Commitment and Contingencies

9 Months Ended

Sep. 30, 2012

Commitment and Contingencies [Abstract]

Commitment and Contingencies

10. Commitment and Contingencies

At September 30, 2012, the Company’s minimum commitments under non-cancelable operating leases were as follows (in thousands):

	San Diego Gross Rental Payments (1)		Equipment Loan (2)		Cambridge Net Rental Payments
October 2012-September 2013	$	528	$	401	$	196
October 2013-September 2014		2,545		437		31
October 2014-September 2015		2,617		437		0
October 2015-September 2016		2,691		437		0
October 2016-September 2017		2,768		437		0
Thereafter		15,607		2,258		0
Total minimum lease payments	$	26,756	$	4,407	$	227

(1) In addition to the tenant allowance included in the base rent, a second tenant allowance option of $1.5 million was exercised which must be paid back in monthly payments at a 9% interest rate. These payments are included in the above amounts.

(2) Amount includes $1.5 million of interest payments.

As described in Note 2, as of September 2010, BP assumed the lease of the Company’s research and development facilities in San Diego, California, and the parties entered into a sublease agreement dated September 2, 2010 for a portion of the San Diego facilities which the Company occupied, rent free, through June 2012.

San Diego Lease

On June 24, 2011, the Company signed a lease agreement for 59,199 square feet of new office and laboratory space in San Diego for a term of 126 months commencing in June 2012. Upon lease commencement, rent is approximately $192,000 a month, which includes both base rent and a tenant improvement allowance. The rent will be increased by 3% on each annual anniversary of the first day of the first full month during the lease term. Further, the lease agreement allows for a “free rent” term starting with the seventh full month in the lease through the end of the sixteenth month. In addition to the tenant allowance incorporated in the lease payment, an additional tenant improvement allowance of $1.5 million is allowed, which must be paid back in monthly payments at a 9% interest rate. The lease provides the Company with two consecutive options to extend the term of the lease for five years each, which may be exercised with 12 months prior written notice. In the event the Company chooses to extend the term of the lease, the minimum monthly rent payable for the additional term will be determined according to the then-prevailing market rate.

In connection with this lease, the Company has put in place a facility for up to $3 million in secured equipment financing to help support the planned build-out of its research and bioprocess development laboratories and corporate headquarters in San Diego. The facility is intended to fund no more than 30% of the total cost of the pilot plant and research and development equipment needed for the new building. The facility is to be paid at an interest rate of 9% over a term of 126 months. As of September 30, 2012, the Company had drawn $2.9 million under this facility.

Cambridge Lease

The Company has a lease obligation for approximately 21,000 square feet of office space in a building in Cambridge, Massachusetts. The offices are leased to the Company under an operating lease with a term through December 2013. On March 31, 2011, the Company terminated its operations in Cambridge. Subsequently, the Company completed a sublease agreement in May 2011 for the full Cambridge facility, which will give the Company additional sublease income of approximately $0.7 million from October 2012 through September 2013 and $0.2 million in the remainder of 2013.

Credit Facility

On October 19, 2011, the Company entered into credit facilities with Comerica consisting of a $3.0 million domestic receivables and inventory revolving line (the “Comerica Line”) and a $10.0 million export-import receivables revolving line (the “Ex-Im line”). No amounts had ever been outstanding on the lines. In conjunction with the sale of the oilseed processing business to DSM, the Comerica line was terminated. Unamortized transactions costs of $0.3 million were expensed and are recorded in conjunction with the termination of the facility within the Other income (expense), net line item on the Company’s Condensed Consolidated Statement of Comprehensive Income (Loss) for the nine months ended September 30, 2012.

Further, in connection with the Comerica Line, the Company issued to Comerica a warrant to purchase 246,212 shares of its common stock at a price per share of $2.64. The warrant is exercisable at any time through the expiration of the warrant on October 19, 2016.

Subsequently as further described in Note 11, the Company entered into a new credit facility with Comerica.

Letter of Credit

Pursuant to the Company’s new facilities lease for office and laboratory space in San Diego, as of September 30, 2012 the Company was required to maintain a letter of credit of $1.6 million on behalf of its landlord. Due to the payoff of debt and resulting debt ratios, the letter of credit was reduced from $3.2 million to $1.6 million in August 2012, and was reflected as long term restricted cash on the Company’s consolidated balance sheets as of September 30, 2012 and December 31, 2011. Subsequently in October 2012, the remaining $1.6 million was released as part of the new credit facility. The deposit provided for by the letter of credit is held as a security for the performance of the Company’s obligations under the lease and not as an advance rental deposit. The letter of credit expires on December 31, 2012, and will be automatically extended annually without amendment through December 31, 2022. The deposit will not be increased at any time but can be reduced based on certain financial and market capitalization requirements.

Litigation

From time to time, the Company is subject to legal proceedings, asserted claims and investigations in the ordinary course of business, including commercial claims, employment and other matters, which management considers to be immaterial, individually and in the aggregate. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. However, the Company believes that it has valid defenses with respect to the legal matters pending against the Company. It is possible, nevertheless, that the Company’s consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.