10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

OR

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

For the transition period from                      to                     

Commission file number: 001-33707

CONSTANT CONTACT, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3285398
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
1601 Trapelo Road, Third Floor Waltham, Massachusetts	02451
(Address of principal executive offices)	(Zip Code)

(781) 472-8100

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

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

As of July 29, 2013, there were 30,680,666 shares of the registrant’s Common Stock, par value $.01 per share, outstanding.

CONSTANT CONTACT, INC.

INDEX

		PAGE NUMBER
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS		1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)			1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)			2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)			3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)			4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)			5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		28
ITEM 4.	CONTROLS AND PROCEDURES		28
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		29
ITEM 1A.	RISK FACTORS		30
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		43
ITEM 6.	EXHIBITS		43
SIGNATURES			44

Part I. Financial Information

Item 1. Financial Statements

Constant Contact, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30,			December 31,
(In thousands, except share and per share data)	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	86,268		$	67,775
Marketable securities		12,999			25,732
Accounts receivable, net of allowance for doubtful accounts		100			92
Prepaid expenses and other current assets		9,165			6,513
Total current assets		108,532			100,112
Property and equipment, net		40,040			39,653
Restricted cash		1,300			750
Goodwill		95,505			95,505
Acquired intangible assets, net		5,532			6,758
Deferred taxes		13,864			11,377
Other assets		2,901			3,107
Total assets	$	267,674		$	257,262
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	8,209		$	8,167
Accrued expenses		13,024			10,803
Deferred revenue		34,718			32,700
Total current liabilities		55,951			51,670
Other long-term liabilities		2,022			2,010
Total liabilities		57,973			53,680
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2013 and December 31, 2012		—			—
Common stock; $0.01 par value; 100,000,000 shares authorized; 30,712,319 and 30,651,375 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively		307			307
Additional paid-in capital		216,534			209,987
Accumulated other comprehensive income		7			11
Accumulated deficit		(7,147	)		(6,723	)
Total stockholders’ equity		209,701			203,582
Total liabilities and stockholders’ equity	$	267,674		$	257,262

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Constant Contact, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share data)	2013			2012			2013			2012
Revenue	$	70,208		$	62,072		$	138,413		$	122,010
Cost of revenue		20,578			18,434			40,486			36,033
Gross profit		49,630			43,638			97,927			85,977
Operating expenses
Research and development		11,999			9,804			22,267			19,275
Sales and marketing		27,804			25,836			58,606			51,554
General and administrative		10,048			7,830			19,942			15,245
Acquisition costs and other related charges		—			574			—			723
Total operating expenses		49,851			44,044			100,815			86,797
Loss from operations		(221	)		(406	)		(2,888	)		(820	)
Interest income and other income (expense), net		12			62			(17	)		133
Loss before income taxes		(209	)		(344	)		(2,905	)		(687	)
Income tax (expense) benefit		299			(118	)		2,481			443
Net income (loss)	$	90		$	(462	)	$	(424	)	$	(244	)
Net income (loss) per share:
Basic	$	0.00		$	(0.02	)	$	(0.01	)	$	(0.01	)
Diluted	$	0.00		$	(0.02	)	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding used in computing per share amounts:
Basic		30,689			30,380			30,660			30,275
Diluted		31,074			30,380			30,660			30,275

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Constant Contact, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2013			2012			2013			2012
Net income (loss)	$	90		$	(462	)	$	(424	)	$	(244	)
Other comprehensive loss:
Net unrealized losses on marketable securities, net of tax		(3	)		(23	)		—			(43	)
Translation adjustment		—			—			(4	)		—
Total other comprehensive loss		(3	)		(23	)		(4	)		(43	)
Comprehensive income (loss)	$	87		$	(485	)	$	(428	)	$	(287	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Constant Contact, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2013			2012
Cash flows from operating activities
Net loss	$	(424	)	$	(244	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		10,751			8,969
Amortization of premium on investments		102			296
Stock-based compensation expense		7,671			7,075
Provision for (recovery of) bad debts		2			(3	)
Deferred income taxes		(2,481	)		(644	)
Taxes paid related to net share settlement of restricted stock units		(1,020	)		(326	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(10	)		(1	)
Prepaid expenses and other current assets		(2,654	)		(2	)
Other assets		206			(406	)
Accounts payable		42			95
Accrued expenses		2,221			(537	)
Deferred revenue		2,018			1,874
Other long-term liabilities		12			(39	)
Net cash provided by operating activities		16,436			16,107
Cash flows from investing activities
Purchases of marketable securities		(1,909	)		(28,357	)
Proceeds from maturities of marketable securities		10,534			31,167
Proceeds from sales of marketable securities		4,000			27,600
Acquisition of businesses, net of cash acquired		—			(68,487	)
Increase in restricted cash		(550	)		—
Acquisition of property and equipment, including costs capitalized for development of internal use software		(9,689	)		(10,644	)
Net cash provided by (used in) investing activities		2,386			(48,721	)
Cash flows from financing activities
Proceeds from issuance of common stock pursuant to the exercise of stock options		807			3,657
Income tax benefit from the exercise of stock options		—			148
Proceeds from issuance of common stock pursuant to employee stock purchase plan		484			536
Repurchase of common stock		(1,618	)		—
Net cash provided by (used in) financing activities		(327	)		4,341
Effects of exchange rates on cash and cash equivalents		(2	)		—
Net increase (decrease) in cash and cash equivalents		18,493			(28,273	)
Cash and cash equivalents, beginning of period		67,775			49,589
Cash and cash equivalents, end of period	$	86,268		$	21,316
Supplemental disclosure of noncash investing and financing activities:
Capitalization of stock-based compensation	$	223		$	443
Fair value of contingent consideration in connection with acquisition included in accrued expenses and other long-term liabilities	$	—		$	12,152

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Constant Contact, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share and per share amounts)

1. Nature of the Business

Constant Contact, Inc. (the “Company”) was incorporated as a Massachusetts corporation on August 25, 1995. The Company reincorporated in the State of Delaware in 2000. The Company provides on-demand email marketing, social media marketing, event marketing, local deals, a platform for online listings and online survey products to small organizations, including small businesses, associations and non-profits primarily in the U.S. The Company’s email marketing product allows customers to create, send and track email marketing campaigns. Social Campaigns^™ allows customers to create, publish, promote and run campaigns on Facebook^®. EventSpot^®, the Company’s event marketing product, enables customers to promote and manage events, track event registrations and collect online payments. The Company’s online survey product enables customers to create and send surveys and analyze the responses. SaveLocal^™ makes it quick and easy for customers to create, run and manage local deals. CardStar^®, one of the Company’s mobile phone applications, allows consumers to easily manage loyalty, rewards and membership cards on a mobile phone. SinglePlatform helps small businesses get discovered through web and mobile searches by providing a single place to update business information and distribute it through a network of on-line publishers. These products are designed for small organizations and are marketed directly by the Company and through a wide variety of partners.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include those of the Company and its subsidiaries, after elimination of all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The condensed consolidated balance sheet at December 31, 2012 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K, File Number 001-33707, on file with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2013 and consolidated results of operations for the three and six months ended June 30, 2013 and 2012 and consolidated cash flows for the six months ended June 30, 2013 and 2012 have been made. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2013.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, judgments and assumptions, including those related to revenue recognition, stock-based compensation, goodwill and acquired intangible assets,

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capitalization of software and website development costs, liability for contingent consideration, litigation accruals and income taxes. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from these estimates.

Revenue Recognition

The Company provides access to its products primarily through subscription arrangements whereby the customer is charged a fee for access for a defined term. Subscription arrangements include access to use the Company’s software via the Internet and support services, such as telephone, email and chat support. When there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured, the Company recognizes revenue on a daily basis over the subscription period as the services are delivered. Delivery is considered to have commenced at the time the customer has paid for the products and has access to the account via a log-in and password. The Company generates revenue from its SaveLocal product by charging a fee to its customers based on the number of deals sold by its customers and the value of the successful deal. The Company recognizes revenue from the fee charged when there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured. The Company also offers ancillary services to its customers related to its subscription-based products such as custom services and training. When sold together, revenue from custom services, training and subscription products are accounted for separately based on vendor-specific objective evidence of fair value of each of the services as the services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. Revenue from custom services and training is recognized as the services are performed.

Deferred Revenue

Deferred revenue consists of payments received in advance of delivery of the Company’s products described above and is recognized as the revenue recognition criteria are met. The Company’s customers generally pay for services in advance on a monthly, semiannual or annual basis.

Accounts Receivable

Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance.

Concentration of Credit Risk and Significant Products and Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. At June 30, 2013 and December 31, 2012, the Company had substantially all cash and investment balances at certain financial institutions without or in excess of federally insured limits, however, the Company maintains its cash balances and custody of its marketable securities with accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

For the three and six months ended June 30, 2013 and the three and six months ended June 30, 2012, revenue from the Company’s email marketing product alone as a percentage of total revenue was approximately 84% and 86%, respectively. No customer accounted for more than 10% of total revenue during these periods.

Goodwill and Acquired Intangible Assets

The Company records goodwill when consideration paid in a business acquisition exceeds the fair value of the net tangible assets and the identified intangible assets acquired. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if facts and circumstances warrant a review. The Company performs its annual assessment for impairment of goodwill on November 30^th and has determined that there is a single reporting unit for the purpose of conducting this annual goodwill impairment assessment.

Intangible assets are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

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Software and Web Site Development Costs

Research and development costs are expensed as incurred and primarily include salaries, fees to consultants and other related costs. Relative to development costs of its on-demand products and website, the Company capitalizes certain direct costs to develop functionality as well as certain upgrades and enhancements that are probable to result in additional functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized as part of property and equipment until the software is substantially complete and ready for its intended use. Capitalized software is amortized over a three-year period in the expense category to which the software relates.

Foreign Currency Translation

The functional currency of the Company’s UK operations is deemed to be the British pound. Accordingly, the assets and liabilities of the Company’s UK subsidiary are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are charged to other income (expense) and were not material to the Company’s operations.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s only elements of other comprehensive income (loss) are unrealized gains and losses on available-for-sale securities and translation adjustments.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the time of acquisition to be cash equivalents. The Company also considers receivables related to customer credit card purchases of $3,689 and $2,509 at June 30, 2013 and December 31, 2012, respectively, to be equivalent to cash. Cash equivalents are stated at fair value.

Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of interest income and other income (expense) based on the specific identification method.

At June 30, 2013, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	10,080	$	16	$	—		$	10,096
Corporate and Agency Bonds		907		—		(1	)		906
Certificates of Deposit		1,000		—		—			1,000
Commercial Paper		997		—		—			997
Total	$	12,984	$	16	$	(1	)	$	12,999

At June 30, 2013, marketable securities consisted of investments that mature within one year.

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At December 31, 2012, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury Notes	$	10,138		20	$	—	$	10,158
Corporate and Agency Bonds		12,675		1		—		12,676
Certificates of Deposit		1,000		—		—		1,000
Commercial Paper		1,898		—		—		1,898
Total	$	25,711	$	21	$	—	$	25,732

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables present the Company’s fair value hierarchy for its cash equivalents and marketable securities, which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	Fair Value Measurements at June 30, 2013 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	51,184	$	—	$	—	$	51,184
U.S. Treasury Notes		10,096		—		—		10,096
Corporate and Agency Bonds		—		906		—		906
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		997		—		997
Total	$	61,280	$	2,903	$	—	$	64,183

	Fair Value Measurements at December 31, 2012 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	38,320	$	—	$	—	$	38,320
U.S. Treasury Notes		10,158		—		—		10,158
Corporate and Agency Bonds		—		12,676		—		12,676
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		1,898		—		1,898
Total	$	48,478	$	15,574	$	—	$	64,052

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The Company has a contingent consideration liability associated with the acquisition of SinglePlatform, Corp. (“SinglePlatform”) in June 2012, which has been assessed at $0 as of June 30, 2013 (see Note 3). Contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of the contingent consideration liability uses assumptions and estimates to forecast a range of outcomes for the contingent consideration. The Company assesses these assumptions and estimates on a quarterly basis as additional data impacting the assumptions is obtained. Changes in the fair value of the contingent consideration liability related to updated assumptions and estimates are recognized within the consolidated statements of operations.

The significant unobservable inputs used in the fair value measurement of contingent consideration are the probabilities of successful achievement of the targeted revenues, the six-month periods in which the revenues are expected to be achieved and the discount rate. Increases or decreases in any of the forecasted scenarios or probabilities of success would result in a higher or lower fair value measurement, respectively. Increases or decreases in the actual achievement of milestones in the relevant period as compared to the estimated achievement would result in a higher or lower fair value measurement, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets or, where applicable and if shorter, over the lease term. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to the statement of operations. Repairs and maintenance costs are expensed as incurred.

Estimated useful lives of assets are as follows:

Computer equipment	3 years
Software	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of life of lease or estimated useful life

Long-Lived Assets

The Company reviews the carrying values of its long-lived assets for possible impairment when events or changes in circumstance indicate that the related carrying amount may not be recoverable. Undiscounted cash flows are compared to the carrying value and when required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of unrestricted common shares outstanding for the period.

Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted common stock and restricted stock units using the “treasury stock” method when the effect is not anti-dilutive.

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The following is a summary of the shares used in computing diluted net income (loss) per share:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Weighted average shares used in calculating basic net income (loss) per share		30,689		30,380		30,660		30,275
Stock options		319		—		—		—
Warrants		1		—		—		—
Unvested restricted stock and restricted stock units		65		—		—		—
Shares used in computing diluted net income (loss) per share		31,074		30,380		30,660		30,275

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share because they had an anti-dilutive impact either because the proceeds under the treasury stock method were in excess of the average fair market value for the period or because the Company had a net loss in the period:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Options to purchase common stock		4,688		5,098		5,597		5,023
Warrants to purchase common stock		—		1		1		1
Unvested restricted stock and restricted stock units		112		388		583		350
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock		4,800		5,487		6,181		5,374

Advertising Expense

The Company expenses advertising costs as incurred.

Accounting for Stock-Based Compensation

The Company values all stock-based compensation, including grants of stock options, restricted stock and restricted stock units, at fair value on the date of grant, and expenses the fair value over the applicable service period. The straight-line method is applied to all grants with service conditions, while the graded vesting method is applied to all grants with both service and performance conditions.

Income Taxes

Income taxes are provided for tax effects of transactions reported in the financial statements and consist of income taxes currently due plus deferred income taxes related to timing differences between the basis of certain assets and liabilities for financial statement and income tax reporting purposes. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

Segment Data

The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. Revenue is generated predominately in the U.S. and all significant assets are held in the U.S.

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3. Acquisitions

CardStar

On January 13, 2012, the Company acquired by merger all of the outstanding capital stock of CardStar, Inc. (“CardStar”) for a cash purchase price of $5,750. CardStar is a leading developer of mobile applications that extend the use of loyalty cards and mobile coupons among consumers. The Company purchased CardStar in order to accelerate its entrance into the mobile marketing and loyalty space.

The Company allocated the purchase price as follows:

Purchased technology	$	624
Net deferred tax assets		553
Goodwill		4,573
Total assets acquired	$	5,750

The purchased technology was valued using the cost to replace method and has an estimated economic life of three years.

Goodwill was recognized for the excess purchase price over the fair value of the assets acquired. Goodwill is primarily attributable to CardStar’s knowledge of mobile applications and coupons and loyalty cards. Goodwill from the CardStar acquisition will be included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of CardStar is not deductible for tax purposes. The operations of CardStar prior to the acquisition were not material to the consolidated results of the Company.

SinglePlatform

On June 12, 2012, the Company acquired by merger all of the outstanding capital stock of SinglePlatform. SinglePlatform provides small businesses a single place to update their business information and delivers that information across its publishing network. The Company purchased SinglePlatform in order to expand its product offerings consistent with its strategy of helping small organizations acquire new customers. The purchase price of $75,009 reflected a cash payment of $62,857 and a liability of $12,152 representing the fair value of contingent consideration of up to $30,000 payable to the former shareholders of SinglePlatform upon achievement by SinglePlatform of certain revenue targets. These revenue targets are measured in six-month intervals from July 1, 2012 to June 30, 2014. If such targets are achieved, the consideration is payable in cash. At the acquisition date, the Company’s estimate of the undiscounted range of outcomes for the contingent consideration was $0 to $21,095 based on a probability weighted estimate of future revenue. Using a discounted cash flow method, the Company recorded an estimated liability of $12,152 as of the acquisition date. This liability was subsequently reduced to $0 by December 31, 2012 based on actual results and revised forecasts. The first two revenue targets, assessed at December 31, 2012 and June 30, 2013, respectively, were not met and, as of June 30, 2013, the maximum amount of contingent consideration payable is $15,000. The Company will continue to assess the probability that the remaining revenue targets will be met and at what level, and any subsequent changes in the estimated fair value of the liability will be reflected in earnings until the liability is fully settled.

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The following table summarizes the purchase price for SinglePlatform and the allocation of the purchase price:

Purchase consideration:
Total cash paid, net of cash acquired	$	62,546
Cash acquired		311
Fair value of contingent consideration		12,152
Total purchase price consideration	$	75,009
Assets acquired and liabilities assumed:
Cash	$	311
Accounts receivable		48
Prepaid expenses and other current assets		60
Property and equipment		14
Identifiable intangible assets		4,760
Other assets		91
Net deferred tax assets		72
Goodwill		71,997
Total assets acquired		77,353
Accounts payable, accrued expenses and other current liabilities		(1,734	)
Deferred revenue		(610	)
Total liabilities assumed		(2,344	)
Total allocation of purchase price consideration	$	75,009

The developed technology and the customer and publisher relationships were valued using the cost to replace method. The trade name was valued using the relief from royalty method. Acquired intangible assets are amortized over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis. The following table presents the estimated fair values and useful lives of identifiable intangible assets acquired:

	Amount		Weighted Average Useful Life
			(in years)
Developed technology	$	850		3
Customer relationships		2,630		3.75
Publisher relationships		710		5
Trade name		570		5
Total identifiable intangible assets	$	4,760		3.95

Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill is primarily attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of being able to market SinglePlatform’s product to the Company’s customer base and being able to market the Company’s products to SinglePlatform’s customer base. Goodwill from the SinglePlatform acquisition is included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of SinglePlatform is not deductible for tax purposes.

The following table presents the pro forma results of the historical consolidated statements of operations of the Company and SinglePlatform for the three and six months ended June 30, 2012, giving effect to the merger as if it occurred on January 1, 2011:

	Three months ended June 30,			Six months ended June 30,
	2012			2012
Pro forma revenue	$	62,326		$	122,474
Pro forma net loss	$	(1,048	)		(1,826	)

The pro forma net loss presented primarily includes adjustments for amortization, interest income and income taxes. This pro forma information does not purport to indicate the results that would have actually been obtained had the acquisition been completed on the assumed date, or which may be realized in the future.

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Transaction costs related to acquisitions were $574 and $723 for the three and six months ended June 30, 2012, respectively, which the Company recorded as acquisition costs and other related charges. The operating expenses of the acquired entities have been included in the consolidated financial statements beginning on their respective acquisition dates but have not been disclosed as the Company does not account for the results of the acquired entities separate from its own results.

4. Goodwill and Acquired Intangible Assets

The carrying amount of goodwill was $95,505 at June 30, 2013 and December 31, 2012. Goodwill is not amortized, but instead is reviewed for impairment at least annually in the fourth quarter or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

Intangible assets consist of the following:

			June 30,2013						December 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology		3 years	$	4,357	$	1,772	$	2,585	$	4,357	$	1,222	$	3,135
Customer relationships		3.75 years		3,315		1,371		1,944		3,315		822		2,493
Publisher relationships		5 years		710		154		556		710		83		627
Trade name		5 years		570		123		447		570		67		503
			$	8,952	$	3,420	$	5,532	$	8,952	$	2,194	$	6,758

The Company amortizes the intangible assets over the estimated useful lives noted above. Amortization of the developed technology and publisher relationships assets is on a straight-line basis as the pattern of consumption of the economic benefits of the intangible assets cannot be reliably determined. The Company also amortizes the trade name asset over its estimated useful life on a straight-line basis as the straight-line basis is not materially different than the pattern of consumption of economic benefit basis. Customer relationships are amortized over their useful life based on the pattern of consumption of economic benefit of the asset. Amortization commences once the asset has been placed in service. Amortization expense for intangible assets was $666 and $292 for the three months ended June 30, 2013 and 2012, respectively. Amortization expense for intangible assets was $1,226 and $456 for the six months ended June 30, 2013 and 2012, respectively. Amortization relating to developed technology and publisher relationships is recorded within cost of revenue and amortization of customer relationships and trade name is recorded within sales and marketing expense. Future estimated amortization expense as of June 30, 2013 is as follows:

Remainder of 2013	$	1,177
2014		2,196
2015		1,583
2016		470
2017		106
Total	$	5,532

5. Stockholders’ Equity and Stock-based Compensation

Share Repurchase Program

In the second quarter of 2013, the Board of Directors authorized the repurchase of up to $20,000 of the Company’s common stock through December 31, 2013. Under the authorization, the Company can repurchase shares in the open market, which may include the use of 10b5-1 trading plans, or through privately negotiated transactions. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions. Share repurchases may be suspended or discontinued at any time. The Company intends to fund repurchases from its cash and cash equivalents.

During the three months ended June 30, 2013, the Company repurchased 100,000 shares at an average price of $16.18 per share. These shares were retired and accounted for as a reduction to stockholders’ equity in the Company’s condensed consolidated balance sheet.

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Stock-Based Awards

Stock Incentive Plan

The Company’s 2011 Stock Incentive Plan (the “2011 Plan”) permits the Company to make grants of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based awards with a maximum term of seven years. These awards may be granted to the Company’s employees, officers, directors, consultants, and advisors. The Company reserved 4,200,000 shares of its common stock for issuance under the 2011 Plan. Additionally, per the terms of the 2011 Plan, shares of common stock previously reserved for issuance under the 2007 Stock Incentive Plan as well as shares reserved for outstanding awards under both the 2007 Stock Incentive Plan and the 1999 Stock Option/Stock Issuance Plan for which the awards are cancelled, forfeited, repurchased or otherwise result in common stock not being issued will be added to the number of shares available for issuance under the 2011 Plan. Awards that are granted with a per share or per unit purchase price less than 100% of fair market value as of the date of grant (e.g., restricted stock and restricted stock unit awards) shall count towards the total number of shares reserved for issuance under the 2011 Plan on a two-for-one basis. As of June 30, 2013, 1,699,166 shares of common stock were available for issuance under the 2011 Plan.

The Company’s 2012 Inducement Award Plan (the “2012 Inducement Plan”) provides for the grant of nonstatutory stock options and restricted stock unit awards as an inducement to an individual entering into employment with the Company or in connection with an acquisition. The Company may issue up to an aggregate of 257,780 shares of common stock pursuant to the 2012 Inducement Plan, subject to adjustment in the event of stock splits and other similar events. Shares issued under the 2012 Inducement Plan may consist in whole or in part of authorized but unissued shares or may be issued shares that the Company has reacquired (provided that open market purchases of shares using the proceeds from the exercise of awards do not increase the number of shares available for future grants). Options granted under the 2012 Inducement Plan must be granted at an exercise price that is not less than 100% of the fair market value of the common stock on the date of grant and may not be granted for a term in excess of seven years. If an award granted under the 2012 Inducement Plan expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of common stock subject to such award being repurchased by the Company) or otherwise results in any common stock not being issued, the unused common stock covered by such award will become available for issuance pursuant to a new award under the 2012 Inducement Plan. As of June 30, 2013, there were 10,025 shares of common stock available for issuance under this plan.

The Company applies the fair value recognition provisions for all stock-based awards granted or modified in accordance with authoritative guidance. Under this guidance the Company records compensation costs over the requisite service period of the award based on the grant-date fair value. The straight-line method is applied to all grants with service conditions, while the graded vesting method is applied to all grants with both service and performance conditions.

Restricted Stock Units

Upon vesting, restricted stock units entitle the holder to one share of common stock for each restricted stock unit. All restricted stock units currently granted have been classified as equity instruments as their terms require settlement in shares. The Company has outstanding restricted stock units with service-based vesting conditions, service and performance-based vesting conditions and market-based vesting conditions.

Restricted stock units with service-based vesting and service-based and performance-based vesting conditions are valued on the grant date using the grant date market price of the underlying shares. Service-based vesting restrictions lapse over periods generally ranging from two to four years. Restricted stock units with both service-based and performance-based vesting conditions consist of restricted stock units which vest upon the achievement of at least two years of service and a targeted revenue run rate of $500,000 (the “Revenue RSUs”). The Revenue RSUs will vest upon the achievement of both (i) a performance condition and (ii) a service condition. The performance condition will be satisfied if the Company achieves a specified quarterly revenue target over a specified measurement period. To satisfy the service condition, the employee must remain employed by the Company until the later of the applicable performance determination date and the second anniversary of the date of grant. The number of Revenue RSUs that will vest upon the achievement of the performance condition and the service condition will vary based on when the performance condition is satisfied, from a maximum of 100% of the number of target shares to a threshold of 25% of the number of target shares with no vesting, absent certain circumstances in a change of control of the Company, if the threshold is not achieved. If the revenue targets are not achieved by March 31, 2017, the Revenue RSUs will expire unvested. The Company also has outstanding a small number of restricted stock units with other performance based vesting criteria. Restricted stock units with market-based vesting conditions consist of restricted stock units which vest upon achievement of a Total Shareholder Return target (the “TSR units”) measured over a three-year period that commenced December 4, 2012. The number of TSR units that will vest upon achievement of the Total Shareholder Return target will vary based on the level of achievement from a maximum of 125% of the target shares to a threshold of 50% of the target shares with no vesting, absent certain circumstances in a change of control of the Company, if the threshold requirement is not achieved or the employee is no longer with the Company at the end of the three-year period. The TSR units are

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valued using a Monte Carlo simulation model. The number of awards expected to be earned, based on achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation for the TSR unit. Compensation cost is recognized regardless of the eventual number of awards that are earned based on the market condition and is recognized on a straight-line basis over the requisite service period.

Stock Purchase Plan

Under the Company’s 2007 Employee Stock Purchase Plan, as amended (the “Purchase Plan”), six-month offering periods begin on January 1 and July 1 of each year, during which employees may elect to purchase shares of the Company’s common stock according to the terms of the offering. Prior to July 1, 2013, the per share purchase price for offerings was equal to 85% of the closing market price of the Company’s common stock on the last day of the offering period. Starting with the six-month offering period that began on July 1, 2013, the per share purchase price for offerings is equal to the lesser of 85% of the closing market price of the Company’s common stock on the first day or last day of the offering period. On May 22, 2013, the Company’s stockholders approved an amendment to the Purchase Plan that increased the number of shares of common stock available for issuance under the Purchase Plan by 350,000. As of June 30, 2013, 425,158 shares of common stock are available under the Purchase Plan for issuance to participating employees.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense on all awards in the following expense categories:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Cost of revenue	$	492	$	450	$	891	$	829
Research and development		917		851		1,748		1,823
Sales and marketing		1,135		996		2,119		1,671
General and administrative		1,587		1,479		2,913		2,752
	$	4,131	$	3,776	$	7,671	$	7,075

Additionally, the Company capitalized $57 and $219 of stock-based compensation related to the development of internal use software for the three months ended June 30, 2013 and 2012, respectively, and $223 and $443 of stock-based compensation expense related to the development of internal use software for the six months ended June 30, 2013 and 2012, respectively.

6. Income Taxes

Income tax is related to federal, state, and to a lesser extent, foreign tax obligations. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, state or foreign tax laws, deductibility of certain costs and expenses, and as a result of acquisitions.

For the three and six months ended June 30, 2013, the Company recorded an income tax benefit of $299 and $2,481, respectively. The Company’s estimated effective tax rate for 2013, which has been applied to the Company’s loss before income taxes for the three and six months ended June 30, 2013, varies from the statutory rate primarily due to 2013 federal and state research and development credits that decrease the effective tax rate, partially offset by non-deductible stock-based compensation expense, that increases the effective tax rate. Additionally, the income tax benefit for the six months ended June 30, 2013 was increased by the 2012 federal research and development credit which was treated as a discrete item. The American Taxpayer Relief Act of 2012, (the “Act”), was enacted on January 2, 2013. The Act retroactively reinstated the federal research and development credit from January 1, 2012. The effect of the change in the tax law related to 2012 was $1,324, which was recognized as a benefit in the first quarter of 2013, the quarter in which the law was enacted.

For the three and six months ended June 30, 2012, the Company recorded an income tax expense of $118 and an income tax benefit of $443, respectively. The Company’s estimated effective tax rate for 2012, which was applied to the Company’s loss before income taxes for the three and six months ended June 30, 2012, varied from the statutory tax rate primarily due to non-deductible stock-based compensation expense, which increased the effective tax rate, partially offset by state research and development credits that reduced the Company’s effective tax rate. Additionally, income taxes for the three and six months ended June 30, 2012 were affected by non-deductible transaction expenses incurred by the Company that were treated as a discrete item.

The Company had net deferred tax assets of $11,985 at December 31, 2012, which increased to $14,461 at June 30, 2013, primarily as a result of the income tax benefit recorded for the six months ended June 30, 2013.

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The Company has not recorded any amounts for unrecognized tax benefits as of June 30, 2013 or December 31, 2012. As of June 30, 2013 and December 31, 2012, the Company had no accrued interest or tax penalties recorded.

7. Accrued Expenses

	June 30, 2013		December 31, 2012
Payroll and payroll related	$	5,607	$	3,800
Licensed software and maintenance		1,197		1,627
Marketing programs		704		1,197
Other accrued expenses		5,516		4,179
	$	13,024	$	10,803

8. Commitments and Contingencies

Office Leases

The Company has a lease for its headquarters space in Waltham, Massachusetts (the “Lease”) that is effective through September 2022 with one ten-year extension option. The Lease includes space the Company is currently occupying as well as space that will be made available at various points in time during the term.

The Company leases office space for a sales and support office in Colorado under a lease agreement effective through April 2019 with three three-year extension options. The Company also leases small amounts of general office space in Florida, New York, California and the United Kingdom under lease agreements that expire at various dates through 2018.

Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate such that rent expense per square foot is recognized on a straight-line basis over the terms of occupancy.

At June 30, 2013, the Company had both prepaid rent and accrued rent balances related to its office leases. The prepaid rent balance was $1,338 at June 30, 2013, of which $314 was included in prepaid expenses and other current assets and $1,024 was included in other assets. The accrued rent balance was $2,187 at June 30, 2013, of which $328 was included in accrued expenses and $1,859 was included in other long-term liabilities. At December 31, 2012, the Company had both prepaid rent and accrued rent balances related to its office leases. The prepaid rent balance was $1,725 at December 31, 2012, of which $302 was included in prepaid expenses and other current assets and $1,423 was included in other assets. The accrued rent balance was $2,154 at December 31, 2012, of which $282 was included in accrued expenses and $1,872 was included in other long-term liabilities.

Total rent expense under office leases was $1,983 and $1,652 for the three months ended June 30, 2013 and 2012, respectively. Total rent expense under office leases was $3,953 and $3,165 for the six months ended June 30, 2013 and 2012, respectively.

As of June 30, 2013, future minimum lease payments under non-cancellable office leases are as follows:

Remainder of 2013	$	3,466
2014		8,116
2015		9,100
2016		10,147
2017		10,153
Thereafter		40,701
Total	$	81,683

Third-Party Hosting Agreements

The Company has agreements with two vendors to provide specialized space and equipment and related services from which the Company hosts its software applications.

Payment escalations and rent holidays specified in these agreements are accrued or deferred as appropriate such that rent expense per square foot is recognized on a straight-line basis over the terms of occupancy. At June 30, 2013 and December 31, 2012, the Company had both prepaid rent and accrued rent balances related to its hosting agreements. At June 30, 2013, the Company had prepaid rent of $970, of which $289 was included in prepaid expenses and other current assets and $681 was included in other assets. The accrued

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rent balance of $163 at June 30, 2013 was included in other long-term liabilities. At December 31, 2012, the Company had prepaid rent of $1,120, of which $259 was included in prepaid expenses and other current assets and $861 was included in other assets and accrued rent of $138 which was included in other long-term liabilities. Total rent expense under hosting agreements was $998 and $994 for the three months ended June 30, 2013 and 2012, respectively. Total rent expense under hosting agreements was $2,005 and $1,900 for the six months ended June 30, 2013 and 2012, respectively.

The agreements include payment commitments that expire at various dates through mid-2017. As of June 30, 2013, future minimum payments under the hosting agreements are as follows:

Remainder of 2013	$	1,974
2014		3,624
2015		3,734
2016		3,845
2017		775
Total	$	13,952

Vendor Commitments

As of June 30, 2013, the Company had issued both cancellable and non-cancellable purchase orders to various vendors and entered into contractual commitments with various vendors totaling $21,251 related primarily to marketing programs and other non-marketing goods and services to be delivered over the next twelve months.

Letters of Credit and Restricted Cash

As of June 30, 2013 and December 31, 2012, the Company maintained a letter of credit totaling $1,300 and $750, respectively, for the benefit of the landlord of the Company’s corporate headquarters lease. The landlord can draw against the letter of credit in the event of default by the Company. The Company was required to maintain a cash balance of at least $1,300 and $750 as of June 30, 2013 and December 31, 2012, respectively, to secure the letter of credit. These amounts were classified as restricted cash in the balance sheet at June 30, 2013 and December 31, 2012.

Contingent Consideration

The former shareholders of SinglePlatform are eligible to receive consideration of up to $15,000, which is contingent upon the achievement of certain revenue targets achieved through June 30, 2014, measured in six-month intervals. If such conditions are achieved, the consideration is payable in cash. The Company does not believe the revenue targets will be met. Accordingly, the Company’s accrual for this contingency as of June 30, 2013 and December 31, 2012 was $0.

Indemnification Obligations

The Company enters into standard indemnification agreements with the Company’s channel partners and certain other third parties in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by the indemnified party in connection with certain intellectual property infringement and other claims by any third party with respect to the Company’s business and technology. Based on historical information and information known as of June 30, 2013, the Company does not expect it will incur any significant liabilities under these indemnification agreements.

Legal Matters

On August 7, 2012, two former employees, on behalf of themselves and all other similarly situated individuals (collectively, the “FLSA Plaintiffs”), filed a complaint in the U.S. District Court for the District of Massachusetts that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on August 9, 2012, alleges that the Company violated the Fair Labor Standards Act and the Massachusetts overtime law with respect to certain current and former sales employees. The FLSA Plaintiffs seek an award for damages in an unspecified amount. The Company and counsel for the FLSA Plaintiffs participated in a court-sanctioned mediation session with an independent mediator in March 2013 and, during the three months ended March 31, 2013, the Company recorded an accrual of $820. In July 2013, the Company and the FLSA Plaintiffs executed a settlement agreement that will terminate the litigation and settle all pending claims against the Company in exchange for an

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aggregate payment of $800. The U.S. District Court has approved the settlement on a preliminary basis. Final approval is expected in the fourth quarter of 2013. Following final approval, the Company will pay the settlement amount. As of June 30, 2013, the Company had an accrual of $820 related to this matter.

On September 24, 2012, RPost Holdings, Inc., RPost Communications Limited and RMail Limited (collectively, “RPost”) filed a complaint in the U.S. District Court for the Eastern District of Texas that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on December 26, 2012, alleges that certain elements of the Company’s email marketing technology infringe five patents held by RPost. RPost seeks an award for damages in an unspecified amount and injunctive relief. On February 11, 2013, RPost amended its complaint to name five of the Company’s partners as defendants. Under the Company’s contractual agreements with these partners, the Company is obligated to indemnify them for claims related to patent infringement. The Company has filed a motion to sever and stay the claims against its partners and a motion to dismiss the claims against the Company. This litigation is in its very early stages. As a result, neither the ultimate outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to defend itself vigorously.

On November 14, 2012, the Company filed a complaint in the U.S. District Court for the District of Delaware against Umbanet, Inc. (“Umbanet”) seeking a declaratory judgment that two patents held by Umbanet (the “Umbanet Patents”) are not infringed by a customer’s use of the Company’s email marketing product and that such patents are invalid (the “Delaware Case”). The Company filed the Delaware Case in response to a complaint filed by Umbanet in the U.S. District Court for the District of New Jersey against one of the Company’s customers alleging that the customer’s use of the Company’s email marketing product infringed the Umbanet Patents (the “New Jersey Case”). Umbanet has filed a motion in the Delaware Case seeking to dismiss the complaint or, in the alternative, stay the case pending resolution of the New Jersey Case. The Company filed a motion in the New Jersey Case seeking to stay the case pending resolution of the Delaware Case. These litigation matters are in a very early stage. As a result, neither the ultimate outcome of these matters nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to pursue these matters vigorously.

On March 7, 2013, CreateAds LLC (“CreateAds”) filed a complaint in the U.S. District Court for the District of Delaware that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on March 8, 2013, alleges that certain elements of the Company’s email marketing technology infringe a patent held by CreateAds. CreateAds seeks an award for damages in an unspecified amount and injunctive relief. The Company has filed a motion to dismiss the complaint. This litigation is in its very early stages. As a result, neither the ultimate outcome of this matter nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to defend itself vigorously.

The Company is from time to time subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of its business. While the outcome of these other claims cannot be predicted with certainty, management does not believe that the outcome of any of these other legal matters will have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

9. 401(k) Savings Plan

The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Board of Directors. The Company elected to make matching contributions for the plan years ending December 31, 2013 and 2012 at a rate of 100% of each employee’s contribution up to a maximum matching contribution of 3% of the employee’s compensation and at a rate of 50% of each employee’s contribution in excess of 3% up to a maximum of 5% of the employee’s compensation.

Through June 30, 2013 and 2012, the Company made matching contributions of $1,406 and $1,197 for the plan years ended December 31, 2013 and 2012, respectively.

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Item 2. 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 the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2012 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 28, 2013. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and elsewhere in this report. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Executive Overview

We are a leading provider of online marketing tools that are designed for small organizations, including small businesses, associations and non-profits. Our tools include our email marketing, social media marketing, event marketing, local deals and survey products. In June 2012, we began offering a distribution platform for online listings following our acquisition of SinglePlatform, Corp., or SinglePlatform. We seek to help our customers succeed by creating and growing their customer and member relationships through our easy-to-use products combined with education, support, KnowHow^® and coaching, all of which allow our customers to create and grow their customer relationships.

We market our products and acquire our customers through a variety of sources including online marketing, such as search engines and advertising on online networks and other websites, offline marketing through television and radio advertising, local seminars, relationships with our partners, referrals from our growing customer base, general brand awareness and a link to our website in the footer of substantially all of the emails sent by our customers.

We have grown rapidly since launching our first on-demand product in 2000. We ended the first half of 2013 with approximately 575,000 unique paying customers and had revenue for the first half of 2013 of $138 million.

Our business strategy is to expand beyond email marketing to provide an integrated multi-product offering that drives higher customer lifetime value. We believe increasing our customer’s lifetime value will be a key contributor to our continued success. To drive lifetime value we will continue to focus on acquiring customers in a cost-effective manner, increasing average revenue per customer through cross-selling and increased product usage and improving customer retention rates.

Recent highlights include:

• We recently introduced our common contacts functionality and will be continuing to roll out that functionality in a phased manner to all of our customers. This enhanced functionality will enable small businesses to have additional views of their contacts and will allow them to run targeted campaigns to specific segments of their contact list. It will also allow customers to track and manage engagement over time, across all of our different campaign types and to build and store contact lists without having a contact’s email address.

• We continue to invest in our SinglePlatform offering and, in April 2013, announced that Yelp^® is part of our SinglePlatform network of publishers. Menu updates to Yelp will go live within 24 hours. In June 2013, we announced a partnership with GrubHub^®, a leading online and mobile food ordering service, to become a menu provider for GrubHub’s AllMenus.com and integrate GrubHub’s online ordering platform into SinglePlatform menus.

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• In April 2013, we announced a share repurchase program. Under the repurchase program, we are authorized to repurchase up to $20 million of our common stock through December 31, 2013. Shares may be repurchased from time to time in the open market or privately negotiated transactions in accordance with applicable securities and stock exchange rules.

• We continue to test pricing and bundling opportunities as well as explore opportunities to sell and cross-sell multiple products. In the second quarter of 2013, we rolled out our new in-product messaging center. We can now run targeted marketing campaigns to small businesses, based on specific demographic and behavioral characteristics.

Key Financial and Operating Metrics

In connection with the ongoing operation of our business, our management regularly reviews key financial and operating metrics. Given our growth strategy, we pay particular attention to customer lifetime value, customer acquisition metrics, trialer growth, customer attrition, success in cross-selling and growing customer list sizes, number of products per customer and average revenue per customer. We also consider other financial and operating metrics such as revenue, gross margin, expenses, customer satisfaction rates, average speed of answer for customer support calls, email deliverability rates and capital expenditures, among others. Management considers these financial and operating metrics critical to understanding and improving our business, reviewing our historical performance, benchmarking our performance versus other companies and identifying current and future trends, and for planning purposes.

In addition, we consider the following non-GAAP financial measures to be key indicators of our financial performance:

• “adjusted EBITDA,” which we define as GAAP net income (loss) before income taxes, interest income and other income (expense), depreciation and amortization, stock-based compensation, litigation contingency accrual and contingent consideration adjustment;

• “adjusted EBITDA margin,” which we define as adjusted EBITDA divided by revenue;

• “non-GAAP net income,” which we define as GAAP net income (loss) before the non-cash portion of income taxes, stock-based compensation expense, litigation contingency accrual and contingent consideration adjustment; and

• “free cash flow,” which we define as net cash flow from operating activities less acquisition of property and equipment.

We believe that these non-GAAP financial measures are useful to management and investors in evaluating our operating performance for the periods presented and provide a tool for evaluating our ongoing operations. These non-GAAP financial measures, however, are not a measure of financial performance under accounting principles generally accepted in the United States of America, or GAAP, and should not be considered a substitute for GAAP financial measures, including but not limited to net income (loss) or cash flows from operating, investing and financing activities and may not be comparable to similarly titled measures reported by other companies.

Certain Trends and Uncertainties

The following represents a summary of certain trends and uncertainties, which could have a significant impact on our financial condition and results of operations. This summary is not intended to be a complete list of potential trends and uncertainties that could impact our business in the long or short term. The summary should be considered along with the factors set forth under Part II, Item 1A “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

• Our long term strategy is substantially dependent on our ability to continue to generate interest in our existing products and to enhance and expand our product offerings to serve the online marketing needs of small businesses, associations and non-profits. If we fail, our financial results could be adversely impacted.

• In connection with our acquisition of SinglePlatform, we have an obligation to the former shareholders of SinglePlatform to pay additional cash consideration of up to $15.0 million, contingent on the achievement of certain revenue targets through June 2014, measured in six-month intervals. Based on our assumptions and estimates related to our revenue forecasts we do not believe we will pay this additional consideration and have recorded no liability at June 30, 2013. We will continue to assess these assumptions and estimates on a quarterly basis. Changes in the estimated liability related to updated assumptions and estimates and to the actual revenue achievement will be recognized within the consolidated statements of operations. If our

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assumptions and estimates change significantly or if actual revenue achievement is significantly different than our estimates, our results of operations and cash flows could be materially affected. See also Note 3, Acquisitions, of the Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. In addition, our operating results could be adversely impacted if we fail to successfully integrate SinglePlatform or if we fail to continue to successfully sell SinglePlatform’s product.

• We believe that given the size of our potential market and the relatively low barriers to entry, competition may increase. Increased competition could result from existing competitors, existing competitors that have been acquired by larger enterprises or new competitors that enter the market because of the potential opportunity. We will continue to closely monitor competitive activity and respond accordingly. Increased competition could have an adverse effect on our financial condition and results of operations.

• From time to time, we may be subject to various claims and lawsuits by partners, customers, or other parties arising in the ordinary course of business, including lawsuits alleging patent infringement. We are currently a party to actions that are described in Part II, Item 1 “Legal Proceedings” included elsewhere in this Quarterly Report on Form 10-Q. These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Furthermore, the results of any of these actions may have a material adverse effect on our results of operations, financial condition and cash flows.

• We believe that as we continue to grow revenue at expected rates, our cost of revenue and operating expenses, including sales and marketing, research and development and general and administrative expenses, will increase in absolute dollar amounts. For a description of the general trends we anticipate in various expense categories, see “Cost of Revenue and Operating Expenses” below.

Sources of Revenue

We derive our revenue principally from subscription fees from our customers. Our revenue is driven primarily by the number of paying customers and the subscription fees for our products and is not concentrated within any one customer or group of customers. In 2012, our top 100 customers accounted for less than 1% of our total revenue. We generally do not require our customers to commit to a contractual term; however, our customers are required to prepay for subscriptions on a monthly, semi-annual, or annual basis by providing a credit card or bank check. Fees are recorded initially as deferred revenue and then recognized as revenue on a daily basis over the prepaid subscription period.

We generate a small amount of revenue from ancillary services related to our products, which primarily consist of custom services and training. For SaveLocal, we charge a fee based on the number of deals sold by our customers and the value of the successful deal. We do not generate significant revenue from this product.

Cost of Revenue and Operating Expenses

We allocate certain occupancy and general office related expenses, such as rent, utilities, office supplies and depreciation of general office assets to cost of revenue and operating expense categories based on headcount. As a result, an occupancy expense allocation is reflected as personnel-related costs in cost of revenue and each operating expense category.

Cost of Revenue. Cost of revenue consists primarily of wages and benefits for software operations and customer support personnel, credit card processing fees, depreciation and amortization, and maintenance and hosting of our software applications underlying our product offerings. We allocate a portion of customer support costs relating to assisting trial customers to sales and marketing expense.

The expenses related to our hosted software applications are affected by the number of customers who subscribe to our products and the complexity and redundancy of our software applications and hosting infrastructure. We expect cost of revenue to increase in absolute dollars as we expect to increase our number of customers but to decrease as a percentage of revenue over time as we gain efficiencies created by our expected revenue growth and cost savings.

Research and Development. Research and development expenses consist primarily of wages and benefits for product strategy and development personnel. We have focused our research and development efforts on improving ease of use, functionality and technological scalability of our existing products as well as on the development of new product offerings. We primarily expense research and development costs. However, direct development costs related to software enhancements that add functionality are capitalized and amortized over their useful life. We expect that on an annual basis research and development expenses will continue to increase both in absolute dollars and as a percentage of revenue due to our expanded investment in our product roadmap during 2013. Over the longer term we expect our research and development expenses to increase in absolute dollars but decrease as a percentage of revenue as we expect to grow our revenue at a faster rate.

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Sales and Marketing. Sales and marketing expenses consist primarily of advertising and promotional costs, wages and benefits for sales and marketing personnel, partner referral fees, the portion of customer support costs that relate to assisting trial customers and amortization of sales and marketing relating intangible assets. Advertising costs consist primarily of pay-per-click advertising with search engines, other online and offline advertising media, including television and radio advertisements, as well as the costs to create and produce these advertisements. Advertising costs are expensed as incurred. Promotional costs consist primarily of public relations, memberships and event costs. Additionally, sales and marketing expenses include costs related to our efforts to retain our customers and to cross-sell and increase usage of our products. In order to continue to grow our business and brand and category awareness, we expect that we will continue to commit substantial resources to our sales and marketing efforts. As a result, we expect that on an annual basis, sales and marketing expenses will increase in absolute dollars, but decrease as a percentage of revenue as we expect to continue to grow our revenue at a faster rate.

General and Administrative. General and administrative expenses consist primarily of wages and benefits for administrative, human resources, internal information technology support, finance, accounting and analytics personnel, professional fees, board compensation and expenses, certain taxes and other corporate expenses. In 2013, we also recorded a loss accrual related to litigation. We expect that general and administrative expenses will increase as we continue to add personnel in connection with the anticipated growth of our business and incur costs related to operating as a public company. We expect that our general and administrative expenses will increase both in absolute dollars and as a percentage of revenue in 2013 due to increased wage costs, particularly as they relate to analytics and business intelligence, increased costs associated with litigation and general increases related to the growth of our business. Over the longer term we expect our general and administrative expenses to decline as a percentage of revenue as we expect to continue to grow our revenue at a faster rate.

Acquisition Costs and Other Related Charges. Acquisition costs and other related charges include expenses associated with third-party professional services we utilize related to the evaluation and execution of successful acquisitions. Acquisition costs and other related charges also include changes in the fair value of our contingent consideration liability recorded as the result of the SinglePlatform acquisition. This liability was measured at fair value on the acquisition date, and until the liability is settled, it must be remeasured to fair value at each reporting period, with the changes included in our results of operations. We will evaluate quarterly remeasurements of the fair value of this liability through June 2014, the last settlement date. We may also continue to incur acquisition costs and other related charges in future periods if we complete additional acquisitions.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that of our significant accounting policies, which are described in the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC, the following accounting policies involve the most judgment and complexity:

• Revenue recognition;

• Income taxes;

• Goodwill and acquired intangible assets;

• Fair value of financial instruments;

• Software and website development costs; and

• Stock-based compensation.

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.

There have been no material changes in our critical accounting policies since December 31, 2012. For further information, please see the discussion of critical accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2012.

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Results of Operations

Three Months Ended June 30, 2013 compared to Three Months Ended June 30, 2012

Revenue

	Three Months Ended June 30,
	2013		2012		Change
	(Dollars in thousands)
Revenue	$	70,208	$	62,072		13	%

Revenue increased by $8.1 million from 2012 to 2013. The increase resulted primarily from an approximately 8% increase in the number of average monthly customers and an approximately 5% increase in average revenue per customer. The increase in average revenue per customer was primarily due to an increase in average number of products per customer and to an increase in average customer list size. We expect our average revenue per customer to increase over time.

Cost of Revenue

	Three Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Cost of revenue	$	20,578		$	18,434			12	%
Percent of revenue		29	%		30	%

Cost of revenue increased by $2.1 million from 2012 to 2013. The increase resulted primarily from increased customer support personnel costs of $886,000 to support our customer growth and increased personnel costs of $339,000 in our operations group to manage our infrastructure. Depreciation, hosting and maintenance costs increased by $563,000 as a result of scaling and adding capacity to our hosting infrastructure.

Research and Development

	Three Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Research and development	$	11,999		$	9,804			22	%
Percent of revenue		17	%		16	%

Research and development expenses increased by $2.2 million from 2012 to 2013. The increase was due primarily to additional personnel-related costs as a result of our continued hiring of research and development employees to further develop and enhance our products.

Sales and Marketing

	Three Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Sales and marketing	$	27,804		$	25,836			8	%
Percent of revenue		40	%		42	%

Sales and marketing expenses increased by $2.0 million from 2012 to 2013. The increase in absolute dollars was largely due to increased advertising and promotional expenditures of $1.0 million resulting from a change in the mix and timing of advertising campaigns including our investment in a television campaign. Personnel-related costs increased by $743,000, primarily from the increase in SinglePlatform sales personnel.

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General and Administrative

	Three Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
General and administrative	$	10,048		$	7,830			28	%
Percent of revenue		14	%		13	%

General and administrative expenses increased by $2.2 million from 2012 to 2013. Personnel-related costs increased by $1.4 million largely as a result of increasing the number of general and administrative employees to support our overall growth, including an increase in the number of employees focused on analytics and business intelligence. Professional service fees increased by $279,000 primarily due to increased costs associated with our defense of certain legal matters.

Acquisition Costs and Other Related Charges

	Three Months Ended June 30,
	2013		2012
	(Dollars in thousands)
Acquisition costs and other related charges	$	—	$	574

Acquisition costs and other related charges consisted of transaction costs during the three months ended June 30, 2012 related to our acquisition of SinglePlatform, which we completed in June 2012.

Interest Income and Other Income (Expense), Net

	Three Months Ended June 30,
	2013		2012		Change
	(Dollars in thousands)
Interest income and other income (expense), net	$	12	$	62		(81	)%

Interest income and other income (expense), net decreased by $50,000 from 2012 to 2013 due to a decrease in interest earned on our investment portfolio primarily as a result of lower balances as well as an increase in foreign currency translation expense.

Income Taxes

	Three Months Ended June 30,
	2013			2012
	(dollars in thousands)
Income tax (expense) benefit	$	299		$	(118	)
Percent of loss before income taxes		143	%		(34	)%

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, state or foreign tax laws, deductibility of certain costs and expenses, and as a result of acquisitions. Our estimated effective tax rate for 2013 is primarily affected by 2013 federal and state research and development credits and non-deductible stock-based compensation expense. Our estimated effective tax rate for 2012 was primarily affected by state research and development credits and non-deductible stock-based compensation expense. Additionally, income taxes for the three months ended June 30, 2012 were affected by non-deductible transaction expenses that we incurred and treated as a discrete item.

Six Months Ended June 30, 2013 compared to Six Months Ended June 30, 2012

Revenue

	Six Months Ended June 30,
	2013		2012		Change
	(Dollars in thousands)
Revenue	$	138,413	$	122,010		13	%

Revenue increased by $16.4 million from 2012 to 2013. The increase resulted primarily from an approximately 9% increase in the number of average monthly customers and an approximately 4% increase in average revenue per customer. The increase in average revenue per customer was primarily due to an increase in the average number of products per customer and to an increase in average customer list size.

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Cost of Revenue

	Six Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Cost of revenue	$	40,486		$	36,033			12	%
Percent of revenue		29	%		30	%

Cost of revenue increased by $4.5 million from 2012 to 2013. The increase resulted primarily from increased customer support personnel costs of $2.0 million to support our customer growth and increased personnel costs of $747,000 in our operations group to manage our infrastructure. Depreciation, hosting and maintenance costs increased by $1.2 million as a result of scaling and adding capacity to our hosting infrastructure.

Research and Development

	Six Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Research and development	$	22,267		$	19,275			16	%
Percent of revenue		16	%		16	%

Research and development expenses increased by $3.0 million from 2012 to 2013. The increase was due primarily to additional personnel-related costs as a result of our continued hiring of research and development employees to further develop and enhance our products.

Sales and Marketing

	Six Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
Sales and marketing	$	58,606		$	51,554			14	%
Percent of revenue		42	%		42	%

Sales and marketing expenses increased by $7.1 million from 2012 to 2013. The increase in absolute dollars was largely due to increased advertising and promotional expenditures of $3.6 million resulting from a change in the mix and timing of advertising campaigns including our investment in a television campaign. Personnel-related costs increased by $2.8 million, primarily from the increase in SinglePlatform sales personnel. Partner referral fees increased by $597,000 as the number of new customers generated from our partners increased.

General and Administrative

	Six Months Ended June 30,
	2013			2012			Change
	(Dollars in thousands)
General and administrative	$	19,942		$	15,245			31	%
Percent of revenue		14	%		13	%

General and administrative expenses increased by $4.7 million from 2012 to 2013. Increased personnel-related costs of $2.7 million were largely due to an increase in the number of general and administrative employees to support our overall growth, including an increase in the number of employees focused on analytics and business intelligence and those relating to SinglePlatform. Additionally, we recorded an accrual related to a litigation matter of $820,000 in the first quarter of 2013 and our professional service fees increased by $586,000 primarily due to increased costs associated with our defense of certain legal matters.

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Acquisition Costs and Other Related Charges

	Six Months Ended June 30,
	2013		2012
	(Dollars in thousands)
Acquisition costs and other related charges	$	—	$	723

Acquisition costs and other related charges consisted of transaction costs related to our acquisitions of CardStar, Inc., or CardStar and SinglePlatform, which we completed in January 2012 and June 2012, respectively.

Interest Income and Other Income (Expense), Net

	Six Months Ended June 30,
	2013			2012		Change
	(Dollars in thousands)
Interest income and other income (expense), net	$	(17	)	$	133		(113	)%

Interest income and other income (expense), net decreased by $150,000 from 2012 to 2013 due to a decrease in interest earned on our investment portfolio primarily as a result of lower balances as well as an increase in foreign currency translation expense.

Income Taxes

	Six Months Ended June 30,
	2013			2012
	(dollars in thousands)
Income tax benefit	$	2,481		$	443
Percent of loss before income taxes		85	%		64	%

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, state or foreign tax laws, deductibility of certain costs and expenses, and as a result of acquisitions. Our estimated effective tax rate for 2013 is primarily affected by 2013 federal and state research and development credits and non-deductible stock-based compensation expense. Additionally, the income tax benefit was increased by the 2012 federal research and development credit which was treated as a discrete item in the first quarter of 2013. The American Taxpayer Relief Act of 2012, or the Act, was enacted on January 2, 2013. The Act retroactively reinstated the federal research and development credit from January 1, 2012. The effect of the change in the tax law related to 2012 was $1.3 million, which was recognized as a benefit to income tax expense in the first quarter of 2013, the quarter in which the law was enacted.

Our estimated effective tax rate for 2012 was primarily affected by state research and development credits and non-deductible stock-based compensation expense. Additionally, income taxes for the six months ended June 30, 2012 were affected by non-deductible transaction expenses that we incurred and treated as a discrete item.

Liquidity and Capital Resources

During the first half of 2013 and 2012, we funded our operations with cash flows generated from operations. At June 30, 2013, our principal sources of liquidity were cash and cash equivalents and marketable securities of $99.3 million.

Net cash provided by operating activities was $16.4 million and $16.1 million for the six months ended June 30, 2013 and 2012, respectively. The slight increase in 2013 was due primarily to an increase in the add-backs of non-cash items, including depreciation and amortization and stock-based compensation, and an increase in cash generated from changes in working capital accounts, partially offset by an increase in the net loss in the six months ended June 30, 2013 as compared to the six months ended June 30, 2012. We generated a net loss of $424,000 in 2013 as compared to a net loss of $244,000 in the same period in 2012. In 2013, our depreciation and amortization increased by $1.8 million and our stock-based compensation increased by $596,000. This increase was partially offset by an increase in our deferred tax assets of $2.5 million in 2013 as compared to $644,000 in 2012. Cash provided by changes in our working capital accounts increased by $851,000 in the first half of 2013 as compared to the first half of 2012. Changes in our working capital accounts are primarily driven by timing of payments to our vendors as well as cash receipts from our customers. Cash provided by operating activities has historically been affected by the amount of net income (loss), growth in prepaid subscriptions, changes in working capital accounts and the timing of rent payment and add-backs of non-cash expense items such as depreciation and amortization and the expense associated with stock-based awards as well as changes in deferred taxes.

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Net cash provided by investing activities was $2.4 million in the six months ended June 30, 2013 as compared to net cash used in investing activities of $48.7 million in the six months ended June 30, 2012. Net cash provided by investing activities in the first six months of 2013 consisted primarily of the net cash provided by marketable securities transactions offset partially by cash paid to acquire property and equipment as well as an increase in restricted cash related to a lease amendment for our corporate headquarters. Net cash used in investing activities in the first six months of 2012 consisted primarily of cash paid to purchase CardStar and SinglePlatform and to acquire property and equipment partially offset by the net cash provided by marketable securities transactions. In January 2012, we completed the acquisition of CardStar, for a cash payment of $5.8 million and, in June 2012, we completed the acquisition of SinglePlatform for a cash payment of $62.7 million. Acquisition of property and equipment of $9.7 million and $10.6 million in the six month periods ended June 30, 2013 and 2012, respectively, consisted of the purchase of computer equipment for our operations and employees, furniture and leasehold improvements and the capitalization of certain software development costs. We have made capital expenditures to increase capacity of our operational equipment and to accommodate growth in our business. During each of the six month periods ended June 30, 2013 and 2012, we capitalized $3.2 million of costs associated with the development of internal use software.

Net cash used in financing activities was $327,000 for the six months ended June 30, 2013 as compared to cash provided by financing activities of $4.3 million for the six months ended June 30, 2012. Net cash provided by proceeds from stock issued pursuant to the exercise of stock options and to the employee stock purchase plan in the first six months of 2013 was completely offset by $1.6 million of cash used to repurchase our common stock on the open market. In the second quarter of 2013, we announced a repurchase program of up to $20 million of our common stock through December 31, 2013. Net cash provided by financing activities in the first six months of 2012 consisted of proceeds from stock issued pursuant to the exercise of stock options and to the employee stock purchase plan, as well as the income tax benefit from the exercise of stock options.

As of December 31, 2012, we had federal and state net operating loss carry-forwards of $42.9 million and $1.1 million, respectively, which we intend to use to the extent available to offset payments of future federal and state income tax liabilities. If unused, our net operating loss carry-forwards expire at various dates through 2032 for federal and 2017 for state income tax purposes.

Contractual Obligations

We lease our headquarters under an operating lease that is effective through September 2022 with one ten-year extension option. The lease includes the space we are occupying now as well as additional space that will be made available to us through the term of the lease. We lease office space in Colorado for a sales and support office under an operating lease that expires in April 2019 with three three-year extension options. We also lease small amounts of general office space in Florida, New York, California and the United Kingdom under lease agreements that expire at various dates through 2018.

We have agreements with various vendors to provide specialized space and equipment and related services from which we host our software application. The agreements include payment commitments that expire at various dates through early 2017.

As of June 30, 2013, we had issued both cancellable and non-cancellable purchase orders and entered into contractual commitments with various vendors totaling $21.3 million. This amount relates primarily to marketing programs and other non-marketing related goods and services to be delivered over the next twelve months.

The following table summarizes our contractual obligations at June 30, 2013, and the effect such obligations are expected to have on our liquidity and cash flow in future periods.

	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(In thousands)
Office lease obligations	$	81,683	$	7,440	$	18,294	$	20,177	$	35,772
Third-party hosting agreements		13,952		3,778		7,468		2,706		—
Vendor commitments		21,251		21,251		—		—		—
Total(1)	$	116,886	$	32,469	$	25,762	$	22,883	$	35,772

(1) As of June 30, 2013, we had an obligation to the former shareholders of SinglePlatform under which we are obligated to pay cash consideration of up to $15.0 million, which is contingent on the achievement by SinglePlatform of certain revenue targets through June 30, 2014, measured in six-month intervals. Based on our current revenue forecasts, we do not expect to pay any of the consideration. We will continue to assess our forecasts and assumptions on a quarterly basis as additional data impacting the assumptions is obtained.

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On April 25, 2013, we announced that our Board of Directors authorized the repurchase of up to $20 million of our common stock through December 31, 2013. Under the authorization, we can repurchase shares in the open market, which may include the use of 10b5-1 trading plans, or through privately negotiated transactions. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions. Share repurchases may be suspended or discontinued at any time. We expect to fund the share repurchases from our cash and cash equivalents.

Our future capital requirements may vary materially from those now planned and will depend on many factors, including, but not limited to, development of new products, market acceptance of our products, the levels of advertising and promotion required to launch additional products and improve our competitive position in the marketplace, the expansion of our sales, support and marketing organizations, the establishment of additional offices in the United States and worldwide and the building of infrastructure necessary to support our anticipated growth, the response of competitors to our products and our relationships with suppliers and clients. Since the introduction of our on-demand email marketing product in 2000, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase on an absolute dollar basis in the future.

We believe that our current cash, cash equivalents and marketable securities and operating cash flows will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. Thereafter, we may need to raise additional funds through public or private financings or borrowings to fund our operations, to develop or enhance products, to fund expansion, to respond to competitive pressures or to acquire complementary products, businesses or technologies. If required, additional financing may not be available on terms that are favorable to us, or at all. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced and these securities might have rights, preferences and privileges senior to those of our current stockholders or we may be subject to covenants that restrict how we conduct our business. No assurance can be given that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us.

During the last three years, inflation and changing prices have not had a material effect on our business. We are unable to predict whether inflation or changing prices will materially affect our business in the foreseeable future.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financing activities. We do not have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk. Significantly all of our revenue and expenses are denominated in U.S. dollars. Accordingly, our results of operations and cash flows are not subject to material fluctuations due to changes in foreign currency exchange rates. Increased activity in international markets will expose us to changes in currency exchange rates. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

Interest Rate Sensitivity. We had cash and cash equivalents and marketable securities of $99.3 million at June 30, 2013, which consisted of cash, government securities, corporate and agency bonds, commercial paper, certificates of deposit and money market instruments. Interest income is sensitive to changes in the general level of U.S. interest rates; however, due to the nature of these investments, we do not believe that we have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to

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allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2013, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

(b) Changes in Internal Control over Financial Reporting.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On August 7, 2012, two former employees, on behalf of themselves and all other similarly situated individuals, or collectively, the FLSA Plaintiffs, filed a complaint in the U.S. District Court for the District of Massachusetts that named us as a defendant in a lawsuit. The complaint, which was served on us on August 9, 2012, alleges that we violated the Fair Labor Standards Act and the Massachusetts overtime law with respect to certain of our current and former sales employees. The FLSA Plaintiffs’ complaint seeks an award for damages in an unspecified amount. We participated in a court-sanctioned mediation session with an independent mediator in March 2013 and, during the three months ended March 31, 2013, we recorded an accrual of $820,000. In July 2013, we executed a settlement agreement with the FLSA Plaintiffs that will terminate the litigation and settle all pending claims against us in exchange for an aggregate payment of $800,000. The U.S. District Court has approved the settlement on a preliminary basis. Final approval is expected in the fourth quarter of 2013. Following final court approval, we will pay the settlement amount. As of June 30, 2013, we had an accrual of $820,000 related to this matter. See also Note 8, Commitments and Contingencies, of the Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

On September 24, 2012, RPost Holdings, Inc., RPost Communications Limited and RMail Limited, or collectively, RPost, filed a complaint in the U.S. District Court for the Eastern District of Texas that named us as a defendant in a lawsuit. The complaint, which was served on us on December 26, 2012, alleges that certain elements of our email marketing technology infringe five patents held by RPost. RPost seeks an award for damages in an unspecified amount and injunctive relief. On February 11, 2013, RPost amended its complaint to name five of our partners as defendants. Under our contractual agreements with these partners, we are obligated to indemnify them for claims related to patent infringement. We have filed a motion to sever and stay the claims against our partners and a motion to dismiss the claims against us. This litigation is in its very early stages. As a result, neither the ultimate outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, we believe we have meritorious defenses to any claim of infringement and intend to defend the lawsuit vigorously.

On November 14, 2012, we filed a complaint in the U.S. District Court for the District of Delaware against Umbanet, Inc., or Umbanet, seeking a declaratory judgment that two patents held by Umbanet, or collectively, the Umbanet Patents, are not infringed by a customer’s use of our email marketing product and that such patents are invalid. We refer to this matter as the Delaware Case. We filed the Delaware Case in response to a complaint filed by Umbanet in the U.S. District Court for the District of New Jersey against one of our customers alleging that the customer’s use of our email marketing product infringed the Umbanet Patents. We refer to this matter as the New Jersey Case. Umbanet has filed a motion in the Delaware Case seeking to dismiss the complaint or, in the alternative, stay the case pending resolution of the New Jersey Case. We have filed a motion in the New Jersey Case seeking to stay the case pending resolution of the Delaware Case. This litigation is in its very early stages. As a result, neither the ultimate outcome of this matter nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, we believe that we have meritorious defenses to any claim of infringement and intend to defend the lawsuit vigorously.

On March 7, 2013, CreateAds LLC, or CreateAds, filed a complaint in the U.S. District Court for the District of Delaware that named us as a defendant in a lawsuit. The complaint, which was served on us on March 8, 2013, alleges that certain elements of our email marketing technology infringe a patent held by CreateAds. CreateAds seeks an award for damages in an unspecified amount and injunctive relief. We have filed a motion to dismiss the complaint. This litigation matter is in a very early stage. As a result, neither the ultimate outcome of this matter nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, we believe that we have meritorious defenses to any claim of infringement and intend to pursue this matter vigorously.

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From time to time we may become subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of our business. While the outcome of these other claims cannot be predicted with certainty, we do not believe that the outcome of any of these other legal matters will have a material adverse effect on our results of operations, financial condition or cash flows.

Item 1A. Risk Factors

Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

If we are unable to attract new customers and retain existing customers, our business and results of operations will be affected adversely.

To succeed, we must continue to attract and retain a large number of customers. Over the last few years, there has been a decline in the number of new customers we have added on an annual basis. In 2011, we added fewer new customers than we added in 2010 and in 2012 we added fewer new customers than we added in either 2010 or 2011. We rely on a variety of methods to attract new customers, such as paying providers of online services, search engines, directories and other websites to provide content, advertising banners and other links that direct customers to our website, television and radio advertising, the efforts of our partners and the inclusion of a link to our website in substantially all of our customers’ emails. In addition, we are committed to providing our customers with a high level of support. As a result, we believe many of our new customers are referred to us by existing customers. However, customers cancel their accounts for many reasons, including economic concerns, business failure or a perception that they do not use our products effectively, the service is not a good value and that they can manage their online marketing efforts without our products. In some cases, we terminate an account because the customer fails to comply with our standard terms and conditions. As our customer base continues to grow, even if our customer retention rates remain the same on a percentage basis, the absolute number of customers we lose each month will increase. We must continually add new customers to replace customers whose accounts are cancelled or terminated, which may involve significantly higher marketing expenditures than we currently anticipate. If we are unable to use any of our current marketing initiatives or the cost of such initiatives were to significantly increase or such initiatives or our efforts to satisfy our existing customers are not successful, we may not be able to attract new customers or retain existing customers on a cost-effective basis and, as a result, our business and results of operations would be affected adversely.

Our business is substantially dependent on the market for email marketing services for small organizations.

We derive, and expect to continue to derive, a substantial portion of our revenue from our email marketing product for small organizations, including small businesses, associations and non-profits. For the year ended December 31, 2012, our revenue from our email marketing product alone was approximately 85% of our total revenue. Widespread acceptance of email marketing among small organizations will continue to be critical to our future growth and success. There is no certainty regarding how the market for email marketing will continue to develop, or whether it will experience any significant contractions. Our ability to attract and retain customers will depend in part on our ability to make email marketing convenient, effective and affordable. If small organizations determine that email marketing does not sufficiently benefit them or utilize alternative or new electronic methods of communicating with their customers, existing customers may cancel their accounts and potential customers may decide not to adopt email marketing. If the market for email marketing services fails to continue to grow or grows more slowly than we currently anticipate, demand for our services may decline and our revenue would suffer.

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Our growth strategy requires us to expand our product offerings beyond email marketing and this expansion may not be successful.

We have traditionally focused our business on providing our email marketing product for small organizations, but in the last few years we have expanded our product offerings. In 2007, we introduced our survey product and our add-on email archive service that enables our customers to archive their past email campaigns. In 2009, we launched our event marketing product. Through our acquisition of Nutshell Mail, Inc., which we completed in May 2010, we now provide a tool for small organizations to monitor and engage with social media networks. In January 2012, we launched our Social Campaigns product which allows small businesses the ability to run multi-step, results-oriented campaigns on their social networks. Also, in January 2012, we acquired CardStar, a leading developer of mobile applications that extend the use of loyalty, rewards and membership cards and mobile coupons among consumers. In February 2012, we introduced our SaveLocal product, which makes it quick and easy for our customers to create, run and manage local deals. In June 2012, we acquired SinglePlatform, a company that helps small business get discovered through web and mobile searches by providing a single place to update relevant business information. Our efforts to introduce new products beyond our email marketing product or to offer a bundled offering of two or more of our products may not result in significant revenue growth, may not be complementary to our email marketing product, may not be timely, may divert management resources from our existing operations and require us to commit significant financial resources to an unproven business or product or may be confusing to our customers, any of which may harm our financial performance and impede our long-term growth strategy.

U.S. federal legislation and the laws of many foreign countries impose certain obligations on the senders of commercial emails, which could minimize the effectiveness of our products, particularly our email marketing product, and establish financial penalties for non-compliance, which could increase the costs of our business.

The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, establishes certain requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient as to source or content. The CAN-SPAM Act, among other things, obligates the sender of commercial emails to provide recipients with the ability to opt out of receiving future emails from the sender. In addition, some states have passed laws regulating commercial email practices that are significantly more punitive and difficult to comply with than the CAN-SPAM Act, particularly Utah and Michigan, which have enacted do-not-email registries listing minors who do not wish to receive unsolicited commercial email that markets certain covered content, such as adult or other harmful products. Some portions of these state laws may not be preempted by the CAN-SPAM Act. The ability of our customers’ constituents to opt out of receiving commercial emails may minimize the effectiveness of our products. Moreover, non-compliance with the CAN-SPAM Act carries significant financial penalties. If we were found to be in violation of the CAN-SPAM Act, applicable state laws not preempted by the CAN-SPAM Act, or foreign laws regulating the distribution of commercial email such as the laws of Canada and the United Kingdom, whether as a result of violations by our customers or if we were deemed to be directly subject to and in violation of these requirements, we could be required to pay penalties, which would adversely affect our financial performance and significantly harm our business, and our reputation would suffer. We also may be required to change one or more aspects of the way we operate our business, which could impair our ability to attract and retain customers or could increase our operating costs.

If the security of our customers’ confidential information stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be severely harmed, we may be exposed to liability and we may lose the ability to offer our customers a credit card payment option.

Our system stores our customers’ proprietary email contacts lists, credit card information and other critical data. Any accidental or willful security breaches or other unauthorized access could expose us to liability for the loss of such information, adverse regulatory action by federal and state governments, time-consuming and expensive litigation and other possible liabilities as well as negative publicity, which could severely damage our reputation. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our software are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of our customers’ data, our relationships with our customers will be severely damaged, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and our third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, as we continue to grow our customer base and our brand becomes more widely known and recognized, we may become a more inviting target for third parties seeking to compromise our security systems.

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The federal government and many states, including Massachusetts, have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, and we could lose customers and fail to acquire new customers. In addition, if we fail to maintain our compliance with the data protection policy standards adopted by the major credit card issuers, we could lose our ability to offer our customers a credit card payment option. Any loss of our ability to offer our customers a credit card payment option would harm our reputation and make our products less attractive to many small organizations by negatively impacting our customer experience and significantly increasing our administrative costs related to customer payment processing.

Our existing general liability insurance may not cover any, or cover only a portion of any, potential claims related to security breaches to which we are exposed or may not be adequate to indemnify us for all or any portion of liabilities that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage would increase our operating expenses and reduce our net income.

The market in which we participate is highly competitive and, if we do not compete effectively, our operating results could be harmed.

The market for our products is highly competitive and rapidly changing, and the barriers to entry are relatively low. With the introduction of new technologies and the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales, limit customer attrition and maintain our prices.

Our principal email marketing competitors include providers of email marketing products for small to medium size businesses such as AWeber Systems, Inc., iContact Corporation, a subsidiary of Vocus, Inc., Protus, a subsidiary of j2 Global Communications, Inc. (Campaigner), The Rocket Science Group LLC (MailChimp), Vertical Response, Inc., a subsidiary of Deluxe Corporation, and Vistaprint N.V. These vendors typically charge a low monthly fee or a low fee per number of emails sent and, in some cases, they have a free offering. Competition could result in reduced sales, reduced margins or the failure of our email marketing product to achieve or maintain more widespread market acceptance, any of which could harm our business. In addition, there are a number of other vendors that are focused on providing email marketing products for larger organizations, including Alterian, a subsidiary of SDL, plc, CheetahMail, Inc., a subsidiary of Experian Group Limited, ExactTarget, Inc., a subsidiary of Salesforce.com, Inc., Responsys Inc., Silverpop Systems Inc., Eloqua Limited, a subsidiary of Oracle Corporation, and StrongMail Systems, Inc. While we do not compete currently with vendors of email marketing products serving larger customers, we may compete with these providers in the future. Finally, in the future, our email marketing product may experience competition from Internet Service Providers, or ISPs, advertising and direct marketing agencies and other large established businesses, possessing large, existing customer bases, substantial financial resources and established distribution channels. If these companies decide to develop, market or resell competitive email marketing products, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed. In addition, one or more of these entities could decide to offer a competitive email marketing product at no cost or low cost in order to generate revenue as part of a larger product offering.

Our other products also face intense competition. EventSpot, our event marketing product, competes with offerings by Eventbrite, Inc., Evite, LLC, a wholly-owned, operating business of IAC/InterActiveCorp, Regonline, a division of The Active Network, Inc., and Cvent, Inc. Our Social Campaigns product competes with offerings by Offerpop Corporation, Pagemodo, a subsidiary of VistaPrint N.V., Vocus Social Media LLC doing business as North Social and Wildfire Interactive, a subsidiary of Google Inc. Our survey product competes with similar offerings by Surveymonkey.com Corporation and Widgix, LLC doing business as SurveyGizmo. Our SaveLocal product competes with offerings by Groupon, Inc., LivingSocial, Inc., Amazon Local and Googleoffers. Our SinglePlatform product competes with offerings by Yext, Inc. and Locu, Inc.

Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products. Our current and potential competitors may have more extensive customer bases and broader customer relationships than we have. In addition, these companies may have longer operating histories and greater name recognition than we have and may be able to bundle email marketing, event marketing or survey products with other products that have already gained widespread market acceptance and offer them at no cost or low cost. These competitors may be better able to respond quickly to new technologies and to undertake more extensive marketing campaigns. If we are unable to compete with such companies, the demand for our products could substantially decline.

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Any significant disruption in service on our website or in our computer systems, or in our customer support services, could result in a loss of customers.

The satisfactory performance, reliability and availability of our technology and our underlying network infrastructure are critical to our operations, level of customer service, reputation and ability to attract new customers and retain existing customers. In providing our services, we rely on third-party hosting facilities, bandwidth providers, ISPs and mobile networks. Our production system hardware and the disaster recovery operations for our production system hardware are co-located in third-party hosting facilities. These facilities do not guarantee that our customers’ access to our products will be uninterrupted, error-free or secure. Our operations also depend on the ability of our third-party hosting facilities to protect their and our systems against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. In the event that our third-party hosting arrangements are terminated, or there is a lapse of service or damage to these facilities, we could experience interruptions in our service as well as delays and additional expense in arranging new facilities. In addition, our customer support services, which are located at our headquarters in Waltham, Massachusetts and at our sales and support office in Loveland, Colorado, would experience interruptions as a result of any disruption of electrical, phone or any other similar facility support services. Any interruptions or delays in access to our products or customer support, whether as a result of third-party error, our own error, natural disasters, security breaches or malicious actions, such as denial-of-service or similar attacks, whether accidental or willful, could harm our relationships with customers and our reputation. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors could damage our brand and reputation, divert our employees’ attention, reduce our revenue, subject us to liability and cause customers to cancel their accounts, any of which could adversely affect our business, financial condition and results of operations.

Our production disaster recovery system is located at one of our third-party hosting facilities. Our corporate disaster recovery system is located at our headquarters in Waltham, Massachusetts. Neither system provides real-time backup or has been tested under actual disaster conditions and neither system may have sufficient capacity to recover all data and services in the event of an outage. In the event of a disaster in which our production system hardware and the disaster recovery operations for our production system hardware are irreparably damaged or destroyed, we would experience interruptions in access to our products. Moreover, our headquarters and our production system hardware are located within several miles of each other. As a result, any regional disaster could affect these locations equally. Any or all of these events could cause our customers to lose access to our products, which will harm our business and results of operations.

Third parties have asserted, and may in the future assert, claims that we are infringing their intellectual property, which, whether successful or not, could subject us to costly and time-consuming litigation or require us to obtain expensive licenses, and our business may be adversely affected.

The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. Third parties, including so-called non-practicing entities, which are entities that have no operating business but exist purely as collectors of patents, have asserted, and in the future may assert, patent and other intellectual property infringement claims against us in the form of lawsuits, letters or other forms of communication. These claims, whether or not successful, could:

• divert management’s attention;

• result in costly and time-consuming litigation;

• require us to enter into royalty or licensing agreements, which may not be available on acceptable terms, or at all;

• in the case of open source software-related claims, require us to release our software code under the terms of an open source license; or

• require us to redesign our software and services to avoid infringement.

As a result, any third-party intellectual property claims against us could increase our expenses and adversely affect our business. In addition, many of our agreements with our partners and others require us to indemnify them for third-party intellectual property infringement claims, which would increase the cost to us resulting from an adverse ruling on any such claim. Even if we have not infringed any third party’s intellectual property rights, we cannot be sure our legal defenses will be successful, and even if we are successful in defending against such claims, our legal defense could require significant financial resources and management time. Finally, if a third party successfully asserts a claim that our products infringe its proprietary rights, royalty or licensing agreements might not be available on terms we find acceptable or at all and we may be required to pay significant monetary damages to such third party.

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We may be subject to time-consuming and costly litigation.

From time to time, we may be subject to various claims and lawsuits by partners, customers, or other parties arising in the ordinary course of business, including lawsuits alleging patent infringement. We are currently a party to the actions that are described in Part II, Item 1 “Legal Proceedings” included elsewhere in this Quarterly Report on Form 10-Q. These matters can be time-consuming, divert management’s attention and resources, and cause us to incur significant expenses. Furthermore, the results of any of these actions may have a material adverse effect on our results of operations, financial condition and cash flows.

Current economic conditions may further negatively affect the small business sector, which may cause our customers to terminate existing accounts with us or cause potential customers to fail to purchase our products, resulting in a decrease in our revenue and impairing our ability to operate profitably.

Our products are designed specifically for small organizations. These organizations frequently have limited budgets and are often resource and time-constrained and, as a result, may be more likely to be significantly affected by economic downturns than their larger, more established counterparts. We believe that small organizations continue to experience some amount of economic hardship. As a result, small organizations may choose to spend the limited funds that they have on items other than our products and may experience higher failure rates. Moreover, if small organizations experience economic distress, they may be unwilling or unable to expend time and financial resources on marketing, which would negatively affect the overall demand for our products, increase customer attrition and could cause our revenue to decline. There can be no assurance, therefore, that current economic conditions or worsening economic conditions, or a recurring recession, will not have a significant adverse impact on our operating and financial results.

If the delivery of our customers’ emails is limited or blocked or our customers’ emails are directed to an alternate or “tabbed” section of the recipient’s inbox, customers may cancel their accounts.

ISPs can block emails from reaching their users. The implementation of new or more restrictive policies by ISPs may make it more difficult to deliver our customers’ emails. We continually improve our own technology and work closely with ISPs to maintain our deliverability rates. In addition, some ISPs have started to categorize as promotional or otherwise emails that originate from email service providers and, as a result, direct them to an alternate or “tabbed” section of the recipient’s inbox. If ISPs materially limit or halt the delivery of our customers’ emails, or if we fail to deliver our customers’ emails in a manner compatible with ISPs’ email handling or authentication technologies or other policies, or if the open rates of our customers’ emails are negatively impacted by the actions of ISPs to categorize emails, then the fees we charge for our email marketing product may not be accepted by the market and customers may question the effectiveness of our products, and customers may cancel their accounts. This, in turn, could harm our business and financial performance.

If we fail to promote and maintain our brands in a cost-effective manner, we may lose market share and our revenue may decrease.

We believe that developing and maintaining awareness of the Constant Contact brands in a cost-effective manner is critical to our goal of achieving widespread acceptance of our engagement marketing platform and attracting new customers. Furthermore, we believe that the importance of brand recognition will increase as competition in our industry increases. Successful promotion of our brands will depend largely on the effectiveness of our marketing efforts and the effectiveness and affordability of our products for our target customer demographic. Historically, our efforts to build our brands have involved significant expense, and it is likely that our future marketing efforts will require us to incur additional significant expenses. Such brand promotion activities may not yield increased revenue and, even if they do, any revenue increases may not offset the expenses we incur to promote our brands. If we fail to promote and maintain our brands successfully, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may lose our existing customers to our competitors or be unable to attract new customers, which would cause our revenue to decrease.

We depend on search engines to attract a significant percentage of our customers, and if those search engines change their listings or our relationship with them deteriorates or terminates, we may be unable to attract new customers, which would adversely affect our business and results of operations.

Many of our customers located our website by clicking through on search results displayed by search engines such as Google^®,
Yahoo!^® and Bing^®. Search engines typically provide two types of search results, algorithmic and purchased listings. Algorithmic listings cannot be purchased, and instead are determined and displayed solely by a set of formulas designed by the search engine. Purchased listings can be purchased by advertisers in order to attract users to their websites. We rely on both algorithmic and purchased listings to attract a significant percentage of the customers we serve to our website. Search engines revise their algorithms from time to time in an attempt to optimize their search result listings. If search engines on which we rely for algorithmic listings

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modify their algorithms, this could result in fewer potential customers clicking through to our website, requiring us to resort to other costly resources to attempt to replace this traffic, which, in turn, could reduce our revenue and negatively impact our operating results, harming our business. If one or more search engines on which we rely for purchased listings modifies or terminates its relationship with us, our expenses could rise, or our revenue could decline and our business may suffer. The cost of purchased search listing advertising fluctuates and may increase as demand for these channels grows, and any such increases could negatively affect our financial results.

The success of our business depends on the continued growth and acceptance of email as a communications tool and the related expansion and reliability of the Internet infrastructure. If consumers do not continue to use email or alternative communications tools gain popularity, such as social media or text messaging, demand for our email marketing product may decline.

The future success of our business depends on the continued and widespread adoption of email as a primary means of communication. Security problems such as “viruses,” “worms” and other malicious programs or reliability issues arising from outages and damage to the Internet infrastructure could create the perception that email is not a safe and reliable means of communication, which would discourage businesses and consumers from using email. Use of email by businesses and consumers also depends on the ability of ISPs to prevent unsolicited bulk email, or “spam,” from overwhelming consumers’ inboxes. In recent years, ISPs have developed new technologies to filter unwanted messages before they reach users’ inboxes. In response, spammers have employed more sophisticated techniques to reach consumers’ inboxes. Although companies in the anti-spam industry have started to address the techniques used by spammers, if security problems become widespread or frequent or if ISPs cannot effectively control spam, the use of email as a means of communication may decline as consumers find alternative ways to communicate. In addition, if alternative communications tools, such as social media or text messaging, gain widespread acceptance, the need for email may lessen. Any decrease in the use of email would reduce demand for our email marketing product and harm our business.

Various private spam blacklists have in the past interfered with, and may in the future interfere with, the effectiveness of our products and our ability to conduct business.

We depend on email to market to and communicate with our customers, and our customers rely on email to communicate with their customers and members. Various private entities attempt to regulate the use of email for commercial solicitation. These entities often advocate standards of conduct or practice that significantly exceed current legal requirements and classify certain email solicitations that comply with current legal requirements as spam. Some of these entities maintain “blacklists” of companies and individuals, and the websites, ISPs and Internet protocol addresses associated with those entities or individuals that do not adhere to those standards of conduct or practices for commercial email solicitations that the blacklisting entity believes are appropriate. If a company’s Internet protocol addresses are listed by a blacklisting entity, emails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that subscribes to the blacklisting entity’s service or purchases its blacklist.

Some of our Internet protocol addresses currently are listed with one or more blacklisting entities and, in the future, our other Internet protocol addresses may also be listed with these and other blacklisting entities. There can be no guarantee that we will not continue to be blacklisted or that we will be able to successfully remove ourselves from those lists. Blacklisting of this type could interfere with our ability to market our products and services and communicate with our customers and could undermine the effectiveness of our customers’ marketing campaigns, all of which could have a material negative impact on our business and results of operations.

Our customers’ use of our products and website to transmit negative messages or website links to harmful applications in violation of our policies or otherwise could damage our reputation, and we may face liability for unauthorized, inaccurate or fraudulent information distributed via our products.

Our customers could use our products or website to transmit negative messages or website links to harmful applications, reproduce and distribute copyrighted material or the trademarks of others without permission, or report inaccurate or fraudulent data or information. Any such use of our products could damage our reputation and we could face claims for damages, copyright or trademark infringement, defamation, negligence or fraud. Moreover, our customers’ promotion of their products and services through our products may not comply with federal, state and foreign laws. We cannot predict whether our role in facilitating these activities would expose us to liability under these laws. Even if claims asserted against us do not result in liability, we may incur substantial costs in investigating and defending such claims. If we are found liable for our customers’ activities, we could be required to pay fines or penalties, redesign business methods or otherwise expend resources to remedy any damages caused by such actions and to avoid future liability.

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Our customers’ use of our SaveLocal product may negatively impact our reputation and could subject us to legal and regulatory risks, each of which could harm our business and results of operations.

Our brand and reputation may be harmed by our customers’ use of our SaveLocal product. Any shortcomings of one or more of our SaveLocal customers, particularly with respect to an issue affecting the quality of the deal offered or the products or services sold or such customer’s fraudulent or deceptive conduct, may be attributed to us, potentially damaging our reputation and brand value, reducing our ability to attract new customers or retain our current customers and subjecting us to potential liability, thereby negatively affecting our results of operations.

The application of certain U.S. and international laws and regulations to SaveLocal deals and to our role in facilitating our customers’ offer of SaveLocal deals is uncertain. These include laws and regulations such as the Credit Card Accountability Responsibility and Disclosure Act of 2009, or the CARD Act, the laws of most states, which contain provisions governing product terms and conditions of gift cards, gift certificates, stored value or pre-paid cards or coupons and unclaimed and abandoned property laws. These laws may include provisions prohibiting or limiting the use of expiration dates on gift cards or the amount of fees charged in connection with gift cards or requiring specific disclosures on or in connection with gift cards and the imposition of certain fees.

If we are required to alter our business practices as a result of any laws or regulations, our revenue could decrease, our costs could increase and our business could otherwise be harmed. In addition, the costs and expenses associated with defending any actions related to such additional laws and regulations and any payments of related penalties, judgments or settlements could adversely impact our financial results.

In addition, if any laws or regulations require that the face value of SaveLocal coupons have a minimum expiration period beyond the period desired by our SaveLocal customers for their promotional programs, or no expiration period, this may affect the willingness of our customers to use our SaveLocal product in jurisdictions where these laws apply.

Our business may be negatively impacted by seasonal trends.

Sales of our products are impacted by seasonality. Small organizations are typically less active during the summer months. As a result, we adjust our sales and marketing activities accordingly. Thus, we generate fewer new customers during this time. If these seasonality trends change materially, our financial and operating results for any given quarter may be negatively impacted and may differ materially from results in prior quarterly periods. In addition, our recent acquisition of SinglePlatform may impact our historical seasonality trends.

If we fail to enhance our existing products or develop new products, our products may become obsolete or less competitive and we could lose customers.

If we are unable to enhance our existing products successfully, including our current recent enhancements to our contact management functionality and our plans to update our editing environment, or develop new products that keep pace with rapid technological developments and meet our customers’ needs, our business will be harmed. Creating and designing such enhancements and new products entails significant technical and business risks and requires substantial expenditures and lead-time, and there is no guarantee that such enhancements and new products will be completed in a timely fashion, nor is there any guarantee that any new product offerings will anticipate our customer’s needs or gain acceptance among our customers or in the broader market. In addition, such enhancements and new products may not be profitable for a number of years, if at all, and even if they are profitable, operating margins for new products may not be as high as the margins we have experienced historically. Our existing customers and prospective new customers may be dissatisfied with our enhancements to our existing products and may leave us or choose competing providers, or may not view any new product as complementary to our other product offerings and not purchase such additional products.

If we cannot successfully enhance our existing services or develop new products or if we are not successful in implementing such enhancements and selling new products to our customers, we could lose customers or have difficulty attracting new customers, which would adversely impact our financial performance.

Our relationships with our partners may not be as successful in generating new customers as we anticipate, which could adversely affect our ability to increase our customer base.

We maintain a network of different types of partners, some of whom refer customers to us through links on their websites and outbound promotion to their customers, resell our products and create integrations with our products. We have invested and will continue to invest in programs to enhance our partners’ effectiveness; however, these programs could require substantial investment while providing no assurance of return or incremental revenue. We also rely on some of our partners to create integrations with third-party applications and platforms used by our customers. If we fail to encourage our partners to create such integrations, demand for

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our products could decrease, which would harm our business and operating results. If we are unable to maintain our contractual relationships with existing partners or establish new contractual relationships with potential partners, we may experience delays and increased costs in adding customers, which could have a material adverse effect on us. The number of customers we are able to add through these relationships is dependent on the marketing efforts of our partners over which we exercise very little control, and a significant decrease in the number of new customers generated through these relationships or failure of our investment in partner programs to be effective could adversely affect the size of our customer base and revenue.

Competition for employees in our industry is intense, and we may not be able to attract and retain the highly skilled employees whom we need to support our business.

Competition for highly skilled engineering and marketing personnel is intense and we continue to face difficulty identifying and hiring qualified personnel in certain areas of our business and in certain locations. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In particular, candidates making employment decisions, particularly in high-technology industries, often consider the value of any equity they may receive in connection with their employment. As a result, any significant volatility in the market price of our stock, including the recent decline in share value, may adversely affect our ability to attract or retain highly skilled engineering and marketing personnel.

In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to serve our customers could diminish, resulting in a material adverse effect on our business.

The success of our SinglePlatform offering is based, in part, on the quality of the content provided by our SinglePlatform customers and our ability to maintain a strong network of publishers.

Our SinglePlatform customers provide us with current information about their business that we, in turn, provide to our network of electronic publishers, such as Yelp, foursquare^®, YP.com and Urbanspoon^®. The success of the SinglePlatform offering depends, in part, on our ability to provide these publishers and their consumers with the information they seek, which in turn depends on the quantity and quality of the content provided by our SinglePlatform customers. For example, we may be unable to provide these publishers and their consumers with the information they seek if our customers do not contribute content that is helpful, reliable and up-to-date, or if they remove content they previously submitted. If our SinglePlatform product does not provide content that is helpful, reliable and up-to-date, our ability to maintain our current network of electronic publishers and sign up new publishers could be harmed. If we are unable to provide our electronic publishers and their consumers with the information they seek, or if they can find equivalent content on other services, they may stop or reduce their use of our product, which could negatively impact our ability to retain existing customers and obtain new customers and our business would be harmed.

If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part, on our ability to attract and retain key personnel. Our future also depends on the continued contributions of our executive officers and other key technical and marketing personnel, each of whom would be difficult to replace. In particular, Gail F. Goodman, our Chairman, President and Chief Executive Officer, is critical to the management of our business and operations and the development of our strategic direction. The loss of the services of Ms. Goodman or other executive officers or key personnel and the process to replace any of our key personnel would involve significant time and expense, may take longer than anticipated and may significantly delay or prevent the achievement of our business objectives.

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We rely on third-party computer hardware and software that may be difficult to replace or that could cause errors or failures of our service and that requires us to closely monitor our usage to ensure that we remain in compliance with any applicable licensing requirements.

We rely on computer hardware purchased and software licensed from third parties in order to offer our products, including hardware and software from such large vendors as International Business Machines Corporation, Dell Computer Corporation, 3PAR Inc., a division of the Hewlett-Packard Company, Oracle Corporation, Juniper Networks, Inc., Cisco Systems, Inc., Ciena Corporation and EMC Corporation. This hardware and software may not continue to be available on commercially reasonable terms, or at all. If we lose the right to use any of this hardware or software or such hardware or software malfunctions, our customers could experience delays or be unable to access our services until we can obtain and integrate equivalent technology or repair the malfunctioning hardware or software. Any delays or failures associated with our services could upset our customers and harm our business. In addition, if we fail to remain in compliance with the licensing requirements related to any third-party computer hardware and software we use, we may be subject to unanticipated expenses, auditing costs, penalties and the loss of such hardware and software, all of which could have a material adverse effect on our financial condition and results of operations.

If we are unable to protect the confidentiality of our unpatented proprietary information, processes and know-how and trade secrets, the value of our technology and products could be adversely affected.

We rely heavily upon unpatented proprietary technology, processes and know-how and trade secrets. Although we try to protect this information in part by executing confidentiality agreements with our employees, consultants and third parties, such agreements may offer only limited protection and may be breached. Any unauthorized disclosure or dissemination of our proprietary technology, processes and know-how or our trade secrets, whether by breach of a confidentiality agreement or otherwise, may cause irreparable harm to our business, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise be independently developed by our competitors or other third parties. If we are unable to protect the confidentiality of our proprietary information, processes and know-how or our trade secrets are disclosed, the value of our technology and services could be adversely affected, which could negatively impact our business, financial condition and results of operations.

Our use of open source software could impose limitations on our ability to commercialize our products.

We incorporate open source software into our products. Although we monitor our use of open source software closely, the terms of many open source licenses to which we are subject have not been interpreted by United States or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our products. In such event, we could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products or to discontinue sales of our products, or to release our software code under the terms of an open source license, any of which could materially adversely affect our business. Given the nature of open source software, there is also a risk that third parties may assert copyright and other intellectual property infringement claims against us based on our use of certain open source software programs.

Our anticipated growth could strain our personnel resources and infrastructure, and if we are unable to implement appropriate controls and procedures to manage our anticipated growth, we may not be able to implement our business plan successfully.

We are currently experiencing a period of rapid growth in our headcount and operations, which has placed, and will continue to place, to the extent that we are able to sustain such growth, a significant strain on our management and our administrative, operational and financial reporting infrastructure. Our success will depend in part on the ability of our senior management to manage this expected growth effectively. To do so, we believe we will need to continue to hire, train and manage new employees as needed. If our new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be harmed. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational and financial controls and update our reporting procedures and systems. The expected addition of new employees and the capital investments that we anticipate will be necessary to manage our anticipated growth will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term. If we fail to manage our anticipated growth successfully, we will be unable to execute our business plan successfully.

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Providing our products to customers outside the United States exposes us to risks inherent in international business.

Customers in more than 180 countries and territories currently use our products. In 2011, we opened a marketing office in the United Kingdom and we may continue to expand our international operations in the future. Accordingly, we are subject to risks and challenges that we would otherwise not face if we conducted our business only in the United States. The risks and challenges associated with providing our products to customers outside the United States include:

• localization of our products, including translation into foreign languages and associated expenses;

• laws and business practices favoring local competitors;

• compliance with multiple, conflicting and changing governmental laws and regulations, including those relating to tax, email, privacy and data protection;

• foreign currency fluctuations;

• different pricing environments;

• difficulties in staffing and maintaining foreign operations; and

• regional economic and political conditions.

If we fail to meet these risks and challenges, we will be unable to execute our business plan and may be subject to fines and regulatory actions.

We have incurred net losses in the past and expect to incur net losses on a quarterly basis in the future.

We have incurred net losses in the past and expect to incur net losses on a quarterly basis in the future. We reported net income for the second quarter of 2013 and for 2012, 2011 and 2010; however, we experienced net losses in prior years and a net loss for the first quarter of 2013. While we expect to generate future profitability, we may experience net losses in future periods, particularly quarterly periods. In addition, we expect our operating expenses to increase as we continue to expand our operations. If our operating expenses exceed our expectations, our financial performance could be adversely affected.

Failure to maintain effective internal control over financial reporting and disclosure controls and procedures would have a material adverse effect on our business.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In order to comply with Section 404 of the Sarbanes-Oxley Act’s requirements relating to internal control over financial reporting, we incur substantial accounting expense and expend significant management time on compliance-related issues. We expect to continue to incur such expenses and expend such time in the future. If in the future we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to sanctions or investigations by the NASDAQ Stock Market, the SEC or other regulatory authorities, which would require additional financial and management resources.

Our ability to use net operating loss carry-forwards in the United States may be limited.

As of December 31, 2012, we had net operating loss carry-forwards of $42.9 million for U.S. federal tax purposes and $1.1 million for state tax purposes. These loss carry-forwards expire at varying dates between 2013 and 2032. To the extent available, we intend to use these net operating loss carry-forwards to reduce the corporate income tax liability associated with our operations. Section 382 of the Internal Revenue Code of 1986, as amended, generally imposes an annual limitation on the amount of net operating loss carry-forwards that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership. While our analysis shows that our public stock offerings and prior private financings have not resulted in ownership changes that would limit our ability to utilize net operating loss carry-forwards, any subsequent ownership changes could result in such a limitation. To the extent our use of net operating loss carry-forwards is significantly limited, our income could be subject to corporate income tax earlier than it would if we were able to use net operating loss carry-forwards, which could have a negative effect on our financial results.

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Our quarterly results may fluctuate and if we fail to meet the expectations of analysts or investors, our stock price could decline substantially.

Our quarterly operating results may fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our common stock could decline. Some of the important factors that could cause our revenue and operating results to fluctuate from quarter to quarter include:

• our ability to attract new customers, retain existing customers and satisfy our customers’ requirements;

• general economic conditions;

• average revenue per customer;

• our cost to acquire new customers;

• changes in our pricing policies;

• our ability to expand our business;

• our ability to execute successfully on our strategy;

• new product and service introductions;

• technical difficulties or interruptions in our services as a result of our actions or those of third parties;

• the timing of additional investments in our hardware and software systems;

• the seasonal trends in our business;

• regulatory compliance costs;

• costs associated with future acquisitions of technologies and businesses and our ability to successfully integrate these acquisitions; and

• extraordinary expenses such as litigation or other dispute-related settlement payments.

Some of these factors are not within our control, and the occurrence of one or more of them may cause our operating results to vary widely. As such, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful and should not be relied upon as an indication of future performance.

We may need additional capital in the future, which may not be available to us on favorable terms, or at all, and may dilute the ownership of our existing stockholders.

We have historically relied on outside financing and cash from operations to fund our operations, capital expenditures and growth. We may require additional capital from equity or debt financing in the future to:

• fund our operations;

• respond to competitive pressures;

• take advantage of strategic opportunities, including more rapid expansion of our business or the acquisition of complementary products, technologies or businesses; and

• develop new products or enhancements to existing products.

We may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may place limits on our financial and operating flexibility. If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution, and any new securities we issue could have rights, preferences and privileges senior to those of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be significantly limited.

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We may engage in future acquisitions that could disrupt our business, dilute stockholder value and harm our business, operating results or financial condition.

We have completed several acquisitions in the past three years, including our most recent acquisition of SinglePlatform in June 2012. We have, from time to time, evaluated other acquisition opportunities and may pursue acquisition opportunities in the future. Acquisitions involve numerous risks, including:

• an inability to locate a suitable acquisition candidate or technology or acquire a desirable candidate or technology on favorable terms;

• difficulties in integrating personnel and operations from the acquired business or acquired technology with our existing technology and products and in retaining and motivating key personnel from the acquired business;

• disruptions in our ongoing operations and the diversion of our management’s attention from their day-to-day responsibilities associated with operating our business;

• increases in our expenses that adversely impact our business, operating results and financial condition;

• potential write-offs of acquired assets and increased amortization expense related to identifiable assets acquired; and

• potentially dilutive issuances of equity securities or the incurrence of debt.

In addition, any acquisitions we complete may not ultimately strengthen our competitive position or achieve our goals, or such an acquisition may be viewed negatively by our customers, stockholders or the financial markets.

RISKS RELATED TO THE OWNERSHIP OF OUR COMMON STOCK

The market price of our common stock has been and may continue to be volatile.

The trading price of our common stock has been and may continue to be highly volatile and could be subject to wide fluctuations in response to various factors. Some of the factors that may cause the market price of our common stock to fluctuate include:

• fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

• quarterly unique customer additions and customer retention rates;

• changes in estimates of our financial results or recommendations by securities analysts;

• changes in general economic, industry and market conditions;

• failure of any of our products to achieve or maintain market acceptance;

• changes in market valuations of similar companies;

• success of competitive products;

• our ability to successfully integrate acquisitions;

• changes in our capital structure, such as future issuances of securities or the incurrence of debt;

• announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;

• regulatory developments in the United States, foreign countries or both;

• litigation involving our company, our general industry or both;

• additions or departures of key personnel;

• investors’ general perception of us; and

• the total number of shares of our common stock that have been sold short.

In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

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There can be no assurance that our stock repurchase program will enhance long-term stockholder value and stock repurchases could increase the volatility of the price of our common stock and will diminish our cash and cash equivalents.

On April 25, 2013, we announced that our Board of Directors approved a stock repurchase program for up to $20 million of our common stock through December 31, 2013. Under the repurchase program, we are authorized to repurchase shares in the open market, which may include the use of 10b5-1 trading plans, or through privately negotiated transactions. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions. The repurchase program may be suspended or discontinued at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility. The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, our stock repurchase program will diminish our cash and cash equivalents, which may reduce our flexibility with respect to future acquisitions. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. We do not control these analysts. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change of 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. In addition, our restated certificate of incorporation and second amended and restated bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Among other things, our restated certificate of incorporation and second amended and restated bylaws:

• authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to impede or delay a takeover attempt;

• establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

• require that directors only be removed from office for cause and only upon a supermajority stockholder vote;

• provide that vacancies on our board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office;

• limit who may call special meetings of stockholders;

• prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and

• require supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and second amended and restated bylaws.

We do not currently intend to pay dividends on our common stock and, consequently, the ability to achieve a return on an investment in our common stock will depend on appreciation in the price of our common stock.

We do not expect to pay cash dividends on our common stock. Any future dividend payments are within the absolute discretion of our board of directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant. We may not generate sufficient cash from operations in the future to pay dividends on our common stock.

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

The following is a summary of our repurchases of our common stock during the three month period ended June 30, 2013:

Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Approximate Dollar Value of Shares that May Yet Be  Purchased Under the Plans or Programs (2)
April 1 to April 30, 2013		—		—		—		—
May 1 to May 31, 2013		—		—		—		—
June 1 to June 30, 2013		100,000	$	16.18		100,000	$	18,381,688
Total		100,000	$	16.18		100,000	$	18,381,688

(1) Includes commissions, markups and expenses

(2) In April 2013, our board of directors approved the repurchase of up to $20 million of our common stock through December 31, 2013. Repurchased shares are retired and resume the status of authorized but unissued shares of common stock.

Item 6. Exhibits

The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed (other than exhibit 32.1 and exhibit 32.2 and exhibits related to Extensible Business Reporting, or XBRL) as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.

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SIGNATURES

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

	CONSTANT CONTACT, INC.
Date: July 31, 2013	By:	/s/ Gail F. Goodman
		Gail F. Goodman
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: July 31, 2013	By:	/s/ Harpreet S. Grewal
		Harpreet S. Grewal
		Executive Vice President and
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Listed and indexed below are all Exhibits filed as part of this report.

Exhibit No.	Description
10.1	Agreement of lease dated as of April 30, 2013 by and between Constant Contact, Inc. and Battery Commercial Associates LLC.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 *	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.
32.2 *	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.
101.INS#	XBRL Instance Document
101.SCH#	XBRL Taxonomy Extension Schema Document.
101.CAL#	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB#	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE#	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF#	XBRL Taxonomy Extension Definition Linkbase Document.

* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

# Extensible Business Reporting Language (XBRL) information is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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EX-10.1

Exhibit 10.1

THIS AGREEMENT OF LEASE (this “Lease”), made as of this 30 day of April, 2013 (the “Effective Date”) by and between BATTERY COMMERCIAL ASSOCIATES LLC, having an office c/o The Moinian Group, 3 Columbus Circle, Suite 2300, New York, New York 10019 (“Landlord”) and CONSTANT CONTACT, INC., having an address at 1601 Trapelo Road, Waltham, Massachusetts 02451 (“Tenant”).

1. BASIC LEASE TERMS.

A. Definitions. The following definitions contained in this subsection A of this Article 1 shall have the meanings hereinafter set forth used throughout this Lease and the Exhibits and Schedules (if any) annexed hereto and made a part hereof.

(i) “Base Tax: Year’’ shall mean the Tax: Year commencing on July 1, 2013 and ending on June 30, 2014.

(ii) “Broker(s)” shall mean Cassidy Turley and Richards Barry Joyce & Partners.

(iii) “Building” the building known as 17 Battery South, County, City and State of New York.

(iv) “Commencement Date” shall mean May 1, 2013

(v) “Expiration Date” shall mean October 31, 2018.

(vi) “Permitted Uses” shall mean general, executive and administrative offices use and for no other purpose.

(vii) “Premises” shall mean a portion of the eleventh (11^th) floor in the Building, as more particularly shown on Exhibit 1 annexed hereto and made a part hereof.

(viii) “Real Property” shall mean the Building together with the plot of land upon which such building stands.

(ix) “Rent” shall mean the Rent payable hereunder as set forth on the rent schedule attached hereto and made a part hereof as Schedule E.

(x:) “Rent Commencement Date” shall mean June 1, 2013.

(xi) “Security Deposit” shall mean the amount of $107,205.00.

(xii) “Tenant’s Proportionate Share” shall mean 4.67%.

Notwithstanding anything to the contrary contained in this subsection A of this Article 1, Articles 1 through 50 of this Lease shall control the rights and obligations of the parties hereto.

B. Demise. Subject to and upon the terms and conditions of this Lease, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises.

C. Term. This Lease shall be for a term (the “Term”) which commences on the Commencement Date and ends on the Expiration Date, unless sooner terminated pursuant to any of the terms, covenants or conditions of this Lease or pursuant to law. In the event that the date set forth above for the Commencement Date is not a date certain, then within ten (10) days of Landlord’s request, Tenant and Landlord shall join in the execution of an agreement stipulating the Commencement Date, the Rent Commencement Date and the Expiration Date of this Lease, substantially in the form annexed hereto and made a part hereof as Exhibit 2 (the “Commencement Letter”). In the event Tenant fails to execute and deliver such agreement to Landlord within ten (10) days from Tenant’s receipt thereof, then, in such case, the Commencement Date, the Rent Commencement Date and the Expiration Date set forth in such agreement shall be deemed conclusive and binding upon Tenant, provided however, such failure to execute the Commencement Letter shall not affect the effectiveness of the terms and provisions of this Lease.

D. Rent. (i) Commencing as of the Rent Commencement Date, and continuing throughout the Term, Tenant shall pay Landlord the annual Rent set forth on Schedule E annexed hereto and made a part hereof, payable without demand, on or in advance of the first (1^st) day of each month in equal monthly installments, in lawful money (legal tender for public or private debts) of the United States of America, at the office of Landlord or such other place as Landlord may designate from time to time without (except as otherwise expressly set forth in this Lease to the contrary) any set-off, offset, abatement or deduction whatsoever, except that Tenant shall pay the first (1^st) monthly installment, in the form of a check, upon Tenant’s execution of this Lease. If the Rent Commencement Date occurs on a date other than the first day of a calendar month, Tenant shall pay to Landlord on or before the first day of the next month the monthly installment of Rent for such partial month on a pro rata basis (based on the actual number of days in the commencement month), and the first month’s rent paid by Tenant as described above shall be applied to the first full calendar month of the Term for which Rent shall be due and payable. Such payment, together with the sum paid by Tenant as first month’s Rent upon the execution of this Lease, shall constitute payment of the Rent for the period from the Rent Commencement Date to and including the last day of the next succeeding calendar month.

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(ii) Tenant has agreed to pay to Landlord a three (3.0%) percent annual cumulative and compounding increase in the base Rent in lieu of operating expenses escalations for the Term of the Lease, and any renewal thereof. Such increase is included in the base Rent as such is set forth on Schedule E annexed hereto and made a part hereof.

E. Rent Credit. Notwithstanding anything to the contrary hereinabove set forth, provided this Lease is in full force and effect and Tenant is not in material default under this Lease, beyond any applicable notice and cure periods, if any, Tenant shall be entitled to a credit against the base Rent for the period: (i) from the Commencement Date through the Rent Commencement Date; and (ii) from the three (3) month anniversary of the Rent Commencement Date through and including the date prior to the seven (7) month anniversary of the Rent Commencement Date. The foregoing rent credits shall be null and void “ab initio” if Landlord at any time terminates this Lease or re-enters or repossesses the Premises on account of any default of Tenant under this Lease, and Landlord shall be entitled to recover from Tenant, in addition to all other amounts Landlord is entitled to recover, the aggregate amount of the rent credit herein provided for.

2. USE AND OCCUPANCY.

A. Permitted Uses. Tenant shall use and occupy the Premises for the Permitted Uses, and for no other purpose.

B. Use Prohibitions. Anything contained herein to the contrary notwithstanding, Tenant shall not use the Premises or any part thereof, or permit the Premises or any part thereof to be used, (i) for the business of photographic, multilith or multigraph reproductions or offset printing, (ii) as an employment agency, labor union office, physician’s or dentist’s office or for the rendition of any other diagnostic or therapeutic services, dance or music studio, school (except for the training of employees of Tenant), (iii) for a public stenographer or typist, (iv) for a telephone or telegraph agency, telephone or secretarial service for the public at large, (v) for a messenger service for the public at large, (vi) gambling or gaming activities, obscene or pornographic purposes or any sort of commercial sex establishment, (vii) for the possession, storage, manufacture or sale of alcohol, drugs or narcotics, (viii) for the offices or business of any federal, state or municipal agency or any agency of any foreign government or (ix) for a security or guard service. If any provision of this Lease permits, in whole or in part, use involving fabrication of any product or assembly of components of any product or the sale of any product or service, such use is only permitted to the extent lawful under the present certificate of occupancy for the Building and under laws, ordinances, regulations, rules and orders of any governmental body having jurisdiction over the Premises, from time to time in effect. The provisions of this Article shall be binding upon Tenant’s successors, assigns, subtenants and licensees and shall not be waived by any consent to an assignment or subletting or otherwise except by written instrument expressly referring to this Article. Nothing in this subsection B shall preclude Tenant from using any part of the Premises for photographic, multilith or multigraph reproductions in connection with, either directly or indirectly, its own business and/or activities.

C. 11th Floor Common Lobby. Provided that: (i) Tenant and Wall Street Access Inc. are the only two tenants who occupy any space on the eleventh (11^th) floor of the Building; and (ii) Tenant and Wall Street Access, Inc. have entered into a written agreement as to the procedure, coordination and operation of the joint use of the common area of the lobby located on the eleventh (11^th) floor as a joint reception area, and such written agreement is delivered to, and on file with, Landlord; and (iii) the common area of the eleventh (11^th) floor lobby is used for Tenant and Wall Street Access’s reception area only, Tenant shall be permitted to use the common area lobby located on the eleventh (11^th) floor as a reception area for Tenant and Wall Street Access Inc. In the event that either Tenant or Wall Street Access Inc. is no longer a tenant or occupant of the eleventh (11^th) floor of the Building, the rights granted to Tenant expressly set forth in this Article 2(C) shall immediately terminate and expire and the eleventh (11th) floor common area lobby shall immediately revert back to common area, with Tenant have no right to use such as reception or for any other use and Landlord shall take back such space to be used as similar other common areas in the Building. In the event that Landlord takes back the eleventh (11^th) floor common lobby pursuant to the terms of this Article 2(C) such shall not entitle Tenant to any abatement or diminution of rent, or relive Tenant from any of its obligations under this lease, or impose any liability upon Landlord, or its agents, by reason of inconvenience or annoyance to Tenant or injury to or interruption of Tenant’s business or otherwise. Notwithstanding anything to the contrary, in the event that a new tenant leases all of the balance of the Premises which not subject to this Lease, and such occupant is not Wall Street Access, the accommodation granted to Tenant in connection with the 11th Floor Common Lobby shall be permitted provided that Tenant and such new tenant enter into a written agreement agreeing to the common use of the 11^th Floor Common Lobby, in a similar manner as was agreed to with Wall Street Access and such new tenant occupies the full balance of the 11^th floor which is not subject to this Lease.

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3. ALTERATIONS.

A. Alterations Within Premises. (i) Tenant shall not make or perform or permit the making or performance of, any alterations, installations, improvements, additions or other physical changes in or about the Premises (“Alterations”) without Landlord’s prior consent. Subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, and to the provisions of this Article, Tenant, at Tenant’s sole and exclusive cost and expense, may make Alterations in or to the interior of the Premises which are nonstructural, do not affect the Building’s mechanical, electrical, plumbing, Class E or other Building systems or the structural integrity of the Building, do not affect any part of the Building other than the Premises, do not affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building, do not reduce the value or utility of the Building and which are performed only by contractors and mechanics first reasonably approved by Landlord and in compliance with all applicable laws. Tenant shall not perform work which would (i) require changes to the structural components of the Building or the exterior design of the Building, (ii) require any material modification to the Building’s mechanical, electrical, plumbing installations or other Building installations outside the Premises, (iii) not be in compliance with all applicable laws, rules, regulations and requirements of any governmental department having jurisdiction over the Building and/or the construction of the Premises, including but not limited to, the Americans with Disabilities Act of 1990, or (iv) be incompatible with the Certificate of Occupancy for the Building. Except as otherwise expressly set forth herein, any changes required by any governmental department affecting the construction of the Premises shall be performed at Tenant’s sole cost and expense. All Alterations shall be done at Tenant’s sole cost and expense and at such times and in such manner as Landlord may from time to time reasonably designate pursuant to the conditions for Alterations prescribed by Landlord for the Premises. A copy of the current construction conditions and requirements for tenant alteration work and new construction is annexed hereto and made a part hereof as Schedule C.

(ii) Provided that Tenant has provided Landlord with fifteen (15) days prior written notice prior to the commencement of any work performed and that such Alterations do not exceed $75,000.00 in the aggregate in any one (1) lease year, Tenant shall be permitted to, without first obtaining Landlord prior consent, make minor alterations, provided such alterations are: (ii) are nonstructural, (iii) do not affect the Building’s mechanical, electrical, plumbing, Class E or other Building systems or the structural integrity of the Building; (iv) do not affect any part of the Building other than the Premises; (v) do not affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building; (vi) do not reduce the value or utility of the Building; (vi) are performed in compliance with all applicable laws, rules, regulations and requirements of any governmental or quasi-governmental agency and otherwise in compliance with all of the terms of this Lease; and (vii) do not require the filing of any plans or obtaining of any permits with any governmental or quasi-governmental authority. Simultaneously with the delivery of the prior notice as required under this paragraph 3(A)(ii) Tenant shall also deliver to Landlord any specifications, work contracts, and such other information which clearly identifies the nature and cost of the work to be performed in each instance.

B. Restoration of Premises. All furniture, furnishings and movable trade fixtures and removable partitions installed by Tenant must be removed from the Premises by Tenant, at Tenant’s sole cost and expense, prior to the Expiration Date. All Alterations in and to the Premises which may be made by Landlord or Tenant prior to and during the Term, or any renewal thereof, shall become the property of Landlord upon the Expiration Date or earlier end of the Term or any renewal thereof, and shall not be removed from the Premises by Tenant unless Landlord, at Landlord’s option by notice to Tenant given to Tenant at the time Landlord approves such Alteration, elects to have them removed from the Premises by Tenant, in which event the same shall be removed from the Premises by Tenant, at Tenant’s sole cost and expense, prior to the Expiration Date. In the event Landlord elects to have Tenant remove such Alterations, Tenant shall repair and restore in a good and workmanlike manner to the condition existing prior to such installation (reasonable wear and tear excepted) any damage to the Premises or the Building caused by such removal. Any of such Alterations or other property not so removed by Tenant at or prior to the Expiration Date or earlier termination of the Term shall become the property of Landlord, but nothing herein shall be deemed to relieve Tenant of responsibility for the cost and expense of removal of any such Alterations or other property which Tenant is obligated to remove hereunder. Notwithstanding the foregoing, or anything contained in this Lease to the contrary, in no event shall Tenant have any obligation to remove Tenant’s Initial Alteration Work at the expiration or earlier termination of this Lease.

C. Chlorofluorocarbons. Anything contained herein to the contrary notwithstanding, in the event Tenant shall perform any repair or remove any mechanical or other equipment within the Premises containing chlorofluorocarbons (“CFC’s”), the repair or removal of such equipment, as the case may be, shall conform with all requirements of law and industry practices. Additionally, any such repair or removal shall be done by contractors reasonably approved by Landlord and subject to the procedures to which Landlord’s consent shall have previously been obtained. Tenant shall indemnify and hold Landlord harmless from and against any and all liability, costs, expenses or damages resulting from any contamination within the Building, as a result of the repair or removal of any of the aforesaid equipment containing CFC’s by Tenant.

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D. Submission of Plans. (i) Prior to making any Alterations, Tenant (i) shall submit to Landlord or to a consultant appointed by Landlord (“Landlord’s Consultant”) detailed plans and specifications (Including layout, architectural, mechanical, electrical, plumbing, Class E sprinkler and structural drawings stamped by a professional engineer or architect licensed in the State of New York) for each proposed Alteration and shall not commence any such Alteration without first obtaining Landlord’s approval of such plans and specifications which approval shall not be unreasonably withheld, conditioned or delayed, (ii) shall pay to Landlord all reasonable costs and expenses incurred by Landlord (including the cost of Landlord’s Consultant) in connection with Landlord’s review of Tenant’s plans and specifications up to a maximum of $4,500.00 for each review (however, the payment to Landlord by Tenant of such cost and expenses shall be limited to actual out-of-pocket expenses in connection with Tenant’s Initial Alteration Work), (iii) shall, at Tenant’s sole cost and expense, obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies (provided that Landlord shall reasonably cooperate with Tenant and reasonably assist Tenant in Tenant’s obtaining any permits, approvals or certificates, including any permits, approvals or certificates required by the Landmarks Preservation Commission, however such cooperation shall be limited to execution of any required filings, which require a signature by landlord, and shall all be at no cost or expense to Landlord), and (iv) shall furnish to Landlord evidence that Tenant. and Tenant’s contractors and subcontractors engaged in connection with such Alterations, are carrying such insurance as set forth in Schedule C annexed hereto and made a part hereof. Upon completion of such Alteration, Tenant, at Tenant’s sole cost and expense, shall obtain certificates of final approval of such Alteration, including the “as-built” drawings showing such Alterations, required by any governmental or quasi-governmental bodies and shall furnish Landlord with copies thereof. All Alterations shall be made and performed in accordance with the Rules and Regulations (hereinafter defined) and in accordance with the Americans with Disabilities Act of 1990, as amended, including but not limited to the accessibility provisions thereof; all materials and equipment to be incorporated in the Premises as a result of all Alterations shall be new and first quality; no such materials or equipment shall be subject to any lien, encumbrance, chattel mortgage or title retention or security agreement. Landlord’s approval of Tenant’s plans, specifications and working drawings for Alterations shall create no responsibility or liability on the part of Landlord with respect to their completeness, design, sufficiency or compliance with all applicable laws, rules or regulations of governmental agencies or authorities.

(ii) To the extent Landlord’s review and approval of Tenant’s plans and/or specifications is required pursuant to this Article, Landlord shall promptly review, in good faith, Tenant’s plans and specifications submitted for Landlord’s approval under this Article and shall notify Tenant within fifteen (15) days of the receipt thereof that Landlord either; (i) approves Tenant’s plans and specifications as so submitted, (ii) disapproves Tenant’s plans and specifications (stating the reasons therefor with reasonable specificity), (iii) requires clarification or additional information or {iv) has engaged the services of an outside consultant to review Tenant’s plans and specifications (an “Outside Consultant Notice”). If Landlord fails to respond to Tenant’s submission of Tenant’s plans and specifications within fifteen (15) day period, Tenant may give a notice to Landlord referencing this Article 3(D)(ii) and stating in bold, 14- point font the following:

“YOU AS LANDLORD HAVE FAILED TO TIMELY RESPOND TO TENANTS REQUEST FOR LANDLORD TO CONSENT TO TENANTS PLANS AND SPECIFICATIONS PURSUANT TO ARTICLE 3 OF THE LEASE OF A PORTION OF THE 11^th FLOOR AT 17 BATTERY SOUTH, NEW YORK, NEW YORK, AND YOUR FAILURE TO RESPOND TO TENANT ON OR BEFORE THE DATE WHICH IS FIVE (5) BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE SHALL BE DEEMED A WAIVER APPROVAL OF THE ALTERATIONS IDENTIFIED WITH SUFFICIENT DETAIL IN SUCH PLANS AND SPECIFICATIONS.”

After receipt of such second notice, if Landlord fails to respond to Tenant’s Plans within such five (5) business day period, Landlord shall be deemed to have granted approval to Tenant’s Plans specifications. If Landlord delivers an Outside Consultant Notice within the time period set forth above, the effect thereof shall be to extend by five (5) business days the number of days that Landlord shall have to respond to Tenant’s plans and specifications.

(iii) Promptly following the substantial completion of any Alterations, Tenant shall submit to Landlord: (a) one (1) sepia and one (1) copy on floppy disk (using a current version of Autocad or such other similar software as is then commonly in use) of final, “as-built” CAD drawings and plans for the Premises showing all such Alterations and demonstrating that such Alterations were performed substantially in accordance with plans and specifications first approved by Landlord and (b) an itemization of Tenant’s total construction costs, detailed by contractor, subcontractors, vendors and materialmen; bills, receipts, lien waivers and releases from all contractors, subcontractors, vendors and materialmen; architects’ and Tenant’s certification of completion, payment and acceptance, and all governmental approvals and confirmations of completion for such Alterations.

E. Mechanics’ Liens: Labor Conflicts. Any mechanic’s lien filed against the Premises, or the Real Property, for work claimed to have been done for. or materials claimed to have been furnished to, Tenant, shall be discharged by Tenant within thirty (30) days after Tenant receives notice of same, at Tenant’s sole cost and expense, by payment or filing the bond required by law. Tenant shall not, at any

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time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, service provider, mechanic or laborer in the Premises, whether in connection with any Alterations, cleaning services or otherwise, if, in Landlord’s sole discretion, such employment will interfere or cause any conflict with other contractors, service providers, mechanics, or laborers engaged in the construction, cleaning, maintenance or operation or the Building by Landlord, Tenant or others. In the event of any such interference or conflict, Tenant, upon demand of Landlord, shall cause all contractors, service providers, mechanics or laborers causing such interference or conflict to leave the Building immediately.

4. REPAIRS. Landlord shall maintain and repair the public portions of the Building, both exterior and interior, structural and non-structural, including, without limitation, all Building systems which serve multiple tenants in good working order. Tenant shall, throughout the Term, take good care of the Premises and the fixtures and appurtenances therein and at Tenant’s sole cost and expense, make all nonstructural repairs thereto as and when needed to preserve them in good working order and condition, reasonable wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted. If Landlord is requested by Tenant to replace any lamps, tubes, ballasts and starters in the lighting fixtures installed in the Premises, Tenant shall pay Landlord for all replacements to the lamps, tubes, ballasts and starters in the lighting fixtures installed in the Premises. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, whether requiring structural or nonstructural repairs, caused by or resulting from the carelessness, omission, neglect or improper conduct of, or Alterations made by, or any work, labor, service or equipment done for or supplied to, Tenant or any subtenant, or the installation, use or operation of any property or equipment by Tenant or any of Tenant’s subtenants, agents, employees, invitees or licensees, shall be repaired promptly by Tenant, at its sole cost and expense, to the satisfaction of Landlord. Tenant also shall repair all damage to the Building and the Premises caused by the moving of Tenant’s fixtures, furniture or equipment. All the aforesaid repairs shall be of quality and class equal to the original work or construction and shall be made in accordance with the provisions of Article 3 hereof. If Tenant fails after ten (10) days notice to proceed with due diligence to make repairs required to be made by Tenant hereunder, or if Landlord elects to make any repairs in or to the Building or the facilities and systems thereof for which Tenant is responsible, the same may be made by Landlord, at the expense of Tenant, and the expenses thereof incurred by Landlord shall be collectible by Landlord as additional rent within thirty (30) days after rendition of a bill or statement therefor. Tenant shall give Landlord prompt notice after discovery of any defective condition in the Premises for which Landlord may be responsible hereunder. Except as expressly provided in this Lease to the contrary, there shall be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord, Tenant or others making, or failing to make, any repairs, alterations, additions or improvements in or to any portion of the Building, or the Premises, or in or to fixtures, appurtenances, or equipment thereof. If the Premises be or become infested with vermin, Tenant, at Tenant’s expense, shall cause the same to be exterminated from time to time to the satisfaction of Landlord and shall employ such exterminators and such exterminating company or companies as shall be reasonably approved by Landlord. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were designed or constructed, and no sweepings, rubbish, rags, acids or other substances shall be deposited therein. If at any time any windows of the Premises are temporarily dosed, darkened or bricked-up for any reason whatsoever including, but not limited to, Landlord’s own acts as required to be performed by law, or any of such windows are permanently closed, darkened or bricked-up if required by law or related to any construction upon property adjacent to the Real Property by Landlord or others, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of Rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction.

5. WINDOW CLEANING. Tenant shall not clean, nor require, permit, suffer or allow any window in the Premises to be cleaned, from the outside in violation of Section 202 of the Labor Law, or any other applicable law, or of the rules of the Board of Standards and Appeals, or of any other board or body having or asserting jurisdiction. Landlord shall clean the exterior of the windows of the Premises to be cleaned on no less than an annual basis.

6. REQUIREMENTS OF LAW: FLOOR LOAD.

A. Requirements of Law. Tenant, at Tenant’s sole expense, shall promptly comply with all present and future laws. statutes, orders, directives and regulations of federal, state, county, city and municipal authorities, departments, bureaus, boards, agencies, commissions and other sub-divisions thereof, and of any official thereof and any other governmental and quasi-public authority and all rules, orders, regulations or requirements of the New York Board of Fire Underwriters, or any other similar body which shall now or hereafter Impose any violation, order or duty upon Landlord or Tenant with respect to the Premises as a result of the particular use (as opposed to office use generally), occupation or alteration thereof by Tenant. Tenant shall not do or permit to be done any act or thing upon the Premises which is contrary to and will Invalidate or be in conflict with any public liability, fire or other policies of insurance at any time carried by or for the benefit or Landlord with respect to the Building and fixtures and

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property therein, or which shall or might subject Landlord to any liability or responsibility to any person or for property damage. Tenant shall not do, or permit anything to be done in or upon the Premises, or bring or keep anything therein, except as now or hereafter permitted by the New York City Fire Department, New York Board of Fire Underwriters, New York Fire Insurance Rating Organization or other authority having jurisdiction and then only in such quantity and manner as not to increase the insurance rate applicable to the Building, or use the Premises in a manner which shall increase the rate of fire insurance on the Building or on property located therein, over that in similar type buildings or in effect prior to this Lease. If by reason of Tenant’s failure to comply with the provisions of this Article, the fire insurance rate shall at the beginning of this Lease or at any time thereafter be higher than it otherwise would be, then Tenant shall reimburse Landlord, as additional rent hereunder, for that part of all fire insurance premiums thereafter paid by Landlord which shall have been charged because of such failure of use by Tenant, and shall make such reimbursement upon the first day of the month following such outlay by Landlord. In any action or proceeding wherein Landlord and Tenant are parties, a schedule or “make up” of rates for the Building or the Premises issued by the New York Fire Insurance Rating Organization, or other body fixing such fire insurance rates, shall be conclusive evidence of the facts therein stated and of the several items and charges in the fire insurance rates then applicable to the Premises. Any work or installations made or performed by or on behalf of Tenant or any person claiming through or under Tenant pursuant to this Article shall be made in conformity with, and subject to the provisions of, Article 3 hereof.

B. Floor Load. Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot area that such floor was designed to carry and which is allowed by law. Landlord reserves the right to reasonably prescribe the weight and position of all safes, business machines and heavy equipment and installations such that the same are placed and maintained by Tenant, at Tenant’s expense, in settings sufficient in Landlord’s judgment to absorb and prevent vibration, noise and annoyance. Tenant shall not move any safe, heavy machinery, heavy equipment, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent, which prior consent shall not be unreasonably withheld, conditioned or delayed, and payment to Landlord of Landlord’s costs in connection therewith. If such safe, machinery, equipment, freight, bulky matter or fixtures requires special handling, Tenant agrees to employ only persons holding a Master Rigger’s License to do said work, and that all work in connection therewith shall comply with the Administrative Code of the City of New York and all other laws and regulations applicable thereto, and shall be done during such hours as Landlord may designate. Tenant shall be solely and exclusively responsible for the reviewing of the floor load, elevator capacity and any other engineering issues with regard to the installation and removal of any and all vaults or safes to be brought into or removed from the Premises by Tenant or Tenant’s agents. In the event that any reinforcement of the floor is deemed necessary, such reinforcement and any and all costs and expenses in connection therewith shall be at the sole and exclusive cost and expense of Tenant, and shall only be installed with the prior written consent of Landlord, which prior consent shall not be unreasonably withheld, conditioned or delayed, and otherwise in accordance with the terms and conditions of this Lease. Tenant at its sole and exclusive cost and expense, agrees to reimburse Landlord for any and all third party costs and expense which Landlord incurs in connection with structural enhancements or other work performed in connection with any safe, vault, floor load or elevator issues concerning the subject matter of this paragraph. Tenant acknowledges and agrees the Landlord has made no representations regarding the floor load of the Premises or the weight load of any elevator in the Building and in the event the floor load is unable to carry the weight of any safes, heavy machinery or equipment which Tenant desires to install in the Premises, or the elevator is unable to carry the weight load of any safes, heavy machinery or equipment which Tenant desires to install in the Premises, such shall not affect the terms of this Lease and Landlord shall have no responsibility or liability on connection therewith.

7. SUBORDINATION.

A. Subordination. This Lease is subject and subordinate to each and every ground or underlying lease of the Real Property or the Building hereafter made by Landlord (collectively, the “Superior Leases”) and to each and every trust indenture and mortgage (collectively the “Mortgages”) which may now or hereafter affect the Real Property, the Building or any such Superior Lease and the leasehold interest created thereby, and to all renewals, extensions, supplements, amendments, modifications, consolidations, and replacements thereof or thereto, substitutions therefor and advances made thereunder. This clause shall be self-operative and no further instrument of subordination shall be required to make the interest of any lessor under a Superior Lease, or trustee or mortgagee of a Mortgage superior to the interest of Tenant hereunder. In confirmation of such subordination, however, Tenant shall execute promptly any certificate that Landlord may reasonably request. If the date of expiration of any Superior Lease shall be the same day as the Expiration Date, the Term shall end and expire twelve (12) hours prior to the expiration of the Superior Lease. Tenant covenants and agrees that, except as expressly provided herein, after written notice thereof Tenant shall immediately cease any action or inaction which would constitute a default under any Superior Lease or Mortgage, or omit to do anything that Tenant is obligated to do under the terms of this Lease so as to cause Landlord to be in default under any of the foregoing. If, in connection with the financing of the Real Property, the Building or the interest of the lessee under any Superior Lease, any lending institution shall request reasonable modifications of this Lease, provided such modifications do not materially increase the obligations or materially and adversely affect the rights of Tenant under this Lease, Tenant covenants to make such

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modifications. Landlord shall request from its lender and shall use its commercially reasonable efforts to obtain from its lender for Tenant, a subordination, non-disturbance and attornment agreement (“SNDA”) in the lender’s current standard form; provided however that the Landlord’s failure to obtain an SNDA shall not constitute a default under this Lease by the Landlord nor shall the terms and provisions of this Lease be affected thereby which shall all remain in full force and effect; and further provided that any costs incurred by Landlord in obtaining such SNDA shall be paid by Tenant within thirty (30) days of Landlord’s demand as additional rent hereunder. Landlord confirms that as of the Effective Date, there are no Superior Leases affecting the Building or the Premises.

B. Attornment. If at any time prior to the expiration of the Term, any Mortgage shall be foreclosed or any Superior Lease shall terminate or be terminated for any reason, Tenant agrees, at the election and upon demand of any owner of the Real Property or the Building, or the lessor under any such Superior Lease, or of any mortgagee in possession of the Real Property or the Building, to attorn, from time to time, to any such owner, lessor or mortgagee, upon the then executory terms and conditions of this Lease, for the remainder of the term originally demised in this Lease, provided that such owner, lessor or mortgagee, as the case may be, or receiver caused to be appointed by any of the foregoing, shall not then be entitled to possession of the Premises. The provisions of this subsection B shall inure to the benefit of any such owner, lessor or mortgagee, shall apply notwithstanding that, as a matter of law, this Lease may terminate upon the termination of any such Superior Lease, and shall be self-operative upon any such demand, and no further instrument shall be required to give effect to said provisions. Tenant, however, upon demand of any such owner, lessor or mortgagee, agrees to execute, from time to time, instruments in confirmation of the foregoing provisions of this subsection B, satisfactory to any such owner, lessor or mortgagee, acknowledging such attornment and setting forth the terms and conditions of its tenancy. Nothing contained in this subsection B shall be construed to impair any right otherwise exercisable by any such owner, lessor or mortgagee.

8. RULES AND REGULATIONS. Tenant and Tenant’s employees, agents, visitors and licensees shall observe faithfully, and comply strictly with, the Rules and Regulations annexed hereto and made a part hereof as Schedule A and such other and further reasonable Rules and Regulations as Landlord or Landlord’s agents may from time to time adopt (collectively, the “Rules and Regulations”) on such notice to be given as Landlord may elect. Nothing in this Lease contained shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease, against any other tenant and landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees. Landlord agrees to enforce the Rules and Regulations against Tenant in a non-discriminatory manner. In the event of a conflict between the Rules and Regulation and this Lease, the terms of this Lease shall control.

9. INSURANCE.

A. Liability Insurance. Tenant shall obtain at its own expense and keep in full force and effect during the Term, a policy of commercial general liability insurance, on a per occurrence per location primary coverage basis covering claims for personal injury, bodily injury, death and property damage occurring upon, in or about the Premises including coverage for premises/operations, products/completed operations, personal injury/advertising liability, under which Tenant is named as the insured, and Landlord, Landlord’s managing agent, the present and any future mortgagee of the Real Property or the Building and/or such other designees specified by Landlord from time to time, are named as additional insureds. Such policy shall also contain a provision which provides the Insurance company will not cancel or refuse to renew the policy, or change in any material way the nature or extent of the coverage provided by such policy, without first endeavoring to provide Landlord at least thirty (30) days written notice by certified mail, return receipt requested, which notice shall contain the policy number and the names of the insureds and policy holder. Upon Tenant’s knowledge of such insurance companies Intentional to cancel or not renew the policy, or chance in any material way the nature or extent of the coverage provided by such policy, Tenant shall immediately provide Landlord at least thirty (30) days written notice by certified mail, return receipt requested, of same, which notice shall contain the policy number and the names of the insureds and policy holder The policy must provide at least a limit of $1,000,000 per occurrence, with a $2,000,000 per location / general aggregate, and a $2,000,000 products and completed operations aggregate. Such insurance shall be inclusive of any defense costs.

B. Umbrella Coverage. Such coverage may be maintained by a policy providing coverage over and above applicable underlying Commercial General Liability with coverage not more restrictive than the underlying liability with limits acceptable to Landlord, but at a minimum $5,000,000 per occurrence and in the aggregate.

C. Workers Compensation. Tenant shall also maintain at its own cost and expense during the Term a policy of workers’ compensation insurance providing statutory benefits for Tenant’s employees and employer’s liability with limits of $1,000,000 per accident, $1,000,000 per disease per employee, and $1,000,000 for disease aggregate which must be endorsed to include benefits as required under laws of the state(s) in which the work is being performed. Such Worker’s Compensation shall be schedules under the Umbrella limit.

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D. All-Risk Insurance. Tenant shall also maintain at its own expense during the Term “All-Risks” property insurance in an amount adequate to cover all Alterations, equipment, installations, construction and other improvements installed within the Premises, whether existing in the Premises on the date hereof or hereinafter installed by or on behalf of Landlord or Tenant, and on all furniture, fixtures, equipment, personal property and inventory of Tenant located in the Premises and any property in the care, custody and control of Tenant (fixed or otherwise) sufficient to provide 100% full replacement value of such items, which policy shall otherwise comply with the provisions of this Article 9. Tenant covenants and agrees that, to the maximum extent permitted by law, all merchandise, furniture, fixtures and property of every kind, nature and description related to or arising out of Tenant’s leasehold estate hereunder, shall be at the sole risk and hazard of Tenant, and that if any part thereof shall be damaged, destroyed, stolen or removed from any cause or reason whatsoever, no part of said damage or loss shall be charged to, or borne by, Landlord. In addition, throughout the Term, Tenant shall maintain business interruption insurance using the insurance service office standard form (or equivalent) on all “all risk” basis to reimburse Tenant for its loss of profits and expenses as a result of an interruption of business, which such coverage shall be purchased and maintained at a limit adequate to protect not less than six (6) months of profits and expenses

E. Tenant Property & Waiver. In no event shall Landlord be responsible for bursting of pipes, unforeseeable loss or damage for adjacent tenants. Landlord shall not be liable for any injury or damage to persons or property resulting from unknown fire, explosion, falling plaster, steam, gas, electricity, electrical or electronic emanations or disturbance, water, rain or snow or leaks from any part of the Building or from the pipes, or caused by dampness, vandalism, malicious mischief or by any other cause of whatever nature, unless caused by or due to the gross negligence of Landlord, its agents, servants or employees and then only any (I) notice to Landlord of the condition claimed to constitute negligence in writing and (II) the expiration of a reasonable time after such notice has been received by landlord without Landlord having taken all reasonable and practicable means to cure or correct such condition; and pending such cure or correction by Landlord. Tenant shall take all reasonable prudent temporary measures and safeguards to prevent injury, loss or damage to persons and property.

F. Waiver of Subrogation. The parties hereto shall procure an appropriate clause in, or endorsement on, any “all-risk” property insurance covering the Premises and the Building, including its respective Alterations, construction and other improvements as well as personal property, fixtures, furniture, inventory and equipment located thereon or therein, pursuant to which the insurance companies waive subrogation or consent to a waiver of right of recovery, and each party hereby agrees that it will not make any claim against or seek to recover from the other or the partners, directors, officers, shareholders or employees of such party for any loss or damage to its property or the property of others resulting from fire or other hazards covered by such “all-risk” property insurance policies to the extent that such loss or damage is actually recoverable under such policies exclusive of any deductibles. If the payment of an additional premium is required for the inclusion of such waiver of subrogation provision, each party shall advise the other of the amount of any such additional premiums and the other party shall pay the same. It is expressly understood and agreed that Landlord will not carry insurance on the Alterations, construction and other improvements presently existing or hereafter installed within the Premises or on Tenant’s fixtures, furnishings, equipment, personal property or inventory located in the Premises or insurance against interruption of Tenant’s business.

G. Additional Insurance Requirements. (i) Landlord reserves the right to require other insurance as may from time to time be reasonably prudent and requested by landlord’s of tenant’s in other similar situated buildings.

(ii) In addition to any insurance requirements of Tenant, Tenant shall secure, pay for, and maintain or cause to Tenant’s Contractors and Sub Contractors to secure, pay for and maintain during the continuance of construction and installation of any fixtures or other work performed within the Building or Premises, insurance as set forth on Schedule C annexed hereto and made a part hereof.

(iii) The above insurance policies shall be primary and non-contributory and may not be cancelled or materially reduced without at least thirty (30) days prior written notice by certified mail, return receipt requested, which notice shall be delivered by Tenant to Landlord, and any other such parties as may be required from time to time by Landlord upon Tenant’s knowledge of such insurance companies intention to cancel or materially reduce the terms of the policy. Policies shall name Landlord, Managing Agent and any current or future lenders as additional insureds as their interest may appear. All insurance companies involved in such insurance shall maintain A.M. Bests or equivalent rating of not less than A­ VIII.

(iv) In addition, original or certified certificates of all requested policies shall be provided to Landlord upon request and certificates of insurance must be maintained and up to date at all times. Certificates must provide adequate evidence of all required coverages and must be delivered to Landlord at least thirty (30) days prior to any policy expiration throughout the term of the Lease.

(v) Any insurance limits required are minimum limits only and not intended to restrict the liability imposed on the Tenant or any contractors hired by Tenant.

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10. DESTRUCTION OF THE PREMISES; PROPERTY LOSS OR DAMAGE.

A. Repair of Damage. If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Owner and this Lease shall continue in full force and effect except as hereinafter set forth. If the Premises shall be damaged by fire or other casualty, then the Premises shall be repaired and restored to its condition preceding the damage in accordance with the provisions of this Article 10. Whenever in this Article 10 reference is made to restoration of the Premises, (i) Tenant’s obligation shall be as to all property within the Premises including Tenant’s furniture, fix1ures, equipment and other personal property, any and all Alterations, construction or other improvements made to the Premises by or on behalf of Tenant and any other leasehold improvements existing in the Premises on the date hereof, all of which shall be restored and replaced at Tenant’s sole cost and expense and (ii) Landlord’s obligation, if any, shall be as to the shell, which constitutes the structure of the Building and the mechanical, electrical, plumbing, air-conditioning and other building-wide systems up to the point of connection into the Premises. Landlord shall have no liability to Tenant, and Tenant shall not be entitled to terminate this Lease, if such repairs and restoration are not in fact completed within Landlord’s estimated time period, so long as Landlord shall have proceeded with reasonable due diligence. The Rent until such repairs shall be made shall be reduced in the proportion which the area of the part of the Premises which is not usable by Tenant bears to the total area of the Premises; provided, however, should Tenant reoccupy a portion of the Premises for the conduct of its business prior to the date such repairs are made, the Rent shall be reinstated with respect to such reoccupied portion of the Premises and shall be payable by Tenant from the date of such occupancy. Notwithstanding the foregoing to the contrary, in no event shall the Rent be reduced for a period in excess of two {2) months following the date Landlord substantially completes its repair and restoration obligations hereunder.

B. Termination Options. (a) Anything in subsection A of this Article 10 to the contrary notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, or if the Building shall be so damaged by fire or other casualty that, in Landlord’s opinion, either substantial alteration, demolition or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged or rendered untenantable), or if the Building, after its proposed repair, alteration or restoration, shall not be economically viable as an office building, then in any of such events, Landlord, at Landlord’s option, may, not later than ninety (90) days following the damage, give Tenant a notice in writing terminating this Lease. In addition, (i) if any damage shall occur to the Premises or the Building during the last two (2) years of the Term, Landlord shall have the option to terminate this Lease upon not less than sixty (60) days prior written notice to Tenant and (ii) Landlord shall not be obligated to repair or restore the Premises or the Building if a holder of a mortgage or underlying leasehold applies proceeds of insurance to the loan or lease payment balance, and the remaining proceeds, if any, available to Landlord are insufficient to pay for such repair or restoration. If Landlord elects to terminate this Lease, the Term shall expire upon the date set forth in such notice, and Tenant shall vacate the Premises and surrender the same to Landlord without prejudice however, to Landlord’s rights and remedies against Tenant under this Lease in effect prior to such termination and any Rent owing shall be paid up to such date and any payments of Rent made by Tenant which were on account of any period subsequent to such date shall be returned to Tenant. Upon the termination of this Lease under the conditions provided for in the next preceding sentence, Tenant’s liability for Rent thereafter accruing shall cease as of the day following such damage.

(b) Notwithstanding anything to the contrary contained in this Article 10, in the event that: (i) a material portion of the Premises is rendered wholly untenantable or inaccessible due to fire or other casualty and (ii) Tenant is unable and in fact does not use or occupy any portion of the Premises as a result of such fire or casualty, and (iii) Landlord does not elect to terminate the Lease pursuant to Landlord’s termination right as provided above, and (iv) in Landlord’s sole determination Landlord elects to rebuild and restore same and does not elect to termination this Lease in accordance with the provisions of this Article 10, then Landlord shall notify Tenant, within sixty (60) days of the casualty, of Landlord’s good faith estimate of the period necessary for Landlord to restore the core and shell of the Premises (the “Casualty Estimate Notice”). In the event that the time estimated by Landlord to substantially restore the core and shell of the Premises set forth in the Casualty Estimate Notice is greater than two hundred and seventy (270) days after the occurrence of such fire or casualty (or such longer period if Landlord is delayed through Force Majeure Causes or other similar causes beyond Landlord’s control) and provided that such casualty was in no way the fault or in no way caused by Tenant, Tenant shall have the option, which must be exercised within thirty (30) days of the date the Casualty Estimate Notice is delivered to Tenant, to elect by written notice to Landlord to terminate this Lease on a date not less than fifteen (15) nor more than thirty (30) days after the date the Casualty Estimate Notice is delivered to Tenant, time being of the essence. Provided that Tenant has not timely and property exercised its right to terminate this Lease as set forth in this Subsection 1O(B)(b) of this Article 10, in the event Landlord has not Substantially Completed the restoration of the core and shell of the Premises within the two hundred and seventy (270) day period as set forth above (or such longer period if Landlord is delayed through Force Majeure Causes or other similar causes beyond Landlord’s control), then, and in such event, Tenant may elect to terminate this Lease upon giving written notice to Landlord within thirty (30) days after the end of such two hundred and seventy (270) day period, and if Landlord has not delivered Tenant possession of the

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Premises restored as required hereunder on the expiration of such thirty (30) day period, the Term of this Lease shall expire and Tenant shall vacate the Premises and surrender same to Landlord, however, any and all Rent and additional Rent due and owing under the Lease up to and including the date which Tenant actually vacates and surrenders the Premises shall be immediately paid to Landlord upon such vacating of the Premises and shall be a condition to such termination, and any payments of Rent which were made by Tenant which were on account of any period subsequent to the date of such casualty shall be returned to Tenant. Notwithstanding anything contained herein to the contrary, in the event that all or substantially all of the Premises are rendered wholly untenantable or inaccessible due to fire or other casualty during the last twelve (12) months of the Term and Tenant cannot and does not use or occupy the entire Premises as a result of such fire or casualty, and provided that Landlord does not elect to terminate this Lease in accordance with the provisions of this Article 10, then Tenant may elect to terminate this Lease upon written notice to Landlord within thirty (30) days after such fire or other casualty, and the term of this Lease shall expire on the date set forth in such notice which shall be not less than ten (10) or greater than thirty (30) days after the date such notice is given, provided that Tenant vacates the Premises and surrenders to Landlord possession of the Premises on or before such date in the condition required by this Lease as if such date were the Expiration Date in which event Tenant shall remain liable for any and all obligations under this lease through the date Tenant actually vacates and surrenders the Premises to Landlord and the representations, covenants and warranties of this Lease, which, by their terms, survive termination, shall survive such termination.

C. Repair Delays. Landlord shall not be liable for reasonable delays which may arise by reason of the claim adjustment with any insurance company on the part of Landlord and/or Tenant, and for reasonable delays on account of “labor troubles” or any other cause Force Majeure Cause or similar circumstance beyond Landlord’s control.

D. Provision Controlling. The parties agree that this Article 10 constitutes an express agreement governing any case of damage or destruction of the Premises or the Building by fire or other casualty, and that Section 227 of the Real Property Law of the State of New York, which provides for such contingency in the absence of an express agreement, and any other law of like import now or hereafter in force shall have no application in any such case.

E. Property Loss or Damage. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant’s agent with respect to such property and neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise. Neither Landlord nor its agents shall be liable for any injury or damage to persons or property or interruption of Tenant’s business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes. appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by construction of any private, public or quasi-public work; nor shall landlord be liable for any latent defect in the Premises or in the Building. Anything in this Article 10 to the contrary notwithstanding, nothing In this lease shall be construed to relieve Landlord from responsibility directly to Tenant for any loss or damage caused directly to Tenant wholly or in part by the gross negligence or willful misconduct of Landlord. Nothing in the foregoing sentence shall affect any right of landlord to the indemnity from Tenant to which landlord may be entitled under Article 37 hereof in order to recoup for payments made to compensate for losses of third parties.

11. CONDEMNATION.

A. Condemnation. If the whole of the Real Property, the Building or the Premises shall be acquired or condemned for any public or quasi-public use or purpose, this Lease and the Term shall end as of the date of the vesting of title with the same effect as if said date were the Expiration Date. If only a part of the Real Property shall be so acquired or condemned then, (i) except as hereinafter provided in this subsection A, this lease and the Term shall continue in force and effect but, if a part of the Premises is included in the part of the Real Property so acquired or condemned, from and after the dale of the vesting of title, the Rent shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation; (ii) whether or not the Premises shall be affected thereby, Landlord, at Landlord’s option, may give to Tenant, within sixty (60) days next following the date upon which landlord shall have received notice of vesting of title, a thirty (30) days’ notice of termination of this Lease; and (iii) if the part of the Real Property so acquired or condemned shall contain more than twenty (20%) percent of the total area of the Premises immediately prior to such acquisition or condemnation, or if, by reason of such acquisition or condemnation, Tenant no longer has reasonable means of access to the Premises. Tenant, at Tenant’s option, may give to Landlord, within sixty (60) days next following the date upon which Tenant shall have received notice of vesting of title, a thirty (30) days’ notice of termination of this Lease. If any such thirty (30) days’ notice of termination is given by Landlord or Tenant, this Lease and the Term shall come to an end and expire upon the expiration of said thirty (30) days with the same effect as if the date of expiration of said thirty (30) days were the Expiration Date. If a part of the Premises shall be so

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acquired or condemned and this Lease and the Term shall not be terminated pursuant to the foregoing provisions of this subsection A, Landlord, at Landlord’s expense, shall restore that part of the Premises not so acquired or condemned to a self-contained rental unit. In the event of any termination of this Lease and the Term pursuant to the provisions of this subsection A, the Rent shall be apportioned as of the date of sooner termination and any prepaid portion of Rent for any period after such date shall be refunded by Landlord to Tenant.

B. Award. In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive the entire award for any such acquisition or condemnation, Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired portion of the Term and Tenant hereby expressly assigns to Landlord all of its right in and to any such award. Nothing contained in this subsection B shall be deemed to prevent Tenant from making a claim in any condemnation proceedings for the then value of any furniture, furnishings and fixtures installed by and at the sole expense of Tenant and included in such taking, provided that such award shall not reduce the amount of the aware (or delay the payment thereof) otherwise payable to Landlord.

12. ASSIGNMENT AND SUBLETTING.

A. Prohibition Without Consent. Tenant expressly covenants that it shall not (i) assign or otherwise transfer this Lease or the term and estate hereby granted, (ii) mortgage, pledge or encumber this Lease or the Premises or any part thereof in any manner by reason of any act or omission on the part of Tenant, or (iii) sublet the Premises or any part thereof or permit the Premises or any part thereof to be used or occupied by others (whether for desk space, mailing privileges or otherwise), without obtaining the prior written consent of Landlord in each instance. If this Lease be assigned, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the Rent herein reserved, but no assignment, underletting, occupancy or collection shall be deemed a waiver of the provisions hereof, the acceptance of the assignee, undertenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Landlord to an assignment or underletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or underletting. In no event shall any permitted subtenant assign or encumber its sublease or further sublet all or any portion of its sublet space, or otherwise suffer or permit the sublet space or any part thereof to be used or occupied by others, without Landlord’s prior written consent in each instance. Any assignment, sublease, mortgage, pledge, encumbrance or transfer in contravention of the provisions of this Article 12 shall be void.

B. Notice of Proposed Transfer. If Tenant shall at any time or times during the Term desire to assign this Lease or sublet all or part of the Premises, Tenant shall give notice thereof to Landlord, which notice shall be accompanied by (i) a conformed or photostatic copy of the proposed assignment or sublease, the effective or commencement date of which shall be not less than thirty (30) nor more than one hundred and eighty (180) days after the giving of such notice, (ii) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the Premises, (iii) current financial information with respect to the proposed assignee or subtenant, including, without limitation, its most recent financial report, (iv) an agreement by Tenant to indemnify Landlord against liability resulting from any claims that may be made against Landlord by the proposed assignee or subtenant or by any brokers or other persons claiming a commission or similar compensation in connection with the proposed assignment or sublease and (v) in the case of a sublease, such additional information related to the proposed subtenant as Landlord shall reasonably request, if any.

C. Landlord’s Options. The notice containing all of the information set forth in Subsection B of this Article 12 above shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at its option terminate this Lease (if the proposed transaction is an assignment or a sublease of all or substantially all of the Premises). Said options may be exercised by Landlord by notice to Tenant at any time within thirty (30) days after the aforesaid notice has been given by Tenant to Landlord; and during such thirty (30) day period Tenant shall not assign this Lease nor sublet such space to any person or entity.

D. Termination by Landlord. If Landlord exercises its option to terminate this Lease in the case where Tenant desires either to assign this Lease or sublet all or substantially all of the Premises, then this Lease shall end and expire on the date that such assignment or sublet was to be effective or commence, as the case may be, and the Rent and additional rent due hereunder shall be paid and apportioned to such date. Furthermore, if Landlord exercises its option to terminate this Lease pursuant to subsection C of this Article 12, Landlord shall be free to and shall have no liability to Tenant if Landlord should lease the Premises (or any part thereof) to Tenant’s prospective assignee or subtenant.

E. Intentionally Omitted.

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F. Effect of Termination. If required by applicable law in connection with any termination of this Lease, Tenant shall complete, swear to and file any questionnaires, tax returns, affidavits or other documentation which may be required to be filed with the appropriate governmental agency in connection with any other tax which may now or hereafter be in effect.

G. Conditions for Landlord’s Approval. In the event Landlord does not exercise its option provided to it pursuant to subsection C of this Article 12 and provided that Tenant is not in default of any of Tenant’s obligations under this Lease (after notice and the expiration of any applicable grace period) as of the time of Landlord’s consent, and as of the effective date of the proposed assignment or commencement date of the proposed sublease, Landlord’s consent (which must be in writing and form reasonably satisfactory to Landlord) to the proposed assignment or sublease shall not be unreasonably withheld or delayed, provided and upon condition that:

(i) Tenant shall have complied with the provisions of subsection B of this Article 12 and Landlord shall not have exercised any of its options under subsection C of this Article 12 within the time permitted therefor:

(ii) In Landlord’s reasonable judgment the proposed assignee or subtenant is engaged in a business or activity, and the Premises, or the relevant part thereof, will be used in a manner, which (a) is in keeping with the then standards of the Building, (b) is limited to the use of the Premises for the Permitted Use, and (c) will not violate any negative covenant as to use contained in any other lease of office space in the Building:

(iii) The proposed assignee or subtenant is a reputable party of good character and with sufficient financial worth considering the responsibility involved, and Landlord has been furnished with reasonable proof thereof:

(iv) Neither (a) the proposed assignee or subtenant nor (b) any person which, directly or indirectly, controls, is controlled by or is under common control with, the proposed assignee or subtenant, is then an occupant of any part of the Building, provided this clause (iv) shall not be applicable if Landlord does not have available for lease to third parties, at such time, space comparable to the portion of the Premises to be sublet or assigned:

(v) The proposed assignee or subtenant is not a person with whom Landlord is or has been, within the preceding six (6) month period, negotiating to lease space in the Building, provided this clause (iv) shall not be applicable if Landlord does not have available for lease to third parties, at such time, space comparable to the portion of the Premises to be sublet or assigned;

(vi) The form of the proposed sublease or instrument of assignment (a) shall be in form reasonably satisfactory to Landlord, and (b) shall comply with the applicable provisions of this Article 12:

(vii) There shall not be more than two (2) subtenants of the Premises;

(viii) The Premises shall not have been listed or otherwise publicly advertised for assignment or subletting at a rental rate lower than then current market rent per rentable square foot for the Premises as though the Premises were vacant, and the rental and other terms and conditions of the sublease are the same as those contained in the proposed sublease furnished to Landlord pursuant to subsection B of this Article 12;

(ix) Within five (5) days after receipt of a bill therefor, Tenant shall reimburse Landlord for the reasonable costs that may be incurred by Landlord in connection with said assignment or sublease, Including without limitation, the costs of making investigations as to the acceptability of the proposed assignee or subtenant, and reasonable legal costs incurred by Landlord in connection with the granting of any requested consent, which amount shall be up to a maximum of $3,000.00 for each sublease or assignment request:

(x) Intentionally Omitted.

(xi) The proposed occupancy shall not, in Landlord’s reasonable opinion, increase the office cleaning requirements or the Building’s operating or other expenses or impose an extra burden upon services to be supplied by Landlord to Tenant (unless Tenant agrees in writing to pay for such increased expense);

(xii) The proposed assignee or subtenant or its business shall not be subject to compliance with additional requirements of law (including related regulations) beyond those requirements which are applicable to the named Tenant herein; and

(xiii) The proposed subtenant or assignee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in, and the jurisdiction of the courts of New York State.

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Each subletting pursuant to this subsection G of this Article 12 shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any such subletting to Landlord or any such subletting to any other subtenant and/or acceptance of Rent or additional rent by Landlord from any subtenant, Tenant shall and will remain fully liable for the payment of the Rent and additional rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on the part of Tenant to be performed and all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease shall be deemed to be a violation by Tenant. Tenant further agrees that notwithstanding any such subletting, no other and further subletting of the Premises by Tenant or any person claiming through or under Tenant shall or will be made except upon compliance with and subject to the provisions of this Article 12. If Landlord shall decline to give its consent to any proposed assignment or sublease, or if Landlord shall exercise its option under subsection C of this Article 12, Tenant shall indemnify, defend and hold harmless Landlord against and from any and all loss, liability, damages, costs, and expenses (including reasonable counsel fees) resulting from any claims that may be made against Landlord by the proposed assignee or subtenant or by any brokers or other persons claiming a commission or similar compensation in connection with the proposed assignment or sublease.

H. Future Requests. In the event that (i) Landlord fails to exercise either of its options under subsection C of this Article 12 and consents to a proposed assignment or sublease, and (ii) Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred and twenty (120) days after the giving of such consent, then, Tenant shall again comply with all of the provisions and conditions of subsection B of this Article 12 before assigning this Lease or subletting all or part of the Premises.

I. Sublease Provisions. With respect to each and every sublease or subletting authorized by Landlord under the provisions of this Lease, it is further agreed that:

(i) No subletting shall be for a term ending later than one (1) day prior to the Expiration Date of this Lease;

(ii) No sublease shall be delivered, and no subtenant shall take possession of the Premises or any part thereof, until an executed counterpart of such sublease has been delivered to Landlord;

(iii) Each sublease shall provide that it is subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and that in the event of termination, re-entry or dispossession by Landlord under this Lease Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublessor, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not (a) be liable for any previous act or omission of Tenant under such sublease, (b) be subject to any counterclaim, offset or defense, not expressly provided in such sublease, which theretofore accrued to such subtenant against Tenant, or (c) be bound by any previous modification of such sublease or by any previous prepayment of more than one (1) month’s Rent. The provisions of this Article 12 shall be self-operative and no further instrument shall be required to give effect to this provision.

(iv) If any laws, orders, rules or regulations of any applicable governmental authority require that any Hazardous Substances, including, without limitation, asbestos, contained in or about the Premises to be sublet (the “Sublet Space”) be dealt with In any particular manner in connection with any alteration of the Sublet Space, then it shall be the subtenant’s obligation, at the subtenant’s expense, to deal with such Hazardous Substances in accordance with all such laws, orders, rules and regulations (unless Landlord elects to deal with such Hazardous Substances itself, in which event, the subtenant shall reimburse Landlord for all of Landlord’s costs and expenses in connection therewith within ten (10) days next following the rendition of a statement therefor).

J. Profits from Assignment or Subletting. (a) If the aggregate of the amounts payable as fixed rent and as additional rent on account of Taxes, Operating Expenses and Electric Inclusion Factor by a subtenant under a sublease of any part of the Premises and the amount of any Other Sublease Consideration payable to Tenant by such subtenant, whether received in a lump-sum payment or otherwise shall be in excess of Tenant’s Basic Cost therefor at that time then, promptly after the collection thereof, Tenant shall pay to Landlord in monthly installments as and when collected, as Additional Charges, fifty (50%) percent of such excess. Tenant shall deliver to Landlord within sixty (60) days after the end of each calendar year and within sixty (60) days after the expiration or earlier termination of this Lease a statement specifying each sublease in effect during such calendar year or partial calendar year, the rentable area demised thereby, the term thereof and a computation in reasonable detail showing the calculation of the amounts paid and payable by the subtenant to Tenant, and by Tenant to Landlord, with respect to such sublease for the period covered by such statement. “Tenant’s Basic Cost” for sublet space at any time means the sum of (i) the portion of the base Rent, any tax payments in connection with Article 28 hereof, and any Additional Rent which is attributable to the sublet space, plus (ii) the amount

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payable by Tenant on account of electricity in respect of the sublet space, plus (iii) the amount of any reasonable brokerage commissions, reasonable legal fees and reasonable advertising expenses, free rent or other rental incentives actually provided to subtenant and the cost of any work completed for such subtenant’s occupancy paid by Tenant in connection with the sublease amortized on a straight-line basis over the term of the sublease. “Other Sublease Considerations” means all sums paid for the furnishing of guaranteed services by Tenant and the sale or rental of Tenant’s fixtures, leasehold improvements, equipment, furniture or other personal property less, in the case of the sale thereof, the then net unamortized or undepreciated cost thereof determined on the basis of Tenant’s federal income tax returns.

(b) Upon any assignment of this Lease, Tenant shall pay to Landlord fifty (50%) percent of the Assignment Consideration received by Tenant for such assignment, after deducting therefrom the amount of any reasonable brokerage commissions, reasonable legal fees and reasonable advertising expenses, free rent or other rental incentives actually provided to subtenant and the cost of any work completed for such subtenant’s occupancy paid by Tenant In connection with the assignment. “Assignment Consideration” means an amount equal to all sums and other considerations paid to Tenant by the assignee for or by reason of such assignment (including, without limitation, sums paid for the furnishing of services by Tenant and the sale or rental of Tenant’s fixtures, leasehold improvements, equipment, furniture, furnishings or other personal property, less, in the case of a sale thereof, the then net unamortized or undepreciated cost thereof determined on the basis of Tenant’s federal income tax returns).

K. Other Transfers. (i) If Tenant is a corporation other than a corporation whose stock is listed and traded on a nationally recognized stock exchange (hereinafter referred to as a “public corporation”), the provisions of subsection A of this Article 12 shall apply to a transfer (by one or more transfers) of a majority of the stock of Tenant as if such transfer of a majority of the stock of Tenant were an assignment of this Lease; but said provisions shall not apply to transactions with a corporation into or with which Tenant is merged or consolidated or to which substantially all of Tenant’s assets or stock are transferred, provided that such merger, consolidation or transfer of assets or stock is for a valid business purpose and not principally for the purpose of transferring the leasehold estate created hereby, and provided further, that in any of such events (a) the successor to Tenant has a net worth computed in accordance with generally accepted accounting principles at least equal to the net worth of Tenant immediately prior to such merger, consolidation or transfer, and (b) proof satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction (provided that if any applicable law or regulation prohibits the delivery of such proof, then Tenant shall be permitted to deliver such proof after the occurrence of such transaction). For the avoidance of doubt, it is merely confirmed that transfer of stock on a nationally recognized stock exchange shall not be deemed to be a transfer under the provisions of this Article 12 and shall not require Landlord’s consent.

(ii) If Tenant is a partnership, the provisions of subsection A of this Article 12 shall apply to a transfer (by one or more transfers) of a majority interest in the partnership, as if such transfer were an assignment of this Lease.

(iii) If Tenant is a subdivision, authority, body, agency, instrumentality or other entity created and/or controlled pursuant to the laws of the State of New York or any city, town or village of such state or of federal government (“Governmental Entity’’), the provisions of subsection A of this Article 12 shall apply to a transfer (by one or more transfers) of any of Tenant’s rights to use and occupy the Premises, to any other Governmental Entity, as if such transfer of the right of use and occupancy were an assignment of this Lease; but said provisions shall not apply to a transfer of any of Tenant’s rights in and to the Premises to any Governmental Entity which shall replace or succeed to substantially similar public functions, responsibilities and areas of authority as Tenant, provided that in any of such events the successor Governmental Entity (a) shall utilize the Premises in a manner substantially similar to Tenant, and (b) shall not utilize the Premises in any manner which, in Landlord’s judgment, would impair the reputation of the Building as a first-class office building.

L. Related Corporation. Tenant may, without Landlord’s consent, permit any corporations or other business entities (but not including Governmental Entities) which control, are controlled by, or are under common control with Tenant (herein referred to as “related corporation”) to sublet all or part of the Premises for any of the purposes permitted to Tenant or take an assignment of this Lease, subject however to compliance with Tenant’s obligations under this Lease. Such subletting or assignment shall not be deemed to vest in any such related corporation any right or interest in this Lease or the Premises nor shall it relieve, release, impair or discharge any of Tenant’s obligations hereunder. For the purposes hereof, “control” shall be deemed to mean ownership of not less than fifty percent (50%) of all of the voting stock of such corporation or not less than fifty percent (50%) of all of the legal and equitable interest in any other business entities.

M. Assumption by Assignee. Any assignment or transfer, whether made with Landlord’s consent pursuant to subsection A of this Article 12 or without Landlord’s consent pursuant to subsection K of this Article 12, shall be made only if, the assignee shall execute, acknowledge and deliver to Landlord an agreement in form and substance satisfactory to Landlord whereby the assignee shall

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assume the obligations of this Lease and agree to be bound by all of the terms, conditions, covenants and provisions hereof on the part of Tenant to be performed or observed and whereby the assignee shall agree that the provisions in subsection A of this Article 12 shall, notwithstanding such assignment or transfer, continue to be binding upon it in respect of all future assignments and transfers. In the case where such assignment does not require the consent of Landlord pursuant to the terms of this Article 12 and Tenant is prohibited by applicable law or regulation from disclosing the assignment to Landlord prior to the effectuation of such assignment, Tenant may deliver such agreement to Landlord after the effectuation of the assignment. The original named Tenant covenants that, notwithstanding any assignment or transfer, whether or not in violation of the provisions of this Lease, and notwithstanding the acceptance of Rent and/or additional rent by Landlord from an assignee, transferee or any other party, the original named Tenant shall remain fully liable for the payment of the Rent and additional rent and for the other obligations of this Lease on the part of Tenant to be performed or observed.

N. Liability of Tenant. The joint and several liability of Tenant and any immediate or remote successor in interest of Tenant and the due performance of the obligations of this Lease on Tenant’s part to be performed or observed shall not be discharged, released or impaired in any respect by any agreement or stipulation made by Landlord extending the time, or modifying any of the obligations, of this Lease, or by any waiver or failure of Landlord to enforce any of the obligations of this Lease.

O. Listings. The listing of any name other than that of Tenant, guarantors, and Permitted Licensees (as defined herein), whether on the doors of the Premises or the Building directory, or otherwise, shall not operate to vest any right or interest in this Lease or in the Premises, nor shall it be deemed to be the consent of Landlord to any assignment or transfer of this Lease or to any sublease of the Premises or to the use or occupancy thereof by others. Any such listing shall constitute a privilege extended by Landlord, revocable at Landlord’s will by notice to Tenant.

P. Intentionally Omitted.

Q. Re-entry by Landlord. If Landlord shall recover or come into possession of the Premises before the date herein fixed for the termination of this Lease, Landlord shall have the right, at its option, to take over any and all subleases or sublettings of the Premises or any part thereof made by Tenant and to succeed to all the rights of said subleases and sublettings or such of them as it may elect to take over. Tenant hereby expressly assigns and transfers to Landlord such of the subleases and sublettings as Landlord may elect to take over at the time of such recovery of possession, such assignment and transfer not to be effective until the termination of this Lease or re-entry by Landlord hereunder or if Landlord shall otherwise succeed to Tenant’s estate in the Premises, at which time Tenant shall upon request of Landlord, execute, acknowledge and deliver to Landlord such further instruments of assignment and transfer as may be necessary to vest in Landlord the then existing subleases and sublettings. Every subletting hereunder is subject to the condition and by its acceptance of and entry into a sublease, each subtenant thereunder shall be deemed conclusively to have thereby agreed from· and after the termination of this Lease or re-entry by Landlord hereunder of or if Landlord shall otherwise succeed to Tenant’s estate in the Premises, that such subtenant shall waive any right to surrender possession or to terminate the sublease and, at Landlord’s election, such subtenant shall be bound to Landlord for the balance of the term of such sublease and shall attorn to and recognize Landlord, as its landlord, under all of the then executory terms of such sublease, except that Landlord shall not (i) be liable for any previous act, omission or negligence of Tenant under such sublease, (ii) be subject to any counterclaim, defense or offset not expressly provided for in such sublease, which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification or amendment of such sublease or by any previous prepayment of more than one (1) month’s rent and additional rent which shall be payable as provided in the sublease, (iv) be obligated to repair the subleased space or the Building or any part thereof, in the event of total or substantial total damage beyond such repair as can reasonably be accomplished from the net proceeds of insurance actually made available to Landlord, (v) be obligated to repair the subleased space or the Building or any part thereof, in the event of partial condemnation beyond such repair as can reasonably be accomplished from the net proceeds of any award actually made available to Landlord as consequential damages allocable to the part of the subleased space or the Building not taken or (vi) be obligated to perform any work in the subleased space of the Building or to prepare them for occupancy beyond Landlord’s obligations under this Lease, and the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed automatically upon and as a condition of occupying or using the Premises or any part thereof, to have given a waiver of the type described in and to the extent and upon the conditions set forth in this Article 12.

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13. CONDITION OF THE PREMISES.

A. Acceptance by Tenant. On the Commencement Date Landlord shall deliver vacant possession of the Premises to Tenant, free and clear of all tenants and occupants, in the condition as required pursuant to the terms expressly set forth herein. Tenant acknowledges that Tenant is currently located in a portion of the Premises pursuant to a sublease agreement and therefore Tenant is entirely familiar and knowledgeable of the condition and state of repair of the Premises and agrees that, except as otherwise expressly set forth herein, Tenant has examined the Premises and agrees to accept possession of the Premises in the condition and state of repair as which shall exist on the date hereof “AS IS”, ‘WHERE IS”. Landlord shall have no obligation whatsoever to perform any work or make any installations, alterations or improvements, or provide any material to Tenant or the Premises in order to prepare the Premises for Tenant’s occupancy or otherwise. The execution of this Lease by Tenant shall be conclusive evidence as against Tenant that, at the time such possession was so taken, the Premises and the Building were in good and satisfactory condition to the complete satisfaction of Tenant. Notwithstanding the foregoing or anything in this Lease to the contrary, Landlord shall deliver the Premises on the Commencement Date with all Building systems, including without limitation, the HVAC, electrical, plumbing and mechanical systems servicing the Building, in good working order and shall have a useful life of not less than sixty-seven (67) months.

B. Bathroom Upgrades. Landlord and Tenant agree that if any modifications, installations, replacements or other work to the bathrooms located in the Premises is required by any currently applicable laws, statutes, orders, directives, rules, regulations or requirements of any applicable governmental or quasi-governmental agency as a direct result of the Tenant Initial Alteration Work (the “Bathroom Work”) then Tenant shall complete such Bathroom Work at Landlord sole cost and expense in an amount equal to the lesser of: (i) the actual cost of the Bathroom Work, and (ii) Twenty Thousand Dollars and 00/100 ($20,000.00). Upon Landlord’s receipt of actual itemized bills marked paid and cancelled checks paid in connection with the Bathroom Work performed by Tenant, Landlord shall reimburse Tenant within thirty (30) days of Landlord’s receipt thereof. Notwithstanding anything to the contrary contained in this Article 13(B), in the event that the Bathroom Work is required due to Tenant’s occupancy exceeding the occupancy capacity for which the bathrooms were designed, then Landlord shall have no obligation to reimburse Tenant whatsoever In connection with the Bathroom Work and all such Bathroom Work shall be performed at Tenant’s sole and exclusive cost and expense.

C. Louvered Window. Landlord and Tenant acknowledge that Landlord will be replacing one (1) louvered window which is located in the Premises. Landlord agrees to use its commercially reasonable efforts to replace the louvered window in a timely manner (but in no event later than August 1, 2013) and agrees to use its commercially reasonable efforts to minimize disruption of, and interference with, Tenant’s use and occupancy of the Premises while replacing such window.

D. Schedules and Exhibits. All of the terms, covenants and conditions of the Schedules and Exhibits annexed hereto are incorporated in this Lease as if fully set forth at length herein.

14. ACCESS TO PREMISES.

A. Access by Landlord. Tenant shall permit Landlord, Landlord’s agents and public utilities servicing the Building to erect, use, maintain and replace, concealed ducts, pipes and conduits in and through the Premises and in connection therewith Landlord shall use its reasonable efforts to limit any reduction in the useable portion of the Premises in connection therewith. Landlord, Landlord’s agents and/or affiliates, and the holder of any Mortgage shall each have the right to enter the Premises at all reasonable times (and upon reasonable prior notice which maybe oral), and Landlord shall notify Tenant so as a representative of Tenant shall be given the opportunity to be present, however such presence of a Tenant representative shall not be required) to: (i) examine the same, (ii) to show them to prospective purchasers or mortgagees of the Building or space therein, (iii} to make such reasonable repairs, replacements, alterations, improvements or additions as Landlord may deem necessary or desirable to the Premises or to any other portion of the Building or which Landlord may elect to perform following Tenant’s failure to make repairs or perform any work which Tenant is obligated to perform under this Lease, (iv) for the purpose of complying with laws, regulations or other requirements of government authorities and (v) to perform “Remedial Work” (as defined in Article 40 hereof) after the failure of Tenant to perform the same in accordance with the terms of this Lease. Landlord shall be allowed, during the progress of any work in and about the Premises, to take all necessary material and equipment into and upon the Premises and to store them within the Premise (however no storage shall be allowed overnight except if approved by Tenant) without the same constituting an eviction or constructive eviction of Tenant in whole or in part and the Rent shall in nowise abate while any decorations, repairs, replacements, alterations, Improvements or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise. During the six (6) month period prior to the Expiration Date or the expiration of any renewal or extended term, Landlord may exhibit the Premises to prospective tenants thereof during normal business hours while Tenant is present upon twenty-four (24) hours advance notice. If, during the last three (3) months of the Term, Tenant shall have removed all or substantially all of Tenant’s property therefrom, Landlord may immediately enter and alter, renovate and redecorate the Premises, without elimination or abatement of Rent, or incurring liability to Tenant for any compensation, and such acts shall not be deemed an actual or constructive eviction and shall have no effect upon this Lease, however in the event Landlord enters the space pursuant to the previous sentence, Tenant shall be relieved of all

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restoration obligations with respect to the Premises. If Tenant shall not be personally present to open and permit an entry into the Premises, at any time, when for any reason an entry therein shall be necessary or permissible, Landlord or Landlord’s agents may enter the same by a master key, or may forcibly enter the same, without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents shall accord reasonable care to Tenant’s property), and without in any manner affecting the obligations and covenants of this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Landlord any obligation, responsibility or liability whatsoever, for the care, supervision or repair of the Building or any part thereof, other than as herein provided.

B. Other Landlord Privileges. Landlord shall have the right at any time, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets or other public parts of the Building and to change the name, number or designation by which the Building is commonly known. Tenant acknowledges that Landlord may (but shall have no obligation to) perform repairs, improvements, alterations and/or substantial renovation work in and to the public parts of the Building and the mechanical and other systems serving the Building (which work may include improvements to the lobby and facade of the Building, which may require that scaffolding and/or a sidewalk bridge be placed in front of the Building, and the replacement of window glass, requiring access to the same from within the Premises). Landlord shall incur no liability to Tenant, nor shall Tenant be entitled to any abatement of Rent on account of any noise, vibration or other disturbance to Tenant’s business at the Premises (provided that Tenant is not denied access thereto) which shall arise out of the performance by Landlord or other tenants of the aforesaid repairs, alterations, additions, improvements, alterations and renovations of the Building or any part thereof and Tenant hereby agrees to release Landlord of and from any claims (including without limitation, claims arising by reason of loss or interruption of business) of every kind and nature whatsoever arising under or in connection therewith. Tenant understands and agrees that all parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, corridor walls, doors and entrances), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair. Landlord, throughout the Term, shall have free access to any and all mechanical installations of Landlord, inducting but not limited to air-cooling, fan, ventilating, machine rooms and electrical closets. When accessing the Premises pursuant to the terms of this Article 14, Landlord shall use its reasonable efforts to minimize disruption of, and interference with, Tenant’s use and occupancy of the Premises while making any such repairs, replacements or improvements, although nothing contained herein shall require Landlord to make such repairs, replacements, or improvements outside of the normal business hours or incur any additional costs or expenses.

15. CERTIFICATE OF OCCUPANCY Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy Issued for the Premises or for the Building and in the event that any department of the City or Stale of New York shall hereafter at any time contend and/or declare by notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of such certificate of occupancy whether or not such use shall be a Permitted Use, Tenant shall, upon five {5) days written notice from Landlord, immediately discontinue such use of the Premises. Failure by Tenant to discontinue such use after such notice shall be considered a default in the fulfillment of a covenant of this Lease and Landlord shall have the right to terminate this Lease immediately, and in addition thereto shall have the right to exercise any and all rights and privileges and remedies given to Landlord by and pursuant to the provisions of Articles 17 and 18 hereof.

16. LANDLORD’S LIABILITY. The obligations of Landlord under this Lease shall not be binding upon Landlord named herein from and after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of Its Interest in the Building or the Real Property, as the case may be, and in the event of any such sale. conveyance, assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and II shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, grantee, assignee or other transferee that such purchaser, grantee, assignee or other transferee has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder. Neither the shareholders, members, directors or officers or· Landlord, if Landlord is a corporation, nor the partners comprising Landlord (nor any of the shareholders, members, directors or officers of such partners), if Landlord is a partnership (collectively, the “Parties’), shall be liable for the performance of Landlord’s obligations under this Lease. Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and shall not seek any damages against any of the Parties. The liability of Landlord for Landlord’s obligations under this Lease shall not exceed and shall be limited to Landlord’s interest in the Building and the Real Property and Tenant shall not look to or attach any other property or assets of Landlord or the property or assets of any of the Parties in seeking either to enforce Landlord’s Obligations under this Lease or to satisfy a judgment for Landlord’s failure to perform such obligations. In

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no event shall either party (or any of the officers, trustees, directors, partners, beneficiaries, joint ventures, members, stockholders or other principals or representatives and the like, disclosed or undisclosed, thereof) ever be liable for incidental or consequential damages.

17. DEFAULT.

A. Events of Default: Conditions of Limitation. This Lease and the term and estate hereby granted are subject to the limitations that upon the occurrence, at any time prior to or during the Term, of any one or more of the following events (referred to as “Events of Default”):

(i) if Tenant shall default in the payment when due of any installment of Rent or in the payment when due of any additional rent, and such default shall continue for a period of five (5) days after notice of such default; or

(ii) if Tenant shall default in the observance or performance of any term, covenant or condition of this Lease on Tenant’s part to be observed or performed (other than the covenants for the payment of Rent and additional rent) and Tenant shall fail to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days and Tenant shall not commence within said period of thirty (30) days, or shall not thereafter diligently prosecute to completion all steps necessary to remedy such default; or

(iii) if Tenant shall default in the observance or performance of any term, covenant or condition on Tenant’s part to be observed or performed under any other lease with Landlord or Landlord’s predecessor in interest of space in the Building and such default shall continue beyond any grace period set forth in such other lease for the remedying of such default; or

(iv) Intentionally Omitted; or

(v) if Tenant’s interest in this Lease shall devolve upon or pass to any person, whether by operation of law or otherwise, except as may be expressly permitted under Article 12 hereof; or

(vi) if this Lease shall be rejected under §235 of Title 11 of the U.S. Bankruptcy Code; or

(vii) if any execution or attachment shall be issued against Tenant or any of Tenant’s property pursuant to which the Premises shall be taken or occupied or attempted to be taken or occupied;

then, in any of said cases, at any time prior to or during the Term, of any one or more of such Events of Default, Landlord, at any time thereafter, at Landlord’s option, may give to Tenant a five (5) days’ notice of termination of this Lease and, in the event such notice is given, this Lease and the Term shall come to an end and expire (whether or not the Term shall have commenced) upon the expiration of said five (5) days with the same effect as if the date of expiration of said five (5) days were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 18 hereof.

B. Effect of Bankruptcy. Anything elsewhere in this Lease to the contrary notwithstanding, this Lease may be canceled by Landlord by sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (i) the commencement of a case in bankruptcy or under the laws of any state naming Tenant as the debtor: or (ii) the making by Tenant of any assignment or any other arrangement for the benefit of creditors under any state statute. Neither Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall thereafter be entitled to possession of the Premises but shall forthwith quit and surrender !he Premises. If this Lease shall have been assigned in accordance with its terms, the provisions of this Article 17 shall be applicable to any of the persons or entities primarily or secondarily liable for Tenant’s obligations under this Lease. It is stipulated and agreed that in the event of the termination of this Lease pursuant to this subsection, Landlord shall forthwith, notwithstanding any other provisions of this lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount determined in accordance with Subsection B(i)(c) of Article 18 of this Lease.

C. Conditional Limitation. Nothing contained in this Article 17 shall be deemed to require Landlord to give the notices herein provided for prior to the commencement of a summary proceeding for non-payment of rent or a plenary action for recovery of rent on account of any default in the payment of the same, it being intended that such notices are for the sole purpose of creating a conditional limitation hereunder pursuant to which this Lease shall terminate and if Tenant thereafter remains in possession after such termination, Tenant shall do so as a holdover tenant.

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18. REMEDIES AND DAMAGES.

A. Landlord’s Remedies. (i) If any execution or attachment shall be issued against Tenant or any of Tenant’s property whereupon the Premises shall be taken or occupied or attempted to be taken or occupied by someone other than Tenant, or if an Event of Default shall exist, or if this Lease and the Term shall expire and come to an end as provided in Article 17:

(a) Landlord and its agents and servants may immediately, or at any time after such default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, either by summary proceedings, or by any other applicable action or proceeding, (without being liable to indictment, prosecution or damages therefor), and may repossess the Premises and dispossess Tenant and any other persons from the Premises and remove any and all of their property and effects from the Premises; and

(b) Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in its sole discretion, may determine. Landlord shall have no obligation to relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise to affect any such liability; Landlord, at Landlord’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Premises as Landlord, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(ii) Except as provided for in this Lease, Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant and all such persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (a) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, or (b) any re­ entry by Landlord, or (c) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words “re-enter”, “re-entry” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach by Tenant, or any persons claiming through or under Tenant, of any term, covenant or condition of this Lease on Tenant’s part to be observed or performed, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The right to invoke the remedies hereinbefore set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

B. Damages. (i) If this Lease and the Term shall expire and come to an end as provided in Article 17, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in subsection A of this Article 18, or by or under any summary proceeding or any other action or proceeding, then, in any of said events:

(a) Tenant shall pay to Landlord all Rent, additional rent and other charges payable under this Lease by Tenant to Landlord to the dale upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

(b) Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (referred to as “Deficiency’) between the Rent reserved in this Lease for the period which otherwise would have constituted the unexpired portion of the Term and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of subsection A(i) of this Article 18 for any part of such period (first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination of this Lease, or Landlord’s reentry upon the Premises and with such reletting including, but not limited to, all repossession costs. brokerage commissions, advertising, legal expenses, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting); any such Deficiency shall be paid in monthly installments by Tenant on the days specified in this Lease for payment of installments of Rent, Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise, and no suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

(c) whether or not Landlord shall have collected any monthly Deficiencies as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any further Deficiencies as and for liquidated and agreed final damages, a sum equal to the amount by which the Rent reserved in this Lease for the period which otherwise would have

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constituted the unexpired portion of the Term exceeds the then fair and reasonable rental value of the Premises for the same period, less the aggregate amount of Deficiencies theretofore collected by Landlord pursuant to the provisions of subsection B(1)(b) of this Article 18 for the same period; if, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Premises, or any part thereof, shall have been relet by Landlord for the period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting.

(ii) If the Premises, or any part thereof, shall be relet together with other space in the Building, the rents collected or reserved under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this subsection B. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Rent reserved in this Lease. Solely for the purposes of this Article, the term “Rent” as used in subsection B(i) of this Article 18 shall mean the Rent in effect immediately prior to the date upon which this Lease and the Term shall have expired and come to an end, or the date of re-entry upon the Premises by Landlord, as the case may be, adjusted to reflect any increase or decrease pursuant to the provisions of Article 28 hereof for the Comparison Year (as defined in said Article 28) immediately preceding such event. Nothing contained in Article 17 or this Article 18 shall be deemed to limit or preclude the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in subsection B(i) of this Article 18.

C. Legal Fees. (i) Tenant hereby agrees to pay, as additional rent, all reasonable attorneys’ fees and disbursements (and all other court costs or expenses of legal proceedings) which Landlord may incur or pay out by reason of, or in connection with:

(a) any successful action or proceeding by Landlord which results in termination of this Lease;

(b) any other action or proceeding by Landlord against Tenant (including, but not limited to, any arbitration proceeding) that results in a final judgment for Landlord;

(c) any default by Tenant in the observance or performance of any obligation under this Lease (including, but not limited to, matters involving payment of rent and additional rent, computation of escalations, alterations or other Tenant’s work and subletting or assignment), whether or not Landlord commences any action or proceeding against Tenant;

(d) any action or proceeding brought by Tenant against Landlord (or any officer, partner or employee of Landlord) in which Tenant fails to secure a final unappealable judgment against Landlord; and

(e) any other appearance by Landlord (or any officer, partner or employee of Landlord) as a witness or otherwise in any action or proceeding whatsoever involving or affecting Landlord, Tenant or this Lease in which Tenant fails to secure a final unappealable judgment against Landlord.

(ii) Tenant’s obligations under this subsection C of Article 18 shall survive the expiration of the Term hereof or any ear1ier termination of this Lease. This provision is intended to supplement (and not to limit) other provisions of this Lease pertaining to indemnities and/or attorneys’ fees.

D. Additional Landlord Remedies. Tenant hereby acknowledges and agrees that in the event this Lease and the Term hereof shall expire and come to an end as provided in Article 17, Tenant shall be liable for an amount equal to the sum of the unamortized portion of any brokerage commissions or fees paid by Landlord in connection with this Lease (amortized on a straight-line basis over the Term of this Lease), which sum shall be immediately due and payable by Tenant on demand by Landlord and deemed to be additional rent hereunder.

19. FEES AND EXPENSES.

A. Curing Tenant’s Defaults. If Tenant shall default in the observance or performance of any term or covenant on Tenant’s part to be observed or performed under or by virtue of any of the terms or provisions in any Article of this Lease, after the giving of notice of required) and upon the expiration of any applicable grace period (except in an emergency), Landlord may immediately or at any time thereafter and without notice perform the same for the account of Tenant. If Landlord makes any expenditures or Incurs any obligations for the payment of money in connection with any such default by Tenant or the cure thereof including, but not limited to, any damages or tines or any reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding, such sums paid or obligations Incurred with interest and costs shall be deemed to be additional rent hereunder and shall

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be paid by Tenant to Landlord within thirty (30) days of rendition of any bill or statement to Tenant therefor. If the Term hereof shall have expired at the time Landlord sustains or incurs such expenditures, such sums shall be recoverable by Landlord, as damages.

B. Late Charges. If Tenant shall fail to make payment of any installment of Rent or any additional rent within seven (7) days after the date when such payment is due, Tenant shall pay to Landlord, in addition to such installment of Rent or such additional rent, as the case may be, as a late charge and as additional rent, a sum based on a rate equal to the lesser of (i) four percent (4%) per annum above the then current prime rate charged by Citibank, N.A. or its successor and (ii) the maximum rate permitted by applicable law, of the amount unpaid computed from the date such payment was due to and including the date of payment, but in no event shall interest be computed and payable for less than a full calendar month. Tenant acknowledges and agrees that, except as otherwise expressly provided herein, if Tenant fails to dispute any item of additional rent within thirty (30) days of receipt of a bill or notice therefor, Tenant shall be deemed to have waived its right to dispute the same.

20. NO REPRESENTATIONS BY LANDLORD. Landlord or Landlord’s agents have made no representations or promises with respect to the Building, the Real Property, the Premises, Taxes (as defined in Article 28 hereof) or any other matter or thing affecting or related to the Premises, except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth herein.

21. END OF TERM.

A. Surrender of Premises. Upon the expiration or other termination of the Term, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean, in good order and condition, ordinary wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted, and Tenant shall comply with the restoration obligations, if any, set forth in Article 3 hereof. Tenant’s obligation to observe or perform this covenant shall survive the expiration or sooner termination of the Term. If the last day of the Term or any renewal thereof falls on Saturday or Sunday this Lease shall expire on the immediately preceding business day.

B. Holdover bv Tenant. The parties recognize and agree that the damage to Landlord resulting from any failure by Tenant to timely surrender possession of the Premises as aforesaid will be substantial, will exceed the amount of the monthly installments of the Rent theretofore payable hereunder, and will be impossible to accurately measure. Tenant therefore agrees that if possession of the Premises is not surrendered to Landlord on or prior to the Expiration Date or sooner termination of the Term, in addition to any other rights or remedy Landlord may have hereunder or at law, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over in the Premises after the Expiration Date or sooner termination of this Lease, a sum equal to two (2x) times the aggregate of that portion of the Rent and the additional rent which was payable under this Lease during the last month of the Term. Nothing herein contained shall be deemed to permit Tenant to retain possession of the Premises after the Expiration Date or sooner termination of this Lease and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 21, which provisions shall survive the Expiration Date or sooner termination of this Lease. If Tenant shall hold-over or remain in possession of any portion of the Premises beyond the Expiration Date of this Lease, notwithstanding the acceptance of any Rent and additional rent paid by Tenant pursuant to the preceding provisions, Tenant shall be subject not only to summary proceeding and all damages related thereto, but also to any damages arising out of lost opportunities (and/or new leases) by Landlord to re-let the Premises (or any part thereof). All damages to Landlord by reason of such holding over by Tenant may be the subject of a separate action and need not be asserted by Landlord in any summary proceedings against Tenant.

22. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon Tenant paying the Rent and additional rent and observing and performing all the terms, covenants and conditions on Tenant’s part to be observed and performed, Tenant may peaceably and quietly enjoy the Premises, subject, nevertheless, to the terms and conditions of this Lease including, but not limited to, Article 16 hereof and to all Superior Leases and Mortgages.

23. FAILURE TO GIVE POSSESSION. Tenant waives any right to rescind this Lease under Section 223-a of the New York Real Property Law or any successor statute of similar import then in force, or otherwise, and further waives the right to recover any damages which may result from Landlord’s failure to deliver possession of the Premises on the date set forth in Article 1 hereof for the commencement of the Term for any reason whatsoever, including, but not limited to, the failure of the present tenant of the Premises to vacate and surrender the Premises to Landlord. If Landlord shall be unable to give possession of the Premises on such date, and provided Tenant is not responsible for such inability to give possession, the Rent reserved and covenanted to be paid herein shall not commence until the

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possession of the Premises is given or the Premises are available for occupancy by Tenant, and no such failure to give possession on such date shall in any way affect the validity of this Lease or the obligations of Tenant hereunder or give rise to any claim for damages by Tenant or claim for rescission of this Lease, nor shall same be construed in any way to extend the Term. If permission is given to Tenant to enter into the possession of the Premises or to occupy premises other than the Premises prior to the Commencement Date, Tenant covenants and agrees that such occupancy shall be deemed to be under all the terms, covenants, conditions and provisions of this Lease, including the covenant to pay Rent.

24. NO WAIVER.

A. If there be any agreement between Landlord and Tenant providing for the cancellation of this Lease upon certain provisions or contingencies and/or an agreement for the renewal hereof at the expiration of the Term, the right to such renewal or the execution of a renewal agreement between Landlord and Tenant prior to the expiration of the Term shall not be considered an extension thereof or a vested right in Tenant to such further term, so as to prevent Landlord from canceling this Lease and any such extension thereof during the remainder of the original Term; such privilege, if and when so exercised by Landlord, shall cancel and terminate this Lease and any such renewal or extension previously entered into between Landlord and Tenant or the right of Tenant to any such renewal or extension; any right herein contained on the part of Landlord to cancel this Lease shall continue during any extension or renewal hereof; any option on the part of Tenant herein contained for an extension or renewal hereof shall not be deemed to give Tenant any option for a further extension beyond the first renewal or extended term.

B. No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises. In the event Tenant at any time desires to have Landlord sublet the Premises for Tenant’s account, Landlord or Landlord’s agents are authorized to receive said keys for such purpose without releasing Tenant from any of the obligations under this Lease, and Tenant hereby relieves Landlord of any liability for loss of or damage to any of Tenant’s effects in connection with such subletting.

C. The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease or any of the Rules and Regulations set forth or hereafter adopted by Landlord, shall not prevent a subsequent act which would have originally constituted a violation from having all force and effect of an original violation. The receipt by Landlord of Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant and/or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. No provision of this Lease shall be deemed to have been waived by Landlord unless such waiver be in writing signed by Landlord.

D. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, or as Landlord may elect to apply same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy in this Lease provided.

E. This Lease contains the entire agreement between the parties and all prior negotiations and agreements are merged in this Lease. Any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.

25. WAIVER OF TRIAL BY JURY. It is mutually agreed by and between Landlord and Tenant that the respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, any claim of injury or damage, or for the enforcement of any remedy under any statute, emergency or otherwise. It is further mutually agreed that in the event Landlord commences any summary proceeding (whether for nonpayment of rent or because Tenant continues in possession of the Premises after the expiration or termination of the Term), Tenant will not interpose any counterclaim (except for mandatory or compulsory counterclaims) of whatever nature or description in any such proceeding. Tenant shall not join, consolidate, remove, or otherwise attempt to limit or stay any action or proceeding commenced by the Landlord against the Tenant or in which the Landlord and the Tenant are parties, except as required by law.

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26. INABILITY TO PERFORM. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reasons of strikes, labor troubles, inability to procure labor or materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war, natural emergency, Acts of God, fire or other casualty, condemnation or other reason of a similar or dissimilar nature beyond the reasonable control of the party (each a “Force Majeure Cause”) delayed in performing work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. Notwithstanding the foregoing, nothing contained in this Article 26 shall operate to excuse Tenant from the prompt payment of Rent, additional rent or any other payments or charges required by the terms of this Lease or shall operate to extend the Lease Term. Delays or failures to perform resulting from lack of funds shall not be deemed delays beyond the reasonable control of a party.

27. BILLS AND NOTICES. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be deemed sufficiently given or rendered if in writing, sent by registered or certified mail (return receipt requested}, or nationally recognized overnight courier (e.g., FedEx or UPS) addressed as follows or to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the others in accordance with the provisions of this Article 27;

If to Landlord:	Battery Commercial Associates LLC c/o The Moinian Group 3 Columbus Circle, Suite 2300 New York, New York 10019
with a copy to:	Harry R. Dreizen, Esq. 3 Columbus Circle, Suite 2300 New York, New York 10019
with a copy to:	Newmark Knight Frank, Inc. 125 Park Avenue New York, New York 10017
If to Tenant:	Constant Contact, Inc. 1601 Trapelo Road Waltham, Massachusetts 02451 Attn: General Counsel
with a copy to:	WilmerHale LLP 60 State Street Boston, Massachusetts 02109 Attn: Paul Jakubowski, Esq.

Tenant hereby acknowledges and agrees that any such bill, statement, demand, notice, request or other communication may be given by Landlord’s agent on behalf of Landlord. Any such bill, statement, demand, notice, request or other communication shall be deemed given on the date of any personal delivery. or one (1) business day after being sent if delivered by overnight courier for the next business day delivery, or three (3) business days after mailing i f sent by certified mail. Notwithstanding anything contained in this Article 27 to the contrary, bills and statements issued by Landlord may be sent by the method(s) set forth hereinabove, without copies to any other party. This notice provision has been specifically negotiated between the parties hereto.

28. ESCALATION.

A. Defined Terms. In a determination of any increase in the Rent under the provisions of this Article 28, Landlord and Tenant agree as follows:

(i) “Taxes” shall mean the aggregate amount of real estate taxes and any special or other assessments (exclusive of penalties and interest thereon) imposed upon the Real Property and real estate taxes or assessments imposed in connection with the receipt of income or rents from the Building to the extent that same shall be in lieu of all or a portion of the aforesaid taxes or assessments, or additions or increases thereof (including, without limitation, (i) assessments made upon or with respect to any “air rights”, i) assessments made in connection with any business improvement district and (iii) any assessments levied after the date of this Lease for public benefits to the Real Property or the Building (excluding an amount equal to the assessments payable in whole or in part during or for the Base Tax Year (as defined in Article 1 of this Lease)) which assessments, if payable in installments, shall be deemed payable in the maximum number of permissible Installments and there shall be Included in real estate taxes for each Comparison .Year in which such installments may be paid, the installments of such

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assessment so becoming payable during such Comparison Year (in the manner in which such taxes and assessments are imposed as of the date hereof); provided, that if because of any change in the taxation of real estate, any other tax or assessment (including, without limitation, any occupancy, gross receipts, rental, income, franchise, transit or other tax) is imposed upon Landlord or the owner of the Real Property or the Building, or the occupancy, rents or income therefrom, in substitution for or in addition to, any of the foregoing Taxes, such other tax or assessment shall be deemed part of the Taxes. With respect to any Comparison Year (hereinafter defined) all expenses, including attorneys’ fees and disbursements, experts’ and other witnesses’ fees, incurred in contesting the validity or amount of any Taxes or in obtaining a refund of Taxes shall be considered as part of the Taxes for such year. Taxes shall not include any income, franchise, estate, rent, succession, excise, profit, proceeds, inheritance capital stock, or transfer tax.

(ii) “Assessed Valuation” shall mean the amount for which the Real Property is assessed pursuant to applicable provisions of the New York City Charter and of the Administrative Code of the City of New York for the purpose of imposition of Taxes.

(iii) “Tax Year” shall mean the period July 1 through June 30 (or such other period as hereinafter may be duly adopted by the City of New York as its fiscal year for real estate tax purposes).

(iv) “Base Taxes” shall mean the Taxes payable for the Base Tax Year.

(v) “Comparison Year” shall mean with respect to Taxes, any Tax Year subsequent to the Base Tax Year for any part or all of which there is an increase in the Rent pursuant to subsection B of this Article 28.

(vi) “Landlord’s Statement” shall mean an instrument or instruments containing a comparison of any increase or decrease in the Rent for the preceding Comparison Year pursuant to the provisions of this Article 28. If requested by Tenant, Landlord shall include the relevant tax bill or invoice issued by the taxing authority as applicable to such Landlord’s Statement in question.

B. Escalation. (i) If the Taxes payable for any Comparison Year (any part or all of which falls within the Term) shall represent an increase above the Base Taxes, then the Rent for such Comparison Year and continuing thereafter until a new Landlord’s Statement is rendered to Tenant, shall be increased by Tenant’s Proportionate Share of such increase. The Taxes shall be initially computed on the basis of the Assessed Valuation in effect at the time Landlord’s Statement is rendered (as the Taxes may have been settled or finally adjudicated prior to such time) regardless of any then pending application, proceeding or appeal respecting the reduction of any such Assessed Valuation, but shall be subject to subsequent adjustment as provided in subsection D(i)(a) of this Article 28.

C. Payment of Escalations. (i) At any time prior to, during or after any Comparison Year Landlord shall render to Tenant, either in accordance with the provisions of Article 27 hereof or by personal delivery at the Premises, a Landlord’s Statement or Statements showing separately or together (a) a comparison of the Taxes payable for the Comparison Year with the Base Taxes. and (b) the amount of the increase in the Rent resulting from each of such comparisons. Landlord’s failure to render a Landlord’s Statement and/or receive payments with respect thereto during or with respect to any Comparison Year shall not prejudice Landlord’s right to render a Landlord’s Statement and/or receive payments with respect thereto during or with respect to any subsequent Comparison Year, and shall not eliminate or reduce Tenant’s obligation to pay increases in the Rent pursuant to this Article 28 for such Comparison Year. Landlord may also at any time and from time to time, furnish to Tenant a revised Landlord’s Statement or Statements showing separately or together a comparison of the Taxes payable for the Comparison Year with the Base Taxes. Landlord shall have deemed to waive its rights to receive any payment for any Comparison Year if the applicable Landlord Statement is not delivered to Landlord prior to the two (2) year anniversary of the Expiration Date.

(ii) (a) With respect to an increase in the Rent resulting from an increase in the Taxes for any Comparison Year above the Base Taxes, Tenant shall pay to Landlord a sum equal to one-half (%) of such increase on the first day of June and a sum equal to one-half (Y,) of such increase on the first day of December of each calendar year. If Landlord’s Statement shall be furnished to Tenant after the commencement of the Comparison Year to which it relates, then (1) until Landlord’s Statement is rendered for such Comparison Year, Tenant shall pay Tenant’s Proportionate Share of Taxes for such Comparison Year in semi-annual installments, as described above, based upon the last prior Landlord’s Statement rendered to Tenant with respect to Taxes, and (2) Tenant shall, within thirty (30) days after Landlord’s Statement is furnished to Tenant, pay to Landlord an amount equal to any underpayment of the installments of Taxes theretofore paid by Tenant for such Comparison Year and, in the event of an overpayment by Tenant, Landlord shall permit Tenant to credit against subsequent payments under this subsection (C)(ii)(b) of this Article 28 the amount of such overpayment or, at Tenant’s election, refund the same to Tenant. If during the Term of this Lease, Taxes are required to be paid (either to the appropriate taxing authorities or as tax escrow payments to a mortgagee or ground lessor) in full or in monthly, quarterly, or other installments, on any other date or dates than as presently required, then, at Landlord’s option, Tenant ‘s Proportionate Share with respect to Taxes shall be correspondingly accelerated or revised so that Tenant’s Proportionate Share is due at least thirty (30) days prior to the date payments

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are due to the taxing authorities or the superior mortgagee or ground lessor, as the case may be. The benefit of any discount for any early payment or prepayment of Taxes shall accrue solely to the benefit of Landlord, and such discount shall not be subtracted from Tenant’s Proportionate Share of such Taxes.

(b) Following each Landlord’s Statement, a reconciliation shall be made as follows: Tenant shall be debited with any increase in the Rent shown on such Landlord’s Statement and credited with the aggregate, if any, paid by Tenant on account in accordance with the provisions of subsection C(ii)(a) or C(ii)(b) for the Comparison Year in question; Tenant shall pay any net debit balance to Landlord within thirty (30) days next following rendition by Landlord, either in accordance with the provisions of Article 27 hereof or by personal delivery to the Premises, of an invoice for such net debit balance; any net credit balance shall be applied against the next accruing monthly installment of Rent.

D. Adjustments. (i) (a) In the event that, after a Landlord’s Statement has been sent to Tenant, an Assessed Valuation which had been utilized in computing the Taxes for a Comparison Year is reduced (as a result of settlement, final determination of legal proceedings or otherwise), and as a result thereof a refund of Taxes is actually received by or on behalf of Landlord, then, promptly after receipt of such refund, Landlord shall send Tenant a statement adjusting the Taxes for such Comparison Year (taking into account the expenses mentioned in the last sentence of subsection A(i) of this Article 28) and setting forth Tenant’s Proportionate Share of such refund and Tenant shall be entitled to receive such Share by way of a credit against the Rent next becoming due after the sending of such Statement or at Tenant’s election, as a refund; provided, however, that Tenant’s Share of such refund shall be limited to the amount, if any, which Tenant had theretofore paid to Landlord as increased Rent for such Comparison Year on the basis of the Assessed Valuation before it had been reduced.

(b) In the event that, after a Landlord’s Statement has been sent to Tenant, the Assessed Valuation which had been utilized in computing the Base Taxes is reduced (as a result of settlement, final determination of legal proceedings or otherwise) then, and in such event: (1) the Base Taxes shall be retroactively adjusted to reflect such reduction, (2) the monthly installment of Rent shall be increased accordingly and (3) all retroactive additional rent resulting from such retroactive adjustment shall be forthwith payable when billed by Landlord. Landlord promptly shall send to Tenant a statement setting forth the basis for such retroactive adjustment and additional rent payments.

(ii) Any Landlord’s Statement sent to Tenant shall be conclusively binding upon Tenant unless, within thirty (30) days after such statement is sent, Tenant shall (a) pay to Landlord the amount set forth in such statement, without prejudice to Tenant’s right to dispute the same, and (b) send a written notice to Landlord objecting to such statement and specifying the particular respects in which such statement is claimed to be incorrect. The parties recognize the unavailability of Landlord’s books and records because of the confidential nature thereof.

(iii) Anything in this Article 28 to the contrary notwithstanding, under no circumstances shall the rent payable under this Lease be less than the then annual base Rent set forth in Article 1 hereof.

(iv) The expiration or termination of this Lease during any Comparison Year for any part or all of which there is an increase or decrease in the Rent under this Article shall not affect the rights or obligations of the parties hereto respecting such increase or decrease and any Landlord’s Statement relating to such increase or decrease may, on a pro rata basis, be sent to Tenant subsequent to, and all such rights and obligations shall survive, any such expiration or termination. Any payments due under such Landlord’s Statement shall be payable within thirty (30) days after such statement is sent to Tenant.

E. Capital Improvements. Notwithstanding anything contained in this Lease to the contrary, Tenant shall not be responsible for the performance of any work or costs associated therewith, in connection with any laws, regulations or the like which require (a) structural repairs or modification, or (b) repairs or modifications to the utility of the Building-wide service equipment, or (c) installation of new building systems equipment which service the whole Building, unless such repairs, modification or installations shall be due to Tenant’s particular manner of use of the Premises (as opposed to office use generally). Landlord and Tenant acknowledge that the performance of any work or costs associated therewith in connection with such repairs, installations or modification to the above (a) -(c) shall also not be the responsibility or liability of Tenant if such are caused by Tenant’s initial Alterations performed in the Premises. However, If any capital improvement is made to the Real Property during any calendar year during the Term, which is solely required to be made pursuant to applicable law, enacted after the Commencement Date, and such costs shall be capitalized and amortized over their useful life determined in accordance with GAAP, then Tenant shall pay to Landlord, in equal monthly installments spread out equally for the remainder of months of the Term, Tenant’s Proportionate Share of the reasonable annual amortization, with interest, of the cost of such improvement in each calendar year during the Term during which such amortization occurs. This provision shall not be applicable (and shall not apply to any capital improvement made within) during the last two (2) years of the Term of this Lease.

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29. SERVICES.

A. Elevator. Landlord shall provide passenger elevator facilities on business days from 7:00 A.M. to 7:00 P.M. and Saturdays from 8:00 A.M. to 1:00 P.M. and shall have one (1) passenger elevator in the bank of elevators servicing the Premises available at all other limes. Landlord shall provide freight elevator services on an “as available” basis for incidental use by Tenant from 8:00 A.M. through 12:00 Noon and from 1:00 P.M. through 5:00 P.M. on business days only. Any extended use may be arranged with Landlord’s prior consent and Tenant shall pay as additional rent all building standard charges therefor. Tenant shall be entitled to forty (40) hours of freight elevator use, at no charge to Tenant during performance of Tenant’s Initial Alteration Work.

B. Heating. Landlord shall furnish heat to the Premises when and as required by law, on business days from 7:00 A.M. to 7:00 P.M. and Saturdays from 8:00 A.M. to 1:00 P.M from October 15 through May 15 (subject to outside temperature conditions). Landlord shall not be responsible for the adequacy, design or capacity of the heating distribution system if the normal operation of the heat distribution system serving the Building shall fail to provide heat at reasonable temperatures or any reasonable volumes or velocities in any parts of the Premises by reason of any rearrangement of partitioning or other Alterations made or performed by or on behalf of Tenant or any person claiming through or under Tenant.

C. Cooling/Central System or Package Unit Serving Multiple Tenants. The Premises shall be serviced by Landlord’s building air conditioning and ventilation system. Landlord shall furnish air­ cooling on business days from 7:00 A.M. to 7:00 P.M. and on Saturday from 8:00 A.M. to 1:00 P.M. from May 15 through October 15 (subject to outside temperature conditions) of each year during the Term, when, in the judgment of Landlord, reasonably exercised, it may be required for the comfortable occupancy of the Premises, and shall ventilate the Premises on business days and for similar hours during other months of the year. Landlord agrees to maintain and repair such system at its own cost and expense, except in the event that any such repairs or maintenance are required by reason of the negligence or misuse by Tenant of such air-cooling system. Tenant shall not alter, modify or replace such air-cooling system or any part thereof without the prior written consent of Landlord. Anything in this subsection C to the contrary notwithstanding, Landlord shall not be responsible if the normal operation of the air-cooling system serving the Premises shall ran to provide cooled air at reasonable temperatures, pressures or degrees of humidity or any reasonable volumes or velocities in any parts of the Premises by reason of (I) human occupancy factors and any machinery or equipment installed by or on behalf of Tenant or any person claiming through or under Tenant that have an electrical load in excess of the average electrical load for the Building air-cooling system as designed or (ii) any rearrangement of partitioning or other Alterations made or performed by or on behalf of Tenant or any person claiming through or under Tenant. Tenant agrees to keep and cause to be kept dosed all of the windows in the Premises whenever the air-cooling system is in operation and agrees to lower and close the blinds when necessary because of the sun’s position whenever the air-cooling system is in operation. Tenant at all times agrees to cooperate fully with Landlord and to abide by the reasonable regulations and requirements which Landlord may prescribe for the proper functioning and protection of the air-cooling system.

D. After Hours and Additional Services, The Rent does not include any charge to Tenant for the furnishing of any additional passenger elevator facilities, any freight elevator facilities (other than as contemplated in Article 29 subsection A) or for the service of heat or cooling to the Premises during periods other than the hours and days set forth in sections A, B and C of this Article 29 for the furnishing and distributing of such facilities or services (referred to as “Overtime Periods”). Accordingly, if Landlord shall furnish any (i) passenger elevator facilities to Tenant during Overtime Periods or freight elevator facilities, except as provided In subsection A of this Article 29, or (ii) heat or cooling to the Premises during Overtime Periods, then Tenant shall pay Landlord additional rent for such facilities or services at the standard reasonable rates then fixed by the Landlord for the Building or, if no such rates are then fixed, at reasonable rates. Neither the facilities nor the services referred to in this Article 290 shall be furnished to Tenant or the Premises if Landlord has not received advance notice from Tenant specifying the particular facilities or services requested by Tenant at least twenty-four (24) hours prior to the date on which the facilities or services are to be furnished; or if Tenant is in default under or in breach of any of the terms, covenants or conditions of this Lease; or if Landlord shall determine, in its sole and exclusive discretion, that such facilities or services are requested in connection with, or the use thereof shall create or aid in a default under or a breach of any term, covenant or condition of this Lease. All of the facilities and services referred to in this Article 29D are conveniences and are not and shall not be deemed to be appurtenances to the Premises, and the failure of Landlord to furnish any or all of such facilities or services shall not constitute or give rise to any claim of an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant. or Injury to or interruption of Tenant’s business or otherwise. Landlord may limit the furnishing during Overtime Periods of any of the facilities or services referred to in this Article 290 to a total of twenty (20) hours in any one week. Landlord’s rates for usage of the systems set forth in this Article 29 are as follows: (i) for perimeter overtime heating (Perimeter Base Building/Secondary System) is $200.00 per hour, (ii) for overtime circulation (Interior Base Building/Air Handling Units) is $100.00 per hour, and (iii) for overtime air-conditioning (Interior Base Building/Air Handling Units) is $250.00 per hour, and no such overtime service shall be provided for or charged for less than four (4) hours for each request, provided, however, such charges are subject to reasonable change, from time to time, as hereinbefore provided.

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E. Cleaning Provided by Tenant. Tenant, at Tenant’s sole and exclusive cost and expense, shall cause the Premises to be kept clean in a manner satisfactory to Landlord and no one other than persons reasonably approved by Landlord shall be permitted to enter the Premises or the Building for such purpose. In addition, Tenant shall. at its own cost and expense, clean and remove all garbage, waste, rubbish and refuse from the Premises and the Building in accordance with such rules and regulations Landlord deems reasonably necessary or desirable for the proper operation of the Building.

F. Sprinkler System. (a) If there now is or shall be installed in the Building a “sprinkler system”, and such system or any of its appliances shall be damaged or injured or not in proper working order by reason of any act or omission of Tenant, Tenant’s agents, servants, employees, licensees or visitors, Tenant shall forthwith restore the same to good working condition at its own expense; and if the New York Board of Fire Underwriters or the New York Fire Insurance Rating Organization or any bureau, department or official of the state or city government, shall require or recommend that any changes, modifications, alterations or additional sprinkler heads or other equipment be made or supplied by reason of Tenant’s particular manner of use (as opposed to general office use), or the location of the partitions, trade fixtures, or other contents of the Premises, Tenant shall, at Tenant’s expense, promptly make and supply such changes, modifications, alterations, additional sprinkler heads or other equipment.

(b) Landlord and Tenant hereby agree that in connection with Tenant’s installation of the Tenant’s Initial Alteration Work, Tenant shall construct and install the Fire Sprinkler Scope of Work, at Landlord’s sole cost and expense. The “Fire Sprinkler Scope of Work” is more particularly described on Schedule H annexed hereto and made a part hereof. Final plans and specifications, including without limitation the design and installation, for the work performed in connection with the sprinkler in the Premises shall, at all times, remain subject to Landlord’s prior written consent and approval, which approval shall not be unreasonably withheld, delayed or conditioned, provided such work is consistent with the Fire Sprinkler Scope of Work. Said review and approval will be based on the services of a professional engineering representative for Landlord to examine the sprinkler plans submitted by Tenant for the review of the design and all associated expenses requested by Tenant to install same. Landlord shall reimburse Tenant for all hard and soft costs directly associated with the Fire Sprinkler Scope of Work (including without limitation architectural and design costs) within thirty (30) days of Landlord’s receipt of actual itemized bills marked paid and cancelled checks paid in connection with the Fire Sprinkler Scope of Work. Landlord reserves the right to make an inspection of final installation of the fire sprinkler.

(c) Landlord shall, at Landlord’s sole cost and expense, cause the Building’s riser standpipe system and other Building infrastructure fire systems, e.g., alarms, to be fully functional and operational by October 31, 2013 (i.e., in a condition that permits the Premises’ sprinkler system to tie-in thereto and be operational). If and to the extent that such systems or infrastructure are not operational (and in a condition for such tie-in) by such date, Landlord shall be responsible, at Landlord’s sole cost and expense, for the installation and operation of any necessary temporary fire systems required by statute or code.

G. Water. Landlord shall provide water for ordinary drinking, cleaning and lavatory purposes, but if Tenant requires uses or consumes water for any other purposes or in unusual quantities (of which fact Landlord shall be the judge in its reasonable discretion), Landlord may install a water meter at Tenant’s expense and thereby measure Tenant’s water consumption for all purposes. In such event (i) Tenant shall keep said meter and installation equipment in good working order and repair at Tenant’s own cost and expense; (ii) Tenant agrees to pay for water consumed, as shown on said meter thirty (30) days after bills are rendered as additional rent; and (iii) Tenant covenants and agrees to pay the sewer rent, charge or any other tax, rent, levy or charge which now or hereafter is assessed, imposed or shall become a lien upon the Premises or the realty of which they are part pursuant to law, order or regulation made or issued in connection with any such metered use, consumption, maintenance or supply of water, water system, or sewage or sewage connection or system.

H. Electricity.

(i) Tenant’s demand for, and consumption of, electricity in the Premises shall be determined by such submeters installed (or, if existing, retrofitted) by Landlord at Landlord’s sole and exclusive cost and expense. Landlord shall make available during the Term of this Lease electricity for all purposes with an average capacity of not less than six (6) watts demand load per useable square foot of the Premises. Tenant shall pay for such electric consumption as additional Rent upon rendition of bills therefor, which bills shall be rendered by or on behalf of Landlord separately for each meter and payable as additional rent hereunder and shall be calculated at the then applicable rate prescribed by the public utility company serving the Premises sub metered electrical energy, plus (a) Landlord’s charge for overhead and supervision in the amount of six (6%) percent of the total electric bill and (b) any taxes or other charges in connection therewith. If any tax shall be imposed upon Landlord’s receipts from the sale or resale of electrical energy to Tenant, the pro rata share applicable to the electrical energy service received by Tenant shall be passed on to, included in the bill of, and paid by Tenant, if and to the extent

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permitted by law. Landlord shall bill Tenant monthly, for the cost of its consumption of electricity in the Premises and Tenant shall pay the amount thereof at the time of payment of each installment of Rent. If either the quantity or character of electrical services Is changed by the utility company or other company supplying electrical service to the Building, or is no longer available or suitable for Tenant’s requirements, no such change, unavailability or unsuitability shall constitute and actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relive Tenant from any of its obligations under this lease, or impose any liability upon Landlord, or its agents, by reason of inconvenience or annoyance to Tenant or injury to or interruption of Tenant’s business or otherwise.

(ii) If Tenant requires additional electrical energy In excess of six (6) watts per square foot for any reason whatsoever, Including without limitation, the use of additional business machines, office equipment, or other applicable In the Premises which utilize electrical energy, Tenant shall request such additional electrical energy from Landlord In each 1nstance. Landlord agrees to facilitate such additional electrical energy provided that (i) any additional feeders or risers which are required to supply Tenant’s additional electrical requirements. and all other equipment proper and necessary in connection with such feeders or risers, shall be installed by Landlord upon Tenant’s request, at the sole and exclusive cost and expense of Tenant (including without limitation, a connection fee of Three Hundred and Fifty dollars ($350.00) per kilovolt ampere), and (ii) provided that, in Landlord’s sole judgment, such additional feeders or risers are necessary and are permissible under applicable laws and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or interfere with or disturb other Tenant or occupants of the Building.

(iii) Tenant covenants that at no time shall the use of electrical energy servicing the Premises exceed the capacity of the existing feeders or wiring installations then servicing the Premises nor shall Tenant use any electrical equipment which, in Landlord’s reasonable opinion, will overload such installations or interfere with the use thereof by the Building or other tenants. Tenant shall not make or perform, or permit the making or performing of, any Alterations to wiring installations or other electrical facilities in or serving the Premises without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld, conditioned or delayed, and without paying Landlord customary charges therefor. Any such Alterations, additions or consent by Landlord shall be subject to the provisions of this Article 29 as well as to the other provision of this Lease, including, but not limited to, the provision of Article 3 above.

(iv) At Landlord’s option, Landlord shall furnish and install all replacement lighting, tubes, lamps, bulbs and ballasts required in the Premises, and Tenant shall pay to landlord or its designated contractor upon demand Landlord’s then established reasonable charges therefor; provided that the foregoing shall not apply with respect to the replacement of lighting, tubes, lamps, bulbs and ballasts replaced by Tenant as part of the Tenant’s Initial Alteration Work.

(v) While Landlord will use its commercially reasonable efforts to install a submeter in the Premises on or prior to May 1, 2013, until such time as the submeter is installed in the Premises, Tenant shall pay for electric current on a “rent inclusion” basis at the rate of $53,602.50 per year, payable in equal monthly installments of Four Thousand Four Hundred and Sixty-Six dollars and 88/100 ($4,466.88) per month as additional Rent hereunder

I. Interruption of Services. (i) Landlord reserves the right to stop service of the heating, the elevator, electrical plumbing or other mechanical systems or facilities In the Building and cleaning services, when necessary, by reason of accident or emergency, or after reasonable prior notice for repairs, additions, alterations, replacements, decorations or improvements in the judgment of Landlord desirable or necessary to be made, until said repairs, additions, alterations, replacements, decorations or improvements shall have been completed. Landlord shall have no responsibility or liability for Interruption, curtailment or failure to supply heat, outside air, elevator, plumbing, electricity or cleaning when prevented by exercising its right to stop service or by strikes, labor troubles or accidents. Force Majeure Causes or by any cause whatsoever reasonably beyond Landlord’s control, or by failure of independent contractors to perform or by laws, orders, rules or regulations of any federal, state, county or municipal authority (including, without limitation. regulations may require the removal of CFC’s as well as the alteration or replacement of equipment utilizing CFC’s), or failure of suitable fuel supply, or inability by exercise of reasonable diligence to obtain suitable fuel or by reason of governmental preemption in connection with a National Emergency or by reason of the conditions of supply and demand which have been or are affected by a Force Majeure Cause or other similar circumstance out of Landlord’s control. The exercise of such right or such failure by Landlord shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any compensation or to any abatement or diminution of Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise.

(ii) Critical Services. Notwithstanding anything contained herein to the contrary, in the event that Critical Services, as defined below, are not available to Tenant, and as a direct result of Tenant’s loss of such Critical Services causes all of the Premises to become unusable or access

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to the Premises is barred for more than ninety (90) consecutive days, and Tenant gives Landlord written notice thereof within five (5) business days after such is realized by Tenant, and in fact Tenant does not open for business at the Premises or access the Premises during such period based solely on Tenant’s loss of such Critical Services, in such event, Tenant shall have the right to terminate this Lease, as its sole and exclusive right, remedy and recourse pursuant to the terms hereof. Provided that Tenant has timely delivered the required five (5) business day notice described above and the affected Critical Service has not been restored within such ninety (90) day period, then Tenant shall have the right to terminate this Lease on five (5) business days’ notice at any time following the expiration of such ninety (90) day period but prior to the date that such Critical Service is actually restored; provided that if Tenant delivers such second five (5) business day notice and Landlord restores such affected Critical Service (or causes the same to be restored) during such second five (5) business day period, then Tenant’s termination notice shall be null and void and this Lease shall continue in full force and effect. This provision shall not apply in the event of a condition caused by fire or other casualty or condemnation as otherwise provided for in this Lease, but rather the casualty and condemnation provision set forth herein shall prevail in such instances. As used herein the term “Critical Services” shall mean, electricity, heat, water, air cooling, ventilation, telecommunications or elevator service to the Premises. In the event that Landlord relocates the electrical switch gear which serves the Premises to an above grade floor in the Building, Tenant shall no longer have the right to terminate the Lease as set forth in this Article 29(1)(ii).

J. Access. Tenant shall have access to the Building and the Premises twenty-four (24) hours a day, seven (7) days a week. Landlord agrees that Tenant shall be permitted to install a card reader access system on the front door of the Premises, any server room located in the Premises (provided such server room does not contain any Building systems or panels or controls to which Landlord or Landlord’s agents would need access) and a code-entry lock on any IT storage closet located in the Premises. All such installations shall be made in accordance with the provisions of this Lease, including, without limitation Article 3.

K. Telecommunications. Tenant shall have the right to obtain telecommunications from RCN, Verizon, Sidera, or Time Warner, all who currently serve the Building. With Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed, Tenant shall have the right to contract directly with other service providers selected by Tenant provided Landlord has the capacity and ability to accommodate such other providers.

30. PARTNERSHIP TENANT.

A. Partnership Tenants. If Tenant’s interest in this Lease shall be assigned to a partnership (or to two (2) or more persons, individually and as co-partners of a partnership) pursuant to Article 12 (any such partnership and such persons are referred to in this Article 30 as a “Partnership Tenant”), the following provisions of this Article 30 shall apply to such Partnership Tenant: (i) the liability of each of the parties comprising a Partnership Tenant shall be joint and several, and (ii) each of the parties comprising a Partnership Tenant hereby consents in advance to, and agrees to be bound by, any written instrument which may hereafter be executed, changing, modifying or discharging this Lease, in whole or in part, or surrendering all or any part of the Premises to Landlord, and by any notices, demands, requests or other communications which may hereafter be given by a Partnership Tenant or by any of the parties comprising a Partnership Tenant, and (iii) any bills, statements, notices, demands, requests or other communications given or rendered to a Partnership Tenant and to all such parties shall be binding upon a Partnership Tenant and all such parties, and {iv) if a Partnership Tenant shall admit new partners, all of such new partners shall, by their admission to a Partnership Tenant, be deemed to have assumed performance of all of the terms, covenants and conditions of this Lease on Tenant’s part to be observed and performed, and (v) a Partnership Tenant shall give prompt notice to Landlord of the admission of any such new partners, and upon demand of Landlord, shall cause each such new partner to execute and deliver to Landlord an agreement in form satisfactory to Landlord, wherein each such new partner shall assume performance of all the terms, covenants and conditions of this Lease on Tenant’s part to be observed and performed (but neither Landlord’s failure to request any such agreement nor the failure of any such new partner to execute or deliver any such agreement to Landlord shall vitiate the provisions of subdivision (iv) of subsection A of this Article 30).

B. Limited Liability Entity. Notwithstanding anything to the contrary contained herein, if Tenant is a limited or general partnership (or is comprised of two (2) or more persons, individually or as co-partners), the change or conversion of Tenant to (i) a limited liability company, (ii) a limited liability partnership, or (iii) any other entity which possesses the characteristics of limited liability (any such limited liability company, limited liability partnership or entity is collectively referred to as a “Limited Liability Successor Entity”), shall be prohibited unless the prior written consent of Landlord is obtained, which consent may be withheld in Landlord’s sole discretion. Notwithstanding the foregoing, Landlord agrees not to unreasonably withhold or delay such consent provided that:

(a) The Limited Liability Successor Entity succeeds to all or substantially all of Tenant’s business and assets;

(b) The Limited Liability Successor Entity shall have a net worth, determined in

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accordance with generally accepted accounting principles, consistently applied, of not less than the greater of the net worth of Tenant on (1) the date of execution of this Lease, or (2) the day immediately preceding the proposed effective date of such conversion:

(c) Tenant is not in default of any of the terms, covenants or conditions of this Lease on the proposed effective date of such conversion:

(d) Tenant shall cause each partner of Tenant to execute and deliver to Landlord an agreement, in form and substance satisfactory to Landlord, wherein each such partner agrees to remain personally liable for all of the terms, covenants and conditions of this Lease that are to be observed and performed by the Limited Liability Successor Entity; and

(e) Tenant shall reimburse Landlord within ten (10) business days following demand by Landlord for any and all reasonable costs and expenses that may be incurred by Landlord in connection with said conversion of Tenant to a Limited Liability Successor Entity, including, without limitation, any attorney’s fees and disbursements.

31. VAULT SPACE, Any vaults, vault space or other space outside the boundaries of the Real Property, notwithstanding anything contained in this Lease or indicated on any sketch, blueprint or plan are not Included In the Premises. Landlord makes no representation as to the location of the boundaries of the Real Property. All vaults and vault space and all other space outside the boundaries of the Real Property which Tenant may be permitted to use or occupy is to be used or occupied under a revocable license, and If any such license shall be revoked, or If the amount of such space shall be diminished or required by any Federal, State or Municipal authority or by any public utility company, such revocation. diminution or requisition shall not constitute an actual or constructive eviction, in whole or in part. or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord. Any fee, tax or charge imposed by any governmental authority for any such vaults, vault space or other space actually used by Tenant, shall be paid by Tenant.

32. SECURITY DEPOSIT (a) Tenant shall deposit with Landlord on the signing of this Lease the Security Deposit the amount of $107,205.00, as security for the faithful performance and observance by Tenant of the terms, conditions and provisions of this Lease, including without limitation the surrender of possession of the Premises to Landlord herein provided. It is agreed that in the event Tenant defaults in respect of any of the terms, provisions and conditions of this Lease, including, but not limited to, the payment of Rent and additional rent, Landlord may apply or retain the whole or any part of the Security Deposit so deposited to the extent required for the payment of any Rent and additional rent or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of Tenant’s default in respect of any of the terms, covenants and conditions of this Lease, including but not limited to, any damages or deficiency in the reletting of the Premises, whether such damages or deficiency accrue or accrues before or after summary proceedings or other reentry by Landlord. If Landlord applies or retains any part of the Security Deposit so deposited, Tenant, within five (5) business days’ after notice from Landlord, shall deposit with Landlord the amount so applied or retained so that Landlord shall have the full Security Deposit on hand at all times during the Term. The failure by Tenant to deposit such additional amount within the foregoing time period shall be deemed a material default pursuant to Article 17 of this Lease. If Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the Security Deposit shall be returned to Tenant within thirty (30) days after the Expiration Date and after delivery of the entire possession of the Premises to Landlord. In the event of a sale of the Real Property or the Building or leasing of the Building, Landlord shall transfer the Security Deposit to the vendee or lessee and Landlord shall thereupon be released by Tenant from all liability for the return of the Security Deposit; and Tenant agrees to look solely to the new Landlord for the return of the Security Deposit; and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the Security Deposit to a new Landlord. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the Security Deposit and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Landlord shall retain the Security Deposit in an interest bearing account at a customary rate of interest for the benefit of the tenant less any customary charges charged by managing agent.

(b) In lieu of a cash Security Deposit as contemplated under Article 32(a) above, at any time during the Term of this Lease, Tenant shall have the right to deliver to Landlord, an irrevocable letter of credit (the “Letter of Credit”) in the amount equal to the Security Deposit (as defined in Article 1 of this Lease) as security for the full and faithful performance and observation by Tenant of all covenants, agreements, warranties, conditions, terms and provisions of this Lease to be performed, fulfilled, or observed by Tenant. Landlord shall have the right, without prejudice to any other remedy, to draw upon the Letter of Credit to pay Landlord’s damages arising from, or to cure any default of tenant after the expiration of any applicable notice and cure periods. The Letter of Credit shall be, among other things: (i) irrevocable and unconditional; (ii) conditioned for payment solely upon presentation of the Letter of Credit and a sight draft: (iii) transferable one (1) or more limes by Landlord without the consent of applicant and without any fee charged to Landlord in connection therewith; (iv) evergreen: (v) payment by drawing down on the

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Letter of Credit shall not be contingent on reimbursement by applicant, and (vi) full and partial drawings shall be permitted. Tenant acknowledges and agrees that it shall pay to Landlord upon Landlord’s demand, as additional rent, within thirty (30) days after the delivery of an invoice thereof, any and all reasonable costs or fees charged in connection with the Letter of Credit that arise due to: (i) Landlord’s sale or transfer of all or a portion of the Building; or (ii) the addition, deletion, or modification of any beneficiaries under the Letter of Credit. The Letter of Credit shall be issued by a commercial bank or trust company reasonably satisfactory to Landlord, having banking offices at which the Letter of Credit may be drawn upon in the City of New York, borough of Manhattan; provided that Landlord hereby approves Silicon Valley Bank. The Letter of Credit shall expire not earlier than twelve (12) months after the date of delivery of such Letter of Credit to Landlord and shall provide that same shall be automatically renewed for successive twelve (12) month periods. If the issuing bank does not renew the Letter of Credit, and if Tenant does not deliver a substitute Letter of Credit at least thirty (30) days prior to the expiration of the current period, then, in addition to its rights granted under the Lease, Landlord shall have the right to draw on the existing Letter of Credit and hold same as a cash security deposit pursuant to the provision of Article 32(a) above. Tenant hereby agrees to cooperate at its sole cost and expense, with Landlord to promptly execute and deliver to Landlord any and all modifications, amendments, and replacements of the Letter of Credit, as Landlord may reasonably request to carry out the tenns and conditions of this Article 32.

33. CAPTIONS. The captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision thereof.

34. ADDITIONAL DEFINITIONS.

A. The term “office” or “offices”, wherever used in this Lease, shall not be construed to mean premises used as a store or stores, for the sale or display, at any time, of goods, wares or merchandise, of any kind, or as a restaurant, shop, booth, bootblack or other stand, barber shop, or for other similar purposes or for manufacturing.

B. The words “reenter” and “reentry” as used in this Lease are not restricted to their technical legal meaning.

C. The term “rent” as used in this Lease shall mean and be deemed to include Rent, any increases in Rent, all additional rent and any other sums payable hereunder.

D. The term “business days” as used in this Lease shall exclude Saturdays, Sundays and all days observed by the State or Federal Government as legal holidays and union holidays for those unions that materially affect the delivery of services in the Building.

35. PARTIES BOUND. The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective heirs, distributees, executors, administrators, successors, and, except as otherwise provided in this Lease, their assigns.

36. BROKER. Each party hereto represents and warrants that such party has dealt directly with (and only with), the Broker (as defined In Article 1 herein) as broker In connection with this Lease, and that insofar as each party knows no other broker negotiated this Lease or is entitled to any commission in connection therewith; and each party covenants and agrees to pay, hold harmless and indemnify the other from and against any and all cost. expense (including reasonable attorney’s fees) or liability for any compensation, commissions or charges claimed by any broker or agent, other than the Broker, with respect to this Lease or the negotiations thereof, arising from such party’s acts, conduct or conversations. The execution and delivery of this Lease by each party shall be conclusive evidence that such party has relied upon the foregoing representation and warranty. Landlord shall be responsible for and pay the commission due to Broker In connection with this Lease pursuant to a separate written agreement. This Paragraph shall survive the expiration or sooner termination of this Lease.

37. INDEMNITY. Tenant shall not do or permit any act or thing to be done upon the Premises which may subject Landlord to any liability or responsibility for injury, damages to persons or property or to any liability by reason of any violation of law or of any legal requirement of public authority, but shall exercise such control over the Premises as to fully protect Landlord against any such liability. Except if such is caused by the gross negligence or willful misconduct of Landlord, Tenant agrees to indemnify and save harmless Landlord from and against all liabilities, obligations, damages, penalties, claims, costs and expenses, Including reasonable attorney fees, incurred or arising from: (i) any act, omission or negligence of Tenant; Its contractors, licensees, agents, employees. Invitees or visitors, (ii) any accident, injury or damage whatsoever caused to any person or to the property of any person and occurring during the Term In or about the Premises, (iii) any accident, injury or damage to any person, entity or property, occurring outside of the Premises but anywhere within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act or omission of Tenant or Tenant’s agents.

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employees, invitees or visitors. (iv) any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed and performed and (v) Tenant, or any of Tenant’s contractors, licensees, agents, employees, invitees or visitors causing or permitting any Hazardous Substance {as hereinafter defined) to be brought upon, kept or used in or about the Premises or the Real Property or any seepage, escape or release of such Hazardous Substances. The term “Hazardous Substances• shall mean, collectively, (a) asbestos and polychlorinated biphenyls and (b) hazardous or toxic materials, wastes and substances which are defined, determined and identified as such pursuant to any law. Tenant’s liability under this Lease extends to the acts and omissions of any subtenant and any contractor, licensee, agent, employee, invitee or visitor of any subtenant. As used herein and in all other provisions in this Lease containing indemnities made for the benefit of Landlord, the term “Landlord” shall mean the Landlord herein named and its managing agent and their respective parent companies and/or corporations, their respective controlled, associated, affiliated and subsidiary companies and/or corporations and their respective members, officers, partners, agents, consultants, servants, employees, successors and assigns. This indemnity and hold harmless agreement shall include indemnity from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof. This Paragraph shall survive the expiration or sooner termination of this Lease.

38. ADJACENT EXCAVATION SHORING. If an excavation shall be made upon land adjacent to the Premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation, license to enter upon the Premises for the purpose of doing such work as said person shall deem necessary to preserve the wall or the Building from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Landlord, or diminution or abatement of Rent.

39. MISCELLANEOUS.

A. No Offer. This Lease is offered for signature by Tenant and it is understood that this Lease shall not be binding upon Landlord unless and until Landlord shall have executed and delivered a fully executed copy of this Lease to Tenant and all of Tenant’s obligations relative to the effectiveness hereof have been satisfied, including, but not limited to, the delivery of a valid insurance certificate complying with the requirements hereof and the receipt by the Landlord of good usable funds for the payment of the first monthly installment of rent and the Security Deposit. The delivery of this Lease by the Tenant to the Landlord shall constitute an irrevocable offer to the Landlord for a period of twenty (20) days during which period Landlord may accept or reject this Lease, at its option.

A. Certificates. From time to time, within ten (10) days next following request by Landlord or the mortgagee of a Mortgage, Tenant shall deliver to Landlord or such mortgagee, as the case may be, a written statement executed and acknowledged by Tenant, in form satisfactory to Landlord or such mortgagee, (i) stating that this Lease Is then in full force and effect and has not been modified (or if modified, setting forth all modifications), (ii) setting forth the date to which the Rent, additional rent and other charges hereunder have been paid, together with the amount of fixed base monthly Rent then payable, (iii) stating whether or not, to the best knowledge of Tenant, Landlord Is in default under this Lease, and, if Landlord is in default, setting forth the specific nature of all such defaults, Qv) stating the amount of the security deposit under this Lease, (v) staling whether there are any subleases affecting the Premises, (vi) stating the address of Tenant to which all notices and communications under the Lease shall be sent, (vii) staling the Commencement Date, the Rent Commencement Date and the Expiration Date, and (viii) as to any other matters reasonably requested by Landlord or such mortgagee. Tenant acknowledges that any statement delivered pursuant to this subsection B may be relied upon by Landlord, any purchaser or owner of the Real Property or the Building, or Landlord’s interest in the Real Property or the Building or any Superior Lease, or by any mortgagee of a Mortgage, or by any assignee of any mortgagee of a Mortgage, or by any lessor under any Superior Lease.

C. Directory Listings. Landlord agrees to provide Tenant, at Landlord’s sole cost and expense, with up to two (2) listings of Tenant’s name and/or the names of Permitted Licensees on the directory in the lobby of the Building. Upon written request by Tenant, Landlord agrees to provide Tenant with additional listings on such directory, at Tenant’s sole cost and expense, provided Tenant shall be limited to a number of listings determined by multiplying Tenant’s Proportionate Share by the total number of spaces for listings on such directory.

D. Authority. If Tenant is a corporation or partnership, each individual executing this Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and validly existing entity qualified to do business in the State of New York and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so.

E. Signage. Tenant shall not exhibit, inscribe, paint or affix any sign, advertisement, notice or other lettering on any portion of the Building or the outside of the Premises without the prior written consent of Landlord in each instance. A plan of all signage or other lettering proposed to be exhibited,

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Inscribed, painted or affixed on the entry door(s) to the Premises or in the common lobby of the eleventh (11^th) floor shall be prepared by Tenant in conformity with building standard signage requirements (if any) and submitted to Landlord for Landlord’s consent, which consent shall not be unreasonably withheld, conditioned or delayed. Upon the granting of Landlord’s consent, Tenant may install such signage at Tenant’s sole cost and expense. Upon Installation of any such signage or other lettering, such signage or lettering shall not be removed, changed or otherwise modified in any way without Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Any signage, advertisement, notice or other lettering which shall be exhibited, Inscribed, painted or affixed by or on behalf of Tenant in violation of the provisions of this section may be removed by Landlord and the cost of any such removal shall be paid by Tenant as additional rent. Tenant shall not exhibit, inscribe, paint or affix on any part of the Premises or the Building visible to the general public any signage or lettering including the words “temporary’’ or “personnel”.

F. Consents and Approvals. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent of Landlord or the written approval of Landlord and no consent or approval of Landlord shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Landlord. Wherever in this Lease Landlord’s consent or approval is required, if Landlord shall delay or refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment.

G. Governing Law. This Lease shall be deemed to have been made in New York County, New York, and shall be construed in accordance with the laws of New York. All actions or proceedings relating, directly or indirectly, to this Lease shall be litigated only in courts located within the County of New York. Landlord and Tenant, any guarantor of the performance of Tenant’s obligations hereunder and their respective successors and assigns, hereby subject themselves to the jurisdiction of any state or federal court located with such county, and shall be subject to service provided that the terms, provisions and conditions of Article 27 are adhered to.

H. No Rights of Third Parties. Any and all rights and benefits granted to Tenant under the terms and conditions of this Lease are for the exclusive benefit of Tenant, it being the express intent of the parties hereto that in no event shall any such right be conferred upon or for the benefit of any third party and no third party shall have any right to make any claim as a beneficiary of any right or benefit granted to Tenant under this Lease.

40. HAZARDOUS SUBSTANCES. Tenant shall not permit the presence, handling, use. storage or transportation of Hazardous Substances in or about the Premises or the Building (except for normal office supplies cleaning products kept In normal quantities and stored and used in compliance with Environmental Law) and Tenant shall, at its sole cost and expense, perform any and all Remedial Work arising from, growing out of or related to any breach of the foregoing covenant by Tenant. The term “Remedial Work” shall mean all investigation, monitoring, restoration, abatement, detoxification, containment, handling, treatment, removal, storage, decontamination, clean-up, transport, disposal or other ameliorative work or response action undertaken in connection with (a) any “Environmental Laws· (as hereinafter defined), (b) any order of any governmental authority having jurisdiction over the Premises and/or the Building, ·or (c) any final judgment, consent decree, settlement or compromise with respect to any “Hazardous Substances Claims” (as hereinafter defined) The term “Hazardous Substances Claims” shall mean any and all enforcement, clean-up, removal, remedial or other governmental or regulatory actions. agreements or orders threatened in writing, instituted or completed pursuant to any Environmental Laws and any and all other actions, proceedings, claims, written demands or causes of action, whether meritorious or not including, without limitation. third party claims for contribution, indemnity, personal injury or real or personal property damage), that, in each case, relate to, arise from or are based, in whole or in part, on the occurrence or alleged occurrence of any violation or alleged violation of or responsibility under any applicable Environmental Law by Tenant and relating to the Premises and/or the Building or to the ownership, use, occupation or operation thereof. The term “Environmental Laws” shall mean any and all present and future federal, state and local laws (whether under common law, statute, ordinance, rule, regulation or otherwise), court or administrative orders or decrees, requirements of permits issued with respect thereto, and other requirements of governmental authorities having jurisdiction over the Premises and/or the Building relating to protection of the environment, to public health and safety or any Hazardous Substances (Including, without limitation, the Comprehensive Environmental Response. Compensation, and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601, et seq., as heretofore or hereafter amended from time to time).

41. PUBLIC REPORTING. Landlord and Tenant acknowledge and agree that based on the fact that Tenant is a public company, Tenant shall be permitted to disclose the existence and the terms set forth in this Lease if required to satisfy Tenant’s public reporting requirements.

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42. CONDOMINIUM. (i) This Lease and all rights of Tenant hereunder are and shall be subject and subordinate in all respects to any past, present and future condominium declaration and any other documents, instruments, or agreements.” including, without limitation any by-laws, offering plan(s), or house rules, as same may be amended from time to time (collectively, the “Declaration”) which have been and/or shall be recorded or executed in connection therewith including those which were executed or prepared in order to convert the Land and the improvements (or any part thereof) erected thereon to a condominium form of ownership in accordance with the provisions of Article 9-B of the Real Property Law, or any successor thereto. If any such Declaration is to be recorded, Tenant, upon the request of Landlord, shall enter into an amendment of this Lease confirming such subordination and modifying the Lease in such respects as shall be necessary to conform to such condominium conversion, including, without limitation, appropriate adjustments to Tenant’s Share and appropriate reductions in the Operating Expenses for the Base Operating Year and the Base Tax Amount; provided, that, such amendment shall not reduce Tenant’s rights or increase Tenant’s obligations under this Lease (in either case in any material respect) or increase Tenant’s monetary obligations under the Lease. Tenant shall comply with and shall not breach or permit to be breached any of the terms, covenants, conditions, or provisions of the Declaration.

(ii) Landlord represents and warrants to Tenant that (i) to Landlord’s knowledge without additional inquiry, Landlord is not in default of its obligations as Unit Owner under the Declaration as of the Effective Date, (ii) Landlord has taken all actions and received all consents under the Declaration sufficient to permit Landlord to execute and deliver this Lease and perform Landlord’s obligations hereunder, and (iii) Landlord’s entry into this Lease Is not in violation of the Declaration. So long as this Lease is in full force and effect and no Event of Default exists hereunder, Landlord will not consent to any amendments or modifications to the Declaration that would materially adversely affect Tenant’s use and occupancy of the Premises. Landlord hereby agrees that, to the extent required by the Declaration, Landlord shall promptly and diligently obtain any approvals or consents required under the Declaration and necessary for Tenant’s construction of any Alterations in the Premises, from time to time, including the Tenant’s Initial Alteration Work.

43. LANDMARK DESIGNATION, THE TENANT IS HEREBY NOTIFIED THAT THE PREMISES ARE SUBJECT TO THE JURISDICTION OF THE LANDMARKS PRESERVATION COMMISSION. IN ACCORDANCE WITH SECTIONS 25-305, 25-306, 25-309 AND 25-310 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK AND THE RULES SET FORTH IN TITLE 63 OF THE RULES OF THE CITY OF NEW YORK, ANY DEMOLITION, CONSTRUCTION, RECONSTRUCTlON, ALTERATION OR MINOR WORK AS DESCRIBED IN SUCH SECTIONS AND SUCH RULES, MAY NOT BE COMMENCED WITHIN OR AT THE PREMISES WITHOUT THE PRIOR WRITTEN APPROVAL OF THE LANDMARKS PRESERVATION COMMISSION. TENANT IS NOTIFIED THAT SUCH DEMOLITION, CONSTRUCTION, RECO.NSTRUCTION, ALTERATIONS OR MINOR WORK INCLUDES, BUT IS NOT LIMITED TO, (A) WORK TO THE EXTERIOR OF THE PREMISES INVOLVING WINDOWS, SIGNS, AWNINGS, FLAGPOLES, BANNERS AND STOREFRONT ALTERATIONS AND (B) INTERIOR WORK TO THE PREMISES THAT (I) REQUIRES A PERMIT FROM THE DEPARTMENT OF BUILDINGS OR (II) CHANGES, DESTROYS OR AFFECTS AN INTERIOR ARCHITECTURAL FEATURE OF AN INTERIOR LANDMARK OR AN EXTERIOR ARCHITECTURAL FEATURE OF AN IMPROVEMENT THAT IS A LANDMARK OR LOCATED ON A LANDMARK SITE OR IN A HISTORIC DISTRICT.

44. LANDLORD’S CONTRIBUTION. (a) Tenant shall have prepared by a registered architect and/or a licensed professional engineer, at Tenant’s sole and exclusive cost and expense, and submit to Landlord for Landlord’s prior written approval in accordance with the applicable provisions of the Lease, final and complete dimensioned architectural, mechanical, electrical and structural drawings and specifications, self-certified, in a form ready for use as construction drawings for the installation of alterations, installations, decorations and improvements in the Premises to prepare the same for Tenant’s initial occupancy thereof (“Tenant’s Initial Alteration Work”). All such construction plans and specifications and all such work shall be effected in accordance with all applicable provisions of the Lease at Tenant’s sole and exclusive cost and expense. Landlord has received the basic work plan annexed hereto as Schedule Q, which Landlord approves in principal, however Landlord approval shall at all times remain subject to Landlord receipt and review of final and complete dimensioned architectural, mechanical, electrical and structural drawings and specifications, self-certified, in a form ready for use as construction drawings for the installation of alterations, installations, decorations and improvements in the Premises to prepare the same for Tenant’s initial occupancy thereof. Landlord hereby approves J. Calnan & Associates as Tenant’s contractor in connection with Tenant’s Initial Alteration Work.

(b) Provided that at the time that any requisition for reimbursement is requested by Tenant and at the time that any requisition of the Work Allowance is payable from Landlord to Tenant: (i) Tenant is not in default under any of the terms or conditions of this Lease, beyond any notice and cure periods, including, without limitation being current on all rent and additional rent and (ii) the Lease is in full force and effect, Landlord shall reimburse Tenant for the cost of Tenant’s Work In an amount equal to the lesser of: (y) Four Hundred Twenty-Eight Thousand Eight Hundred and Twenty dollars and 001100 ($428,820.00); and (z) the actual cost of Tenant’s Work (such lesser amount being deemed, the “Work Allowance”).

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(c) “Tenant’s Work” means the installation of fixtures, improvements and appurtenances (related to hard costs only and expressly excluding soft costs) attached to or built into the Premises, and shall not include interest, late charges, trade fixtures, furniture, furnishings, equipment, professional fees, workstations, work surfaces (whether or not affixed to walls and/or convector covers), related cabinetry, moveable business equipment or any personal property whatsoever, or to the cost of labor, materials or services used to furnish or provide the same.

(d) “Reimbursement Request” shall mean a request by Tenant for payment from Landlord for Tenant’s Work and shall consist of such documents and information from Tenant as Landlord may require to substantiate the completion of, and payment for, such Tenant’s Work to which the Reimbursement Request relates (the ‘Work Cost”). Each such Reimbursement Request, and all required documentation and information submitted in connection therewith, shall be delivered to the Property Manager by certified Mail, return receipt requested, or delivered by reputable nationally recognized overnight courier (e.g., UPS of FedEx) with a copy to Landlord, attn.: General Counsel.

(e) With respect to each Reimbursement Request, and simultaneously with each Reimbursement Request, Tenant shall deliver to Landlord: (1) a certificate signed by Tenant’s architect or general contractor certifying that the requisite portion of Tenant’s Work has been satisfactorily completed in accordance with the plans and specifications therefor approved by Landlord, (2) an itemization of Tenant’s total construction costs, detailed by contractor, subcontractors, vendors and materialmen (3) paid invoices, bills, and receipts evidencing the cost of the requisite portion of the Work Allowance, and (4) a partial release from the general contractor with respect to the amount of the Work Allowance being requested. Upon the release of the final payment of the Work Allowance Tenant shall provide (1) a general release from the general contractor, the subcontractors and the materialsmen with respect to Tenant’s Work and (5) all Building Department sign-offs and inspection certificates and any permits required to be issued by the Building Department or any other governmental entities having jurisdiction thereover; and

(f) From time-to-time, but not more than once a month, Tenant may give Landlord a Reimbursement Request for so much of Work Cost as arose since the end of the period to which the most recent prior Reimbursement Request related, or, with respect to the first Reimbursement Request, for the initial Work Cost.

(g) Upon the condition that Tenant is not in default under this Lease after notice and expiration of any applicable cure period and provided that all documents and information required by Landlord have been provided, within thirty (30) days after Landlord receives a Reimbursement Request, Landlord shall pay Tenant one hundred percent (100%) of the Work Cost reflected in such Reimbursement Request, however, Landlord shall withhold the final ten percent (10%) of Work Allowance (the “Retainage”); and provided that Tenant is not in default under this Lease, within thirty (30) days after Tenant furnishes Landlord with (x) a final, stamped set of “as-built” CADD plans for the Premises which demonstrates that Tenant’s Initial Alteration Work has been completed in accordance with plans and specifications first approved by Landlord and (y) its final Reimbursement Request which demonstrates that Tenant’s Initial Alteration Work has been completed and paid for in full by Tenant and (z) all documents and information required by Landlord, Landlord shall pay Tenant all the Retainage.

(h) With respect to each application, Tenant shall not then be in default under this Lease, beyond any applicable notice or cure period.

(i) The right to receive reimbursement for the cost of Tenant’s Work as set forth in this Article 44, shall be for the exclusive benefit of Tenant, it being the express intent of the parties hereto that in no event shall such right be conferred upon or for the benefit of any third party, including, without limitation, any contractor, subcontractor, materialman, laborer, architect, engineer, attorney or any other person, firm or entity.

U) It is expressly understood and agreed that if the amount of the Work Allowance is less than the cost of the Tenant’s Work, Tenant shall remain solely responsible for the payment and completion of, and in all events shall complete, at its sole cost and expense, Tenant’s Initial Alteration Work in materially the manner as such Tenant Initial Alteration Work was approved by Landlord. Any portion of the Work Allowance not disbursed shall be retained by Landlord.

(k) In the event that Landlord shall fail to timely pay any portion of the Work Allowance or the cost of the Bathroom Work or the cost of the Fire Sprinkler Scope of Work, Tenant shall deliver to Landlord a written notice referencing the applicable article of this pursuant to which such amount is due Tenant and this Article 44(k) and stating in bold, 14-point font the following:

“YOU AS LANDLORD HAVE FAILED TO TIMELY REIMBURSE TENANT PURSUANT TO ARTICLE      OF THE LEASE FOR A PORTION OF THE 11^TH FLOOR AT 17 BATTERY SOUTH, NEW YORK, NEW YORK, PLEASE ALLOW THIS NOTICE TO SERVE AS YOUR SECOND NOTICE FOR PAYMENT.”

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After delivery of such second notice from Tenant to Landlord, upon Landlord’s receipt of such second notice, if Landlord fails to pay such amount within such ten (10) business day period, Tenant may, at its option, deduct such amounts from the next installment{s) of Rent thereafter becoming due under the Lease, until such sums due to Tenant shall have been fully paid by Landlord or fully credited and accounted for.

45. DOWNTOWN REVITALIZATION PLAN.

(a) Landlord believes that the Building qualifies for a real property tax abatement and other tax and/or expense reductions (collectively hereinafter referred to as an “Abatement”) applicable to pre-1975 buildings in lower Manhattan pursuant to the Lower Manhattan Plan (1995 NY A.B. 8028), effective October 29, 1995 (the ‘‘Commercial Revitalization Program”). Landlord acknowledges that Tenant may request that Landlord join Tenant in executing a Commercial Revitalization Program Application (hereinafter referred to as an “Application”). Landlord agrees to join Tenant in executing an Application subject to Tenant’s agreement to, and compliance with the terms of this Paragraph.

(b) Tenant agrees that if Tenant requests Landlord to join Tenant in executing an Application, Tenant shall pay (i) all costs and expenses arising in connection with the Application, including, without limitation, any application fee and/or filing fee; and (ii) all fees and disbursements for professional services utilized by Landlord in connection therewith including, without limitation, legal, accountant’s and clerical fees. Tenant agrees that compliance with all requirements ancillary to the Application and the Abatement shall be the sole responsibility of Tenant and that Landlord shall bear no responsibility therefor. Landlord’s only obligation in connection with an Application shall be to reasonably cooperate with Tenant in executing the same, it being understood that Landlord shall bear no responsibility for the accuracy or completeness of any Application. Landlord shall not be required to join Tenant in executing an Application or any ancillary documentation if doing so would result in any cost, loss, damage or liability to Landlord or if such Application and/or ancillary documents are not accurate and complete in every respect. Landlord makes no representation that the Building, the Premises or this lease are eligible for an Abatement nor that an Abatement will be obtained in connection this Amendment (or, if obtained, that an Abatement will continue in effect).

(c) Tenant acknowledges that Tenant’s obligation to pay Rent, additional rent and/or any other charges (collectively hereinafter referred to as “Rent”) due hereunder shall continue unaffected if an Application made in connection with this lease is rejected (or if an Abatement, once obtained, does not continue to be in effect). The Rent set forth herein does not reflect any Abatement. If an Abatement is granted in connection with this lease, Landlord shall adjust the Rent payable hereunder to accurately reflect such Abatement as of the date that such Abatement takes effect but only for as long as it remains in effect. Tenant hereby agrees that Tenant shall be entitled to the benefits of an Abatement only to the extent that Landlord’s real property tax payments are actually reduced pursuant to such Abatement, Tenant shall not be entitled to any reduction in Rent by reason of any abatement or reduction in real property taxes for any reason other than Abatement, and any Abatement granted will be revoked if, during the period of such Abatement, real property taxes, water or sewer charges or other lienable charges are unpaid for more than one (1) year, unless such delinquent amounts are paid as provided in the relevant law.

(d) Tenant hereby acknowledges that, in order to qualify for an Abatement, Landlord and/or Tenant must timely spend at least five ($5.00) dollars per square foot for a new lease with a minimum term of five (5) years (the “Expenditure Minimum”) in preparing the Premises and/or that common areas of the Building for Tenant’s occupancy but that Landlord shall have no obligation to: (i) make any expenditure in connection with Landlord’s work, or otherwise, which Landlord is not otherwise obligated to make under this provisions of this lease; or (ii) consent to any improvements to be made by Tenant in or to the Premises to which Landlord is not otherwise required hereunder to consent.

(e) The calculation of the square footage of the Premises for purposes of: (i) completing an Application; (ii) determining the Expenditure Minimum; and/or (iii) calculating the amount of any Abatement available with respect to this lease shall be made utilizing the ratio of Tenant’s Proportionate Share to the New York City Department of Finance listing of the square footage of the Building, Tenant hereby agrees that the foregoing method of calculating the square footage of the demised premises may differ from and shall not otherwise be utilized by Tenant in calculating Rent, determining the size of the Premises, measuring the relationship of the size of the Premises to the Building or other space therein or otherwise assessing any of Tenant’s rights or obligations hereunder or otherwise.

46. TEMPORARY SPACE As of the Effective Date through the day prior to the seven (7) month anniversary of the Commencement Date {the ‘Temp Space Term”), Landlord hereby grants to Tenant and Tenant hereby takes from Landlord the right to use and occupy Suite 625 (the “Temp Space”) located in the Building, which occupancy shall be subject to and conditioned upon all of the terms and conditions of this Lease, except for Tenant’s base Rent obligation. Throughout the Temp Space Term, Tenant shall

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pay to Landlord the amount of Five Hundred and Eighty-Four dollars ($584.00) per month on account of electric expenses used by Tenant in the Premises (the “Electric Payment’). The Electric Payment shall be payable to Landlord commencing on the Effective Date through the date Tenant vacates and surrenders the Temp Space to Landlord, on or prior to the first (1st) day of each month. On or prior to the expiration of the Temp Space Term, Tenant shall vacate and surrender the Temp Space to Landlord in the condition as required pursuant to Article 21 above and otherwise in the state and condition as such was delivered to Tenant, reasonable wear and tear excepted. In the event that Tenant fails to vacate and surrender the Temp Space to Landlord on or prior to the expiration of the Temp Space Term, Landlord shall have all rights and remedies against Tenant the same as if Tenant failed to deliver the Premises to Landlord upon the Expiration Date hereof. and In addition Tenant shall pay to Landlord, as liquidated damages, the amount of Three Hundred ($300.00} dollars per day for each day that Tenant remains in possession of the Temp Space from the expiration of the Temp Space Term through the dale Tenant vacates and surrenders possession of the Temp Space to Landlord as required herein.

47. RIGHT OF FIRST OFFER.

A. As used herein:

(i) “Available” means, as to the Offer Space (as hereinafter defined), the first instance after the Commencement Date hereof, that any such Offer Space is vacant and free of any present or future possessory right now existing in favor of any third party. Notwithstanding the foregoing, such space shall not be deemed Available and Landlord shall not be obligated to notify Tenant of the Availability of such space if Landlord is negotiating an extension of a lease or a new direct lease with an existing tenant or occupant of such space, and Landlord shall be free to enter into any such extension of lease or new direct lease.

(ii) “Offer Space” means any portion of the eleventh (11^th) floor of the Building.

(iii) Provided that: (i) this Lease shall be in full force and effect, (ii) there shall not then be an existing default under this Lease, beyond any applicable notice and cure periods (iii) Tenant and its affiliates shall be in physical occupancy of the entire rentable area of the Premises, and (iv) as of the Anticipated Inclusion Date (as defined below), there shall be at least two (2) full years remaining in the Term, if any Offer Space becomes, or Landlord reasonably anticipates that any Offer Space will become, Available, Landlord shall give to Tenant notice (an “Offer Notice”) thereof, specifying (a) a description and the rentable square footage of the Offer Space, (b) the “Offer Space Rent” for the Offer Space which shall be equal to the then escalated rent per square foot which Tenant is then paying for the Premises under this Lease. which shall be subject to the terms of Article 1(D)(ii); (c) the date or estimated date that such Offer Space has or shall become Available (the “Anticipated Inclusion Date’), and (d) any other relevant economic terms selected by Landlord which Landlord in good faith believes is customary in the marketplace.

(iv) Provided that on the date that Tenant exercises the Offer Space Option (as hereinafter defined) and on the Offer Space Inclusion Date (as hereinafter defined) the conditions described in Article 47(A) continue to be satisfied, Tenant shall have one (1) option (the “Offer Space Option”), exercisable by written notice (an “Acceptance Notice”) delivered to Landlord on or before the date that is ten (10) Business Days after the giving of the Offer Notice (time being of the essence) to include the entire Offer Space in the Premises for a term ending on the Expiration Date.

B. If Tenant timely delivers the Acceptance Notice, then, on the date on which Landlord delivers vacant and broom-dean possession of the Offer Space to Tenant (the “Offer Space Inclusion Date”), the Offer Space shall become part of the Premises. upon all of the terms and conditions set forth in this Lease, except (i) the Offer Space Rent for the Offer Space shall be as set forth above, (ii) Tenant’s Proportionate Share shall be increased to reflect the inclusion of the Offer Space as part of the Premises (iii) unless otherwise specified by Landlord in the Offer Notice, Landlord shall not be required to perform any Landlord’s Work or any other work, pay a Landlord’s contribution or a work allowance or any other amount, or render any services to make the Building or the Offer Space ready for Tenant’s use or occupancy, and Tenant shall accept the Offer Space vacant, free of any possessory interest thereon, broom dean and otherwise in its “AS IS” condition as of the date of the Offer Notice, and (iv) as may be otherwise set forth in the Offer Notice.

C. If Landlord is unable to deliver possession of the Offer Space to Tenant for any reason on or before the Anticipated Inclusion Date, the Offer Space Inclusion Date shall be the date on which Landlord is able to so deliver possession and Landlord shall have no liability to Tenant therefor and this Lease shall not in any way be impaired. If an existing tenant of the Offer Space holds over. Landlord shall use commercially reasonable efforts, which may include the commencement of an eviction action against such holdover tenant, if such action is determined by Landlord to be commercially reasonable in the circumstances, to obtain possession of the Offer Space. This Article 47(C) constitutes “an express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law and any other law of like import now or hereafter in effect.

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D. If, after receiving an Offer Notice as set forth above, Tenant fails timely to give an Acceptance Notice, then (i) Landlord may enter into one or more leases of all or any part of the Offer Space with third parties on such terms and conditions as Landlord shall determine, the Offer Space Option shall be null and void and of no further force and effect with respect to all or any part of the Offer Space and Landlord shall have no further obligation to offer all or any part of the Offer Space to Tenant, and (ii) Tenant shall, as soon as reasonably practicable after demand by Landlord, execute an instrument reasonably satisfactory to Landlord and Tenant confirming Tenant’s waiver of, and extinguishing, the Offer Space Option contained in this Article 47. Promptly after the occurrence of the Offer Space Inclusion Date, Landlord and Tenant shall confirm the occurrence thereof and the inclusion of the Offer Space in the Premises by executing an instrument reasonably satisfactory to Landlord and Tenant; provided, that failure by Landlord or Tenant to execute such instrument shall not affect the inclusion of the Offer Space in the Premises in accordance with this Article 47.

48. Intentionally Omitted.

49. EXPANSION OPTION. Provided that (i) this Lease shall be in full force and effect, and (ii) there shall not then be an existing default under this Lease, beyond any applicable notice and cure periods, Tenant shall have the right to expand the Premises to Include Suite 232 located on a portion of the second (2^nd) floor or the Building (the “Suite 232’’) once Suite 232 becomes, or Landlord reasonably anticipates that Suite 232 will become Available. For the purposes of this Article 49, “Available” means, as to Suite 232, the first instance after the Commencement Date hereof, that Suite 232 is vacant and free of any present or future possessory right now existing by the current tenant thereof or any subtenant (not including Tenant) or any other occupant. Landlord shalt give to Tenant notice (an “Offer Notice”) thereof, specifying a description of Suite 232, more particular identified on Exhibit 3 annexed hereto and the rentable square footage of Suite 232. If Tenant shall give Landlord written notice on or prior to January 1, 2016 electing to so expand the Premises (the “Expansion Notice”) to include Suite 232 as part of the Premises, then Landlord shall deliver possession of Suite 232 to Tenant upon the date that Suite 232 becomes Available (the “Suite 232 Commencement Date”). If Tenant shall fail to timely deliver the Expansion notice to Landlord, Tenant shall be deemed to have waived the expansion right set forth in this Article 49, and Landlord shall be free to lease all or any portion of Suite 232 to with third parties on such terms and conditions as Landlord shall determine, the expansion option set forth in this Article 49 shall be null and void and of no further force and effect with respect to all or any part of Suite 232 and Landlord shall have no further obligation to offer all or any part of Suite 232 to Tenant, and Tenant shall, as soon as reasonably practicable after demand by Landlord, execute an instrument reasonably satisfactory to Landlord and Tenant confirming Tenant’s waiver of, and extinguishing, the expansion option contained in this Article 49. If Tenant timely deliver the Expansion Notice to Landlord in accordance with the conditions hereof, then, on the Suite 232 Commencement Date, Suite 232 shall become part of the Premises, upon all of the terms and conditions set forth in this Lease, for the remainder of the Term, except: (A) Tenant’s Proportionate Share shall be increased to reflect the inclusion of Suite 232 as part of the Premises; (B) Tenant shall not be entitled to any rent abatement or free rent; and (C) the base Rent for Suite 232 shall be equal to the then escalated rent per square foot which Tenant is then paying for the Premises under the Lease (prior to the inclusion of Suite 232); and (D) Landlord shall have no obligation to pay Tenant any work allowance, deliver any materials or perform any alteration or work with respect to Suite 232 whatsoever, and Tenant shall accept Suite 232 otherwise in its current then “AS-IS” condition as of the Suite 232 Commencement Date.

50. LEASE DRAFTING. It is acknowledged and agreed that in the preparation of this lease, indistinguishable contributions were made by the attorneys and other representatives of both Landlord and Tenant and that Landlord and Tenant each waives any and all rights, either In law or in equity, to have this lease or any part thereof interpreted in favor of one party over the other on the basis of lease draftsmanship and preparation.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

**SIGNATURE PAGE TO FOLLOW**

38

IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.

BATTERY COMMERCIAL ASSOCIATES LLC, Landlord
By:	/s/ Joseph Moinian
Name:	Joseph Moinian
Title:	Managing Member
CONSTANT CONTACT, INC., Tenant
By:	/s/ Harpreet Grewal
Name:	Harpreet Grewal
Title:	CFO
Tenant’s EIN Number:

39

EXHIBIT 1

Floor Plan of Premises

40

EXHIBIT 1

EXHIBIT 2

FORM OF COMMENCEMENT LETTER

BATTERY COMMERCIAL ASSOCIATES LLC

c/o The Moinian Group

3 Columbus Circle, Suite 2300

New York, New York 10019

New York, New York             

Re: Agreement of Lease dated as of the                      by and between BATIERY COMMERCIAL ASSOCIATES LLC (“Landlord”) and(“Tenant”).

PREMISES:

Dear Tenant:

Tenant acknowledges and agrees that the following terms are hereby agreed upon by and between the Landlord and Tenant and shall be deemed to have the following definitions in the Lease:

1)      The Commencement Date is deemed to be

2)      The Rent Commencement Date is deemed to be

3)      The Lease Expiration Date is deemed to be

By affixing your signature below the parties acknowledge and agree to the terms of this letter and to give the terms defined above such meaning in the Lease.

Please affix your signature in the space provided below, and return an executed original to Landlord’s attention.

BATTERY COMMERCIAL ASSOCIATES LLC,

Landlord

By:

READ, AGREED AND ACCEPTED:

                    , Tenant

By:

Name:

Title:

41

EXHIBIT 3

Floor Plan- Suite 232

42

EXHIBIT 3

SUITE 232

SCHEDULE A

RULES AND REGULATIONS

I. The rights of each tenant In the Building to the entrances, corridors and elevators of the Building are limited to ingress to and egress from such tenant’s premises and no tenant shall use, or permit the use of the entrances, corridors, or elevators for any other purpose. No tenant shall invite to its premises, or permit the visit of persons in such numbers or under such conditions as ·to interfere with the use and enjoyment of any of the plazas, entrances, corridors, elevators and other facilities of the Building by other tenants. No tenant shall encumber or obstruct, or permit the encumbrances or obstruction of any of the sidewalks, plazas, entrances, corridors, elevators, fire exits or stairways of the Building. Landlord reserves the right to control and operate the public portions of the Building, the public facilities, as well as facilities furnished for the common use of the tenants, in such manner as Landlord deems best for the benefit of the tenants generally.

II. Landlord may refuse admission to the Building outside of ordinary business hours to any person not known to the watchman in charge or not having a pass Issued by Landlord or not properly identified, and may require all persons admitted to or leaving the Building outside of ordinary business hours to register. Tenants’ employees, agents and visitors shall be permitted to enter and leave the Building whenever appropriate arrangements have been previously made between Landlord and the tenant with respect thereto. Each tenant shall be responsible for all persons for Whom It requests such permission and shall be liable to Landlord for all acts of such persons. Any person whose presence in the Building at any time shall, in the judgment of Landlord, be prejudicial to the safely, character, reputation or interests of the Building or its tenants may be denied access to the Building or may be ejected therefrom. In case of invasion, riot, public excitement or other commotion Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Building. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement of such requirement shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of tenant. Landlord shall, in no way, be liable to any tenant for damages or loss arising from the admission, exclusion or ejection of any person to or from a tenant’s premises or the Building under the provisions of this rule.

III. No tenant shall obtain or accept for use in its premises ice, drinking water, towels, barbering, boot blacking, floor polishing, lighting maintenance, cleaning or other similar services from any persons not authorized by Landlord in writing to furnish such services. Such services shall be furnished only at such hours, in such places within the tenant’s premises and under such regulation as may be fixed by Landlord.

IV. No window or other air-conditioning units shall be installed by any tenant, and only such window coverings as are supplied or permitted by Landlord shall be used in a tenant’s premises.

V. There shall not be used in any space, nor in the public halls of the Building, either by any tenant, jobber or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards.

VI. All entrance doors in each tenant’s premises shall be left locked when the tenant’s premises are not in use. Entrance doors shall not be left open at any time. All windows in each tenant’s premises shall be kept closed at all times and all blinds therein above the ground floor shall be lowered when and as reasonably required because of the position of the sun, during the operation of the air-conditioning system to cool or ventilate the tenant’s premises.

VII. No noise, including the playing of any musical instruments, radio or television, which, in the judgment of Landlord, might disturb other tenants In the Building, shall be made or permitted by any tenant. No dangerous, inflammable, combustible or explosive object, material or fluid shall be brought into the Building by any tenant or with the permission of any tenant.

VIII. Each tenant shall be required to use Landlord’s designated locksmith and may only install such locks and other security devices as Landlord approves. Each tenant shall furnish Landlord with keys to its respective premises so that Landlord may have access thereto for the purposes set forth in the Lease. No additional locks or bolls of any kind shall be placed upon any of the- doors or windows in any tenant’s premises and no lock on any door therein shall be changed or altered in any respect. Duplicate keys for a tenant’s

43

premises and toilet rooms shall be procured only from Landlord, which may make a reasonable charge therefore. Upon the termination of a tenant’s lease, all keys of the tenant’s premises and toilet rooms shall be delivered to Landlord.

IX. Each tenant, shall, at its expense, provide artificial light in the premises for Landlord’s agents, contractors and employees while performing janitorial or other cleaning services and making repairs or alterations in said premises.

X. No tenant shall install or permit to be installed any vending machines, except for use by Tenant’s employees and visitors.

XI. No animals or birds may be brought into or kept in or about the Building: Tenant acknowledges that any violation of this Rule and Regulation will impair the first class character and reputation of the Building. In addition, no bicycles, mopeds or vehicles of any kind shall be brought into or kept in or about the Building or permitted therein.

XII. No furniture, office equipment, packages or merchandise will be received In the Building or carried up or down in the elevator, except between such hours as shall be designated by Landlord. Landlord shall prescribe the charge for freight elevator use and the method and manner in which any merchandise, heavy furniture, equipment or safes shall be brought in or taken out of the Building, and also the hours al which such moving shall be done. No furniture, office equipment, merchandise, large packages or parcels shall be moved or transported in the passenger elevators at any time.

XIII. All electrical fixtures hung in offices or spaces along the perimeter of any tenant’s Premises must be fluorescent, or LED or similarly energy efficient quality, type, design and bulb color approved by Landlord unless the prior consent of Landlord has been obtained for other lamping.

XIV. The exterior windows and doors that reflect or admit light and air into any premises or the halls, passageways or other public places in the Building, shall not be covered or obstructed by any tenant, nor shall any articles be placed on the windowsills.

XV. Canvassing, soliciting and peddling in the Building is prohibited and each tenant shall cooperate to prevent same.

XVI. No tenant shall do any cooking, conduct any restaurant, luncheonette or cafeteria for the sale or service of food or beverages to its employees or to others, except as expressly approved in writing by Landlord, Landlord hereby approves the use of microwaves In the Premises. In addition, no tenant shall cause or permit any odors of cooking or other processes or any unusual or objectionable odors to emanate from the premises. The foregoing shall not preclude tenant from having food or beverages delivered to or served at the premises, provided that no cooking or food preparation shall be carried out at the premises (except as expressly set forth herein).

XVII. No tenant shall generate, store, handle, discharge or otherwise deal with any Hazardous Substances on or about the Real Property, except to the extent expressly permitted in the Lease.

44

SCHEDULE B

REQUIREMENTS FOR

“CERTIFICATES OF FINAL APPROVAL”

1. All required Building Department Forms must be properly filled out and completed by the approved architect/engineer of record or Building Department expediter, as required.

2. All forms are to be submitted to Landlord for Landlord’s review and signature prior to submission of final plans and forms to the New York City Building Department, as required.

3. All pertinent forms and filed plans are to be stamped and sealed by a licensed architect and/or professional engineer, as required. All controlled inspections are to be performed by the architect/engineer of record unless approved otherwise by Landlord.

4. A copy of all approved forms, permits and approved Building Department plans (stamped and signed by the New York City Building Department) are to be submitted to the building office prior to start of work.

5. Copies of all completed inspection reports and NYC Building Department sign-offs are to be submitted to the building office immediately following completion of construction, as required.

6. All claims, violations or discrepancies with improperly filed plans, applications, or improperly completed work shall become the sole responsibility of the applicant to resolve, as required.

7. All changes to previously approved plans and applications must be filed under an amended application, as required. Landlord reserves the right to withhold approvals to proceed with changes until associated plans are properly filed with the New York City Building Department, as required.

8. The architect/engineer of record accepts full responsibility for any and all discrepancies or violations which arise out of non-compliance with all local laws and building codes having jurisdiction over the work.

9. Landlord reserves the right to reject any and all work requests and new work applications that are not properly filed or accompanied by approved plans and building permits.

10. All ACP’s and asbestos inspections must be conducted by a licensed and fully qualified asbestos inspection agency approved by Landlord.

These forms must be furnished by the Architect / Engineer of record or Building Department expediter (filing agency) and approved by the Landlord prior to submitting all plans and forms to the New York City Building Department for final approval.

These forms must be furnished by Tenant.

	Form	Description
*	PW-1	Building Notice Application (Plan work approval application)
*	PW-1B	Plumbing/Mechanical Equipment Application and Inspection Report
*	PW-1	Statement Form B
*	TR-1	Amendment Controlled Inspection Report
	PW-2	Building Permit Form (All Disciplines)
	Form 708	Building Permit “Card”
*	TR-1	Certification of Completed Inspection and Certified Completion Letter by Architect/Engineer of record or Building Department expediter.
	PW-3	Cost Affidavit Form
	PW-4	Equipment Use Application Form

45

*	PW-6	Revised Certificate of Occupancy for change in use (if applicable)
	Form ACP7	New York City Department of
	Or	Environmental Protection Asbestos
	Form ACP5	Inspection Report as prepared by a licensed and approved asbestos inspection agency
		Building Department Equipment Use Permits for all new HVAC equipment installed under this application
		Revised Certificate of Occupancy for change in use (if applicable)

* These items must be perforated (with the date and New York City Building Department Stamp) to signify New York City Building Department Approval. All forms must bear proper approvals and sign-offs prior to authorization given by Landlord to proceed with the work.

46

SCHEDULE C

TENANT ALTERATION WORK AND NEW CONSTRUCTION

                  CONDITIONS AND REQUIREMENTS

1. No Alterations are permitted to commence until original Certificates of Insurance required from Tenant’s general contractor (the “General Contractor”) and all subcontractors complying with the attached requirements are on file with the Building office.

2. All New York City Building Department applications with assigned BN# and permits must be on file with the Building office prior to starting work. A copy of the building permit must also be posted on the job site by the General Contractor. The General Contractor shall make all arrangements with Landlord’s expediter for final inspections and sign-offs prior to substantial completion.

3. The General Contractor shall comply with all Federal, State and local laws, building codes, OSHA requirements, and all laws having jurisdiction over the performance and handling of the Alterations.

4. The existing “Class E” fire alarm system (inducting all wiring and controls), if any, must be maintained at all times. Any additions or alterations \o the existing system shall be coordinated with the Building office as required. All final tie-in work is to be performed by Landlord’s fire alarm vendor and coordinated by the General Contractor. All costs for the tie-ins are reimbursable to Landlord by Tenant

5. All wood used, whether temporary or not, such as blocking, form work, doors, frames, etc. shall be fire rated in accordance with the New York City Building and Fire Code requirements governing this work.

6. Building standby personnel (i.e. Building operating engineer and/or elevator operator), required for all construction will be at Landlord’s discretion. Freight elevators used for overtime deliveries must be scheduled in writing with Landlord at least 24 hours in advance, as required. All costs associated are reimbursable to Landlord by Tenant.

7. The General Contractor shall comply with the Rules and Regulations of the Building elevators and the manner of handling materials, equipment and debris to avoid conflict and interference with Building operations. All bulk deliveries or removals will be made prior to 8:00 a.m. and after 5:00 p.m. or on weekends, as required.

8. No exterior hoisting will be permitted. All products or materials specified are to be assembled on­site, and delivered to the site in such a manner so as to allow unobstructed passage through the Building’s freight elevator, lobbies, corridors, etc. The General Contractor will be responsible for protection of all finished spaces, as required.

9. All construction personnel must use the freight elevator at all limes. Any and all tradesman found riding the passenger elevators without prior approval from Landlord will be escorted out of the Building and not be allowed re-entry without written approval from the Building office.

10. During the performance of Alterations, Tenant’s construction supervisor or job superintendent must be present on the job site at all times.

11. During the performance of Alterations, all demolition work shall be performed after 6:00 p.m. during the week or on weekends. This would include carting or rubbish removal as well as performing any operations that would disturb other Building tenants or other occupants (drilling, chopping, grinding, recircuiting, etc.).

12. No conduits or cutouts are permitted to be installed in the floor slab without prior written approval from Landlord. Landlord reserves the right to restrict locations of such items to areas that will not interfere with the Building’s framing system or components. No conduits or cutouts are permitted outside of Tenant’s Premises.

13. Plumbing connections to Building supply, waste and vent lines are to be performed after normal working hours, and coordinated with the Building manager, and are to include the following minimum requirements:

A Separate shutoff valves for all new hot and/or cold water supply lines (including associated access doors).

B. Patch and repair of existing construction on floor below, immediately following completion of plumbing work (to be performed after normal working hours, as required).

47

14. The General Contractor must coordinate all work to occur in public spaces, core areas and other tenant occupied spaces with Landlord, and perform all such work after normal working hours (to include associated patch and repair work). The General Contractor shall provide all required protection of existing finishes within the affected area(s).

15. The General Contractor must perform all floor coring, drilling or trenching after normal business hours, and obtain Landlord’s permission and approval of same prior to performing such work.

16. Convector mounted outlets and associated conduits, wiring, boxes, etc., shall be located and installed in areas where they will not hinder the operation or maintenance of existing fan coil units or prevent removal or replacement of access panels or removable covers.

17. The General Contractor shall be responsible for all final tests, inspections and approvals associated with all modifications, deletions or additions to Building Class “E” systems and equipment.

18. Recircuiting of existing power/lighting panels and circuits affecting Building and/or tenant operations are to be performed after normal business hours and coordinated with the Building office in advance, as required.

19. All burning and welding to be performed in occupied or finished areas shall be performed after normal business hours and coordinated with the Building office in advance, as required. Proper ventilation of the work area will be required in order to perform this work.

20. The General Contractor shall provide Landlord’s managing agent and the Building office with all approved submittal and closeout documents as well as all required final inspections and Building Department sign-offs just prior to or immediately following completion of construction.

21. Any and all Alterations to the Building sprinkler system (including draining of system) are to be performed after normal business hours and coordinated with the Building office, as required. All costs associated with the shutdown, drain and refill of the sprinkler system are reimbursable to Landlord.

22. The General Contractor shall be responsible for any and all daily cleanup required to keep the job site clean throughout the entire course of the Alterations. No debris shall be allowed to accumulate in any public spaces.

23. The General Contractor shall be responsible for proper protection of all existing finishes and construction for Alterations to be performed in common Building areas. All Alterations to be performed in occupied areas outside of the Premises shall be performed after normal business hours and coordinated with the Building office, as required.

24. The General Contractor shall perform any and all hoisting associated with the Alterations after normal business hours. The General Contractor will obtain all required permits and insurance to perform work of this nature. The General Contractor shall specify hoisting methods and provide all required permits and insurance to Landlord’s managing agent and the Building office prior to commencement of Alterations.

25. All contractors and subcontractors shall perform all work in a professional manner, and shall work in close harmony with one another as well as with the Building management and maintenance personnel.

26. The General Contractor shall forward complete copies of all approved contractor submittal, and Building and Fire Department sign-offs and Statement of Responsibility forms, to the Building office immediately following completion of construction.

48

INSURANCE REQUIREMENTS

LIABILITY LIMITATIONS

A. Comprehensive or Commercial General Liability Insurance written on an occurrence basis, to afford protection of $5,000,000 combined single limit for personal injury (provide such amount shall be $1,000,000 for subcontractors), bodily injury and/or death and Broad Form property damage arising out of any one occurrence; and which insurance shall include coverage for premises-operations (including explosion, collapse and underground coverage), elevators, contractual liability, owner’s and contractor’s protective liability, and completed operations liability.

B. Comprehensive Auto Liability Insurance covering the use of all owned, non-owned and hired vehicles providing bodily injury and property damage coverage, all on a per occurrence basis, at a combined single limit of $1,000,000.

C. Worker’s Compensation Insurance providing statutory benefits for contractor’s employees and Employer’s Liability Coverage in an amount not less than $100,000/$500,000/$100,000.

D. Property coverage damage to or loss of use of contractor’s equipment.

CERTIFICATE HOLDER

BATTERY COMMERCIAL ASSOCIATES LLC

3 Columbus Circle, Suite 2300

New York, New York 10019

ADDITIONAL INSUREDS

NEWMARK KNIGHT FRANK

125 Park Avenue

Eleventh (11^th) Floor

New York, New York 10017

THE MOINIAN GROUP

3 Columbus Circle, Suite 2300

New York, New York 10019

In addition to listing each of the Additional Insureds, as noted above, the Certificate of Insurance, general liability form, shall state “The General Aggregate limit applies separately to each project.”

The name and address of the Additional Insureds shall appear on the Certificate of Insurance. The insurance agent’s address and telephone number is also required.

49

SCHEDULE D

INTENTIONALLY OMITTED

50

SCHEDULE E

RENT SCHEDULE

17 BATTERY SOUTH – PARTIAL ELEVENTH (11th) FLOOR

CONSTANT CONTACT, INC.

YEAR	MONTHLY BASE RENT		ANNUAL BASE RENT
Commencement Date through and including the day prior to the one (1) year anniversary of the Commencement Date	$	53,602.50	$	643,230.00
From the one (1) year anniversary of the Commencement Date through and including the day prior to the two (2) year anniversary of the Commencement Date	$	55,210.58	$	662,526.90
From the two (2) year anniversary of the Commencement Date through and including the day prior to the three (3) year anniversary of the Commencement Date	$	56,866.89	$	682,402.71
From the three (3) year anniversary of the Commencement Date through and including the day prior to the four (4) year anniversary of the Commencement Date	$	58,572.90	$	702,874.79
From the four (4) year anniversary of the Commencement Date through and including the day prior to the five (5) year anniversary of the Commencement Date	$	60,330.09	$	723,961.03
From the five (5) year anniversary of the Commencement Date through and including the Expiration Date	$	62,139.99	$	745,679.86

51

SCHEDULE F

INTENTIONALLY OMITTED

52

SCHEDULE G

TENANT’S INITIAL ALTERATION WORK

53

SCHEDULE H

FIRE SPRINKLER SCOPE OF WORK

• Tenant will design and install, at Landlord’s sole cost and expense, an approved sprinkler system for the Premises. Tenant’s scope of work will be limited to connecting to the existing building standpipe risers, installing necessary valving & fire alarm devised at the standpipe riser connection, and installing piping and sprinkler heads throughout the Premises. Landlord shall provide to Tenant, at no charge and within five (5) business days after the effective Date, the fire protection riser diagram and hydraulic information for Tenant’s use in preparation of such design.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gail F. Goodman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Constant Contact, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2013	/s/ Gail F. Goodman
	Gail F. Goodman
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Harpreet S. Grewal, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Constant Contact, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2013	/s/ Harpreet S. Grewal
	Harpreet S. Grewal
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2013 of Constant Contact, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gail F. Goodman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated July 31, 2013	/s/ Gail F. Goodman
	Gail F. Goodman
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2013 of Constant Contact, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harpreet S. Grewal, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 31, 2013	/s/ Harpreet S. Grewal
	Harpreet S. Grewal
	Executive Vice President and Chief Financial Officer and Treasurer

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Marketable Securities

At June 30, 2013, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	10,080	$	16	$	—		$	10,096
Corporate and Agency Bonds		907		—		(1	)		906
Certificates of Deposit		1,000		—		—			1,000
Commercial Paper		997		—		—			997
Total	$	12,984	$	16	$	(1	)	$	12,999

At June 30, 2013, marketable securities consisted of investments that mature within one year.

At December 31, 2012, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury Notes	$	10,138		20	$	—	$	10,158
Corporate and Agency Bonds		12,675		1		—		12,676
Certificates of Deposit		1,000		—		—		1,000
Commercial Paper		1,898		—		—		1,898
Total	$	25,711	$	21	$	—	$	25,732

Fair Value Hierarchy for Cash Equivalents and Marketable Securities Measured at Fair Value on Recurring Basis

The following tables present the Company’s fair value hierarchy for its cash equivalents and marketable securities which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

Fair Value Measurements at June 30, 2013 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	51,184	$	—	$	—	$	51,184
U.S. Treasury Notes		10,096		—		—		10,096
Corporate and Agency Bonds		—		906		—		906
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		997		—		997
Total	$	61,280	$	2,903	$	—	$	64,183

	Fair Value Measurements at December 31, 2012 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	38,320	$	—	$	—	$	38,320
U.S. Treasury Notes		10,158		—		—		10,158
Corporate and Agency Bonds		—		12,676		—		12,676
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		1,898		—		1,898
Total	$	48,478	$	15,574	$	—	$	64,052

Estimated Useful Lives of Assets

Estimated useful lives of assets are as follows:

Computer equipment	3 years
Software	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of life of lease or estimated useful life

Shares Used in Computing Diluted Net Income (Loss) Per Share

The following is a summary of the shares used in computing diluted net income (loss) per share:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Weighted average shares used in calculating basic net income (loss) per share		30,689		30,380		30,660		30,275
Stock options		319		—		—		—
Warrants		1		—		—		—
Unvested restricted stock and restricted stock units		65		—		—		—
Shares used in computing diluted net income (loss) per share		31,074		30,380		30,660		30,275

Common Stock Equivalents Excluded from Computation of Diluted Net Income (Loss) Per Share

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share because they had an anti-dilutive impact either because the proceeds under the treasury stock method were in excess of the average fair market value for the period or because the Company had a net loss in the period:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Options to purchase common stock		4,688		5,098		5,597		5,023
Warrants to purchase common stock		—		1		1		1
Unvested restricted stock and restricted stock units		112		388		583		350
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock		4,800		5,487		6,181		5,374

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Revenue	$ 70,208	$ 62,072	$ 138,413	$ 122,010
Cost of revenue	20,578	18,434	40,486	36,033
Gross profit	49,630	43,638	97,927	85,977
Operating expenses
Research and development	11,999	9,804	22,267	19,275
Sales and marketing	27,804	25,836	58,606	51,554
General and administrative	10,048	7,830	19,942	15,245
Acquisition costs and other related charges		574		723
Total operating expenses	49,851	44,044	100,815	86,797
Loss from operations	(221)	(406)	(2,888)	(820)
Interest income and other income (expense), net	12	62	(17)	133
Loss before income taxes	(209)	(344)	(2,905)	(687)
Income tax (expense) benefit	299	(118)	2,481	443
Net income (loss)	$ 90	$ (462)	$ (424)	$ (244)
Net income (loss) per share:
Basic	$ 0.00	$ (0.02)	$ (0.01)	$ (0.01)
Diluted	$ 0.00	$ (0.02)	$ (0.01)	$ (0.01)
Weighted average shares outstanding used in computing per share amounts:
Basic	30,689	30,380	30,660	30,275
Diluted	31,074	30,380	30,660	30,275

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Goodwill and Acquired Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

4. Goodwill and Acquired Intangible Assets

The carrying amount of goodwill was $95,505 at June 30, 2013 and December 31, 2012. Goodwill is not amortized, but instead is reviewed for impairment at least annually in the fourth quarter or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

Intangible assets consist of the following:

			June 30,2013						December 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology		3 years	$	4,357	$	1,772	$	2,585	$	4,357	$	1,222	$	3,135
Customer relationships		3.75 years		3,315		1,371		1,944		3,315		822		2,493
Publisher relationships		5 years		710		154		556		710		83		627
Trade name		5 years		570		123		447		570		67		503
			$	8,952	$	3,420	$	5,532	$	8,952	$	2,194	$	6,758

The Company amortizes the intangible assets over the estimated useful lives noted above. Amortization of the developed technology and publisher relationships assets is on a straight-line basis as the pattern of consumption of the economic benefits of the intangible assets cannot be reliably determined. The Company also amortizes the trade name asset over its estimated useful life on a straight-line basis as the straight-line basis is not materially different than the pattern of consumption of economic benefit basis. Customer relationships are amortized over their useful life based on the pattern of consumption of economic benefit of the asset. Amortization commences once the asset has been placed in service. Amortization expense for intangible assets was $666 and $292 for the three months ended June 30, 2013 and 2012, respectively. Amortization expense for intangible assets was $1,226 and $456 for the six months ended June 30, 2013 and 2012, respectively. Amortization relating to developed technology and publisher relationships is recorded within cost of revenue and amortization of customer relationships and trade name is recorded within sales and marketing expense. Future estimated amortization expense as of June 30, 2013 is as follows:

Remainder of 2013	$	1,177
2014		2,196
2015		1,583
2016		470
2017		106
Total	$	5,532

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Summary of Significant Accounting Policies - Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 12,984	$ 25,711
Gross Unrealized Gains	16	21
Gross Unrealized Losses	(1)
Estimated Fair Value	12,999	25,732
U.S. Treasury Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,080	10,138
Gross Unrealized Gains	16	20
Estimated Fair Value	10,096	10,158
Corporate and Agency Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	907	12,675
Gross Unrealized Gains		1
Gross Unrealized Losses	(1)
Estimated Fair Value	906	12,676
Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,000	1,000
Estimated Fair Value	1,000	1,000
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	997	1,898
Estimated Fair Value	$ 997	$ 1,898

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2013

SinglePlatform [Member]

Allocation of Purchase Price

The following table summarizes the purchase price for SinglePlatform and the allocation of the purchase price:

Purchase consideration:
Total cash paid, net of cash acquired	$	62,546
Cash acquired		311
Fair value of contingent consideration		12,152
Total purchase price consideration	$	75,009
Assets acquired and liabilities assumed:
Cash	$	311
Accounts receivable		48
Prepaid expenses and other current assets		60
Property and equipment		14
Identifiable intangible assets		4,760
Other assets		91
Net deferred tax assets		72
Goodwill		71,997
Total assets acquired		77,353
Accounts payable, accrued expenses and other current liabilities		(1,734	)
Deferred revenue		(610	)
Total liabilities assumed		(2,344	)
Total allocation of purchase price consideration	$	75,009

Estimated Fair Values and Useful Lives of Identifiable Intangible Assets Acquired

The following table presents the estimated fair values and useful lives of identifiable intangible assets acquired:

	Amount		Weighted Average Useful Life
			(in years)
Developed technology	$	850		3
Customer relationships		2,630		3.75
Publisher relationships		710		5
Trade name		570		5
Total identifiable intangible assets	$	4,760		3.95

Pro Forma Results of Historical Consolidated Statements of Operations

The following table presents the pro forma results of the historical consolidated statements of operations of the Company and SinglePlatform for the three and six months ended June 30, 2012, giving effect to the merger as if it occurred on January 1, 2011:

	Three months ended June 30,			Six months ended June 30,
	2012			2012
Pro forma revenue	$	62,326		$	122,474
Pro forma net loss	$	(1,048	)		(1,826	)

CardStar [Member]

Allocation of Purchase Price

The Company allocated the purchase price as follows:

Purchased technology	$	624
Net deferred tax assets		553
Goodwill		4,573
Total assets acquired	$	5,750

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Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income tax (expense) benefit	$ 299	$ (118)	$ 2,481	$ 443
Effect of change in the tax law			1,324
Net deferred tax assets	14,461		14,461		11,985
Unrecognized tax benefits	0		0		0
Unrecognized tax benefits, accrued interest or tax penalties	$ 0		$ 0		$ 0

XML

Summary of Significant Accounting Policies - Shares Used in Computing Diluted Net Income (Loss) Per Share (Detail) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares used in calculating basic net income (loss) per share	30,689	30,380	30,660	30,275
Unvested restricted stock and restricted stock units	65
Shares used in computing diluted net income (loss) per share	31,074	30,380	30,660	30,275
Stock Options [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Stock options and Warrants	319
Warrants [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Stock options and Warrants	1

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Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Detail)	6 Months Ended
	Jun. 30, 2013
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	3 years
Software [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	3 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of Leasehold improvements	Shorter of life of lease or estimated useful life

XML

Goodwill and Acquired Intangible Assets - Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 8,952	$ 8,952
Accumulated Amortization	3,420	2,194
Net Carrying Amount	5,532	6,758
Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	3 years
Gross Carrying Amount	4,357	4,357
Accumulated Amortization	1,772	1,222
Net Carrying Amount	2,585	3,135
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	3 years 9 months
Gross Carrying Amount	3,315	3,315
Accumulated Amortization	1,371	822
Net Carrying Amount	1,944	2,493
Publisher Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	5 years
Gross Carrying Amount	710	710
Accumulated Amortization	154	83
Net Carrying Amount	556	627
Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	5 years
Gross Carrying Amount	570	570
Accumulated Amortization	123	67
Net Carrying Amount	$ 447	$ 503

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	0 Months Ended	6 Months Ended			6 Months Ended			3 Months Ended		6 Months Ended							6 Months Ended	3 Months Ended		6 Months Ended
	Aug. 07, 2012 Plaintiff	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2013 Sales and Support Office [Member] OptionPlan	Jun. 30, 2013 General Office [Member]	Jun. 30, 2013 New York [Member]	Jun. 30, 2013 Office Leases [Member]	Jun. 30, 2012 Office Leases [Member]	Jun. 30, 2013 Office Leases [Member]	Jun. 30, 2012 Office Leases [Member]	Dec. 31, 2012 Office Leases [Member]	Jun. 30, 2013 Office Leases [Member] Accrued Expenses [Member]	Dec. 31, 2012 Office Leases [Member] Accrued Expenses [Member]	Jun. 30, 2013 Office Leases [Member] Other Long-Term Liabilities [Member]	Dec. 31, 2012 Office Leases [Member] Other Long-Term Liabilities [Member]	Jun. 30, 2013 Headquarters Space [Member] OptionPlan	Jun. 30, 2013 Third-Party Hosting Agreements [Member]	Jun. 30, 2012 Third-Party Hosting Agreements [Member]	Jun. 30, 2013 Third-Party Hosting Agreements [Member] Vendor	Jun. 30, 2012 Third-Party Hosting Agreements [Member]	Dec. 31, 2012 Third-Party Hosting Agreements [Member]	Jun. 30, 2013 Third-Party Hosting Agreements [Member] Other Long-Term Liabilities [Member]	Dec. 31, 2012 Third-Party Hosting Agreements [Member] Other Long-Term Liabilities [Member]
Operating Leased Assets [Line Items]
Lease expiration date																	Sep. 22, 2022
Time period for extension option					3 years												10 years
Number of extension option					3												1
Expiration of lease agreement		Various dates through mid-2017			April 2019	Various dates through 2018	October 2018
Prepaid rent								$ 1,338		$ 1,338		$ 1,725						$ 970		$ 970		$ 1,120
Prepaid expenses and other current assets		9,165		6,513				314		314		302						289		289		259
Other assets								1,024		1,024		1,423						681		681		861
Accrued rent balance								2,187		2,187		2,154
Accrued rent balance included in accrued expenses													328	282
Accrued rent balance included in other long-term liabilities															1,859	1,872							163	138
Rent expense								1,983	1,652	3,953	3,165							998	994	2,005	1,900
Number of vendors provide for related services																				2
Amount of contractual commitments with various vendors		21,251
Letter of credit for the benefit of the landlord		1,300		750
Cash balance to secure the letter of credit		1,300		750
Amount payable upon achievement of certain revenue targets		15,000
Accrual for contingency		0		0
Number of Plaintiffs	2
Litigation Settlement, aggregate payment		800
Loss contingency accrual		$ 820	$ 820

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Acquisitions - Estimated Fair Values and Useful Lives of Identifiable Intangible Assets Acquired (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Acquired Finite-Lived Intangible Assets [Line Items]
Total identifiable intangible assets	$ 4,760
Total identifiable intangible assets, Weighted Average Useful Life	3 years 11 months 12 days
Developed Technology [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total identifiable intangible assets	850
Total identifiable intangible assets, Weighted Average Useful Life	3 years
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total identifiable intangible assets	2,630
Total identifiable intangible assets, Weighted Average Useful Life	3 years 9 months
Publisher Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total identifiable intangible assets	710
Total identifiable intangible assets, Weighted Average Useful Life	5 years
Trade Name [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total identifiable intangible assets	$ 570
Total identifiable intangible assets, Weighted Average Useful Life	5 years

XML

Summary of Significant Accounting Policies - Fair Value Hierarchy for Cash Equivalents and Marketable Securities Measured at Fair Value on Recurring Basis (Detail) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial Assets:
Total	$ 64,183	$ 64,052
Money Market Instruments [Member]
Financial Assets:
Cash and cash equivalents fair value disclosure	51,184	38,320
U.S. Treasury Notes [Member]
Financial Assets:
Available for sale securities fair value disclosure	10,096	10,158
Corporate and Agency Bonds [Member]
Financial Assets:
Available for sale securities fair value disclosure	906	12,676
Certificates of Deposit [Member]
Financial Assets:
Available for sale securities fair value disclosure	1,000	1,000
Commercial Paper [Member]
Financial Assets:
Available for sale securities fair value disclosure	997	1,898
Level 2 [Member]
Financial Assets:
Available for sale securities fair value disclosure	2,903	15,574
Level 2 [Member] | Corporate and Agency Bonds [Member]
Financial Assets:
Available for sale securities fair value disclosure	906	12,676
Level 2 [Member] | Certificates of Deposit [Member]
Financial Assets:
Available for sale securities fair value disclosure	1,000	1,000
Level 2 [Member] | Commercial Paper [Member]
Financial Assets:
Available for sale securities fair value disclosure	997	1,898
Level 3 [Member]
Financial Assets:
Available for sale securities fair value disclosure
Level 3 [Member] | Money Market Instruments [Member]
Financial Assets:
Cash and cash equivalents fair value disclosure
Level 3 [Member] | U.S. Treasury Notes [Member]
Financial Assets:
Available for sale securities fair value disclosure
Level 3 [Member] | Corporate and Agency Bonds [Member]
Financial Assets:
Available for sale securities fair value disclosure
Level 3 [Member] | Certificates of Deposit [Member]
Financial Assets:
Available for sale securities fair value disclosure
Level 3 [Member] | Commercial Paper [Member]
Financial Assets:
Available for sale securities fair value disclosure
Level 1 [Member]
Financial Assets:
Total	61,280	48,478
Level 1 [Member] | Money Market Instruments [Member]
Financial Assets:
Cash and cash equivalents fair value disclosure	51,184	38,320
Level 1 [Member] | U.S. Treasury Notes [Member]
Financial Assets:
Available for sale securities fair value disclosure	$ 10,096	$ 10,158

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities
Net loss	$ (424)	$ (244)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	10,751	8,969
Amortization of premium on investments	102	296
Stock-based compensation expense	7,671	7,075
Provision for (recovery of) bad debts	2	(3)
Deferred income taxes	(2,481)	(644)
Taxes paid related to net share settlement of restricted stock units	(1,020)	(326)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(10)	(1)
Prepaid expenses and other current assets	(2,654)	(2)
Other assets	206	(406)
Accounts payable	42	95
Accrued expenses	2,221	(537)
Deferred revenue	2,018	1,874
Other long-term liabilities	12	(39)
Net cash provided by operating activities	16,436	16,107
Cash flows from investing activities
Purchases of marketable securities	(1,909)	(28,357)
Proceeds from maturities of marketable securities	10,534	31,167
Proceeds from sales of marketable securities	4,000	27,600
Acquisition of businesses, net of cash acquired		(68,487)
Increase in restricted cash	(550)
Acquisition of property and equipment, including costs capitalized for development of internal use software	(9,689)	(10,644)
Net cash provided by (used in) investing activities	2,386	(48,721)
Cash flows from financing activities
Proceeds from issuance of common stock pursuant to the exercise of stock options	807	3,657
Income tax benefit from the exercise of stock options		148
Proceeds from issuance of common stock pursuant to employee stock purchase plan	484	536
Repurchase of common stock	(1,618)
Net cash provided by (used in) financing activities	(327)	4,341
Effects of exchange rates on cash and cash equivalents	(2)
Net increase (decrease) in cash and cash equivalents	18,493	(28,273)
Cash and cash equivalents, beginning of period	67,775	49,589
Cash and cash equivalents, end of period	86,268	21,316
Supplemental disclosure of noncash investing and financing activities:
Capitalization of stock-based compensation	223	443
Fair value of contingent consideration in connection with acquisition included in accrued expenses and other long-term liabilities		$ 12,152

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include those of the Company and its subsidiaries, after elimination of all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The condensed consolidated balance sheet at December 31, 2012 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K, File Number 001-33707, on file with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2013 and consolidated results of operations for the three and six months ended June 30, 2013 and 2012 and consolidated cash flows for the six months ended June 30, 2013 and 2012 have been made. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2013.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, judgments and assumptions, including those related to revenue recognition, stock-based compensation, goodwill and acquired intangible assets, capitalization of software and website development costs, liability for contingent consideration, litigation accruals and income taxes. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from these estimates.

Revenue Recognition

The Company provides access to its products primarily through subscription arrangements whereby the customer is charged a fee for access for a defined term. Subscription arrangements include access to use the Company’s software via the Internet and support services, such as telephone, email and chat support. When there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured, the Company recognizes revenue on a daily basis over the subscription period as the services are delivered. Delivery is considered to have commenced at the time the customer has paid for the products and has access to the account via a log-in and password. The Company generates revenue from its SaveLocal product by charging a fee to its customers based on the number of deals sold by its customers and the value of the successful deal. The Company recognizes revenue from the fee charged when there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured. The Company also offers ancillary services to its customers related to its subscription-based products such as custom services and training. When sold together, revenue from custom services, training and subscription products are accounted for separately based on vendor-specific objective evidence of fair value of each of the services as the services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. Revenue from custom services and training is recognized as the services are performed.

Deferred Revenue

Deferred revenue consists of payments received in advance of delivery of the Company’s products described above and is recognized as the revenue recognition criteria are met. The Company’s customers generally pay for services in advance on a monthly, semiannual or annual basis.

Accounts Receivable

Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance.

Concentration of Credit Risk and Significant Products and Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. At June 30, 2013 and December 31, 2012, the Company had substantially all cash and investment balances at certain financial institutions without or in excess of federally insured limits, however, the Company maintains its cash balances and custody of its marketable securities with accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

For the three and six months ended June 30, 2013 and the three and six months ended June 30, 2012, revenue from the Company’s email marketing product alone as a percentage of total revenue was approximately 84% and 86%, respectively. No customer accounted for more than 10% of total revenue during these periods.

Goodwill and Acquired Intangible Assets

The Company records goodwill when consideration paid in a business acquisition exceeds the fair value of the net tangible assets and the identified intangible assets acquired. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if facts and circumstances warrant a review. The Company performs its annual assessment for impairment of goodwill on November 30^th and has determined that there is a single reporting unit for the purpose of conducting this annual goodwill impairment assessment.

Intangible assets are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

Software and Web Site Development Costs

Research and development costs are expensed as incurred and primarily include salaries, fees to consultants and other related costs. Relative to development costs of its on-demand products and website, the Company capitalizes certain direct costs to develop functionality as well as certain upgrades and enhancements that are probable to result in additional functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized as part of property and equipment until the software is substantially complete and ready for its intended use. Capitalized software is amortized over a three-year period in the expense category to which the software relates.

Foreign Currency Translation

The functional currency of the Company’s UK operations is deemed to be the British pound. Accordingly, the assets and liabilities of the Company’s UK subsidiary are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are charged to other income (expense) and were not material to the Company’s operations.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s only elements of other comprehensive income (loss) are unrealized gains and losses on available-for-sale securities and translation adjustments.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the time of acquisition to be cash equivalents. The Company also considers receivables related to customer credit card purchases of $3,689 and $2,509 at June 30, 2013 and December 31, 2012, respectively, to be equivalent to cash. Cash equivalents are stated at fair value.

Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of interest income and other income (expense) based on the specific identification method.

At June 30, 2013, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	10,080	$	16	$	—		$	10,096
Corporate and Agency Bonds		907		—		(1	)		906
Certificates of Deposit		1,000		—		—			1,000
Commercial Paper		997		—		—			997
Total	$	12,984	$	16	$	(1	)	$	12,999

At June 30, 2013, marketable securities consisted of investments that mature within one year.

At December 31, 2012, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury Notes	$	10,138		20	$	—	$	10,158
Corporate and Agency Bonds		12,675		1		—		12,676
Certificates of Deposit		1,000		—		—		1,000
Commercial Paper		1,898		—		—		1,898
Total	$	25,711	$	21	$	—	$	25,732

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables present the Company’s fair value hierarchy for its cash equivalents and marketable securities, which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	Fair Value Measurements at June 30, 2013 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	51,184	$	—	$	—	$	51,184
U.S. Treasury Notes		10,096		—		—		10,096
Corporate and Agency Bonds		—		906		—		906
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		997		—		997
Total	$	61,280	$	2,903	$	—	$	64,183

	Fair Value Measurements at December 31, 2012 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	38,320	$	—	$	—	$	38,320
U.S. Treasury Notes		10,158		—		—		10,158
Corporate and Agency Bonds		—		12,676		—		12,676
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		1,898		—		1,898
Total	$	48,478	$	15,574	$	—	$	64,052

The Company has a contingent consideration liability associated with the acquisition of SinglePlatform, Corp. (“SinglePlatform”) in June 2012, which has been assessed at $0 as of June 30, 2013 (see Note 3). Contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of the contingent consideration liability uses assumptions and estimates to forecast a range of outcomes for the contingent consideration. The Company assesses these assumptions and estimates on a quarterly basis as additional data impacting the assumptions is obtained. Changes in the fair value of the contingent consideration liability related to updated assumptions and estimates are recognized within the consolidated statements of operations.

The significant unobservable inputs used in the fair value measurement of contingent consideration are the probabilities of successful achievement of the targeted revenues, the six-month periods in which the revenues are expected to be achieved and the discount rate. Increases or decreases in any of the forecasted scenarios or probabilities of success would result in a higher or lower fair value measurement, respectively. Increases or decreases in the actual achievement of milestones in the relevant period as compared to the estimated achievement would result in a higher or lower fair value measurement, respectively.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets or, where applicable and if shorter, over the lease term. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to the statement of operations. Repairs and maintenance costs are expensed as incurred.

Estimated useful lives of assets are as follows:

Computer equipment	3 years
Software	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of life of lease or estimated useful life

Long-Lived Assets

The Company reviews the carrying values of its long-lived assets for possible impairment when events or changes in circumstance indicate that the related carrying amount may not be recoverable. Undiscounted cash flows are compared to the carrying value and when required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of unrestricted common shares outstanding for the period.

Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted common stock and restricted stock units using the “treasury stock” method when the effect is not anti-dilutive.

The following is a summary of the shares used in computing diluted net income (loss) per share:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Weighted average shares used in calculating basic net income (loss) per share		30,689		30,380		30,660		30,275
Stock options		319		—		—		—
Warrants		1		—		—		—
Unvested restricted stock and restricted stock units		65		—		—		—
Shares used in computing diluted net income (loss) per share		31,074		30,380		30,660		30,275

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share because they had an anti-dilutive impact either because the proceeds under the treasury stock method were in excess of the average fair market value for the period or because the Company had a net loss in the period:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Options to purchase common stock		4,688		5,098		5,597		5,023
Warrants to purchase common stock		—		1		1		1
Unvested restricted stock and restricted stock units		112		388		583		350
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock		4,800		5,487		6,181		5,374

Advertising Expense

The Company expenses advertising costs as incurred.

Accounting for Stock-Based Compensation

The Company values all stock-based compensation, including grants of stock options, restricted stock and restricted stock units, at fair value on the date of grant, and expenses the fair value over the applicable service period. The straight-line method is applied to all grants with service conditions, while the graded vesting method is applied to all grants with both service and performance conditions.

Income Taxes

Income taxes are provided for tax effects of transactions reported in the financial statements and consist of income taxes currently due plus deferred income taxes related to timing differences between the basis of certain assets and liabilities for financial statement and income tax reporting purposes. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

Segment Data

The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. Revenue is generated predominately in the U.S. and all significant assets are held in the U.S.

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Stockholders' Equity and Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Stockholders' Equity and Stock-Based Compensation

5. Stockholders’ Equity and Stock-based Compensation

Share Repurchase Program

In the second quarter of 2013, the Board of Directors authorized the repurchase of up to $20,000 of the Company’s common stock through December 31, 2013. Under the authorization, the Company can repurchase shares in the open market, which may include the use of 10b5-1 trading plans, or through privately negotiated transactions. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions. Share repurchases may be suspended or discontinued at any time. The Company intends to fund repurchases from its cash and cash equivalents.

During the three months ended June 30, 2013, the Company repurchased 100,000 shares at an average price of $16.18 per share. These shares were retired and accounted for as a reduction to stockholders’ equity in the Company’s condensed consolidated balance sheet.

Stock-Based Awards

Stock Incentive Plan

The Company’s 2011 Stock Incentive Plan (the “2011 Plan”) permits the Company to make grants of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based awards with a maximum term of seven years. These awards may be granted to the Company’s employees, officers, directors, consultants, and advisors. The Company reserved 4,200,000 shares of its common stock for issuance under the 2011 Plan. Additionally, per the terms of the 2011 Plan, shares of common stock previously reserved for issuance under the 2007 Stock Incentive Plan as well as shares reserved for outstanding awards under both the 2007 Stock Incentive Plan and the 1999 Stock Option/Stock Issuance Plan for which the awards are cancelled, forfeited, repurchased or otherwise result in common stock not being issued will be added to the number of shares available for issuance under the 2011 Plan. Awards that are granted with a per share or per unit purchase price less than 100% of fair market value as of the date of grant (e.g., restricted stock and restricted stock unit awards) shall count towards the total number of shares reserved for issuance under the 2011 Plan on a two-for-one basis. As of June 30, 2013, 1,699,166 shares of common stock were available for issuance under the 2011 Plan.

The Company’s 2012 Inducement Award Plan (the “2012 Inducement Plan”) provides for the grant of nonstatutory stock options and restricted stock unit awards as an inducement to an individual entering into employment with the Company or in connection with an acquisition. The Company may issue up to an aggregate of 257,780 shares of common stock pursuant to the 2012 Inducement Plan, subject to adjustment in the event of stock splits and other similar events. Shares issued under the 2012 Inducement Plan may consist in whole or in part of authorized but unissued shares or may be issued shares that the Company has reacquired (provided that open market purchases of shares using the proceeds from the exercise of awards do not increase the number of shares available for future grants). Options granted under the 2012 Inducement Plan must be granted at an exercise price that is not less than 100% of the fair market value of the common stock on the date of grant and may not be granted for a term in excess of seven years. If an award granted under the 2012 Inducement Plan expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of common stock subject to such award being repurchased by the Company) or otherwise results in any common stock not being issued, the unused common stock covered by such award will become available for issuance pursuant to a new award under the 2012 Inducement Plan. As of June 30, 2013, there were 10,025 shares of common stock available for issuance under this plan.

The Company applies the fair value recognition provisions for all stock-based awards granted or modified in accordance with authoritative guidance. Under this guidance the Company records compensation costs over the requisite service period of the award based on the grant-date fair value. The straight-line method is applied to all grants with service conditions, while the graded vesting method is applied to all grants with both service and performance conditions.

Restricted Stock Units

Upon vesting, restricted stock units entitle the holder to one share of common stock for each restricted stock unit. All restricted stock units currently granted have been classified as equity instruments as their terms require settlement in shares. The Company has outstanding restricted stock units with service-based vesting conditions, service and performance-based vesting conditions and market-based vesting conditions.

Restricted stock units with service-based vesting and service-based and performance-based vesting conditions are valued on the grant date using the grant date market price of the underlying shares. Service-based vesting restrictions lapse over periods generally ranging from two to four years. Restricted stock units with both service-based and performance-based vesting conditions consist of restricted stock units which vest upon the achievement of at least two years of service and a targeted revenue run rate of $500,000 (the “Revenue RSUs”). The Revenue RSUs will vest upon the achievement of both (i) a performance condition and (ii) a service condition. The performance condition will be satisfied if the Company achieves a specified quarterly revenue target over a specified measurement period. To satisfy the service condition, the employee must remain employed by the Company until the later of the applicable performance determination date and the second anniversary of the date of grant. The number of Revenue RSUs that will vest upon the achievement of the performance condition and the service condition will vary based on when the performance condition is satisfied, from a maximum of 100% of the number of target shares to a threshold of 25% of the number of target shares with no vesting, absent certain circumstances in a change of control of the Company, if the threshold is not achieved. If the revenue targets are not achieved by March 31, 2017, the Revenue RSUs will expire unvested. The Company also has outstanding a small number of restricted stock units with other performance based vesting criteria. Restricted stock units with market-based vesting conditions consist of restricted stock units which vest upon achievement of a Total Shareholder Return target (the “TSR units”) measured over a three-year period that commenced December 4, 2012. The number of TSR units that will vest upon achievement of the Total Shareholder Return target will vary based on the level of achievement from a maximum of 125% of the target shares to a threshold of 50% of the target shares with no vesting, absent certain circumstances in a change of control of the Company, if the threshold requirement is not achieved or the employee is no longer with the Company at the end of the three-year period. The TSR units are valued using a Monte Carlo simulation model. The number of awards expected to be earned, based on achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation for the TSR unit. Compensation cost is recognized regardless of the eventual number of awards that are earned based on the market condition and is recognized on a straight-line basis over the requisite service period.

Stock Purchase Plan

Under the Company’s 2007 Employee Stock Purchase Plan, as amended (the “Purchase Plan”), six-month offering periods begin on January 1 and July 1 of each year, during which employees may elect to purchase shares of the Company’s common stock according to the terms of the offering. Prior to July 1, 2013, the per share purchase price for offerings was equal to 85% of the closing market price of the Company’s common stock on the last day of the offering period. Starting with the six-month offering period that began on July 1, 2013, the per share purchase price for offerings is equal to the lesser of 85% of the closing market price of the Company’s common stock on the first day or last day of the offering period. On May 22, 2013, the Company’s stockholders approved an amendment to the Purchase Plan that increased the number of shares of common stock available for issuance under the Purchase Plan by 350,000. As of June 30, 2013, 425,158 shares of common stock are available under the Purchase Plan for issuance to participating employees.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense on all awards in the following expense categories:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Cost of revenue	$	492	$	450	$	891	$	829
Research and development		917		851		1,748		1,823
Sales and marketing		1,135		996		2,119		1,671
General and administrative		1,587		1,479		2,913		2,752
	$	4,131	$	3,776	$	7,671	$	7,075

Additionally, the Company capitalized $57 and $219 of stock-based compensation related to the development of internal use software for the three months ended June 30, 2013 and 2012, respectively, and $223 and $443 of stock-based compensation expense related to the development of internal use software for the six months ended June 30, 2013 and 2012, respectively.

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Acquisitions

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

CardStar

On January 13, 2012, the Company acquired by merger all of the outstanding capital stock of CardStar, Inc. (“CardStar”) for a cash purchase price of $5,750. CardStar is a leading developer of mobile applications that extend the use of loyalty cards and mobile coupons among consumers. The Company purchased CardStar in order to accelerate its entrance into the mobile marketing and loyalty space.

The Company allocated the purchase price as follows:

Purchased technology	$	624
Net deferred tax assets		553
Goodwill		4,573
Total assets acquired	$	5,750

The purchased technology was valued using the cost to replace method and has an estimated economic life of three years.

Goodwill was recognized for the excess purchase price over the fair value of the assets acquired. Goodwill is primarily attributable to CardStar’s knowledge of mobile applications and coupons and loyalty cards. Goodwill from the CardStar acquisition will be included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of CardStar is not deductible for tax purposes. The operations of CardStar prior to the acquisition were not material to the consolidated results of the Company.

SinglePlatform

On June 12, 2012, the Company acquired by merger all of the outstanding capital stock of SinglePlatform. SinglePlatform provides small businesses a single place to update their business information and delivers that information across its publishing network. The Company purchased SinglePlatform in order to expand its product offerings consistent with its strategy of helping small organizations acquire new customers. The purchase price of $75,009 reflected a cash payment of $62,857 and a liability of $12,152 representing the fair value of contingent consideration of up to $30,000 payable to the former shareholders of SinglePlatform upon achievement by SinglePlatform of certain revenue targets. These revenue targets are measured in six-month intervals from July 1, 2012 to June 30, 2014. If such targets are achieved, the consideration is payable in cash. At the acquisition date, the Company’s estimate of the undiscounted range of outcomes for the contingent consideration was $0 to $21,095 based on a probability weighted estimate of future revenue. Using a discounted cash flow method, the Company recorded an estimated liability of $12,152 as of the acquisition date. This liability was subsequently reduced to $0 by December 31, 2012 based on actual results and revised forecasts. The first two revenue targets, assessed at December 31, 2012 and June 30, 2013, respectively, were not met and, as of June 30, 2013, the maximum amount of contingent consideration payable is $15,000. The Company will continue to assess the probability that the remaining revenue targets will be met and at what level, and any subsequent changes in the estimated fair value of the liability will be reflected in earnings until the liability is fully settled.

The following table summarizes the purchase price for SinglePlatform and the allocation of the purchase price:

Purchase consideration:
Total cash paid, net of cash acquired	$	62,546
Cash acquired		311
Fair value of contingent consideration		12,152
Total purchase price consideration	$	75,009
Assets acquired and liabilities assumed:
Cash	$	311
Accounts receivable		48
Prepaid expenses and other current assets		60
Property and equipment		14
Identifiable intangible assets		4,760
Other assets		91
Net deferred tax assets		72
Goodwill		71,997
Total assets acquired		77,353
Accounts payable, accrued expenses and other current liabilities		(1,734	)
Deferred revenue		(610	)
Total liabilities assumed		(2,344	)
Total allocation of purchase price consideration	$	75,009

The developed technology and the customer and publisher relationships were valued using the cost to replace method. The trade name was valued using the relief from royalty method. Acquired intangible assets are amortized over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis. The following table presents the estimated fair values and useful lives of identifiable intangible assets acquired:

	Amount		Weighted Average Useful Life
			(in years)
Developed technology	$	850		3
Customer relationships		2,630		3.75
Publisher relationships		710		5
Trade name		570		5
Total identifiable intangible assets	$	4,760		3.95

Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill is primarily attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of being able to market SinglePlatform’s product to the Company’s customer base and being able to market the Company’s products to SinglePlatform’s customer base. Goodwill from the SinglePlatform acquisition is included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of SinglePlatform is not deductible for tax purposes.

The following table presents the pro forma results of the historical consolidated statements of operations of the Company and SinglePlatform for the three and six months ended June 30, 2012, giving effect to the merger as if it occurred on January 1, 2011:

	Three months ended June 30,			Six months ended June 30,
	2012			2012
Pro forma revenue	$	62,326		$	122,474
Pro forma net loss	$	(1,048	)		(1,826	)

The pro forma net loss presented primarily includes adjustments for amortization, interest income and income taxes. This pro forma information does not purport to indicate the results that would have actually been obtained had the acquisition been completed on the assumed date, or which may be realized in the future.

Transaction costs related to acquisitions were $574 and $723 for the three and six months ended June 30, 2012, respectively, which the Company recorded as acquisition costs and other related charges. The operating expenses of the acquired entities have been included in the consolidated financial statements beginning on their respective acquisition dates but have not been disclosed as the Company does not account for the results of the acquired entities separate from its own results.

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Commitments and Contingencies - Future Minimum Lease Payments Under Leases and Agreements (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Office Leases [Member]
Operating Leased Assets [Line Items]
Remainder of 2013	$ 3,466
2014	8,116
2015	9,100
2016	10,147
2017	10,153
Thereafter	40,701
Total	81,683
Third-Party Hosting Agreements [Member]
Operating Leased Assets [Line Items]
Remainder of 2013	1,974
2014	3,624
2015	3,734
2016	3,845
2017	775
Total	$ 13,952

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Summary of Significant Accounting Policies - Common Stock Equivalents Excluded from Computation of Diluted Net Income (Loss) Per Share (Detail) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock	4,800	5,487	6,181	5,374
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock	4,688	5,098	5,597	5,023
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock		1	1	1
Unvested Restricted Stock and Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock	112	388	583	350

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Acquisitions - Pro Forma Results of Historical Consolidated Statements of Operations (Detail) (SinglePlatform [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
SinglePlatform [Member]
Business Acquisition [Line Items]
Pro forma revenue	$ 62,326	$ 122,474
Pro forma net loss	$ (1,048)	$ (1,826)

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Stockholders' Equity and Stock-Based Compensation - Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 4,131	$ 3,776	$ 7,671	$ 7,075
Cost of Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	492	450	891	829
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	917	851	1,748	1,823
Sales and Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,135	996	2,119	1,671
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 1,587	$ 1,479	$ 2,913	$ 2,752

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	30,712,319	30,651,375
Common stock, shares outstanding	30,712,319	30,651,375

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Office Leases

The Company has a lease for its headquarters space in Waltham, Massachusetts (the “Lease”) that is effective through September 2022 with one ten-year extension option. The Lease includes space the Company is currently occupying as well as space that will be made available at various points in time during the term.

The Company leases office space for a sales and support office in Colorado under a lease agreement effective through April 2019 with three three-year extension options. The Company also leases small amounts of general office space in Florida, New York, California and the United Kingdom under lease agreements that expire at various dates through 2018.

Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate such that rent expense per square foot is recognized on a straight-line basis over the terms of occupancy.

At June 30, 2013, the Company had both prepaid rent and accrued rent balances related to its office leases. The prepaid rent balance was $1,338 at June 30, 2013, of which $314 was included in prepaid expenses and other current assets and $1,024 was included in other assets. The accrued rent balance was $2,187 at June 30, 2013, of which $328 was included in accrued expenses and $1,859 was included in other long-term liabilities. At December 31, 2012, the Company had both prepaid rent and accrued rent balances related to its office leases. The prepaid rent balance was $1,725 at December 31, 2012, of which $302 was included in prepaid expenses and other current assets and $1,423 was included in other assets. The accrued rent balance was $2,154 at December 31, 2012, of which $282 was included in accrued expenses and $1,872 was included in other long-term liabilities.

Total rent expense under office leases was $1,983 and $1,652 for the three months ended June 30, 2013 and 2012, respectively. Total rent expense under office leases was $3,953 and $3,165 for the six months ended June 30, 2013 and 2012, respectively.

As of June 30, 2013, future minimum lease payments under non-cancellable office leases are as follows:

Remainder of 2013	$	3,466
2014		8,116
2015		9,100
2016		10,147
2017		10,153
Thereafter		40,701
Total	$	81,683

Third-Party Hosting Agreements

The Company has agreements with two vendors to provide specialized space and equipment and related services from which the Company hosts its software applications.

Payment escalations and rent holidays specified in these agreements are accrued or deferred as appropriate such that rent expense per square foot is recognized on a straight-line basis over the terms of occupancy. At June 30, 2013 and December 31, 2012, the Company had both prepaid rent and accrued rent balances related to its hosting agreements. At June 30, 2013, the Company had prepaid rent of $970, of which $289 was included in prepaid expenses and other current assets and $681 was included in other assets. The accrued rent balance of $163 at June 30, 2013 was included in other long-term liabilities. At December 31, 2012, the Company had prepaid rent of $1,120, of which $259 was included in prepaid expenses and other current assets and $861 was included in other assets and accrued rent of $138 which was included in other long-term liabilities. Total rent expense under hosting agreements was $998 and $994 for the three months ended June 30, 2013 and 2012, respectively. Total rent expense under hosting agreements was $2,005 and $1,900 for the six months ended June 30, 2013 and 2012, respectively.

The agreements include payment commitments that expire at various dates through mid-2017. As of June 30, 2013, future minimum payments under the hosting agreements are as follows:

Remainder of 2013	$	1,974
2014		3,624
2015		3,734
2016		3,845
2017		775
Total	$	13,952

Vendor Commitments

As of June 30, 2013, the Company had issued both cancellable and non-cancellable purchase orders to various vendors and entered into contractual commitments with various vendors totaling $21,251 related primarily to marketing programs and other non-marketing goods and services to be delivered over the next twelve months.

Letters of Credit and Restricted Cash

As of June 30, 2013 and December 31, 2012, the Company maintained a letter of credit totaling $1,300 and $750, respectively, for the benefit of the landlord of the Company’s corporate headquarters lease. The landlord can draw against the letter of credit in the event of default by the Company. The Company was required to maintain a cash balance of at least $1,300 and $750 as of June 30, 2013 and December 31, 2012, respectively, to secure the letter of credit. These amounts were classified as restricted cash in the balance sheet at June 30, 2013 and December 31, 2012.

Contingent Consideration

The former shareholders of SinglePlatform are eligible to receive consideration of up to $15,000, which is contingent upon the achievement of certain revenue targets achieved through June 30, 2014, measured in six-month intervals. If such conditions are achieved, the consideration is payable in cash. The Company does not believe the revenue targets will be met. Accordingly, the Company’s accrual for this contingency as of June 30, 2013 and December 31, 2012 was $0.

Indemnification Obligations

The Company enters into standard indemnification agreements with the Company’s channel partners and certain other third parties in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by the indemnified party in connection with certain intellectual property infringement and other claims by any third party with respect to the Company’s business and technology. Based on historical information and information known as of June 30, 2013, the Company does not expect it will incur any significant liabilities under these indemnification agreements.

Legal Matters

On August 7, 2012, two former employees, on behalf of themselves and all other similarly situated individuals (collectively, the “FLSA Plaintiffs”), filed a complaint in the U.S. District Court for the District of Massachusetts that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on August 9, 2012, alleges that the Company violated the Fair Labor Standards Act and the Massachusetts overtime law with respect to certain current and former sales employees. The FLSA Plaintiffs seek an award for damages in an unspecified amount. The Company and counsel for the FLSA Plaintiffs participated in a court-sanctioned mediation session with an independent mediator in March 2013 and, during the three months ended March 31, 2013, the Company recorded an accrual of $820. In July 2013, the Company and the FLSA Plaintiffs executed a settlement agreement that will terminate the litigation and settle all pending claims against the Company in exchange for an aggregate payment of $800. The U.S. District Court has approved the settlement on a preliminary basis. Final approval is expected in the fourth quarter of 2013. Following final approval, the Company will pay the settlement amount. As of June 30, 2013, the Company had an accrual of $820 related to this matter.

On September 24, 2012, RPost Holdings, Inc., RPost Communications Limited and RMail Limited (collectively, “RPost”) filed a complaint in the U.S. District Court for the Eastern District of Texas that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on December 26, 2012, alleges that certain elements of the Company’s email marketing technology infringe five patents held by RPost. RPost seeks an award for damages in an unspecified amount and injunctive relief. On February 11, 2013, RPost amended its complaint to name five of the Company’s partners as defendants. Under the Company’s contractual agreements with these partners, the Company is obligated to indemnify them for claims related to patent infringement. The Company has filed a motion to sever and stay the claims against its partners and a motion to dismiss the claims against the Company. This litigation is in its very early stages. As a result, neither the ultimate outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to defend itself vigorously.

On November 14, 2012, the Company filed a complaint in the U.S. District Court for the District of Delaware against Umbanet, Inc. (“Umbanet”) seeking a declaratory judgment that two patents held by Umbanet (the “Umbanet Patents”) are not infringed by a customer’s use of the Company’s email marketing product and that such patents are invalid (the “Delaware Case”). The Company filed the Delaware Case in response to a complaint filed by Umbanet in the U.S. District Court for the District of New Jersey against one of the Company’s customers alleging that the customer’s use of the Company’s email marketing product infringed the Umbanet Patents (the “New Jersey Case”). Umbanet has filed a motion in the Delaware Case seeking to dismiss the complaint or, in the alternative, stay the case pending resolution of the New Jersey Case. The Company filed a motion in the New Jersey Case seeking to stay the case pending resolution of the Delaware Case. These litigation matters are in a very early stage. As a result, neither the ultimate outcome of these matters nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to pursue these matters vigorously.

On March 7, 2013, CreateAds LLC (“CreateAds”) filed a complaint in the U.S. District Court for the District of Delaware that named the Company as a defendant in a lawsuit. The complaint, which was served on the Company on March 8, 2013, alleges that certain elements of the Company’s email marketing technology infringe a patent held by CreateAds. CreateAds seeks an award for damages in an unspecified amount and injunctive relief. The Company has filed a motion to dismiss the complaint. This litigation is in its very early stages. As a result, neither the ultimate outcome of this matter nor an estimate of a probable loss or any reasonably possible losses can be assessed at this time. Nevertheless, the Company believes that it has meritorious defenses to any claim of infringement and intends to defend itself vigorously.

The Company is from time to time subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of its business. While the outcome of these other claims cannot be predicted with certainty, management does not believe that the outcome of any of these other legal matters will have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 90	$ (462)	$ (424)	$ (244)
Other comprehensive loss:
Net unrealized losses on marketable securities, net of tax	(3)	(23)		(43)
Translation adjustment			(4)
Total other comprehensive loss	(3)	(23)	(4)	(43)
Comprehensive income (loss)	$ 87	$ (485)	$ (428)	$ (287)

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 86,268	$ 67,775
Marketable securities	12,999	25,732
Accounts receivable, net of allowance for doubtful accounts	100	92
Prepaid expenses and other current assets	9,165	6,513
Total current assets	108,532	100,112
Property and equipment, net	40,040	39,653
Restricted cash	1,300	750
Goodwill	95,505	95,505
Acquired intangible assets, net	5,532	6,758
Deferred taxes	13,864	11,377
Other assets	2,901	3,107
Total assets	267,674	257,262
Current liabilities
Accounts payable	8,209	8,167
Accrued expenses	13,024	10,803
Deferred revenue	34,718	32,700
Total current liabilities	55,951	51,670
Other long-term liabilities	2,022	2,010
Total liabilities	57,973	53,680
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2013 and December 31, 2012
Common stock; $0.01 par value; 100,000,000 shares authorized; 30,712,319 and 30,651,375 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	307	307
Additional paid-in capital	216,534	209,987
Accumulated other comprehensive income	7	11
Accumulated deficit	(7,147)	(6,723)
Total stockholders' equity	209,701	203,582
Total liabilities and stockholders' equity	$ 267,674	$ 257,262

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Acquisitions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended			0 Months Ended	1 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jan. 13, 2012 CardStar [Member]	Jun. 12, 2012 SinglePlatform [Member]	Dec. 31, 2012 SinglePlatform [Member]	Jun. 30, 2013 SinglePlatform [Member]
Business Acquisition [Line Items]
Cash purchase price					$ 5,750	$ 62,857
Estimated economic life of the purchased technology related to acquisition					3 years
Total purchase price included in acquisition of SinglePlatform						75,009
Fair value of contingent consideration payable		0		0		12,152	0	0
Amount payable upon achievement of certain revenue targets		15,000				30,000		15,000
Intervals period to be measured revenue targets		6 months
The estimated undiscounted range of outcomes for the contingent consideration, low						0
The estimated undiscounted range of outcomes for the contingent consideration, high						21,095
Contingent consideration adjustment							12,152
Transactions costs related to acquisitions	$ 574		$ 723

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended					6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Sales [Member] Customer	Jun. 30, 2012 Sales [Member] Customer	Jun. 30, 2013 Sales [Member] Customer	Jun. 30, 2012 Sales [Member] Customer	Jun. 30, 2013 Sales [Member] Minimum [Member]	Jun. 30, 2012 Sales [Member] Minimum [Member]	Jun. 30, 2013 Sales [Member] Minimum [Member]	Jun. 30, 2012 Sales [Member] Minimum [Member]	Jun. 30, 2013 SinglePlatform [Member]	Dec. 31, 2012 SinglePlatform [Member]	Jun. 12, 2012 SinglePlatform [Member]	Jun. 30, 2013 Software and Website Development Costs [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total revenue received			84.00%	84.00%	86.00%	86.00%	10.00%	10.00%	10.00%	10.00%
Number of customers accounted for more than specified percentage of revenue			0	0	0	0
Estimated economic life of the developed technology related to acquisition of Single Platform														3 years
Cash and cash equivalents and short term investments maturity period	3 months
Credit card receivables	$ 3,689	$ 2,509
Maturity period for marketable securities classified as available-for-sale	1 year
Contingent consideration liability associated with acquisition	$ 0	$ 0									$ 0	$ 0	$ 12,152
Intervals period to be measured revenue targets	6 months
Minimum percentage of probability of realizing the benefit upon ultimate settlement	50.00%

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Accrued Expenses - Components of Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Payables And Accruals [Abstract]
Payroll and payroll related	$ 5,607	$ 3,800
Licensed software and maintenance	1,197	1,627
Marketing programs	704	1,197
Other accrued expenses	5,516	4,179
Accrued expenses, total	$ 13,024	$ 10,803

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Goodwill and Acquired Intangible Assets - Future Estimated Amortization Expense for Assets Placed in Service (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2013	$ 1,177
2014	2,196
2015	1,583
2016	470
2017	106
Net Carrying Amount	$ 5,532	$ 6,758

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Stockholders' Equity and Stock Based Compensation - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended							1 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Maximum [Member]	Jun. 30, 2013 Restricted Stock Units [Member]	Jun. 30, 2013 2011 Plan [Member]	Jun. 30, 2013 Performance Based Vesting [Member] Restricted Stock Units [Member]	Jun. 30, 2013 Performance Based Vesting [Member] Restricted Stock Units [Member] Minimum [Member]	Jun. 30, 2013 Performance Based Vesting [Member] Restricted Stock Units [Member] Maximum [Member]	Jun. 30, 2013 Market-Based Vesting Conditions [Member] Restricted Stock Units [Member] Minimum [Member]	Jun. 30, 2013 Market-Based Vesting Conditions [Member] Restricted Stock Units [Member] Maximum [Member]	May 22, 2013 2007 Employee Stock Purchase Plan [Member]	Jun. 30, 2013 2007 Employee Stock Purchase Plan [Member]	Jun. 30, 2013 2012 Inducement Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program authorized amount of shares repurchased					$ 20,000
Stock repurchase program number of shares authorized to be repurchased	100,000		100,000
Stock repurchase program average purchase price per share	$ 16.18
Maximum term of incentive stock options, non-statutory stock options, restricted stock, restricted stock units and other stock-based awards							7 years								7 years
Common stock shares reserved for issuance							4,200,000								257,780
Minimum percentage of fair market value of per unit purchase price							100.00%								100.00%
Shares of common stock available for issuance							1,699,166							425,158	10,025
Number of share of common stock for each restricted stock unit						1
Vesting period of restricted awards									2 years	4 years
Revenue run rate of restricted stock								500,000
Percentage of target shares allowed to vest									25.00%	100.00%	50.00%	125.00%
Employee Stock Purchase Plan offering period														6 months
Percentage of closing market price of common stock equals to per share purchase price for offerings														85.00%
Additional Shares of common stock available for issuance													350,000
Capitalized stock-based compensation expense	$ 57	$ 219	$ 223	$ 443

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Accrued Expenses

6 Months Ended

Jun. 30, 2013

Payables And Accruals [Abstract]

Accrued Expenses

7. Accrued Expenses

	June 30, 2013		December 31, 2012
Payroll and payroll related	$	5,607	$	3,800
Licensed software and maintenance		1,197		1,627
Marketing programs		704		1,197
Other accrued expenses		5,516		4,179
	$	13,024	$	10,803

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Acquisitions - Allocation of Purchase Price (Detail) (USD $) In Thousands, unless otherwise specified				1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jan. 13, 2012 CardStar [Member]	Jun. 12, 2012 SinglePlatform [Member]	Jun. 30, 2013 SinglePlatform [Member]	Dec. 31, 2012 SinglePlatform [Member]
Purchase consideration:
Total cash paid, net of cash acquired				$ 62,546
Cash acquired				311
Fair value of contingent consideration	0	0		12,152	0	0
Total purchase price consideration				75,009
Assets acquired and liabilities assumed:
Cash				311
Accounts receivable				48
Prepaid expenses and other current assets				60
Property and equipment				14
Purchased technology and Identifiable intangible assets			624	4,760
Other assets				91
Net deferred tax assets			553	72
Goodwill	95,505	95,505	4,573	71,997
Total assets acquired			5,750	77,353
Accounts payable, accrued expenses and other current liabilities				(1,734)
Deferred revenue				(610)
Total liabilities assumed				(2,344)
Total allocation of purchase price consideration				$ 75,009

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401(k) Savings Plan - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Contribution by employer to 401 (k) Savings Plan	$ 1,406	$ 1,197
Employee's Contributions up to 3% [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent	100.00%	100.00%
Employee's Contributions Between 3% and 5% [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent	50.00%	50.00%
100% of Matching Contribution [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of the employee's compensation	3.00%	3.00%
50% of Matching Contribution [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of the employee's compensation	5.00%	5.00%
50% of Matching Contribution [Member] | Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of the employee's compensation	3.00%	3.00%

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements include those of the Company and its subsidiaries, after elimination of all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The condensed consolidated balance sheet at December 31, 2012 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K, File Number 001-33707, on file with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2013 and consolidated results of operations for the three and six months ended June 30, 2013 and 2012 and consolidated cash flows for the six months ended June 30, 2013 and 2012 have been made. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2013.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, judgments and assumptions, including those related to revenue recognition, stock-based compensation, goodwill and acquired intangible assets, capitalization of software and website development costs, liability for contingent consideration, litigation accruals and income taxes. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from these estimates.

Revenue Recognition

Revenue Recognition

The Company provides access to its products primarily through subscription arrangements whereby the customer is charged a fee for access for a defined term. Subscription arrangements include access to use the Company’s software via the Internet and support services, such as telephone, email and chat support. When there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured, the Company recognizes revenue on a daily basis over the subscription period as the services are delivered. Delivery is considered to have commenced at the time the customer has paid for the products and has access to the account via a log-in and password. The Company generates revenue from its SaveLocal product by charging a fee to its customers based on the number of deals sold by its customers and the value of the successful deal. The Company recognizes revenue from the fee charged when there is evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured. The Company also offers ancillary services to its customers related to its subscription-based products such as custom services and training. When sold together, revenue from custom services, training and subscription products are accounted for separately based on vendor-specific objective evidence of fair value of each of the services as the services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. Revenue from custom services and training is recognized as the services are performed.

Deferred Revenue

Deferred Revenue

Deferred revenue consists of payments received in advance of delivery of the Company’s products described above and is recognized as the revenue recognition criteria are met. The Company’s customers generally pay for services in advance on a monthly, semiannual or annual basis.

Accounts Receivable

Accounts Receivable

Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance.

Concentration of Credit Risk and Significant Products and Customers

Concentration of Credit Risk and Significant Products and Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. At June 30, 2013 and December 31, 2012, the Company had substantially all cash and investment balances at certain financial institutions without or in excess of federally insured limits, however, the Company maintains its cash balances and custody of its marketable securities with accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

For the three and six months ended June 30, 2013 and the three and six months ended June 30, 2012, revenue from the Company’s email marketing product alone as a percentage of total revenue was approximately 84% and 86%, respectively. No customer accounted for more than 10% of total revenue during these periods.

Goodwill and Acquired Intangible Assets

Goodwill and Acquired Intangible Assets

The Company records goodwill when consideration paid in a business acquisition exceeds the fair value of the net tangible assets and the identified intangible assets acquired. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if facts and circumstances warrant a review. The Company performs its annual assessment for impairment of goodwill on November 30^th and has determined that there is a single reporting unit for the purpose of conducting this annual goodwill impairment assessment.

Intangible assets are recorded at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

Software and Web Site Development Costs

Software and Web Site Development Costs

Research and development costs are expensed as incurred and primarily include salaries, fees to consultants and other related costs. Relative to development costs of its on-demand products and website, the Company capitalizes certain direct costs to develop functionality as well as certain upgrades and enhancements that are probable to result in additional functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized as part of property and equipment until the software is substantially complete and ready for its intended use. Capitalized software is amortized over a three-year period in the expense category to which the software relates.

Foreign Currency Translation

Foreign Currency Translation

The functional currency of the Company’s UK operations is deemed to be the British pound. Accordingly, the assets and liabilities of the Company’s UK subsidiary are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are charged to other income (expense) and were not material to the Company’s operations.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s only elements of other comprehensive income (loss) are unrealized gains and losses on available-for-sale securities and translation adjustments.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the time of acquisition to be cash equivalents. The Company also considers receivables related to customer credit card purchases of $3,689 and $2,509 at June 30, 2013 and December 31, 2012, respectively, to be equivalent to cash. Cash equivalents are stated at fair value.

Marketable Securities

Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of interest income and other income (expense) based on the specific identification method.

At June 30, 2013, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	10,080	$	16	$	—		$	10,096
Corporate and Agency Bonds		907		—		(1	)		906
Certificates of Deposit		1,000		—		—			1,000
Commercial Paper		997		—		—			997
Total	$	12,984	$	16	$	(1	)	$	12,999

At June 30, 2013, marketable securities consisted of investments that mature within one year.

At December 31, 2012, marketable securities by security type consisted of:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury Notes	$	10,138		20	$	—	$	10,158
Corporate and Agency Bonds		12,675		1		—		12,676
Certificates of Deposit		1,000		—		—		1,000
Commercial Paper		1,898		—		—		1,898
Total	$	25,711	$	21	$	—	$	25,732

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables present the Company’s fair value hierarchy for its cash equivalents and marketable securities, which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	Fair Value Measurements at June 30, 2013 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	51,184	$	—	$	—	$	51,184
U.S. Treasury Notes		10,096		—		—		10,096
Corporate and Agency Bonds		—		906		—		906
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		997		—		997
Total	$	61,280	$	2,903	$	—	$	64,183

	Fair Value Measurements at December 31, 2012 Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money Market Instruments	$	38,320	$	—	$	—	$	38,320
U.S. Treasury Notes		10,158		—		—		10,158
Corporate and Agency Bonds		—		12,676		—		12,676
Certificates of Deposit		—		1,000		—		1,000
Commercial Paper		—		1,898		—		1,898
Total	$	48,478	$	15,574	$	—	$	64,052

The Company has a contingent consideration liability associated with the acquisition of SinglePlatform, Corp. (“SinglePlatform”) in June 2012, which has been assessed at $0 as of June 30, 2013 (see Note 3). Contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of the contingent consideration liability uses assumptions and estimates to forecast a range of outcomes for the contingent consideration. The Company assesses these assumptions and estimates on a quarterly basis as additional data impacting the assumptions is obtained. Changes in the fair value of the contingent consideration liability related to updated assumptions and estimates are recognized within the consolidated statements of operations.

The significant unobservable inputs used in the fair value measurement of contingent consideration are the probabilities of successful achievement of the targeted revenues, the six-month periods in which the revenues are expected to be achieved and the discount rate. Increases or decreases in any of the forecasted scenarios or probabilities of success would result in a higher or lower fair value measurement, respectively. Increases or decreases in the actual achievement of milestones in the relevant period as compared to the estimated achievement would result in a higher or lower fair value measurement, respectively.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets or, where applicable and if shorter, over the lease term. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to the statement of operations. Repairs and maintenance costs are expensed as incurred.

Estimated useful lives of assets are as follows:

Computer equipment	3 years
Software	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of life of lease or estimated useful life

Long-Lived Assets

Long-Lived Assets

The Company reviews the carrying values of its long-lived assets for possible impairment when events or changes in circumstance indicate that the related carrying amount may not be recoverable. Undiscounted cash flows are compared to the carrying value and when required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount over the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of unrestricted common shares outstanding for the period.

Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted common stock and restricted stock units using the “treasury stock” method when the effect is not anti-dilutive.

The following is a summary of the shares used in computing diluted net income (loss) per share:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Weighted average shares used in calculating basic net income (loss) per share		30,689		30,380		30,660		30,275
Stock options		319		—		—		—
Warrants		1		—		—		—
Unvested restricted stock and restricted stock units		65		—		—		—
Shares used in computing diluted net income (loss) per share		31,074		30,380		30,660		30,275

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share because they had an anti-dilutive impact either because the proceeds under the treasury stock method were in excess of the average fair market value for the period or because the Company had a net loss in the period:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(In thousands)
Options to purchase common stock		4,688		5,098		5,597		5,023
Warrants to purchase common stock		—		1		1		1
Unvested restricted stock and restricted stock units		112		388		583		350
Total options and warrants exercisable into common stock, restricted stock units issuable in common stock and restricted stock		4,800		5,487		6,181		5,374

Advertising Expense

Advertising Expense

The Company expenses advertising costs as incurred.

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation

The Company values all stock-based compensation, including grants of stock options, restricted stock and restricted stock units, at fair value on the date of grant, and expenses the fair value over the applicable service period. The straight-line method is applied to all grants with service conditions, while the graded vesting method is applied to all grants with both service and performance conditions.

Income Taxes

Income Taxes

Income taxes are provided for tax effects of transactions reported in the financial statements and consist of income taxes currently due plus deferred income taxes related to timing differences between the basis of certain assets and liabilities for financial statement and income tax reporting purposes. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

Segment Data

Segment Data

The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. Revenue is generated predominately in the U.S. and all significant assets are held in the U.S.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

Income tax is related to federal, state, and to a lesser extent, foreign tax obligations. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to federal, state or foreign tax laws, deductibility of certain costs and expenses, and as a result of acquisitions.

For the three and six months ended June 30, 2013, the Company recorded an income tax benefit of $299 and $2,481, respectively. The Company’s estimated effective tax rate for 2013, which has been applied to the Company’s loss before income taxes for the three and six months ended June 30, 2013, varies from the statutory rate primarily due to 2013 federal and state research and development credits that decrease the effective tax rate, partially offset by non-deductible stock-based compensation expense, that increases the effective tax rate. Additionally, the income tax benefit for the six months ended June 30, 2013 was increased by the 2012 federal research and development credit which was treated as a discrete item. The American Taxpayer Relief Act of 2012, (the “Act”), was enacted on January 2, 2013. The Act retroactively reinstated the federal research and development credit from January 1, 2012. The effect of the change in the tax law related to 2012 was $1,324, which was recognized as a benefit in the first quarter of 2013, the quarter in which the law was enacted.

For the three and six months ended June 30, 2012, the Company recorded an income tax expense of $118 and an income tax benefit of $443, respectively. The Company’s estimated effective tax rate for 2012, which was applied to the Company’s loss before income taxes for the three and six months ended June 30, 2012, varied from the statutory tax rate primarily due to non-deductible stock-based compensation expense, which increased the effective tax rate, partially offset by state research and development credits that reduced the Company’s effective tax rate. Additionally, income taxes for the three and six months ended June 30, 2012 were affected by non-deductible transaction expenses incurred by the Company that were treated as a discrete item.

The Company had net deferred tax assets of $11,985 at December 31, 2012, which increased to $14,461 at June 30, 2013, primarily as a result of the income tax benefit recorded for the six months ended June 30, 2013.

The Company has not recorded any amounts for unrecognized tax benefits as of June 30, 2013 or December 31, 2012. As of June 30, 2013 and December 31, 2012, the Company had no accrued interest or tax penalties recorded.

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Nature of the Business

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Nature of the Business

1. Nature of the Business

Constant Contact, Inc. (the “Company”) was incorporated as a Massachusetts corporation on August 25, 1995. The Company reincorporated in the State of Delaware in 2000. The Company provides on-demand email marketing, social media marketing, event marketing, local deals, a platform for online listings and online survey products to small organizations, including small businesses, associations and non-profits primarily in the U.S. The Company’s email marketing product allows customers to create, send and track email marketing campaigns. Social Campaigns^™ allows customers to create, publish, promote and run campaigns on Facebook^®. EventSpot^®, the Company’s event marketing product, enables customers to promote and manage events, track event registrations and collect online payments. The Company’s online survey product enables customers to create and send surveys and analyze the responses. SaveLocal^™ makes it quick and easy for customers to create, run and manage local deals. CardStar^®, one of the Company’s mobile phone applications, allows consumers to easily manage loyalty, rewards and membership cards on a mobile phone. SinglePlatform helps small businesses get discovered through web and mobile searches by providing a single place to update business information and distribute it through a network of on-line publishers. These products are designed for small organizations and are marketed directly by the Company and through a wide variety of partners.

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Goodwill and Acquired Intangible Assets - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Carrying amount of goodwill	$ 95,505		$ 95,505		$ 95,505
Amortization expense for intangible assets	$ 666	$ 292	$ 1,226	$ 456

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Goodwill and Acquired Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consist of the following:

			June 30,2013						December 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology		3 years	$	4,357	$	1,772	$	2,585	$	4,357	$	1,222	$	3,135
Customer relationships		3.75 years		3,315		1,371		1,944		3,315		822		2,493
Publisher relationships		5 years		710		154		556		710		83		627
Trade name		5 years		570		123		447		570		67		503
			$	8,952	$	3,420	$	5,532	$	8,952	$	2,194	$	6,758

Future Estimated Amortization Expense for Assets Placed in Service

Future estimated amortization expense as of June 30, 2013 is as follows:

Remainder of 2013	$	1,177
2014		2,196
2015		1,583
2016		470
2017		106
Total	$	5,532

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401(k) Savings Plan

6 Months Ended

Jun. 30, 2013

Compensation And Retirement Disclosure [Abstract]

401(k) Savings Plan

9. 401(k) Savings Plan

The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Board of Directors. The Company elected to make matching contributions for the plan years ending December 31, 2013 and 2012 at a rate of 100% of each employee’s contribution up to a maximum matching contribution of 3% of the employee’s compensation and at a rate of 50% of each employee’s contribution in excess of 3% up to a maximum of 5% of the employee’s compensation.

Through June 30, 2013 and 2012, the Company made matching contributions of $1,406 and $1,197 for the plan years ended December 31, 2013 and 2012, respectively.

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Office Leases [Member]

Future Minimum Lease Payments Under Leases and Agreements

As of June 30, 2013, future minimum lease payments under non-cancellable office leases are as follows:

Remainder of 2013	$	3,466
2014		8,116
2015		9,100
2016		10,147
2017		10,153
Thereafter		40,701
Total	$	81,683

Third-Party Hosting Agreements [Member]

Future Minimum Lease Payments Under Leases and Agreements

The agreements include payment commitments that expire at various dates through mid-2017. As of June 30, 2013, future minimum payments under the hosting agreements are as follows:

Remainder of 2013	$	1,974
2014		3,624
2015		3,734
2016		3,845
2017		775
Total	$	13,952

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Stockholders' Equity and Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense on all awards in the following expense categories:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Cost of revenue	$	492	$	450	$	891	$	829
Research and development		917		851		1,748		1,823
Sales and marketing		1,135		996		2,119		1,671
General and administrative		1,587		1,479		2,913		2,752
	$	4,131	$	3,776	$	7,671	$	7,075

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 29, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Registrant Name	Constant Contact, Inc.
Entity Central Index Key	0001405277
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		30,680,666

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2013

Payables And Accruals [Abstract]

Components of Accrued Expenses

	June 30, 2013		December 31, 2012
Payroll and payroll related	$	5,607	$	3,800
Licensed software and maintenance		1,197		1,627
Marketing programs		704		1,197
Other accrued expenses		5,516		4,179
	$	13,024	$	10,803