FORM 10-K
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(Mark One)
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2012
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Intermolecular, Inc.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
(State or Other Jurisdiction of Incorporation or Organization)
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20-1616267
(I.R.S. Employer Identification No.)
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3011 N. First Street
San Jose, California
(Address of Principal Executive Offices)
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95134
(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, $0.001 par value
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The NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated filer
ý
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
o
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Page
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PART I
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PART II
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PART III
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PART IV
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•
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Equipment suppliers.
Equipment suppliers provide high-volume manufacturing solutions that are not purpose-built for researching the interaction of advanced materials, processes, integration and device architectures. Additionally, they provide solutions that are not always uniquely tailored to specific customer applications.
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•
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Industry consortia.
Industry consortia provide solutions that offer no competitive differentiation because the customer must share the IP with all consortium participants, including competitors.
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•
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Alliance partnerships.
Alliance partnerships impose limitations on the overall outcome, as they are typically structured to find generic solutions rather than the solutions for a particular application. Additionally, these generic solutions are offered to a small set of competitors and are not customer-specific or application-specific.
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•
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University research.
University research provides theoretical solutions requiring additional work and time to commercialize, since this work typically does not address manufacturing or commercialization challenges.
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•
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Third-party IP licensing.
Third-party IP licensing is primarily used for defensive purposes or market access. Those who cross-license IP do not necessarily receive a solution that is specific to the customer, manufacturing process or application, and the received solution is not differentiated from what their competitors receive through the same license.
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•
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Tempus HPC processing.
We use our Tempus HPC processing tools to rapidly process different experiments consisting of various combinations of materials, processing parameters, sequencing and device structures. We are able to perform up to
192
experiments on a single substrate, as compared to conventional methods, which typically allow only a single experiment at a time.
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•
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Automated characterization.
We use automated characterization systems to characterize the substrates processed by our Tempus HPC processing tools, thereby generating experimental data at a speed that matches our processing throughput.
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•
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Informatics and analysis software.
We use our informatics and analysis software to automate experiment generation, characterization, data analysis and reporting (in each case matching our processing throughput), and to create an aggregated and searchable database of information that includes the experimental results we generate.
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•
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Accelerated time-to-market with better, lower-cost products.
Faster processing of experiments, throughput-matched characterization and real-time data management and analysis allow additional learning cycles and broader exploration of materials and process solution combinations. In highly competitive markets, the resulting
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•
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Development of application and manufacturing-ready IP tailored to our customers' specifications.
When we engage in a CDP with our customers, we use our HPC platform and customized workflows to develop IP-protected, proprietary technology that is tailored to our customers' applications and ready for high-volume manufacturing. We provide our customers rights to the IP for their applications primarily through royalty-bearing licenses.
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•
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Increased R&D productivity and reduced technology risk.
Using our combinatorial processes, we narrow the potential combinations of advanced materials, processes and device architecture solutions through a series of increasingly rigorous screening stages to guide the selection of solutions that meet device performance requirements and that are cost-efficient and ready for high-volume manufacturing. The combinatorial process of screening and evaluating these solutions and their manufacturability mitigates our customers' technology risk earlier in the development cycle.
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•
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Proprietary and patented HPC platform.
Our HPC platform employs proprietary and patented combinatorial methods to parallel and rapid-serial process up to
192
experiments on a single substrate as compared to conventional methods, which typically allow only a single experiment at a time. As of December 31, 2012, we owned or had exclusive rights within our field of use to
971
U.S. patents and patent applications (some of which also have foreign counterparts), which provide us with a competitive advantage in the use of combinatorial methods and systems in our target markets.
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•
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Flexible technology platform configurable for and extendable to multiple markets.
Our HPC platform can be configured for many applications and extended to address the broad set of integrated device markets. Because of the similarities
and synergies
in materials deposition, manufacturing processes and device integration complexities across markets, our platform allows us to create customized workflows and support innovation across multiple markets.
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•
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Seasoned engineering team with multi-disciplinary expertise.
We have assembled a multi-disciplinary team of
approximately 150
scientists and engineers, of whom approximately
40%
have Ph.D.s, with expertise across various disciplines, fields and technologies, including materials science, chemistry, physics, engineering, process equipment development, software and informatics, process development and integration, device technologies and device integration.
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•
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Deep expertise in advanced materials, processes, integration and device architectures.
We have accelerated innovation for a broad set of customers across multiple markets. During each CDP, our team and our platform enable more rapid comprehension and learning about advanced materials, processes, integration and device architectures, some of which is applicable across markets. We aggressively protect IP that we generate with customers. IP such as materials characteristics, optimized processes and interoperability of systems and architectures can be applicable beyond the field of use of the CDP and can benefit new customers without impacting competitive differentiation of current customers.
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•
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Collaborative customer engagements leading to IP generation and strategic alignment.
Customers pay us development service and HPC platform subscription fees during multi-year CDPs.
We grant them rights to proprietary technology and IP developed during our collaborations.
As customers successfully commercialize products incorporating technology developed through the CDPs, we receive licensing fees and/or royalties. In certain cases, we sell HPC processing tools to our customers and customers pay us a license fee for use of our HPC platform and associated software. This alignment of interests facilitates collaboration and open communication that improves development efficiencies and is more likely to result in innovative, differentiated products.
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•
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Attractive business model with contracted CDP revenue and recurring high-margin royalties.
Our multi-year CDPs generate predictable CDP and services revenue from our customers. Our CDPs also establish the terms upon which we will receive licensing and royalty revenue from the sale of our customers' products that incorporate technology developed through our CDPs. These licensing and royalty arrangements create a business model with attractive margins and a high degree of near-term visibility. Licensing and royalty revenue has increased over the past three years and has accounted for a larger portion of revenue (
24%
,
27%
and
19%
in the years ended December 31, 2012, 2011 and 2010, respectively), and we expect the percentage will increase going forward as more of our customers license our developed technology and commercialize and ramp production of products incorporating technology developed through our CDPs.
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•
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Target large, high-volume semiconductor markets.
We target customers in large, high-volume semiconductor markets, including DRAM, flash memory and complex logic. Success in these markets requires semiconductor companies to consistently remain at the leading edge of cost and performance, which demands innovation around materials science, processes, integration and device architectures.
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•
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Target large, high-growth, emerging clean energy markets.
We target customers in large clean energy markets with high growth or continued high growth potential, including the markets for flat glass coatings and glass-based devices, thin film and crystalline solar cells, LEDs and other energy efficiency technologies. We believe we can deliver significant improvements in cost, performance and manufacturability in these markets with our HPC platform.
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•
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Engage with existing and potential market leaders in our target markets.
We enter into CDPs with companies that are well-positioned to lead their markets. We engage with customers that have track records of technological innovation, deploy significant resources and are pursuing advancements that are critical to their success and strategy.
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•
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Create proprietary IP with our customers.
We develop differentiated, IP-protected technologies with our customers, and we grant them rights to these technologies and IP, primarily through royalty-bearing licenses. We structure our customer engagements so that our business interests align with their market success.
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•
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Enhance our HPC platform and multi-disciplinary team.
We continue to develop, broaden and protect our processing, characterization, data analysis and workflow capabilities. To enhance our existing platform, we will continue to recruit personnel with broad, highly technical skill sets.
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•
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Explore and develop new technologies in high-volume integrated devices.
We will continue to explore and internally develop new technologies and expertise to serve future customers in our targeted markets, including, in particular, clean energy. We will focus these efforts in markets that are in the early stages of development to speed innovation, capture value and facilitate success for customers.
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•
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Primary Screening.
Primary screening
incorporates and
focuses on materials discovery. Materials are screened for certain properties to select possible candidates for a next level of screening. In the initial primary screening there may be thousands of candidates that are subsequently reduced to hundreds of candidates.
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•
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Secondary Screening.
Solution candidate materials from primary screening are advanced to secondary screening processes that will examine materials and unit process development. In this secondary screening, processes and integration are considered to narrow the candidates from hundreds of candidates to tens of candidates.
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•
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Tertiary Screening.
Solution candidate materials and process conditions that continue to meet or exceed the defined criteria through the secondary screening stage are then either transferred to our customer or processed internally for additional characterization and scale up. These candidates are then characterized on a larger scale, and correlation of the desired process is developed to allow the transfer of the developed technology to a manufacturing scale process.
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•
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Manufacturing and Commercialization.
Once a candidate has passed this development scale analysis, it is ready for commercialization and the customer will decide whether to commercialize the developed technology.
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•
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Tempus F-10.
A stand-alone system used for primary screening through the automatic creation of formulations, especially those involving powders and viscous liquids.
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•
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Tempus F-20.
A stand-alone system for materials and process screening, which is used for library creation as well as processing of wafer coupons. This product can be used for primary or secondary screening, depending on the reactor block design and the substrate type.
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•
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Tempus F-30.
A stand-alone system for integration and tertiary scale up screening, which is used to scale up the most promising results from primary and secondary screening to full patterned wafer processing.
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•
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Tempus P-30-HPC-Physical Vapor Deposition (PVD).
A 300mm chamber with the ability to use up to four PVD sources and three optional deposition methods (including DC, RF and pulse DC) on a vast range of film thicknesses and/or compositions and/or film stacks within each site-isolated region of a substrate.
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•
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Tempus A-30-HPC-Atomic Layer Deposition (ALD).
A 300mm chamber capable of site isolation of both metal and dielectric films across quadrants of the wafer, with the ability to introduce variation of film thickness and/or composition and/or film stacks within each quadrant.
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•
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Tempus ST-30-Surface Treatment.
A 300mm chamber capable of exposing critical layers pre or post dry
deposition at variable temperatures to different chemistries which can be modulated by the chamber's downstream plasma source.
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•
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Tempus AP-30.
A configurable platform with multiple A-30, P-30 or ST-30 chambers and common support modules to facilitate
in-
situ processing of ALD, PVD or Surface Treatment for rapid screening of thin-film metal alloys, dielectrics and multilayer stacks. Processes can be scaled to facilitate high-volume manufacturing.
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•
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Workflow Management Software.
Manages the design and process of experiments, metrology and collection of data and summarizes aggregated data for the various working teams in the form of status reports; provides our customers with real-time access to results of our experiments and analysis.
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•
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Analysis and Reporting Software.
Provides data and analysis tools to evaluate process distributions, correlate electrical distributions, map defectivity distributions, perform spectral analysis and facilitate interactive creation of summary reporting.
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•
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Security and Collaboration Management Software.
Provides secure communication between geographically dispersed working teams, ensures the security of created documentation and presentations, manages the minutes for meetings, provides programs and project plans to coordinate working teams, shares summary reports across the working team and provides reviews of finished processes and status of ongoing processes.
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•
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Integration Services.
Facilitate collaboration between our tools and the customer's process and metrology tools, automate the recipe loading, automate data collection and leverage software to customize reports.
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•
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Combinatorial systems and methods related to fluids-based processing.
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•
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Combinatorial systems and methods related to vacuum-based processes, including deposition and etch.
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•
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Systems and methods for site-isolated processing.
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•
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Combinatorial systems and methods related to high-volume manufacturing.
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•
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Processing techniques using combinatorial and non-combinatorial methods.
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▪
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our dependence on a limited number of customers;
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▪
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the length of our sales and development cycles for CDPs, which makes it difficult to predict the timing of new or expanded CDPs, as well as the timeframe in which technology developed under CDPs will be available for commercialization;
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▪
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fluctuations in the volume and prices of products manufactured and sold by our customers that generate royalty revenue for us;
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▪
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our revenue mix, which may vary from quarter to quarter as we enter into new CDPs and related customer arrangements, existing CDPs are completed, extended or expanded and licensing arrangements take effect;
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▪
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the highly cyclical nature of and price volatility in the semiconductor industry;
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▪
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the financial stability of any of our customers (including but not limited to the impact of our customer Elpida's filing for protection under the Corporate Reorganization Act in Japan in February 2012);
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▪
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the timing and extent to which we enter into new CDPs or complete, extend or expand existing CDPs;
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▪
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one-time offsets to revenue associated with the vesting of contingent warrants issued to two of our customers that are currently outstanding;
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▪
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non-cash charges relating to stock-based compensation, amortization of intangible assets and impairment expenses related to inventory and long-lived assets;
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▪
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any involvement in significant litigation, and in particular intellectual property litigation;
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▪
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any payments resulting from our intellectual property indemnification policies and obligations;
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•
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our potential need for additional capital to finance our business;
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•
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any delay in shipments caused by shortages of components incorporated in our customers' products, design errors or other manufacturing problems associated with our customers' products;
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•
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warranty claims, product recalls and product liability for our HPC tools and for our customers' products that incorporate technology developed through our CDPs; and
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•
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business interruptions such as earthquakes and other natural disasters.
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(1)
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We may be unable to achieve broad customer acceptance of our HPC platform and approach as an alternative to conventional research and development activities.
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(2)
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We may be unable to successfully collaborate with all of our customers to achieve the technological innovations sought by our customers.
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(3)
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Our customers may not be successful in commercializing products that incorporate technology and IP developed during our CDPs with them.
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(4)
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Potential customers may be resistant to negotiating agreements for payment of license and royalty revenue; and we may face challenges in monitoring and enforcing royalty agreements with existing customers.
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•
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the limited number of customers that are appropriate sales targets for our platform and that are willing to enter into licensing agreements with us;
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•
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our ability to enter into CDPs with customers who are or will become market leaders in larger, growing market segments;
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•
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our customers' budgetary constraints and internal review procedures that must be completed to begin collaboration with us; and
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•
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the significant cultural transition required for a customer's internal R&D team to embrace us as a collaborative partner.
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•
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improve our sales, marketing and customer support programs and our R&D efforts;
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•
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enhance our operational and financial control systems;
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•
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expand, train and manage our employee base; and
|
•
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effectively address new issues related to our growth as they arise.
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•
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fluctuations in our financial results or outlook, or those of our customers or of companies perceived to be similar to us;
|
•
|
changes in estimates of our financial results or recommendations by securities analysts;
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•
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changes in market valuations of similar companies;
|
•
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changes in our capital structure, such as future issuances of securities or the incurring of debt;
|
•
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announcements by us or our competitors of significant contracts, acquisitions or strategic alliances; and
|
•
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litigation involving us, our general industry or both;
|
•
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additions or departures of key personnel;
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•
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regulatory developments in the U.S., countries in Asia, and/or other foreign countries;
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•
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investors' general perception of us; and
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•
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general economic and political conditions in the US and globally, such as recessions, interest rate changes and international currency fluctuations
|
•
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staggered board of directors;
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•
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authorizing the board to issue, without stockholder approval, preferred stock with rights senior to those of our common stock;
|
•
|
authorizing the board to amend our bylaws and to fill board vacancies until the next annual meeting of the stockholders;
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•
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prohibiting stockholder action by written consent;
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•
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limiting the liability of, and providing indemnification to, our directors and officers;
|
•
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eliminating the ability of our stockholders to call special meetings; and
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•
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requiring advance notification of stockholder nominations and proposals.
|
|
Low
|
|
High
|
||||
Fiscal Year Ended December 31, 2012
|
|
|
|
||||
First Quarter
|
$
|
5.01
|
|
|
$
|
9.55
|
|
Second Quarter
|
$
|
5.87
|
|
|
$
|
7.75
|
|
Third Quarter
|
$
|
6.40
|
|
|
$
|
8.00
|
|
Fourth Quarter
|
$
|
6.31
|
|
|
$
|
9.28
|
|
|
|
|
|
||||
|
Low
|
|
High
|
||||
Fiscal Year Ended December 31, 2011
|
|
|
|
||||
Fourth Quarter (beginning November 18, 2011)
|
$
|
8.00
|
|
|
$
|
10.01
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except share and per share amounts)
|
||||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
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|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CDP and services revenue
|
|
$
|
47,468
|
|
|
$
|
36,733
|
|
|
$
|
27,705
|
|
|
$
|
14,182
|
|
|
$
|
14,647
|
|
Product revenue
|
|
3,495
|
|
|
2,717
|
|
|
6,959
|
|
|
9,065
|
|
|
6,206
|
|
|||||
Licensing and royalty revenue
|
|
15,864
|
|
|
14,380
|
|
|
8,010
|
|
|
3,663
|
|
|
2,276
|
|
|||||
Total revenue
|
|
66,827
|
|
|
53,830
|
|
|
42,674
|
|
|
26,910
|
|
|
23,129
|
|
|||||
Cost of revenue
|
|
28,403
|
|
|
25,469
|
|
|
20,926
|
|
|
13,018
|
|
|
12,625
|
|
|||||
Gross profit
|
|
38,424
|
|
|
28,361
|
|
|
21,748
|
|
|
13,892
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|
|
10,504
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
21,839
|
|
|
19,260
|
|
|
13,917
|
|
|
10,983
|
|
|
11,849
|
|
|||||
Sales and marketing
|
|
5,433
|
|
|
4,285
|
|
|
4,074
|
|
|
3,211
|
|
|
3,849
|
|
|||||
General and administrative
|
|
10,868
|
|
|
8,534
|
|
|
5,761
|
|
|
4,867
|
|
|
4,300
|
|
|||||
Total operating expenses
|
|
38,140
|
|
|
32,079
|
|
|
23,752
|
|
|
19,061
|
|
|
19,998
|
|
|||||
Loss from operations
|
|
284
|
|
|
(3,718
|
)
|
|
(2,004
|
)
|
|
(5,169
|
)
|
|
(9,494
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income (expense), net
|
|
(1,004
|
)
|
|
(87
|
)
|
|
43
|
|
|
(6
|
)
|
|
174
|
|
|||||
Other income (expense), net
|
|
15
|
|
|
(26,167
|
)
|
|
202
|
|
|
(62
|
)
|
|
6
|
|
|||||
Total other income (expense), net
|
|
(989
|
)
|
|
(26,254
|
)
|
|
245
|
|
|
(68
|
)
|
|
180
|
|
|||||
Loss before provision for income taxes
|
|
(705
|
)
|
|
(29,972
|
)
|
|
(1,759
|
)
|
|
(5,237
|
)
|
|
(9,314
|
)
|
|||||
Provision for income taxes
|
|
51
|
|
|
43
|
|
|
19
|
|
|
17
|
|
|
186
|
|
|||||
Net loss
|
|
(756
|
)
|
|
(30,015
|
)
|
|
(1,778
|
)
|
|
(5,254
|
)
|
|
(9,500
|
)
|
|||||
Accretion on redeemable convertible preferred stock
|
|
—
|
|
|
(8,660
|
)
|
|
(14,162
|
)
|
|
(9,170
|
)
|
|
(5,436
|
)
|
|||||
Net loss attributable to common stockholders
|
|
$
|
(756
|
)
|
|
$
|
(38,675
|
)
|
|
$
|
(15,940
|
)
|
|
$
|
(14,424
|
)
|
|
$
|
(14,936
|
)
|
Net loss per share of common stock, basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(3.99
|
)
|
|
$
|
(2.86
|
)
|
|
$
|
(2.62
|
)
|
|
$
|
(2.97
|
)
|
Weighted-average number of shares used in computing net loss per share of common stock, basic and diluted
|
|
42,966,448
|
|
|
9,698,880
|
|
|
5,567,286
|
|
|
5,511,889
|
|
|
5,024,118
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA (unaudited)
|
|
$
|
12,895
|
|
|
$
|
6,367
|
|
|
$
|
4,589
|
|
|
$
|
272
|
|
|
$
|
(5,062
|
)
|
Adjusted earnings (unaudited)
|
|
$
|
2,896
|
|
|
$
|
(842
|
)
|
|
$
|
(358
|
)
|
|
$
|
(4,131
|
)
|
|
$
|
(8,504
|
)
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
|
|
$
|
78,283
|
|
|
$
|
81,002
|
|
|
$
|
23,064
|
|
|
$
|
32,620
|
|
|
$
|
40,902
|
|
Working capital
|
|
52,207
|
|
|
74,665
|
|
|
4,825
|
|
|
16,389
|
|
|
26,663
|
|
|||||
Total assets
|
|
123,685
|
|
|
127,814
|
|
|
55,571
|
|
|
54,469
|
|
|
62,190
|
|
|||||
Long-term debt, including current portion
|
|
26,514
|
|
|
27,318
|
|
|
—
|
|
|
—
|
|
|
4,445
|
|
|||||
Preferred stock warrant liability
|
|
—
|
|
|
—
|
|
|
215
|
|
|
159
|
|
|
—
|
|
|||||
Redeemable convertible preferred stock
|
|
—
|
|
|
—
|
|
|
55,633
|
|
|
55,633
|
|
|
55,633
|
|
|||||
Accumulated accretion of redeemable convertible preferred stock to redemption values
|
|
—
|
|
|
—
|
|
|
34,426
|
|
|
20,264
|
|
|
11,094
|
|
|||||
Total stockholders' equity (deficit)
|
|
85,517
|
|
|
80,173
|
|
|
(64,356
|
)
|
|
(49,889
|
)
|
|
(36,579
|
)
|
•
|
Adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments;
|
•
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
|
•
|
Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to us; and
|
•
|
Other companies, including companies in our industry, may calculate adjusted EBITDA measures differently, which reduces their usefulness as a comparative measure.
|
•
|
Adjusted earnings do not reflect our cash expenditures for capital equipment or other contractual commitments;
|
•
|
Adjusted earnings do not reflect changes in, or cash requirements for, our working capital needs; and
|
•
|
Other companies, including companies in our industry, may calculate adjusted earnings measures differently, which reduces their usefulness as a comparative measure.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
Adjusted EBITDA:
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Net loss
|
|
$
|
(756
|
)
|
|
$
|
(30,015
|
)
|
|
$
|
(1,778
|
)
|
|
$
|
(5,254
|
)
|
|
$
|
(9,500
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue(1)
|
|
—
|
|
|
312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest, net
|
|
1,004
|
|
|
641
|
|
|
13
|
|
|
48
|
|
|
(94
|
)
|
|||||
Provision for taxes
|
|
51
|
|
|
43
|
|
|
19
|
|
|
17
|
|
|
186
|
|
|||||
Depreciation, amortization and impairments
|
|
8,944
|
|
|
7,079
|
|
|
4,971
|
|
|
4,380
|
|
|
3,430
|
|
|||||
Mark-to-market derivative liability
|
|
—
|
|
|
25,865
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense(2)
|
|
3,652
|
|
|
2,442
|
|
|
1,364
|
|
|
1,081
|
|
|
916
|
|
|||||
Adjusted EBITDA
|
|
$
|
12,895
|
|
|
$
|
6,367
|
|
|
$
|
4,589
|
|
|
$
|
272
|
|
|
$
|
(5,062
|
)
|
|
|
Years Ended December 31,
|
||||||||||||||||||
Adjusted Earnings:
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Net loss
|
|
$
|
(756
|
)
|
|
$
|
(30,015
|
)
|
|
$
|
(1,778
|
)
|
|
$
|
(5,254
|
)
|
|
$
|
(9,500
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue(1)
|
|
—
|
|
|
312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense (preferred stock warrant mark-to-market)
|
|
—
|
|
|
554
|
|
|
56
|
|
|
42
|
|
|
80
|
|
|||||
Mark-to-market derivative liability
|
|
—
|
|
|
25,865
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense(2)
|
|
3,652
|
|
|
2,442
|
|
|
1,364
|
|
|
1,081
|
|
|
916
|
|
|||||
Adjusted earnings
|
|
$
|
2,896
|
|
|
$
|
(842
|
)
|
|
$
|
(358
|
)
|
|
$
|
(4,131
|
)
|
|
$
|
(8,504
|
)
|
(1)
|
Reduction in revenue as a result of common stock warrants issued in connection with a customer agreement
|
(2)
|
Includes stock-based compensation as follows:
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cost of revenues
|
|
$
|
1,011
|
|
|
$
|
622
|
|
|
$
|
285
|
|
|
$
|
134
|
|
|
$
|
71
|
|
Research and development
|
|
872
|
|
|
462
|
|
|
204
|
|
|
222
|
|
|
170
|
|
|||||
Sales and marketing
|
|
774
|
|
|
770
|
|
|
422
|
|
|
378
|
|
|
408
|
|
|||||
General and administrative
|
|
995
|
|
|
588
|
|
|
453
|
|
|
347
|
|
|
267
|
|
|||||
Total stock-based compensation
|
|
$
|
3,652
|
|
|
$
|
2,442
|
|
|
$
|
1,364
|
|
|
$
|
1,081
|
|
|
$
|
916
|
|
•
|
Overview
. Discussion of our business and overall analysis of financial and other highlights affecting the Company in order to provide context for the remainder of MD&A.
|
•
|
Strategy
. Our overall strategy.
|
•
|
Basis of Presentation
. A summary of the primary elements of our financial results.
|
•
|
Critical Accounting Estimates
. Accounting estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
|
•
|
Results of Operations
. An analysis of our financial results comparing the year ended December 31, 2012 to the year ended December 31, 2011.
|
•
|
Liquidity and Capital Resources
. An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
CDP and services revenue
|
$
|
47,468
|
|
|
$
|
36,733
|
|
|
$
|
27,705
|
|
Product revenue
|
3,495
|
|
|
2,717
|
|
|
6,959
|
|
|||
Licensing and royalty revenue
|
15,864
|
|
|
14,380
|
|
|
8,010
|
|
|||
Total revenue
|
$
|
66,827
|
|
|
$
|
53,830
|
|
|
$
|
42,674
|
|
•
|
CDP and services revenue.
CDP revenue may include payments for full time equivalent employees, milestone payments, subscription payments for dedicated and shared workflow tools used in the CDP and reimbursed payments for consumables and outside services from third parties. Individual CDPs typically range from one to three years. Services revenue outside of CDPs is substantially comprised of support and maintenance fees and extended warranty agreements. CDP and services revenue is recognized in a manner consistent with activities performed.
|
•
|
Product revenue.
Product revenue consists of sales of our workflow hardware and embedded software. In support of our business strategy, we selectively sell our proprietary tools to increase opportunities for CDPs and licensing fees and royalties. Historically, we have not sold a significant number of our workflow products and we do not anticipate selling a significant number in the future. As our other revenue streams increase we expect our product revenue to decrease as a percentage of our overall revenue. Product revenue has been recognized upon shipment since January 1, 2011. Product sales that originated prior to January 1, 2011 were generally recognized on a straight-line basis over the maintenance period once delivery occurred (title and risk of loss passed to the customer), and customer acceptance, if required, was achieved.
|
•
|
Licensing and royalty revenue.
Licensing and royalty revenue consists of licensing fees and royalties for granting our customers rights to our proprietary technology and IP. Specifically, this includes licensing the HPC capabilities of our workflows, licensing our informatics and analysis software, and licensing fees and royalties on products commercialized by our customers that incorporate technology developed through our CDPs. In certain instances, minimum license fees and royalties may be guaranteed by customer contracts and are recognized as revenue ratably over the related periods. During 2012, in connection with a CDP, we recognized revenue on the sale of intellectual property that was developed during the term of the CDP. In the last three years, licensing and royalty revenue has generally been the fastest growing element of our revenue. Over the long term, we expect licensing and royalty revenue to be an increasing and significant component of our revenue.
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenues:
|
|
|
|
|
|
||||||
Cost of CDP and services revenue
|
$
|
26,492
|
|
|
$
|
23,761
|
|
|
$
|
16,855
|
|
Cost of product revenue
|
1,635
|
|
|
953
|
|
|
3,665
|
|
|||
Cost of licensing and royalty revenue
|
276
|
|
|
755
|
|
|
406
|
|
|||
Total cost of revenues
|
$
|
28,403
|
|
|
$
|
25,469
|
|
|
$
|
20,926
|
|
•
|
Cost of CDP and services revenue.
Our cost of CDP and services revenue is primarily comprised of salaries and other personnel-related expenses (including stock-based compensation) for our collaborative research and development scientists, engineers and development fab process operations employees. Additionally, our cost of revenue includes costs of wafers, targets, materials, program-related supplies, third-party professional fees and depreciation of equipment used in CDPs.
|
•
|
Cost of product revenue.
Our cost of product revenue primarily includes our cost of products sold. Our cost of product revenue will fluctuate based on the type of product and configuration sold. Historically, we have not sold a significant number of our workflow products and we do not anticipate selling a significant number in the future. Cost of product revenue has been recognized upon product shipment since January 1, 2011. For product sales that originated prior to January 1, 2011, our cost of product revenue was recognized in a similar manner as the corresponding product revenue and was generally recognized on a straight-line basis over the maintenance period. The variability in cost of product revenue as a percentage of revenue is related to the quantity and configuration of products sold during the period and the corresponding maintenance period over which product revenue and cost of product revenue is being recognized.
|
•
|
Cost of licensing and royalty revenue.
Our cost of licensing and royalty revenue prior to January 1, 2012 included license fees paid to Symyx. As part of our completion of the Symyx asset purchase transaction in November 2011, in connection with our initial public offering, we no longer have an obligation to pay licensing fees to Symyx for any period on or after January 1, 2012. In 2012, our cost of licensing and royalty revenue has been, and we expect will continue to be, primarily comprised of the amortization of acquired patents and licensing obligations.
|
|
Years Ended December 31,
|
|
|
|
|
||||||||
|
2012
|
|
2011
|
|
$ Change
|
|
% Change
|
||||||
|
|
|
(in thousands)
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
|
|
||||||
CDP and services revenue
|
$
|
47,468
|
|
|
$
|
36,733
|
|
|
$
|
10,735
|
|
|
29%
|
Product revenue
|
3,495
|
|
|
2,717
|
|
|
778
|
|
|
29%
|
|||
Licensing and royalty revenue
|
15,864
|
|
|
14,380
|
|
|
1,484
|
|
|
10%
|
|||
Total revenue
|
66,827
|
|
|
53,830
|
|
|
12,997
|
|
|
24%
|
|||
Cost of revenue
|
28,403
|
|
|
25,469
|
|
|
2,934
|
|
|
12%
|
|||
Gross profit
|
38,424
|
|
|
28,361
|
|
|
10,063
|
|
|
35%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
||||||
Research and development
|
21,839
|
|
|
19,260
|
|
|
2,579
|
|
|
13%
|
|||
Sales and marketing
|
5,433
|
|
|
4,285
|
|
|
1,148
|
|
|
27%
|
|||
General and administrative
|
10,868
|
|
|
8,534
|
|
|
2,334
|
|
|
27%
|
|||
Total operating expenses
|
38,140
|
|
|
32,079
|
|
|
6,061
|
|
|
19%
|
|||
Income (loss) from operations
|
284
|
|
|
(3,718
|
)
|
|
4,002
|
|
|
(108)%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(1,004
|
)
|
|
(87
|
)
|
|
(917
|
)
|
|
|
|||
Other income (expense), net
|
15
|
|
|
(26,167
|
)
|
|
26,182
|
|
|
|
|||
Total other income (expense), net
|
(989
|
)
|
|
(26,254
|
)
|
|
25,265
|
|
|
|
|||
Loss before provision for income taxes
|
(705
|
)
|
|
(29,972
|
)
|
|
29,267
|
|
|
|
|||
Provision for income taxes
|
51
|
|
|
43
|
|
|
8
|
|
|
|
|||
Net loss
|
$
|
(756
|
)
|
|
$
|
(30,015
|
)
|
|
$
|
29,259
|
|
|
|
|
Years Ended December 31,
|
||||||||||||
|
2012
|
|
2011
|
||||||||||
|
Revenues
|
|
% of Revenues
|
|
Revenues
|
|
% of Revenues
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
United States
|
$
|
51,045
|
|
|
76
|
%
|
|
$
|
35,573
|
|
|
66
|
%
|
Japan
|
13,594
|
|
|
20
|
%
|
|
15,148
|
|
|
28
|
%
|
||
APAC other
|
2,066
|
|
|
4
|
%
|
|
2,934
|
|
|
5
|
%
|
||
Europe and Middle East
|
122
|
|
|
—
|
%
|
|
175
|
|
|
1
|
%
|
||
Total
|
$
|
66,827
|
|
|
100
|
%
|
|
$
|
53,830
|
|
|
100
|
%
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||
|
2011
|
|
2010
|
|
$ Change
|
|
% Change
|
|||||||
|
|
|
(in thousands)
|
|
|
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
CDP and services revenue
|
$
|
36,733
|
|
|
$
|
27,705
|
|
|
$
|
9,028
|
|
|
33
|
%
|
Product revenue
|
2,717
|
|
|
6,959
|
|
|
(4,242
|
)
|
|
(61
|
)%
|
|||
Licensing and royalty revenue
|
14,380
|
|
|
8,010
|
|
|
6,370
|
|
|
80
|
%
|
|||
Total revenue
|
53,830
|
|
|
42,674
|
|
|
11,156
|
|
|
26
|
%
|
|||
Cost of revenue
|
25,469
|
|
|
20,926
|
|
|
4,543
|
|
|
22
|
%
|
|||
Gross profit
|
28,361
|
|
|
21,748
|
|
|
6,613
|
|
|
30
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development
|
19,260
|
|
|
13,917
|
|
|
5,343
|
|
|
38
|
%
|
|||
Sales and marketing
|
4,285
|
|
|
4,074
|
|
|
211
|
|
|
5
|
%
|
|||
General and administrative
|
8,534
|
|
|
5,761
|
|
|
2,773
|
|
|
48
|
%
|
|||
Total operating expenses
|
32,079
|
|
|
23,752
|
|
|
8,327
|
|
|
35
|
%
|
|||
Loss from operations
|
(3,718
|
)
|
|
(2,004
|
)
|
|
(1,714
|
)
|
|
86
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Interest (expense) income, net
|
(87
|
)
|
|
43
|
|
|
(130
|
)
|
|
|
|
|||
Other (expense) income, net
|
(26,167
|
)
|
|
202
|
|
|
(26,369
|
)
|
|
|
|
|||
Total other income (expense), net
|
(26,254
|
)
|
|
245
|
|
|
(26,499
|
)
|
|
|
|
|||
Loss before provision for income taxes
|
(29,972
|
)
|
|
(1,759
|
)
|
|
(28,213
|
)
|
|
|
|
|||
Provision for income taxes
|
43
|
|
|
19
|
|
|
24
|
|
|
|
|
|||
Net loss
|
$
|
(30,015
|
)
|
|
$
|
(1,778
|
)
|
|
$
|
(28,237
|
)
|
|
|
|
|
Years Ended December 31,
|
||||||||||||
|
2011
|
|
2010
|
||||||||||
|
Revenues
|
|
% of Revenues
|
|
Revenues
|
|
% of Revenues
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
United States
|
$
|
35,573
|
|
|
66
|
%
|
|
$
|
29,526
|
|
|
69
|
%
|
Japan
|
15,148
|
|
|
28
|
%
|
|
12,449
|
|
|
29
|
%
|
||
APAC Other
|
2,934
|
|
|
5
|
%
|
|
489
|
|
|
1
|
%
|
||
Europe and Middle East
|
175
|
|
|
1
|
%
|
|
210
|
|
|
1
|
%
|
||
Total
|
$
|
53,830
|
|
|
100
|
%
|
|
$
|
42,674
|
|
|
100
|
%
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2012
|
|
September 30, 2012
|
|
June 30, 2012
|
|
March 31, 2012
|
|
December 31, 2011
|
|
September 30, 2011
|
|
June 30, 2011
|
|
March 31, 2011
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
CDP and services revenue
|
$
|
11,632
|
|
|
$
|
12,481
|
|
|
$
|
11,160
|
|
|
$
|
12,195
|
|
|
$
|
10,564
|
|
|
$
|
10,349
|
|
|
$
|
8,027
|
|
|
$
|
7,793
|
|
Product revenue
|
—
|
|
|
760
|
|
|
2,057
|
|
|
678
|
|
|
679
|
|
|
678
|
|
|
682
|
|
|
678
|
|
||||||||
Licensing and royalty revenue
|
5,811
|
|
|
3,248
|
|
|
3,296
|
|
|
3,509
|
|
|
3,889
|
|
|
3,847
|
|
|
3,427
|
|
|
3,217
|
|
||||||||
Total revenue
|
17,443
|
|
|
16,489
|
|
|
16,513
|
|
|
16,382
|
|
|
15,132
|
|
|
14,874
|
|
|
12,136
|
|
|
11,688
|
|
||||||||
Cost of revenue
|
6,537
|
|
|
7,204
|
|
|
7,474
|
|
|
7,188
|
|
|
7,470
|
|
|
6,676
|
|
|
5,807
|
|
|
5,516
|
|
||||||||
Gross profit
|
10,906
|
|
|
9,285
|
|
|
9,039
|
|
|
9,194
|
|
|
7,662
|
|
|
8,198
|
|
|
6,329
|
|
|
6,172
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Research and development
|
5,837
|
|
|
5,174
|
|
|
5,760
|
|
|
5,068
|
|
|
4,659
|
|
|
5,113
|
|
|
4,969
|
|
|
4,519
|
|
||||||||
Sales and marketing
|
1,599
|
|
|
1,322
|
|
|
1,272
|
|
|
1,240
|
|
|
1,056
|
|
|
1,249
|
|
|
1,075
|
|
|
905
|
|
||||||||
General and administrative
|
2,678
|
|
|
2,650
|
|
|
2,722
|
|
|
2,818
|
|
|
2,378
|
|
|
2,231
|
|
|
2,126
|
|
|
1,799
|
|
||||||||
Total operating expenses
|
10,114
|
|
|
9,146
|
|
|
9,754
|
|
|
9,126
|
|
|
8,093
|
|
|
8,593
|
|
|
8,170
|
|
|
7,223
|
|
||||||||
Income (loss) from operations
|
792
|
|
|
139
|
|
|
(715
|
)
|
|
68
|
|
|
(431
|
)
|
|
(395
|
)
|
|
(1,841
|
)
|
|
(1,051
|
)
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest (expense) income, net
|
(250
|
)
|
|
(255
|
)
|
|
(250
|
)
|
|
(249
|
)
|
|
(103
|
)
|
|
6
|
|
|
6
|
|
|
4
|
|
||||||||
Other (expense) income, net
|
(1
|
)
|
|
10
|
|
|
12
|
|
|
(6
|
)
|
|
(24,993
|
)
|
|
(839
|
)
|
|
(157
|
)
|
|
(178
|
)
|
||||||||
Total other (expense) income, net
|
(251
|
)
|
|
(245
|
)
|
|
(238
|
)
|
|
(255
|
)
|
|
(25,096
|
)
|
|
(833
|
)
|
|
(151
|
)
|
|
(174
|
)
|
||||||||
Income (loss) before provision for income taxes
|
541
|
|
|
(106
|
)
|
|
(953
|
)
|
|
(187
|
)
|
|
(25,527
|
)
|
|
(1,228
|
)
|
|
(1,992
|
)
|
|
(1,225
|
)
|
||||||||
Provision for income taxes
|
39
|
|
|
6
|
|
|
7
|
|
|
(1
|
)
|
|
24
|
|
|
6
|
|
|
12
|
|
|
1
|
|
||||||||
Net income (loss)
|
502
|
|
|
(112
|
)
|
|
(960
|
)
|
|
(186
|
)
|
|
(25,551
|
)
|
|
(1,234
|
)
|
|
(2,004
|
)
|
|
(1,226
|
)
|
||||||||
Accretion on redeemable convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,565
|
)
|
|
(3,054
|
)
|
|
(4,041
|
)
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
502
|
|
|
$
|
(112
|
)
|
|
$
|
(960
|
)
|
|
$
|
(186
|
)
|
|
$
|
(25,551
|
)
|
|
$
|
(2,799
|
)
|
|
$
|
(5,058
|
)
|
|
$
|
(5,267
|
)
|
Net income (loss) per share of common stock, basic
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
|
$
|
(1.19
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
(0.89
|
)
|
|
$
|
(0.93
|
)
|
Net income (loss) per share of common stock, diluted
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
|
$
|
(1.19
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
(0.89
|
)
|
|
$
|
(0.93
|
)
|
Shares used in computing net income (loss) per share of common stock, basic
|
43,684,167
|
|
|
43,278,588
|
|
|
42,650,369
|
|
|
42,241,345
|
|
|
21,519,116
|
|
|
5,750,979
|
|
|
5,663,213
|
|
|
5,633,192
|
|
||||||||
Shares used in computing net income (loss) per share of common stock, diluted
|
47,726,284
|
|
|
43,278,588
|
|
|
42,650,369
|
|
|
42,241,345
|
|
|
21,519,116
|
|
|
5,750,979
|
|
|
5,663,213
|
|
|
5,633,192
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
3,486
|
|
|
$
|
(8,156
|
)
|
|
$
|
1,175
|
|
Net cash (used in) provided by investing activities
|
$
|
(7,834
|
)
|
|
$
|
(13,468
|
)
|
|
$
|
924
|
|
Net cash provided by financing activities
|
$
|
1,629
|
|
|
$
|
79,562
|
|
|
$
|
109
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
One Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than
5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating lease obligations
|
$
|
4,092
|
|
|
$
|
1,657
|
|
|
$
|
2,435
|
|
|
—
|
|
|
—
|
|
||
Note payable
|
26,514
|
|
|
26,514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Contractual interest payments on note payable
|
936
|
|
|
936
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations(1)
|
2,400
|
|
|
2,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
33,942
|
|
|
$
|
31,507
|
|
|
$
|
2,435
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Purchase obligations consist of firm non-cancelable agreements to purchase property and equipment and inventory related items.
|
|
Page
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
78,283
|
|
|
$
|
81,002
|
|
Accounts receivable, net of allowance for doubtful accounts of $170 and zero as of December 31, 2012 and 2011, respectively
|
7,294
|
|
|
10,227
|
|
||
Accounts receivable, due from related parties
|
1,036
|
|
|
935
|
|
||
Inventory, current portion
|
1,631
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
1,361
|
|
|
1,763
|
|
||
Total current assets
|
89,605
|
|
|
93,927
|
|
||
Inventory, net of current portion
|
3,160
|
|
|
2,532
|
|
||
Property and equipment, net
|
24,058
|
|
|
25,128
|
|
||
Intangible assets, net
|
6,671
|
|
|
6,067
|
|
||
Other assets
|
191
|
|
|
160
|
|
||
Total assets
|
$
|
123,685
|
|
|
$
|
127,814
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
971
|
|
|
$
|
1,079
|
|
Accrued liabilities
|
3,386
|
|
|
3,759
|
|
||
Accrued compensation and employee benefits
|
3,397
|
|
|
2,452
|
|
||
Deferred revenue, current portion
|
2,301
|
|
|
1,575
|
|
||
Related party deferred revenue, current portion
|
829
|
|
|
9,593
|
|
||
Note payable, current portion
|
26,514
|
|
|
804
|
|
||
Total current liabilities
|
37,398
|
|
|
19,262
|
|
||
Related party deferred revenue, net of current portion
|
—
|
|
|
716
|
|
||
Deferred rent, net of current portion
|
624
|
|
|
1,004
|
|
||
Note payable, net of current portion
|
—
|
|
|
26,514
|
|
||
Other long-term liabilities
|
146
|
|
|
145
|
|
||
Total liabilities
|
38,168
|
|
|
47,641
|
|
||
Commitments and contingencies (note 5)
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of December 31, 2012 and December 31, 2011
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001 per share—200,000,000 and 200,000,000 shares authorized as of December 31, 2012 and 2011, respectively; 44,046,970 and 42,218,906 shares issued and outstanding, respectively
|
44
|
|
|
42
|
|
||
Additional paid-in capital
|
186,778
|
|
|
180,680
|
|
||
Accumulated deficit
|
(101,305
|
)
|
|
(100,549
|
)
|
||
Total stockholders' equity
|
85,517
|
|
|
80,173
|
|
||
Total liabilities and stockholders' equity
|
$
|
123,685
|
|
|
$
|
127,814
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Collaborative development program and services revenue
|
$
|
47,468
|
|
|
$
|
36,733
|
|
|
$
|
27,705
|
|
Product revenue
|
3,495
|
|
|
2,717
|
|
|
6,959
|
|
|||
Licensing and royalty revenue
|
15,864
|
|
|
14,380
|
|
|
8,010
|
|
|||
Total revenue
|
66,827
|
|
|
53,830
|
|
|
42,674
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Cost of collaborative development program and services revenue
|
26,492
|
|
|
23,761
|
|
|
16,855
|
|
|||
Cost of product revenue
|
1,635
|
|
|
953
|
|
|
3,665
|
|
|||
Cost of licensing and royalty revenue
|
276
|
|
|
755
|
|
|
406
|
|
|||
Total cost of revenue
|
28,403
|
|
|
25,469
|
|
|
20,926
|
|
|||
Gross profit
|
38,424
|
|
|
28,361
|
|
|
21,748
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
21,839
|
|
|
19,260
|
|
|
13,917
|
|
|||
Sales and marketing
|
5,433
|
|
|
4,285
|
|
|
4,074
|
|
|||
General and administrative
|
10,868
|
|
|
8,534
|
|
|
5,761
|
|
|||
Total operating expenses
|
38,140
|
|
|
32,079
|
|
|
23,752
|
|
|||
Income (loss) from operations
|
284
|
|
|
(3,718
|
)
|
|
(2,004
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest (expense) income, net
|
(1,004
|
)
|
|
(87
|
)
|
|
43
|
|
|||
Other income (expense), net
|
15
|
|
|
(26,167
|
)
|
|
202
|
|
|||
Total other income (expense), net
|
(989
|
)
|
|
(26,254
|
)
|
|
245
|
|
|||
Loss before provision for income taxes
|
(705
|
)
|
|
(29,972
|
)
|
|
(1,759
|
)
|
|||
Provision for income taxes
|
51
|
|
|
43
|
|
|
19
|
|
|||
Net loss
|
(756
|
)
|
|
(30,015
|
)
|
|
(1,778
|
)
|
|||
Accretion on redeemable convertible preferred stock
|
—
|
|
|
(8,660
|
)
|
|
(14,162
|
)
|
|||
Net loss attributable to common stockholders
|
$
|
(756
|
)
|
|
$
|
(38,675
|
)
|
|
$
|
(15,940
|
)
|
Net loss per share of common stock, basic and diluted
|
$
|
(0.02
|
)
|
|
$
|
(3.99
|
)
|
|
$
|
(2.86
|
)
|
Weighted-average number of shares used in computing net loss per share of common stock, basic and diluted
|
42,966,448
|
|
|
9,698,880
|
|
|
5,567,286
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Collaborative development program and services revenue
|
$
|
11,838
|
|
|
$
|
11,294
|
|
|
$
|
13,382
|
|
Product revenue
|
2,139
|
|
|
11
|
|
|
6,047
|
|
|||
Licensing and royalty revenue
|
7,091
|
|
|
9,688
|
|
|
6,584
|
|
|||
Total revenue
|
$
|
21,068
|
|
|
$
|
20,993
|
|
|
$
|
26,013
|
|
Cost of Revenue:
|
|
|
|
|
|
||||||
Cost of collaborative development program and services revenue
|
55
|
|
|
1,075
|
|
|
1,250
|
|
|||
Cost of product revenue
|
—
|
|
|
119
|
|
|
322
|
|
|||
Cost of licensing and royalty revenue
|
—
|
|
|
635
|
|
|
406
|
|
|||
Total cost of revenue
|
$
|
55
|
|
|
$
|
1,829
|
|
|
$
|
1,978
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Loss for the period
|
$
|
(756
|
)
|
|
$
|
(38,675
|
)
|
|
$
|
(15,940
|
)
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|||
Comprehensive loss for the period, net of income tax
|
$
|
(756
|
)
|
|
$
|
(38,675
|
)
|
|
$
|
(15,940
|
)
|
|
|
|
|
|
|
|
Redeemable Convertible
Preferred Stock
|
|
Stockholders' Equity (Deficit)
|
||||||||||||||||||||||
|
Common stock
|
|
|
|
|
|
|
||||||||||||||||||
|
Additional
paid-in capital
|
|
Accumulated
deficit
|
|
Total
stockholders'
equity (deficit)
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||
Balances as of December 31, 2009
|
52,443,325
|
|
|
$
|
75,897
|
|
|
5,532,801
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
(49,895
|
)
|
|
$
|
(49,889
|
)
|
Issuance of common stock from option exercises
|
—
|
|
|
—
|
|
|
86,915
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,364
|
|
|
—
|
|
|
1,364
|
|
|||||
Accretion of preferred stock to redemption amount
|
—
|
|
|
14,162
|
|
|
—
|
|
|
—
|
|
|
(1,473
|
)
|
|
(12,689
|
)
|
|
(14,162
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,778
|
)
|
|
(1,778
|
)
|
|||||
Balances as of December 31, 2010
|
52,443,325
|
|
|
90,059
|
|
|
5,619,716
|
|
|
6
|
|
|
—
|
|
|
(64,362
|
)
|
|
(64,356
|
)
|
|||||
Issuance of Series E redeemable convertible preferred stock (net of issuance costs of $118)
|
6,018,122
|
|
|
24,882
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Conversion of preferred stock into common stock at a conversion rate of 1-for-2
|
(58,461,447
|
)
|
|
(123,601
|
)
|
|
29,230,708
|
|
|
29
|
|
|
123,572
|
|
|
—
|
|
|
123,601
|
|
|||||
Proceeds from initial public offering, net of expenses
|
—
|
|
|
—
|
|
|
5,681,796
|
|
|
6
|
|
|
49,211
|
|
|
—
|
|
|
49,217
|
|
|||||
Reclassification of preferred stock warrant liability to APIC upon IPO
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
769
|
|
|
—
|
|
|
769
|
|
|||||
Issuance of common stock from option exercises
|
—
|
|
|
—
|
|
|
368,194
|
|
|
—
|
|
|
446
|
|
|
—
|
|
|
446
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,413
|
|
|
—
|
|
|
2,413
|
|
|||||
Issuance of common stock warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
341
|
|
|
—
|
|
|
341
|
|
|||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
1,313,492
|
|
|
1
|
|
|
6,375
|
|
|
—
|
|
|
6,376
|
|
|||||
Non cash issuance of common stock for services
|
—
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|||||
Accretion of preferred stock to redemption amount
|
—
|
|
|
8,660
|
|
|
—
|
|
|
—
|
|
|
(2,488
|
)
|
|
(6,172
|
)
|
|
(8,660
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,015
|
)
|
|
(30,015
|
)
|
|||||
Balances as of December 31, 2011
|
—
|
|
|
$
|
—
|
|
|
42,218,906
|
|
|
$
|
42
|
|
|
$
|
180,680
|
|
|
$
|
(100,549
|
)
|
|
$
|
80,173
|
|
Issuance of common stock from option exercises
|
—
|
|
|
—
|
|
|
1,747,214
|
|
|
2
|
|
|
2,446
|
|
|
—
|
|
|
2,448
|
|
|||||
Issuance of restricted stock awards
|
—
|
|
|
—
|
|
|
80,850
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,652
|
|
|
—
|
|
|
3,652
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(756
|
)
|
|
(756
|
)
|
|||||
Balances as of December 31, 2012
|
—
|
|
|
$
|
—
|
|
|
44,046,970
|
|
|
$
|
44
|
|
|
$
|
186,778
|
|
|
$
|
(101,305
|
)
|
|
$
|
85,517
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(756
|
)
|
|
$
|
(30,015
|
)
|
|
$
|
(1,778
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
7,995
|
|
|
7,079
|
|
|
4,971
|
|
|||
Stock-based compensation
|
3,652
|
|
|
2,442
|
|
|
1,364
|
|
|||
Revaluation of preferred stock warrant liability
|
—
|
|
|
554
|
|
|
56
|
|
|||
Revaluation of derivative liability
|
—
|
|
|
24,476
|
|
|
—
|
|
|||
Common stock warrant charge (contra revenue)
|
—
|
|
|
312
|
|
|
—
|
|
|||
Impairment of long-lived assets
|
949
|
|
|
—
|
|
|
—
|
|
|||
Loss on disposal of property and equipment
|
2
|
|
|
65
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Prepaid expenses and other assets
|
371
|
|
|
(2,677
|
)
|
|
1,523
|
|
|||
Inventory
|
(1,459
|
)
|
|
(343
|
)
|
|
(810
|
)
|
|||
Accounts receivable
|
2,788
|
|
|
(7,030
|
)
|
|
(2,943
|
)
|
|||
Accounts payable
|
(177
|
)
|
|
(203
|
)
|
|
1,000
|
|
|||
Accrued and other liabilities
|
(369
|
)
|
|
5,446
|
|
|
2,274
|
|
|||
Deferred revenue
|
726
|
|
|
(5,128
|
)
|
|
4,827
|
|
|||
Related party deferred revenue
|
(10,236
|
)
|
|
(3,134
|
)
|
|
(9,309
|
)
|
|||
Net cash provided by (used in) operating activities
|
3,486
|
|
|
(8,156
|
)
|
|
1,175
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of short-term investments
|
(2,201
|
)
|
|
(750
|
)
|
|
—
|
|
|||
Redemption of short-term investments
|
2,201
|
|
|
750
|
|
|
11,764
|
|
|||
Purchase of property and equipment
|
(6,560
|
)
|
|
(12,806
|
)
|
|
(10,517
|
)
|
|||
Purchased and capitalized intangible assets
|
(1,274
|
)
|
|
(835
|
)
|
|
(323
|
)
|
|||
Decrease in restricted cash
|
—
|
|
|
173
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(7,834
|
)
|
|
(13,468
|
)
|
|
924
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Payment of long-term debt
|
(804
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of selling stockholder offering costs
|
—
|
|
|
(1,389
|
)
|
|
—
|
|
|||
Proceeds from exercise of common stock options
|
2,433
|
|
|
476
|
|
|
109
|
|
|||
Proceeds from exercise of common stock warrants
|
—
|
|
|
6,376
|
|
|
—
|
|
|||
Proceeds from initial public offering, net of expenses
|
—
|
|
|
49,217
|
|
|
—
|
|
|||
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs
|
—
|
|
|
24,882
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
1,629
|
|
|
79,562
|
|
|
109
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(2,719
|
)
|
|
57,938
|
|
|
2,208
|
|
|||
Cash and cash equivalents at beginning of period
|
81,002
|
|
|
23,064
|
|
|
20,856
|
|
|||
Cash and cash equivalents at end of period
|
$
|
78,283
|
|
|
$
|
81,002
|
|
|
$
|
23,064
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid for income taxes, net of refunds received
|
$
|
45
|
|
|
$
|
20
|
|
|
$
|
(73
|
)
|
Noncash investing and financing activities
|
|
|
|
|
|
||||||
Accretion of redeemable convertible preferred stock
|
$
|
—
|
|
|
$
|
8,660
|
|
|
$
|
14,162
|
|
Contract intangible obtained under a derivative liability
|
$
|
—
|
|
|
$
|
2,842
|
|
|
$
|
—
|
|
Issuance of debt in connection with derivative liability
|
$
|
—
|
|
|
$
|
27,318
|
|
|
$
|
—
|
|
•
|
Persuasive evidence of an arrangement exists;
|
•
|
Delivery has occurred;
|
•
|
The fee is fixed or determinable; and
|
•
|
Collectability of the fee is probable.
|
•
|
provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how the consideration should be allocated;
|
•
|
require an entity to allocate revenue in an arrangement using estimated selling prices (ESP) of deliverables if the Company does not have vendor- specific objective evidence of selling price (VSOE) or third-party evidence of selling price (TPE); and
|
•
|
eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method.
|
|
Balance at Beginning of Period
|
|
Additions Charged to Revenues
|
|
Deductions (1)
|
|
Balance at End of Period
|
||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
||||||||
2012
|
$
|
—
|
|
|
$
|
170
|
|
|
$
|
—
|
|
|
$
|
170
|
|
2011
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2010
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Revenue
|
|
Accounts
Receivable
|
|||||||||||
|
Years Ended December 31,
|
|
As of December 31,
|
|||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|||||
Customer A
|
25
|
%
|
|
29
|
%
|
|
52
|
%
|
|
*
|
|
|
*
|
|
Customer B
|
28
|
%
|
|
17
|
%
|
|
*
|
|
|
25
|
%
|
|
78
|
%
|
Customer C (1)
|
14
|
%
|
|
18
|
%
|
|
20
|
%
|
|
*
|
|
|
*
|
|
Customer D
|
*
|
|
|
*
|
|
|
*
|
|
|
12
|
%
|
|
*
|
|
Customer E
|
*
|
|
|
—
|
|
|
—
|
|
|
40
|
%
|
|
—
|
|
|
As of December 31, 2012
|
||||||||||||||
|
Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
70,488
|
|
|
$
|
70,488
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets measured at fair value
|
$
|
70,488
|
|
|
$
|
70,488
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31, 2011
|
||||||||||||||
|
Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
75,660
|
|
|
$
|
75,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificates of deposit
|
100
|
|
|
100
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
75,760
|
|
|
$
|
75,760
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Fair value—beginning of period
|
$
|
—
|
|
|
$
|
215
|
|
|
$
|
159
|
|
Initial fair value of derivative liability
|
—
|
|
|
2,842
|
|
|
—
|
|
|||
Mark-to-market of warrant and derivative liabilities
|
—
|
|
|
25,030
|
|
|
—
|
|
|||
Reclassification of warrant liability to equity
|
—
|
|
|
(769
|
)
|
|
56
|
|
|||
Reclassification of derivative liability to note payable
|
—
|
|
|
(27,318
|
)
|
|
—
|
|
|||
Fair value—end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
215
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Lab equipment and machinery
|
$
|
38,667
|
|
|
$
|
33,515
|
|
Leasehold improvements
|
2,873
|
|
|
2,086
|
|
||
Computer equipment and software
|
3,467
|
|
|
3,016
|
|
||
Furniture and fixtures
|
160
|
|
|
146
|
|
||
Construction in progress
|
5,964
|
|
|
5,088
|
|
||
Total property and equipment
|
51,131
|
|
|
43,851
|
|
||
Less accumulated depreciation
|
(27,073
|
)
|
|
(18,723
|
)
|
||
Property and equipment, net
|
$
|
24,058
|
|
|
$
|
25,128
|
|
|
Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Depreciation Expense
|
7,411
|
|
|
6,992
|
|
|
4,962
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Patents issued
|
$
|
3,932
|
|
|
$
|
3,562
|
|
Patents pending
|
3,386
|
|
|
2,566
|
|
||
Trademarks
|
40
|
|
|
38
|
|
||
Total intangible assets
|
7,358
|
|
|
6,166
|
|
||
Less patent amortization
|
(687
|
)
|
|
(99
|
)
|
||
Intangible assets, net
|
$
|
6,671
|
|
|
$
|
6,067
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Amortization Expense
|
$
|
588
|
|
|
$
|
81
|
|
|
$
|
9
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Rent expense
|
$
|
1,297
|
|
|
$
|
1,961
|
|
|
$
|
1,649
|
|
Minimum return to Symyx
|
$
|
67,000
|
|
Proceeds to Symyx from offering
|
(39,682
|
)
|
|
Initial fair value of derivative liability
|
(2,842
|
)
|
|
Reimbursement of offering related expenses
|
1,389
|
|
|
Mark-to-market adjustment
|
$
|
25,865
|
|
|
Year Ended December 31, 2012
|
||||||||||
|
Principal
|
|
Interest
|
|
Total
|
||||||
Symyx payments
|
$
|
804
|
|
|
$
|
1,196
|
|
|
$
|
2,000
|
|
|
Conversion
Rate
|
|
Preferred
Stock Shares
|
|
Common
Stock Shares
|
||
Series A
|
1-for-2
|
|
8,399,831
|
|
|
4,199,912
|
|
Series B
|
1-for-2
|
|
22,780,964
|
|
|
11,390,477
|
|
Series C
|
1-for-2
|
|
14,686,698
|
|
|
7,343,345
|
|
Series D
|
1-for-2
|
|
6,575,832
|
|
|
3,287,915
|
|
Series E
|
1-for-2
|
|
6,018,122
|
|
|
3,009,059
|
|
|
|
|
58,461,447
|
|
|
29,230,708
|
|
|
Options Outstanding
|
|||||||||||
|
Number of
Stock Options
Outstanding
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Balance as of December 31, 2009
|
6,097,431
|
|
|
$
|
1.18
|
|
|
7.3
|
|
$
|
9,047
|
|
Granted
|
1,579,875
|
|
|
2.76
|
|
|
|
|
|
|
||
Exercised
|
(86,915
|
)
|
|
1.18
|
|
|
|
|
141
|
|
||
Cancelled
|
(321,482
|
)
|
|
2.06
|
|
|
|
|
|
|
||
Balance as of December 31, 2010
|
7,268,909
|
|
|
1.48
|
|
|
6.9
|
|
13,937
|
|
||
Granted
|
1,570,684
|
|
|
7.13
|
|
|
|
|
|
|
||
Exercised
|
(368,194
|
)
|
|
1.26
|
|
|
|
|
2,854
|
|
||
Cancelled
|
(241,802
|
)
|
|
3.28
|
|
|
|
|
|
|
||
Balance as of December 31, 2011
|
8,229,597
|
|
|
2.52
|
|
|
6.6
|
|
50,541
|
|
||
Granted
|
1,339,129
|
|
|
8.12
|
|
|
|
|
|
|
||
Exercised
|
(1,747,213
|
)
|
|
1.39
|
|
|
|
|
9,558
|
|
||
Cancelled
|
(395,096
|
)
|
|
6.63
|
|
|
|
|
|
|
||
Balance as of December 31, 2012
|
7,426,417
|
|
|
3.57
|
|
|
6.4
|
|
40,040
|
|
||
Exercisable as of December 31, 2012
|
4,949,432
|
|
|
$
|
2.00
|
|
|
5.2
|
|
$
|
34,298
|
|
Vested and expected to vest as of December 31, 2012
|
6,961,817
|
|
|
$
|
3.38
|
|
|
|
|
$
|
38,826
|
|
|
Number of
Stock RSUs Outstanding |
|
Weighted-Average Grant Date Fair Value
|
|||
Balance as of December 31, 2011
|
—
|
|
|
$
|
—
|
|
Granted
|
274,070
|
|
|
6.48
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited
|
(19,207
|
)
|
|
6.49
|
|
|
Balance as of December 31, 2012
|
254,863
|
|
|
$
|
6.48
|
|
Vested and expected to vest as of December 31, 2012
|
209,045
|
|
|
|
|
|
Years Ended December 31,
|
||||
|
2012
|
|
2011
|
||
Number of stock options outstanding
|
7,426,417
|
|
|
8,229,597
|
|
Number of RSUs outstanding
|
254,863
|
|
|
—
|
|
Shares available for future grant
|
5,001,956
|
|
|
4,300,996
|
|
Number of warrants outstanding
|
912,368
|
|
|
912,368
|
|
Total shares reserved
|
13,595,604
|
|
|
13,442,961
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Cost of revenue
|
$
|
1,011
|
|
|
$
|
622
|
|
|
$
|
285
|
|
Research and development
|
872
|
|
|
462
|
|
|
204
|
|
|||
Sales and marketing
|
774
|
|
|
770
|
|
|
422
|
|
|||
General and administrative
|
995
|
|
|
588
|
|
|
453
|
|
|||
Total stock-based compensation
|
$
|
3,652
|
|
|
$
|
2,442
|
|
|
$
|
1,364
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||
Exercise Price
|
|
Options
Outstanding
|
|
Weighted-Average
Remaining
Contractual
Life (Years)
|
|
Weighted-Average
Exercise Price
per Share
|
|
Exercisable
|
|
Weighted-Average
Exercise Price
per Share
|
||||||||
$
|
0.10
|
|
|
888,873
|
|
|
2.5
|
|
$
|
0.10
|
|
|
888,873
|
|
|
$
|
0.10
|
|
0.20
|
|
|
476,500
|
|
|
3.3
|
|
0.20
|
|
|
476,500
|
|
|
0.20
|
|
|||
1.50
|
|
|
288,500
|
|
|
3.8
|
|
1.50
|
|
|
288,500
|
|
|
1.50
|
|
|||
1.66
|
|
|
722,000
|
|
|
4.7
|
|
1.66
|
|
|
722,000
|
|
|
1.66
|
|
|||
2.00
|
|
|
1,301,036
|
|
|
6.2
|
|
2.00
|
|
|
1,218,666
|
|
|
2.00
|
|
|||
2.04
|
|
|
112,863
|
|
|
5.2
|
|
2.04
|
|
|
112,863
|
|
|
2.04
|
|
|||
2.66
|
|
|
1,042,042
|
|
|
7.2
|
|
2.66
|
|
|
673,050
|
|
|
2.66
|
|
|||
2.90
|
|
|
36,305
|
|
|
5.8
|
|
2.90
|
|
|
36,305
|
|
|
2.90
|
|
|||
3.40
|
|
|
147,240
|
|
|
8.0
|
|
3.40
|
|
|
61,984
|
|
|
3.40
|
|
|||
5.34
|
|
|
22,200
|
|
|
9.2
|
|
5.34
|
|
|
4,500
|
|
|
5.34
|
|
|||
6.20
|
|
|
900,623
|
|
|
8.3
|
|
6.20
|
|
|
375,675
|
|
|
6.20
|
|
|||
6.60
|
|
|
30,000
|
|
|
9.3
|
|
6.60
|
|
|
—
|
|
|
—
|
|
|||
6.62
|
|
|
60,000
|
|
|
9.4
|
|
6.62
|
|
|
—
|
|
|
—
|
|
|||
6.91
|
|
|
202,000
|
|
|
9.6
|
|
6.91
|
|
|
—
|
|
|
—
|
|
|||
7.06
|
|
|
137,900
|
|
|
9.8
|
|
7.06
|
|
|
—
|
|
|
—
|
|
|||
7.25
|
|
|
8,550
|
|
|
9.9
|
|
7.25
|
|
|
—
|
|
|
—
|
|
|||
8.84
|
|
|
772,000
|
|
|
9.1
|
|
8.84
|
|
|
1,500
|
|
|
8.84
|
|
|||
9.05
|
|
|
32,535
|
|
|
8.9
|
|
9.05
|
|
|
10,746
|
|
|
9.05
|
|
|||
10.00
|
|
|
138,750
|
|
|
8.9
|
|
10.00
|
|
|
42,254
|
|
|
10.00
|
|
|||
11.96
|
|
|
106,500
|
|
|
8.6
|
|
11.96
|
|
|
36,016
|
|
|
11.96
|
|
|||
|
|
7,426,417
|
|
|
6.4
|
|
3.57
|
|
|
4,949,432
|
|
|
2.00
|
|
|
Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Expected term (in years)
|
6.0
|
|
|
6.0
|
|
|
6.0
|
|
Risk-free interest rate
|
1.1
|
%
|
|
2.1
|
%
|
|
2.2
|
%
|
Expected volatility
|
60
|
%
|
|
57
|
%
|
|
55
|
%
|
Expected dividend rate
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Years Ended December 31,
|
|||||||||
|
2012
|
|
2011
|
|
2010
|
|||||
Net loss attributable to common stockholders
|
$
|
(756
|
)
|
|
(38,675
|
)
|
|
$
|
(15,940
|
)
|
Shares used in computing net loss per share of common stock, basic and diluted
|
42,966,448
|
|
|
9,698,880
|
|
|
5,567,286
|
|
||
Net loss per share of common stock, basic and diluted
|
$
|
(0.02
|
)
|
|
(3.99
|
)
|
|
$
|
(2.86
|
)
|
|
Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Redeemable convertible preferred stock
|
—
|
|
|
—
|
|
|
26,221,649
|
|
Stock options to purchase common stock
|
7,426,417
|
|
|
8,229,597
|
|
|
7,268,909
|
|
Common stock subject to repurchase
|
7,500
|
|
|
15,000
|
|
|
—
|
|
Common and preferred stock warrants
|
912,368
|
|
|
912,368
|
|
|
1,812,360
|
|
|
As of December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
1
|
|
|
1
|
|
|
1
|
|
|||
Foreign
|
50
|
|
|
42
|
|
|
18
|
|
|||
Total current
|
$
|
51
|
|
|
$
|
43
|
|
|
$
|
19
|
|
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deferred
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total provision for income taxes
|
$
|
51
|
|
|
$
|
43
|
|
|
$
|
19
|
|
|
As of December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Expected provision at statutory federal rate
|
$
|
(247
|
)
|
|
$
|
(10,482
|
)
|
|
$
|
(616
|
)
|
State tax—net of federal benefit
|
1
|
|
|
1
|
|
|
1
|
|
|||
U.S. federal research credit
|
—
|
|
|
(870
|
)
|
|
(626
|
)
|
|||
Non deductible expenses
|
131
|
|
|
763
|
|
|
486
|
|
|||
Change in statutory tax rate
|
—
|
|
|
—
|
|
|
(264
|
)
|
|||
Others
|
31
|
|
|
6
|
|
|
164
|
|
|||
Change in valuation allowance
|
135
|
|
|
10,625
|
|
|
874
|
|
|||
Provision for income taxes
|
$
|
51
|
|
|
$
|
43
|
|
|
$
|
19
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss federal and state
|
$
|
12,515
|
|
|
$
|
10,776
|
|
Research and foreign tax credits
|
5,810
|
|
|
4,619
|
|
||
Accrued compensation and vacation
|
1,201
|
|
|
437
|
|
||
Deferred revenue, other accruals and reserves
|
574
|
|
|
2,186
|
|
||
Stock-based compensation
|
1,822
|
|
|
346
|
|
||
Patents
|
8,118
|
|
|
10,280
|
|
||
Gross deferred tax assets
|
30,040
|
|
|
28,644
|
|
||
Valuation allowance
|
(29,199
|
)
|
|
(27,057
|
)
|
||
Total deferred tax asset
|
841
|
|
|
1,587
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
841
|
|
|
1,587
|
|
||
Total deferred tax liabilities
|
841
|
|
|
1,587
|
|
||
Net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Unrecognized benefit—beginning of period
|
$
|
1,401
|
|
|
$
|
1,067
|
|
|
$
|
746
|
|
Gross increase—prior period tax positions
|
38
|
|
|
—
|
|
|
—
|
|
|||
Gross decreases—prior period tax positions
|
—
|
|
|
(113
|
)
|
|
—
|
|
|||
Gross increases—current period tax positions
|
401
|
|
|
447
|
|
|
321
|
|
|||
Unrecognized benefit—end of period
|
$
|
1,840
|
|
|
$
|
1,401
|
|
|
$
|
1,067
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Related party revenue
|
$
|
4,543
|
|
|
$
|
5,237
|
|
|
$
|
3,883
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Related party revenue
|
$
|
16,524
|
|
|
$
|
15,756
|
|
|
$
|
22,130
|
|
Related cost of revenue
|
$
|
55
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
United States
|
$
|
51,045
|
|
|
$
|
35,573
|
|
|
$
|
29,526
|
|
Japan
|
13,594
|
|
|
15,148
|
|
|
12,449
|
|
|||
APAC other
|
2,066
|
|
|
2,934
|
|
|
489
|
|
|||
Europe and Middle East
|
122
|
|
|
175
|
|
|
210
|
|
|||
Total
|
$
|
66,827
|
|
|
$
|
53,830
|
|
|
$
|
42,674
|
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
(a)
|
The following documents are filed as part of this report:
|
(b)
|
Financial Statements: See "Index to Consolidated Financial Statements" in Part II, Item 8 of this Form 10-K
|
(c)
|
All schedules are omitted because either they are not required information, or the required information is in the financial statements or notes thereto.
|
(d)
|
Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Form 10-K.
|
|
|
INTERMOLECULAR, INC.
|
||
Date: March 1, 2013
|
|
By:
|
|
/s/ DAVID E. LAZOVSKY
David E. Lazovsky
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
/s/ DAVID E. LAZOVSKY
David E. Lazovsky
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 1, 2013
|
/s/ PETER L. EIDELMAN
Peter L. Eidelman
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March 1, 2013
|
/s/ THOMAS R. BARUCH
Thomas R. Baruch
|
|
Chairman of the Board of Directors
|
|
March 1, 2013
|
/s/ MARVIN D. BURKETT
Marvin D. Burkett
|
|
Director
|
|
March 1, 2013
|
Irwin Federman
|
|
Director
|
|
|
/s/ BRUCE M. McWILLIAMS
Bruce M. McWilliams
|
|
Director
|
|
March 1, 2013
|
/s/ GEORGE M. SCALISE
George M. Scalise
|
|
Director
|
|
March 1, 2013
|
/s/ JOHN L. WALECKA
John L. Walecka
|
|
Director
|
|
March 1, 2013
|
Exhibit
Number
|
|
|
|
|
Incorporated By Reference
|
|
Filed
Herewith
|
||||||
|
|
Exhibit Description
|
|
Form
|
|
Date
|
|
Number
|
|
||||
2.1
|
|
|
|
Asset Purchase Agreement by and between Intermolecular, Inc. and Symyx Technologies, Inc. dated as of July 28, 2011.(1)
|
|
S-1/A
|
|
9/9/2011
|
|
2.1
|
|
|
|
3.1
|
|
|
|
Amended and Restated Certificate of Incorporation of Intermolecular, Inc.
|
|
10-K
|
|
03/16/2012
|
|
3.1
|
|
|
|
3.2
|
|
|
|
Amended and Restated Bylaws of Intermolecular, Inc.
|
|
10-K
|
|
03/16/2012
|
|
3.2
|
|
|
|
4.1
|
|
|
|
Specimen Common Stock Certificate.
|
|
S-1/A
|
|
11/7/2011
|
|
4.1
|
|
|
|
4.2
|
|
|
|
Warrant to purchase shares of common stock issued to Timane S.a.r.l. dated June 20, 2008.
|
|
S-1
|
|
7/29/2011
|
|
4.2
|
|
|
|
4.3
|
|
|
|
Form of warrant to purchase shares of common stock issued to Toshiba Corporation and SanDisk Corporation dated March 15, 2010.
|
|
S-1/A
|
|
10/26/2011
|
|
4.3
|
|
|
|
4.4
|
|
|
|
Fourth Amended and Restated Investor Rights Agreement dated as of March 4, 2011, by and among Intermolecular, Inc. and certain stockholders named therein, as amended by Amendment No. 1 to Fourth Amended and Restated Investor Rights Agreement dated as of June 14, 2011.
|
|
S-1
|
|
7/29/2011
|
|
10.1
|
|
|
|
4.5
|
|
|
|
Secured Promissory Note, issued by the Company to Symyx Technologies, Inc. on November 23, 2011.
|
|
10-K
|
|
03/16/2012
|
|
4.5
|
|
|
|
10.1
|
|
|
|
Lease Agreement by and between Intermolecular, Inc. and Novellus Systems, Inc. dated as of May 11, 2010, as amended by the Confirmation of Commencement Date of the Lease Agreement dated as of June 10, 2010.
|
|
S-1
|
|
7/29/2011
|
|
10.2
|
|
|
|
10.2
|
|
†
|
|
Collaborative Development Program Agreement by and among SanDisk Corporation, Toshiba Corporation and Intermolecular, Inc. dated March 15, 2010.
|
|
S-1/A
|
|
11/7/2011
|
|
10.3
|
|
|
|
10.3
|
|
†
|
|
Alliance Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of November 17, 2006.
|
|
S-1/A
|
|
10/26/2011
|
|
10.4
|
|
|
|
Exhibit
Number
|
|
|
|
|
Incorporated By Reference
|
|
Filed
Herewith
|
||||||
|
|
Exhibit Description
|
|
Form
|
|
Date
|
|
Number
|
|
||||
10.4
|
|
†
|
|
Wets Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of July 13, 2007, as amended by the Addendum to Wets Workflow Purchase Agreement dated as of December 21, 2007, the Amendment to Addendum to Wets Workflow Purchase Agreement dated as of December 16, 2008 and the Supplemental Agreement to the Amendment to the Addendum to Wets Workflow Purchase Agreement dated as of March 16, 2009.
|
|
S-1/A
|
|
11/7/2011
|
|
10.5
|
|
|
|
10.5
|
|
†
|
|
Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of December 16, 2008.
|
|
S-1/A
|
|
10/26/2011
|
|
10.6
|
|
|
|
10.6
|
|
†
|
|
Modification to the Wets Workflow Purchase Agreement and Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of August 27, 2010.
|
|
S-1/A
|
|
9/30/2011
|
|
10.7
|
|
|
|
10.7
|
|
†
|
|
Amendment Number 5 to the Wets Workflow Purchase Agreement and Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of March 3, 2011.
|
|
S-1/A
|
|
9/30/2011
|
|
10.8
|
|
|
|
10.8
|
|
†
|
|
CDP Services Addendum to Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of October 1, 2011, Amendment Number 6 to the Wets Workflow Purchase Agreement and Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of October 27, 2011, and Amendment Number 7 to the Wets Workflow Purchase Agreement and Dry Workflow Purchase Agreement by and between Intermolecular, Inc. and Advanced Technology Materials, Inc. dated as of October 27, 2011.
|
|
10-K
|
|
03/16/2012
|
|
10.8
|
|
|
|
10.9
|
|
†
|
|
Advanced Memory Development Program Agreement by and between Intermolecular, Inc. and Elpida Memory, Inc. dated as of May 22, 2008, as amended by Exhibit C—Royalty Terms dated as of August 18, 2008, the Supplemental Joint Development Agreement dated as of January 27, 2009, the Amendment to the Supplemental Joint Development Agreement dated as of May 25, 2009 and the Amendment to the Advanced Memory Agreement dated July 29, 2010.
|
|
S-1/A
|
|
11/7/2011
|
|
10.9
|
|
|
|
(1)
|
All exhibits, schedules and similar attachments to this exhibit have been omitted. Copies of such exhibits, schedules and similar attachments will be furnished supplementally to the SEC upon request.
|
1.
|
Advanced Memory Development Program Agreement, dated May 22, 2008; (“1
st
Agreement”)
|
2.
|
Exhibit C – Royalty Terms, dated August 18, 2008; (“2
nd
Agreement”)
|
3.
|
Supplemental Joint Development Agreement, dated January 27, 2009; (“3
rd
Agreement”)
|
4.
|
Amendment to the Supplemental Joint Development Agreement, dated May 25, 2009; (“4
th
Agreement”)
|
5.
|
Amendment to the Advanced Memory Agreements, dated July 29, 2010 (“5
th
Agreement”)
|
1.
|
All capitalized terms not defined herein shall have the meaning set forth in the Advanced Memory Agreements.
|
2.
|
The following CDP Developed Technology constitutes Fee Triggering Technology –
|
2.1
|
[***] (“First Fee Triggering Technology”).
|
3.
|
The following product constitutes a Product –
|
3.1
|
[***] (“First Product”).
|
4.
|
The First Fee Triggering Technology shall be first utilized in the First Product on January 1, 2013 (“First Fee Trigger Date”)
|
5.
|
In consideration for utilization of the First Fee Triggering Technology in the First Product, Elpida shall pay Intermolecular [***] US Dollars (US[***]) per year for [***] years (“First Annual Contribution Fee Period”) beginning on the First Fee Trigger Date.
|
6.
|
Elpida shall pay the aforementioned amount during the First Annual Contribution Fee Period in quarterly payments of US$[***] in accordance with the followings:
|
6.1
|
Elpida shall make a payment of [***] US Dollars (US$[***]) on the first day of the first calendar quarter of 2013, and the following schedule shall govern the remaining payments for each calendar quarter:
|
A.
|
If on or before [***], 2013, Elpida has shipped the First Product for commercial use by Elpida’s customer or Elpida has not shipped the First Product for a reason other than the [***], Elpida shall make a payment of [***] US Dollars (US[***]) on [***], 2013 and a payment of [***] Dollars (US $[***]) on [***], 2013 and on the first day of each calendar quarter through the First Annual Contribution Fee Period;
|
B.
|
If Elpida has not shipped the First Product for commercial use by Elpida’s customer by [***], 2013 due to [***] but shipped it on or before [***], 2013, Elpida shall make a payment of [***] US Dollars (US$[***]) on [***], 2013 as the remaining payment of the first calendar quarter of 2013, a payment of [***] Dollars (US $[***]) on [***], 2013, a payment of [***] Dollars (US $[***]) on [***], 2013, and a payment of [***] Dollars (US $[***]) on the first day of each calendar quarter thereafter, through the First Annual Contribution Fee Period; or
|
C.
|
If Elpida has not shipped the First Product for commercial use by Elpida’s customer by [***], 2013 due to the [***], Elpida shall make a payment of [***] US Dollars (US$[***]) on [***], 2013. Additionally, the parties will discuss in good faith the timing of the remaining payments of [***] US Dollars (US$[***]) for the first calendar quarter of 2013, the second calendar quarter of 2013 and of the payments for each calendar quarter thereafter through the First Annual Contribution Fee Period. Nothing in this Section 6.1 (C), is intended to reduce Elpida’s obligations to make a payment of [***] US Dollars (US$[***]) for each calendar quarter under Section 2.2 or a payment of [***] US Dollars (US$[***]) for each calendar quarter during the Annual Contribution Fee Period under Section 2.3 of the 5
th
Agreement.
|
6.2
|
No Other Modifications. Other than as provided herein, no other amendments are being made to the Advanced Memory Agreements, and all other provisions of the Advanced Memory Agreements shall remain in full force and effect in accordance with the terms of the Advanced Memory Agreements.
|
1.
|
Definitions
|
1.1.
|
Capitalized Terms
|
1.2.
|
Amendment Period
|
1.3.
|
Locations
|
1.4.
|
Tools
|
1.5.
|
Supported Tools
|
2.
|
License, Royalties and Fees
|
2.1.
|
One (1) Payment
|
|
A
|
B
|
C
|
D
|
|
Site #
|
Location
|
Tools/Licenses included
|
Amounts already paid for portion of Amendment Period
|
|
|
Amounts paid by Jan 7,2013 for Amendment Period
|
|||||
1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2
|
[***]
|
[***]
|
[***]
|
[***]
|
|
3
|
[***]
|
[***]
|
[***]
|
[***]
|
|
4
|
[***]
|
[***]
|
[***]
|
[***]
|
|
5
|
[***]
|
[***]
|
[***]
|
[***]
|
|
6
|
[***]
|
[***]
|
|||
|
|
|
|
[***]
|
[***]
|
2.2.
|
No Volume-Based Royalties owed during the Amendment Period
|
3.
|
Support Fees
|
3.1.
|
Amendment Period
|
3.2.
|
Terms beyond the Amendment Period
|
3.3.
|
Upgrades
[***]
|
3.4.
|
Upgrades
[***]
|
4.
|
Payments for FTEs
|
4.1.
|
Amendment Period
|
4.2.
|
Other Terms
|
5.
|
Payment obligations of Amendment Number 7
|
6.
|
Remove
[***]
from List of Strategic Accounts
|
7.
|
Use of Dry Workflow
|
8.
|
Amendment shall have an effective date of Dec. 31, 2012 (“Effective Date”).
|
9.
|
Miscellaneous
|
1.
|
Customer is engaged in, among other things, research, design, experimentation, development and commercialization of materials, manufacturing processes, and technologies in the Field as more fully defined in Section 2.14 below.
|
2.
|
IMI is engaged in, among other things, research, design, experimentation, development and commercialization in the area of and using HPC Technology as more fully defined in Section 2.15 below.
|
3.
|
IMI and Customer wish to enter into an agreement under which IMI will use HPC Technology for the benefit of Customer under the terms and conditions set forth in this Agreement.
|
1.
|
EXHIBITS
|
1.1
|
List of CDP Activities
|
1.2
|
Form of Election
|
1.3
|
[***]
|
1.4
|
[***]
|
2.
|
DEFINITIONS
|
2.1
|
Affiliate
|
2.1.1.
|
to have more than fifty percent (50%) of the voting rights or of the outstanding shares or securities representing the right to vote for either the election of the board of directors or a similar managing authority, or a supervisory board, or
|
2.1.2.
|
if there do not exist outstanding shares or securities as may be the case in a partnership, joint venture or unincorporated association, to have more than fifty percent (50%) of the ownership interest representing the right to make decisions for such entity.
|
2.2
|
Background Technology
|
2.2.1.
|
that is owned, acquired, or licensed by the party at any time during the term of this Agreement; and
|
2.2.2.
|
that is not a result of CDP Activities.
|
2.3
|
CDP
|
2.4
|
CDP Activities
|
2.5
|
CDP Fees
|
2.6
|
CDP Technology
|
2.7
|
THIS SECTION INTENTIONALLY LEFT BLANK
|
2.8
|
Confidential Information
|
2.9
|
[***]
|
2.10
|
[***]
|
2.11
|
[***]
|
2.12
|
Effective Date
|
2.13
|
[***]
|
2.14
|
[***]
|
2.15
|
FTE
|
2.15.1.
|
An employee or contractor assigned to conduct CDP Activities based on approximately [***]
hours per year
.
|
2.15.2.
|
Two (2) or more employees or contractors assigned to conduct CDP Activities based on an aggregate of approximately [***]
hours per year
.
|
2.16
|
[***]
|
2.17
|
HPC Technology
|
2.18
|
Intellectual Property Rights
|
2.18.1.
|
U.S. and foreign patents and patent applications claiming any inventions or discoveries made, developed, conceived, or reduced to practice, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations and extensions thereof,
|
2.18.2.
|
U.S. and foreign copyrights,
|
2.18.3.
|
U.S. and foreign trademarks, service marks, trade names, trade dress, domain names and similar rights,
|
2.18.4.
|
U.S. and foreign mask work rights, and
|
2.18.5.
|
Any other moral, intellectual or other proprietary rights of any kind now known or hereafter recognized in any jurisdiction in the world.
|
2.19
|
Know-how
|
2.20
|
[***]
|
2.21
|
Product
|
2.22
|
[***]
|
2.23
|
Project
|
2.24
|
Project Technology
|
2.25
|
Project A Technology
|
2.26
|
Project B Technology
|
2.27
|
Royalties
|
2.28
|
Sale or Sold
|
2.28.1.
|
sale of the Product as a stand-alone product, or
|
2.28.2.
|
sale of the Product where the Product is sold as a component or constituent of other products.
|
2.29
|
Statutory Rights
|
2.29.1.
|
Application to or registration with a governmental entity; and
|
2.29.2.
|
Approval of such application or registration by such entity.
|
2.30
|
THIS SECTION INTENTIONALLY LEFT BLANK
|
2.31
|
Term
|
2.32
|
Third Party
|
2.33
|
[***]
|
2.34
|
Revenues
|
3.
|
CDP
|
3.1
|
On the Effective Date, IMI shall commence CDP Activities.
|
3.2
|
The duration of the CDP shall be for the Term.
|
3.3
|
CDP Activities
|
3.3.1.
|
Customer and IMI shall conduct CDP Activities in a collaborative effort pursuant to one or more written project statements (each, a "Project").
|
3.3.2.
|
Each Project shall describe the activities to be conducted by each party.
|
3.3.3.
|
Prior to the start of CDP Activities for each Project, the parties will categorize the Project as Project A or Project B.
|
3.3.4.
|
In order for a Project to be categorized as Project [***],
|
i.
|
the cumulative duration of the Project (as measured by its start date and end date) shall be no more than [***] (the [***] period need not be continuous), and
|
ii.
|
the Project consists of [***].
|
3.3.5.
|
In order for a Project to be categorized as Project [***],
|
i.
|
the duration of the Project (as measured by its start date and end date) shall be greater than [***], and
|
ii.
|
the Project consists of [***].
|
3.3.6.
|
If the Project has not been categorized prior to its start date, such Project will be deemed to be Project [***] if the end date of the Project is greater than [***] after the start date, else such Project will be deemed to be Project [***].
|
3.3.7.
|
Each Project shall have a start date and an end date.
|
3.3.8.
|
The parties agree that at all times during the Term, at least [***] of FTEs provided by IMI in accordance with Section 3.4.1, shall be dedicated to projects categorized as Project [***].
|
3.3.9.
|
Any revision to a Project shall be carried out pursuant to Sections 3.5, 3.6, 3.7, 3.8 and 3.9, and when agreed upon will be incorporated into this Agreement, superseding or supplementing the previous Project.
|
3.3.10.
|
Each party will commit appropriate resources in equipment, facilities and personnel reasonably necessary to complete its respective tasks in accordance with each Project, including the resources listed in such Project.
|
3.3.11.
|
Except as set forth in Section 7.2 or as stated in a Project, Customer and IMI will each bear their own respective costs associated with the CDP Activities.
|
3.4
|
FTEs
|
3.4.1.
|
Subject to the payments in Section 7.1, IM shall provide
[***]
FTEs to conduct and support the CDP Activities.
|
3.4.2.
|
Customer shall provide
[***]
FTEs to conduct its obligations and support the CDP Activities, which FTEs shall be primarily stationed at
[***]
.
|
3.4.3.
|
Neither party is required to perform activities other than in accordance with the Projects or utilize a total number of FTEs in excess of the number of FTEs described in such Projects.
|
3.5
|
Project Changes
|
3.6
|
Development Records
|
3.7
|
Project Managers
|
3.8
|
Dispute Escalation Process
|
3.9
|
Progress Reports; Meetings
|
4.
|
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS AND KNOW-HOW
|
4.1
|
Background Technology
|
4.2
|
Project A Technology
|
4.3
|
Project B Technology
|
4.3.4.
|
[***]
|
4.3.5.
|
[***]
|
4.3.6.
|
[***]
|
4.4
|
Cooperation
|
4.5
|
HPC Technology
|
5.
|
LICENSES AND TRANSFER OF RIGHTS
|
5.1
|
Project
[***]
Technology
|
5.1.12.
|
to engage in
CDP Activities
with
IMI, and
|
5.1.13.
|
to use, make, have made, import/export, offer to sell and sell Products
[***].
|
5.2
|
License of Project
[***]
Technology to IMI for Projects
|
5.2.7.
|
Customer hereby grants IMI a worldwide, non-exclusive, non-transferable, royalty-free, license, without right of sublicense, to use the Project [***] Technology, licensed to Customer in Section 5.1, for Projects with Customer.
|
5.3
|
IMI Background Technology
|
5.3.1.
|
Such
Background Technology is
necessary for Customer to carry out its obligations under
the CDP Activities,
|
5.3.2.
|
Such
Background Technology is
necessary to exercise any licenses granted by IMI to Customer under the CDP Technology
,
|
5.3.3.
|
IMI has the right to grant such a License, and
|
5.3.4.
|
Granting such a License will not result in [***].
|
1.
|
Customer may sublicense to Customer’s Affiliate.
|
2.
|
Customer may sublicense to Third Parties that Customer may hire to have Products manufactured for it under the licenses granted under Section 5.1.2 provided the sublicense is no greater in scope than the license granted to Customer by IMI. Furthermore, (i) such have made rights shall apply only when the designs, specifications and working drawings for the manufacture of such Products to be manufactured by such Third Party are furnished to the Third Party manufacturer by the Customer; (ii) such have-made rights shall not extend to standard, off-the-shelf products of such Third Party manufacturer, nor to products originally designed by such Third Party manufacturer to which only minor revisions are made to conform to the specifications of the Customer; and (iii) upon manufacture, such Products shall be offered for sale, sold, leased, or otherwise transferred by the Customer as Customer’s own product and not on behalf of another.
|
3.
|
Customer may license to Third Parties other than the Third Parties mentioned in item 2 above, in accordance with Section 5.7 and Section 7.6.
|
5.4
|
Customer Background Technology
|
5.4.1.
|
Such
Background Technology is
necessary for IMI to carry out its obligations under
the CDP Activities for the sole benefit of Customer,
|
5.4.2.
|
Customer has the right to grant such licenses, and
|
5.4.3.
|
Granting such a license will not result in [***].
|
5.5
|
HPC Technology
|
5.6
|
Licenses to Affiliates
|
5.7
|
Licenses to Third Parties
|
5.8
|
Reservation of R
ights
|
5.9
|
[***]
in Project
[***]
Technology
|
5.9.1.
|
[***]
upon receiving payment and license back
|
5.9.2.
|
License back from Customer
|
6.
|
INTELLECTUAL PROPERTY PROTECTION
|
6.1
|
[***]
controls prosecution
|
6.1.8.
|
[***] shall have the sole right, but not the obligation, to apply for, seek issuance of, and maintain in the United States and in foreign countries during the Term the patent rights associated with the [***] Technology that is solely owned by [***] or jointly owned by IMI and Customer.
|
6.1.9.
|
All costs associated with such activity shall be split equally between the parties, unless otherwise agreed to in writing.
|
6.1.10.
|
The prosecution, filing and maintenance of all patent rights and applications are the within the sole discretion and responsibility of [***]. All decisions with respect to prosecution of the above patent rights are reserved to [***].
|
6.1.11.
|
The parties agree to mutually develop a process for assisting each other in such activities.
|
6.2
|
Patent Filing, Prosecution and Maintenance
|
6.2.5.
|
[***] shall have the first right to prepare, file, prosecute and maintain, at its own expense and in consultation with [***], patent applications and patents claiming [***], and to conduct any interferences, re-examinations, reissues, oppositions or requests for patent term extension or governmental equivalents thereto, but without affecting the ownership and license provisions set forth in Sections 4 and 5.
|
6.2.6.
|
In the event that [***] does not file, prosecute or maintain any such patent or patent application (including the failure to do so in [***]), or undertake such other activities described above, then [***] shall have the right to assume such activities at its own expense but without affecting the ownership and license provisions set forth in Sections 4 and 5.
|
6.3
|
Cooperation
|
6.3.4.
|
Each party agrees to execute all papers, including patent applications and invention assignments, and otherwise agrees to assist the other party, as reasonably required and at the other party’s reasonable expense, to perfect the rights, title and other interests in CDP Technology.
|
6.3.5.
|
IMI and Customer shall both use reasonable efforts to keep the other fully informed as to the status of patent matters with respect to CDP Technology, including by providing the other the opportunity to review and comment on complete copies of any documents a reasonable time in advance of applicable filing dates, and upon request, providing to the other party copies of any substantive documents that a party receives from the United States Patent and Trademark Office and any foreign patent offices, within a reasonable time period after receipt, including notice of all official actions, interferences, reissues, re-examinations, oppositions, or requests for patent term extensions.
|
6.3.6.
|
IMI and Customer shall each reasonably cooperate with and assist the other at its own expense in connection with such activities, at the other party's request. The Project Managers will (a) facilitate communication between the parties regarding patents and patent applications with respect to CDP Technology, (b) discuss and provide input on patent strategy with respect to CDP Technology, and (c) review applications and other substantive papers with respect to CDP Technology prior to filing with the patent office.
|
7.
|
PAYMENTS
|
7.1
|
CDP Fees
|
7.1.7.
|
As consideration for conducting and supporting the CDP Activities in accordance with Section 3 Customer shall, during the Term, make monthly payments to IMI (“CDP Fees”) as follows:
|
i.
|
Customer shall pay IMI $[***] ([***] U.S. dollars) for [***].
|
ii.
|
Customer shall pay IMI $[***] ([***] U.S. dollars) for [***].
|
iii.
|
For the months starting [***] until the end of the Term, Customer shall pay IMI $[***] ([***] U.S. dollars) each.
|
7.1.8.
|
IMI shall invoice Customer
in one-month intervals.
|
7.1.9.
|
The aforementioned monthly payments shall reflect the minimum fees for services performed in the prior month. No payment will be treated as a deposit for future services and will be fully earned upon invoice date.
|
7.2
|
Expenses
|
7.2.7.
|
consumables, such as substrates, mask sets, materials, and targets,
|
7.2.8.
|
outsourced metrology and characterization not supported internally by IMI,
|
7.2.9.
|
reasonable travel and lodging expenses for IMI personnel performing activities at Customer's facilities, and
|
7.2.10.
|
any other out-of-pocket costs to support the CDP Activities.
|
7.3
|
Fees for
[***]
|
7.3.1.
|
[***]
|
7.3.2.
|
[***]
|
7.3.3.
|
The [***] and the [***] shall be in the form as attached in Exhibit 1.2.
|
7.3.4.
|
IMI shall invoice Customer
following each [***] or [***], as applicable, and Customer shall remit payment within [***] days following receipt of each invoice.
|
7.3.5.
|
The aforementioned
payments
shall reflect the fees for
[***]
. No payment will be treated as a deposit for future services and will be fully earned upon invoice date.
|
7.4
|
Royalty payments for use of
[***]
|
7.4.1.
|
Customer agrees that it shall pay IMI upon the Sale of Products starting in the [***]. The payments shall be based on [***].
|
7.4.2.
|
Royalty
[***]
|
7.4.3.
|
Royalty during
[***]
|
|
[***]
|
|||
|
|
|
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
7.4.4.
|
Reporting on Products Sold
|
7.4.5.
|
Customer shall make all Royalty payments within [***] days after the date of such report.
|
7.5
|
[***]
License Fees for
[***]
use of
[***]
|
7.5.1.
|
During the Term, Customer shall not owe any [***] to [***] the [***] the [***] to [***] under Section 5.1. In order to [***] such license beyond the Term, Customer shall make [***] payments to IMI of $ [***] ([***] U.S. dollars) each in accordance with Sections 7.5.2 and 7.5.3. IMI will invoice Customer for each such [***] payment at the start of such [***].
|
7.5.2.
|
Customer shall make such
[***]
payments for a period of
[***]
starting on the first day of every
[***]
starting with the first
[***]
after the end of the Term.
|
7.5.3.
|
After the end of the aforementioned [***] period, for each [***] of the next [***], Customer shall make payments to IMI of an amount per [***] which amount [***] per [***] (U.S. Dollars) at the end of the [***] period.
|
7.5.4.
|
The payments owed per
[***]
in this Section 7.5 shall be
[***]
owed by Customer to IMI pursuant to the Project
[***]
Technology license (as described in
Section 7.4). [***]
|
7.5.5.
|
If Customer does not [***] in accordance with Section 7.5.1 then the [***] under [***].
|
i.
|
Notwithstanding the foregoing, in the event that Customer does not [***] for a [***] Customer may [***] by making a payment equal to [***] in the following [***]. Provided that Customer may exercise such right to [***] times during the Term.
|
7.6
|
Third Party Payments
|
7.6.1.
|
[***] percent ([***]%) of
payments received by Customer from Third Party or
|
7.6.2.
|
Amount equal to
[***]
applied to the Third Party
|
7.7
|
Payment Method
|
7.7.3.
|
All payments hereunder shall be made in U.S. dollars by Customer or one of its U.S. Affiliates.
|
7.7.4.
|
All payments due to IMI under this Agreement shall be made by bank wire transfer as follows:
|
7.8
|
Late payments
|
7.9
|
Transaction Taxes
|
7.10
|
Records; Inspection
|
7.10.3.
|
Customer shall keep complete
,
true and accurate books of
account and records on its own behalf for the purpose of determining the amounts payable under this Agreement
.
Such books and records shall be kept at Customer for at least
[***]
following the end of the
[***]
to which they pertain.
|
7.10.4.
|
Such records will be open for inspection during such
[***]
period by an independent auditor reasonably acceptable to Customer, solely for the purpose of verifying
amounts payable to IMI hereunder. Such
inspections may be made no more than once each calendar year, at reasonable times and on reasonable notice
.
|
7.10.5.
|
Inspections
conducted under this Section 7.10
shall be at the expense of IMI, unless a variation or error producing an increase exceeding
[***]
percent (
[***]
%) of the
amounts
payable for any period covered by the inspection is established a
nd confirmed in the course of any
such inspection, whereupon all reasonable costs relating to the inspection for such period and any unpaid amounts that are discovered will be paid promptly by Customer. Each party agrees to hold in confidence pursuant to Section 8 al
l information concerning
payments and reports, and all information learned
in the course
of any audit or inspection, except to the extent necessary for that party to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law.
|
8.
|
CONFIDENTIAL INFORMATION
|
8.1
|
The parties acknowledge that they may receive information from the other party which may be considered confidential and
proprietary.
The receiving party agrees to avoid any un-authorized disclosure, dissemination, or use of such information that, if disclosed in writing, is identified and marked as confidential (or with words of similar meaning) at the time of its disclosure (or that, if disclosed verbally, is designated as confidential at the time of disclosure and is summarized and identified as confidential in a writing delivered to the receiving party within
[***]
days after the disclosure) or that are observed during a visit of the manufacturing facilities of one of the parties and such information would appear to a reasonable person as confidential information ("Confidential Information"). Both parties agree that this Agreement is the Confidential Information of both parties.
|
8.2
|
The receiving party will use the Confidential Information solely for the purpose of performing its rights and obligations under the Agreement.
|
8.3
|
The receiving party will not disclose Confidential Information to a Third Party without the prior written consent of the disclosing party or in connection with a license under Section 5.6. The receiving party will protect such information from un-authorized disclosure, use or dissemination with at least the same degree of care as the receiving party exercises to protect its own information of similar type and importance, but in no event less than reasonable care.
|
8.4
|
The obligations of confidentiality and protection required by this Section will survive the expiration, termination, or cancellation of this Agreement for a period of five years thereafter.
|
8.5
|
The obligation of confidentiality will not apply, or will cease to apply, to any information that: (a) was known to the receiving party prior to its receipt of Confidential Information under this Agreement; (b) is or becomes publicly available without breach of this Agreement by the receiving party; (c) is received from a third party without an obligation of confidentiality to the disclosing party or (d) is developed independently by employees of the receiving party not having access to such information.
|
8.6
|
Notwithstanding anything to the contrary in this Section 8, each party shall be permitted to lawfully disclose Confidential Information of the other party to any governmental agency to the extent such disclosure is required by law (including but not limited to the SEC, USPTO and pursuant to a subpoena) ; provided, however that before making such disclosure, the party about to make such disclosure shall seek the highest level of protection available and give the other party an adequate opportunity to interpose an objection or take action to assure confidential handling of such information.
|
9.
|
WARRANTY; LIMITATION OF LIABILITY
|
9.1
|
By IMI
|
9.1.6.
|
It has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder; and
|
9.1.7.
|
This Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.
|
9.2
|
By Customer
|
9.2.6.
|
It has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder; and
|
9.2.7.
|
This Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.
|
9.3
|
Disclaimer
|
10.
|
LIMITATION OF LIABILITY
|
10.1
|
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR ANY BREACH OF ANY CONFIDENTIALITY OBLIGATION UNDER THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY, ITS AFFILIATES OR TO ANYTHIRD PARTY CLAIMING THROUGH OR UNDER THE OTHER PARTY HERETO, FOR ANY LOST PROFITS, LOSS OF DATA, EQUIPMEN'T DOWNTIME OR FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
|
10.2
|
EXCEPT FOR BREACHES OF ANY CONFIDENTIALITY AND CDP TECHNOLOGY INDEMNITY OBLIGATIONS OF SECTION 11, IN NO EVENT WILL EITHER PARTY’S LIABILITY TO THE OTHER UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID OR PAYABLE BY SUCH PARTY TO THE OTHER PARTY IN THE [***] PRECEDING THE CLAIM.
|
10.3
|
IN ADDITION, BOTH PARTIES ACKNOWLEDGE AND AGREE THAT AS BETWEEN THE PARTIES, NEITHER PARTY SHALL BE LIABLE FOR ANY PRODUCT LIABILITY CLAIMS RESULTING FROM THE MANUFACTURE, SALE OR USE OF ANY PRODUCTS DEVELOPED AS A RESULT OF CDP ACTIVITIES THAT EITHER PARTY USES, MAKES OR SELLS.
|
10.4
|
The parties acknowledge and agree that the foregoing limitations of liability are an essential element of this agreement and that in their absence the terms of this agreement would be substantially different.
|
11.
|
INDEMNIFICATION
|
11.1
|
IMI will defend, indemnify and hold Customer harmless from and against all claims, damages, losses, liabilities and expenses, including reasonable fees and expenses of attorneys and other professionals, arising out of or resulting from the following: (i) any action by a third party against Customer that is based upon any claim that any services performed under this Agreement by IMI or deliverables hereunder (including, without limitation, the Know-How resulting from CDP Activities), infringe a patent, copyright or other proprietary right or violate a trade secret (“Infringement Claim”); (ii) any action by a third party that is based upon any negligent act or omission or willful misconduct of IMI, and (iii) any action based upon any act or omission arising out of IMI being on Customer premises.
|
11.2
|
IMI shall have no liability under this Section with respect to an Infringement Claim but solely to the extent that the Infringement Claim arises from (i) the combination of the Project IP with any equipment or device that is not supplied by IMI, (ii) the specifications for the Project IP that are provided by Customer, in writing, and there are no commercially reasonable alternatives, (iii) the combination of the Project IP with any Customer Background Intellectual Property , or (iv) or any modification to the Project IP, unless IMI approved or directed such modification in writing.
|
11.3
|
IMI shall have sole control of the defense of such Claim, however, Customer may participate in such defense at its own expense. IMI shall not settle or compromise any such Claim without obtaining the prior written consent of Customer in any manner which binds Customer or accepts liability by or on behalf of Customer or affects Customer’s use of the Project IP. In the case of an Infringement Claim, IMI can: (1) procure for Customer the right to continue using the Project IP; or (2) replace or modify the Project IP with non-infringing Project IP, provided that it does not adversely affect the functionality, form, fit, or use of the Project IP, and such replacement or modification meets or exceeds the specifications for the Project IP.
|
11.4
|
IMI’s
obligation to indemnify and hold Customer harmless shall, with respect to all total, cumulative liabilities or obligations incurred by Customer, whether or not payable to a Third Party, be limited to no more than
a sum of $ [***] ([***] U.S. Dollars).
All claims will be aggregated to determine satisfaction of this limit and the existence of multiple claims will not enlarge this limit. In no event will IMI be liable for any lost profits or consequential, incidental, special, punitive, or indirect damages that Customer may suffer or incur as a result of any action. .
|
12.
|
TERM AND TERMINATION
|
12.1
|
Term
|
12.1.3.
|
The term of this Agreement shall come into full force and effect on the Effective Date, and, unless terminated earlier as provided in this Section 12.2, shall continue for a period [***] (the "Term").
|
12.1.4.
|
Notwithstanding the foregoing section, Customer shall have the unilateral right to terminate the Agreement by notifying IMI at any time during the [***] period starting [***] after the Effective Date (i.e. during the [***] month of the Term). The date when such notice is provided shall be hereinafter referred to as the Notice Date. Any termination pursuant to this Section 12.1.2 shall be effective [***] after the Notice Date.
|
12.2
|
Termination for Breach
|
12.3
|
Effect of Termination
|
12.3.1.
|
Accrued Rights and Obligations
|
12.3.2.
|
Termination of
Projects
|
12.4
|
Survival
|
13.
|
MISCELLANEOUS
|
13.1
|
Amendment
|
13.2
|
No Implied License
|
13.3
|
Assignment
|
13.3.1.
|
Neither party shall assign or transfer this Agreement either voluntarily or by operation of law, in whole
or in part, without the prior
written consent of the other party, such consent not to be un-reasonably withheld.
|
13.3.2.
|
Any attempt to assign without such consent shall be void and of no effect.
|
13.3.3.
|
Notwithstanding 13.3.1 and 13.3.2, this Agreement shall be binding upon and shall inure to the benefit of any successor corporation of IMI resulting from a sale or other transfer of its entire assets to such successor or from a consolidation with such successor corporation, provided the successor corporation and the Affiliates of the successor corporation are not engaged in the business of manufacturing photo-voltaic solar modules.
|
13.3.4.
|
Notwithstanding 13.3.1 and 13.3.2, this Agreement shall be binding upon and shall inure to the benefit of any successor corporation of Customer resulting from a sale or other transfer of its entire assets to such successor or from a consolidation with such successor corporation.
|
13.4
|
Drafting
|
13.5
|
Governing Law
|
13.6
|
Venue
|
13.7
|
Enforcement rights concerning Project
[***]
Technology
|
13.7.6.
|
If either party learns of any infringement by a third party of the CDP Technology, the party learning of the infringement will give written notice of such infringement to the other party.
|
13.7.7.
|
The parties will have [***] days from the written notice of infringement (“[***]”) to elect to participate in the prosecution of such infringement.
|
13.7.8.
|
In the event a party declines or fails to [***], the other party shall [***]. Except in the case of the CDP Technology expressly licensed under this Agreement, [***] in such infringement.
|
13.7.9.
|
In the event that [***], the parties shall use commercially reasonable efforts to [***].
|
13.7.10.
|
In the event that the parties [***] within [***] days after expiration of [***]:
|
i.
|
[***]
|
ii.
|
[***]
|
13.7.11.
|
When a Party [***], then:
|
i.
|
The [***] Party shall give the [***] days prior written notice, including [***];
|
ii.
|
The [***] Party [***]; and
|
iii.
|
The [***] Party may [***], without approval of the [***] Party provided that [***]). If such [***], which approval shall not be unreasonably withheld, delayed or conditioned.
|
13.7.12.
|
Unless agreed to in writing in accordance with Section 13.7.4, any [***].
|
13.8
|
Independent Contractors
|
13.9
|
Compliance with Laws
|
13.10
|
Notices
|
13.10.1.
|
Unless otherwise agreed to by the parties, the communications required or permitted to be given or made under this Agreement shall be made in writing, via personal delivery, registered mail, facsimile
transmission (with written confirmation copy by registered first-class mail)
, addressed to the appropriate party at the address indicated below
and a copy to the receiving party’s legal department.
|
13.10.2.
|
All communications made pursuant
to this section shall be deemed made or given on the date of such personal
delivery, mailing or transmission.
|
13.10.3.
|
If to Customer:
|
13.10.4.
|
With a copy to:
|
13.10.5.
|
If to IMI:
|
13.10.6.
|
The Parties may change the name and address to which communications should be sent under this section by providing prior written notice to the other party.
|
13.11
|
Captions
|
13.12
|
Counterparts
|
13.13
|
Signatures by Electronic Mail or Facsimile
|
13.14
|
Copies
|
13.15
|
Non-waiver
|
13.16
|
Severability
|
13.17
|
Publicity; Disclosure of Agreement
|
13.17.3.
|
to the extent required by law, to
governmental entities, or
|
13.17.4.
|
to
such party's attorneys, accountants, advisors, investors and financing sources and their advisors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, or
|
13.17.5.
|
in connection with the enforcement of this Agreement or rights under this Agreement, or
|
13.17.6.
|
in connection with a merger, acquisition, financing transaction or proposed merger, acquisition or financing transaction.
|
13.18
|
Force Majeure
|
13.19
|
Third Party Beneficiaries
|
13.20
|
Integration
|
13.21
|
R
epresentation by Legal Counsel
|
13.22
|
Insurance
.
|
13.22.1.
|
Statutory Workers’ Compensation Insurance covering all persons employed by IMI engaged in the CDP Project, including employers liability coverage, with minimum limits of at least one million dollars ($1,000,000) per accident and one million dollars ($1,000,000) per disease or whatever limit is required by law, whichever is higher.
|
13.22.2.
|
Commercial General liability (CGL) coverage with minimum limits of at least two million dollars ($2,000,000) per occurrence, CGL for bodily injury, personal injury, property damage and products and completed operation liability.
|
13.22.3.
|
Excess liability limits of two million dollars ($2,000,000) per occurrence, excess of underlying general liability and Workers’ compensation.
|
13.22.4.
|
All policies listed herein 13.22(with the exception of those pertaining to employers liability coverage are required to be on a per occurrence policy limit.
|
13.22.5.
|
All policies must be issued by an insurer with an A.M. Best rating of at least “A-.”
|
13.22.6.
|
Within thirty (30) days of the Effective Date, IMI shall provide to Company a certificate of insurance for all insurance required in this subsection. Each such certificate shall contain a provision for thirty (30) days’ advance notice of all policy changes, including without limitation, cancellation. If a policy is changed or canceled, IMI shall deliver to Company renewal or replacement certificates within thirty (30) days prior to expiration or change of any such insurance. Any coverage provided under these policies to Company would be primary to any other coverage available to Company. Notwithstanding, the failure to provide certificates in accordance with this Section shall not release IMI in any manner of any liability established under this Agreement.
|
13.23
|
Compliance with Laws
.
|
13.23.1.
|
Compliance with Securities Laws. IMI agrees that certain of the information provided by Company to IMI hereunder may be “material, nonpublic information” for purposes of federal or state securities laws, the awareness of which prohibits IMI and its employees, contractors, representatives and agents from (i) buying or selling Company’s securities (stock, options, etc.) (i.e., “insider trading”) and (ii) passing information to anyone who may buy or sell Company’s securities (i.e., “tipping”), until after the information has been disclosed to the public and absorbed by the market. Without limiting any of IMI’s other obligations under this Agreement, IMI will comply with all federal and state securities laws prohibiting insider trading and tipping, and shall immediately notify Company in the event of any insider trading or tipping by IMI or its employees, contractors, representatives or agents of which it becomes aware.
|
13.23.2.
|
In accordance with the requirements of the Foreign Corrupt Practices Act of the United States (15 U.S.C. § 78dd-1 and 2) (“FCPA”), IMI agrees and warrants that it shall not make, offer, promise or authorize any payment, loan, gift, donation or other giving of money or things of value, directly or indirectly, whether through IMI, its affiliates, partners, officers, employees, agents or representatives, whether in cash or kind, and whether pursuant to a written agreement, to or for the use of any government official, any political party or official thereof or any candidate for political office, for the purpose of influencing or inducing any official act or decision in order to further the activities contemplated by this Agreement, including obtaining or retaining any government approval or funding related to such activities. IMI acknowledges that in entering into this Agreement, Company has relied upon IMI’s representation and warranty that it will strictly comply with the FCPA, and IMI agrees that if it violates the FCPA in the course of performing the activities enumerated in this Agreement, Company may immediately upon notice to IMI terminate this Agreement.
|
13.23.3.
|
EICC Compliance. IMI hereby (a) acknowledges and understands that Company requires its suppliers and consultants to adopt the Electronic Industry Code of Conduct (the “EICC”), as promulgated by the Electronic Industry Citizenship Coalition, and (b) agrees to implement and ascribe to the EICC during the term of this Agreement. The EICC may be viewed at
.
|
13.24
|
Public Disclosure
|
13.24.1.
|
Neither party shall without the prior written consent of the other party, issue press releases, marketing literature, public statements, or in any way engage in any other form of public disclosure relating to this Agreement or CDP Activities or Projects, except to the extent required by law, to governmental entities; provided, however that before making such disclosure, the party about to make such disclosure shall seek the highest level of protection available and give the other party an adequate opportunity to interpose an objection or take action to assure appropriate handling of such information.
|
Date: March 1, 2013
|
|
/s/ DAVID E. LAZOVSKY
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David E. Lazovsky
President and Chief Executive Officer
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Date: March 1, 2013
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/s/ PETER L. EIDELMAN
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Peter L. Eidelman
Chief Financial Officer
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ DAVID E. LAZOVSKY
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Name:
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David E. Lazovsky
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Title:
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President and Chief Executive Officer
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•
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ PETER L. EIDELMAN
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Name:
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Peter L. Eidelman
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Title:
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Chief Financial Officer
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