.
 
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Section 6.4 : Indemnification Contracts . The Board is authorized to cause the Corporation to enter into indemnification contracts with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing indemnification or advancement rights to such person. Such rights may be greater than those provided in this Article VI.
Section 6.5: Right of Indemnitee to Bring Suit . The following shall apply to the extent not in conflict with any indemnification contract provided for in Section 6.4 above.
6.5.1 Right to Bring Suit . If a claim under Section 6.1 or 6.2 of this Article VI is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in applicable law.
6.5.2 Effect of Determination . Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.
6.5.3 Burden of Proof . In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI, or otherwise, shall be on the Corporation.
 
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Section 6.6 : Nature of Rights . The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI and existing at the time of such amendment, repeal or modification, including with respect to any occurrence or alleged occurrence of any action or omissions to act that took place prior to such amendment, repeal or modification.
ARTICLE VII: NOTICES
Section 7.1 : Notice .
7.1.1 Form and Delivery . Except as otherwise specifically required in these Bylaws (including, without limitation, Section 7.1.2 below) or by law, all notices required to be given pursuant to these Bylaws shall be in writing and may, (a) in every instance in connection with any delivery to a member of the Board, be effectively given by hand delivery (including use of a delivery service), by depositing such notice in the mail, postage prepaid, or by sending such notice by prepaid telegram, cablegram, overnight express courier, facsimile, electronic mail or other form of electronic transmission and (b) be effectively be delivered to a stockholder when given by hand delivery, by depositing such notice in the mail, postage prepaid or, if specifically consented to by the stockholder as described in Section 7.1.2 of this Article VII by sending such notice by telegram, cablegram, facsimile, electronic mail or other form of electronic transmission. Any such notice shall be addressed to the person to whom notice is to be given at such person’s address as it appears on the records of the Corporation. The notice shall be deemed given (a) in the case of hand delivery, when received by the person to whom notice is to be given or by any person accepting such notice on behalf of such person, (b) in the case of delivery by mail, upon deposit in the mail, (c) in the case of delivery by overnight express courier, when dispatched, and (d) in the case of delivery via telegram, cablegram, facsimile, electronic mail or other form of electronic transmission, when dispatched
7.1.2 Electronic Transmission . Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation, or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given in accordance with Section 232 of the DGCL. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (a) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (b) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided , however , the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this Section 7.1.2 shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder.
 
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7.1.3 Affidavit of Giving Notice . An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Section 7.2 : Waiver of Notice . Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver of notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any waiver of notice.
ARTICLE VIII: INTERESTED DIRECTORS
Section 8.1 : Interested Directors . No contract or transaction between the Corporation and one or more of its members of the Board or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are members of the board of directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof that authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if: (a) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (b) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders.
Section 8.2 : Quorum . Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
ARTICLE IX: MISCELLANEOUS
Section 9.1 : Fiscal Year . The fiscal year of the Corporation shall be determined by resolution of the Board.
 
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Section 9.2 : Seal . The Board may provide for a corporate seal, which may have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board.
Section 9.3 : Form of Records . Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of, diskettes, CDs, or any other information storage device or method.
Section 9.4 : Reliance upon Books and Records . A member of the Board, or a member of any committee designated by the Board shall, in the performance of such person’s duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 9.5 : Certificate of Incorporation Governs . In the event of any conflict between the provisions of the Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern.
Section 9.6 : Severability . If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation) shall remain in full force and effect.
ARTICLE X: AMENDMENT
Notwithstanding any other provision of these Bylaws, any amendment or repeal of these Bylaws shall require the approval of the Board or the stockholders of the Corporation as provided in the Certificate of Incorporation.

 
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CERTIFICATION OF AMENDED AND RESTATED BYLAWS
OF
CASTLIGHT HEALTH, INC.
(a Delaware corporation)
I, Giovanni M. Colella, certify that I am Secretary of Castlight Health, Inc., a Delaware corporation (the “ Corporation ”), that I am duly authorized to make and deliver this certification, that the attached Bylaws are a true and complete copy of the Amended and Restated Bylaws of the Corporation in effect as of the date of this certificate.
Dated:                                  , 2014

 
 	
Giovanni M. Colella, Secretary	

Exhibit 4.1

	

The Corporation shall furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock of the Corporation or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Such requests shall be made to the Corporation’s Secretary at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	 	–	  	as tenants in common	  	UNIF GIFT MIN ACT	  	–	  	                     Custodian                     	
TEN ENT	 	–	  	as tenants by the entireties	  		  		  	    (Cust)                             (Minor)	
JT TEN	 	–	  	as joint tenants with right of survivorship and not as tenants in common	  		  		  	under Uniform Gifts to Minors
Act                                                          
                             (State)	
COM PROP	 	–	  	as community property	  	UNIF TRF MIN ACT	  	–	  	                 Custodian (until age              )	
	 		  		  		  		  	   (Cust)
                     under Uniform Transfers
    (Minor)
to Minors Act                                         
                                         (State)	
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED,                                                                                   hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE	  		  		

 
 
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 
shares of the capital stock represented by within Certificate, and do hereby irrevocably constitute and appoint                                                                                                                                                     attorney-in-fact to transfer the said stock on the books of the within named Corporation with full power of the substitution in the premises.
Dated                                                                              

	  	X 	  	 	  	 	
	  	X 	  	 	  	 	
Signature(s) Guaranteed:	  		  	NOTICE:	  	THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.	

	
		
By 	 	 	
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE. SIGNATURE GUARANTEES MUST NOT BE DATED.	

EXHIBIT 5.1

March 3, 2014
Castlight Health, Inc.
Two Rincon Center
121 Spear Street, Suite 300
San Francisco, CA 94105
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-1 (File Number 333-193840) (the “ Registration Statement ”) initially filed by Castlight Health, Inc., a Delaware corporation (the “ Company ”), with the Securities and Exchange Commission (the “ Commission ”) on or about February 10, 2014, as subsequently amended on March 3, 2014, in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 12,765,000 shares of the Company’s Class B Common Stock (the “ Stock ”).
In rendering this opinion, we have examined such matters of fact as we have deemed necessary in order to render the opinion set forth herein, which included examination of the following:
 
 	(1)	the Company’s Amended and Restated Certificate of Incorporation, as amended, certified by the Delaware Secretary of State on February 5, 2014 (the “ Restated Certificate ”), the Amended and Restated Certificate of Incorporation that the Company intends to file prior to the consummation of the sale of the Stock (the “ Pre-Effective Restated Certificate ”) and the Restated Certificate of Incorporation that the Company intends to file and that will be effective upon the consummation of the sale of the Stock (the “ Post-Effective Restated Certificate ”).	
 
 	(2)	the Company’s Amended and Restated Bylaws, certified by the Company’s Secretary on September 24, 2012 (the “ Bylaws ) and the Restated Bylaws that the Company has adopted in connection with, and that will be effective upon, the consummation of the sale of the Stock (the “ Post-Effective Bylaws ”).	
 
 	(3)	the Registration Statement, together with the Exhibits filed as a part thereof or incorporated therein by reference.	
 
 	(4)	the Prospectus prepared in connection with the Registration Statement (the “ Prospectus ”).	
 
 	(5)	the underwriting agreement to be entered into by and among the Company and the several Underwriters named in Schedule I thereto.	

March 3, 2014
Page 2
 
 	(6)	minutes of meetings and actions by written consent of the Company’s Board of Directors (the “ Board ”) and stockholders (the “ Stockholders ”) at which, or pursuant to which, the Restated Certificate, the Pre-Effective Restated Certificate, the Post-Effective Restated Certificate, the Bylaws and the Post-Effective Bylaws were approved.	
 
 	(6)	minutes of a meeting of the Board held on January 30, 2014, at which which resolutions approving the sale and issuance of the Stock were adopted and approved.	
 
 	(7)	the stock records for the Company that the Company has provided to us (consisting of a list of stockholders and a list of option and warrant holders respecting the Company’s capital stock and of any rights to purchase capital stock that was prepared by the Company and dated February 28, 2014 verifying the number of such issued and outstanding securities).	
 
 	(8)	A Certificate of Good Standing issued by the Secretary of State of the State of Delaware dated February 28, 2014, stating that the Company is qualified to do business and in good standing under the laws of the State of Delaware (the “ Certificate of Good Standing ”).	
 
 	(9)	a Management Certificate addressed to us and dated of even date herewith executed by the Company containing certain factual representations (the “ Management Certificate ”).	
In our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the authenticity and completeness of all documents submitted to us as originals, the conformity to originals and completeness of all documents submitted to us as copies, the legal capacity of all persons or entities executing the same, and the lack of any undisclosed termination, modification, waiver or amendment to any document reviewed by us.
The Company’s capital stock is uncertificated. The Company will properly register the transfer of the Stock to the purchasers of such Stock on the Company’s record of uncertificated securities.
We render this opinion only with respect to, and express no opinion herein concerning the application or effect of the laws of any jurisdiction other than, the existing laws of the United States of America, of the State of California and of the Delaware General Corporation Law and reported judicial decisions relating thereto.
With respect to our opinion expressed in paragraph (1) below as to the valid existence and good standing of the Company under the laws of the State of Delaware, we have relied solely upon the Certificate of Good Standing and representations made to us by the Company.

March 3, 2014
Page 3
 
In connection with our opinion expressed in paragraphs (2) below, we have assumed that, at or prior to the time of the delivery of any shares of Stock, the Registration Statement will have been declared effective under the Securities Act of 1933, as amended, that the registration will apply to such shares of Stock and will not have been modified or rescinded and that there will not have occurred any change in law affecting the validity of the issuance of such shares of Stock.
In accordance with Section 95 of the American Law Institute’s Restatement (Third) of the Law Governing Lawyers (2000), this opinion letter is to be interpreted in accordance with customary practices of lawyers rendering opinions in connection with the filing of a registration statement of the type described herein.
Based upon the foregoing, we are of the following opinion:
(1) The Company is a corporation validly existing, in good standing, under the laws of the State of Delaware; and
(2) the up to 12,765,000 shares of Stock to be issued and sold by the Company, when issued, sold and delivered in the manner and for the consideration stated in the Registration Statement and the Prospectus and in accordance with the resolutions adopted by the Board and to be adopted by the Pricing Committee of the Board, will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us, if any, in the Registration Statement, the Prospectus constituting a part thereof and any amendments thereto.
This opinion is intended solely for use in connection with issuance and sale of shares subject to the Registration Statement and is not to be relied upon for any other purpose. This opinion is rendered as of the date first written above and based solely on our understanding of facts in existence as of such date after the aforementioned examination. We assume no obligation to advise you of any fact, circumstance, event or change in the law or the facts that may hereafter be brought to our attention whether or not such occurrence would affect or modify the opinions expressed herein.

Very truly yours,	
	
FENWICK & WEST LLP	
		
By:	 	/s/ Fenwick & West LLP	

Exhibit 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of                      , 2014 is made by and between Castlight Health, Inc., a Delaware corporation (the “ Company ”), and                      , a director, officer or key employee of the Company or one of the Company’s subsidiaries or other service provider who satisfies the definition of Indemnifiable Person set forth below (“ Indemnitee ”).
RECITALS
A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as representatives of corporations unless they are protected by comprehensive liability insurance and indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no relationship to the compensation of such representatives;
B. The members of the Board of Directors of the Company (the “ Board ”) have concluded that to retain and attract talented and experienced individuals to serve as representatives of the Company and its Subsidiaries and Affiliates and to encourage such individuals to take the business risks necessary for the success of the Company and its Subsidiaries and Affiliates, it is necessary for the Company to contractually indemnify certain of its representatives and the representatives of its Subsidiaries and Affiliates, and to assume for itself maximum liability for Expenses and Other Liabilities in connection with claims against such representatives in connection with their service to the Company and its Subsidiaries and Affiliates;
C. Section 145 of the Delaware General Corporation Law (“ Section 145 ”), empowers the Company to indemnify by agreement its officers, directors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations, partnerships, joint ventures, trusts or other enterprises, and expressly provides that the indemnification provided thereby is not exclusive; and
D. The Company desires and has requested Indemnitee to serve or continue to serve as a representative of the Company and/or the Subsidiaries or Affiliates of the Company free from undue concern about inappropriate claims for damages arising out of or related to such services to the Company and/or the Subsidiaries or Affiliates of the Company.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions .
(a) Affiliate . For purposes of this Agreement, “Affiliate” of the Company means any corporation, partnership, limited liability company, joint venture, trust or other enterprise in respect of which Indemnitee is or was or will be serving as a director, officer,

trustee, manager, member, partner, employee, agent, attorney, consultant, member of the entity’s governing body (whether constituted as a board of directors, board of managers, general partner or otherwise), fiduciary, or in any other similar capacity at the request, election or direction of the Company, and including, but not limited to, any employee benefit plan of the Company or a Subsidiary or Affiliate of the Company.
(b) Change in Control . For purposes of this Agreement, “Change in Control” means (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a Subsidiary or a trustee or other fiduciary holding securities under an employee benefit plan of the Company or Subsidiary, is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding capital stock, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the outstanding capital stock of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into capital stock of the surviving entity) at least 70% of the total voting power represented by the capital stock of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
(c) Expenses . For purposes of this Agreement, “Expenses” means all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements, and other out-of-pocket costs), paid or incurred by Indemnitee in connection with either the investigation, defense or appeal of, or being a witness in, a Proceeding (as defined below), or establishing or enforcing a right to indemnification under this Agreement, Section 145 or otherwise; provided, however, that Expenses shall not include any judgments, fines, excise taxes or penalties in respect of the Employee Retirement Income Security Act (“ ERISA ”) or amounts paid in settlement of a Proceeding.
(d) Exchange Act . For purposes of this Agreement, “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(e) Indemnifiable Event . For purposes of this Agreement, “Indemnifiable Event” means any event or occurrence related to Indemnitee’s service for the Company or any Subsidiary or Affiliate as an Indemnifiable Person (as defined below), or by reason of anything done or not done, or any act or omission, by Indemnitee in any such capacity.
(f) Indemnifiable Person . For the purposes of this Agreement, “Indemnifiable Person” means any person who is or was a director, officer, trustee, manager, member, partner, employee, attorney, consultant, member of an entity’s governing body (whether constituted as a board of directors, board of managers, general partner or otherwise) or other agent or fiduciary of the Company or a Subsidiary or Affiliate of the Company.
 
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(g) Independent Counsel . For purposes of this Agreement, “Independent Counsel” means legal counsel that has not performed services for the Company or Indemnitee in the five years preceding the time in question and that would not, under applicable standards of professional conduct, have a conflict of interest in representing either the Company or Indemnitee.
(h) Other Liabilities . For purposes of this Agreement, “Other Liabilities” means any and all liabilities of any type whatsoever (including, but not limited to, judgments, fines, penalties, ERISA (or other benefit plan related) excise taxes or penalties, and amounts paid in settlement and all interest, taxes, assessments and other charges paid or payable in connection with or in respect of any such judgments, fines, ERISA (or other benefit plan related) excise taxes or penalties, or amounts paid in settlement).
(i) Proceeding . For the purposes of this Agreement, “Proceeding” means any threatened, pending, or completed action, suit or other proceeding, whether civil, criminal, administrative, investigative, legislative or any other type whatsoever, preliminary, informal or formal, including any arbitration or other alternative dispute resolution and including any appeal of any of the foregoing.
(j) Subsidiary . For purposes of this Agreement, “Subsidiary” means any entity of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company.
2. Agreement to Serve . The Indemnitee agrees to serve and/or continue to serve as an Indemnifiable Person in the capacity or capacities in which Indemnitee currently serves the Company as an Indemnifiable Person, and any additional capacity in which Indemnitee may agree to serve, until such time as Indemnitee’s service in a particular capacity shall end according to the terms of an agreement, the Company’s Certificate of Incorporation or Bylaws, governing law, or otherwise. Nothing contained in this Agreement is intended to create any right to continued employment or other form of service for the Company or a Subsidiary or Affiliate of the Company by Indemnitee.
3. Mandatory Indemnification .
(a) Agreement to Indemnify . In the event Indemnitee is a person who was or is a party to or witness in or is threatened to be made a party to or witness in any Proceeding by reason of an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses and Other Liabilities incurred by Indemnitee in connection with (including in preparation for) such Proceeding to the fullest extent not prohibited by the provisions of the Delaware General Corporation Law (“ DGCL ”), as the same may be amended from time to time (but only to the extent that such amendment permits the Company to provide broader indemnification rights than the DGCL permitted prior to the adoption of such amendment).
 
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(b) Exception for Amounts Covered by Insurance and Other Sources . Notwithstanding the foregoing, the Company shall not be obligated to indemnify Indemnitee for Expenses or Other Liabilities of any type whatsoever (including, but not limited to judgments, fines, penalties, ERISA excise taxes or penalties and amounts paid in settlement) to the extent such have been paid directly to Indemnitee (or paid directly to a third party on Indemnitee’s behalf) by any directors and officers, or other type, of insurance maintained by the Company. Further, [except as provided in Section 3(c),] the Company shall not be obligated to indemnify Indemnitee for Expenses or Other Liabilities of any type whatsoever (including, but not limited to judgments, fines, penalties, ERISA excise taxes or penalties and amounts paid in settlement) to the extent such have been paid directly to Indemnitee (or paid directly to a third party on Indemnitee’s behalf) pursuant to any indemnification arrangement for the benefit of Indemnitee provided by any third party; provided however that this provision shall not limit any such third party’s equitable rights to contribution or indemnification from the Company with respect to amounts so paid by the third party.
(c) [ Company Obligations Primary . The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rights to indemnification for or advancement of Expenses and Other Liabilities and/or insurance provided by [name of VC or other sponsoring organization] (“ Other Indemnitor ”). The Company agrees with Indemnitee that the Company is the indemnitor of first resort of Indemnitee with respect to matters for which indemnification is provided under this Agreement (i.e., its obligations to Indemnitee are primary and any obligation of the Other Indemnitor to advance of expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary) and that the Company will be obligated to make all payments due to or for the benefit of Indemnitee under this Agreement without regard to any rights that Indemnitee may have against the Other Indemnitor. The Company hereby waives any equitable rights to contribution or indemnification from the Other Indemnitor in respect of any amounts paid to Indemnitee hereunder. The Company further agrees that no reimbursement of Other Liabilities or payment of Expenses by the Other Indemnitor to or for the benefit of Indemnitee shall affect the obligations of the Company hereunder, and that the Company shall be obligated to repay the Other Indemnitor for all amounts so paid or reimbursed to the extent that the Company has an obligation to indemnify Indemnitee for such Expenses or Other Liabilities hereunder. In the event that the Company provides any such repayment to the Other Indemnitor, the Company shall not be obligated to reimburse the Indemnitee for any Expenses or Other Liabilities related to such repayments. The Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from the Other Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Other Indemnitor on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Other Indemnitor shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company if the Other Indemnitor had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Other Indemnitor is not entitled to the subrogation rights described in the preceding sentence, the Other Indemnitor shall have the right of contribution by the Company to the Other Indemnitor with respect to any advance or payment by the Other Indemnitor to or on behalf of the Indemnitee.]
 
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4. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Expenses or Other Liabilities but not entitled, however, to indemnification for the total amount of such Expenses or Other Liabilities, the Company shall nevertheless indemnify Indemnitee for such total amount except as to the portion thereof for which indemnification is prohibited by the provisions of the DGCL. In any review or Proceeding to determine the extent of indemnification, the Company shall bear the burden to establish, by clear and convincing evidence, the lack of a successful resolution of a particular claim, issue or matter and which amounts sought in indemnity are allocable to claims, issues or matters which were not successfully resolved.
5. Liability Insurance . So long as Indemnitee shall continue to serve the Company or a Subsidiary or Affiliate of the Company as an Indemnifiable Person and thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding as a result of an Indemnifiable Event, the Company shall use reasonable efforts to maintain in full force and effect for the benefit of Indemnitee as an insured (i) liability insurance issued by one or more reputable insurers and having the policy amount and deductible deemed appropriate by the Board and providing in all respects coverage at least comparable to and in the same amount as that provided to the Chairman of the Board or the Chief Executive Officer of the Company and (ii) any replacement or substitute policies issued by one or more reputable insurers providing in all respects coverage at least comparable to and in the same amount as that being provided to the Chairman of the Board or the Chief Executive Officer of the Company. The purchase, establishment and maintenance of any such insurance or other arrangements shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such insurance or other arrangement.
6. Mandatory Advancement of Expenses . If requested by Indemnitee, the Company shall advance prior to the final disposition of the Proceeding all Expenses reasonably incurred by Indemnitee in connection with (including in preparation for) a Proceeding related to an Indemnifiable Event. Indemnitee hereby undertakes to repay such amounts advanced if, and only if and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Company’s Bylaws or the DGCL; it being understood that if Indemnitee is entitled to be indemnified by the Company under any of this Agreement, the Company’s Bylaws or the DGCL, Indemnitee shall not be required to repay such amounts advanced to the extent they relate to such matter(s) for which Indemnitee is entitled to such indemnification. The advances to be made hereunder shall be paid by the Company to Indemnitee or directly to a third party designated by Indemnitee within thirty (30) days following delivery of a written request therefor by Indemnitee to the Company. Indemnitee’s undertaking to repay any Expenses advanced to Indemnitee hereunder shall be unsecured and shall not be subject to the accrual or payment of any interest thereon.
7. Notice and Other Indemnification Procedures .
(a) Notification . Promptly after receipt by Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, Indemnitee shall, if Indemnitee believes that indemnification or advancement of Expenses with respect thereto may
 
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be sought from the Company under this Agreement, notify the Company of the commencement or threat of commencement thereof. However, a failure so to notify the Company promptly following Indemnitee’s receipt of such notice shall not relieve the Company from any liability that it may have to Indemnitee except to the extent that the Company is materially prejudiced in its defense of such Proceeding as a result of such failure.
(b) Insurance and Other Matters . If, at the time of the receipt of a notice of the commencement of a Proceeding pursuant to Section 7(a) above, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the issuers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such insurance policies.
(c) Assumption of Defense . In the event the Company shall be obligated to advance the Expenses for any Proceeding against Indemnitee, the Company, if deemed appropriate by the Company, shall be entitled to assume the defense of such Proceeding as provided herein. Such defense by the Company may include the representation of two or more parties by one attorney or law firm as permitted under the ethical rules and legal requirements related to joint representations. Following delivery of written notice to Indemnitee of the Company’s election to assume the defense of such Proceeding, the approval by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) of counsel designated by the Company and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. If (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have notified the Board in writing that Indemnitee has reasonably concluded that there is likely to be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (iii) the Company fails to employ counsel to assume the defense of such Proceeding, the fees and expenses of Indemnitee’s counsel shall be subject to indemnification and/or advancement pursuant to the terms of this Agreement. Nothing herein shall prevent Indemnitee from employing counsel for any such Proceeding at Indemnitee’s expense.
(d) Settlement . The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent; provided , however , that if a Change in Control has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel (selected in accordance with Section 8(c) below) has approved the settlement. Neither the Company nor any Subsidiary or Affiliate shall enter into a settlement of any Proceeding that might result in the imposition of any Expense, Other Liability, penalty, limitation or detriment on Indemnitee, whether indemnifiable under this Agreement or otherwise, without Indemnitee’s written consent, unless such settlement is purely monetary, fully releases Indemnitee of all liability associated with such Proceeding and has been consented to by the Independent Directors. Neither the Company nor Indemnitee shall unreasonably withhold consent from any settlement of any Proceeding. The Company shall not, on its own behalf, settle any part of any Proceeding to which Indemnitee is party with respect to other parties (including the Company) without the written consent of Indemnitee if any portion of such settlement is to be funded from insurance proceeds from insurance policies as to which Indemnitee is an insured party unless approved by either (i) the written consent of Indemnitee or (ii) a majority of the Independent Directors; provided, however, that the right to constrain the Company’s use of corporate insurance as described in this section shall terminate at the time the Company concludes (per the terms of this Agreement) that (x) Indemnitee is not entitled to indemnification pursuant to this Agreement, or (y) such indemnification obligation to Indemnitee has been fully discharged by the Company.
 
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8. Determination of Right to Indemnification .
(a) Success on the Merits or Otherwise . To the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 3(a) above or in the defense of any claim, issue or matter described therein, the Company shall indemnify Indemnitee against Expenses actually and reasonably incurred in connection therewith.
(b) Indemnification in Other Situations . In the event that Section 8(a) is inapplicable, the Company shall also indemnify Indemnitee if Indemnitee has not failed to meet the applicable standard of conduct for indemnification, as determined by the process set forth in Sections 8(c) and 8(d) below.
(c) Forum . Indemnitee shall be entitled to select the forum in which determination of whether or not Indemnitee has met the applicable standard of conduct shall be decided, and such election will be made from among the following:
(1) Those members of the Board who are Independent Directors even though less than a quorum;
(2) A committee of Independent Directors designated by a majority vote of Independent Directors, even though less than a quorum; or
(3) Independent Counsel selected by Indemnitee and approved by the Board, which approval may not be unreasonably withheld, conditioned or delayed, which counsel shall make such determination in a written opinion.
If Indemnitee is an officer or a director of the Company at the time that Indemnitee is selecting the forum, then Indemnitee shall not select Independent Counsel as such forum unless there are no Independent Directors or unless the Independent Directors agree to the selection of Independent Counsel as the forum.
The selected forum shall be referred to herein as the “Reviewing Party”. Notwithstanding the foregoing, following any Change in Control, the Reviewing Party shall be Independent Counsel selected in the manner provided in (3) above.
(d) Decision Timing and Expenses . As soon as practicable, and in no event later than thirty (30) days after receipt by the Company of written notice of Indemnitee’s choice of forum pursuant to Section 8(c) above, the Company and Indemnitee shall each submit to the Reviewing Party such information as they believe is appropriate for the Reviewing Party to consider. The Reviewing Party shall arrive at its decision within a reasonable period of time
 
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following the receipt of all such information from the Company and Indemnitee, but in no event later than thirty (30) days following the receipt of all such information, provided that the time by which the Reviewing Party must reach a decision may be extended by mutual agreement of the Company and Indemnitee. All Expenses associated with the process set forth in this Section 8(d), including but not limited to the Expenses of the Reviewing Party, shall be paid by the Company.
(e) Delaware Court of Chancery . Notwithstanding a final determination by any Reviewing Party that Indemnitee is not entitled to indemnification with respect to a specific Proceeding, Indemnitee shall have the right to apply to the Court of Chancery, for the purpose of enforcing Indemnitee’s right to indemnification pursuant to this Agreement; it being understood that the Court of Chancery shall be the exclusive forum for enforcing Indemnitee’s right to indemnification pursuant to this Agreement following the determination by the Reviewing Party.
(f) Expenses . The Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with any hearing or Proceeding under this Section 8 involving Indemnitee and against all Expenses and Other Liabilities incurred by Indemnitee in connection with any other Proceeding between the Company and Indemnitee involving the interpretation or enforcement of the rights of Indemnitee under this Agreement unless a court of competent jurisdiction finds that each of the material claims of Indemnitee in any such Proceeding was frivolous or made in bad faith.
(g) Determination of “Good Faith” . For purposes of any determination of whether Indemnitee acted in “good faith,” Indemnitee shall be deemed to have acted in good faith if in taking or failing to take the action in question Indemnitee relied on the records or books of account of the Company or a Subsidiary or Affiliate, including financial statements, or on information, opinions, reports or statements provided to Indemnitee by the officers or other employees of the Company or a Subsidiary or Affiliate in the course of their duties, or on the advice of legal counsel for the Company or a Subsidiary or Affiliate, or on information or records given or reports made to the Company or a Subsidiary or Affiliate by an independent certified public accountant or by an appraiser or other expert selected by the Company or a Subsidiary or Affiliate, or by any other person (including legal counsel, accountants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company or a Subsidiary or Affiliate. In connection with any determination as to whether Indemnitee is entitled to be indemnified hereunder, or to advancement of expenses, the Reviewing Party or court shall presume that Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification or advancement of Expenses, as the case may be, and the burden of proof shall be on the Company to establish, by clear and convincing evidence, that Indemnitee is not so entitled. The provisions of this Section 8(g) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or failures to act, of any other person serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person shall not be imputed to Indemnitee for purposes of determining the right to indemnification hereunder.
 
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9. Exceptions . Any other provision herein to the contrary notwithstanding,
(a) Claims Initiated by Indemnitee . The Company shall not be obligated pursuant to the terms of this Agreement to indemnify or advance Expenses to Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement, any other statute or law, as permitted under Section 145, or otherwise, (ii) where the Board has consented to the initiation of such Proceeding, or (iii) with respect to Proceedings brought to discharge Indemnitee’s fiduciary responsibilities, whether under ERISA or otherwise, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board finds it to be appropriate; provided that these exceptions shall not apply to Proceedings in which Indemnitee is engaged in conduct protected by any whistleblower statute, the up-the-ladder provisions of Section 307 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or any similar provision of any applicable federal, state or foreign securities law; or
(b) Section 16(b) Actions . The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any suit in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of l934 (the “ Exchange Act ”) and amendments thereto or similar provisions of any federal, state or local statutory law; or
(c) Exchange Act Reimbursement . The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act or Section 954 of the Dodd Frank Wall Street Reform and Consumer Protection Act (“ Dodd Frank Act ”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or
(d) Unlawful Indemnification . The Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee for Other Liabilities if such indemnification is prohibited by law, if so established by a non-appealable judgment or other final non-appealable adjudication adverse to Indemnitee.
Notwithstanding any of the foregoing, (i) Indemnitee is entitled to receive advancement of Expenses for the defense of any Proceeding referenced in subsections (b) or (c) above; and (ii) if Indemnitee is required to make a payment in a Proceeding described in subsection (c), and no court in any such Proceeding has found that Indemnitee personally engaged in acts or omissions outside the scope of indemnification, Indemnitee shall not be required to repay such advancement of Expenses.
10. Non-exclusivity . The provisions for indemnification and advancement of Expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements, or
 
9

otherwise, both as to acts or omissions in his or her official capacity and to acts or omissions in another capacity while serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person and Indemnitee’s rights hereunder shall continue after Indemnitee has ceased serving the Company or a Subsidiary or Affiliate as an Indemnifiable Person and shall inure to the benefit of the heirs, executors and administrators of Indemnitee.
11. Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of the Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
12. Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) and except as expressly provided herein, no such waiver shall constitute a continuing waiver.
13. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. In the event of a Change in Control, the Company shall maintain in force any and all directors’ and officers’ liability insurance policies and fiduciary liability insurance policies then maintained by the Company in a manner that will continue to provide coverage to the individual insureds under these policies for a period of six years after such Change of Control.
14. Notice . All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and a receipt is provided by the party to whom such communication is delivered, (ii) if mailed by certified or registered mail with postage prepaid, return receipt requested, on the signing by the recipient of an acknowledgement of receipt form accompanying delivery through the U.S. mail, (iii) personal service by a process server, or (iv) delivery to the recipient’s address by overnight delivery (e.g., FedEx, UPS or DHL) or other commercial delivery service. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice complying with the provisions of this Section 14. Delivery of communications to the Company with respect to this Agreement shall be sent to the attention of the Company’s General Counsel.
 
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15. No Presumptions . For purposes of this Agreement, the termination of any Proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise. In addition, neither the failure of the Company or a Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Company or a Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of Proceedings by Indemnitee to secure a judicial determination by exercising Indemnitee’s rights under Section 8(e) of this Agreement shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has failed to meet any particular standard of conduct or did not have any particular belief or is not entitled to indemnification under applicable law or otherwise. Additionally, any admission of liability by the Company in connection with any settlement by the Company with a regulatory agency shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise. Moreover, the conviction of or plea of guilty or nolo contendere (or its equivalent) by Indemnitee in a jurisdiction outside the United States and its territories, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or otherwise, unless the underlying act or omission relating to such conviction or plea would be deemed a criminal offense within the United States and its territories or any subdivision thereof having jurisdiction over Indemnitee.
16. Survival of Rights . The rights conferred on Indemnitee by this Agreement shall continue after Indemnitee has ceased to serve the Company or a Subsidiary or Affiliate of the Company as an Indemnifiable Person and shall inure to the benefit of Indemnitee’s heirs, executors and administrators.
17. Subrogation and Contribution .
(a) [Except as provided in Section 3(c),] in the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
(b) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by or on behalf of Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the
 
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relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
18. Specific Performance, Etc. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute Proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.
19. Counterparts . This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
20. Headings . The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
21. Governing Law . This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely with Delaware.
22. Consent to Jurisdiction . The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any Proceeding which arises out of or relates to this Agreement.
23. Effective Date . This Agreement shall become effective on the closing date of the Company’s initial public offering pursuant to a Registration Statement on Form S-1 (the “Effective Date”).
24. Entire Agreement . This Agreement and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and, upon the Effective Date, this Agreement and the documents referred to herein supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.
 
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The parties hereto have entered into this Indemnity Agreement effective as of the date first above written.

	 		 	CASTLIGHT HEALTH, INC.	
					
	 		 		 	By:	 	 	
					
	 		 		 	Its:	 	 	
				
	 		 		 	INDEMNITEE:	

				
	 		 	Address:    	 	 	

 
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Exhibit 10.2
CASTLIGHT HEALTH, INC.
2008 STOCK INCENTIVE PLAN

TABLE OF CONTENTS

 	  	 	  	 	  	Page	 	
			
1.	  	PURPOSE OF THE PLAN	  	 	1	  	
			
2.	  	ADMINISTRATION	  	 	1	  	
				
	  	2.1	  	Administrator	  	 	1	  	
				
	  	2.2	  	Plan Awards; Interpretation; Powers of Administrator	  	 	2	  	
				
	  	2.3	  	Binding Determinations	  	 	3	  	
				
	  	2.4	  	Reliance on Experts	  	 	3	  	
				
	  	2.5	  	Delegation	  	 	3	  	
			
3.	  	ELIGIBILITY	  	 	3	  	
			
 4.	  	STOCK SUBJECT TO THE PLAN	  	 	4	  	
				
	  	4.1	  	Shares Available	  	 	4	  	
				
	  	4.2	  	Share Limits	  	 	4	  	
				
	  	4.3	  	Replenishment and Reissue of Unvested Awards	  	 	4	  	
				
	  	4.4	  	Reservation of Shares	  	 	5	  	
			
 5.	  	OPTION GRANT PROGRAM	  	 	5	  	
				
	  	5.1	  	Option Grants in General	  	 	5	  	
				
	  	5.2	  	Types of Options	  	 	5	  	
				
	  	5.3	  	Option Price	  	 	6	  	
				
	  	5.4	  	Vesting; Term; Exercise Procedure	  	 	8	  	
				
	  	5.5	  	Limitations on Grant and Terms of Incentive Stock Options	  	 	8	  	
				
	  	5.6	  	Effects of Termination of Employment on Options	  	 	9	  	
				
	  	5.7	  	Option Repricing/Cancellation and Regrant/Waiver of Restrictions	  	 	10	  	
				
	  	5.8	  	Early Exercise Options	  	 	11	  	
			
 6.	  	STOCK AWARD PROGRAM	  	 	11	  	
				
	  	6.1	  	Stock Awards in General	  	 	11	  	
				
	  	6.2	  	Types of Stock Awards	  	 	12	  	
				
	  	6.3	  	Purchase Price	  	 	12	  	
				
	  	6.4	  	Vesting	  	 	12	  	
				
	  	6.5	  	Term	  	 	12	  	
				
	  	6.6	  	Stock Certificates; Fractional Shares	  	 	12	  	
				
	  	6.7	  	Dividend and Voting Rights	  	 	12	  	
 
-i-

TABLE OF CONTENTS
(continued)

 	  	 	  	 	  	Page	 	
				
	  	6.8	  	Termination of Employment; Return to the Corporation	  	 	13	  	
				
	  	6.9	  	Waiver of Restrictions	  	 	13	  	
			
 7.	  	PROVISIONS APPLICABLE TO ALL AWARDS	  	 	13	  	
				
	  	7.1	  	Rights of Eligible Persons, Participants and Beneficiaries	  	 	13	  	
				
	  	7.2	  	No Transferability; Limited Exception to Transfer Restrictions	  	 	14	  	
				
	  	7.3	  	Adjustments; Changes in Control	  	 	15	  	
				
	  	7.4	  	Termination of Employment or Services	  	 	19	  	
				
	  	7.5	  	Compliance with Laws	  	 	20	  	
				
	  	7.6	  	Tax Withholding	  	 	22	  	
				
	  	7.7	  	Plan and Award Amendments, Termination and Suspension	  	 	23	  	
				
	  	7.8	  	Privileges of Stock Ownership	  	 	24	  	
				
	  	7.9	  	Stock-Based Awards in Substitution for Awards Granted by Other Corporation	  	 	24	  	
				
	  	7.10	  	Effective Date of the Plan	  	 	24	  	
				
	  	7.11	  	Term of the Plan	  	 	24	  	
				
	  	7.12	  	Governing Law/Severability	  	 	24	  	
				
	  	7.13	  	Captions	  	 	25	  	
				
	  	7.14	  	Non-Exclusivity of Plan	  	 	25	  	
				
	  	7.15	  	No Restriction on Corporate Powers	  	 	25	  	
				
	  	7.16	  	Other Company Compensation or Benefit Programs	  	 	25	  	
			
8.	  	DEFINITIONS	  	 	26	  	
 
-ii-

CASTLIGHT HEALTH, INC.
2008 STOCK INCENTIVE PLAN †
PREFACE
This Plan is divided into two separate equity programs: (1) the option grant program set forth in Section 5 under which Eligible Persons (as defined in Section 3) may, at the discretion of the Administrator, be granted Options, and (2) the stock award program set forth in Section 6 under which Eligible Persons may, at the discretion of the Administrator, be awarded restricted or unrestricted shares of Common Stock. Section 2 of this Plan contains the general rules regarding the administration of this Plan. Section 3 sets forth the requirements for eligibility to receive an Award grant under this Plan. Section 4 describes the capital stock of the Corporation that may be subject to Awards granted under this Plan. Section 7 contains other provisions applicable to all Awards granted under this Plan. Section 8 provides definitions for certain capitalized terms used in this Plan and not otherwise defined herein.
 
1.	PURPOSE OF THE PLAN .	
The purpose of this Plan is to promote the success of the Corporation and the interests of its stockholders by providing a means through which the Corporation may grant equity-based incentives to attract, motivate, retain and reward certain officers, employees, directors and other eligible persons and to further link the interests of Award recipients with those of the Corporation’s stockholders generally.
 
2.	ADMINISTRATION .	
 
 	2.1	Administrator . This Plan shall be administered by and all Awards under this Plan shall be authorized by the Administrator. The “ Administrator ” means the Board or one or more committees appointed by the Board or another committee (within its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to the extent permitted by Section 157(c) of the Delaware General Corporation Law and any other applicable law, to one or more officers of the Corporation, its powers under this Plan (a) to designate the officers and employees of the Corporation and its Affiliates who will receive grants of Awards under this Plan, and (b) to determine the number of shares subject to, and the other terms and conditions of, such Awards. The Board may delegate different levels of authority to different committees with administrative and grant authority under this Plan. Unless otherwise provided in the Bylaws of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the vote of a majority of the members present	

†  	Plan initially adopted April 3, 2008. Amended to increase Share Limit (Section 4.2) on November 6, 2008, February 10, 2010, June 18, 2010, November 9, 2010 and July 21, 2011	
 
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 	assuming the presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute action by the acting Administrator.	
 
 	2.2	Plan Awards; Interpretation; Powers of Administrator . Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of Awards and the administration of this Plan (in the case of a committee or delegation to one or more officers, within the authority delegated to that committee or person(s)), including, without limitation, the authority to:	
 
 	(a)	determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive Awards;	
 
 	(b)	grant Awards to Eligible Persons, determine the price and number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of Awards consistent with the express limits of this Plan, establish the installments (if any) in which such Awards will become exercisable or will vest (which may include, without limitation, performance and/or time-based schedules) or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such Awards;	
 
 	(c)	approve the forms of Award Agreements, which need not be identical either as to type of Award or among Participants;	
 
 	(d)	construe and interpret this Plan and any Award Agreement or other agreements defining the rights and obligations of the Corporation, its Affiliates, and Participants under this Plan, make factual determinations with respect to the administration of this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the Awards;	
 
 	(e)	cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards, subject to any required consent under Section 7.7.4;	
 
 	(f)	accelerate or extend the vesting or exercisability or extend the term of any or all outstanding Awards (within the maximum ten-year term of Awards under Sections 5.4.2 and 6.5) in such circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of a personal nature);	
 
 	(g)	determine Fair Market Value for purposes of this Plan and Awards;	
 
 	(h)	determine the duration and purposes of leaves of absence that may be granted to Participants without constituting a termination of their employment for purposes of this Plan; and	
 
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 	(i)	determine whether, and the extent to which, adjustments are required pursuant to Section 7.3 hereof and authorize the termination, conversion, substitution or succession of awards upon the occurrence of an event of the type described in Section 7.3.	
 
 	2.3	Binding Determinations . Any action taken by, or inaction of, the Corporation, any Affiliate, the Board or the Administrator relating or pursuant to this Plan and within its authority hereunder or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor the Administrator, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any Award), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time.	
 
 	2.4	Reliance on Experts . In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely upon the advice of experts, including employees of and professional advisors to the Corporation. No director, officer or agent of the Corporation or any of its Affiliates shall be liable for any such action or determination taken or made or omitted in good faith.	
 
 	2.5	Delegation . The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Corporation or any of its Affiliates or to third parties.	
 
3.	ELIGIBILITY .	
Awards may be granted under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “ Eligible Person ” means any person who qualifies as one of the following at the time of grant of the respective Award:
 
 	(a)	an officer (whether or not a director) or employee of the Corporation or any of its Affiliates;	
 
 	(b)	any member of the Board; or	
 
 	(c)	any director of one of the Corporation’s Affiliates, or any individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation or one of its Affiliates, as applicable, in a capital raising transaction or as a market maker or promoter of that entity’s securities) to the Corporation or one of its Affiliates.	
An advisor or consultant may be selected as an Eligible Person pursuant to clause (c) above only if such person’s participation in this Plan would not adversely affect (1) the
 
3

Corporation’s eligibility to rely on the Rule 701 exemption from registration under the Securities Act for the offering of shares issuable under this Plan by the Corporation, or (2) the Corporation’s compliance with any other applicable laws.
An Eligible Person may, but need not, be granted one or more Awards pursuant to Section 5 and/or one or more Awards pursuant to Section 6. An Eligible Person who has been granted an Award under this Plan may, if otherwise eligible, be granted additional Awards under this Plan if the Administrator so determines. However, a person’s status as an Eligible Person is not a commitment that any Award will be granted to that person under this Plan. Furthermore, an Eligible Person who has been granted an Award under Section 5 is not necessarily entitled to an Award under Section 6, or vice versa, unless otherwise expressly determined by the Administrator.
Each Award granted under this Plan must be approved by the Administrator at or prior to the grant of the Award.
 
4.	STOCK SUBJECT TO THE PLAN .	
 
 	4.1	Shares Available . Subject to the provisions of Section 7.3.1, the capital stock that may be delivered under this Plan will be shares of the Corporation’s authorized but unissued Common Stock and any of its shares of Common Stock held as treasury shares. The shares of Common Stock issued and delivered may be issued and delivered for any lawful consideration.	
 
 	4.2	Share Limits . Subject to the provisions of Section 7.3.1 and further subject to the share counting rules of Section 4.3, the maximum number of shares of Common Stock that may be delivered pursuant to Awards granted under this Plan will not exceed 11,916,754 shares (the “ Share Limit ”) in the aggregate. As required under Treasury Regulation Section 1.422-2(b)(3)(i), in no event will the number of shares of Common Stock that may be delivered pursuant to Incentive Stock Options granted under this Plan exceed the Share Limit.	
 
 	4.3	Replenishment and Reissue of Unvested Awards . To the extent that an Award is settled in cash or a form other than shares of Common Stock, the shares that would have been delivered had there been no such cash or other settlement shall not be counted against the shares available for issuance under this Plan. No Award may be granted under this Plan unless, on the date of grant, the sum of (a) the maximum number of shares of Common Stock issuable at any time pursuant to such Award, plus (b) the number of shares of Common Stock that have previously been issued pursuant to Awards granted under this Plan, plus (c) the maximum number of shares of Common Stock that may be issued at any time after such date of grant pursuant to Awards that are outstanding on such date, does not exceed the Share Limit. Shares of Common Stock that are subject to or underlie Options granted under this Plan that expire or for any reason are canceled or terminated without having been exercised (or shares of Common Stock subject to or underlying the unexercised portion of such Options in the case of Options that were partially exercised), as well as shares of Common Stock that are subject to Stock Awards made under this Plan that are forfeited to the Corporation or	
 
4

 	otherwise repurchased by the Corporation prior to the vesting of such shares for a price not greater than the original purchase or issue price of such shares (as adjusted pursuant to Section 7.3.1) will again, except to the extent prohibited by law or applicable listing or regulatory requirements (and subject to any applicable limitations of the Code in the case of Awards intended to be Incentive Stock Options), be available for subsequent Award grants under this Plan. Shares that are exchanged by a Participant or withheld by the Corporation as full or partial payment in connection with any Award under this Plan, as well as any shares exchanged by a Participant or withheld by the Corporation or one of its Affiliates to satisfy the tax withholding obligations related to any Award, shall be available for subsequent Awards under this Plan.	
 
 	4.4	Reservation of Shares . The Corporation shall at all times reserve a number of shares of Common Stock sufficient to cover the Corporation’s obligations and contingent obligations to deliver shares with respect to Awards then outstanding under this Plan.	
 
5.	OPTION GRANT PROGRAM .	
 
 	5.1	Option Grants in General . Each Option shall be evidenced by an Award Agreement in the form approved by the Administrator. The Award Agreement evidencing an Option shall contain the terms established by the Administrator for that Option, as well as any other terms, provisions, or restrictions that the Administrator may impose on the Option or any shares of Common Stock subject to the Option; in each case subject to the applicable provisions and limitations of this Section 5 and the other applicable provisions and limitations of this Plan. The Administrator may require that the recipient of an Option promptly execute and return to the Corporation his or her Award Agreement evidencing the Option. In addition, the Administrator may require that the spouse of any married recipient of an Option also promptly execute and return to the Corporation the Award Agreement evidencing the Option granted to the recipient or such other spousal consent form that the Administrator may require in connection with the grant of the Option.	
 
 	5.2	Types of Options . The Administrator will designate each Option granted under this Plan as either an Incentive Stock Option or a Nonqualified Stock Option, and such designation shall be set forth in the applicable Award Agreement. Any Option granted under this Plan that is not expressly designated in the applicable Award Agreement as an Incentive Stock Option will be deemed to be designated a Nonqualified Stock Option under this Plan and not an “incentive stock option” within the meaning of Section 422 of the Code. Incentive Stock Options shall be subject to the provisions of Section 5.5 in addition to the provisions of this Plan applicable to Options generally. The Administrator may, in its discretion, designate any Option as an “early exercise option” pursuant to Section 5.8.	
 
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 	5.3	Option Price .	
 
 	5.3.1	Pricing Limits . Subject to the following provisions of this Section 5.3.1, the Administrator will determine the purchase price per share of the Common Stock covered by each Option (the “exercise price” of the Option) at the time of the grant of the Option, which exercise price will be set forth in the applicable Award Agreement. In no case will the exercise price of an Option be less than the greater of:	
 
 	(a)	the par value of the Common Stock;	
 
 	(b)	in the case of an Incentive Stock Option and subject to clause (c) below, 100% of the Fair Market Value of the Common Stock on the date of grant; or	
 
 	(c)	in the case of an Incentive Stock Option granted to a Participant described in Section 5.5.4, 110% of the Fair Market Value of the Common Stock on the date of grant.	
 
 	5.3.2	Payment Provisions . The Corporation will not be obligated to deliver certificates for the shares of Common Stock to be purchased on exercise of an Option unless and until it receives full payment of the exercise price therefor, all related withholding obligations under Section 7.6 have been satisfied, and all other conditions to the exercise of the Option set forth herein or in the Award Agreement have been satisfied. The purchase price of any shares of Common Stock purchased on exercise of an Option must be paid in full at the time of each purchase in such lawful consideration as may be permitted or required by the Administrator, which may include, without limitation, one or a combination of the following methods:	
 
 	(a)	cash, check payable to the order of the Corporation, or electronic funds transfer;	
 
 	(b)	notice and third party payment in such manner as may be authorized by the Administrator;	
 
 	(c)	the delivery of previously owned shares of Common Stock;	
 
 	(d)	by a reduction in the number of shares of Common Stock otherwise deliverable pursuant to the Award;	
 
 	(e)	subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise”; or	
 
 	(f)	if authorized by the Administrator or specified in the applicable Award Agreement, by a promissory note of the Participant consistent with the requirements of Section 5.3.3.	
 
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In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. Shares of Common Stock used to satisfy the exercise price of an Option (whether previously-owned shares or shares otherwise deliverable pursuant to the terms of the Option) shall be valued at their Fair Market Value on the date of exercise. Unless otherwise expressly provided in the applicable Award Agreement, the Administrator may eliminate or limit a Participant’s ability to pay the purchase or exercise price of any Award by any method other than cash payment to the Corporation.
 
 	5.3.3	Acceptance of Notes to Finance Exercise . The Corporation may, with the Administrator’s approval in each specific case, accept one or more promissory notes from any Eligible Person in connection with the exercise of any Option; provided that any such note shall be subject to the following terms and conditions:	
 
 	(a)	The principal of the note shall not exceed the amount required to be paid to the Corporation upon the exercise, purchase or acquisition of one or more Awards under this Plan and the note shall be delivered directly to the Corporation in consideration of such exercise, purchase or acquisition.	
 
 	(b)	The initial term of the note shall be determined by the Administrator; provided that the term of the note, including extensions, shall not exceed a period of five years.	
 
 	(c)	The note shall provide for full recourse to the Participant and shall bear interest at a rate determined by the Administrator, but not less than the interest rate necessary to avoid the imputation of interest under the Code and to avoid any adverse accounting consequences in connection with the exercise, purchase or acquisition.	
 
 	(d)	If the employment or services of the Participant by or to the Corporation and its Affiliates terminates, the unpaid principal balance of the note shall become due and payable on the 30th business day after such termination; provided, however, that if a sale of the shares acquired on exercise of the Option would cause such Participant to incur liability under Section 16(b) of the Exchange Act, the unpaid balance shall become due and payable on the 10th business day after the first day on which a sale of such shares could have been made without incurring such liability assuming for these purposes that there are no other transactions (or deemed transactions) in securities of the Corporation by the Participant subsequent to such termination.	
 
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 	(e)	If required by the Administrator or by applicable law, the note shall be secured by a pledge of any shares or rights financed thereby or other collateral, in compliance with applicable law.	
The terms, repayment provisions, and collateral release provisions of the note and the pledge securing the note shall conform with all applicable rules and regulations, including those of the Federal Reserve Board and any applicable state law, as then in effect.
 
 	5.4	Vesting; Term; Exercise Procedure .	
 
 	5.4.1	Vesting . Except as provided in Section 5.8, an Option may be exercised only to the extent that it is vested and exercisable. The Administrator will determine the vesting and/or exercisability provisions of each Option (which may be based on performance criteria, passage of time or other factors or any combination thereof), which provisions will be set forth in the applicable Award Agreement. Unless the Administrator otherwise expressly provides, once exercisable an Option will remain exercisable until the expiration or earlier termination of the Option.	
 
 	5.4.2	Term . Each Option shall expire not more than 10 years after its date of grant. Each Option will be subject to earlier termination as provided in or pursuant to Sections 5.7 and 7.3.	
 
 	5.4.3	Exercise Procedure . Any exercisable Option will be deemed to be exercised when the Corporation receives written notice of such exercise from the Participant (on a form and in such manner as may be required by the Administrator), together with any required payment made in accordance with Section 5.3 and Section 7.6 and any written statement required pursuant to Section 7.5.1.	
 
 	5.4.4	Fractional Shares/Minimum Issue . Fractional share interests will be disregarded, but may be accumulated. The Administrator, however, may determine that cash, other securities, or other property will be paid or transferred in lieu of any fractional share interests. No fewer than 100 shares (subject to adjustment pursuant to Section 7.3.1) may be purchased on exercise of any Option at one time unless the number purchased is the total number at the time available for purchase under the Option.	
 
 	5.5	Limitations on Grant and Terms of Incentive Stock Options .	
 
 	5.5.1	$100,000 Limit . To the extent that the aggregate Fair Market Value of stock with respect to which incentive stock options first become exercisable by a Participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to Incentive Stock Options under this Plan and stock subject to incentive stock options under all other plans of the Corporation or any of its Affiliates, such options will be treated as nonqualified stock options. For this purpose, the Fair Market Value of the stock subject to options will be determined as of the date the options were	
 
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 	awarded. In reducing the number of options treated as incentive stock options to meet the $100,000 limit, the most recently granted options will be reduced (recharacterized as nonqualified stock options) first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an incentive stock option.	
 
 	5.5.2	Other Code Limits . Incentive Stock Options may only be granted to individuals that are employees of the Corporation or one of its Affiliates and satisfy the other eligibility requirements of the Code. Any Award Agreement relating to Incentive Stock Options will contain or shall be deemed to contain such other terms and conditions as from time to time are required in order that the Option be an “incentive stock option” as that term is defined in Section 422 of the Code.	
 
 	5.5.3	ISO Notice of Sale Requirement . Any Participant who exercises an Incentive Stock Option shall give prompt written notice to the Corporation of any sale or other transfer of the shares of Common Stock acquired on such exercise if the sale or other transfer occurs within (a) one year after the exercise date of the Option, or (b) two years after the grant date of the Option.	
 
 	5.5.4	Limits on 10% Holders . No Incentive Stock Option may be granted to any person who, at the time the Incentive Stock Option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of outstanding stock of the Corporation (or any of its Affiliates) possessing more than 10% of the total combined voting power of all classes of stock of the Corporation (or any of its Affiliates), unless the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of the stock subject to the Incentive Stock Option and the Incentive Stock Option by its terms is not exercisable more than five years after the date the Incentive Stock Option is granted.	
 
 	5.6	Effects of Termination of Employment on Options .	
 
 	5.6.1	Dismissal for Cause . Unless otherwise provided in the Award Agreement and subject to earlier termination pursuant to or as contemplated by Section 5.4.2 or 7.3, if a Participant’s employment by or service to the Corporation or any of its Affiliates is terminated by such entity for Cause, the Participant’s Option will terminate on the Participant’s Severance Date, whether or not the Option is then vested and/or exercisable.	
 
 	5.6.2	Death or Disability . Unless otherwise provided in the Award Agreement (consistent with applicable securities laws) and subject to earlier termination pursuant to or as contemplated by Section 5.4.2 or 7.3, if a Participant’s employment by or service to the Corporation or any of its	
 
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 	Affiliates terminates as a result of the Participant’s death or Total Disability:	
 
 	(a)	the Participant (or his or her Personal Representative or Beneficiary, in the case of the Participant’s Total Disability or death, respectively), will have until the date that is 12 months after the Participant’s Severance Date to exercise the Participant’s Option (or portion thereof) to the extent that it was vested and exercisable on the Severance Date;	
 
 	(b)	the Option, to the extent not vested and exercisable on the Participant’s Severance Date, shall terminate on the Severance Date; and	
 
 	(c)	the Option, to the extent exercisable for the 12-month period following the Participant’s Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 12-month period.	
 
 	5.6.3	Other Terminations of Employment . Unless otherwise provided in the Award Agreement (consistent with applicable securities laws) and subject to earlier termination pursuant to or as contemplated by Section 5.4.2 or 7.3, if a Participant’s employment by or service to the Corporation or any of its Affiliates terminates for any reason other than a termination by such entity for Cause or because of the Participant’s death or Total Disability:	
 
 	(a)	the Participant will have until the date that is 3 months after the Participant’s Severance Date to exercise his or her Option (or portion thereof) to the extent that it was vested and exercisable on the Severance Date;	
 
 	(b)	the Option, to the extent not vested and exercisable on the Participant’s Severance Date, shall terminate on the Severance Date; and	
 
 	(c)	the Option, to the extent exercisable for the 3-month period following the Participant’s Severance Date and not exercised during such period, shall terminate at the close of business on the last day of the 3-month period.	
 
 	5.7	Option Repricing/Cancellation and Regrant/Waiver of Restrictions . Subject to Section 4 and Section 7.7 and the specific limitations on Options contained in this Plan, the Administrator from time to time may authorize, generally or in specific cases only, for the benefit of any Eligible Person, any adjustment in the exercise price, the vesting schedule, the number of shares subject to, or the term of, an Option granted under this Plan by cancellation of an outstanding Option and a subsequent regranting of the Option, by amendment, by substitution of an outstanding Option, by waiver or by other legally valid means. Such amendment or other action may result in, among other changes, an exercise price that is higher	
 
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 	or lower than the exercise price of the original or prior Option, provide for a greater or lesser number of shares of Common Stock subject to the Option, or provide for a longer or shorter vesting or exercise period.	
 
 	5.8	Early Exercise Options . The Administrator may, in its discretion, designate any Option as an “early exercise” Option which, by express provision in the applicable Award Agreement, may be exercised prior to the date such Option has vested. If the Participant elects to exercise all or a portion of any such Option before it is vested, the shares of Common Stock acquired under the Option which are attributable to the unvested portion of the Option shall be Restricted Shares. The applicable Award Agreement will specify the extent (if any) to which and the time (if ever) at which the Participant will be entitled to dividends, voting and other rights in respect of such Restricted Shares prior to vesting, and the restrictions imposed on such shares and the conditions of release or lapse of such restrictions. Unless otherwise expressly provided in the applicable Award Agreement, such Restricted Shares shall be subject to the provisions of Sections 6.6 through 6.9, below.	
 
 	5.9	Information to Optionees . If the Corporation is relying on the exemption from registration under Section 12(g) of the Exchange Act, pursuant to Rule 12h-1(f)(1) promulgated under the Exchange Act, then the Corporation shall provide the Required Information (as defined below) in the manner required by Rule 12h-1(f)(1) to all optionees every six months until the Corporation becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is no longer relying on the exemption pursuant to Rule 12h-1(f)(1); provided , that , prior to receiving access to the Required Information the optionee must agree to keep the Required Information confidential pursuant to a written agreement in the form provided by the Corporation. For purposes of this Section 5.9, “ Required Information ” means the information described in Rules 701(e)(3), (4) and (5) under the Securities Act.	
 
6.	STOCK AWARD PROGRAM .	
 
 	6.1	Stock Awards in General . Each Stock Award shall be evidenced by an Award Agreement in the form approved by the Administrator. The Award Agreement evidencing a Stock Award shall contain the terms established by the Administrator for that Stock Award, as well as any other terms, provisions, or restrictions that the Administrator may impose on the Stock Award; in each case subject to the applicable provisions and limitations of this Section 6 and the other applicable provisions and limitations of this Plan. The Administrator may require that the recipient of a Stock Award promptly execute and return to the Corporation his or her Award Agreement evidencing the Stock Award. In addition, the Administrator may require that the spouse of any married recipient of a Stock Award also promptly execute and return to the Corporation the Award Agreement evidencing the Stock Award granted to the recipient or such other spousal consent form that the Administrator may require in connection with the grant of the Stock Award.	
 
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 	6.2	Types of Stock Awards . The Administrator shall designate whether a Stock Award shall be a Restricted Stock Award, and such designation shall be set forth in the applicable Award Agreement.	
 
 	6.3	Purchase Price .	
 
 	6.3.1	Pricing Limits . Subject to the following provisions of this Section 6.3, the Administrator will determine the purchase price per share of the Common Stock covered by each Stock Award at the time of grant of the Award. In no case will such purchase price be less than the par value of the Common Stock.	
 
 	6.3.2	Payment Provisions . The Corporation will not be obligated to issue certificates evidencing shares of Common Stock awarded under this Section 6 unless and until it receives full payment of the purchase price therefor and all other conditions to the purchase, as determined by the Administrator, have been satisfied. The purchase price of any shares subject to a Stock Award must be paid in full at the time of the purchase in such lawful consideration as may be permitted or required by the Administrator, which may include, without limitation, one or a combination of the methods set forth in clauses (a) through (f) in Section 5.3.2 and/or past services rendered to the Corporation or any of its Affiliates.	
 
 	6.4	Vesting . The restrictions imposed on the shares of Common Stock subject to a Restricted Stock Award (which may be based on performance criteria, passage of time or other factors or any combination thereof) will be set forth in the applicable Award Agreement.	
 
 	6.5	Term . A Stock Award shall either vest or be forfeited not more than 10 years after the date of grant. Each Stock Award will be subject to earlier termination as provided in or pursuant to Sections 6.8 and 7.3. Any payment of cash or delivery of stock in payment for a Stock Award may be delayed until a future date if specifically authorized by the Administrator in writing and by the Participant.	
 
 	6.6	Stock Certificates; Fractional Shares . Stock certificates evidencing Restricted Shares will bear a legend making appropriate reference to the restrictions imposed hereunder and will be held by the Corporation or by a third party designated by the Administrator until the restrictions on such shares have lapsed, the shares have vested in accordance with the provisions of the Award Agreement and Section 6.4, and any related loan has been repaid. Fractional share interests will be disregarded, but may be accumulated. The Administrator, however, may determine that cash, other securities, or other property will be paid or transferred in lieu of any fractional share interests.	
 
 	6.7	Dividend and Voting Rights . Unless otherwise provided in the applicable Award Agreement, a Participant receiving Restricted Shares will be entitled to cash dividend and voting rights for all Restricted Shares issued even though they are	
 
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 	not vested, but such rights will terminate immediately as to any Restricted Shares which cease to be eligible for vesting.	
 
 	6.8	Termination of Employment; Return to the Corporation . Unless the Administrator otherwise expressly provides, Restricted Shares subject to an Award that remain subject to vesting conditions that have not been satisfied by the time specified in the applicable Award Agreement (which may include, without limitation, the Participant’s Severance Date), will not vest and will be reacquired by the Corporation in such manner and on such terms as the Administrator provides, which terms shall include return or repayment of the lower of (a) the Fair Market Value of the Restricted Shares at the time of the termination, or (b) the original purchase price of the Restricted Shares, without interest, to the Participant to the extent not prohibited by law. The Award Agreement shall specify any other terms or conditions of the repurchase if the Award fails to vest. Any other Stock Award that has not been exercised as of a Participant’s Severance Date shall terminate on that date unless otherwise expressly provided by the Administrator in the applicable Award Agreement.	
 
 	6.9	Waiver of Restrictions . Subject to Sections 4 and 7.7 and the specific limitations on Stock Awards contained in this Plan, the Administrator from time to time may authorize, generally or in specific cases only, for the benefit of any Eligible Person, any adjustment in the vesting schedule, or the restrictions upon or the term of, a Stock Award granted under this Plan by amendment, by substitution of an outstanding Stock Award, by waiver or by other legally valid means.	
 
7.	PROVISIONS APPLICABLE TO ALL AWARDS .	
 
 	7.1	Rights of Eligible Persons, Participants and Beneficiaries .	
 
 	7.1.1	Employment Status . No person shall have any claim or rights to be granted an Award (or additional Awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.	
 
 	7.1.2	No Employment/Service Contract . Nothing contained in this Plan (or in any other documents under this Plan or related to any Award) shall confer upon any Eligible Person or Participant any right to continue in the employ or other service of the Corporation or any of its Affiliates, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Corporation or any Affiliate to change such person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause at any time. Nothing in this Section 7.1.2, or in Section 7.3 or 7.15, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract. An Award Agreement shall not constitute a contract of employment or service.	
 
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 	7.1.3	Plan Not Funded . Awards payable under this Plan will be payable in shares of Common Stock or from the general assets of the Corporation, and (except as to the share reservation provided in Section 4.4) no special or separate reserve, fund or deposit will be made to assure payment of such Awards. No Participant, Beneficiary or other person will have any right, title or interest in any fund or in any specific asset (including shares of Common Stock, except as expressly provided) of the Corporation or any of its Affiliates by reason of any Award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan will create, or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation or any of its Affiliates and any Participant, Beneficiary or other person. To the extent that a Participant, Beneficiary or other person acquires a right to receive payment pursuant to any Award hereunder, such right will be no greater than the right of any unsecured general creditor of the Corporation.	
 
 	7.1.4	Charter Documents . The Certificate of Incorporation and Bylaws of the Corporation, as either of them may lawfully be amended from time to time, may provide for additional restrictions and limitations with respect to the Common Stock (including additional restrictions and limitations on the voting or transfer of Common Stock) or priorities, rights and preferences as to securities and interests prior in rights to the Common Stock. To the extent that these restrictions and limitations are greater than those set forth in this Plan or any Award Agreement, such restrictions and limitations shall apply to any shares of Common Stock acquired pursuant to the exercise of Awards and are incorporated herein by this reference.	
 
 	7.2	No Transferability; Limited Exception to Transfer Restrictions .	
 
 	7.2.1	Limit On Exercise and Transfer . Unless otherwise expressly provided in (or pursuant to) this Section 7.2, by applicable law and by the Award Agreement, as the same may be amended:	
 
 	(a)	all Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;	
 
 	(b)	Awards will be exercised only by the Participant; and	
 
 	(c)	amounts payable or shares issuable pursuant to an Award will be delivered only to (or for the account of) the Participant.	
In addition, the shares shall be subject to the restrictions set forth in the applicable Award Agreement.
 
 	7.2.2	Further Exceptions to Limits On Transfer . The exercise and transfer restrictions in Section 7.2.1 will not apply to:	
 
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 	(a)	transfers to the Corporation;	
 
 	(b)	transfers by gift or domestic relations order to one or more “family members” (as that term is defined in SEC Rule 701 promulgated under the Securities Act) of the Participant;	
 
 	(c)	the designation of a Beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by the Participant’s Beneficiary, or, in the absence of a validly designated Beneficiary, transfers by will or the laws of descent and distribution; or	
 
 	(d)	if the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant’s duly authorized legal representative.	
Notwithstanding anything else in this Section 7.2.2 to the contrary, but subject to compliance with all applicable laws, Incentive Stock Options and Restricted Stock Awards will be subject to any and all transfer restrictions under the Code applicable to such awards or necessary to maintain the intended tax consequences of such Awards. Notwithstanding clause (b) above but subject to compliance with all applicable laws, any contemplated transfer by gift or domestic relations order to one or more “family members” of a Participant as referenced in clause (b) above is subject to the condition precedent that the transfer be approved by the Administrator in order for it to be effective. The Administrator may, in its sole discretion, withhold its approval of any such proposed transfer.
For the avoidance of doubt, the restrictions against assignment and transfer applies to an Option and the shares to be issued on exercise of an Option, and shall be understood to include, without limitation, a prohibition against any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” or any “call equivalent position” (in each case, as defined in Rule 16a-1 promulgated under the Exchange Act). During the lifetime of the Participant, an Option will be exercisable only by the Participant or Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal representative. The terms of an Option shall be binding upon the executor, administrator, successors and assigns of the Participant who is a party thereto.
 
 	7.3	Adjustments; Changes in Control .	
 
 	7.3.1	Adjustments . Subject to Section 7.3.2 below, upon (or, as may be necessary to effect the adjustment, immediately prior to): any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split; any merger, combination, consolidation, or other reorganization; any split-up, spin-off, or similar extraordinary dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or	
 
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 	any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and proportionately adjust (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of Awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to any outstanding Awards, (3) the grant, purchase, or exercise price of any outstanding Awards, and/or (4) the securities, cash or other property deliverable upon exercise or vesting of any outstanding Awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding Awards.	
Unless otherwise expressly provided in the applicable Award Agreement, upon (or, as may be necessary to effect the adjustment, immediately prior to) any event or transaction described in the preceding paragraph or a sale of all or substantially all of the business or assets of the Corporation as an entirety, the Administrator shall equitably and proportionately adjust the performance standards applicable to any then-outstanding performance-based Awards to the extent necessary to preserve (but not increase) the level of incentives by this Plan and the then-outstanding performance-based Awards.
It is intended that, if possible, any adjustments contemplated by the preceding two paragraphs be made in a manner that satisfies applicable U.S. legal, tax (including, without limitation and as applicable in the circumstances, Section 424 of the Code and Section 409A of the Code) and accounting (so as to not trigger any charge to earnings with respect to such adjustment) requirements.
Without limiting the generality of Section 2.3, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.3.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.
Unless otherwise expressly provided by the Administrator, in no event shall a conversion of one or more outstanding shares of the Corporation’s preferred stock (if any) or any new issuance of securities by the Corporation for consideration be deemed, in and of itself, to require an adjustment pursuant to this Section 7.3.1.
 
 	7.3.2	Consequences of a Change in Control Event . Upon the occurrence of a Change in Control Event, the Administrator may make provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all outstanding Awards (or the cash, securities or other property deliverable to the holder(s) of any or all outstanding Awards) based upon, to the extent relevant in the circumstances, the distribution or	
 
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 	consideration payable to holders of the Common Stock upon or in respect of such event.	
The Administrator may, in its sole discretion, provide in the applicable Award Agreement or by an amendment thereto for the accelerated vesting of one or more Awards to the extent such Awards are outstanding upon a Change in Control Event or such other events or circumstances as the Administrator may provide.
The Administrator may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash, securities or other property settlement. In the case of Options, but without limitation on other methodologies, the Administrator may base such settlement solely upon the excess (if any) of the amount payable upon or in respect of such event over the exercise price of the Option to the extent of the then vested and exercisable shares subject to the Option.
In any of the events referred to in this Section 7.3.2, the Administrator may take such action contemplated by this Section 7.3.2 prior to such event (as opposed to on the occurrence of such event) to the extent that the Administrator deems the action necessary to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration to occur immediately prior to the applicable event and/or reinstate the original terms of the Award if an event giving rise to an acceleration does not occur.
 
 	7.3.3	Early Termination of Awards . Upon the occurrence of a Change in Control Event, each then-outstanding Award (whether or not vested and/or exercisable, but after giving effect to any accelerated vesting required in the circumstances pursuant to Sections 7.3.2, 7.3.4 and 7.3.5) shall terminate, subject to any provision that has been expressly made by the Administrator, through a plan of reorganization or otherwise, for the survival, substitution, assumption, exchange or other continuation or settlement of such Award and provided that, in the case of Options that will not survive or be substituted for, assumed, exchanged, or otherwise continued or settled in the Change in Control Event, the holder of such Award shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding and vested Options (the vested portion of such Options determined after giving effect to any accelerated vesting required in the circumstances pursuant to Sections 7.3.2, 7.3.4 and 7.3.5) in accordance with their terms before the termination of the Awards (except that in no case shall more than ten days’ notice of accelerated vesting and the impending termination be required and any acceleration may be made contingent upon the actual occurrence of the event). For purposes of this Section 7.3, an Award shall be deemed to have been “assumed” if (without limiting other circumstances in which an Award is assumed) the Award continues after	
 
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 	the Change in Control Event, and/or is assumed and continued by a Parent (as such term is defined in the definition of Change in Control Event) following a Change in Control Event, and confers the right to purchase or receive, as applicable and subject to vesting and the other terms and conditions of the Award, for each share of Common Stock subject to the Award immediately prior to the Change in Control Event, the consideration (whether cash, shares, or other securities or property) received in the Change in Control Event by the stockholders of the Corporation for each share of Common Stock sold or exchanged in such transaction (or the consideration received by a majority of the stockholders participating in such transaction if the stockholders were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common Stock in the transaction is not solely the ordinary common stock of a successor corporation or a Parent, the Board may provide for the consideration to be received upon exercise or payment of the Award, for each share subject to the Award, to be solely ordinary common stock of the successor corporation or a Parent equal in Fair Market Value to the per share consideration received by the stockholders participating in the Change in Control Event.	
 
 	7.3.4	Other Acceleration Rules . The Administrator may override the provisions of this Section 7.3 as to any Award by express provision in the applicable Award Agreement and may accord any Participant a right to refuse any acceleration, whether pursuant to the Award Agreement or otherwise, in such circumstances as the Administrator may approve. The portion of any Incentive Stock Option accelerated in connection with a Change in Control Event (or such other circumstances as may trigger accelerated vesting of the Incentive Stock Option) shall remain exercisable as an Incentive Stock Option only to the extent the applicable $100,000 limitation on Incentive Stock Options is not exceeded. To the extent exceeded, the accelerated portion of the Option shall be exercisable as a Nonqualified Stock Option.	
 
 	7.3.5	Golden Parachute Limitation . Notwithstanding anything else contained in this Section 7.3 to the contrary, in no event shall any Award or payment be accelerated under this Section 7.3 to an extent or in a manner so that such Award or payment, together with any other compensation and benefits provided to, or for the benefit of, the Participant under any other plan or agreement of the Corporation or one of its Affiliates, would not be fully deductible by the Corporation or one of its Affiliates for federal income tax purposes because of Section 280G of the Code. If a holder of an Award would be entitled to benefits or payments hereunder and under any other plan or program that would constitute “parachute payments” as defined in Section 280G of the Code, then the holder may by written notice to the Corporation designate the order in which such parachute payments will be reduced or modified so that the Corporation or one of its Affiliates is not denied federal income tax deductions for any “parachute payments” because of Section 280G of the Code. Notwithstanding the	
 
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 	foregoing, if a Participant is a party to an employment or other agreement with the Corporation or one of its Affiliates, or is a participant in a severance program sponsored by the Corporation or one of its Affiliates that contains express provisions regarding Section 280G and/or Section 4999 of the Code (or any similar successor provision), or the applicable Award Agreement includes such provisions, the Section 280G and/or Section 4999 provisions of such employment or other agreement or plan, as applicable, shall control as to the Awards held by that Participant (for example, and without limitation, a Participant may be a party to an employment agreement with the Corporation or one of its Affiliates that provides for a “gross-up” as opposed to a “cut-back” in the event that the Section 280G thresholds are reached or exceeded in connection with a change in control and, in such event, the Section 280G and/or Section 4999 provisions of such employment agreement shall control as to any Awards held by that Participant).	
 
 	7.4	Termination of Employment or Services .	
 
 	7.4.1	Events Not Deemed a Termination of Employment . Unless the Administrator otherwise expressly provides with respect to a particular Award, if a Participant’s employment by or service to the Corporation or an Affiliate terminates but immediately thereafter the Participant continues in the employ of or service to another Affiliate or the Corporation, as applicable, the Participant shall be deemed to have not had a termination of employment or service for purposes of this Plan and the Participant’s Awards. Unless the express policy of the Corporation or the Administrator otherwise provides, a Participant’s employment relationship with the Corporation or any of its Affiliates shall not be considered terminated solely due to any sick leave, military leave, or any other leave of absence authorized by the Corporation or any Affiliate or the Administrator; provided that , unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave is for a period of not more than three months. In the case of any Participant on an approved leave of absence, continued vesting of the Award while on leave from the employ of or service with the Corporation or any of its Affiliates will be suspended until the Participant returns to service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an Award be exercised after the expiration of the term of the Award set forth in the Award Agreement.	
 
 	7.4.2	Effect of Change of Affiliate Status . For purposes of this Plan and any Award, if an entity ceases to be an Affiliate, a termination of employment or service will be deemed to have occurred with respect to each Eligible Person in respect of such Affiliate who does not continue as an Eligible Person in respect of another Affiliate that continues as such after giving effect to the transaction or other event giving rise to the change in status.	
 
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 	7.4.3	Administrator Discretion . Notwithstanding the provisions of Section 5.6 or 6.8, in the event of, or in anticipation of, a termination of employment or service with the Corporation or any of its Affiliates for any reason, the Administrator may accelerate the vesting and exercisability of all or a portion of the Participant’s Award, and/or, subject to the provisions of Sections 5.4.2 and 7.3, extend the exercisability period of the Participant’s Option upon such terms as the Administrator determines and expressly sets forth in or by amendment to the Award Agreement.	
 
 	7.4.4	Termination of Consulting or Affiliate Services . If the Participant is an Eligible Person solely by reason of clause (c) of Section 3, the Administrator shall be the sole judge of whether the Participant continues to render services to the Corporation or any of its Affiliates, unless a written contract or the Award Agreement otherwise provides. If, in these circumstances, the Corporation or any Affiliate notifies the Participant in writing that a termination of the Participant’s services to the Corporation or any Affiliate has occurred for purposes of this Plan, then (unless the contract or the Award Agreement otherwise expressly provides), the Participant’s termination of services with the Corporation or Affiliate for purposes of this Plan shall be the date which is 10 days after the mailing of the notice by the Corporation or Affiliate or, in the case of a termination for Cause, the date of the mailing of the notice.	
 
 	7.5	Compliance with Laws .	
 
 	7.5.1	General . This Plan, the granting and vesting of Awards under this Plan, and the offer, issuance and delivery of shares of Common Stock, the acceptance of promissory notes and/or the payment of money under this Plan or under Awards are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities laws, and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation, provide such assurances and representations to the Corporation as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.	
 
 	7.5.2	Compliance with Securities Laws . No Participant shall sell, pledge or otherwise transfer shares of Common Stock acquired pursuant to an Award or any interest in such shares except in accordance with the express terms of this Plan and the applicable Award Agreement. Any attempted transfer in violation of this Section 7.5 shall be void and of no effect. Without in any way limiting the provisions set forth above, no Participant shall make any disposition of all or any portion of shares of Common Stock acquired or to be acquired pursuant to an Award, except in	
 
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 	compliance with all applicable federal and state securities laws and unless and until:	
 
 	(a)	there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement;	
 
 	(b)	such disposition is made in accordance with Rule 144 under the Securities Act; or	
 
 	(c)	such Participant notifies the Corporation of the proposed disposition and furnishes the Corporation with a statement of the circumstances surrounding the proposed disposition, and, if requested by the Corporation, furnishes to the Corporation an opinion of counsel acceptable to the Corporation’s counsel, that such disposition will not require registration under the Securities Act and will be in compliance with all applicable state securities laws.	
Notwithstanding anything else herein to the contrary, neither the Corporation or any Affiliate has any obligation to register the Common Stock or file any registration statement under either federal or state securities laws, nor does the Corporation or any Affiliate make any representation concerning the likelihood of a public offering of the Common Stock or any other securities of the Corporation or any Affiliate.
 
 	7.5.3	Share Legends . All certificates evidencing shares of Common Stock issued or delivered under this Plan shall bear the following legends and/or any other appropriate or required legends under applicable laws:	
“OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION.”
“THE SHARES ARE SUBJECT TO THE CORPORATION’S RIGHT OF FIRST REFUSAL TO REPURCHASE THE SHARES UNDER THE CORPORATION’S STOCK INCENTIVE PLAN AND AGREEMENTS WITH THE CORPORATION THEREUNDER, COPIES OF WHICH ARE AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION.”
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE
 
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PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS.”
 
 	7.5.4	Confidential Information . Any financial or other information relating to the Corporation obtained by Participants in connection with or as a result of this Plan or their Awards shall be treated as confidential.	
 
 	7.6	Tax Withholding .	
 
 	7.6.1	Tax Withholding . Upon any exercise, vesting, or payment of any Award or upon the disposition of shares of Common Stock acquired pursuant to the exercise of an Incentive Stock Option prior to satisfaction of the holding period requirements of Section 422 of the Code, the Corporation or any of its Affiliates shall have the right at its option to:	
 
 	(a)	require the Participant (or the Participant’s Personal Representative or Beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Corporation or Affiliate may be required to withhold with respect to such Award event or payment;	
 
 	(b)	deduct from any amount otherwise payable (in respect of an Award or otherwise) in cash to the Participant (or the Participant’s Personal Representative or Beneficiary, as the case may be) the minimum amount of any taxes which the Corporation or Affiliate may be required to withhold with respect to such Award event or payment; or	
 
 	(c)	reduce the number of shares of Common Stock to be delivered by (or otherwise reacquire shares held by the Participant) the appropriate number of shares of Common Stock, valued at their then Fair Market Value, to satisfy the minimum withholding obligation.	
In any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under this Plan, the Administrator may in its sole discretion (subject to Section 7.5) grant (either at the time of the Award or thereafter) to the Participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, to have the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their Fair Market Value or at the sales price in accordance with authorized procedures for cashless exercises,
 
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 	necessary to satisfy the minimum applicable withholding obligation on exercise, vesting or payment. In no event shall the shares withheld exceed the minimum whole number of shares required for tax withholding under applicable law. The Corporation may, with the Administrator’s approval, accept one or more promissory notes from any Eligible Person in connection with taxes required to be withheld upon the exercise, vesting or payment of any Award under this Plan; provided that any such note shall be subject to terms and conditions established by the Administrator and the requirements of applicable law.	
 
 	7.6.2	Tax Loans . If so provided in the Award Agreement or otherwise authorized by the Administrator, the Corporation may, to the extent permitted by law, authorize a loan to an Eligible Person in the amount of any taxes that the Corporation or any of its Affiliates may be required to withhold with respect to shares of Common Stock received (or disposed of, as the case may be) pursuant to a transaction described in Section 7.6.1. Such a loan will be for a term and at a rate of interest and pursuant to such other terms and conditions as the Corporation may establish, subject to compliance with applicable law. Such a loan need not otherwise comply with the provisions of Section 5.3.3.	
 
 	7.7	Plan and Award Amendments, Termination and Suspension .	
 
 	7.7.1	Board Authorization . The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No Awards may be granted during any period that the Board suspends this Plan.	
 
 	7.7.2	Stockholder Approval . To the extent then required by applicable law or any applicable listing agency or required under Sections 162, 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to stockholder approval.	
 
 	7.7.3	Amendments to Awards . Without limiting any other express authority of the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on Awards to Participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a Participant, and (subject to the requirements of Sections 2.2 and 7.7.4) may make other changes to the terms and conditions of Awards.	
 
 	7.7.4	Limitations on Amendments to Plan and Awards . No amendment, suspension or termination of this Plan or amendment of any outstanding Award Agreement shall, without written consent of the Participant, affect in any manner materially adverse to the Participant any rights or benefits of the Participant or obligations of the Corporation under any Award granted under this Plan prior to the effective date of such change.	
 
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 	Changes, settlements and other actions contemplated by Section 7.3 shall not be deemed to constitute changes or amendments for purposes of this Section 7.7.	
 
 	7.8	Privileges of Stock Ownership . Except as otherwise expressly authorized by the Administrator, a Participant will not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held of record by the Participant. Except as expressly required by Section 7.3.1, no adjustment will be made for dividends or other rights as a stockholder for which a record date is prior to such date of delivery.	
 
 	7.9	Stock-Based Awards in Substitution for Awards Granted by Other Corporation . Awards may be granted to Eligible Persons in substitution for or in connection with an assumption of employee stock options, stock appreciation rights, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Corporation or one of its Affiliates, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Corporation or one of its Affiliates, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The Awards so granted need not comply with other specific terms of this Plan, provided the Awards reflect only adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Common Stock in the transaction and any change in the issuer of the security. Any shares that are delivered and any Awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Corporation or one of its Affiliates in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan.	
 
 	7.10	Effective Date of the Plan . This Plan is effective upon the Effective Date, subject to approval by the stockholders of the Corporation within twelve months after the date the Board approves this Plan.	
 
 	7.11	Term of the Plan . Unless earlier terminated by the Board, this Plan will terminate at the close of business on the day before the 10 th anniversary of the Effective Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional Awards may be granted under this Plan, but previously granted Awards (and the authority of the Administrator with respect thereto, including the authority to amend such Awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.	
 
 	7.12	Governing Law/Severability .	
 
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 	7.12.1	Choice of Law . This Plan, the Awards, all documents evidencing Awards and all other related documents will be governed by, and construed in accordance with, the laws of the state of Delaware.	
 
 	7.12.2	Severability . If it is determined that any provision of this Plan or an Award Agreement is invalid and unenforceable, the remaining provisions of this Plan and/or the Award Agreement, as applicable, will continue in effect provided that the essential economic terms of this Plan and the Award can still be enforced.	
 
 	7.13	Captions . Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.	
 
 	7.14	Non-Exclusivity of Plan . Nothing in this Plan will limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority.	
 
 	7.15	No Restriction on Corporate Powers . The existence of this Plan, the Award Agreements, and the Awards granted hereunder, shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the Corporation’s or any Affiliate’s capital structure or its business; (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation or any Affiliate; (c) any issue of bonds, debentures, capital, preferred or prior preference stocks ahead of or affecting the Corporation’s capital stock or the rights thereof; (d) any dissolution or liquidation of the Corporation or any Affiliate; (e) any sale or transfer of all or any part of the Corporation or any Affiliate’s assets or business; or (f) any other corporate act or proceeding by the Corporation or any Affiliate. No Participant, Beneficiary or any other person shall have any claim under any Award or Award Agreement against any member of the Board or the Administrator, or the Corporation or any employees, officers or agents of the Corporation or any Affiliate, as a result of any such action.	
 
 	7.16	Other Company Compensation or Benefit Programs . Payments and other benefits received by a Participant under an Award made pursuant to this Plan shall not be deemed a part of a Participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any Affiliate, except where the Administrator or the Board expressly otherwise provides or authorizes in writing. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or any Affiliate.	
 
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8.	DEFINITIONS .	
“ Administrator ” has the meaning given to such term in Section 2.1.
“ Affiliate ” means (a) any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if, at the time of the determination, each of the corporations other than the Corporation owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, or (b) any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if, at the time of the determination, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“ Award ” means an award of any Option or Stock Award, or any combination thereof, whether alternative or cumulative, authorized by and granted under this Plan.
“ Award Agreement ” means any writing, approved by the Administrator, setting forth the terms of an Award that has been duly authorized and approved.
“ Award Date ” means the date upon which the Administrator took the action granting an Award or such later date as the Administrator designates as the Award Date at the time of the grant of the Award.
“ Beneficiary ” means the person, persons, trust or trusts designated by a Participant, or, in the absence of a designation, entitled by will or the laws of descent and distribution, to receive the benefits specified in the Award Agreement and under this Plan if the Participant dies, and means the Participant’s executor or administrator if no other Beneficiary is designated and able to act under the circumstances.
“ Board ” means the Board of Directors of the Corporation.
“ Cause ” with respect to a Participant means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract with the Participant that defines such term for purposes of determining the effect that a “for cause” termination has on the Participant’s stock options and/or stock awards) a termination of employment or service based upon a finding by the Corporation or any of its Affiliates, acting in good faith and based on its reasonable belief at the time, that the Participant:
 
 	(a)	has been negligent in the discharge of his or her duties to the Corporation or any Affiliate, has refused to perform stated or assigned duties or is incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;	
 
 	(b)	has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information;	
 
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 	(c)	has breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Corporation or any of its Affiliates; or has been convicted of, or pled guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar offenses);	
 
 	(d)	has materially breached any of the provisions of any agreement with the Corporation or any of its Affiliates;	
 
 	(e)	has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Corporation or any of its Affiliates; or	
 
 	(f)	has improperly induced a vendor or customer to break or terminate any contract with the Corporation or any of its Affiliates or induced a principal for whom the Corporation or any Affiliate acts as agent to terminate such agency relationship.	
A termination for Cause shall be deemed to occur (subject to reinstatement upon a contrary final determination by the Administrator) on the date on which the Corporation or any Affiliate first delivers written notice to the Participant of a finding of termination for Cause.
“ Change in Control Event ” means any of the following:
 
 	(a)	Approval by stockholders of the Corporation (or, if no stockholder approval is required, by the Board alone) of the complete dissolution or liquidation of the Corporation, other than in the context of a Business Combination that does not constitute a Change in Control Event under paragraph (c) below;	
 
 	(b)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “ Person ”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (1) the then-outstanding shares of common stock of the Corporation (the “ Outstanding Company Common Stock ”) or (2) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided, however, that, for purposes of this paragraph (b), the following acquisitions shall not constitute a Change in Control Event; (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Affiliate or a successor, (D) any acquisition by any entity pursuant to a Business Combination, (E) any acquisition by a Person described in and satisfying the conditions of Rule 13d-1(b) promulgated under the Exchange Act, or (F) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Common Stock and/or the Outstanding Company Voting Securities on the Effective Date (or an affiliate, heir, descendant, or related party of or to such Person);	
 
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 	(c)	Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation (a “ Subsidiary ”), a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its Subsidiaries (each, a “ Business Combination ”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries (a “ Parent ”)), and (2) no Person (excluding any individual or entity described in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;	
provided, however, that a transaction shall not constitute a Change in Control Event if it is in connection with the underwritten public offering of the Corporation’s securities.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
“ Common Stock ” means the shares of the Corporation’s common stock, par value $0.0001 per share, and such other securities or property as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 7.3.1 of this Plan.
“ Corporation ” means Castlight Health, Inc., a Delaware corporation, and its successors.
“ Effective Date ” means the date the Board approved this Plan.
“ Eligible Person ” has the meaning given to such term in Section 3 of this Plan.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time.
 
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“ Fair Market Value ,” for purposes of this Plan and unless otherwise determined or provided by the Administrator in the circumstances, means as follows:
 
 	(a)	If the Common Stock is listed or admitted to trade on the New York Stock Exchange or other national securities exchange (the “ Exchange ”), the Fair Market Value shall equal the closing price of a share of Common Stock as reported on the composite tape for securities on the Exchange for the date in question, or, if no sales of Common Stock were made on the Exchange on that date, the closing price of a share of Common Stock as reported on said composite tape for the next preceding day on which sales of Common Stock were made on the Exchange. The Administrator may, however, provide with respect to one or more Awards that the Fair Market Value shall equal the closing price of a share of Common Stock as reported on the composite tape for securities listed on the Exchange on the last trading day preceding the date in question or the average of the high and low trading prices of a share of Common Stock as reported on the composite tape for securities listed on the Exchange for the date in question or the most recent trading day.	
 
 	(b)	If the Common Stock is not listed or admitted to trade on a national securities exchange, the Fair Market Value shall be the value as reasonably determined by the Administrator for purposes of the Award in the circumstances.	
The Administrator also may adopt a different methodology for determining Fair Market Value with respect to one or more Awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular Award(s) (for example, and without limitation, the Administrator may provide that Fair Market Value for purposes of one or more Awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date).
Any determination as to Fair Market Value made pursuant to this Plan shall be made without regard to any restriction other than a restriction which, by its terms, will never lapse, and shall be conclusive and binding on all persons with respect to Awards granted under this Plan.
“ Incentive Stock Option ” means an Option that is designated and intended as an “incentive stock option” within the meaning of Section 422 of the Code, the award of which contains such provisions (including but not limited to the receipt of stockholder approval of this Plan, if the award is made prior to such approval) and is made under such circumstances and to such persons as may be necessary to comply with that section.
“ Nonqualified Stock Option ” means an Option that is not an “incentive stock option” within the meaning of Section 422 of the Code and includes any Option designated or intended as a Nonqualified Stock Option and any Option designated or intended as an Incentive Stock Option that fails to meet the applicable legal requirements thereof.
 
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“ Option ” means an option to purchase Common Stock granted under Section 5 of this Plan. The Administrator will designate any Option granted to an employee of the Corporation or an Affiliate as a Nonqualified Stock Option or an Incentive Stock Option.
“ Participant ” means an Eligible Person who has been granted and holds an Award under this Plan.
“ Personal Representative ” means the person or persons who, upon the disability or incompetence of a Participant, has acquired on behalf of the Participant, by legal proceeding or otherwise, the power to exercise the rights or receive benefits under this Plan by virtue of having become the legal representative of the Participant.
“ Plan ” means this Castlight Health, Inc. 2008 Stock Incentive Plan, as it may hereafter be amended from time to time.
“ Public Offering Date ” means the date the Common Stock is first registered under the Exchange Act and listed or quoted on a recognized national securities exchange.
“ Restricted Shares ” or “ Restricted Stock ” means shares of Common Stock awarded to a Participant under this Plan, subject to payment of such consideration and such conditions on vesting (which may include, among others, the passage of time, specified performance objectives or other factors) and such transfer and other restrictions as are established in or pursuant to this Plan and the related Award Agreement, to the extent such remain unvested and restricted under the terms of the applicable Award Agreement.
“ Restricted Stock Award ” means an award of Restricted Stock.
“ Securities Act ” means the Securities Act of 1933, as amended from time to time.
“ Severance Date ” with respect to a particular Participant means, unless otherwise provided in the applicable Award Agreement:
 
 	(a)	if the Participant is an Eligible Person under clause (a) of Section 3 and the Participant’s employment by the Corporation or any of its Affiliates terminates (regardless of the reason), the last day that the Participant is actually employed by the Corporation or such Affiliate (unless, immediately following such termination of employment, the Participant is a member of the Board or, by express written agreement with the Corporation or any of its Affiliates, continues to provide other services to the Corporation or any Affiliate as an Eligible Person under clause (c) of Section 3, in which case the Participant’s Severance Date shall not be the date of such termination of employment but shall be determined in accordance with clause (b) or (c) below, as applicable, in connection with the termination of the Participant’s other services);	
 
 	(b)	if the Participant is not an Eligible Person under clause (a) of Section 3 but is an Eligible Person under clause (b) thereof, and the Participant ceases to be a member of the Board (regardless of the reason), the last day that the Participant is actually a member of the Board (unless, immediately following such termination, the Participant is an employee of the Corporation or any of its Affiliates or, by	
 
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 	express written agreement with the Corporation or any of its Affiliates, continues to provide other services to the Corporation or any Affiliate as an Eligible Person under clause (c) of Section 3, in which case the Participant’s Severance Date shall not be the date of such termination but shall be determined in accordance with clause (a) above or (c) below, as applicable, in connection with the termination of the Participant’s employment or other services);	
 
 	(c)	if the Participant is not an Eligible Person under clause (a) or clause (b) of Section 3 but is an Eligible Person under clause (c) thereof, and the Participant ceases to provide services to the Corporation or any of its Affiliates as determined in accordance with Section 7.4.4 (regardless of the reason), the last day that the Participant actually provides services to the Corporation or such Affiliate as an Eligible Person under clause (c) of Section 3 (unless, immediately following such termination, the Participant is an employee of the Corporation or any of its Affiliates or is a member of the Board, in which case the Participant’s Severance Date shall not be the date of such termination of services but shall be determined in accordance with clause (a) or (b) above, as applicable, in connection with the termination of the Participant’s employment or membership on the Board).	
“ Stock Award ” means an award of shares of Common Stock under Section 6 of this Plan. A Stock Award may be a Restricted Stock Award or an award of unrestricted shares of Common Stock.
“ Total Disability ” means a “total and permanent disability” within the meaning of Section 22(e)(3) of the Code and, with respect to Awards other than Incentive Stock Options, such other disabilities, infirmities, afflictions, or conditions as the Administrator may include.
 
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CASTLIGHT HEALTH, INC.
AMENDED AND RESTATED 2008 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this “ Option Agreement ”) dated * GrantDate * by and between Castlight Health, Inc., a Delaware corporation (the “ Corporation ”), and * Name *, an individual (the “ Participant ”), evidences the stock option (the “ Option ”) granted by the Corporation to the Participant as to the number of shares of the Corporation’s Class A Common Stock, par value $0.0001 per share, or Class B Common Stock, par value $0.0001 per share, first set forth below.
Number of Shares of Common Stock: 1 * Shares *                 Award Date: * GrantDate *
Class of Shares of Common Stock: 2 Class A Shares of Common Stock
Exercise Price per Share: 1 $* PricePerShare *                       Expiration Date: 1,3 * ExpirationDate *
Vesting Commencement Date: * VCD *
Type of Option (check one) :                 Nonqualified Stock Option
                                                                 Incentive Stock Option                             X
Vesting : 1,2 *VestSchedule*
The Option is granted under the Castlight Health, Inc. Amended and Restated 2008 Stock Incentive Plan (the “ Plan ”) and subject to the Terms and Conditions of Stock Option (the “ Terms ”) attached to this Option Agreement (incorporated herein by this reference) and to the Plan. The Option has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant. Capitalized terms are defined in the Plan if not defined herein. The parties agree to the terms of the Option set forth herein. The Participant acknowledges receipt of a copy of the Terms and the Plan, specifically acknowledges and agrees to Section 12 of the Terms, and agrees to maintain in confidence all information provided to him/her in connection with the Option.

“PARTICIPANT”	 		 	CASTLIGHT HEALTH, INC.,
a Delaware corporation	
By:	 	 	 		 		 		
Name: * Name *	 		 	By:	 	 	
	 		 		 	John Doyle	
 	 		 		 		
Address	 		 	Its:	 	Vice President	
 	 		 		 		
City, State, Zip Code	 		 	Date:	 	 	
					
Date:	 	 	 		 		 		
CONSENT OF SPOUSE/DOMESTIC PARTNER
In consideration of the Corporation’s execution of this Option Agreement, the undersigned spouse of the Participant agrees to be bound by all of the terms and provisions hereof and of the Plan.

 	  		  	 	  		
Signature of Spouse/Domestic Partner	  		  	Date	  		

1  	Subject to adjustment under Section 7.3.1 of the Plan.	
2  	Subject to adjustment or conversion under the Plan, the Corporation’s governing documents or any other applicable agreement or contract.	
3  	Subject to early termination under Section 5.6 or 7.3 of the Plan.	

TERMS AND CONDITIONS OF STOCK OPTION
 
1.	Vesting; Limits on Exercise .	
The Option shall vest and become exercisable in percentage installments of the aggregate number of shares subject to the Option as set forth on the cover page of this Option Agreement. The Option may be exercised only to the extent the Option is vested and exercisable.
 
 	•	 	Cumulative Exercisability . To the extent that the Option is vested and exercisable, the Participant has the right to exercise the Option (to the extent not previously exercised), and such right shall continue, until the expiration or earlier termination of the Option; provided, however, that the shares of Common Stock issued upon exercise of the Option shall be subject to the adjustment, conversion and other provisions set forth in this Option Agreement, the Exercise Agreement, the Plan, the Corporation’s governing documents or any other applicable agreement or contract.	
 
 	•	 	No Fractional Shares . Fractional share interests shall be disregarded, but may be cumulated.	
 
 	•	 	Minimum Exercise . No fewer than 100 shares of Common Stock (subject to adjustment under Section 7.3.1 of the Plan) may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the Option.	
 
 	•	 	ISO Value Limit . If the Option is designated as an Incentive Stock Option (an “ ISO ”), as indicated on the cover page of this Option Agreement, and if the aggregate fair market value of the shares with respect to which ISOs (whether granted under the Option or otherwise) first become exercisable by the Participant in any calendar year exceeds $100,000, as measured on the applicable Award Dates, the limitations of Section 5.5.1 of the Plan shall apply and to such extent the Option will be rendered a Nonqualified Stock Option.	
 
2.	Continuance of Employment/Service Required; No Employment/Service Commitment .	
The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Option and the rights and benefits under this Option Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 4 below or under the Plan.
Nothing contained in this Option Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Affiliates, affects the Participant’s status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any Affiliate, interferes in any way with the right of the Corporation or any Affiliate at any time to terminate such employment or service, or affects the right of the Corporation or any Affiliate to increase or decrease the Participant’s other compensation.
 
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3.	Method of Exercise of Option .	
The Option shall be exercisable by the delivery to the Secretary of the Corporation (or such other person as the Administrator may require pursuant to such administrative exercise procedures as the Administrator may implement from time to time) of:
 
 	•	 	an executed Exercise Agreement (stating the number of shares and class of Common Stock to be purchased pursuant to the Option) in substantially the form attached hereto as Exhibit A or such other form as the Administrator may require from time to time (the “ Exercise Agreement ”);	
 
 	•	 	payment in full for the Exercise Price of the shares to be purchased, in cash or by electronic funds transfer to the Corporation, or by certified or cashier’s check payable to the order of the Corporation subject to such specific procedures or directions as the Administrator may establish;	
 
 	•	 	any written statements or agreements required pursuant to Section 7.5.1 of the Plan;	
 
 	•	 	satisfaction of the tax withholding provisions of Section 7.6.1 of the Plan;	
 
 	•	 	a duly executed joinder to the Amended and Restated Voting Agreement entered into as of April 26, 2012 by and among the Corporation and the other parties named therein, as such may be amended from time to time (the “ Voting Agreement ”), such joinder to the Voting Agreement to be in substantially the form attached hereto as Exhibit B; and	
 
 	•	 	a duly executed joinder to the Amended and Restated Right of First Refusal and Co-Sale Agreement entered into as of April 26,2012, by and among the Corporation and the other parties named therein, as such may be amended from time to time (the “ Co-Sale Agreement ”), such joinder to the Co-Sale Agreement to be in substantially the form attached hereto as Exhibit C.	
The Administrator also may, but is not required to, authorize a non-cash payment alternative specified below at or prior to the time of exercise. In which case, the Exercise Price and/or applicable withholding taxes, to the extent so authorized, may be paid in full or in part by delivery to the Corporation of:
 
 	•	 	shares of Common Stock already owned by the Participant, valued at their Fair Market Value on the exercise date; and/or	
 
 	•	 	if the Common Stock is then registered under the Exchange Act and listed or quoted on a recognized national securities exchange, irrevocable instructions to a broker to, upon exercise of the Option, promptly sell a sufficient number of shares of Common Stock acquired upon exercise of the Option and deliver to the Corporation the amount necessary to pay the Exercise Price (and, if applicable, the amount of any related tax withholding obligations); and/or	
 
 	•	 	a note meeting the requirements of Section 5.3.3 of the Plan (or, in the case of tax loans, Section 7.6.2 of the Plan).	
An Option will qualify as an ISO only if it meets all of the applicable requirements of the Code. If the Option is designated as an ISO, the Option may be rendered a Nonqualified Stock Option if the Administrator permits the use of one or more of the non-cash payment alternatives referenced above.
 
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4.	Early Termination of Option .	
The Option, to the extent not previously exercised, and all other rights in respect thereof, whether vested and exercisable or not, shall terminate and become null and void prior to the Expiration Date in the event of:
 
 	•	 	the termination of the Participant’s employment or services as provided in Section 5.6 of the Plan, or	
 
 	•	 	the termination of the Option pursuant to Section 7.3 of the Plan.	
Notwithstanding any post-termination exercise period provided for herein or in the Plan, an Option will qualify as an ISO only if it is exercised within the applicable exercise periods for ISOs under, and meets all of the other requirements of, the Code. If the Option is designated as an ISO and is not exercised within the applicable exercise periods for ISOs or does not meet such other requirements, the Option will be rendered a Nonqualified Stock Option.
 
5.	Non-Transferability and Other Restrictions .	
The Option and any other rights of the Participant under this Option Agreement or the Plan are nontransferable and exercisable only by the Participant, except as set forth in Section 7.2 of the Plan. Any shares of Common Stock issued on exercise of the Option are subject to substantial restrictions on transfer, rights of first refusal and other rights in favor of the Corporation as set forth in this Option Agreement, the Exercise Agreement, the Voting Agreement, the Co-Sale Agreement, the Plan and the Corporation’s governing documents. The restrictions imposed on any such shares pursuant to the Voting Agreement and the Co-Sale Agreement are in addition to, and not in lieu of, any restrictions and repurchase rights imposed on such shares pursuant to the Plan, this Option Agreement, the Exercise Agreement and the Corporation’s governing documents.
 
6.	Securities Law Compliance .	
The Participant acknowledges that the Option and the shares of Common Stock are not being registered under the Securities Act based, in part, in reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act, and a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Participant, by executing this Option Agreement, hereby makes the following representations to the Corporation and acknowledges that the Corporation’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations.
 
 	•	 	The Participant is acquiring the Option and, if and when he/she exercises the Option, will acquire the shares of Common Stock solely for the Participant’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the shares within the meaning of the Securities Act and/or any applicable state securities laws.	
 
 	•	 	The Participant has had an opportunity to ask questions and receive answers from the Corporation regarding the terms and conditions of the Option and the restrictions imposed on any shares of Common Stock purchased upon exercise of the Option. The Participant has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to exercise the Option and purchase shares of Common Stock. However, in evaluating the merits and risks of an investment in the Common Stock, the Participant has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors.	
 
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 	•	 	The Participant is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying shares of Common Stock to an amount in excess of the Exercise Price, and that any investment in common shares of a closely held corporation such as the Corporation is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.	
 
 	•	 	The Participant understands that any shares of Common Stock acquired on exercise of the Option will be characterized as “restricted securities” under the federal securities laws, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act, as presently in effect, with which the Participant is familiar.	
 
 	•	 	The Participant has read and understands the restrictions and limitations set forth in the Plan, this Option Agreement (including these Terms), the Exercise Agreement, the Voting Agreement, the Co-Sale Agreement and the Corporation’s governing documents, which are imposed on the Option and any shares of Common Stock which may be acquired upon exercise of the Option.	
 
 	•	 	At no time was an oral representation made to the Participant relating to the Option or the purchase of shares of Common Stock and the Participant was not presented with or solicited by any promotional meeting or material relating to the Option or the Common Stock.	
 
7.	Lock-Up Agreement .	
The Participant hereby agrees that, for one hundred eighty (180) days (or such longer period as described below) following the effective date of the registration statement of the Corporation filed under the Securities Act in connection with the Corporation’s initial underwritten public offering registered under the Securities Act, he or she shall not directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Corporation during such period except Common Stock included in such registration; provided, however, that:
 
 	•	 	all executive officers and directors of the Corporation and holders of at least 1% of the outstanding capital stock of the Corporation enter into similar agreements; and	
 
 	•	 	such market stand-off time period shall not exceed one hundred eighty (180) days (or such other period, not to exceed thirty (30) days after the expiration of the market stand-off period, as may be requested by the Corporation or an underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).	
The Participant hereby agrees that he or she will enter into the underwriter’s standard lock-up agreement containing restrictions similar to those set forth in this Section 7. In addition, in order to enforce the foregoing covenant, the Corporation may impose stop-transfer instructions with respect to all securities held by the Participant (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.
 
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For the purposes of this Section 7, the term “Participant” includes, where the context so requires, any permitted direct or indirect transferee of the Participant. Notwithstanding anything else herein to the contrary, this Section 7 shall not be construed so as to prohibit the Participant from participating in a registration or a public offering of the Common Stock with respect to any shares which he or she may hold at that time; provided, however, that such participation shall be at the sole discretion of the Board.
 
8.	Right of First Refusal .	
The Corporation shall have a right of first refusal, as set forth below, to purchase the shares of Common Stock acquired upon exercise of the Option (the “ Shares ”) before the Shares (or any interest in them) can be validly transferred to any other person or entity.
8.1 Notice of Intent to Sell. Before there can be a valid sale or transfer of any Shares (or any interest in them) by any holder thereof, the holder shall first give notice in writing to the Corporation, mailed or delivered in accordance with the provisions of Section 9, of his or her intention to sell or transfer such Shares (the “ Option Notice ”).
The Option Notice shall specify the identity of the proposed transferee, the number and class of Shares to be sold or transferred to the transferee, the price per Share and the terms upon which such holder intends to make such sale or transfer. If the payment terms for the Shares described in the Option Notice differ from delivery of cash or a check at closing, the Corporation shall have the option, as set forth herein, of purchasing the Shares for cash (or a cash equivalent) at closing in an amount which the Corporation determines is a fair value equivalent of that payment. The determination of a fair value equivalent shall be made in the Corporation’s best judgment and such determination shall be mailed or delivered to the selling or transferring stockholder (the “ Corporation’s Notice ”) within ten (10) days of its receipt of the Option Notice. Should the selling or transferring stockholder disagree with the Corporation’s determination of a fair value equivalent, he or she shall have the right (the “ Retraction Right ”) to retract the proposed sale or transfer to a third party and the offer of Shares to the Corporation pursuant to the Option Notice (such retraction to be made in writing and mailed or delivered in accordance with the provisions of Section 9). If the stockholder again proposes to sell or transfer the Shares, the stockholder shall again offer such Shares to the Corporation pursuant to the terms of this Section 8 prior to any sale or transfer.
8.2 Option to Purchase. Subject to the selling stockholder’s Retraction Right, during the 60-day period commencing upon receipt of the Option Notice by the Corporation (the “ Option Period ”), the Corporation shall have an option to purchase any or all of the Shares specified in the Option Notice at the price offered therein (the “ Right of First Refusal ”).
8.3 Purchase of Shares. Not more than thirty (30) days after receipt of the Option Notice, the Corporation shall give written notice to the stockholder desiring to sell or transfer Shares of the number of such Shares to be purchased (or, if no Shares are to be purchased, stating such fact) by the Corporation pursuant to the terms of this Section 8 (the “ Purchase Notice ”). Purchases pursuant to this Section 8 shall be consummated within thirty (30) days after delivery of the Purchase Notice to the selling stockholder, but in no event later than the expiration of the Option Period. The purchase price shall be paid at the closing in cash, by check, by cancellation of money purchase indebtedness, or, if the payment terms set forth in the Option Notice differ from payment in cash or by check at closing, in accordance with the payment terms set forth in the Option Notice (or payment of the amount set forth in the Corporation’s Notice in cash, by cancellation of money purchase indebtedness, or by check). The purchase price shall be paid against surrender by the selling stockholder of a stock certificate evidencing the number of Shares specified in the Option Notice, with duly endorsed stock powers.
 
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8.4 Ability to Sell Unpurchased Shares. Unless all of the Shares referred to in the Option Notice are to be purchased as indicated in the Purchase Notice, the stockholder desiring to sell or transfer may dispose of any Shares referred to in the Option Notice that are not to be purchased by the Corporation to the person or persons specified in the Option Notice during a period of twenty (20) days commencing upon his or her receipt of the Purchase Notice; provided, however, that he or she shall not sell or transfer such Shares (a) at a lower price or on terms more favorable to the purchaser or transferee than those specified in the Option Notice, or (b) to a person other than the person or persons specified in the Option Notice; provided, further, that such transfer is consistent with the other provisions and limitations of the Plan, this Option Agreement (including these Terms), and the Exercise Agreement. If the transfer is not consummated within such twenty (20) day period, the stockholder shall again offer such Shares to the Corporation pursuant to the terms of this Section 8 prior to any sale or transfer to the same or any other person.
8.5 Assignment. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 8 to one or more stockholders of the Corporation.
8.6 Termination of Right of First Refusal. The Corporation’s Right of First Refusal shall terminate to the extent that it is not exercised prior to the Public Offering Date.
8.7 No Stockholder Rights Following Repurchase. If the Participant (or any permitted transferee) holds Shares as to which the Right of First Refusal has been exercised (in connection with the termination of the Participant’s employment or otherwise), the Participant shall be entitled to the value of such shares in accordance with the provisions of this Section 8, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a stockholder with respect to the shares subject to the repurchase. To the maximum extent permitted by law, the Participant’s rights following the exercise of the Right of First Refusal shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified in this Section 8.
 
9.	Notices .	
Any notice to be given under the terms of this Option Agreement or the Exercise Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Participant at the address reflected or last reflected on the Corporation’s payroll records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Participant is no longer an Eligible Person, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 9.
 
10.	Plan .	
The Option and all rights of the Participant under this Option Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Participant agrees to be bound by the terms of the Plan and this Option Agreement (including these Terms). The Participant acknowledges having read and understood the Plan, the Stock Option Questions & Answers for the Plan, and this Option Agreement. Unless otherwise expressly provided in other sections of this Option Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.
 
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11.	Entire Agreement .	
This Option Agreement (including these Terms and together with the form of Exercise Agreement attached hereto) and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan, this Option Agreement and the Exercise Agreement may be amended pursuant to Section 7.7 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof or of the Exercise Agreement in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Voting Agreement and Co-Sale Agreement are outside the scope of the foregoing integration provision as to any shares of Common Stock that may be issued upon exercise of the Option.
 
12.	Satisfaction of All Rights to Equity .	
The Option is in complete satisfaction of any and all rights that the Participant may have (under an employment, consulting, or other written or oral agreement with the Corporation or any of its Affiliates, or otherwise) to receive (1) stock options or stock awards with respect to the securities of the Corporation or any of its Affiliates, and/or (2) any other equity or derivative security in or with respect to the Corporation or any of its Affiliates. This Option Agreement supersedes the terms of all prior understandings and agreements, written or oral, of the parties with respect to such matters. The Participant shall have no further rights or benefits under any prior agreement conveying any right with respect to any security or derivative security in or with respect to the Corporation or any of its Affiliates. The foregoing notwithstanding, this Section 12 shall not adversely affect the Participant’s rights under any prior stock option or stock award agreement under the Plan (provided such agreement is expressly labeled as a stock option or stock award agreement under the Plan and is similar in form to this Option Agreement) which has been signed by an authorized officer of the Corporation.
 
13.	Governing Law; Limited Rights; Severability .	
13.1. Delaware Law; Construction. This Option Agreement and the Exercise Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder. The terms of the Option grant have resulted from the negotiations of the parties and each of the parties has had an opportunity to obtain and consult with its own counsel. The language of all parts of the Plan, this Option Agreement (including these Terms) and the Exercise Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the parties.
13.2. Limited Rights. The Participant has no rights as a stockholder of the Corporation with respect to the Option as set forth in Section 7.8 of the Plan. The Option does not place any limit on the corporate authority of the Corporation as set forth in Section 7.15 of the Plan.
13.3. Arbitration. Any controversy arising out of or relating to this Option Agreement (including these Terms), the Plan, and/or the Exercise Agreement, their enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of their provisions, or any other controversy arising out of or related to the Option, including, but not limited to, any state or federal statutory claims, shall be submitted to arbitration in San Francisco County, California, before a
 
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sole arbitrator selected from Judicial Arbitration and Mediation Services, Inc., San Francisco, California, or its successor (“ JAMS ”), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from the American Arbitration Association, and shall be conducted in accordance with the provisions of California Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution of such dispute; provided, however, that provisional injunctive relief may, but need not, be sought by either party to this Option Agreement in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. Final resolution of any dispute through arbitration may include any remedy or relief which the arbitrator deems just and equitable, including any and all remedies provided by applicable state or federal statutes. At the conclusion of the arbitration, the arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the arbitrator’s award or decision is based. Any award or relief granted by the arbitrator hereunder shall be final and binding on the parties hereto and may be enforced by any court of competent jurisdiction. The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with any of the matters referenced in the first sentence above. The parties agree that Corporation shall be responsible for payment of the forum costs of any arbitration hereunder, including the arbitrator’s fee. The parties further agree that in any proceeding with respect to such matters, each party shall bear its own attorney’s fees and costs (other than forum costs associated with the arbitration) incurred by it or him or her in connection with the resolution of the dispute.
13.4. Severability . If the arbitrator selected in accordance with Section 13.3 or a court of competent jurisdiction determines that any portion of this Option Agreement, the Plan, or the Exercise Agreement is in violation of any statute or public policy, then only the portions of this Option Agreement, the Plan, or the Exercise Agreement, as applicable, which violate such statute or public policy shall be stricken, and all portions of this Option Agreement, the Plan, and the Exercise Agreement which do not violate any statute or public policy shall continue in full force and effect. Furthermore, it is the parties’ intent that any court order striking any portion of this Option Agreement, the Plan, and/or the Exercise Agreement should modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties hereunder.
13.5. Stockholder Approval. Notwithstanding anything else contained herein to the contrary, the Option and all rights of the Participant under this Option Agreement are subject to approval of the Plan by the Corporation’s stockholders (such approval to be obtained in accordance with the terms of the Plan, the Corporation’s Bylaws, and applicable law) within 12 months after the Effective Date of the Plan.
(Remainder of Page Intentionally Left Blank)
 
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EXHIBIT A
CASTLIGHT HEALTH, INC.
AMENDED AND RESTATED 2008 STOCK INCENTIVE PLAN
OPTION EXERCISE AGREEMENT
The undersigned (the “ Purchaser ”) hereby irrevocably elects to exercise his/her right, evidenced by that certain Stock Option Agreement dated as of                      (the “ Option Agreement ”) under the Castlight Health, Inc. Amended and Restated 2008 Stock Incentive Plan (the “ Plan ”), as follows:
 
 	•	 	the Purchaser hereby irrevocably elects to purchase                      shares of Class A Common Stock, par value $0.0001 per share, and/or                      shares of Class B Common Stock, par value $0.0001 per share (collectively, the “ Shares ”), of Castlight Health, Inc., a Delaware corporation (the “ Corporation ”), and	
 
 	•	 	such purchase shall be at the price of $                      per share, for an aggregate amount of $                      (subject to applicable withholding taxes pursuant to Section 7.6.1 of the Plan).	
Capitalized terms are defined in the Plan if not defined herein.
1. Delivery of Share Certificate . The Purchaser requests that a certificate representing the Shares be registered to Purchaser and delivered to:                                                         .
2. Investment Representations . The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by Securities and Exchange Commission Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in Section 6 of the “Terms and Conditions of Stock Option” (which are attached to and a part of the Option Agreement, the “ Terms ”) and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares.
The Purchaser also understands and acknowledges (a) that the certificates representing the Shares will be legended as provided for in Section 7.5.3 of the Plan and Section 13(b) of the Voting Agreement and Section 4.1 of the Co-Sale Agreement, and (b) that the Corporation has no obligation to register the Shares or file any registration statement under federal or state securities laws.
3. Limitation on Disposition and Other Restrictions . The Shares are subject to and the Purchaser hereby agrees to the following terms and conditions of the sale of the Shares to the Purchaser:
 
 	•	 	any transfer of the Shares must comply with the restrictions on transfer set forth in Section 7.2 of the Plan and all applicable laws as set forth in Section 7.5 of the Plan;	
 
 	•	 	the Shares are subject to, and following any otherwise permitted transfer of the Shares, the Shares shall remain subject to, and the transferee shall be bound by, the lock-up provisions set forth in Section 7 of the Terms, the Corporation’s right of first refusal set forth in Section 8 of the Terms, the share legend requirements of Section 7.5.3 of the Plan, the foregoing provisions of this Section 3, the arbitration provisions of Section 13.3 of the Terms, and additional restrictions as set forth in the Voting Agreement, the Co-Sale Agreement, the Option Agreement, the Plan and Corporation’s governing documents;	
 
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 	•	 	as required by Section 3 of the Terms, the Purchaser has enclosed herewith a duly executed joinder to the Voting Agreement and the Co-Sale Agreement; and	
 
 	•	 	as a condition to any otherwise permitted transfer of the Shares, the Corporation may require the transferee to execute a written agreement, in a form acceptable to the Administrator, that the transferee acknowledges and agrees to the foregoing terms and restrictions imposed on the Shares.	
4. Plan and Option Agreement . The Purchaser acknowledges that all of his/her rights are subject to, and the Purchaser agrees to be bound by, all of the terms and conditions of the Plan and the Option Agreement (including the Terms), both of which are incorporated herein by this reference. If a conflict or inconsistency between the terms and conditions of this Exercise Agreement and of the Plan or the Option Agreement shall arise, the terms and conditions of the Plan and/or the Option Agreement shall govern. The Purchaser acknowledges receipt of a copy of all documents referenced herein (including the Terms and the Stock Option Questions & Answers for the Plan) and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them. Any controversy or claim arising out of or relating to this Exercise Agreement shall be submitted to arbitration in accordance with Section 13.3 of the Terms, and Delaware law shall apply as provided in Section 13.1 of the Terms.
5. Entire Agreement . This Exercise Agreement, the Option Agreement (including the Terms), and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan, the Option Agreement and this Exercise Agreement may be amended pursuant to Section 7.7 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof or of the Option Agreement in writing to the extent such waiver does not adversely affect the interests of the Purchaser hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. The Voting Agreement and Co-Sale Agreement are outside of the scope of the foregoing integration provision as to any Shares that may be issued upon exercise of the Option.
 
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6. Notice of Sale of ISO Shares . If the Shares are being acquired upon exercise of an Option intended to qualify as an Incentive Stock Option, the Purchaser agrees that, upon any sale or other transfer of the Shares within either one year of the date that they are acquired by the Purchaser or two years after the Award Date set forth in the Option Agreement, the Purchaser shall provide the notice required under Section 5.5.3 of the Plan.

“PURCHASER”	 		 	ACCEPTED BY:
CASTLIGHT HEALTH, INC.,	
	 		 	a Delaware corporation	
					
By:	 	 
 	 	 	 	By:	 	 
 	
Name: 	 	 
 	 		 	Its:	 	 
 	
Date:	 	 
 	 		 	Date:	 	 

	 		 		 	(To be completed by the corporation after the price (including applicable withholding taxes), value (if applicable) and receipt of funds is verified.)	
 
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EXHIBIT B
JOINDER TO VOTING AGREEMENT

JOINDER AGREEMENT
                     , 20     
The undersigned hereby agrees, effective as of the date hereof, to become a party to that certain Amended and Restated Voting Agreement, dated April 26, 2012, by and among Castlight Health, Inc., a Delaware corporation, and the parties named therein, as such may be amended from time to time (the “Agreement”), and for all purposes of the Agreement, the undersigned shall be included within the term “Common Holder” (as defined in the Agreement).

If an Individual:	
		
By:	 	 	

Name:	 	 	

Address:	 	 	

	
If an Entity:

 
(Print name of Entity)	

By:	 	 	
			
	 	(Signature)	

 
(Print Name)	

 
(Print Title)	

Address:	 	 	

EXHIBIT C
JOINDER TO RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
JOINDER AGREEMENT
                 , 20     
The undersigned hereby agrees, effective as of the date hereof, to become a party to that certain Amended and Restated Right of First Refusal and Co-Sale Agreement, dated April 26, 2012, by and among Castlight Health, Inc., a Delaware corporation, and the parties named therein, as such may be amended from time to time (the “Agreement”), and for all purposes of the Agreement, the undersigned shall be included within the term “Common Holder” (as defined in the Agreement).

If an Individual:	
		
By:	 	 	

Name:	 	 	

Address:	 	 	

	
If an Entity:

 
(Print name of Entity)	

By:	 	 	
			
	 	(Signature)	

 
(Print Name)	

 
(Print Title)	

Address:	 	 	

CASTLIGHT HEALTH, INC.
2008 STOCK INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (the “ Agreement ”) is made and entered into as of              (the “ Effective Date ”) by and between CASTLIGHT HEALTH, INC., a Delaware corporation (the “ Corporation ”), and              (“ Purchaser ”). Capitalized terms not defined herein shall have the meanings ascribed to them in the Corporation’s 2008 Stock Incentive Plan, as may be amended from time to time (the “ Plan ”).
1. PURCHASE OF SHARES.
1.1 Agreement to Purchase and Sell Shares . On the Effective Date and subject to the terms and conditions of this Agreement and the Plan, Purchaser hereby purchases from the Corporation, and the Corporation hereby sells to Purchaser,              (              ) shares of the Corporation’s Class A Common Stock (the “ Shares ”), at the price of              ( $              )  per share (the “ Purchase Price Per Share ”) for a Total Purchase Price of              ($              )  (the “ Purchase Price ”). As used in this Agreement, the term “ Shares ” includes the Shares purchased under this Agreement and all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.
1.2 Payment . Purchaser hereby delivers payment of the Purchase Price as follows (check and complete as appropriate):
 
¨	in cash (by check or electronic funds transfer) in the amount of $              , receipt of which is acknowledged by the Corporation.	
 
¨	by cancellation of indebtedness of the Corporation owed to Purchaser in the amount of $              .	
 
¨	by the waiver hereby of compensation due or accrued for services rendered in the amount of $              .	
 
¨	by delivery of              fully-paid, nonassessable and vested shares of the Common Stock of the Corporation owned by Purchaser free and clear of all liens, claims, encumbrances or security interests, valued at the current Fair Market Value of $              per share (a) for which the Corporation has received “full payment of the purchase price” within the meaning of Securities and Exchange Commission (“ SEC ”) Rule 144, (if purchased by use of a promissory note, such note has been fully paid with respect to such vested shares), or (b) that were obtained by Purchaser in the open public market.	
2. DELIVERIES.
2.1 Deliveries by the Purchaser . Purchaser hereby delivers to the Corporation at its principal executive offices: (a) this completed and signed Agreement, (b) the Purchase Price, paid by delivery of the form of payment specified in Section 1.2, (c) a duly executed joinder to the Amended and Restated Voting Agreement dated as of April 26, 2012 among the Corporation and
 
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certain stockholders and other investors in the Corporation (the “ Voting Agreement ”), such joinder to the Voting Agreement to be in substantially the form attached hereto as Exhibit 1 and (d) a duly executed joinder to the Amended and Restated Right of First Refusal and Co-Sale Agreement entered into as of April 26, 2012, by and among the Corporation and the other parties named therein, as such may be amended from time to time (the “ Co-Sale Agreement ”), such joinder to the Co-Sale Agreement to be in substantially the form attached hereto as Exhibit 2 .
2.2 Deliveries by the Corporation . Upon its receipt of the Purchase Price, payment or other provision for any applicable tax obligations, if any, and all the documents to be executed and delivered by Purchaser to the Corporation as provided herein, the Corporation will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser with the appropriate legends affixed thereto, to be placed in escrow as provided in Section 7.2 to secure performance of Purchaser’s obligations under Sections 5 and 6 until expiration or termination of the Corporation’s Repurchase Option and Refusal Right (as such terms are defined in Sections 5 and 6, respectively).
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Corporation as follows.
3.1 Agrees to Terms of the Plan . Purchaser has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions.
3.2 Acknowledgment of Tax Risks . Purchaser acknowledges that there may be adverse tax consequences upon the purchase and the disposition of the Shares, and that Purchaser has been advised by the Corporation to consult a tax adviser prior to such purchase or disposition. Purchaser further acknowledges that Purchaser is not relying on the Corporation or its counsel for tax advice regarding Purchaser’s purchaser or disposition of the Shares or the tax consequences to Purchaser of this Agreement.
3.3 Shares Not Registered or Qualified . Purchaser understands and acknowledges that the Shares have not been registered with the SEC under the Securities Act, or with any securities regulatory agency administering any state securities laws, and that, notwithstanding any other provision of this Agreement to the contrary, the purchase of any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. Purchaser agrees to cooperate with the Corporation to ensure compliance with such laws.
3.4 No Transfer Unless Registered or Exempt; Contractual Restrictions on Transfers . Purchaser understands that Purchaser may not transfer any Shares unless such Shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Corporation, exemptions from such registration and qualification requirements are available. Purchaser understands that only the Corporation may file a registration statement with the SEC and that the Corporation is under no obligation to do so with respect to the Shares. Purchaser has also been advised that exemptions from registration and qualification may not be available or may not permit Purchaser to transfer all or any of the Shares in the amounts or at the times proposed by Purchaser. Purchaser further acknowledges that this Agreement imposes additional restrictions on transfer of the Shares.
3.5 SEC Rule 701 . Shares that are issued pursuant to SEC Rule 701 promulgated under the Securities Act may become freely tradable by non-affiliates (under limited conditions regarding
 
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the method of sale) ninety (90) days after the first sale of Common Stock of the Corporation to the general public pursuant to a registration statement filed with and declared effective by the SEC, subject to the lengthier market standoff agreement contained in Section 4 of this Agreement or any other agreement entered into by Purchaser. Affiliates must comply with the provisions (other than the holding period requirements) of SEC Rule 144 which permits certain limited sales of unregistered securities. SEC Rule 144 is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of SEC Rule 144). Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the SEC Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of SEC Rule 144. Purchaser understands that SEC Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Corporation or if “current public information” about the Corporation (as defined in SEC Rule 144) is not publicly available.
3.6 Access to Information . Purchaser has had access to all information regarding the Corporation and its present and prospective business, assets, liabilities and financial condition that Purchaser reasonably considers important in making the decision to purchase the Shares, and Purchaser has had ample opportunity to ask questions of the Corporation’s representatives concerning such matters and this investment.
3.7 Understanding of Risks . Purchaser is fully aware of: (a) the highly speculative nature of the investment in the Shares; (b) the financial hazards involved; (c) the lack of liquidity of the Shares and the restrictions on transferability of the Shares ( e.g. , that Purchaser may not be able to sell or dispose of the Shares or use them as collateral for loans); (d) the qualifications and backgrounds of the management of the Corporation; and (e) the tax consequences of investment in, and disposition of, the Shares.
3.8 Purchase for Own Account for Investment . Purchaser is purchasing the Shares for Purchaser’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act. Purchaser has no present intention of selling or otherwise disposing of all or any portion of the Shares and no one other than Purchaser has any beneficial ownership of any of the Shares.
3.9 No General Solicitation . At no time was Purchaser presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Shares.
3.10 SEC Rule 144 . Purchaser has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144), subject to the lengthier market standoff agreement contained in Section 4 of this Agreement or any other agreement entered into by Purchaser. Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Corporation or if “current public information” about the Corporation (as defined in Rule 144) is not publicly available.
4. MARKET STANDOFF AGREEMENT. Subject to the provisions of this Section, Purchaser agrees in connection with any registration of the Corporation’s securities under the Securities Act or other registered public offering that, upon the request of the Corporation or the
 
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underwriters managing any registered public offering of the Corporation’s securities, Purchaser will not sell or otherwise dispose of any Shares without the prior written consent of the Corporation or such managing underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Corporation or the managing underwriters may specify for employee-stockholders generally; provided however , that if during the last seventeen (17) days of the restricted period the Corporation issues an earnings release or material news, or a material event relating to the Corporation occurs, or prior to the expiration of the restricted period the Corporation announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, if required by the underwriters or the Corporation, for so long as, and to the extent that, Rule 2711 or any successor rule of the Financial Industry Regulatory Authority applies, the restrictions imposed by this Section 4 shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. The restricted period shall in any event terminate two (2) years after the closing date of the Corporation’s initial public offering. For purposes of this Section 4, the term “Corporation” shall include any wholly-owned subsidiary of the Corporation into which the Corporation merges or consolidates. In order to enforce the foregoing covenant, the Corporation shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period. Purchaser further agrees that the underwriters of any such registered public offering shall be third party beneficiaries of this Section 4 and agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing. Notwithstanding anything in this Section to the contrary, for the avoidance of doubt, the foregoing provisions of this Section shall not apply to any registration of securities of the Corporation (a) under an employee benefit plan or (b) in a merger, consolidation, business combination or similar transaction.
5. COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES. The Corporation, or (subject to Section 5.6) its assignee, shall have the option to repurchase all or a portion of the Purchaser’s Shares that are Unvested Shares (as defined below) on the Termination Date on the terms and conditions set forth in this Section 5 (the “ Repurchase Option ”) if Purchaser is Terminated (as defined below) for any reason, or no reason, including without limitation, Purchaser’s death, Total Disability (as defined in the Plan), voluntary resignation or termination by the Corporation with or without Cause.
For purposes of this Section 5 “ Termination ” or “ Terminated ” means, with respect to the Purchaser, that the Purchaser has for any reason ceased to provide services as an employee, officer, director or consultant to the Corporation or a Parent or Subsidiary of the Corporation. A Purchaser will not be deemed to have ceased to provide services while the Purchaser is on a bona fide leave of absence, if such leave was approved by the Corporation in writing. In the case of an approved leave of absence, the Administrator may make such provisions respecting crediting of service, including suspension of vesting of the Award (including pursuant to a formal policy adopted from time to time by the Corporation) it may deem appropriate.
5.1 Termination and Termination Date . In case of any dispute as to whether and when Purchaser is Terminated, the Administrator shall have discretion to determine in good faith whether Purchaser has been Terminated and the effective date of such Termination (the “ Termination Date ”).
5.2 Vested and Unvested Shares . Shares that are vested pursuant to the schedule set forth in this Section 5.2 are “ Vested Shares . ” Shares that are not vested pursuant to
 
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such schedule are “ Unvested Shares .” [ Insert Vesting Schedule ]. No fractional Shares shall be issued. No Shares will become Vested Shares after the Termination Date. The number of the Shares that are Vested Shares or Unvested Shares will be proportionally adjusted to reflect any stock split, reverse stock split or similar change in the capital structure of the Corporation as set forth in Section 7.3.1 of the Plan occurring after the Effective Date.
5.3 Exercise of Repurchase Option . At any time within ninety (90) days after the Purchaser’s Termination Date, the Corporation, or its assignee, may, at its option, elect to repurchase any or all the Purchaser’s Shares that are Unvested Shares on the Termination Date by giving Purchaser written notice of exercise of the Repurchase Option, specifying the number of Unvested Shares to be repurchased. Such Unvested Shares shall be repurchased at the Purchase Price Per Share, proportionately adjusted for any stock split, reverse stock split or similar change in the capital structure of the Corporation as set forth in Section 7.3.1 of the Plan occurring after the Effective Date (the “ Repurchase Price ”). The Repurchase Price shall be payable, at the option of the Corporation or its assignee, by check or by cancellation of all or a portion of any outstanding indebtedness owed by Purchaser to the Corporation and/or such assignee, or by any combination thereof. The Repurchase Price shall be paid without interest within the term of the Repurchase Option as described in the first sentence of this Section 5.3. The Corporation may, at its option, decline to exercise its Repurchase Option or may exercise its Repurchase Option only with respect to a portion of the Unvested Shares.
5.4 Right of Termination Unaffected . Nothing in this Agreement shall be construed to limit or otherwise affect in any manner whatsoever the right or power of the Corporation (or any Parent or Subsidiary of the Corporation) to terminate Purchaser’s employment or other relationship with Corporation (or the Parent or Subsidiary of the Corporation) at any time, for any reason or no reason, with or without Cause.
5.5 Additional or Exchanged Securities and Property . Subject to the provisions of Section 5.2 above, in the event of a merger or consolidation of the Corporation with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a recapitalization or a similar transaction affecting the Corporation’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed or issued with respect to, any Unvested Shares shall immediately be subject to the Repurchase Option. Appropriate adjustments shall be made to the price per share to be paid for Unvested Shares upon the exercise of the Repurchase Option (by allocating such price among the Unvested Shares and such other securities or property), provided that the aggregate purchase price payable for the Unvested Shares and all such other securities and property shall remain the same price that was original payable under the Repurchase Option to repurchase such Unvested Shares. Subject to the provisions of Section 5.2 above, in the event of a merger or consolidation of the Corporation with or into another entity or any other corporate reorganization, the Repurchase Option may be exercised by the Corporation’s successor.
5.6 Assignment of Repurchase Right . The Corporation may freely assign the Corporation’s Repurchase Option, in whole or in part, provided that any person who accepts an assignment of the Repurchase Option from the Corporation shall assume all of the Corporation’s rights and obligations with respect to the Repurchase Option (to the extent so assigned) under this Agreement.
 
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6. COMPANY’S REFUSAL RIGHT. Unvested Shares shall be subject to the restrictions on transfer and the granting of encumbrances thereon as provided in Section 7 hereof. Before any Vested Shares (as defined in Section 5 hereof) held by Purchaser or any transferee of such Vested Shares (either sometimes referred to herein as the “ Holder ”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Corporation and/or its assignee(s) will have a right of first refusal to purchase the Vested Shares to be sold or transferred (the “ Offered Shares ”) on the terms and conditions set forth in this Section (the “ Refusal Right ”).
6.1 Notice of Proposed Transfer . The Holder of the Offered Shares will deliver to the Corporation a written notice (the “ Notice ”) stating: (a) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (b) the name and address of each proposed purchaser or other transferee of Offered Shares (“ Proposed Transferee ”); (c) the number of Offered Shares to be transferred to each Proposed Transferee; (d) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares to each Proposed Transferee (the “ Offered Price ”); and (e) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Corporation and/or its assignee(s) pursuant to the Corporation’s Refusal Right at the Offered Price as provided for in this Agreement.
6.2 Exercise of Refusal Right . At any time within thirty (30) days after the date the Notice is effective pursuant to Section 9.2, the Corporation and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as provided in Section 6.3 below.
6.3 Purchase Price . The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift), then the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Corporation’s Board of Directors. If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Corporation’s Board of Directors, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.
6.4 Payment . The purchase price for the Offered Shares will be paid, at the option of the Corporation and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding indebtedness owed by the Holder to the Corporation (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof. The purchase price will be paid without interest within sixty (60) days after the Corporation’s receipt of the Notice, or, at the option of the Corporation and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.
6.5 Holder’s Right to Transfer . If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Corporation and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to such Proposed Transferee at the Offered Price or at a higher price, provided that (a) such sale or other transfer is consummated within one hundred twenty (120) days after the date the Notice is effective pursuant to Section 9.2, (b) any such sale or other transfer is effected in compliance with all applicable securities laws, and (c) such Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee. If the Offered Shares described in the Notice are not transferred to such
 
6

Proposed Transferee within such one hundred twenty (120) day period, then a new Notice must be given to the Corporation pursuant to which the Corporation will again be offered the Refusal Right before any Shares held by the Holder may be sold or otherwise transferred.
(a) 6.6 Exempt Transfers . Notwithstanding the foregoing, the following transfers of Vested Shares will be exempt from the Refusal Right: (a) the transfer of any or all of the Vested Shares during Purchaser’s lifetime by gift or on Purchaser’s death by will or intestacy to Purchaser’s “Immediate Family” (as defined below) or to a trust for the benefit of Purchaser or Purchaser’s Immediate Family, provided that each transferee agrees in a writing satisfactory to the Corporation that the provisions of this Section will continue to apply to the transferred Vested Shares in the hands of such transferee; (b) any transfer of Vested Shares made pursuant to a statutory merger or statutory consolidation of the Corporation with or into another entity or entities (except that, subject to Section 6.7, unless the agreement of merger or consolidation expressly otherwise provides, the Refusal Right will continue to apply thereafter to such Vested Shares, in which case the surviving entity of such merger or consolidation shall succeed to the rights of the Corporation under this Section); or (c) any transfer of Vested Shares pursuant to the winding up and dissolution of the Corporation. As used herein, the term “ Immediate Family” will mean Purchaser’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of Purchaser or Purchaser’s spouse, or the spouse of any of the above or Spousal Equivalent, as defined herein. As used herein, a person is deemed to be a “ Spousal Equivalent” provided the following circumstances are true: (i) irrespective of whether or not the Purchaser and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (ii) they intend to remain so indefinitely, (iii) neither are married to anyone else, (iv) both are at least 18 years of age and mentally competent to consent to contract, (v) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (vi) they are jointly responsible for each other’s common welfare and financial obligations, and (vii) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.
6.7 Termination of Refusal Right . The Refusal Right will terminate as to all Shares: (a) on the effective date of the first sale of Common Stock of the Corporation to the public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act or, if expressly approved by the Board as terminating the Refusal Right, under the laws of any other country having substantially the same effect (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (b) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Corporation with or into another entity or entities if the common stock of the surviving entity or any direct or indirect parent entity thereof is registered under the Securities Exchange Act of 1934, as amended.
7. ADDITIONAL RESTRICTIONS UPON SHARE OWNERSHIP OR TRANSFER.
7.1 Rights as a Stockholder . Subject to the terms and conditions of this Agreement, Purchaser will have all of the rights of a stockholder of the Corporation with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares or the Corporation and/or its assignee(s) exercise(s) the Refusal Right or the Repurchase Option. Upon an exercise of the Refusal Right or the Repurchase Option, Purchaser will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Purchaser will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Corporation for transfer or cancellation.
 
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7.2 Escrow . As security for Purchaser’s faithful performance of this Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s) to the Secretary of the Corporation or other designee of the Corporation (the “ Escrow Holder ”), who is hereby appointed to hold such certificate(s) in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Agreement. Purchaser and the Corporation agree that Escrow Holder will not be liable to any party to this Agreement (or to any other person or entity) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Agreement. The Shares will be released from escrow upon termination of both the Refusal Right and the Repurchase Option.
7.3 Encumbrances on Shares . Without the Corporation’s prior written consent given with the approval of the Corporation’s Board of Directors, Purchaser may not grant a lien or security interest in, or pledge, hypothecate or encumber, any Unvested Shares.
7.4 Restrictions on Transfers . Unvested Shares may not be sold or otherwise transferred by Purchaser without the Corporation’s prior written consent. Purchaser hereby agrees that Purchaser shall make no disposition of the Shares (other than as permitted by this Agreement) unless and until:
(a) Purchaser shall have notified the Corporation of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;
(b) Purchaser shall have complied with all requirements of this Agreement applicable to the disposition of the Shares, including but not limited to the Refusal Right, the Market Standoff and the Repurchase Option; and
(c) Purchaser shall have provided the Corporation with written assurances, in form and substance satisfactory to counsel for the Corporation, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any state securities laws, and (ii) all appropriate actions necessary for compliance with the registration and qualification requirements of the Securities Act and any state securities laws, or of any exemption from registration or qualification, available thereunder (including Rule 144) have been taken.
Each person (other than the Corporation) to whom the Shares are transferred by means of one of the permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred Shares are subject to the Corporation’s Refusal Right or the Repurchase Option granted hereunder and the market stand-off provisions of Section 4 hereof, to the same extent such Shares would be so subject if retained by the Purchaser.
 
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7.5 Restrictive Legends and Stop-transfer Orders . Purchaser understands and agrees that the Corporation will place any of the legends as set out in Section 7.5.3 of the Plan and as set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by applicable laws, the Corporation’s Certificate of Incorporation or Bylaws, any other agreement between Purchaser and the Corporation or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, INCLUDING THE RIGHT OF FIRST REFUSAL AND THE REPURCHASE OPTION HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AND A MARKET STANDOFF AGREEMENT, AS SET FORTH IN A RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS INCLUDING THE RIGHT OF FIRST REFUSAL, THE REPURCHASE OPTION AND THE MARKET STANDOFF ARE BINDING ON TRANSFEREES OF THESE SHARES.
Purchaser agrees that the stock certificate(s) evidencing the Shares shall, in addition, bear any legends required under the Corporation Voting Agreement and the Co-Sale Agreement (and/or any other agreement that is a successor to or replacement of such agreements), as applicable.
Purchaser also agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Corporation may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Corporation transfers its own securities, it may make appropriate notations to the same effect in its own records. The Corporation will not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (b) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.
8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES. PURCHASER REPRESENTS (a) THAT PURCHASER HAS CONSULTED WITH ANY TAX ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. Purchaser hereby acknowledges that Purchaser has been informed that, with respect to Unvested Shares, unless an election is filed by Purchaser with the Internal Revenue Service (and, if necessary, the proper state
 
9

taxing authorities) within 30 days after the purchase of the Shares electing, pursuant to Section 83(b) of the Internal Revenue Code (and similar state tax provisions, if applicable), to be taxed currently on any difference between the Purchase Price of the Unvested Shares and their Fair Market Value on the date of purchase, there will be a recognition of taxable income to Purchaser, measured by the excess, if any, of the Fair Market Value of the Unvested Shares, at the time they cease to be Unvested Shares, over the Purchase Price for such Shares. Purchaser represents that Purchaser has consulted any tax advisers Purchaser deems advisable in connection with Purchaser’s purchase of the Shares and the filing of the election under Section 83(b) and similar tax provisions. A form of Election under Section 83(b) is attached hereto as Exhibit 3 for reference. BY PROVIDING THE FORM OF ELECTION, NEITHER THE COMPANY NOR ITS LEGAL COUNSEL IS THEREBY UNDERTAKING TO FILE THE ELECTION FOR PURCHASER, WHICH OBLIGATION TO FILE SHALL REMAIN SOLELY WITH PURCHASER.
9. GENERAL PROVISIONS.
9.1 Successors and Assigns . The Corporation may assign any of its rights under this Agreement, including its rights to purchase Shares under the Refusal Right or the Repurchase Option. Neither Purchaser, nor any of Purchaser’s successors and assigns, may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Corporation. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Corporation. Subject to the restrictions on transfer herein set forth, this Agreement will be binding upon Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns.
9.2 Notices . Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (a) at the time of personal delivery, if delivery is in person; (b) at the time an electronic confirmation of receipt is received, if delivery is by email; (c) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (d) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (e) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. Any notice for delivery outside the United States will be sent by email, facsimile or by express courier. Any notice not delivered personally or by email will be sent with postage and/or other charges prepaid and properly addressed to Purchaser at the last known address or facsimile number on the books of the Corporation, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto or, in the case of the Corporation, to it at its principal place of business. Notices to the Corporation will be marked “Attention: Chief Financial Officer.” Notices by facsimile shall be machine verified as received.
9.3 Further Assurances . The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.
9.4 Entire Agreement . The Plan is incorporated herein by reference. The Plan and this Agreement, together with all Exhibits hereto, constitute the entire agreement and
 
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understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, between the parties hereto with respect to the specific subject matter hereof.
9.5 Severability . If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
9.6 Corporation Co-Sale and Voting Agreement. As a material inducement and consideration for the Corporation to enter into this Agreement, Purchaser hereby agrees that if, the Corporation requests Purchaser to enter into and become a party to the Corporation’s Co-Sale Agreement (and to subject the Shares to the rights of first refusal held by the Corporation and other Corporation investors thereunder and the co-sale rights of other investors thereunder) and/or the Corporation Voting Agreement pursuant to which Purchaser would agree to vote all shares of Corporation stock held by Purchaser, then Purchaser will enter into such agreements and execute and deliver a signature page thereto (as requested by the Corporation) in such capacity or capacities as the Corporation requests.
9.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.
9.8 Execution. This Agreement may be entered into in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. This Agreement may be executed and delivered by facsimile and, upon such delivery, the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.
[The remainder of this page has intentionally been left blank]
[Signature page follows]
 
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IN WITNESS WHEREOF , the Corporation has caused this Restricted Stock Purchase Agreement to be executed by its duly authorized representative, and Purchaser has executed this Restricted Stock Purchase Agreement, as of the date first set forth above.

CASTLIGHT HEALTH, INC.	 		 	PURCHASER	
				
By:	 	 	 	 	 	 	

Address: 	 	 	 		 	Address:	 	 	

Fax No.:	 	(              )                                                      	 		 	Fax No.:	 	(              )                                                      	
Exhibits
 
Exhibit	1: Joinder to Voting Agreement	
Exhibit	2: Joinder to Right of First Refusal and Co-Sale Agreement	
Exhibit	3: Form of Election Pursuant to Section 83(b)	
 
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EXHIBIT 1
JOINDER TO VOTING AGREEMENT
 
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JOINDER AGREEMENT
                              , 20     
The undersigned hereby agrees, effective as of the date hereof, to become a party to that certain Amended and Restated Voting Agreement, dated April 26, 2012, by and among Castlight Health, Inc., a Delaware corporation, and the parties named therein, as such may be amended from time to time (the “Agreement”), and for all purposes of the Agreement, the undersigned shall be included within the term “Common Holder” (as defined in the Agreement).

If an Individual:	
		
By:	 	 	

Name:	 	 	

Address:	 	 	

	
If an Entity:

 
(Print name of Entity)	

		
By:    	 	 	
			
	 	(Signature)	

	
 
(Print Name)	

	
 
(Print Title)	

		
Address:	 	 	

 
2

EXHIBIT 2
JOINDER TO RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

JOINDER AGREEMENT
                              , 20     
The undersigned hereby agrees, effective as of the date hereof, to become a party to that certain Amended and Restated Right of First Refusal and Co-Sale Agreement, dated April 26, 2012, by and among Castlight Health, Inc., a Delaware corporation, and the parties named therein, as such may be amended from time to time (the “Agreement”), and for all purposes of the Agreement, the undersigned shall be included within the term “Common Holder” (as defined in the Agreement).

If an Individual:	
		
By:	 	 	

Name:	 	 	

Address:	 	 	

	
If an Entity:

 
(Print name of Entity)	

		
By:    	 	 	
			
	 	(Signature)	

	
 
(Print Name)	

	
 
(Print Title)	

		
Address:	 	 	

 
2

EXHIBIT 3
FORM OF SECTION 83(B) ELECTION

ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property, as compensation for services in the calculation of regular gross income.

1.     	 	TAXPAYER’S NAME:	    		
			
	 	TAXPAYER’S ADDRESS:	    	 	

			
	 	SOCIAL SECURITY NUMBER:	    	 	
 
2.	The property with respect to which the election is made is described as follows:              (              ) shares of Class A Common Stock of CASTLIGHT HEALTH, INC., a Delaware corporation (the “ Corporation ”) which were transferred pursuant to a Restricted Stock Purchase Agreement entered into by Taxpayer and the Corporation, which is Taxpayer’s employer or the corporation for whom the Taxpayer performs services.	
 
3.	The date on which the shares were transferred pursuant to the purchase of the shares was              , 20              and this election is made for calendar year 20__.	
 
4.	The shares received are subject to the following restrictions: The Corporation may repurchase all or a portion of the shares at the Taxpayer’s original purchase price per share at the time of Taxpayer’s termination of employment or services.	
 
5.	The fair market value of the shares (without regard to restrictions other than restrictions which by their terms will never lapse) was $              per share x              shares = $              at the time of purchase.	
 
6.	The amount paid for such shares by Taxpayer was $              per share x              shares = $              .	
 
7.	The Taxpayer has submitted a copy of this statement to the Corporation.	
 
8.	The amount to include in gross income is $              . [The result of the amount reported in Item 5 minus the amount reported in Item 6.]	
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE (“ IRS ”), AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE TAXPAYER’S INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED WITHOUT THE CONSENT OF THE IRS.

Dated:	 	 	 		 	 	
	 		 		 	Taxpayer’s Signature	

Exhibit 10.3
CASTLIGHT HEALTH, INC.
2014 EQUITY INCENTIVE PLAN
1. PURPOSE . The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.
2. SHARES SUBJECT TO THE PLAN .
2.1. Number of Shares Available . Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is fifteen million (15,000,000) Shares, plus (a) any reserved shares not issued or subject to outstanding grants under the Company’s 2008 Stock Incentive Plan (the “ Prior Plan ”) on the Effective Date (as defined below), (b) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (c) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (d) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (e) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.
2.2. Lapsed, Returned Awards . Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.
2.3. Minimum Share Reserve . At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.
2.4. Automatic Share Reserve Increase . The number of Shares available for grant and issuance under the Plan shall be increased on January 1 of each of the calendar years 2015 through 2024, by the lesser of (a) five percent (5%) of the aggregate number of shares of the Company’s Class A and Class B common stock issued and outstanding on each December 31 immediately prior to the date of increase or (b) such number of Shares determined by the Board; provided, however, that if on January 1 of a calendar year, the Board has not either confirmed the five
 
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percent (5%) increase described in clause “(a)” of this paragraph or approved an increase of a lesser number of Shares for such calendar year, then the Board shall be deemed to have waived the automatic increase provided for by this paragraph, and no such increase shall occur for such calendar year.
2.5. Limitations . No more than fifty-five million (55,000,000) Shares shall be issued pursuant to the exercise of ISOs.
2.6. Adjustment of Shares . If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, including shares reserved under sub-clauses (a)-(e) of Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.5, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number of Shares that may be granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.
3. ELIGIBILITY . ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive more than five million (5,000,000) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees are eligible to receive up to a maximum of ten million (10,000,000) Shares in the calendar year in which they commence their employment.
4. ADMINISTRATION .
4.1. Committee Composition; Authority . This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan. The Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;
 
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(e) determine the number of Shares or other consideration subject to Awards;
(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;
(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;
(h) grant waivers of Plan or Award conditions;
(i) determine the vesting, exercisability and payment of Awards;
(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(k) determine whether an Award has been earned;
(l) determine the terms and conditions of any, and to institute any Exchange Program;
(m) reduce or waive any criteria with respect to Performance Factors;
(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code;
(o) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States;
(p) make all other determinations necessary or advisable for the administration of this Plan; and
(q) delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law.
4.2. Committee Interpretation and Discretion . Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.
 
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4.3. Section 162(m) of the Code and Section 16 of the Exchange Act . When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (c) a change in accounting standards required by generally accepted accounting principles.
4.4. Documentation . The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.
4.5. Foreign Award Recipients . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 2.1 hereof; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.
5. OPTIONS . An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ ISOs ”) or Nonqualified Stock Options (“ NSOs ”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this section.
 
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5.1. Option Grant . Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.
5.2. Date of Grant . The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement will be delivered to the Participant within a reasonable time after the granting of the Option.
5.3. Exercise Period . Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided , however , that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“ Ten Percent Stockholder ”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
5.4. Exercise Price . The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.
5.5. Method of Exercise . Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
5.6. Termination of Service . If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the
 
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Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.
(a) Death . If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options.
(b) Disability . If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options.
(c) Cause . If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s date of termination of Service, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, Cause shall have the meaning set forth in the Plan.
5.7. Limitations on Exercise . The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.
5.8. Limitations on ISOs . With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.9. Modification, Extension or Renewal . The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of
 
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such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided , however , that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.
5.10. No Disqualification . Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.
6. RESTRICTED STOCK AWARDS . A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are subject to restrictions (“ Restricted Stock ”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.
6.1. Restricted Stock Purchase Agreement . All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.
6.2. Purchase Price . The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.
6.3. Terms of Restricted Stock Awards . Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.
6.4. Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
 
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7. STOCK BONUS AWARDS . A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.
7.1. Terms of Stock Bonus Awards . The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.
7.2. Form of Payment to Participant . Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.
7.3. Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
8. STOCK APPRECIATION RIGHTS . A Stock Appreciation Right (“ SAR ”) is an award to an eligible Employee, Consultant, or Director that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.
8.1. Terms of SARs . The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.
8.2. Exercise Period and Expiration Date . A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee
 
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determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.
8.3. Form of Settlement . Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.
8.4. Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
9. RESTRICTED STOCK UNITS . A Restricted Stock Unit (“ RSU ”) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.
9.1. Terms of RSUs . The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.
9.2. Form and Timing of Settlement . Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.
9.3. Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
 
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10. PERFORMANCE AWARDS . A Performance Award is an award to an eligible Employee, Consultant, or Director of a cash bonus or an award of Performance Shares denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Awards shall be made pursuant to an Award Agreement.
10.1. Terms of Performance Shares . The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement, and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. No Participant will be eligible to receive more than ten million dollars ($10,000,000) in Performance Awards in any calendar year under this Plan.
10.2. Value, Earning and Timing of Performance Shares . Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.
10.3. Termination of Service . Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).
11. PAYMENT FOR SHARE PURCHASES . Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;
(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;
(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;
(e) by any combination of the foregoing; or
(f) by any other method of payment as is permitted by applicable law.
 
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12. GRANTS TO NON-EMPLOYEE DIRECTORS . Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate number of Shares subject to Awards granted to a Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed one million (1,000,000).
12.1. Eligibility . Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.
12.2. Vesting, Exercisability and Settlement . Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.
12.3. Election to receive Awards in Lieu of Cash . A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company.
13. WITHHOLDING TAXES .
13.1. Withholding Generally . Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or the applicable tax event occurs, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant. The Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the previous trading day.
13.2. Stock Withholding . The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld or (d) withholding from proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
14. TRANSFERABILITY .
14.1. Transfer Generally . Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter
 
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vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (a) during the Participant’s lifetime only by (i) the Participant, or (ii) the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee.
14.2. Award Transfer Program . Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (a) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (b) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company or its Parent or any Subsidiary, (c) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (d) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (e) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion.
15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES .
15.1. Voting and Dividends . No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any dividend equivalent rights permitted by an applicable Award Agreement. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided , that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided , further , that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.
15.2. Restrictions on Shares . At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “ Right of Repurchase ”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.
16. CERTIFICATES . All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.
 
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17. ESCROW; PLEDGE OF SHARES . To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided , however , that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS . Without prior stockholder approval the Committee may (a) reprice Options or SARs(and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising from the repricing), and (b) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.
19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE . An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
20. NO OBLIGATION TO EMPLOY . Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.
21. CORPORATE TRANSACTIONS .
21.1. Assumption or Replacement of Awards by Successor . In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue,
 
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in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards shall have their vesting accelerate as to all shares subject to such Award (and any applicable right of repurchase fully lapse) immediately prior to the Corporate Transaction. Further, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. In addition, following a Corporate Transaction, 100% of the total number of Shares subject to each time-based Award held by an Employee shall become vested if the Employee’s employment is terminated by the Company without Cause or by the Employee for Good Reason during the period beginning on the date that is three (3) months prior to the Corporate Transaction and ending on the twelve (12) month anniversary of the Corporate Transaction; it being understood that the vesting acceleration set forth in the preceding clause is in addition to vesting of the Shares that has occurred prior to the termination of employment without Cause or for Good Reason. Awards need not be treated similarly in a Corporate Transaction.
21.2. Assumption of Awards by the Company . The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged ( except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year.
21.3. Non-Employee Directors’ Awards . Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.
22. ADOPTION AND STOCKHOLDER APPROVAL . This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.
23. TERM OF PLAN/GOVERNING LAW . Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules).
 
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24. AMENDMENT OR TERMINATION OF PLAN . The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided , however , that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further , that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.
25. NONEXCLUSIVITY OF THE PLAN . Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
26. INSIDER TRADING POLICY . Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.
27. ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY . All Awards, subject to applicable law, shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancelation of outstanding Awards and the recoupment of any gains realized with respect to Awards.
28. DEFINITIONS . As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:
28.1. “ Award ” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.
28.2. “ Award Agreement ” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which shall be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.
28.3. “ Award Transfer Program ” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.
28.4. “ Board ” means the Board of Directors of the Company.
28.5. “ Cause ” means (a) the Participant is convicted of, or pleads guilty or nolo contendere to, a felony (under the laws of the United States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction); (b) the Participant has engaged in acts of fraud, dishonesty or other acts of willful misconduct in the course of his duties hereunder; (c) the Participant willfully fails to perform or uphold
 
15

his or her duties under the applicable Award Agreement after receiving written notice from the Company or willfully fails to comply with reasonable directives of the Company without a reasonable belief the failure to comply was in the best interest of the Company; (d) a material breach by the Participant of the applicable Award Agreement or any contract the Participant is party to with the Company; provided, however, that if the breach is reasonably susceptible of cure, the Participant shall be entitled to receive at least 30 days to cure the breach fully after receiving written notice from the Company; or (e) unauthorized use or disclosure by the Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company. The determination as to whether a Participant is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20 above, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 28.5.
28.6. “ Code ” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
28.7. “ Committee ” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.
28.8. “ Common Stock ” means the Class B common stock of the Company.
28.9. “ Company ” means Castlight Health, Inc., or any successor corporation.
28.10. “ Consultant ” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.
28.11. “ Corporate Transaction ” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by member of the Board whose appointment or election is not endorsed by as majority of the members of the Board prior to the date of the appointment or election. For purpose of this
 
16

subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.
28.12. “ Director ” means a member of the Board.
28.13. “ Disability ” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
28.14. “ Effective Date ” means the day immediately prior to the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.
28.15. “ Employee ” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
28.16. “ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.
28.17. “ Exchange Program ” means a program pursuant to which (a) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (b) the exercise price of an outstanding Award is increased or reduced.
28.18. “ Exercise Price ” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.
28.19. “ Fair Market Value ” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:
(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable;
 
17

(c) in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or
(d) if none of the foregoing is applicable, by the Board or the Committee in good faith.
28.20. “Good Reason” means the occurrence of any of the following conditions without a Participant’s express written consent: (a) any reduction in the Participant’s rate of base salary or the target bonus amount that Participant is eligible to receive, unless such reduction is consistent with a salary or bonus reduction implemented by the Company for other similarly situated employees of the Company; or (b) a relocation of the Participant’s principal office with the Company of more than fifty (50) miles from its current location; provided, however, that any such condition or conditions, as applicable, shall not constitute Good Reason unless both (i) the Participant provides written notice to the Company of the condition claimed to constitute Good Reason within ninety (90) days of the initial existence of such condition(s), and (ii) the Company fails to remedy such condition(s) within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events the termination of the Participant’s employment with the Company shall not be treated as a termination for “Good Reason” unless such termination occurs not more than one hundred and twenty (120) days following the initial existence of the condition claimed to constitute Good Reason . The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20 above, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Good Reason” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 28.20.
28.21. “ Insider ” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.
28.22. “ IRS ” means the United States Internal Revenue Service.
28.23. “ Non-Employee Director ” means a Director who is not an Employee of the Company or any Parent or Subsidiary.
28.24. “ Option ” means an award of an option to purchase Shares pursuant to Section 5.
28.25. “ Parent ” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
28.26. “ Participant ” means a person who holds an Award under this Plan.
28.27. “ Performance Award ” means cash or stock granted pursuant to Section 10 or Section 12 of the Plan.
 
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28.28. “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied:
(a) Profit Before Tax;
(b) Billings;
(c) Revenue;
(d) Net revenue;
(e) Earnings (which may include earnings before interest and taxes, earnings before taxes, and net earnings);
(f) Operating income;
(g) Operating margin;
(h) Operating profit;
(i) Controllable operating profit, or net operating profit;
(j) Net Profit;
(k) Gross margin;
(l) Operating expenses or operating expenses as a percentage of revenue;
(m) Net income;
(n) Earnings per share;
(o) Total stockholder return;
(p) Market share;
(q) Return on assets or net assets;
(r) The Company’s stock price;
(s) Growth in stockholder value relative to a pre-determined index;
(t) Return on equity;
(u) Return on invested capital;
(v) Cash Flow (including free cash flow or operating cash flows)
(w) Cash conversion cycle;
 
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(x) Economic value added;
(y) Individual confidential business objectives;
(z) Contract awards or backlog;
(aa) Overhead or other expense reduction;
(bb) Credit rating;
(cc) Strategic plan development and implementation;
(dd) Succession plan development and implementation;
(ee) Improvement in workforce diversity;
(ff) Customer indicators;
(gg) New product invention or innovation;
(hh) Attainment of research and development milestones;
(ii) Improvements in productivity;
(jj) Bookings;
(kk) Attainment of objective operating goals and employee metrics
The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.
28.29. “ Performance Period ” means the period of service determined by the Committee during which years of service or performance is to be measured for the Award.
28.30. “ Performance Share ” means an Award granted pursuant to Section 10 or Section 12 of the Plan.
28.31. “ Permitted Transferee ” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.
28.32. “ Plan ” means this Castlight Health, Inc. 2014 Equity Incentive Plan.
 
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28.33. “ Purchase Price ” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.
28.34. “ Restricted Stock Award ” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.
28.35. “ Restricted Stock Unit ” means an Award granted pursuant to Section 9 or Section 12 of the Plan.
28.36. “ SEC ” means the United States Securities and Exchange Commission.
28.37. “ Securities Act ” means the United States Securities Act of 1933, as amended.
28.38. “ Service ” shall mean service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent or Subsidiary of the Company, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence approved by the Company; provided , that such leave is for a period of not more than 90 days (x) unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or (y) unless provided otherwise pursuant to formal policy adopted from time to time by the Committee and issued and promulgated to employees in writing. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification to vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military leave, if required by applicable laws, vesting shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. An employee shall have terminated employment as of the date he or she ceases to be employed (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law, provided however , that a change in status from an employee to a consultant or advisor shall not terminate the service provider’s Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Services and the effective date on which the Participant ceased to provide Services.
28.39. “ Shares ” means shares of the Common Stock and the common stock of any successor entity.
28.40. “ Stock Appreciation Right ” means an Award granted pursuant to Section 8 or Section 12 of the Plan.
28.41. “ Stock Bonus ” means an Award granted pursuant to Section 7 or Section 12 of the Plan.
28.42. “ Subsidiary ” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
 
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28.43. “ Treasury Regulations ” means regulations promulgated by the United States Treasury Department.
28.44. “ Unvested Shares ” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).
 
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N OTICE OF S TOCK O PTION G RANT
(G LOBAL )
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You have been granted an Option by Castlight Health, Inc. (the “ Company ”) under the Company’s 2014 Equity Incentive Plan (the “ Plan ”) to purchase shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice of Stock Option Grant (the “ Notice ”) and the Stock Option Agreement (the “ Option Agreement ”), including any applicable country-specific provisions in the appendix attached hereto (if any) (the “ Appendix ”). Unless otherwise defined herein, any capitalized terms used herein will have the meaning ascribed to them in the Plan.

Name:	  	 	  		
			
Address:     	  	 	  		

Grant Number :             	  	 	  		
			
Date of Grant:	  	 	  		
			
Vesting Commencement Date:     	  	 	  		
			
Exercise price per Share :	  	 	  		
			
Total Number of Shares :	  	 	  		
		
Type of Option:	  	             Non-Qualified Stock Option	
		
	  	             Incentive Stock Option	
		
Expiration Date:	  	                  , 20      ; This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.	
		
Vesting Schedule:	  	[INSERT VESTING SCHEDULE].	
By accepting (whether in writing, electronically or otherwise) this Option, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice and the Option Agreement. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You further acknowledge that the grant of this Option by the Company is at the Company’s sole discretion, and does not entitle you to further grant(s) of Option(s) or any other award(s) under the Plan or any other plan or program maintained by the Company or any parent, subsidiary or affiliate of the Company. You acknowledge that the vesting of the Option pursuant to this Notice is earned only by continuing Service. By accepting this Option, you consent to electronic delivery as set forth in the Option Agreement.

CASTLIGHT HEALTH, INC.	
		
By:	 	 	
		
Its:	 	 	

S TOCK O PTION A GREEMENT
(G LOBAL )
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You have been granted an Option by Castlight Health, Inc. (the “ Company ”) under the 2014 Equity Incentive Plan (the “ Plan ”) to purchase Shares (the “ Option ”), subject to the terms and conditions of the Plan, the Notice of Stock Option Grant (the “ Notice ”) and this Stock Option Agreement (the “ Agreement ”), including any applicable country-specific provisions in the appendix attached hereto (if any) (the “ Appendix ”), which constitutes part of this Agreement.
1. Grant of Option . You have been granted an Option for the number of Shares set forth in the Notice at the exercise price per Share set forth in the Notice (the “ exercise price ”). In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. If designated in the Notice as an Incentive Stock Option (“ ISO ”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonqualified Stock Option (“ NSO ”).
2. Termination Period .
(a) General Rule . If your Service terminates for any reason except death or Disability, and other than for Cause, then this Option will expire at the close of business at Company headquarters on the date three months after your termination date. If your Service is terminated for Cause, this Option will expire upon the date of such termination. Your Service will be considered terminated as of the date you are no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred and the effective date of such termination. The Committee shall have the exclusive discretion to determine whether you may still be considered to be providing services while on an approved leave of absence.
(b) Death; Disability . If you die before your Service terminates, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date of death. If your Service terminates because of your Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after your termination date.
(c) No Notice . You are responsible for keeping track of these exercise periods following your termination of Service for any reason. The Company will not provide further notice of such periods. In no event shall this Option be exercised later than the Expiration Date set forth in the Notice.

3. Exercise of Option .
(a) Right to Exercise . This Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Agreement. In the event of your death, Disability, or other cessation of Service, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice and this Agreement. This Option may not be exercised for a fraction of a Share.
(b) Method of Exercise . This Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “ Exercise Notice ”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “ Exercised Shares ”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate exercise price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate exercise price and any applicable tax withholding due upon exercise of the Option.
(c) Exercise by Another . If another person wants to exercise this Option after it has been transferred to him or her in compliance with this Agreement, that person must prove to the Company’s satisfaction that he or she is entitled to exercise this Option. That person must also complete the proper Exercise Notice form (as described above) and pay the exercise price (as described below) and any applicable tax withholding due upon exercise of the Option (as described below).
4. Method of Payment . Payment of the aggregate exercise price shall be by any of the following, or a combination thereof, at your election:
(a) your personal check, wire transfer, or a cashier’s check;
(b) certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to you. However, you may not surrender, or attest to the ownership of, shares of Company stock in payment of the exercise price of your Option if your action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;
(c) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any, will be delivered to you. The directions must be given by signing a special notice of exercise form provided by the Company; or
(d) other method authorized by the Company.
5. Non-Transferability of Option . In general, except as provided below, only you may exercise this Option prior to your death. You may not transfer or assign this Option, except as provided below. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may,

however, dispose of this Option in your will or in a beneficiary designation. However, if this Option is designated as a NSO in the Notice, then the Committee (as defined in the Plan) may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members. For purposes of this Agreement, “ family member ” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest. In addition, if this Option is designated as a NSO in the Notice, then the Committee may, in its sole discretion, allow you to transfer this Option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. This Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of you only by you, your guardian, or legal representative, as permitted in the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of you.
6. Term of Option . This Option shall in any event expire on the expiration date set forth in the Notice, which date is 10 years after the grant date (five years after the grant date if this Option is designated as an ISO in the Notice and Section 5.3 of the Plan applies).
7. Tax Consequences . You should consult a tax advisor for tax consequences relating to this Option in the jurisdiction in which you are subject to tax. YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option . You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the Option exercise.
(b) Notice of Disqualifying Disposition of ISO Shares . If you sell or otherwise dispose of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, you shall immediately notify the Company in writing of such disposition. You agree that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current compensation paid to you.
8. Withholding Taxes and Stock Withholding . Regardless of any action the Company or your actual employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“ Tax-Related Items ”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items.

Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company. The Fair Market Value of these Shares, determined as of the effective date of the Option exercise, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this Section.
9. Acknowledgement . The Company and you agree that the Option is granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). You: (a) acknowledge receipt of a copy of the Plan and the Plan prospectus, (b) represent that you have carefully read and are familiar with their provisions, and (c) hereby accept the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and the Agreement.
10. Appendix . Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for your country set forth as an attachment to this Agreement (if any). Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.
11. Consent to Electronic Delivery of All Plan Documents and Disclosures . By your acceptance of this Option, you consent to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Option. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if

you contact the Company by telephone, through a postal service or electronic mail at [insert e-mail address]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert e-mail address]. Finally, you understand that you are not required to consent to electronic delivery. To the extent you have been provided with a copy of this Agreement, the Plan, or any other documents relating to the Option in a language other than English, the English language documents will prevail in case of any ambiguities or divergences as a result of translation.
12. Compliance with Laws and Regulations; Legends . The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Shares shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the issuance of any Shares pursuant to this Option, the Company may require you to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. The Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any, determined by the Company.
13. Governing Law; Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
14. No Rights as Employee, Director or Consultant . Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without cause.
15. Adjustment . In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this Option and the exercise price per Share may be adjusted pursuant to the Plan.
16. Lock-Up Agreement . In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short

sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.
17. Plan Discretionary; Extraordinary Compensation . You acknowledge and understand that the Plan is wholly discretionary in nature. You understand that the Company has reserved the right to amend, suspend or terminate the Plan at any time, and that the grant of an Option in one year or at any time does not in any way create any contractual or other right to receive future grants of Options or benefits in lieu of Options in any future year or in any given amount. You understand that all determinations with respect to any such future grants, including, but not limited to, the times when Options shall be offered and the vesting schedule will be at the sole discretion of the Company. The value of the Option is an extraordinary item of compensation outside the scope of your employment contract, if any, and is not to be considered part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. You acknowledge that the right to be granted Options and to continue vesting or to receive further grants of Options will terminate effective as of the date upon which you receive notice of termination, regardless of when the termination is effective.
18. Data Privacy .
(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other grant materials by and among, as applicable, the Employer, the Company and its Parent, and Subsidiaries for the exclusive purpose of implementing, administering and managing your participation in the Plan (“Data”).
(b) You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan.

(c) You understand that Data may be transferred to a Company-designated Plan broker or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. You understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorizes the Company, its designated Plan broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Options or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
19. A ward Subject to Company Clawback or Recoupment . The Option shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancelation of your Option (whether vested or unvested) and the recoupment of any gains realized with respect to your Option.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended only by another written agreement between the parties.
BY ACCEPTING THIS OPTION, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

Appendix
[To be provided, if required.]

N OTICE OF R ESTRICTED S TOCK A WARD
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You (“ you ”) have been granted the opportunity to purchase shares of Common Stock of Castlight Health, Inc. (the “ Company ”) that are subject to restrictions (the “ Restricted Shares ”) and the terms and conditions of the Castlight Health, Inc. 2014 Equity Incentive Plan (the “ Plan ”), this Notice of Restricted Stock Award (the “ Notice ”) and the attached Restricted Stock Agreement (the “ Restricted Stock Agreement ”). Unless otherwise defined herein, any capitalized terms used herein will have the meaning ascribed to them in the Plan.

Name:	  	 	
		
Address:     	  	 	

Total Number of Restricted Shares Awarded :	  	 	

Fair Market Value per Restricted Share:	  	$	

Total Fair Market Value of Award:	  	$	

Purchase Price per Restricted Share:	  	$	

Total Purchase Price for all Restricted Shares:	  	$	

Date of Grant:	  		

Vesting Commencement Date:	  		

Vesting Schedule :	  	[INSERT VESTING SCHEDULE]	
By accepting (whether in writing, electronically or otherwise) the Restricted Shares, you and the Company agree that the Restricted Shares are granted under and governed by the terms and conditions of the Plan, the Notice and the Restricted Stock Agreement. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You further acknowledge that the grant of the Restricted Shares by the Company is at the Company’s sole discretion, and does not entitle you to further grant(s) of Restricted Shares or any other award(s) under the Plan or any other plan or program maintained by the Company or any parent, subsidiary or affiliate of the Company. You acknowledge that the vesting of the Restricted Shares pursuant to this Notice is earned only by continuing Service as an Employee, Director or Consultant of the Company. If the Restricted Stock Agreement is not executed by you within thirty (30) days of the Date of Grant above, then this grant shall be void.

CASTLIGHT HEALTH, INC.	 		 	RECIPIENT:	
						
By:  	 	 	 		 	Signature	  	 	  		
						
Its:	 	 	 		 	Please Print Name  	  	 	  		

R ESTRICTED S TOCK A GREEMENT
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
THIS RESTRICTED STOCK AGREEMENT (this “ Agreement ”) is made as of              , 20      by and between Castlight Health, Inc., a Delaware corporation (the “ Company ”), and              (“ Participant ”) pursuant to the Company’s 2014 Equity Incentive Plan (the “ Plan ”). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.
1. Sale of Stock . Subject to the terms and conditions of this Agreement, on the Purchase Date (as defined below) the Company will issue and sell to Participant, and Participant agrees to purchase from the Company the number of Shares shown on the Notice of Restricted Stock Award (the “ Notice ”) at a purchase price of $              per Share. The per Share purchase price of the Shares shall be not less than the par value of the Shares as of the date of the offer of such Shares to the Participant. The term “ Shares ” refers to the purchased Shares and all securities received in replacement of or in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Participant is entitled by reason of Participant’s ownership of the Shares.
2. Time and Place of Purchase . The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the parties, or on such other date as the Company and Participant shall agree (the “ Purchase Date ”). On the Purchase Date, the Company will issue a stock certificate registered in Participant’s name, or uncertificated shares designated for the Participant in book entry form on the records of the Company’s transfer agent, representing the Shares to be purchased by Participant against payment of the purchase price therefor by Participant by (a) check made payable to the Company, (b) cancellation of indebtedness of the Company to Participant, (c) Participant’s personal Services that the Committee has determined to have a value not less than aggregate par value of the Shares to be issued Participant, or (d) a combination of the foregoing.
3. Restrictions on Resale . By signing this Agreement, Participant agrees not to sell any Shares acquired pursuant to the Plan and this Agreement at a time when applicable laws, regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction will apply as long as Participant is providing Service to the Company or a Subsidiary of the Company.
(a) Repurchase Right on Termination Other Than for Cause . For the purposes of this Agreement, a “ Repurchase Event ” shall mean an occurrence of one of the following:
(i) termination of Participant’s Service, whether voluntary or involuntary and with or without cause;
(ii) resignation, retirement or death of Participant; or
 
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(iii) any attempted transfer by Participant of the Shares, or any interest therein, in violation of this Agreement.
Upon the occurrence of a Repurchase Event, the Company shall have the right (but not an obligation) to purchase the Shares of Participant at a price equal to the Purchase Price per Share (the “ Repurchase Right ”). The Repurchase Right shall lapse in accordance with the vesting schedule set forth in the Notice of Restricted Stock Award. For purposes of this Agreement, “ Unvested Shares ” means Stock pursuant to which the Company’s Repurchase Right has not lapsed.
(b) Exercise of Repurchase Right . Unless the Company provides written notice to Participant within 90 days from the date of termination of Participant’s Service to the Company that the Company does not intend to exercise its Repurchase Right with respect to some or all of the Unvested Shares, the Repurchase Right shall be deemed automatically exercised by the Company as of the 90th day following such termination, provided that the Company may notify Participant that it is exercising its Repurchase Right as of a date prior to such 90th day. Unless Participant is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its Repurchase Right as to some or all of the Unvested Shares, execution of this Agreement by Participant constitutes written notice to Participant of the Company’s intention to exercise its Repurchase Right with respect to all Unvested Shares to which such Repurchase Right applies at the time of Participant’s termination of Service. The Company, at its choice, may satisfy its payment obligation to Participant with respect to exercise of the Repurchase Right by either (A) delivering a check to Participant in the amount of the purchase price for the Unvested Shares being repurchased, or (B) in the event Participant is indebted to the Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by a combination of (A) and (B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase Right by canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, such cancellation of indebtedness shall be deemed automatically to occur as of the 90th day following termination of Participant’s Service unless the Company otherwise satisfies its payment obligations. As a result of any repurchase of Unvested Shares pursuant to the Repurchase Right, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the number of Unvested Shares being repurchased by the Company, without further action by Participant.
(c) Acceptance of Restrictions . Acceptance of the Shares shall constitute Participant’s agreement to such restrictions and the legending of his or her certificates or the notation in the Company’s direct registration system for stock issuance and transfer of such restrictions and accompanying legends set forth in Section 4(a) with respect thereto. Notwithstanding such restrictions, however, so long as Participant is the holder of the Shares, or any portion thereof, he or she shall be entitled to receive all dividends declared on and to vote the Shares and to all other rights of a stockholder with respect thereto.
 
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(d) Non-Transferability of Unvested Shares . In addition to any other limitation on transfer created by applicable securities laws or any other agreement between the Company and Participant, Participant may not transfer any Unvested Shares, or any interest therein, unless consented to in writing by a duly authorized representative of the Company. Any purported transfer is void and of no effect, and no purported transferee thereof will be recognized as a holder of the Unvested Shares for any purpose whatsoever. Should such a transfer purport to occur, the Company may refuse to carry out the transfer on its books, set aside the transfer, or exercise any other legal or equitable remedy. In the event the Company consents to a transfer of Unvested Shares, all transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement, including, insofar as applicable, the Repurchase Right. In the event of any purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares or interest to the Participant for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Right is deemed exercised by the Company, the Company may deem any transferee to have transferred the Shares or interest to Participant prior to their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Participant’s obligation to pay such transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Participant for such Shares or interest.
(e) Assignment . The Repurchase Right may be assigned by the Company in whole or in part to any persons or organization.
4. Restrictive Legends and Stop Transfer Orders .
(a) Legends . The certificate or certificates or book entry or book entries representing the Shares shall bear or be noted by the Company’s transfer agent with the following legend (as well as any legends required by applicable state and federal corporate and securities laws):
THE SHARES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Stop-Transfer Notices . Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as the owner or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
 
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5. No Rights as Employee, Director or Consultant . Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant ’ s Service, for any reason, with or without cause.
6. Miscellaneous .
(a) Acknowledgement . The Company and Participant agree that the Restricted Shares are granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant: (i) acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the Restricted Shares subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.
(b) Entire Agreement; Enforcement of Rights . This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
(c) Compliance with Laws and Regulations . The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.
(d) Governing Law; Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
(e) Construction . This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.
(f) Notices . Any notice to be given under the terms of the Plan shall be addressed to the Company in care of its principal office, and any notice to be given to the Participant shall be addressed to such Participant at the address maintained by the Company for such person or at such other address as the Participant may specify in writing to the Company.
 
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(g) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall he deemed an original and all of which together shall constitute one instrument.
(h) U.S. Tax Consequences . Unless an Election (defined below) is made, in which case, the tax mechanics under Section 8 apply, upon vesting of Shares, Participant will include in taxable income the difference between the fair market value of the vesting Shares, as determined on the date of their vesting, and the price paid for the Shares. This will be treated as ordinary income by Participant and will be subject to withholding by the Company when required by applicable law. In the absence of an Election, the Company shall withhold a number of vesting Shares with a fair market value (determined on the date of their vesting) equal to the minimum amount the Company is required to withhold for income and employment taxes. If Participant makes an Election, then Participant must, prior to making the Election, pay in cash (or check) to the Company an amount equal to the amount the Company is required to withhold for income and employment taxes.
7. Withholding Taxes . Regardless of any action the Company or your employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“ Tax-Related Items ”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or your Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the shares received under this award, including the award or vesting of such shares, the subsequent sale of shares under this award and the receipt of any dividends; and (2) do not commit to structure the terms of the award to reduce or eliminate your liability for Tax-Related Items.
No stock certificates will be released to you unless you have paid or made adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or your Employer. In this regard, you authorize the Company and/or your Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or your Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding shares that otherwise would be delivered to you when they vest having a Fair Market Value equal to the amount necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company. The Fair Market Value of these shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or your Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your acquisition of shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.
 
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8. Section 83(b) Election . Participant hereby acknowledges that he or she has been informed that, with respect to the purchase of the Shares, an election may be filed by the Participant with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase (the “ Election ”). Making the Election will result in recognition of taxable income to the Participant on the date of purchase, measured by the excess, if any, of the Fair Market Value of the Shares over the purchase price for the Shares. Absent such an Election, taxable income will be measured and recognized by Participant at the time or times on which the Company’s Repurchase Right lapses. Participant is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election. PARTICIPANT ACKNOWLEDGES THAT IT IS SOLELY PARTICIPANT’S RESPONSIBILITY, AND NOT THE COMPANY’S RESPONSIBILITY, TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PARTICIPANT REQUESTS THE COMPANY, OR ITS REPRESENTATIVE, TO MAKE THIS FILING ON PARTICIPANT’S BEHALF
9. Consent to Electronic Delivery of All Plan Documents and Disclosures . By acceptance of these Restricted Shares, you consent to the electronic delivery of the Notice, this Restricted Stock Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Restricted Shares. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at [email address]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [email address]. Finally, you understand that you are not required to consent to electronic delivery. To the extent you have been provided with a copy of this Agreement, the Plan, or any other documents relating to the Restricted Shares in a language other than English, the English language documents will prevail in case of any ambiguities or divergences as a result of translation.
10. L ock-Up Agreement . In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such
 
6

period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.
11. A ward Subject to Company Clawback or Recoupment . The Shares shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancelation of your Shares (whether vested or unvested) and the recoupment of any gains realized with respect to your Shares.
BY ACCEPTING THIS AWARD OF RESTRICTED SHARES, PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
 
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RECEIPT
Castlight Health, Inc. hereby acknowledges receipt of (check as applicable):
¨ A check in the amount of $             
¨ The cancellation of indebtedness in the amount of $             
given by              as consideration for the book entry in the Participant’s name or Certificate No. -              for              shares of Common Stock of Castlight Health, Inc.
Dated:             

CASTLIGHT HEALTH, INC.	
		
By:	 	 	
		
Its:	 	 	
 
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RECEIPT AND CONSENT
The undersigned Participant hereby acknowledges the book entry in the Participant’s name or receipt of a photocopy of Certificate No. -              for              shares of Common Stock of Castlight Health, Inc. (the “ Company ”).
The undersigned further acknowledges that the Secretary of the Company, or his or her designee, is acting as escrow holder pursuant to the Restricted Stock Agreement that Participant has previously entered into with the Company. As escrow holder, the Secretary of the Company, or his or her designee, holds the original of the aforementioned certificate issued in the undersigned’s name. To facilitate any transfer of Shares to the Company pursuant to the Restricted Stock Agreement, Participant has executed the attached Assignment Separate from Certificate.
Dated:                      , 20         

Signature	  	 	  		  		
				
Please Print Name  	  	 	  		  		

 
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STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of              ,              , [ COMPLETE AT THE TIME OF PURCHASE ] (the “ Agreement ”), the undersigned Participant hereby sells, assigns and transfers unto              ,              shares of the Common Stock of Castlight Health, Inc., a Delaware corporation (the “ Company ”), standing in the undersigned’s name on the books of the Company represented hereby by book entry or by Certificate No(s).              [ COMPLETE AT THE TIME OF PURCHASE ] delivered herewith, and does hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.
Dated:              ,             

PARTICIPANT	

(Signature)	

(Please Print Name)	
Instructions to Participant : Please do not fill in any blanks other than the signature line. The purpose of this document is to enable the Company and/or its assignee(s) to acquire the shares upon exercise of its “Repurchase Right” set forth in the Agreement without requiring additional action by the Participant.
 
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N OTICE OF S TOCK A PPRECIATION R IGHT
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You have been granted Stock Appreciation Rights (each, a “ SAR ”) by Castlight Health, Inc. (the “ Company ”) under the Company’s 2014 Equity Incentive Plan (the “ Plan ”) to purchase shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice of Stock Appreciation Right (the “ Notice ”) and the Stock Appreciation Right Agreement (the “ SAR Agreement ”). Unless otherwise defined herein, any capitalized terms used herein will have the meaning ascribed to them in the Plan.

Name:	  	 	
		
Address:     	  	 	

Grant Number :                                   	  	 	  		
			
Date of Grant :	  	 	  		
			
Vesting Commencement Date :	  	 	  		
			
Fair Market Value on Date of Grant :	  	 	  		
			
Total Number of Shares :	  	 	  		
		
Expiration Date :	  	                  , 20__; This SAR expires earlier if your Service terminates earlier, as described in the SAR Agreement.	
		
Vesting Schedule :	  	[INSERT VESTING SCHEDULE].	
By accepting (whether in writing, electronically or otherwise) this SAR, you and the Company agree that this SAR is granted under and governed by the terms and conditions of the Plan, the Notice and the SAR Agreement. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You further acknowledge that the grant of this SAR by the Company is at the Company’s sole discretion, and does not entitle you to further grant(s) of SAR(s) or any other award(s) under the Plan or any other plan or program maintained by the Company or any parent, subsidiary or affiliate of the Company. You acknowledge that the vesting of the SAR pursuant to this Notice is earned only by continuing Service. By accepting this SAR, you consent to electronic delivery as set forth in the SAR Agreement.

CASTLIGHT HEALTH, INC.	
		
By:	 	 	
		
Its:	 	 	

S TOCK A PPRECIATION R IGHT A GREEMENT
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You have been granted Stock Appreciation Rights (each, a “ SAR ”) by Castlight Health, Inc. (the “ Company ”) under the Company’s 2014 Equity Incentive Plan (the “ Plan ”), subject to the terms and conditions of the Plan, the Notice of Stock Appreciation Right Grant (the “ Notice ”) and this Stock Appreciation Right Agreement (the “ Agreement ”).
1. Grant of SAR . You have been granted a SAR for the number of Shares set forth in the Notice. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.
2. Termination Period .
(a) General Rule . If your Service terminates for any reason except death or Disability, and other than for Cause, then this SAR will expire at the close of business at Company headquarters on the date three months after your termination date. If your Service is terminated for Cause, this SAR will expire upon the date of such termination. Your Service will be considered terminated as of the date you are no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred and the effective date of such termination. The Committee shall have the exclusive discretion to determine whether you may still be considered to be providing services while on an approved leave of absence.
(b) Death; Disability . If you die before your Service terminates, then this SAR will expire at the close of business at Company headquarters on the date 12 months after the date of death. If your Service terminates because of your Disability, then this SAR will expire at the close of business at Company headquarters on the date 12 months after your termination date.
(c) No Notice . You are responsible for keeping track of these exercise periods following your termination of Service for any reason. The Company will not provide further notice of such periods. In no event shall this SAR be exercised later than the Expiration Date set forth in the Notice.
3. Exercise of SAR .
(a) Right to Exercise . This SAR is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Agreement. In the event of your death, Disability, or other cessation of Service, the exercisability of the SAR is governed by the applicable provisions of the Plan, the Notice and this Agreement. This SAR may not be exercised for a fraction of a Share.
(b) Method of Exercise . This SAR is exercisable by delivery of an exercise notice in a form specified by the Company (the “ Exercise Notice ”), which shall state the election to exercise the SAR, the number of Shares in respect of which the SAR is being exercised (the “ Exercised Shares ”), and such other representations and agreements as may be required by the

Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. This SAR shall be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by any applicable tax withholding due upon exercise of the SAR.
(c) Exercise by Another . If another person wants to exercise this SAR after it has been transferred to him or her in compliance with this Agreement, that person must prove to the Company’s satisfaction that he or she is entitled to exercise this SAR. That person must also complete the proper Exercise Notice form (as described above) and pay any applicable tax withholding due upon exercise of the SAR (as described below).
4. Non-Transferability of SAR . In general, except as provided below, only you may exercise this SAR prior to your death. You may not transfer or assign this SAR, except as provided below. For instance, you may not sell this SAR or use it as security for a loan. If you attempt to do any of these things, this SAR will immediately become invalid. You may, however, dispose of this SAR in your will or in a beneficiary designation. However, the Committee (as defined in the Plan) may, in its sole discretion, allow you to transfer this SAR as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest. The Committee may, in its sole discretion, allow you to transfer this SAR to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow you to transfer this SAR only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. This SAR may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of you only by you, your guardian, or legal representative, as permitted in the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of you.
5. Term of SAR . This SAR shall in any event expire on the expiration date set forth in the Notice, which date is 10 years after the grant date.
6. Tax Consequences . You should consult a tax advisor for tax consequences relating to this SAR in the jurisdiction in which you are subject to tax. YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS SAR OR DISPOSING OF THE SHARES. You will not be allowed to exercise this SAR unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the SAR exercise.
7. Withholding Taxes and Stock Withholding . Regardless of any action the Company or your actual employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“ Tax-Related Items ”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no

representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the SAR grant, including the grant, vesting or exercise of the SAR, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the SAR to reduce or eliminate your liability for Tax-Related Items.
Prior to exercise of the SAR, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this SAR, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company. The Fair Market Value of these Shares, determined as of the effective date of the SAR exercise, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this Section.
8. Acknowledgement . The Company and you agree that the SAR is granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). You: (a) acknowledge receipt of a copy of the Plan and the Plan prospectus, (b) represent that you have carefully read and are familiar with their provisions, and (c) hereby accept the SAR subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and the Agreement.
9. Consent to Electronic Delivery of All Plan Documents and Disclosures . By your acceptance of this SAR, you consent to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the SAR. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at [insert e-mail address]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to

which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert e-mail address]. Finally, you understand that you are not required to consent to electronic delivery.
10. Compliance with Laws and Regulations; Legends . The Company will not permit anyone to exercise this SAR if the issuance of shares at that time would violate any law or regulation, including without limitation all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer. The Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any, determined by the Company.
11. Governing Law; Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
12. No Rights as Employee, Director or Consultant . Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without cause.
13. Adjustment . In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this SAR may be adjusted pursuant to the Plan.
14. Lock-Up Agreement . In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.

15. A ward Subject to Company Clawback or Recoupment . The SAR shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancelation of your SAR (whether vested or unvested) and the recoupment of any gains realized with respect to your SAR.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this SAR. Any prior agreements, commitments or negotiations concerning this SAR are superseded. This Agreement may be amended only by another written agreement between the parties.
BY ACCEPTING THIS SAR, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

N OTICE OF R ESTRICTED S TOCK U NIT A WARD
(G LOBAL )
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You (“ you ”) have been granted an award of Restricted Stock Units (“ RSUs ”) by Castlight Health, Inc. (the “ Company ”) under the Company’s 2014 Equity Incentive Plan (the “ Plan ”) subject to the terms and conditions of the Plan, this Notice of Restricted Stock Unit Award (the “ Notice ”) and the attached Restricted Stock Unit Agreement (hereinafter “ RSU Agreement ”), including any applicable country-specific provisions in the appendix attached hereto (if any) (the “ Appendix ”). Unless otherwise defined herein, any capitalized terms used herein will have the meaning ascribed to them in the Plan.

Name:	  	 	  		
			
Address:     	  	 	  		

Number of RSUs:                                 	  	 	  		
			
Date of Grant:	  	 	  		
			
Vesting Commencement Date:	  	 	  		
		
Expiration Date:	  	The date on which settlement of all RSUs granted hereunder occurs. This RSU expires earlier if your Service terminates, as described in the RSU Agreement.	
		
Vesting Schedule:	  	[INSERT DESIRED VESTING SCHEDULE]	
By accepting (whether in writing, electronically or otherwise) these RSUs, you and the Company agree that these RSUs are granted under and governed by the terms and conditions of the Plan, the Notice and the RSU Agreement. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You further acknowledge that the grant of this RSU by the Company is at the Company’s sole discretion, and does not entitle you to further grant(s) of RSU(s) or any other award(s) under the Plan or any other plan or program maintained by the Company or any parent, subsidiary or affiliate of the Company. You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing Service. By accepting this RSU, you consent to electronic delivery as set forth in the RSU Agreement.

PARTICIPANT	 		 	CASTLIGHT HEALTH, INC.	
						
Signature:	 	 	 		 	By:  	  	 	  		
						
Print Name:  	 	 	 		 	Its:	  	 	  		

R ESTRICTED S TOCK U NIT A GREEMENT
(G LOBAL )
C ASTLIGHT H EALTH , I NC . 2014 E QUITY I NCENTIVE P LAN
You have been granted Restricted Stock Units (“ RSUs ”) subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “ Notice ”) and this RSU Agreement, including any applicable country-specific provisions in the appendix attached hereto (if any) (the “ Appendix ”)
1. Settlement . Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. Settlement means the delivery of the Shares vested under an RSU. No fractional RSUs or rights for fractional Shares shall be created pursuant to this RSU Agreement.
2. No Stockholder Rights . Unless and until such time as Shares are issued in settlement of vested RSUs, you shall have no ownership of the Shares allocated to the RSUs and shall have no right dividends or to vote such Shares.
3. Dividend Equivalents . Dividends, if any (whether in cash or Shares), shall not be credited to you.
4. No Transfer . RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.
5. Termination . If your Service terminates for for Cause or your resignation without Good Reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights you have to such RSUs shall immediately terminate. If your Service is terminated by the Company without Cause or by you for Good Reason, all unvested RSUs shall be forfeited to the Company three months following the termination of your Service, and all rights you have to such RSUs shall terminate three months following the termination of your Service. Notwithstanding the foregoing, vesting ceases on such date your Service terminates (unless determined otherwise by the Committee). Your Service will be considered terminated as of the date you are no longer providing services (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred and the effective date of such termination. The Committee shall have the exclusive discretion to determine whether you may still be considered to be providing services while on an approved leave of absence.
6. Tax Consequences . You acknowledge that there will be tax consequences upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and you should consult a tax adviser regarding your tax obligations prior to such settlement or disposition in the jurisdiction where you are subject to tax.
 
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7. Withholding Taxes and Stock Withholding . Regardless of any action the Company or your actual employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“ Tax-Related Items ”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items. You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to the settlement of your RSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your RSUs are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf and you hereby authorize such sales by this authorization), (c) your payment of a cash amount, or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (a)-(d) above, and the Committee shall establish the method prior to the Tax-Related Items withholding event. The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described. Finally, you acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section.
Unless determined otherwise by the Committee in advance of a Tax-Related Items withholding event, the method of withholding for this RSU will be (a) above.
8. Acknowledgement . The Company and you agree that the RSUs are granted under and governed by the Notice, this RSU Agreement and the provisions of the Plan. You: (a) acknowledge receipt of a copy of the Plan prospectus, (b) represent that you have carefully read and are familiar with their provisions, and (c) hereby accept the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Notice.
9. Entire Agreement; Enforcement of Rights . This RSU Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or
 
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negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this RSU Agreement, nor any waiver of any rights under this RSU Agreement, shall be effective unless in writing and signed by the parties to this RSU Agreement. The failure by either party to enforce any rights under this RSU Agreement shall not be construed as a waiver of any rights of such party.
10. Compliance with Laws and Regulations; Legends . The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Shares shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the issuance of any Shares pursuant to this RSU, the Company may require you to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. The Shares issued pursuant to this RSU Agreement shall be endorsed with appropriate legends, if any, determined by the Company.
11. Governing Law; Severability . If one or more provisions of this RSU Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this RSU Agreement, (b) the balance of this RSU Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this RSU Agreement shall be enforceable in accordance with its terms. This RSU Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
12. No Rights as Employee, Director or Consultant . Nothing in this RSU Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without cause.
13. Appendix . Notwithstanding any provisions in this RSU Agreement, the RSU shall be subject to any special terms and conditions set forth in the Appendix to this RSU Agreement for your country set forth as an attachment to this RSU Agreement (if any). Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this RSU Agreement.
14 . Consent to Electronic Delivery of All Plan Documents and Disclosures . By acceptance of this RSU, you consent to the electronic delivery of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSU. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the
 
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delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at [insert email]. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to electronic delivery. To the extent you have been provided with a copy of this RSU Agreement, the Plan, or any other documents relating to the RSU in a language other than English, the English language documents will prevail in case of any ambiguities or divergences as a result of translation.
15 . Code Section 409A . For purposes of this RSU Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Internal Revenue Code and the regulations thereunder (“ Section 409A ”). Notwithstanding anything else provided herein, to the extent any payments provided under this RSU Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (a) the expiration of the six-month period measured from your separation from service from the Company or (b) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
16 . Lock-Up Agreement . In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.
 
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17 . A ward Subject to Company Clawback or Recoupment . The RSU shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancelation of your RSU (whether vested or unvested) and the recoupment of any gains realized with respect to your RSU.
18 . Plan Discretionary; Extraordinary Compensation . You acknowledge and understand that the Plan is wholly discretionary in nature. You understand that the Company has reserved the right to amend, suspend or terminate the Plan at any time, and that the grant of an RSU in one year or at any time does not in any way create any contractual or other right to receive future grants of RSUs or benefits in lieu of RSUs in any future year or in any given amount. You understand that all determinations with respect to any such future grants, including, but not limited to, the times when RSUs shall be offered, the settlement of RSUs, and the vesting schedule will be at the sole discretion of the Company. The value of the RSU is an extraordinary item of compensation outside the scope of your employment contract, if any, and is not to be considered part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. You acknowledge that the right to be granted RSUs, receive settlement of unvested RSUs, and to continue vesting or to receive further grants of RSUs will terminate effective as of the date upon which you receive notice of termination, regardless of when the termination is effective.
19 . Data Privacy .
(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this RSU Agreement and any other grant materials by and among, as applicable, the Employer, the Company and its Parent, and Subsidiaries for the exclusive purpose of implementing, administering and managing your participation in the Plan (“Data”) .
(b) You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan .
(c) You understand that Data may be transferred to a Company-designated Plan broker or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan . You understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e . g . , the United States) may have different data privacy laws and protections than your country . You understand that you may request a list with the names
 
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and addresses of any potential recipients of the Data by contacting your local human resources representative . You authorizes the Company, its designated Plan broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan . You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan . You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative . Further, you understand that you are providing the consents herein on a purely voluntary basis . If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company would not be able to grant you RSUs, options or other equity awards or administer or maintain such awards . Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan . For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative .
BY ACCEPTING THIS RSU, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
 
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Exhibit 10.4
C ASTLIGHT H EALTH , I NC .
2014 E MPLOYEE S TOCK P URCHASE P LAN
1. Establishment of Plan . Castlight Health, Inc. proposes to grant options to purchase shares of Common Stock to eligible employees of the Company and its Participating Corporations pursuant to this Plan. The Company intends this Plan to qualify as an “employee stock purchase plan” under Code Section 423 (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan but defined for purposes of Code Section 423 shall have the same definition herein. However, with regard to offers of options for purchase of the Common Stock under the Plan to employees outside the United States working for a Subsidiary or an Affiliate, the Board may offer a subplan or an option that is not intended to meet the Code Section 423 requirements, provided, if necessary under Code Section 423, that the other terms and conditions of the Plan are met. Subject to Section 14, a total of six million (6,000,000) shares of Common Stock is reserved for issuance under this Plan.
In addition, on each January 1 for the first nine (9) calendar years after the first Offering Date, the aggregate number of shares of Common Stock reserved for issuance under the Plan shall be increased automatically by the lesser of (a) the number of shares of Common Stock equal to one percent (1%) of the aggregate number of outstanding shares of Class A and Class B common stock of the Company on the immediately preceding December 31 (rounded down to the nearest whole share) or (b) such number of Shares determined by the Board; provided, however, that if prior to January 1 of a calendar year, the Board has not either confirmed the one percent (1%) increase described in clause “(a)” of this paragraph or approved an increase of a lesser number of Shares, then the Board shall be deemed to have waived the automatic increase provided for by this paragraph, and no such increase shall occur for such calendar year;; and, provided further , that the aggregate number of shares issued over the term of this Plan shall not exceed thirty-six million (36,000,000) shares of Common Stock.
The number of shares reserved for issuance under this Plan and the maximum number of shares that may be issued under this Plan shall be subject to adjustments effected in accordance with Section 14 of this Plan. Capitalized terms not defined elsewhere in the text are defined in Section 27.
2. Purpose . The purpose of this Plan is to provide eligible employees of the Company and Participating Corporations with a means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees’ sense of participation in the affairs of the Company and Participating Corporations, and to provide an incentive for continued employment.
3. Administration . The Plan will be administered by the Board or the Compensation Committee of the Board (either referred to herein as the “ Committee ”). Subject to the provisions of this Plan and the limitations of Section 423 of the Code or any successor provision in the Code, all questions of interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and binding upon all Participants. The Committee will
 
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have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and decide upon any and all claims filed under the Plan. Every finding, decision and determination made by the Committee will, to the full extent permitted by law, be final and binding upon all parties. Notwithstanding any provision to the contrary in this Plan, the Committee may adopt rules and/or procedures relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States. The Committee will have the authority to determine the Fair Market Value of the Common Stock (which determination shall be final, binding and conclusive for all purposes) in accordance with Section 8 below and to interpret Section 8 of the Plan in connection with circumstances that impact the Fair Market Value. Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than standard fees as established from time to time by the Board for services rendered by Board members serving on the Board or its committees. All expenses incurred in connection with the administration of this Plan shall be paid by the Company. For purposes of this Plan, the Committee may designate separate offerings under the Plan (the terms of which need not be identical) in which eligible employees of one or more Participating Corporations will participate, even if the dates of the applicable Offering Periods of each such offering are identical.
4. Eligibility .
(a) Any employee of the Company or the Participating Corporations is eligible to participate in an Offering Period under this Plan except that one or more of the following categories of employees may be excluded from coverage under the Plan by the Committee (other than where prohibited by applicable law):
(i) employees who are not employed by the Company or a Participating Corporation prior to the beginning of such Offering Period or prior to such other time period as specified by the Committee;
(ii) employees who are customarily employed for twenty (20) hours or less per week;
(iii) employees who are customarily employed for five (5) months or less in a calendar year;
(iv) employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Corporations or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Corporations; and
(v) employees who do not meet any other eligibility requirements that the Committee may choose to impose (within the limits permitted by the Code, if applicable);
 
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The foregoing notwithstanding, an individual shall not be eligible if his or her participation in the Plan is prohibited by the law of any country that has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the Plan.
(b) Individuals who provide services to the Company or any of its Participating Corporations as independent contractors who are reclassified as common law employees for any reason except for federal income and employment tax purposes are not eligible to participate in an Offering Period under this Plan.
5. Offering Dates .
(a) While the Plan is in effect, the Committee shall determine the duration and commencement date of each Offering Period, provided that an Offering Period shall in no event be longer than twenty-seven (27) months, except as otherwise provided by an applicable subplan. Offering Periods may be consecutive or overlapping. Each Offering Period may consist of one or more Purchase Periods during which payroll deductions of Participants are accumulated under this Plan. While the Plan is in effect, the Committee shall determine the duration and commencement date of each Purchase Period, provided that a Purchase Period shall in no event end later than the close of the Offering Period in which it begins. Purchase Periods shall be consecutive.
(b) The initial Offering Period shall commence on the Effective Date, and shall end with the Purchase Date that occurs on a date selected by the Committee approximately six (6) months after the Effective Date (but in any event not more than twenty-seven (27) months after the Effective Date). The initial Offering Period shall consist of a single Purchase Period. Thereafter, a new six-month Offering Period shall commence on each May 1 and November 1, with each such Offering Period also consisting of a single six-month Purchase Period, except as otherwise provided by an applicable subplan. The Committee shall have the power to change these terms as provided in Section 25 below.
6. Participation in this Plan .
(a) Any employee who is an eligible employee determined in accordance with Section 4 immediately prior to the initial Offering Period will be automatically enrolled in the initial Offering Period under this Plan at a contribution level equal to fifteen percent (15%) of such employee’s Compensation. Notwithstanding the foregoing, an eligible employee may elect to decrease his or her contribution rate for the initial Offering Period under the Plan by delivering an enrollment/change form to the Company and/or by affecting such decrease through an authorized third party administrator (the “ Third Party Administrator ”), within thirty (30) days after the filing of an effective registration statement pursuant to Form S-8, or such shorter time as may be determined by the Committee.
(b) With respect to Offering Periods after the initial Offering Period, an eligible employee determined in accordance with Section 4 may elect to become a Participant by submitting an enrollment/change form, or electronic representation thereof, to the Company and/or via the Third Party Administrator’s standard process, prior to the commencement of the Offering Period to which such agreement relates in accordance with such rules as the Committee may determine.
 
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(c) Once an employee becomes a Participant in an Offering Period, then such Participant will automatically participate in each subsequent Offering Period commencing immediately following the last day of such prior Offering Period at the same contribution level unless the Participant withdraws or is deemed to withdraw from this Plan or terminates further participation in the Offering Period as set forth in Section 11 below or otherwise notifies the Company of a change in the Participant’s contribution letter by filing an additional subscription agreement or electronic representation thereof with the Company and/or the Third Party Administrator, prior to the next Offering Period. A Participant that is automatically enrolled in a subsequent Offering Period pursuant to this section is not required to file any additional subscription agreement in order to continue participation in this Plan.
7. Grant of Option on Enrollment . Becoming a Participant with respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to such Participant of an option to purchase on the Purchase Date up to that number of shares of Common Stock determined by a fraction, the numerator of which is the amount of the contribution level for such Participant multiplied by such Participant’s Compensation (as defined in Section 9 below) during such Purchase Period and the denominator of which is the lower of (i) eighty-five percent (85%) of the Fair Market Value of a share of the Common Stock on the Offering Date, or (ii) eighty-five percent (85%) of the Fair Market Value of a share of the Common Stock on the Purchase Date; provided , however , that for the Purchase Period within the initial Offering Period the numerator shall be fifteen percent (15%) of the Participant’s Compensation for such Purchase Period, or such lower percentage as determined by the Committee prior to the Effective Date or pursuant to a Participant’s election to lower the amount as set forth in Section 6(a) above, and provided , further , that the number of shares of Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (x) the maximum number of shares set by the Committee pursuant to Section 10(b) below with respect to the applicable Purchase Date, or (y) the maximum number of shares which may be purchased pursuant to Section 10(a) below with respect to the applicable Purchase Date.
8. Purchase Price . The Purchase Price in any Offering Period shall be eighty-five percent (85%) of the lesser of:
(a) The Fair Market Value on the Offering Date; or
(b) The Fair Market Value on the Purchase Date.
9. Payment of Purchase Price; Payroll Deduction Changes; Share Issuances .
(a) The Purchase Price of the shares shall be accumulated by regular payroll deductions made during each Offering Period, unless the Committee determines that contributions may be made in another form (including payment by check at the end of a Purchase Period). The deductions are made as a percentage of the Participant’s Compensation in one percent (1%)
 
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increments not less than one percent (1%), nor greater than fifteen percent (15%) or such lower limit set by the Committee. “ Compensation ” shall mean all W-2 cash compensation, including without limitation base salary or regular hourly wages, bonuses, incentive compensation, commissions, overtime, shift premiums, plus draws against commissions (or in foreign jurisdictions, equivalent cash compensation); however, the Committee may at any time prior to the beginning of an Offering Period determine that for that and future Offering Periods, Compensation shall mean base salary or regular hourly wages (or in foreign jurisdictions, equivalent cash compensation). For purposes of determining a Participant’s Compensation, any election by such Participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code (or in foreign jurisdictions, equivalent salary deductions) shall be treated as if the Participant did not make such election. Payroll deductions shall commence on the first payday following the last Purchase Date (or the first payday following the Effective Date of the Plan with respect to the initial Offering Period) and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan. Notwithstanding the foregoing, the terms of any subplan may permit matching shares without the payment of any purchase price.
(b) Subject to Section 25 below and to the rules of the Committee, a Participant may make changes in the rate of payroll deductions during an Offering Period or any Purchase Period by filing with the Company a new authorization for payroll deductions.
(c) Subject to Section 25 below and to the rules of the Committee, a Participant may reduce his or her payroll deduction percentage to zero during an Offering Period by filing with the Company a request for cessation of payroll deductions, and after such reduction becomes effective no further payroll deductions will be made for the duration of the Offering Period. Payroll deductions credited to the Participant’s account prior to the effective date of the request shall be used to purchase shares of Common Stock in accordance with Section (e) below. A reduction of the payroll deduction percentage to zero shall be treated as such Participant’s withdrawal from such Offering Period, and the Plan, effective as of the day after the next Purchase Date following the filing date of such request with the Company.
(d) All payroll deductions made for a Participant are credited to his or her account under this Plan and are deposited with the general funds of the Company, and the Company shall not be obligated to segregate such payroll deductions, except to the extent required to be segregated due to local legal restrictions outside the United States. No interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose.
(e) On each Purchase Date, so long as this Plan remains in effect and provided that the Participant has not submitted a signed and completed withdrawal form before that date which notifies the Company and/or the Third Party Administrator that the Participant wishes to withdraw from that Offering Period under this Plan and have all payroll deductions accumulated in the account maintained on behalf of the Participant as of that date returned to the Participant, the Company shall apply the funds then in the Participant’s account to the purchase of whole shares of Common Stock reserved under the option granted to such Participant with respect to the Offering Period to the extent that such option is exercisable on the Purchase Date. The Purchase
 
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Price shall be as specified in Section 8 of this Plan. Any fractional share, as calculated under this Subsection (e), shall be rounded down to the next lower whole share, unless the Committee determines with respect to all Participants that any fractional share shall be credited as a fractional share. Any amount remaining in a Participant’s account on a Purchase Date which is less than the amount necessary to purchase a full share of Common Stock shall be carried forward into the next Purchase Period or Offering Period, as the case may be (except to the extent required due to local legal requirements outside the United States), as otherwise determined by the Committee. In the event that this Plan has been oversubscribed, all funds not used to purchase shares on the Purchase Date shall be returned to the Participant, without interest (except to the extent required due to local legal requirements outside the United States). No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such Purchase Date.
(f) As promptly as practicable after the Purchase Date, the Company shall issue shares for the Participant’s benefit representing the shares purchased upon exercise of his or her option.
(g) During a Participant’s lifetime, his or her option to purchase shares hereunder is exercisable only by him or her. The Participant will have no interest or voting right in shares covered by his or her option until such option has been exercised.
(h) To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any shares of Common Stock under the Plan until such obligations are satisfied.
10. Limitations on Shares to be Purchased .
(a) No Participant shall be entitled to purchase stock under any Offering Period at a rate which, when aggregated with such Participant’s rights to purchase stock, that are also outstanding in the same calendar year(s) (whether under other Offering Periods or other employee stock purchase plans of the Company, its Parent and its Subsidiaries), exceeds $25,000 in Fair Market Value, determined as of the Offering Date, (or such other limit as may be imposed by the Code) for each calendar year in which such Offering Period is in effect (hereinafter the “Maximum Share Amount”). The Company may automatically suspend the payroll deductions of any Participant as necessary to enforce such limit provided that when the Company automatically resumes such payroll deductions, the Company must apply the rate in effect immediately prior to such suspension.
(b) The Committee may, in its sole discretion, set a lower maximum number of shares which may be purchased by any Participant during any Offering Period than that determined under Section 10(a) above, which shall then be the Maximum Share Amount for subsequent Offering Periods; provided, however, in no event shall a Participant be permitted to purchase more than two thousand (2,000) Shares during any one Purchase Period, irrespective of the Maximum Share Amount set forth in (a) and (b) hereof. If a new Maximum Share Amount is set, then all Participants will be notified of such Maximum Share Amount prior to the commencement of the next Offering Period for which it is to be effective. The Maximum Share Amount shall continue to apply with respect to all succeeding Offering Periods unless revised by the Committee as set forth above.
 
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(c) If the number of shares to be purchased on a Purchase Date by all Participants exceeds the number of shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Committee shall determine to be equitable. In such event, the Company will give written notice of such reduction of the number of shares to be purchased under a Participant’s option to each Participant affected.
(d) Any payroll deductions accumulated in a Participant’s account which are not used to purchase stock due to the limitations in this Section 10, and not covered by Section 9(e), shall be returned to the Participant as soon as administratively practicable after the end of the applicable Purchase Period, without interest (except to the extent required due to local legal requirements outside the United States).
11. Withdrawal .
(a) Each Participant may withdraw from an Offering Period under this Plan pursuant to a method specified by the Company. Such withdrawal may be elected at any time prior to the end of an Offering Period, or such other time period as specified by the Committee.
(b) Upon withdrawal from this Plan, the accumulated payroll deductions shall be returned to the withdrawn Participant, without interest, and his or her interest in this Plan shall terminate. In the event a Participant voluntarily elects to withdraw from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set forth in Section 6 above for initial participation in this Plan.
12. Termination of Employment . Termination of a Participant’s employment for any reason, including retirement, death, disability, or the failure of a Participant to remain an eligible employee of the Company or of a Participating Corporation, immediately terminates his or her participation in this Plan. In such event, accumulated payroll deductions credited to the Participant’s account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest (except to the extent required due to local legal requirements outside the United States). For purposes of this Section 12, an employee will not be deemed to have terminated employment or failed to remain in the continuous employ of the Company or of a Participating Corporation in the case of sick leave, military leave, or any other leave of absence approved by the Company; provided that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute. The Company will have sole discretion to determine whether a Participant has terminated employment and the effective date on which the Participant terminated employment, regardless of any notice period or garden leave required under local law.
 
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13. Return of Payroll Deductions . In the event a Participant’s interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall deliver to the Participant all accumulated payroll deductions credited to such Participant’s account. No interest shall accrue on the payroll deductions of a Participant in this Plan (except to the extent required due to local legal requirements outside the United States).
14. Capital Changes . If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then the Committee shall adjust the number and class of Common Stock that may be delivered under the Plan, the Purchase Price and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 1 and 10 shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.
15. Nonassignability . Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22 below) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect.
16. Use of Participant Funds and Reports . The Company may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be required to segregate Participant payroll deductions (except to the extent required due to local legal requirements outside the United States). Until Shares are issued, Participants will only have the rights of an unsecured creditor. Each Participant shall receive, or have access to, promptly after the end of each Purchase Period a report of his or her account setting forth the total payroll deductions accumulated, the number of shares purchased, the Purchase Price thereof and the remaining cash balance, if any, carried forward or refunded, as determined by the Committee in conformance with Section 9 of the Plan, to the next Purchase Period or Offering Period, as the case may be.
17. Notice of Disposition . Each U.S. taxpayer Participant shall notify the Company in writing if the Participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which such shares were purchased (the “ Notice Period ”). The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Company’s transfer agent to notify the Company of any transfer of the shares. The obligation of the Participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates.
18. No Rights to Continued Employment . Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to remain in the employ of the Company or any Participating Corporation, or restrict the right of the Company or any Participating Corporation to terminate such employee’s employment.
 
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19. Equal Rights And Privileges . All eligible employees granted an option under this Plan that is intended to meet the Code Section 423 requirements shall have equal rights and privileges with respect to this Plan or within any separate offering under the Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company or the Committee, be reformed to comply with the requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan.
20. Notices . All notices or other communications by a Participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
21. Term; Stockholder Approval . This Plan will become effective on the Effective Date. This Plan shall be approved by the stockholders of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board. No purchase of shares that are subject to such stockholder approval before becoming available under this Plan shall occur prior to stockholder approval of such shares and the Committee may delay any Purchase Date and postpone the commencement of any Offering Period subsequent to such Purchase Date as deemed necessary or desirable to obtain such approval (provided that if a Purchase Date would occur more than twenty-four (24) months after commencement of the Offering Period to which it relates, then such Purchase Date shall not occur and instead such Offering Period shall terminate without the purchase of such shares and Participants in such Offering Period shall be refunded their contributions without interest). This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board at any time pursuant to Section 25 below), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) the tenth anniversary of the first Purchase Date under the Plan.
22. Designation of Beneficiary.
(a) If provided in the subscription agreement, a Participant may file a written or electronic designation of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under this Plan in the event of such Participant’s death subsequent to the end of a Purchase Period but prior to delivery to him of such shares and cash. In addition, a Participant may file a written or electronic designation of a beneficiary who is to receive any cash from the Participant’s account under this Plan in the event of such Participant’s death prior to a Purchase Date. Such form shall be valid only if it was filed with the Company and/or the Third Party Administrator at the prescribed location before the Participant’s death.
 
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(b) Such designation of beneficiary may be changed by the Participant at any time by written notice filed with the Company at the prescribed location before the Participant’s death. In the event of the death of a Participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such Participant’s death, the Company shall deliver such cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or, if no spouse is known to the Company, then to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
23. Conditions Upon Issuance of Shares; Limitation on Sale of Shares . Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed, exchange control restrictions and/or securities law restrictions outside the United States, and shall be further subject to the approval of counsel for the Company with respect to such compliance. Shares may be held in trust or subject to further restrictions as permitted by any subplan.
24. Applicable Law . The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
25. Amendment or Termination . The Committee, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Committee, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of shares of Common Stock on the next Purchase Date (which may be sooner than originally scheduled, if determined by the Committee in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 14). If an Offering Period is terminated prior to its previously-scheduled expiration, all amounts then credited to Participants’ accounts for such Offering Period, which have not been used to purchase shares of Common Stock, shall be returned to those Participants (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable. Further, the Committee will be entitled to establish rules to change the Purchase Periods and Offering Periods, limit the frequency and/or number of changes in the amount withheld during a Purchase Period or an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the administration of the Plan, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s base salary or regular hourly wages, and establish such other limitations or procedures as the Committee determines in its sole discretion advisable which are consistent with the Plan. Such actions will not require stockholder approval or the consent of any Participants. However, no amendment shall be made without approval of the stockholders of the Company (obtained in accordance with Section 21 above) within twelve (12) months of the adoption of such amendment (or earlier if
 
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required by Section 21) if such amendment would: (a) increase the number of shares that may be issued under this Plan; or (b) change the designation of the employees (or class of employees) eligible for participation in this Plan. In addition, in the event the Committee determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Committee may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequences including, but not limited to: (i) amending the definition of Compensation, including with respect to an Offering Period underway at the time; (ii) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price; (iii) shortening any Offering Period by setting a Purchase Date, including an Offering Period underway at the time of the Committee action; (iv) reducing the maximum percentage of compensation a participant may elect to set aside as payroll deductions; and (v) reducing the maximum number of shares of Common Stock a Participant may purchase during any Offering Period. Such modifications or amendments will not require approval of the stockholders of the Company or the consent of any Participants.
26. Corporate Transactions . In the event of a Corporate Transaction (as defined below), each outstanding right to purchase Common Stock will be assumed or an equivalent option substituted by the successor corporation or a parent or a subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the purchase right, the Offering Period with respect to which such purchase right relates will be shortened by setting a new Purchase Date (the “ New Purchase Date ”) and will end on the New Purchase Date. The New Purchase Date shall occur on or prior to the consummation of the Corporate Transaction, and the Plan shall terminate on the consummation of the Corporate Transaction.
27. Definitions.
(a) “ Affiliate ” means (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.
(b) “ Board ” shall mean the Board of Directors of the Company.
(c) “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
(d) “ Common Stock ” shall mean the Class B common stock of the Company.
(e) “ Company ” shall mean Castlight Health, Inc., a Delaware corporation.
(f) “ Corporate Transaction ” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or (ii) the
 
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consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.
(g) “ Effective Date ” shall mean the date on which the Registration Statement covering the initial public offering of the shares of Common Stock is declared effective by the U.S. Securities and Exchange Commission.
(h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(i) “ Fair Market Value ” shall mean, as of any date, the value of a share of Common Stock determined as follows:
(i) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(ii) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) if such Common Stock is publicly traded but is neither quoted on the Nasdaq Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iv) with respect to the initial Offering Period, Fair Market Value on the Offering Date shall be the price at which shares of Common Stock are offered to the public by the Company’s underwriters pursuant to the Registration Statement covering the initial public offering of shares of Common Stock; and
(v) if none of the foregoing is applicable, by the Committee in good faith.
(j) “ Offering Date ” shall mean the first business day of each Offering Period. However, for the initial Offering Period the Offering Date shall be the Effective Date.
 
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(k) “ Offering Period ” shall mean a period with respect to which the right to purchase Common Stock may be granted under the Plan, as determined by the Committee pursuant to Section 5(a).
(l) “ Parent ” shall have the same meaning as “parent corporation” in Sections 424(e) and 424(f) of the Code.
(m) “ Participant ” shall mean an eligible employee who meets the eligibility requirements set forth in Section 4 and who is either automatically enrolled in the initial Offering Period or who elects to participate in this Plan pursuant to Section 6(b).
(n) “ Participating Corporation ” shall mean any Parent, Subsidiary or Affiliate that the Board designates from time to time as a corporation that shall participate in this Plan.
(o) “ Plan ” shall mean this Castlight Health, Inc. 2014 Employee Stock Purchase Plan.
(p) “ Purchase Date ” shall mean the last U.S. business day of each Purchase Period.
(q) “ Purchase Period ” shall mean a period during which contributions may be made toward the purchase of Common Stock under the Plan, as determined by the Committee pursuant to Section 5(b).
(r) “ Purchase Price ” shall mean the price at which Participants may purchase a share of Common Stock under the Plan, as determined pursuant to Section 8.
(s) “ Subsidiary ” shall have the same meaning as “subsidiary corporation” in Sections 424(e) and 424(f) of the Code.
 
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Castlight Health, Inc. (the “Company”)	  	U.S. Enrollment/Change Form	
	
2014 EMPLOYEE STOCK PURCHASE PLAN (“ESPP”)
(Capitalized terms not defined in this form shall have the meaning set forth in the ESPP.)	

SECTION 1:
ACTIONS	  	C HECK D ESIRED A CTION :
 
¨        Enroll in the ESPP
¨        Change Contribution Percentage
¨        Discontinue Contributions (withdrawal)	  	AND C OMPLETE S ECTIONS :
 
2 + 3 + 4 + 7
2 + 4 + 7
2 + 5 + 7	  		
			
SECTION 2:
PERSONAL DATA	  	Name:                                                                                                               
Home Address:                                                                                                 
____________________________________________________________
 
Social Security / Identification No.:                                                                	  	 
 
Department:
_____________	
		
SECTION 3:
ENROLL	  	I hereby elect to participate in the ESPP, effective at the beginning of the next Offering Period. I elect to purchase shares of the Common Stock of the Company subject to the terms and conditions of the ESPP and this Enrollment/Change Form (the “Enrollment/Change Form”). I understand that shares of Common Stock purchased on my behalf will be issued in street name and deposited directly into my brokerage account with [Broker] or its affiliates. I hereby agree to take all steps, and sign all forms, required to establish an account with [Broker] or its affiliates for this purpose.
 
My participation will continue as long as I remain eligible, unless I withdraw from the ESPP by filing a new Enrollment/Change Form with the Company. I understand that I must notify the Company of any disposition of shares of Common Stock purchased under the ESPP.	
		
SECTION 4:
ELECT CONTRIBUTION PERCENTAGE	  	I hereby authorize the Company to withhold from each of my paychecks __% of my Compensation (as defined in the ESPP) paid during such Offering Period as long as I continue to participate in the ESPP or otherwise instruct the Company by filing a subsequent Enrollment/Change Form. That amount will be applied to the purchase of shares of the Company’s Common Stock pursuant to the ESPP. The percentage must be a whole number (from 1%, up to a maximum of 15%).
 
If this is a change to my current enrollment, this represents an ¨ -increase ¨ -decrease to my contribution percentage.
 
Note: You may not increase your contribution at any time within a Purchase Period. You may decrease your contribution percentage to a percentage other than 0% only once within a Purchase Period to be effective during that Purchase Period. A change will become effective as soon as reasonably practicable after the form is received by the Company. An increase in your contribution percentage can only take effect with the next Offering Period .	

			
SECTION 5:
DISCONTINUE CONTRIBUTIONS	  	¨        I hereby elect to stop my contributions under the ESPP , effective as soon as reasonably practicable after this form is received by the Company.
 
Please ¨ -refund all contributions to me in cash, without interest OR ¨ - use my contributions to purchase shares on the next Purchase Date. I understand that I cannot resume participation until the start of the next Offering Period and must timely file a new enrollment form to do so.	
		
SECTION 6:
ELECTRONIC DELIVERY AND ACCEPTANCE	  	The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the ESPP by electronic means. I hereby consent to receive such documents by electronic delivery and agree to participate in the ESPP through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.	
		
SECTION 7:
ACKNOWLEDGMENT AND SIGNATURE	  	I understand that this Enrollment/Change Form will remain in effect throughout successive offering periods unless terminated by me or I become ineligible to participate in the ESPP.
 
I acknowledge that I have received a copy of the ESPP and of the Prospectus (which summarizes the major features of the ESPP). I have read the ESPP and the Prospectus and my signature below (or my clicking on the Accept box if this is an electronic form) indicates that I hereby agree to be bound by the terms of the ESPP and this Enrollment/Change Form.
Signature:                                                                                                                     Date:                     	

***Confidential Treatment Requested. Certain omitted portions of this exhibit have been filed with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 promulgated under the Securities Act of 1933.
Exhibit 10.11
MASTER SERVICES AGREEMENT
This Master Services Agreement (“MSA”) is effective as of November 28, 2012 (“Effective Date”), by and between Castlight Health, Inc., a Delaware corporation located at 685 Market Street, Suite 300, San Francisco, CA 94105 (“Castlight”) and the Administrative Committee of the Wal-Mart Stores, Inc., Associates’ Health and Welfare Plan (“Plan”), located at 508 SW 8 th Street, Bentonville, AR 72716-3500 (“Customer”).
RECITALS
A. WHEREAS, Castlight provides web-based and other services that provide health care cost and transparency to users.
B. WHEREAS, Customer desires to enter into this MSA and related attachments, addenda, Service Addendums (as defined below) and exhibits, collectively the “Agreement” to set forth the terms and conditions upon which Castlight shall provide certain services to or on behalf of Customer, and Castlight desires to provide such services under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the parties agree as follows:
ARTICLE 1. DEFINITIONS
1.1 “Castlight Platform” means Castlight’s proprietary technology platform and system (including without limitation software, algorithms and proprietary and technical information therein) for gathering, analyzing, modifying and making available to its users certain health-related user and provider data and related information, guidance and services.
1.2 “Castlight Service” means services that Castlight provides using the Castlight Platform which are more fully described in the applicable Service Addendum.
1.3 “Data” means the following categories of data or information: (i) User Data, (ii) Customer Data, and (iii) TPA(s) Data.
1.4 “Employee User” means each Customer employee who meets the Eligibility Criteria to participate in or be provided the Castlight Service, as defined in the applicable Service Addendum.
1.5 “TPA” means any third party administrator designated by Customer which may include ***, which are Customer’s third party administrators of health services, including physician network management, as of the Effective Date.
1.6 “TPAs Data” means data provided by the TPAs on behalf of the Customer such as, but not limited, to formulary data, provider directories, network data, national pre-authorization procedures, clinical policy bulletins and proprietary rate tables as agreed to by the TPAs.
1.7 “New Data” means (a) a modified version of User Data or Customer Data or (b) new data created with reference to User Data or Customer Data, in each case whether through aggregation, cleansing, scrubbing, reverse engineering, extraction or other means, such that (i) with respect to modified User Data or new data created with reference thereto, the applicable User has been de-identified in accordance with 45 CFR section 164.514, as applicable and (ii) with respect to modified Customer Data or new data created with reference thereto, Customer has been de-identified in accordance with 45 CFR section 164.514, as applicable.

1.8 “Customer Data” means data specific to Customer provided by or on behalf of Customer to Castlight, such as, but not limited to, Summary of Plan Design and medical and claims histories.
1.9 “Services” means (a) the Castlight Service, and (b) the Other Services (as defined in the applicable Service Addendum).
1.10 “Providers” means certain third parties that provide services to Customer, such as employee benefits portals, and in connection with such provision of services to Customer will be providing information to Castlight in connection with this Agreement.
1.11 “User” means Employee Users and Adult Dependent Users.
1.12 “User Data” means demographic and other User-specific information and data, whether or not such information or data is Protected Health Information (as defined in the Business Associate Agreement between Castlight and Customer dated September 20, 2012 (the “BAA”)). User Data includes, without limitation, each Employee User’s name, address, dependent information, claims histories and explanations of benefits.
1.13 “Launch Date” shall have the same meaning as such term is defined in the First Services Addendum executed between Castlight and the Plan, dated of even date hereof (the “First Services Addendum”).
ARTICLE 2. SERVICES.
The specific Services to be provided and related terms and conditions shall be specified in writing (each such writing, a “Service Addendum”). Each Service Addendum shall (a) be signed by an authorized representative of each party; (b) include the applicable term, the description of Services to be performed, the responsibilities of the parties, compensation and payment terms and any additional terms and conditions as needed; (c) be subject to all of the terms and conditions of this MSA and the BAA. The terms and conditions of the MSA and the BAA shall control in the event of a conflict with the Service Addendum, except to the extent that the applicable Service Addendum expressly states that it supersedes this MSA.
ARTICLE 3. TERM AND TERMINATION
3.1 Term . The initial term of this Agreement (the “Initial Term”) commences on the Effective Date and continues until December 31, 2015. (The Initial Term is also referred to as the “Term.”) This Agreement may be terminated during the Term as provided below in Section 3.2 and Section 3.3.
3.2 Termination for Cause . Either party may terminate this Agreement at any time during the Term: (a) immediately for a material breach of this Agreement by the other party unless such material breach is cured within such 30 day period; or (b) immediately if the other party becomes the subject of a petition in bankruptcy or any other proceeding relating to insolvency, receivership, liquidation or assignment for the benefit of creditors.
3.3 Termination without Cause.
 
 	(a)	Termination *** . Upon the effective date of such termination, Castlight shall immediately cease work on the effective Service Addendum(s) and deliver to Customer all Services	
 
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 	performed to date of termination. In the event ***, Customer shall pay Castlight a fee to allow Castlight the recover a portion of the costs it has incurred (e.g., software, hardware, IT infrastructure, engineering resources, management resources, new hires, training, increased third party vendor costs) in anticipation of providing services under this Agreement. The fee shall be equal to the ***. Castlight represents that the fee will not exceed *** under this Agreement.	
 
 	(b)	Termination after First Contract Year . Upon written notice to Castlight, at any time during any Term subsequent to the First Contract Year, Customer may terminate this Agreement *** prior written notice. Upon the effective date of such termination, Castlight shall immediately cease work on the effective Service Addendum and deliver to Customer all Services performed to date of termination. In the event of such termination, Customer shall only be responsible for the payment of fees described in Section 3.4.	
3.4 Effect of Expiration or Termination . Upon expiration or termination of this Agreement (a) Castlight shall have no further obligation to perform the Services and shall cease performing the Services; (b) neither party shall be relieved from any obligation accrued up to and including the date of such expiration or termination nor deprived of any right or remedy otherwise available to it hereunder; (c) within 30 days Customer will pay Castlight for all Services performed. Article 4 (including the sections of any Service Addendum regarding payment obligations), Article 6, Section 7.1 (except Customer shall have no further obligation under Section 7.l(b)), Article 8 (except for Section 8.1), Article 9 and those provisions of any Service Addendum that survive such expiration or termination as specified in such Service Addendum shall survive any termination or expiration of this Agreement.
ARTICLE 4. FEES, PAYMENT AND PAYMENT TERMS
4.1 Service Fees, Invoicing and Payment Terms . Castlight’s compensation and payment for the Services and the applicable invoicing and payment terms shall be as set forth in the applicable Service Addendum.
4.2 Taxes . Castlight’s fees do not include any taxes, levies, duties or similar governmental assessments of any nature, including but not limited to value-added, sales and use, or withholding taxes, assessable by any local, state, provincial, federal or foreign jurisdiction (collectively, “Taxes”). Customer is responsible for paying all Taxes associated with its purchases hereunder. If Castlight has the legal obligation to pay or collect Taxes for which Customer is responsible under this Section 4.2, the appropriate amount shall be invoiced to and paid by Customer.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1 By Both Parties . Each party represents and warrants to the other party that: (a) it has all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder and (b) by entering into this Agreement, including any Service Addendum, it does not and will not violate or constitute a breach of any of its contractual obligations with third parties.
5.2 By Castlight . Castlight represents and warrants to Customer that (a) Castlight shall properly supervise all persons performing Services and shall require that all such persons comply with the applicable terms of this Agreement, including any applicable Service Addendum and the BAA; (b) to
 
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Castlight’s knowledge as of the Effective Date, the Castlight Platform does not infringe any registered U.S. copyright, patent or trademark of any third party; and (c) Castlight will perform the Services in a professional manner, and such Services will comply in all material respects with the descriptions set forth in the applicable Service Addendum, subject to the terms and conditions thereof.
5.3 DISCLAIMER . EXCEPT FOR THE EXPRESS LIMITED WARRANTIES SET FORTH IN SECTIONS 5.1 AND 5.2, CASTLIGHT MAKES NO WARRANTY IN CONNECTION WITH THE SUBJECT MATTER OF THE AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE SERVICES AND THE CASTLIGHT PLATFORM) AND HEREBY DISCLAIMS ANY AND ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING ALL IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE, REGARDING SUCH SUBJECT MATTER.
ARTICLE 6. CONFIDENTIAL INFORMATION. (a) Both Parties acknowledge that either party may receive (the “Receiving Party”) Confidential Information (as defined hereinafter) from the other Party (the “Disclosing Party”) during the Term of this Agreement and such Confidential Information will be deemed to have been received in confidence and will be used only for the purposes of this Agreement. The Receiving Party shall use the Disclosing Party’s Confidential Information only to perform its obligations under this Agreement and disclose the Disclosing Party’s Confidential Information only to the Receiving Party’s personnel having a need to know the information for the purpose of this Agreement; provided that Customer acknowledges that certain Confidential Information is disclosed to users of the Services as necessary to provide the Services. The Receiving Party shall treat the Confidential Information as it does its own valuable and sensitive information of a similar nature and, in any event, with not less than a reasonable degree of care. Upon the Disclosing Party’s written request, the Receiving Party shall return or certify the destruction of all Confidential Information, and the obligation of confidentiality shall continue for three (3) years from the expiration or termination of this Agreement except as noted below in Section 6(a)(i) and 6(a)(ii); provided however, the parties agree and acknowledge that it will be infeasible for Castlight to return or destroy PII (as defined below) related to a User that has requested Customer retain information related to such User; and PII stored on encrypted back-up tapes that are stored in a secure location; provided further, however, the Receiving Party shall keep (i) any personally identifiable information and personal health information as defined in 45 CFR section 160.l03 (collectively, “PII”) confidential in perpetuity; and (ii) any trade secrets of the Disclosing Party confidential as long as such information is deemed a trade secret. (b) The term “Confidential Information” includes, without limitation, (i) PII; (ii) all information communicated by the Disclosing Party that should reasonably be considered confidential under the circumstances, notwithstanding whether it was identified as such at the time of disclosure; (iii) all information identified as confidential to which Receiving Party has access in connection with the subject matter hereof, whether before or after the Effective Date; and (iv) this Agreement and shall include without limitation, (A) all trade secrets, (B) existing or contemplated products, services, designs, technology, processes, technical data, engineering techniques, methodologies and concepts and any information related thereto, and (C) information relating to business plans, sales or marketing methods and customer lists or requirements. (c) The obligations of either Party under this Article 6 will not apply to information that the Receiving Party can demonstrate (i) was in the possession at the time of disclosure and without restriction as to confidentiality; (ii) at the time of disclosure is generally available to the public or after disclosure becomes generally available to the public through no breach of agreement or other wrongful act by the Receiving Party; provided, however, the Receiving Party remains subject to confidentiality obligations regardless of its availability to the public or availability through unauthorized disclosure; (iii) has been received from a third party without restriction on disclosure and without breach of agreement or other wrongful act by the Receiving Party; or (iv) is independently developed by the Receiving Party without regard to the Confidential Information of the other party. (d) In the event the Receiving Party is required by law, regulation, stock exchange requirement or legal process to disclose any of the Confidential Information, the Receiving Party agrees
 
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to (i) give Disclosing Party, to the extent possible, advance notice prior to disclosure so the Disclosing Party may contest the disclosure or seek a protective order, and (ii) limit the disclosure to minimum amount that is legally required to be disclosed.
ARTICLE 7. INTELLECTUAL PROPERTY AND DATA RIGHTS
7.1 Improvements and Feedback . Castlight will exclusively own all right, title and interest in and to (a) the Castlight Platform and to the Castlight Service; (b), any improvements, enhancements, derivative works, modifications, additional modules or features to or for the Castlight Platform or the Castlight Service developed or created during the Term, whether created or developed solely or jointly by or for the parties or any User; and (c) all intellectual property rights in the foregoing. Castlight will exclusively own all right, title and interest in and to any feedback, ideas, suggestions or information that Customer provides relating to the Castlight Service or the Castlight Platform, including all intellectual property rights therein.
7.2 Access and Use of Data . Customer will provide, or direct the TPA(s) and/or Providers to provide, Data to Castlight for Castlight’s performance of the Services. Castlight may access, reproduce, modify and prepare derivative works of, aggregate, analyze, cleanse, scrub, reverse engineer, distribute, display, present and otherwise use Data as reasonably necessary for the purposes of performing and providing Services. Customer shall ensure that (i) all information that Customer provides to Castlight, including but not limited to eligibility files, is authentic, accurate, reliable, complete and confidential and (ii) Castlight may use such information in accordance with the terms of this Agreement without violating or infringing any third party rights. Customer’s security measures shall include, but are not limited to: (a) maintaining, and requiring agents and subcontractors to maintain, administrative, technical and physical safeguards to protect the security, integrity and confidentiality of data provided to Castlight, including up-to-date and anti-virus software; (b) not accessing or using the electronic systems of Castlight for any purpose that is illegal or unauthorized; and (c) maintaining and enforcing security management policies and procedures and utilizing mechanisms and processes to prevent, detect, record, analyze, contain and resolve unauthorized access attempts and for periodically reviewing its processing infrastructure for potential security vulnerabilities. Castlight is entitled to rely on the information submitted by the Customer and TPA(s) unless Castlight knew or should have known the information was erroneous.
7.3 Ownership . As between the parties (a) Customer shall own all rights, title and interest in and to any and all Customer Data and (b) Castlight shall own all rights, title and interest in and to any and all New Data.
7.4 Effect of Termination on Data Rights . Castlight will, within ninety (90) days after written request by Customer, purge all Customer Data received from the Customer except (a) to the extent a User has requested that Castlight retain information related to such User or (b) stored on encrypted back-up medium that are stored in a secure location; provided, however Castlight will not be required to purge any New Data and will, at all times, be free to use such New Data for any purpose without restriction of any kind.
 
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ARTICLE 8. INSURANCE, INDEMNIFICATION AND LIMITATIONS OF LIABILITY
8.1 Insurance . During the Term of this Agreement and for a period of 3 years following the expiration or termination, Castlight shall obtain and maintain a policy or policies of liability insurance covering Castlight’s obligations under this Agreement to include (i) commercial general liability insurance, (ii) workers’ compensation insurance as required by applicable law; (iii) insurance covering intellectual property infringement; and (iv) professional liability insurance protecting Castlight and Customer from errors and omissions of Castlight in connection with the performance of Services. All such insurance required herein shall be with companies and in amounts reasonably acceptable to Customer (and Customer acknowledges that Castlight’s existing insurance amounts and companies are acceptable) and the coverage thereunder may not be reduced or canceled without Customer’s prior written consent. All insurance shall be primary and not contributory with regard to any other available insurance to Customer. All insurance shall be written by companies with a BEST Guide rating of B+ VII or better. Certificates of insurance (or copies of policies) shall be furnished to Customer upon Customer’s request. All such policies shall include Customer as an additional insured and contain a waiver of subrogation. Such policy(ies) shall have a minimum coverage of $*** per occurrence and in the aggregate.
8.2 Indemnity by Castlight . Castlight agrees to defend, indemnify and hold harmless Customer, its directors, officers, employees and agents for that portion of any loss, liability, damage, expense, settlement, cost or obligation (including court costs and reasonable attorneys’ fees) arising from third party claims of Castlight’ s actual or alleged (a) negligence, or willful or criminal misconduct; (b) material breach of this Agreement; or (c) misrepresentation or fraud related to or arising out of the Services and/or Castlight’s performance of the Services.
8.3 Indemnity by Customer . Customer agrees to defend, indemnify and hold harmless Castlight, its directors, officers, employees and agents for that portion of any loss, liability, damage, expense, settlement, cost or obligation (including court costs and reasonable attorneys’ fees) arising from third party claims of Customer’s actual or alleged (a) negligence or willful or criminal misconduct; (b) material breach of this Agreement; or (c) misrepresentation or fraud related to or arising out of the performance of this Agreement.
8.4 Limitation of Liability . NEITHER CUSTOMER NOR CASTLIGHT SHALL BE LIABLE TO THE OTHER UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER, REGARDLESS OF W HETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS SECTION SHALL LIMIT THE ABILITY OF EITHER PARTY TO OBTAIN DAMAGES THAT FULLY COMPENSATE SUCH PARTY FOR ACTUAL LOSSES, FINES, PENALTIES AND REASONABLE ATTORNEY’S FEES OR OTHER COSTS OR TO OBTAIN AN Y RELIEF PROVIDED UNDER ***. THE LIMITATIONS SPECIFIED IN THIS SECTION 8.4 WILL SURVIVE AND APPLY EVEN IF ANY LIMITED REM EDY SPECI FIED IN THIS AGREEMENT IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE. THE FOREGOING SHALL NOT LIMIT CUSTOMER’S PAYMENT OBLIGATIONS UNDER THIS AGREEMENT OR ANY SERVICE ADDENDUM.
ARTICLE 9. MISCELLANEOUS
9.1 Complete Agreement . This Agreement, including all exhibits and addenda hereto, sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals, representations or understandings between them, written or oral, concerning such subject matter. No waiver or modification of any provision of this Agreement may be made unless by a written instrument duly executed by both parties. Any waiver or breach of any term or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term or condition.
 
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9.2 Assignment . Neither Customer nor Castlight may assign this Agreement, or any rights, duties or obligations contained herein, to any other person, firm, corporation or other business entity without the prior written consent of the other party except that this Agreement may be assigned by either party to any of its parent, subsidiary or affiliate organizations or any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business assets which assignment shall be subject to the other party’s prior written consent, which consent shall not be unreasonably withheld or delayed. Any assignment in violation of this Section 9.2 shall be void and of no force or effect. If Customer consents to any assignment, Castlight shall remain liable for the action of any party to whom Castlight assigns this Agreement, or its rights or obligations. If Castlight subcontracts any of its obligations under this Agreement, it shall be fully responsible for the performance of its subcontractors as if they were employees.
9.3 Notices . All notices and other communications required or permitted under this Agreement shall be in writing, served personally on, delivered by recognized overnight courier or mailed by certified or registered United States mail to, the party to be charged with receipt thereof at the address first listed above. Notices and other communications served by mail shall be deemed given hereunder 72 hours after deposit of such notice or communication in the United States Post Office as certified or registered mail with postage prepaid and duly addressed to whom such notice or communication is to be given. All other notices shall be deemed given hereunder upon actual receipt. Any such party may change said party’s address for purposes of this Section by giving to the parties intended to be bound thereby, in the manner provided herein, a written notice of such change.
9.4 Severability . All Sections, clauses thereof and covenants contained in this Agreement are severable, and in the event any of them shall be held to be invalid by any court, this Agreement will remain in full force and effect, such Sections, clauses or covenants will be deemed stricken and the remaining provisions will not be affected or impaired and will be interpreted as if such invalid Sections, clauses or covenants were not contained herein.
9.5 Applicable Law and Waiver of Jury Trial . This Agreement is made and shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. Each party waives any right to jury trial in connection with any dispute arising out of or concerning the Agreement.
9.6 Relationship of Parties . The parties are independent contractors. This does not create a partnership, joint venture, franchise, agency, fiduciary or employment relationship between the parties.
9.7 Attorneys’ Fees . If any action at law or in equity is necessary to enforce the terms of the Agreement, the substantially prevailing party will be entitled to reasonable attorneys’ fees, costs and expenses in addition to any other relief to which such prevailing party may be entitled.
9.8 Force Majeure . Neither party shall be responsible or liable to the other party for nonperformance or delay in performance of any terms or conditions of this Agreement (except payment obligations) due to acts of God, acts of governments, wars, riots, strikes or other labor disputes, fire, flood, or other causes beyond the reasonable control of the nonperforming or delayed party and without the negligence of such party, provided, however, nonperformance or delay in excess of one hundred eighty (180) days shall constitute cause for termination of this Agreement by either party. Castlight shall maintain disaster back­up plans and procedures as reasonably necessary to minimize the interruption of its services to be provided to the Customer pursuant to this Agreement.
 
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9.9 Audit . Once in each 12 month period and upon at least 10 days prior written notice, Castlight shall allow Customer or its duly authorized representative (at Customer’s sole cost and expense), the right during the Term of this Agreement and for two (2) years after its termination or expiration to conduct in a manner that does not unreasonably interfere with Castlight’s business further full and independent audits and investigations during normal business hours of (i) Castlight’s business; and (ii) all information, books, records and accounts, including, but not limited to, wages due to individuals performing Services under this Agreement, taxes, including unemployment, income and social security, which are due, may be payable, or may otherwise be required to be withheld from wages (but subject to Castlight’s obligations of confidentiality to third parties). Castlight shall keep accurate and complete accounts and time records related to this Agreement.
9.10 Publicity and Use of Trademarks . Neither party shall use the name, logo, trademarks or trade names of the other party in publicity releases, promotional material, customer lists, advertising, marketing or business-generating efforts whether written or oral, without obtaining that party’s prior written consent, which consent shall be given at its sole discretion.
9.11 Headings . The headings of this Agreement are intended solely for convenience of reference and shall be given no effect in the interpretation or construction of this Agreement.
9.12 Counterparts . The Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this MSA to be duly executed as of the date(s) set forth below to be effective as of the Effective Date.
ACCEPTED AND AGREED TO FOR:

CASTLIGHT HEALTH, INC.	 		 	ADMINISTRATIVE COMMITTEE OF THE WAL-MART STORES, INC. ASSOCIATES’ HEALTH AND WELFARE PLAN	
					
By:	 	/s/ Randall J. Womack	 		 	By:	 	/s/ Illegible	
					
Its:	 	COO	 		 	Its:	 	11/29/12	
					
Date:	 	11/26/12	 		 	Date:	 	 	
 
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FIRST SERVICE ADDENDUM, aka Statement of Work
This First Service Addendum (this “First Addendum”), aka Statement of Work, is made and entered into by and between the Administrative Committee of the Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan (“Plan”) located at 508 SW 8 th Street, Bentonville, AR 72716-3500 (“Customer”) and Castlight Health, Inc. (“Castlight”), to be effective as of the same date as that certain Master Services Agreement dated November 28, 2012, entered into by the parties (the “MSA,” and collectively with its attachments, addenda and exhibits, the Business Associate Agreement and this First Addendum, the “Agreement”) to which this First Addendum is attached and incorporated. All capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Agreement.
Recitals
 
 	A.	WHEREAS, the Plan is sponsored by Wal-Mart Stores, Inc. (“Wal-Mart”) and governed under the Employee Retirement Income Security Act of 1974, as amended.	
 
 	B.	WHEREAS, the benefit program offered under the Plan is available to covered associates and their dependents as defined below.	
1. DEFINITIONS. For purposes of this First Addendum, unless otherwise agreed by the parties in writing:
 
 	a.	“Eligibility Criteria” means,	
 
 	(i)	a Wal-Mart employee for whom *** acts as the third party administrator (“TPA”) as of the Effective Date (“*** Employee User”) and an Adult Dependent User for whom *** acts as TPA as of the Effective Date (“*** Adult Dependent User”) as identified by Castlight based on information provided by Customer to Castlight (*** Employee Users and *** Adult Dependent Users collectively “*** Users”);	
 
 	(ii)	a Wal-Mart employee for whom *** acts as TPA as of the Effective Date (an “*** Employee User”) and an Adult Dependent User for whom *** acts as TPA as of the Effective Date (“*** Adult Dependent User”) as identified by Castlight based on information provided by Customer to Castlight (*** Employee User and *** Adult Dependent User collectively “*** Users”);	
 
 	(iii)	a Wal-Mart employee for whom *** acts as TPA as of the Effective Date (“*** Employee User”) and an Adult Dependent for whom *** acts as TPA as of the Effective Date (“*** Adult Dependent User”) as identified by Castlight based on information provided by Customer to Castlight (*** Employee Users and *** Adult Dependent Users collectively “*** Users”).	
 
 	b.	“Launch Date” means the day immediately following the day Castlight delivers notice that implementation is complete for Castlight Service for the *** Users and *** Users and the Castlight Service (and to *** Users subject to Section 2.d below). Customer agrees that its purchases hereunder are neither contingent on the delivery of any future functionality or features nor dependent on any oral or written public comments made by Castlight regarding future functionality or features. The Launch Date is currently targeted for April 1, 2013.	
 
 	c.	“*** Launch Date” means the day immediately following the day Castlight delivers notice that (a) *** has provided Castlight sufficient data for Castlight to provide the Castlight Service (as defined below) and (b) that implementation is complete for ***	
 
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 	Users of such full Castlight Service. The *** Launch Date is the date that the full Castlight Service is available to be rolled out to *** Users. The *** Launch Date will be determined in accordance with this First Addendum.	
 
 	d.	“User” means an *** User, an *** User and a *** User.	
 
 	e.	“Adult Dependent User” means a person that is an adult dependent of an Employee User or is an adult otherwise eligible to receive health care coverage through an Employee User under the applicable rules of the Plan.	
 
 	f.	“Uptime” shall mean all times when the Castlight Service is running and is available to be accessed by Users as measured by the site monitoring software operated by Castlight (the “Monitoring Software”).	
 
 	g.	“Available Time” shall mean the number of hours in any given month less the amount of Downtime related to events outside of Castlight’s control such as force majeure events, Standard Maintenance Windows, Emergency Maintenance Windows, internet-wide disruptions, denial of service attacks.	
 
 	h.	“Downtime” shall mean all times in which the Castlight Service fails HTTP checks, content verification checks and a service check as measured by the Monitoring Software.	
 
 	i.	“Standard Maintenance Window” consists of a weekly maintenance hour between 10:00 p.m. and 2:00 a.m. Pacific Time every second and fourth Friday of each month or at such other time on Saturday or Sunday as may be scheduled from time to time with ten day prior notice to Customer.	
 
 	j.	“Emergency Maintenance Window” means emergency updates as result of vendor recommended patches to deal with high risk security threats as well as hardware replacement, which maintenance Castlight will use commercially reasonable efforts to perform maintenance during periods of low usage (such as evenings) and to promptly notify Customer of emergency maintenance.	
 
 	k.	“Other Services” means the implementation services and premium communication services more fully described in Section 3 and Section 4 below.	
2. CASTLIGHT SERVICE. During the term of this First Addendum, Castlight will use commercially reasonable efforts to provide Users with the services described in Section 2a, 2b, 2c, 2d and 2e (collectively, the “Castlight Service”), a healthcare navigation service that uses the Castlight Platform to bring price and quality transparency to Users. The Castlight Service is intended to help Users answer basic questions about their healthcare costs, quality of providers and plan benefits by showing them past care expenses, medical policy information, past savings opportunities and estimated prices for providers/services they are considering. The Castlight Service will be comprised of the following:
a. Castlight’s Online Service : Commencing with the Launch Date, Castlight will allow Users access to the online portion of the Castlight Service (the “Online Service”). Commencing with the Launch Date, the Online Service will include the functionality detailed below. Castlight will provide Customer advance written notice of any material changes to the functionality described below will have an impact on User functionality or an impact on the manner in which TPAs interface with the Castlight Platform or assist in the delivery of Castlight Service, including but not limited to Customer claims feed described in Section 3(d), services related to provider directories as described in Section 3(e) and services related to the provision of Accumulator Data described in Section 3(h), provided that no change in functionality shall, at the Customer’s sole determination, adversely affect the functionality of the Castlight Service that existed as of the Launch Date:
i. User Account Management features:
 
 	•	 	User registration	
 
 	•	 	User password change/reset	
 
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 	•	 	User e-mail address change	
 
 	•	 	User communication opt out options	
ii. Past care features:
 
 	•	 	History of past medical services with costs	
 
 	•	 	Cost detail for past medical services	
 
 	•	 	Periodic email notices for claims activity	
 
 	•	 	Out of network alerts	
iii. Insurance plan and coverage features:
 
 	•	 	Key medical policy features	
 
 	•	 	Accumulator snapshots	
iv. Prospective services search features:
 
 	•	 	Provider and services search box	
 
 	•	 	Out-of-pocket estimates for select inpatient and outpatient services/providers (list of supported inpatient and outpatient services is at the discretion of Castlight and may vary over time or by geography)	
 
 	•	 	Sort results by out of pocket costs and distance	
 
 	•	 	Care synonyms, spelling correction and other tools to make search intuitive	
 
 	•	 	Detailed provider information (e.g. languages spoken, schooling) for select providers	
 
 	•	 	Detailed explanation and educational content on pricing and/or coverage for select outpatient services	
 
 	•	 	Consumer ratings	
v. Online support features:
 
 	•	 	“Ask Castlight” support feature	
 
 	•	 	Toll-free support number	
vi. Security features:
 
 	•	 	Secure platform	
 
 	•	 	HIPAA compliant	
vii. Mobile platform providing access to certain features via mobile devices:
 
 	•	 	Apple iPhone app	
 
 	•	 	Google Android app	
 
 	•	 	Mobile web application	
viii. Pharmacy services: subject to *** agreement with Castlight, an integration of ***s web site that includes links to the certain pages via single sign on technology which may include:
 
 	•	 	Claims History	
 
 	•	 	Search Results	
 
 	•	 	Financial savings opportunities	
b. Castlight User support: Online and phone support in English for registered Users, 7AM – 8PM Central Time, in the following areas: (i) technical support including password reset, bug reporting; (ii) clarification support including answering questions to increase health literacy and explanation of how to use the Online Service; and (iii) shopping support including guiding Users on searching for outpatient providers/services and how to interpret search results. For purposes of this performance standard, the call center shall be deemed not available during Castlight Support’s hours of operation (hereinafter, “downtime”) whenever callers receive a busy signal, there is no answer to a telephone call, or the telephone call is answered by voicemail during Castlight’s hours of operation and there is no option for the caller to speak to a customer service representative.
 
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c. Basic reporting services: Castlight standard reporting, as enhanced by Castlight from time to time, which shall include quarterly reporting on utilization of the Castlight Service related to registration, engagement, search activity, spend and support utilization.
d. Castlight Service for *** Users . For *** Users, on the Launch Date Castlight will offer the Castlight Service, provided that the Online Service portion of such Castlight Service offered to *** Users shall not include certain functionality set forth in Section 2.a above, including but not limited to Past Care Features (Section 2.a.ii above). Notwithstanding the foregoing, upon the *** Launch Date, *** Users will receive the full Castlight Service as outlined in Sections 2.a, 2.b, 2c and 2.e.
e. Centers of Excellence Support . Castlight will support the selection of Customer’s Centers of Excellence providers through display in the Castlight Platform according to established quality parameters for Centers of Excellence providers. In addition, Castlight will support the evaluation of providers based on such parameters in order to determine if they meet quality expectations for the Centers of Excellence program .
3. IMPLEMENTATION SERVICES. During the term of this First Addendum, Castlight will also use commercially reasonable efforts to provide related implementation services described below, which, for purposes of this First Addendum, will be deemed the Implementation Services. The Implementation Services will be comprised of the following:
a. Eligibility feeds: Set up a Customer feed so that Castlight can receive User Eligibility Criteria information;
b. Email feeds : Set up a Customer feed so that Castlight can maintain a set of current email addresses to send alert notifications and other product updates;
c. Benefits Information : Customer shall provide all Plan information, open enrollment materials and TPA key contacts;
d. Customer Claims Feed : Set up *** and *** feeds to enable regular imports of Plan’s claims information into the Castlight Platform;
e. Provider directories : Set up monthly TPA feed to provide Castlight with a monthly provider directory;
f. Customer support plan: Co-develop a Customer support plan (e.g. who handles what calls); and
g. Testing plan: Co-develop an integration testing plan for the Castlight Service.
h. Accumulator Data . Set up a feed from each TPA (or the clearinghouse used by such TPA) for Customer’s Accumulator Data (defined as information provided in the form of HIPAA 270/271 transaction data for use by Castlight in identifying deductible accumulations and other information necessary for Castlight’s display of out-of-pocket cost estimates to Users as part of the Castlight Services).
4. PREMIUM COMMUNICATION SERVICES. The following “premium” communication services or their equivalents:
(a) co-development of a comprehensive marketing and communications plan;
 
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(b) development of a personnel manager communications toolkit including all required copyrighting and design of print and on-line collateral;
(c) development and execution of regional WebEx training sessions for personnel managers;
(d) development of comprehensive on-line communications collateral for Customer benefits portal and intranet sites;
(e) customization of Customer specific communications microsite, incorporating the Customer logo, Customer-specific home page messaging, and Customer-specific support phone number;
(f) design and execution of print or on-line collateral specific to the needs of home office, distribution, and trucking locations including podcasts, newsletter articles, and digital collateral;
(g) full design and execution for three communications pilots to test the effectiveness of home print, employee incentives, and manager incentives, as well as similar design and execution for up to three follow­ on pilot expansions;
(h) monthly management reporting on engagement and end user success stories;
(i) e-mail invitations for Users to register for the Online Service;
(j) translation of any requested communications pieces to Spanish;
(k) generation and sending of e-mail marketing communications;
(l) tracking of Castlight-generated e-mail marketing campaigns;
(m) in-product training materials (e.g. a product tour) for all Users;
(n) quarterly User surveys;
(o) ongoing communications to Users regarding changes/upgrades to the Online Service, health care consumerism education, user feedback surveys, and other related topics;
(p) up to 24 graphically designed in-application targeted messages;
(q) full project management of Castlight-related communications including weekly check-in calls;
(r) up to four on-site meetings annually including store and distribution center visits, and attendance at annual shareholders meeting and annual internal managers meeting;
(s) annual refresh of all appropriate communications in advance of annual enrollment; and
(t) full participation and collaboration in including appropriate messaging regarding Castlight in all other benefits communications. Customer acknowledges that Castlight will host the microsite referenced in section 4.e above under a Customer specific public URL for the benefit of Customer and Customer grants Castlight license to use Customer’s name and logo on such microsite.
 
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5. SERVICE EXCLUSIONS. Subject to change from time to time at the sole discretion of Castlight, except as specifically set forth above the Castlight Service and the Other Services do not include the following:
(a) prospective search and out of pocket cost information for dental, vision or other non-outpatient services and certain inpatient and outpatient procedures;
(b) additional customizations of the Online Service;
(c) customized reporting or data analytics;
(d) additional communications or training;
(e) additional Customer support services (e.g. claims dispute resolution);
(f) supporting a change in Customer’s third party administrator from the TPA to another party;
(g) supporting the addition of other third party administrators beyond the TPAs named in Section 1.4 of the MSA;
(h) supporting data feeds in addition to the data feed from the TPAs; and
(i) provision of the Castlight Service to persons other than Users. Provision of any of these additional services to persons other than Users will require a separate Service Addendum, including terms and conditions and additional associated service fees to be mutually agreed by the parties.
6. PROJECT STAFF.
 
 	a.	Castlight will provide the following resources prior to launch:	
 
 	1.	Implementation Manager;	
 
 	11.	Marketing/Communications lead;	
 
 	iii.	Legal/Finance resources to support scoping and contracting;	
 
 	iv.	Staff as needed to detail and execute technical work; and	
 
 	v.	Leadership support.	
 
 	b.	Customer will similarly commit the following resources:	
 
 	1.	Implementation Project Manager;	
 
 	ii.	Business Development/Legal resource to support scoping and contracting;	
 
 	111.	IT/Delivery staff as needed for integration, data feeds, etc.; and	
 
 	iv.	Leadership support.	
7. UPTIME COMMITMENT. Castlight warrants to Customer that each month Uptime shall constitute at least 99.9% of Available Time for the Castlight Service (“Service Level Warranty”). If Castlight breaches the Service Level Warranty (as confirmed by the Monitoring Software), Castlight will issue a credit against the next invoice payable by Customer (and if no further invoices are due, Castlight will pay Customer the amount of the credit within thirty days of the end of this First Addendum). Such credit will be equal to five percent (5%) of Customer’s monthly Service Fee.
 
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8. TELEPHONE INQUIRY HANDLING.
 
 	a.	Calls Answered < 30 seconds: 80% of all telephone calls answered during a calendar month by Castlight’s customer service representatives will be answered in thirty (30) seconds or less.	
 
 	b.	Abandonment Rate: The telephone call abandonment rate will be 3.0% or less. The telephone call abandonment rate will be calculated by dividing the total number of telephone calls from persons covered under the Plan that are terminated by the caller after the call is queued by the automated telephone system for the next available customer service representative, but before the caller speaks with a customer service representative, by the total number of telephone calls from persons covered under the Plan received at Castlight’s office each month.	
 
 	c.	Performance Guarantee: In the event that Castlight’s service performance level is determined to be less than any of the standards described in Section 8(a) and 8(b), above, during any month for any reason (except related to events outside of Castlight’s control such as force majeure events), Castlight will be responsible for issuing a credit against the next invoice payable by Customer (and if no further invoices are due, Castlight will pay Customer the amount of the credit within thirty days of the end of this First Addendum). Such credit will be equal to five percent (5%) of Customer’s monthly Service Fee.	
9. IMPLEMENTATION FEES. In consideration of Castlight’s provision of the Implementation Services under Section 3 of this First Addendum and the Communications Services under Section 4 above, Customer shall pay Castlight a nonrefundable Implementation and Communications Fee of $***, payable concurrent with the execution of this First Addendum. Fees that Customer may be charged by the TPAs, any providers or other third parties in connection with the implementation of the Castlight Service and integration of Castlight with such parties (which may include but are not limited to fees for marketing collateral/agency costs for additional marketing developed by Customer, costs for claims extracts and/or provider directory feeds to Castlight, eligibility file feeds and time/materials payments to support Customer’s outsourced call center integration into Castlight) shall be the sole responsibility of Customer.
10. FEES FOR THE CASTLIGHT SERVICES.
a. Monthly Service Fees. In consideration of Castlight’s provision of the Castlight Services (including the Castlight Services to *** Users) under Section 2 of this First Addendum, for each month (or portion thereof) during the Term (as defined in the MSA) after the Launch Date, Customer will pay Castlight, in accordance with Section 11, the Service Fee (as calculated under this Section 10).
b. Monthly Service Fees . The “Service Fee” for each month commencing with the Launch Date will be the sum of:
i. the product of: (A) the number of eligible *** Employee Users each month; and (B) the per *** Employee User per month rate of $*** (the “Monthly *** Employee Fee”); plus
ii. the product of: (A) the number of eligible *** Adult Dependent Users each month; and (B) the per *** Adult Dependent User rate of $*** (the “Monthly *** Dependent Fee”); plus
iii. the product of: (A) the number of eligible *** Users each month (which is the sum of the *** Employee Users and the *** Adult Dependent Users); and (B) the per *** User per month rate of $*** (the “Monthly *** Fee”); plus
 
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iv. the product of: (A) the number of eligible *** Users each month; and (B) the per *** User per month rate of $*** (the “Monthly *** Fee”); provided that following the *** Launch Date, the Monthly *** Fee during the remainder of the Initial Term shall be the product of (x) the number of eligible *** Users each month and (y) $***, commencing with the first day of the first month following the *** Launch Date.
c. Partial Months . Service Fees will not be adjusted on a pro rata basis. In the event of any partial month, such as upon termination of the Agreement, the full amount of the Service Fees will be payable for such month. If an employee or an adult dependent is a User on the eligibility file run on the 15th day of a month (the “Billing File Run”) he/she will be included in Customer’s self-billing process and will be deemed a User for the full month, even if the User was only a User for a portion of that month.
d. Calculation of Service Fee . On a set date each month, Customer will determine the number of *** Employee Users, *** Adult Dependent Users, *** Users and *** Users who meet the Eligibility Criteria, and Customer ‘will calculate the full fee payable for such *** Employee Users, *** Adult Dependent Users, *** Users and *** Users, as applicable, for such month. Customer will report results of each monthly Billing File Run and the related full fee payable to Castlight by the last day of such applicable month. Castlight may verify the amount calculated by Customer by comparing the number in the Billing File Run for the applicable month to the eligibility file run with the date closest to the Billing File Run for the applicable month. A variance of up to I% is acceptable with no risk for payment adjustments.
11. PAYMENT AND INVOICES. Customer’s payment to Castlight for the Service Fee will be due no later than thirty (30) days after the end of each month. Castlight will calculate and invoice the Customer Support Fee, if any, each month for the prior month. For all other fees (or if there are no more invoices for the Customer Support Fee), Castlight will invoice Customer and payment will be due thirty (30) days after Customer’s receipt of each invoice. If any charge owing by Customer (other than charges disputed in good faith) is 30 days or more overdue, Castlight may, without limiting its other rights and remedies, suspend the Castlight Service until such amounts are paid in full. Additionally, all amounts not paid when due will accrue interest (without the requirement of a notice) at the lower of 1.5% per month or the highest rate permissible by law until the unpaid amounts are paid in full.
12. TERM. This First Addendum shall terminate upon the termination of the MSA unless otherwise mutually agreed by the parties.
ACCEPTED AND AGREED TO FOR:

CASTLIGHT HEALTH, INC.	 		 	ADMINISTRATIVE COMMITTEE OF THE WAL-MART STORES, INC. ASSOCIATES’ HEALTH AND WELFARE PLAN	
					
By:	 	/s/ Randall J. Womack	 		 	By:	 	/s/ Illegible	
					
Its:	 	COO	 		 	Its:	 	Illegible	
					
Date:	 	11/26/12	 		 	Date:	 	11/29/12	
 
8

HIPAA BUSINESS ASSOCIATE AGREEMENT
This Business Associate Agreement (“Agreement”) is by and between the Administrative Committee on behalf of the Wal-Mart Stores, Inc. Associates’ Health & Welfare Plan (“Covered Entity”) and Castlight Health, Inc. (“Business Associate”), and, except as expressly provided below, is effective as of September 11, 2012 (the “Agreement Effective Date”).
RECITALS
 
 	A.	In accordance with a separate agreement (“Services Agreement’’) the Business Associate has agreed to perform, or assist in the performance of, functions, activities, or services on behalf of the Covered Entity involving the use or disclosure of PHI (“Services”).	
 
 	B.	Covered Entity and Business Associate intend to protect the privacy and provide for the security of PHI disclosed to Business Associate pursuant to this Agreement in compliance with the Health Insurance Portability and Accountability Act of 1996, Public Law No. 104-191 (“HIPAA”), regulations promulgated thereunder by the U.S. Department of Health and Human Services (“HIPAA Regulations”), and other applicable laws.	
 
 	C.	The purpose of this Agreement is to satisfy certain standards and requirements of HIPAA, the Privacy Rule and the Security Rule, as defined below, including, but not limited to, Title 45, Sections 164.314(a)(2)(i), 164.502(e) and 164.504(e) of the Code of Federal Regulations (“CFR”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”) provisions of the American Recovery and Reinvestment Act of 2009 (“ARRA”) Pub. Law No. 111-5 and its implementing regulations.	
In consideration of the mutual promises below and the exchange of information pursuant to this Agreement, the parties agree as follows:
1. Definitions .
a. “ Breach ” shall mean the acquisition, access, use or disclosure of PHI in a manner not permitted by the Privacy Rule that compromises the security or privacy of the PHI subject to the exceptions set forth in 45 C.F.R. 164.402.
b. “ De-identified PHI ” shall mean PHI that has been de-identified in accordance with the standards set forth in 45 CFR § 164.514(b).
c. “ Designated Record Set ” shall have the meaning given to such term under the Privacy Rule, including, but not limited to, 45 CFR Section 164.501.
d. “ Discovery ” shall mean the first day on which a Breach is known to Business Associate (including any person, other than the individual committing the breach, that is an employee, officer, or other agent of Business Associate), or should reasonably have been known to Business Associate, to have occurred.
 
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e. “ Electronic Protected Health Information” or “Electronic PHI ” shall have the meaning given to such term under the Privacy Rule and the Security Rule, including, but not limited to, 45 CFR Section 160.103, as applied to the information that Business Associate creates, receives, maintains or transmits from or on behalf of Covered Entity.
f. “ Individual ” shall have the meaning given to such term under the Privacy Rule and the Security Rule, including, but not limited to, 45 CFR Section 160.103 and shall include a person who qualifies as a personal representative in accordance with 45 CFR Section l64.502(g).
g. “ PHI ” shall mean Protected Health Information and Electronic Protected Health Information.
h. “ Privacy Rule ” shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR Parts 160 and 162 and Part 164, Subparts A and E.
i. “ Protected Health Information ” shall have the meaning given to such term under the Privacy Rule and the Security Rule, including, but not limited to, 45 CFR Section 160.l03, as applied to the information that Business Associate creates, receives, maintains or transmits from or on behalf of Covered Entity.
j. “ Required by Law ” shall have the meaning given to such term under the Privacy Rule and the Security Rule, including, but not limited to, 45 CFR Section 164.103.
k. “ Secretary ” shall mean the Secretary of the Department of Health and Human Services or his or her designee.
l. “ Secured PHI ” shall mean PHI which is secured through the use of a technology or methodology consistent with HIPAA and HITECH and which is not Unsecured PHI.
m. “ Security Incident ” shall have the meaning given to such term under the Security Rule, including, but not limited to, 45 CFR Section 164.304, but shall not include, (i) unsuccessful attempts to penetrate computer networks or servers maintained by Business Associate and (ii) immaterial incidents that occur on a routine basis, such as general “pinging” or “denial of service” attacks.
n. “ Security Rule ” shall mean the Security Standards at 45 CFR Parts 160 and 162 and Parts 164, Subparts A and C.
o. “ Unsecured PHI ” shall mean PHI that is not secured through the use of a technology or methodology consistent with HIPAA and HITECH.
p. “Users” shall mean those subcontractors, agents, or third parties of the Business Associate who or which shall, in accordance with an agreement consistent with HITECH Section 13404, use or disclose the minimum necessary PHI for the purpose of providing Services.
 
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2. Uses and Disclosures of PHI .
a. Permitted Uses and Disclosures . Except as otherwise limited in this Agreement, Business Associate may use or disclose PHI to perform the Services, provided that such use or disclosure would not violate the Privacy Rule if done by Covered Entity; and (ii) use PHI for the proper management and administration of Business Associate or to carry out the legal responsibilities of Business Associate. If Business Associate is carrying out Covered Entity’s obligations under the Privacy Rule or Security Rule pursuant to this Agreement, then Business Associate shall comply, to the extent applicable, with the requirements of the Privacy Rule and Security Rule in the performance of such obligations. Except as otherwise limited in this Agreement, Business Associate may disclose PHI for the proper management and administration of Business Associate, provided that disclosures are Required by Law, or Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will remain confidential and will be used or further disclosed only as Required by Law or for the purpose for which it was disclosed to the person, and that the person agrees to notify Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached.
b. Data Aggregation . To the extent permitted by Covered Entity in this Agreement, Business Associate may use De-identified PHI to provide Data Aggregation services as permitted by 45 CFR § 164.504(e)(2)(i)(B), including use of PHI for statistical compilations, reports, research and all other purposes allowed under applicable law.
c. De-identified Data . Business Associate may create De-identified PHI and may use or disclose such De-identified data for the provision and development of Business Associate’s Services on Business Associate’s password protected web based service. Business Associate shall not separately sell such de-identified data to third parties and shall not disclose such de-identified data to third parties except to users of such password protected web based service; provided, however that Business Associate may aggregate such de-identified data as permitted by the Covered Entity in this Agreement.
d. Disclosure Pursuant to Authorization . Without limiting the generality of the foregoing, Business Associate reserves the right at its sole discretion to disclose PHI in response to and in accordance with a valid written authorization executed by such individual that meets the requirements set forth in the HIPAA Privacy Rule.
3. Obligations of Business Associate .
a. Appropriate Safeguards . Business Associate shall use appropriate safeguards to prevent use or disclosure of PHI other than as provided for by this Agreement. Business Associate shall implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity and availability of PHI, as required by the Security Rule.
 
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b. Reporting of Improper Use or Disclosure . Business Associate shall report to Covered Entity any use or disclosure of PHI not provided for by the Agreement and this Agreement within five (5) days of becoming aware of such use or disclosure. Business Associate shall report to Covered Entity any Security Incident within five (5) days of becoming aware of such incident. Business Associate shall notify Covered of any Breach of Unsecured PHI as soon as practicable, and no later than thirty (30) days after discovery of such Breach. Business Associate’s notification to Covered Entity of a Breach shall include: (i) the identification of each individual whose Unsecured PHI has been, or is reasonably believed by Business Associate to have been, accessed, acquired or disclosed during the Breach; and (ii) any particulars regarding the Breach that Covered Entity would need to include in its notification, as such particulars are identified in 42 U.S.C. § 17932 and 45 C.F.R. § 164.404, and identify a contact person for more information when reporting.
c. Business Associate’s Agents . Business Associate shall ensure that any agent, including a subcontractor, to whom it provides PHI, agrees to restrictions and conditions at least as restrictive as those that apply through this Agreement to Business Associate with respect to such PHl. Business Associate shall ensure that any agent, including a subcontractor, to whom it provides PHI, agrees to implement reasonable and appropriate safeguards to protect such information. If any agents or subcontractors of the Business Associate are not subject to the jurisdiction or laws of the United States, or if any use or disclosure of PHI in performing Services will be outside of the jurisdiction of the United States, such entities must agree by written contract with the Business Associate to be subject to the jurisdiction of the Secretary, the laws and the courts of the United States, and waive any available jurisdictional defenses as they pertain to the parties’ obligations under this Agreement, the Privacy Rule or the Security Rule.
d. Access to PHI . Business Associate shall provide access, at the request of Covered Entity, within 10 business days and in the manner designated by Covered Entity, to PHI in a Designated Record Set, to Covered Entity or, as directed by Covered Entity, to an Individual in order to meet the requirements under 45 CFR Section 164.524. If the Covered Entity directs, the Business Associate shall act as the Covered Entity in complying with 45 CFR Section 164.524, including providing access and notices within 10 business days and in the manner directed under that regulation, and providing periodic notice of such access and compliance to the Covered Entity, within 10 business days and in the manner directed by it.
e. Amendment of PHI . Business Associate shall make any amendment(s) to PHI in a Designated Record Set that Covered Entity directs or agrees to pursuant to 45 CFR Section 164.526, at the request of Covered Entity or an Individual, and within 10 business days and in the manner designated by Covered Entity. If an Individual requests an amendment of PHI directly from Business Associate or its agents or subcontractors, Business Associate must notify Covered Entity in writing within five (5) business days of receiving such request. Any denial of amendment of PHI maintained by Business Associate or its agents or subcontractors shall be the responsibility of Covered Entity, unless the Covered Entity directs the Business Associate to act on its behalf in the manner required under 45 CFR Section 164.526.
f. Documentation of Disclosures . Business Associate agrees to document such disclosures of PHI and information related to such disclosures as would be required for Covered Entity to respond to a request by an Individual for an accounting of disclosures of PHI
 
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in accordance with 45 CFR Section 164.528. At a minimum, such information shall include: (i) the date of disclosure; (ii) the name of the entity or person who received PHI and, if known, the address of the entity or person; (iii) a brief description of the PHI disclosed; and (iv) a brief statement of the purpose of the disclosure that reasonably informs the Individual of the basis for the disclosure, or a copy of the Individual’s authorization, or a copy of the written request for disclosure.
g. Accounting of Disclosures . Business Associate agrees to provide to Covered Entity or an Individual, within 10 business days and in the manner designated by Covered Entity, information collected in accordance with Section 3(f) of this Agreement, to permit Covered Entity to respond to a request by an Individual for an accounting of disclosures of PHI in accordance with 45 CFR Section 164.528. In the event that the request for an accounting is delivered directly to Business Associate or its agents or subcontractors, Business Associate shall, as directed by Covered Entity, prepare and deliver such accounting directly to the Individual in accordance with 45 CFR Section 164.528, and shall notify Covered Entity of such response. In the absence of direction from Covered Entity, Business Associate shall forward such request for an accounting to Covered Entity in writing within five (5) business days of receipt of such request. It shall be Covered Entity’s responsibility to prepare and deliver any such accounting requested.
h. Retention of PHI . Notwithstanding Section 4(c) of this Agreement, Business Associate shall only retain PHI throughout the term of the Services Agreement as necessary to perform the Services and upon termination or expiration of this Agreement all PHI shall be returned to the Covered Entity or destroyed in accordance with section 4.c of this Agreement.
i. Governmental Access to Records . Business Associate shall make its internal practices, books and records, including policies and procedures and PHI, relating to the use and disclosure of PHI received from, or created or received by Business Associate on behalf of, Covered Entity available to the Secretary for purposes of the Secretary determining Covered Entity’s compliance with the Privacy Rule and the Security Rule.
j. Mitigation . Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a use or disclosure of PHI by Business Associate in violation of the requirements of this Agreement.
k. Minimum Necessary . Business Associate (or its agents or subcontractors) shall only request, use and disclose the minimum amount of PHI necessary to accomplish the purpose of the request, use or disclosure.
l. Electronic Transmission Standards . Business Associate agrees to comply with all applicable electronic transactions and code sets standards under HIPAA no later than October 16, 2003.
4. Term and Termination .
a. Term . The term of this Agreement shall commence as of the Agreement Effective Date, and shall terminate when all of the PHI provided by Covered Entity to Business
 
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Associate, or created or received by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity or, if it is infeasible to return or destroy PHI, protections are extended to such information, in accordance with the termination provisions in this Section.
b. Termination for Cause . Upon Covered Entity’s knowledge of a material breach by Business Associate of this Agreement, Business Associate agrees that Covered Entity may provide a 30 day opportunity for Business Associate to cure the breach or end the violation, or if cure is not possible then terminate this Agreement and, if necessary and appropriate, the Services Agreement.
c. Effect of Termination . Except as provided in paragraph (ii) of this Section 4(c) and except as to PHI that has been de-identified in accordance with the standards set forth in 45 C.F.R. § 164.514(b), upon termination of this Agreement for any reason, as directed by Covered Entity, Business Associate shall return or destroy all PHI received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity, and shall retain no copies of the PHI. This provision shall apply to PHI that is in the possession of Users.
In the event that Business Associate determines that returning or destroying the PHI is infeasible, Business Associate shall provide to Covered Entity notification of the conditions that make return or destruction infeasible. Upon mutual agreement of the parties that return or destruction of PHI is infeasible Business Associate shall extend the protections of this Agreement to such PHI and limit further uses and disclosures of such PHI to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such PHI. The parties agree and acknowledge that it will be infeasible for Business Associate to return or destroy PHI: (i) related to a user of Business Associate’s service that has requested Business Associate retain information related to such user; and (ii) PHI stored on encrypted back-up tapes that are stored in a secure location.
5. Regulatory References . A reference in this Agreement to a section in the Privacy Rule or the Security Rule means the section as in effect or as amended, and for which compliance is required.
6. Amendment . The parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for Covered Entity to comply with the requirements of the Privacy Rule, the Security Rule and HIPAA.
7. Survival . The respective rights and obligations of Business Associate under Section 4(c) of this Agreement shall survive the termination of this Agreement and the Services Agreement.
8. No Third Party Beneficiaries . Nothing express or implied in this Agreement is intended to confer, nor shall anything herein confer, upon any person other than Covered Entity, Business Associate and their respective successors or assigns, any rights, remedies, obligations or liabilities whatsoever.
9. Effect on Services Agreement . Except as specifically required to implement the purposes of this Agreement, or to the extent inconsistent with this Agreement, all other terms of the Services Agreement shall remain in full force and effect.
 
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10. Indemnification . In addition to, and not in limitation of, any indemnification rights of Covered Entity in the Services Agreement, Business Associate shall defend, indemnify and hold harmless the Covered Entity, the plan administrator and the plan sponsor, and their respective officers, directors, employees or agents, for any and all liabilities, damages, claims and expenses, including penalties and reasonable attorneys’ fees, incurred as a result of Business Associate’s material violation of the Privacy Rule, the Security Rule or this Agreement.
11. Right to Audit . During the term of this Agreement, no more than once in each 12 month period, Covered Entity may inspect and audit its records in Business Associate’s or Users’ custody at reasonable times during normal business hours and upon reasonable advance notice to Business Associate.
12. Interpretation . Any ambiguity or inconsistency in this Agreement shall be resolved in favor of a meaning that permits Covered Entity to comply with the Privacy Rule, the Security Rule, and HITECH.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Agreement Effective Date.
 
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COVERED ENTITY	 		 	BUSINESS ASSOCIATES	
			
Wal-Mart Stores, Inc. Associates’ Health & Welfare Plan	 		 	Castlight Health, Inc.	
					
By:	 	/s/ Lisa Woods	 		 	By:	 	/s/ Charles Ott	
					
Print Name:	 	Lisa Woods	 		 	Print Name:	 	Charles Ott	
					
Title:	 	SR. Director of U.S. Healthcare	 		 	Title:	 	Corporate Counsel	
					
Date:	 	9-20-2012	 		 	Date:	 	September 11, 2012	
 
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report dated February 7, 2014, in Amendment No. 1 to the Registration Statement (Form S-1 No. 333-193840) and related Prospectus of Castlight Health, Inc. for the registration of shares of its Class B common stock.
/s/  Ernst & Young LLP
San Francisco, CA
February 28, 2014