lifelock and xapo lawsuit

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WENCESLAO CASARES CROSS-COMPLAINT

Case No. 114-CV-268767962834

KEKER & VAN NEST LLPSTEVEN P. RAGLAND - # 221076 [email protected] BENJAMIN BERKOWITZ - # 244441 [email protected] ERIN E. MEYER - #274244 [email protected] BRIGGS MATHESON - # 291287 [email protected] 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188

Attorneys for Defendants WENCESLAO CASARES and CYNTHIA MCADAM

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF SANTA CLARA

LEMON, INC. and LEMON ARGENTINA, S.R.L.,

Plaintiffs,

v.

WENCESLAO CASARES; FEDERICO MURRONE; FABIAN CUESTA; MARTIN APESTEGUIA; CYNTHIA MCADAM; and DOES 1 through 10,

Defendants.

Case No. 114-CV-268767 DEFENDANT WENCESLAO CASARES CROSS-COMPLAINT FOR: (1) BREACH OF CONTRACT; (2) BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; (3) CONVERSION; (4) UNJUST ENRICHMENT; AND (5) DECLARATORY RELIEF

DEMAND FOR JURY TRIAL

Judge: Hon. Peter H. Kirwan Date Filed: Aug. 1, 2014

WENCESLAO CASARES,

Cross-Complainant,

v.

LEMON, INC. and LIFELOCK, INC.,

Cross-Defendants.

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1WENCESLAO CASARES CROSS-COMPLAINT

Case No. 114-CV-268767962834

Pursuant to California Code of Civil Procedure 428.10 and 428.20, Defendant and

Cross-Complainant Wenceslao Casares (Casares), by and through his attorneys, hereby files

this Cross-Complaint against Plaintiff and Cross-Defendant Lemon, Inc. (Lemon) and Cross-

Defendant LifeLock, Inc. (LifeLock) (collectively, Cross-Defendants) as follows:

I. NATURE OF ACTION

1. This is an action necessary to hold Cross-Defendants Lemon and LifeLock

accountable for their willful breach of contract and tortious conduct against Cross-Complainant

Wences Casares.

2. Wences Casares is a Silicon Valley-based entrepreneur who has successfully

founded and led multiple companies. In July 2011, Casares founded Lemon, where he oversaw

the development of the Lemon Walleta cloud-based digital wallet that allowed users to store

digital copies of credit cards, debit cards, reward cards, and personal identification.

3. LifeLock acquired Lemon in December 2013, and asked Casares to remain with

the company during the transition period. Casares agreed on the condition that Lemons new

parent corporation would not interfere with his management of the Lemon team. LifeLock

assured Casares that it would not interfere with his management of Lemons operations, and

agreed to automatically accelerate the vesting of certain stock options if the company materially

diminished his responsibilities as Lemons General Manager. Specifically, as part of the

LifeLock/Lemon acquisition, Casares entered into (i) an Option Cancellation, Assumption and

Revesting Agreement with Lemon (the Option Assumption Agreement), and (ii) a Restricted

Stock Purchase Agreement with LifeLock (the RSA) (collectively, the Stock Agreements).

Pursuant to the Option Assumption Agreement, Lemon assumed Casares unvested stock options

in the company, making them exercisable for approximately 31,208 shares of LifeLock common

stock and subjecting them to new, lengthier vesting terms. As LifeLock wished to have even

more of Casares equity subject to vesting terms, it required under the RSA that he purchase

approximately 38,877 shares of LifeLock common stock by paying LifeLock approximately

$295,000. Separately, on information and belief, Casares received restricted stock units worth

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Case No. 114-CV-268767962834

approximately $1.3 million at the time of the acquisition as part of a retention package for

continuing Lemon employees.

4. Casares lived up to his contractual promises and, in the weeks leading up to the

closing of the LifeLock/Lemon deal, worked with his team to prepare and launch the LifeLock

Wallet, a new and rebranded version of the Lemon Wallet app that represented the first step in

integrating the LifeLock and Lemon products. The Lemon team working under Casares had

previously developed new versions of the Wallet app quickly, and finished the all-new LifeLock

Wallet in just over a month. Contrary to their agreement, however, immediately following the

Lemon acquisition, LifeLock repeatedly and consistently obstructed Casaress management of the

Lemon team and directly obstructed his development of the next generation LifeLock Wallet.

LifeLocks highly dysfunctional management proved itself to be adept at corporate infighting and

bureaucracy, and ultimately unwilling to support the innovative Lemon team that it had acquired,

or to permit that team to be led by Casares without interference. LifeLocks dysfunctional

managementand its willful and intentional post-acquisition breaches of its agreements with

Casares and his teamsquandered the success of its acquired company, and then sought to blame

everyone but themselves for their mistakes. By torpedoing the LifeLock Wallet app, and

preventing Casares from doing his job, LifeLock not only willfully breached its contract with

Casares, but virtually guaranteed the failure of its acquisition, Lemon.

5. Indeed, by mid-2014, LifeLock had decimated post-acquisition Lemons entire

team, and Casares was hamstrung and left unable to salvage the Wallet product. In late July

2014, Casares tendered his resignation for Good Cause, which triggered automatic vesting of

Casares shares of LifeLock common stock under the Stock Agreements.

6. LifeLock, and its subsidiary, Lemon, then fraudulently and willfully breached its

contract with Casares, purporting to terminate Casares employment for Cause on August 1,

2014 and thereafter purporting to cancel his LifeLock shares. Through this fraud, LifeLock

wrongfully and willfully breached its contract with Casares and sought to deprive Casares of the

value of equity in LifeLock, which he was entitled to under the Stock Agreements.

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Case No. 114-CV-268767962834

II. PARTIES

7. Cross-Complainant Wenceslao Casares is a resident and citizen of California. He

is formerly the founder and CEO of Cross-Defendant Lemon, Inc.

8. On information and belief, Lemon, Inc. is a corporation organized and existing

under the laws of the State of Delaware, with its principal place of business in Mountain View,

California.

9. On information and belief, LifeLock, Inc. is a corporation organized and existing

under the laws of Delaware, with its principal place of business in Tempe, Arizona, and maintains

offices in at least six locations in California. LifeLock is the parent company of Lemon, Inc. and

Lemon Argentina, S.R.L.

10. On information and belief, at all times relevant hereto, Lemon and LifeLock, and

each of them, acted in concert with and/or was the agent, partner, affiliate, co-conspirator, aider

and abettor, servant, associate, representative, predecessor-in-interest, and/or successor-in-interest

of the other, and in engaging in the acts hereinafter alleged, Lemon and LifeLock were acting in

concert with and within the course and scope of their authority as agent, partner, affiliate, co-

conspirator, aider and abettor, servant, associate, representative, predecessor-in-interest and/or

successor-in-interest of the other.

III. JURISDICTION AND VENUE

11. Jurisdiction in this Court is proper because Cross-Complainant asserts California

state law claims and seeks relief regarding money and property with the value in excess of the

jurisdictional minimum of this Court.

12. The Court has personal jurisdiction over Lemon, Inc. because its principal place of

business is in California and regularly and continuously conducts business in California.

13. This Court has personal jurisdiction over LifeLock because it maintains offices

throughout California and regularly and continuously conducts business in California.

14. Venue is proper in Santa Clara, California because the injuries alleged herein

occurred in this county.

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Case No. 114-CV-268767962834

IV. RELEVANT FACTS

A. Casares Launches Lemon

15. Casares founded Lemon in July 2011. Within a few months of its founding,

Lemon released its feature product, the Lemon Walleta mobile device app that allowed users

to store digital images of the contents of a physical walletinitially receipts and subsequently

expanded to include copies of credit cards, debit cards, and personal identification. The Wallet

quickly became a success, and within just two years attracted nearly five million users.

16. Around the time he founded Lemon in 2011, Casares first learned about bitcoina

software-based digital currency that is not tied to any countrys central bank or government.

Casares soon became fascinated by the currency, and began experimenting with different bitcoin-

related technologies in his spare time.

17. In the spring of 2013, Casares suggested to Lemons Board of Directors that the

company explore adding a way for the Lemon Wallet app to connect to the bitcoin infrastructure

to enable bitcoin transactional features for the Lemon Wallet. The Board agreed to test the idea

but after just a few months determined that transactional features would be incompatible with the

Lemon Wallet, which was designed to be a storage backup of digital images of credit cards and

receipts, not a platform for digital currency payments. The Board also did not want to jeopardize

Lemons success with the Lemon Wallet by adding a feature based on a new and untested digital

currency. In or around July 2013, the Lemon Board abandoned the project of trying to connect

the Lemon Wallet to the bitcoin infrastructure.

B. LifeLock Acquires Lemon

18. In 2010, LifeLock agreed to pay $11 million to the Federal Trade Commission

(FTC) and another $1 million to a group of 35 state attorneys general to settle charges that

LifeLock had engaged in false advertising to promote its identity theft protection services. As

part of the settlement, LifeLock entered into a stringent Consent Order with the FTC, which

imposes various ongoing conduct, record keeping, and reporting obligations on the company and

its founder and CEO, Todd Davis, and requires that LifeLock submit to ongoing compliance

monitoring by the FTC.

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Case No. 114-CV-268767962834

19. Following this episode, LifeLock hired Hilary Schneider as its new president. On

information and belief, Schneider previously served as a technology consultant and executive at

Yahoo, Inc. in Sunnyvale, California. On information and belief, shortly after hiring Schneider,

LifeLock opened a new office in Silicon Valley, with the goal of expanding LifeLocks presence

there.

20. In May 2013, LifeLock approached Lemon about the possibility of a strategic

partnership between the two companies. On information and belief, LifeLock lacked its own

mobile product at the time and sought a partnership with Lemon in an effort to expand into the

mobile application market and broaden LifeLocks aging user base.

21. Following several discussions, the two companies decided not to pursue a strategic

partnership at that time.

22. Instead, in or around August 2013, LifeLock contacted Casares to ask if he would

sell Lemon to LifeLock. Over the next several weeks, Casares discussed with Hilary Schneider,

LifeLocks President, and Villi Iltchev, LifeLocks then-Executive Vice President of Corporate

Strategy and Development, the possibility of LifeLock acquiring Lemon. Casares explained to

the LifeLock executives that he wanted to sell Lemon so that he would be free to work on a

separate bitcoin-related business, Xapo Ltd. (Xapo). In September 2013, Casares agreed to

sell Lemon to LifeLock.

23. In preparation for the acquisition, LifeLock formed Lemon Argentina, a new

wholly-owned LifeLock subsidiary that would assume the operational responsibilities of Lemons

Buenos Aires office following the acquisition.

24. During the weeks leading up to the closing of the LifeLock/Lemon acquisition,

Casares and his team of Lemon engineers in Buenos Aires developed the LifeLock Wallet, a

new version of the Lemon Wallet app, which would be released as soon as the acquisition was

complete.

25. In November 2013, LifeLock asked Casares to stay on at Lemon after the

acquisition. Casares agreed to do so, but only on the condition that LifeLock would not interfere

with his management of the post-acquisition Lemon team. LifeLocks President, Hilary

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Case No. 114-CV-268767962834

Schneider, assured Casares that Lemons new parent corporation would not intrude into the

Lemon teams operations, and that Casares would be free to run Lemon as he had before the

acquisition.

26. On December 4, 2013, Schneider sent Casares a letter offering him the position of

General Manager of Mobile at Lemon. Casares offer letter is attached hereto as Exhibit A.

27. The offer letter provides:

[LifeLock] is delighted that effective on or about December 12, 2013, subject to the closing of the transaction between LifeLock and Lemon, we will welcome you to the LifeLock family. We are confident that you will find your role within the LifeLock family to be one in which you can make significant contributions.

The following represents our conditional offer to you for employment beginning January 1, 2014, as General Manager, Mobile. Your position will report to Hilary Schneider, President of LifeLock, and the Board of Directors at Lemon. This offer is specifically conditioned on the closing of the transaction currently in negotiation between LifeLock and Lemon, Inc.

28. On December 11, 2013, LifeLock and Lemon executed the Agreement and Plan of

Merger, in which Lemons shareholders sold their interests in Lemon to LifeLock for

approximately $43 million. As shareholders in Lemon, Casares, Cynthia McAdam, Federico

Murrone, Martin Apesteguia, and Fabian Cuesta received their prorated share of the proceeds

from the sale, which totaled approximately 5% of the proceedsless the approximately $750,000

of proceeds pocketed by LifeLock by requiring Casares, Murrone, and Apesteguia to purchase

their stock in the company. The LifeLock Wallet was released the next day.

29. Also on December 11, 2013, as a condition to the closing of the acquisition,

Casares entered into two additional agreements with LifeLock and its post-acquisition subsidiary

Lemon: (i) an Option Cancellation, Assumption and Revesting Agreement (the Option

Assumption Agreement) with Lemon, and (ii) a Restricted Stock Purchase Agreement (the

RSA) with LifeLock (collectively, the Stock Agreements), which are attached hereto as

Exhibits B and C, respectively.

30. Pursuant to the Option Assumption Agreement, Casares agreed to assign[],

transfer[] and surrender to [Lemon] for cancellation . . . all of [his] right, title and interest in and

to the Vested Options and the shares of Common Stock Options in Lemon in exchange for

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Case No. 114-CV-268767962834

certain consideration. Casares further agreed in the Option Assumption Agreement that his

Unvested Option[s] in Lemon would be assumed by LifeLock, and that the unvested options

would thereupon become exercisable for shares of LifeLock common stock.

31. The Option Assumption Agreement also contains an acceleration clause, which

provides that [i]n the event that [Casares] Continuous Services [to post-acquisition Lemon] is

terminated (A) by the Company or an Affiliate without Cause or (B) by [Casares] for Good

Reason, 100% of the LifeLock common stock subject to Casares unvested stock options in

Lemon shall become vested and immediately exercisable.

32. Good Reason is defined in the Option Assumption Agreement to include, among

other things, a material diminution in [Casares] title, duties or responsibilities to a level below

those set forth in his December 4, 2013 offer letter.

33. The Option Assumption Agreement also sets forth the circumstances and

procedures by which Lemon may terminate Casares employment for Cause. Except in limited,

specified circumstances that do not apply here, the agreement requires Lemon to provide Casares

with written notice of the basis for termination, and a reasonable period of time after receipt of

written notice to remedy any alleged problem.

34. Under the terms of the other Stock Agreement, the RSA, Casares agreed to

purchase from LifeLock approximately 38,877 shares of LifeLock common stock, for which

Casares paid approximately $295,000 in consideration.

35. The RSA, like the Option Assumption Agreement, contains an Acceleration of

Vesting clause, which provides that in the event that [Casares] Continuous Services is

terminated (i) by [LifeLock] or an Affiliate without Cause or (ii) by [Casares] for Good Reason,

100% of the Unvested Shares shall become Vested Shares. Good Reason and Cause have

the same definitions in the RSA as in the Option Assumption Agreement.

36. Also as part of the closing of the LifeLock/Lemon acquisition, on information and

belief, LifeLock granted Casares restricted stock units worth approximately $1.3 million at the

time as part of a retention package for continuing Lemon employees.

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Case No. 114-CV-268767962834

C. LifeLock and Lemon Materially Diminish Casares Duties and Responsibilities as Lemons General Manager of Mobile

37. Following the acquisition, Casares began working as Lemons General Manager of

Mobile on or around January 1, 2014.

38. Despite LifeLocks repeated assurances that it would not interfere with Casares

management of the Lemon Mobile team, within weeks of Casares assuming the position of

General Manager, LifeLock, and in particular its legal department, began to interfere in all

aspects of the Lemon teams operations, ultimately causing its work to grind to a halt.

39. Based on extensive discussions with LifeLocks President and its head of product,

one of Casares first objectives as Lemons General Manager of Mobile following the acquisition

was to develop an update to the recently-launched LifeLock Wallet that would integrate coupons

and other offers from third-party vendors into the app. However, LifeLock, apparently

apprehensive about its ongoing complianceor non-compliancewith the FTC Consent Order,1

repeatedly and continuously interfered with the project at every step, imposing significant product

changes and requiring even the slightest of contemplated changes to go through countless rounds

of review and second-guessing from LifeLocks dysfunctional corporate offices.

40. LifeLocks interference caused significant delays in the development and release

of updates to the LifeLock Wallet. As a result of LifeLocks corporate infighting and

mismanagement, Casares and his team were repeatedly forced to suspend their work on the

LifeLock Wallet while they waited for LifeLocks corporate bureaucracy.

41. LifeLocks corporate infighting and mismanagement reached such a level that at

one point, LifeLocks General Counsel, Clarissa Cerda, insisted that the legal department review

and approve every product development decision made by Lemon mobiles development team.

1 Upon information and belief, during the time that LifeLocks legal department and dysfunctional management was interfering with the mobile teams development of the LifeLock Wallet, obstructing efforts by Casares and his team to update the LifeLock Wallet app, and breaking their promises to Casares, LifeLock was violating the terms of the FTC Consent Order. On information and belief, on or about July 21, 2015, the FTC filed a new complaint against LifeLock in federal court in Arizona asserting that LifeLock violated the 2010 settlement with the agency and 35 state attorneys general by continuing to make deceptive claims about its identity theft protection services, and by failing to take steps required to protect its users data.

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Case No. 114-CV-268767962834

This malignant corporate infighting among LifeLocks top managers ground development to a

halt and made it impossible for the Lemon team to navigate the LifeLock corporate bureaucracy.2

42. In addition, as a result of LifeLocks mismanagement and interference with the

Lemon mobile team, as well as the corporate infighting between LifeLocks top managers,

Lemon was forced to abandon deals that Casares and his team had negotiated with third-party

vendors.

43. LifeLocks interference with Casares and his team not only represented gross

personal dysfunction at LifeLocks highest levels, but was directly contrary to the assurances that

LifeLock and its President, Hilary Schneider, had provided to Casares when he agreed to lead the

Lemon mobile team during the post-acquisition transition.

44. In or around January 2014, Casares met with Hilary Schneider and informed her

that he could not continue as General Manager as long as LifeLock insisted on controlling every

aspect of the Mobile teams operations. Schneider told Casares to be more patient and requested

that he withdraw his resignation. Casares agreed to the request.

45. In or around February 2014, Casares again met with Schneider and Todd Davis,

LifeLocks Chief Executive Officer, at LifeLocks headquarters in Tempe, Arizona, and again

informed them that he could no longer serve as General Manager of Mobile due to LifeLocks

bureaucratic mismanagement of the Lemon team. Schneider and Davis again assured Casares

that they would address problems with LifeLocks interference with the Lemon team, including

by terminating the employment of LifeLocks General Counsel, Clarissa Cerda.

46. Despite these assurances to Casares, LifeLock again failed to make any changes to

address its interference with the mobile teams development of the LifeLock Wallet, and in fact

continued to obstruct efforts by Casares and his team to update the LifeLock Wallet app.

47. On March 6, 2014, Casares again met with Schneider to inform her that he planned

to resign from LifeLock because he was being prevented from doing his work to develop the next

2 When Casares initially raised these issues regarding Cerdas interference with the Lemon mobile team to LifeLocks CEO Todd Davis and its President Hilary Schneider, Davis and Schneider suggested hiring a professional consultant to provide Cerda with management training. Casares does not know whether Cerda ultimately competed such training, but has become aware that she no longer serves as LifeLocks General Counsel.

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Case No. 114-CV-268767962834

generation of the Lemon product. He told Schneider that rather than continue to be bogged down

by LifeLocks bureaucracy and mismanagement, it made more sense for him to focus on his

separate work at Xapo full-time. Schneider told Casares that she shared his frustrations about

Cerda, but asked Casares to remain at Lemon for at least a few more months, and requested that

he wait to announce the launch of Xapo until after LifeLocks next analyst meeting on March 12.

Casares agreed to both requests, and withdrew his resignation.

48. On or around March 12, 2014, Schneider sent an email informing LifeLocks

employees that Casares has let us know that he is leaving LifeLock to become the Chairman of

Xapo, a company that provides safe storage for Bitcoin. Schneider praised Casares for

buil[ding] a strong and capable team that has good momentum, and noted that Casares would

remain at LifeLock for a period of time to ensure a smooth transition.

49. The following week, and without discussion with Casares, LifeLock suspended the

Lemon mobile teams managersincluding Murrone, Apesteguia, and Cuestashuttered the

Lemon Argentina offices, and ceased all work on the LifeLock Wallet. Shortly thereafter,

LifeLock fired Murrone, Apesteguia, Cuesta, and the remaining members of Casares team at

Lemon.

50. In or around May 2014, LifeLock removed the LifeLock Wallet app from online

marketplaces such as iTunes and Google Play, and suspended the app indefinitely.

51. On July 31, 2014, Casares, who by now was left with no responsibilities or duties

whatsoever at LifeLock/Lemon and was increasingly troubled by LifeLock/Lemons

unprofessional and improper conduct, sent a letter to Clarissa Cerda providing notice of his

resignation for Good Reason. The letter, which is attached hereto as Exhibit D, provides:

This letter serves as notice of the termination of my continuous services to LifeLock for Good Reason, as defined in the Restricted Stock Purchase Agreement and Option Cancellation, Assumption and Revesting Agreement that were part of the LifeLock-Lemon transaction. LifeLock created the Good Reason for this action because LifeLock, through its Chief Executive Officer, President, and/or board of directors, has caused a material diminution in my duties or responsibilities to a level below the duties or responsibilities set forth in my December 4, 2013 offer letter from LifeLock.

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Case No. 114-CV-268767962834

52. The very next day, on August 1, 2014, Todd Davis sent a letter to Casares

purportedly terminating his employment for Cause. LifeLock did not provide Casares with

written notice of his termination prior to Davis August 1 letter, nor did LifeLock provide a

reasonable period of time after receipt of written notice for Casares to remedy the alleged basis

for his termination, as required under the Stock Agreements.

53. On or around August 1, 2014, LifeLock cancelled all of the restricted stock and

unvested stock options that were subject to the Stock Agreements accelerated vesting clauses.

On information and belief, the cancelled stock and options represented more than $2 million in

equity in LifeLock.

54. In addition, LifeLock cancelled all of Casares LifeLock restricted stock units,

which he had been granted as part of the retention package for continuing Lemon employees. On

information and belief, Casares restricted stock units represent more than an additional $1.3

million in equity in LifeLock.

FIRST CLAIM FOR RELIEF Breach of Contract Stock Agreements (against all cross-defendants)

55. Casares hereby incorporates by reference each of the allegations in the preceding

paragraphs as though fully set forth here.

56. On or about December 11, 2013, Casares entered into a valid and enforceable

Option Cancellation, Assumption and Revesting Agreement (Option Assumption Agreement)

with Lemon, pursuant to which Casares acknowledged and agreed that his unvested stock options

in Lemon would be assumed by LifeLock, and become exercisable for approximately 31,208

shares of LifeLock common stock. The Option Assumption Agreement further provided that

100% of the unvested shares associated with Casares shall become fully vested and exercisable in

the event Casares terminates his employment services with Lifelock/Lemon for Good Reason, as

defined in the Agreement.

57. On or about December 11, 2013, Casares entered into a valid and enforceable

Restricted Stock Purchase Agreement (RSA) with LifeLock, pursuant to which Casares

purchased approximately 38,877 shares of common stock in LifeLock. The RSA further provided

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Case No. 114-CV-268767962834

that 100% of the unvested shares associated with Casares shall become fully vested and

exercisable in the event Casares terminates his employment services with Lifelock/Lemon for

Good Reason, as defined in the RSA.

58. Casares timely, fully, and adequately performed the terms and conditions

prescribed in the Option Assumption Agreement and RSA (collectively, the Stock Agreements)

and imposed by law, to the extent performance was within Casares power without the

cooperation of Lemon or LifeLock.

59. Casares terminated his employment with LifeLock/Lemon for Good Reason on

July 31, 2014.

60. As detailed above, Cross-Defendants materially breached the Stock Agreements

by failing to acknowledge and implement the accelerated vesting of the unvested stock options

associated with Casares, and by preventing Casares from exercising them.

61. As a direct and proximate result of Cross-Defendants material breaches of the

Stock Agreements, Casares has suffered, and will continue to suffer, damages in an amount not

yet ascertained, but which Casares is informed and believes, and therefore alleges, exceeds the

Courts jurisdictional amount.

SECOND CLAIM FOR RELIEF Breach of the Implied Covenant of Good Faith and Fair Dealing

(against all cross-defendants)



63. As detailed above, Casares entered into valid, enforceable Stock Agreements with

Lemon and LifeLock.

64. Casares timely, fully, and adequately performed the terms and conditions

prescribed in the Stock Agreements and imposed by law, to the extent performance was within

Casares power without the cooperation of Lemon or LifeLock.

65. Cross-defendants were under an obligation to acknowledge and implement the

accelerated vesting of 100% of the unvested stock options associated with Casares under the

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Case No. 114-CV-268767962834

Stock Agreements, and also under a duty to do everything that the Stock Agreements presupposed

Cross-Defendants would do to accomplish the purpose of the Stock Agreements.

66. Cross-defendants breached the implied covenant of good faith and fair dealing by

failing to acknowledge and implement the accelerated vesting of the unvested stock options

associated with Casares under the Stock Agreements; by preventing Casares from exercising

those stock options; and otherwise interfering with and failing to cooperate with Casares in the

performance of the Stock Agreements, as alleged above.

67. As a direct and proximate result of Cross-defendants breach, Casares has suffered,

and will continue to suffer, damages in an amount not yet ascertained, but which Casares is

informed and believes, and therefore alleges, exceeds the Courts jurisdictional amount.

THIRD CLAIM FOR RELIEF Conversion (against all cross-defendants)



69. Casares entered into valid, enforceable Stock Agreements with Lemon and

LifeLock, pursuant to which he acquired rights to unvested shares of LifeLock common stock.

The Stock Agreements provided that 100% of the unvested LifeLock shares associated with

Casares shall become fully vested and exercisable in the event Casares terminates his

employment services with Lifelock/Lemon for Good Reason, as defined in the Stock Agreements.

70. Casares terminated his employment with LifeLock/Lemon for Good Reason on

July 31, 2014. As a result, 100% of the unvested LifeLock shares associated with Casares vested

and became exercisable on that date.

71. Pursuant to the Stock Agreements, Casares is the rightful owner of fully vested

and exercisable shares of LifeLock common stock.

72. As detailed above, Cross-defendants have wrongfully assumed dominion over the

above-described unvested stock options associated with Casares under the Stock Agreements.

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Case No. 114-CV-268767962834

73. As a direct result of Cross-Defendants wrongful assumption of control over the

above-described stock options, Casares has suffered, and will continue to suffer, actual damages

in an amount to be proven at trial.

74. Cross-defendants conduct was willful, malicious, oppressive, and in conscious

disregard of Casares rights, and Casares is therefore entitled to an award of punitive damages to

punish Cross-defendants wrongful conduct and deter future wrongful conduct.

FOURTH CLAIM FOR RELIEF Unjust Enrichment (against all cross-defendants)



76. As a result of the illegal and wrongful conduct alleged herein, Cross-defendants

have been and will continue to be unjustly enriched at the expense of Casares in an amount to be

proven at trial. Specifically, Cross-defendants have wrongfully assumed ownership and control

over the unvested stock options associated with Casares under the Stock Agreements by failing to

acknowledge and implement the accelerated vesting to which he was entitled under those

agreements. These stock options rightfully belong to Casares.

77. Cross-defendants should be required to disgorge and return to Casares all the ill-

gotten gains that Cross-defendants illegally and wrongfully obtained at Casares expense, and a

constructive trust should be imposed thereon.

FIFTH CLAIM FOR RELIEF Declaratory Relief (against all cross-defendants)



79. An actual controversy has arisen and now exists between Casares and Cross-

defendants concerning Casares rights and Cross-defendants duties under the Stock Agreements.

80. Specifically, Casares contends that pursuant to the Stock Agreements, he acquired

rights to unvested shares of LifeLock common stock, which became fully vested and exercisable

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when Casares terminated his employment services with Lifelock/Lemon for Good Reason on July

31, 2014.

81. Casares desires a judicial determination of his rights and a declaration that (1) he is

the rightful owner of the fully vested and exercisable shares of LifeLock common stock

associated with him under the Stock Agreements; and (2) Cross-Defendants must acknowledge

and implement the accelerated vesting to which Casares is entitled under the Stock Agreements.

DEMAND FOR JURY TRIAL

82. Cross-Claimant Casares hereby demands a jury trial on all issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Cross-Claimant Casares requests that this Court enter judgment in his

favor and against Cross-Defendants Lemon and LifeLock as follows:

1. A monetary award to be entered as damages against Lemon and LifeLock in an

amount to be determined at trial;

2. An award of punitive damages to be entered against Lemon and LifeLock in an

amount to be determined at trial;

3. A declaration of Casares rights under the Stock Agreements;

4. All equitable remedies to which Casares is entitled based on the facts and claims

alleged herein;

5. An award of attorneys fees as allowed by law, an award of costs of suit as allowed

by law, any interest on damages allowed by law; and

6. Any other relief that the Court deems proper, fair, equitable, just, and appropriate.

Dated: July 24, 2015

By:

KEKER & VAN NEST LLP

/s/ Steven P. Ragland STEVEN P. RAGLAND

Attorneys for Defendants WENCESLAOCASARES and CYNTHIA MCADAM

lifelock and xapo lawsuit

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