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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-2390133
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3888 Calle Fortunada
San Diego, California
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92123
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.10 per share
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Nasdaq Global Market
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Large accelerated filer
¨
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Accelerated filer
x
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Page
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•
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dependence upon the sale of products to a small number of customers and vertical markets, some of which are heavily dependent on government funding or government subsidies which may or may not continue in the future;
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•
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uncertainties related to the global geopolitical landscape and the recent elections in the United States;
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•
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risks related to acquisitions and potential for unsuccessful integration of acquisitions;
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•
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risk that our restructuring efforts may not be successful and that we may not be able to realize the anticipated cost savings and other benefits;
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•
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our ability to obtain sufficient capital to meet our operating or other needs;
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•
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downward pressures on product pricing from increased competition and potential shift in sales mix with respect to low margin and high margin business;
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•
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our ability to manage and minimize the impact of unfavorable legal proceedings;
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•
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risk that activist stockholders attempt to effect changes to our company which could adversely affect our corporate governance;
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•
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risks related to our international operations including, but not limited to, our ability to adequately comply with the changing rules and regulations in countries where our business is conducted, our ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations arising from our international operations, and our ability to continue to comply with the U.S. Foreign Corrupt Practices Act as well as the anti-bribery laws of foreign jurisdictions;
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•
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dependence upon the sale of products into Asia and Europe, where macroeconomic factors outside our control may adversely affect our sales;
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•
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our ability to remain competitive and stimulate customer demand through successful introduction of new products, and to educate our prospective customers on the products we offer;
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•
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successful acquisition, development and retention of key personnel;
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•
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our ability to effectively manage our reliance upon certain suppliers of key component parts, specialty equipment and logistical services;
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•
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our ability to manage product quality problems;
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•
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our ability to protect our intellectual property rights and to defend claims against us;
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•
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our ability to effectively identify, enter into, manage and benefit from strategic alliances;
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•
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occurrence of a catastrophic event at any of our facilities;
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•
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occurrence of a technology systems failure, network disruption, or breach in data security, and
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•
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our ability to match production volume to actual customer demand.
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Item 1.
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Business
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•
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Ultracapacitors:
Ultracapacitors are energy storage devices that possess a unique combination of high power density, extremely long operational life and the ability to charge and discharge very rapidly. Our ultracapacitor cells, multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including automotive, bus, rail and truck in transportation, grid energy storage and renewable wind energy solutions. Our recently developed lithium-ion capacitors are energy storage devices with the power characteristics of an ultracapacitor combined with enhanced energy storage capacity approaching that of a battery. They are uniquely designed to address a variety of applications in the rail, grid, and industrial markets where energy density and weight are differentiating factors.
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•
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Dry Battery Electrode Technology:
We believe our dry electrode technology has the potential to be a revolutionary technology within the battery industry with a substantial market opportunity, particularly for use in electric vehicles. By applying our proprietary and fundamental dry electrode manufacturing technology and trade secrets to batteries of varying chemistries, we believe we can create significant performance and cost benefits when compared with today’s state of the art wet electrode technology.
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•
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High-Voltage Capacitors:
Our CONDIS® high-voltage capacitors are designed and manufactured to perform reliably for decades in all climates. These products include grading and coupling capacitors and electric voltage transformers that are used to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy.
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•
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the ability to charge and discharge up to 100 times faster;
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•
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significantly lower weight per unit of power delivery;
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•
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higher charge/discharge turnaround efficiency, minimizing energy loss;
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•
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the ability to operate reliably and continuously in extreme temperatures (-40º C to +65º C);
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•
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minimal to no maintenance requirements;
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•
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“life of the application” durability; and
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•
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minimal environmental issues associated with disposal because they contain no heavy metals.
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•
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designing and producing products that perform reliably for the life of the application or systems into which they are integrated;
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•
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designing efficient manufacturing with low scrap rates to achieve improved profit margins and to enable us to reduce prices to allow our products to penetrate new and price-sensitive applications;
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•
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designing our products to have superior technical performance;
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•
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designing our products to be compact and light; and
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•
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designing new products that provide novel solutions to expand our market opportunities.
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•
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compositions of the electrode, including its formulation, design and fabrication techniques;
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•
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materials science associated with raw material components;
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•
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physical cell package designs as well as the affiliated processes used in cell assembly;
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•
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cell-to-cell and module-to-module interconnect technologies that minimize equivalent series resistance and enhance the functionality, performance and longevity of ultracapacitor products including system level electronics; and
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•
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module and system designs that facilitate applications of ultracapacitor technology.
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•
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physical cell package designs as well as the affiliated processes used in cell assembly;
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•
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component selection to enable compliance with environmental regulations with minimal sacrifice to product performance; and
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•
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manufacture of capacitors in a manner which significantly reduces exposure of internal components to impurities, moisture and other undesirable materials in an effort to avoid longer manufacturing times and reduced performance characteristics without these technical advancements.
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Years ended December 31,
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|||||||||||||||||||
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2016
|
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2015
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|
2014
|
|||||||||||||||
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|
Amount
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|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
Revenue from external customers located in
(1)
:
|
|
(Dollars in thousands)
|
|||||||||||||||||||
China
|
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$
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48,191
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|
|
40
|
%
|
|
$
|
87,856
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|
|
53
|
%
|
|
$
|
89,143
|
|
|
48
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%
|
United States
|
|
12,041
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|
|
10
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%
|
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20,836
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|
|
12
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%
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23,758
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|
|
13
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%
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|||
Germany
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12,854
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|
10
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%
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13,972
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|
|
8
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%
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|
16,384
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|
|
9
|
%
|
|||
All other countries
(1)
|
|
48,158
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|
|
40
|
%
|
|
44,708
|
|
|
27
|
%
|
|
57,301
|
|
|
30
|
%
|
|||
Total
|
|
$
|
121,244
|
|
|
100
|
%
|
|
$
|
167,372
|
|
|
100
|
%
|
|
$
|
186,586
|
|
|
100
|
%
|
(1)
|
Location is determined by shipment destination
|
(2)
|
Revenue from external customers located in countries included in “All other countries” does not individually comprise more than 10% of total revenue for any of the years presented.
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|
|
Years ended December 31,
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|||||||||||||||||||
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2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Amount
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|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
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Percent
|
|||||||||
Long-lived assets:
|
|
(Dollars in thousands)
|
|||||||||||||||||||
United States
|
|
$
|
19,267
|
|
|
74
|
%
|
|
$
|
22,267
|
|
|
69
|
%
|
|
$
|
28,013
|
|
|
72
|
%
|
China
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|
1,477
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|
|
6
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%
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|
4,148
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|
|
13
|
%
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|
4,991
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|
|
13
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%
|
|||
Switzerland
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|
5,376
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|
|
20
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%
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|
6,021
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|
|
18
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%
|
|
5,663
|
|
|
15
|
%
|
|||
Total
|
|
$
|
26,120
|
|
|
100
|
%
|
|
$
|
32,436
|
|
|
100
|
%
|
|
$
|
38,667
|
|
|
100
|
%
|
|
|
Years ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Ultracapacitors
|
|
$
|
71,491
|
|
|
59
|
%
|
|
$
|
114,525
|
|
|
68
|
%
|
|
$
|
135,637
|
|
|
73
|
%
|
High-voltage capacitors
|
|
45,177
|
|
|
37
|
%
|
|
41,718
|
|
|
25
|
%
|
|
40,361
|
|
|
21
|
%
|
|||
Microelectronic products
(1)
|
|
4,576
|
|
|
4
|
%
|
|
11,129
|
|
|
7
|
%
|
|
10,588
|
|
|
6
|
%
|
|||
Total
|
|
$
|
121,244
|
|
|
100
|
%
|
|
$
|
167,372
|
|
|
100
|
%
|
|
$
|
186,586
|
|
|
100
|
%
|
(1)
|
The microelectronics product line was sold in April 2016.
|
•
|
the difficulty of assimilating the acquired operations and personnel and integrating them into our current business;
|
•
|
the potential impairment of employee morale;
|
•
|
the potential disruption of our ongoing business;
|
•
|
preserving important strategic and customer relationships;
|
•
|
the diversion of management’s attention and other resources;
|
•
|
the risks of entering markets in which we have little or no experience;
|
•
|
the possibility that acquisition-related liabilities that we incur or assume may prove to be more burdensome than anticipated;
|
•
|
the risks associated with possible violations of the Foreign Corrupt Practices Act, the United Kingdom Bribery Act of 2010, and other anti-corruption laws as a result of any acquisition or otherwise applicable to our business; and
|
•
|
the possibility that any acquired businesses do not perform as expected.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2016
|
|
|
|
|
||||
First Quarter
|
|
$
|
7.39
|
|
|
$
|
4.81
|
|
Second Quarter
|
|
6.72
|
|
|
4.75
|
|
||
Third Quarter
|
|
5.67
|
|
|
4.20
|
|
||
Fourth Quarter
|
|
5.63
|
|
|
4.39
|
|
||
Year Ended December 31, 2015
|
|
|
|
|
||||
First Quarter
|
|
$
|
9.30
|
|
|
$
|
6.29
|
|
Second Quarter
|
|
8.29
|
|
|
4.85
|
|
||
Third Quarter
|
|
6.18
|
|
|
4.06
|
|
||
Fourth Quarter
|
|
8.04
|
|
|
5.33
|
|
Item 6.
|
Selected Financial Data
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
121,244
|
|
|
$
|
167,372
|
|
|
$
|
186,586
|
|
|
$
|
193,534
|
|
|
$
|
159,258
|
|
Net income (loss)
|
|
$
|
(23,705
|
)
|
|
$
|
(22,333
|
)
|
|
$
|
(6,272
|
)
|
|
$
|
6,340
|
|
|
$
|
7,174
|
|
Net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(0.74
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.22
|
|
|
$
|
0.25
|
|
Diluted
|
|
$
|
(0.74
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.22
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
140,874
|
|
|
$
|
172,013
|
|
|
$
|
186,600
|
|
|
$
|
190,087
|
|
|
$
|
176,472
|
|
Cash and cash equivalents
|
|
$
|
25,359
|
|
|
$
|
24,382
|
|
|
$
|
24,732
|
|
|
$
|
30,647
|
|
|
$
|
28,739
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
40
|
|
|
$
|
42
|
|
|
$
|
15,549
|
|
|
$
|
7,914
|
|
|
$
|
9,452
|
|
Long-term debt, excluding current portion
|
|
$
|
43
|
|
|
$
|
49
|
|
|
$
|
20
|
|
|
$
|
100
|
|
|
$
|
83
|
|
Stockholders’ equity
|
|
$
|
100,822
|
|
|
$
|
119,176
|
|
|
$
|
126,953
|
|
|
$
|
140,210
|
|
|
$
|
124,933
|
|
Shares outstanding
|
|
32,135
|
|
|
31,782
|
|
|
29,846
|
|
|
29,563
|
|
|
29,162
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Executive Overview
|
•
|
Recent Highlights
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Contractual Obligations
|
•
|
Critical Accounting Estimates
|
•
|
Impact of Inflation
|
•
|
Recent Accounting Pronouncements
|
•
|
Off Balance Sheet Arrangements
|
•
|
In January 2016, we announced that our ultracapacitors had been selected by Beijing Huadian Tianren Electric Power Control Technology Co., Ltd., a subsidiary of China Guodian Corporation, as the core component of a wind farm energy storage demonstration project. One of the five largest power producers in the country, China Guodian Corporation’s system is the first megawatt-scale, ultracapacitor-based wind farm energy storage system in the world.
|
•
|
In February 2016, we announced the newest addition to our K2 family with a 3-volt, 3,000-farad ultracapacitor cell. With 31 percent higher power than our leading 2.7-volt, 3,000-farad cell in the industry-standard 60 mm cylindrical form factor, customers now have the flexibility to either increase available power and energy in the same volume or significantly cost-optimize their system designs with fewer cells or modules while maintaining the same power and energy.
|
•
|
In March 2016, Duke Energy, the largest electric power holding company in the United States, announced the commissioning of a new hybrid-energy storage system utilizing our ultracapacitors to manage solar smoothing events.
|
•
|
In April 2016, we announced that we entered into a definitive agreement to sell our microelectronics product line to Data Device Corporation, a subsidiary of ILC Industries, Inc. The transaction was completed on April 27, 2016.
|
•
|
In July 2016, we announced that our ultracapacitors are being used for regenerative braking energy storage in the Beijing subway system. As part of the strategic partnership with China Railway Rolling Stock Corporation (“CRRC-SRI”) that we announced last year, we continue to collaborate to develop next-generation capacitive energy storage solutions for the China rail market.
|
•
|
In July 2016, we entered into a 12-month joint development agreement with one of the world’s leading automotive OEMs to develop a “proof of concept” that, if successful, could lead to the world’s first electric drivetrain based on our technology, targeting a 2021 automotive platform launch.
|
•
|
In October 2016, we announced our 51-volt (“51V”) module, the newest addition to our ultracapacitor product offerings for rugged applications. The 51V module uses our leading 2.85V, 3,400-farad ultracapacitor cell to deliver the highest energy and power density available in the market today.
|
•
|
In November 2016, we announced the first commercial application of lithium-ion capacitors, developed in conjunction with CRRC-SRI, China’s largest rail manufacturer. The technology will be used for rapid energy regeneration in the trolley system in the capital city of the Hunan province in China. Following last year’s announcement of our strategic partnership with CRRC-SRI to collaborate on developing next-generation capacitive energy storage solutions, this project is the first to leverage our new lithium-ion technology and validates its unique value proposition for rail applications.
|
•
|
In December 2016, we announced the Generator Starting Solutions (“GSS”) product line. As the newest addition to our ultracapacitor-based product offerings, the GSS modules help start commercial and industrial standby and backup generators (“gensets”). We are the first company to offer dedicated ultracapacitor-based products that provide strong successful genset starts within seconds of loss of power.
|
•
|
In January 2017, we announced a definitive agreement with CRRC-SRI to localize manufacturing of our ultracapacitor-based modules for use in the China new energy bus market. Under the terms of the agreement, localized production of our ultracapacitor-based modules is expected to begin in China in the second half of 2017, coinciding with the peak buying season for China's new energy bus market. The production of bus modules extends our strategic partnership with CRRC-SRI and will enable us to compete more effectively in the China bus market moving forward.
|
|
|
Years Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Total revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
73
|
%
|
|
70
|
%
|
|
63
|
%
|
Gross profit
|
|
27
|
%
|
|
30
|
%
|
|
37
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
|
30
|
%
|
|
24
|
%
|
|
24
|
%
|
Research and development
|
|
17
|
%
|
|
15
|
%
|
|
14
|
%
|
Restructuring and exit costs
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
Impairment of assets
|
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
Total operating expenses
|
|
48
|
%
|
|
41
|
%
|
|
38
|
%
|
Loss from operations
|
|
(21
|
)%
|
|
(11
|
)%
|
|
(1
|
)%
|
Gain on sale of product line
|
|
(5
|
)%
|
|
—
|
%
|
|
—
|
%
|
Loss before income taxes
|
|
(16
|
)%
|
|
(11
|
)%
|
|
(1
|
)%
|
Income tax provision
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
Net loss
|
|
(19
|
)%
|
|
(13
|
)%
|
|
(3
|
)%
|
|
|
Years Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
Decrease
|
|
% Change
|
|
Decrease
|
|
% Change
|
||||||||||||
Revenue
|
|
$
|
121,244
|
|
|
$
|
167,372
|
|
|
$
|
186,586
|
|
|
$
|
(46,128
|
)
|
|
(28
|
)%
|
|
$
|
(19,214
|
)
|
|
(10
|
)%
|
Cost of revenue
|
|
88,274
|
|
|
116,410
|
|
|
118,143
|
|
|
(28,136
|
)
|
|
(24
|
)%
|
|
(1,733
|
)
|
|
(1
|
)%
|
|||||
% of Revenue
|
|
73
|
%
|
|
70
|
%
|
|
63
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
|
$
|
32,970
|
|
|
$
|
50,962
|
|
|
$
|
68,443
|
|
|
$
|
(17,992
|
)
|
|
(35
|
)%
|
|
$
|
(17,481
|
)
|
|
(26
|
)%
|
% of Revenue
|
|
27
|
%
|
|
30
|
%
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Ultracapacitors
|
|
59
|
%
|
|
68
|
%
|
|
73
|
%
|
High-voltage capacitors
|
|
37
|
%
|
|
25
|
%
|
|
21
|
%
|
Microelectronics products
|
|
4
|
%
|
|
7
|
%
|
|
6
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Years Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
Decrease
|
|
% Change
|
|
Decrease
|
|
% Change
|
||||||||||||
Selling, general and administrative
|
|
$
|
36,281
|
|
|
$
|
40,758
|
|
|
$
|
43,022
|
|
|
$
|
(4,477
|
)
|
|
(11
|
)%
|
|
$
|
(2,264
|
)
|
|
(5
|
)%
|
% of Revenue
|
|
30
|
%
|
|
24
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
Decrease
|
|
% Change
|
|
Decrease
|
|
% Change
|
||||||||||||
Research and development
|
|
$
|
20,889
|
|
|
$
|
24,697
|
|
|
$
|
26,320
|
|
|
$
|
(3,808
|
)
|
|
(15
|
)%
|
|
$
|
(1,623
|
)
|
|
(6
|
)%
|
% of Revenue
|
|
17
|
%
|
|
15
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
Employee Severance Costs
|
|
Lease Obligation Costs
|
|
Other Exit Costs
|
|
Total
|
||||||||
Restructuring liability as of December 31, 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Costs incurred
|
|
1,439
|
|
|
1,208
|
|
|
—
|
|
|
2,647
|
|
||||
Amounts paid
|
|
(1,010
|
)
|
|
—
|
|
|
—
|
|
|
(1,010
|
)
|
||||
Accruals released
|
|
(135
|
)
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
||||
Other non-cash adjustments
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
||||
Restructuring liability as of December 31, 2015
|
|
294
|
|
|
1,043
|
|
|
—
|
|
|
1,337
|
|
||||
Costs incurred
|
|
67
|
|
|
86
|
|
|
298
|
|
|
451
|
|
||||
Amounts paid
|
|
(207
|
)
|
|
—
|
|
|
(246
|
)
|
|
(453
|
)
|
||||
Accruals released
|
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
||||
Other non-cash adjustments
|
|
—
|
|
|
(327
|
)
|
|
(52
|
)
|
|
(379
|
)
|
||||
Restructuring liability as of December 31, 2016
|
|
$
|
—
|
|
|
$
|
802
|
|
|
$
|
—
|
|
|
$
|
802
|
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
(14,357
|
)
|
|
$
|
9,380
|
|
|
$
|
(6,163
|
)
|
Investing activities
|
|
14,663
|
|
|
(4,143
|
)
|
|
(6,975
|
)
|
|||
Financing activities
|
|
796
|
|
|
(5,366
|
)
|
|
9,563
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(525
|
)
|
|
179
|
|
|
(2,340
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
|
$
|
577
|
|
|
$
|
50
|
|
|
$
|
(5,915
|
)
|
|
|
Payment due by period (in thousands)
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 Year
|
|
1–3
Years
|
|
3–5
Years
|
|
More than
5 Years
|
||||||||||
Operating lease obligations
(1)
|
|
$
|
16,507
|
|
|
$
|
3,167
|
|
|
$
|
4,714
|
|
|
$
|
3,481
|
|
|
$
|
5,145
|
|
Purchase commitments
(2)
|
|
1,668
|
|
|
1,668
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Debt obligations
(3)
|
|
83
|
|
|
40
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|||||
Pension benefit payments
(4)
|
|
30,257
|
|
|
1,320
|
|
|
2,789
|
|
|
2,639
|
|
|
23,509
|
|
|||||
Total
(5) (6)
|
|
$
|
48,515
|
|
|
$
|
6,195
|
|
|
$
|
7,546
|
|
|
$
|
6,120
|
|
|
$
|
28,654
|
|
(1)
|
Operating lease obligations primarily represent building leases.
|
(2)
|
Purchase commitments primarily represent the value of non-cancellable purchase orders and an estimate of purchase orders that if canceled would result in a significant penalty.
|
(3)
|
Debt obligations represent long-term and short-term borrowings related to financing agreements for vehicles.
|
(4)
|
Pension benefit payments represent the expected amounts to be paid for pension benefits.
|
(5)
|
The table excludes $0.3 million of liabilities associated with uncertain tax positions because we are unable to reasonably estimate the timing of future payments, if required.
|
(6)
|
The table excludes deferred tax liability of
$4.9 million
due to uncertainty of timing of future payments. This deferred tax liability on undistributed earnings of a foreign subsidiary represents deferred tax expense associated with a portion of the unremitted earnings of a foreign subsidiary that are not considered permanently reinvested.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Statement Schedule:
|
|
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
25,359
|
|
|
$
|
24,382
|
|
Restricted cash
|
|
—
|
|
|
400
|
|
||
Trade and other accounts receivable, net of allowance for doubtful accounts
of $26
and $252, at December 31, 2016 and December 31, 2015, respectively
|
|
20,441
|
|
|
43,172
|
|
||
Inventories, net
|
|
32,248
|
|
|
39,055
|
|
||
Prepaid expenses and other current assets
|
|
4,407
|
|
|
2,593
|
|
||
Total current assets
|
|
82,455
|
|
|
109,602
|
|
||
Property and equipment, net
|
|
26,120
|
|
|
32,324
|
|
||
Goodwill
|
|
22,799
|
|
|
23,635
|
|
||
Pension asset
|
|
8,887
|
|
|
5,849
|
|
||
Other non-current assets
|
|
613
|
|
|
603
|
|
||
Total assets
|
|
$
|
140,874
|
|
|
$
|
172,013
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
|
$
|
19,181
|
|
|
$
|
33,985
|
|
Accrued employee compensation
|
|
6,152
|
|
|
6,672
|
|
||
Deferred revenue and customer deposits
|
|
3,967
|
|
|
3,066
|
|
||
Short-term borrowings and current portion of long-term debt
|
|
40
|
|
|
42
|
|
||
Total current liabilities
|
|
29,340
|
|
|
43,765
|
|
||
Deferred tax liability, long-term
|
|
8,580
|
|
|
6,076
|
|
||
Long-term debt, excluding current portion
|
|
43
|
|
|
49
|
|
||
Other long-term liabilities
|
|
2,089
|
|
|
2,947
|
|
||
Total liabilities
|
|
40,052
|
|
|
52,837
|
|
||
Commitments and contingencies (Note 12 and Note 14)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $0.10 par value per share, 80,000 and 40,000 shares authorized at December 31, 2016 and December 31, 2015, respectively; 32,135 and 31,782 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
|
|
3,210
|
|
|
3,176
|
|
||
Additional paid-in capital
|
|
296,316
|
|
|
291,505
|
|
||
Accumulated deficit
|
|
(204,104
|
)
|
|
(180,399
|
)
|
||
Accumulated other comprehensive income
|
|
5,400
|
|
|
4,894
|
|
||
Total stockholders’ equity
|
|
100,822
|
|
|
119,176
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
140,874
|
|
|
$
|
172,013
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
|
$
|
121,244
|
|
|
$
|
167,372
|
|
|
$
|
186,586
|
|
Cost of revenue
|
|
88,274
|
|
|
116,410
|
|
|
118,143
|
|
|||
Gross profit
|
|
32,970
|
|
|
50,962
|
|
|
68,443
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
36,281
|
|
|
40,758
|
|
|
43,022
|
|
|||
Research and development
|
|
20,889
|
|
|
24,697
|
|
|
26,320
|
|
|||
Restructuring and exit costs
|
|
297
|
|
|
2,512
|
|
|
—
|
|
|||
Impairment of assets
|
|
1,389
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
|
58,856
|
|
|
67,967
|
|
|
69,342
|
|
|||
Loss from operations
|
|
(25,886
|
)
|
|
(17,005
|
)
|
|
(899
|
)
|
|||
Gain on sale of product line
|
|
(6,657
|
)
|
|
—
|
|
|
—
|
|
|||
Interest expense, net
|
|
248
|
|
|
284
|
|
|
189
|
|
|||
Other income
|
|
(133
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency exchange loss, net
|
|
216
|
|
|
441
|
|
|
838
|
|
|||
Loss before income taxes
|
|
(19,560
|
)
|
|
(17,730
|
)
|
|
(1,926
|
)
|
|||
Income tax provision
|
|
4,145
|
|
|
4,603
|
|
|
4,346
|
|
|||
Net loss
|
|
$
|
(23,705
|
)
|
|
$
|
(22,333
|
)
|
|
$
|
(6,272
|
)
|
Net loss per share:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
$
|
(0.74
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(0.21
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
31,870
|
|
|
30,716
|
|
|
29,216
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
|
$
|
(23,705
|
)
|
|
$
|
(22,333
|
)
|
|
$
|
(6,272
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
|
(2,107
|
)
|
|
1,574
|
|
|
(10,445
|
)
|
|||
Defined benefit pension plan, net of tax:
|
|
|
|
|
|
|
||||||
Actuarial gain (loss) on benefit obligation and plan assets, net of tax provision
of $603
and tax benefit of $531 and $922 for the years ended December 31, 2016, 2015 and 2014, respectively
|
|
2,298
|
|
|
(1,862
|
)
|
|
(2,358
|
)
|
|||
Amortization of deferred loss, net of tax provision
of $48 and $
10 for the years ended December 31, 2016 and 2015, respectively
|
|
195
|
|
|
35
|
|
|
—
|
|
|||
Amortization of prior service cost, net of tax provision of
$30,
$30 and $39 for the years ended December 31, 2016, 2015 and 2014, respectively
|
|
120
|
|
|
106
|
|
|
101
|
|
|||
Settlements and plan changes, net of tax provision of $91 and $118 for the years ended December 31, 2015 and 2014, respectively.
|
|
—
|
|
|
318
|
|
|
302
|
|
|||
Other comprehensive income (loss), net of tax
|
|
506
|
|
|
171
|
|
|
(12,400
|
)
|
|||
Comprehensive loss
|
|
$
|
(23,199
|
)
|
|
$
|
(22,162
|
)
|
|
$
|
(18,672
|
)
|
|
|
Shares
|
|
Amount
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated Other Comprehensive Income
|
|
Total
Stockholders’
Equity
|
|||||||||||
Balance at December 31, 2013
|
|
29,563
|
|
|
$
|
2,953
|
|
|
$
|
271,928
|
|
|
$
|
(151,794
|
)
|
|
$
|
17,123
|
|
|
$
|
140,210
|
|
Common stock issued under employee benefit plans
|
|
175
|
|
|
18
|
|
|
1,432
|
|
|
—
|
|
|
—
|
|
|
1,450
|
|
|||||
Share-based compensation
|
|
312
|
|
|
31
|
|
|
3,933
|
|
|
—
|
|
|
—
|
|
|
3,964
|
|
|||||
Repurchase and cancellation of restricted shares
|
|
(204
|
)
|
|
(20
|
)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,272
|
)
|
|
—
|
|
|
(6,272
|
)
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,445
|
)
|
|
(10,445
|
)
|
|||||
Pension adjustment, net of tax benefit of $765
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,955
|
)
|
|
(1,955
|
)
|
|||||
Balance at December 31, 2014
|
|
29,846
|
|
|
2,982
|
|
|
277,314
|
|
|
(158,066
|
)
|
|
4,723
|
|
|
126,953
|
|
|||||
Common stock issued under employee benefit plans
|
|
142
|
|
|
14
|
|
|
861
|
|
|
—
|
|
|
—
|
|
|
875
|
|
|||||
Share-based compensation
|
|
80
|
|
|
8
|
|
|
3,938
|
|
|
—
|
|
|
—
|
|
|
3,946
|
|
|||||
Proceeds from issuance of common stock, net
|
|
1,831
|
|
|
183
|
|
|
9,381
|
|
|
—
|
|
|
—
|
|
|
9,564
|
|
|||||
Cancellation of restricted shares
|
|
(117
|
)
|
|
(11
|
)
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,333
|
)
|
|
—
|
|
|
(22,333
|
)
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,574
|
|
|
1,574
|
|
|||||
Pension adjustment, net of tax benefit of $400
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,403
|
)
|
|
(1,403
|
)
|
|||||
Balance at December 31, 2015
|
|
31,782
|
|
|
3,176
|
|
|
291,505
|
|
|
(180,399
|
)
|
|
4,894
|
|
|
119,176
|
|
|||||
Common stock issued under employee benefit plans
|
|
180
|
|
|
18
|
|
|
823
|
|
|
—
|
|
|
—
|
|
|
841
|
|
|||||
Share-based compensation
|
|
225
|
|
|
21
|
|
|
3,983
|
|
|
—
|
|
|
—
|
|
|
4,004
|
|
|||||
Cancellation of restricted shares
|
|
(52
|
)
|
|
(5
|
)
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,705
|
)
|
|
—
|
|
|
(23,705
|
)
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,107
|
)
|
|
(2,107
|
)
|
|||||
Pension adjustment, net of tax provision of $681
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,613
|
|
|
2,613
|
|
|||||
Balance at December 31, 2016
|
|
32,135
|
|
|
$
|
3,210
|
|
|
$
|
296,316
|
|
|
$
|
(204,104
|
)
|
|
$
|
5,400
|
|
|
$
|
100,822
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(23,705
|
)
|
|
$
|
(22,333
|
)
|
|
$
|
(6,272
|
)
|
Adjustments to reconcile net loss to net cash from operating activities:
|
|
|
|
|
|
|
||||||
Depreciation
|
|
9,871
|
|
|
11,385
|
|
|
11,159
|
|
|||
Amortization of intangible assets
|
|
—
|
|
|
166
|
|
|
203
|
|
|||
Loss on lease due to restructuring
|
|
87
|
|
|
1,043
|
|
|
—
|
|
|||
Pension cost
|
|
635
|
|
|
412
|
|
|
319
|
|
|||
Stock-based compensation expense
|
|
5,364
|
|
|
3,946
|
|
|
3,967
|
|
|||
Gain on sale of property and equipment
|
|
(131
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of property and equipment
|
|
1,389
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of product line
|
|
(6,657
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized loss (gain) on foreign currency exchange rates
|
|
63
|
|
|
1,631
|
|
|
(2,126
|
)
|
|||
Release of tax valuation allowance
|
|
—
|
|
|
(170
|
)
|
|
—
|
|
|||
Release of tax liability
|
|
(1,518
|
)
|
|
—
|
|
|
—
|
|
|||
Provision for (release of) allowance on accounts receivable
|
|
(106
|
)
|
|
281
|
|
|
20
|
|
|||
Provision for losses on inventory
|
|
397
|
|
|
541
|
|
|
910
|
|
|||
Provision for warranties
|
|
383
|
|
|
1,327
|
|
|
717
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Trade and other accounts receivable
|
|
20,085
|
|
|
315
|
|
|
(15,100
|
)
|
|||
Inventories
|
|
(4,956
|
)
|
|
5,251
|
|
|
(1,520
|
)
|
|||
Prepaid expenses and other assets
|
|
(372
|
)
|
|
(35
|
)
|
|
(79
|
)
|
|||
Pension asset
|
|
(584
|
)
|
|
(650
|
)
|
|
(724
|
)
|
|||
Accounts payable and accrued liabilities
|
|
(14,884
|
)
|
|
5,031
|
|
|
144
|
|
|||
Deferred revenue and customer deposits
|
|
630
|
|
|
2,362
|
|
|
46
|
|
|||
Accrued employee compensation
|
|
(1,478
|
)
|
|
(2,670
|
)
|
|
651
|
|
|||
Deferred tax liability
|
|
1,957
|
|
|
2,017
|
|
|
2,250
|
|
|||
Other long-term liabilities
|
|
(827
|
)
|
|
(470
|
)
|
|
(728
|
)
|
|||
Net cash provided by (used in) operating activities
|
|
(14,357
|
)
|
|
9,380
|
|
|
(6,163
|
)
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(5,956
|
)
|
|
(4,143
|
)
|
|
(6,975
|
)
|
|||
Proceeds from sale of property and equipment
|
|
133
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of product line
|
|
20,486
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
|
14,663
|
|
|
(4,143
|
)
|
|
(6,975
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Principal payments on long-term debt and short-term borrowings
|
|
(45
|
)
|
|
(18,845
|
)
|
|
(7,164
|
)
|
|||
Proceeds from long-term debt and short-term borrowings
|
|
—
|
|
|
3,040
|
|
|
15,279
|
|
|||
Proceeds from sale of common stock, net of offering costs
|
|
—
|
|
|
9,564
|
|
|
—
|
|
|||
Proceeds from issuance of common stock under equity compensation plans
|
|
841
|
|
|
875
|
|
|
1,448
|
|
|||
Net cash provided by (used in) financing activities
|
|
796
|
|
|
(5,366
|
)
|
|
9,563
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(525
|
)
|
|
179
|
|
|
(2,340
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
577
|
|
|
50
|
|
|
(5,915
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
|
24,782
|
|
|
24,732
|
|
|
30,647
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
|
$
|
25,359
|
|
|
$
|
24,782
|
|
|
$
|
24,732
|
|
Cash paid for:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
75
|
|
|
$
|
245
|
|
|
$
|
223
|
|
Income taxes
|
|
$
|
2,551
|
|
|
$
|
3,475
|
|
|
$
|
3,304
|
|
Supplemental schedule of noncash investing and financing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment included in accounts payable and accrued liabilities
|
|
$
|
181
|
|
|
$
|
345
|
|
|
$
|
889
|
|
Amounts in escrow related to sale of product line
|
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Ultracapacitors:
Ultracapacitors are energy storage devices that possess a unique combination of high power density, extremely long operational life and the ability to charge and discharge very rapidly. The Company’s ultracapacitor cells, multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including automotive, bus, rail and truck in transportation and grid energy storage, and wind in renewable energy. The Company has been focusing on developing complementary lithium-ion capacitors which are cost efficient energy storage devices with the power characteristics of an ultracapacitor combined with enhanced energy storage capacity. They are uniquely designed to address a variety of applications in the rail, grid, and industrial markets where energy density and weight are differentiating factors.
|
•
|
High-Voltage Capacitors:
The Company’s CONDIS
®
high-voltage capacitors are designed and manufactured to perform reliably for decades in all climates. These products include grading and coupling capacitors and capacitive voltage dividers that are used to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(23,705
|
)
|
|
$
|
(22,333
|
)
|
|
$
|
(6,272
|
)
|
Denominator
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding, basic and diluted
|
|
31,870
|
|
|
30,716
|
|
|
29,216
|
|
|||
Net loss per share
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
$
|
(0.74
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(0.21
|
)
|
Common Stock
|
|
2016
|
|
2015
|
|
2014
|
|||
Outstanding options to purchase common stock
|
|
414
|
|
|
931
|
|
|
672
|
|
Unvested restricted stock awards
|
|
88
|
|
|
245
|
|
|
528
|
|
Unvested restricted stock unit awards
|
|
1,748
|
|
|
885
|
|
|
224
|
|
Employee stock purchase plan awards
|
|
—
|
|
|
10
|
|
|
9
|
|
Bonus to be paid in stock awards
|
|
265
|
|
|
—
|
|
|
—
|
|
|
|
Years ended December 31,
|
||||||||||
Revenue by product line:
|
|
2016
|
|
2015
|
|
2014
|
||||||
Ultracapacitors
|
|
$
|
71,491
|
|
|
$
|
114,525
|
|
|
$
|
135,637
|
|
High-voltage capacitors
|
|
45,177
|
|
|
41,718
|
|
|
40,361
|
|
|||
Microelectronic products
|
|
4,576
|
|
|
11,129
|
|
|
10,588
|
|
|||
Total
|
|
$
|
121,244
|
|
|
$
|
167,372
|
|
|
$
|
186,586
|
|
|
|
|
|
|
|
|
||||||
|
|
Years ended December 31,
|
||||||||||
Revenue from external customers located in
(1)
:
|
|
2016
|
|
2015
|
|
2014
|
||||||
China
|
|
$
|
48,191
|
|
|
$
|
87,856
|
|
|
$
|
89,143
|
|
United States
|
|
12,041
|
|
|
20,836
|
|
|
23,758
|
|
|||
Germany
|
|
12,854
|
|
|
13,972
|
|
|
16,384
|
|
|||
All other countries
(2)
|
|
48,158
|
|
|
44,708
|
|
|
57,301
|
|
|||
Total
|
|
$
|
121,244
|
|
|
$
|
167,372
|
|
|
$
|
186,586
|
|
_____________
|
|
|
|
|
|
|
|
|
December 31,
2016 |
|
December 31, 2015
|
||||
Raw materials and purchased parts
|
|
$
|
12,980
|
|
|
$
|
21,126
|
|
Work-in-process
|
|
858
|
|
|
4,367
|
|
||
Finished goods
|
|
19,492
|
|
|
16,941
|
|
||
Reserves
|
|
(1,082
|
)
|
|
(3,379
|
)
|
||
Total inventories, net
|
|
$
|
32,248
|
|
|
$
|
39,055
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Beginning balance
|
|
$
|
1,288
|
|
|
$
|
716
|
|
Product warranties issued
|
|
486
|
|
|
751
|
|
||
Settlement of warranties
|
|
(458
|
)
|
|
(755
|
)
|
||
Changes related to preexisting warranties
|
|
(103
|
)
|
|
576
|
|
||
Ending balance
|
|
$
|
1,213
|
|
|
$
|
1,288
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Property and equipment, net:
|
|
|
|
|
||||
Machinery, furniture and office equipment
|
|
$
|
62,583
|
|
|
$
|
76,077
|
|
Computer hardware and software
|
|
10,071
|
|
|
12,235
|
|
||
Leasehold improvements
|
|
20,320
|
|
|
16,883
|
|
||
Construction in progress
|
|
1,401
|
|
|
2,527
|
|
||
Property and equipment, gross
|
|
94,375
|
|
|
107,722
|
|
||
Less accumulated depreciation and amortization
|
|
(68,255
|
)
|
|
(75,398
|
)
|
||
Total property and equipment, net
|
|
$
|
26,120
|
|
|
$
|
32,324
|
|
|
|
|
|
|
||||
Accounts payable and accrued liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
13,109
|
|
|
$
|
22,291
|
|
Income tax payable
|
|
1,066
|
|
|
1,376
|
|
||
Accrued warranty
|
|
1,213
|
|
|
1,288
|
|
||
Other accrued liabilities
|
|
3,793
|
|
|
9,030
|
|
||
Total accounts payable and accrued liabilities
|
|
$
|
19,181
|
|
|
$
|
33,985
|
|
|
|
Foreign
Currency Translation Adjustment |
|
Defined Benefit
Pension Plan |
|
Accumulated
Other Comprehensive Income |
|
Affected Line Items in the Statement of Operations
|
||||||
Balance as of December 31, 2015
|
|
$
|
9,933
|
|
|
$
|
(5,039
|
)
|
|
$
|
4,894
|
|
|
|
Other comprehensive income (loss) before reclassification
|
|
(2,107
|
)
|
|
—
|
|
|
(2,107
|
)
|
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
—
|
|
|
2,613
|
|
|
2,613
|
|
|
Cost of Sales, Selling, General and Administrative and Research and Development Expense
|
|||
Net other comprehensive income (loss) for the
year ended December 31, 2016
|
|
(2,107
|
)
|
|
2,613
|
|
|
506
|
|
|
|
|||
Balance as of December 31, 2016
|
|
$
|
7,826
|
|
|
$
|
(2,426
|
)
|
|
$
|
5,400
|
|
|
|
Balance at December 31, 2014
|
$
|
23,599
|
|
Foreign currency translation adjustments
|
36
|
|
|
Balance at December 31, 2015
|
23,635
|
|
|
Foreign currency translation adjustments
|
(545
|
)
|
|
Disposition of microelectronics product line
|
(291
|
)
|
|
Balance at December 31, 2016
|
$
|
22,799
|
|
|
|
Employee Severance Costs
|
|
Lease Obligation Costs
|
|
Other Exit Costs
|
|
Total
|
||||||||
Restructuring liability as of December 31, 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Costs incurred
|
|
1,439
|
|
|
1,208
|
|
|
—
|
|
|
2,647
|
|
||||
Amounts paid
|
|
(1,010
|
)
|
|
—
|
|
|
—
|
|
|
(1,010
|
)
|
||||
Accruals released
|
|
(135
|
)
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
||||
Other non-cash adjustments
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
||||
Restructuring liability as of December 31, 2015
|
|
294
|
|
|
1,043
|
|
|
—
|
|
|
1,337
|
|
||||
Costs incurred
|
|
67
|
|
|
86
|
|
|
298
|
|
|
451
|
|
||||
Amounts paid
|
|
(207
|
)
|
|
—
|
|
|
(246
|
)
|
|
(453
|
)
|
||||
Accruals released
|
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
||||
Other non-cash adjustments
|
|
—
|
|
|
(327
|
)
|
|
(52
|
)
|
|
(379
|
)
|
||||
Restructuring liability as of December 31, 2016
|
|
$
|
—
|
|
|
$
|
802
|
|
|
$
|
—
|
|
|
$
|
802
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total loss
|
|
$
|
(88
|
)
|
|
$
|
(720
|
)
|
|
$
|
(5,265
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total gain (loss)
|
|
$
|
(37
|
)
|
|
$
|
179
|
|
|
$
|
4,391
|
|
|
|
December 31, 2015
|
||
Gross amounts of recognized asset
|
|
$
|
66
|
|
Gross amounts offset
|
|
(50
|
)
|
|
Net amount of recognized asset
|
|
$
|
16
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Balance at December 31, 2015
|
|
931
|
|
|
$
|
10.19
|
|
|
|
|
|
||
Cancelled
|
|
(517
|
)
|
|
11.17
|
|
|
|
|
|
|||
Balance at December 31, 2016
|
|
414
|
|
|
$
|
8.97
|
|
|
6.03
|
|
$
|
23
|
|
Vested or expected to vest at December 31, 2016
|
|
398
|
|
|
$
|
9.08
|
|
|
5.13
|
|
$
|
21
|
|
Exercisable at December 31, 2016
|
|
246
|
|
|
$
|
10.69
|
|
|
4.04
|
|
$
|
6
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
Expected dividends
|
|
—
|
%
|
Expected volatility range
|
|
60% to 61%
|
|
Expected volatility weighted average
|
|
60
|
%
|
Risk-free interest rate
|
|
1.6
|
%
|
Expected life/term weighted average (in years)
|
|
4.9
|
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Nonvested at December 31, 2015
|
|
245
|
|
|
$
|
13.87
|
|
Vested
|
|
(105
|
)
|
|
14.86
|
|
|
Forfeited
|
|
(52
|
)
|
|
12.73
|
|
|
Nonvested at December 31, 2016
|
|
88
|
|
|
$
|
13.37
|
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Nonvested at December 31, 2015
|
|
885
|
|
|
$
|
7.36
|
|
Granted
|
|
1,353
|
|
|
6.00
|
|
|
Released
|
|
(225
|
)
|
|
7.20
|
|
|
Forfeited
|
|
(265
|
)
|
|
6.86
|
|
|
Nonvested at December 31, 2016
|
|
1,748
|
|
|
$
|
6.40
|
|
|
|
Years Ended December 31,
|
||||
|
|
2016
|
|
2014
|
||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
Expected volatility
|
|
62
|
%
|
|
65
|
%
|
Risk-free interest rate
|
|
1.07
|
%
|
|
0.86
|
%
|
Expected term (in years)
|
|
3.0
|
|
|
3.0
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Service-based restricted stock units
|
|
$
|
2,243
|
|
|
$
|
1,362
|
|
|
$
|
749
|
|
Performance-based restricted stock units
|
|
103
|
|
|
(28
|
)
|
|
28
|
|
|||
Market-condition restricted stock units
|
|
869
|
|
|
128
|
|
|
90
|
|
|||
Total compensation expense recognized for employee restricted stock units
|
|
$
|
3,215
|
|
|
$
|
1,462
|
|
|
$
|
867
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Expected dividends
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Expected volatility
|
|
57
|
%
|
|
57
|
%
|
|
77
|
%
|
|||
Risk-free interest rate
|
|
0.43
|
%
|
|
0.29
|
%
|
|
0.08
|
%
|
|||
Expected life (in years)
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|||
Fair value per share
|
|
$
|
1.93
|
|
|
$
|
1.86
|
|
|
$
|
4.56
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options
|
|
$
|
171
|
|
|
$
|
232
|
|
|
$
|
52
|
|
Restricted stock awards
|
|
388
|
|
|
1,974
|
|
|
2,536
|
|
|||
Restricted stock units
|
|
3,215
|
|
|
1,462
|
|
|
867
|
|
|||
ESPP
|
|
231
|
|
|
278
|
|
|
512
|
|
|||
Bonuses to be settled in stock
|
|
1,359
|
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation expense
|
|
$
|
5,364
|
|
|
$
|
3,946
|
|
|
$
|
3,967
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of revenue
|
|
$
|
854
|
|
|
$
|
644
|
|
|
$
|
740
|
|
Selling, general and administrative
|
|
3,674
|
|
|
2,502
|
|
|
2,362
|
|
|||
Research and development
|
|
836
|
|
|
800
|
|
|
865
|
|
|||
Total stock-based compensation expense
|
|
$
|
5,364
|
|
|
$
|
3,946
|
|
|
$
|
3,967
|
|
2013 Omnibus Equity Incentive Plan
|
4,041,496
|
|
2004 Employee Stock Purchase Plan
|
195,294
|
|
Total
|
4,236,790
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Federal:
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
|
(11,360
|
)
|
|
(4,297
|
)
|
|
(5,608
|
)
|
|||
|
|
(11,360
|
)
|
|
(4,297
|
)
|
|
(5,608
|
)
|
|||
State:
|
|
|
|
|
|
|
||||||
Current
|
|
7
|
|
|
6
|
|
|
6
|
|
|||
Deferred
|
|
923
|
|
|
62
|
|
|
853
|
|
|||
|
|
930
|
|
|
68
|
|
|
859
|
|
|||
Foreign:
|
|
|
|
|
|
|
||||||
Current
|
|
3,742
|
|
|
4,930
|
|
|
2,453
|
|
|||
Deferred
|
|
561
|
|
|
8
|
|
|
1,944
|
|
|||
|
|
4,303
|
|
|
4,938
|
|
|
4,397
|
|
|||
Increase in valuation allowance
|
|
10,272
|
|
|
3,894
|
|
|
4,698
|
|
|||
Tax provision
|
|
$
|
4,145
|
|
|
$
|
4,603
|
|
|
$
|
4,346
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Taxes at federal statutory rate
|
|
$
|
(6,650
|
)
|
|
$
|
(6,028
|
)
|
|
$
|
(655
|
)
|
State taxes, net of federal benefit
|
|
(208
|
)
|
|
(236
|
)
|
|
(90
|
)
|
|||
Effect of tax rate differential for foreign subsidiary
|
|
(2,985
|
)
|
|
(2,641
|
)
|
|
(3,570
|
)
|
|||
Valuation allowance, including tax benefits of stock activity
|
|
10,272
|
|
|
3,894
|
|
|
4,698
|
|
|||
Foreign taxes on unremitted earnings
|
|
1,204
|
|
|
2,085
|
|
|
1,590
|
|
|||
Stock-based compensation
|
|
441
|
|
|
134
|
|
|
621
|
|
|||
Foreign withholding taxes
|
|
260
|
|
|
180
|
|
|
—
|
|
|||
Return to provision adjustments
|
|
1,062
|
|
|
1,131
|
|
|
536
|
|
|||
Subpart F income inclusion
|
|
906
|
|
|
5,914
|
|
|
1,167
|
|
|||
Other
|
|
(157
|
)
|
|
170
|
|
|
49
|
|
|||
Tax provision
|
|
$
|
4,145
|
|
|
$
|
4,603
|
|
|
$
|
4,346
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Tax loss carryforwards
|
|
$
|
62,994
|
|
|
$
|
52,504
|
|
Tax credit carryforwards
|
|
19
|
|
|
19
|
|
||
Uniform capitalization, contract and inventory related reserves
|
|
598
|
|
|
1,558
|
|
||
Accrued vacation
|
|
514
|
|
|
592
|
|
||
Stock-based compensation
|
|
2,130
|
|
|
1,466
|
|
||
Capitalized research and development
|
|
5,532
|
|
|
6,212
|
|
||
Tax basis depreciation less book depreciation
|
|
1,661
|
|
|
1,019
|
|
||
Intangible assets
|
|
1,354
|
|
|
1,533
|
|
||
Deferred revenue
|
|
33
|
|
|
254
|
|
||
Accrued foreign taxes
|
|
1,263
|
|
|
1,271
|
|
||
Other
|
|
2,523
|
|
|
2,527
|
|
||
Total
|
|
78,621
|
|
|
68,955
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Inventory deduction
|
|
(369
|
)
|
|
(235
|
)
|
||
Pension assets
|
|
(1,733
|
)
|
|
(1,173
|
)
|
||
Allowance for doubtful accounts
|
|
(677
|
)
|
|
(378
|
)
|
||
Withholding tax on undistributed earnings of foreign subsidiary
|
|
(4,879
|
)
|
|
(3,675
|
)
|
||
Unrealized gains and losses
|
|
(733
|
)
|
|
(984
|
)
|
||
Other
|
|
—
|
|
|
(1
|
)
|
||
Total
|
|
(8,391
|
)
|
|
(6,446
|
)
|
||
Net deferred tax assets before valuation allowance
|
|
70,230
|
|
|
62,509
|
|
||
Valuation allowance
|
|
(78,366
|
)
|
|
(68,093
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(8,136
|
)
|
|
$
|
(5,584
|
)
|
Balance at December 31, 2014
|
$
|
11,939
|
|
Increase in current period positions
|
1,466
|
|
|
Increase in prior period positions
|
609
|
|
|
Balance at December 31, 2015
|
14,014
|
|
|
Increase in current period positions
|
1,596
|
|
|
Increase in prior period positions
|
116
|
|
|
Decrease in prior period positions
|
(147
|
)
|
|
Balance at December 31, 2016
|
$
|
15,579
|
|
Fiscal Years
|
|
||
2017
|
$
|
3,167
|
|
2018
|
2,392
|
|
|
2019
|
2,322
|
|
|
2020
|
2,199
|
|
|
2021
|
1,282
|
|
|
Thereafter
|
5,145
|
|
|
Total
|
$
|
16,507
|
|
|
|
Years ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
33,153
|
|
|
$
|
33,006
|
|
Service cost
|
|
1,171
|
|
|
958
|
|
||
Interest cost
|
|
246
|
|
|
332
|
|
||
Plan participant contributions
|
|
509
|
|
|
523
|
|
||
Benefits paid
|
|
(1,570
|
)
|
|
(3,064
|
)
|
||
Actuarial (gain) loss
|
|
(2,425
|
)
|
|
1,262
|
|
||
Plan change
|
|
—
|
|
|
83
|
|
||
Effect of foreign currency translation
|
|
(827
|
)
|
|
53
|
|
||
Projected benefit obligation at end of year
|
|
30,257
|
|
|
33,153
|
|
||
Changes in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
39,002
|
|
|
40,368
|
|
||
Actual return on plan assets
|
|
1,657
|
|
|
419
|
|
||
Company contributions
|
|
596
|
|
|
640
|
|
||
Plan participant contributions
|
|
509
|
|
|
523
|
|
||
Benefits paid
|
|
(1,570
|
)
|
|
(3,064
|
)
|
||
Effect of foreign currency translation
|
|
(1,050
|
)
|
|
116
|
|
||
Fair value of plan assets at end of year
|
|
39,144
|
|
|
39,002
|
|
||
Funded status at end of year
|
|
$
|
8,887
|
|
|
$
|
5,849
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Net long-term pension asset
|
|
$
|
8,887
|
|
|
$
|
5,849
|
|
|
|
|
|
|
||||
Accumulated other comprehensive loss consists of the following:
|
|
|
|
|
||||
Net prior service cost
|
|
779
|
|
|
837
|
|
||
Net loss
|
|
3,113
|
|
|
5,668
|
|
||
Accumulated other comprehensive loss before taxes
|
|
$
|
3,892
|
|
|
$
|
6,505
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Components of net periodic pension cost:
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
1,171
|
|
|
$
|
958
|
|
|
$
|
846
|
|
Interest cost
|
|
246
|
|
|
332
|
|
|
697
|
|
|||
Expected return on plan assets
|
|
(1,175
|
)
|
|
(1,551
|
)
|
|
(1,784
|
)
|
|||
Prior service cost amortization
|
|
150
|
|
|
136
|
|
|
140
|
|
|||
Deferred loss amortization
|
|
243
|
|
|
45
|
|
|
—
|
|
|||
Settlement cost
|
|
—
|
|
|
492
|
|
|
420
|
|
|||
Net periodic pension cost
|
|
$
|
635
|
|
|
$
|
412
|
|
|
$
|
319
|
|
Other amounts recognized in other comprehensive income (loss) before income taxes are as follows:
|
|
|
|
|
|
|
||||||
Prior service cost amortization
|
|
$
|
(150
|
)
|
|
$
|
(136
|
)
|
|
$
|
(140
|
)
|
(Gain) loss on value of plan assets
|
|
(476
|
)
|
|
1,131
|
|
|
(1,695
|
)
|
|||
Actuarial (gain) loss on benefit obligation
|
|
(2,425
|
)
|
|
1,262
|
|
|
4,975
|
|
|||
Plan change
|
|
—
|
|
|
83
|
|
|
—
|
|
|||
Settlement
|
|
—
|
|
|
(492
|
)
|
|
(420
|
)
|
|||
Deferred loss amortization
|
|
(243
|
)
|
|
(45
|
)
|
|
—
|
|
|||
Total recognized in other comprehensive income (loss), before taxes
|
|
$
|
(3,294
|
)
|
|
$
|
1,803
|
|
|
$
|
2,720
|
|
Total recognized in net periodic pension cost and other comprehensive income (loss), before taxes
|
|
$
|
(2,659
|
)
|
|
$
|
2,215
|
|
|
$
|
3,039
|
|
|
|
Years ended December 31,
|
||||
|
|
2016
|
|
2015
|
||
Weighted-average assumptions used to determine benefit obligation:
|
|
|
|
|
||
Discount rate
|
|
0.75
|
%
|
|
0.75
|
%
|
Rate of compensation increase
|
|
2.00
|
%
|
|
2.50
|
%
|
Measurement date
|
|
11/30/2016
|
|
|
11/30/2015
|
|
Weighted-average assumptions used to determine net periodic pension cost:
|
|
|
|
|
||
Discount rate
|
|
0.75
|
%
|
|
1.00
|
%
|
Expected long-term return on plan assets
|
|
3.00
|
%
|
|
3.75
|
%
|
Rate of compensation increase
|
|
2.50
|
%
|
|
2.50
|
%
|
|
|
|
|
|
||
Percentage of the fair value of total plan assets held in each major category of plan assets:
|
|
|
|
|
||
Equity securities
|
|
29
|
%
|
|
29
|
%
|
Debt securities
|
|
23
|
%
|
|
23
|
%
|
Real estate investment funds
|
|
43
|
%
|
|
43
|
%
|
Other
|
|
5
|
%
|
|
5
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
Expected amortization during the year ending December 31, 2017 is as follows (in thousands):
|
|
||
|
|
||
Amortization of net prior service costs
|
$
|
145
|
|
2017
|
$
|
1,320
|
|
2018
|
1,409
|
|
|
2019
|
1,380
|
|
|
2020
|
1,301
|
|
|
2021
|
1,338
|
|
|
Years 2022 through 2026
|
7,306
|
|
|
Total
|
$
|
14,054
|
|
|
|
|
|
Fair Value Measurements at
|
||||||||||||
|
|
|
|
December 31, 2016
|
||||||||||||
|
|
Total
|
|
Active
Market
Prices
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash held in Swiss Franc, Euro and USD
|
|
$
|
705
|
|
|
$
|
705
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Investment funds
|
|
12,534
|
|
|
11,481
|
|
|
1,053
|
|
|
—
|
|
||||
Real estate investment funds
|
|
17,034
|
|
|
—
|
|
|
—
|
|
|
17,034
|
|
||||
Fixed income / Bond securities:
|
|
8,842
|
|
|
8,842
|
|
|
—
|
|
|
—
|
|
||||
Other assets (accounts receivable, assets at real estate management company)
|
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
||||
Net assets of pension plan
|
|
$
|
39,144
|
|
|
$
|
21,028
|
|
|
$
|
1,082
|
|
|
$
|
17,034
|
|
|
|
|
|
Fair Value Measurements at
|
||||||||||||
|
|
|
|
December 31, 2015
|
||||||||||||
|
|
Total
|
|
Active
Market
Prices
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash held in Swiss Franc, Euro and USD
|
|
$
|
808
|
|
|
$
|
808
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Investment funds
|
|
12,292
|
|
|
11,303
|
|
|
989
|
|
|
—
|
|
||||
Real estate investment funds
|
|
16,917
|
|
|
—
|
|
|
—
|
|
|
16,917
|
|
||||
Fixed income / Bond securities:
|
|
8,949
|
|
|
8,949
|
|
|
—
|
|
|
—
|
|
||||
Other assets (accounts receivable, assets at real estate management company)
|
|
36
|
|
|
—
|
|
|
36
|
|
|
—
|
|
||||
Net assets of pension plan
|
|
$
|
39,002
|
|
|
$
|
21,060
|
|
|
$
|
1,025
|
|
|
$
|
16,917
|
|
Description
|
|
Real estate
investments
|
||
Balance as of December 31, 2015
|
|
$
|
16,917
|
|
Total unrealized gains included in net gain
(1)
|
|
575
|
|
|
Foreign currency translation adjustments
|
|
(458
|
)
|
|
Balance as of December 31, 2016
|
|
$
|
17,034
|
|
(1)
|
Total unrealized gains are reported as a component of the pension adjustment in accumulated other comprehensive income in the consolidated statement of stockholders’ equity.
|
|
|
Quarter Ended
|
|
|
||||||||||||||||||||
|
|
March 31
|
|
|
|
June 30
|
|
|
|
September 30
|
|
|
|
December 31
|
|
|
||||||||
|
|
(in thousands except per share data)
|
|
|
||||||||||||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
|
$
|
35,203
|
|
|
|
|
$
|
34,135
|
|
|
|
|
$
|
25,506
|
|
|
|
|
$
|
26,400
|
|
|
|
Gross profit
|
|
9,653
|
|
|
|
|
9,981
|
|
|
|
|
7,628
|
|
|
|
|
5,708
|
|
|
|
||||
Net income (loss)
|
|
(6,848
|
)
|
|
(a)
|
|
2,167
|
|
|
(b)
|
|
(6,855
|
)
|
|
(c)
|
|
(12,169
|
)
|
|
(d)
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.22
|
)
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
(0.21
|
)
|
|
|
|
$
|
(0.38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter Ended
|
|
|
||||||||||||||||||||
|
|
March 31
|
|
|
|
June 30
|
|
|
|
September 30
|
|
|
|
December 31
|
|
|
||||||||
|
|
(in thousands except per share data)
|
|
|
||||||||||||||||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
|
$
|
34,670
|
|
|
|
|
$
|
37,796
|
|
|
|
|
$
|
45,076
|
|
|
|
|
$
|
49,830
|
|
|
|
Gross profit
|
|
10,303
|
|
|
|
|
12,153
|
|
|
|
|
14,256
|
|
|
|
|
14,250
|
|
|
|
||||
Net income (loss)
|
|
(9,341
|
)
|
|
(e)
|
|
(9,376
|
)
|
|
(f)
|
|
(1,449
|
)
|
|
(g)
|
|
(2,167
|
)
|
|
(h)
|
||||
Basic and diluted net income (loss) per share
|
|
$
|
(0.32
|
)
|
|
|
|
$
|
(0.31
|
)
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
$
|
(0.07
|
)
|
|
|
(a)
|
Includes non-cash expense for stock-based compensation of
$1.2 million
.
|
(b)
|
Includes gain on sale of product line of
$6.7 million
, release of tax liability of
$1.5 million
and non-cash expense for stock-based compensation of
$1.5 million
.
|
(c)
|
Includes non-cash expense for stock-based compensation of
$1.1 million
.
|
(d)
|
Includes impairment of assets of
$1.2 million
, non-cash deferred tax expense of
$1.2 million
in connection with the probable repatriation of a portion of the unremitted earnings of a foreign subsidiary and non-cash expense for stock-based compensation of
$1.6 million
.
|
(e)
|
Includes non-cash expense for stock-based compensation of
$0.8 million
.
|
(f)
|
Includes restructuring and exit costs of
$2.3 million
, non-cash deferred tax expense of
$2.1 million
in connection with the probable repatriation of a portion of the unremitted earnings of a foreign subsidiary and non-cash expense for stock-based compensation of
$1.0 million
.
|
(g)
|
Includes non-cash expense for stock-based compensation of
$1.1 million
.
|
(h)
|
Includes non-cash expense for stock-based compensation of
$1.0 million
.
|
|
|
Balance at the
Beginning of
the Year ($)
|
|
Charged to
Expense ($)
|
|
Acquisitions/
Transfers
and
Other ($)
|
|
Write-offs
Net of
Recoveries ($)
|
|
Balance at
the End of
the Year ($)
|
|||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
|
|
|
|||||
December 31, 2014
|
|
134
|
|
|
61
|
|
|
—
|
|
|
(52
|
)
|
|
143
|
|
December 31, 2015
|
|
143
|
|
|
304
|
|
|
1
|
|
|
(196
|
)
|
|
252
|
|
December 31, 2016
|
|
252
|
|
|
(106
|
)
|
|
—
|
|
|
(120
|
)
|
|
26
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
(a)
|
Documents filed as part of this report.
|
1.
|
Financial Statements
. The consolidated financial statements required by this item are submitted in a separate section beginning on page 48 of this Annual Report on Form 10-K.
|
2.
|
Financial Statement Schedules
. The financial statement schedule entitled “Valuation and Qualifying Accounts” required by this item is submitted in a separate section beginning on page 81 of this Annual Report on Form 10-K.
|
3.
|
Exhibits
.
|
Exhibit
Number |
|
|
Description of Document
|
3.1
|
|
|
Restated Certificate of Incorporation of Registrant. (5)
|
|
|
|
|
3.2
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated November 22, 1996. (3)
|
|
|
|
|
3.3
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated February 9, 1998. (1)
|
|
|
|
|
3.4
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated June 15, 2016. (16)
|
|
|
|
|
3.5
|
|
|
Amended and Restated Bylaws of Registrant. (2)
|
|
|
|
|
10.1
|
|
|
Indemnity Agreement for Directors of Registrant dated December 2003. (6)
|
|
|
|
|
10.2
|
|
|
Registrant’s 2005 Omnibus Equity Incentive Plan, as amended through May 6, 2010. (7) **
|
|
|
|
|
10.3
|
|
|
Form of Restricted Stock Unit Award Agreement under the 2005 Omnibus Equity Incentive Plan. (8) **
|
|
|
|
|
10.4
|
|
|
Form of Restricted Stock Agreement for Service-based Awards under the 2005 Omnibus Equity Incentive Plan, as amended through May 6, 2010. (9) **
|
|
|
|
|
10.5
|
|
|
Form of Restricted Stock Agreement for Performance-based Awards under the 2005 Omnibus Equity Incentive Plan, as amended through May 6, 2010. (9) **
|
|
|
|
|
10.6
|
|
|
Amended and Restated 2004 Employee Stock Purchase Plan of Registrant. (4) **
|
|
|
|
|
10.7
|
|
|
Registrant’s 2013 Omnibus Equity Incentive Plan. (4) **
|
|
|
|
|
10.8
|
|
|
Form of Option Agreement under the 2013 Omnibus Incentive Plan. (10) **
|
|
|
|
|
10.9
|
|
|
Form of Restricted Stock Unit Agreement under the 2013 Omnibus Equity Incentive Plan. (11) **
|
|
|
|
|
10.10
|
|
|
Form of Performance Restricted Stock Unit Agreement under the 2013 Omnibus Equity Incentive Plan. (10) **
|
|
|
|
|
10.11
|
|
|
Form of Market Stock Unit Award Agreement under the 2013 Omnibus Equity Incentive Plan. (14) **
|
|
|
|
|
10.12
|
|
|
Maxwell Technologies, Inc. Incentive Bonus Plan. (14) **
|
|
|
|
|
10.13
|
|
|
Maxwell Technologies, Inc. Severance and Change in Control Plan. (14) **
|
|
|
|
|
10.14
|
|
|
Transition Agreement and Release of All Claims between the Registrant and Kevin S. Royal, dated May 8, 2015. (12) **
|
|
|
|
|
10.15
|
|
|
Employment Agreement between the Registrant and David Lyle, dated May 8, 2015. (12) **
|
|
|
|
|
10.16
|
|
|
Amendment to Employment Agreement between the Registrant and David Lyle, dated January 15, 2016. (14) **
|
|
|
|
|
10.17
|
|
|
Employment Agreement between the Registrant and Franz Fink, dated April 25, 2014. (15) **
|
|
|
|
|
10.18
|
|
|
Amendment to Employment Agreement between the Registrant and Franz Fink, dated January 15, 2016. (14) **
|
|
|
|
|
10.19
|
|
|
Loan and Security Agreement between the Registrant and East West Bank, dated July 3, 2015. (13)
|
|
|
|
|
10.20
|
|
|
Agreement, dated as of March 11, 2016, by and among the Registrant and Viex Capital Advisors, LLC and its affiliates. (17)
|
|
|
|
Exhibit
Number |
|
|
Description of Document
|
10.21
|
|
|
Asset Purchase Agreement by and between the Registrant and Data Device Corporation, dated April 12, 2016 (excluding schedules and exhibits, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request, pursuant to the provisions of Regulation S-K, Item 601(b)(2)). (18)
|
|
|
|
|
10.22
|
|
|
Amendment No. 1 to Loan and Security Agreement between the Registrant and East West Bank, dated April 12, 2016. (18)
|
|
|
|
|
10.23
|
|
|
Amendment No. 2 to Loan and Security Agreement between the Registrant and East West Bank, dated July 27, 2016. (19)
|
|
|
|
|
10.24
|
|
|
Amendment No. 3 to Loan and Security Agreement between the Registrant and East West Bank, dated October 31, 2016. (20)
|
|
|
|
|
10.25
|
|
|
Localization Agreement, dated January 25, 2017, by and between the Company and CRRC Qingdao Sifang Rolling Stock Research Institute Co., Ltd.*†
|
|
|
|
|
10.26
|
|
|
Amendment No. 4 to Loan and Security Agreement between the Registrant and East West Bank, dated March 1, 2017. *
|
|
|
|
|
21.1
|
|
|
List of Subsidiaries of Registrant. *
|
|
|
|
|
23.1
|
|
|
Consent of Independent Registered Public Accounting Firm. *
|
|
|
|
|
31.1
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
101
|
|
|
The following financial statements and footnotes from the Maxwell Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements. *
|
*
|
Filed herewith.
|
**
|
Management contract or compensatory plan or arrangement of the company required to be filed as an exhibit.
|
†
|
This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without redaction pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
|
(1)
|
Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1999 (SEC file no. 000-10964).
|
(2)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2016(SEC file no. 001-15477).
|
(3)
|
Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1997 (SEC file no. 000-10964).
|
(4)
|
Incorporated herein by reference to Registrant’s Schedule 14A for the 2013 Annual Meeting of Stockholders filed with the SEC on October 30, 2013 (SEC file no. 001-15477).
|
(5)
|
Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1987 (SEC file no. 000-10964).
|
(6)
|
Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (SEC file no. 001-15477).
|
(7)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on May 10, 2010 (SEC file no. 001-15477).
|
(8)
|
Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2009 (SEC file no. 001-15477).
|
(9)
|
Incorporated herein by reference to Registrant’s Annual Reports on Form 10-K for the fiscal year ended December 31, 2010 (SEC file no. 001-15477).
|
(10)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on March 17, 2015 (SEC file no. 001-15477).
|
(11)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K/A filed with the SEC on March 23, 2015 (SEC file no. 001-15477).
|
(12)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2015 (SEC file no. 001-15477).
|
(13)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2015 (SEC file no. 001-15477).
|
(14)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2016 (SEC file no. 001-15477).
|
(15)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2014 (SEC file no. 001-15477).
|
(16)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on June 15, 2016 (SEC file no. 001-15477).
|
(17)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on March 14, 2016 (SEC file no. 001-15477).
|
(18)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on April 12, 2016 (SEC file no. 001-15477).
|
(19)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on August 3, 2016 (SEC file no. 001-15477).
|
(20)
|
Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on November 2, 2016 (SEC file no. 001-15477).
|
(b)
|
See the exhibits required by this item under Item 15(a)(3) above.
|
(c)
|
See the financial statement schedule required by this item under Item 15(a)(2) above.
|
|
M
AXWELL
T
ECHNOLOGIES
, I
NC
.
|
||
|
|
|
|
|
By:
|
|
/
S
/ FRANZ FINK
|
|
|
|
Franz Fink
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ F
RANZ
F
INK
|
|
President and Chief Executive Officer
|
|
March 1, 2017
|
Franz Fink
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ D
AVID
L
YLE
|
|
Senior Vice President, Chief Financial Officer, Treasurer and Secretary
|
|
March 1, 2017
|
David Lyle
|
|
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ R
ICK
B
ERGMAN
|
|
Director
|
|
March 1, 2017
|
Rick Bergman
|
|
|
|
|
|
|
|
|
|
/s/ S
TEVEN
B
ILODEAU
|
|
Director
|
|
March 1, 2017
|
Steven Bilodeau
|
|
|
|
|
|
|
|
|
|
/s/ J
ÖRG
B
UCHHEIM
|
|
Director
|
|
March 1, 2017
|
Jörg Buchheim
|
|
|
|
|
|
|
|
|
|
/s/ B
URKHARD
G
OESCHEL
|
|
Director
|
|
March 1, 2017
|
Burkhard Goeschel
|
|
|
|
|
|
|
|
|
|
/s/ R
OBERT
L. G
UYETT
|
|
Director
|
|
March 1, 2017
|
Robert L. Guyett
|
|
|
|
|
|
|
|
|
|
/s/ R
OGER
H
OWSMON
|
|
Director
|
|
March 1, 2017
|
Roger Howsmon
|
|
|
|
|
|
|
|
|
|
/s/ Y
ON
Y
OON
J
ORDEN
|
|
Director
|
|
March 1, 2017
|
Yon Yoon Jorden
|
|
|
|
|
|
|
|
|
|
/s/ D
AVID
S
CHLOTTERBECK
|
|
Director
|
|
March 1, 2017
|
David Schlotterbeck
|
|
|
|
|
1.
|
DEFINITIONS AND INTERPRETATION
|
1.1.
|
The following defined terms, when used in this Localization Agreement, will have the following meanings:
|
•
|
all information as so defined within the Confidential and Nondisclosure Agreement, as amended, by and between the Parties with an effective date of March 31, 2014 (hereinafter “
NDA
”);
|
•
|
such additional information which is designated as being confidential information within this Localization Agreement or the Localization Term Sheet; and
|
•
|
any other information disclosed under or in relation to the negotiation of this Localization Agreement or the Localization Term Sheet.
|
1.2.
|
Section, Annex and paragraph headings shall not affect the interpretation of this Localization Agreement.
|
1.3.
|
The Annexes form part of this Localization Agreement and shall have effect as if set out in full in the body of this Localization Agreement. Any reference to this Localization Agreement includes the Schedules.
|
1.4.
|
Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular.
|
1.5.
|
This Localization Agreement shall be binding on, and inure to the benefit of, the parties to this Localization Agreement and their respective personal representatives, successors and permitted assigns, and references to any party shall include that party's personal representatives, successors and permitted assigns.
|
1.6.
|
A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time.
|
1.7.
|
A reference to this Localization Agreement or to any other agreement or document referred to in this Localization Agreement is a reference of this Localization Agreement or such other agreement or document as varied or novated (in each case, other than in breach of the provisions of this Localization Agreement) from time to time.
|
1.8.
|
References to Sections and Annexes are to the Sections and Annexes of this Localization Agreement
|
1.9.
|
Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.
|
2.
|
TERM OF AGREEMENT
|
2.1.
|
Unless terminated earlier in accordance with its terms, this Localization Agreement is effective as of the Effective Date and will remain in force until the conclusion of a period of 10 years from the Production Date ("
Initial Term
") and shall automatically extend for 1 year ("
Extended Term
") at the end of the Initial Term and at the end of each Extended Term.
|
3.
|
ASSET TRANSFER
|
3.1.
|
Equipment.
|
a.
|
From the Effective Date, the Parties hereby agree that the Equipment Letter shall terminate with immediate effect. This termination shall not affect any accrued rights or obligations of the Parties under the Equipment Letter as at the date of its termination.
|
b.
|
On or after the applicable Asset Transfer Date, Party B's third party vendor shall invoice Party A for,
USD $
***
or such sum as is determined by the agreed third party valuer, whichever is the lesser (
"
Equipment Price
"),
and within 60 days from receipt of such invoice Party A shall pay the Equipment Price to Party B’s third party vendor. Payment of such amount shall be made in cleared funds to the bank account nominated in writing by Party B’s third party vendor. Acceptance of the Equipment will be done jointly by Party A and Party B. Following such acceptance, Party B’s third party vendor will issue an invoice.
|
c.
|
The Parties anticipate executing a separate agreement regarding the Equipment for the purposes of supporting cross border payment procedures. In the event of a discrepancy between that separate written agreement and this Localization Agreement, this Localization Agreement shall prevail.
|
d.
|
Upon payment by Party A of the invoice for the Equipment Price, Party B’s third party vendor shall transfer such right, title and interest as it has in the Equipment to Party A. Until the applicable Asset Transfer Date, Party A shall have no right, title or interest in or to the Equipment (save except the right to possession and use of the Equipment subject to the terms and conditions of this Localization Agreement).
|
e.
|
It is acknowledged that the risk of loss, theft, damage and/or destruction of the Equipment passed to Party A upon delivery of the Equipment to Party A under the Equipment Letter, and remains with Party A on execution of this Localization Agreement, and remains with Party A on transfer of title in accordance with Section 3.1.c.
|
f.
|
The details of the Equipment in Annex A are given only for the purposes of identifying the Equipment and do not make this Localization Agreement a sale by description. The Equipment is sold on an "as seen" basis. Party B makes no representations and gives no warranties as to the quality, condition, state, durability or description of the Equipment and/or the fitness or suitability for any purpose of the Equipment. All implied statutory or common law terms, conditions and warranties as to the Equipment are excluded to the fullest extent permitted by law. Party A acknowledges that, before the date of this Localization Agreement: (a) Party B has given Party A a reasonable opportunity to inspect and test the Equipment; and (b) Party A has acknowledged the basic function and condition of the Equipment prior to shipment of the Equipment to Party A’s facility. In the event that the Equipment is broken or malfunctions in a substantial manner before the Extended Production Date, then Party B will use good faith efforts to assist Party A in repairing or restoring the Equipment to operational condition. Additionally, until the Extended Production Date, Party B will use good faith efforts to assist Party A to achieve 99% final yield for UCAP Modules produced by Party A on the Equipment. Party A will at all times attempt to achieve 99% final yield for UCAP Modules produced by Party A on the Equipment.
|
g.
|
Party A shall, during the term of this Localization Agreement:
|
i.
|
ensure that the Equipment is kept and operated in a suitable environment, used only for the purposes for which it is designed, and operated in a proper manner by trained competent staff in accordance with any operating and maintenance instructions;
|
ii.
|
make no alteration to the Equipment nor remove any existing component(s) from the Equipment;
|
iii.
|
keep the Equipment at all times at the site for use at Party A’s permitted location within the Territory, details of which must be provided to Party B upon request;
|
iv.
|
until the applicable Asset Transfer Date, permit Party B or its duly authorized representative to inspect the Equipment at all reasonable times; and
|
v.
|
at its own expense, obtain and maintain the applicable insurances.
|
3.2.
|
Patents.
Party B agrees to assign the Patents to Party A, and Party A agrees to grant a license back to Party B in accordance with the terms of the Patent Assignment and License Agreement. The Parties hereby agree, subject to a third party appraisal, to validly execute the Patent Assignment and License Agreement on the Asset Transfer Date and Party A agrees to:
|
a.
|
pay Party B a sum of USD $
***
or such sum as is determined by the agreed third party appraisal, whichever is the lesser. Party B will issue an invoice for this amount and such invoice will be paid within sixty (60) days of the date of the invoice. The assignment of Patents will occur on receipt of such payment by Party B; and
|
b.
|
assign to Party B all rights, title and interest in and to any FIP related to the Initial UCAP Modules, (excluding any FIP unique to the *** referenced under Section 5.4), generated under this Localization Agreement, including any improvements to Party B's BIP, in accordance with Section 6 below. Such assignment to occur on receipt of payment by Party B.
|
4.
|
LICENSE OF TECHNOLOGY & KNOW-HOW
|
4.1.
|
Party B hereby grants to Party A, for the duration of this Localization Agreement, an exclusive (with respect to the Field in the Territory),
***
license to exploit the Licensed Technology and Know-How solely for the purpose of *** the Initial UCAP Modules in the Territory in the Field. Party B also grants to Party A, for the duration of this Localization Agreement, a non-exclusive (with respect to the Rail Field in the Territory), *** license to exploit the Licensed Technology and Know-How solely for the purpose of *** the Initial UCAP Modules in the Territory in the Rail Field. The license granted pursuant to this Section 4.1 shall come into force on the Effective Date.
|
4.2.
|
In consideration for the license granted pursuant to Section 4.1, Party A shall pay to Party B the sum of:
|
a.
|
USD $3,000,000 to be invoiced on or after the Effective Date and paid by Party A within sixty (60) days of receipt of the invoice;
|
b.
|
USD $1,000,000 to be invoiced by Party B on the first date upon which Party A achieves revenue in the Field in the Territory totalling in the aggregate of USD $ *** and which shall be paid by Party A within sixty (60) days of receipt of the invoice.
|
•
|
the *** for UCAP Cells for the Rail Field shall not be more than *** for the Field assuming the USD $ *** threshold above has been fulfilled; or
|
•
|
if the USD $ *** threshold has not been fulfilled then *** for the Rail Field shall be *** for the Field.
|
4.3.
|
The Licensed Technology and Know-How licensed by Party B pursuant to Section 4.1 shall be used by Party A only for the purpose of the manufacture of UCAP Modules in the Territory in the Field and Rail Field and shall constitute Confidential Information of Party B under the provisions of Section 13.
|
5.
|
SERVICES
|
5.1.
|
Sales and Marketing Services
. Party B will provide sales and marketing services, consisting of the support of 3 dedicated Party B personnel to Party A commencing on the Effective Date and for a period of 2 years ("
Sales Service Term
") in accordance with the provisions of Appendix D.
|
5.2.
|
Sales and Marketing Services Fee
. In consideration for the provision of such sales and marketing services, Party A will pay Party B a total of USD $
***
. Party B will invoice the first of six (6) equal installments on the Effective Date and subsequently at the beginning of each calendar quarter. Each payment shall be paid by Party A within sixty (60) days following the date of the invoice. The Parties anticipate executing a separate agreement regarding these services for the purposes of supporting cross border payment procedures. In the event of a discrepancy between that separate written agreement and this Localization Agreement, this Localization Agreement shall prevail.
|
5.3.
|
Sales Personnel.
After the expiry of the Sales Service Term, and notwithstanding Section 14 below, Party A shall have the right to elect to directly hire any or all of the 3 dedicated Party B personnel, provided a transition plan is agreed by the Parties and the relevant personnel.
|
5.4.
|
Design and Engineering Services.
Party B will provide to Party A design and engineering services for the development of *** for a period of 2 years from the date of the Localization Agreement. The activities in furtherance of such services are anticipated to begin on January 1, 2017, in accordance with the provisions of Appendix E. The Parties will work together, on a cost-sharing basis and in good faith, to pursue additional design and engineering services based upon a mutually agreed upon product roadmap and under a separate agreement articulating the applicable terms and conditions.
|
5.5.
|
Design and Engineering Services Fee
. In consideration for the provision of such design and engineering services, Party A will pay Party B a total of USD $ *** . Each payment shall be paid by Party A within sixty (60) days following the date of the invoice. Party B will invoice six (6) equal installments payable as follows:-
|
•
|
Invoice for Installment 1 ( *** ) is to be issued by Party B following the parties reaching agreement on a short form design and engineering services agreement. The Parties acknowledge their intention to negotiate this in good faith with a view to agreeing this by the end of *** , or as soon as possible thereafter.
|
•
|
Invoice for Installment 2 ( *** ) is to be issued by Party B on the later of:
|
o
|
*** ; or
|
o
|
The date the short form design and engineering services agreement is executed by the parties.
|
•
|
Invoice for each remaining four Installments (Each *** ) will be sent by Party B in accordance with the milestones set out in a detailed design and engineering services agreement to be agreed by the Parties. The parties acknowledge their intention that these will be quarterly payments and they intend to negotiate and conclude this detailed design and engineering services agreement by the end of
***
.
|
6.
|
INTELLECTUAL PROPERTY
|
6.1.
|
Ownership, Prosecution and Enforcement of Intellectual Property Rights
|
a.
|
BIP
. The Parties acknowledge that Party B possesses BIP related to the UCAP Cells and Initial UCAP Modules. No right or title in or to any or all Party B's BIP is granted to Party A as a result of entering into this Localization Agreement, except as specifically provided herein, and ownership of any and all Party B's BIP shall remain with Party B. Unless otherwise agreed in writing, preparation, prosecution, maintenance, and enforcement of Party B’s BIP is at the sole discretion and expense of Party B.
|
b.
|
FIP
. The Parties will meet regularly during the term of this Localization Agreement to identify via a written disclosure all FIP generated under this Localization Agreement. The disclosures will be in the form of a written description of such FIP and will include as a minimum: (i) a complete description of any FIP; (ii) the date of the first drawing, sketch, diagram or summary illustrating the FIP; (iii) the date of the conception of the FIP; (iv) identification of the inventor(s) and/or creator(s) of any FIP; and (v) identification of any government or other Third Party rights or funding pertaining to the FIP. The written disclosure shall be signed by each of the inventors and/or creators of any FIP. Using a Party’s customary invention disclosure form(s) and process is acceptable, provided that such forms and process satisfy the requirements of this Section 6.1.b.
|
c.
|
Ownership and Assignment of FIP
. In the event that FIP is generated under this Localization Agreement which is unique to the Initial UCAP Modules or *** in the course of the services provided under Section 5.4 hereof, including any improvements to a Party’s BIP, the Parties agree that all rights *** , including, but not limited to, *** , vests in and is the property of the *** and *** hereby assigns any and all rights, title and interest in and to such FIP generated by *** to *** . All other FIP generated under this Localization Agreement as well as the rights to all FIP *** vests in and is the property of the *** and *** hereby assigns any and all rights, title and interest in and to such FIP generated by *** to *** . The FIP generating party (“Generating Party”) hereby undertakes to execute any documents and do any or all acts requested by the Party owning such FIP per the above (“Owning Party”) to ensure the ownership of the applicable FIP vests fully with the Owning
|
d.
|
Preparation, Prosecution and Maintenance
. Each Party retains the sole right to protect at its sole discretion and expense the BIP or FIP solely-owned by it in accordance with the terms of the Localization Agreement, including deciding whether and how to file and prosecute patent applications or other registrations of IP rights, whether to abandon prosecution of such applications or registrations, and whether to discontinue payment of any maintenance fees with respect to patents or other registrations of IP. Notwithstanding the foregoing, Party B retains the right to continue to participate in the ongoing prosecution of Patents while they remain in the application stage, including the right to review and approve all materials submissions and decisions in relation thereto.
|
e.
|
Enforcement
. Party A will promptly notify Party B in writing of any known or suspected actual or possible infringements, misappropriations, or other violations of any Party B's BIP or Party B's FIP by a Third Party. Party B shall, in its sole discretion, decide whether any enforcement claim or other action is taken in respect of any such infringement and will retain for itself any recovered monetary damages, royalties, or other recovery.
|
f.
|
Party A License of FIP
. Party B hereby grants to Party A
|
i.
|
*** license to use the FIP owned by Party B for the sole purpose of making and selling UCAP Modules in the rail portion of the Field in the Territory *** ; and
|
ii.
|
*** license to use the FIP owned by Party B for the sole purpose of making and selling UCAP Modules in the bus portion of the Field in the Territory for *** .
|
g.
|
Party B License of FIP
. Party A hereby grants to Party B:
|
i.
|
*** license to use the FIP owned by Party A for the sole purpose of making and selling UCAP Modules.
|
7.
|
GOVERNANCE
|
7.1.
|
Steering Committee
. The Parties agree to establish a Steering Committee comprising three (3) representatives from each of Party A and Party B to periodically review the progress under this Localization Agreement. The Party appointing its members in the Steering Committee will have the right to change or otherwise replace all or any of those members. Notwithstanding the foregoing, a change to any member of the Steering Committee within four (4) years of the date of this Localization Agreement shall require the prior consent of the other Party, which cannot be unreasonably withheld. Such Party will notify the other Party of the identity of its new Steering Committee member(s). The Steering Committee will not have the ability to alter the terms of this Localization Agreement except through a formal modification as articulated in Section 28 below (Variations). A quorum for meetings of the Steering Committee requires the presence in person, by tele- or video-conference, or by proxy of at least two (2) individuals nominated by each Party to the Steering Committee. Actions and decisions permitted to be made by the Steering Committee require the approval of at least two (2) individuals nominated by each Party to the Steering Committee.
|
7.2.
|
Steering Committee Duties
. The Steering Committee shall be responsible for reviewing the progress of the activities under this Localization Agreement and shall attempt to resolve such other issues as either Party wishes to present for review and consideration. Any issues which cannot be resolved
|
7.3.
|
Steering Committee Meetings
. The Steering Committee will meet periodically to execute its duties. During the early stages of each this Localization Agreement, the Parties will meet twice per quarter at a minimum, but then will transition to fewer meetings, but preferably no less than once every six (6) months.
|
8.
|
ENCUMBRANCES
|
8.1.
|
Each Party will use reasonable efforts to:
|
a.
|
Notify the other Party within thirty (30) days of any obligation (commercial or otherwise) to any Third Party or other material encumbrance known to it at any time on or after the commencement date of this Localization Agreement regarding its BIP or a Third Party’s IP or other right that could reasonably be expected to materially affect the other Party’s IP as provided herein; and
|
b.
|
In the case of an encumbrance of the type generally described in Section 8.1.a, provide to the other Party full details of any such material encumbrance to the extent the disclosing Party can do so without disclosing privileged attorney-client communications or work product and without violating confidentiality obligations owed to any Third Party.
|
9.
|
COMMERCIALIZATION
|
9.1.
|
Exclusive Supply
. During the Initial Term of this Localization Agreement and any Extended Terms (the "
Exclusivity Period
") and in accordance with the grant of rights anticipated in Section 4 hereof, Party A shall not, and shall ensure that any of its Affiliates using the Licensed Technology and Know-How shall not, in relation to the Field and the Rail Field and Territory, purchase UCAP Cells from, use UCAP Cells supplied by, or use or sell products containing UCAP Cells produced by or sold by a party other than Party B. Such purchase of UCAP Cells by Party A from Party B will be governed under a separate purchase agreement executed by the Parties under which Party A will be the importer of record.
|
9.2.
|
Exclusive Sales Territory
. During the Exclusivity Period, Party A is exclusively authorized to manufacture and sell UCAP Modules only in the Territory in the Field. Party B will retain full rights to fully exploit all rights to UCAP Cells and UCAP Modules in any field throughout the world.
|
9.3.
|
Expansion of Sales Territory.
The Parties acknowledge that they may wish to jointly target in the Territory:
|
a.
|
market segments outside of the Field; or
|
b.
|
additional capacitive energy storage products both inside and outside of the Field,
|
9.4.
|
For the avoidance of doubt, nothing in Sections 9.2 or 9.3 shall limit Party B's rights to fully exploit all rights to UCAP Cells and UCAP Modules in the Territory in market segments outside of the Field.
|
9.5.
|
Royalty.
|
a.
|
For commercialization, Party A shall pay to Party B the sum of USD $ *** for each of the *** periods for which revenue for Party A is USD $ *** for the Field and in the Territory. Such payment shall be due within sixty (60) days of receipt of the invoice issued following the end of the calendar year in which the above metric has been achieved. Such sums shall not be returnable or available for credit against any other sums payable by Party A under this Localization Agreement.
|
b.
|
In addition, for each UCAP Module sold or otherwise supplied by Party A in the Territory in the Field, Party A shall pay Party B royalties as follows: (i) for the first *** following the Production Date, *** of the Net Sales Price; (ii) during the *** following the Production Date, *** of the Net Sales Price; (iii) during the *** following the Production Date, *** of the Net Sales Price; and (iv) during the *** following the Production Date, *** of the Net Sales Price. It is anticipated that the royalties described in this Section 9.5.b will be invoiced quarterly in arrears based on the monthly reports of UCAP Modules which are sold or otherwise supplied by Party A in each calendar month of that quarter and to the extent such invoices are raised, they shall be paid to Party B within sixty (60) days of each invoice date.
|
9.6.
|
Future Joint Venture Equity.
The Parties acknowledge and agree that *** shall have a right to negotiate entry into a future joint venture with *** for the purposes of further developing the market for UCAP Modules. The ownership of such joint venture will be discussed and agreed by the *** at that point in time. If *** elects to participate in such a joint venture, it acknowledges that is may elect to forego its *** in exchange for a
***
.
|
9.7.
|
Product Distribution.
Party A undertakes and agrees that at all times during the Exclusivity Period it will:
|
a.
|
use its best endeavours to promote the distribution and sale of the UCAP Modules to Customers in the Territory;
|
b.
|
submit written reports at regular intervals to Party B, showing details of sales, service stock, outstanding Customer orders, and any other information relating to the performance of its obligations under this Localization Agreement that Party B may reasonably require from time to time;
|
c.
|
maintain on its own account an inventory of the UCAP Modules at levels which are appropriate and adequate for Party A to meet all Customer delivery requirements for the UCAP Modules in the Field throughout the Territory;
|
d.
|
keep full and proper books of account and records showing clearly all enquiries, quotations, transactions and proceedings relating to the UCAP Modules ;
|
e.
|
allow Party B, on reasonable notice, access to its accounts and records relating to the UCAP Modules for inspection;
|
f.
|
allow the authorized representatives of Party B or their duly appointed agents to have access to the premises of Party A at all reasonable times for the purpose of inspecting the Party A's maintenance and repair facilities and the aforesaid books and records;
|
g.
|
act in good faith in setting a sale price for UCAP Modules, such price to be of Fair Value; and
|
h.
|
include the following key term in its contracts with Customers:
|
i.
|
Customers will not seek legal recourse against Party B or any Affiliate of Party B in relation to their use of UCAP Modules; and
|
9.8.
|
Indemnity.
Party A shall continually (including following termination of this Localization Agreement) indemnify Party B against all liabilities, costs, expenses, damages and losses (including but not limited to any direct, indirect or consequential losses, loss of profit and all interest, penalties and legal costs (calculated on a full indemnity basis) and all other professional costs and expenses) ("
Losses
") suffered or incurred by Party B arising out of or in connection with any claim made against Party B arising out of or in connection with the supply and/or use of UCAP Modules sold or otherwise used by Party A, by any Third Party anywhere in the world. This indemnity does not apply to the extent that such Losses are attributable to Party B's negligence, willful misconduct or fraud.
|
9.9.
|
Cost Structure
. The Parties anticipate that Party A will continuously attempt to reduce the applicable cost structure of the UCAP Modules it sells in furtherance of this Localization Agreement in order to remain competitive in the Field and to achieve anticipated gross margin targets for both Party A and Party B. Similarly, the Parties anticipate that Party B will likewise attempt to reduce the applicable cost structure of the UCAP Cells. As of the Effective Date, Annex G shows the current estimated cost breakdown for the UCAP Modules currently produced and sold by Party B, including several assumptions regarding the volume of units produced and related supply chain dynamics.
|
9.10.
|
No Certification
. In line with the Parties' mutual understanding of the Ministry of Industry and Information Technology (“
MIIT
”) current Standard Conditions for the Automobile Power Battery Industry for 2015 (“
2015 Standards
”), Party A confirms its expectation of achieving the Site Certification Date by December 31, 2017. However, if MIIT amends the 2015 Standards with new requirements for Party A to achieve (“
Modified Standards
”), then the Site Certification Date under the Modified Standards will be achieved by Party A no later than June 30, 2018 (“
Modified Site Certification Deadline
”). In the event that: (a) Party A cannot achieve the Site Certification Date within 12 months of the Effective Date in accordance with the 2015 Standards (“Site Certification Deadline”); or (b) Party A cannot achieve the Modified Standards by the Modified Site Certification Deadline, then Party B can in good faith proceed with an alternate partner for localization efforts in the Field and in the Territory and the license grant in Section 4.1 related to the Field shall become non‑exclusive, the requirements of the exclusive supply obligations under Section 9.1 shall remain unchanged, but the key commercialization terms associated with the Field will be renegotiated upon commercially reasonable terms. For the avoidance of doubt, the commercialization terms, including the
***
, related to the *** will remain in effect.
|
9.11.
|
*** .
In the event that the *** is not executed *** , then Party A will *** .
|
10.
|
TERMINATION
|
10.1.
|
Termination for Cause.
This Localization Agreement may be terminated by a Party (the “
Terminating Party
”) prior to the expiration of the Term of the Localization Agreement as provided below.
|
a.
|
Material Breach
. In the event a Party commits a material breach or defaults in the performance of any material term, condition, provision, or agreement of this Localization Agreement (the “
Breaching Party
”), and such breach remains uncured for thirty (30) days after written notice of the breach is given to the Breaching Party by the other Party (in this case, the “
Terminating Party
”), the Terminating Party may, immediately terminate this Localization Agreement.
|
b.
|
Change in Control
. If, at any time during the Term, with respect to a Party ("
First Party
"):
|
i.
|
a Third Party (“
Acquiring Third Party
”) effects a change in Control of the First Party; or
|
ii.
|
the First Party acquires Control over a Third Party (“
Acquired Third Party
”),
|
iii.
|
is a competitor of the Other Party; or
|
iv.
|
will otherwise have an adverse business interest to the Other Party,
|
10.2.
|
Effect of Termination for Material Breach, Change in Control or No Investment
.
|
i.
|
If Party B is the Terminating Party, then Party A will immediately pay Party B the entire amount for the Licensed Technology and Know-How fee (which is USD $5,000,000) unpaid as at the date of such termination;
|
ii.
|
If Party B is the terminating Party, then Party A hereby assigns to Party B, the Patents and will do all things necessary and execute any and all documents necessary to give effect to such assignment such that the Patents are fully vested in Party B and Party B is recorded as the registered owner at the relevant patent office;
|
iii.
|
If Party A is the terminating party, then Party A will decide within 60 days of termination whether it will either:-
|
A.
|
Retain the Equipment and /or the Patents; or
|
B.
|
Transfer the Equipment and /or the Patents back to Party B. On such determination, Party A transfers title in the Equipment and /or the Patents and shall promptly deliver the Equipment to Party B and/or do all things necessary to assign the Patents to Party B. Following such return or assignment, Party B will pay Party A
such sum as is determined by an independent valuer appointed by agreement of Party A and Party B, such amount not to exceed the third party valuation for the Equipment and the Patents on the respective Asset Transfer Date; and
|
iv.
|
If Party B is the terminating Party then Party A hereby transfers to Party B, with immediate effect, title in the Equipment and shall promptly deliver the Equipment to Party B and Party B shall pay Party A
such sum as is determined by an independent valuer.
.
|
10.3.
|
Agreed Termination
. The Parties can mutually agree to terminate this Localization Agreement in writing on terms mutually agreed upon at the time of termination.
|
10.4.
|
Return of Destroyable Confidential Information
. Upon termination or expiration of this Localization Agreement, and upon the request of the owning Party or the disclosing Party, the Party receiving any proprietary or Confidential Information will return to the owning Party or disclosing Party (or at such owning Party or disclosing Party’s instruction destroy), and cease any use of, all proprietary
|
11.
|
PUBLICITY
|
11.1.
|
No Party will use the name of the other Party or its officers or employees in any publicity, advertising, or news release without obtaining the prior written approval of the other Party; provided that nothing in Sections 11 and 12 precludes the Parties from disclosing the existence and the terms of this Localization Agreement if and to the extent such disclosures are reasonably believed to be required to satisfy laws and regulations applicable to the Parties and provided that the disclosing Party must obtain the consent of the other Party in writing prior to disclosure, and only to the extent related to the Parties' activities under this Localization Agreement.
|
12.
|
PUBLICATIONS
|
12.1.
|
Neither Party may publish any information arising under this Localization Agreement without the prior express written consent of the other Party. If a Party intends to publish any information arising under this Localization Agreement, then such Party will provide the other Party with thirty (30) calendar days to review and modify the proposed publication.
|
13.
|
PROPRIETARY OR CONFIDENTIAL INFORMATION
|
13.1.
|
Unless otherwise agreed upon by the Parties in writing, confidentiality under this Localization Agreement will be governed by the Nondisclosure Agreement between the Parties dated March 31, 2014 (the “
NDA
”). The term of the NDA is hereby extended to run through the end of this Localization Agreement. The scope of definition of “
Confidential Information
” shall include all information exchanged under this Localization Agreement that a Party designates as confidential. The term of the confidentiality obligations shall be as stated within the NDA. For the avoidance of doubt, all information contained in Annexes A, B, C, D, E and F and all Intellectual Property dealt with under this Localization Agreement constitutes Confidential Information of Party B subject to the terms and conditions of the NDA.
|
13.2.
|
Absent written permission from the disclosing Party, the receiving Party will use, and will ensure that its Affiliates use, Confidential Information received from the disclosing Party only in connection with carrying out this Localization Agreement.
|
13.3.
|
Notwithstanding the foregoing, this Localization Agreement shall not prevent disclosure of certain information, including the name of the other Party, in response to a valid order or other requirement of a court or other governmental body or regulation; provided that the Party making the disclosure pursuant to such order or requirement shall first give prompt written notice to the other Party and make a reasonable effort to obtain a protective order requiring that the information or the documents so disclosed be used only for the purpose for which the order was issued or the requirement is intended.
|
14.
|
NON-SOLICITATION
|
14.1.
|
Except as otherwise provided under Section 5.3, Each Party (the “
non-Employing Party
”) understands and acknowledges that the other Party (the “
Employing Party
”) has expended and continues to expend significant time and expense in recruiting and training its employees and that the loss of
|
15.
|
INDEPENDENT PARTIES
|
15.1.
|
Nothing in this Localization Agreement is intended to create nor will be construed as creating any association, employment, partnership, or trust. Each Party will be deemed to be and will be an independent contractor.
|
15.2.
|
Neither Party is authorized or empowered to act as agent for the other Party for any purpose and will not on behalf of the other Party enter into any contract, warranty, or representation as to any matter.
|
16.
|
LIABILITY FOR STAFF
|
16.1.
|
Each Party agrees that while its representatives are on the other Party’s site, its representatives will adhere, at all times, to all applicable rules, regulations, policies, and procedures of the other Party. Each Party hereby confirms that its representatives who are engaged in activities under this Localization Agreement have the necessary skills, expertise, and training, including laboratory safety procedures, to perform their obligations under this Localization Agreement.
|
16.2.
|
Each Party will be solely liable for the acts and omissions of its representatives while on the other Party's site, including for any violation of the other Party's applicable rules, regulations, policies, and procedures, as well as for other acts and omissions conducted in performance of their obligations under this Localization Agreement.
|
17.
|
REPRESENTATIONS AND WARRANTIES
|
17.1.
|
Each Party represents and warrants to the other Party that on the Effective Date:
|
a.
|
it is an independent legal person duly organized and validly existing in good standing under the laws of the place of its establishment or incorporation;
|
b.
|
it has full authority to enter into this Localization Agreement and perform its obligations under these agreements;
|
c.
|
it has authorized its representative to sign this Localization Agreement, and the provisions of this Localization Agreement are legally binding upon it from the Effective Date; and
|
d.
|
its execution of this Localization Agreement, and performance of its obligations thereunder, will not violate (i) any provision of its business license, articles of incorporation, articles of association or similar organizational documents; (ii) any applicable laws or any governmental authorization or approval; or (iii) any contract to which it is a party or to which it is subject.
|
18.
|
LIMITATION OF LIABILITY
|
18.1.
|
Nothing in the Localization Agreement will limit or exclude any Party’s liability for personal injury or death arising as a result of that Party’s negligence, intentional or willful misconduct, fraud or fraudulent misrepresentation, or for any liability which cannot be limited or excluded by law.
|
18.2.
|
Other than for breach of confidentiality under Section 13 or infringement of intellectual property, no Party to this Localization Agreement will be liable to the other Party for any indirect, special, incidental, or consequential loss or damage arising out of or in connection with this Localization Agreement no matter the nature of the claim asserted, including claims alleging breach of contract, tort (including negligence), breach of statutory duty, product liability, strict liability, or otherwise. For the avoidance of doubt, the Parties' remedies for breach of this Localization Agreement, and liability for loss or damage arising out of or in connection with this Localization Agreement, are limited to those remedies and liabilities expressly provided for in this Localization Agreement.
|
19.
|
PAYMENTS
|
19.1.
|
The time for payment of all sums due under this Localization Agreement is of the essence. Payment will only be effected when the Party B receives the relevant amount due in cleared funds. If Part A fails to make any payment due to Party B under the agreement by the due date for payment, then Party A shall pay interest on the overdue amount at the rate of 4% per annum above East West Bank's base rate from time to time. Interest shall accrue on a daily basis from the relevant due date until actual payment of the overdue amount, whether before or after judgment.
|
19.2.
|
The Parties will each bear sole responsibility for applicable taxes and other similar payments that may be due, owing or payable to each Party's respective governmental authority on account of any monies paid or to be paid to or received or to be received from each other.
|
20.
|
NOTICES
|
20.1.
|
Any notice or communication pertaining to this Localization Agreement that is required or permitted under this Localization Agreement will be made in writing and will be deemed duly served if delivered personally, sent by facsimile transmissions, electronic mail, or by prepaid registered post to the following:
|
If to Party B:
|
Maxwell Technologies, Inc.
c/o Corporate Secretary 3888 Calle Fortunada San Diego, California 92123 United States of America |
20.2.
|
However, if a notice or communication involves an alleged breach or termination of this Localization Agreement, such communication will be sent by registered or certified mail, and also communicated by telephone as promptly as possible.
|
21.
|
SURVIVAL
|
21.1.
|
The provisions of Sections 10 (Termination), 11 (Publicity), 12 (Publications), 13 (Proprietary or Confidential Information), 14 (Non-Solicitation), 18 (Limitation of Liability), 20 (Notices), 22 (Dispute Resolution and Governing Law), 25 (Severability), 27 (Further Assurance) and any provision which expressly or by operation of law are to survive or come into force on the termination of this Localization Agreement, will survive termination of this Localization Agreement.
|
22.
|
DISPUTE RESOLUTION AND GOVERNING LAW
|
22.1.
|
Resolution by the Parties
. Any dispute or disagreement between the Parties relating to the rights, duties, remedies or other matters arising out of, relating to, or in connection with this Localization Agreement, including, but not limited to, disputes or declaratory relief sought regarding commercialization and license terms and disputes about validity, termination, performance, interpretation, or breach (hereinafter “
Dispute
”), will be referred to the Steering Committee for resolution. If a Dispute cannot be resolved by the Steering Committee within a period of thirty (30) calendar days from the date that the Dispute is presented to the Steering Committee, the Dispute will be referred to the highest ranking business officer of each Party, or their duly authorized nominees, for resolution. If the Dispute cannot be resolved by the highest ranking business officers of the Parties within a period of sixty (60) calendar days from the date that the Dispute is referred to them, either Party may refer the Dispute to arbitration for resolution in accordance with Section 22.2 below.
|
22.2.
|
Arbitration
. Any Dispute arising out of or in connection with this Localization Agreement, including any question regarding its existence, validity or termination, that is not resolved by the Parties under Section 22.1 above shall be referred to and finally resolved by arbitration in Hong Kong administered by the Hong Kong International Arbitration Centre (hereinafter "
HKIAC
") in accordance with the HKIAC Administered Arbitration Rules (hereinafter, the "
HKIAC Rules
") then in force, which rules are deemed to be incorporated by reference in this Section, except as otherwise provided herein. The arbitration tribunal shall consist of three (3) arbitrators, with a presiding arbitrator. The presiding arbitrator shall not be a national of China nor of the United States of America and such arbitrator shall be fluent in English. Party A and Party B shall each appoint one (1) arbitrator and the third arbitrator, who shall serve as the presiding arbitrator, shall be appointed by agreement between the Parties. In the event that the Parties cannot agree on the nomination of the third arbitrator within fourteen (14) days of the arbitration tribunal accepting the case, the third arbitrator shall be appointed by the administrator of the arbitration tribunal. The language to be used in the arbitration proceedings shall be English and Chinese. All costs of arbitration (including arbitration fees, costs of arbitrators, costs of translation and interpretation and legal fees and disbursements) shall be determined by the arbitral tribunal in accordance with the HKIAC Rules. The arbitral award shall be final and binding upon the Parties.
|
22.3.
|
Notwithstanding the foregoing provisions of this section or the authority of the arbitral tribunal to grant interim measures, the Parties agree that once the Parties have attempted to resolve the dispute under Section 22.1 above and when the dispute is accepted by HKIAC under Section 22.2 above, each Party has the right to seek, to the extent permitted under the laws of any relevant jurisdiction, temporary or permanent injunctive or other similar relief, including any causes of action necessary to support such relief, in the relevant court or other authority of competent jurisdiction in the location where the infringement or breach takes place in respect of any claims of infringement of rights in Intellectual Property or Know-How, breach of obligations under Section 11 (Publicity), breach of obligations under Section 12 (Publications), breach of obligations under Section 13 (Proprietary or Confidential Information), or breach of obligations under Section 14 (Non-Solicitation). For clarity, each Party is entitled to apply for permanent injunction or similar relief but both Parties agree that a decision on whether such relief will be final shall be subject to the final conclusion of the concurrent arbitration proceeding.
|
22.4.
|
Governing Law
. The governing law of the Localization Agreement shall be the laws of Hong Kong, without regard to principles of conflicts of law that would require the application of the laws of any other jurisdiction.
|
23.
|
ASSIGNMENT AND SUBCONTRACTING
|
23.1.
|
No Party may assign, transfer, mortgage, charge, subcontract, declare a trust over or deal in any other manner with any of its rights and obligations under this Localization Agreement except that
***
may at any time subcontract its rights and obligations under this Localization Agreement to *** .
|
24.
|
WAIVER
|
24.1.
|
No waiver by any Party hereto of any breach or default of any the covenants of this Localization Agreement will be deemed a waiver as to any subsequent or similar breach or default.
|
25.
|
SEVERABILITY
|
25.1.
|
If any provision of this Localization Agreement is held to be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions will not in any way be affected or impaired thereby, provided that the intent of the Parties is not materially affected thereby.
|
26.
|
ENTIRE AGREEMENT
|
26.1.
|
This Localization Agreement together with the separate services agreements contemplated in Section 5.2 and Section 5.5 constitute the entire agreement between the Parties concerning the subject matter hereof. Unless otherwise incorporated herein by reference, all prior written agreements, understandings, arrangements, documents and communications (whether written or oral) between the Parties respecting said subject matter are void and shall have no force or effect, including, notably the Localization Term Sheet and the Equipment Letter. All conditions, warranties or other terms not expressly contained in this Localization Agreement which might have effect between the Parties or be implied or incorporated into this Agreement, whether by statute, common law or otherwise, are hereby excluded.
|
26.2.
|
The Parties acknowledge that in entering into this Localization Agreement, they have not relied on any oral or written representations or other promises or assurances not contained in this Localization Agreement. The Parties waive all rights and remedies which might otherwise be available to them in respect thereof, except that nothing in this Localization Agreement will limit or exclude any liability of a Party for fraud or fraudulent misrepresentation.
|
27.
|
FURTHER ASSURANCE
|
27.1.
|
The Parties will at their own cost and expense do or procure to be done all such further acts and things and execute or procure the execution of all such other documents as may from time to time reasonably be required for the purpose of giving effect to the full benefit of the provisions of this Localization Agreement.
|
27.2.
|
Each Party covenants and agrees that it will notify the other Party in writing of its intention to file for bankruptcy protection or relief, entry into receivership or similar matter, or otherwise seek relief or protection from its creditors at least thirty (30) days prior to any such filing or action. The failure to so notify the other Party will be considered a material breach of this Localization Agreement and will be grounds for immediate termination under Section 10.1, without any period in which to cure said breach.
|
28.
|
VARIATIONS
|
28.1.
|
No amendment, variation, or modification will be made to this Localization Agreement unless agreed in writing and signed by a duly authorized officer of each Party.
|
29.
|
COUNTERPARTS
|
29.1.
|
This Localization Agreement may be executed in any number of counterparts or duplicates delivered by mail, electronic mail or facsimile, each of which, when executed and delivered, will be original, and such counterparts or duplicates together will constitute one and the same instrument.
|
30.
|
FORCE MAJEURE
|
30.1.
|
In this Localization Agreement, “
Force Majeure
” means any cause preventing any Party from performing any or all of its obligations which arises from or is attributable to acts, events, omissions, or accidents beyond the reasonable control of the Party so prevented including, but not limited to, an act of God, war, riot, civil commotion, malicious damage, epidemic or pandemic, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood or storm or default of suppliers or subcontractors, war, civil war, armed conflict, or terrorist attack, nuclear chemical or biological contamination or sonic boom, but excluding strikes, lock-outs or other industrial disputes (whether involving the workforce of the Party so prevented or the other Party) or the unavailability of raw materials.
|
30.2.
|
If any Party is prevented or delayed in the performance of any of its obligations under this Localization Agreement by Force Majeure, that Party will forthwith serve notice in writing on the other Party specifying the nature and extent of the circumstances giving rise for Force Majeure, and will, subject to service of such notice, have no liability in respect of the performance of such of its obligations as are prevented by the Force Majeure events during the continuation of such events, and for such time after they cease as is necessary for that Party, using commercially reasonable efforts, to recommence its affected operations in order for it to perform its obligations. In the event of such Force Majeure, the Parties will, within a reasonable time, disclose to each other the FIP under this Localization Agreement and the terms and conditions of this Localization Agreement will continue to apply to the Parties in respect of all their ownership, use, and licensing rights to such FIP.
|
30.3.
|
If any Party is prevented by Force Majeure from performance of its obligations for a period in excess of three (3) months, then either Party may terminate this Localization Agreement on service of written notice upon the other Party, in which case no Party will have any liability to any other Party except that rights and liabilities which accrued prior to such termination will continue to subsist.
|
30.4.
|
The Party claiming to be prevented or delayed in the performance of any of its obligations by reason of Force Majeure will take all steps as are reasonably necessary without hereby being obliged to incur any unreasonable expenditure or costs to bring the Force Majeure event to a close or to find a solution by which its obligations may be performed despite the continuance of the Force Majeure event.
|
31.
|
IMPORT AND EXPORT CONTROL
|
31.1.
|
Both Parties agree to comply fully with all United States export control laws including, but not limited to, the regulations of the U.S. Department of Commerce and the U.S. Department of State relating to the export of technical data, as well as all import and export control laws including, but limited to, the regulations of the PRC Ministry of Commerce relating to the import and export of technology, insofar as they relate to activities to be performed under this Localization Agreement. In addition to the above, any diversion contrary to U.S. law or PRC law is prohibited.
|
32.
|
LANGUAGE
|
32.1.
|
This Localization Agreement will be executed in a dual Chinese language and English language format in two (2) originals. In the event of an inconsistency between the two language versions, the Chinese version will prevail.
|
33.
|
THIRD PARTY RIGHTS
|
33.1.
|
Subject as expressly provided to the contrary in this Localization Agreement, a person who is not a party to this Localization Agreement shall have no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) (the "Third Parties Ordinance") to enforce any provision of this Localization Agreement. This Section 33 does not affect any right or remedy of any person which exists or is available otherwise than pursuant to the Third Parties Ordinance.
|
33.2.
|
The rights of the Parties to terminate, rescind or agree any variation, waiver or settlement under this Localization Agreement are not subject to the consent of any other person.
|
No.
|
Process
|
Category
|
Item
|
Qty Needed
|
Asset # if Transfer to SRI
|
4.1
|
***
Welding |
Machine
|
*** Machine
|
1
|
***
|
4.2
|
***
Welding |
Machine
|
***
|
1
|
***
|
4.3
|
***
Welding |
Machine
|
***
|
1
|
***
|
4.4
|
***
Welding |
Machine
|
*** Transformer
|
1
|
N/A -- ***
|
4.5
|
***
Welding |
Machine
|
*** Transformer
|
1
|
***
|
4.6
|
***
Welding |
Machine
|
*** Transformer
|
1
|
***
|
4.7
|
***
Welding |
Machine
|
*** Machine
|
1
|
***
|
4.8
|
***
Welding |
Cart
|
*** Trolley
|
1
|
***
|
4.9
|
***
Welding |
Cart
|
*** Fixture
|
1
|
***
|
4.10
|
***
Welding |
Cart
|
*** Trolley
|
1
|
***
|
4.11
|
***
Welding |
Cart
|
*** Fixture
|
1
|
***
|
4.13
|
***
Welding |
Fixture
|
*** Fixture -- ***
|
2
|
***
|
4.14
|
***
Welding |
Fixture
|
*** Fixture -- ***
|
2
|
Share with *** , but need modify
|
4.15
|
***
Welding |
Fixture
|
*** Fixture -- ***
|
1
|
NA
|
4.16
|
***
Welding |
Fixture
|
*** Fixture -- ***
|
1
|
NA
|
4.18
|
***
Welding |
Device
|
*** Power Meter
|
1
|
***
|
6.3
|
*** Assembly
|
PC
|
PC
|
1
|
*** with test program installed
|
6.4
|
*** Assembly
|
Device
|
***
|
1
|
*** wire tester, no asset # as ***
|
7.4
|
*** Assembly
|
Jig
|
Screw Assemble Assist Arm
|
1
|
***
|
9.1
|
*** Test
|
Device
|
*** Tester
|
1
|
***
|
9.2
|
*** Test
|
PC
|
PC
|
1
|
with *** program installed
|
10.4
|
Functional Test
|
Machine
|
*** Functional Test
|
1
|
***
|
10.5
|
Functional Test
|
Cart
|
Test Cart
|
1
|
Normal
|
10.6
|
Functional Test
|
Machine
|
*** Test Machine
|
1
|
***
|
10.11
|
Functional Test
|
Machine
|
*** Tester
|
1
|
***
|
10.12
|
Functional Test
|
Machine
|
PC
|
1
|
***
|
11.3
|
***
|
Jig
|
***
|
1
|
|
13.1
|
***
|
Jig
|
***
|
1
|
Normal
|
6.2
|
*** Assembly
|
Device
|
***
|
1
|
*** , no asset # as *** .
|
7.6
|
*** Assembly
|
Jig
|
Gage
|
1
|
Normal
|
14.1
|
Packing
|
PC
|
PC
|
1
|
with packaging program installed
|
Maxwell Case No.
|
Title of Invention:
|
Country:
|
Status:
|
Application No.
|
Filing Date:
|
Patent No:
|
Date Issued:
|
***
|
ULTRACAPACITOR MODULE
|
CN
|
***
|
***
|
***
|
***
|
***
|
***
|
ULTRACAPACITOR MODULE
|
CN
|
***
|
***
|
***
|
***
|
***
|
Maxwell Case No.
|
Title of Invention:
|
Country:
|
Status:
|
Application No.
|
Filing Date:
|
Patent No:
|
Date Issued:
|
***
|
METHODS AND APPARATUSES ***
|
CN
|
***
|
***
|
***
|
|
|
***
|
SYSTEMS AND METHODS ***
|
CN
|
***
|
***
|
***
|
|
|
***
|
SYSTEMS AND METHODS ***
|
CN
|
***
|
***
|
***
|
|
|
***
|
*** MODULE
|
CN
|
***
|
***
|
***
|
|
|
Fiscal Quarter Ending
|
Minimum Adjusted Quick Ratio
|
December 31, 2016
|
1.20 to 1.00
|
March 31, 2017
|
1.20 to 1.00
|
June 30, 2017
|
1.20 to 1.00
|
September 30, 2017, and each Fiscal Quarter thereafter
|
1.10 to 1.00
|
Fiscal Quarter Ending
|
Minimum EBITDA
|
||
December 31, 2016
|
|
($6,500,000
|
)
|
March 31, 2017
|
|
($11,000,000
|
)
|
June 30, 2017
|
|
($22,000,000
|
)
|
September 30, 2017
|
|
($22,500,000
|
)
|
December 31, 2017
|
|
($15,000,000
|
)
|
March 31, 2018
|
|
($10,000,000
|
)
|
June 30, 2018, and each Fiscal Quarter thereafter
|
|
($3,000,000
|
)
|
|
MAXWELL TECHNOLOGIES, INC.
|
|
|
|
|
|
By:
/s/ Franz Fink
|
|
Name:__
Franz Fink
___________________________
|
|
Title:
President & CEO
|
|
|
|
EAST WEST BANK
|
|
|
|
|
|
By:
/s/ Eric Berlin
|
|
Name:_
_Eric Berlin______
__
|
|
Title:
_Vice President____
___
|
|
MAXWELL TECHNOLOGIES SA
|
|
|
|
|
|
By:
/s/ Emily Lough
|
|
Name:__
Emily Lough
___________________________
|
|
Title:
Director
|
|
|
|
|
|
|
Please send all Required Reporting to:
|
Eric Berlin
|
FROM:
|
MAXWELL TECHNOLOGIES, INC.
|
REPORTING COVENANTS
|
REQUIRED
|
COMPLIES
|
|
|
Company Prepared Monthly F/S
Company Prepared Quarterly F/S
|
Monthly, within 30 days
Quarterly, within 45 days
|
Yes
Yes
|
No
No
|
N/A
N/A
|
Compliance Certificate
|
Monthly, within 30 days
|
Yes
|
No
|
N/A
|
CPA Audited, Unqualified F/S, as set forth in 10-K
|
Annually, within 90 days of FYE
|
Yes
|
No
|
N/A
|
Borrowing Base Certificate
|
Monthly, within 15 days
|
Yes
|
No
|
N/A
|
A/R and A/P Agings
|
Monthly, within 15 days
|
Yes
|
No
|
N/A
|
Annual Business Plan
|
Annually, within 30 days of start of FY
|
Yes
|
No
|
N/A
|
Intellectual Property Report
|
Quarterly within 30 days
|
Yes
|
No
|
N/A
|
10-Q
|
Quarterly, within 5 days of SEC filing (50 days)
|
Yes
|
No
|
N/A
|
10-K
|
Annually, within 5 days of SEC filing (95 days)
|
Yes
|
No
|
N/A
|
FINANCIAL COVENANTS
|
REQUIRED
|
ACTUAL
|
COMPLIES
|
|
|
|
Minimum Consolidated Cash
|
$10,000,000
|
$__________
|
Yes
|
No
|
|
N/A
|
Minimum Adjusted Quick Ratio (tested quarterly)
|
______: 1.00
|
_____:1.00
|
Yes
|
No
|
|
N/A
|
4 Quarter Minimum EBITDA (tested quarterly)
|
$___________
|
$__________
|
Yes
|
No
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
ENTITY
|
|
STATE/COUNTRY OF INCORPORATION
|
Maxwell Technologies SA
|
|
Switzerland
|
Maxwell Technologies Systems Division, Inc.
|
|
California
|
I-Bus/Phoenix, Inc.
|
|
California
|
Maxwell Holding GmbH (formerly I-Bus/Phoenix, GmbH)
|
|
Germany
|
MML Acquisition, Inc.
|
|
Delaware
|
Maxwell Technologies GmbH
|
|
Germany
|
Maxwell Technologies Korea Co., Ltd
|
|
Korea
|
Maxwell Technologies Hong Kong Ltd
|
|
Hong Kong
|
Maxwell Technologies Shanghai Trading Co., Ltd
|
|
PRC, Shanghai, Pudong
|
Maxwell Technologies Shenzhen Trading Co., Ltd
|
|
PRC, Shenzhen, Longgang
|
March 1, 2017
|
|
/
S
/ FRANZ FINK
|
|
|
Franz Fink
President and Chief Executive Officer
(Principal Executive Officer)
|
March 1, 2017
|
|
/
S
/ DAVID LYLE
|
|
|
David Lyle
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer)
|
March 1, 2017
|
|
/
S
/ FRANZ FINK
|
|
|
Franz Fink
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
March 1, 2017
|
|
/
S
/ DAVID LYLE
|
|
|
David Lyle
|
|
|
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer)
|