x
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QUARTERLY 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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04-3523891
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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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|
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600 Technology Park Drive, Suite 200
Billerica, Massachusetts
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|
01821
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Consolidated Balance Sheets as of June 30, 2017 (Unaudited) and December 31, 2016
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|
Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016 (Unaudited)
|
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Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2017 and 2016 (Unaudited)
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Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (Unaudited)
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Item 1.
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Consolidated Financial Statements (Unaudited)
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(in thousands, except share and per share data)
|
June 30,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
(Unaudited)
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
73,488
|
|
|
$
|
137,174
|
|
Short-term investments
|
185,117
|
|
|
161,396
|
|
||
Accounts receivable, net
|
37,753
|
|
|
28,803
|
|
||
Inventories, net
|
33,956
|
|
|
35,514
|
|
||
Prepaid expenses and other current assets
|
8,431
|
|
|
7,073
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|
||
Total current assets
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338,745
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|
|
369,960
|
|
||
Property and equipment, net
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75,878
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|
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44,753
|
|
||
Other intangible assets, net
|
3,386
|
|
|
2,041
|
|
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Goodwill
|
39,759
|
|
|
39,677
|
|
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Other assets
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1,559
|
|
|
216
|
|
||
Total assets
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$
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459,327
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|
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$
|
456,647
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
12,243
|
|
|
$
|
13,160
|
|
Accrued expenses and other current liabilities
|
34,648
|
|
|
41,228
|
|
||
Deferred revenue
|
1,127
|
|
|
1,309
|
|
||
Total current liabilities
|
48,018
|
|
|
55,697
|
|
||
Long-term debt, net of discount
|
340,836
|
|
|
332,768
|
|
||
Other long-term liabilities
|
5,748
|
|
|
5,032
|
|
||
Total liabilities
|
394,602
|
|
|
393,497
|
|
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Commitments and contingencies (Note 12)
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized: 5,000,000 shares at June 30, 2017 and December 31, 2016.
Issued and outstanding: zero shares at June 30, 2017 and December 31, 2016.
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—
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|
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—
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|
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Common stock, $.001 par value:
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|
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||||
Authorized: 100,000,000 shares at June 30, 2017 and December 31, 2016.
Issued and outstanding: 58,044,088 and 57,457,967 shares at June 30, 2017 and December 31, 2016, respectively. |
58
|
|
|
57
|
|
||
Additional paid-in capital
|
763,364
|
|
|
744,243
|
|
||
Accumulated other comprehensive loss
|
(529
|
)
|
|
(726
|
)
|
||
Accumulated deficit
|
(698,168
|
)
|
|
(680,424
|
)
|
||
Total stockholders’ equity
|
64,725
|
|
|
63,150
|
|
||
Total liabilities and stockholders’ equity
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$
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459,327
|
|
|
$
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456,647
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands, except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
109,756
|
|
|
$
|
87,330
|
|
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$
|
211,469
|
|
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$
|
168,543
|
|
Cost of revenue
|
45,117
|
|
|
36,873
|
|
|
87,432
|
|
|
74,035
|
|
||||
Gross profit
|
64,639
|
|
|
50,457
|
|
|
124,037
|
|
|
94,508
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
18,029
|
|
|
12,953
|
|
|
35,529
|
|
|
25,942
|
|
||||
Sales and marketing
|
29,475
|
|
|
22,950
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|
|
57,570
|
|
|
46,972
|
|
||||
General and administrative
|
20,493
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|
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15,842
|
|
|
39,604
|
|
|
30,581
|
|
||||
Total operating expenses
|
67,997
|
|
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51,745
|
|
|
132,703
|
|
|
103,495
|
|
||||
Operating loss
|
(3,358
|
)
|
|
(1,288
|
)
|
|
(8,666
|
)
|
|
(8,987
|
)
|
||||
Interest expense
|
4,796
|
|
|
3,127
|
|
|
9,803
|
|
|
6,223
|
|
||||
Other income (expense), net
|
488
|
|
|
129
|
|
|
922
|
|
|
299
|
|
||||
Interest expense and other income, net
|
4,308
|
|
|
2,998
|
|
|
8,881
|
|
|
5,924
|
|
||||
Loss from continuing operations before income taxes
|
(7,666
|
)
|
|
(4,286
|
)
|
|
(17,547
|
)
|
|
(14,911
|
)
|
||||
Income tax expense
|
101
|
|
|
65
|
|
|
197
|
|
|
129
|
|
||||
Net loss from continuing operations
|
(7,767
|
)
|
|
(4,351
|
)
|
|
(17,744
|
)
|
|
(15,040
|
)
|
||||
Loss from discontinued operations, net of tax ($0 for each of the three months ended June 30, 2017 and 2016 and $0 and $408 for the six months ended June 30, 2017 and 2016, respectively)
|
—
|
|
|
153
|
|
|
—
|
|
|
(1,639
|
)
|
||||
Net loss
|
$
|
(7,767
|
)
|
|
$
|
(4,198
|
)
|
|
$
|
(17,744
|
)
|
|
$
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(16,679
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)
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Net loss per share basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net loss from continuing operations per share
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$
|
(0.13
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.26
|
)
|
Net loss from discontinued operations per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
Weighted-average number of shares used in calculating net loss per share
|
57,977
|
|
|
57,196
|
|
|
57,836
|
|
|
57,113
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net loss
|
$
|
(7,767
|
)
|
|
$
|
(4,198
|
)
|
|
$
|
(17,744
|
)
|
|
$
|
(16,679
|
)
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment, net of tax
|
186
|
|
|
3
|
|
|
264
|
|
|
403
|
|
||||
Unrealized (loss) income on available-for-sale securities, net of tax
|
(57
|
)
|
|
8
|
|
|
(67
|
)
|
|
8
|
|
||||
Total other comprehensive income, net of tax
|
129
|
|
|
11
|
|
|
197
|
|
|
411
|
|
||||
Total comprehensive loss
|
$
|
(7,638
|
)
|
|
$
|
(4,187
|
)
|
|
$
|
(17,547
|
)
|
|
$
|
(16,268
|
)
|
|
Six Months Ended June 30,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(17,744
|
)
|
|
$
|
(16,679
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
6,707
|
|
|
6,845
|
|
||
Non-cash interest and other expense
|
8,067
|
|
|
3,992
|
|
||
Stock-based compensation expense
|
14,655
|
|
|
10,784
|
|
||
Provision for bad debts
|
722
|
|
|
1,074
|
|
||
Other
|
374
|
|
|
132
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(9,630
|
)
|
|
3,672
|
|
||
Inventories
|
1,527
|
|
|
(13,099
|
)
|
||
Prepaid expenses and other assets
|
(1,662
|
)
|
|
(2,205
|
)
|
||
Accounts payable, accrued expenses and other current liabilities
|
(7,408
|
)
|
|
(1,097
|
)
|
||
Deferred revenue
|
44
|
|
|
(1,020
|
)
|
||
Other long-term liabilities
|
477
|
|
|
765
|
|
||
Net cash used in operating activities
(1)
|
(3,871
|
)
|
|
(6,836
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property, equipment and software
(2)
|
(39,068
|
)
|
|
(5,905
|
)
|
||
Purchases of investments
|
(93,383
|
)
|
|
(35,597
|
)
|
||
Receipts from the maturity or sale of investments
|
68,185
|
|
|
—
|
|
||
Proceeds from divestiture of business, net
|
—
|
|
|
5,714
|
|
||
Net cash used in investing activities
|
(64,266
|
)
|
|
(35,788
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Principal payments of capital lease obligations
|
(269
|
)
|
|
(3,472
|
)
|
||
Proceeds from exercise of stock options and issuance of common stock
|
7,891
|
|
|
1,490
|
|
||
Payment of withholding taxes in connection with vesting of restricted stock units
|
(3,428
|
)
|
|
(2,610
|
)
|
||
Net cash provided by (used in) financing activities
|
4,194
|
|
|
(4,592
|
)
|
||
Effect of exchange rate changes on cash
|
257
|
|
|
205
|
|
||
Net decrease in cash and cash equivalents
|
(63,686
|
)
|
|
(47,011
|
)
|
||
Cash and cash equivalents, beginning of period
|
137,174
|
|
|
122,672
|
|
||
Cash and cash equivalents, end of period
|
$
|
73,488
|
|
|
$
|
75,661
|
|
•
|
The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-party insurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.
|
•
|
Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.
|
•
|
The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-party insurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers, contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction to revenue in the same period the related sales are recorded.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Amgen, Inc.
|
16%
|
|
16
|
%
|
|
16%
|
|
17%
|
Ypsomed
|
20%
|
|
15
|
%
|
|
20%
|
|
15%
|
RGH Enterprises, Inc.
|
10%
|
|
11
|
%
|
|
10%
|
|
11%
|
Note
|
4
|
|
Page
|
||
|
|
|
|
|
|
Convertible Debt
|
Note
|
6
|
|
Page
|
|
|
|
|
|
|
|
Note
|
8
|
|
Page
|
||
|
|
|
|
|
|
Note
|
9
|
|
Page
|
||
|
|
|
|
|
|
Other Intangible Assets
|
Note
|
10
|
|
Page
|
|
|
|
|
|
|
|
Accrued Expenses and Other Current Liabilities - Product Warranty Costs
|
Note
|
11
|
|
Page
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
Note
|
12
|
|
Page
|
|
|
|
|
|
|
|
Equity:
Stock-Based Compensation
|
Note
|
13
|
|
Page
|
|
|
|
|
|
|
|
Note
|
14
|
|
Page
|
(In thousands)
|
Three Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
||||
Discontinued operations:
|
|
|
|
||||
Revenue
(1)
|
$
|
—
|
|
|
$
|
7,730
|
|
Cost of revenue
|
—
|
|
|
5,369
|
|
||
Gross profit
|
—
|
|
|
2,361
|
|
||
Total operating and other (income) expenses
(2)
|
(153
|
)
|
|
3,592
|
|
||
Income (loss) from discontinued operations before taxes
|
153
|
|
|
(1,231
|
)
|
||
Income tax expense
|
—
|
|
|
408
|
|
||
Net income (loss) from discontinued operations
|
$
|
153
|
|
|
$
|
(1,639
|
)
|
|
|
|
|
|
(1)
|
Revenue includes revenue from the operations of Neighborhood Diabetes through date of sale in February 2016.
|
(2)
|
Includes
$1.3 million
loss on sale of Neighborhood Diabetes for the six months ended June 30, 2016.
|
•
|
Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
|
•
|
Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.
|
•
|
Income approach, which is based on the present value of the future stream of net cash flows.
|
|
Fair Value Measurements
|
||||||||||||||
(in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2017
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
45,528
|
|
|
$
|
45,528
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. government and agency bonds
|
4,998
|
|
|
4,998
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total cash equivalents
|
$
|
50,526
|
|
|
$
|
50,526
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
108,978
|
|
|
$
|
82,372
|
|
|
$
|
26,606
|
|
|
$
|
—
|
|
Corporate bonds
|
59,627
|
|
|
—
|
|
|
59,627
|
|
|
—
|
|
||||
Certificates of deposit
|
16,512
|
|
|
—
|
|
|
16,512
|
|
|
—
|
|
||||
Total short-term investments
|
$
|
185,117
|
|
|
$
|
82,372
|
|
|
$
|
102,745
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
93,467
|
|
|
$
|
93,467
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
4,203
|
|
|
—
|
|
|
4,203
|
|
|
—
|
|
||||
Certificates of deposit
|
735
|
|
|
—
|
|
|
735
|
|
|
—
|
|
||||
Total cash equivalents
|
$
|
98,405
|
|
|
$
|
93,467
|
|
|
$
|
4,938
|
|
|
$
|
—
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
79,093
|
|
|
$
|
49,963
|
|
|
$
|
29,130
|
|
|
$
|
—
|
|
Corporate bonds
|
56,653
|
|
|
—
|
|
|
56,653
|
|
|
—
|
|
||||
Certificates of deposit
|
25,650
|
|
|
—
|
|
|
25,650
|
|
|
—
|
|
||||
Total short-term investments
|
$
|
161,396
|
|
|
$
|
49,963
|
|
|
$
|
111,433
|
|
|
$
|
—
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
(in thousands)
|
Carrying
Value
|
|
Estimated Fair
Value
|
|
Carrying
Value |
|
Estimated Fair
Value |
||||||||
2% Convertible Senior Notes
|
$
|
61,135
|
|
|
$
|
81,339
|
|
|
$
|
59,737
|
|
|
$
|
71,909
|
|
|
|
|
|
|
|
|
|
||||||||
1.25% Convertible Senior Notes
|
$
|
279,701
|
|
|
$
|
378,603
|
|
|
$
|
273,031
|
|
|
$
|
320,969
|
|
(in thousands)
|
Amortized cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
June 30, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
109,175
|
|
|
$
|
—
|
|
|
$
|
(197
|
)
|
|
$
|
108,978
|
|
Corporate bonds
|
59,704
|
|
|
—
|
|
|
(77
|
)
|
|
59,627
|
|
||||
Certificates of deposit
|
16,512
|
|
|
—
|
|
|
—
|
|
|
16,512
|
|
||||
Total short-term investments
|
$
|
185,391
|
|
|
$
|
—
|
|
|
$
|
(274
|
)
|
|
$
|
185,117
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
79,211
|
|
|
$
|
—
|
|
|
$
|
(118
|
)
|
|
$
|
79,093
|
|
Corporate bonds
|
56,742
|
|
|
—
|
|
|
(89
|
)
|
|
56,653
|
|
||||
Certificates of deposit
|
25,650
|
|
|
—
|
|
|
—
|
|
|
25,650
|
|
||||
Total short-term investments
|
$
|
161,603
|
|
|
$
|
—
|
|
|
$
|
(207
|
)
|
|
$
|
161,396
|
|
|
As of
|
||||||
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Principal amount of the 2% Convertible Senior Notes
|
$
|
67,084
|
|
|
$
|
67,084
|
|
Principal amount of the 1.25% Convertible Senior Notes
|
345,000
|
|
|
345,000
|
|
||
Unamortized debt discount
|
(62,606
|
)
|
|
(69,684
|
)
|
||
Deferred financing costs
|
(8,642
|
)
|
|
(9,632
|
)
|
||
Long-term debt, net of discount
|
$
|
340,836
|
|
|
$
|
332,768
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Contractual coupon interest
|
$
|
1,413
|
|
|
$
|
1,007
|
|
|
$
|
2,827
|
|
|
$
|
2,013
|
|
Accretion of debt discount
|
3,573
|
|
|
1,727
|
|
|
7,078
|
|
|
3,429
|
|
||||
Amortization of debt issuance costs
|
500
|
|
|
281
|
|
|
990
|
|
|
563
|
|
||||
Total interest and other expense
|
$
|
5,486
|
|
|
$
|
3,015
|
|
|
$
|
10,895
|
|
|
$
|
6,005
|
|
|
Three and Six Months Ended June 30,
|
||||
|
2017
|
|
2016
|
||
2.00% Convertible Senior Notes
|
1,442,433
|
|
|
4,327,257
|
|
1.25% Convertible Senior Notes
|
5,910,954
|
|
|
—
|
|
Unvested restricted stock units
|
978,683
|
|
|
999,186
|
|
Outstanding options
|
3,582,149
|
|
|
3,592,064
|
|
Total dilutive common share equivalents
|
11,914,219
|
|
|
8,918,507
|
|
|
As of
|
||||
|
June 30, 2017
|
|
December 31, 2016
|
||
Amgen, Inc.
|
15
|
%
|
|
16
|
%
|
Ypsomed
|
17
|
%
|
|
19
|
%
|
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Trade receivables
|
$
|
40,410
|
|
|
$
|
31,714
|
|
Allowance for doubtful accounts
|
(2,657
|
)
|
|
(2,911
|
)
|
||
Total accounts receivable, net
|
$
|
37,753
|
|
|
$
|
28,803
|
|
|
As of
|
||||||
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Raw materials
|
$
|
2,501
|
|
|
$
|
1,911
|
|
Work-in-process
|
19,751
|
|
|
15,681
|
|
||
Finished goods, net
|
11,704
|
|
|
17,922
|
|
||
Total inventories
|
$
|
33,956
|
|
|
$
|
35,514
|
|
|
As of
|
||||||||||||||||||||||
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||||||||
Customer and contractual relationships, net
|
$
|
2,065
|
|
|
$
|
(1,612
|
)
|
|
$
|
453
|
|
|
$
|
1,994
|
|
|
$
|
(1,466
|
)
|
|
$
|
528
|
|
Internal-use software
|
5,867
|
|
|
(2,934
|
)
|
|
2,933
|
|
|
4,064
|
|
|
(2,551
|
)
|
|
1,513
|
|
||||||
Total intangible assets
|
$
|
7,932
|
|
|
$
|
(4,546
|
)
|
|
$
|
3,386
|
|
|
$
|
6,058
|
|
|
$
|
(4,017
|
)
|
|
$
|
2,041
|
|
(1)
|
Excludes software in-process of development that is not currently being amortized.
|
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Employee compensation and related costs
|
$
|
18,746
|
|
|
$
|
21,999
|
|
Professional and consulting services
|
6,172
|
|
|
6,753
|
|
||
Supplier charges
|
741
|
|
|
2,886
|
|
||
Warranty
|
1,594
|
|
|
1,642
|
|
||
Other
|
7,395
|
|
|
7,948
|
|
||
Total accrued expenses and other current liabilities
|
$
|
34,648
|
|
|
$
|
41,228
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Balance at the beginning of the period
|
$
|
4,562
|
|
|
$
|
4,160
|
|
|
$
|
4,388
|
|
|
$
|
4,152
|
|
Warranty expense
|
1,135
|
|
|
1,112
|
|
|
1,641
|
|
|
2,139
|
|
||||
Warranty claims settled
|
(880
|
)
|
|
(978
|
)
|
|
(1,212
|
)
|
|
(1,997
|
)
|
||||
Balance at the end of the period
|
$
|
4,817
|
|
|
$
|
4,294
|
|
|
$
|
4,817
|
|
|
$
|
4,294
|
|
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Composition of balance:
|
|
|
|
||||
Short-term
|
$
|
1,594
|
|
|
$
|
1,642
|
|
Long-term
|
3,223
|
|
|
2,746
|
|
||
Total warranty liability:
|
$
|
4,817
|
|
|
$
|
4,388
|
|
(in thousands)
Years Ending December 31,
|
Minimum Lease
Payments
|
||
2017 (remaining)
|
$
|
1,407
|
|
2018
|
2,684
|
|
|
2019
|
2,681
|
|
|
2020
|
2,402
|
|
|
2021
|
2,383
|
|
|
Thereafter
|
2,131
|
|
|
Total
|
$
|
13,688
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Unamortized Expense
|
|
Weighted Average
Remaining Contractual Life (Years)
|
||||||||||||||
($ in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
At June 30, 2017
|
||||||||||||
Stock options
|
$
|
2,909
|
|
|
$
|
2,473
|
|
|
$
|
5,688
|
|
|
$
|
4,794
|
|
|
$
|
21,009
|
|
|
2.5
|
Restricted stock units
|
4,500
|
|
|
2,970
|
|
|
8,737
|
|
|
5,920
|
|
|
30,213
|
|
|
2.1
|
|||||
Employee stock purchase plan
|
122
|
|
|
71
|
|
|
230
|
|
|
71
|
|
|
248
|
|
|
0.4
|
|||||
Total
|
$
|
7,531
|
|
|
$
|
5,514
|
|
|
$
|
14,655
|
|
|
$
|
10,785
|
|
|
$
|
51,470
|
|
|
|
•
|
Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period and is computed over expected terms based upon the historical volatility of the Company's stock.
|
•
|
The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options, as the Company believes this data currently represents the best estimate of the expected life of a new employee option. The Company stratifies its employee population into two groups based upon organizational hierarchy.
|
•
|
The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.
|
•
|
The dividend yield assumption is based on Company history and expectation of paying no dividends. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation.
|
|
Number of
Options (#)
|
|
Weighted Average
Exercise Price ($)
|
|
Aggregate
Intrinsic
Value ($ in 000s)
|
|
Weighted Average
Remaining Contractual Life (Years)
|
|||||
Balance, December 31, 2016
|
3,441,303
|
|
|
$
|
32.27
|
|
|
|
|
|
||
Granted
|
487,402
|
|
|
44.75
|
|
|
|
|
|
|||
Exercised
(1)
|
(292,701
|
)
|
|
24.66
|
|
|
$
|
5,406
|
|
|
|
|
Canceled
|
(53,855
|
)
|
|
33.50
|
|
|
|
|
|
|||
Balance, June 30, 2017
|
3,582,149
|
|
|
$
|
34.57
|
|
|
$
|
59,948
|
|
|
8.1
|
Vested, June 30, 2017
(2)
|
1,734,065
|
|
|
$
|
33.16
|
|
|
$
|
31,475
|
|
|
7.4
|
Vested or expected to vest, June 30, 2017
(2)(3)
|
3,330,380
|
|
|
|
|
$
|
56,274
|
|
|
|
|
|
|
|
|
(1)
|
The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date of exercise and the exercise price of the underlying options. The aggregate intrinsic value of options exercised in the
six months ended June 30, 2017
and
2016
was
$5.4 million
and
$1.0 million
, respectively.
|
(2)
|
The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of
June 30, 2017
, and the exercise price of the underlying options.
|
(3)
|
Represents the number of vested options as of
June 30, 2017
, plus the number of unvested options expected to vest.
|
|
Number of
Shares (#)
|
|
Weighted
Average
Fair Value ($)
|
|||
Balance, December 31, 2016
|
962,219
|
|
|
$
|
31.14
|
|
Granted
|
365,336
|
|
|
45.78
|
|
|
Vested
|
(343,105
|
)
|
|
31.29
|
|
|
Forfeited
|
(5,767
|
)
|
|
32.32
|
|
|
Balance, June 30, 2017
|
978,683
|
|
|
$
|
36.54
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
U.S. Omnipod
|
$
|
65,361
|
|
|
$
|
56,337
|
|
|
$
|
125,016
|
|
|
$
|
107,050
|
|
International Omnipod
|
26,575
|
|
|
16,559
|
|
|
51,719
|
|
|
31,939
|
|
||||
Drug Delivery
|
17,820
|
|
|
14,434
|
|
|
34,734
|
|
|
29,554
|
|
||||
Total
|
$
|
109,756
|
|
|
$
|
87,330
|
|
|
$
|
211,469
|
|
|
$
|
168,543
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States
|
$
|
83,181
|
|
|
$
|
70,771
|
|
|
$
|
159,750
|
|
|
$
|
136,604
|
|
All other
|
26,575
|
|
|
16,559
|
|
|
51,719
|
|
|
31,939
|
|
||||
Total
|
$
|
109,756
|
|
|
$
|
87,330
|
|
|
$
|
211,469
|
|
|
$
|
168,543
|
|
(in thousands)
|
June 30, 2017
|
|
December 31, 2016
|
||||
United States
|
$
|
54,228
|
|
|
$
|
19,341
|
|
China
|
21,722
|
|
|
25,431
|
|
||
Other
|
61
|
|
|
197
|
|
||
Total
|
$
|
76,011
|
|
|
$
|
44,969
|
|
•
|
risks associated with our dependence on our principal product, the Omnipod System;
|
•
|
fluctuations in quarterly results of operations;
|
•
|
our ability to sustain or reduce production costs and increase customer orders and manufacturing volumes;
|
•
|
adverse changes in general economic conditions;
|
•
|
impact of healthcare reform laws;
|
•
|
our inability to raise additional funds in the future on acceptable terms or at all;
|
•
|
potential supply problems or price fluctuations with sole source or third-party suppliers on which we are dependent;
|
•
|
the potential establishment of a competitive bid program;
|
•
|
failure to retain supplier pricing discounts and achieve satisfactory gross margins;
|
•
|
failure to retain key supplier and payor partners;
|
•
|
international business risks;
|
•
|
our inability to effectively assume the distribution and commercial support for our Omnipod System in Europe following the expiration of our global distribution agreement with Ypsomed on June 30, 2018;
|
•
|
our inability to secure and retain adequate coverage or reimbursement for the Omnipod System by third-party payors and potential adverse changes in reimbursement rates or policies relating to the Omnipod System;
|
•
|
failure to retain key payor partners and their members;
|
•
|
failure to retain and manage successfully our Medicare and Medicaid business;
|
•
|
potential adverse effects resulting from competition;
|
•
|
reliance on information technology systems and our ability to control related risks, including a cyber-attack or other breach or disruption of these systems;
|
•
|
technological breakthroughs and innovations adversely affecting our business, and our own new product development initiatives may prove to be ineffective or not commercially successful;
|
•
|
potential termination of our license to incorporate a blood glucose meter into the Omnipod System, or our inability to enter into new license agreements;
|
•
|
challenges to the further development of our non-insulin drug delivery business;
|
•
|
our ability to protect our intellectual property and other proprietary rights; conflicts with the intellectual property of third-parties, including claims that our current or future products infringe or misappropriate the proprietary rights of others;
|
•
|
adverse regulatory or legal actions relating to the Omnipod System;
|
•
|
our products and operations are subject to extensive government regulation, which could restrict our ability to carry on or expand our operations;
|
•
|
failure of our contract manufacturers or component suppliers to comply with the FDA’s quality system regulations;
|
•
|
potential adverse impact resulting from a recall, or discovery of serious safety issues, of our products;
|
•
|
the potential violation of federal or state laws prohibiting “kickbacks” or protecting the confidentiality of patient health information, or any challenge to or investigation into our practices under these laws;
|
•
|
product liability lawsuits that may be brought against us;
|
•
|
reduced retention rates of our customer base;
|
•
|
unfavorable results of clinical studies relating to the Omnipod System or the products of our competitors;
|
•
|
potential future publication of articles or announcement of positions by diabetes associations or other organizations that are unfavorable to the Omnipod System;
|
•
|
the concentration of substantially all of our manufacturing operations at a single location in China and substantially all of our inventory at a single location in Massachusetts;
|
•
|
our ability to effectively manage the construction of our planned manufacturing facility in the U.S.;
|
•
|
our ability to attract and retain personnel;
|
•
|
our ability to manage our growth;
|
•
|
risks associated with potential future acquisitions or investments in new businesses;
|
•
|
our ability to generate sufficient cash to service all of our indebtedness;
|
•
|
the expansion of our distribution network;
|
•
|
our ability to successfully maintain effective internal control over financial reporting;
|
•
|
the volatility of the price of our common stock;
|
•
|
risks related to future sales of our common stock or the conversion of any of our 2% Convertible Senior Notes due June 15, 2019 and 1.25% Convertible Senior Notes due September 15, 2021;
|
•
|
potential indemnification obligations in connection with the disposition of our former Neighborhood Diabetes supplies business;
|
•
|
potential limitations on our ability to use our net operating loss carryforwards; and
|
•
|
anti-takeover provisions in our organizational documents.
|
•
|
Total revenue of $
109.8 million
|
◦
|
U.S. Omnipod revenue of $
65.4 million
|
◦
|
International Omnipod revenue of $
26.6 million
|
◦
|
Drug Delivery revenue of $
17.8 million
|
|
|
Six Months Ended June 30,
|
||||||
(In thousands)
|
|
2017
|
|
2016
|
||||
Cash (used in) provided by:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(3,871
|
)
|
|
$
|
(6,836
|
)
|
Investing activities
|
|
(64,266
|
)
|
|
(35,788
|
)
|
||
Financing activities
|
|
4,194
|
|
|
(4,592
|
)
|
||
Effect of exchange rate changes on cash
|
|
257
|
|
|
205
|
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(63,686
|
)
|
|
$
|
(47,011
|
)
|
|
|
INSULET CORPORATION
(Registrant)
|
|
|
|
Date:
|
August 3, 2017
|
/s/ Patrick J. Sullivan
|
|
|
Patrick J. Sullivan
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date:
|
August 3, 2017
|
/s/ Michael L. Levitz
|
|
|
Michael L. Levitz
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Grant Date:
|
|
|
Name of Grantee:
|
|
|
Number of Shares of Stock Covered by the Option:
|
|
|
Option Price per Share:
|
|
$
|
Vesting Schedule:
|
|
[Your Options shall vest as to one-half on the first anniversary of the Grant Date, one-quarter on the second anniversary of the Grant Date and one-quarter on the third anniversary of the Grant Date (the “
Vesting Dates
”),
provided that
in each case you remain in continuous Service from the Grant Date until the applicable Vesting Date.] 1
[Your Options shall vest as to 100% of the number of shares of Stock as set forth above on April 30, 20__.] 2
|
Non-Qualified Stock Option
|
This Agreement evidences an award of an Option exercisable for that number of shares of Stock set forth on the cover sheet and subject to the terms and conditions set forth in this Agreement and in the Plan. This Option is not intended to be an incentive stock option under Section 422 of the Code and will be interpreted accordingly.
|
Transfer of Option
|
During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. Other than by will or the laws of descent and distribution, the Option may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment, or similar process. If you attempt to do any of these things, you will immediately and automatically forfeit your Option.
Notwithstanding these restrictions on transfer, the Committee may authorize, in its sole discretion, the transfer of a vested Option (in whole or in part) to a member of your immediate family or a trust for the benefit of your immediate family.
|
Vesting and Exercisability
|
Your Option shall vest in accordance with the vesting schedule set forth on the cover sheet of this Agreement.
Upon a Vesting Date, any fractional shares shall be rounded to the nearest whole share, but you cannot vest in more than the number of shares of Stock underlying the Options covered by this Agreement.
Except as otherwise provided in this Agreement, no additional portion of your Option shall vest after your Service has terminated for any reason.
Your Option is only exercisable before it expires and then only with respect to the vested portion of the Option.
|
Termination as a Result of Death or Disability
|
In the event of your termination of Service due to your death or Disability, your Option shall become immediately vested and exercisable.
|
Term
|
Your Option will expire in any event at the close of business at Company headquarters on the day before the tenth (10
th
) anniversary of the Grant Date, as shown on the cover sheet. Your Option will expire earlier if your Service terminates, as described below.
|
Termination of Service – Forfeiture of Options
|
Unless the termination of your Service triggers accelerated vesting or other treatment of your Option pursuant to the terms of this Agreement, the Plan, or otherwise, you will automatically and immediately forfeit to the Company the unvested portion of your Option in the event your Service terminates for any reason.
If your Service is terminated for Cause, then you shall automatically and immediately forfeit to the Company your entire Option (both vested and unvested portions), and the Option shall automatically and immediately expire.
|
Termination of Service – Expiration of Vested Options
|
If your Service terminates for any reason, other than death, Disability or Cause, then the vested portion of your Option will expire at the close of business at Company headquarters on the six month anniversary of your termination date.
If your Service terminates because of your death or Disability, or if you die during the six month
period after your termination for any reason (other than Cause), then the vested portion of your Option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of your death or termination due to Disability. During that twelve (12)-month period, your estate or heirs may exercise the vested portion of your Option.
|
Leaves of Absence
|
For purposes of this Agreement, your Service does not terminate when you go on a
bona fide
leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting or when continued Service crediting is required by Applicable Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work.
Your employer may determine, in its discretion, which leaves count for this purpose and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan.
|
Notice of Exercise
|
The Option may be exercised, in whole or in part, to purchase a whole number of vested shares of Stock of not less than one hundred (100) shares, unless the number of vested shares purchased is the total number available for purchase under the Option, by following the procedures set forth in the Plan and in this Agreement.
When you wish to exercise this Option, you must exercise in a manner required or permitted by the Committee. If someone else wants to exercise this Option after your death, that person must prove to the Committee’s satisfaction that he or she is entitled to do so.
|
Form of Payment
|
When you exercise your Option, you must include payment of the aggregate Option Price for the shares you are purchasing. Subject to any procedures established by the Company, payment may be made in one (or a combination) of the following forms:
•
By your delivery (on a form prescribed by the Company) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Option Price and any withholding taxes.
•
By your delivery of cash, a personal check, a cashier’s check, a money order, or another cash equivalent acceptable to the Company.
•
By the Company’s withholding a number of shares of Stock that would otherwise be issuable to you upon your exercise of your Option. The Fair Market Value of the shares as of the effective date of the Option exercise will be applied to the Option Price.
•
By your surrender of shares of Stock which are already owned by you, which are deemed surrendered by you pursuant to your attestation of ownership to the Company. The Fair Market Value of the shares as of the effective date of the Option exercise will be applied to the Option Price.
|
Evidence of Issuance
|
The issuance of the shares upon exercise of this Option shall be evidenced in such a manner as the Company, in its discretion, deems appropriate, including, without limitation, book-entry or direct registration or the issuance of one or more Stock certificates.
|
Withholding
|
You agree as a condition of this Option that you shall, not later than the date as of which the exercise of this Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Company for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to you a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.
|
Retention Rights
|
This Agreement does not give you the right to be retained or employed by the Company (or any of its Affiliates) in any capacity. The Company and any Affiliates reserve the right to terminate your Service at any time and for any reason.
|
Stockholder Rights
|
You, or your estate or heirs, do not have any of the rights of a stockholder with respect to the shares of Stock underlying the Option unless and until the shares of Stock underlying the Option have been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books. Except as described in the Plan, no adjustments are made for dividends, distributions, or other rights if the applicable record date occurs before your stock certificate is issued (or an appropriate book entry is made).
|
Adjustments
|
In the event of a stock split, a stock dividend, or a similar change in the Company Stock, the number of shares of Stock covered by this Option shall be adjusted pursuant to the Plan.
Your Option shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event the Company is subject to such corporate activity in accordance with the terms of the Plan.
|
Clawback
|
This Option is subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company “clawback” or recoupment policy or Applicable Law that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy or Applicable Law.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct, or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Option earned or accrued during the twelve (12)-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
|
The Plan
|
The text of the Plan is incorporated into this Agreement by reference.
Certain capitalized terms used in this Agreement are defined in the Plan and have the meaning set forth in the Plan.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments, or negotiations concerning this Option are superseded; except that any written consulting, confidentiality, non-competition, non-solicitation, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter.
|
Data Privacy
|
In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.
By accepting the Option, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan.
|
Electronic Delivery
|
By accepting the Option, you consent to receive documents related to the Option by electronic delivery and, if requested, agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. Your consent shall remain in effect throughout your term of Service and thereafter until you withdraw such consent in writing to the Company.
|
Code Section 409A
|
The grant of the Option is intended to be exempt from or, to the extent subject thereto, to comply with Code Section 409A (“
Section 409A
”), and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan or this Agreement, neither the Company, its Affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on you under Section 409A, and neither the Company, its Affiliates, the Board, nor the Committee will have any liability to you for such tax or penalty.
|
Restricted Stock Units
|
This Agreement evidences an award of RSUs in the number set forth on the cover sheet and subject to the vesting and other terms and conditions set forth in this Agreement and in the Plan.
|
Transfer of Unvested RSUs
|
RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, whether by operation of law or otherwise, nor may the RSUs be made subject to execution, attachment, or similar process. If you attempt to do any of these things, you will immediately and automatically forfeit the RSUs.
|
Vesting
|
Your RSUs shall vest in accordance with the vesting schedule set forth on the cover sheet of this Agreement.
Upon a Vesting Date, any fractional shares shall be rounded to the nearest whole share, but you cannot vest in more than the number of shares of Stock underlying the RSUs covered by this Agreement.
Except as otherwise provided in this Agreement, no additional RSUs will vest after your Service has terminated for any reason.
|
Leaves of Absence
|
For purposes of this Agreement, your Service does not terminate when you go on a
bona fide
leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting or when continued Service crediting is required by Applicable Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work.
Your employer determines, in its sole discretion, which leaves count for this purpose and when your Service terminates for all purposes under the Plan.
|
Termination due to Death or Disability
|
If your Service is terminated due to your death or Disability, your RSUs shall immediately become 100% vested as of the date of such termination.
|
Forfeiture of Unvested RSUs
|
You will automatically forfeit to the Company all of the unvested RSUs as of your termination of Service.
|
Delivery
|
Delivery of the shares of Stock represented by your vested RSUs shall be made within thirty (30) days of the applicable Vesting Date or, if earlier, a termination of your Service that results in your RSUs becoming vested.
|
Evidence of Issuance
|
The issuance of the shares of Stock underlying the RSUs covered by this Agreement shall be evidenced in such a manner as the Company, in its discretion, deems appropriate, including, without limitation, book-entry or direct registration or the issuance of one or more Stock certificates. You will have no further rights with regard to a RSU once the share of Stock related to such RSU has been issued to you.
|
Withholding Taxes
|
You agree as a condition of this RSU that you shall, not later than the date as of which the receipt of this Award becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Company for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to you a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.
|
Retention Rights
|
This Agreement does not give you the right to be retained or employed by the Company (or any of its Affiliates) in any capacity. The Company and any Affiliates reserve the right to terminate your Service at any time and for any reason.
|
Stockholder Rights
|
You, or your estate or heirs, do not have any of the rights of a stockholder with respect to any RSU unless and until the share of Stock underlying the RSU has been issued and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books.
|
Adjustments
|
In the event of a stock split, a stock dividend, or a similar change in the Stock, the number of RSUs covered by this Agreement shall be adjusted pursuant to the Plan.
Your RSUs shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event the Company is subject to such corporate activity in accordance with the terms of the Plan.
|
Clawback
|
The RSUs covered by this Agreement, and the shares of Stock that may be issued hereunder, are subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company “clawback” or recoupment policy or Applicable Law that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy or Applicable Law.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct, or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Award earned or accrued during the twelve (12)-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
|
The Plan
|
The text of the Plan is incorporated in this Agreement by reference.
Certain capitalized terms used in this Agreement are defined in the Plan and have the meaning set forth in the Plan.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding the RSUs. Any prior agreements, commitments, or negotiations concerning the RSUs are superseded; except that any written employment, consulting, confidentiality, non-competition, non-solicitation, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter.
|
Data Privacy
|
In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.
By accepting the RSUs, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan.
|
Electronic Delivery
|
By accepting the RSUs, you consent to receive documents related to the RSUs by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. Your consent shall remain in effect throughout your term of Service and thereafter until you withdraw such consent in writing to the Company.
|
Code Section 409A
|
The grant of RSUs under this Agreement is intended to be exempt from or, to the extent subject thereto, to comply with Code Section 409A (“
Section 409A
”), and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan or this Agreement, neither the Company, its Affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on you under Section 409A, and neither the Company, its Affiliates, the Board, nor the Committee will have any liability to you for such tax or penalty.
For purposes of this Agreement, a termination of Service only occurs upon an event that would be a Separation from Service.
Notwithstanding anything in this Agreement to the contrary, if at the time of the Grantee’s Separation from Service, (i) the Grantee is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time), and (ii) the Company makes a good faith determination that an amount payable on account of such separation from service to the Grantee constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six (6)-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A (the “
Delay Period
”), then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it in a lump sum on the first payroll date after such Delay Period (or upon the Grantee’s death, if earlier), without interest thereupon.
|
Grant Date:
|
|
|
Name of Grantee:
|
|
|
Number of Shares of Stock Covered by the Option:
|
|
|
Option Price per Share:
|
|
$
|
Vesting Schedule:
|
|
[Your Options shall vest as to 25% of the number of shares of Stock as set forth above on the first anniversary of the Grant Date and the remaining number of shares of Stock set forth above shall become vested and exercisable in 12 equal quarterly installments thereafter (each a “
Vesting Date
”),
provided that
you remain in continuous Service from the Grant Date until the applicable Vesting Date].
|
Incentive Stock Option
|
This option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code and will be interpreted accordingly. If you cease to be an employee of the Company, its parent or a Subsidiary (“Employee”) but continue to provide Service, this option will be deemed a nonstatutory stock option three months after you cease to be an Employee. In addition, to the extent that all or part of this option exceeds the $100,000 rule of Section 422(d) of the Internal Revenue Code, this option or the lesser excess part will be deemed to be a nonstatutory stock option.
|
Transfer of Option
|
During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. Other than by will or the laws of descent and distribution, the Option may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment, or similar process. If you attempt to do any of these things, you will immediately and automatically forfeit your Option.
Notwithstanding these restrictions on transfer, the Committee may authorize, in its sole discretion, the transfer of a vested Option (in whole or in part) to a member of your immediate family or a trust for the benefit of your immediate family.
|
Vesting and Exercisability
|
Your Option shall vest in accordance with the vesting schedule set forth on the cover sheet of this Agreement.
Upon a Vesting Date, any fractional shares shall be rounded to the nearest whole share, but you cannot vest in more than the number of shares of Stock underlying the Options covered by this Agreement.
Except as otherwise provided in this Agreement, no additional portion of your Option shall vest after your Service has terminated for any reason.
Your Option is only exercisable before it expires and then only with respect to the vested portion of the Option.
|
Withholding
|
You agree as a condition of this Option that you shall, not later than the date as of which the exercise of this Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Company for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to you a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.
|
Retention Rights
|
This Agreement does not give you the right to be retained or employed by the Company (or any of its Affiliates) in any capacity. The Company and any Affiliates reserve the right to terminate your Service at any time and for any reason.
|
Stockholder Rights
|
You, or your estate or heirs, do not have any of the rights of a stockholder with respect to the shares of Stock underlying the Option unless and until the shares of Stock underlying the Option have been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books. Except as described in the Plan, no adjustments are made for dividends, distributions, or other rights if the applicable record date occurs before your stock certificate is issued (or an appropriate book entry is made).
|
Adjustments
|
In the event of a stock split, a stock dividend, or a similar change in the Company Stock, the number of shares of Stock covered by this Option shall be adjusted pursuant to the Plan.
Your Option shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event the Company is subject to such corporate activity in accordance with the terms of the Plan.
|
Clawback
|
This Option is subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company “clawback” or recoupment policy or Applicable Law that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy or Applicable Law.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct, or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Option earned or accrued during the twelve (12)-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
|
The Plan
|
The text of the Plan is incorporated into this Agreement by reference.
Certain capitalized terms used in this Agreement are defined in the Plan and have the meaning set forth in the Plan.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments, or negotiations concerning this Option are superseded; except that any written consulting, confidentiality, non-competition, non-solicitation, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter.
|
Data Privacy
|
In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.
By accepting the Option, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan.
|
Electronic Delivery
|
By accepting the Option, you consent to receive documents related to the Option by electronic delivery and, if requested, agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. Your consent shall remain in effect throughout your term of Service and thereafter until you withdraw such consent in writing to the Company.
|
Certain Dispositions
|
If you sell or otherwise dispose of Stock acquired pursuant to the exercise of this option sooner than the one year anniversary of the date you acquired the Stock, then you agree to notify the Company in writing of the date of sale or disposition, the number of share of Stock sold or disposed of and the sale price per share within 30 days of such sale or disposition.
|
Code Section 409A
|
The grant of the Option is intended to be exempt from or, to the extent subject thereto, to comply with Code Section 409A (“
Section 409A
”), and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan or this Agreement, neither the Company, its Affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on you under Section 409A, and neither the Company, its Affiliates, the Board, nor the Committee will have any liability to you for such tax or penalty.
|
Grant Date:
|
|
|
Name of Grantee:
|
|
|
Number of Shares of Stock Covered by the Option:
|
|
|
Option Price per Share:
|
|
$
|
Vesting Schedule:
|
|
[Your Options shall vest as to 25% of the number of shares of Stock as set forth above on the first anniversary of the Grant Date and the remaining number of shares of Stock set forth above shall become vested and exercisable in 12 equal quarterly installments thereafter (each a “
Vesting Date
”),
provided that
you remain in continuous Service from the Grant Date until the applicable Vesting Date].
|
Non-Qualified Stock Option
|
This Agreement evidences an award of an Option exercisable for that number of shares of Stock set forth on the cover sheet and subject to the terms and conditions set forth in this Agreement and in the Plan. This Option is not intended to be an incentive stock option under Section 422 of the Code and will be interpreted accordingly.
|
Transfer of Option
|
During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. Other than by will or the laws of descent and distribution, the Option may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment, or similar process. If you attempt to do any of these things, you will immediately and automatically forfeit your Option.
Notwithstanding these restrictions on transfer, the Committee may authorize, in its sole discretion, the transfer of a vested Option (in whole or in part) to a member of your immediate family or a trust for the benefit of your immediate family.
|
Vesting and Exercisability
|
Your Option shall vest in accordance with the vesting schedule set forth on the cover sheet of this Agreement.
Upon a Vesting Date, any fractional shares shall be rounded to the nearest whole share, but you cannot vest in more than the number of shares of Stock underlying the Options covered by this Agreement.
Except as otherwise provided in this Agreement, no additional portion of your Option shall vest after your Service has terminated for any reason.
Your Option is only exercisable before it expires and then only with respect to the vested portion of the Option.
|
Withholding
|
You agree as a condition of this Option that you shall, not later than the date as of which the exercise of this Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Company for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to you a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.
|
Retention Rights
|
This Agreement does not give you the right to be retained or employed by the Company (or any of its Affiliates) in any capacity. The Company and any Affiliates reserve the right to terminate your Service at any time and for any reason.
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Stockholder Rights
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You, or your estate or heirs, do not have any of the rights of a stockholder with respect to the shares of Stock underlying the Option unless and until the shares of Stock underlying the Option have been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books. Except as described in the Plan, no adjustments are made for dividends, distributions, or other rights if the applicable record date occurs before your stock certificate is issued (or an appropriate book entry is made).
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Adjustments
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In the event of a stock split, a stock dividend, or a similar change in the Company Stock, the number of shares of Stock covered by this Option shall be adjusted pursuant to the Plan.
Your Option shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event the Company is subject to such corporate activity in accordance with the terms of the Plan.
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Clawback
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This Option is subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company “clawback” or recoupment policy or Applicable Law that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy or Applicable Law.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct, or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Option earned or accrued during the twelve (12)-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.
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Applicable Law
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This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
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The Plan
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The text of the Plan is incorporated into this Agreement by reference.
Certain capitalized terms used in this Agreement are defined in the Plan and have the meaning set forth in the Plan.
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments, or negotiations concerning this Option are superseded; except that any written consulting, confidentiality, non-competition, non-solicitation, and/or severance agreement between you and the Company or an Affiliate, as applicable, shall supersede this Agreement with respect to its subject matter.
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Data Privacy
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In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.
By accepting the Option, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan.
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Electronic Delivery
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By accepting the Option, you consent to receive documents related to the Option by electronic delivery and, if requested, agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. Your consent shall remain in effect throughout your term of Service and thereafter until you withdraw such consent in writing to the Company.
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Code Section 409A
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The grant of the Option is intended to be exempt from or, to the extent subject thereto, to comply with Code Section 409A (“
Section 409A
”), and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan or this Agreement, neither the Company, its Affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on you under Section 409A, and neither the Company, its Affiliates, the Board, nor the Committee will have any liability to you for such tax or penalty.
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Restricted Stock Units
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This Agreement evidences an award of RSUs in the number set forth on the cover sheet and subject to the vesting and other terms and conditions set forth in this Agreement and in the Plan.
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Transfer of Unvested RSUs
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RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered, whether by operation of law or otherwise, nor may the RSUs be made subject to execution, attachment, or similar process. If you attempt to do any of these things, you will immediately and automatically forfeit the RSUs.
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Vesting
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Your RSUs shall vest in accordance with the vesting schedule set forth on the cover sheet of this Agreement.
Upon a Vesting Date, any fractional shares shall be rounded to the nearest whole share, but you cannot vest in more than the number of shares of Stock underlying the RSUs covered by this Agreement.
Except as otherwise provided in this Agreement, no additional RSUs will vest after your Service has terminated for any reason.
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Leaves of Absence
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For purposes of this Agreement, your Service does not terminate when you go on a
bona fide
leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting or when continued Service crediting is required by Applicable Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work.
Your employer determines, in its sole discretion, which leaves count for this purpose and when your Service terminates for all purposes under the Plan.
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Death, Disability and Termination in Connection with a Sale Event
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If your Service is terminated (i) due to your death or Disability or (ii) by the Company without Cause [or by you for Good Reason in either case]
1
within 24 months after a Sale Event, your RSUs shall immediately become 100% vested as of the date of such termination.
[For purposes of this Agreement, “Good Reason” shall mean that you have complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events: (i) a material diminution in your responsibilities, authority or duties; or (ii) a material reduction in your then current base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees; or (iii) the relocation of the Company offices at which you are principally employed to a location more than 30 miles from such offices. For purposes of clause (i) hereof, a change in the reporting relationship, or a change in a title will not, by itself, be sufficient to constitute a material diminution of responsibilities, authority or duty. “Good Reason Process” shall mean: (i) you reasonably determine in good faith that a “Good Reason” condition has occurred; (ii) you notify the Company in writing of the occurrence of the Good Reason condition within 30 days of the occurrence of such condition; (iii) you cooperate in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) you terminate your Service Relationship within 30 days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.] 1
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1 Applicable for grants only to employees at the Vice President level and above.
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Forfeiture of Unvested RSUs
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You will automatically forfeit to the Company all of the unvested RSUs as of your termination of Service.
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Delivery
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Delivery of the shares of Stock represented by your vested RSUs shall be made within thirty (30) days of the applicable Vesting Date or, if earlier, a termination of your Service that results in your RSUs becoming vested.
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Evidence of Issuance
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The issuance of the shares of Stock underlying the RSUs covered by this Agreement shall be evidenced in such a manner as the Company, in its discretion, deems appropriate, including, without limitation, book-entry or direct registration or the issuance of one or more Stock certificates. You will have no further rights with regard to a RSU once the share of Stock related to such RSU has been issued to you.
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Withholding Taxes
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You agree as a condition of this RSU that you shall, not later than the date as of which the receipt of this Award becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Company for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event. The Company shall have the authority to cause the minimum required tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued to you a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.
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Retention Rights
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This Agreement does not give you the right to be retained or employed by the Company (or any of its Affiliates) in any capacity. The Company and any Affiliates reserve the right to terminate your Service at any time and for any reason.
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Stockholder Rights
|
You, or your estate or heirs, do not have any of the rights of a stockholder with respect to any RSU unless and until the share of Stock underlying the RSU has been issued and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company’s books.
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Adjustments
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In the event of a stock split, a stock dividend, or a similar change in the Stock, the number of RSUs covered by this Agreement shall be adjusted pursuant to the Plan.
Your RSUs shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event the Company is subject to such corporate activity in accordance with the terms of the Plan.
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Clawback
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The RSUs covered by this Agreement, and the shares of Stock that may be issued hereunder, are subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company “clawback” or recoupment policy or Applicable Law that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy or Applicable Law.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct, or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Award earned or accrued during the twelve (12)-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.
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Code Section 409A
|
The grant of RSUs under this Agreement is intended to be exempt from or, to the extent subject thereto, to comply with Code Section 409A (“
Section 409A
”), and, accordingly, to the maximum extent permitted, this Agreement will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan or this Agreement, neither the Company, its Affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on you under Section 409A, and neither the Company, its Affiliates, the Board, nor the Committee will have any liability to you for such tax or penalty.
For purposes of this Agreement, a termination of Service only occurs upon an event that would be a Separation from Service.
Notwithstanding anything in this Agreement to the contrary, if at the time of the Grantee’s Separation from Service, (i) the Grantee is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time), and (ii) the Company makes a good faith determination that an amount payable on account of such separation from service to the Grantee constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six (6)-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A (the “
Delay Period
”), then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it in a lump sum on the first payroll date after such Delay Period (or upon the Grantee’s death, if earlier), without interest thereupon.
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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/s/ Patrick J. Sullivan
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||
Patrick J. Sullivan
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||
Chief Executive Officer
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||
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Date:
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August 3, 2017
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Michael L. Levitz
|
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Michael L. Levitz
|
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Chief Financial Officer
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Date:
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August 3, 2017
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/s/ Patrick J. Sullivan
|
||
Patrick J. Sullivan
|
||
Chief Executive Officer
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Date:
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August 3, 2017
|
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/s/ Michael L. Levitz
|
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Michael L. Levitz
|
||
Chief Financial Officer
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Date:
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August 3, 2017
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