S-1/A

As filed with the Securities and Exchange Commission on July 14, 2011

Registration No. 333-173667

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

IMPINJ, INC.

(Exact name of registrant as specified in its charter)

Delaware	3679	91-2041398
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

701 North 34^th Street, Suite 300

Seattle, Washington 98103

(206) 517-5300

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

William T. Colleran, Ph.D.

President and Chief Executive Officer

701 North 34^th Street, Suite 300

Seattle, Washington 98103

(206) 517-5300

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Patrick J. Schultheis Michael Nordtvedt Wilson Sonsini Goodrich & Rosati,
Professional Corporation 701 Fifth Avenue, Suite 5100 Seattle, Washington 98104-7036 (206) 883-2500 Martin A. Wellington Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, California 94025 (650) 752-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

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

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

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued July 14, 2011

                     Shares

COMMON STOCK

Impinj, Inc. is offering                  shares of its common stock and the selling stockholders are offering                  shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market exists for our shares. We anticipate that the initial public offering price will be between $             and $             per share.

We intend to apply for listing of our common stock on              under the symbol “    ”.

Investing in the common stock involves risks. See “Risk Factors” beginning on page 11.

PRICE $             A SHARE

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Company	Proceeds to Selling Stockholders
Per Share	$	$	$	$
Total	$	$	$	$

Impinj and the selling stockholders have granted the underwriters the right to purchase up to an additional shares of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on                     , 2011.

MORGAN STANLEY J.P. MORGAN

NEEDHAM & COMPANY, LLC

PACIFIC CREST SECURITIES

RAYMOND JAMES

                    , 2011

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		11
Special Note Regarding Forward-Looking Statements and Industry Data		35
Use of Proceeds		37
Dividend Policy		38
Capitalization		39
Dilution		41
Selected Financial Data		44
Management’s Discussion and Analysis of Financial Condition and Results of Operations		46
Business		73
Management		90
Executive Compensation		98

	Page
Certain Relationships and Related Party Transactions		121
Principal and Selling Stockholders		125
Description of Capital Stock		128
Shares Eligible For Future Sale		134
Material U.S. Tax Consequences for Non-U.S. Holders of Common Stock		137
Underwriters		140
Legal Matters		145
Experts		145
Where You Can Find Additional Information		145
Index to Unaudited Pro Forma Condensed Financial Statements		P-1
Index to Financial Statements		F-1

We, the selling stockholders and the underwriters have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling stockholders and the underwriters are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

Until                     , 2011, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.

IMPINJ, INC.

Overview

Impinj is the leading provider of UHF RFID solutions for identifying, locating and authenticating items. We believe our technology platform, known as GrandPrix, is the most comprehensive and widely adopted in our industry. GrandPrix’s key elements are Monza tag ICs, Indy reader ICs and Speedway readers and subsystems. RFID systems built on GrandPrix deliver real-time information about tagged items, thereby enabling applications and analytics designed to improve business decisions and enhance consumer experience. Leading retail, apparel, pharmaceutical, food and beverage, technology and logistics companies as well as government agencies rely on our GrandPrix platform. We are the technology leader in our industry, with 90 issued and allowed U.S. patents and 77 pending U.S. patent applications as of April 15, 2011. We have sold over two billion Monza tag ICs since its introduction in 2005, including 940 million in 2010 alone.

We focus exclusively on ultra-high frequency, or UHF, radio-frequency identification, or RFID, solutions. UHF RFID enables writing individualized information to and reading information from tagged items without line of sight and at longer range, higher speed, lower cost and with more automation than any competing technology. We embrace the global industry standard for UHF RFID, called UHF Gen2, which we extend through our leadership in the standards-setting process and enhance with our proprietary technologies and deep domain expertise. UHF Gen2 is the fastest growing segment of the RFID market. UHF Gen2 systems are well suited for high-volume, item-level applications that require low-cost consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. VDC Research Group, or VDC, projects the number of UHF Gen2 tag ICs shipped will grow from 1.5 billion in 2010 to 40.0 billion in 2015, a compound annual growth rate, or CAGR, of 93.2%.

From 2009 to 2010 unit sales of our Monza UHF Gen2 tag ICs increased by 279%. We believe that Impinj leads the market in UHF Gen2 tag ICs, reader ICs and stationary readers with estimated 63%, 86% and 25% share, respectively. We estimate that Impinj enables more than 70% of the UHF Gen2 reader market when we combine the share of our Speedway reader with that of other readers based on our Indy reader ICs. We believe that our market leadership position and the benefits and efficiencies end users derive from UHF Gen2 systems are driving our rapid growth. For 2009, 2010 and the three months ended March 31, 2011, our revenue was $20.8 million, $31.8 million and $12.3 million, respectively, and our net losses from continuing operations were $9.9 million, $11.4 million and $1.8 million, respectively.

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We sell to a broad and well-established ecosystem of more than 450 inlay manufacturers, reader original equipment manufacturers, or OEMs, distributors, system integrators, value-added resellers, or VARs, and other technology companies, as well as to end users. Our ecosystem relies on the elements of our GrandPrix platform to deliver UHF Gen2 solutions in wide-ranging markets, such as to end users Walmart, for apparel inventory management, and Coca-Cola for product authentication in next-generation beverage dispensers, and system integrators such as LS Industrial Systems for tracking and authenticating pharmaceuticals, which we believe, based on our participation in the UHF Gen2 industry, were the largest consumers by volume of our IC products for such applications over 2009 and 2010.

We believe current applications of UHF Gen2 represent a small portion of the potential for this technology. We envision a future when a broad array of everyday items is linked to networked information systems, thereby enabling significantly improved visibility, understanding and analysis of those items’ location and attributes. This global network of connected objects is often referred to as the “Internet of Things.” We believe that UHF Gen2 technology, powered by Impinj, is helping to make that vision a reality.

We use third-party foundries and subcontractors to produce our ICs and contract manufacturers to assemble our readers and subsystems. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and solutions while continuing to build our reputation as the UHF Gen2 leader.

The RFID Industry

RFID technology has been employed for decades. Legacy RFID technologies, such as those that operate in the low frequency, or LF, and high frequency, or HF, bands have been employed for years in specialized applications such as animal tagging and in security applications such as access cards. More recently, the market for UHF systems has grown rapidly as companies deploy enterprise-wide UHF RFID systems to realize the benefits and efficiencies those systems deliver.

UHF Gen2 RFID

The development of the UHF Gen2 standard was, and continues to be, driven by end-user requirements. A critical end-user requirement is that UHF Gen2 be the single worldwide standard for retail RFID. In contrast, technology providers have typically driven specifications for other RFID standards, often leading to competing standards that end users are reluctant to adopt. GS1 EPCglobal, a nonprofit industry association, created the UHF Gen2 standard and a corresponding electronic product code, or EPC, numbering system to assign unique numbers to UHF Gen2-tagged items. GS1 EPCglobal also created other standards and guidelines related to data storing, data sharing, reader operations and tag applications. As of March 31, 2011, GS1 EPCglobal had over 950 end-user members, including many of the world’s leading retail, apparel, logistics and pharmaceutical companies. UHF Gen2 systems generally have lower power requirements, demonstrate superior performance and may be deployed at lower cost compared to LF and HF technologies. These attributes, coupled with the single industry standard, make UHF Gen2 systems well suited for item-level, high-volume applications. These applications generally require ongoing purchases of consumable tags that uniquely identify items.

We believe that apparel retailers are adopting UHF Gen2 systems because of demonstrable benefits and efficiencies. For example, UHF Gen2 systems can identify every tagged garment in a stack in a fraction of a second, enabling daily store-floor inventorying, even while customers remain in the store. Item-level, real-time inventory visibility allows retailers to reduce out-of-stocks and overstocks, carry less inventory, better meet consumers’ needs and make better business decisions. University of Arkansas studies demonstrate that RFID item tagging significantly improves store-floor inventory accuracy.

We believe demand for UHF Gen2 systems will grow both by further penetration into existing applications such as apparel tagging and by expansion into myriad other high-volume tagging applications. In consumer

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retail, UHF Gen2 growth prospects include tagging of consumer electronics, cosmetics and jewelry. A number of governments have mandated UHF Gen2-based tagging of automobiles, pharmaceuticals and liquor. Manufacturing logistics, postal applications and food safety exhibit great promise. These examples represent just some of the applications that we believe will contribute to sustained market growth.

Unlike other semiconductor-based products, we believe the consumable nature of UHF Gen2 tags will drive sustained volume growth. Furthermore, we expect that a number of trends, including ubiquitous connectivity, internet-enabled commerce and the need to identify, authenticate and track items in increasingly complex business environments will accelerate broader adoption of UHF Gen2 systems. VDC projects the number of UHF Gen2 tag ICs shipped will grow from 1.5 billion in 2010 to 40.0 billion in 2015, a CAGR of 93.2%.

Our GrandPrix Platform

We believe that Impinj has the only UHF RFID technology platform, industry-leading product performance and leading market share in each of our tag IC, reader IC and reader product lines. Our GrandPrix platform tightly integrates numerous elements, including Monza tag ICs, reference tag antenna designs, reader antennas, Indy reader ICs, Speedway readers and subsystems, OEM reader reference designs, software-development kits, or SDKs, application-programming interfaces, or APIs, application software and services. Our ecosystem partners develop GrandPrix-based UHF Gen2 systems and deploy them at leading retail, apparel, pharmaceutical, food and beverage, technology and logistics enterprises. GrandPrix provides superior performance, proprietary system enhancements and a comprehensive development environment. Our integrated GrandPrix platform offers numerous benefits to our ecosystem partners and end users, including:

• Superior performance. We believe that each of our products, individually, has best-in-class performance, and when integrated together delivers the best system performance in the industry. We base our belief both on field experience and on industry data, such as the January 2011 ABI Research passive UHF tag Vendor Matrix IC ranking that placed us first in both innovation and implementation.

• Proprietary system enhancements. We use our deep domain expertise to solve the most difficult challenges in UHF Gen2 and embed our proprietary solutions into GrandPrix. For example, traditional UHF tags are not readable when the tag antenna is aligned end-on to the reader antenna. To solve this problem we developed our patent-pending True3D technology that enables orientation-insensitive tags.

• Comprehensive development environment. We strive to empower our ecosystem partners to develop complete systems for end users and to further their preference for our GrandPrix platform. For our Speedway and Indy products we offer development environments, easy-to-use APIs, SDKs, software drivers and libraries, upgrade agents, sample application code and application software.

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Our Competitive Strengths

We are the leading provider of UHF Gen2 solutions and believe we can maintain this position by leveraging our competitive strengths, including:

• Our market and technology leadership. Our exclusive focus on the high-growth UHF Gen2 market and our resulting deep domain knowledge and systems engineering expertise has allowed us to become the market leader. Impinj leads the market in UHF Gen2 tag ICs, reader ICs and stationary readers with estimated 63%, 86% and 25% share, respectively, based on VDC data. We believe our exclusive focus on the UHF Gen2 market allows us to be more nimble, innovation-focused and better able to identify and capture opportunities.

• Our platform approach. We believe that Impinj is the only company that provides an integrated UHF Gen2 product suite. When our ecosystem partners deploy GrandPrix-based systems as an integrated whole, end users benefit from system performance and ease-of-use that we believe cannot be equaled by “mix and match” implementations. In addition, the knowledge we gain from developing one component of a UHF Gen2 system often allows us to optimize other components while improving our domain expertise, which makes us an attractive partner in the critical “design-in” phase of end users’ vendor selection processes.

• Our intellectual property portfolio. We own a strong intellectual property portfolio with 90 issued and allowed U.S. patents and 77 U.S. patent applications as of April 15, 2011. These patents cover UHF Gen2 system design, tag ICs, reader ICs, readers, software, firmware and antenna designs.

• Our standards leadership. We have taken leadership roles in establishing RFID standards at worldwide governing bodies, including GS1 EPCglobal. Our active role in driving standardization of RFID technology has enabled us to maintain our leadership in UHF Gen2 products and to promote the adoption of our technical innovations in the marketplace.

• Our broad and well-established ecosystem. We sell to an ecosystem of more than 450 inlay manufacturers, reader OEMs, distributors, system integrators, VARs and other technology companies. In addition, end users seek us out for our domain knowledge and systems engineering expertise to develop applications that are tailored to their needs. We leverage this understanding of end users’ needs to secure design wins with inlay manufacturers, reader OEMs and end users.

• Our capital-efficient operating model. We use third-party foundries and assembly subcontractors to produce our ICs, and we use contract manufacturers to assemble our readers and subsystems. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and new solutions, while continuing to build our reputation as the UHF Gen2 leader.

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Our Strategy

We strive to accelerate UHF Gen2 market adoption and extend our GrandPrix platform’s leadership while growing revenue profitably. Key elements of our strategy are to:

• Deliver the most innovative UHF Gen2 solutions. We will continue to innovate to extend our significant UHF Gen2 technology leadership. Given the multi-year lifecycle of UHF Gen2 deployments, we believe that design wins earned today will engender continued customer preference for systems that employ our products in the future.

• Embrace and extend the UHF Gen2 standard. We intend to continue our active leadership role within GS1 EPCglobal because we believe this role enables us to extend the UHF Gen2 standard and influence its future direction. We believe that the insights we gain through our involvement in the standards-setting process allow us to deliver first-to-market, standards-compliant products with the potential for broad market acceptance.

• Commercialize new use cases. We intend to continue to actively engage customers and end users to identify key market needs and to develop or enable application-specific solutions that address large market opportunities.

• Expand and enable our implementation and go-to-market partnerships. We intend to continue to broaden and deepen our relationships with inlay manufacturers, reader OEMs, distributors, VARs, system integrators, software providers and other technology companies, as well as with end users. By leveraging these relationships we expect to continue to identify, target and deliver complete solutions to end users in existing and new markets and applications.

Risks Associated with Our Business

Our business and our ability to execute our strategy are subject to many risks that you should be aware of before you decide to buy our common stock. These risks are discussed more fully in “Risk Factors” beginning on page 11 and include, among others:

• The adoption rate for UHF Gen2 technology has been slower than anticipated or forecasted by both us and industry sources. If the market for UHF Gen2 products does not continue to develop, or develops more slowly than we expect, our business will suffer.

• Our market is very competitive, and if we are unsuccessful developing new products and enhancements, our customers or end users do not select our UHF Gen2 products to be designed into their products or systems or we fail to compete successfully, our business and operating results will suffer.

• The UHF Gen2 market has been characterized by significant price erosion. If such erosion continues and we are unable to offset any reductions in our average selling prices by increasing our sales volumes or introducing new products with higher margins, our revenue and gross margins will suffer.

• We rely on a limited number of third parties to manufacture, assemble and test our products, particularly our sole-source supplier of Monza wafers, and we do not have any long-term supply contracts. If the supply of our products is disrupted, fulfilling our customer orders may be adversely affected and our reputation, revenue and growth prospects could be impaired.

• We rely on third party inlay manufacturers, reader OEMs, distributors, VARs and system integrators to sell our products, and we have experienced significant customer concentration in certain of our product lines. If we are unable to maintain our relationships with our channel partners or develop relationships with new channel partners, our business, financial condition and operating results could be harmed.

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Corporate Information

We were incorporated in Delaware in April 2000. Our principal executive office is located at 701 North 34^th Street, Suite 300, Seattle, Washington 98103. Our telephone number is (206) 517-5300. Our website address is www.impinj.com. Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this prospectus.

Unless the context indicates otherwise, as used in this prospectus, the terms “Impinj,” “we,” “us” and “our” refer to Impinj, Inc. We use Impinj^®, the Impinj logo, the Powered by Impinj^® shield logo, GrandPrix^™, Monza^®, Indy^®, Speedway^®, the checkered flag logo and other marks as trademarks in the United States and other countries. This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ^® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

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THE OFFERING

Common stock offered by us	shares
Common stock offered by the selling stockholders	shares
Total	shares
Common stock outstanding after this offering	shares
Over-allotment option	shares
Risk factors	See “Risk Factors” beginning on page 11 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
Use of proceeds	We expect to use approximately $25 million of the net proceeds from this offering to repay indebtedness (including approximately $8.2 million for the repayment of indebtedness held by our affiliates) and the remaining              of the net proceeds for general corporate purposes. We will not receive any of the proceeds from the sale of common stock by the selling stockholders. See “Use of Proceeds.”
Proposed              symbol

The number of shares of our common stock outstanding immediately after this offering is based on 132,776,294 shares of our common stock outstanding as of March 31, 2011. This number excludes, as of March 31, 2011:

• 21,914,388 shares of common stock issuable upon the exercise of outstanding options with a weighted-average exercise price of $0.11 per share;

• 1,004,155 shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan as of March 31, 2011; provided, however, that immediately upon the signing of the underwriting agreement for this offering, our 2010 Equity Incentive Plan will terminate so that no further awards may be granted under our 2010 Equity Incentive Plan;

• an aggregate of up to              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan and 2011 Employee Stock Purchase Plan, each of which will become effective immediately upon the signing of the underwriting agreement for this offering;

• an aggregate of 2,797,112 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying our subordinated convertible promissory notes (which notes will be repaid using a portion of the net proceeds of the offering contemplated by this prospectus);

• an aggregate of 890,721 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share (which warrants will be exercised automatically on a net exercise basis in connection with the offering contemplated by this prospectus if the initial per share price to public exceeds the exercise price of the warrants); and

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• an aggregate of 260,280 shares of our Series E preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share and an aggregate of 300,000 shares of our common stock underlying warrants with an exercise price of $0.21 per share.

Except as otherwise indicated, all information in this prospectus assumes:

• the conversion of all our outstanding shares of convertible preferred stock into 97,465,284 shares of common stock immediately prior to the closing of this offering;

• the filing of our amended and restated certificate of incorporation, which will occur immediately prior to the closing of this offering; and

• no exercise of the underwriters’ over-allotment option.

In addition, we may choose to effect a reverse stock split prior to the effectiveness of this offering. This prospectus does not reflect the effects of this reverse stock split.

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SUMMARY FINANCIAL DATA

We have derived the following summary of our statements of operations data for the years ended December 31, 2008, 2009 and 2010 from our audited financial statements appearing elsewhere in this prospectus. We derived the unaudited statements of operations data for the three months ended March 31, 2010 and 2011 and the balance sheet data as of March 31, 2011 from our unaudited interim financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments necessary to a fair statement of our results of operations and financial position. Our historical results are not necessarily indicative of the results that may be expected in the future. The summary of our financial data set forth below should be read together with our financial statements and the related notes to those statements, as well as the sections captioned “Selected Financial Data” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the “Unaudited Pro Forma Condensed Financial Statements” appearing elsewhere in this prospectus.

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
	(In thousands, except per share amounts)
Revenue:
Product revenue	$	15,457		$	10,305		$	29,221		$	4,640		$	11,397
Development, service and licensing revenue		9,586			10,511			2,576			500			868
Total revenue		25,043			20,816			31,797			5,140			12,265
Costs of revenue:
Cost of product revenue		10,791			6,782			17,008			2,455			6,325
Cost of development, service and licensing revenue		2,006			2,219			603			111			472
Total cost of revenue		12,797			9,001			17,611			2,566			6,797
Gross profit		12,246			11,815			14,186			2,574			5,468
Operating expenses:
Research development		12,257			9,492			10,662			2,389			2,781
Selling and marketing		7,375			7,320			8,256			1,957			2,375
General and administrative		6,711			5,271			5,525			1,241			1,594
Total operating expenses		26,343			22,083			24,503			5,587			6,750
Loss from operations		(14,097	)		(10,268	)		(10,317	)		(3,013	)		(1,282	)
Interest income (expense) and other, net		316			67			(978	)		(55	)		(495	)
Net loss before income tax (expense) benefit		(13,781	)		(10,201	)		(11,295	)		(3,068	)		(1,777	)
Income tax (expense) benefit		644			50			(90	)		(19	)		(24	)
Loss from continuing operations		(13,137	)		(10,151	)		(11,385	)		(3,087	)		(1,801	)
Income from discontinued operations, net of tax		1,275			291			—			—			—
Net loss	$	(11,862	)	$	(9,860	)	$	(11,385	)	$	(3,087	)	$	(1,801	)
Net loss attributable to common stockholders	$	(19,481	)	$	(18,419	)	$	(19,943	)	$	(5,227	)	$	(3,838	)
Basic and diluted loss per common share:
Loss from continuing operations	$	(0.68	)	$	(0.56	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Income from discontinued operations		0.04			0.01			—			—			—
Net loss	$	(0.64	)	$	(0.55	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Weighted-average number of shares used in per share amounts (in thousands):		30,509			33,527			34,127			33,723			34,824
Pro forma net loss per share, basic and diluted(1)							$						$
Pro forma weighted-average shares outstanding, basic and diluted(1)

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	As of March 31, 2011
	Actual			Pro Forma As Adjusted(2)
	(Unaudited)
	(In thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term marketable securities	$	12,052		$
Working capital		18,779
Total assets		43,121
Total long-term debt		18,438
Redeemable convertible preferred stock		160,197
Accumulated deficit		(155,830	)
Total stockholders’ deficit		(155,810	)

(1) Pro forma net loss per share represents net loss divided by the pro forma weighted-average shares outstanding, as though the conversion of our convertible preferred stock into common stock occurred on the first day of the relevant period.

Pro forma weighted-average shares outstanding reflects (a) the conversion of our convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the first day of the relevant period and (b) the impact of the redemption premium on the subordinated convertible promissory notes, based on the number of shares of common stock whose proceeds would be necessary to pay the redemption amount at an assumed initial public offering price of $             per share.

(2) Reflects, on a pro forma basis, the automatic conversion described in footnote (1) and, on an as adjusted basis, the sale by us of             shares of common stock offered by this prospectus at an assumed initial price to public of $             per share, the midpoint of the range set forth on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses, and the application of such proceeds as described in the section captioned “Use of Proceeds.” Each $1.00 increase (decrease) in the assumed initial price to public of $             per share, would increase (decrease) each of cash and cash equivalents, working capital, total assets and total stockholders’ deficit by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of             in the number of shares offered by us would increase (decrease) each of cash and cash equivalents, working capital, total assets and total stockholders’ deficit by approximately $             million, assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial price to public and other terms of this offering determined at pricing.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider the risks and uncertainties described below, which we believe are the material risks of our business and this offering. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition, operating results or growth prospects could be harmed by any of these risks. In that event, the trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to all of the other information contained in this prospectus, including our financial statements and related notes.

Risks Related to Our Business and Industry

Market acceptance of UHF Gen2 solutions is uncertain. If the market for UHF Gen2 solutions does not continue to develop, or develops more slowly than we expect, our business will suffer.

The market for UHF Gen2 solutions is relatively new and, to a large extent, unproven. Whether UHF Gen2 solutions will achieve and sustain high demand and market acceptance is uncertain. The adoption rate for UHF Gen2 technology has been slower than anticipated or forecasted by both us and industry sources. For example, beginning in the early 2000s, when retailers, such as Wal-Mart Stores, Inc., or Walmart, piloted UHF Gen2 for pallet- and case-level tagging to improve the efficiency of their supply chains, their initiatives failed to gain significant traction. Near-term growth of UHF Gen2 item-tagging solutions depends on large organizations with market influence, such as Walmart and Banana Republic, a division of Gap Inc., continuing to adopt and deploy UHF Gen2 item-tagging solutions. The growth of the market for UHF Gen2 solutions will depend upon further adoption within the retail industry, as well as adoption in other industries and by government agencies. If these market-leading early adopters fail to realize demonstrable benefits and efficiencies through expanded adoption of UHF Gen2 solutions, delay deployments as a result of systems integration issues or otherwise, or elect to abandon or delay deployments of UHF Gen2 solutions for any reason, overall market acceptance of these solutions will be materially and adversely affected. Any widespread delay, slowdown or failure by organizations implementing UHF Gen2 solutions could materially and adversely affect our business, operating results, financial condition and prospects.

End users and our prospective customers may not be familiar with our solutions or UHF Gen2 solutions in general, or may use other products and technologies to identify, authenticate, track and prevent loss of their assets. Additionally, even if our prospective customers are familiar with RFID technology and our solutions, a negative perception of, or experience with, RFID technology or of a competitor’s RFID products may deter them from adopting UHF Gen2 technology or our solutions. Businesses, government agencies and other organizations may need education on the benefits of using UHF Gen2 solutions in their operations. These educational efforts may not be successful, and organizations may decide that the costs of adopting UHF Gen2 solutions outweigh the benefits. In addition, increased market adoption of UHF Gen2 solutions is likely to depend in part upon the continued decline in selling prices for UHF Gen2 products and infrastructure, particularly UHF Gen2 tags. Failure of organizations to adopt UHF Gen2 solutions for any reason could hurt the development of the UHF Gen2 market and, consequently, impair our business and prospects.

We have a history of losses, and we expect to incur additional losses in the future. We cannot be certain that we will achieve or sustain profitability.

We have never been profitable, and we expect to continue to incur additional losses in the future. We incurred net losses of $11.9 million, $9.9 million, $11.4 million and $1.8 million in 2008, 2009, 2010 and the three months ended March 31, 2011, respectively. As of March 31, 2011, we had an accumulated deficit of $155.8 million. Our ability to achieve or sustain profitability is based on numerous factors, many of which are out of our control, including the continued widespread adoption of UHF Gen2 solutions, our market share and margins. We may never be able to generate sufficient revenue or sell a sufficient volume of UHF Gen2 products to achieve or sustain profitability.

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Our market is very competitive. If we fail to compete successfully, our business and operating results will suffer.

We face significant competition in the UHF Gen2 industry from both established and emerging players. We believe our principal competitors are NXP B.V., or NXP, and Alien Technology Corporation, or Alien, in the market for tag ICs; austriamicrosystems AG and Phychips Inc. in reader ICs; and Motorola Solutions, Inc., or Motorola, Alien, Federal Signal Corporation, Intermec Technologies Corporation, or Intermec, and Trimble Navigation Limited, or Trimble, in UHF Gen2 readers. In addition, our customers, including inlay manufacturers, reader OEMs and distributors, may decide to enter our market and compete with us rather than purchase our products, which would not only reduce our customer base but also increase competition in the market, adversely affecting our operating results, business and prospects. Companies in adjacent markets or newly formed companies may decide to enter the UHF Gen2 market.

Because the market for UHF Gen2 solutions is new and evolving, winning key end-user and customer accounts early in the development of the market will be critical to growing our business. Competition for key potential customers is intense. Additionally, end users that use competing products and technologies may face high switching costs, which may affect our and our channel partners’ ability to successfully convert them to our products. Failure to obtain orders from key customers and end users, for competitive reasons or otherwise, would materially adversely affect our operating results, business and prospects.

Some of our competitors have longer operating histories and significantly greater financial, research and development, marketing and other resources than us. As a result, some of these competitors are able to devote greater resources to the development, promotion, sale and support of their products. These competitors may also have the ability to provide discounted pricing on their products to gain market share. In addition, consolidation in the UHF Gen2 industry could intensify the competitive pressures that we face. Many of our existing and potential competitors may be better positioned than we are to acquire other companies, technologies or products.

Some of our customers have policies for maintaining diverse supplier bases. Many of these customers desire to enhance competition and maintain multiple providers of UHF Gen2 products and thus do not have an interest in purchasing exclusively from one supplier or promoting a particular brand. Our ability to increase order sizes from these customers and maintain or increase our market share is constrained by these policies. In addition, any decline in quality or availability of our products or any increase in the number of suppliers that such a customer uses may decrease demand for our products and adversely affect our operating results, business and prospects.

Our ability to compete successfully depends on numerous factors, including our ability to:

• maintain our market leadership position and the strength of our brand in UHF Gen2;

• provide an integrated suite of UHF Gen2 products;

• remain an active leader in the standards-setting process and promote relevant standards;

• maintain and expand our relationships with channel partners;

• secure products in large volume in a cost-effective and timely manner from our suppliers;

• develop innovative, differentiated, high-performance solutions relative to our competitors’ solutions; and

• protect our intellectual property.

We cannot assure you that our solutions will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by our existing competitors or new companies entering our market. In addition, we cannot assure you that our competitors do not have or will not develop processes or product designs that currently or in the future will enable them to produce competitive products at lower costs than ours. Any failure to compete successfully would materially adversely affect our business, prospects, operating results and financial condition.

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We rely on a limited number of providers to manufacture, assemble and test our products, and if we fail to obtain quality products in a timely and cost effective matter, our operating results and growth prospects would be adversely affected.

We do not own or operate manufacturing facilities. Currently, all of our Monza wafers are manufactured by Taiwan Semiconductor Manufacturing Company, Limited, or TSMC; all of our Indy wafers are manufactured by Tower Semiconductors Ltd., or TowerJazz; and all of our Speedway readers are manufactured by Plexus Corp., or Plexus. We also use contractors for assembly and testing. We do not control our suppliers’ ability or willingness to meet our supply requirements.

Currently, we do not have long term supply contracts with TSMC, TowerJazz or Plexus, and our suppliers are not required to supply us products for any specific period or in any specific quantity. Suppliers can allocate production capacity to other companies’ products and reduce deliveries to us on short notice. Our suppliers may have long-term agreements with others or allocate capacity to other companies for strategic reasons, which could impair our ability to secure sufficient supply of products for sale.

We place orders for products with some of our suppliers approximately four to five months prior to the anticipated delivery date, with order volumes based on our forecasts of customer demand. Accordingly, if we inaccurately forecast demand for our products, we may be unable to obtain adequate and cost-effective foundry or assembly capacity to meet our customers’ delivery requirements, or we may accumulate excessive inventory.

Manufacturing capacity may not be available when needed or at reasonable prices. For example, in the last three quarters of 2010 we experienced significant shortages in the delivery of Monza wafers from TSMC relative to our submitted purchase orders given high industry demand for foundry capacity. Such shortages adversely affected our ability to meet our obligations to our customers and, in some cases, caused customers to cancel orders, qualify alternative sources of supply or purchase from our competitors. In addition, in response to the recent shortage or future shortages, our customers may overbuy our products, which may artificially inflate sales in near-term periods while leading to sales declines in future periods as our customers consume accumulated inventory. For example, we believe our results in the second quarter of 2011 were adversely affected by excess inventory maintained by certain of our customers.

If our suppliers fail to deliver products at reasonable prices or satisfactory quality levels, our ability to bring products to market and our reputation could suffer. For example, if supplier capacity diminishes, including from a catastrophic loss of facilities or otherwise, we could have difficulty fulfilling our orders, our revenue could decline and our growth prospects could be impaired. We anticipate requiring 9 to 12 months to transition our foundry or assembly services to new providers. Such a transition would likely require a qualification process by our customers or end users, which could also adversely affect our ability to sell our solutions and operating results.

Average selling prices of our products could decrease substantially, which could have a material adverse effect on our revenue and gross margins.

The UHF Gen2 market has been characterized by significant price erosion. We may experience substantial fluctuations in future operating results due to the decline of our average selling prices, or ASPs. The ASP of our UHF Gen2 products has decreased as the market for UHF Gen2 solutions has developed. From time to time, we have reduced the selling price of our products due to competitive pricing pressures, to encourage adoption, to address macroeconomic conditions and for other reasons. We expect that we may have to do so again in the future. If we are unable to offset any reductions in our ASPs by increasing our sales volumes or introducing new products with higher margins, our revenue and gross margins will suffer. Our customers may be slow to migrate to new, higher margin products. Some competitors have significantly greater resources than we have and may be better able to absorb the negative impact on operating results as a result of such trends.

The rapid innovation occurring in the UHF Gen2 market can drive intense pricing pressure, particularly on products containing older technology. Relatively short life cycles for certain products cause them to be replaced

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by more technologically advanced substitutes on a regular basis. In turn, when demand for older technology declines, ASPs may drop, in some cases precipitously. To profitably sell these products, we must improve technology or processes to reduce our production costs in line with the lower selling prices. If we and our third party suppliers and manufacturers cannot advance process technologies or improve efficiencies to a degree sufficient to maintain required margins, we may not be able to sell these products profitably. Should our cost reductions fail to keep pace with reductions in market prices, our business, financial condition and operating results could be materially adversely affected.

Changes in our product mix could cause our overall gross margin to decline, adversely affecting our operating results and financial condition.

Our gross margin is highly dependent on product mix. A shift in sales mix away from our higher margin products could adversely affect our gross margins, and there can be no assurance that we will be able to maintain our historical gross margins. A majority of our revenue is generated by sales of our Monza ICs, which has lower gross margins than our Indy reader ICs and Speedway readers, and we expect Monza IC revenue to increase as a percentage of total revenue over time. If Monza IC revenue continues to grow relative to our other products and services, our company-wide gross margin will decline. Additionally, increased competition and the existence of product alternatives, weaker than expected demand and other factors may lead to further price erosion, lower revenue and lower margins for us in the future, adversely affecting our operating results and financial condition.

If we are unsuccessful developing and introducing new products and enhancements, our operating results and competitive position will be harmed.

To keep pace with technological developments, satisfy increasingly sophisticated end-user requirements and achieve market acceptance, we plan to introduce new UHF Gen2 solutions. We commit significant resources to developing new products, improving performance and reliability and reducing costs. In the future, we may not succeed in developing the underlying technologies or processes necessary to create new or enhanced products or in licensing or otherwise acquiring these technologies from third parties. We may also fail to anticipate or meet market requirements for new features and functionality. We may be unable to develop commercially viable products using new or enhanced technologies, such as smaller silicon process geometries for ICs or new materials or designs for antennas. The success of a new or enhanced product depends on accurate forecasts of long-term market demand and future technological developments, as well as on a variety of specific implementation factors, including:

• timely and efficient completion of process design;

• timely and efficient implementation of manufacturing, assembly and testing procedures;

• product performance;

• product certification;

• the quality and reliability of the product; and

• effective marketing, sales and service.

To the extent that we fail to introduce new or enhanced solutions that meet the needs of our customers in a timely fashion, we will lose market share and our revenue and financial condition could be materially adversely affected.

Fluctuations in our quarterly and annual operating results may adversely affect our business, prospects and stock price.

You must consider our business and prospects in light of the risks and difficulties we encounter in the new, uncertain and rapidly evolving market for UHF Gen2 solutions. Because this market is new and evolving, predicting its future growth rate and size is difficult. In the past, both we and other industry participants have

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overestimated UHF Gen2 market size and growth rates. The rapidly evolving nature of the markets in which we sell our products, as well as other factors that are beyond our control, reduce our ability to accurately evaluate our future prospects and forecast quarterly or annual performance. End users drive demand for our products, particularly Monza tag ICs. Because we sell a significant portion of our products through channel partners, our ability to determine end-user demand is constrained. To date, we have had limited success in accurately predicting future sales of our UHF Gen2 products. We expect that our visibility into future sales of our products, including both sales volumes and prices, will continue to be limited for the foreseeable future and could result in fluctuations in our quarterly and annual operating results that we are unable to predict as well as failure to achieve our expected operating results.

Numerous other factors, many of which are outside our control, may cause or contribute to significant fluctuations in our quarterly and annual revenue and operating results. These fluctuations may make financial planning and forecasting difficult. In addition, these fluctuations may result in unanticipated decreases in our available cash, which could negatively affect our business and prospects. Factors that may contribute to fluctuations in our operating results and revenue include:

• variations in the adoption rate of UHF Gen2 technology and any delays in UHF Gen2 deployments by industry leaders;

• fluctuations in demand for our solutions, particularly by large inlay manufacturers and other significant customers on which we rely for a substantial portion of our revenue;

• fluctuations in supply for our solutions;

• variations in the quality of our products and return rates;

• declines in average selling prices for our products;

• delays in timing of product shipments and work performed under development contracts;

• variations in the introduction or enhancement of products, services and technologies by us and our competitors and market acceptance of these new or enhanced products, services and technologies;

• unanticipated excess or obsolete inventory as a result of introduction of new products, quality issues or otherwise;

• changes in the amount and timing of our operating costs, including those related to the expansion of our business, operations and infrastructure;

• changes in business cycles or seasonal fluctuations that may affect the markets in which we sell our products;

• adverse outcomes of litigation, intellectual property disputes or governmental proceedings;

• changes in industry standards or specifications, or changes in government regulations, relating to UHF Gen2;

• late, delayed or cancelled payments from our customers; and

• unanticipated impairment of long-lived assets and goodwill.

One or more of the foregoing or other factors may cause our operating expenses in one period to be disproportionately higher or lower or may cause our revenue and operating results to fluctuate significantly. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.

We generate most of our revenue from our Monza ICs, and a decline in sales of these products could adversely affect our operating results and financial condition.

We derive, and expect to continue to derive, a majority of our product revenue from our Monza tag ICs, and we expect this trend to continue. In addition, the continued adoption of our Monza ICs drives in part our ability

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to generate revenue from our other products. As a result, we are particularly vulnerable to fluctuations in demand for our Monza ICs, and if demand for them declines significantly, our business and operating results will be adversely affected.

Our reliance on third-party inlay manufacturers, reader OEMs, distributors, VARs and system integrators to sell our products could adversely affect our business and operating results.

We rely significantly on third-party inlay manufacturers, reader OEMs and distributors to distribute our products to end users. Substantially all of our Monza ICs and a substantial majority of our Indy ICs are sold through inlay manufacturers and distributors, respectively. In 2010, sales to Avery Dennison Corporation, or Avery Dennison, and UPM-Kymmene Corporation, or UPM, accounted for 42% and 29% of our Monza IC revenue, respectively, and sales to our top two Indy reader IC customers accounted for 34% and 17%, respectively, of our reader IC revenue. Although our strategy is to diversify our customer base by pursuing increased orders from mid-size buyers and expanding sales to other customers, we cannot give any assurance that we will be successful in doing so. Even if we are successful in obtaining and retaining new customers, our existing customers or other inlay manufacturers, reader OEMs and distributors may continue to account for a substantial portion of our sales in the future. Changes in markets, customers or products, or negative developments in general economic and financial conditions and the lack of availability of credit, may adversely affect the ability of these inlay manufacturers, reader OEMs and distributors to bring our products to market. End users drive demand for our products, particularly Monza tag ICs. Because we sell a significant portion of our products through channel partners, our ability to determine end-user demand is constrained. Additionally, if they are unable to sell an adequate amount of our products in a given quarter to end users or if they decide to decrease their inventories of our products for any reason, our revenue may decline.

For strategic or other reasons, our inlay manufacturers, reader OEMs and distributors may choose to prioritize the sale of our competitors’ products over our products. Our future performance will depend, in part, on our ability to attract additional inlay manufacturers, reader OEMs and distributors who will be able to market and support our products effectively, especially in markets in which we have not previously sold our products. If we cannot retain our current inlay manufacturers, reader OEMs and distributors or establish new relationships, our business, financial condition and operating results could be harmed. In addition, our competitors’ strategic relationships with or acquisitions of these inlay manufacturers, reader OEMs or distributors could disrupt our relationships with them. Any such disruption in the distribution of our products could impair or delay sales of our products to end users and increase our costs of distribution, which could adversely affect our sales or operating results.

Our revenue also depends on the ability of system integrators to successfully market, sell, install and provide technical support for systems in which our products are integrated or to sell our products on a stand-alone basis. Our revenue may decline if the efforts of these system integrators fail. Further, the faulty or negligent implementation and installation of our products by system integrators may harm our reputation. Moreover, because we are often at least one step removed from the end users of our products, we may be unable to rectify damage to our reputation caused by system integrators, distributors or VARs who have direct contact with end users. If our system integrators, distributors or VARs are unable to sell an adequate amount of our products in a given quarter to manufacturers and end users or if they decide to decrease their inventories of our products for any reason, our sales to these channel partners and our revenue may decline.

If some channel partners decide to purchase more of our products than are required to satisfy end user demand in any particular period, inventories at these channel partners would grow in that period. These channel partners likely would reduce future orders until inventory levels realign with end customer demand, which could adversely affect our product revenue in a subsequent period. We believe this dynamic adversely affected our operating results in the second quarter of 2011. Distributors may also return our products, subject to time and quantity limitations. Our reserve estimates for products stocked by our distributors are based principally on reports provided to us by our distributors, typically on a monthly basis. To date, we believe that this data

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typically has been accurate but is often late and subject to errors in our distributors’ accounting systems. To the extent that this resale and channel inventory data is inaccurate or not received in a timely manner, we may not be able to make reserve estimates for future periods accurately or at all.

Many of our channel partners provide us with customer referrals and cooperate with us in marketing our products; however, our relationships with them may be terminated at any time. If we fail to successfully manage our relationships with our channel partners, our ability to sell our products into new industries and to increase our penetration into existing industries may be impaired and our business would be harmed.

We will lose market share and may not be successful if end users or customers do not select our products to be designed into their products and systems.

End users often undertake extensive pilot programs or qualification processes prior to placing orders for large quantities of UHF Gen2 products, in particular for UHF Gen2 reader products, because these products must function as part of a larger system or network or meet certain other specifications. We spend significant time and resources to have our solutions selected by a potential end user or customer, which is known as a “design-in.” In the case of UHF Gen2 reader products, such “design-ins” mean that the reader products have been selected to be designed into the end user’s system and, in the case of a UHF Gen2 tag, may mean the tag has met certain unique performance criteria established by the end user or customer. If we fail to develop new products that adequately or competitively address the needs of potential end users, they may not select our products to be designed into their systems, which would adversely affect our business, prospects and operating results.

Our products must meet exacting technical and quality specifications. Defects, errors in or interoperability issues with our products or the failure of our products to operate as expected could affect our reputation, result in significant costs to us and impair our ability to sell our products.

Our products may contain defects, errors or not operate as expected, which could materially and adversely affect our reputation, result in significant costs to us and impair our ability to sell our products in the future. Our customers have demanding specifications for quality, performance and reliability that our tag and reader products must meet. Our products are highly technical and designed to be deployed in large and complex systems, networks and other settings under a wide variety of conditions. Customers and end users may discover errors, defects or incompatibilities in our products only after they have been fully deployed. For example, harsh environments and radio-frequency interference may negatively affect the performance of our UHF Gen2 readers. In addition, users of our UHF Gen2 products may experience compatibility or interoperability issues between our products and their enterprise software systems or networks, or between our products and other UHF Gen2 products they use.

We may also experience quality problems with our products that are combined with or incorporated into products from other vendors, such as tags produced by our inlay manufacturers, or that are assembled by subcontractors. We may have difficulty identifying and correcting the source of problems when third parties are combining, incorporating or assembling our products.

If we are unable to fix errors or other problems, we could experience:

• loss of customers or customer orders;

• lost or delayed market acceptance and sales of our products;

• loss of market share;

• damage to our brand and reputation;

• impaired ability to attract new customers or achieve market acceptance;

• diversion of development resources;

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• increased service and warranty costs;

• replacement costs;

• legal actions by our customers; and

• increased insurance costs.

While our agreements typically contain provisions and disclaimers that purport to limit our liability for damages resulting from defects in our products, such limitations and disclaimers may not be enforced by a court or other tribunal or otherwise effectively protect us from claims. We may be required to indemnify our customers against liabilities arising from defects in our products or their solutions which incorporate our products. These liabilities may also include costs incurred by our customers or end users to correct the problems or replace our products.

The costs incurred correcting product defects or errors may be substantial and could adversely affect our operating results. While we test our products for defects or errors prior to product release, defects or errors are occasionally identified by our customers. Such defects or errors have occurred in the past and may occur in the future. For example, in the fourth quarter of 2010, we adopted new tag IC post-processing techniques to enhance the number of Monza ICs we could supply. Despite our qualification testing, the new techniques increased our defect rate, and our product returns increased. To the extent product failures are material, they could adversely affect our business, operating results, customer relationships, reputation and prospects.

In addition, our new products, features and enhancements must comply with the UHF Gen2 standard. Compatibility issues could disrupt our customers’ operations, hurt our customer relations and materially adverse our business and prospects.

If we are unable to protect our intellectual property, our business could be adversely affected.

Our success depends in part upon our ability to protect our intellectual property. We rely on a variety of intellectual property rights, including patents in the United States and copyrights, trademarks and trade secrets in the United States and foreign countries for this protection. Because most RFID products are used in or imported into the United States, we do not have patents or pending patent applications in any foreign country. By seeking patent protection only in the United States, our ability to assert our intellectual property rights outside the United States will be limited. We have registered trademarks and domain names in selected foreign countries where we believe filing for such protection is appropriate. Regardless, some of our products and technologies may not be covered or covered adequately by any patent, patent application, trademark, copyright, trade secret or domain name.

We cannot guarantee that:

• any of our present or future patents or patent claims will not lapse or be invalidated, circumvented, challenged or abandoned;

• our intellectual property rights will provide competitive advantages to us;

• our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;

• any of our pending or future patent applications will be issued or have the coverage originally sought;

• our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak;

• any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or

• we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments.

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In addition, our competitors or others may design around our patents or protected technologies. Effective intellectual property protection may be unavailable or more limited in one or more relevant jurisdictions relative to those protections available in the United States. If we pursue litigation to assert our intellectual property rights, an adverse decision in any legal action could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise negatively impact our business, financial condition and operating results.

Monitoring unauthorized use of our intellectual property is difficult and costly. Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of unauthorized use, any failures to identify unauthorized use or otherwise adequately protect our intellectual property could adversely affect our business. Moreover, any litigation, could be time consuming, and we could be forced to incur significant costs and divert our attention and the efforts of our employees, which could, in turn, result in lower revenue and higher expenses.

We also rely on customary contractual protections with our customers, suppliers, distributors, employees and consultants, and we implement security measures to protect our trade secrets. We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach, that third parties will not discover our proprietary information independently or through legal means or that our suppliers, employees or consultants will not assert rights to our intellectual property.

Finally, our use of overseas manufacturers may involve particular risks. The intellectual property protection in countries where our third-party contractors operate is weaker than in the United States. If the steps we have taken and the protection provided by law do not adequately safeguard our intellectual property rights, we could suffer losses in profits due to the sales of competing products which exploit our intellectual property rights.

Our licensing of UHF Gen2-related intellectual property from others may be subject to requirements or limitations that could adversely affect our business and prospects.

We have intellectual property license agreements that give us access to certain patents and intellectual property of others. We have not licensed our patents or intellectual property to others except as necessary for our customers to practice their business using our products and as required pursuant to agreements we have entered into in connection with our participation in the development of GS1 EPCglobal specifications and International Standards Organization, or ISO, standards, as described below. We may choose to license our patents or intellectual property to others in the future. We cannot guarantee that any patents and technology that we provide in such future licenses will not be used to compete against us.

We may face claims of intellectual property infringement, which could be time consuming, costly to defend or settle and result in the loss of significant rights.

Our industry is characterized by companies that hold large numbers of patents and other intellectual property rights and that may vigorously pursue, protect and enforce their intellectual property rights. For example, two companies that manufacture and sell UHF Gen2 products, Intermec and Alien, have been engaged in patent litigation (to which we are not a party), when Alien sought declaratory judgment of non-infringement of certain Intermec RFID patents. We have in the past and may in the future receive invitations to license patent and other intellectual property rights to technologies that are important to our business. We may also receive assertions against us, our customers or distributors, claiming that we infringe patent or other intellectual property rights. Claims that our products, processes, technology or other aspects of our business infringe third-party intellectual property rights, regardless of their merit or resolution, could be costly to defend or settle and could divert the efforts and attention of our management and technical personnel. If we decline to accept an offer, the offering party may allege that we infringe such patents, which could result in litigation.

In addition, many of our customer and distributor agreements require us to indemnify and defend our customers or distributors from third-party infringement claims and pay damages in the case of adverse rulings. Moreover, we may not know whether we are infringing a third party’s rights, due to the large number of patents

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related to UHF Gen2 or to other systemic factors. For instance, patent applications in the United States are maintained in confidence for up to 18 months after their filing or, in some cases, for the entire time prior to issuance as a patent. Thus, we would not be able to account for such rights before publication. Competitors may also have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our patents. Claims of this sort could harm our relationships with our customers or distributors and might deter future customers from doing business with us. We do not know whether we will prevail in any such future proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If any pending or future proceedings result in an adverse outcome, we could be required to:

• cease the manufacture, use or sale of the infringing products, processes or technology;

• pay substantial damages for infringement;

• expend significant resources to develop non-infringing products, processes or technology;

• license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms, or at all;

• cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or

• pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology.

Any of the foregoing results could have a material adverse effect on our business, financial condition and operating results.

We have limited visibility regarding the length of the sales cycles for our products.

Based on the limited sales history for our UHF Gen2 products, we have limited visibility into the length of the sales cycle for our products, and from time to time sales cycles have been longer than initially anticipated. Numerous factors can contribute to the length of the sales cycle, including technical evaluations of our products by our customers and end users and our efforts to educate customers and end users on the uses and benefits of UHF Gen2 technology. The length and uncertain timing of the sales cycle can lead to delayed product orders. In anticipation of product orders, we may incur substantial costs before the sales cycle is complete and before we receive any customer orders or payments. If a sale is not completed or is cancelled or delayed, we may incur substantial expenses, which would hinder our ability to achieve or maintain profitability or otherwise negatively affect our financial results.

We are subject to order and shipment uncertainties. Inaccuracies in our estimates of customer demand and product mix could negatively affect our inventory levels, sales and operating results.

We derive revenue primarily from customer purchase orders rather than long-term purchase commitments. To ensure availability of our products, in some cases we start manufacturing based on forecasts provided by customers in advance of receiving purchase orders from them. Our customers can cancel purchase orders or defer the shipments of our products under certain circumstances with little or no advance notice to us. Some of our products are manufactured according to our estimates of customer demand, which requires us to make demand forecast assumptions for every customer, and which may introduce significant variability into our aggregate estimate. We typically sell to channel partners rather than to end users, and we consequently have limited visibility into future end-user demand, which could adversely affect our revenue forecasts and operating margins. Moreover, because the market for UHF Gen2 solutions is relatively new, many of our customers have difficulty accurately forecasting their product requirements and estimating the timing of their new product introductions, which ultimately affects their demand for our products. Additionally, we sometimes receive soft commitments for larger order sizes which do not materialize.

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Historically, because of this limited visibility, our estimates of customer demand have been inaccurate. Some of these inaccuracies have been material, leading to excess inventory with associated costs or product shortages with its concomitant reduction in revenue and gross margin. For example, we believe our operating results were adversely affected in the second quarter of 2011 as certain key end users in the retail apparel industry delayed purchases of Monza tag ICs as the result of, among other things, delayed integration of UHF Gen2 solutions with their ERP systems. These forecasting inaccuracies may occur in the future, and their adverse impact could grow if we are unsuccessful in selling more products to some customers. Excess inventory levels and increased obsolescence could result in unexpected expenses or increases in our reserves that could adversely affect our business, operating results and financial condition. If we were to underestimate customer demand or if sufficient manufacturing capacity were unavailable, we could miss revenue opportunities, potentially lose market share and damage our customer relationships. For example, we were unable to meet customer demand for our products in 2010 as a result of supply constraints and thus lost revenue opportunities. In response, we have purchased excess inventory, which may expose us to the risk of inventory write-downs due to excess and obsolescence of inventory that we are unable to sell on a timely basis. In the fourth quarter of 2010, we wrote off $592,000 in obsolete inventory, primarily our Speedway Classic reader. Any significant future cancellations or deferrals of product orders or the return of previously sold products due to manufacturing defects could materially and adversely impact our profit margins, increase our write offs due to product obsolescence and restrict our ability to fund our operations.

Our sales and marketing efforts may be unsuccessful in maintaining and expanding existing sales channels, developing new sales channels and increasing the sales of our products.

To grow our business, we must add new customers for our UHF Gen2 solutions in addition to retaining and increasing sales to our current customers. Our ability to attract new customers will depend in part on the success of our sales and marketing efforts. There can be no guarantee that we will be successful in developing or implementing our sales and marketing strategy. If suitable sales channels do not develop, we may not be able to sell certain of our products in significant volumes and our operating results, business and prospects may be harmed.

We may be unable to successfully expand our international operations.

We currently generate approximately 40% of our revenue outside of the Americas. We anticipate growing our business in part by continuing to expand our international operations. Our international operations involve a variety of risks, including:

• unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;

• more stringent regulations relating to data privacy and the unauthorized use of, or access to, commercial and personal information, particularly in Europe;

• lack of established standards or regulations with which our UHF Gen2 products must comply;

• greater difficulty in supporting and localizing our products;

• different or unique competitive pressures as a result of, among other things, the presence of local businesses and other market players;

• challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;

• limited or unfavorable intellectual property protection;

• changes in foreign currency exchange rates;

• changes in a specific country’s or region’s political, regulatory, legal or economic conditions;

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• international political conflicts;

• differing regulations with regard to maintaining operations, products and public information;

• differing labor regulations, especially where labor laws are generally more advantageous to employees than in the United States; and

• restrictions on repatriation of earnings.

We have limited experience in marketing, selling and supporting our products and services abroad. We may not be able to increase or maintain international market demand for our products. In addition, regulations or standards adopted by other countries may require us to redesign our existing products or develop new products for those countries. For example, foreign governments may impose regulations or standards with which our current UHF Gen2 products do not comply, or may require operation in frequency bands in which our products do not operate. Furthermore, if we are unable to expand international operations in a timely and cost-effective manner in response to increased overseas demand, we could miss sales opportunities and our revenue would decline, adversely affecting our operating results, business and prospects. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business, prospects and operating results will suffer.

If we do not successfully attract and complete custom engineering projects with strategic end users and others, adoption of our products could be delayed, and our market position could be compromised.

To encourage the widespread market adoption of our products and of UHF Gen2 technology in general and to extend the reach and capabilities of our products, we sometimes perform non-recurring engineering, or NRE, product, tool or software developments for strategic end users and others. We compete with other companies to win these engagements and, in the future, may not be able to compete successfully. Some developments grant time-bounded exclusivity to the customer who paid for the NRE, which may limit our ability to capitalize on the knowledge and experience we gain in connection with such engagements. If we accept such NRE-based development yet do not successfully complete the project, our relationship with the customer could deteriorate, and we may lose business and the opportunity to expand the market for our products. Because some NRE-based developments take a year or more to complete, our time to product revenue can be long. Additionally, the customer may choose to cancel or delay the development mid-way through the process, again causing a loss of potential revenue. If a competitor develops and markets a similar product yet we are unable to compete in the general market due to the time-bounded exclusivity with our customers, then we could lose business, market share and revenue opportunities.

Acquisitions could result in operating difficulties, dilution and other harmful consequences.

We have made, and may continue to make, acquisitions of companies, products, services and technologies to expand our product offerings and capabilities, customer base and business. For example, in July 2008, we acquired certain assets of Intel Corporation’s UHF RFID reader IC business. We have only acquired this one business. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions, and occasionally we may engage in discussions regarding potential acquisitions. Any of these transactions could be material to our financial condition and operating results. In addition, the process of integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures. Acquisition-related risks include:

• diversion of management time and focus from operating our business to acquisition integration challenges;

• difficulties integrating the products into our strategy and product plan;

• the possibility that customers may seek a new supplier to replace us because of an acquisition;

• inability to retain employees from the businesses we acquire;

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• challenges associated with integrating employees from the acquired company into our organization;

• difficulties integrating each company’s accounting, management information, human resource and other administrative systems to permit effective management;

• potential requirements for remediating controls, procedures and policies appropriate for a public company in acquired businesses that prior to the acquisition lacked these controls, procedures and policies;

• potential liability for past or present environmental, hazardous substance, or contamination concerns associated with the acquired business or its predecessors;

• possible write-offs or impairment charges resulting from acquisitions; and

• unanticipated or unknown liabilities relating to acquired businesses.

Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. Also, the anticipated benefit of any acquisition may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all.

Our efforts to influence new standards could fail, which could adversely affect our ability to compete.

To encourage widespread market adoption of UHF RFID technology, we have participated in the development of industry standards, and we have designed our products to comply with these standards. GS1 EPCglobal is currently developing an enhanced version of UHF Gen2 based on end-user requirements, which we anticipate will be known as “UHF Gen2 Version 2” or simply “Gen2 V2.” The end-user requirements mandate that Gen2 V2 be backward compatible with the original Gen2. ISO has taken a set of steps that indicate that, like in the past, they will adopt and standardize Gen2 V2 as the next generation of 18000-6C (and which ISO has indicated that they will rename to 18000-63). In the future, we could lose our leadership position in GS1 EPCglobal or we could lose our project editorship position for UHF Gen2. Gen2 V2 could fail to be backward compatible with the original Gen2, GS1 EPCglobal could fail to ratify Gen2 V2, or ISO could choose to not adopt Gen2 V2. If Gen2 V2 diverges significantly from our or the market’s needs, or if it fails to materialize or to be standardized by ISO, then our products may likewise fail to keep pace with the market’s needs, our competitors’ products and end-user requirements, in which case end users could delay their UHF Gen2 adoption. Alternative or competing technologies could gain market share at the expense of UHF Gen2 and at the expense of our Gen2 products, and these competing technologies could use intellectual property that is either not royalty free or to which we do not have access.

Compliance with, and changes in, government spectrum regulations could adversely affect our ability to sell our products and impair our operating results.

Government spectrum regulations require that our UHF Gen2 readers and reader-based subsystems be certified in the jurisdiction where they are to be operated. Speedway Revolution readers are certified for use in over 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and each country in the European Union. If any of these products is found to be noncompliant despite having such certification, then we could be required to modify field-deployed readers to regain such certification and could spend significant resources as well as miss sales opportunities in the process. Our revenue would decline, adversely affecting our operating results, financial conditions, business and prospects. Additionally, government regulations may change, requiring us to redesign our products to the revised regulations or constraining our ability to implement new and desired features into our products, thereby causing us to incur significant expense or forego opportunities to improve on our products and potentially delaying our time-to-market, adversely affecting our operating results, financial conditions, business and prospects.

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Alternative technologies or standards, or changes in existing technologies or standards, may adversely affect the growth of the market for UHF Gen2 solutions.

Significant developments in alternative technologies may affect our business in ways that we cannot anticipate. For instance, technology or market breakthroughs in legacy RFID systems, such as LF or HF systems, may adversely affect the growth of the UHF Gen2 market generally and demand for our products in particular. For example, near-field communications technology, which today addresses a different market than UHF Gen2, could, with breakthrough innovations, compete with UHF Gen2 in item tagging. Likewise, new technologies such as organic transistors may allow lower-cost UHF Gen2 ICs than our current silicon-based technology allows. An inability to innovate in new or enhanced technologies or processes, or to react to changes in existing technologies or in the market, or to compete with advances in legacy technologies, could materially delay our development of new and enhanced products and potentially result in product obsolescence, decreased revenue or a loss of market share.

Similarly, the introduction of new industry standards, or changes to existing industry standards, could make our products incompatible with the new or changed standards and could cause us to incur substantial development costs to adapt to these new or changed standards, particularly if they were to achieve, or be perceived as likely to achieve, greater penetration in the marketplace than UHF Gen2 or Gen2 V2. Moreover, the adoption or expected adoption of such new or changed standards could slow the sale of existing products even before products based on the new or changed standards become available. New industry standards or changes to existing standards could also limit our ability to implement new features in our products if those features do not meet the new or changed standards. The lost opportunities as well as the time and expense required for us to develop new products or change our existing products to comply with new or changed standards could be substantial, and there is no assurance that we could successfully develop products that comply with new or changed standards in doing so. If we are not successful in complying with any new or changed industry standards then we could lose market share, causing our business to suffer.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

We are subject to export control laws, regulations and requirements that limit which products we sell and where and to whom we sell our products. In some cases, it is possible that export licenses would be required from U.S. government agencies for some of our products in accordance with the Export Administration Regulations, the International Traffic in Arms Regulations or economic sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. We may not be successful in obtaining the necessary export licenses in all instances. Any limitation on our ability to export or sell our products imposed by these laws would adversely affect our business, financial condition and results of operations. In addition, changes in our products or changes in export and import and economic sanctions laws and implementing regulations may create delays in the introduction of new products in international markets, prevent our customers from deploying our products internationally or, in some cases, prevent the export or import of our products to certain countries altogether. While we are not aware of any other current or proposed export or import regulations which would materially restrict our ability to sell our products, any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by these regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations. In such event, our business and results of operations could be adversely affected.

Privacy and security concerns relating to UHF Gen2 technology could damage our reputation and deter current and potential customers from using our products. If we fail to develop products that meet privacy regulations or guidelines, customers may curtail using our products in certain applications, which would harm our business, operating results and financial condition.

From time to time, concerns have been and are expected to continue to be expressed about whether UHF Gen2 products can compromise consumer privacy or even facilitate theft. Typical fears include unauthorized

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parties collecting personal information, tracking consumers, stealing identities or causing other privacy-related issues. UHF Gen2 tags may be surreptitiously identified by unauthorized readers to track a consumer or otherwise gain access to information that a consumer considers private, even if the customer employs security measures such as shielding and encryption. Similarly, retailers may inadvertently or perhaps even intentionally scan consumers’ tags to gain information, such as shopping behavior, that may be illegal to collect or if not illegal, may be considered intrusive by consumers. Unauthorized readers could gain access to sensitive end-user information stored in the tags, again despite measures such as shielding and encryption designed to thwart such unauthorized access. For example, criminals seeking to divert or steal high-value pharmaceutical products could seek to identify these products by looking for tags with Electronic Product Codes, or EPCs, corresponding to these products. In addition, it may be possible to embed computer viruses or other malicious code into UHF Gen2 tags so that by reading the contents of a tag memory, the malicious code can be inserted into end-user systems. If a privacy or security breach occurs, our customers would be the likely target of regulatory actions or private lawsuits. However, in such cases, a customer might allege that our technology did not function as promised and may sue us for breach of contract, breach of warranty, negligence or another cause of action. Additionally, if our customers’ security measures are breached, even if through means beyond our control, our reputation could be damaged and our business and prospects could suffer. Moreover, concerns about security and privacy risks, even if unfounded, could damage our reputation and operating results and could delay the development of the overall UHF Gen2 industry.

Some regulatory jurisdictions expect Gen2 V2 to address consumer privacy concerns. If Gen2 V2 does not adequately address the concerns, or if regulators act independently, new laws could significantly impair the use of UHF Gen2 technology in certain applications, which in turn could affect our ability to sell our UHF Gen2 products into these applications and adversely affect our operating results, financial condition, business and prospects. Similarly, if we fail to implement new products that comply with the Gen2 V2 specification or any new regulations, or both, customers could choose to avoid our products which could adversely affect our operating results, financial conditions, business and prospects. Security breaches could expose us to litigation and possible liability. Even if our efforts meet any new standards or regulations, if our security measures are breached as a result of third-party action, employee error, criminal acts by an employee, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to customer or end-user data, our reputation could be damaged, our business and prospects may suffer and we could incur significant liability.

Government regulations and guidelines relating to consumer privacy may have an adverse impact on the adoption of our products, require us to make design changes or constrain our ability to implement new and desired features for our products.

Public scrutiny of the manner and extent to which companies collect and use personal information, both in the United States and in many foreign countries, is at an all-time high. Our customers are subject to a number of foreign and domestic laws and regulations relating to the collection, storage, transmission and use of personal information about individuals, as well as additional laws and regulations that specifically address privacy and security issues related to the use of RFID technology. For example, some U.S. states have enacted statutes specifically governing the use of RFID. Four states have enacted laws stating that when an enhanced driver’s license or other state-issued identification card contains RFID technology, the RFID technology must include security controls to protect against the unauthorized disclosure of personal information. Three states have enacted laws that prohibit reading a person’s identification documents using RFID without that person’s knowledge or consent, except in certain circumstances. In addition, the European Commission, or EC, has issued voluntary guidance specifically designed to address privacy concerns about the use of RFID technology. The data security and privacy legislative and regulatory landscape in both the United States and the European Union, or EU, is rapidly evolving, and changes in such laws and regulations may adversely impact our business, including our ability to develop future products.

In May 2009, the EC released a recommendation that retail companies in the EU inform their customers when RFID tags are placed on or embedded in their products. In April 2011, the EC signed a voluntary agreement with private and public stakeholders to develop privacy guidelines for companies using RFID

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technology in the EU. The agreement requires companies to conduct comprehensive privacy impact assessments of new RFID applications and to take measures to address the risks identified by the assessment before the RFID application is deployed. While compliance with the guidelines is voluntary, our customers that do business in the EU may have a preference for RFID solutions that are compliant with the guidelines. If our products do not provide the necessary functionality to allow customers to comply with the guidelines, our business may suffer.

If we fail to develop products that implement end-user requirements for security, end users may choose not to use our products in certain applications, which would harm our business, operating results and financial condition.

UHF Gen2 does not currently include the technologies necessary for securely authenticating a tag or a reader, and as a consequence does not have the ability to store information in tag memory securely. The user requirements for Gen2 V2 address these shortcomings. If GS1 EPCglobal fails to address these requirements in Gen2 V2, or we fail to implement the new Gen2 V2 features in our products, our business and prospects may suffer. Even if the Gen2 V2 specification is ratified, adopted by ISO and we implement it in our products, a third party may breach the security in our products, in which case our reputation could be damaged and our business and prospects may suffer.

Our participation in standard-setting organizations requires us to license our patents to third parties, including competitors, and limits our ability to enforce our patents.

In the course of participating in the development of GS1 EPCglobal specifications, including UHF Gen2, UHF Gen2 V2, tag data standards, or TDS, low-level reader protocol, or LLRP, and others, we have agreed to license on a royalty-free basis those of our patents that are necessarily infringed by the practice of these specifications to other GS1 EPCglobal members, subject to reciprocal royalty-free rights from those other members. Because it may not be clear whether a member’s intellectual property is necessary or optional to the practice of a specification, disputes could arise among members, resulting in our inability to receive a license on royalty-free terms. In addition, in the course of participating in the development of certain ISO standards we have agreed to grant to all users worldwide a license to those of our patents that are necessarily infringed by the practice of those standards, including at frequencies other than UHF, on terms that are reasonable and non-discriminatory, sometimes referred to as RAND, again subject to reciprocity. As a result, we are not always able to limit to whom and, to a certain extent, on what terms we license our technologies, and our control over and our ability to generate licensing revenue from some of our technologies may be limited.

We rely on third-party license agreements, and impairment of these agreements may cause production or shipment delays that would harm our business.

We have licensing agreements with various entities for patents, software and other technology incorporated into our manufacturing operations or products. For example, we license tools from electronic design automation software vendors to design our silicon products. Third-party licenses for patents, software and other technology important to our business may not continue to be available to us on commercially reasonable terms, if at all. The impairment of these licenses could result in significant manufacturing interruptions, delays or reductions in product shipments until alternative technology could be developed, licensed and integrated, if at all possible, which would materially harm our business and operating results.

Our use of open source software may expose us to additional risks and harm our intellectual property.

Our products, processes and technology sometimes utilize and incorporate software that is subject to an open-source license. Open-source software is typically freely accessible, usable and modifiable. Certain open-source software licenses require a user who intends to distribute the open-source software as a component of the user’s software to disclose publicly part or all of the user’s source code. In addition, certain open-source software licenses require the user of such software to make any derivative works of the open-source code available to others at low or no cost. This licensing regime can subject previously proprietary software to open-source license terms.

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While we monitor the use of all open-source software in our products, processes and technology and try to ensure that no open-source software is integrated in a way that inadvertently requires us to disclose the source code to the related product, processes or technology, such use could occur and could harm our intellectual property position and have a material adverse effect on our business, operating results and financial condition.

Our products may cannibalize revenue from each other, which could harm our business.

The sale of some of our products enables our customers to compete with other of our products. For example, sales of our Indy reader ICs allow our customers to manufacture and sell readers which may compete with our Speedway Revolution reader. Similarly, sales of our Speedway Revolution reader enables our customers to manufacture and sell integrated portal readers which may compete with our Speedway xPortal reader subsystem. We may see one product line expand at the expense of another, or we may be asked or even pushed by customers of one product line to disadvantage or divest another product line. We are unable to predict whether we can manage such conflicts in the future, or retain customers despite the conflicts. Any of the foregoing could have a material adverse effect on our business, financial condition and operating results.

Our reader OEMs rely on component suppliers for their products and any failure of those suppliers to perform could adversely affect demand for our Indy ICs.

Our reader OEM customers procure essential components from other suppliers, including sole-source suppliers for some components or products. For example, currently most OEMs who manufacture Indy-based readers procure ARM7 processors for those readers from Atmel Corporation. A delay in supply or a catastrophic loss to Atmel’s facilities would disrupt our reader OEM customers’ operations and may adversely affect demand for our Indy ICs and operating results.

Lack of enterprise systems able to exploit the information generated by UHF Gen2 systems may adversely affect the market for our products.

A successful end-user UHF Gen2 deployment, for example in a retail apparel store, requires not only the deployment of Gen2 tags and readers, but also back-end infrastructure improvements to derive business value with information from tagged items. Unless technology providers continue to develop and advance back-end business-analytics tools, and end users install or enhance their back-end systems to include these business analytics tools, deployments of UHF Gen2 could stall. The market perception of UHF Gen2 could sour if end users do not deploy the business-analytics tools or if the performance of the tools is poor. Our efforts to foster the deployment of these business-analytics tools by providing technical guidance to technology providers that develop them could falter. Similarly, systems integrators form an essential part of the UHF Gen2 market by delivering UHF Gen2 deployment know-how to end users who otherwise would not be able to deploy UHF Gen2 systems on their own. Our efforts to train and support systems integrators could likewise falter. Furthermore, integration of UHF Gen2 solutions with end-user enterprise systems may prove to be more time consuming than initially anticipated which could result in delays in UHF Gen2 deployments. If one or both of the business-analytics or systems-integrator communities does not succeed adequately, if we become unable to support these communities adequately or if deployment of UHF Gen2 solutions are delayed as a result of system integration delays or otherwise, we could see a material adverse impact on our business, operating results, financial condition or prospects.

Our business would be adversely affected by the departure of members of our executive management team.

Our success depends, in large part, on the continued contributions of our executive management team, including the services of Chris Diorio, Ph.D., our chairman, co-founder, chief technology officer and director; William T. Colleran, Ph.D., our president, chief executive officer and director and Evan Fein, our senior vice president and chief financial officer. None of our executive management team is bound by employment contracts to remain with us for a specified period. The loss of any member of our executive management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.

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If we are unable to attract, train and retain qualified personnel, especially our design and technical personnel, we may not be able to effectively execute our business strategy.

Our future success depends on our ability to attract, retain and motivate qualified personnel, including our management, sales and marketing, finance and especially our design and technical personnel. We do not know whether we will be able to retain all of these personnel as we continue to pursue our business strategy. As the source of our technical and product innovations, our design and technical personnel represent a significant asset. The availability of, and competition for, qualified personnel in the Seattle area, where we are headquartered, constrains our ability to attract qualified personnel. The loss of the services of one or more of our key employees, especially of our key design and technical personnel, or our inability to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and operating results.

Provisions in our customer agreements concerning pricing and other terms could adversely affect our operating results.

In the ordinary course of business, we have occasionally entered into agreements that contain pricing terms that could adversely affect our operating results and gross margins. For example, we have contracts that specify future pricing on Indy ICs, as well as contracts that contain most favored customer pricing for certain customers on specified products. Additionally, some of our development agreements contain exclusivity terms that may prevent us from developing substantially similar systems for other customers during the exclusivity period. We may decide for competitive or strategic reasons to enter into similar types of agreements in the future, and any such agreements could impair our operating results. Further offering reduced prices or other favorable terms to one customer could adversely affect our ability to negotiate favorable terms with other customers.

We and our third-party contractors are subject to environmental laws and regulations that could impose substantial costs upon us and may adversely affect our business, operating results and financial condition.

Some of our operations, such as our research, development and laboratory facilities, are regulated under various federal, state, local, foreign and international environmental laws, including those governing the discharge of pollutants into the air and water, the management, disposal, handling and labeling of, and exposure to, hazardous substances and wastes and the cleanup of contaminated sites. We could incur costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims, or could be required to incur substantial investigation or remediation costs, if we were to violate or become liable under environmental laws. Liability under certain environmental laws can be joint and several and without regard to comparative fault. In addition, certain of our products contain hazardous substances and are subject to legal requirements that regulate their content, such as the European Union’s Restriction of Hazardous Substances Directive, or RoHS, and analogous regulations elsewhere. While we have designed our products to be compliant with environmental regulations and require our third party contractors to comply, we cannot guarantee that we or our products will always be in compliance with these requirements. Environmental laws also tend to become more stringent over time, and we cannot predict the ultimate costs under environmental laws and the timing of these costs. Failure to comply with these and other environmental laws could result in fines and penalties and decreased revenue, which could adversely affect our operating results.

If our third-party contractors fail to operate in compliance with environmental requirements, properly dispose of wastes associated with our products, or comply with requirements governing the hazardous substances content of our products, we could be held liable or suffer reputational harm.

We may not sustain or effectively manage our growth.

We have experienced significant revenue growth in a short period of time. We may not achieve similar growth rates in future periods. You should not rely on our operating results for any prior periods as an indication of our future operating performance. If we are unable to maintain adequate revenue growth, our financial results could suffer and our stock price would decline.

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To successfully manage our growth and the responsibilities of being a public company, we believe we must effectively:

• recruit, hire, train and manage additional qualified engineers for our research and development activities;

• add sales personnel and expand customer support offices;

• implement and improve administrative, financial and operational systems, procedures and controls; and

• integrate and train new employees quickly and effectively and coordinate among our executive, engineering, finance, marketing, sales, operations and customer support organizations.

All of the activities above add to the complexity of our organization and increase our operating expenses.

We may have insufficient management capabilities and internal resources to manage our growth and business effectively. Accordingly, we may require significant additional resources as we increase our business operations in complexity and scale. We cannot assure you that resources will be available when we need them or that we will have sufficient capital to fund these potential resource needs.

If we are unable to manage our growth effectively, we may not be able to exploit market opportunities or develop new products, and we may fail to satisfy customer requirements, maintain product quality, execute our business plan or respond to competitive pressures.

We are bound by the restrictions contained in our debt instruments that may restrict our ability to pursue our business strategies.

Our credit facilities require us to comply with various covenants that limit our ability, among other things, to:

• dispose of assets;

• complete mergers or acquisitions;

• incur indebtedness;

• encumber assets;

• pay dividends or make other distributions to holders of our capital stock;

• make investments;

• change certain key management personnel; and

• engage in transactions with our affiliates.

These restrictions could inhibit our ability to pursue our business strategies. If we default under our credit facilities, and such event of default was not cured or waived, the lender could terminate commitments to lend and cause all amounts outstanding with respect to the debt to be due and payable immediately, which in turn could result in cross defaults under our other debt instruments. Our assets and cash flow may not be sufficient to fully repay borrowings under all of our outstanding debt instruments if some or all of these instruments are accelerated upon a default.

Although we intend to repay our debt with a portion of the proceeds of this offering, we may incur indebtedness in the future. The debt instruments governing such indebtedness could contain provisions that are as, or more, restrictive that our existing debt instruments. If we are unable to repay, refinance or restructure our indebtedness when payment is due, the lenders could force us into bankruptcy or liquidation.

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If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements would be impaired, which could adversely affect our operating results, our ability to operate our business and our stock price.

We must ensure that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis. Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent auditors addressing these assessments. We are only at the beginning stages of implementing systems and controls to comply with Section 404. Both we and our independent auditors will be testing our internal controls in connection with the Section 404 requirements and could identify areas for further attention or improvement. For example, in the second quarter of 2011 we identified three offsetting errors which impacted inventory as of March 31, 2011 and costs of goods sold for the three month period then ended. Although the effect of these errors did not have a material impact on our financial statements as of March 31, 2011, we concluded that, taken together, these items represent a significant deficiency in our internal control over financial reporting. A significant deficiency is a deficiency or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness, yet important enough to merit attention by those responsible for the oversight of the company’s financial reporting. Although we believe we will be able to address the significant deficiency with remedial measures, the measures we take may not be effective, and we may not be able to implement and maintain effective internal control over financial reporting in the future. Implementing any changes to our internal controls may require compliance training of our directors, officers and employees, entail substantial costs to modify our accounting systems and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal control over financial reporting, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In addition, investors’ perceptions that our internal control over financial reporting is inadequate or that we are unable to produce accurate financial statements may materially adversely affect our stock price.

We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to existing stockholders, restrict our operations or adversely affect our ability to operate our business.

If we need to raise additional funds due to unforeseen circumstances or material expenditures or if our operating results are worse than expected, we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all, and any additional financings could result in additional dilution to our existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, expending capital, or declaring dividends, or which impose financial covenants on us that limit our ability to achieve our business objectives. If we need additional capital and cannot raise it on acceptable terms, we may not be able to meet our business objectives, our stock price may fall and you may lose some or all of your investment.

Our operations could be disrupted by earthquakes or other natural disasters.

Our facilities could be disabled or suffer catastrophic losses caused by earthquake, fire, flood or other natural disasters. We have facilities in areas with substantial seismic activity, such as our headquarters and offices in Seattle, Washington, and in areas with tornado activity, such as our office in Bentonville, Arkansas. A catastrophic loss at any of our facilities or the facilities of our third-party suppliers would disrupt our operations, delay production and shipments, reduce revenue and result in large expenses to repair or replace the facility. We do not carry insurance policies that cover potential losses caused by earthquakes or other natural disasters.

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Our ability to use net operating losses to offset future tax liabilities may be limited.

As of March 31, 2011, we had federal net operating loss carryforwards, or NOLs, to offset future taxable income of approximately $106.3 million, which expire in various years beginning in 2020, if not utilized. A lack of future taxable income would adversely affect our ability to utilize these NOLs. In addition, under Section 382 of the U.S. Internal Revenue Code, or the Code, a corporation that experiences a more-than 50% ownership change over a three-year testing period is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. Our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, many of the causes of which are outside of our control, could result in an ownership change under Section 382 of the Code. Our NOLs may also be impaired under state law. As a result of these limitations, we may not be able to utilize a material portion of the NOLs.

The unfavorable outcome of any future litigation or administrative action could negatively impact us.

Our financial results could be negatively impacted by unfavorable outcomes in any future litigation or administrative actions. We cannot assure favorable outcomes in litigation or administrative proceedings. Costs associated with litigation and administrative proceedings are very high and could negatively impact our financial results.

Risks Relating to this Offering and Ownership of Our Common Stock

The market price of our common stock may be volatile, and the value of your investment could decline significantly.

Investors who purchase common stock in this offering may not be able to sell their shares at or above the initial price to public. Securities of companies similar to ours experience significant price and volume fluctuations. The following factors, in addition to other risks described in this prospectus, may have a significant effect on our common stock price:

• quarterly variations in our results of operations or those of our competitors;

• delays in end-user deployments of UHF Gen2 solutions;

• announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments;

• developments with respect to intellectual property rights;

• our ability to develop and market new and enhanced products on a timely basis;

• commencement of, or our involvement in, litigation;

• major changes in our board of directors or management;

• changes in governmental regulations or in the status of our regulatory approvals;

• changes in earnings estimates or recommendations by securities analysts; and

• general economic conditions and slow or negative growth of related markets.

In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect our stock price, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. In addition, in the past, securities class action litigation has often been instituted against companies whose stock prices have declined, especially following periods of volatility in the overall market. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

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If securities or industry analysts do not publish research reports about our business, or if they issue an adverse opinion about our business, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us issues an adverse opinion about our company, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Future sales of our common stock in the public market could cause our stock price to fall.

Our stock price could decline as a result of sales of a large number of shares after this offering or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon completion of this offering,              shares of our common stock will be outstanding (             shares of common stock will be outstanding assuming exercise of the underwriters’ over-allotment option in full), based on our shares outstanding as of March 31, 2011. All shares of common stock expected to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The resale of the remaining              shares, or     % of our outstanding shares after this offering, are currently prohibited or otherwise restricted as a result of securities law provisions, market standoff agreements entered into by our stockholders with us or lock-up agreements entered into by our stockholders with the underwriters; however, subject to applicable securities law restrictions and certain extensions, these shares will be able to be sold in the public market beginning 180 days after the date of this prospectus. In addition, the shares subject to outstanding options, of which              are exercisable as of March 31, 2011, and the shares reserved for future issuance under our stock option and equity incentive plans will become available for sale immediately upon the exercise of such options and the expiration of any applicable market stand-off or lock-up agreements. For more information see the section of this prospectus captioned “Shares Eligible for Future Sale.”

Holders of approximately              shares (including the shares underlying the warrants described in the section of this prospectus captioned “Shares Eligible for Future Sale—Warrants”), or     %, of our common stock will have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register the offer and sale of all shares of common stock that we may issue under our equity compensation plans. Once we register the offer and sale of shares for the holders of registration rights and option holders, they can be freely sold in the public market upon issuance, subject to the lock-up agreements described in the section of this prospectus captioned “Underwriters.”

In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, employee arrangement or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.

Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.

Our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 81% of our capital stock as of March 31, 2011, and we expect that upon completion of this offering, that same group will beneficially own at least     % of our capital stock, of which     % will be beneficially owned by our executive officers. Accordingly, after this offering, our executive officers, directors and principal stockholders will be able to determine the composition of our board of directors, retain the

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voting power to approve all matters requiring stockholder approval, including mergers and other business combinations, and continue to have significant influence over our operations. This concentration of ownership could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material adverse effect on our stock price and may prevent attempts by our stockholders to replace or remove our board of directors or management.

We have broad discretion to use the net proceeds from this offering, and our investment of these proceeds may not yield a favorable return. We may invest the proceeds of this offering in ways you disagree with.

Our management has broad discretion as to how to spend and invest the proceeds from this offering and we may spend or invest these proceeds in a way with which our stockholders may disagree. Accordingly, you will need to rely on our judgment with respect to the use of these proceeds. We intend to use the proceeds from this offering for debt repayment, product development, working capital and other general corporate purposes, including the costs associated with being a public company. These uses may not yield a favorable return to our stockholders.

An active trading market for our common stock may not develop.

Prior to this offering, there has been no public market for our common stock. Although we expect that our common stock will be approved for listing on             , an active trading market for our shares may never develop or be sustained following this offering. The initial price to public for our common stock was determined through negotiations with the underwriters, and the negotiated price may not be indicative of the market price of the common stock after the offering. This initial price to public may vary from the market price of our common stock after the offering. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the initial price to public.

Anti-takeover provisions in our charter documents and under Delaware or Washington law could make an acquisition of us difficult, limit attempts by our stockholders to replace or remove our current management and limit our stock price.

Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our stock. Among other things, our certificate of incorporation and bylaws will:

• permit our board of directors to issue up to              shares of preferred stock, with any rights, preferences and privileges as they may designate;

• provide that the authorized number of directors may be changed only by resolution of the board of directors;

• provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;

• divide our board of directors into three classes;

• require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken by written consent;

• provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice;

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• not provide for cumulative voting rights (therefore allowing the holders of a plurality of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose);

• provide that special meetings of our stockholders may be called only by the chairman of the board, our chief executive officer or by the board of directors; and

• provide that stockholders will be permitted to amend our bylaws only upon receiving at least two-thirds of the total votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Likewise, because our principal executive offices are located in Washington, the anti-takeover provisions of the Washington Business Corporation Act may apply to us under certain circumstances now or in the future. These provisions prohibit a “target corporation” from engaging in any of a broad range of business combinations with any stockholder constituting an “acquiring person” for a period of five years following the date on which the stockholder became an “acquiring person.” See “Description of Capital Stock” elsewhere in this prospectus.

We will incur increased costs by being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. We also anticipate that we will incur costs associated with relatively recently adopted corporate governance requirements, including requirements of the SEC and the             . We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We also expect these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Some of the statements under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this prospectus contain forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this prospectus include, but are not limited to, statements about:

• the breadth and rate of adoption of UHF Gen2 solutions and growth of the UHF Gen2 market;

• our ability to compete effectively against other providers of UHF Gen2 products or competing technology;

• average selling prices of our products and the effect of price erosion, if any, for UHF Gen2 solutions;

• product mix and gross margins for our products;

• our ability to develop and introduce new products and enhancements that achieve market acceptance;

• the performance of the third parties on which we rely for the manufacture, assembly and testing of our products;

• our ability to maintain appropriate inventory levels, including adequate resources from our suppliers;

• our ability to commercialize new end uses for UHF Gen2 solutions, further our market penetration and enter into new geographies and end markets;

• our ability to broaden and deepen our relationships with inlay manufacturers, reader OEMs, distributors, VARs and system integrators;

• our ability to secure “design-in” for UHF Gen2 solutions and the ability of inlay manufacturers, reader OEMs, VARs, distributors and system integrators to sell our products to end users;

• our ability to maintain market share for our products and technology leadership within the UHF Gen2 market;

• our ability to adequately protect our intellectual property;

• our liquidity and capital resources;

• our future leadership of the standards-setting process and the impact of changes in the UHF Gen2 standard; and

• our ability to manage growth in our business.

In addition, you should refer to the “Risk Factors” section of this prospectus for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to

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be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933 do not protect any forward-looking statements that we make in connection with this offering.

This prospectus contains market data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified any third party information. While we believe the market position, market opportunity and market size information included in this prospectus is generally reliable, such information is inherently imprecise.

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USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of the shares of common stock by us in this offering will be approximately $            , or approximately $            if the underwriters exercise their over-allotment option in full, based upon an assumed initial price to public of $            per share, the mid-point of the range reflected on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses. Each $1.00 increase (decrease) in the assumed initial price to public of $            per share would increase (decrease) the net proceeds to us from this offering by approximately $            , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of            shares in the number of shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $            , assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We do not expect that a change in the initial price to public or the number of shares by these amounts would have a material effect on our uses of the proceeds from this offering, although it may accelerate the time at which we will need to seek additional capital. We will not receive any of the proceeds from the sale of common stock by the selling stockholders.

We intend to use approximately $10.0 million, $2.0 million and up to $13.0 million of the net proceeds from this offering to repay amounts outstanding under our mezzanine term loan facility, the “Facility B” term loan borrowings of our credit facility and our subordinated secured convertible promissory notes, respectively. Of the net proceeds intended to repay amounts outstanding under our subordinated secured convertible promissory notes, approximately $8.2 million would be paid to our affiliates. The mezzanine term loan facility, which is scheduled to mature in March 2013, accrues interest at a fixed rate equal to 11.0% per year and is payable monthly. We used the proceeds of the mezzanine term loan facility to finance the purchase of Monza wafers to avoid supply constraints similar to those which we faced in 2010. The Facility B term loan borrowings portion of our credit facility, which is scheduled to mature in December 2013, accrues interest at a floating rate equal to the greater of 4.5% and the lender’s prime rate plus 1.25% and is payable monthly. We used the Facility B term loan borrowings and the proceeds of subordinated secured convertible promissory notes for working capital and general corporate purposes. The subordinated secured convertible promissory notes, of which there was approximately $6.4 million aggregate principal and accrued interest outstanding as of March 31, 2011, are scheduled to mature in June 2011 and accrue interest at a fixed rate equal to 9.0% per year. Subject to certain exceptions, we are required to repay all of the subordinated secured convertible promissory notes at a price equal to two times the outstanding principal amount and accrued and unpaid interest in connection with the offering contemplated by this prospectus.

We currently expect to use the remaining $             of net proceeds of this offering for general corporate purposes.

The expected use of net proceeds of this offering represents our current intentions based upon our present plans and business conditions. We cannot specify with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering. Pending their uses, we plan to invest the net proceeds of this offering in short-and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock or any other securities. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future. In addition, our credit facility materially restricts, and future debt instruments we issue may materially restrict, our ability to pay dividends on our common stock. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements of our current or then-existing credit facilities and other factors our board of directors deems relevant.

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CAPITALIZATION

The following table summarizes our capitalization as of March 31, 2011:

• on an actual basis; and

• on a pro forma, as adjusted basis, to reflect the sale and issuance by us of              shares of common stock in this offering at an assumed initial price to public of $             per share, the mid-point of the range reflected on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses, and the application of such proceeds as described in the section captioned “Use of Proceeds.”

You should read the information in this table together with our financial statements and related notes to those statements, as well as the sections captioned “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.

	As of March 31, 2011
	Actual			Pro Forma As Adjusted(1)
	(Unaudited)
	(In thousands, except per share data)
Long-term debt:
Credit facility		8,708
Mezzanine credit facility		9,730
Total long-term debt		18,438
Redeemable convertible preferred stock, $0.001 par value per share; issuable in series, 206,227,960 authorized, 97,465,284 shares issued and outstanding, actual; no shares authorized, no shares issued or outstanding, pro forma as adjusted		160,197
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value per share; no shares authorized, no shares issued or outstanding, actual;              authorized, no shares issued or outstanding, pro forma as adjusted
Common stock, $0.001 par value per share, 160,000,000 shares authorized, 35,311,010 shares issued and outstanding, actual; 132,776,294 shares authorized,              shares issued and outstanding, pro forma as adjusted		35
Accumulated deficit		(155,830	)
Accumulated other comprehensive loss		(15	)
Additional paid-in capital		—
Total stockholders’ deficit		(155,810	)
Total capitalization	$	22,825		$

(1) Each $1.00 increase (decrease) in the assumed initial price to public of $            per share, the mid-point of the range reflected on the cover page of this prospectus, would increase (decrease) each of cash and equivalents, additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $            , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of            shares in the number of shares offered by us would increase (decrease) each of additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $            , assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial price to public and other terms of this offering determined at pricing.

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The number of shares of our common stock outstanding immediately after this offering is based on 132,776,294 shares of our common stock outstanding as of March 31, 2011. The outstanding share information in the table above excludes as of March 31, 2011:

• 21,914,388 shares of common stock issuable upon the exercise of outstanding options with a weighted-average exercise price of $0.11 per share;

• 1,004,155 shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan as of March 31, 2011; provided, however, that immediately upon the signing of the underwriting agreement for this offering, our 2010 Equity Incentive Plan will terminate so that no further awards may be granted under our 2010 Equity Incentive Plan;

• an aggregate of up to              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan and 2011 Employee Stock Purchase Plan, each of which will become effective immediately upon the signing of the underwriting agreement for this offering;

• an aggregate of 2,797,112 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying our subordinated convertible promissory notes (which notes will be repaid using a portion of the net proceeds of the offering contemplated by this prospectus);

• an aggregate of 890,721 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share (which warrants will be exercised automatically on a net exercise basis in connection with the offering contemplated by this prospectus if the initial per share price to public exceeds the exercise price of the warrants); and

• an aggregate of 260,280 shares of our Series E preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share and an aggregate of 300,000 shares of our common stock underlying warrants with an exercise price of $0.21 per share.

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DILUTION

If you invest in our common stock you will experience immediate and substantial dilution in the pro forma net tangible book value of your shares of common stock. Dilution in pro forma net tangible book value represents the difference between the price to public per share of our common stock and the pro forma net tangible book value per share of our common stock immediately after the offering.

The historical net tangible book deficit of our common stock as of March 31, 2011 was $0.3 million, or $0.01 per share. Historical net tangible book value (deficit) per share represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the number of shares of outstanding common stock.

After giving effect to (1) the automatic conversion of our outstanding preferred stock into an aggregate of            shares of common stock immediately prior to the completion of this offering, (2) the issuance of            shares of our common stock in this offering, and (3) receipt of the net proceeds from our sale of            shares of common stock in this offering at an assumed initial price to public of $            per share (the midpoint of the price range set forth on the cover of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2011 would have been approximately $            million, or $            per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $            per share to existing stockholders and an immediate dilution of $            per share to new investors purchasing common stock in this offering.

The following table illustrates this dilution on a per share basis to new investors:

Assumed initial price to public per share				$
Historical net tangible book deficit per share as of March 31, 2011	$	(0.01	)
Decrease per share attributable to conversion of convertible preferred stock		0.01
Pro forma net tangible book deficit per share before this offering	$	—
Increase in net tangible book value per share attributable to investors participating in this offering
Pro forma as adjusted net tangible book value per share, as adjusted to give effect to this offering
Pro forma dilution per share to investors participating in this offering				$

Each $1.00 increase (decrease) in the assumed initial price to public of $            per share would increase (decrease) our pro forma as adjusted net tangible book value by approximately $            , or approximately $            per share, and increase (decrease) in the pro forma dilution per share to investors in this offering by approximately $            per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase of              in the number of shares offered by us would increase our pro forma as adjusted net tangible book value by approximately $            , or $            per share, and the pro forma dilution per share to investors in this offering would be $            per share, assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, a decrease of            shares in the number of shares offered by us would decrease our pro forma as adjusted net tangible book value by approximately $            , or $            per share, and the pro forma dilution per share to investors in this offering would be $            per share, assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial price to public and other terms of this offering determined at pricing.

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If the underwriters exercise their option in full to purchase            additional shares of common stock in this offering, the pro forma as adjusted net tangible book value per share after the offering would be $            per share, the increase in the pro forma net tangible book value per share to existing stockholders would be $            per share and the pro forma dilution to new investors purchasing common stock in this offering would be $            per share.

Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to            or approximately            % of the total shares of our common stock outstanding after this offering, or            shares and approximately            % of the total shares of our common stock outstanding after this offering if the over-allotment option is exercised in full. The number of shares to be purchased by new investors will be increased to            or approximately            % of the total shares of our common stock outstanding after this offering, or            shares and approximately            of the total shares of common stock outstanding after this offering, if the over-allotment option is exercised in full.

The following table summarizes, on a pro forma basis as of March 31, 2011, the differences between the number of shares of common stock purchased from us, the total consideration and the weighted-average price per share paid by existing stockholders and by investors participating in this offering at an assumed initial price to public of $            per share, before deducting underwriting discounts and commissions and estimated offering expenses:

	Shares Purchased			Total Consideration			Weighted- Average Price Per Share
	Number	Percent		Amount	Percent
Existing stockholders before this offering			%	$		%	$
Investors participating in this offering
Total			%	$		%

Each $1.00 increase (decrease) in the assumed initial price to public of $            per share would increase (decrease) total consideration paid by new investors by approximately $            , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of            in the number of shares offered by us would increase (decrease) total consideration paid by new investors, assuming that the assumed initial price to public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The above discussion and tables are based on 132,776,294 shares of our common stock outstanding as of March 31, 2011. This number excludes, as of March 31, 2011:

• 21,914,388 shares of common stock issuable upon the exercise of outstanding options with a weighted-average exercise price of $0.11 per share;

• 1,004,155 shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan as of March 31, 2011; provided, however, that immediately upon the signing of the underwriting agreement for this offering, our 2010 Equity Incentive Plan will terminate so that no further awards may be granted under our 2010 Equity Incentive Plan;

• an aggregate of up to              shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan and 2011 Employee Stock Purchase Plan, each of which will become effective immediately upon the signing of the underwriting agreement for this offering;

• an aggregate of 2,797,112 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying our subordinated convertible promissory notes (which notes will be repaid using a portion of the net proceeds of the offering contemplated by this prospectus);

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• an aggregate of 890,721 shares of Series E convertible preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share (which warrants will be exercised automatically on a net exercise basis in connection with the offering contemplated by this prospectus if the initial per share price to public exceeds the exercise price of the warrants); and

• an aggregate of 260,280 shares of our Series E preferred stock (which will convert into shares of common stock on a one-for-one basis in connection with the offering) underlying warrants with an exercise price of $2.286 per share and an aggregate of 300,000 shares of our common stock underlying warrants with an exercise price of $0.21 per share.

Effective upon the closing of this offering, an aggregate of up to              shares of our common stock will be reserved for future issuance under our equity benefit plans, and these share reserves will also be subject to automatic annual increases in accordance with the terms of the plans. To the extent that new options are issued under our equity benefit plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering.

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SELECTED FINANCIAL DATA

We derived the following selected statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the balance sheet data as of December 31, 2009 and 2010 from our audited financial statements appearing elsewhere in this prospectus. We derived the unaudited statements of operations data for the three months ended March 31, 2010 and 2011 and the balance sheet data as of March 31, 2011 from our unaudited interim financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to a fair statement of our results of operations and financial position. The selected statements of operations data for the years ended December 31, 2006 and 2007 and balance sheet data as of December 31, 2006, 2007 and 2008 were derived from audited financial statements not appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The selected financial data set forth below should be read together with our financial statements and the related notes to those statements, as well as the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the “Unaudited Pro Forma Condensed Financial Statements” appearing elsewhere in this prospectus.

	Year Ended December 31,															Three Months Ended March 31,
	2006			2007			2008			2009			2010			2010			2011
																(Unaudited)
	(In thousands, except per share amounts)
Revenue:
Product revenue	$	18,322		$	14,872		$	15,457		$	10,305		$	29,221		$	4,640		$	11,397
Development, service and licensing revenue		455			1,022			9,586			10,511			2,576			500			868
Total revenue		18,777			15,894			25,043			20,816			31,797			5,140			12,265
Costs of revenue(1):
Cost of product revenue		12,236			9,410			10,791			6,782			17,008			2,455			6,325
Cost of development, service and licensing revenue		397			480			2,006			2,219			603			111			472
Total cost of revenue		12,633			9,890			12,797			9,001			17,611			2,566			6,797
Gross profit		6,144			6,004			12,246			11,815			14,186			2,574			5,468
Operating expenses:
Research development(1)		10,329			11,675			12,257			9,492			10,662			2,389			2,781
Selling and marketing(1)		3,300			5,253			7,375			7,320			8,256			1,957			2,375
General and administrative(1)		6,783			6,718			6,711			5,271			5,585			1,241			1,594
Total operating expenses		20,412			23,646			26,343			22,083			24,503			5,587			6,750
Loss from operations		(14,268	)		(17,642	)		(14,097	)		(10,268	)		(10,317	)		(3,013	)		(1,282	)
Interest income (expense) and other, net		824			1,042			316			67			(978	)		(55	)		(495	)
Net loss before income tax (expense) benefit		(13,444	)		(16,600	)		(13,781	)		(10,201	)		(11,295	)		(3,068	)		(1,777	)
Income tax (expense) benefit		—			—			644			50			(90	)		(19	)		(24	)
Loss from continuing operations		(13,444	)		(16,600	)		(13,137	)		(10,151	)		(11,385	)		(3,087	)		(1,801	)

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	Year Ended December 31,															Three Months Ended March 31,
	2006			2007			2008			2009			2010			2010			2011
																(Unaudited)
	(In thousands, except per share amounts)
Income (loss) from discontinued operations, net of tax		(607	)		(3,431	)		1,275			291			—			—			—
Net loss	$	(14,051	)	$	(20,031	)	$	(11,862	)	$	(9,860	)	$	(11,385	)	$	(3,087	)	$	(1,801	)
Net loss attributable to common stockholders	$	(18,437	)	$	(25,779	)	$	(19,481	)	$	(18,419	)	$	(19,943	)	$	(5,227	)	$	(3,838	)
Basic and diluted loss per share:
Loss from continuing operations	$	(0.68	)	$	(0.82	)	$	(0.68	)	$	(0.56	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Income (loss) from discontinued operations		(0.03	)		(0.13	)		0.04			0.01			—			—			—
Net loss	$	(0.71	)	$	(0.95	)	$	(0.64	)	$	(0.55	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Weighted-average number of shares used in per share amounts		26,085			27,238			30,509			33,527			34,127			33,723			34,824
Pro forma net loss per share, basic and diluted(2)													$						$
Pro forma weighted-average shares outstanding, basic and diluted(2)

(1) Includes stock-based compensation as follows:

Total cost of revenue	$	5	$	43	$	16	$	20	$	25	$	6	$	7
Research and development		41		178		123		114		203		31		109
Selling and marketing		10		42		96		82		138		21		47
General and administrative		8		26		112		97		133		39		68
Total stock-based compensation	$	64	$	289	$	347	$	313	$	499	$	97	$	231

(2) Pro forma net loss per share represents net loss divided by the pro forma weighted-average shares outstanding, as though the conversion of our convertible preferred stock into common stock occurred on the first day of the relevant period.

Pro forma weighted-average shares outstanding reflects (a) the conversion of our convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the first day of the relevant period and (b) the impact of the redemption premium on the subordinated convertible promissory notes, based on the number of shares of common stock whose proceeds would be necessary to pay the redemption amount at an assumed initial public offering price of $             per share.

	As of December 31,															As of March 31, 2011
	2006			2007			2008			2009			2010
																(Unaudited)
	(In thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term marketable securities	$	14,022		$	32,151		$	20,190		$	11,320		$	6,743		$	12,052
Working capital		16,032			31,886			19,640			9,984			6,606			18,779
Total assets		26,076			41,423			35,127			22,498			29,454			43,121
Total long-term debt		—			2,000			1,733			133			5,278			18,438
Redeemable convertible preferred stock		89,193			127,563			141,043			149,602			158,160			160,197
Accumulated deficit		(71,406	)		(96,815	)		(115,127	)		(133,188	)		(152,525	)		(155,830	)
Total stockholders’ deficit		(71,379	)		(96,775	)		(114,995	)		(133,166	)		(152,505	)		(155,810	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

You should read the following discussion and analysis together with our financial statements and the related notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

Impinj is the leading provider of UHF RFID solutions for identifying, locating and authenticating items. We believe our technology platform, known as GrandPrix, is the most comprehensive and widely adopted in our industry. RFID systems built on GrandPrix deliver real-time information about tagged items, thereby enabling applications and analytics designed to improve business decisions and enhance consumer experience. Leading retail, apparel, pharmaceutical, food and beverage, technology and logistics companies as well as government agencies rely on our GrandPrix platform.

The history of our product development and sales and marketing efforts follows:

• Our company was founded in 2000 and began RFID activities in 2002.

• In June 2003, our chairman and chief technology officer led the development of the UHF Gen2 standard, which GS1 EPCglobal ratified in December 2004 and ISO adopted in July 2006.

• In April 2005, we launched Monza 1, the first UHF Gen2 tag IC.

• In April 2005, we launched our Speedway UHF Gen2 reader, the first high-performance UHF Gen2 reader.

• In June 2008, we sold our logic nonvolatile memory, or NVM, intellectual property licensing business to Synopsys for approximately $5.2 million in cash to focus on our core UHF Gen2 business.

• In July 2008, we acquired our Indy reader IC business from Intel Corporation for approximately $6.5 million in stock.

• In July 2009, we launched our Speedway Revolution reader, the first UHF Gen2 high-performance reader powered by an Ethernet cable, which lowers cost of operation and simplifies installation.

• In February 2010, we launched our True3D antenna technology and our QT technology, both of which are enhancements to our current Monza product family.

• In April 2010, we launched our Speedway xPortal integrated portal reader, which incorporates our Speedway Revolution reader with innovative antenna technology in an integrated package.

• In July 2010, we launched our Indy R500 reader IC, developed specifically to address the emerging market for low-cost handheld, desktop and embedded RFID readers.

• In April 2011, we introduced our Monza 5 tag IC, optimized for high-performance, high-volume, item-level tagging, and our Source Tagging Platform, or STP, software application that, when paired with our Monza 4 and 5 tag ICs, enables tag encoding that is three times faster than prior ICs.

We derive a substantial majority of our revenue from the sale of Monza tag ICs, Indy reader ICs and Speedway readers. We also derive revenue from custom development engagements. Although we will continue to strategically pursue development engagements, we expect product revenue to represent an increasing percentage of total revenue over time. In 2009, certain leading retailers initiated pilot programs for item-level tagging of apparel designed to provide real-time visibility into their inventory. The success of these pilot

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programs led to large deployments of our item-level UHF Gen2 solutions by companies such as Walmart beginning in 2010, and we experienced a substantial increase in demand for our products. However, we experienced Monza supply shortages during the last three quarters of 2010, which constrained product revenue. In addition, we experienced a decrease in wafer yield resulting from transitory problems encountered in connection with the adoption of a new laser-based process for dicing Monza wafers, which resulted in increased returns in the fourth quarter of 2010. Our total product revenue increased to $29.2 million in 2010, which represents a 184% increase from 2009.

We use third-party trailing-edge CMOS foundries and subcontractors to produce our semiconductor products and contract manufacturers to assemble our readers and subsystems. Our capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and solutions and building our reputation as the UHF Gen2 technology leader. We invested $12.3 million, $9.5 million and $10.7 million in 2008, 2009 and 2010, respectively, in research and development and intend to continue to make significant investments in research and development to maintain our technology leadership.

Our total revenue increased to $31.8 million in 2010 from $20.8 million in 2009, which was driven by the 184% increase in product revenue. We have never been profitable and have losses from continuing operations of $9.9 million and $11.4 million in 2009 and 2010, respectively. For the three months ended March 31, 2011, we had total revenue and net loss of $12.3 million and $1.8 million, respectively, and as of March 31, 2011, our accumulated deficit was $155.8 million.

Factors Affecting Our Performance

Market Adoption

Our future financial performance will be driven by the rate, scope and depth of adoption of our UHF Gen2 products in multiple end markets and applications. In 2010, some major retailers, including Walmart, Bloomingdale’s and J.C. Penney, rolled-out UHF Gen2 deployments for item-level tagging. These deployments significantly increased our sales of our UHF Gen2 products. We believe these deployments are indicative of a trend toward greater adoption of UHF Gen2 standard-based systems in retail and other markets; however, we cannot be assured that this trend will continue. For example, we believe our operating results were adversely affected in the second quarter of 2011 as certain key end users in the retail apparel industry delayed purchases of Monza tag ICs as the result of, among other things, delayed integration of UHF Gen2 solutions with their ERP systems.

Market Share

We expect the UHF Gen2 market to continue to grow rapidly, as more companies embrace the benefits that UHF Gen2 solutions can provide. To date, we have been able to maintain a high market share for all of our products, but we expect that this share will decrease over time. Specifically, we expect increased competition in our end markets to erode our market share. We intend to invest our time and resources to deliver the most innovative UHF Gen2 solutions, embrace and extend the UHF Gen2 standard, commercialize new use cases and expand and enable our implementation and go-to-market partnerships.

Revenue Mix and Gross Margin

Substantially all of our product revenue is derived from sales of Monza tag ICs, Indy reader ICs, and Speedway readers, each of which has a different margin profile and selling price. In 2010, sales of Monza tag ICs represented approximately two-thirds of our product revenue, and we expect Monza sales to represent a substantial majority of our product revenue in the future. Depending on the proportion of our revenue that these three products represent in any given period, our gross margin may vary. Our Indy ICs and Speedway readers have higher gross margins than our Monza tag ICs. We expect that product revenue from Monza tag ICs will increase relative to revenue from our other products as UHF Gen2 adoption increases, reducing our total gross

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margins. In addition, we expect gross margins for Monza tag ICs may also fluctuate as we introduce products with new or enhanced features that command premium pricing, reduce our product costs and from variability in the timing with which we introduce new Monza products. Management focuses on Monza unit sales as a primary indicator of current business success.

We will continue to pursue strategically important non-recurring engineering, or NRE, based developments, which generally have higher gross margins than do our product revenue. Revenue and margin for such NRE engagements may fluctuate period to period, given that they are non-recurring in nature and are customized to a specific customer’s requirements. We expect development revenue to decrease as a percentage of total revenue over time.

Average Selling Price

The average selling price of our UHF Gen2 products has decreased as the market for UHF Gen2 solutions has grown. Although the average selling prices of our UHF Gen2 products may continue to decline in the future, we do not expect them to decline at the same rate as they have historically, based on our recent experience and our product differentiation efforts that allow us to offer customers various feature and pricing options.

Basis of Presentation

Revenue

We generate revenue from the sale of UHF Gen2 products, development and service contracts, and licensing agreements. We are organized as, and operate in, one reportable segment: the development and sale of UHF Gen2 products based on our GrandPrix platform.

Product Revenue. The UHF Gen2 products we sell include Monza tag ICs, Indy reader ICs and Speedway readers. We generate our product revenue as follows:

• We sell substantially all of our Monza tag ICs to inlay manufacturers. In 2010, Monza IC sales to Avery Dennison and UPM accounted for 42% and 29%, respectively, of our Monza IC revenue. We expect that these percentages will decrease over time as the demand for our Monza ICs increases and as the number of inlay manufacturers grows.

• We sell a substantial majority of our Indy reader ICs to reader OEMs and other customers, such as Trimble, Motorola and Coca-Cola. In 2010, sales to our top two Indy customers accounted for 34% and 17% of our Indy reader IC revenue. We sell our Indy ICs primarily through distributors. As with our Monza ICs, we expect customer concentration for Indy reader ICs to decrease over time.

• We sell most of our Speedway readers directly to VARs and system integrators via distributors. We have not experienced customer concentration in our Speedway reader product line.

We have established, and will strive to broaden and deepen, relationships with our ecosystem of inlay manufacturers, reader OEMs, distributors, VARs, system integrators and other technology companies. We also seek to establish close relationships with end users, particularly those who we believe are exemplars in the industry. These relationships with end users allow us to better understand key market trends and direction.

In 2010, demand for our products grew rapidly. This growth was driven by adoption across several industries, but particularly in the retail apparel industry. Our ability to meet demand for our Monza ICs was constrained by inadequate wafer supply during the last three quarters of 2010. Consequently, in the first quarter of 2011 we purchased more than six months of our forecasted Monza IC wafer supply using borrowings from our mezzanine term loan facility described below, and we will carry more inventory in 2011 than in prior years. Over the longer term, as our product volume increases, we anticipate qualifying additional wafer suppliers. In addition, we experienced a decrease in wafer yield resulting from transitory problems encountered in connection with the adoption of a new laser-based process for dicing Monza wafers, which resulted in increased returns of Monza tag ICs in the fourth quarter of 2010.

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Development, Service and Licensing Revenue

Development. We engage in NRE-based custom solution development for end users and others. Development revenue represented 31.3%, 39.1% and 3.9% of our total revenue in 2008, 2009 and 2010, respectively. We derived approximately $7.7 million of our development, service and licensing revenue from a single customer in each of 2008 and 2009. We often receive payment for these development engagements in advance of work completed, and record these payments as deferred revenue until they are earned. We intend to continue pursuing development contracts with end users and others to further develop the UHF Gen2 ecosystem and to fund product developments that we may apply to other applications.

Service. We provide one-year service, warranty, and software updates to our Speedway customers. Some of our Indy and Speedway customers purchase long-term service contracts, support contracts, or extended warranties. Service revenue represented 4.3%, 7.5% and 2.7% of our revenue in 2008, 2009 and 2010, respectively.

Licensing. We license Speedway firmware and Indy software to reader OEMs and antenna reference designs to inlay manufacturers. We bundle the Indy software with annual maintenance and support including unspecified software updates and enhancements during the term of the support period. Licensing revenue represented 2.7%, 3.9% and 1.5% of our revenue in 2008, 2009 and 2010, respectively.

We recognize revenue as described in Note 2 of the notes to our financial statements appearing elsewhere in this prospectus.

Revenue by Geography. We categorize our sales based on the location of our inlay manufacturers, reader OEMs, distributors, VARs or end users who purchase products and services directly from us. Americas includes North and South America; EMEA includes Europe, the Middle East and Africa; and APAC includes Asia Pacific and Australia. We sell fewer of our Monza tag ICs and Indy reader ICs in EMEA given its relatively smaller manufacturing base compared to APAC and the Americas. We believe the percentage of our products deployed in EMEA is greater than the percentage of revenue we derive from EMEA because we sell our products to channel partners in APAC and the Americas that in turn sell to end users in EMEA. APAC revenue has increased as percentage of total revenue as we have expanded our presence in China to address an emerging market for UHF Gen2 products.

Cost of Revenue

Cost of product revenue includes costs associated with the manufacture of our Monza tag ICs, Indy reader ICs and Speedway readers. Costs associated with the manufacture of Monza ICs and Indy ICs typically include purchases of wafers, post processing and testing and packaging, as well as associated overhead costs such as logistics, quality control, planning and procurement. These costs depend, at least in part, on the terms that we negotiate with our suppliers, including pricing and payment terms. We outsource the manufacturing of our readers to a third-party contract manufacturer, and our costs for readers are based on negotiated prices for finished goods. Cost of product revenue also includes charges for inventory write-downs, warranty costs and accrued losses on purchase commitments to third-party contract manufacturers.

Cost of service, development and license revenue consists primarily of direct labor and other associated costs, such as travel and materials associated with fulfilling contracts under which services are provided.

Operating Expenses

Research and Development Expense. Research and development expense consists primarily of salaries and related compensation costs for our product development personnel, contract developers, prototype materials and other expenses related to the development of new and improved products. In the past, we have invested, and we plan to continue to invest, significant amounts in research and development activities to develop new products and enhance existing products and the performance and interoperability of products in our GrandPrix platform. Accordingly, we expect research and development expense to increase in absolute dollars in future periods.

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Selling and Marketing Expense. Selling and marketing expense consists primarily of salaries and related compensation costs for our sales personnel, as well as travel, advertising and promotional expenses and other related expenses. We anticipate that sales and marketing expense will continue to increase in absolute dollars, as we increase headcount and focus on expanding our market penetration, and enter new geographic and vertical markets. In addition, we expect variable sales compensation to fluctuate as a function of sales.

General and Administrative Expense. General and administrative expense consists primarily of salaries and related compensation costs for our executive, finance, human resources and information technology personnel, legal, accounting and other professional services, travel and related expenses, insurance, occupancy and other overhead costs. We expect our general and administrative expenses to increase in absolute dollars as we add personnel and facilities to support our growth. We will incur additional compliance and reporting costs as a public company.

Interest Expense

Interest expense consists primarily of interest expense on our debt instruments and amortization of deferred financing fees associated with such instruments. We intend to use a portion of the net proceeds from the offering to repay the outstanding principal amount of and accrued but unpaid interest on our subordinated convertible promissory notes. Subject to certain exceptions, we are also required to pay a premium upon such repayment equal to the outstanding principal amount and accrued unpaid interest. The payment of such premium will be reflected in interest expense for the period in which repayment occurs. As of March 31, 2011, there was approximately $6.4 million aggregate principal and accrued interest of subordinated convertible promissory notes outstanding. For more information about our debt instruments, see “—Liquidity and Capital Resources—Sources of Funds.”

Results of Operations

The following table presents our results of operations for the periods indicated as a percentage of total revenue. Percentages from certain line items do not sum to the subtotal or total line items due to rounding. The period-to-period comparisons of results are not necessarily indicative of results for future periods.

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
Revenue:
Product revenue		61.7	%		49.5	%		91.9	%		90.3	%		92.9	%
Development, service and licensing revenue		38.3			50.5			8.1			9.7			7.1
Total revenue		100.0			100.0			100.0			100.0			100.0
Costs of revenue:
Cost of product revenue, as a percentage of related revenue		69.8			65.8			58.2			52.9			55.5
Cost of development, service and licensing revenue, as a percentage of related revenue		20.9			21.1			23.4			22.2			54.4
Total cost of revenue		51.1			43.2			55.4			49.9			55.4
Gross profit		48.9			56.8			44.6			50.1			44.6
Operating expenses:
Research development		48.9			45.6			33.5			46.5			22.7
Selling and marketing		29.4			35.2			26.0			38.1			19.4
General and administrative		26.8			25.3			17.6			24.1			13.0
Total operating expenses		105.1			106.1			77.1			108.7			55.1
Loss from operations		(56.3	)		(49.3	)		(32.5	)		(58.6	)		(10.5	)
Interest income (expense) and other, net		1.3			0.3			(3.1	)		(1.1	)		(4.0	)
Net loss before income tax (expense) benefit		(55.0	)		(49.0	)		(35.5	)		(59.7	)		(14.5	)
Income tax (expense) benefit		2.6			0.2			(0.3	)		(0.4	)		(0.2	)
Loss from continuing operations		(52.5	)		(48.8	)		(35.8	)		(60.1	)		(14.7	)
Income from discontinued operations, net of tax		5.1			1.4			—			—			—
Net loss		(47.4	)%		(47.4	)%		(35.8	)%		(60.1	)%		(14.7	)%

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Comparison of Three Months Ended March 31, 2011 and 2010

Revenue

	Three Months Ended March  31,				Change 2010 v. 2011
	2010		2011		In Dollars		Percentage
	(Dollars in thousands)
Product revenue	$	4,640	$	11,397	$	6,757		145.6	%
Development, service and licensing revenue		500		868		368		73.6
Total revenue	$	5,140	$	12,265	$	7,125		138.6

The increase in total revenue for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to an increase in the volume of Monza tag ICs, Indy reader ICs and Speedway readers sold due to the increased demand for our products primarily as a result of large retailers expanding their adoption of our item-level UHF Gen2 solutions, partially offset by a decrease in ASPs due to competition and volume-based discounts. Development, service and licensing revenue increased as a result of new consulting agreements with existing customers.

Product Revenue. The increase in product revenue for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was primarily attributable to a 302% increase in the volume of Monza tag ICs sold to new and existing customers as UHF Gen2 solutions were deployed more widely. Our first quarter 2011 results also benefitted from sales of Monza tag ICs deferred in the fourth quarter of 2010 due to supply constraints. These increases were partially offset by declines in Monza tag IC ASPs of approximately 11% due to competition and volume-based discounts.

Development, Service and Licensing Revenue. The increase in development, service and licensing revenue for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to new consulting agreements with existing customers. We recognized $548,000 and $210,000 in development revenue in the three months ended March 31, 2011 and 2010, respectively. Service and licensing revenue was relatively flat for the three months ended March 31, 2011 compared to the three months ended March 31, 2010.

Revenue by Geography. Revenue from the Americas, APAC and EMEA grew 102.9%, 154.2% and 229.5%, respectively, in the three months ended March 31, 2011 compared to the three months ended March 31, 2010. The growth in all three regions was primarily attributable to the volume increase in Monza tag ICs discussed above as large retailers expanded their adoption of our item-level UHF Gen2 solutions. For additional information, see Note 14 to the financial statements accompanying this prospectus.

Gross Profit

	Three Months Ended March 31,						Change 2010 v. 2011
	2010			2011			In Dollars		Percentage
	(Dollars in thousands)
Product gross profit	$	2,185		$	5,072		$	2,887		132.1	%
Development, service and licensing gross profit		389			396			7		1.7
Total gross profit	$	2,574		$	5,468		$	2,894		112.4
Product gross margin		47.1	%		44.5	%
Development, service and licensing gross margin		77.8			45.6
Total gross margin		50.1			44.6

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The $2.9 million increase in total gross profit for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to increases in both product revenue and in development, service and licensing revenue. Gross margin declined in the three months ended March 31, 2011 compared to the three months ended March 31, 2010 as a result of lower development, service and licensing revenue as a percentage of total revenue.

Product Gross Margin. The decrease in product gross margin in the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to a shift in product mix toward our Monza tag ICs, partially offset by our ability to leverage overhead costs over a higher amount of total product revenue.

Development, Service and Licensing Gross Margin. The decrease in gross margin on our development, service and licensing revenue in the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to a change in development projects. Our development projects are customized to the customer’s requirements, and therefore our gross margin varies from project to project.

Operating Expenses

Research and Development Expense

	Three Months Ended March 31,				Change 2010 v. 2011
	2010		2011		In Dollars		Percentage
	(Dollars in thousands)
Research and development expense	$	2,389	$	2,781	$	392		16.4	%

The increase in research and development expense for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was attributable to a $386,000 increase in personnel costs as we added staff for product development and a $216,000 increase in lab supplies, equipment and professional services. Partially offsetting this increase was a $209,000 reduction due to the assignment of more of our engineering staff to development projects as we engaged in new development consulting agreements.

Selling and Marketing Expense

	Three Months Ended March 31,				Change 2010 v. 2011
	2010		2011		In Dollars		Percentage
	(Dollars in thousands)
Selling and marketing expense	$	1,957	$	2,375	$	418		21.4	%

The increase in selling and marketing expense for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was primarily attributable to a $357,000 increase in personnel costs due to an increase in selling and marketing headcount to expand channel sales and geographic coverage and an increase in variable compensation due to increased revenue. In addition, advertising and marketing program costs increased $39,000 in the three months ended March 31, 2011 compared to the three months ended March 31, 2010.

General and Administrative Expense

	Three Months Ended March 31,				Change 2010 v. 2011
	2010		2011		In Dollars		Percentage
	(Dollars in thousands)
General and administrative expense	$	1,241	$	1,594	$	353		28.4	%

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The increase in general and administrative expense for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was primarily attributable to a $302,000 increase in our personnel costs in the three months ended March 31, 2011 as we increased the number of finance, information systems and human resources employees in anticipation of future growth, as well as a $103,000 increase in professional consulting services related to the upgrade of our information systems. Partially offsetting these increases was a $52,000 decrease in depreciation expense.

Interest Income (Expense) and Other, Net

	Three Months Ended March 31,						Change 2010 v. 2011
	2010			2011			In Dollars			Percentage
	(Dollars in thousands)
Interest income	$	3		$	1		$	(2	)		(66.7	)%
Interest expense		(55	)		(382	)		(327	)		N/A
Other income (expense), net		(3	)		(114	)		(111	)		N/A

The increase in interest expense for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 was driven by increased borrowings under our credit facilities after March 31, 2010, as well as the issuance of convertible promissory notes in June and July 2010. The increase in other income (expense) for the three months ended March 31, 2011 compared to the prior year period was primarily due to the change in the fair value of convertible preferred stock warrants.

Comparison of Years Ended December 31, 2008, 2009 and 2010

Revenue

	Year Ended December 31,						Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010		In Dollars			Percentage			In Dollars			Percentage
	(Dollars in thousands)
Product revenue	$	15,457	$	10,305	$	29,221	$	(5,152	)		(33.3	%)	$	18,916			183.6	%
Development, service and licensing revenue		9,586		10,511		2,576		925			9.6			(7,935	)		(75.5	)
Total revenue	$	25,043	$	20,816	$	31,797	$	(4,227	)		(16.9	)	$	10,981			52.8

The increase in total revenue for 2010 compared to 2009 was attributable to the increased demand for our Monza tag ICs, Indy reader ICs and Speedway reader products, primarily as a result of successful pilot programs conducted by large retailers in 2009 which led to large deployments of our item-level UHF Gen2 solutions in 2010, offset in part by a decrease in ASPs due to competition and volume-based discounts and a decrease in development, service and licensing revenue as a result of the completion of a consulting agreement with a significant customer in 2009. The decrease in total revenue for 2009 compared to 2008 was due to a decrease in demand for our product revenue as a result of macroeconomic conditions.

Product Revenue. The increase in product revenue for 2010 compared to 2009 was attributable to large deployments of our products, primarily Monza tag ICs, by several retailers, including Walmart and Banana Republic. In 2010, the volume of Monza tag ICs sold increased 279%. The increase was partially offset by a decline in Monza tag IC ASPs of approximately 16% due to competition and volume-based discounts.

The decrease in product revenue for 2009 compared to 2008 was attributable to a large bulk order of readers sold to a single customer in 2008. In addition to the effect of this $3.0 million order, product revenue decreased in 2009 compared to 2008 primarily as a result of approximately a 30% decrease in the ASPs for our Monza tag ICs, which was attributable to competitive factors, volume-based discounts and macroeconomic weakness, and more than offset a 19% increase in the volume of Monza tag ICs sold.

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Development, Service and Licensing Revenue. The decrease in development, service and licensing revenue for 2010 compared to 2009 was attributable to the completion in 2009 of a large consulting agreement with a single customer. We recognized $7.7 million in development, service and licensing revenue with respect to such agreement in both 2009 and 2008. Excluding the effect of this large consulting agreement, development, service and licensing revenue was relatively constant from 2008 through 2010.

Revenue by Geography. Revenue from the Americas, APAC and EMEA grew 22.1%, 176.1% and 98.8%, respectively, in 2010 compared to 2009. The increase in the Americas and EMEA in 2010 was primarily due to an increase in the volume of Monza tag ICs sold as discussed above, partially offset by decreases in ASPs for this product line due to competition and volume-based discounts. In addition, partially offsetting the increase in the Americas was a decline in development, service and licensing revenue due to the completion in 2009 of a large consulting agreement with a single customer with respect to which we recognized $7.7 million in 2009. The increase in APAC was primarily attributable to adding additional sales and marketing resources. Revenue in the Americas and EMEA declined 23.6% and 21.1%, respectively, in 2009 compared to 2008, while revenue in APAC grew 55.7% in 2009 compared to 2008. The decrease in revenue in the Americas was primarily attributable to a large $3.0 million bulk order of readers sold to a single customer in the United States in 2008. In addition, revenue in the Americas and EMEA declined due to a decrease in ASPs, primarily for our Monza tag ICs, which more than offset an increase in the volume of Monza tag ICs sold. ASPs declined due to competition, volume-based discounts and macroeconomic weakness in both the Americas and EMEA. The increase in revenue in APAC in 2009 compared to 2008 was due to the addition of channel partners in China during 2009, as well as increased adoption of UHF Gen2 solutions in China.

Gross Profit

	Year Ended December 31,									Change 2008 v. 2009						Change 2009 v. 2010
	2008			2009			2010			In Dollars			Percentage			In Dollars			Percentage
	(Dollars in thousands)
Product gross profit	$	4,666		$	3,523		$	12,213		$	(1,143	)		(24.5	)%	$	8,690			246.7	%
Development, service and licensing gross profit		7,580			8,292			1,973			712			9.4			(6,319	)		(76.2	)
Total gross profit	$	12,246		$	11,815		$	14,186		$	(431	)		(3.5	)	$	2,371			20.1
Product gross margin		30.2	%		34.2	%		41.8	%
Development, service and licensing gross margin		79.1			78.9			76.6
Total gross margin		48.9			56.8			44.6

The $2.4 million increase in total gross profit for 2010 compared to 2009 was attributable to the increase in product revenue partially offset by the decrease in development, service and licensing revenue. Gross margin declined in 2010 compared to 2009 as a result of a substantial decline in development, service and licensing revenue, both in absolute dollars and as a percentage of total revenue.

The decrease in gross profit for 2009 compared to 2008 was attributable to the decrease in product revenue partially offset by the increase in development, service and licensing revenue. The increase in gross margin in 2009 compared to 2008 was attributable to a decline in product revenue, both in absolute dollars and as a percentage of total revenue.

Product Gross Margin. The increase in product gross margin in 2010 compared to 2009 was attributable to our ability to leverage our overhead costs over a higher amount of revenue, partially offset by a shift in product mix toward our Monza tag ICs. The increase in product gross margin in 2009 compared to 2008 was attributable to the inclusion of a full year of revenue from sale of Indy reader ICs following the acquisition of this product line from Intel Corporation in June 2008.

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Development, Service and Licensing Gross Margin. The decrease in gross margin on our development, service and licensing revenue in 2010 compared to 2009 was attributable to a change in mix between development projects and licensing. Our development projects are customized to the customer’s requirements and therefore our gross margin varies from project to project, but generally have lower margins than licensing.

Operating Expenses

Research and Development Expense

	Year Ended December 31,						Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010		In Dollars			Percentage			In Dollars		Percentage
	(Dollars in thousands)
Research and development expense	$	12,257	$	9,492	$	10,662	$	(2,765	)		(22.6	%)	$	1,170		12.3	%

The increase in research and development expense for 2010 compared to 2009 was attributable to a $1.5 million increase in personnel costs as we shifted personnel from development engagements with customers to product development. Partially offsetting the increase in personnel costs was a $214,000 decrease in lab supplies and equipment expenses, an $86,000 decrease in consulting services and a $30,000 decrease in fabrication, test and other expenses.

In 2009 we decreased research and development expense compared to 2008 in an effort to better align our expense with expected cash flows given the relatively weak macroeconomic environment. We decreased personnel costs by $1.9 million by reducing our research and development headcount from 67 to 51, lab supplies and equipment expense by $423,000 and consulting services expense by $288,000. Partially offsetting these decreases was an increase in rent expense of $338,000 and an increase in fabrication and testing expenses of $152,000 as a result of including a full year of research and development expense related to the acquisition of the Indy reader IC product line. In addition, research and development expense in 2008 included $650,000 of in-process research and development acquired with the Indy reader IC product line. We did not acquire any in-process research and development in 2009.

Selling and Marketing Expense

	Year Ended December 31,						Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010		In Dollars			Percentage			In Dollars		Percentage
	(Dollars in thousands)
Selling and marketing expense	$	7,375	$	7,320	$	8,256	$	(55	)		(0.7	%)	$	936		12.8	%

The increase in selling and marketing expense for 2010 compared to 2009 was primarily attributable to a $608,000 increase in personnel costs as we increased selling and marketing headcount to increase channel sales and geographic coverage. In addition, advertising and marketing program costs increased by $255,000 in 2010 compared to 2009 as we introduced new products to the market, and our variable compensation increased $94,000 as a result of the increase in product revenue.

Selling and marketing expense was relatively flat in 2009 compared to 2008. In 2009 our professional fees decreased $424,000 because we replaced outside consultants with employees and an additional $378,000 due to cutbacks in our advertising and marketing program. These decreases were partially offset by a $678,000 increase in personnel costs as a result of including a full year of sales and marketing expense related to the acquisition of the Indy IC product line and a $69,000 increase in rent and facilities costs.

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General and Administrative Expense

	Year Ended December 31,						Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010		In Dollars			Percentage			In Dollars		Percentage
	(Dollars in thousands)
General and administrative expense	$	6,711	$	5,271	$	5,585	$	(1,440	)		(21.5	%)	$	314		6.0	%

The increase in general and administrative expense for 2010 compared to 2009 was primarily attributable to a $370,000 increase in employee relocation expenses related to the closing of our Orange County, California office and a $220,000 increase in our personnel costs in 2010 as we increased the number of finance, information systems and human resource employees in anticipation of future growth. Partially offsetting these increases were decreases in professional services fees for legal, accounting and patent advisory services of $133,000 and a decrease in depreciation and other expenses of $133,000.

The decrease in general and administrative expense for 2009 compared to 2008 was primarily attributable to a $848,000 decrease in personnel costs as we reduced headcount to better align expenses with revenue expectations given the uncertain macroeconomic environment. In addition, our rent and facilities expense decreased $380,000 as we subleased out some of our office space, our professional services expenses decreased $171,000 as we spent less on consultants and patent advisory services in 2009, and our bad debt expense decreased 99,000. A $58,000 increase in depreciation expense offset these decreases.

Interest Income (Expense) and Other, Net

	Year Ended December 31,									Change 2008 v. 2009						Change 2009 v. 2010
	2008			2009			2010			In Dollars			Percentage			In Dollars			Percentage
	(Dollars in thousands)
Interest income	$	723		$	234		$	8		$	(489	)		(67.6	%)	$	(226	)		96.6	%
Interest (expense)		(514	)		(524	)		(793	)		(10	)		(1.9	)		(269	)		(51.3	)
Other income		107			357			(193	)		250			233.6			(550	)		(154.1	)

The decrease in interest income in 2010 compared to 2009 and in 2009 compared to 2008 was primarily attributable to lower average cash and cash equivalent balances as well as a decrease in interest rates.

The increase in interest expense in 2010 compared to 2009 was primarily attributable to the issuance of $6.0 million of convertible debt at an interest rate of 9% in June 2010 and July 2010 and an increase in average debt outstanding on bank loans. Interest expense in 2009 was flat compared to 2008.

The decrease in other income in 2010 compared to 2009 was primarily due to a $193,000 loss in 2010 compared to a $174,000 gain in 2009 attributable to the change in the fair value of convertible preferred stock warrants.

The increase in other income in 2009 compared to 2008 was primarily due to a $174,000 gain in 2009 compared to a $45,000 gain in 2008 attributable to the change in the fair value of convertible preferred stock warrants.

Income Tax Benefit (Expense)

	Year Ended December 31,							Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010			In Dollars			Percentage			In Dollars			Percentage
	(Dollars in thousands)
Income tax (expense) benefit	$	644	$	50	$	(90	)	$	(594	)		(92.2	%)	$	(140	)		(280.0	%)

The increase in income tax expense in 2010 compared to 2009 was primarily due to a $159,000 decrease in tax benefit related to our gain from discontinued operations recognized in 2009. Excluding this decrease in tax benefit, our tax expense in 2010 compared to 2009 was flat.

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In 2008 and 2009 we recognized a gain from discontinued operations which resulted in the recognition of a tax benefit equal to the portion of our net operating loss carryforward utilized to offset the tax expense associated with the gain from discontinued operations. Since the gain from discontinued operations in 2009 was less than the gain in 2008, the related tax benefit recognized in 2009 is less than in 2008.

Income (Loss) from Discontinued Operations, Net of Tax

	Year Ended December 31,						Change 2008 v. 2009						Change 2009 v. 2010
	2008		2009		2010		In Dollars			Percentage			In Dollars			Percentage
	(Dollars in thousands)
Income (loss) from discontinued operations, net of tax	$	1,275	$	291	$	—	$	(984	)		(77.2	%)	$	(291	)		(100.0	%)

In June 2008, we sold our NVM intellectual property business line for approximately $5.2 million in cash proceeds, resulting in a gain of $1.3 million net of income tax expense of $698,000. Of the total proceeds, $450,000 was restricted pending resolution of sales contingencies. In 2009, the contingencies were resolved and the $450,000 deferred gain was recorded, net of income tax expense of $159,000. Historical financial results for our NVM intellectual property business have been reclassified as discontinued operations for all periods.

Quarterly Results of Operations

The following tables set forth selected unaudited quarterly statements of operations data for the last five fiscal quarters, as well as the percentage that each line item represents of total net revenue. The financial statements for each of these quarters have been prepared on the same basis as the audited financial statements included elsewhere in this prospectus and, in the opinion of management, reflect all adjustments, which include solely normal recurring adjustments, necessary to a fair statement of our results of operations and financial position for these periods. These data should be read in conjunction with the audited financial statements and accompanying notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of our operating results for any future period.

	Three Months Ended
	Mar 31, 2010		June 30, 2010		Sep 30, 2010		Dec 31, 2010		March 31, 2011
	(Unaudited) (In thousands, except per share data)
Revenue:
Product revenue	$	4,640	$	6,362	$	7,246	$	10,973	$	11,397
Development, service and licensing revenue		500		773		684		619		868
Total revenue		5,140		7,135		7,930		11,592		12,265
Costs of revenue:
Cost of product revenue		2,455		3,423		3,877		7,253		6,325
Cost of development, service and licensing revenue		111		154		132		206		472
Total cost of revenue		2,566		3,577		4,009		7,459		6,797
Gross profit		2,574		3,558		3,921		4,133		5,468

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	Three Months Ended
	Mar 31, 2010			June 30, 2010			Sep 30, 2010			Dec 31, 2010			March 31, 2011
	(Unaudited) (In thousands, except per share data)
Operating expenses:
Research and development		2,389			2,767			3,042			2,464			2,781
Selling and marketing		1,957			2,056			2,038			2,205			2,375
General and administrative		1,241			1,437			1,327			1,570			1,594
Total operating expenses		5,587			6,260			6,417			6,239			6,750
Loss from operations		(3,013	)		(2,702	)		(2,496	)		(2,106	)		(1,282	)
Interest income (expense) and other, net		(55	)		(67	)		(387	)		(469	)		(495	)
Net loss before income tax (expense) benefit		(3,068	)		(2,769	)		(2,883	)		(2,575	)		(1,777	)
Income tax (expense) benefit		(19	)		(38	)		(23	)		(10	)		(24	)
Net loss	$	(3,087	)	$	(2,807	)	$	(2,906	)	$	(2,585	)	$	(1,801	)

	Three Months Ended(1)
	Mar 31, 2010			June 30, 2010			Sep 30, 2010			Dec 31, 2010			March 31, 2011
	(Unaudited)
Revenue:
Product revenue		90.3	%		89.2	%		91.4	%		94.7	%		92.9	%
Development, service and licensing revenue		9.7			10.8			8.6			5.3			7.1
Total revenue		100.0			100.0			100.0			100.0			100.0
Costs of revenue:
Cost of product revenue		52.9			53.8			53.5			66.1			55.5
Cost of development, service and licensing revenue		22.2			19.9			19.3			33.3			54.4
Total cost of revenue		49.9			50.1			50.6			64.4			55.4
Gross margin		50.1			49.9			49.5			35.7			44.6
Operating expenses:
Research development		46.5			38.8			38.4			21.3			22.7
Selling and marketing		38.1			28.8			25.7			19.0			19.4
General and administrative		24.1			20.1			16.9			13.5			13.0
Total operating expenses		108.7			87.7			81.0			53.8			55.1
Loss from operations		(58.6	)		(37.9	)		(31.5	)		(18.2	)		(10.5	)
Interest income and other, net		(1.1	)		(0.9	)		(4.9	)		(4.0	)		(4.0	)
Net loss before income tax (expense) benefit		(59.7	)		(38.8	)		(36.4	)		(22.2	)		(14.5	)
Income tax (expense) benefit		(0.4	)		(0.5	)		(0.3	)		(0.1	)		(0.2	)
Net loss		(60.1	)		(39.3	)		(36.7	)		(22.3	)		(14.7	)

(1) Percentages from certain line items do not sum to the subtotal or total of those line items due to rounding.

Beginning in 2010 we experienced a substantial increase in demand for our products as end users significantly expanded deployments of UHF Gen2 solutions. In addition, prior to 2010 we generated a substantially larger percentage of our revenue from NRE engagements. Although we intend to continue to pursue development contracts with strategic end users, given the maturation of the ecosystem of UHF Gen2 providers and the expected demand for our products, we expect development, service and licensing revenue to be less on a percentage of total revenue basis than it was prior to 2010. As a result, we do not believe that comparisons of our quarterly results prior to 2010 to subsequent periods are helpful.

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Our operating results fluctuate from quarter to quarter as a result of a variety of factors. Our ability to meet demand for our Monza tag ICs was constrained by supply of Monza wafers during the last three quarters of 2010. In the fourth quarter of 2010, gross margins were adversely affected as certain customers who had ordered Monza 3 ICs accepted our offer to deliver Monza 4 ICs at reduced prices in response to supply constraints. Fourth quarter 2010 product margins were also adversely affected by a decrease in wafer yield resulting from transitory problems encountered in connection with a change in our Monza post-processing. In addition, development gross margins were adversely affected in fourth quarter of 2010 and first quarter of 2011, due to the the variability of the terms of our development projects. Our first quarter 2011 results benefited from sales of products deferred in fourth quarter 2010 due to supply constraints. Research and development expense increased in the third quarter of 2010 due to a $333,000 expense related to expanding the number of foundries that could manufacture our Monza silicon wafers.

Retailers typically do not install or change infrastructure during the holiday season in the fourth calendar quarter. Consequently, we have experienced and expect to continue to experience decreased sales of readers and other UHF Gen2 infrastructure products to retailers during the fourth quarter.

Liquidity and Capital Resources

As of March 31, 2011, we had cash, cash equivalents and short-term marketable securities of $12.1 million, which primarily consisted of cash deposits and money market funds held at major financial institutions. Since inception, we have financed our operations primarily through private sales of equity and, to a lesser extent, from borrowings. Our principal uses of cash are funding our operations, debt service payments, as described below, and capital expenditures.

Sources of Funds

We believe, based on our current operating plan, that our existing cash and cash equivalents and available borrowings under our credit facility will be sufficient to meet our anticipated cash needs for at least the next 12 months.

From time to time, we may explore additional financing sources and means to lower our cost of capital, which could include equity, equity-linked and debt financing. In addition, in connection with any future acquisitions, we may require additional funding which may be provided in the form of additional debt, equity or equity-linked financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms.

Credit Facility. In May 2010, we entered into a loan and security agreement, which we refer to as our credit facility, pursuant to which we (1) incurred $1.5 million in term loan borrowings and were allowed to incur an additional $500,000 of term loan borrowings prior to January 31, 2011 and (2) from time to time could incur revolver borrowings of up to the lesser of $4.0 million and a borrowing base tied to the amount of eligible accounts. The credit facility also provides for the issuance of letters of credit, foreign exchange forward contracts and cash management services; however, the amount of revolver borrowings available to us is reduced by any such indebtedness that we incur. Interest on term loan borrowings accrues at a floating rate equal to the greater of 5.0% and the lender’s prime rate plus 0.5%. We are required to repay the initial term loan borrowings in 24 equal monthly installments beginning on May 1, 2011 and any subsequent term loan borrowings in 27 equal monthly installments beginning on the first day of the month following the day on which such indebtedness was incurred. We may at our option prepay all of the term loan borrowings by paying the lender, among other things, all principal and accrued interest plus a make-whole premium. Interest on revolver borrowings accrues at a floating rate equal to the greater of the lender’s prime rate and 4.0% and is payable monthly.

In February 2011, such loan and security agreement was amended to provide for the incurrence of an additional $2.0 million of “Facility B” term loan borrowings. Interest on Facility B term loan borrowings accrues at a floating rate equal to the greater of 4.5% and the lender’s prime rate plus 1.25% and is payable monthly. We

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are required to repay the Facility B loan in 27 monthly installments beginning on October 1, 2011. We may at our option prepay all Facility B term loan borrowings by paying the lender, among other things, all principal and accrued interest plus a make-whole premium. In addition, the credit facility was amended to increase the amount of available revolver borrowings to $10.0 million, to provide for interest on revolver borrowings at a floating rate equal to the lender’s prime rate plus 0.75%, to extend the maturity date to February 1, 2013 and to provide for monthly payments. The U.S. Export-Import Bank has agreed to guarantee up to $6.8 million of revolver borrowings incurred under the credit facility to finance the cost of manufacturing, purchasing or selling items intended for export.

The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The credit facility also requires us to maintain a minimum tangible net worth and liquidity ratio. We were in compliance with such covenants as of December 31, 2010 and March 31, 2011. Our obligations under the credit facility are secured by substantially all of our assets other than intellectual property.

Mezzanine Term Loan Facility. In March 2011, we entered into a loan and security agreement with the same lender as under the credit facility, which we refer to as the mezzanine credit facility, pursuant to which we incurred $10.0 million in term loan borrowings. Interest on term loan borrowings incurred under the mezzanine credit facility accrues at a fixed rate equal to 11.0% per year and is payable monthly. The principal amount of all outstanding borrowings under the mezzanine credit facility is payable on March 25, 2013. We may, at our option, prepay all borrowings without penalty by paying the lender all principal and accrued interest with respect to such term loan borrowing. The mezzanine credit facility contains customary events of default and covenants that are substantially similar to those contained in the credit facility, except for certain covenants relating to reporting, tangible net worth and liquidity ratio requirements which are omitted from the mezzanine credit facility. We were in compliance with such covenants as of December 31, 2010 and March 31, 2011. Our obligations under the loan and security agreement are secured by substantially all of our assets other than intellectual property. In addition, we entered into a success fee agreement in connection with the mezzanine loan facility, which requires us to pay a success fee if we are acquired or we sell all or substantially all of our assets. The success fee agreement will automatically terminate upon the completion of the offering contemplated by this prospectus.

As of March 31, 2011, we had approximately $1.5 million of term loan borrowings, $400,000 of Facility B term loan borrowings, $10.0 million of mezzanine borrowings and $7.7 million of revolver borrowings outstanding, which accrue interest at 5.0%, 5.0%, 11.0% and 4.0%, respectively.

We issued the lender warrants to purchase 24,059 and 17,498 shares of our Series E preferred stock in June 2010 and February 2011, respectively, in connection with entering into the credit facility and amendment described above. Such warrants have a ten year terms and an exercise price of $2.286 per share. We issued the lender a warrant to purchase 300,000 shares of our common stock in connection with entering into the mezzanine credit facility in March 2011. Such warrant has a ten year term and an exercise price of $0.21 per share.

Convertible Promissory Notes. In June and July 2010, we issued approximately $6.0 million aggregate principal amount of our subordinated secured convertible promissory notes to existing investors. Interest on the subordinated secured convertible promissory notes accrues interest on the unpaid principal balance at 9.0% per year, and all unpaid principal, accrued interest and any other amounts payable under the subordinated secured convertible promissory notes are due and payable on the earlier to occur of: (1) June 30, 2011, (2) when upon the occurrence and during the continuance of an event of default listed in the subordinated secured convertible promissory notes, such amounts are declared due and payable by the investor; provided, the subordinated secured convertible promissory notes shall become payable immediately prior to the closing of a liquidation event, including an initial public offering; provided further that, if a liquidity event has not occurred prior to the scheduled maturity date, the maturity date may be extended by the vote of holders of more than 60% of the then outstanding aggregate principal amount of the subordinated secured convertible promissory notes. We expect that the maturity date of the subordinated secured convertible promissory notes will be extended if the offering

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contemplated by this prospectus is consummated after the scheduled maturity date. We are required to repay all the outstanding principal amount of the subordinated secured convertible promissory notes and all accrued and unpaid interest on the subordinated secured convertible promissory notes plus a premium equal to the sum of the outstanding principal and accrued interest on the subordinated secured convertible promissory notes in connection with the consummation of an initial public offering; however, holders of at least $100,000 aggregate principal amount of notes may, at their option, convert the principal amount of their notes plus accrued and unpaid interest into (1) shares of our Series E preferred stock at a conversion price of $2.286 per share (which conversion price is subject to adjustments for stock splits, reverse stock splits, stock dividends and the like) or (2) if all of the shares of our Series E preferred stock are converted into shares of our common stock, a number of shares of common stock that holders would have received had they converted their notes into Series E preferred stock immediately prior to the conversion pursuant to our certificate of incorporation. The subordinated secured convertible promissory notes contain customary events of default and covenants. We were in compliance with such covenants as of March 31, 2011. Our obligations under the subordinated secured convertible promissory notes are secured by substantially all of our assets other than intellectual property. Note holders have agreed not to pursue repayment of any indebtedness under the subordinated secured convertible promissory notes or under any other instrument or writing evidencing our indebtedness to them while there are outstanding borrowings under the credit facility and mezzanine credit facility. As of March 31, 2011, total outstanding aggregate principal and accrued interest for the subordinated secured convertible promissory notes was approximately $6.4 million.

In addition, we issued warrants to purchase an aggregate of 890,721 shares of our Series E preferred stock at a purchase price per share of $2.286 to the holders of subordinated secured convertible promissory notes. Such warrants will be exercised automatically on a net exercise basis in connection with the offering contemplated by this prospectus if the initial per share price to public exceeds the exercise price of the warrants; otherwise the warrants will expire upon the closing of the offering.

Loan and Security Agreement. In October 2007, we entered into a loan and security agreement pursuant to which we could incur up to $10.0 million in indebtedness. Interest on each advance under the agreement accrued at the lower of (1) 14.0% and (2) the greater of 11.50% and the lender’s prime rate plus 4.25%. We were required to pay interest only for the first 24 months of the agreement, subsequent to which we were required to pay 15 equal monthly installments of principal and interest. All of the indebtedness incurred under such loan and security agreement was repaid in connection with the entry into our credit facility. We also issued the lender warrants to purchase 218,723 shares of our Series E convertible redeemable preferred stock. Each of such warrants has a seven year term and an exercise price of $2.286 per share. Following the completion of the offering contemplated by this prospectus, such warrants will be exercisable for shares of our common stock.

Use of Funds

Our principal uses of cash are our operating expenses, satisfaction of our obligations under our debt instruments, debt repayment and other working capital requirements. We employ a fabless manufacturing model by outsourcing production of our products to third-party trailing edge CMOS manufacturers. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and solutions.

We may need to raise additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise additional funds through public or private debt or equity financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our common stock and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.

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Historical Cash Flow Trends

The following table shows a summary of our cash flows for the periods indicated:

	Years Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
	(In thousands)
Cash used in operating activities	$	(16,690	)	$	(8,853	)	$	(14,601	)	$	(3,190	)	$	(8,236	)
Cash provided by investing activities		14,511			11,852			3,572			2,377			819
Cash provided by (used in) financing activities		(117	)		(427	)		10,161			(445	)		13,626

Operating Cash Flows. Net cash used in operating activities in each of the periods presented was primarily a result of net losses, investments in inventory and an increase in accounts receivable. In the latter part of 2010, we were unable to meet demand for our Monza tag ICs due to inadequate wafer supply. Consequently, in the first quarter of 2011 we purchased more than six months of our forecasted Monza tag IC wafer supply using borrowings from our mezzanine term loan facility. We will carry more inventory in 2011 than in prior years. Our accounts receivable balance increased as a result of increased revenue in the three months ended March 31, 2011. We expect accounts receivable to grow as our revenue increases because a significant portion of our revenue occurs late in the quarter. Net cash used in operating activities in the three months ended March 31, 2011 consisted of a $1.8 million net loss, $6.6 million increase in inventory, a $1.9 million increase in accounts receivable, a $733,000 increase in prepaid expenses and a $368,000 decrease in accounts payable and accrued liabilities, partially offset by a $1.5 million increase in deferred revenue. Net cash used in operating activities in the three months ended March 31, 2010 consisted of a $3.1 million net loss, a $1.7 million increase in accounts receivable and a $801,000 increase in inventory, partially offset by a $1.1 million increase in accounts payable and accrued expenses and a $695,000 increase in deferred revenue.

Net cash used in operating activities in 2010 consisted of an $11.4 million net loss, a $6.7 million increase in accounts receivable due to a significant increase in revenue during the fourth quarter of 2010 compared to 2009 and a $6.6 million increase in inventory as we purchased inventory in December 2010 to meet an increase in forecasted demand for our products in the first quarter of 2011, partially offset by a $6.1 million increase in accounts payable and accrued expenses primarily due to the purchase of additional inventory and a $441,000 increase in deferred revenue. Net cash used in operating activities in 2009 consisted of a $9.9 million net loss, a $1.0 million increase in accrued liabilities and a $667,000 decrease in deferred revenue partially offset by a $1.3 million decrease in accounts receivable. Net cash used in operating activities in 2008 consisted of an $11.9 million net loss, a $1.8 million decrease in deferred revenue, a $1.1 million increase in cash used for discontinued operations, a $926,000 decrease in accounts payable and accrued liabilities, a $436,000 increase in accounts receivable and a $226,000 increase in inventory. In 2009, we used approximately $7.8 million less cash for operating activities than in 2008. This decreased use of cash was primarily attributable to a decrease in spending and working capital used for research and development and general and administrative activities as a result of reducing our staffing levels to better align our expenses with expected revenue. In addition, in 2008, we sold our NVM intellectual property business in which we used $1.1 million for operating activities in 2008.

Investing Cash Flows. Net cash provided by investing activities in the three months ended March 31, 2011 consisted of $900,000 of the maturity of marketable securities and release of restricted cash of $100,000, partially offset by the purchase of $181,000 of equipment. Net cash provided by investing activities in the three months ended March 31, 2010 consisted of $2.4 million net effect of the maturities and purchases of marketable securities. Net cash provided by investing activities in 2010 was primarily as the result of the approximately $3.7 million net effect of the maturities and purchases of marketable securities, and the release of $349,000 of restricted cash partially offset by the purchase of $468,000 of equipment. Net cash provided by investing activities in 2009 was primarily the result of the approximately $11.3 million net effect of the maturities and purchases of marketable securities, and the release of $672,000 of restricted cash partially offset by the purchase of $100,000 of equipment. Net cash provided by investing activities in 2008 was primarily as the result of the

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approximately $10.0 million net effect of the maturities and purchases of marketable securities, an increase in restricted cash of $141,000 and $5.2 million from the sale of our NVM line of business, partially offset by the purchase of $308,000 of equipment. We expect to continue to increase investments in property and equipment in 2011 as we expand our operations.

Financing Cash Flows. Net cash provided by financing activities in the three months ended March 31, 2011 and 2010 was primarily due to the incurrence of indebtedness as discussed above. In 2010, net cash provided by financing activities consisted of aggregate net proceeds of $6.0 million from the subordinated secured convertible promissory notes and net incurrence of debt under our credit facility of $4.3 million for working capital. In 2009, net cash used by financing activities consisted of payments with respect to our loan and security agreement and capital lease obligations. In 2008 net cash used in financing activities consisted of payments with respect to our capital lease obligations partially offset in part by proceeds from the issuance of our common stock upon exercise of employee stock options.

Contractual Obligations

The following table reflects a summary of our contractual obligations as of March 31, 2011:

	Payments due by period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(In thousands)
Credit facilities	$	19,618	$	910	$	18,708	$	—	$	—
Subordinated secured convertible promissory notes—related parties		6,396		6,396		—		—		—
Operating lease obligations(1)		2,852		566		1,558		728		—
Capital lease obligations(2)		533		216		305		12		—
Other obligations(3)		10,780		10,780		—		—		—
Total	$	40,179	$	18,868	$	20,571	$	740	$	—

(1) Includes the minimum rental payments for our corporate office building in Seattle, Washington.

(2) Consists of the minimum rental payments plus imputed interest expense on our leased equipment.

(3) Consists of obligations to purchase inventory.

Critical Accounting Policies and Significant Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under other assumptions or conditions.

Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to:

• revenue recognition;

• accounts receivable;

• inventory;

• goodwill and long-lived assets;

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• income taxes;

• fair value measurements; and

• stock-based compensation.

Revenue Recognition

We generate revenue from sales of our hardware products, software, development and service contracts and licensing agreements. We recognize product revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and there are no significant post-delivery obligations remaining; (3) the price is fixed or determinable; and (4) collection is probable.

Product Revenue. Hardware products are typically considered delivered upon shipment. Certain arrangements contain provisions for customer acceptance. Where we are unable to demonstrate that the customer acceptance provisions are met on shipment, revenue is deferred until all acceptance criteria have been met or the acceptance clause or contingency lapses.

For the sale of products to a distributor, we evaluate our ability to estimate returns, considering a number of factors, including the geography in which a sales transaction originates, payment terms and our relationship and past history with the distributor. If we are not able to estimate returns at the time of sale to a distributor, revenue recognition is deferred until there is persuasive evidence indicating the product has sold-through to an end user. Persuasive evidence of sell-through may include reports from distributors documenting sell-through activity, data indicating an order has shipped to an end user or other similar information. At the time of revenue recognition, we record reserves for estimated sales returns and stock rotation arrangements. Sales returns and stock rotation reserves are estimated based on a number of factors, including historical activity, forecasted demand in relation to inventory levels, expected price changes, expected timing of new product releases and other related factors. We monitor and analyze actual experience and adjust these reserves on a quarterly basis. It is possible that these estimates will change in the future or that the actual amounts could differ from our estimates.

Our Speedway reader products are sold in combination with services, which primarily consist of hardware and software support. Hardware support includes Internet access to technical content, repair or replacement of hardware in the event of breakage or failure and telephone and Internet access to technical support personnel during the term of the support period. Software is integrated with our Speedway reader products and is essential to the functionality of the integrated products.

In October 2009, the Financial Accounting Standards Board, or FASB, amended the accounting standards for revenue recognition to remove tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of industry-specific software revenue recognition guidance. In October 2009, the FASB also amended the accounting standards for multiple deliverable revenue arrangements to: (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated and how the consideration should be allocated; (2) require an entity to allocate revenue in an arrangement using best estimated selling prices, or ESP, of deliverables if a vendor does not have vendor-specific objective evidence of selling price, VSOE, or third-party evidence of selling price, or TPE; and (3) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. We elected to early adopt this accounting guidance at the beginning of 2010 on a prospective basis for applicable transactions originating or materially modified after January 1, 2010. This guidance does not generally change the units of accounting for our revenue transactions.

For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality and undelivered software elements relating to the hardware product’s essential software, we allocate revenue to all deliverables based on their relative selling prices. In such circumstances, the newly adopted accounting principles establish a hierarchy to determine the selling price to be used for allocating

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revenue to deliverables as follows: (1) VSOE; (2) TPE; and (3) ESP. VSOE generally exists only when we sell the deliverable separately and is the price actually charged by us for that deliverable. When VSOE cannot be established, we attempt to establish the selling price of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. We are unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis and are therefore typically not able to determine TPE. When we are unable to establish selling price using VSOE or TPE, we use ESP in the allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis.

Our ESPs for the hardware and software products are calculated using a method consistent with the way management prices new products. We consider multiple factors in developing the ESPs for our products including our historical pricing and discounting practices, the costs incurred to manufacture the product, the nature of the customer relationship and market trends. In addition, we may consider other factors as appropriate, including the pricing of competitive alternatives if they exist and product-specific business objectives. We regularly review VSOE and ESP and maintain internal controls over the establishment and updates of these estimates. Estimating our ESP requires significant judgment. Changes in our judgment could materially impact the amount of revenue recognized.

We present revenue net of sales tax in our statement of operations. Shipping charges billed to customers are included in product revenue and the related shipping costs are included in cost of product revenue.

Development, Service and Licensing Revenue. We account for nonrecurring engineering development contracts and license contracts that involve significant production, modification or customization of our products by generally recognizing the revenue over the performance period under the percentage of completion, or POC, method measured on a cost incurred basis and when amounts are legally due under the terms of the agreement. Advance payments under these license and development contracts are deferred and recognized as revenue ratably over the contract period. Under the POC method of accounting, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Changes to the original estimates may be required during the life of the contract. Estimates are reviewed periodically and the effect of any change in the estimated gross margin percentage for a contract is reflected in cost of sales in the period the change becomes known. The use of the POC method of accounting involves considerable use of estimates and judgments in determining revenue, costs and profits and in assigning the amounts to accounting periods. Changes in our judgment could materially impact the amount of revenue recognized.

We recognize revenue in accordance with industry specific software accounting guidance for stand alone software licenses and related support services. Revenue from license agreements that do not require significant production, modification or customization of our software is generally recognized when: (1) delivery has occurred; (2) there is no customer acceptance clause in the contract; (3) there are no significant post-delivery obligations remaining; (3) the price is fixed; and (4) collection of the resulting receivable is reasonably assured. For transactions, where we have established VSOE for the fair value of support services as measured by the renewal prices paid by our customers when the services are sold separately on a stand alone basis, we use the residual method to determine the amount of software product revenue to be recognized. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the sales amount is recognized as license revenue. Support services revenue is deferred and recognized ratably over the period during which the services are to be performed, which is typically from one to three years. In those instances where we have not established VSOE of our support services, the license and service revenue is recognized on a straight-line basis over the support period.

Amounts allocated to the support services sold with our Speedway reader products are deferred and recognized on a straight-line basis over the support services term.

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Accounts Receivable

Accounts receivable consist of amounts billed currently due from customers net of an allowance for doubtful accounts and an allowance for sales returns. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in existing accounts receivable and is determined based on historical write-off experience, the creditworthiness of our customers and market and economic conditions. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Estimating uncollectible accounts requires considerable judgment. Changes in our judgments or actual losses greater than estimated could have a material impact on our results of operations, financial position and cash flows.

Inventory

Inventory consists of a combination of raw materials, work-in-progress and finished goods and are stated at the lower of cost and market. Cost is determined using the average costing method, which approximates the first in, first out, or FIFO, method. Reserves for excess and obsolete inventory are established based on our analysis of inventory levels and future sales forecasts. Inventory write-downs are included in cost of revenue and were $894,000, $0 and $592,000 for the years ended December 31, 2008, 2009 and 2010, respectively, and $14,000 and $109,000 for the three months ended March 31, 2010 and 2011, respectively. We specifically identify inventory to write down by considering various factors including inventory age, forecasted demand, new product release schedules, market conditions and other related factors. Given our decision to significantly increase our inventory levels in an effort to avoid wafer shortages later in 2011, similar to those experienced in 2010, we placed considerable weight on our sales forecasts for the next nine to 12 months for each inventory item in evaluating our inventory value at December 31, 2010 and March 31, 2011. Estimating the value of our inventory requires considerable judgment. Changes in our judgment could have a material impact on our results of operations, financial position and cash flows.

Goodwill; Intangibles and Long Lived Assets

Goodwill represents the excess of the purchase price over the fair value of the net identified assets acquired in a business combination. We evaluate the goodwill which is assigned to our Indy reader IC reporting unit for impairment on an annual basis on September 30 or when indicators for impairment exist. Indicators of impairment would include the impacts of significant adverse changes in legal factors; market and economic conditions; the result of our operational performance and strategic plans; adverse actions by regulators; unanticipated changes in competition and market share; and the potential for sale or disposal of all or a significant portion of our business. A significant impairment could have a material adverse effect on our financial position and results of operations. No impairment charge for goodwill was recorded during the years ended December 31, 2008, 2009 and 2010. The assessment of whether our goodwill is impaired requires significant judgment. Changes in our judgment or the consideration of additional unknown factors could have a material impact on our results of operations, financial position and cash flows.

Long-lived assets include property and equipment life. We assess the carrying value of our long-lived assets and intangible assets with a definite life when indicators of impairment exist and recognize an impairment loss when the carrying amount of an asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment losses are measured by comparing the carrying amount of a long-lived asset to its fair value. Indicators of impairment would include the impacts of significant adverse changes in legal factors; market and economic conditions; the result of our operating performance and strategic plans; adverse actions by regulators; unanticipated changes in competition; and market conditions. The assessment of whether our intangible assets are impaired requires significant judgment. Changes in our judgment or the consideration of additional unknown factors could have a material impact on our results of operations, financial position and cash flows.

Identifiable intangible assets are comprised of purchased customer lists, patents and developed technologies. Identifiable intangible assets are amortized over their estimated useful lives, ranging from seven to eight years

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for customer lists, four years for developed technology and seven years for patents, using the straight-line method. Changes in the estimated useful lives of our intangible assets could have a material impact on our results of operations and financial position.

Property and equipment are recorded at cost. Depreciation is determined using the straight-line method over the estimated useful life of the assets. Additions and improvements that increase the value or extend the life of an asset are capitalized. Ordinary repairs and maintenance are expensed as incurred. Assets under capital leases and leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful life of the asset. Changes in the estimated useful lives of our property and equipment could have a material impact on our results of operations and financial position.

Income Taxes

We use the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when such assets and liabilities are recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the year that includes the enactment date. We determine deferred tax assets including net operating losses and liabilities, based on temporary differences between the book and tax bases of assets and liabilities. We believe that it is currently more likely than not that our deferred tax assets will not be realized and as such, a full valuation allowance is required.

We utilize a two-step approach for evaluating uncertain tax positions. Step one, recognition, requires us to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. If a tax position is not considered “more likely than not” to be sustained, no benefits of the position are recognized. If we determine that a position is “more likely than not” to be sustained, then we proceed to step two, measurement, which is based on the largest amount of benefit which is more likely than not to be realized on effective settlement. This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and financial reporting purposes. If actual results differ from our estimates, our net operating loss and credit carryforwards could be materially impacted.

At December 31, 2010, we had federal net operating loss carryforwards, or NOLs, of approximately $105.9 million and federal research and experimentation credit carryforwards of approximately $5.1 million, which may be used to reduce future taxable income or offset income taxes due. These NOLs and credit carryforwards expire beginning in 2020 through 2029.

Our realization of the benefits of the NOLs and credit carryforwards is dependent on sufficient taxable income in future fiscal years. We have established a valuation allowance against the carrying value of our deferred tax assets, as it is not currently more likely than not that we will be able to realize these deferred tax assets. In addition, utilization of NOLs and credits to offset future income subject to taxes may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986, or the Code, and similar state provisions. Events that cause limitations in the amount of NOLs that we may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50%, as defined by Code Section 382, over a three-year period. Utilization of our NOLs and tax credit carryforwards could be significantly reduced if a cumulative ownership change of more than 50% has occurred in our past or occurs in our future.

We do not anticipate that the amount of our existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Due to the presence of NOLs in most jurisdictions, our tax years remain open for examination by taxing authorities back to 2000.

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Fair Value Measurements

We record short-term investments and preferred stock warrant liabilities at fair value. We establish fair value of our assets and liabilities using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and a fair value hierarchy based on the inputs used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1—Quoted prices in active markets for identical instruments.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Whenever possible, we use observable market data and rely on unobservable inputs only when observable market data is not available. Our preferred stock warrants are categorized as Level 3 because they were valued based on unobservable inputs and our judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such financial instruments. We perform a fair value assessment of the preferred stock warrant inputs on a quarterly basis using the Black-Scholes model. The assumptions used in the Black-Scholes model are inherently subjective and involve significant judgment. Changes in our judgments could have a material impact on our results of operations and financial position. Any change in fair value is recognized as a component of other income (expense) on the statements of operations.

Stock-Based Compensation

We have granted stock options at exercise prices believed to be equal to the fair market value of the common stock underlying such options as determined by our board of directors, with input from management, on the date of grant. Because our common stock is not currently publicly traded, our board of directors exercises significant judgment in determining the fair market value of our common stock. Changes in our judgments could have a material impact on our results of operations and financial position. Members of our board of directors and management team have extensive business, financial and investing experience. In assessing the fair value of our common stock as of option grant dates, our board of directors considered numerous objective and subjective factors including:

• our financial projections and future prospects;

• the current lack of marketability of our common stock as a private company;

• the stock price performance of comparable public companies;

• the hiring of key personnel;

• the likelihood of achieving a liquidity event for the shares of common stock underlying the options, given prevailing market conditions;

• our results of operations, history of losses and other financial metrics

• conditions in our industry and the economy generally; and

• valuations of our common stock performed as of January 1, June 30, September 30 and December 31, 2010.

As of each stock option grant date listed below, our board of directors believes it made a thorough evaluation of the relevant factors to determine the fair market value of our common stock and accordingly set the exercise price of the options granted equal to its estimate of the fair value of our common stock determined as of such date. On each option grant date, our board of directors considered the most recent valuation of our common

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stock as one of several factors in estimating the fair market value of our common stock. In addition, our board of directors considered changes in our financial condition that had occurred subsequent to the previous valuation date, then current general economic and market conditions as described more fully below and the other objective and subjective factors described above. Based on these considerations, our board of directors also determined that no significant change in our business or expectations of future business had occurred as of each grant date since the most recent valuation that would have warranted a materially different determination of value of our common stock than that suggested by the valuation. The valuations were consistent with the guidance and methods outlined in the AICPA Practice Aid Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or AICPA Practice Aid, for all option grant dates listed below.

January 2010 Valuation. In conducting the January 2010 valuation of our common stock we used a two-step methodology. First we estimated the market value of invested capital, or MVIC, of us as a whole (which is defined as interest-bearing debt plus market value of preferred and common equity), and then we allocated the enterprise value to each element of the capital structure, including our common stock, to determine the fair value of a single share of common stock.

We estimated our MVIC using the market and guideline public company approaches. The market approach entailed analyzing acquisitions involving companies similar to us and our acquisition of the UHF RFID assets from Intel Corporation and applying the MVIC to revenue ratios implied by such acquisitions to our revenue projections. The market approach suggested that our MVIC was between $73.0 million and $126.5 million, and we used their average, $84.6 million.

The guideline public company approach entailed applying the stock price to revenue ratios of public companies similar to us to our revenue projections. The guideline public company approach suggested that our MVIC was between $38.2 million and $53.7 million, and we used their average, approximately $46.0 million. The valuation suggested by the guideline public company approach was less than that suggested by the market approach because it assumed the sale of our shares that represent a minority interest of our capital stock instead of the sale of control of us.

The resulting estimates of our MVIC were then allocated to the various securities that comprise our capital structure, using the Black-Scholes option-pricing model. This option pricing model treats the rights of the holders of preferred and common stock as equivalent to that of call options on any value of the enterprise above certain break points of value based on the claims of lenders and the liquidation preferences and rights of participation and conversion of the holders of preferred stock. To determine the break points, we made estimates of the anticipated timing of a potential acquisition of us and estimates of the volatility of our equity securities based on available information on volatility of stocks of publicly-traded companies similar to ours.

We applied the Black-Scholes option model based on a liquidity event that would occur one to five years in the future. We assumed volatilities of our common stock of 50% and 70%, which corresponds to the upper half of the range of the volatilities of common stock of the publicly-traded companies deemed to be similar to us. The risk-free interest rate was based on U.S. Treasury Securities matching the expected timing of the liquidity event. Based on this information, we determined the total value of each security. A discount was then applied to reflect the lack of marketability of our common stock based on put option analyses of the publicly-traded companies deeded to be similar to us. Such discounts ranged from 29% for a liquidity event assumed to occur in one year to 34% for a liquidity event assumed to occur in five years.

Finally, we considered two possible scenarios: (1) a change of control transaction and (2) the sale by a common stockholder of shares that represent a minority interest in a private company. At the time of the January 2010 valuation, we did not consider an initial public offering as a third potential liquidity event because we deemed the likelihood of such a scenario was remote. We applied a range of probabilities for the two scenarios, beginning with the probability of a change of control and sale of a minority interest of 80% and 20%, respectively, and ending with 40% and 60%, respectively. The fair market value of our common stock suggested by the January 2010 valuation was $0.03 to $0.08 per share.

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June 2010 Valuation. The June 2010 valuation was conducted using substantially the same methodology as the January 2010 valuation. We did not consider an initial public offering as a third potential liquidity event because, at the time of such valuation, the values suggested by such scenario appeared to be less favorable compared to a change of control transaction. The fair market value of our common stock suggested by the June 2010 valuation was $0.04 to $0.10 per share.

September 2010 Valuation. The September 2010 valuation was conducted using substantially the same methodology as the January 2010 valuation. We did not consider an initial public offering as a third potential liquidity event because, at the time of such valuation, the values suggested by such scenario appeared to be less favorable compared to a change of control transaction. The fair market value of our common stock suggested by the September 2010 valuation was $0.05 to $0.11 per share.

December 2010 Valuation. The December 2010 valuation was conducted using substantially the same methodology as the January 2010 valuation; however, in addition to considering a change of control transaction and sale of a minority interest in a private company, we also considered the possibility that we would complete an initial public offering of our common stock. For the purpose of the December 2010 valuation, we fixed the probability of the sale of a minority interest in a private company at 40% and applied a range of probabilities for the other two scenarios, beginning with the probability of a change of control and sale of a minority interest of a public company of 40% and 20%, respectively, and ending with 20% and 40%, respectively. The fair market value of our common stock suggested by the January 2010 valuation was $0.12 to $0.21 per share.

In connection with the preparation of our financial statements for the year ended December 31, 2010 and the three months ended March 31, 2011, we assessed our estimate of fair value of our common stock for financial reporting purposes given our improving financial performance and prospects, evolving belief during the second half of 2010 and the first quarter of 2011 that an initial public offering was increasingly viable and the generally improving conditions in the capital markets. In the process of this assessment, we evaluated the stock price-to-revenue multiples of public companies we deemed similar to us in light of our historical and forecasted financial results. While these multiples had been one of the factors we considered in connection with our prior valuations, in connection with the assessment of the estimate of the fair value of our common stock for financial reporting purposes we determined that it was more appropriate to give much greater weight to revenue multiples given the increased likelihood of an initial public offering. We did not consider stock price-to-earnings multiples of such companies because we did not believe they would be meaningful given our stage of development. As a result of such assessment, we determined that for financial reporting purposes the fair value of our common stock was higher than the board of directors’ fair market value estimate for each of the option grant dates from May 26, 2010 through February 24, 2011. As a result, we retroactively adjusted the fair value per common share as of each such grant date based on the progress of our business at each relevant date, giving particular emphasis to the amount of revenue for each quarter relative to the total historical and forecasted revenue for the period we assessed.

From January 1, 2010 through the date of this prospectus, we granted stock options with exercise prices and fair value assessments as follows:

Grant Date	Common Shares Underlying Options Granted		Exercise Price Per Share		Fair Value Per Common Share for Financial Reporting Purposes at Grant Date		Intrinsic Value Per Underlying Common Share
February 24, 2010		55,000	$	0.05	$	0.05	$	—
May 26, 2010		226,500		0.07		0.16		0.09
August 5, 2010		1,472,000		0.09		0.32		0.23
November 3, 2010		187,500		0.11		0.50		0.39
January 26, 2011		336,500		0.18		0.75		0.57
February 24, 2011		4,186,000		0.18		0.75		0.57
April 20, 2011		348,000		1.02		1.02		—

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Based on an assumed initial price to public of $             per share, the mid-point of the price range set forth on the cover page of this prospectus, the intrinsic value of stock options outstanding at March 31, 2011 was $             million, of which $             million and $             million related to stock options that were vested and unvested, respectively, at that date.

We account for stock-based compensation at fair value. Stock-based compensation costs are recognized based on their grant date fair value estimated using the Black-Scholes model. Stock-based compensation expense recognized in the statement of operations is based on options ultimately expected to vest and has been reduced by an estimated forfeiture rate based on our historical and expected forfeiture patterns.

Determining the fair value of stock-based awards at the grant date under the Black-Scholes model requires judgment, including estimating the value per share of our common stock, volatility, expected term and risk-free interest rate. The assumptions used in calculating the fair value of stock-based awards represent our best estimates based on management judgment and subjective future expectations. These estimates involve inherent uncertainties. If any of the assumptions used in the Black-Scholes model significantly change, stock-based compensation for future awards may differ materially from the awards granted previously.

We use the straight-line method of allocating compensation cost over the requisite service period of the related award. The expected term of options granted is based on historical experience of similar awards and expectations of future employee behavior. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We based our estimate of volatility on the estimated volatility of similar entities whose share prices are publicly available. We have not paid and do not anticipate paying cash dividends on our common stock; therefore, the expected dividend yield is assumed to be zero. Key assumptions utilized in estimating the fair values of stock-based awards are as follows:

	Year Ended December 31,						Three Months Ended March 31
	2008		2009		2010		2010		2011
Risk-free interest rates		2.7%-3.5%		2.2-3.0%		1.5%-2.8%		2.2%-2.8%		2.0%-2.6%
Expected term		6.0 years		5.3–6.3 years		5.0–6.3 years		5.0–6.3 years		5.0–6.3 years
Expected dividend yield	$	—	$	—	$	—	$	—	$	—
Volatility		70.0%		57.4%-58.8%		45.6%-46.6%		46.6%		45.3%-45.7%

The weighted-average grant date fair value per share of employee stock options granted during 2008, 2009 and 2010 was $0.30, $0.05 and $0.24, respectively. The weighted-average grant date fair value per share of employee stock options granted during the three months ended March 31, 2010 and 2011 was $0.02 and $0.61, respectively. The total compensation cost related to unvested stock option grants not yet recognized as of March 31, 2011 was $2.6 million, and the weighted-average period over which these grants are expected to vest is 3.8 years. The total fair value of options vested during the year was $389,000, $217,000 and $306,000 for 2008, 2009 and 2010, respectively. The total fair value of options vested during the three months ended March 31, 2010 and 2011 was $76,000 and $102,000.

Off-Balance Sheet Arrangements

Since inception, we have not had any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for another contractually narrow or limited purpose.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

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Quantitative and Qualitative Disclosures about Market Risk

The principal market risk we face is interest rate risk. We had cash, cash equivalents and short-term marketable securities of $6.7 million as of December 31, 2010 and $12.1 million as of March 31, 2011. The goals of our investment policy are liquidity and capital preservation; we do not enter into investments for trading or speculative purposes. Our investment policy allows us to maintain a portfolio of cash equivalents and investments in a variety of securities, including U.S. government agencies, corporate bonds and commercial paper issued under the FDIC Temporary Liquidity Guarantee Program and money market funds. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short term nature of our cash, cash equivalents and short-term marketable securities. Declines in interest rates, however, would reduce future investment income. A 1% decline in interest rates, occurring January 1, 2010 and sustained throughout the period ended December 31, 2010, would not have been material.

We are subject to interest rate risk in connection with the borrowings under our credit facility, which accrue interest at variable rates. As of March 31, 2011, our borrowings under our credit facility and mezzanine facility had a blended rate of 7.8%. As of December 31, 2010, our borrowings under our credit facility had a blended rate of 4.3%. Assuming the credit facilities is fully drawn and holding other variables constant, a 1% increase in interest rates, occurring January 1, 2011 and sustained throughout the period ended December 31, 2011, would result in an increase in annual interest expense and a decrease in our cash flows and income before taxes of approximately $240,000 per year.

Prices for our products are denominated in U.S. dollars and, as a result, we do not face significant risk with respect to foreign currency exchange rates.

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BUSINESS

Who We Are

Impinj is the leading provider of UHF RFID solutions for identifying, locating and authenticating everyday items. We believe our technology platform, known as GrandPrix, is the most comprehensive and widely adopted in our industry. GrandPrix’s key elements are Monza tag ICs, Indy reader ICs and Speedway readers and subsystems. RFID systems built on GrandPrix deliver real-time information about tagged items, thereby enabling applications and analytics designed to improve business decisions and enhance consumer experience. Leading retail, apparel, pharmaceutical, food and beverage, technology and logistics companies as well as government agencies rely on our GrandPrix platform. We are the technology leader in our industry, with 90 issued and allowed U.S. patents and 77 pending U.S. patent applications as of April 15, 2011. We have sold over two billion Monza tag ICs since its introduction in 2005, including 940 million in 2010 alone.

We focus exclusively on UHF RFID solutions. UHF RFID enables writing individualized information to and reading information from tagged items without line of sight and at longer range, higher speed, lower cost and with more automation than any competing technology. We embrace the global industry standard for UHF RFID, called UHF Gen2, which we extend through our leadership in the standards-setting process and enhance with our proprietary technologies and deep domain expertise. UHF Gen2 is the fastest growing segment of the RFID market. UHF Gen2 systems are well suited for high-volume, item-level applications that require low-cost, consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. VDC projects the number of UHF Gen2 tag ICs shipped will grow from 1.5 billion in 2010 to 40.0 billion in 2015, a compound annual growth rate, or CAGR, of 93.2%.

From 2009 to 2010, unit sales of our Monza UHF Gen2 tag ICs increased by 279%. We believe that Impinj leads the market in UHF Gen2 tag ICs, reader ICs and stationary readers with estimated 63%, 86% and 25% share, respectively, based on VDC data. We estimate that Impinj enables more than 70% of the UHF Gen2 reader market when we combine the share of our Speedway reader with that of other readers based on our Indy reader ICs. We believe that our market leadership position and the benefits and efficiencies end users derive, from UHF Gen2 systems are driving our rapid growth. For 2009, 2010 and the three months ended March 31, 2011, our revenue was $20.8 million, $31.8 million and $12.3 million, respectively, and our net losses from continuing operations were $9.9 million, $11.4 million and $1.8 million, respectively.

We sell to a broad and well-established ecosystem of more than 450 inlay manufacturers, reader OEMs, distributors, system integrators, VARs and other technology companies, as well as to end users. Our ecosystem relies on the elements of our GrandPrix platform to deliver UHF Gen2 solutions in wide-ranging markets, such as end users Walmart, for apparel inventory management, and Coca-Cola for product authentication in next-generation beverage dispensers, and system integrators such as LS Industrial Systems for tracking and authenticating pharmaceuticals, which we believe, based on our participation in the UHF Gen2 industry, were the largest consumers by volume of our IC products for such applications over 2009 and 2010.

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We believe current applications of UHF Gen2 represent a small portion of the potential for this technology. We envision a future when a broad array of everyday items are linked to networked information systems, thereby enabling significantly improved visibility, understanding and analysis of those items’ location and attributes. This global network of connected objects is often referred to as the “Internet of Things.” We believe that UHF Gen2 technology, powered by Impinj, is helping to make that vision a reality.

We use third-party foundries and subcontractors to produce our ICs and contract manufacturers to assemble our readers and subsystems. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and solutions while continuing to build our reputation as the UHF Gen2 leader.

RFID Industry

RFID technology has been employed for decades. Legacy RFID technologies, such as those that operate in the LF or HF bands, have been employed for years in specialized applications such as animal tagging and in security applications such as access cards. More recently, the market for UHF systems has grown rapidly as companies deploy enterprise-scale UHF RFID systems to realize the benefits and efficiencies those systems deliver. UHF Gen2 systems generally have lower power requirements, demonstrate superior performance, and may be deployed at lower cost compared to LF and HF technologies. These attributes, coupled with the single industry standard, make UHF Gen2 systems well suited for item-level, high-volume applications that require disposable tags. Unlike other semiconductor markets, we believe the consumable nature of UHF Gen2 tags will drive ongoing purchases and sustained tag volumes. Furthermore, we expect that a number of trends, including ubiquitous network connectivity, internet-enabled commerce and the need to identify, authenticate and track items in increasingly complex business environments will accelerate broader adoption of UHF Gen2 systems. VDC projects the number of UHF Gen2 tag ICs shipped will grow from 1.5 billion in 2010 to 40.0 billion in 2015, a CAGR of 93.2%.

Taxonomy of RFID

RFID systems may be classified by their operating frequencies and the means by which their tags obtain power and reply to readers. Most commercial systems operate in LF, HF or UHF radio bands. RFID tags are categorized as passive, battery-assisted passive or active based on their power source. Passive tags receive their operating power from the radio signals transmitted by an RFID reader and reply by reflecting information back to the reader. Battery-assisted passive tags power their internal electronics from a battery, but reply in the same manner as passive tags. Active tags use a battery to power both their internal electronics and their radio communications. Currently, we focus exclusively on solutions using passive, UHF Gen2 RFID.

The key performance characteristics that determine an RFID system’s suitability for a given application are identification rate, read and write range, write speed and cost. Identification rate is the rate at which a reader uniquely identifies tags when multiple tags are within that reader’s field of view. Identification rates can exceed 1,000 tags per second for UHF Gen2 systems but are typically less than 50 tags per second for legacy LF and HF systems. Read and write range measures the maximum communication distance between a reader and a tag when identifying and writing, respectively, and can exceed 30 feet for UHF Gen2 systems but is typically less than three feet for legacy LF and HF systems. Write speed is the rate at which an encoder can write all the requisite information to a tag, and can exceed 1,500 tags per minute for UHF Gen2 systems. For applications that consume large volumes of tags, tag cost is the dominant cost factor determining a system’s suitability. UHF Gen2 tags are typically much less expensive than LF and HF tags.

LF systems are typically used in applications such as animal tagging, access control and keyless automobile ignition systems. HF systems are known for their security features that protect tag data and are often used for access control, smart cards, e-passports and near-field communication, or NFC, used for payment transactions among other applications. Because neither LF nor HF systems possess the combination of speed, range and low cost that UHF Gen2 systems offer, these legacy systems are generally considered unsuitable for high-volume,

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item-level applications. In contrast, the attributes of UHF Gen2 systems make them well suited for high-volume, item-level applications that require consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. Nearly all UHF RFID systems entering deployment today implement the UHF Gen2 protocol, a single worldwide standard conceived and championed by end users, unlike LF and HF systems which are governed by multiple, competing standards conceived by technology vendors.

According to VDC, the markets for LF and HF RFID systems were $456.2 million and $1.2 billion, respectively, in 2010, while the market for UHF Gen2 systems was $333.8 million. The expected growth of the UHF Gen2 market significantly exceeds growth of the LF and HF markets. According to VDC, the LF and HF RFID markets are expected to grow at a CAGR of 4.9% and 18.4%, respectively, from 2010 to 2015, compared to 59.0% for UHF Gen2 for the same period.

Elements of a UHF Gen2 RFID System

The building blocks of a UHF Gen2 system are tags, readers and software. Tags are affixed to items and contain unique information about those items. Readers interrogate the tags and convey the item information to enterprise systems. Software performs tasks ranging from filtering redundant tag reads to analyzing the item information.

Tags. A tag includes a tag IC, an antenna, a substrate and finishing. Each tag contains a unique code that allows the item to which the tag is attached to be identified, authenticated and tracked. In some applications the tag may also store additional data, such as a unique identifier for the tag itself or more detailed information about the tagged item.

• Tag IC:  The tag IC includes a radio to communicate with a reader, a simple processor and memory.

• Antenna: The antenna, typically made from aluminum or silver ink, is formed on the substrate and electrically coupled to the tag IC.

• Substrate: The substrate to which the tag IC and antenna are affixed is typically made from either plastic or paper.

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• Finishing: A substrate with an antenna and an affixed tag IC is called an inlay. Some UHF Gen2 applications use an inlay with no additional finishing, while other RFID applications, for example consumable RFID-enabled apparel hang tags, require that the inlay be embedded in paper stock in a process known as conversion. A converted inlay is known as a tag or label.

Readers. A reader is a radio that communicates with tags, processes tag information and relays tag information to and from enterprise systems. A UHF Gen2 reader powers tags wirelessly; identifies individual tags; reads, writes, locks and in some instances disables tags; and communicates tag information over a network. A reader may also perform various advanced functions such as searching for tags that meet selection criteria (for example, search for all size 31×32 jeans) or reading product information from an inventoried tag. A reader may be based on discrete components or on an integrated reader IC. A reader requires an antenna to communicate over the air and a network connection to communicate with an enterprise system or other device.

Readers may be stationary, mobile or embedded. Stationary readers are often mounted to a wall or ceiling, such as at a loading dock. Mobile readers are typically specialized hand-held devices, but may also be included in devices such as forklifts and cell phones. Embedded readers are embedded within a host device, such as a point-of-sale terminal, or a product dispenser and identify tagged items for the host.

Software. UHF Gen2 systems use software on the reader, in host systems or devices that support the reader and in enterprise data systems that analyze tag information. On-reader software manages reader operations and performs tag-specific functions such as determining a tag’s direction of travel or writing an electronic product code, or EPC, number into a tag. Host software generally manages tag data, for example, correlating tag information from multiple readers to determine where a tag is located on a sales floor. Enterprise software analyzes tag data to drive business decisions such as determining when to restock store shelves or run promotions.

UHF Gen2 RFID

The development of the UHF Gen2 standard was, and continues to be, driven by end-user requirements. A critical end-user requirement is that UHF Gen2 be the single, worldwide standard for retail RFID. In contrast, technology providers have typically driven specifications for other RFID standards, often leading to competing standards that end users are reluctant to adopt. GS1 EPCglobal, a nonprofit industry association, created the UHF Gen2 standard and a corresponding EPC numbering system to assign unique numbers to UHF Gen2-tagged items. GS1 EPCglobal also created other standards and guidelines related to data storing, data sharing, reader operations and tag applications. As of March 31, 2011, GS1 EPCglobal had over 950 end-user members, including many of the world’s leading retail, apparel, logistics and pharmaceutical companies. UHF Gen2 was ratified by GS1 EPCglobal in 2004 and then by the International Standards Organization, or ISO, in 2006 as ISO 18000-6C. The next enhancement to the UHF Gen2 standard, known as Gen2 V2 and which GS1 EPCglobal has planned for ratification in 2012, will address tag security, authentication, loss prevention, file management and limiting traceability. End users require that Gen2 V2 be fully backward compatible with today’s Gen2 standard.

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The Growth of the UHF Gen2 Market

Beginning in the early 2000s retailers and consumer-goods companies piloted UHF Gen2 for pallet- and case-level tagging. Their primary goal was to improve the efficiency of their supply chains. Their initiatives failed to gain significant traction primarily because the merchandise suppliers bore most of the tagging costs while the retailers realized most of the benefits. In the mid-2000s a few leading retailers began investigating tagging individual items to improve store-floor visibility, particularly for apparel. In addition, others began item-tagging initiatives focused on food safety, pharmaceutical anti-counterfeiting and loss prevention. By 2010 some major retailers, including Walmart, Bloomingdale’s and J.C. Penney, began enterprise-wide UHF Gen2 deployments based on item-level tagging.

We believe that apparel retailers are adopting UHF Gen2 systems because of demonstrable benefits and efficiencies. UHF Gen2 systems can identify every tagged garment in a stack in a fraction of a second, enabling daily store-floor inventorying, even while customers remain in the store. Item-level, real-time inventory visibility allows retailers to reduce out-of-stocks and overstocks, carry less inventory, better meet consumers’ needs and make better business decisions. University of Arkansas studies demonstrate that RFID item tagging significantly improves store-floor inventory accuracy.

We believe demand for UHF Gen2 systems will grow both by further penetration into existing applications such as apparel tagging and by expansion into myriad other high-volume applications. In consumer retail, UHF Gen2 growth prospects include tagging of consumer electronics, cosmetics and jewelry. A number of governments have mandated UHF Gen2-based tagging of automobiles, pharmaceuticals and liquor. Manufacturing logistics, postal applications and food safety exhibit great promise. These examples represent just some of the applications that we believe will contribute to sustained market growth.

Our GrandPrix Platform

We believe that Impinj has the only UHF Gen2 technology platform, industry-leading product performance and leading market share in each of our tag IC, reader IC and reader product lines. Our GrandPrix platform tightly integrates numerous elements, including Monza tag ICs, reference tag antenna designs, reader antennas, Indy reader ICs, Speedway readers and subsystems, OEM reader reference designs, APIs, application software and services. Our ecosystem partners develop GrandPrix-based UHF Gen2 systems and deploy them at leading retail, apparel, pharmaceutical, food and beverage, technology and logistics enterprises. GrandPrix provides superior performance, proprietary system enhancements and a comprehensive development environment.

The following is a graphic depiction of our GrandPrix platform.

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Our integrated GrandPrix platform offers numerous benefits to our ecosystem partners and end users, including:

• Superior performance. We believe that each of our products, individually, has best-in-class performance, and when integrated together delivers the best system performance in the industry. We base our belief on both field experience and industry data, such as the January 2011 ABI Research passive UHF tag IC Vendor Matrix ranking that placed us first in both innovation and implementation. Just one example of best-in-class performance is the superior write speed of our Monza tag ICs, which allows our Source Tagging Platform, or STP, to encode Monza-based tags at rates that are able to keep pace with high-speed apparel and pharmaceutical manufacturing lines.

• Proprietary system enhancements. We use our deep domain expertise to solve the most difficult challenges in UHF Gen2 and embed our proprietary solutions into GrandPrix. For example, traditional UHF tags are not readable when the tag antenna is aligned end-on to the reader antenna. To solve this problem, we developed our patent-pending True3D technology that enables orientation-insensitive tags. As another example, many UHF Gen2 systems face the challenge of hard-to-read tags, such as a tag at the bottom of a stack of jeans on a metal shelf. To address this problem, we include our patent-pending TagFocus technology in our Monza tag ICs, Indy reader ICs and Speedway readers.

• Comprehensive development environment. We strive to empower our ecosystem partners to develop complete systems for end users and further their preference for our GrandPrix platform. For our Speedway and Indy products we offer development environments, easy-to-use APIs, SDKs, software drivers and libraries, upgrade agents, sample application code and application software. Additionally, we focus on training our ecosystem partners and providing them the know-how and tools they need to deliver complete systems to their customers. We also provide them with application notes and white papers and offer them web-based support and access to our product-application engineers.

Our Competitive Strengths

We are the leading provider of UHF Gen2 solutions and believe we can maintain this position by leveraging our competitive strengths, including:

• Our market and technology leadership. Our exclusive focus on the high-growth UHF Gen2 market and our resulting deep domain knowledge and systems engineering expertise has allowed us to become the market leader. Impinj leads the market in UHF Gen2 tag ICs, reader ICs and stationary readers with estimated 63%, 86% and 25% share, respectively, based on VDC data. We estimate that Impinj enables more than 70% of the UHF Gen2 reader market when we combine the share of our Speedway reader with that of other readers based on our Indy reader ICs. We believe that our products have been first-to-market in several UHF Gen2 product categories, including the first tag IC, the first high-performance reader IC and the first high-performance stationary reader. Our first-mover advantage has, in part, enabled us to establish and maintain our market-share leadership. We believe our exclusive focus on the UHF Gen2 market allows us to be more nimble, innovation-focused and better able to identify and capture opportunities.

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• Our platform approach. We believe that Impinj is the only company that provides an integrated UHF Gen2 product suite. When our ecosystem partners deploy GrandPrix-based systems as an integrated whole, end users benefit from system performance and ease-of-use that we believe cannot be equaled by “mix and match” implementations. In addition, the knowledge we gain from developing one component of a UHF Gen2 system often allows us to optimize other components while improving our domain expertise, which makes us an attractive partner in the critical “design-in” phase of end users’ vendor selection processes.

• Our intellectual property portfolio. We own a strong intellectual property portfolio with 90 issued and allowed U.S. patents and 77 U.S. patent applications as of April 15, 2011. These patents cover UHF Gen2 system design, tag ICs, reader ICs, readers, software, firmware and antenna designs. We also own several trademarks that protect our company and product brands. We expect these trademarks will increase in value as the UHF Gen2 market grows and as we continue to demonstrate our market leadership.

• Our standards leadership. We have taken leadership roles in establishing RFID standards at worldwide governing bodies, including GS1 EPCglobal. Our active role in driving standardization of RFID technology has enabled us to maintain our leadership in UHF Gen2 products and to promote the adoption of our technical innovations in the marketplace.

• Our broad and well-established ecosystem. We sell to an ecosystem of more than 450 inlay manufacturers, reader OEMs, distributors, system integrators, VARs and other technology companies. In addition, end users solicit our domain knowledge and systems engineering expertise to develop applications that are tailored to their needs. We leverage this understanding of end users’ needs to secure design wins with inlay manufacturers, reader OEMs and end users.

• Our capital-efficient operating model. We use third-party foundries and assembly subcontractors to produce our ICs, and we use contract manufacturers to assemble our readers and subsystems. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and new solutions, while continuing to build our reputation as the UHF Gen2 leader.

Our Strategy

We strive to accelerate UHF Gen2 market adoption and extend our GrandPrix platform’s leadership while growing revenue profitably. Key elements of our strategy are to:

• Deliver the most innovative UHF Gen2 solutions. We will continue to innovate to extend our significant UHF Gen2 technology leadership. By leveraging our end-user engagements, deep domain knowledge in UHF RFID and systems engineering expertise, we are well positioned to offer innovative, differentiated products and applications. Given the multi-year lifecycle of UHF Gen2 deployments, we believe that design wins earned today will engender continued customer preference for systems that employ our products in the future.

• Embrace and extend the UHF Gen2 standard. We intend to continue our active leadership role within GS1 EPCglobal because we believe this role enables us to extend the UHF Gen2 standard and influence its future direction. We believe that the insights we gain through our involvement in the standards-setting process allow us to deliver first-to-market, standards-compliant products with the potential for broad market acceptance. In addition, we believe our knowledge of these standards allows us to offer enhanced, proprietary product features that generate greater benefits and efficiencies for end users, justify premium pricing, deepen end-user reliance on Impinj-based systems and allow us to maintain leading market share.

• Commercialize new use cases. We intend to continue to actively engage customers and end users to identify key market needs and to develop or enable application-specific solutions that address large

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market opportunities. By expanding deployment of our UHF Gen2 solutions into new use cases and markets, we hope to accelerate growth of the markets for our products, maintain our market-leading position and further exploit the economies of scale as we grow.

• Expand our implementation and go-to-market partnerships. We intend to continue to broaden and deepen our relationships with inlay manufacturers, reader OEMs, distributors, VARs, system integrators, software providers and other technology companies, as well as with end users. By leveraging these relationships we expect to continue to identify, target and deliver complete solutions to end users in existing and new markets and applications.

Our Products

Our products include Monza tag ICs and associated antenna reference designs; Indy reader ICs and associated reference designs; Speedway readers and Speedway-based subsystems; reader antennas; application software; and non-recurring engineering, or NRE, developments.

Monza Tag ICs and Antenna Reference Designs

We introduced the first UHF Gen2 tag IC, Monza 1, in 2005, more than a year ahead of any competing UHF Gen2 IC offering. Over the past six years we have sold more than two billion Monza ICs, including over 940 million in 2010 alone. We offer a family of Monza ICs including standard-feature tag ICs targeted at applications that require an EPC code but little or no additional functionality and premium-feature tag ICs targeted at applications that require special functionality or additional memory and can accommodate higher pricing.

• Standard-feature ICs. Our standard-feature product line includes Monza 3, which has been in volume production since 2008, and its replacement Monza 5, which we released in April 2011. Monza 5 improves on Monza 3 with 33% greater range, three times greater write speed and unique serial numbers on each tag IC.

• Premium-feature ICs. Our premium-feature product line includes Monza 4D, 4E and 4QT. Monza 4D includes True3D, 76% greater read range than Monza 3 with a True3D antenna and a unique tag serial number. Monza 4E includes all the features of Monza 4D and adds support for alphanumeric EPCs. Monza 4QT includes all the features of Monza 4D, adds 512 bits of user memory and also offers QT technology. QT technology provides security features that address consumer privacy when a retailer uses Monza 4QT in electronic-article surveillance applications and that address data security when end users store sensitive information in user memory.

When used in conjunction with a GrandPrix-based reader, Monza 4 and Monza 5 offer the following additional patent-pending value-added features:

• TagFocus, which allows a GrandPrix-based reader to focus on identifying hard-to-read tags.

• FastID, which allows a GrandPrix-based reader to rapidly obtain the tag IC’s unique serial number for anticounterfeiting purposes.

• SafeWrite, which allows a GrandPrix-based reader to avoid data errors when encoding Monza tags, such as on high-speed manufacturing lines.

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We sell most Monza tag ICs in wafer form. Our customers use specialized machines to pick the ICs from a wafer and attach each IC onto an antenna to form an inlay.

Monza wafer	Monza-based tag

We also sell Monza ICs in packaged form for high-reliability applications such as inlays built on printed-circuit boards. We provide reference antenna designs for a variety of applications, including True3D designs for long-range, high-performance designs for applications like tire tagging and miniature designs for short-range applications like jewelry tagging. We also provide reference designs for specialized applications such as the tagging of metal objects or liquid-filled containers.

Indy Reader ICs and Reference Designs

We entered the reader IC market in 2008 by acquiring Intel’s reader IC business. Our product line today comprises three Indy reader ICs, the R500, R1000 and R2000. The R500 is our entry-level IC focused on embedded applications. The R1000 is our mid-range IC focused on handheld reader applications. The R2000 is our flagship offering focused on stationary reader applications. All three ICs incorporate the key radio functionality needed to implement a UHF Gen2 reader, and all three employ a common API, development environment, drivers and libraries.

We strive to create and promote a preference for our GrandPrix platform among our reader OEM partners by reducing the complexity and cost of developing an Indy-based reader and by increasing the overall performance of solutions built on Indy. We support our Indy product line with easy-to-use reference designs, SDKs, host libraries and software, sample application code and demo applications. We offer tools for our reader OEM partners to develop on multiple host platforms and environments including WinCE and WinXP. Our development environment allows our reader OEM partners to rapidly develop Indy-based products, and our Indy software natively supports the value-added features of our Monza tag ICs.

Indy reader IC family

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Indy ICs are used today in a wide range of applications and products including stationary high-performance readers such as Motorola’s FX7400, handheld readers typically used on a store floor for real-time inventory such as Motorola’s MC3090-Z, ThingMagic reader modules commonly used in printers for label encoding and embedded applications such as Coca-Cola’s Freestyle beverage dispenser, all pictured below.

Speedway Readers and Speedway-based Subsystems

We introduced the first high-performance four-port stationary UHF Gen2 reader, Speedway Classic, in 2005. A four-port reader supports up to four antennas, each of which can point in a different direction to identify tags over a wide field of view. We introduced Speedway Revolution as an even higher performance replacement for Speedway Classic in 2009. We offer two versions of Speedway Revolution, the four-port R420 and the two-port R220. Both allow power-over-Ethernet, or PoE, operation, which end users value because PoE operation eliminates the need to run electrical power to the reader. Speedway Revolution readers are certified for use in over 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and each country in the European Union.

Typically, a Speedway Revolution reader is affixed to a wall or ceiling, such as at a dock door, or embedded in another product, such as a medical cabinet or tool chest. Speedway Revolution does not use Indy, but instead employs a discrete radio IC that we designed to provide higher levels of performance. We sell Speedway Revolution to our ecosystem partners who need the highest performance reader. Some of these ecosystem partners also manufacture their own Indy-based readers; and they include Speedway Revolution in their product line to offer their customers access to the highest performance reader.

We also offer xPortal, a Speedway-based subsystem that functions as an integrated portal reader for entry points such as dock doors. xPortal integrates into a single package, a Speedway Revolution reader and a dual linear phased-array, or DLPA, antenna system. DLPA allows xPortal to electrically sweep its radio beam up and down, thereby providing RFID coverage for an entire doorway in an easy-to-mount, PoE-enabled package.

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Speedway® Revolution R420 reader	Speedway® xPortal integrated portal reader

We support our Speedway product line with SDKs, libraries and software, sample application code and demo applications. Our software development kit, OctaneSDK, allows reader OEM partners to develop applications for Speedway Revolution quickly. We support Monza’s value-added features natively in Speedway Revolution and incorporate a set of patented features to build and maintain OEM partner loyalty to our Speedway product line. One example of such a feature is our Autopilot technology, which dynamically tunes the reader settings for best performance on millisecond timescales. Autopilot self-adjusts to the reader environment, optimizes itself based on the number of tags present in each reader antenna’s field of view and reduces RF transmissions when no tags are present.

Reader Antennas

We sell a variety of special purpose antennas. Some applications require a reader antenna that does not exist on the market. For example, in 2007 we developed a reader antenna that could fit on a pharmaceutical line, focus the transmitted energy to read a single tagged bottle at the time, and read the tag reliably even if the bottle contained a liquid. No UHF reader antennas could accomplish all three objectives. For this and other applications, we invented near-field UHF reader antennas that inductively couple to a UHF Gen2 tag. Our invention of near-field UHF spawned a product family that today includes several antennas, each optimized for a challenging application. For example, we designed the Guardwall antenna solution shown below to read each bottle in a case of 48 pharmaceutical bottles on a conveyor belt. The lobes show regions where the power is sufficient to read the tags. We provide specialized antennas like Guardwall as part of our GrandPrix platform along with custom antenna design services when a suitable antenna does not exist.

Software

UHF Gen2 systems use software on the reader, in host systems or devices that support the reader and in enterprise data systems that analyze tag read information. We offer two software packages today that focus on tag-specific functions and run either on the reader or on the host that supports the reader. The first software package determines a tag’s direction-of-travel. The second software package is our Source Tagging Platform, or STP, which performs EPC and proprietary number management and tag encoding. STP, when used with Monza tag ICs, enables tag encoding at rates of 1,500 tags per minute, allowing in-line encoding on high-speed apparel or pharmaceutical manufacturing lines without slowing down the line.

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NRE Developments

To encourage the widespread adoption of GrandPrix and to extend the reach and capabilities of our product portfolio we sometimes perform NRE-funded product, tool or software developments. We typically engage in NRE developments for our ecosystem partners, but on certain occasions we also perform them for end users if the development will generate significant revenue or significantly expand our product portfolio. We also offer a service called FastTrack by which an ecosystem partner can engage us for a small paid development like designing a Monza or Speedway antenna for a specific application.

These NRE-based developments allow us to expand our know-how and other intellectual property in ways that often have broad applicability across end markets. Although we may grant an ecosystem partner or end user time- and application-limited exclusivity with respect to the technology we develop, we retain ownership of the intellectual property developed in connection with such engagements.

Our NRE developments typically require a significant customization and expertise that system integration companies may not be able to provide. These implementation processes typically are lengthy and can require us to incur design and development expenditures, although customers typically fund such efforts. After securing a design win or initiating a pilot program, the typical time from early engagement by our sales force to actual product introduction runs from three months to over a year. Given that redesign and implementation of UHF RFID systems can be time consuming and expensive, once our products are deployed by strategic end users, our experience has been that they prefer to continue employing our solution for the life of the system, which can be two to five years or more, rather than switch to a competitor’s offering.

Manufacturing

Monza Tag ICs

TSMC is our sole source for fabricating Monza wafers at facilities in Taiwan, Shanghai, China and Camas, Washington. We work with TSMC solely on a purchase-order basis and do not have a long-term agreement with them for wafer fabrication. We test the wafers either at our office in Seattle, Washington or at a subcontractor in Thailand. We rely on multiple contractors to post-process the wafers into Monza ICs. With limited exceptions, all of our contractors for Monza ICs work on a purchase-order basis.

Indy Reader ICs

TowerJazz fabricates wafers for our Indy ICs in Newport Beach, California. A subcontractor assembles and packages our Indy ICs and another subcontractor performs packaged-part testing. TowerJazz and all Indy subcontractors work on a purchase-order basis.

Speedway Readers

Plexus manufactures our Speedway readers in Penang, Malaysia. Our agreement with Plexus is non-exclusive and renews automatically each year, subject to each party’s right to terminate upon 180 days notice. A subcontractor assembles and tests the Speedway printed circuit boards for us and another subcontractor manufactures our reader antennas and performs box-build and test for us. Plexus and both subcontractors work on a purchase-order basis.

Standards

To encourage widespread market adoption of UHF RFID technology, we have participated in the development of industry standards and we have designed our solutions to comply with these standards. Most significantly, over the past nine years we, our customers, our partners and our competitors have collaborated to develop UHF RFID standards in both GS1 EPCglobal and ISO. During this time GS1 EPCglobal and ISO have

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worked together collaboratively. When GS1 EPCglobal developed UHF Gen2, ISO approved the protocol for international standardization as ISO 18000-6C. Members of the World Trade Organization are required to adopt international standards, which includes ISO 18000-6C.

Like most others in the UHF RFID industry, we have focused our efforts on GS1 EPCglobal because (1) GS1 EPCglobal standards are based on end user requirements, (2) GS1 EPCglobal enforces a predominantly royalty-free intellectual property policy and (3) GS1 EPCglobal’s standards development process tends to be faster than the corresponding process in ISO. We have sought and maintained leadership positions in GS1 EPCglobal during the last nine years, including the role of project editor for UHF Gen2.

GS1 EPCglobal is currently developing an enhanced version of UHF Gen2, again based on end-user requirements, which we anticipate will be known as “UHF Gen2 Version 2” or “Gen2 V2.” The end-user requirements mandate that Gen2 V2 be backward compatible with the original UHF Gen2. UHF Gen2 V2 will expand on UHF Gen2’s focus on pallet and case tagging by adding features for item-level tagging. The new features anticipated for Gen2 V2 include security, loss prevention, file management, authentication and tag untraceability. We expect that ISO will adopt and standardize Gen2 V2 as the next generation of 18000-6C (which ISO has indicated they will rename to 18000-63).

We have also participated in GS1 EPCglobal’s development of a number of other standards, such as the tag data standards, or TDS, and the low-level reader protocol, or LLRP. Likewise, we have participated in the development of a number of ISO standards which do not have a correlate within GS1 EPCglobal. Finally, we have participated in other standards activities and industry organizations such as the Voluntary Interindustry Commerce Solutions Association, or VICS.

In the course of participating in the development of GS1 EPCglobal and ISO RFID specifications including UHF Gen2, Gen2 V2, TDS, LLRP and others, we have agreed to license certain patents as described in greater detail in the section captioned “—Intellectual Property and Proprietary Rights.”

Government Regulation

Government regulations regarding radio devices operating in the UHF band vary worldwide and require that our Speedway readers and subsystems be certified in each jurisdiction where they will operate. For example, U.S. radio regulations fall under the oversight of the Federal Communications Commission. Speedway Revolution is certified for operation pursuant to FCC rules, which allow unlicensed use in the U.S. and its territories. Currently, Speedway Revolution readers are certified for use in over 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and each country in the European Union. We monitor evolving RF spectrum regulations in those countries and we seek certification in new countries that we believe present compelling market opportunities. We also monitor worldwide regulatory developments in RFID privacy, health and safety.

Intellectual Property and Proprietary Rights

We seek to protect our proprietary technologies by applying for patents, retaining trade secrets and defending, enforcing and using our intellectual property rights where appropriate. As of April 15, 2011, our intellectual property portfolio included 90 issued and allowed U.S. patents and 77 pending U.S. patent applications. Our issued patents will expire between 2014 and 2030. To protect confidential technical information that is not subject to patent protection, we rely on trade secret law and enter into confidentiality agreements with our employees, customers, suppliers and partners.

We have not sought patent protection in countries outside of the United States. Because most RFID products are used or imported into the United States, we determined that the costs associated with pursuing foreign patents outweighed the potential benefits. However, by not seeking patent protection outside the United States for our intellectual property, our ability to assert our intellectual property rights outside the United States may be limited.

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We have occasionally engaged in licensing and other activities aimed at generating income and other benefits from our intellectual property assets. In June 2008, we sold our nonvolatile memory, or NVM, intellectual property business line for approximately $5.2 million in cash. The following month we acquired Intel Corporation’s UHF RFID reader IC business. The transaction with Intel included a perpetual, royalty-free license from Intel to us for intellectual property incorporated in the Indy reader ICs. We currently continue Intel’s practice of licensing the source code necessary to operate the Indy reader ICs to our Indy customers. Under the license, the source code and any modifications made by our customer to the source code may be used only with Indy. We obtain a grant back to any source-code modifications made by our Indy customers and either a license to their intellectual property in the source code or a covenant not to sue us on the source code. We also enable interoperability between our products and third-party products by licensing certain interfaces to developers in our OctaneSDK.

While our patents and trade secrets constitute valuable assets, we do not view any one of them as being material to our operations as a whole. Instead, we believe that the combination of our patents and trade secrets creates an advantage for our business.

In addition to developing and protecting our own patents and trade secrets, we have entered into licensing, broad-scope cross licensing and other agreements authorizing us to use patents and other intellectual property owned by third parties or to operate within the scope of patents owned by third parties. For example, in the course of participating in the development of GS1 EPCglobal UHF RFID specifications including UHF Gen2, UHF Gen2 V2, TDS, LLRP and others, we have agreed to license those of our patents that are necessarily infringed by the practice of these specifications on a royalty-free basis to other GS1 EPCglobal members, subject to reciprocal royalty-free rights from those other members. Currently, approximately eight of our patents and pending applications are necessary for the practice of the UHF Gen2 specification. In addition, in the course of participating in ISO, we have agreed to grant to all users worldwide a license to those of our patents that are necessarily infringed by the practice of a variety of RFID standards, including at frequencies other than UHF, on reasonable and nondiscriminatory terms, again subject to reciprocity.

We own a number of trademarks and develop names for our new products and secure trademark protection for them, including domain name registration, in relevant jurisdictions.

Research and Development

We have committed, and expect to continue to commit, significant resources to developing new solutions, improving product performance and reliability and reducing costs. We direct our research and development efforts primarily to the development of our Monza tag ICs, Indy reader ICs, Speedway readers and reader subsystems, antennas, application software and NRE-based engineering projects. We currently perform all research and development and almost all of our product development internally. We have assembled a team of highly skilled engineers with expertise in UHF RFID. As of March 31, 2011, we had approximately 66 employees in research and development, of which 10 hold a Ph.D. degree and 25 hold a masters degree. Our research and development expense was $12.3 million, $9.5 million and $10.7 million in 2008, 2009 and 2010, respectively. In addition, a substantial portion of our development, service and licensing revenue represents customer-sponsored research activities, which accrue to our benefit in the form of development of new products and techniques.

We regularly review our business portfolio and our related new product and technology development opportunities and reallocate our research and our development resources accordingly. For products targeting established markets, we evaluate our research and development expenditures based on business need and risk assessments. For break-through technologies and new market opportunities, we look at the size of the potential addressable market and the strategic fit and synergies with the rest of our portfolio. We allocate our research and development to maintain a mix of emerging, growth and mature businesses.

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Selling and Marketing

We sell our products through multiple channels worldwide using both a direct sales force and a network of international distributors. We organize our sales personnel according to three geographies: Americas, APAC and EMEA. Impinj personnel in each region are responsible for managing customer relationships, design-ins and product promotion. We maintain sales offices in Seattle, Washington, Shanghai, China, Bentonville, Arkansas and Austin, Texas. We employ additional field-based account executives that cover the United States, Taiwan, Malaysia and Europe. We sell to more than 450 inlay manufacturers, reader OEMs, distributors, system integrators, VARs and other technology companies, as well as to end users. Our sales force seeks to develop strong relationships with channel partners that possess domain expertise in specific industries and our technical marketing, product and field-application engineers actively engage potential customers during their design processes to introduce them to the capabilities and advantages of our GrandPrix platform.

Monza tag IC sales to Avery Dennison accounted for 22%, 10% and 12% of our total revenue in 2010, 2009 and 2008, respectively. Monza tag IC sales to UPM accounted for 14% and 11% of total revenue in 2010 and 2008, respectively. Custom development work and reader sales to Walmart accounted for 40% and 50% of our total revenue in 2009 and 2008, respectively.

We generate a substantial majority of our revenue from the sale of Monza tag ICs, Indy reader ICs and Speedway readers. Each of these product families has a distinct distribution channel.

Monza Tag ICs

We sell approximately 95% of Monza tag ICs directly to inlay manufacturers and sell the remainder through distributors to smaller inlay manufacturers. We sell Monza primarily as finished wafers and in smaller volumes as packaged Monza ICs.

Indy Reader ICs

We sell approximately 78% of Indy reader ICs through distributors to reader OEM and sell the remainder directly to reader OEMs. These OEMs, in turn, supply readers to systems integrators or end users.

Speedway Readers

We sell approximately 62% of Speedway readers through a two-tier distribution channel in which we sell readers to geographically-focused distributors that in turn sell to VARs and system integrators. We sell the remainder to premier partners and, rarely, to an end user directly. We strive to manage our channel relationships so that a prospective customer will find an appropriate supply source.

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Competition

The market for our solutions is highly competitive, and we believe that competition will increase as the UHF Gen2 market grows and as the underlying technology continues to advance. We compete with both development-stage and established companies, some of which may have much longer operating histories, greater name recognition and substantially greater financial, technical and operational resources than us. The following table summarizes our principal competitors and the competitive factors for each of the key product lines in our GrandPrix platform.

Product	Principal Competitors	Competitive Factors
Tag ICs	•      Alien Technology Corporation •      NXP B.V.	•      Performance and reliability •      Features and functionality •      Ease of inlay manufacture •      Customer support and reference designs •      Supplier reputation and reliability •      Product portfolio •      Inlay certification in end-user applications •      Price
Reader ICs	•      austriamicrosystems AG •      Phychips Inc.	•      Performance and reliability •      Features and functionality •      Ease of use •      Customer support, development tools, APIs and reference designs
		•      Supplier reputation and reliability •      Product portfolio •      OEM product certification in end-user applications •      Price
Readers	•      Alien Technology Corporation •      FEIG ELECTRONIC GmbH •      Intermec Technologies Corporation •      Motorola Solutions, Inc. •      Sirit Inc., a unit of Federal Signal Corporation •      ThingMagic, a division of Trimble Navigation Limited	•      Performance and reliability •      Features and functionality •      Ease of use •      Customer support, development tools, APIs and reference designs •      Supplier reputation and reliability •      Product portfolio •      Certification in end-user applications •      Price

We believe that GrandPrix is the only UHF Gen2 platform in the industry. Our competitors provide certain components of a complete RFID system, but we believe we are the only vendor that provides tag ICs, reader ICs and readers. Our platform gives us numerous competitive advantages. We believe systems that use GrandPrix as an integrated whole are easier to deploy, and they outperform “mix and match” implementations using competing products. We have a competitive cost position but choose not to be the price leader because we believe that our products and our platform offer superior performance and reliability than the competition.

While we believe that we compete favorably based on the factors described above, many of our competitors have greater financial, business development and marketing resources than we have. Our future competitiveness will depend upon our ability to design, develop and market compelling GrandPrix-based solutions. In addition, our competitive position will depend on our ability to continue to attract and retain talent while protecting our

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intellectual property. For additional information, see the section of this prospectus captioned “Risk Factors—The market in which we operate is highly competitive, and if we fail to compete successfully, our business and results of operations would be significantly harmed.”

Employees

As of March 31, 2011, we had 142 employees, 14 of whom hold Ph.D. degrees and 66 of whom were engaged in full time research and development activities. None of our employees is represented by a labor union and we consider our employee relations to be good.

Facilities

Our principal executive office is located in Seattle, Washington. The office has 37,716 square feet and the office lease expires in August 2016, subject to our option to extend for either three or five year additional years. The annual lease payments for this office are approximately $476,000. We also lease sales offices in Shanghai, China, Bentonville, Arkansas and Austin, Texas, and have satellite engineering offices in Rancho Cordova, California and Newport Beach, California. We believe that the facilities we currently lease are sufficient for our current and anticipated future needs.

Legal Proceedings

As of the date of this prospectus, we are not a party to any material legal proceedings with respect to us or any of our material properties. In the normal course of business, we may from time to time be named as a party to various legal claims, actions and complaints, including matters involving employment, intellectual property or others. It is impossible to predict with certainty whether any resulting liability would have a material adverse effect on our financial position, results of operations or cash flows.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth the names, ages and positions of our executive officers and directors as of June 16, 2011:

Name	Age		Position
William T. Colleran, Ph.D.		49	Director, President and Chief Executive Officer
Evan Fein		39	Senior Vice President and Chief Financial Officer
Chris Diorio, Ph.D.		49	Director, Chairman and Chief Technology Officer
Steve Voit		53	Executive Vice President Sales & Marketing
John Quist		49	Senior Vice President Operations
Tom A. Alberg (1)(3)		71	Director
Stephen D. Arnold, Ph.D. (2)(3)		60	Director
Clinton Bybee (1)(2)(3)		48	Director
Gregory Sessler (1)		58	Director
Albert Yu, Ph.D. (2)		70	Director

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Nominating and Governance Committee

Executive Officers

William T. Colleran, Ph.D., has served as our chief executive officer, president and a member of our board of directors since February 2001. Prior to joining us, from July 2000 to February 2001, Dr. Colleran served as director of business development for Broadcom Corporation, a fabless semiconductor company. From February 1999 to July 2000 Dr. Colleran served as chief executive officer for Innovent Systems, Inc., a bluetooth fabless semiconductor company, which he led from the company’s inception through sale to Broadcom Corporation in July 2000. From August 1996 to February 1999, Dr. Colleran worked for Merrill Lynch’s Technology Investment Banking Group. Dr. Colleran received a Bachelor of Science degree from the University of Notre Dame, a Master of Science degree from University of Southern California, and a Doctor of Philosophy degree from University of California, Los Angeles, all in electrical engineering, and a Juris Doctor degree from Harvard Law School. We believe Dr. Colleran possesses specific attributes that qualify him to serve as a member of our board of directors, including the perspective and experience he brings as our chief executive officer and president, which brings operational expertise to our board of directors.

Evan Fein has served as our senior vice president and chief financial officer since November 2010 and previously served as our senior vice president finance and administration from June 2009 to November 2010, as our vice president finance and administration from February 2004 to June 2009 and as our director of finance from October 2000 to February 2004. Prior to joining us, Mr. Fein worked at T-Mobile, a wireless telecommunications provider (formerly VoiceStream Wireless) managing the company’s financial planning and corporate development activities. Mr. Fein received a Bachelor of Science degree in mathematics from the University of Washington and a Master of Business Administration degree from the University of Washington.

Chris Diorio, Ph.D., is one of our co-founders and has served as chairman of our board of directors since April 2000, chief technology officer since November 2006, previously served as our vice president of engineering from June 2004 to November 2006 and as a consultant to us from April 2000 to June 2004. He also serves as an associate professor of computer science and engineering at the University of Washington, as a

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co-chair of the GS1 EPCglobal Hardware Action Group and as project editor for the UHF Gen2 specification. Dr. Diorio received a Bachelor of Arts degree in physics from Occidental College and Master of Science degree and a Doctor of Philosophy degree in electrical engineering from the California Institute of Technology. We believe Dr. Diorio possesses specific attributes that qualify him to serve as a member of our board of directors, including the perspective and experience he brings as our chief technology officer and one of our founders and his leadership role in GS1 EPCglobal, which brings historic knowledge, operational expertise and continuity to our board of directors.

Steve Voit has served as our executive vice president sales and marketing since September 2008 and previously as a strategic marketing consultant for us from November 2007 to September 2008. Prior to joining us, from November 2002 to September 2007, Mr. Voit served as vice president of business and channel development at General Dynamics Itronix, a computer hardware company. From June 2001 to August 2002, Mr. Voit served as vice president of Sales at NetMotion Wireless, a wireless software company. Mr. Voit received a Bachelor of Science degree in mechanical engineering from the University of Colorado and a Master of Business Administration degree from Northwestern University.

John Quist has served as our senior vice president operations since March 2006. Prior to joining us in March 2006, Mr. Quist worked at Cypress Semiconductor, a semiconductor company, from May 1988 to March 2006, most recently as director of manufacturing. Mr. Quist received a Bachelor of Science degree in industrial technology from San Jose State University.

Board of Directors

Tom A. Alberg has served as a member of our board of directors since September 2000. Mr. Alberg has been a managing director of Madrona Venture Group, LLC, a venture capital firm, since September 1999, and a principal in Madrona Investment Group, LLC, a private investment firm, since January 1996. From June 1996 to the present, Mr. Alberg has been a director of Amazon.com, Inc., and from February 1998 to August 2006, he was a director of Advanced Digital Information Corporation. Mr. Alberg received a Bachelor of Arts degree in international affairs from Harvard College and a Juris Doctor degree from Columbia Law School. We believe that Mr. Alberg possesses specific attributes that qualify him to serve as a member of our board of directors, including his experience as a venture capitalist investing in technology companies, experience with emerging technologies, experience as a director of public companies, as well as his skills relating to financial statement and accounting matters.

Stephen D. Arnold, Ph.D., has served as member of our board of directors since May 2002. He is a co-founder and venture partner of Polaris Venture Partners, a venture capital firm established in May 1995. From August 2008 to the present, Dr. Arnold has been a director of Rainmaker Entertainment Inc. Prior to helping start Polaris, Dr. Arnold served as a special advisor to Burr, Egan, Deleage & Co. from September 1994 to March 1995. From September 1993 to September 1994, he served as vice president of Broadband Media Applications at Microsoft Corporation and from August 1991 to September 1993, he served as president and chief executive officer of Continuum Productions (now Corbis). Prior to Continuum, Dr. Arnold held several management and executive positions at Lucasfilm Ltd. from January 1984 to July 1991, including serving as vice president and general manager of LucasArts Games and Learning divisions and as vice president of the New Media Group. He is co-founder and vice chairman of the board of directors of the Ltd from January 1984 to July 1991. He continues to serve as vice chairman of the board of directors of the George Lucas Educational Foundation. Dr. Arnold received a Bachelor of Science degree in psychology from Macalester College, a Master of Arts degree in comparative psychology and a Doctor of Philosophy degree in developmental psychology from the California Institute of Integral Studies in San Francisco. We believe that Dr. Arnold possesses specific attributes that qualify him to serve as a member of our board of directors, including his experience with a wide range of technology companies and the venture capital industry.

Clinton Bybee has served as member of our board of directors since January 2008. He is a managing director of ARCH Venture Partners, a venture capital firm, which he joined as a co-founder in June 1994. Previously,

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Mr. Bybee worked with ARCH Development Corporation, managed a venture investment fund for the State of Illinois and was a production engineer with Amoco Corporation. Mr. Bybee received a Bachelor of Science degree in petroleum engineering from Texas A&M University and a Master of Business Administration degree from the University of Chicago. We believe that Mr. Bybee possesses specific attributes that qualify him to serve as a member of our board of directors, including his experience with a wide range of technology companies and the venture capital industry.

Gregory Sessler has served as member of our board of directors since April 2011 and currently serves as chairman of our audit committee. Mr. Sessler has served as the chief operating officer since December 2008 and has served as the executive vice president and chief financial officer since 2002 of Spiration, Inc., which became a wholly-owned subsidiary of Olympus Corporation of the Americas in July 2010. Prior to joining Spiration, Mr. Sessler served as senior vice president and chief financial officer of Rosetta Inpharmatics from March 2000 until its acquisition by Merck & Co., Inc. in July 2001. From June 2008 to the present, Mr. Sessler has been a director and chairman of the audit committee of Marina Biotech, Inc. He also serves on the executive committee and is a past chairman of the board of directors of the Washington Biotechnology and Biomedical Association. Mr. Sessler received a Bachelor of Science degree in accounting from Syracuse University and a Master of Business Administration degree from the Stanford Graduate School of Business. We believe that Mr. Sessler possesses specific attributes that qualify him to serve as a member of our board of directors, including his skills relating to financial statement and accounting matters and experience as a director and audit committee chairman of a public company.

Albert Yu, Ph.D., has served as member of our board of directors since December 2005. He is chairman of OneAngstrom LLC and has been active in investing and mentoring high technology companies. Dr. Yu retired from Intel Corporation in 2002, after almost 30 years with the company. He had served as senior vice president, member of the Corporate Management Committee and general manager of Intel’s microprocessors, chipsets and software business for over 16 years. Prior to Intel, he was with Fairchild R&D Lab, where he conducted research and development of solid-state devices and circuits. From August 2005 to the present, Dr. Yu has been a director of PDF Solutions, Inc., and from February 2004 to the present, he has been a director of Preferred Bank. Dr. Yu received a Bachelor of Science degree from the California Institute of Technology, a Master of Science degree and Doctor of Philosophy degree from Stanford University, all in electrical engineering. We believe that Dr. Yu possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive knowledge and experience of the platform and semiconductor industry and service as a director and advisory board member for many companies and venture capital firms.

Board Composition and Risk Oversight

Our board of directors is currently composed of seven members. Five of our directors are independent within the meaning of the independent director guidelines of             . Drs. Colleran, Arnold and Diorio, and Messrs. Alberg, Bybee and Sessler were initially elected to our board of directors pursuant to a voting agreement that will terminate automatically by its terms upon the completion of this offering. Our certificate of incorporation and bylaws to be in effect upon the completion of this offering provide that the number of our directors shall be at least one and will be fixed from time to time by resolution of our board of directors. There are no family relationships among any of our directors or executive officers.

In 2010, our board of directors met 11 times.

Immediately prior to this offering, our board of directors will be divided into three classes of directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose terms are then expiring. The terms of the directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders to be held during the years 2012 for the Class I directors, 2013 for the Class II directors and 2014 for the Class III directors.

• Our Class I directors will be Steve Arnold, Chris Diorio and Gregory Sessler.

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• Our Class II directors will be Clinton Bybee and Albert Yu.

• Our Class III directors will be Tom Alberg and William Colleran.

The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control. See the section of this prospectus captioned “Description of Capital Stock—Anti-Takeover Effects of Delaware and Washington Law and Our Certificate of Incorporation and Bylaws” for a discussion of other anti-takeover provisions found in our certificate of incorporation.

Our board of directors has an active role, as a whole and also at the committee level, in overseeing the management of our risks. The board of directors is responsible for general oversight of risks and regular review of information regarding our risks, including credit risks, liquidity risks and operational risks. Our compensation committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Our audit committee is responsible for overseeing the management of our risks relating to accounting matters and financial reporting. Our nominating and corporate governance committee is responsible for overseeing the management of our risks associated with the independence of our board of directors and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire board of directors is regularly informed through discussions from committee members about such risks. Our board of directors believes its administration of its risk oversight function has not affected the board of directors’ leadership structure.

Director Independence

Upon the completion of this offering, our common stock will be listed on             . Under the rules of             , independent directors must comprise a majority of a listed company’s board of directors within a specified period of the completion of this offering. In addition, the rules of             require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under the rules of             , a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

To be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.

In April 2011, our board of directors undertook a review of its composition, the composition of its committees and the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that none of Messrs. Alberg, Bybee and Sessler and Drs. Arnold and Yu, representing five of our seven directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the rules of             . Our board of directors also determined that Messrs. Alberg, Bybee and Sessler, who comprise our audit committee, Drs. Arnold and Yu and Mr. Bybee who comprise our compensation committee, and Messrs. Alberg and Bybee and Dr. Arnold who comprise our nominating and governance committee, satisfy the independence standards for those committees established by applicable SEC rules and the rules of             .

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In making this determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

Our board of directors has an audit committee, a compensation committee and a nominating and governance committee, each of which has the composition and the responsibilities described below.

Audit Committee

The members of our audit committee are Messrs. Alberg, Bybee and Sessler, each of whom is a non-employee member of our board of directors. Our audit committee chairman, Mr. Sessler, is our audit committee financial expert, as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, and possesses financial sophistication, as defined under the rules of             . Our audit committee oversees our corporate accounting and financial reporting process and assists our board of directors in monitoring our financial systems. Our audit committee will also:

• approve the hiring, discharging and compensation of our independent auditors;

• oversee the work of our independent auditors;

• approve engagements of the independent auditors to render any audit or permissible non-audit services;

• review the qualifications, independence and performance of the independent auditors;

• review our financial statements and review our critical accounting policies and estimates;

• review the adequacy and effectiveness of our internal controls; and

• review and discuss with management and the independent auditors the results of our annual audit, our quarterly financial statements and our publicly filed reports.

In 2010, our audit committee met once.

Compensation Committee

The members of our compensation committee are Drs. Arnold and Yu and Mr. Bybee. Dr. Arnold is the chairman of our compensation committee. Our compensation committee oversees our compensation policies, plans and benefits programs. The compensation committee will also:

• review and recommend policies relating to compensation and benefits of our officers and employees;

• review and approve corporate goals and objectives relevant to compensation of our chief executive officer and other senior officers;

• evaluate the performance of our officers in light of established goals and objectives;

• recommend compensation of our officers based on its evaluations; and

• administer the issuance of stock options and other awards under our stock plans.

In 2010, our compensation committee met once.

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Nominating and Governance Committee

The members of our nominating and governance committee are Messrs. Alberg and Bybee and Dr. Arnold. Mr. Alberg is the chairman of our nominating and governance committee. Our nominating and governance committee oversees and assists our board of directors in reviewing and recommending nominees for election as directors. The nominating and governance committee will also:

• evaluate and make recommendations regarding the organization and governance of the board of directors and its committees;

• assess the performance of members of the board of directors and make recommendations regarding committee and chair assignments;

• recommend desired qualifications for board of directors membership and conduct searches for potential members of the board of directors; and

• review and make recommendations with regard to our corporate governance guidelines.

Our nominating and governance committee was formed in April 2011.

Our board of directors may from time to time establish other committees.

Director Compensation

Compensation paid or accrued for services rendered to us by Dr. Colleran in his role as chief executive officer and by Dr. Diorio in his role as chief technology officer is included in our disclosures related to executive compensation in the section of this prospectus captioned “Executive Compensation.”

Dr. Yu has been granted options for his service as an outside director. On February 24, 2010, Dr. Yu was granted an option to purchase 25,000 shares of common stock at an exercise price of $0.05 per share. On January 26, 2011, Dr. Yu was granted an option to purchase 25,000 shares at an exercise price of $0.18. Each option grant was fully vested upon grant. These option grants were made pursuant to the agreement we entered into with Dr. Yu when he joined our board of directors that entitled Dr. Yu to an annual option grant to purchase 25,000 shares of our common stock for each year he serves on our board directors. Consistent with past practices, these option grants were made at the beginning of each year.

In April 2011, Mr. Sessler was granted an option to purchase 200,000 shares of our common stock. The option vests quarterly over three years. Mr. Sessler’s option was granted in connection with his joining our board of directors in April 2011. In determining the number of shares subject to Mr. Sessler’s option grant, we reviewed the size of the option grants made by our peer group companies to new outside directors and provided an option grant that was within the median 50-percentile of new, non-employee directors grants made by our peer group companies.

We do not have an established set of criteria for granting equity awards to our outside directors but anticipate implementing a formal non-employee director compensation policy in connection with the offering contemplated by this prospectus.

We have a practice of reimbursing directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at board or committee meetings.

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The following table sets forth information concerning compensation paid or accrued for services rendered to us by members of our board of directors for the year ended December 31, 2010. The table excludes Drs. Colleran and Diorio who are our chief executive officer and chief technology officer, respectively, and who did not receive any compensation from us in each of his role as a director in the year ended December 31, 2010.

Director Compensation

Name	Option Awards  ($)(1)		Total ($)
Tom Alberg		—		—
Stephen Arnold		—		—
Clinton Bybee		—		—
Albert Yu		542		542

(1) Represents the aggregate expense recognized for financial statement reporting purposes for 2010, calculated in accordance with FASB ASC Topic 718 without regard to estimated forfeitures. See Note 11 to our financial statements included elsewhere in this prospectus for a discussion of assumptions made in determining the grant date fair value and compensation expense of our stock options.

The compensation committee has retained Compensia, Inc., or Compensia, a compensation advisory firm, to provide recommendations on director compensation following this offering based on an analysis of market data compiled from certain public technology companies. Based on the recommendation of Compensia, our compensation committee intends to adopt an outside director compensation policy that will become applicable to all of our non-employee directors effective upon the completion of this offering.

For further information regarding the equity compensation of our non-employee directors, see the section titled “Executive Compensation—Employee Benefit Plans—2011 Equity Incentive Plan.”

Code of Business Conduct and Ethics

We intend to adopt a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions prior to the completion of this offering. Following this offering, a current copy of the code will be posted on the investor section of our website, www.impinj.com.

Compensation Committee Interlocks and Insider Participation

The members of our compensation committee are Drs. Arnold and Yu and Mr. Bybee. None of the members of our compensation committee is an officer or employee of us. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Limitation of Liability and Indemnification

Our certificate of incorporation and bylaws to be in effect upon the completion of this offering provide the indemnification of our directors and officers to the fullest extent permitted under the Delaware General Corporation Law. In addition, our certificate of incorporation to be in effect upon the completion of this offering provides that our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director and that if the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

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As permitted by Delaware General Corporation Law, we have entered into separate indemnification agreements with each of our directors and certain of our officers that require us, among other things, to indemnify them against certain liabilities which may arise by reason of their status as directors, officers or certain other employees. We expect to obtain and maintain insurance policies under which our directors and officers are insured, within the limits and subject to the limitations of those policies, against certain expenses in connection with the defense of, and certain liabilities that might be imposed as a result of, actions, suits or proceedings to which they are parties by reason of being or having been directors or officers. The coverage provided by these policies may apply whether or not we would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation Law.

We believe that these provisions and agreements are necessary to attract and retain qualified persons as our officers and directors. At present, there is no pending litigation or proceeding involving our directors or officers for which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following is a discussion and analysis of the compensation arrangements of our named executive officers who are listed in the 2010 Summary Compensation Table, which provides detailed compensation information related to these individuals. This discussion contains forward-looking statements that are based on our current considerations, expectations and determination regarding future compensation programs. The actual amount and form of compensation and the compensation programs that we adopt may differ materially from current or planned programs as summarized in the discussion.

General Compensation Philosophy

Our general executive compensation philosophy is to provide programs that attract, motivate, reward and retain highly qualified executives and to motivate them to pursue our corporate objectives while encouraging the creation of long-term value for our shareholders. We evaluate and reward our executive officers through compensation intended to motivate them to identify and capitalize on opportunities to grow our business and maximize shareholder value over time. We strive to provide an executive compensation program that is market competitive, rewards achievement of our business objectives and is designed to provide a foundation of fixed compensation (base salary) and a significant portion of performance-based compensation (short-term and long-term incentive opportunities) that align the interests of executives with those of our shareholders.

Compensation Decision Process

Our historic executive compensation program reflects our operations as a private startup company as we have relied largely upon our board of directors, our compensation committee and the chief executive officer’s experience in determining the appropriate compensation levels of our executives. Until recently, in an effort to control expenditures and allocate our limited resources effectively, we have not engaged compensation consultants or established formal benchmark processes against any set of peer group companies. From time to time, we have consulted as reference points compensation surveys showing the compensation practices of similar companies, measured by location, number of employees, industry, and level of funding. We did not formally benchmark our compensation to the survey data or systematically use the surveys. Instead, we occasionally consulted the surveys in order to develop an understanding of the market (based on the factors described above) in which we compete for talent.

Our compensation decisions have been made based on individual performance, on internal equity and the compensation each executive had negotiated at the time he joined our company.

Since mid-2003, our executive compensation program has been administered by our board of directors and our compensation committee, with substantial input from our chief executive officer. For the past several years, our chief executive officer periodically reviewed the compensation of our executive management, except for himself and the chief technology officer, and made recommendations to the compensation committee for any adjustments to base salary and any grants of equity compensation for each named executive officer. Base salaries were adjusted following consideration of our chief executive officer’s evaluation of each named executive officer’s performance (other than himself and the chief technology officer) relative to expectations and to the performance of our other employees. No specific performance criteria or weighting was considered in his evaluation. Rather, our chief executive officer used his discretion and judgment in making his performance evaluations. Equity grants to named executive officers (other than the chief executive officer and chief technology officer) were made after consideration of each named executive officer’s performance relative to expectations and to the performance of our other employees, his current equity holdings relative to the equity holdings of our other executives and the extent to which such equity holdings were unvested. No specific performance criteria or weighting was considered in our chief executive officer’s evaluation. Instead, he used his discretion and judgment in making his performance evaluations. With respect to his compensation and that of the chief technology officer, the chief executive officer made recommendations to the compensation committee and the board of directors. No specific performance criteria

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or weighting was considered in our chief executive officer’s evaluation. Instead, he used his discretion and judgment in making his recommendations. The compensation committee had the final say on named executive officer compensation and had the ability to accept or reject the chief executive officer’s recommendations for all named executive officers, including the chief executive officer and chief technology officer. Final decisions with respect to the compensation for the chief executive officer and chief technology officer were made in a meeting of the compensation committee outside the chief executive officer’s presence.

In determining compensation for 2010, the compensation committee relied on their general experience in determining each compensation element.

Beginning in October 2010, the compensation committee engaged Compensia, Inc., or Compensia, an independent executive compensation consulting firm from whom the compensation committee obtained relevant compensation data and will continue to do so in the future. Our compensation committee, Compensia, and our management worked together to choose a public company peer group for executive compensation purposes for 2011. These companies were chosen from a group of similar publicly-traded companies, taking into account size, business and growth potential. For 2011, we consulted with Compensia in the establishment of reference points and guidelines with respect to base salary, incentive compensation, and equity compensation. We expect that following our initial public offering, we will benchmark our compensation relative to data from our public company peer group (which may change over time). The compensation committee also intends to review industry survey data prepared by Compensia, including Compensia’s executive and equity compensation assessment, and Radford’s Global Technology Survey.

Weighting of Elements of Compensation Program

We did not have any pre-determined formula or target for allocating compensation between short-and long-term, fixed and variable or cash and non-cash compensation. As a privately-held company, executive compensation has been heavily weighted towards equity, which has been awarded in the form of stock options. Our board of directors and compensation committee determined that this form of compensation focused our executives on driving achievement of our strategic and financial goals. Our board of directors and compensation committee also believe that making stock options a key component of executive compensation aligned the executive team with the long-term interests of our shareholders. To maintain a competitive compensation program, we have also offered cash compensation in the form of base salaries to reward individual contributions and compensate our employees for their day-to-day responsibilities, and made occasional discretionary bonuses to reward excellence, leadership, and achievement of our shorter-term objectives.

Principal Elements of Executive Compensation

Components of Named Executive Officer Compensation

The compensation program for our named executive officers consists of:

• base salary;

• incentive cash compensation;

• stock options;

• employee benefits and perquisites; and

• change of control and severance arrangements.

We believe these elements provide a compensation package that attracts and retains qualified individuals, links individual performance to our performance, focuses the efforts of our named executive officers on the achievement of both our short-term and long-term objectives and aligns the interests of our named executive officers with those of our shareholders.

As our needs evolve and circumstances require, we intend to continue to evaluate our philosophy and compensation program. Going forward, we expect to review our executive compensation annually.

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Base Salaries

We provide a base salary to our named executive officers and other employees to compensate them for services rendered on a day-to-day basis during the year. Base salary typically is used to recognize the experience, skills, knowledge and responsibilities required of each named executive officer, although competitive market conditions also play a role in setting the level of base salary. We do not apply specific formulas to determine changes in base salary. Rather, the base salaries of our named executive officers have been reviewed on an annual basis for the past few years, and adjustments have been made to reflect our economic condition and future expected performance, as well as what our named executive officers could be expected to receive if employed at companies similarly situated to ours and our overall subjective assessment of appropriate salary levels, while being mindful of the need to conserve cash resources.

2010 Base Salaries. In 2009, base salaries for the named executive officers were reduced by 10% to address the effects of the economic recession on our company. The reduction was proposed by our management team and accepted by the board of directors. In late 2009 and in early 2010, these salary reductions were rolled back, and base salaries for the named executive officers were restored. None of the named executive officers received base salary increases above the levels that were in place immediately before the prior reductions, except for our chief financial officer, who received a base salary increase in connection with his promotion during 2009 and an additional salary increase in connection with his promotion to chief financial officer during 2010. For 2010, base salaries were as follows:

Name	2010 Base Salary ($)
William Colleran Chief Executive Officer and President		275,018
Evan Fein Senior Vice President, Chief Financial Officer		207,067	(1)
Chris Diorio Chairman and Chief Technology Officer		275,018
Steve Voit Executive Vice President Sales and Marketing		227,966
John Quist Senior Vice President Operations		205,385

(1) Includes the mid-year increase to Mr. Fein’s base salary in connection with his promotion to Chief Financial Officer in August 2010.

Incentive Cash Compensation

Through 2010, we have provided annual cash incentives for our chief executive officer and chief technology officer on a discretionary basis. We have also provided annual cash incentive compensation for our executive vice president, sales and marketing tied to his achievement of revenue targets and completion of personal goals set by our chief executive officer.

For our chief executive officer and chief technology officer, the board of directors approved discretionary bonuses at the end of the fiscal year based on recommendations from the compensation committee. The compensation committee determined the bonus amounts based on its assessment of our performance and each named executive officer’s contribution to that performance.

For 2011, the compensation committee and the chief executive officer, with the assistance of Compensia, are developing a more formal bonus program for the named executive officers that will be primarily tied to corporate financial metrics with an adjustment factor for individual performance.

2010 Incentive Cash Compensation. For 2010, the compensation committee determined to pay bonuses in the amount of $50,000, $15,000 and $50,000 to our chief executive officer, chief financial officer and chief technology officer, respectively. The bonuses paid to our chief executive officer and chief technology officer

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were primarily based on their contributions in leading us to exceed our 2010 operating plan, along with the fact that each executive voluntarily agreed to reduce his base salary in 2009 and neither executive received a base salary or bonus increase in 2009. Our 2010 operating plan involved a blend of financial and non-financial components, and the compensation committee awarded these bonuses in recognition of the leadership provided by our chief executive officer and chief technology officer executing this plan. No specific weight was given to any particular component. The bonus paid to our chief financial officer was based on recognition of his personal performance in upgrading the financial expertise of our company. No weighting was involved. Instead, our compensation committee evaluated our chief financial officer’s performance in its totality and exercised its discretion to pay a bonus rewarding his performance.

For our executive vice president, sales and marketing, we established at the beginning of 2010 a target bonus percentage of 37.8% of his base salary. Our chief executive officer established performance goals for our executive vice president, sales and marketing which consisted of equally weighted billings and individual performance, or MBO, components. The billings component was intended to be challenging and to drive performance towards achieving results throughout the year. The billings component was determined by the ratio of customer billings through the year (less any bad debt) and a target billings number. The MBO component comprised the following metrics (with the applicable weight given to each metric shown): (1) sales (20%); (2) sales operations (20%); (3) marketing (30%); (4) business development (10%); and (5) executive leadership and administration (20%). These metrics were intended to motivate our executive vice president, sales and marketing to identify and capitalize on opportunities to grow our business and maximize shareholder value. In early 2011, our chief executive officer reviewed and evaluated our performance against the billings target and the performance of our executive vice president, sales and marketing against his individualized MBO goals, and determined that our executive vice president, sales and marketing achieved 67.9% of his target bonus for 2011. This was based on an achievement of 91.1% of the billings goal and 45.0% of the performance goals by our executive vice president, sales and marketing. This percentage was used to pay our executive vice president, sales and marketing a bonus in the amount of $50,958.

Long-Term Equity-Based Incentive Compensation

We believe that strong long-term corporate performance is achieved with a corporate culture that encourages a long-term focus by our named executive officers through the use of equity-based awards, the value of which depends on our stock performance. Our equity-based incentives have historically been granted in the form of stock options. We grant stock options to provide our named executive officers with incentives to help align their interests with the interests of our shareholders and to enable them to participate in the long-term appreciation of our stock value. Additionally, stock options provide an important tool for us to retain our named executive officers, as the options are subject to vesting over an extended period of time subject to continued service with us.

Historically, we have granted stock options on a periodic basis to our named executive officers, and have not had an established set of criteria for granting equity awards. Instead, the board of directors or compensation committee exercised its judgment and discretion, in consultation with our chief executive officer, and considered, among other things, the role and responsibility of the named executive officer, competitive factors, the amount of stock-based equity compensation already held by the named executive officer and the number of options still unvested, to determine its recommendations for stock options. We do not have, nor do we plan to establish, any program, plan or practice to time stock option grants in coordination with releasing material non-public information.

Stock Ownership Guidelines and Insider Trading Policy. As of the date of this prospectus, the board of directors has not adopted stock ownership guidelines with respect to the named executive officers or for the board of directors itself, although it may consider doing so in the future. In connection with this offering, we will establish an insider trading compliance policy that prohibits, among other things, short sales, hedging of stock ownership positions and transactions involving derivative securities relating to our common stock.

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Equity Grants. In August 2010, our board of directors approved the grant of stock options to a number of our employees, including the named executive officers listed in the table below. These stock option grants were made to continue to drive performance among our employees (including the executives listed in the table below), to enhance our value, better align their interests with the interests of our shareholders, and address potential retention concerns. In determining the number of shares subject to the stock options, the board of directors considered the following factors for each named executive officer listed below:

• current equity holdings relative to our then-outstanding equity securities (measured on a fully-diluted basis);

• the number of unvested shares;

• individual performance; and

• recent equity grants.

As of immediately prior to the grant date, Mr. Fein’s equity holdings equaled 600,000 shares of which 39% remained unvested, and Mr. Quist’s equity holdings equaled 600,000 of which 77% remained unvested. After reviewing these data, our board of directors exercised judgment and discretion in determining share amounts that would:

• align the interests of these named executive officers with our stockholders;

• recognize each named executive officer’s past performance; and

• motivate them to continue to perform in the future.

Our board of directors did not apply specific weighting of these factors. Differences in the share amounts resulted because our board of directors desired to provide incentives in accordance with the specific duties and responsibilities of each named executive officer.

Named Executive Officer	Option Grants (Number of Shares)		Grant Date
Evan Fein		35,000		08/05/10
John Quist		25,000		08/05/10

In February 2011, our board of directors approved the grant of stock options to the named executive officers listed in table below. In making these grants, the board of directors reviewed the market data from Compensia regarding executive compensation in comparable public companies in our industry. In determining the number of shares subject to the stock options for each named executive officer listed below, the board of directors considered the following factors:

• current equity holdings relative to our then-outstanding equity securities (measured on a fully-diluted basis);

• the number of unvested shares;

• individual performance and criticality to our company;

• most recent equity grant made to each named executive officer; and

• the data provided by Compensia.

As of immediately prior to the grant date, Dr. Colleran held 6,500,000 shares of which 13% remained unvested, Mr. Fein held 635,000 shares of which 34% remained unvested, Dr. Diorio held 13,400,000 shares of which 4% remained unvested, Mr. Voit held 1,682,193 shares of which 41% remained unvested, and Mr. Quist held 625,000 shares of which 53% remained unvested. Mr. Fein was awarded two options: one to purchase 400,000 shares in recognition of his promotion to chief financial officer and one to purchase 150,000 shares consistent

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with the other grants made to the named executive officers. After reviewing these data, our board of directors exercised its judgment and discretion in determining share amounts that would:

• align the interests of these named executive officers with our stockholders;

• recognize their past performance;

• motivate them to continue to perform; and

• address potential retention concerns.

Our board of directors did not apply specific weighting of these factors or benchmarking against the Compensia data. The differences in the share amounts resulted from our board of directors’ desire to provide incentives to the named executive officers in accordance with their duties and responsibilities.

Named Executive Officer	Option Grants (Number of Shares)		Grant Date
William Colleran		600,000		02/24/11
Evan Fein		550,000		02/24/11
Chris Diorio		400,000		02/24/11
Steve Voit		100,000		02/24/11
John Quist		150,000		02/24/11

Employee Benefits and Perquisites

Our named executive officers are eligible to participate in the same group insurance and employee benefit plans as our other salaried employees. We provide employee benefits to all eligible employees, including our named executive officers, which the compensation committee believes are reasonable and consistent with our overall compensation objective to better enable us to attract and retain employees. These benefits include 401(k), medical, dental, vision and disability benefits and other plans and programs made available to other eligible employees in the applicable country of residence. We provide special long-term disability coverage for our named executive officers who are eligible for disability coverage until approximately age 65 if they cannot return to their own occupation. At this time, we do not provide any other special plans or programs for our named executive officers. Accordingly, employee benefits and perquisites are reviewed from time to time only to ensure that benefit levels remain competitive for us as a whole, but are not included in the compensation committee’s annual determination of a named executive officer’s compensation package.

Change of Control and Severance Benefits

Our board of directors and compensation committee consider maintaining a stable and effective management team to be essential in protecting and enhancing the best interests of us and our shareholders. We have established change of control and severance arrangements with our named executive officers to provide assurances of specified severance benefits if their employment is subject to involuntary termination other than for death, disability, or cause or voluntary termination for good reason. We believe that it is imperative to provide such individuals with severance benefits upon certain terminations of employment, which we recognize can be triggered at any time, to (1) secure their continued dedication to their work, notwithstanding the possibility of a termination by us and (2) provide such individuals with an incentive to continue employment with us. Based on the experience and subjective judgment of our board of directors and compensation committee, we believe that the severance benefits are competitive relative to the severance protection provided to similarly situated individuals at companies with which we compete for talent and appropriate given that the benefits are subject to the executive’s entry into a release of claims in favor of us.

We also recognize that the possibility of a change of control may exist from time to time, and that this possibility, and the uncertainty and questions it may raise among management, may result in the departure or distraction of management to our and our shareholders’ detriment. Accordingly, our board of directors decided to take appropriate steps to encourage the continued attention, dedication and continuity of members of our management to their assigned duties without the distraction that may arise from the possibility or occurrence of a change of control. As a result, we have agreements with each of our named executive officers that provide additional benefits in the event of a change of control. For more detail, see “—Potential Payments Upon Termination or Change of Control.”

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Tax and Accounting Treatment of Compensation

Deductibility of Executive Compensation

Generally, Section 162(m) of the Internal Revenue Code, or Code, disallows a tax deduction to any publicly-held corporation for any remuneration in excess of $1 million paid in any taxable year to its chief executive officer and to certain other highly compensated officers. Remuneration in excess of $1 million may be deducted if, among other things, it qualifies as “performance-based compensation” within the meaning of the Code.

As we have been a privately-held corporation, we have not previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation for our executive officers. Further, under a certain Section 162(m) exception, any compensation paid pursuant to compensation arrangements in existence before the effective date of this public offering will not be subject to the $1,000,000 limitation. In addition, any equity awards we make under our 2011 Equity Incentive Plan will not be subject to this limitation, provided such awards are made prior to the earlier of: (1) the expiration of the plan; (2) a material modification of the plan (as determined under Section 162(m); (3) the issuance of all the employer stock and other compensation allocated under the plan; and (4) the first meeting of shareholders at which directors are elected after the close of the third calendar year following the year in which the public offering occurs. Where reasonably practicable, we will seek to qualify the variable compensation paid to our executive officers for the “performance-based compensation” exemption from the deductibility limit. As such, in approving the amount and form of compensation for our executive officers in the future, we will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m). Our compensation committee may, in its judgment, authorize compensation payments that do not comply with an exemption from the deductibility limit when it believes that such payments are appropriate to attract and retain executive talent.

Taxation of “Parachute” Payments and Deferred Compensation

We have not provided any named executive officer with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G, 4999 or 409A of the Code during 2010 and we have not agreed and are not otherwise obligated to provide any named executive officer with such a “gross-up” or other reimbursement. Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control that exceeds certain prescribed limits, and that we, or a successor, may forfeit a deduction on the amounts subject to this additional tax. Section 409A also imposes additional significant taxes on the individual in the event that an executive officer, director or other service provider receives “deferred compensation” that does not meet the requirements of Section 409A of the Code.

Accounting Treatment

We follow Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, or ASC Topic 718, formerly known as SFAS 123(R), for our stock-based awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.

We account for equity compensation paid to our employees under the rules of FASB ASC Topic 718, which requires us to estimate and record an expense for each award of equity compensation over the service period of the award. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

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2010 Summary Compensation Table

The following table summarizes the compensation that we paid to or earned by our chief executive officer, chief financial officer and each of our three other most highly compensated executive officers during the year ended December 31, 2010. We refer to these officers in this prospectus as our named executive officers.

Name and Principal Position	Year		Salary ($)		Bonus ($)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)			Total ($)
William Colleran.		2010		275,018		50,000		—		—			325,018
Chief Executive Officer and President
Evan Fein		2010		207,067		15,000		8,679		—			230,746
Chief Financial Officer and Senior Vice President
Chris Diorio		2010		275,018		50,000		—		1,450	(2)		326,468
Chairman and Chief Technology Officer
Steve Voit		2010		227,966		50,958		—		—			278,924
Executive Vice President Sales and Marketing
John Quist		2010		205,385		—		6,199		—			211,584
Senior Vice President Operations

(1) The amounts included in the “Option Awards” column represent the aggregate grant date fair value of option awards calculated in accordance with authoritative accounting guidance on stock compensation. The valuation assumptions used in determining such amounts are described in the notes to our consolidated financial statements included elsewhere in this prospectus.

(2) The amount reflects the dollar value of patent awards to Dr. Diorio.

Grants of Plan-Based Awards For the Year Ended December 31, 2010

The following table provides information regarding grants of plan-based awards made during the year ended December 31, 2010, to each of our named executive officers.

Name	Grant Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)						All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)
			Threshold ($)		Target ($)		Maximum ($)
William Colleran		—		—		—		—		—		—		—
Evan Fein		08/05/2010		—		—		—		35,000		0.09		8,679
Chris Diorio		—		—		—		—		—		—		—
Steve Voit		—		—		—		—		—		—		—
John Quist		08/05/2010		—		—		—		25,000		0.09		6,199

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Outstanding Equity Awards at December 31, 2010

The following table shows grants of stock options outstanding at December 31, 2010 to each of our named executive officers.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
William Colleran		200,000	(1)		—		0.08		07/16/2012
		200,000	(2)		—		0.10		11/30/2014
		400,000	(3)		—		0.05		09/22/2019
		400,000	(4)		—		0.05		09/22/2019
		1,199,976	(5)		—		0.05		09/22/2019
		1,922,032	(5)		—		0.05		09/22/2019
		23	(6)		—		0.05		10/22/2019
		1,599,977	(6)		—		0.05		10/22/2019
Evan Fein		7,500	(7)		—		0.08		11/15/2011
		42,500	(8)		—		0.08		01/27/2014
		50,000	(9)		—		0.08		03/30/2014
		75,000	(10)		—		0.10		03/29/2015
		25,000	(11)		—		0.20		05/09/2016
		25,000	(12)		—		0.22		12/06/2016
		50,000	(13)		—		0.05		09/22/2019
		75,000	(14)		—		0.05		09/22/2019
		150,000	(15)		—		0.05		10/22/2019
		35,000	(16)		—		0.09		08/04/2020
Chris Diorio		800,000	(15)		—		0.05		10/22/2019
Steve Voit		1,476,786	(17)		—		0.05		02/05/2019
		205,407	(18)		—		0.05		09/22/2019
John Quist		155,000	(19)		—		0.05		02/05/2019
		50,000	(20)		—		0.05		09/22/2019
		70,000	(21)		—		0.05		09/22/2019
		225,000	(22)		—		0.05		09/22/2019
		100,000	(15)		—		0.05		10/22/2019
		25,000	(16)		—		0.09		08/04/2020

(1) This option was granted on July 17, 2002. One-twelfth (1/12^th) of the shares subject to the option vested on March 5, 2005 and each month thereafter on the same day of the month.

(2) This option was granted on December 1, 2004. One-twelfth (1/12^th) of the shares subject to the option vested on March 5, 2005 and each month thereafter on the same day of the month.

(3) This option was originally granted on December 1, 2004 and was regranted on September 23, 2009 as part of our option exchange. One-fourth (1/4^th) of the shares subject to the option vested on December 23, 2009, and one-fourth (1/4^th) of the shares subject to the option shall vest every three months thereafter on the same day of the month.

(4) This option was originally granted on August 15, 2006 and was regranted on September 23, 2009 as part of our option exchange. One-sixth (1/6^th) of the shares subject to the option vested on December 23, 2009, and one-sixth (1/6^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(5) This option was originally granted on February 22, 2001 and was regranted on September 23, 2009 as part of our option exchange. One-fourth (1/4^th) of the shares subject to the option vested on December 23, 2009, and one-fourth (1/4^th) of the shares subject to the option shall vest every three months thereafter on the same day of the month.

(6) This option was granted on October 22, 2009. One forty-eighth (1/48^th) of the shares subject to the option vested on February 1, 2009, and one forty-eighth (1/48^th) of the shares subject to the option shall vest each month thereafter on the same day of the month.

(7) This option was granted on November 16, 2001. Twenty-five percent (25%) of the shares subject to the option vested on November 16, 2002, and one forty-eighth (1/48^th) of the shares subject to the option vested each month thereafter on the same day of the month.

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(8) This option was granted on January 28, 2004. Twenty-five percent (25%) of the shares subject to the option vested on October 16, 2004, and one forty-eighth (1/48^th) of the shares subject to the Option vested each month thereafter on the same day of the month.

(9) This option was granted on March 31, 2004. Twenty-five percent (25%) of the shares subject to the option vested on March 15, 2005, and one forty-eighth (1/48^th) of the shares subject to the option vested each month thereafter on the same day of the month.

(10) This option was granted on March 30, 2005. Twenty-five percent (25%) of the shares subject to the option vested on March 15, 2006, and one forty-eighth (1/48^th) of the shares subject to the option vested each month thereafter on the same day of the month.

(11) This option was granted on May 10, 2006. One forty-eighth (1/48^th) of the shares subject to the option vested on June 10, 2006, and one forty-eighth (1/48^th) of the shares subject to the option vested each month thereafter on the same day of the month.

(12) This option was granted on December 7, 2006. One forty-eighth (1/48^th) of the shares subject to the option vested on December 13, 2006, and one forty-eighth (1/48^th) of the shares subject to the option vested each month thereafter on the same day of the month.

(13) This option was originally granted on August 18, 2008 and was regranted on September 23, 2009 as part of our option exchange. One-eighteenth (1/18^th) of the shares subject to the option vested on December 23, 2009, and one-eighteenth (1/18^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(14) This option was originally granted on April 18, 2007 and was regranted on September 23, 2009 as part of our option exchange. One-fourteenth (1/14^th) of the shares subject to the option vested on December 23, 2009, and one-fourteenth (1/14^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(15) This option was granted on October 22, 2009. One forty-eighth (1/48^th) of the shares subject to the option vested on November 22, 2009, and one forty-eighth (1/48^th) of the shares subject to the option shall vest each month thereafter on the same day of the month.

(16) This option was granted on August 5, 2010. One forty-eighth (1/48^th) of the shares subject to the option vested on June 1, 2010, and one forty-eighth (1/48^th) of the shares subject to the option shall vest each month thereafter on the same day of the month.

(17) This option was granted on February 6, 2009. Twenty-five percent (25%) of the shares subject to the option vested on September 30, 2009, and one forty-eighth (1/48^th) of the shares subject to the option shall vest each month thereafter on the same day of the month.

(18) This option was originally granted on December 4, 2007 and was regranted on September 23, 2009 as part of our option exchange. One-eighth (1/8^th) of the shares subject to the option vested on December 23, 2009, and one-eighth (1/8^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(19) This option was granted on February 6, 2009. One forty-eighth (1/48^th) of the shares subject to the option vested on February 20, 2009, and one forty-eighth (1/48^th) of the shares subject to the option shall vest each month thereafter on the same day of the month.

(20) This option was originally granted on April 18, 2007 and was regranted on September 23, 2009 as part of our option exchange. One-fourteenth (1/14^th) of the shares subject to the option vested on December 23, 2009, and one-fourteenth (1/14^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(21) This option was originally granted on August 18, 2008 and was regranted on September 23, 2009 as part of our option exchange. One-eighteenth (1/18^th) of the shares subject to the option vested on December 23, 2009, and one-eighteenth (1/18^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

(22) This option was originally granted on May 10, 2006 and was regranted on September 23, 2009 as part of our option exchange. One-eighth (1/8^th) of the shares subject to the option vested on December 23, 2009, and one-eighth (1/8^th) of the shares subject to the option shall vest each three months thereafter on the same day of the month.

Exchange of Outstanding Stock Options

In September 2009, we offered eligible holders of our stock options, including our executive officers and all our employees, the opportunity to exchange certain outstanding options for new options with an exercise price equal to the fair value of our common stock on September 23, 2009, the date on which this exchange offer ended. Options eligible for exchange included all options with an exercise price greater than $0.05 per share that remained outstanding and unexercised on September 23, 2009. We determined that the fair market value of our common stock on September 23, 2009 was $0.05. The new options issued in this exchange were exercisable for the same number of shares as the old options and were subject to the same terms and conditions, except that the vesting period for the new options was extended by up to 24 months based on the number of shares previously vested in the options. Approximately options to purchase 6,576,165 shares were exchanged, including options to purchase 4,997,415 shares held by one of our non-employee directors and our executive officers other than Dr. Diorio. We made this exchange offer because many of the outstanding options held by our employees had exercise prices significantly above the fair value of our common stock, and we believed that such options provided little incentive to employees. Our executive officers were entitled to participate in the exchange offer on the same basis as other employees because we intend for options to be an important form of incentive compensation for our executive officers.

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Employment Agreements and Offer Letters

William T. Colleran, Ph.D.

We entered into an employment agreement with William T. Colleran, Ph. D., our chief executive officer and president, dated July 19, 2007, as amended December 19, 2008 and February 19, 2009, respectively. This agreement has no specific term and constitutes at-will employment. Dr. Colleran’s current annual base salary for 2011 is $320,008, and he is eligible to earn bonus compensation based on the achievement of certain performance objectives established by our board of directors or the compensation committee. Under the terms of this agreement, if Dr. Colleran’s employment is terminated other than for cause, death, or disability, or he resigns for good reason, he will be eligible to receive the following benefits, if he timely signs a release of claims and continues to comply with the non-competition and non-solicitation provisions in his employment agreement:

• continued payment of base salary for a period of six months (12 months, if his termination occurs within 12 months following a change of control);

• lump sum payment equal to 50% of annual base salary (but only if his termination occurs within 12 months following a change of control);

• pro-rated portion of annual target performance bonus;

• reimbursement by us for up to six months of COBRA premiums to continue health insurance coverage for him and his eligible dependents;

• accelerated vesting of 25% of the then unvested portion of outstanding equity awards (100%, if his termination occurs within 12 months following a change of control); and

• extension of the exercise period for outstanding vested stock options for up to one year following termination.

Evan Fein

We entered into an employment agreement with Evan Fein, our senior vice president and chief financial officer, dated December 23, 2009. This agreement has no specific term and constitutes at-will employment. Mr. Fein’s current annual base salary for 2011 is $220,542. Under the terms of this agreement, if Mr. Fein’s employment is terminated other than for cause, death, or disability, or he resigns for good reason, he will be eligible to receive the following benefits, if he timely signs a release of claims and continues to comply with the non-competition and non-solicitation provisions in his employment agreement:

• continued payment of base salary for a period of six months;

• pro-rated portion of annual target performance bonus;

• reimbursement by us for up to six months of COBRA premiums to continue health insurance coverage for him and his eligible dependents;

• accelerated vesting of 50% of the then unvested portion of outstanding equity awards (but only if his termination occurs within six months following a change of control); and

• extension of the exercise period for outstanding vested stock options for up to one year following termination.

Chris Diorio, Ph.D.

We entered into an employment offer letter with Chris Diorio, Ph. D., our co-founder, chairman and chief technology officer, dated March 16, 2007, as amended December 19, 2008 and February 20, 2009. This letter has no specific term and constitutes at-will employment. Dr. Diorio’s current annual base salary for 2011 is $275,018, and he is eligible to earn bonus compensation based on the achievement of certain performance objectives established by our board of directors or the compensation committee. Under the terms of this letter, if

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Dr. Diorio’s employment is terminated other than for cause, death, or disability, or he resigns for good reason, he will be eligible to receive the following benefits, if he timely signs a release of claims and continues to comply with the non-competition and non-solicitation provisions in his offer letter:

• continued payment of base salary for a period of six months (12 months, if his termination occurs within 12 months following a change of control);

• lump sum payment equal to 50% of annual base salary (but only if his termination occurs within 12 months following a change of control);

• pro-rated portion of annual target performance bonus;

• reimbursement by us for up to six months of COBRA premiums to continue health insurance coverage for him and his eligible dependents;

• accelerated vesting of 25% of the then unvested portion of outstanding equity awards (100%, if his termination occurs within 12 months following a change of control); and

• extension of the exercise period for outstanding vested stock options for up to one year following termination.

Steve Voit

We entered into an employment offer letter with Steve Voit, our executive vice president sales and marketing, dated September 30, 2008, as amended on December 19, 2008, February 19, 2009, and January 5, 2010 and April 16, 2011. This letter has no specific term and constitutes at-will employment. Mr. Voit’s current annual base salary for 2011 is $229,528, and he is eligible to earn bonus compensation of up to $86,762, based on the achievement of certain performance objectives established by our board of directors or the compensation committee. Under the terms of this letter, if Mr. Voit’s employment is terminated other than for cause, death, or disability, or he resigns for good reason, he will be eligible to receive the following benefits, if he timely signs a release of claims and continues to comply with the non-competition and non-solicitation provisions in his offer letter:

• continued payment of base salary for a period of six months;

• pro-rated portion of annual target performance bonus; and

• accelerated vesting of 50% of the then unvested portion of outstanding equity awards (but only if his termination occurs within six months following a change of control).

John Quist

We entered into an employment agreement with John Quist, our senior vice president operations, dated March 10, 2006, as amended on March 31, 2011. The agreement has no specific term and constitutes at-will employment. Mr. Quist’s current annual base salary for 2011 is $207,480. Mr. Quist initially was entitled to reimbursement for travel, relocation, and temporary housing expenses in connection with his relocation to the Seattle, Washington area. Under the terms of this agreement, if Mr. Quist’s employment terminates as a result of a constructive termination, he will be eligible to receive continued payment of base salary for a period of three months, if he timely signs a release of claims. If Mr. Quist’s employment is terminated other than for cause, death or permanent disability within one year following a change of control, he will be eligible to receive accelerated vesting of 50% of the then unvested shares subject to the option he received in connection with his hire, if he timely signs a release of claims.

For purposes of the agreements and letters above, the following definitions shall apply:

• “Cause”: means: (1) the named executive officer’s conviction of a felony; (2) the named executive officer’s commission of any act of fraud with respect to us; (3) the named executive officer’s

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intentional misconduct that has a materially adverse effect upon our business; (4) the named executive officer’s breach of any of the named executive officer’s fiduciary obligations as our officer or of any contractual obligation that the named executive officer has to us, in either case where the breach has a materially adverse effect on our business; (5) the named executive officer’s willful misconduct or gross negligence in performance of the named executive officer’s duties hereunder, including the named executive officer’s refusal to comply in any material respect with the legal directives of the board of directors so long as such directives are not inconsistent with the named executive officer’s position and duties; or (6) the named executive officer’s death or disability. However, prior to any termination of the named executive officer’s employment for Cause defined in clauses (3), (4) or (5) above, we shall give written notice to the named executive officer of the actions or omissions deemed to constitute the Cause event, and if it is possible to cure the specified default, the named executive officer shall have a period of not less than 30 days in which to cure the specified default in the named executive officer’s performance.

• “Constructive Termination” (applies to Mr. Quist): means the named executive officer’s resignation within 30 days following the notice and cure period described below, due to a relocation required by us as a result of our relocation of the named executive officer’s assigned work site to a location more than 50 miles from the named executive officer’s assigned work site immediately prior to such relocation; provided, however, that such relocated work site must also be more than 50 miles from the named executive officer’s then current home address; and provided further, however, that no Constructive Termination shall be deemed to occur if we offer the named executive officer the opportunity to work remotely so that his principal work site is at his home or a location within 50 miles of his home following any relocation of his assigned work site. Notwithstanding the foregoing, the named executive officer will not resign for a “constructive termination” without first providing us with written notice of the acts or omissions constituting the grounds for “constructive termination” within 90 days of the initial existence of the grounds for “constructive termination” and a reasonable cure period of not less than 30 days following the day of such notice.

• “Good Reason” (applies to Drs. Colleran and Diorio and Mr. Voit): means the named executive officer’s resignation that is effective within two years following the occurrence of one or more of the following events without the named executive officer’s consent: (1) a material reduction of named executive officer’s base salary; (2) the assignment to named executive officer of any duties, or the reduction of the named executive officer’s duties, either of which results in a material diminution in the named executive officer’s authority, duties or responsibilities with us in effect immediately prior to such assignment or reduction, or the removal of the named executive officer from such position and responsibilities, unless the named executive officer is provided with comparable authority, duties or responsibilities; provided that, neither a mere change in title alone nor reassignment following a change of control to a position that is substantially similar to the position held prior to the change of control in terms of job duties, responsibilities and requirements shall constitute a material reduction in job responsibilities; or (3) a material change in the geographic location at which the named executive officer must perform services (for purposes of this definition, the relocation of the named executive officer to a facility or a location less than 50 miles from the named executive officer’s then-present location shall not be considered a material change in geographic location). The named executive officer will not resign for “Good Reason” without first providing us with written notice of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of not less than 30 days following the date of such notice.

• “Good Reason” (applies to Mr. Fein): means the named executive officer’s resignation within two years following the expiration of any of our cure periods (discussed below) following the occurrence of one or more of the following events without the named executive officer’s consent: (1) a material reduction of the named executive officer’s base salary (for purposes of this definition, the reduction of base salary by less than 10% from the named executive officer’s then-present base salary shall not be considered a material reduction); provided that, an across-the-board reduction in the salary level of all other senior executives by the same percentage amount as part of a general salary level reduction shall not constitute

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such a material reduction; (2) the assignment to the named executive officer of any duties, or the reduction of the named executive officer’s duties, either of which results in a material diminution in the named executive officer’s authority, duties or responsibilities with us in effect immediately prior to such assignment or reduction, or the removal of the named executive officer from such position and responsibilities, unless the named executive officer is provided with comparable authority, duties or responsibilities; provided that, neither a mere change in title alone nor reassignment following a change of control to a position that is substantially similar to the position held prior to the change of control in terms of job duties, responsibilities and requirements shall constitute a material reduction in job responsibilities; or (3) a material change in the geographic location at which the named executive officer must perform services (for purposes of this definition, the relocation of the named executive officer to a facility or a location less than 50 miles from the named executive officer’s then-present location shall not be considered a material change in geographic location). The named executive officer will not resign for “Good Reason” without first providing us with written notice of the acts or omissions constituting the grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of not less than 30 days following the date of such notice.

Potential Payments Upon Termination or Change of Control

The table below provides an estimate of the value of the compensation and benefits due to each of our named executive officers in the events described below, assuming that the termination of employment or change in control was effective on December 31, 2010, under the agreements described above. The actual amounts to be paid can only be determined at the time of the termination of employment or change of control, as applicable.

Termination without Cause or Resignation for Good Reason

	Salary Continuation  ($)		Value of Accelerated Equity Awards ($)(1)			Continuation of Healthcare Coverage Premiums ($)		Total ($)
William Colleran		137,509		157,500	(2)		10,096		305,105
Evan Fein		103,534		—			10,096		113,630
Chris Diorio		137,509		99,167	(3)		10,096		246,772
Steve Voit		113,983		—			—		113,983
John Quist		51,346		—			—		51,346

(1) Amounts indicated in the table are calculated as the difference between the fair value of a share of common stock underlying the options subject to accelerated vesting on December 31, 2010 and the exercise price of these options, multiplied by the number of accelerated shares. The fair value of a share of common stock on December 31, 2010 was $0.75.

(2) As of December 31, 2010, 225,000 shares of common stock subject to Dr. Colleran’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 25% of the shares subject to the options granted to Dr. Colleran that were unvested as of December 31, 2010.

(3) As of December 31, 2010, 141,667 shares of common stock subject to Dr. Diorio’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 25% of the shares subject to the options granted to Dr. Diorio that were unvested as of December 31, 2010.

Termination without Cause or Resignation for Good Reason on or following a Change of Control

	Salary Continuation ($)		Bonus ($)		Value of Accelerated Equity Awards ($)(1)			Continuation of Healthcare Coverage Premiums ($)		Total ($)
William Colleran		275,018		137,509		630,000	(2)		10,096		1,052,623
Evan Fein		103,534		—		76,568	(3)		10,096		190,198
Chris Diorio		275,018		137,509		396,667	(4)		10,096		819,290
Steve Voit		113,983		—		253,093	(5)		—		367,076
John Quist		51,346		—		118,571	(6)		—		169,917

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(1) Amounts indicated in the table are calculated as the difference between the fair value of a share of common stock underlying the options subject to accelerated vesting on December 31, 2010 and the exercise price of these options, multiplied by the number of accelerated shares. The fair value of a share of common stock on December 31, 2010 was $0.75.

(2) As of December 31, 2010, 900,001 shares of common stock subject to Dr. Colleran’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 100% of the shares subject to the options granted to Dr. Colleran that were unvested as of December 31, 2010.

(3) As of December 31, 2010, 110,237 shares of common stock subject to Mr. Fein’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 50% of the shares subject to the options granted to Mr. Fein that were unvested as of December 31, 2010.

(4) As of December 31, 2010, 566,667 shares of common stock subject to Dr. Diorio’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 100% of the shares subject to the options granted to Dr. Diorio that were unvested as of December 31, 2010.

(5) As of December 31, 2010, 361,561 shares of common stock subject to Mr. Voit’s options would accelerate if he were either terminated without cause or resigns for good reason, which is 50% of the shares subject to the options granted to Mr. Voit that were unvested as of December 31, 2010.

(6) As of December 31, 2010, 169,997 shares of common stock subject to Mr. Quist’s options would accelerate if he were terminated without cause, which is 50% of the shares subject to the options granted to Mr. Quist that were unvested as of December 31, 2010.

Employee Benefit Plans

2011 Employee Stock Purchase Plan

Our executive officers and all of our other employees will be allowed to participate in our 2011 Employee Stock Purchase Plan, which will be effective upon the completion of this offering. We believe that providing them the opportunity to participate in the 2011 Employee Stock Purchase Plan provides them with a further incentive towards ensuring our success and accomplishing our corporate goals.

The specific provisions of our 2011 Employee Stock Purchase Plan are as provided for below.

Our board of directors intends to adopt, and we expect our stockholders will approve, prior to the completion of this offering, our 2011 Employee Stock Purchase Plan. The 2011 Employee Stock Purchase Plan will become effective upon completion of this offering.

A total of              shares of our common stock will be made available for sale under the 2011 Employee Stock Purchase Plan. In addition, our 2011 Employee Stock Purchase Plan provides for annual increases in the number of shares available for issuance under plan on the first day of each fiscal year beginning in 2012, equal to the least of:

•     % of the outstanding shares of our common stock on the first day of such year;

•              shares of common stock; or

• such amount as determined by our board of directors.

Our compensation committee administers the 2011 Employee Stock Purchase Plan, and has full and exclusive authority to interpret the terms of the plan and determine eligibility to participate subject to the conditions of the plan as described below.

All of our employees are eligible to participate if they are employed by us, or any participating subsidiary, for at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock under the 2011 Employee Stock Purchase Plan if such employee:

• immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock; or

• hold rights to purchase stock under all of our employee stock purchase plans that accrue at a rate that exceeds $25,000 worth of stock for each calendar year.

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Our 2011 Employee Stock Purchase Plan is intended to qualify under Section 423 of the Code. Each offering period includes purchase periods, which will be the approximately six month-period commencing with one exercise date and ending with the next exercise date. The offering periods are scheduled to start on the first trading day on or after              and              of each year, except for the first such offering period, which will commence on the first trading day on or after completion of this offering and will end on the first trading day on or after             .

Our 2011 Employee Stock Purchase Plan permits participants to purchase common stock through payroll deductions of up to     % of their eligible compensation, which includes a participant’s base straight time gross earnings, certain commissions, overtime and shift premium, but exclusive of payments for incentive compensation, bonuses and other compensation. A participant may purchase a maximum of                  shares during a six month-period.

Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of each six-month purchase period. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date. If the fair market value of our common stock on the exercise date is less than the fair market value on the first trading day of the offering period, participants will be withdrawn from the current offering period following their purchase of shares on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offering period, and will be paid their accrued contributions that have not yet been used to purchase shares of common stock. Participation ends automatically upon termination of employment with us.

A participant may not transfer rights granted under the 2011 Employee Stock Purchase Plan. If the compensation committee permits the transfer of rights, it may only be done other than by will, the laws of descent and distribution, or as otherwise provided under the 2011 Employee Stock Purchase Plan.

In the event of our merger or change in control, as defined under the 2011 Employee Stock Purchase Plan, a successor corporation may assume or substitute for each outstanding option. If the successor corporation refuses to assume or substitute for the option, the offering period then in progress will be shortened, and a new exercise date will be set. The administrator will notify each participant that the exercise date has been changed and that the participant’s option will be exercised automatically on the new exercise date unless prior to such date the participant has withdrawn from the offering period.

Our 2011 Employee Stock Purchase Plan will automatically terminate in 2031, unless we terminate it sooner. Our board of directors has the authority to amend, suspend or terminate our 2011 Employee Stock Purchase Plan, except that, subject to certain exceptions described in the 2011 Employee Stock Purchase Plan, no such action may adversely affect any outstanding rights to purchase stock under our 2011 Employee Stock Purchase Plan.

2011 Equity Incentive Plan

Our board of directors intends to adopt, and we expect our stockholders will approve, our 2011 Equity Incentive Plan prior to the completion of this offering. Subject to stockholder approval, the 2011 Equity Incentive Plan is effective upon the later to occur of its adoption by our board of directors and the effective date of this offering, and is not expected to be utilized until after the completion of this offering. Our 2011 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and any of our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.

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A total of                  shares of our common stock are reserved for issuance pursuant to the 2011 Equity Incentive Plan, of which no awards are issued and outstanding. In addition, the shares reserved for issuance under our 2011 Equity Incentive Plan will also include (1) those shares reserved but unissued under the 2010 Plan (as defined below) as of the effective date of the first registration statement filed by us and declared effective with respect to any class of our securities and (2) shares returned to the 2010 Plan and 2000 Plan (each as defined below) as the result of expiration or termination of options (provided that the maximum number of shares that may be added to the 2011 Equity Incentive Plan pursuant to (1) and (2) is              shares). The number of shares available for issuance under the 2011 Equity Incentive Plan will also include an annual increase on the first day of each year beginning in 2012, equal to the least of:

•              shares;

•     % of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or

• such other amount as our board of directors may determine.

Our compensation committee will administer our 2011 Equity Incentive Plan after the completion of the offering. In the case of options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more “outside directors” within the meaning of Section 162(m).

Subject to the provisions of our 2011 Equity Incentive Plan, the administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a higher or lower exercise price.

The exercise price of options granted under our 2011 Equity Incentive Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns 10% of the total combined voting power of all classes of our outstanding stock, the term must not exceed 5 years and the exercise price must equal at least 110% of the fair market value on the grant date. Subject to the provisions of our 2011 Equity Incentive Plan, the administrator determines the term of all other options.

After the termination of service of an employee, director or consultant, he or she may exercise his or her option or stock appreciation right for the period of time stated in his or her award agreement to the extent that the option is vested on the date of termination. Generally, if termination is due to death or disability, the option or stock appreciation right will remain exercisable for 12 months. In all other cases, the option or stock appreciation right will generally remain exercisable for three months following the termination of service. However, in no event may an option be exercised later than the expiration of its term.

Stock appreciation rights may be granted under our 2011 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of our 2011 Equity Incentive Plan, the administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.

Awards of restricted stock may be granted under our 2011 Equity Incentive Plan, which are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The

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administrator will determine the number of shares granted and may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Awards of restricted stock units may be granted under our 2011 Equity Incentive Plan, which are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. The administrator determines the terms and conditions of restricted stock units including the number of units granted, the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. The administrator, in its sole discretion may accelerate the time at which any restrictions will lapse or be removed.

Awards of performance units and performance shares may be granted under our 2011 Equity Incentive Plan, which are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.

Our 2011 Equity Incentive Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2011 Equity Incentive Plan. Please see the description of our Outside Director Equity Compensation Policy below.

Unless the administrator provides otherwise, our 2011 Equity Incentive Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

Our 2011 Equity Incentive Plan provides that in the event of a merger or “change in control,” as defined in the 2011 Equity Incentive Plan, each outstanding award will be treated as the administrator determines, including that the successor corporation or its parent or subsidiary will assume or substitute an equivalent award for each outstanding award. The administrator is not required to treat all awards similarly. If there is no assumption or substitution of outstanding awards, the awards will fully vest, all restrictions will lapse, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and the awards will become fully exercisable. The administrator will provide notice to the recipient that he or she has the right to exercise the option and stock appreciation right as to all of the shares subject to the award, all restrictions on restricted stock will lapse, and all performance goals or other vesting requirements.

2010 Equity Incentive Plan, as amended

Our 2010 Equity Incentive Plan, or the 2010 Plan, was adopted by our board of directors on March 23, 2010 and approved by our stockholders on March 25, 2011, and was amended by our board of directors on June 30, 2010 and February 24, 2011.

The 2010 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any affiliates’ employees, and for the grant of nonstatutory stock options and awards of restricted or unrestricted shares of common stock to our employees, consultants, and advisors and our affiliates’ employees, consultants, and advisors. However, no advisor or consultant is eligible to receive an award under the 2010 Plan if such person’s participation in the 2010 Plan adversely affects our compliance with Rule 701 of the Securities Act of 1933 or with any other applicable law. Our board of directors

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has decided not to grant any additional options under our 2010 Plan upon the completion of this offering. However, the 2010 Plan will continue to govern the terms and conditions of the outstanding stock options and stock awards previously granted under the 2010 Plan.

Subject to the provisions of the 2010 Plan, the maximum aggregate number of shares (subject to adjustment) of our common stock, par value $0.001 per share, which may be subject to awards and sold under the 2010 Plan is 7,381,946 shares plus shares that were subject to stock options or similar awards granted under the 2000 Stock Option Plan that expired or terminated without having been exercised in full and unvested shares issued pursuant to awards granted under the 2000 Stock Option Plan that were forfeited to or repurchased by us. Shares issued pursuant to awards under the 2010 Plan that we repurchase or that expire or are forfeited, as well as shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award, will become available for future grant under the 2010 Plan. In addition, to the extent that an award is paid out in cash rather than shares, such cash payment will not reduce the number of shares available for issuance under the 2010 Plan.

As of March 31, 2011, options to purchase 6,091,687 shares of our common stock were outstanding under the 2010 Plan. If an option expires or becomes unexercisable without having been exercised in full, such shares will become available for future grant or sale.

Our board of directors currently administers the 2010 Plan. Under the 2010 Plan, the administrator has the authority and discretion to select those individuals who will receive awards, choose the type or types of awards to be granted to selected individuals, and determine the terms that will apply to the awards granted (including the number of shares of common stock that the recipient may be entitled to receive or purchase), which terms may vary from award to award. The administrator also may authorize generally or in specific cases any adjustment in the exercise price, vesting schedule, number of shares subject to, or the term of any option by cancelling an outstanding option and subsequently regranting the option by amendment, substitution, waiver, or other legally valid means. The administrator also has the authority to determine the fair market value of a share of our common stock for purposes of the 2010 Plan and the awards granted thereunder. The administrator is authorized to interpret the provisions of the 2010 Plan and individual award agreements, and generally take any other actions that are contemplated by the 2010 Plan or necessary or appropriate in the administration of the 2010 Plan and individual award agreements. All decisions of the administrator are final and binding on all persons.

The administrator may grant incentive and/or nonstatutory stock options under the 2010 Plan, provided that incentive stock options are only granted to employees. The exercise price of such options must equal at least the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years; provided, however, that an incentive stock option held by a participant who owns more than 10% of the total combined voting power of all classes of our stock, or of certain of our affiliates, may not have a term in excess of five years and must have an exercise price of at least 110% of the fair market value of our common stock on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, check, promissory note, shares or other property acceptable to the administrator. Subject to the provisions of the 2010 Plan, the administrator determines the remaining terms of the options (e.g., vesting).

Stock appreciation rights may be granted under our 2010 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of our 2010 Plan, the administrator determines the terms of stock appreciation rights, including when such rights vest and become exercisable and whether to settle such awards in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. The specific terms will be set forth in an award agreement.

After the termination of service of an employee, director or consultant, he or she may exercise his or her option or stock appreciation for the period of time stated in his or her award agreement. Generally, if termination

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is due to death or disability, the option or stock appreciation right will remain exercisable for six months. In all other cases, the option will generally remain exercisable for 30 days following the termination of service. In some cases, options or stock appreciation rights issued to consultants pursuant to our 2010 Plan provide that they may be exercised at any time prior to the expiration of the ten year term of the option or stock appreciation right. However, in no event may an option or stock appreciation right be exercised later than the expiration of its term. In the event a participant is terminated for cause and the participant acquired vested shares pursuant to the exercise of an option or stock appreciation right under the 2010 Plan, we have the right to repurchase those shares during the 90-day period following the termination date.

Restricted stock may be granted under our 2010 Plan. Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse, in accordance with terms and conditions established by the administrator. The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest for any reason will be forfeited by the recipient and will revert to us. The specific terms will be set forth in an award agreement.

Restricted stock units may be granted under our 2010 Plan. Each restricted stock unit granted is a bookkeeping entry representing an amount equal to the fair market value of one share of our common stock. The administrator determines the terms and conditions of restricted stock units including the vesting criteria, which may include achievement of specified performance criteria or continued service to us, and the form and timing of payment. The administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. The administrator determines in its sole discretion whether an award will be settled in stock, cash or a combination of both. The specific terms will be set forth in an award agreement.

Unless the administrator provides otherwise, our 2010 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2010 Plan, the administrator will make proportionate adjustments to the exercise price and/or the number and/or type of shares covered by each award. The administrator may also provide for cash payments, or for the exchange of outstanding options granted under the 2010 Plan for other awards in such circumstances, such as by conversion, assumption, or substitution of an option for another company’s options on a ratio corresponding to the terms of a merger or other reorganization.

Our 2010 Plan provides that in the event of a merger or change in control, as defined under the 2010 Plan, each outstanding award will be treated as the administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period of time.

Our board of directors has the authority to amend, alter, suspend or terminate the 2010 Plan, provided such action does not impair the existing rights of any participant. Our 2010 Plan will automatically terminate in 2020 unless we terminate it sooner.

2000 Stock Plan

Our 2000 Stock Option Plan, or the 2000 Plan, was adopted by our board of directors and approved by our stockholders on April 6, 2000. The 2000 Plan was terminated on March 31, 2010. Following the termination of our 2000 Plan, we did not grant any additional awards under the 2000 Plan, but the 2000 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.

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Our 2000 Plan provided for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any subsidiary’s employees, and for the grant of nonqualified stock options and stock purchase rights to our employees and consultants and our affiliates’ or subsidiary’s employees and consultants.

Subject to the provisions of our 2000 Plan, the maximum aggregate number of shares issuable under our 2000 Plan was 27,113,054 shares. As of March 31, 2011, options to purchase 15,822,701 shares of our common stock were outstanding under the 2000 Plan. If an option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an option exchange program, such shares will become available for future grant or sale.

Our board of directors currently administers our 2000 Plan. Under our 2000 Plan, the administrator has the power to determine the terms of awards, including the recipients, the exercise price, if any, the number of shares covering each awards, the fair market value of a share of common stock, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon exercise of the award, and the terms of the award agreements for use under the 2000 Plan. The administrator has the authority to implement an option exchange program on such terms and conditions as it deems appropriate, provided that no amendment or adjustment, without participant’s prior written consent, may adversely affect any rights of a participant. The administrator also may modify any outstanding option without a participant’s consent if necessary to avoid our incurring adverse accounting charges. The administrator has the authority to interpret all provisions of the 2000 Plan, to prescribe the form of stock option agreements, and to adopt, amend, and rescind rules pertaining to the administration of the 2000 Plan. Any decision made, or action taken, by the administrator or in connection with the administration of the 2000 Plan shall be final and conclusive on all persons.

The exercise price of options granted under our 2000 Plan had to be at least equal to the fair market value of our common stock on the date of grant for incentive stock options and 85% of the fair market value of our common stock on the date of grant for nonstatutory stock options, except that with respect to any optionee who owned 10% of the voting power of all classes of our outstanding stock as of the grant date, the exercise price had to equal at least 110% of the fair market value on the grant date. The term of an incentive stock option had to not exceed ten years, except that with respect to any optionee who owned 10% of the voting power of all classes of our outstanding stock as of the grant, the term could not exceed five years. Unless otherwise provided in the option agreement, payment of the exercise price of an option will be made in cash or a cash equivalent acceptable to the administrator. The administrator also may provide that for the payment of the exercise price of an option by shares. Subject to the provisions of our 2000 Plan, the administrator determined the terms of all other options in its discretion.

After the termination of service of an employee or consultant, he or she may exercise his or her award to the extent vested for the period of time stated in his or her option agreement. Generally, if termination is due to death or disability, the award will remain exercisable for six months (12 months in the case of a termination due to death). In all other cases, the award will generally remain exercisable for 30 days following the termination of service. However, in no event may an option be exercised later than the expiration of its term. In the event a participant is terminated for cause and the participant acquired vested shares pursuant to the exercise of an option under the 2000 Plan, we have the right to repurchase those shares during the 90-day period following the termination date.

Unless the administrator provides otherwise, our 2000 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

In the event of certain changes in our capitalization, we or the administrator shall make proportionate adjustments to the number, value, and class of stock represented by the outstanding awards in accordance with such terms as we or the administrator may determine.

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In the event of a merger or consolidation of us (regardless of whether we are the surviving corporation), or a sale of substantially all of our assets, each outstanding award shall be assumed or substituted for by the successor corporation. If the successor corporation refuses to assume the award or to substitute an equivalent option or right, the outstanding award shall terminate upon the consummation of the transaction.

Our board of directors has the authority to amend, suspend or terminate the 2000 Plan provided such action does not impair the rights of any optionee without his or her written consent.

Retirement Plans

401(k) Plan. We maintain a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to participate in the 401(k) plan as of the first day of the month on or following the date they begin employment and participants are able to defer up to the lesser of 90% of their eligible compensation or $16,500. All participants’ interests in their deferrals are 100% vested when contributed. The 401(k) plan permits us to make matching contributions and profit sharing contributions to eligible participants, although we have not made any such contributions to date. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.

Limitation on Liability and Indemnification Matters

Our amended and restated certificate of incorporation and amended and restated bylaws, each to be effective upon the completion of this offering, will provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our amended and restated certificate of incorporation from limiting the liability of our directors for the following:

• any breach of the director’s duty of loyalty to us or to our stockholders;

• acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

• unlawful payment of dividends or unlawful stock repurchases or redemptions; and

• any transaction from which the director derived an improper personal benefit.

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our amended and restated certificate of incorporation does not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our amended and restated bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

In addition to the indemnification required in our amended and restated certificate of incorporation and amended and restated bylaws, we plan to enter into indemnification agreements with each of our current directors, officers and some employees before the completion of this offering. These agreements will provide for the indemnification of our directors, officers and some employees for certain expenses and liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, or hearing, inquiry or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by

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reason of the fact that they are or were a director, officer, employee, agent or fiduciary of us, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent or fiduciary of another entity. In the case of an action or proceeding by or in the right of us or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following is a summary of transactions since January 1, 2008 to which we have been a party in which the amount involved exceeded $120,000 and in which any of our executive officers, directors, promoters or beneficial holders of more than 5% of our capital stock had or will have a direct or indirect material interest, other than compensation arrangements which are described under the section of this prospectus entitled “Management—Executive Compensation.”

Related Party Transaction Policy

We intend to adopt prior to the completion of this offering a formal, written policy that our executive officers, directors (including director nominees), holders of more than 5% of any class of our voting securities and any member of the immediate family of or any entities affiliated with any of the foregoing persons, are not permitted to enter into a related party transaction with us without the prior approval or, in the case of pending or ongoing related party transactions, ratification of our audit committee. For purposes of our policy, a related party transaction is a transaction, arrangement or relationship where we were, are or will be involved and in which a related party had, has or will have a direct or indirect material interest.

Certain transactions with related parties, however, are excluded from the definition of a related party transaction including, but not limited to (1) transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $20,000, (2) transactions where a related party’s interest derives solely from his or her service as a director of another entity that is a party to the transaction, (3) transactions where a related party’s interest derives solely from his or her ownership of less than 10% of the equity interest in another entity that is a party to the transaction and (4) transactions where a related party’s interest derives solely from his or her ownership of a class of our equity securities and all holders of that class received the same benefit on a pro rata basis.

No member of the audit committee may participate in any review, consideration or approval of any related party transaction where such member or any of his or her immediate family members is the related party. In approving or rejecting the proposed agreement, our audit committee shall consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to (1) the benefits and perceived benefits to us, (2) the materiality and character of the related party’s direct and indirect interest, (3) the availability of other sources for comparable products or services, (4) the terms of the transaction and (5) the terms available to unrelated third parties under the same or similar circumstances. In reviewing proposed related party transactions, the audit committee will only approve or ratify related party transactions that are in, or not inconsistent with, the best interests of us and our stockholders.

The transactions described below were consummated prior to our adoption of the formal, written policy described above and therefore the foregoing policies and procedures were not followed with respect to the transactions. However, we believe that the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Bridge Debt Financing

In June and July 2010, we issued approximately $6.0 million aggregate principal amount of our subordinated secured convertible promissory notes, or 2010 Notes, to existing investors. Interest on the 2010 Notes accrues interest on the unpaid principal balance at 9.0% per year, and all unpaid principal, accrued interest and any other amounts payable under the 2010 Notes are due and payable on the earlier to occur of (1) June 30, 2011 and (2) when upon the occurrence and during the continuance of an event of default listed in the 2010 Notes, such amounts are declared due and payable by the investor; provided, the 2010 Notes shall become payable immediately prior to the closing of a liquidation event, including an initial public offering; provided further that, if a liquidity event has not occurred prior to the scheduled maturity date, the maturity date may be

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extended by the vote of holders of more than 60% of the aggregate principal amount of the 2010 Notes. We expect that that the maturity date of the 2010 Notes will be extended if the offering contemplated by this prospectus is consummated after the scheduled maturity date. We are required to repay all principal and accrued interest on the 2010 Notes plus a premium equal to the sum of the outstanding principal and accrued interest on the 2010 Notes in connection with the consummation of an initial public offering; however, holders of at least $100,000 aggregate principal amount of the 2010 Notes may, at their option, convert the principal amount of their 2010 Notes plus accrued interest into (1) shares of our Series E preferred stock at a conversion price of $2.286 per share (which conversion price is subject to adjustments for stock splits, reverse stock splits, stock dividends and the like) or (2) if all of the shares of our Series E preferred stock are converted into shares of our common stock, a number of shares of common stock that holders would have received had they converted their notes in to Series E preferred stock immediately prior to the conversion pursuant to our certificate of incorporation. The 2010 Notes contain customary events of default and covenants. We were in compliance with such covenants as of December 31, 2010. Our obligations under the 2010 Notes are secured by substantially all of our assets other than intellectual property. The 2010 Notes are subordinate in right of payment to the credit facilities described above in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this prospectus. As of December 31, 2010, approximately $6.0 million aggregate principal amount of our convertible notes were outstanding. We currently expect that the 2010 Notes will become due and payable upon the closing of this offering, and we intend to use a portion of the net proceeds from this offering to satisfy our repayment obligations under the 2010 Notes. Of the net proceeds intended to repay amounts outstanding under the 2010 Notes, approximately $8.2 million would be paid to our affiliates.

Each investor who purchased a 2010 Note also received a warrant to purchase a number of shares of our Series E preferred stock equal to the quotient obtained by dividing (x) the sum of (A) 30% of the principal amount of the 2010 Note up to the maximum of the pro rata amount set forth in the Note and Warrant Purchase Agreement purchased by such investor and (B) 50% of any other participation amount over the pro rata amount as set forth in the Note and Warrant Purchase Agreement by (y) $2.286, which warrants are currently exercisable for rights to purchase an aggregate of 890,721 shares of our Series E preferred stock at a purchase price per share of $2.286.

The table below sets forth (1) the principal amount of 2010 Notes purchased by each of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of or any entities affiliated with any of the foregoing persons and (2) the number of shares of our Series E preferred stock currently issuable upon the exercise of warrants issued in connection with the purchase of our 2010 Notes.

Purchaser	Principal Amount of 2010 Note(s) Purchased		Number of Shares of Series E Preferred Stock Currently Issuable upon Exercise of Warrant(s) Issued in Connection with 2010 Notes
Entities affiliated with Madrona Venture Group(1)	$	920,046		120,740
Entities affiliated with ARCH Venture Partners(2)		994,522		130,514
Entities affiliated with Polaris Venture Partners.(3)		972,083		127,569
Entities affiliated with Mobius Venture Capital, Inc.(4)		718,056		94,231
Middlefield Ventures, Inc.(5)		205,496		26,968
Chris Diorio	$	24,998		3,280
Total	$	3,835,201		503,302

(1) Consists of a 2010 Note in the principal amount of $740,347 and a related warrant currently exercisable for 97,158 shares issued to Madrona Venture Fund 1-A, L.P., a 2010 Note in the principal amount of $80,576 and a related warrant currently exercisable for 10,574 shares issued to Madrona Venture Fund 1-B, L.P., and a 2010 Note in the principal amount of $99,123 and a related warrant currently exercisable for 13,008 shares issued to Madrona Managing Director Fund, L.L.C., which entities are aggregated for purposes of reporting our share ownership information and collectively hold 5% or more of our capital stock. Tom A. Alberg, a managing director of Madrona Venture Group, is a member of our board of directors.

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(2) Consists of a 2010 Note in the principal amount of $987,866 and a related warrant currently exercisable for 129,641 shares issued to ARCH Venture Fund V, L.P., and a 2010 Note in the principal amount of $6,656 and a related warrant currently exercisable for 873 shares issued to ARCH V Entrepreneurs Fund, L.P., which entities are aggregated for purposes of reporting our share ownership information and collectively hold 5% or more of our capital stock. Clinton Bybee, a managing director of ARCH Venture Partners, is a member of our board of directors.

(3) Consists of a 2010 Note in the principal amount of $933,773 and a related warrant currently exercisable for 122,542 shares issued to Polaris Venture Partners III, L.P., a 2010 Note in the principal amount of $23,805 and a related warrant currently exercisable for 3,124 shares issued to Polaris Venture Partners Entrepreneurs’ Fund III, L.P., and a 2010 Note in the principal amount of $14,505 and a related warrant currently exercisable for 1,903 shares issued to Polaris Venture Partners Founders’ Fund III, L.P., which entities are aggregated for purposes of reporting our share ownership information and collectively hold 5% or more of our capital stock. Stephen D. Arnold, Ph.D., a venture partner of Polaris Venture Partners, is a member of our board of directors.

(4) Consists of a 2010 Note in the principal amount of $333,609 and a related warrant currently exercisable for 43,780 shares issued to Mobius Technology Ventures VI L.P., a 2010 Note in the principal amount of $357,807 and a related warrant currently exercisable for 46,956 shares issued to SOFTBANK U.S. Ventures Fund VI L.P., a 2010 Note in the principal amount of $12,997 and a related warrant currently exercisable for 1,705 shares issued to Mobius Technology Ventures Advisors Fund VI L.P. and a 2010 Note in the principal amount of $13,643 and a related warrant currently exercisable for 1,790 shares issued to Mobius Technology Ventures Side Fund VI L.P., which entities are aggregated for purposes of reporting our share ownership information and collectively hold 5% or more of our capital stock.

(5) Middlefield Ventures, Inc. is affiliated with Intel Corporation, a holder of more than 5% of our outstanding shares of common stock.

2009 Stock Option Exchange

In September 2009, we offered eligible holders of our stock options, including our executive officers, all our employees and one of our non-employee directors, the opportunity to exchange certain outstanding options for new options with an exercise price equal to the fair value of our common stock on September 23, 2009, the date on which this exchange offer ended. Options eligible for exchange included all options with an exercise price greater than $0.05 per share that remained outstanding and unexercised on September 23, 2009. We determined that the fair market value of our common stock on September 23, 2009 was $0.05. The new options issued in this exchange were exercisable for the same number of shares as the old options and were subject to the same terms and conditions, except that the vesting period for the new options was extended by up to 24 months based on the number of shares previously vested in the options. Options to purchase approximately 6,576,165 shares were exchanged, including the following share amounts by the following executive officers and non-employee director:

Name and Principal Position	Number of Shares Underlying Options Exchanged
William Colleran Chief Executive Officer and President		3,922,008
Evan Fein Chief Financial Officer and Senior Vice President		125,000
Steve Voit Executive Vice President Sales and Marketing		205,407
John Quist Senior Vice President Operations		345,000
Albert Yu Director		400,000
Total		4,997,415

Customer Agreements

In December 2009 we entered into an agreement with Intel for engineering services related to our technology, and we are continuing to perform under March 2010 and April 2011 amendments to that agreement. For the year that ended December 31, 2009, no revenue was recognized under this agreement. For the year ended December 31, 2010, we recorded revenue of $668,000 under this agreement.

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Investors’ Rights Agreement

We have entered into an investors’ rights agreement with certain holders of our common stock and convertible preferred stock, including Chris Diorio, our chairman and chief technology officer, Intel Corporation and entities affiliated with each of ARCH Venture Partners, Polaris Venture Partners, Madrona Venture Group and Mobius Venture Capital, Inc. As of March 31, 2011, the holders of 121,124,172 shares of our common stock, including the shares of common stock issuable upon the conversion of our convertible preferred stock, are entitled to rights with respect to the registration of their shares under the Securities Act. For a description of these registration rights, see “Description of Capital Stock—Registration Rights.”

Other Transactions

We have entered into employment agreements with our executive officers that, among other things, provide for certain severance and change of control benefits. For a description of these agreements, see “Executive Compensation—Executive Employment Agreements.”

We have granted stock options to our executive officers and to two of our non-executive directors. For a description of these options, see “Management—Director Compensation” and “Executive Compensation.”

We will enter into indemnification agreements with our directors and executive officers prior to the completion of this offering. For a description of these agreements, see “Management—Limitation of Liability and Indemnification.”

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock as of March 31, 2011 by:

• each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock;

• each of the named executive officers;

• each of our directors;

• all of our executive officers and directors as a group; and

• the selling stockholders, which consist of the entities and individuals shown as having shares listed in the column “Shares Being Offered.”

The percentage of beneficial ownership prior to the offering shown in the table is based upon 132,776,294 shares outstanding as of March 31, 2011. The percentage of beneficial ownership after this offering shown in the table is based on             shares of common stock outstanding after the closing of this offering, assuming no exercise of the underwriters’ over-allotment option.

Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules take into account shares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before the 60th day after March 31, 2011. Certain of the options granted to our named executive officers may be exercised prior to the vesting of the underlying shares. We refer to such options as being “early exercisable.” Shares of common stock issued upon early exercise are subject to our right to repurchase such shares until such shares have vested. These shares are deemed to be outstanding and beneficially owned by the person holding those options or a warrant for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as otherwise noted below, the address for person or entity listed in the table is c/o Impinj, Inc., 701 North 34^th Street, Suite 300, Seattle, Washington 98103.

	Shares Beneficially Owned Prior to this Offering					Number of Shares Being Offered		Shares Beneficially Owned After this Offering
Name of Beneficial Owner	Number		Percentage					Number	Percentage
5% Stockholders and Selling Stockholders(1)
Entities affiliated with ARCH Venture Partners(2)		19,518,725		14.69	%
Entities affiliated with Polaris Venture Partners(3)		19,078,335		14.35
Entities affiliated with Madrona Venture Group(4)		18,057,043		13.59
Entities affiliated with Mobius Venture Capital, Inc.(5)		14,092,735		10.61
Intel Corporation(6)		8,767,681		6.60
Named Executive Officers and Directors
William T. Colleran, Ph.D.(7)		7,100,000		5.10
Evan Fein(8)		1,185,000		*
Chris Diorio, Ph.D.(9)		13,600,000		10.15
Steve Voit(10)		1,782,193		1.32
John Quist(11)		775,000		*
Tom A. Alberg(4)		18,057,043		13.59			—
Stephen D. Arnold, Ph.D.(6)		19,078,335		14.35			—
Clinton Bybee(2)		19,518,725		14.69
Gregory Sessler		—		—			—
Albert Yu, Ph.D.(12)		475,000		*			—
All directors and executive officers as a group (10 persons)		81,571,296		59.71

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* Represents beneficial ownership of less than 1%.

(1) Dr. Diorio is also a holder of greater than 5% of our outstanding shares of common stock.

(2) Consists of 119,688 shares and a warrant to purchase 873 shares held of record by ARCH V Entrepreneurs Fund, L.P. and 19,268,523 shares and a warrant to purchase 129,641 shares held of record by ARCH Venture Fund V, L.P. ARCH Venture Partners V, L.P., as the sole general partner of ARCH Venture Fund V, L.P. and ARCH V Entrepreneurs Fund, L.P., may be deemed to beneficially own certain of the shares held of record by ARCH Venture Fund V, L.P. and ARCH V Entrepreneurs Fund, L.P., but disclaims beneficial ownership of such shares, in which it does not have an actual pecuniary interest. ARCH Venture Partners V, LLC, as the sole general partner of ARCH Venture Partners V, L.P., may be deemed to beneficially own certain of the shares held of record by ARCH Venture Fund V, L.P. and ARCH V Entrepreneurs Fund, L.P. but disclaims beneficial ownership of such shares, in which it does not have an actual pecuniary interest. Clinton Bybee, Robert Nelsen, Keith Crandell and Steven Lazarus are the managing directors of ARCH Venture Partners V, LLC, and each may be deemed to beneficially own certain of the shares held of record by ARCH Venture Fund V, L.P. and ARCH V Entrepreneurs Fund, L.P. Mr. Bybee, Mr. Nelsen, Mr. Crandell and Mr. Lazarus disclaim beneficial ownership of all shares held of record by ARCH Venture Fund V, L.P. and ARCH V Entrepreneurs Fund, L.P., in which they do not have an actual pecuniary interest. By virtue of their relationship as affiliated entities who have overlapping general partners and managing directors, ARCH Venture Fund V, L.P., ARCH V Entrepreneurs Fund, L.P., ARCH Venture Partners V, L.P., ARCH Venture Partners V, LLC, Keith Crandell, Mr. Bybee, Robert Nelsen and Steven Lazarus may be deemed to share the voting and investment control of the record shares. The address of ARCH Venture Fund V, L.P., ARCH V Entrepreneurs Fund, L.P., Mr. Bybee, Mr. Nelsen, Mr. Crandell and Mr. Lazarus is 8725 West Higgins Road, Suite 290, Chicago, Illinois 60631.

(3) Consists of 18,193,717 shares and a warrant to purchase 122,542 shares held of record by Polaris Venture Partners III. L.P., 470,999 shares and a warrant to purchase 3,124 shares held of record by Polaris Venture Partners Entrepreneur’s Fund III, L.P. and 286,050 shares and a warrant to purchase 1,903 shares held of record by Polaris Venture Partners Founders’ Fund III, L.P. Polaris Venture Management Co. III, L.L.C., as the sole general partner of Polaris Venture Partners III, L.P., Polaris Venture Partners Entrepreneur’s Fund III, L.P. and Polaris Venture Partners Founders’ Fund III, L.P., may be deemed to beneficially own certain of the shares held of record by Polaris Venture Partners III, L.P., Polaris Venture Partners Entrepreneur’s Fund III, L.P. and Polaris Venture Partners Founders’ Fund III, L.P. but disclaims beneficial ownership of such shares, in which it does not have an actual pecuniary interest. Dr. Arnold disclaims beneficial ownership of all shares held of record by Polaris Venture Partners III, L.P., Polaris Venture Partners Entrepreneur’s Fund III, L.P. and Polaris Venture Partners Founders’ Fund III, L.P., in which he does not have an actual pecuniary interest. By virtue of their relationship as affiliated entities who have overlapping general partners and managing directors, Polaris Venture Management Co. III, L.L.C., Polaris Venture Partners III, L.P., Polaris Venture Partners Entrepreneur’s Fund III, L.P., Polaris Venture Partners Founders’ Fund III, L.P., Jonathan Flint and Terrance McGuire may be deemed to share the voting and investment control of the record shares. The address of Polaris Venture Partners III, L.P., Polaris Venture Partners Entrepreneur’s Fund III, L.P., Polaris Venture Partners Founders’ Fund III, L.P. is 1000 Winter Street, Suite 3350, Waltham, Massachusetts, 02451 and the address of Dr. Arnold is 1000 Second Avenue, Suite 3700, Seattle, Washington 98104.

(4) Consists of 1,933,040 shares and a warrant to purchase 13,008 shares held of record by Madrona Managing Director Fund, LLC, 14,430,125 shares and a warrant to purchase 97,158 shares held of record by Madrona Venture Fund I-A, L.P. and 1,573,138 shares and a warrant to purchase 10,574 shares held of record by Madrona Venture Fund I-B, L.P. Madrona Investment Partners, LLC, as the sole general partner of Madrona Venture Fund I-A, L.P. and Madrona Venture Fund I-B, L.P., may be deemed to beneficially own certain of the shares held of record by Madrona Venture Fund I-A, L.P. and Madrona Venture Fund I-B, L.P. but disclaims beneficial ownership of such shares, in which it does not have an actual pecuniary interest. Mr. Alberg disclaims beneficial ownership of all shares held of record by Madrona Managing Director Fund, LLC, Madrona Venture Fund I-A, L.P. and Madrona Venture Fund I-B, L.P., in which he does not have an actual pecuniary interest. By virtue of their relationship as affiliated entities who have overlapping general partners and managing directors, Madrona Managing Director Fund, LLC, Madrona Venture Fund I-A, L.P., Madrona Venture Fund I-B, L.P., Madrona Investment Partners, LLC and Mr. Alberg may be deemed to share the voting and investment control of the record shares. The address of Madrona Managing Director Fund, LLC, Madrona Venture Fund I-A, L.P., Madrona Venture Fund I-B, L.P. and Mr. Alberg is 1000 Second Avenue, Suite 3700, Seattle, Washington 98104.

(5) Consists of 253,372 shares and a warrant to purchase 1,705 shares held of record by Mobius Technology Ventures Advisors Fund VI L.P., 265,971 shares and a warrant to purchase 1,790 shares held of record by Mobius Technology Ventures Side Fund VI L.P., 6,503,707 shares and a warrant to purchase 43,780 shares held of record by Mobius Technology Ventures VI L.P. and 6,975,454 shares and a warrant to purchase 46,956 shares held of record by SOFTBANK U.S. Ventures Fund VI L.P. Mobius VI LLC, as the sole general partner of Mobius Technology Ventures Advisors Fund VI L.P., Mobius Technology Ventures Side Fund VI L.P., Mobius Technology Ventures VI L.P. and SOFTBANK U.S. Ventures Fund VI L.P., may be deemed to beneficially own certain of the shares held of record by Mobius Technology Ventures Advisors Fund VI L.P., Mobius Technology Ventures Side Fund VI L.P., Mobius Technology Ventures VI L.P. and SOFTBANK U.S. Ventures Fund VI L.P. but disclaims beneficial ownership of such shares, in which it does not have an actual pecuniary interest. By virtue of their relationship as affiliated entities who have overlapping general partners and managing directors, Mobius VI LLC, Mobius Technology Ventures Advisors Fund VI L.P., Mobius Technology Ventures Side Fund VI L.P., Mobius Technology Ventures VI L.P., SOFTBANK U.S. Ventures Fund VI L.P., Jason Mendelson and Brad Feld may be deemed to share the voting and investment control of the record shares. The address of Mobius Technology Ventures Advisors Fund VI L.P., Mobius Technology Ventures Side Fund VI L.P., Mobius Technology Ventures VI L.P. and SOFTBANK U.S. Ventures Fund VI L.P. is 1050 Walnut Street, Suite 210, Boulder, Colorado 80302.

(6) Consists of 8,740,713 shares and a warrant to purchase 26,968 shares.

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(7) Consists of 577,992 shares held in trusts for Dr. Colleran’s children, over which Dr. Colleran has no voting or investment power and with respect to which Dr. Colleran disclaims beneficial ownership, and 6,522,008 shares Dr. Colleran has the right to acquire within 60 days of March 31, 2011 through the exercise of options, all of which options are early exercisable.

(8) Includes 100,000 shares held of record by Mr. Fein and 1,085,000 shares Mr. Fein has the right to acquire within 60 days of March 31, 2011 through the exercise of options.

(9) Includes 12,400,000 shares held of record by Dr. Diorio and 1,200,000 shares Dr. Diorio has the right to acquire within 60 days of March 31, 2011 through the exercise of options, all of which options are early exercisable.

(10) Includes 1,782,193 shares Mr. Voit has the right to acquire within 60 days of March 31, 2011 through the exercise of options, all of which options are early exercisable.

(11) Includes 775,000 shares Mr. Quist has the right to acquire within 60 days of March 31, 2011 through the exercise of options, all of which options are early exercisable.

(12) Includes 475,000 shares Dr. Yu has the right to acquire within 60 days of March 31, 2011 through the exercise of options, all of which options are early exercisable.

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DESCRIPTION OF CAPITAL STOCK

The following is a summary of the rights of our common stock and convertible preferred stock. This summary is not complete. For more detailed information, please see our certificate of incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.

Upon the closing of this offering and the filing of our certificate of incorporation to be effective upon completion of this offering, our authorized capital stock will consist of             shares of common stock, par value $0.001 per share, and             shares of convertible preferred stock, par value $0.001 per share.

Upon the closing of this offering, all the outstanding shares of our convertible preferred stock will automatically convert into an aggregate of 97,465,284 shares of our common stock. In addition, upon the closing of this offering and after giving effect to the conversion of our convertible preferred stock into common stock, warrants to purchase an aggregate of 1,451,001 shares of common stock will remain outstanding if they are not exercised prior to closing of this offering.

Common Stock

Outstanding Shares

Based on 132,776,294 shares of common stock outstanding as of March 31, 2011, the conversion of convertible preferred stock outstanding as of March 31, 2011 into 97,465,284 shares of common stock upon the completion of this offering, the issuance of             shares of common stock in this offering, and no exercise of options or warrants, there will be             shares of common stock outstanding upon the closing of this offering. As of March 31, 2011, assuming the conversion of all outstanding convertible preferred stock into common stock upon the closing of this offering, we had approximately 197 record holders of our common stock.

As of March 31, 2011, there were 1,451,001 shares of common stock subject to outstanding warrants, assuming the conversion of all outstanding convertible preferred stock into common stock upon the closing of this offering, and 21,914,388 shares of common stock subject to outstanding options.

Voting Rights

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Our certificate of incorporation and bylaws to be in effect upon the completion of this offering do not provide for cumulative voting rights. Because of this, the holders of a plurality of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose.

Dividends

Subject to preferences that may be applicable to any then outstanding preferred stock, holders of common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. For more information see the section of this prospectus captioned “Dividend Policy.”

Liquidation

In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.

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Rights and Preferences

Holders of common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

Fully Paid and Nonassessable

All of our outstanding shares of common stock are, and the shares of common stock to be issued pursuant to this offering will be, fully paid and nonassessable.

Preferred Stock

Upon the closing of this offering, our board of directors will have the authority, without further action by the stockholders, to issue up to              shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing change in our control or other corporate action. Upon closing of this offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of convertible preferred stock.

Warrants

As of March 31, 2011, warrants exercisable for an aggregate of 1,151,001 shares of our Series E preferred stock at an exercise price of $2.286 per share and a warrant exercisable for 300,000 shares of our common stock at an exercise price of $0.21 per share were outstanding. These warrants exercisable for our Series E preferred stock include: (1) warrants exercisable for 218,723 shares of Series E preferred stock issued in October 2007 in connection with the entry in our loan agreement; (2) warrants exercisable for an additional 24,059 and 17,498 shares of Series E preferred stock issued in June 2010 and February 2011, respectively, in connection with the entry into, and amendments of our credit facility; and (3) warrants exercisable for 890,721 shares of our Series E preferred stock issued in June and July 2010 in connection with our 2010 Notes financing. The warrant exercisable for 300,000 shares of our common stock was issued in March 2011 in connection with the entry into our mezzanine credit facility.

These warrants have a net exercise provision under which their holders may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of our stock at the time of exercise of the warrants after deduction of the aggregate exercise price. These warrants contain provisions for adjustment of the exercise price and number of shares issuable upon the exercise of warrants in the event of certain stock dividends, stock splits, reorganizations, reclassifications and consolidations.

The warrants issued to our lenders under our loan and security agreement and credit facility will become exercisable for shares of common stock in connection with the conversion of all our outstanding shares of convertible preferred stock into common stock immediately prior to the closing of this offering. The warrant issued in October 2007 will terminate on October 3, 2014 if not exercised earlier, the warrant issued in June 2010 in connection with the entry into our credit facility will terminate on June 2, 2020 if not exercised earlier, the warrant issued in February 2011 will terminate on February 2, 2021 if not exercised earlier, and the warrant issued in March 2011 will terminate on March 25, 2021 if not exercised earlier.

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The warrants issued in connection with our 2010 Notes financing will be exercised automatically on a net exercise basis in connection with the offering contemplated by this prospectus if the initial per share price to the public exceeds the exercise price of the warrants; otherwise, such warrants will expire upon the closing of this offering.

Registration Rights

Under our investors’ rights agreement, following the closing of this offering, the holders of approximately                      shares of common stock (including the shares underlying the warrants described in “Shares Eligible for Future Sale—Warrants”) or their transferees, have the right to require us to register the offer and sale of their shares, or to include their shares in any registration statement we file, in each case as described below.

Demand Registration Rights

The holders of at least 30% of the shares having registration rights have the right to demand that we use commercially reasonable efforts to file a registration statement for the registration of the offer and sale of at least 20% of the shares having such registration rights. We are only obligated to file up to two registration statements in connection with the exercise of demand registration rights. These registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration under certain circumstances.

Form S-3 Registration Rights

At any time after we are qualified to file a registration statement on Form S-3, the holders of at least 10% of the shares having registration rights have the right to demand that we file a registration statement on Form S-3 so long as the aggregate amount of shares to be offered and sold under such registration statement on Form S-3 is at least $1.0 million. We are not obligated to file any registration statements within 180 days of a registration statement that we propose. These registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration statement on Form S-3 under certain circumstances.

Piggyback Registration Rights

At any time after the closing of this offering, if we propose to register the offer and sale of any of our securities under the Securities Act either for our own account or for the account of other stockholders, a stockholder with registration rights will have the right, subject to certain exceptions, to include their shares of common stock in the registration statement. These registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration statement under certain circumstances, but not below 30% of the total number of shares covered by the registration statement.

Expenses of Registration

We will pay all expenses relating to any demand registrations, Form S-3 registrations and piggyback registrations, other than underwriting discounts and selling commissions.

Termination

The registration rights terminate upon the earliest of (1) the date that is five years after the closing of this offering, (2) as to a given holder of registration rights, when such holder of registration rights can sell all of such holder’s registrable securities in a three month-period pursuant to Rule 144 promulgated under the Securities Act and (3) a change in control of us.

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Anti-Takeover Effects of Delaware and Washington Law and Our Certificate of Incorporation and Bylaws

Delaware Law

We are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a publicly held Delaware corporation from engaging in a “business combination” with any “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:

• prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

• upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

• on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Section 203 defines a business combination to include:

• any merger or consolidation involving the corporation and the interested stockholder;

• any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

• subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

• any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; and

• the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

Washington Business Corporation Act

The laws of Washington, where our principal executive offices are located, impose restrictions on certain transactions between certain foreign corporations and significant stockholders. In particular, the Washington Business Corporation Act, or WBCA, prohibits a “target corporation,” with certain exceptions, from engaging in certain “significant business transactions” with a person or group of persons which beneficially owns 10% or more of the voting securities of the target corporation, an “acquiring person,” for a period of five years after such acquisition, unless the transaction or acquisition of shares is approved by a majority of the members of the target corporation’s board of directors prior to the time of acquisition. Such prohibited transactions may include, among other things:

• any merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person;

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• any termination of 5% or more of the employees of the target corporation as a result of the acquiring person’s acquisition of 10% or more of the shares; and

• allowing the acquiring person to receive any disproportionate benefit as a stockholder.

After the five-year period, a significant business transaction may take place as long as it complies with certain fair price provisions of the statute or is approved at an annual or special meeting of stockholders.

We will be considered a “target corporation” so long as our principal executive office is located in Washington, and (1) a majority of our employees are residents of the state of Washington or we employ more than one thousand residents of the state of Washington; (2) a majority of our tangible assets, measured by market value, are located in the state of Washington or we have more than fifty million dollars’ worth of tangible assets located in the state of Washington; and (3) any one of the following: (a) more than 10% of our stockholders of record are resident in the state of Washington; (b) more than 10% of our shares are owned of record by state residents; or (c) 1,000 or more of our stockholders of record are resident in the state.

If we meet the definition of a target corporation, the WBCA may have the effect of delaying, deferring or preventing a change of control.

Certificate of Incorporation and Bylaws

Provisions of our certificate of incorporation and bylaws to be effective upon completion of this offering may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our certificate of incorporation and bylaws will:

• permit our board of directors to issue up to              shares of preferred stock, with any rights, preferences and privileges as they may designate, including the right to approve an acquisition or other change in our control;

• provide that the authorized number of directors may be changed only by resolution of the board of directors;

• provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;

• divide our board of directors into three classes;

• require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;

• provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice;

• not provide for cumulative voting rights (therefore allowing the holders of a plurality of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose);

• provide that special meetings of our stockholders may be called only by the chairman of the board, our chief executive officer or by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors; and

• provide that stockholders will be permitted to amend our bylaws only upon receiving at least 66 ²/3% of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.

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The amendment of any of these provisions would require approval by the holders of at least 66 ²/3% of our then outstanding common stock, voting as a single class.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is             . The transfer agent and registrar’s address is             .

Listing

We intend to apply to have our common stock approved for listing on              under the symbol “    .”

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and although we expect that our common stock will be approved for listing on            , we cannot assure you that there will be an active public market for our common stock following this offering. We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. Future sales of substantial amounts of common stock in the public market, including shares issued upon exercise of outstanding options, or the perception that such sales may occur, however, could adversely affect the market price of our common stock and also could adversely affect our future ability to raise capital through the sale of our common stock or other equity-related securities of ours at times and prices we believe appropriate.

Upon completion of this offering, based on our shares outstanding as of March 31, 2011 and after giving effect to the conversion of all outstanding shares of our preferred stock,            shares of our common stock will be outstanding, or            shares of common stock if the underwriters exercise their over-allotment option in full. All of the shares of common stock expected to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining outstanding shares of our common stock will be deemed “restricted securities” as that term is defined under Rule 144. Restricted securities may be sold in the public market only if their offer and sale is registered under the Securities Act or if the offer and sale of those securities qualify for an exemption from registration, including exemptions provided by Rules 144 and 701 under the Securities Act, which are summarized below.

As a result of the lock-up agreements and market stand-off provisions described below and the provisions of Rules 144 or 701, and assuming no extension of the lock-up period and no exercise of the underwriters’ over-allotment option, the shares of our common stock that will be deemed “restricted securities” will be available for sale in the public market following the completion of this offering as follows:

•             shares will be eligible for sale on the date of this prospectus; and

•             shares will be eligible for sale upon expiration of the lock-up agreements and market stand-off provisions described below, beginning more than 180 days after the date of this prospectus.

We may issue shares of our common stock from time to time for a variety of corporate purposes, including in capital-raising activities through future public offerings or private placements, in connection with exercise of stock options, vesting of restricted stock units and other issuances relating to our employee benefit plans and as consideration for future acquisitions, investments or other purposes. The number of shares of our common stock that we may issue may be significant, depending on the events surrounding such issuances. In some cases, the shares we issue may be freely tradable without restriction or further registration under the Securities Act; in other cases, we may grant registration rights covering the shares issued in connection with these issuances, in which case the holders of the common stock will have the right, under certain circumstances, to cause us to register any resale of such shares to the public.

Lock-up Agreements

We, our directors and officers and the other holders of our equity securities have agreed, subject to certain exceptions, not to offer, sell or transfer any common stock or securities convertible into or exchangeable or exercisable for common stock, for 180 days after the date of this prospectus without first obtaining the written consent of Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC on behalf of the underwriters, subject to specified exceptions and a possible extension of up to 34 additional days beyond the end of such 180-day period, after the date of this prospectus. These agreements are described below under the section captioned “Underwriters.”

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Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC have advised us that they have no present intent or arrangement to release any shares subject to a lock-up, and will consider the release of any lock-up on a case-by-case basis. Upon a request to release any shares subject to a lock-up, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC would consider the particular circumstances surrounding the request, including, but not limited to, the length of time before the lock-up expires, the number of shares requested to be released, reasons for the request, the possible impact on the market or our common stock and whether the holder of our shares requesting the release is an officer, director or other affiliate of ours.

Rule 144

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who is not our affiliate and has not been our affiliate at any time during the preceding three months will be entitled to sell any shares of our common stock that such person has beneficially owned for at least six months, including the holding period of any prior owner other than one of our affiliates, without regard to the registration requirements of the Securities Act. Sales of our common stock by any such person would be subject to the availability of current public information about us if the shares to be sold were beneficially owned by such person for less than one year.

In addition, under Rule 144, a person may sell shares of our common stock acquired from us immediately upon the completion of this offering, without regard to the registration requirements of the Securities Act or the availability of public information about us, if:

• the person is not our affiliate and has not been our affiliate at any time during the preceding three months; and

• the person has beneficially owned the shares to be sold for at least one year, including the holding period of any prior owner other than one of our affiliates.

Beginning 90 days after the date of this prospectus, our affiliates who have beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

• 1% of the number of shares of our common stock then outstanding, which will equal approximately            shares immediately after this offering; and

• the average weekly trading volume in our common stock on            during the four calendar weeks preceding the date of filing of a notice on Form 144 with respect to the sale.

Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. To the extent that shares were acquired from one of our affiliates, a person’s holding period for the purpose of effecting a sale under Rule 144 would commence on the date of transfer from the affiliate.

Rule 701

In general, under Rule 701 a person who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been one of our affiliates during the immediately preceding 90 days may sell these shares in reliance upon Rule 144, but without being required to comply with the notice, manner of sale or public information requirements or volume limitation provisions of Rule 144. Rule 701 also permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701.

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As of March 31, 2011, 12,076,696 shares of our outstanding common stock had been issued in reliance on Rule 701 as a result of exercises of stock options. All of these shares, however, are subject to lock-up agreements or market stand-off provisions as discussed above, and, as a result, these shares will only become eligible for sale at the earlier of the expiration of the lock-up period or upon obtaining the consent of Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC on behalf of the underwriters to release all or any portion of these shares from the lock-up agreements.

Stock Options

As of March 31, 2011, options to purchase an aggregate 21,914,388 shares of our common stock were outstanding. We intend to file one or more registration statements on Form S-8 under the Securities Act to register the offer and sale of all shares of our common stock subject to outstanding stock options and all shares issued or issuable under our stock plans. We expect to file the registration statement covering these shares after the date of this prospectus, which will permit the resale of such shares by persons who are non-affiliates of ours in the public market without restriction under the Securities Act, subject, with respect to certain of the shares, to the provisions of the lock-up agreements and market stand-off provisions described above.

Warrants

Upon completion of this offering, warrants entitling holders to purchase an aggregate of 260,280 shares of our common stock at an exercise price of $2.286 per share and 300,000 shares of our common stock at an exercise price of $0.21 per share (subject to adjustment as provided in the warrants) will remain outstanding. See “Description of Capital Stock—Warrants” for additional information. Such shares issued upon exercise of the warrants may be able to be sold after the expiration of the lock-up period described above subject the requirements of Rule 144 described above.

Registration Rights

Upon completion of this offering, the holders of approximately            shares of our common stock (including the shares underlying the warrants described in “—Warrants” above), will be eligible to exercise certain rights to cause us to register their shares for resale under the Securities Act, subject to various conditions and limitations. These registration rights are described under the caption “Description of Capital Stock—Registration Rights.” Upon the effectiveness of a registration statement covering these shares, the shares would become freely tradable, and a large number of shares may be sold into the public market. If that occurs, the market price of our common stock could be adversely affected.

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MATERIAL U.S. TAX CONSEQUENCES FOR

NON-U.S. HOLDERS OF COMMON STOCK

The following is a summary of the material U.S. federal income and estate tax consequences to non-U.S. holders of the ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the U.S. Internal Revenue Code, U.S. Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof, all of which are subject to change, possibly with retroactive effect, which could result in U.S. federal income and estate tax consequences different than those summarized below. We have not sought a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

This summary does not address the tax considerations arising under the laws of any state, local or other jurisdiction and is limited to investors who will hold our common stock as a capital asset for tax purposes. This summary does not address all tax considerations that may be important to a particular investor in light of the investor’s circumstances or to certain categories of non-U.S. investors that may be subject to special rules, such as:

• banks, insurance companies or other financial institutions (except to the extent specifically set forth below);

• tax-exempt organizations;

• controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

• dealers in securities or currencies;

• traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

• persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);

• certain former citizens or long-term residents of the United States;

• persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; or

• persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.

In addition, if a partnership (including any entity classified as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock and partners in such partnerships should consult their tax advisors.

The following discussion of material U.S. federal income and estate tax consequences to non-U.S. holders is for general information only. You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.

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Non-U.S. Holder Defined

For purposes of this discussion, you are a non-U.S. holder if you are a beneficial owner of our common stock other than a (1) U.S. citizen or U.S. resident alien, (2) a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, that was created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (3) an estate whose income is subject to U.S. federal income taxation regardless of its source, (4) a trust that either is subject to the supervision of a court within the United States and has one or more U.S. persons with authority to control all of its substantial decisions, or has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person or (5) a partnership.

Distributions on Common Stock

If we make distributions on our common stock, these distributions generally will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent these distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock.

Any dividend paid to you generally will be subject to withholding either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. If you are eligible for a reduced rate of withholding pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If you hold our common stock through a financial institution or other agent acting on your behalf, you will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, attributable to a permanent establishment maintained by you in the United States) are exempt from withholding. In order to claim this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying exemption. Such effectively connected dividends, although not subject to withholding, are taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.

Gain on Disposition of Common Stock

Subject to the discussion below regarding recent legislative withholding developments, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

• the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain is attributable to a permanent establishment maintained by you in the U.S.);

• you are an individual who is present in the U.S. for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or

• our common stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding corporation”, or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and your holding period for our common stock.

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If you are described in the first bullet above, you will generally be required to pay tax on the net gain derived from the sale at the same graduated U.S. federal income tax rates applicable to U.S. persons (net of certain deductions and credits), and if you are a corporate non-U.S. holder, you may be subject to branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. If you are described in the second bullet above, you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses (even though you are not considered a resident of the United States).

We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, our common stock will be treated as a U.S. real property interest only if you actually or constructively hold more than 5% of such regularly traded common stock at any time during the applicable period described above.

Federal Estate Tax

Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death generally will be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report is sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.

Payments of dividends on or the gross proceeds of disposition of our common stock may be subject to additional information reporting and backup withholding at a current rate of 28% unless you establish an exemption, for example by properly certifying your non-U.S. status on a Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.

Backup withholding is not an additional tax. Any amounts withheld from a payment to you under the backup withholding rules will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information or returns are furnished to the IRS in a timely manner.

Recent Legislative Developments

Recent legislation generally imposes withholding at a rate of 30% on payments to certain foreign entities (including financial institutions, which include hedge funds, private equity funds, mutual funds, securitization vehicles and other investment vehicles regardless of size), after December 31, 2012, of dividends on and the gross proceeds of dispositions of U.S. common stock, unless various U.S. information reporting and due diligence requirements (that are different from, and in addition to, the beneficial owner certification requirements described above) have been satisfied that generally relate to ownership by U.S. persons of interests in or accounts with those entities. You should consult your tax advisor regarding the possible implications of this legislation on your investment in our common stock.

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UNDERWRITERS

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:

Name	Number of Shares
Morgan Stanley & Co. LLC
J.P. Morgan Securities LLC
Needham & Company, LLC
Pacific Crest Securities LLC
Raymond James & Associates, Inc.
Total

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option, described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased, or, in the case of a default with respect to the shares covered by the underwriters’ over-allotment described below, the underwriting agreement may be terminated.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $            a share under the public offering price. Any underwriter may allow, and such dealers may reallow, a concession not in excess of $            a share to other underwriters or to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to            additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

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The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of common stock from            .

	Total
	Share	No Exercise	Full Exercise
Public offering price	$	$	$
Underwriting discounts and commissions to be paid by:
Us
The selling stockholders
Proceeds, before expenses, to us
Proceeds, before expenses, to selling stockholders

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $        million.

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

We have applied to list our common stock on the        under the trading symbol “        .”

We and all directors and officers and the holders of our outstanding stock, stock options and warrants have agreed that, without the prior written consent of the representatives on behalf of the underwriters, and subject to certain exceptions, we and they will not, during the period ending 180 days after the date of this prospectus:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock;

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; or

• make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

In addition, we and the holders of our outstanding stock, stock options and warrants have agreed that, without the prior written consent of the representatives on behalf of the underwriters, and subject to certain exceptions, we and they will not, during the period ending 180 days after the date of this prospectus, file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock. The restrictions described in this paragraph do not apply to:

• the sale of shares to the underwriters;

• transactions by a security holder relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions;

• the transfer by a security holder of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock (1) to an immediate family member of a security holder or to a trust formed for the benefit of such an immediate family member, (2) by bona fide gift, will or

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intestacy, (3) if the security holder is a corporation, partnership or other business entity (a) to another corporation, partnership or other business entity that is an affiliate of such security holder or (b) as part of a disposition, transfer or distribution without consideration by the security holder to its equity holders or (4) if the security holder is a trust, to a trustor or beneficiary of the trust, provided that in each case, each transferee, donee or distributee shall sign and deliver a lock-up agreement and no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock, shall be required or shall be voluntarily made during the lock-up period;

• the transfer by a security holder of shares of common stock or any securities convertible into common stock by a security holder to us upon a vesting event of our securities or upon the exercise of options or warrants to purchase our securities, in each case on a “cashless” or “net exercise” basis or to cover tax withholding obligations of the undersigned in connection with such vesting or exercise, provided no filing under Section 16(a) of the Exchange Act reporting a disposition of shares of common stock shall be required or shall be voluntarily made in connection with such vesting or exercise;

• the establishment by a security holder of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that such plan does not provide for the transfer of common stock during the lock-up period and no public announcement or filing under the Exchange Act regarding the establishment of such plan shall be required of or voluntarily made by or on behalf of the security holder or us;

• the conversion of our outstanding convertible preferred stock into shares of our common stock, provided that such shares of common stock remain subject to the terms of the lock-up agreement;

• the transfer by a security holder of shares of our common stock or any security convertible into or exercisable or exchangeable for common stock to us, pursuant to agreements under which we have the option to repurchase such shares or a right of first refusal with respect to transfers of such shares;

• the transfer by a security holder of shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock that occurs by operation of law, such as pursuant to a qualified domestic order or in connection with a divorce settlement;

• the transfer by a security holder of shares of our common stock or any security convertible into or exercisable or exchangeable for common stock pursuant to a bona fide third party tender offer, merger, consolidation or other similar transaction made to all holders of the common stock involving a change of control of us, provided that if the tender offer, merger, consolidation or other such transaction is not completed, the common stock owned by the security holder shall remain subject to the restrictions contained in this agreement; and

• the exercise of a security holder of any right with respect to, or the taking of any other action in preparation for, a registration by us of shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, provided that no transfer of the security holder’s common stock registered pursuant to the exercise of such rights under this item shall occur, and no registration statement shall be filed, during the lock-up period.

The 180-day restricted period described in the preceding paragraph will be extended if:

• during the last 17 days of the 180-day restricted period we issue an earnings release or a material news event relating to us occurs, or

• prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

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In order to facilitate the offering of our common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common stock for their own accounts. In addition, to cover over-allotments or to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in the offering, if the syndicate repurchases previously distributed common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of these liabilities.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make internet distributions on the same basis as other allocations.

The underwriters may from time to time in the future provide us with investment banking, financial advisory or other services for which they may receive customary compensation.

Pricing of the Offering

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be the future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. We cannot assure you that the prices at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common stock will develop and continue after this offering.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

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(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

Each underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

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LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Seattle, Washington. Davis Polk & Wardwell LLP, Menlo Park, California is representing the underwriters. Investment funds associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation hold 59,998 shares of our common stock, which represents less than 1% of our outstanding shares of common stock.

EXPERTS

The financial statements as of December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some items of which are contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or document referred to are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement is this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.

You may read and copy the registration statement, including the exhibits and schedules thereto, at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. We also maintain a website at www.impinj.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above.

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Impinj, Inc.

Index to Unaudited Pro Forma Condensed Financial Statements

	Page
Unaudited Pro Forma Condensed Balance Sheet as of March 31, 2011		P-3
Notes to Unaudited Pro Forma Condensed Balance Sheet		P-4
Unaudited Pro Forma Condensed Statements of Operations for the year ended December 31, 2010 and the three months ended March 31, 2011		P-5
Notes to Unaudited Pro Forma Condensed Statements of Operations		P-6

P-1

Unaudited Pro Forma Condensed Financial Statements

The following unaudited pro forma information has been prepared assuming that upon the completion of an initial public offering (1) all of our preferred stock outstanding will automatically convert into shares of common stock; (2) our preferred stock warrants will be converted to the same number of warrants to purchase common stock or will be automatically exercised or terminated; and (3) our subordinated convertible promissory notes and related interest will be repayable together with a premium equal to the carrying value of the subordinated convertible promissory notes and related interest ($6.4 million as of March 31, 2011).

The unaudited pro forma adjustments are based on available information and certain assumptions that we believe are reasonable. The unaudited pro forma condensed financial statements were prepared on a basis consistent with that used in preparing our audited financial statements and include all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of our financial position and results of operations for the unaudited periods.

The unaudited pro forma condensed financial statements should be read in conjunction with the sections of this prospectus captioned “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and related notes included elsewhere in this prospectus. The unaudited pro forma condensed financial statements are for informational purposes only and are not intended to represent or be indicative of the results of operations or financial position that we would have reported had this offering been completed on the dates indicated and should not be taken as representative of our future results of operations or financial position.

P-2

Impinj, Inc.

Unaudited Pro Forma Condensed Balance Sheet

(In thousands, except per share amounts)

	As Reported March 31, 2011			Pro Forma Adjustments			Pro Forma March 31, 2011
Assets
Cash and cash equivalents	$	11,752		$			$	11,752
Short-term marketable securities		300						300
Accounts receivable, net of allowances		9,501						9,501
Inventory		14,392						14,392
Prepaid expenses and other current assets		867						867
Total current assets		36,812			—			36,812
Property and equipment, net of accumulated depreciation		1,202						1,202
Restricted cash		300						300
Other non-current assets		112						112
Goodwill		3,881						3,881
Other intangible assets, net		814						814
Total assets		43,121			—			43,121
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable		4,607						4,607
Accrued compensation and employee related benefits		2,193						2,193
Accrued liabilities		1,443						1,443
Current portion of long-term debt		910						910
Subordinated convertible promissory notes—related parties		6,279			6,515	(a)		12,794
Current portion of capital lease obligations		172						172
Current portion of deferred rent		31						31
Current portion of deferred revenue		2,398						2,398
Total current liabilities		18,033			6,515			24,548
Long-term debt, net of current portion		18,438						18,438
Capital lease obligations, net of current portion		277						277
Long-term liabilities—other		252						252
Warrant liability		880			(880	)(b)		—
Deferred rent, net of current portion		776						776
Deferred revenue, net of current portion		78						78
Total liabilities		38,734			5,635			44,369
Commitments and contingencies
Redeemable Convertible preferred stock, $0.001 par value
Series A: authorized, issued and outstanding, actual 4,000,000 shares (aggregate liquidation value of $600 at March 31, 2011); issued and outstanding, pro forma zero shares		600			(600	)(c)		—
Series B: authorized, issued and outstanding, actual 18,134,992 shares (aggregate liquidation value of $15,113 at March 31, 2011); issued and outstanding, pro forma zero shares		15,113			(15,113	)(c)		—
Series C: authorized, issued and outstanding, actual 43,382,413 shares (aggregate liquidation value of $55,093 at March 31, 2011); issued and outstanding, pro forma zero shares		55,726			(55,726	)(c)		—
Series D: authorized, issued and outstanding, actual 13,596,575 shares (aggregate liquidation value of $35,930 at March 31, 2011); issued and outstanding, pro forma zero shares		36,393			(36,393	)(c)		—
Series E: authorized, 24,000,000 shares; issued and outstanding, actual 18,351,304 shares (aggregate liquidation value of $53,037 at March 31,2011); issued and outstanding, pro forma zero shares		52,365			(52,365	)(c)		—
		160,197			(160,197	)(c)		—
Stockholders’ deficit
Common stock, $0.001 par value—authorized, 160,000,000 shares; issued and outstanding, actual 35,311,010 shares as of March 31, 2011, issued and outstanding pro forma, 132,776,294 shares		35			97	(c)		132
Additional paid-in capital		—			160,980	(b),(c)		160,980
Accumulated deficit		(155,830	)		(6,515	)(a)		(162,345	)
Accumulated other comprehensive (loss)		(15	)					(15	)
Total stockholders’ deficit		(155,810	)		154,562			(1,248	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	43,121		$	—		$	43,121

See the accompanying notes to unaudited pro forma condensed balance sheet.

P-3

Notes to Unaudited Pro Forma Condensed Balance Sheet

The March 31, 2011 unaudited pro forma condensed balance sheet reflects the initial public offering as if it had occurred on March 31, 2011 as follows: (1) conversion of all 97,465,284 outstanding shares of preferred stock into the same number of shares of common stock; (2) the reclassification of 1,151,001 shares of liability-classified preferred stock warrants valued at $880,000; (3) recognition of the repayment premium of $6.4 million due on our subordinated convertible promissory notes, or Notes; and (4) the acceleration of unamortized debt issuance costs of $118,000 related to the Notes.

(a) Pursuant to the terms of our Notes, upon the consummation of an initial public offering, we are required to repay all principal and accrued interest on the Notes together with a premium equal to the sum of all principal and interest on the Notes. Accordingly, this adjustment includes the following (in thousands):

Premium due on Notes in connection with consummation of initial public offering	$	6,397
Acceleration of unamortized debt issuance costs on Notes		118
Total	$	6,515

(b) As summarized in the table below, in connection with the establishment of our debt facilities, we issued warrants to purchase 260,280 shares of Series E redeemable convertible preferred stock, with contractual terms ranging from seven to ten years and an exercise price of $2.286 per share. In connection with the issuance of the Notes, we issued warrants to purchase an aggregate of 890,721 shares of our Series E redeemable convertible preferred stock, with a seven-year contractual term.

The warrants issued in connection with our debt facilities will be converted to warrants to purchase the same number of shares of common stock upon the consummation of an initial public offering. The warrants issued in connection with the Notes will be automatically exercised on a net exercise basis if the initial per share price of common stock to the public in an initial public offering exceeds the exercise price of the warrants, $2.286 per share at March 31, 2011, or they will expire.

All of the warrants issued in connection with the debt facilities and the Notes will be revalued to fair value immediately prior to the consummation of the initial public offering and any change in fair value will be recognized in net income. Since the warrants will no longer be for the purchase of Series E redeemable convertible preferred stock which contains redemption provisions, the fair value, if any, of the warrants will be reclassified from liabilities to additional paid-in capital upon the consummation of an initial public offering. We are unable to estimate what the fair value, if any, of the warrants will be immediately prior to the initial public offering. For purposes of this unaudited pro forma condensed balance sheet, we have reclassified the carrying values of the warrants at March 31, 2011 from liabilities to additional paid-in capital. Further, we have assumed that the warrants issued in connection with the Notes will be automatically exercised upon the consummation of the initial public offering.

Summary of Outstanding Preferred Stock Warrants	Warrants to purchase preferred stock which convert to equity- classified common stock warrants				Warrants to purchase preferred stock which convert to common stock if the offering price is higher than the exercise price of the warrants				Total
	December 31,     2010		March 31,     2011		December 31,     2010		March 31,     2011		December 31, 2010		March 31, 2011
Number of shares of preferred stock available for purchase		242,782		260,280		890,721		890,721		1,133,503		1,151,001
Warrant liability recorded	$	122,000	$	163,000	$	623,000	$	717,000	$	745,000	$	880,000

(c) This adjustment reflects the conversion of all 97,465,284 outstanding shares of preferred stock into the same number of shares of common stock.

P-4

Impinj, Inc.

Unaudited Pro Forma Condensed Statements of Operations

(In thousands, except per share amounts)

	As Reported Year Ended December 31, 2010			Pro Forma Adjustments			Pro Forma Year Ended December 31, 2010			As Reported Three Months Ended March 31, 2011			Pro Forma Adjustments			Pro Forma Three Months Ended March 31, 2011
Revenue
Product revenue	$	29,221					$	29,221		$	11,397					$	11,397
Development, service and licensing revenue		2,576						2,576			868						868
Total revenue		31,797			—			31,797			12,265			—			12,265
Cost of revenue
Cost of product revenue		17,008						17,008			6,325						6,325
Cost of development, service and licensing revenue		603						603			472						472
Total cost of revenue		17,611			—			17,611			6,797			—			6,797
Gross profit		14,186			—			14,186			5,468			—			5,468
Operating expenses
Research and development		10,662						10,662			2,781						2,781
Selling and marketing		8,256						8,256			2,375						2,375
General and administrative		5,585						5,585			1,594						1,594
Total operating expenses		24,503						24,503			6,750						6,750
Loss from operations		(10,317	)					(10,317	)		(1,282	)					(1,282	)
Interest income (expense) and other, net:
Interest income		8						8			1						1
Interest expense		(793	)		487	(a)		(306	)		(382	)		252	(a)		(130	)
Other income (expense), net		(193	)		193	(b)		—			(114	)		116	(b)		2
Total interest income (expense) and other, net		(978	)		680			(298	)		(495	)		368			(127	)
Loss before income tax (expense) benefit		(11,295	)		680			(10,615	)		(1,777	)		368			(1,409	)
Income tax (expense) benefit		(90	)		—			(90	)		(24	)		—			(24	)
Net loss	$	(11,385	)	$	680			(10,705	)	$	(1,801	)	$	368			(1,433	)
Net loss attributable to common stockholders	$	(19,943	)	$	9,238	(a), (b), (c)	$	(10,705	)	$	(3,838	)	$	2,405	(a), (b), (c)	$	(1,433	)
Basic and diluted net loss per common share (d)	$	(0.58	)				$			$	(0.11	)				$
Weighted-average number of shares used in computation of per share amounts (d)		34,127									34,824

See the accompanying notes to unaudited pro forma condensed statements of operations.

P-5

Notes to Unaudited Pro Forma Condensed Statements of Operations

The unaudited pro forma condensed statements of operations for the year ended December 31, 2010 and the three months ended March 31, 2011 have been prepared assuming the conversion of preferred stock (using the if-converted method), and reflect the initial public offering as if it had occurred on January 1, 2010 as follows: (1) conversion of all 97,465,284 outstanding shares of preferred stock into the same number of shares of common stock; (2) removal of the remeasurement adjustments related to the liability-classified preferred stock warrants; (3) removal of interest expense recognized on the Notes; and (4) the impact of              shares whose proceeds would be necessary to repay the Notes.

(a) Pursuant to the terms of the Notes, upon the consummation of an initial public offering, we are required to repay all principal and accrued interest on the Notes. Accordingly, we have assumed the Notes were not outstanding as of January 1, 2010. This adjustment includes the reversal of interest expense on the Notes.

(b) Pursuant to the terms of our warrants to purchase redeemable convertible preferred stock, as fully described in Note (b) of the unaudited pro forma condensed balance sheet, all of the warrants will be automatically exercised or will be converted into warrants to purchase the same number of shares of common stock or will expire upon the closing of an initial public offering. Accordingly, we have removed the remeasurement adjustments related to all liability-classified preferred stock warrants.

(c) Upon the consummation of an initial public offering, all of the outstanding shares of our convertible preferred stock will automatically convert into the same number of shares of our common stock. Accordingly, we have reversed the accretion of our redeemable convertible preferred stock.

The total net adjustment to net loss attributable to common stockholders is as follows (in thousands):

	Year Ended December 31, 2010			Three Months Ended March 31, 2011
Reversal of the accretion of redeemable convertible preferred stock	$	8,558		$	2,037
Reversal of interest expense recognized on the Notes		487	(a)		252	(a)
Removal of the revaluation of all liability-classified preferred stock warrants		193	(b)		116	(b)
Total	$	9,238		$	2,405

The recognition of the repayment premium on the Notes of $6.3 million and $6.4 million for the period ended December 31, 2010 and March 31, 2011, respectively, which will be recognized in interest expense when paid, has not been included in unaudited pro forma net loss and unaudited pro forma basic and diluted net loss per share as it is a non-recurring charge. In addition, the acceleration of unamortized debt costs related to the Notes of $235,000 and $118,000 as of December 31, 2010 and March 31, 2011, respectively, which will be recognized in interest expense, has not been included in the unaudited pro forma net loss and unaudited pro forma basic and diluted net loss per share as it is a non-recurring charge.

P-6

(d) The weighted-average shares used in computing pro forma net loss per share have been determined assuming the conversion of preferred stock (using the if-converted method) and reflects: (1) conversion of all 97,465,284 outstanding shares of preferred stock into the same number of shares of common stock and (2) the impact of                  shares whose proceeds would be necessary to repay the Notes together with the related repayment premium. The impact of shares whose proceeds would be necessary to repay the Notes and related repayment premium are included in weighted-average shares because the Notes are held by stockholders. Total weighted-average shares are calculated as follows:

	Year Ended December 31, 2010			Three Months Ended March 31, 2011
	(In thousands)
Weighted-average common shares outstanding		34,321			35,073
Weighted-average unvested shares of common stock subject to repurchase		(194	)		(249	)
Adjustment for conversion of preferred stock		97,465			97,465
Adjustment for assumed redemption of the Notes and related repayment premium
Weighted-average common shares outstanding—basic and diluted

Outstanding options and warrants were excluded from the computation of unaudited pro forma net loss per share because their effect would have been antidilutive.

P-7

Impinj, Inc.

Index to Financial Statements

	Page
Report of Independent Registered Public Accounting Firm		F-2
Balance Sheets		F-3
Statements of Operations		F-4
Statements of Changes in Redeemable Convertible Preferred Stock		F-5
Statements of Changes in Stockholders’ Deficit		F-6
Statements of Cash Flows		F-7
Notes to Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Impinj, Inc.

In our opinion, the accompanying balance sheets and the related statements of operations, of changes in redeemable convertible preferred stock, of changes in stockholders’ deficit and of cash flows present fairly, in all material respects, the financial position of Impinj, Inc. at December 31, 2010 and 2009, and the results of its operations and cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Impinj, Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington

April 21, 2011

F-2

Impinj, Inc.

Balance Sheets

(In thousands, except per share amounts)

	December 31,						March 31, 2011
	2009			2010
							(Unaudited)
Assets
Cash and cash equivalents	$	6,415		$	5,543		$	11,752
Short-term marketable securities		4,905			1,200			300
Accounts receivable, net of allowances of $75, $506 and $618, respectively		1,694			8,102			9,501
Inventory		1,917			7,912			14,392
Prepaid expenses and other current assets		228			260			867
Total current assets		15,159			23,017			36,812
Property and equipment, net of accumulated depreciation of $5,229, $6,224 and $6,467, respectively		1,493			1,262			1,202
Restricted cash		749			400			300
Other non-current assets		—			—			112
Goodwill		3,881			3,881			3,881
Other intangible assets, net		1,216			894			814
Total assets		22,498			29,454			43,121
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable		762			5,235			4,607
Accrued compensation and employee related benefits		1,271			1,930			2,193
Accrued liabilities		654			1,450			1,443
Current portion of long-term debt		1,600			722			910
Subordinated convertible promissory notes – related parties		—			6,026			6,279
Current portion of capital lease obligations		193			177			172
Current portion of deferred rent		98			31			31
Current portion of deferred revenue		597			840			2,398
Total current liabilities		5,175			16,411			18,033
Long-term debt, net of current portion		133			5,278			18,438
Capital lease obligations, net of current portion		200			316			277
Long-term liabilities—other		138			228			252
Warrant liability		65			745			880
Deferred rent, net of current portion		194			702			776
Deferred revenue, net of current portion		157			119			78
Total liabilities		6,062			23,799			38,734
Commitments and contingencies (Note 12)
Redeemable Convertible preferred stock, $0.001 par value
Series A: authorized, issued and outstanding, actual 4,000,000 shares (aggregate liquidation value of $600 at December 31, 2010); issued and outstanding, pro forma zero shares		600			600			600
Series B: authorized, issued and outstanding, actual 18,134,992 shares (aggregate liquidation value of $15,113 at December 31, 2010); issued and outstanding, pro forma zero shares		15,113			15,113			15,113
Series C: authorized, issued and outstanding, actual 43,382,413 shares (aggregate liquidation value of $55,093 at December 31, 2010); issued and outstanding, pro forma zero shares		52,562			55,093			55,726
Series D: authorized, issued and outstanding, actual 13,596,575 shares (aggregate liquidation value of $35,930 at December 31, 2010); issued and outstanding, pro forma zero shares		34,075			35,930			36,393
Series E: authorized, 24,000,000 shares; issued and outstanding, actual 18,351,304 shares (aggregate liquidation value of $53,037 at December 31, 2010); issued and outstanding, pro forma zero shares		47,252			51,424			52,365
		149,602			158,160			160,197
Stockholders’ deficit
Common stock, $0.001 par value—authorized, 160,000,000 shares; issued and outstanding, actual 33,837,732, 34,882,656 and 35,311,010 shares as of December 31, 2009, 2010 and March 31, 2011, respectively; issued and outstanding pro forma, 132,776,294 shares		34			35			35
Additional paid-in capital		—			—			—
Accumulated deficit		(133,188	)		(152,525	)		(155,830	)
Accumulated other comprehensive (loss)		(12	)		(15	)		(15	)
Total stockholders’ deficit		(133,166	)		(152,505	)		(155,810	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	22,498		$	29,454		$	43,121

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

F-3

Impinj, Inc.

Statements of Operations

(In thousands, except per share amounts)

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
Revenue
Product revenue	$	15,457		$	10,305		$	29,221		$	4,640		$	11,397
Development, service and licensing revenue		9,586			10,511			2,576			500			868
Total revenue		25,043			20,816			31,797			5,140			12,265
Cost of revenue
Cost of product revenue		10,791			6,782			17,008			2,455			6,325
Cost of development, service and licensing revenue		2,006			2,219			603			111			472
Total cost of revenue		12,797			9,001			17,611			2,566			6,797
Gross profit		12,246			11,815			14,186			2,574			5,468
Operating expenses
Research and development		12,257			9,492			10,662			2,389			2,781
Selling and marketing		7,375			7,320			8,256			1,957			2,375
General and administrative		6,711			5,271			5,585			1,241			1,594
Total operating expenses		26,343			22,083			24,503			5,587			6,750
Loss from operations		(14,097	)		(10,268	)		(10,317	)		(3,013	)		(1,282	)
Interest income (expense) and other, net:
Interest income		723			234			8			3			1
Interest expense		(514	)		(524	)		(793	)		(55	)		(382	)
Other income (expense), net		107			357			(193	)		(3	)		(114	)
Total interest income (expense) and other, net		316			67			(978	)		(55	)		(495	)
Loss before income tax (expense) benefit		(13,781	)		(10,201	)		(11,295	)		(3,068	)		(1,777	)
Income tax (expense) benefit		644			50			(90	)		(19	)		(24	)
Loss from continuing operations		(13,137	)		(10,151	)		(11,385	)		(3,087	)		(1,801	)
Income from discontinued operations, net of tax		1,275			291			—			—			—
Net loss	$	(11,862	)	$	(9,860	)	$	(11,385	)	$	(3,087	)	$	(1,801	)
Net loss attributable to common stockholders	$	(19,481	)	$	(18,419	)	$	(19,943	)	$	(5,227	)	$	(3,838	)
Basic and diluted loss per common share:
Loss from continuing operations	$	(0.68	)	$	(0.56	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Income from discontinued operations		0.04			0.01			—			—			—
Net loss	$	(0.64	)	$	(0.55	)	$	(0.58	)	$	(0.15	)	$	(0.11	)
Weighted-average number of shares used in computation of per share amounts		30,509			33,527			34,127			33,723			34,824
Pro forma net loss per common share, basic and diluted (unaudited)							$						$
Weighted-average number of shares used in computation of pro forma per share amounts (unaudited)

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

F-4

Impinj, Inc.

Statements of Changes in Redeemable Convertible Preferred Stock

(In thousands, except per share amounts)

	Redeemable Convertible Preferred Stock
	Series A				Series B				Series C				Series D				Series E
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Total
Balances at December 31, 2007		4,000,000	$	600		18,134,992	$	15,113		43,382,413	$	47,501		13,596,575	$	30,365		14,345,144	$	33,984	$	127,563
Issuance of Series E preferred stock		—		—		—		—		—		—		—		—		4,006,160		5,861		5,861
Accretion of preferred stock		—		—		—		—		—		2,531		—		1,855		—		3,233		7,619
Balances at December 31, 2008		4,000,000		600		18,134,992		15,113		43,382,413		50,032		13,596,575		32,220		18,351,304		43,078		141,043
Accretion of preferred stock		—		—		—		—		—		2,530		—		1,855		—		4,174		8,559
Balances at December 31, 2009		4,000,000		600		18,134,992		15,113		43,382,413		52,562		13,596,575		34,075		18,351,304		47,252		149,602
Accretion of preferred stock		—		—		—		—		—		2,531		—		1,855		—		4,172		8,558
Balances at December 31, 2010		4,000,000		600		18,134,992		15,113		43,382,413		55,093		13,596,575		35,930		18,351,304		51,424		158,160
Accretion of preferred stock (Unaudited)		—		—		—		—		—		633		—		463		—		941		2,037
Balances at March 31, 2011 (Unaudited)		4,000,000	$	600		18,134,992	$	15,113		43,382,413	$	55,726		13,596,575	$	36,393		18,351,304	$	52,365	$	160,197

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

F-5

Impinj, Inc.

Statements of Changes in Stockholders’ Deficit

(In thousands, except per share amounts)

	Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Deficit			Total Comprehensive Income (Loss)
	Shares			Amount
Balances at December 31, 2007		28,059,793		$	28	$	—		$	(96,815	)	$	12		$	(96,775	)	$
Common stock issued in connection with early exercises of stock options		171,690			—		—			—			—			—
Common stock issued in connection with all other exercises of stock options		826,343			—		118			—			—			118
Common stock issued in connection with business acquisition		4,734,553			5		657									662
Vesting of early-exercised stock options		—			—		47			—			—			47
Common stock repurchased		(178,698	)		—		—			—			—			—
Stock-based compensation		—			—		347			—			—			347
Comprehensive income
Net loss		—			—		—			(11,862	)		—			(11,862	)		(11,862	)
Accretion of preferred stock		—			—		(1,169	)		(6,450	)		—			(7,619	)		(7,619	)
Change in unrealized investment gain		—			—		—			—			90			90			90
Cumulative foreign exchange translation adjustment		—			—		—			—			(3	)		(3	)		(3	)
Balances at December 31, 2008		33,613,681			33		—			(115,127	)		99			(114,995	)		(19,394	)
Common stock issued in connection with early exercises of stock options		83,127			—		—			—			—			—
Common stock issued in connection with all other exercises of stock options		140,924			1		18			—			—			19
Vesting of early-exercised stock options		—			—		27			—			—			27
Stock-based compensation		—			—		313			—			—			313
Comprehensive income
Net loss		—			—		—			(9,860	)		—			(9,860	)		(9,860	)
Accretion of preferred stock		—			—		(358	)		(8,201	)		—			(8,559	)		(8,559	)
Change in unrealized investment gain		—			—		—			—			(102	)		(102	)		(102	)
Cumulative foreign exchange translation adjustment		—			—		—			—			(9	)		(9	)		(9	)
Balances at December 31, 2009		33,837,732			34		—			(133,188	)		(12	)		(133,166	)		(18,530	)
Common stock issued in connection with early exercises of stock options		249,636			—		—			—			—			—
Common stock issued in connection with all other exercises of stock options		810,365			1		88			—			—			89
Vesting of early-exercised stock options		—			—		19			—			—			19
Common stock repurchased		(15,077	)		—		—			—			—			—
Stock-based compensation		—			—		499			—			—			499
Comprehensive income (loss):
Net loss		—			—		—			(11,385	)		—			(11,385	)		(11,385	)
Accretion of preferred stock		—			—		(606	)		(7,952	)		—			(8,558	)		(8,558	)
Change in unrealized investment gain		—			—		—			—			1			1			1
Cumulative foreign exchange translation adjustment		—			—		—			—			(4	)		(4	)		(4	)
Balances at December 31, 2010		34,882,656		$	35		—		$	(152,525	)	$	(15	)		(152,505	)		(19,946	)
Common stock issued in connection with early exercises of stock options (Unaudited)		201,688			—		—			—			—			—
Common stock issued in connection with all other exercises of stock options (Unaudited)		226,666			—		22			—			—			22
Common stock warrant issued in connection with credit facility (Unaudited)							270									270
Vesting of early-exercised stock options (Unaudited)		—			—		10			—			—			10
Stock-based compensation (Unaudited)		—			—		231			—			—			231
Comprehensive income (loss)		—			—		—			—			—			—
Net loss (Unaudited)		—			—		—			(1,801	)		—			(1,801	)		(1,801	)
Accretion of preferred stock (Unaudited)		—			—		(533	)		(1,504	)		—			(2,037	)		(2,037	)
Balances at March 31, 2011 (Unaudited)		35,311,010		$	35	$	—		$	(155,830	)	$	(15	)	$	(155,810	)	$	(3,838	)

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

F-6

Impinj, Inc.

Statements of Cash Flows

(In thousands)

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
Operating activities
Net loss	$	(11,862	)	$	(9,860	)	$	(11,385	)	$	(3,087	)	$	(1,801	)
Adjustment to reconcile net loss to net cash used in operating activities:
Gain from discontinued operations		(3,634	)		(450	)		—			—			—
Depreciation		1,105			1,179			995			257			243
Amortization of intangible assets		161			323			322			81			80
Write-off of acquired in-process technology		650			—			—			—
Loss (gain) on disposal of assets		33			(2	)		—			—			(2	)
Amortization of discounts on short-term marketable securities		(243	)		52			15			13			—
Amortization of debt issuance costs		189			141			326			—			151
Accrued interest on subordinated convertible promissory notes		—			—			276			—			135
Revaluation of warrant liability		(45	)		(174	)		193			3			116
Provision for doubtful accounts receivable		112			14			28			—
Provision for inventory write-downs		894			—			592			14			109
Provision for sales returns		—			—			289			—			500
Stock-based compensation		347			313			499			97			231
Changes in operating assets and liabilities
Accounts receivable		(436	)		1,327			(6,725	)		(1,670	)		(1,899	)
Inventory		(226	)		101			(6,587	)		(801	)		(6,589	)
Prepaid expenses and other current assets		254			103			(107	)		(18	)		(733	)
Deferred revenue		(1,768	)		(667	)		205			695			1,517
Deferred rent		(179	)		(224	)		441			106			74
Accounts payable		653			(283	)		5,640			219			(627	)
Accrued liabilities		(1,579	)		(746	)		382			901			259
Discontinued operations		(1,116	)		—			—			—			—
Net cash used in operating activities		(16,690	)		(8,853	)		(14,601	)		(3,190	)		(8,236	)
Investing activities
Cash used for business purchase		(254	)		—			—			—			—
Purchases of property and equipment		(308	)		(100	)		(468	)		(13	)		(181	)
Restricted cash		(141	)		672			349			—			100
Purchases of marketable securities		(27,594	)		(9,707	)		(2,454	)		(1,255	)		—
Proceeds from sale of business unit		5,200			—			—			—			—
Proceeds from sale of property and equipment		19			2			—			—			—
Proceeds from maturities of marketable securities		37,589			20,985			6,145			3,645			900
Net cash provided by investing activities		14,511			11,852			3,572			2,377			819
Financing activities
Payments on capital lease financing obligations		(242	)		(186	)		(196	)		(49	)		(44	)
Payments on working capital facility		—			(267	)		(19,733	)		(400	)		(11,717	)
Proceeds from working capital facility		—			—			24,000			—			15,335
Proceeds from subordinated convertible promissory notes – related parties		—			—			5,986			—			—
Proceeds from mezzanine credit facility		—			—			—			—			10,000
Proceeds from issuance of common stock upon exercise of employee stock options		167			26			105			4			52
Payments to repurchase stock from employees upon termination		(42	)		—			(1	)		—			—
Net cash (used in) provided by financing activities		(117	)		(427	)		10,161			(445	)		13,626
Effect of exchange rates on cash		(3	)		(9	)		(4	)		(2	)		—
Net (decrease) increase in cash and cash equivalents		(2,299	)		2,563			(872	)		(1,260	)		6,209
Cash and cash equivalents
Beginning of period		6,151			3,852			6,415			6,415			5,543
End of period	$	3,852		$	6,415		$	5,543		$	5,155		$	11,752
Supplemental disclosure of cash flow information
Cash paid for interest	$	312		$	305		$	325		$	55		$	99
Supplemental disclosure of noncash financing and investing activities
Accretion on preferred shares		7,619			8,559			8,558			2,140			2,037
Warrants issued in connection with convertible debt issuance		—			—			470			—			—
Warrants issued in connection with working capital facility		—			—			17			—			19
Warrants issued in connection with mezzanine credit facility		—			—			—			—			270
Vesting of early-exercised stock options		47			27			19			5			10
Additions to property and equipment through capital leases		288			—			296			—			—
Preferred stock issued in connection with business acquisition		5,861			—			—			—			—
Common stock issued in connection with business acquisition		662			—			—			—			—

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

F-7

Impinj, Inc.

Notes to Financial Statements

1. Description of Business

Impinj, Inc., a Delaware corporation, is headquartered in Seattle, Washington. We are a provider of ultra high frequency, or UHF, radio frequency identification, or RFID, solutions for identifying, locating and authenticating items. We derive revenue from the sale of our Monza tag integrated circuits, or ICs, Indy reader ICs and Speedway readers as well as from development engagements. RFID systems built on our GrandPrix platform deliver real-time information about tagged items, thereby enabling applications and analytics designed to improve business decisions and enhance consumer experience. We use third-party foundries and subcontractors to produce our ICs and contract manufacturers to assemble our readers. We seek to protect our proprietary technologies by seeking patents, retaining trade secrets and defending, enforcing and using our intellectual property rights where appropriate.

We have incurred losses and negative cash flows from operations since inception. We expect operating losses and negative cash flows to continue for the near future as additional costs and expenses are incurred for working capital, product development, sales and marketing and other promotional activities, increases to our sales force, and investments in our administrative infrastructure. Failure to generate sufficient revenue or raise additional capital could have a material adverse effect on our ability to meet our intended business objectives.

At December 31, 2010, we have approximately $144.5 million of Series C, Series D and Series E redeemable convertible preferred stock that becomes subject to redemption at the option of holders of a majority of each Series of preferred stock in February 2011. In addition, at December 31, 2010 we had approximately $6.3 million of subordinated convertible notes and accrued interest due to holders of our Series E preferred stock that have a scheduled maturity date of June 30, 2011.

In connection with the issuance of the subordinated convertible notes, holders of a majority of each of the Series C, Series D and Series E preferred stock agreed not to pursue the repayment of any indebtedness under the subordinated convertible notes or any other instrument or writing evidencing our indebtedness to them while there are outstanding borrowings under the Credit Facility or mezzanine credit facility. See also Note 8, Note 9 and Note 10.

Unaudited Pro Forma Net Loss Per Share

The unaudited pro forma information has been prepared assuming that upon the completion of an initial public offering (1) all of our preferred stock outstanding will automatically convert into shares of common stock; (2) our preferred stock warrants will be converted to the same number of warrants to purchase common stock or will be automatically exercised or terminated; and (3) our subordinated convertible promissory notes and related interest ($6.4 million at March 31, 2011) will be due together with a repayment premium of $6.4 million.

The unaudited pro forma basic and diluted net loss per share for the year ended December 31, 2010 and the three months ended March 31, 2011 have been prepared assuming the conversion of preferred stock (using the if-converted method) and reflects the initial public offering as if it had occurred on January 1, 2010 as follows: (1) conversion of all 97,465,284 outstanding shares of preferred stock into the same number of shares of common stock; (2) removal of the remeasurement adjustments related to the liability-classified preferred stock warrants; and (3) the impact of              shares whose proceeds would be necessary to repay the subordinated convertible promissory notes together with the related repayment premium. The impact of shares whose proceeds would be necessary to repay the Notes and related repayment premium are included in weighted-average shares because the Notes are held by stockholders.

F-8

Impinj, Inc.

Notes to Financial Statements

2. Summary of Significant Accounting Policies

Accounting Principles

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and judgments that we rely upon in preparing our financial statements include revenue recognition, collectability of accounts receivable, inventory obsolescence, depreciable lives for fixed assets, the determination of fair value of stock awards, estimated costs to complete development contracts, warranty obligations, accrued liabilities and deferred income. Actual results could differ from our estimates.

Unaudited Interim Financial Information

The financial statements as of March 31, 2011, and for the three months ended March 31, 2010 and March 31, 2011 are unaudited. All disclosures as of March 31, 2011 and for the three months ended March 31, 2010 and March 31, 2011, presented in the notes to the financial statements are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair statement of our financial position as of March 31, 2011 and results of operations and cash flows for the three months ended March 31, 2010 and March 31, 2011. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results to be expected for the year ended December 31, 2011 or for other interim periods or for future years.

Concentrations of Risks

Financial instruments that subject us to concentrations of credit risk consist primarily of cash equivalents, short term marketable securities and accounts receivable. These instruments are generally unsecured and uninsured. We extend credit to customers based upon an evaluation of the customer’s financial condition and generally collateral is not required. Total revenue and accounts receivable concentration is presented in the following tables:

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
Revenue
Customer A		50	%		40	%		2	%		3	%		5	%
Customer B		10			10			22			20			21
Customer C		10			6			14			11			10
Customer D		—			2			6			13			3
		70	%		58	%		44	%		47	%		39	%

F-9

Impinj, Inc.

Notes to Financial Statements

	Year Ended December 31,						Three Months Ended March 31,
	2009			2010			2010			2011
Accounts Receivable
Customer B		19	%		22	%		23	%		23	%
Customer C		15			19			10			9
		34	%		41	%		33	%		32	%

We outsource the manufacturing and production of our hardware products to a limited number of suppliers. Although there are a limited number of manufacturers for hardware products, we believe that other suppliers could provide similar products on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would adversely affect our operating results.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash deposits and investments in money market funds with maturities of 90 days or less when purchased. We invest our cash and cash equivalents in deposits with one major financial institution, and our balances consistently exceed federally insured limits. We have not experienced any losses on our cash and cash equivalents.

Investments

Investments consist of U.S. government agency debt securities and commercial paper with maturities ranging from one to five months. Investments with original maturities greater than 90 days when purchased are classified as short-term investments. We have classified these investments as available-for-sale. Available-for-sale securities are reported at fair value with related unrealized gains and losses, which are deemed to be temporary in nature, included as a separate component of accumulated other comprehensive income (loss).

Realized gains and losses and declines in value of securities determined to be other than temporary are included in interest income (expense) in the statement of operations. The cost of investments for purposes of computing realized and unrealized gains and losses are based on the specific identification method.

The fair value of debt securities is adjusted for amortization of premiums and accretion of discounts and interest and dividends, if any. These amounts are included in the statement of operations as interest income.

Fair Value of Financial Instruments

At December 31, 2010 and 2009, the carrying value of short-term financial instruments including cash equivalents, accounts receivable, accounts payable, accrued compensation and employee related benefits and accrued liabilities approximate fair value due to the short-term maturities of these instruments. We did not hold any financial instruments with a carrying value materially different from their fair value, based on quoted market prices or rates for the same or similar instruments or internal valuation models. We believe the fair value of our long-term capital lease obligations and our long-term debt approximates their carrying value based on the borrowing rates currently available to us for loans with similar terms.

F-10

Impinj, Inc.

Notes to Financial Statements

Fair Value Measurement

We record short-term investments and preferred stock warrant liabilities at fair value. We establish fair value of our assets and liabilities using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and a fair value hierarchy based on the inputs used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1—Quoted prices in active markets for identical instruments.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Whenever possible, we use observable market data and rely on unobservable inputs only when observable market data is not available, when determining fair value. The following tables summarize our assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3		Fair Value at December 31, 2009
	(In thousands)
Assets:
Cash equivalents
Money market funds	$	5,492	$	—	$	—	$	5,492
Short-term investments
US Government and agency securities		—		4,905		—		4,905
Total assets measured at fair value	$	5,492	$	4,905	$	—	$	10,397
Liabilities:
Convertible preferred stock warrants	$	—	$	—	$	65	$	65
Total liabilities measured at fair value	$	—	$	—	$	65	$	65
	Level 1		Level 2		Level 3		Fair Value at December 31, 2010
	(In thousands)
Assets:
Cash equivalents
Money market funds	$	19	$	—	$	—	$	19
Short-term investments
US Government and agency securities		—		1,200		—		1,200
Total assets measured at fair value	$	19	$	1,200	$	—	$	1,219
Liabilities:
Convertible preferred stock warrants	$	—	$	—	$	745	$	745
Total liabilities measured at fair value	$	—	$	—	$	745	$	745

F-11

Impinj, Inc.

Notes to Financial Statements

	Level 1		Level 2		Level 3		Fair Value at March 31, 2011
	(In thousands)
	(Unaudited)
Assets:
Cash equivalents
Money market funds	$	2	$	—	$	—	$	2
Short-term investments
US Government and agency securities		—		300		—		300
Total assets measured at fair value	$	2	$	300	$	—	$	302
Liabilities:
Convertible preferred stock warrants	$	—	$	—	$	880	$	880
Total liabilities measured at fair value	$	—	$	—	$	880	$	880

We did not realize any gains or losses on our short-term investments in 2008, 2009 or 2010. The following table provides a roll-forward of the fair value of the preferred stock warrants categorized as Level 3 for the years ended December 31, 2009 and 2010 (in thousands):

Balance at December 31, 2008	$	239
Remeasurement of convertible preferred stock warrants		(174	)
Balance at December 31, 2009		65
Issuance of convertible preferred stock warrants		487
Remeasurement of convertible preferred stock warrants		193
Balance at December 31, 2010		745
Issuance of convertible preferred stock warrants (Unaudited)		19
Remeasurement of convertible preferred stock warrants (Unaudited)		116
Balance at March 31, 2011 (Unaudited)	$	880

Our redeemable convertible preferred stock contains redemption provisions which preclude equity classification. Accordingly, warrants to purchase this redeemable convertible preferred stock are classified as liabilities.

Our preferred stock warrants are categorized as Level 3 because they were valued based on unobservable inputs and our judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such financial instruments. We perform a fair value assessment of the preferred stock warrant inputs on a quarterly basis using the Black-Scholes model and the following variable assumptions: remaining contractual lives ranging from 4 to 10 years, volatility of 50% and risk-free interest rates ranging from 0.97% to 3.47%. The assumptions used in the Black-Scholes model are inherently subjective and involve significant judgment. Any change in fair value is recognized as a component of other income (expense) on the statements of operations.

Accounts Receivable

Accounts receivable consists of amounts billed currently due from customers net of an allowance for doubtful accounts and an allowance for sales returns. The allowance for doubtful accounts is our best estimate of

F-12

Impinj, Inc.

Notes to Financial Statements

the amount of probable credit losses in existing accounts receivable and is determined based on historical write-off experience and on specific customer accounts believed to be a collection risk. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We record our sales returns allowance based on historical returns experience.

The following table summarizes our allowance for doubtful accounts:

	Balance at beginning of year		Charged to costs and expenses		Write-offs			Balance at end of year
	(In thousands)
Allowance for doubtful accounts:
For year ended December 31, 2008	$	125	$	112	$	(87	)	$	150
For year ended December 31, 2009		150		14		(89	)		75
For year ended December 31, 2010		75		28		(3	)		100

The following table summarizes our allowance for sales returns:

	Balance at beginning of year		Charged to costs and expenses		Write-offs		Balance at end of year
	(In thousands)
Allowance for sales returns:
For year ended December 31, 2010	$	—	$	406	$	—	$	406

Inventory

Inventories consist of a combination of raw materials, work-in-progress and finished goods and are stated at the lower of cost or market. Cost is determined using the average costing method, which approximates the first in, first out, or FIFO, method. Reserves for excess and obsolete inventory are established based on our analysis of inventory levels and future sales forecasts.

Inventories consist of the following:

	December 31,				March 31,
	2009		2010		2011
					(Unaudited)
	(In thousands)
Raw materials	$	231	$	4,603	$	5,877
Work-in-process		958		1,164		5,757
Finished goods		728		2,145		2,758
Total inventory	$	1,917	$	7,912	$	14,392

Inventory write-downs are included in cost of revenue and were $894,000, $0 and $592,000 for the years ended December 31, 2008, 2009 and 2010, respectively, and $14,000 and $109,000 for the three months ended March 31, 2010 and 2011, respectively.

Long-Lived Assets and Intangible Assets

Long-lived assets include property and equipment. We assess the carrying value of our long-lived assets and intangible assets with a definite life, when indicators of impairment exist and recognize an impairment loss when

F-13

Impinj, Inc.

Notes to Financial Statements

the carrying amount of an asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment losses are measured by comparing the carrying amount of a long-lived asset to its fair value.

Identifiable intangible assets are comprised of purchased customer lists, patents and developed technologies. Identifiable intangible assets are amortized over their estimated useful lives, ranging from four to eight years, using the straight-line method.

Property and equipment are recorded at cost. Depreciation is determined using the straight-line method over the estimated useful life of the assets. Additions and improvements that increase the value or extend the life of an asset are capitalized. Ordinary repairs and maintenance are expensed as incurred. Assets under capital leases and leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful life of the asset.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identified assets acquired in a business combination. We evaluate our goodwill which is assigned to our Indy reader IC reporting unit for impairment on an annual basis on September 30 or when indicators for impairment exist. Indicators of impairment would include: the impacts of significant adverse changes in legal factors; market and economic conditions; the result of our operational performance and strategic plans; adverse actions by regulators; unanticipated changes in competition and market share; and the potential for sale or disposal of all or a significant portion of our business. A significant impairment could have a material adverse effect on our financial position and results of operations. No impairment charge for goodwill was recorded during the years ended December 31, 2008, 2009 and 2010.

Restricted Cash

At December 31, 2009 and 2010, restricted cash consists of letters of credit issued as security for leased facilities in Seattle, Washington and Newport Beach, California.

Revenue Recognition

We generate revenue from sales of our hardware products, software, development and service contracts and licensing agreements. We recognize product revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and there are no significant post-delivery obligations remaining; (3) the price is fixed or determinable; and (4) collection is probable.

Product Revenue. Hardware products are typically considered delivered upon shipment. Certain arrangements contain provisions for customer acceptance. Where we are unable to demonstrate that the customer acceptance provisions are met on shipment, revenue is deferred until all acceptance criteria have been met or the acceptance clause or contingency lapses.

For the sale of products to a distributor, we evaluate our ability to estimate returns, considering a number of factors, the geography in which a sales transaction originates, payment terms and our relationship and past history with the distributor. If we are not able to estimate returns at the time of sale to a distributor, revenue recognition is deferred until there is persuasive evidence indicating the product has sold-through to an end user. Persuasive evidence of sell-through may include reports from distributors documenting sell-through activity, data

F-14

Impinj, Inc.

Notes to Financial Statements

indicating an order has shipped to an end user or other similar information. At the time of revenue recognition, we record reserves for estimated sales returns and stock rotation arrangements. Sales returns and stock rotation reserves are estimated based on historical activity and expectations of future experience. We monitor and analyze actual experience and adjust these reserves on a quarterly basis.

Our Speedway reader products are sold in combination with services, which primarily consist of hardware and software support. Hardware support includes Internet access to technical content, repair or replacement of hardware in the event of breakage or failure and telephone and Internet access to technical support personnel during the term of the support period. Software is integrated with our Speedway reader products and is essential to the functionality of the integrated products.

In October 2009, the Financial Accounting Standards Board, or FASB, amended the accounting standards for revenue recognition to remove tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of industry-specific software revenue recognition guidance. In October 2009, the FASB also amended the accounting standards for multiple deliverable revenue arrangements to: (1) provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated and how the consideration should be allocated; (2) require an entity to allocate revenue in an arrangement using best estimated selling prices, or ESP, of deliverables if a vendor does not have vendor-specific objective evidence of selling price, VSOE, or third-party evidence of selling price, or TPE; and (3) eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. We elected to early adopt this accounting guidance at the beginning of 2010 on a prospective basis for applicable transactions originating or materially modified after January 1, 2010. This guidance does not generally change the units of accounting for our revenue transactions.

For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality and undelivered software elements relating to the hardware product’s essential software, we allocate revenue to all deliverables based on their relative selling prices. In such circumstances, the newly adopted accounting principles establish a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (1) VSOE; (2) TPE; and (3) ESP. VSOE generally exists only when we sell the deliverable separately and is the price actually charged by us for that deliverable. When VSOE cannot be established, we attempt to establish the selling price of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. We are unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis and are therefore typically not able to determine TPE. When we are unable to establish selling price using VSOE or TPE, we use ESP in the allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis.

Our ESPs for the hardware and software products are calculated using a method consistent with the way management prices new products. We consider multiple factors in developing the ESPs for our products including our historical pricing and discounting practices, the costs incurred to manufacture the product, the nature of the customer relationship and market trends. In addition, we may consider other factors as appropriate, including the pricing of competitive alternatives if they exist and product-specific business objectives. We regularly review VSOE and ESP and maintain internal controls over the establishment and updates of these estimates.

We present revenue net of sales tax in our statement of operations. Shipping charges billed to customers are included in product revenue and the related shipping costs are included in cost of product revenue.

F-15

Impinj, Inc.

Notes to Financial Statements

Development, Service and Licensing Revenue. We account for nonrecurring engineering development contracts and license contracts that involve significant production, modification or customization of our products by generally recognizing the revenue over the performance period under the percentage of completion, or POC, method measured on a cost incurred basis and when amounts are legally due under the terms of the agreement. Advance payments under these license and development contracts are deferred and recognized as revenue ratably over the contract period. Under the POC method of accounting, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Changes to the original estimates may be required during the life of the contract. Estimates are reviewed periodically and the effect of any change in the estimated gross margin percentage for a contract is reflected in cost of sales in the period the change becomes known. The use of the POC method of accounting involves considerable use of estimates in determining revenue, costs and profits and in assigning the amounts to accounting periods.

We recognize revenue in accordance with industry specific software accounting guidance for stand alone software licenses and related support services. Revenue from license agreements that do not require significant production, modification or customization of our software is generally recognized when: (1) delivery has occurred; (2) there is no customer acceptance clause in the contract; (3) there are no significant post-delivery obligations remaining; (3) the price is fixed; and (4) collection of the resulting receivable is reasonably assured. For transactions, where we have established VSOE for the fair value of support services as measured by the renewal prices paid by our customers when the services are sold separately on a stand alone basis, we use the residual method to determine the amount of software product revenue to be recognized. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the sales amount is recognized as license revenue. Support services revenue is deferred and recognized ratably over the period during which the services are to be performed, which is typically from one to three years. In those instances where we have not established VSOE of our support services, the license and service revenue is recognized on a straight-line basis over the support period.

Amounts allocated to the support services sold with our Speedway reader products are deferred and recognized on a straight-line basis over the support services term.

Guarantees and Product Warranties

In the normal course of business to facilitate sales of our products, we indemnify other parties, including customers, resellers and parties to other transactions with us, with respect to certain matters. We have agreed to hold the other party harmless against losses arising from a breach of representations or covenants, from intellectual property infringement and from other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

We provide limited warranty coverage for most products generally ranging from a period of 90 days to one year from the date of shipment. A liability is recorded for the estimated cost of product warranties based on historical claims, product failure rates and other factors when the related revenue is recognized. We review these estimates on a regular basis and adjust the warranty reserves as actual experience differs from historical estimates or other information becomes available. This warranty liability primarily includes the anticipated cost of materials, labor and shipping necessary to repair or replace the product. Accrued warranty costs in 2008, 2009 and 2010 were not material.

F-16

Impinj, Inc.

Notes to Financial Statements

Research and Development Costs

Research and development costs are expensed as incurred and consist of salaries and related benefits of product development personnel, contract developers, prototype materials and other expenses related to the development of new and improved products.

Income Taxes

We use the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when such assets and liabilities are recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the year that includes the enactment date. We determine deferred tax assets including net operating losses and liabilities, based on temporary differences between the book and tax bases of assets and liabilities. We believe that it is currently more likely than not that our deferred tax assets will not be realized and as such, a full valuation allowance is required.

We utilize a two-step approach for evaluating uncertain tax positions. Step one, recognition, requires us to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. If a tax position is not considered “more likely than not” to be sustained, no benefits of the position are recognized. Step two, measurement, is based on the largest amount of benefit which is more likely than not to be realized on effective settlement.

Net Loss Per Share

Net loss attributable to common stockholders per share is computed by dividing the net loss allocable to common stockholders by the weighted-average number of shares of common stock outstanding. We have outstanding stock options, unvested common stock subject to repurchase, warrants, preferred stock and convertible debt, which have not been included in the calculation of diluted net loss attributable to common stockholders per share because to do so would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss attributable to common stockholders per share for each period are the same.

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss per common share:

	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(Unaudited)
	(In thousands, except per share amounts)
Numerator:
Net loss	$	(11,862	)	$	(9,860	)	$	(11,385	)	$	(3,087	)	$	(1,801	)
Accretion of redeemable convertible preferred stock		(7,619	)		(8,559	)		(8,558	)		(2,140	)		(2,037	)
Net loss attributable to common stockholders	$	(19,481	)	$	(18,419	)	$	(19,943	)	$	(5,227	)	$	(3,838	)
Denominator:
Weighted-average common shares outstanding		30,914			33,680			34,321			33,846			35,073
Weighted-average unvested shares of common stock subject to repurchase		(405	)		(153	)		(194	)		(123	)		(249	)
Weighted-average common shares outstanding—basic and diluted		30,509			33,527			34,127			33,723			34,824

F-17

Impinj, Inc.

Notes to Financial Statements

The following outstanding options, warrants and preferred stock were excluded from the computation of diluted net loss per common share applicable to common stockholders for the periods presented because their effect would have been antidilutive:

	Year Ended December 31,						March 31,
	2008		2009		2010		2010		2011
							(Unaudited)
	(In thousands)
Options to purchase common stock		14,024		17,301		17,851		17,252		21,914
Convertible preferred stock (as converted)		97,465		97,465		97,465		97,465		97,465
Subordinated convertible promissory notes (as converted)		—		—		2,739		—		2,797
Convertible preferred stock warrants (as converted)		219		219		243		219		260
Convertible preferred stock warrants (as converted)		—		—		891		—		891
Common stock warrant		—		—		—		—		300

Pro Forma Net Loss Per Share (Unaudited)

Pro Forma net loss per share is computed as follows:

	Year Ended December 31,			Three Months Ended March 31,
	2010			2011
	(In thousands)
Numerator:
Net loss	$	(11,385	)	$	(1,801	)
Remeasurement adjustments to preferred stock warrants		193			116
Pro forma net loss		(11,192	)		(1,685	)
Denominator:
Weighted-average common shares outstanding		34,321			35,073
Weighted-average unvested shares of common stock subject to repurchase		(194	)		(249	)
Adjustment for conversion of preferred stock		97,465			97,465
Adjustment for assumed repayment of subordinated promissory notes
Weighted-average common shares outstanding—basic and diluted

Outstanding options and warrants were excluded from the computation of unaudited pro forma net loss per share because their effect would have been antidilutive.

Stock-Based Compensation

We have a stock-based employee compensation plan that is more fully described in Note 11.

We account for stock-based compensation at fair value. Stock-based compensation costs are recognized based on their grant date fair value estimated using the Black-Scholes model. Stock-based compensation expense recognized in the statement of operations is based on options ultimately expected to vest and has been reduced by an estimated forfeiture rate based on our historical and expected forfeiture patterns.

We use the straight-line method of allocating compensation cost over the requisite service period of the related award. The expected term of options granted is based on expectations of historical experience of similar awards and expectation of future employee behavior. The risk-free rate for the expected term of the option is

F-18

Impinj, Inc.

Notes to Financial Statements

based on the U.S. Treasury yield curve in effect at the time of grant. We based our estimate of expected volatility on the estimated volatility of similar entities whose share prices are publicly available. We have not paid and do not anticipate paying cash dividends on common stock; therefore, the expected dividend yield is assumed to be zero.

The following table presents the detail of stock-based compensation expense amounts included in our statement of operations for the periods indicated below:

	Year Ended December 31,						Three months ended March 31,
	2008		2009		2010		2010		2011
							(Unaudited)
	(In thousands)
Cost of revenue	$	16	$	20	$	25	$	6	$	7
Research and development		123		114		203		31		109
Selling and marketing		96		82		138		21		47
General and administrative		112		97		133		39		68
Total stock-based compensation expense	$	347	$	313	$	499	$	97	$	231

We account for equity instruments issued to nonemployees at fair value. All transactions in which services are received for the issuance of equity instruments are accounted for based on the fair value of the equity instrument issued. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date on which it is probable that performance will occur. Stock-based compensation expense on options granted to nonemployees was not material in 2008, 2009, 2010 and the three months ended March 31, 2010 and 2011.

Advertising

Advertising costs are expensed as incurred. Advertising costs were $247,000, $81,000, $142,000, $45,000 and $29,000 for the years ended December 31, 2008, 2009 and 2010 and the three months ended March 31, 2010 and 2011, respectively.

Risks and Uncertainties

Inherent in our business are various risks and uncertainties, including our limited operating history and development of advanced technologies in a rapidly changing industry. These risks include the failure to develop and extend our products and the rejection of our products by consumers, as well as other risks and uncertainties. If we do not successfully implement our business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in our capital stock may not be recoverable. Our success depends upon the acceptance of our technology, development of sales and distribution channels and our ability to generate significant revenue from the use of its technology.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes unrealized gains and losses on investments and foreign currency translation adjustments. For the three months ended March 31, 2010, there are no components of other comprehensive loss which are not included in net loss; therefore a separate statement of accumulated other comprehensive loss is not included.

F-19

Impinj, Inc.

Notes to Financial Statements

3. Property and Equipment

Property and equipment at December 31 consist of the following:

	Useful Lives	December 31,
		2009			2010
	(years)	(In thousands)
Laboratory equipment	3	$	3,153		$	3,689
Computer equipment and software	3		1,789			2,017
Furniture and fixtures	3-7		561			561
Leasehold improvements	shorter of lease term or economic life		1,219			1,219
			6,722			7,486
Less: Accumulated depreciation			(5,229	)		(6,224	)
		$	1,493		$	1,262

Depreciation expense was $1.1 million, $1.2 million and $995,000 for the years ended December 31, 2008, 2009 and 2010, respectively. The net book value of property and equipment acquired under capital leases was $300,000 and $322,000 at December 31, 2009 and 2010, respectively.

For the year ended December 31, 2010, we capitalized $51,000 of internally developed software in connection with costs incurred for the upgrade of our ERP system which was placed in service in February 2011.

4. Business Combinations

On July 3, 2008, we acquired Intel Corporation’s UHF Gen2 reader IC operation to add an additional product line to the RFID solutions we provide. The purchase consideration for Intel’s net assets related to the UHF Gen2 reader IC business was common and preferred stock valued at $6.5 million. The acquisition was accounted for under the purchase method. In addition to the equity consideration provided to Intel, we incurred an additional $254,000 of direct acquisition costs.

We determined that the UHF Gen2 reader IC operations constituted a business combination. Accordingly, the allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values as of the date of acquisition. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed was allocated to goodwill.

The purchase consideration was as follows (in thousands):

Issuance of shares of redeemable convertible Series E preferred stock	$	5,861
Issuance of shares of common stock		662
Acquisition costs		254
Total consideration paid	$	6,777

F-20

Impinj, Inc.

Notes to Financial Statements

The allocation of the purchase price was as follows (in thousands):

Inventory	$	264
Property and equipment		1,150
Net liabilities assumed		(868	)
Intangible assets		1,700
Goodwill		3,881
In-process research and development		650
Total consideration paid	$	6,777

The amounts allocated to the identifiable intangible assets were determined through established valuation techniques accepted in the technology industry, primarily using the income approach. We determined the valuation of the identifiable intangible assets using future cash flow assumptions and discount rates ranging from 19% to 22%. The acquired intangible assets included developed technology, patents and customer lists. These intangible assets are amortized over the following estimated useful lives: four years for the technology, seven years for the patents and seven to eight years for the customer lists. The weighted-average amortization period for the intangible assets is 5.9 years.

The $3.9 million of goodwill we recorded in connection with the acquisition is deductible for income tax purposes.

In connection with this acquisition, we recorded an expense of $650,000 in 2008 for the write-off of acquired in-process research and development, or IPR&D. The purchase price allocated to acquired IPR&D was determined through established valuation techniques. The acquired IPR&D was immediately expensed because technological feasibility had not been established, and no future alternative use of the technology existed. The write-off of acquired IPR&D is a component of research and development expense in the statements of operations.

The results of operations and the estimated fair values of the assets acquired and liabilities assumed is included in our financial statements from the date of acquisition.

The acquired business contributed revenue of approximately $586,000 for the period from July 1, 2008 to December 31, 2008. The following unaudited pro forma summary presents consolidated information as if we had acquired the business as of January 1, 2008. Adjustments have been made for the estimated amortization of intangible assets and other appropriate pro forma adjustments. The charges for purchased in-process research and development are included in the pro forma results. The information presented does not purport to be indicative of the results that would have been achieved had the acquisition been made as of January 1, 2008 nor of the results which may occur in the future.

F-21

Impinj, Inc.

Notes to Financial Statements

	Year Ended December 31,
	2008
	(In thousands except per share data)
	(Unaudited)
Total revenue	$	15,973
Net loss from continuing operations		(18,522	)
Gain on discontinued operations		1,275
Net loss	$	(17,247	)
Net loss attributable to common stockholders	$	(24,866	)
Basic and diluted loss per common share:
Loss from continuing operations	$	(0.86	)
Gain on discontinued operations		0.04
Net loss	$	(0.82	)
Weighted-average number of shares used in computation of per share amounts		30,509

These amounts have been calculated applying our accounting policies and adjusting the results of the acquired business to reflect the additional amortization that would have been charged assuming the fair value adjustment to intangible assets had been applied from January 1, 2008 together with consequential tax effects.

5. Intangible Assets

Intangible assets at December 31, 2009 and 2010 consist of the following:

	Useful Lives (Years)	December 31, 2009							December 31, 2010
		Gross		Accumulated Amortization			Net		Gross		Accumulated amortization			Net
	(In thousands)
Patents	7	$	150	$	(32	)	$	118	$	150	$	(54	)	$	96
Customer list	7-8		700		(133	)		567		700		(221	)		479
Technology	4		850		(319	)		531		850		(531	)		319
		$	1,700	$	(484	)	$	1,216	$	1,700	$	(806	)	$	894

The weighted-average remaining amortization period for the intangible assets is 3.9 years. Amortization expense related to these intangibles was $161,000, $323,000 and $322,000 for the years ended December 31, 2008, 2009 and 2010, respectively.

Estimated amortization expense of intangible assets for the next five years and thereafter are as follows (in thousands):

Year Ended December 31,
2011	$	322
2012		216
2013		110
2014		110
2015		96
Thereafter		40
	$	894

F-22

Impinj, Inc.

Notes to Financial Statements

6. Discontinued Operations

In June 2008, we sold our nonvolatile memory, or NVM, business to Synopsys, Inc. for total consideration of $5.2 million of which $450,000 was placed in escrow until certain contingencies lapsed. This $450,000 was recorded as restricted cash and a deferred gain in 2008. In 2009, the contingencies lapsed and we reclassified the $450,000 from restricted cash to cash and recognized the deferred gain. The sale included intellectual property, NVM technology and certain property and equipment.

Our historical financial results have been reclassified as discontinued operations in the statement of operations for all periods presented. The resulting gains of $3.6 million and $450,000 from the sale are included in the gain on discontinued operations in the statement of operations for the years ended December 31, 2008 and 2009. Summarized operating results for the intellectual property products business for the years ended December 31, 2008 and 2009 are as follows:

	Year Ended December 31,
	2008			2009
	(In thousands)
Total revenue	$	1,262		$	—
Operating expenses		(2,923	)		—
Gain on discontinued operations		3,634			450
Pretax gain from discontinued operations		1,973			450
Income taxes		(698	)		(159	)
Gain on discontinued operations	$	1,275		$	291

7. Income Taxes

At December 31, 2010, we had federal net operating loss carryforwards, or NOLs, of approximately $105.9 million and federal research and experimentation credit carryforwards of approximately $5.1 million which may be used to reduce future taxable income or offset income taxes due. These NOLs and credit carryforwards expire beginning in 2020 through 2029.

Our net deferred tax assets consisted of the following for the periods indicated:

	Year Ended December 31,
	2009			2010
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	33,071		$	36,719
Credit carryforwards		3,678			4,140
Depreciation and amortization		830			653
Capitalized research and development		993			646
Deferred rent		69			248
Allowances		285			503
Other		283			448
Deferred tax assets		39,209			43,357
Less: Valuation allowance		(39,209	)		(43,357	)
Net deferred tax assets	$	—		$	—
Deferred tax liability:
Goodwill		(138	)		(228	)
Net deferred tax liability	$	(138	)	$	(228	)

F-23

Impinj, Inc.

Notes to Financial Statements

We did not record a tax benefit related to our stock options during the years ended December 31, 2008, 2009 and 2010, since we currently maintain a full valuation allowance for our deferred tax assets. Our realization of the benefits of the NOLs and credit carryforwards is dependent on sufficient taxable income in future fiscal years. We have established a valuation allowance against the carrying value of our deferred tax assets, as it is not currently more likely than not that we will be able to realize these deferred tax assets. In addition, utilization of NOLs and credits to offset future income subject to taxes may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986, or the Code, and similar state provisions. Events that cause limitations in the amount of NOLs that we may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50%, as defined by Code Section 382, over a three-year period. Utilization of our NOLs and tax credit carryforwards could be significantly reduced if a cumulative ownership change of more than 50% has occurred in our past or occurs in our future.

Our income tax (expense) benefit consists of the following:

	2008		2009		2010
	(In thousands)
Current:
US	$	—	$	—	$	—
Foreign		—		—		—
		—		—		—
Deferred:
US	$	644	$	50	$	(90	)
Foreign		—		—		—
	$	644	$	50	$	(90	)

We file a U.S. federal income tax return. A reconciliation of the effect of applying federal statutory rates and the effective income tax rates used to calculate our income tax expense (benefit) on our loss from continuing operations is as follows:

	2008			2009			2010
U.S. statutory rate		34.0	%		34.0	%		34.0	%
Change in valuation allowance		(33.8	)		(42.2	)		(38.1	)
State taxes (net of federal benefit)		1.2			1.3			1.3
Federal research and development credit		6.0			5.4			5.7
Nondeductible expenses and other		(2.8	)		2.0			(3.1	)
Effective income tax rate		4.6	%		0.5	%		(0.8	)%

Income from discontinued operations before income tax expense was approximately $2.0 million and $450,000 for the years ended December 31, 2008 and 2009, respectively, and was all derived in the United States. The following table is a reconciliation from the U.S. statutory rate to the effective tax rate for discontinued operations:

	2008			2009
U.S. statutory rate		34.0	%		34.0	%
State taxes (net of federal benefit)		1.4			1.4
Effective income tax rate		35.4	%		35.4	%

F-24

Impinj, Inc.

Notes to Financial Statements

The table below summarizes changes in the deferred tax asset valuation allowance:

	Balance at beginning of year		Charged to costs and expenses		Write-offs		Balance at end of year
	(In thousands)
Deferred tax valuation allowance:
For year ended December 31, 2008	$	31,390	$	4,759	$	—	$	36,149
For year ended December 31, 2009		36,149		3,060		—		39,209
For year ended December 31, 2010		39,209		4,148		—		43,357

We classify applicable interest and penalties as a component of the provision for income taxes. The amount of accrued interest and penalties is not material. The total balance of unrecognized tax benefits was as follows:

	Year Ended December 31,
	2009		2010
	(In thousands)
Unrecognized tax benefits at beginning of year	$	1,100	$	1,226
Additions based on current year tax positions		126		154
Unrecognized tax benefits at end of year	$	1,226	$	1,380

We do not anticipate that the amount of our existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Due to the presence of net operating loss carryforwards in most jurisdictions, our tax years remain open for examination by taxing authorities back to 2000.

8. Debt Facilities

In May 2010, we entered into a loan and security agreement, or Credit Facility with a bank (the “Bank”), pursuant to which we (1) incurred $1.5 million in term loan borrowings and were allowed to incur an additional $500,000 of term loan borrowings prior to January 31, 2011 and (2) could incur revolver borrowings of up to the lesser of $4.0 million and a borrowing base tied to the amount of eligible accounts receivable. The Credit Facility also provides for the issuance of letters of credit, foreign exchange forward contracts and cash management services; however, the amount of revolver borrowings available to us is reduced by any such indebtedness that we incur. Interest on term loan borrowings accrues at a floating rate equal to the greater of 5.0% and the lender’s prime rate plus 0.5% (5.0% at December 31, 2010). We are required to repay the initial term loan borrowings in 24 equal monthly installments beginning on May 1, 2011 and any subsequent term loan borrowings in 27 equal monthly installments beginning on the first day of the month following the day on which such indebtedness was incurred. We may at our option prepay all of the term loan borrowings by paying the lender all principal and accrued interest plus a make-whole premium. Interest on revolver borrowings accrues at a floating rate equal to the greater of the lender’s prime rate and 4.0% (4.0 % at December 31, 2010) and is payable monthly. At December 31, 2010, $4.0 million was outstanding on the revolving line of credit and $2.0 million was outstanding on the term loan. The weighted-average interest rate on this facility was 4.3% at December 31, 2010.

In February 2011, the Credit Facility was amended to provide for an additional $2.0 million of “Facility B” term loan borrowings. Interest on Facility B term loan borrowings accrues at a floating rate equal to the greater of 4.5% and the lender’s prime rate plus 1.25% and is payable monthly. We are required to repay the Facility B term loan in 27 equal monthly installments beginning on October 1, 2011. In addition, the Credit Facility was amended to increase the amount of available revolver borrowings to $10.0 million, to provide for interest on revolver borrowings at a floating rate equal to the lender’s prime rate plus 0.75% and to extend the maturity date

F-25

Impinj, Inc.

Notes to Financial Statements

to February 1, 2013. The U.S. Export-Import Bank has agreed to guarantee up to $6.8 million of revolver borrowings incurred under the Credit Facility to finance the cost of manufacturing, purchasing or selling items intended for export.

The Credit Facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The Credit Facility also requires us to maintain a minimum tangible net worth and liquidity ratio. We were in compliance with such covenants as of December 31, 2010. Our obligations under the Credit Facility are secured by substantially all of our assets other than intellectual property.

Scheduled principal maturities are as follows (in thousands):

Year ended December 31,
2011	$	722
2012		972
2013		4,306
	$	6,000

In connection with the establishment of the Credit Facility and its subsequent amendment, we issued warrants to purchase 24,059 and 17,498, shares of Series E preferred stock, respectively, with a ten year term and an exercise price of $2.286 per share. The warrants are exercisable at any time, and from time to time, prior to expiration for cash or on a net exercise basis. The warrants can only be settled in delivery of shares to holders of the warrant on the settlement date. The warrants are not redeemable. We valued these warrants on their respective grant dates, June 2, 2010 and February 2, 2011 at $17,000 and $19,000, respectively, using the Black-Scholes model with the following variables: Series E preferred stock price of $1.33 at June 2, 2010 and $1.80 at February 2, 2011, the contractual life of 10 years, volatility of 50% and a risk-free interest rate ranging from 3.35% to 3.52%. The warrant discount is being amortized to interest expense over the commitment term of the Credit Facility. The warrants are exercisable through June 2, 2020 and February 1, 2021, respectively. The maximum number of shares of Series E preferred stock issuable upon exercise was 41,557 in the aggregate. Series E preferred stock had a per share fair value of $1.62 and $1.80 as of December 31, 2010 and March 31, 2011, respectively.

In connection with a prior loan obtained in 2007 and which was paid off in May 2010, we issued warrants to purchase 218,723 shares of Series E preferred stock with a seven year term and an exercise price of $2.286 per share. The warrants are exercisable at any time, and from time to time, prior to expiration for cash or on a net exercise basis. The warrants can only be settled in delivery of shares to holders of the warrant on the settlement date. The warrants are not redeemable. We valued the warrants at the date of grant, October 3, 2007, at $284,000, using the Black-Scholes model with the following variables: Series E preferred stock price of $2.29, the contractual life of seven years, volatility of 50% and a risk free interest rate of 4.4%. The warrant discount was amortized to interest expense over the loan commitment term. The warrants are exercisable through October 3, 2014, or upon sale, consolidation or merger of our company or sale of all or substantially all of our assets.

In March 2011, we entered into a loan and security agreement with the Bank, which we refer to as the mezzanine credit facility, pursuant to which we incurred $10.0 million in term loan borrowings. Interest on term loan borrowings incurred under the mezzanine credit facility accrues at a fixed rate equal to 11.0% per year and is payable monthly. The principal amount of all outstanding borrowings is payable on March 25, 2013. We may, at our option, prepay all borrowings without penalty by paying the lender all principal and accrued interest with

F-26

Impinj, Inc.

Notes to Financial Statements

respect to such term loan borrowing. The mezzanine credit facility contains customary events of default and covenants that are substantially similar to those contained in the Credit Facility, except for certain covenants relating to reporting, tangible net worth and liquidity ratio, requirements which are omitted from the mezzanine credit facility. Our obligations under the loan and security agreement are secured by substantially all of our assets other than intellectual property. In addition, we entered into a success fee agreement in connection with the mezzanine loan facility, which requires us to pay a success fee if we are acquired or we sell all or substantially all of our assets. The success fee agreement will automatically terminate upon the completion of a public offering for our common stock.

In connection with the mezzanine credit facility, we issued the lender a warrant to purchase 300,000 shares of our common stock. The warrant has a ten-year term and an exercise price of $0.21 per share. The warrants are exercisable at any time, and from time to time, prior to expiration for cash or on a net exercise basis. The warrants can only be settled in delivery of shares to holders of the warrant on the settlement date. The warrants are not redeemable. We valued the warrant at the date of grant, March 25, 2011, at $270,000, using the Black-Scholes model with the following variables: common stock fair value of $1.02, the contractual life of 10 years, volatility of 51.5% and a risk-free interest rate of 3.5%. The warrant discount will be amortized to expense over the loan commitment term. The maximum number of shares of common stock issuable under these warrants was 300,000. Our common stock had a per share value of $1.02 as of March 31, 2011.

As of March 31, 2011, we had approximately $1.5 million of term loan borrowings, $400,000 of Facility B term loan borrowings, $10.0 million of mezzanine borrowings and $7.7 million of revolver borrowings outstanding.

9. Subordinated Convertible Promissory Notes—Related Parties

In June and July 2010, we issued approximately $6.0 million aggregate principal amount of our subordinated secured convertible promissory notes, or the Notes, to existing investors. Interest on the Notes accrues at 9.0% and all unpaid principal and interest is payable on the scheduled maturity date of June 30, 2011; provided that, if a liquidity event has not occurred prior to the scheduled maturity date, the maturity date may be extended by the vote of holders of more than 60% of the aggregate principal amount of the Notes. We are required to repay all principal and accrued interest on the Notes together with a premium equal to the sum of all principal and accrued interest on the Notes in connection with the consummation of an initial public offering; however, holders of over $100,000 aggregate principal amount of Notes may, at their option, convert their notes plus accrued interest into (1) shares of our Series E preferred stock at a conversion price of $2.286 per share (which conversion price is subject to adjustments for stock splits, reverse stock splits, stock dividends and the like) or (2) if all of the shares of our Series E preferred stock are converted into shares of our common stock, a number of shares of common stock that holders would have received had they converted their notes into Series E preferred stock immediately prior to the conversion. As of December 31, 2010 and March 31, 2011, this repayment premium was $6.3 million and $6.4 million, respectively. The Notes contain customary events of default and covenants. We were in compliance with such covenants as of December 31, 2010. Our obligations under the Notes are secured by substantially all of our assets other than intellectual property. The Notes are subordinate in right of payment to the Credit Facility described above. As of December 31, 2010, total outstanding aggregate principal and accrued interest for the Notes was approximately $6.3 million.

In connection with the issuance of the Notes, we issued warrants to purchase an aggregate of 890,721 shares of our capital stock of the same type and at the same price as the Notes are convertible into. The warrants will be exercised automatically on a net exercise basis if the initial per share price to the public in an initial public offering exceeds the exercise price of the warrants; otherwise the warrant will expire upon the closing of such

F-27

Impinj, Inc.

Notes to Financial Statements

offering. We valued the warrants issued in connection with the Notes on the date of grant at $470,000 using the Black-Scholes model with the following variables: Series E preferred stock price of $1.33, the contractual life of seven years, volatility of 50% and a risk-free interest rate of 2.42%. The value of the warrants was based on the assumption that they would be exercised for Series E preferred stock. The warrant discount is being amortized to expense over the term of the Notes. In 2010 we recognized $235,000 of expense for these warrants. The warrants are exercisable until conversion or repayment of the related Notes. The maximum number of Series E preferred stock issuable under the warrants was 890,721. Series E preferred stock had a per share fair value of $1.62 and $1.80 as of December 31, 2010 and March 31, 2011, respectively.

In connection with the promissory note agreements, the Note holders agreed to not pursue the repayment of any indebtedness under the Notes or under any other instrument or writing evidencing new indebtedness to them while there was outstanding borrowings under the credit facility or mezzanine credit facility.

10. Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Common Stock

We have authorized 160,000,000 shares of voting $0.001 par value common stock. Each holder of the common stock is entitled to one vote per common share. At its discretion, the Board of Directors may declare dividends on shares of common stock, subject to the prior rights of our preferred stockholders. Upon liquidation or dissolution, holders of common stock will receive distributions only after preferred stock preferences have been satisfied.

We have reserved 124,631,940, shares of common stock for the conversions of preferred stock and the exercise of options and warrants.

Redeemable Convertible Preferred Stock

As of December 31, 2010, we have authorized 206,227,960 shares of preferred stock, of which 4,000,000 have been designated Series A convertible preferred stock, 4,000,000 have been designated Series A-1 convertible preferred stock, 18,134,992 have been designated Series B convertible preferred stock, 18,134,992 have been designated Series B-1 convertible preferred stock, 43,382,413 have been designated Series C redeemable convertible preferred stock and 43,382,413 have been designated Series C-1 redeemable convertible preferred stock, 13,596,575 have been designated Series D redeemable convertible preferred stock and 13,596,575 have been designated Series D-1 redeemable convertible preferred stock, 24,000,000 have been designated Series redeemable convertible E preferred stock and 24,000,000 have been designated Series E-1 redeemable convertible preferred stock. None of the shares of Series A-1 preferred stock, Series B-1 preferred stock, Series C-1 preferred stock, Series D-1 preferred stock or Series E-1 preferred stock has been issued as of December 31, 2010.

Redemption

The holders of a majority of the outstanding shares of Series C preferred stock, Series D preferred stock or Series E preferred stock, may, at any time after February 23, 2011, require us to redeem the Series C preferred stock, Series D preferred stock or Series E preferred stock, respectively, at the original issuance price plus any declared or accumulated but unpaid dividends, plus an amount equal to 7% annual interest on the face value of the preferred stock accrued from the date of issuance of such shares.

One third of the shares are redeemable in the year the redemption election is made. The remaining shares are to be redeemed ratably over the next two anniversaries of the initial redemption date. If we do not have

F-28

Impinj, Inc.

Notes to Financial Statements

sufficient funds legally available to redeem all shares of Series C preferred stock, Series D preferred stock or Series E preferred stock, then we will (1) redeem the maximum possible number of shares ratably among holders of Series E preferred stock and (2) any remaining funds will be used to redeem the maximum possible number of shares ratably among holders of Series C preferred stock and Series D preferred stock. Thereafter, when additional funds are available for redemption of shares, the redemption will be subject to the priority noted above.

In addition, the Series A preferred stock, Series B preferred stock, Series C preferred stock, Series D preferred stock and Series E preferred stock all contain provisions that, in the event of a change in the control of our company, would give the holders of the preferred stock the right to receive a cash distribution equal to the liquidation preference on the preferred stock.

Due to the redemption characteristics described above, the preferred stock has not been included in the stockholders’ deficit and is presented as redeemable convertible preferred stock as of December 31, 2010 and 2009.

As of December 31, 2009 and 2010, we have recorded accretion of $32.8 million and $41.4 million, respectively, of interest related to the Series C preferred stock, Series D preferred stock and Series E preferred stock, of which $7.6 million, $8.6 million and $8.6 million was recorded in 2008, 2009 and 2010, respectively.

In connection with the issuance of the subordinated convertible notes, holders of a majority of each of the Series C, Series D and Series E preferred stock agreed not to pursue the repayment of any indebtedness under the subordinated convertible notes or any other instrument or writing evidencing our indebtedness to them while there are outstanding borrowings under the Credit Facility or mezzanine credit facility described in Note 8.

Dividends

The holders of preferred stock are entitled to receive noncumulative dividends prior to and in preference to any dividends to common stockholders, at a rate of $0.015 per share per annum on each outstanding share of Series A preferred stock, approximately $0.083 per share per annum on each outstanding share of Series B and Series C preferred stock, approximately $0.195 per share per annum on each outstanding share of Series D preferred stock and approximately $0.229 per share per annum on each outstanding share of Series E preferred stock as and when declared by the Board of Directors. The dividend per share is subject to adjustment for stock splits, stock dividends and reclassification.

Liquidation

In the event of any liquidation, dissolution or winding up of the corporation, including a merger, acquisition or sale of assets where the beneficial owners of our common and preferred stock own less than 50% of the resulting voting power of the surviving entity, the holders of Series E preferred stock shall be entitled to receive, prior and in preference to any distribution of assets to the holders of Series A preferred stock, Series B preferred stock, Series C preferred stock, Series D preferred stock or common stock, an amount equal to $2.286 (subject to adjustment) for each share of Series E preferred stock held by them plus declared but unpaid dividends. If our assets are insufficient to permit this payment, then the assets shall be distributed ratably among the holders of Series E preferred stock.

If assets remain after this distribution, the holders of Series D preferred stock shall be entitled to receive, prior and in preference to any distribution of assets to the holders of Series A preferred stock, Series B preferred

F-29

Impinj, Inc.

Notes to Financial Statements

stock, Series C preferred stock or common stock, an amount equal to approximately $1.949 (subject to adjustment) for each share of Series D preferred stock held by them plus declared but unpaid dividends. If our assets are insufficient to permit this payment, then the assets shall be distributed ratably among the holders of Series D preferred stock.

If assets remain after this distribution, the holders of Series C preferred stock shall be entitled to receive, prior and in preference to any further distribution of assets to the holders of Series A preferred stock, Series B preferred stock or common stock, an amount equal to approximately $0.833 (subject to adjustment) for each share of Series C preferred stock held by them plus declared but unpaid dividends. If our assets are insufficient to permit this payment, then the assets shall be distributed ratably among the holder of Series C preferred stock.

If assets remain after this distribution, the holders of Series A preferred stock, Series B preferred stock, Series C preferred stock, Series D preferred stock and Series E preferred stock shall be entitled to receive, prior and in preference to any distribution of assets to the holders of common stock, an amount equal to (1) $0.15 (subject to adjustment) for each share of Series A preferred stock held by them plus declared but unpaid dividends, (2) approximately $0.833 (subject to adjustment) for each share of Series B preferred stock held by them plus declared but unpaid dividends, (3) approximately $0.833 (subject to adjustment) for each share of Series C preferred stock held by them plus declared but unpaid dividends, (4) approximately $1.949 (subject to adjustment) for each share of Series D preferred stock held by them plus declared but unpaid dividends and (5) $2.286 (subject to adjustment) for each share of Series E preferred stock held by them plus declared but unpaid dividends. If our assets are insufficient to permit these payments, then our assets shall be distributed ratably among all preferred stockholders.

If assets remain after this distribution, the assets shall be distributed ratably to the holders of Series B, C, D and E preferred stock (assuming conversion to common stock) and the common stockholders until the holders of Series B preferred stock have received an aggregate of approximately $2.083 per share, the Series C holders have received an aggregate of approximately $2.083 per share, the holders of Series D preferred stock have received an aggregate of $4.873 per share and the holders of Series E preferred stock have received an aggregate of $5.715 per share. After this distribution, all assets shall be ratably distributed to the common stockholders.

Voting

Each holder of preferred stock is entitled to vote on all matters and is entitled to that number of votes equal to the number of votes that would be accorded to the number of shares of common stock into which such holder’s preferred stock would be converted.

Conversion

Each share of preferred stock is convertible at the option of the holder into such number of shares of common stock as is determined by dividing its stated value by the conversion price at the time of conversion. The conversion price is equal to the original issue price as adjusted for stock splits, stock dividends and recapitalizations. All shares of preferred stock will be automatically converted into shares of common stock upon the closing of a public offering if the public offering price is not less than $5.00 per share and results in aggregate proceeds of at least $25 million.

11. Stock Based Compensation

We have adopted various option plans under which stock options and common stock can be granted to employees and non-employees. The plans provide for the grant of incentive stock options, within the meaning of

F-30

Impinj, Inc.

Notes to Financial Statements

Section 422 of the Code, to our employees and any affiliates’ employees and for the grant of nonstatutory stock options and awards of restricted or unrestricted shares of common stock to our employees, consultants and advisors and our affiliates’ employees, consultants and advisors.

Employees are provided with the opportunity to early exercise stock options subject to the original vesting schedule of the option. In the event of voluntary or involuntary termination of employment with us, we have an irrevocable and exclusive option to repurchase the unvested portion of the shares, at the original exercise price after the termination of employment. We account for cash received in consideration for the purchase of unvested shares of common stock or the early exercise of unvested stock options as a current liability, included in accrued compensation and employee related benefits on the balance sheet. We repurchased 179,000, 0 and 15,000 unvested shares from terminated employees during 2008, 2009 and 2010, respectively.

Detail related to activity of unvested shares of our common stock is as follows:

	Number of Unvested Shares Outstanding			Weighted- Average Fair Value
	(In thousands, except per share amounts)
Balance as of December 31, 2009		155		$	0.12
Issued		249			0.11
Vested		(116	)		0.12
Repurchased		(15	)		0.03
Balance as of December 31, 2010		273			0.12
Issued (Unaudited)		202			0.49
Vested (Unaudited)		(119	)		0.13
Balance as of March 31, 2011 (Unaudited)		356			0.33

A summary of the option activity under our stock option plan is presented below:

	Shares Available for Grant			Options Outstanding
				Number of Shares			Weighted- Average Exercise Price
	(In thousands, except per share amounts)
Balances at December 31, 2009		356			17,301		$	0.09
Additional shares reserved		2,000			—
Options granted		(1,941	)		1,941			0.09
Options exercised		—			(1,060	)		0.10
Options canceled		331			(331	)		0.09
Repurchased		15			—			0.05
Balances at December 31, 2010		761			17,851			0.09
Additional shares reserved (Unaudited)		4,735			—
Options granted (Unaudited)		(4,522	)		4,522			0.18
Options exercised (Unaudited)					(428	)		0.13
Options cancelled (Unaudited)		30			(31	)		0.09
Balance at March 31, 2011 (Unaudited)		1,004			21,914			0.11

F-31

Impinj, Inc.

Notes to Financial Statements

The total intrinsic value for options exercised during the years ended December 31, 2008, 2009 and 2010 was $133,000, $0 and $125,000, respectively, representing the difference between the estimated fair values of our common stock underlying these options at the dates of exercise and the exercise prices paid. The total intrinsic value of options exercised during the three months ended March 31, 2010 and 2011 was $0 and $219,000, respectively.

The following table summarizes information about stock options outstanding at December 31, 2010:

Exercise Prices	December 31, 2010
	Shares Subject to Options Outstanding		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price		Total Intrinsic Value
	(In thousands, except per share amounts)
$0.05		12,157		8.64	$	0.05	$	8,510
$0.07 – $0.18		3,364		6.62		0.09		2,205
$0.20 – $0.22		540		5.49		0.21		293
$0.30		1,790		7.19		0.30		805
$0.05 – $0.30		17,851		8.02		0.09	$	11,813
Exercisable		17,821		8.02		0.09	$	11,793
Vested and expected to vest		16,184		8.02		0.09	$	10,681

All options granted during the years ended December 31, 2008 and 2009 were granted at exercise prices that equaled the estimated per share value of our common stock at the date of grant. The estimated weighted-average grant date fair value of options granted during the years ended December 31, 2008 and 2009 was $0.30 and $0.05, respectively. The estimated weighted-average grant date fair value of the 1.9 million options granted during the year ended December 31, 2010, all with exercise prices less than the estimated per share value of our common stock at the date of grant, was $0.24. The estimated weighted-average grant date fair value of the options granted during the three months ended March 31, 2010 and 2011, all with exercise prices less than the estimated per share value of our common stock at the date of grant, was $0.02 and $0.61, respectively. The fair value of each employee option grant for the years ended December 31, 2008, 2009, 2010 and three months ended March 31, 2010 and 2011 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Year Ended December 31,			Three Months Ended March 31,
	2008	2009	2010	2010	2011
				(Unaudited)
Risk-free interest rates	2.7% - 3.5%	2.2% - 3.0%	1.5% - 2.8%	2.2% - 2.8%	1.5% - 5.0%
Expected term	6.0 years	5.3 - 6.3 years	5.0 - 6.3 years	5.0 – 6.3 years	5.0 – 6.3 years
Expected dividends yield	None	None	None	None	None
Volatility	70.0%	57.4% - 58.8%	45.6% - 46.6%	46.6%	45.3% - 45.7%

We determined that it was not practicable to calculate the volatility of our share price since our securities are not publicly traded and therefore there is no readily determinable market value for our stock. Therefore, we estimated our volatility based on reported market value data for a group of publicly-traded entities that we believe was relatively comparable after consideration of their size, stage of lifecycle, profitability, growth and risk and return on investment. We used the average volatility rates reported by the comparable group for the expected term estimated by us.

F-32

Impinj, Inc.

Notes to Financial Statements

The total fair value of options vested during the year was $389,000, $217,000 and $306,000 for 2008, 2009 and 2010, respectively. The total fair value of options vested during the three months ended March 31, 2010 and 2011 was $76,000 and $102,000.

As of December 31, 2010, our total unrecognized compensation cost related to stock based awards granted is $485,000 which will be recognized over the weighted-average remaining requisite service period of 2.6 years. As of March 31, 2011, our total unrecognized compensation cost related to stock based awards granted is $2.6 million which will be recognized over the weighted-average remaining requisite service period of 3.8 years.

In September 2009, we completed an offer to exchange certain employee stock options for new options with an exercise price of $0.05 granted on a one-for-one basis. The vesting period for the new options was lengthened by 12 to 24 months compared to the vesting period of the original option grants. Options for 6.6 million shares were exchanged resulting in a modification charge of $155,000 which is being recognized over the vesting period of the new options.

12. Commitments and Contingencies

We lease 37,716 square feet of office space in Seattle, Washington for our corporate headquarters under a noncancelable operating lease that expires in August 2016 with an option to renew for an additional three or five year term. The terms of the lease provide for rental payments on a graduated scale and include an option to lease additional office space in the future. Under the terms of the lease, we received landlord incentives totaling $754,000. We recorded these landlord incentives as deferred rent obligations and are amortizing them as a reduction in rental expense over the term of the lease. In addition, we lease additional office space in various locations and each of these leases expires or converts to a month-to-month lease during 2011 except one lease which expires in February 2012.

We recognize rent expense on a straight line basis over the lease period. Total rent expense under noncancelable operating leases was $1.2 million, $1.2 million and $867,000 for the years ended December 31, 2008, 2009 and 2010.

We lease a portion of our property and equipment under capital leases, which include options allowing us to purchase the equipment at the end of the lease term.

Future minimum lease payments under noncancelable operating and capital leases as of December 31, 2010 are as follows:

	Operating		Capital
	(In thousands)
2011	$	580	$	227
2012		538		190
2013		514		112
2014		514		45
2015		514		19
Thereafter		343		—
Total minimum lease payments	$	3,003		593
Less: Portion representing interest				(100	)
Present value of capital lease obligations				493
Less: Current portion				(177	)
Capital lease obligations, net of current portion			$	316

F-33

Impinj, Inc.

Notes to Financial Statements

Obligations with Third-Party Manufacturers

We manufacture products with a third-party manufacturer under recurring one year agreements. As of December 31, 2010, we were committed to purchase $11.2 million of inventory. Pursuant to an agreement with one of our suppliers, we have committed to purchase a minimum of $120,000 of inventory production services per month through September 2011.

13. Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We are organized as, and operate in, one reportable segment: the development and sale of UHF Gen2 products. Our chief operating decision-maker is the executive team, led by our chief executive officer. Our executive team regularly reviews financial information presented on a total company basis, accompanied by information about revenue and direct material gross margin by product family for purposes of monitoring our product mix impact on total gross margin. Our executive team evaluates performance based primarily on total revenue. Our assets are primarily located in the United States and not allocated to any specific geographic region. Therefore, geographic information is presented only for total revenue. All of our long-lived assets are located in the United States.

The following table is based on the geographic location of our VARs, inlay manufacturers, reader OEMs, distributors or end users who purchased products and services directly from us. For sales to our resellers and distributors, their geographic location may be different from the geographic locations of the ultimate end users. Sales by geography were as follows:

	Year Ended December 31,						Three Months Ended March 31,
	2008		2009		2010		2010		2011
	(In thousands)						(Unaudited)
Americas	$	20,517	$	15,685	$	19,151	$	2,790	$	5,661
Asia Pacific		2,030		3,161		8,729		1,512		3,843
Europe, Middle East and Africa		2,496		1,970		3,917		838		2,761
Total revenue	$	25,043	$	20,816	$	31,797	$	5,140	$	12,265

Total revenue in the United States was $20.5 million, $15.1 million, $18.6 million, $2.7 million and $5.3 million for 2008, 2009, 2010 and the three months ended March 31,2010 and 2011, respectively.

14. Retirement Plans

In 2001, we adopted a salary deferral 401(k) plan for our employees. The plan allows employees to contribute a percentage of their pretax earnings annually, subject to limitations imposed by the Internal Revenue Service. The plan also allows us to make a matching contribution, subject to certain limitations. To date, we have not made any contributions to the plan.

15. Subsequent Events

We evaluated events that occurred between the end of the most recent fiscal year and April 21, 2011, the date the financial statements were issued.

F-34

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

Estimated expenses, other than underwriting discounts and commissions, payable by the registrant in connection with the sale of the common stock being registered under this registration statement are as follows:

	Amount to be Paid
SEC registration fee	$	11,610
FINRA filing fee		10,500
Exchange listing fee		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue Sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees and expenses		*
Miscellaneous		*
Total	$	*

* To be completed by amendment

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that the person acted in good faith and in a manner the person reasonably believed to be in our best interests, and, with respect to any criminal action, had no reasonable cause to believe the person’s actions were unlawful. The Delaware General Corporation Law further provides that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement, a vote of stockholders or otherwise. The certificate of incorporation of the registrant to be in effect upon the completion of this offering provides that the indemnification of the registrant’s directors and officers to the fullest extent permitted under the Delaware General Corporation Law. In addition, the bylaws of the registrant to be in effect upon the completion of this offering require the registrant to fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director, or officer of the registrant, or is or was a director or officer of the registrant serving at the registrant’s request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the fullest extent permitted by applicable law.

Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for payments of unlawful dividends or unlawful stock repurchases or redemptions or (4) for any transaction from which the director derived an improper personal benefit. The registrant’s certificate of incorporation to be in effect upon the completion of this offering provides that the registrant’s directors shall not be personally liable to it or its stockholders for monetary damages for breach of fiduciary duty as a director and that if the Delaware General Corporation Law is amended

II-1

to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of the registrant’s directors shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

Section 174 of the Delaware General Corporation Law provides, among other things, that a director who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved, or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts

As permitted by Delaware General Corporation Law, the registrant has entered into separate indemnification agreements with each of the registrant’s directors and certain of the registrant’s officers which require the registrant, among other things, to indemnify them against certain liabilities which may arise by reason of their status as directors, officers or certain other employees.

The registrant expects to obtain and maintain insurance policies under which its directors and officers are insured, within the limits and subject to the limitations of those policies, against certain expenses in connection with the defense of, and certain liabilities which might be imposed as a result of, actions, suits or proceedings to which they are parties by reason of being or having been directors or officers. The coverage provided by these policies may apply whether or not the registrant would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation Law.

These indemnification provisions and the indemnification agreements entered into between the registrant and the registrant’s officers and directors may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.

The underwriting agreement between the registrant and the underwriters filed as Exhibit 1.1 to this registration statement provides for the indemnification by the underwriters of the registrant’s directors and officers and certain controlling persons against specified liabilities, including liabilities under the Securities Act with respect to information provided by the underwriters specifically for inclusion in the registration statement.

Item 15. Recent Sales of Unregistered Securities.

The following list sets forth information regarding all unregistered securities sold by us in the past three years. No underwriters were involved in the sales and the certificates representing the securities sold and issued contain legends restricting transfer of the securities without registration under the Securities Act or an applicable exemption from registration.

(1) From July 7, 2008 through July 8, 2011, we granted options under our 2000 Stock Plan to purchase an aggregate of 15,109,201 shares of common stock to employees, consultants and directors, having exercise prices ranging from $0.05 to $0.30 per share. Of these, options to purchase 2,288,933 shares of common stock had been exercised for aggregate consideration of $261,667.81, at exercise prices ranging from $0.05 to $0.30 per share. As of July 8, 2011, we cancelled options to purchase 10,197,010 shares of common stock.

(2) From the inception of the 2010 Equity Incentive Plan on March 31, 2010 through July 8, 2011, we granted options under our 2010 Equity Incentive Plan to purchase an aggregate of 6,756,500 shares of common stock to employees, consultants and directors, having exercise prices ranging from $0.07 to $1.02 per share. Of these, options to purchase 372,645 shares of common stock had been exercised for aggregate consideration of $48,733.05, at exercise prices ranging from $0.07 to $0.18 per share. As of July 8, 2011, we cancelled options to purchase 56,605 shares of common stock.

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(3) On July 3, 2008, we issued and sold an aggregate of 4,734,553 shares of common stock and 4,006,160 shares of Series E preferred stock to one corporation in connection with an asset purchase.

(4) On September 23, 2009, as part of a stock option exchange program, we granted to 37 of our employees, directors and consultants under our 2000 Stock Plan, options to purchase an aggregate of 6,576,165 shares of our common stock at an exercise price of $0.05 per share in exchange for the cancellation by such parties of stock options to purchase an equal number of shares of our common stock that were previously outstanding under our 2000 Stock Option Plan.

(5) On June 2, 2010, in connection with the entry into the primary loan and security agreements between us and Silicon Valley Bank, we issued a warrant to purchase 24,059 shares of our Series E preferred stock to Silicon Valley Bank at an exercise price of $2.286 per share.

(6) On June 30, 2010, we issued and sold subordinated secured convertible promissory notes with an aggregate principal amount of $4,316,837 and warrants to purchase an aggregate of 584,240 shares of Series E preferred stock at an exercise price of $2.286 per share to a total of 30 accredited investors, all of whom were our existing investors and had a pre-existing relationship with us.

(7) On July 1, 2010, we issued and sold subordinated secured convertible promissory notes with an aggregate principal amount of $1,302,824 and warrants to purchase an aggregate of 258,461 shares of Series E preferred stock at an exercise price of $2.286 per share to three accredited investors, all of whom were our existing investors and had a pre-existing relationship with us.

(8) On July 6, 2010, we issued and sold subordinated secured convertible promissory notes with an aggregate principal amount of $157,072 and a warrant to purchase an aggregate of 20,613 shares of Series E preferred stock at an exercise price of $2.286 per share to one accredited investor who was one of our existing investors and had a pre-existing relationship with us.

(9) On July 13, 2010, we issued and sold subordinated secured convertible promissory notes with an aggregate principal amount of $3,352 and a warrant to purchase an aggregate of 439 shares of Series E preferred stock at an exercise price of $2.286 per share to one accredited investor who was one of our existing investors and had a pre-existing relationship with us.

(10) On July 16, 2010, we issued and sold subordinated secured convertible promissory notes with an aggregate principal amount of $205,496 and a warrant to purchase an aggregate of 26,968 shares of Series E preferred stock at an exercise price of $2.286 per share to one accredited investor who was one of our existing investors and had a pre-existing relationship with us.

(11) On February 2, 2011, in connection with amendments of the loan and security agreements between us and Silicon Valley Bank, we issued a warrant to purchase 17,498 shares of our Series E preferred stock to Silicon Valley Bank at an exercise price of $2.286 per share.

(12) On March 25, 2011, in connection with the entry into the mezzanine loan and security agreement between us and Silicon Valley Bank, we issued a warrant to purchase 300,000 shares of our common stock to Silicon Valley Bank at an exercise price of $0.21 per share.

The offers, sales and issuances of the securities described in Items 15(1) and 15(2) were exempt from registration under the Securities Act under either (1) Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701 or (2) Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of such securities were the registrant’s employees, consultants or directors and received the securities under the registrant’s 2000 Stock Plan or 2010 Equity Incentive Plan. The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.

II-3

The offers, sales, and issuances of the securities described in Items 15(3) through (12) were exempt from registration under the Securities Act under Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited person and had adequate access, through employment, business or other relationships, to information about the registrant.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
2.1†	Asset Purchase Agreement, dated July 3, 2008, by and between the registrant and Intel Corporation
2.2†	License Agreement, dated July 3, 2008, by and between the registrant and Intel Corporation
3.1*	Form of Amended and Restated Certificate of Incorporation, to be effective upon completion of the offering
3.2*	Form of Amended and Restated Bylaws, to be effective upon closing of the offering
4.1*	Specimen Common Stock Certificate of the registrant
4.2**	Amended and Restated Investors’ Rights Agreement, dated July 3, 2008, by and among the registrant and the investors named therein
4.3**	Amendment No. 2 to Investors’ Rights Agreement, dated February 8, 2011, by and among the registrant and the investors named therein
4.4**	Amendment No. 3 to Investors’ Rights Agreement, dated March 25, 2011, by and among the registrant and the investors named therein
4.5**	Amendment No. 4 to Investors’ Rights Agreement, dated April 20, 2011, by and among the registrant and the investors named therein
4.6**	Form of Subordinated Secured Convertible Promissory Note dated June 30, 2010
4.7**	Warrant to purchase Series E preferred stock, issued to Horizon Technology Funding Company V LLC on October 3, 2007
4.8**	Warrant to purchase Series E preferred stock, issued to Silicon Valley Bank on June 2, 2010
4.9**	Warrant to purchase Series E preferred stock, issued to Silicon Valley Bank on February 2, 2011
4.10**	Warrant to purchase common stock, issued to Silicon Valley Bank on March 25, 2011
4.11**	Form of Warrant to Purchase Shares of Preferred Stock dated June 30, 2010
5.1*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
10.1**	Form of Director and Executive Officer Indemnification Agreement
10.2**	2000 Stock Plan, as amended
10.3**	Form of Stock Option Agreement under the 2000 Stock Plan
10.4**	2010 Equity Incentive Plan, as amended
10.5**	Form of Stock Option Agreement under the 2010 Equity Incentive Plan
10.6**	Form of Early Exercise Stock Option Agreement under the 2010 Equity Incentive Plan
10.7*	2011 Equity Incentive Plan
10.8*	Form of Agreement under the 2011 Equity Incentive Plan
10.9*	2011 Employee Stock Purchase Plan, to be in effect upon the closing of this offering
10.10+**	Amended and Restated Colleran Employment Agreement, dated December 19, 2008, between the registrant and William T. Colleran, Ph.D.
10.11+**	First Amendment to Colleran Employment Agreement, dated February 19, 2009, between the registrant and William T. Colleran, Ph.D.
10.12+**	Fein Employment Agreement, dated December 23, 2009, between the registrant and Evan Fein
10.13+**	Amended and Restated Diorio Employment Agreement, dated December 19, 2008, between the registrant and Chris Diorio, Ph.D.

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Exhibit Number	Description
10.14+**	First Amendment to Diorio Employment Agreement, dated February 20, 2009, between the registrant and Chris Diorio, Ph.D.
10.15+**	Amended and Restated Voit Employment Agreement, dated December 19, 2008, between the registrant and Steve Voit
10.16+**	First Amendment to Voit Employment Agreement, dated February 19, 2009, between the registrant and Steve Voit
10.17+**	Second Amendment to Voit Employment Agreement, dated January 5, 2010, between the registrant and Steve Voit
10.18+**	Third Amendment to Voit Employment Agreement, dated April 16, 2011 between the registrant and Steve Voit
10.19+**	Employment Agreement, dated March 10, 2006, between the registrant and John Quist
10.20+**	Amendment to John Quist Employment Agreement, dated March 31, 2011, between the registrant and John Quist
10.21**	Office Lease, dated November 17, 2004, by and between the registrant and Bedford Property Investors, Inc.
10.22**	First Amendment to Lease, dated July 21, 2006, by and between the registrant and Fremont Lake Union Center LLC
10.23**	Second Amendment to Lease, dated December 11, 2009, by and between the registrant and Fremont Lake Union Center LLC
10.24**	Loan and Security Agreement, dated May 7, 2010, by and between the registrant and Silicon Valley Bank
10.25**	Loan and Security Agreement (EX-IM Loan Facility), dated May 7, 2010, by and between the registrant and Silicon Valley Bank
10.26**	First Amendment to Loan and Security Agreement, dated February 2, 2011, by and between the registrant and Silicon Valley Bank
10.27**	First Amendment to Loan and Security Agreement (EX-IM Loan Facility), dated February 2, 2011, by and between the registrant and Silicon Valley Bank
10.28**	Second Amendment to Loan and Security Agreement, dated March 25, 2011, by and between the registrant and Silicon Valley Bank
10.29**	Loan and Security Agreement, dated March 25, 2011, by and between the registrant and Silicon Valley Bank
10.30**	Third Amendment to Loan and Security Agreement, dated May 5, 2011, by and between the registrant and Silicon Valley Bank
10.31†	Purchase Agreement—Services Phase 2, dated December 23, 2009, by and between the registrant and Intel Corporation
10.32†	Amendment No. 1 to Purchase Agreement—Services Phase 2, dated March 24, 2010, by and between the registrant and Intel Corporation
10.33†	Amendment No. 2 to Purchase Agreement—Services Phase 2, dated April 20, 2011, by and between the registrant and Intel Corporation
10.34**	Professional Service Agreement, dated March 29, 2006, by and between the registrant and Plexus Services Corp.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
23.2*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
24.1**	Powers of Attorney (included in page II-7 to the original filing of this registration statement)

* To be filed by amendment.

** Previously filed.

+ Indicates a management contract or compensatory plan.

† Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

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(b) Financial statement schedules.

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on July 14, 2011.

IMPINJ, INC.
By:	/s/ William T. Colleran
	William T. Colleran, Ph.D.
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated below:

Signature	Title	Date
/s/ William T. Colleran William T. Colleran, Ph.D.	President, Chief Executive Officer and Director (Principal Executive Officer)	July 14, 2011
/s/ Evan Fein Evan Fein	Chief Financial Officer (Principal Accounting and Financial Officer)	July 14, 2011
* Chris Diorio, Ph.D.	Chairman of the Board and Directors	July 14, 2011
* Tom A. Alberg	Director	July 14, 2011
* Stephen D. Arnold, Ph.D.	Director	July 14, 2011
* Clinton Bybee	Director	July 14, 2011
* Gregory Sessler	Director	July 14, 2011
* Albert Yu, Ph.D.	Director	July 14, 2011

*By:	/s/ William T. Colleran
	William T. Colleran, Ph.D.
	Attorney-in-fact

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EXHIBIT INDEX

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
2.1†	Asset Purchase Agreement, dated July 3, 2008, by and between the registrant and Intel Corporation
2.2†	License Agreement, dated July 3, 2008, by and between the registrant and Intel Corporation
3.1*	Form of Amended and Restated Certificate of Incorporation, to be effective upon completion of the offering
3.2*	Form of Amended and Restated Bylaws, to be effective upon closing of the offering
4.1*	Specimen Common Stock Certificate of the registrant
4.2**	Amended and Restated Investors’ Rights Agreement, dated July 3, 2008, by and among the registrant and the investors named therein
4.3**	Amendment No. 2 to Investors’ Rights Agreement, dated February 8, 2011, by and among the registrant and the investors named therein
4.4**	Amendment No. 3 to Investors’ Rights Agreement, dated March 25, 2011, by and among the registrant and the investors named therein
4.5**	Amendment No. 4 to Investors’ Rights Agreement, dated April 20, 2011, by and among the registrant and the investors named therein
4.6**	Form of Subordinated Secured Convertible Promissory Note dated June 30, 2010
4.7**	Warrant to purchase Series E preferred stock, issued to Horizon Technology Funding Company V LLC on October 3, 2007
4.8**	Warrant to purchase Series E preferred stock, issued to Silicon Valley Bank on June 2, 2010
4.9**	Warrant to purchase Series E preferred stock, issued to Silicon Valley Bank on February 2, 2011
4.10**	Warrant to purchase common stock, issued to Silicon Valley Bank on March 25, 2011
4.11**	Form of Warrant to Purchase Shares of Preferred Stock of the registrant dated June 30, 2010
5.1*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
10.1**	Form of Director and Executive Officer Indemnification Agreement
10.2**	2000 Stock Plan, as amended
10.3**	Form of Stock Option Agreement under the 2000 Stock Plan
10.4**	2010 Equity Incentive Plan, as amended
10.5**	Form of Stock Option Agreement under the 2010 Equity Incentive Plan
10.6**	Form of Early Exercise Stock Option Agreement under the 2010 Equity Incentive Plan
10.7*	2011 Equity Incentive Plan
10.8*	Form of Agreement under the 2011 Equity Incentive Plan
10.9*	2011 Employee Stock Purchase Plan, to be in effect upon the closing of this offering
10.10+**	Amended and Restated Colleran Employment Agreement, dated December 19, 2008, between the registrant and William T. Colleran, Ph.D.
10.11+**	First Amendment to Colleran Employment Agreement, dated February 19, 2009, between the registrant and William T. Colleran, Ph.D.
10.12+**	Fein Employment Agreement, dated December 23, 2009, between the registrant and Evan Fein
10.13+**	Amended and Restated Diorio Employment Agreement, dated December 19, 2008, between the registrant and Chris Diorio, Ph.D.
10.14+**	First Amendment to Diorio Employment Agreement, dated February 20, 2009, between the registrant and Chris Diorio, Ph.D.
10.15+**	Amended and Restated Voit Employment Agreement, dated December 19, 2008, between the registrant and Steve Voit
10.16+**	First Amendment to Voit Employment Agreement, dated February 19, 2009, between the registrant and Steve Voit
10.17+**	Second Amendment to Voit Employment Agreement, dated January 5, 2010, between the registrant and Steve Voit
10.18+**	Third Amendment to Voit Employment Agreement, dated April 16, 2011 between the registrant and Steve Voit

1

Exhibit Number	Description
10.19+**	Employment Agreement, dated March 10, 2006, between the registrant and John Quist
10.20+**	Amendment to John Quist Employment Agreement, dated March 31, 2011, between the registrant and John Quist
10.21**	Office Lease, dated November 17, 2004, by and between the registrant and Bedford Property Investors, Inc.
10.22**	First Amendment to Lease, dated July 21, 2006, by and between the registrant and Fremont Lake Union Center LLC
10.23**	Second Amendment to Lease, dated December 11, 2009, by and between the registrant and Fremont Lake Union Center LLC
10.24**	Loan and Security Agreement, dated May 7, 2010, by and between the registrant and Silicon Valley Bank
10.25**	Loan and Security Agreement (EX-IM Loan Facility), dated May 7, 2010, by and between the registrant and Silicon Valley Bank
10.26**	First Amendment to Loan and Security Agreement, dated February 2, 2011, by and between the registrant and Silicon Valley Bank
10.27**	First Amendment to Loan and Security Agreement (EX-IM Loan Facility), dated February 2, 2011, by and between the registrant and Silicon Valley Bank
10.28**	Second Amendment to Loan and Security Agreement, dated March 25, 2011, by and between the registrant and Silicon Valley Bank
10.29**	Loan and Security Agreement, dated March 25, 2011, by and between the registrant and Silicon Valley Bank
10.30**	Third Amendment to Loan and Security Agreement, dated May 5, 2011, by and between the registrant and Silicon Valley Bank
10.31†	Purchase Agreement—Services Phase 2, dated December 23, 2009, by and between the registrant and Intel Corporation
10.32†	Amendment No. 1 to Purchase Agreement—Services Phase 2, dated March 24, 2010, by and between the registrant and Intel Corporation
10.33†	Amendment No. 2 to Purchase Agreement—Services Phase 2, dated April 20, 2011, by and between the registrant and Intel Corporation
10.34**	Professional Service Agreement, dated March 29, 2006, by and between the registrant and Plexus Services Corp.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
23.2*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
24.1**	Powers of Attorney (included in page II-7 to the original filing of this registration statement)

* To be filed by amendment.

** Previously filed.

+ Indicates a management contract or compensatory plan.

† Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

2

EX-2.1

Exhibit 2.1

ASSET PURCHASE AGREEMENT

between

INTEL CORPORATION

and

IMPINJ, INC.

Dated as of July 3, 2008

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

TABLE OF CONTENTS

		Page
Article I DEFINITIONS			1
1.1	Certain Definitions		1
1.2	Terms Defined Elsewhere in this Agreement		7
1.3	Other Definitional and Interpretive Matters		9
Article II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES			10
2.1	Purchase and Sale of Assets		10
2.2	Excluded Assets		10
2.3	Assumption of Liabilities		12
2.4	Excluded Liabilities		13
2.6	Further Conveyances and Assumptions; Consent of Third Parties		14
2.7	Bulk Sales Laws		14
2.8	Purchase Price Allocation		14
Article III CONSIDERATION			15
3.1	Consideration		15
3.2	Issuance and Delivery of Milestone Shares		15
3.3	Escrowed Shares		17
Article IV CLOSING			17
4.1	Closing Date		17
Article V REPRESENTATIONS AND WARRANTIES OF SELLER			17
5.1	Organization and Good Standing		18
5.2	Authorization of Agreement		18
5.3	Conflicts; Consents of Third Parties		18
5.4	Title to and Condition of Purchased Assets		19
5.5	Taxes		19
5.6	Intellectual Property		20
5.7	Purchased Contracts		22
5.8	Employee Matters		22
5.9	Labor		23
5.10	Litigation		23
5.11	Compliance with Laws; Permits		23

i

TABLE OF CONTENTS

(continued)

		Page
5.12	Financial Advisors		24
5.13	Customers and Suppliers; Change in Practices		24
5.14	Restrictions on Business Activities		24
5.15	Products		24
5.16	No Other Representations or Warranties; Schedules		25
Article VI REPRESENTATIONS AND WARRANTIES OF PURCHASER			25
6.1	Organization and Good Standing		25
6.2	Authorization of Agreement		26
6.3	Conflicts; Consents of Third Parties		26
6.4	Litigation		27
6.5	Financial Advisors		27
6.6	Compliance with Applicable Laws		27
6.7	Investigation		27
6.8	Condition of the Purchased Assets		27
Article VII COVENANTS			28
7.1	Accounts Receivable		28
7.2	Accounts Payable		28
7.3	Cooperation in Third Party Litigation		28
7.4	Confidentiality		29
7.5	Preservation of Records		30
7.6	Publicity		30
7.7	Use of Name and Marks		30
7.8	Inventory		31
7.9	Disclosure Schedules; Supplementation and Amendment of Schedules		31
Article VIII EMPLOYEES AND EMPLOYEE BENEFITS			31
8.1	Employment		31
8.2	Consent		31
8.3	Vacation /PTO		32
8.4	COBRA Continuation Coverage		32
8.5	Employment Tax Reporting		32

ii

TABLE OF CONTENTS

(continued)

		Page
Article IX CLOSING DELIVERIES			32
9.1	Closing Deliveries by Seller		32
9.2	Purchaser Deliveries		32
9.3	Mutual Deliveries		32
Article X INDEMNIFICATION			33
10.1	Survival of Certain Provisions; Escrow		33
10.2	Indemnification by Seller		35
10.3	Indemnification by Purchaser		35
10.4	Indemnification Procedures		36
10.5	Certain Limitations on Indemnification		37
10.6	Calculation of Losses; Payment of Losses		38
10.7	Tax Treatment of Indemnity Payments		40
10.8	Exclusive Remedy		40
Article XI MISCELLANEOUS			40
11.1	Payment of Sales, Use or Similar Taxes		40
11.2	Expenses		41
11.3	Dispute Resolution; Submission to Jurisdiction; Consent to Service of Process		41
11.4	Entire Agreement; Amendments and Waivers		42
11.5	Governing Law		43
11.6	Notices		43
11.7	Notice of Change of Control		44
11.8	Severability		44
11.9	Binding Effect; Assignment		44
11.10	Third Party Beneficiaries		44
11.11	Specific Performance		44
11.12	No Presumption Against Drafting Party		45
11.13	Counterparts		45

iii

TABLE OF CONTENTS

(continued)

Schedules

Seller Disclosure Schedule

Purchaser Disclosure Schedule

Exhibits
A	Schedule of Purchased Assets
B	Bill of Sale
C	Assignment and Assumption Agreement
D	License Agreement
E	Transition Services Agreement
F	Stock Purchase Agreement
G	Amended and Restated Certificate of Incorporation of Purchaser
H	Amended and Restated Investors Rights Agreement
I	Amended and Restated Right of First Refusal and Co-Sale Agreement
J	Amended and Restated Voting Agreement
K	Board Observer and Confidentiality Agreement
L	Form of Press Release

iv

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of July 3, 2008, is by and between Intel Corporation, a Delaware corporation (“Seller”), and Impinj, Inc., a Delaware corporation (“Purchaser”).

W I T N E S S E T H

WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to acquire from Seller, the Purchased Assets, and Purchaser desires to assume the Assumed Liabilities;

WHEREAS, Seller and Purchaser shall enter into certain other Transfer Documents at Closing;

WHEREAS, Seller and Purchaser desire to make certain representations, warranties, covenants and agreements in connection with the transaction contemplated by this Agreement as set forth herein; and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Books and Records” means the books and records of Seller and its Affiliates, whether in electronic or print form, that were prepared for and relate primarily to the Purchased Assets or the use thereof and that are necessary for the operation of the Purchased Assets after the Closing; provided that “Books and Records” shall not include (i) any such Books and Records constituting Technology or Intellectual Property that is not Purchased Technology or Purchased Intellectual Property, (ii) any personnel files for Employees of Seller or its Affiliates; (iii) any files as may be required to be retained by Seller under applicable Law regarding privacy; and (iv)

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any duplicate copies of any Books and Records retained by Seller or its Affiliates, subject to the obligations relating to the use and disclosure thereof set forth in this Agreement.

“Business Day” means any day of the year on which national banking institutions in California are open to the public for conducting business and are not required or authorized to close.

“Catena Agreement” means that certain Purchase Agreement by and between Seller and Catena Holding b.v., effective as of December 23, 2004, as amended on each of April 22, 2005, October 17, 2006 and March 14, 2007, and as supplemented by letter agreement on September 26, 2005 .

“Change of Control” of a Person shall mean (a) the acquisition of such Person by another Person or group by means of any transaction or series of related transactions (including, without limitation, any stock acquisition, reorganization, merger or consolidation), whether accomplished directly or indirectly, other than a transaction or series of transactions in which the holders of the voting securities of such Person outstanding immediately prior to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in such Person held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of such Person or such surviving entity outstanding immediately after such transaction or series of transactions, or (b) a sale, lease or other conveyance of substantially all of the assets of such Person.

“Claims” means all causes of action, claims, demands, rights and privileges against third parties, whether liquidated or unliquidated, fixed or contingent, choate or inchoate.

“Code” means the Internal Revenue Code of 1986, as amended.

“Contract” means any written contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease or license.

“Common Stock” shall mean the common stock, par value $0.001 per share, of Purchaser.

“Employee” means any individual who is employed or engaged by Seller or by any of its Affiliates in connection with the development, manufacture and sale of the Products and listed on Exhibit A attached hereto under the heading “Employees.”

“Employee Agreement” means each management, employment, severance, consulting, relocation, repatriation or expatriation Contract between Seller or any of its Affiliates and any Employees directly relating to such Employee’s terms or conditions of employment.

“Employee Plan” means any plan, program, policy, practice, agreement or other arrangements providing for compensation, severance, termination pay, pension benefits, retirement benefits, deferred compensation, performance awards, stock or stock-related awards, material fringe benefits (including health, dental, vision, life, disability, sabbatical, accidental death and dismemberment benefits), or other material employee benefits or material

2

remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, excluding any Employee Agreement, which is or has been maintained by Seller or its ERISA Affiliates for the benefit of any Employee or with respect to which Seller or any ERISA Affiliate has any liability or obligation to any Employee.

“Employment Liabilities” shall mean any and all claims, debts, liabilities, commitments and obligations, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, to the extent arising from service with Seller or an Affiliate of Seller prior to the Closing, including all costs and expenses relating thereto arising under law, rule, regulation, permit, action or proceeding before any governmental authority, order or consent decree or any award of any arbitrator of any kind relating to any Employee Plan, Employee Agreement or otherwise relating to an Employee and his or her employment with Seller or any ERISA Affiliate through the Closing Date, including but not limited to payments or entitlements that Seller owes or has committed to pay to the Transferred Employees, including wages, other remuneration, holiday or vacation pay, bonus, severance pay (statutory or otherwise), commission, pension contributions, taxes and any other liability, payment or obligations arising from the employment of the Transferred Employees by Seller prior to the Closing.

“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean each subsidiary of Seller for which any Employee regularly performs significant services and any other person or entity under common control with Seller or any of its subsidiaries for which any Employee regularly performs significant services within the meaning of Section 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

“Excluded Contracts” means all Contracts that are not Purchased Contracts.

“Furniture and Equipment” means the furniture, fixtures, furnishings, equipment, vehicles, leasehold improvements, and other tangible personal property of Seller listed on Exhibit A attached hereto under the heading “Furniture and Equipment.”

“Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“Indebtedness” of any Person means, without duplication, (i) the principal of and, accreted value and accrued and unpaid interest in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments the payment for which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities; (iii) all obligations of the type referred to in clauses (i) and (ii) of any Persons the payment for which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise; and (iv) all

3

obligations of the type referred to in clauses (i) through (iii) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

“Intellectual Property” means all intellectual property rights arising from or in respect of the following, whether protected, created or arising under the Laws of the United States or any other jurisdiction or under any international convention: (i) all patents and applications therefor, including all continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations and extensions thereof (collectively, “Patents”); (ii) all trademarks, service marks, trade names, trade dress, logos, corporate names and other source or business identifiers, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof (collectively, “Marks”); (iii) all Internet domain names; (iv) all copyrights and mask works, along with all applications, registrations, reversions, extensions and renewals thereof (collectively, “Copyrights”); and (v) trade secrets and rights in information that is not generally known or readily ascertainable through proper means (“Trade Secrets”).

“Intellectual Property Licenses” means (i) any grant by Seller to a third Person of any license under the Purchased Intellectual Property or to any Purchased Technology and (ii) any grant to Seller of any license under any third Person’s Intellectual Property related primarily to the Products, in each case as listed on Exhibit A as part of the Purchased Contracts.

“IRS” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

“International Employee Plan” shall mean each Employee Plan that has been adopted or maintained by Seller or any ERISA Affiliate, whether informally or formally, or with respect to which Seller or any ERISA Affiliate will or may have any liability, for the benefit of Employees who perform services outside the United States.

“Inventory” means raw materials, work-in-progress, finished goods, supplies, packaging materials and other inventories owned by Seller listed on Exhibit A under the heading “Inventory.”

“Inventory Transfer Date” means, as to any item of Inventory, the earlier of (i) the date of the termination of the Transition Services Agreement in accordance with Section 6 of the Transition Services Agreement or (ii) the date on which the title to such item of Inventory is transferred to Purchaser pursuant to Section 7.8 hereof.

“Knowledge of Seller” means the actual knowledge of those Persons identified on Schedule 1.1(a) of the Seller Disclosure Schedule.

“Law” means any foreign, federal, state, local law, statute, code, ordinance, rule or regulation.

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Body.

4

“Liability” means any debt, liability or obligation (whether direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due), and including all costs and expenses relating thereto.

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude or transfer restriction; provided, however, that neither any Intellectual Property Licenses nor any licenses pursuant to this Agreement or the Transfer Documents shall be considered a Lien on any Intellectual Property.

“Milestone Payment Date” shall mean July 20, 2009.

“Multiemployer Plan” means any Pension Plan that is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

“Ordinary Course of Operation” means the ordinary and usual course of operations conducted by Seller or its Affiliates using the Purchased Assets.

“Pension Plan” shall mean each Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“Permits” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

“Permitted Exceptions” means statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or, as set forth in Schedule 1.1(b) of the Seller Disclosure Schedule, the amount or validity of which is being contested in good faith by appropriate proceedings.

“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“Prepayments” means all prepaid items and deposits paid by Seller or any of its Affiliates in connection with the Purchased Contracts, and any claim, remedy or other right related to any of the foregoing.

“Products” means certain of the products developed, manufactured, marketed or sold by Seller, as listed on Exhibit A attached hereto under the heading “Products.”

“Purchased Contracts” means the Contracts and open purchase orders identified as Purchased Contracts on Exhibit A attached hereto.

5

“Purchased Intellectual Property” means only certain Intellectual Property owned by Seller as set forth on Exhibit A attached hereto under the heading “Purchased Intellectual Property.”

“Purchased Technology” means only that Technology identified as Purchased Technology on Exhibit A attached hereto under the heading “Purchased Technology.”

“Purchased Product Material and Information” means all collateral materials, brochures, manuals, promotional materials, sales materials, display materials and product information materials relating primarily to the Products.

“Purchaser Material Adverse Effect” means a material adverse effect on the operations, financial condition, earnings, results of operations, assets or Liabilities of Purchaser or the ability of Purchaser to perform its obligations under this Agreement or the Stock Purchase Agreement, to consummate the transactions contemplated hereby or thereby or to own or operate the Purchased Assets and pay and discharge the Assumed Liabilities.

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the environment.

“SEC” means the United States Securities and Exchange Commission.

“Seller Material Adverse Effect” means a material adverse effect on (i) the value of the Purchased Assets (taken as a whole), or (ii) the ability of Seller to perform its obligations under each of this Agreement, License Agreement and the Transition Services Agreement or to consummate the transactions contemplated hereby and thereby.

“Tax” or “Taxes” means (i) any and all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, capital, sales, use, ad valorem, value added, intangible, unitary, transfer, franchise, profits, inventory, capital stock, license, withholding, backup withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property, prohibited transactions, windfall or excess profits and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, whether disputed or not; (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i); and (iii) any Liability for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any Person for Taxes.

“Taxing Authority” means the IRS and any other Governmental Body responsible for the administration of any Tax.

“Tax Return” means any written or electronic return, report or statement filed or required to be filed with respect to any Tax (including any attachments and schedules thereto, and any amendment thereof), including any information return, certificate, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes Seller or any of its Affiliates.

6

“Technology” means all technology in any form, including technical information, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, computer programs, subroutines, tools, materials, specifications, processes, inventions and discoveries (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, works of authorship, improvements and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein.

“Transfer Documents” means the Bill of Sale attached hereto as Exhibit B (the “Bill of Sale”), the Assignment and Assumption Agreement attached hereto as Exhibit C (the “Assignment and Assumption Agreement”), the License Agreement attached hereto as Exhibit D (the “License Agreement”), the Transition Services Agreement attached hereto as Exhibit E (the “Transition Services Agreement”), the Stock Purchase Agreement attached hereto as Exhibit F (the “Stock Purchase Agreement”), the Amended and Restated Certificate of Incorporation of Purchaser attached hereto as Exhibit G (the “Certificate of Incorporation”), the Amended and Restated Investors’ Rights Agreement attached hereto as Exhibit H (the “Investors’ Rights Agreement”), the Amended and Restated Right of First Refusal and Co-Sale Agreement attached hereto as Exhibit I (the “First Refusal and Co-Sale Agreement”), the Amended and Restated Voting Agreement attached hereto as Exhibit J (the “Voting Agreement”), and the Board Observer and Confidentiality Agreement (the “Board Observer Agreement”) attached hereto as Exhibit K, each to be executed and delivered at or prior to the Closing.

“Transferred Employee” means an Employee who becomes a service provider to the Purchaser or any of its Affiliates.

1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have meanings set forth in the sections indicated:

Term	Definition
Agreement	Preamble, Preamble, Preamble
Asset Acquisition Statement	Section 2.8
Assignment and Assumption Agreement	Section 1.1
Assumed Liabilities	Section 2.3
Basket	Section 10.5(a)
Bill of Sale	Section 1.1
Board Observer Agreement	Section 1.1
Cash Payment Election Period	Section 10.6(a)
Certificate of Incorporation	Section 1.1
Closing	Section 4.1
Closing Common Shares	Section 3.1
Closing Date	Section 4.1
Closing Preferred Shares	Section 3.1
Closing Shares	Section 3.1
Common Escrowed Shares	Section 3.3(a)
Common Per Share Value	Section 10.5(e)

7

control	Section 1.1
Copyrights	Section 1.1
Covenant Survival Period	Section 10.1(b)
Discloser	Section 7.4
Escrowed Shares	Section 3.3(a)
Exceptional Matters	Section 10.1(a)
Excluded Assets	Section 2.2
Excluded Liabilities	Section 2.4
First Refusal and Co-Sale Agreement	Section 1.1
Indemnification Cap	Section 10.5(e)
Indemnification Claim	Section 10.4(b)
Inventory Services	Section 7.8
Investors’ Rights Agreement	Section 1.1
License Agreement	Section 1.1
Marks	Section 1.1
Maximum Threshold	Section 3.2(a)
Measurement Period	Section 3.2(a)
Milestone Common Shares	Section 3.1
Milestone Preferred Shares	Section 3.1
Milestone Shares	Section 3.1
Minimum Threshold	Section 3.2(b)
NDA	Section 7.4
Notice of Claim	Section 10.4(a)
Open Source Materials	Section 5.6(h)
Patents	Section 1.1
Plan	Section 3.1
Preferred Escrowed Shares	Section 3.3(a)
Press Release	Section 7.6(a)
Purchased Assets	Section 2.1
Purchaser Assumed Accounts Payable	Section 2.3(d)
Purchaser Documents	Section 6.2
Purchaser Indemnified Parties	Section 10.2(a)
Recipient	Section 7.4
RFID Revenue	Section 3.2(a)
SEC	Section 7.4
Seller Accounts Payable	Section 2.4(c)
Seller Accounts Receivable	Section 2.2(c)
Seller Disclosure Schedule	Article V
Seller Documents	Section 5.2
Seller Indemnified Parties	Section 10.3(a)
Seller Marks	Section 7.7
Standards Body	Section 5.6(i)
Stock Purchase Agreement	Section 1.1
Survival Period	Section 10.1(a)
Trade Secrets	Section 1.1
Transaction Terms	Section 7.4

8

Transition Services Agreement	Section 1.1
Unit Value	Section 10.6(c)
Units	Section 10.6(a)
Voting Agreement	Section 1.1
Warranty Eligible Products	Section 2.4(g)

1.3 Other Definitional and Interpretive Matters. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any matter or item disclosed on one Schedule shall be deemed to have been disclosed on each other Schedule. Disclosure of any item on any Schedule shall not constitute an admission or indication that such item or matter is material or would have a Seller Material Adverse Effect. No disclosure on a Schedule relating to a possible breach or violation of any Contract, Law or Order shall be construed as an admission or indication that breach or violation exists or has actually occurred. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

9

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing, and solely with respect to the Inventory, at the applicable Inventory Transfer Date, Purchaser shall purchase, acquire and accept from Seller, and Seller shall sell, transfer, assign, convey and deliver to Purchaser all of Seller’s right, title and interest in, to and under the assets described below, all as set forth in further detail on Exhibit A attached hereto (the “Purchased Assets”):

(a) the Purchased Contracts;

(b) the Purchased Product Materials and Information;

(c) the Furniture and Equipment;

(d) the Inventory;

(e) the Purchased Intellectual Property;

(f) the Purchased Technology;

(g) to the extent assignable, the Permits listed on Exhibit A attached hereto under the heading “Permits”;

(h) all Prepayments associated with Purchased Contracts that are assigned to and assumed by Purchaser;

(i) the Books and Records; and

(j) to the extent assignable, all rights of indemnity, warranty rights, rights of contribution, rights to refunds and other rights to recovery to the extent relating to the Purchased Assets;

The Purchased Intellectual Property and the Purchased Technology shall be subject to any licenses granted to Seller pursuant to any Transfer Document. The Purchased Intellectual Property and the Purchased Technology may be further obligated to be non-exclusively licensed, with or without receipt of payment, as a result of Seller’s or its Affiliates’ participation in various Standards Bodies as set forth on Schedule 5.6(h) of the Seller Disclosure Schedule. To the extent that Seller or any of its Affiliates is required to ensure that successors assume such obligations to license with respect to the Purchased Intellectual Property or the Purchased Technology, Purchaser shall assume such obligations as of the Closing.

2.2 Excluded Assets. Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser, and Seller shall retain all right, title and interest to, in and under the Excluded Assets. “Excluded Assets” shall mean all assets,

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properties, interests and rights of Seller and any of its Affiliates other than the Purchased Assets, including without limitation each of the following assets:

(a) the Excluded Contracts;

(b) all cash, cash equivalents, bank deposits or similar cash items of Seller and its Affiliates;

(c) all accounts receivable of Seller and its Affiliates existing on the Closing Date (including, for the avoidance of doubt, (i) invoiced accounts receivable and (ii) accrued but uninvoiced accounts receivable) whether or not arising from or related to the Purchased Assets (the “Seller Accounts Receivable”);

(d) all minute books, organizational documents, stock registers and such other books and records of Seller or any of its Affiliates;

(e) any Intellectual Property of Seller and its Affiliates other than the Purchased Intellectual Property;

(f) any Technology of Seller other than the Purchased Technology;

(g) any personnel files pertaining to any Employee;

(h) any other books and records of Seller and its Affiliates other than the Books and Records;

(i) all Claims of Seller or any of its Affiliates to the extent related to any of the other Excluded Assets or any of the Excluded Liabilities;

(j) all Claims of Seller or any of its Affiliates with respect to the Purchased Assets to the extent related to events or breaches occurring on or prior to the Closing, including any causes of action, claims and rights which Seller or its Affiliates may have under any insurance policies or rights to proceeds thereof relating to the assets, properties, business or operations of Seller or any of its Affiliates;

(k) all claim, right or interest of Seller or any of its Affiliates in or to any refund, rebate, abatement or other recovery for Taxes paid by Seller or any of its Affiliates that are not reimbursed by Purchaser, together with any interest due thereon or penalty rebate arising therefrom, to the extent the basis of such claim, right or interest arises or accrues prior to the Closing;

(l) all Prepayments associated with any Contract that is not assigned to and assumed by Purchaser;

(m) all Employee Plans;

(n) all Tax returns and financial statements of Seller and its Affiliates and all records (including working papers) related thereto;

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(o) all enterprise software, databases and networks of Seller or its Affiliates, including all sales management, engineering, materials, business planning, manufacturing, logistics, finance and accounting systems utilized in the use of the Purchased Assets;

(p) all inventory of Seller, including but not limited to any parts, components, work-in-process and raw materials of Seller, other than the Inventory;

(q) all ownership interests of Seller and its Affiliates in any Person;

(r) all Permits, except the Permits listed on Exhibit A attached hereto under the heading “Permits”; and

(s) all rights that accrue to Seller under this Agreement.

2.3 Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall assume, effective as of the Closing, and shall timely perform, pay and discharge in accordance with their respective terms, the following Liabilities of Seller (collectively, the “Assumed Liabilities”):

(a) all Liabilities resulting from, arising out of or related to the Purchased Contracts that are incurred or required to be paid, performed or otherwise discharged on or after the Closing Date, other than for breaches or violations of such Purchased Contracts occurring prior to the Closing Date;

(b) Liabilities arising out of, relating to or with respect to the employment or performance of services by any Transferred Employee from and after the Closing Date and Liabilities assumed by Purchaser pursuant to Section 8.5 of this Agreement;

(c) Liabilities arising from the Products sold by Purchaser after the Closing Date, relating to product liability, warranty, refund or similar claims or returns, adjustments, allowances or repairs.

(d) Liabilities constituting, or arising in connection with, accounts payable to Catena Holding b.v. with respect to the Catena Agreement from and after the Closing Date (regardless of when incurred), as set forth on Schedule 2.3(d) of the Seller Disclosure Schedule (the “Purchaser Assumed Accounts Payable”);

(e) excise, value added, registration, recording, documentary, filing, conveyancing, sales, use, stamp, transfer, real or personal property, ad valorem and other similar Taxes applicable to the transfer of the Purchased Assets, to the extent set forth in Sections 11.1(a) and 11.1(b);

(f) all other Liabilities with respect to the Products, the Purchased Assets or the Transferred Employees arising after the Closing (other than those, if any, expressly retained by Seller pursuant to this Agreement), and, solely with respect to the Inventory, all Liabilities arising after the applicable Inventory Transfer Date;

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(g) Liabilities for Taxes relating to the Purchased Assets for all taxable periods (or portions thereof) beginning after the Closing Date, apportioned as set forth in Section 11.1(b); and

(h) all other Liabilities that are expressly assumed by Purchaser under this Agreement.

2.4 Excluded Liabilities. Purchaser will not assume or be liable for any Excluded Liabilities. “Excluded Liabilities” shall mean all Liabilities of Seller and its Affiliates other than the Assumed Liabilities, and shall include without limitation the following Liabilities:

(a) all Liabilities arising out of Excluded Assets, including Excluded Contracts;

(b) Liabilities (i) resulting from, arising out of or related to the Purchased Contracts or the Products that are required to be paid, performed or otherwise discharged prior to the Closing Date and (ii) arising from the defective Products sold by Seller prior to the Closing Date.

(c) Liabilities constituting, or arising in connection with, accounts payable of Seller existing on the Closing Date, other than with respect to the Catena Agreement (the “Seller Accounts Payable”);

(d) Except to the extent specifically provided in Article VIII, (i) all Employment Liabilities to Employees; (ii) all payments with respect to the Transferred Employees that are due to be paid prior to or on the Closing Date (including, without prejudice to the generality of the foregoing, pension contributions, insurance premiums and taxation) to any third party in connection with the employment by Seller or its Affiliates prior to the Closing Date of any of the Transferred Employees; (iii) any non-forfeitable claims of any Transferred Employees from their prior employment with Seller or an ERISA Affiliate which have been incurred or accrued on or prior to the Closing Date; and (iv) all costs and disbursements incurred in connection with the termination of any employment of any Employee prior to or in connection with the Closing Date (including any Employee who does not accept an offer of employment with Purchaser);

(e) except as otherwise provided in Sections 2.3 (e), 2.3(g), and 11.1, all Liabilities for Taxes (i) for all taxable periods in the case of Taxes relating or attributable to the Excluded Assets, (ii) for all taxable periods (or portions thereof) ending on or prior to (or, to the extent attributable to the portion of such period ending on the Closing Date, including) the Closing Date, in the case of Taxes relating or attributable to the Purchased Assets and (iii) under any Tax allocation, sharing, indemnity or similar agreement to which Seller of any of its Affiliates is a party;

(f) all Liabilities relating to amounts required to be paid by Seller hereunder; and

(g) the cost of servicing or replacing any Products sold, leased or transferred by Seller prior to the Closing that are eligible for, and entitled to, coverage at the time that such

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claim for warranty service or replacement is made under the express or implied warranties delivered with such Products by Seller (“Warranty Eligible Products”).

2.5 Servicing Warranty Eligible Products. Purchaser will use commercially reasonable efforts to service or replace all Warranty Eligible Products. All costs incurred by Purchaser with respect to servicing or replacing Warranty Eligible Products shall be deemed to be Losses pursuant to Section 10.2(a)(iii). For purposes of clarity, any cost incurred by Purchaser for voluntarily providing warranty coverage for a Product sold by Seller prior to the Closing that is no longer eligible for such warranty coverage shall not be deemed to be a Loss pursuant to this Agreement.

2.6 Further Conveyances and Assumptions; Consent of Third Parties. From time to time following the Closing, Seller and Purchaser shall execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and acquittances and such other instruments, and shall take such further actions, as may be reasonably necessary or appropriate to (i) consummate or implement expeditiously the transactions contemplated by this Agreement or the other Transaction Documents or (ii) seek to obtain any required third party consent or approval to the assignment of any Purchased Contracts; provided, however, that Seller and its Affiliates shall have no obligation to incur any expenses or Liabilities or provide any financial accommodation or to remain secondarily or contingently liable for any Assumed Liability in seeking to obtain any such consent. Purchaser and Seller shall use their respective commercially reasonable efforts to seek to obtain, or seek to cause to be obtained, any consent, substitution, approval or amendment required to novate all Liabilities under any and all Purchased Contracts or other Liabilities that constitute Assumed Liabilities or to obtain in writing the unconditional release of Seller and its Affiliates so that, in any such case, Purchaser shall be solely responsible for such Liabilities.

2.7 Bulk Sales Laws. The parties hereto waive compliance of any provisions of any “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Purchaser.

2.8 Purchase Price Allocation. Seller and Purchaser shall allocate the total consideration as specified in Schedule 2.8 of the Seller Disclosure Schedule and, in accordance with Section 1060 of the Code, Seller shall prepare and deliver to Purchaser copies of Form 8594 consistent with such allocation and any required exhibits thereto (the “Asset Acquisition Statement”) within thirty (30) days after Closing. The total consideration for the Purchased Assets shall be allocated in accordance with the Asset Acquisition Statement, provided by Seller to Purchaser, and all income Tax Returns and reports filed by Purchaser and Seller shall be prepared consistently with such allocation. Neither Purchaser nor Seller shall, nor shall they permit their respective Affiliates to, take any position inconsistent with the Asset Acquisition Statement.

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ARTICLE III

CONSIDERATION

3.1 Consideration. In consideration for the Purchased Assets, subject to the terms and conditions set forth in this Agreement and the Stock Purchase Agreement, in addition to the assumption by Purchaser of the Assumed Liabilities, Purchaser agrees to deliver to Seller (i) at the Closing, stock certificates validly issued in the name of Seller representing (A) 4,006,160 shares (less the shares held pursuant to Section 3.3 below) of Purchaser’s Series E Preferred Stock (the “Closing Preferred Shares”), and (B) 4,734,553 shares (less the shares held pursuant to Section 3.3 below) of Purchaser’s Common Stock (the “Closing Common Shares”, and together with the Closing Preferred Shares, the “Closing Shares”); and (ii) at the Milestone Payment Date, subject to Section 3.3 below, stock certificates validly issued in the name of Seller representing (A) the number of shares of Purchaser’s Series E Preferred Stock that equals up to one and one-quarter percent (1.25%) (calculated on a post issuance basis) of the sum of (x) 145,678,560 shares (as adjusted for stock splits, combinations and the like), plus (y) that number of additional shares equal to any increase in the current authorized number of shares for issuance under Purchaser’s 2000 Stock Plan (“Plan”) as set forth in Section 2.3(c)(iii) of the Stock Purchase Agreement or are the subject of any award under the Plan or any other equity incentive plan or award of Purchaser between the Closing Date and the last day of the Measurement Period (other than, for avoidance of doubt, such shares that were outstanding or reserved under the Plan immediately prior to the Closing), minus (z) that number of shares of capital stock that are repurchased or cancelled by Purchaser between the Closing Date and the last day of the Measurement Period that do not otherwise become available for issuance pursuant to any equity incentive plan, after giving effect to the issuance of the Milestone Shares (the “Milestone Preferred Shares”) and (B) the number of shares of Purchaser’s Common Stock that equals up to two and three-quarters percent (2.75%) (calculated on a post issuance basis) of the sum of (x) 145,678,560 (as adjusted for stock splits, combinations and the like) shares, plus (y) that number of additional shares equal to any increase in the current authorized number of shares for issuance under the Plan as set forth in Section 2.3(c)(iii) of the Stock Purchase Agreement or are the subject of any award under the Plan or any other equity incentive plan or award of Purchaser between the Closing Date and the last day of the Measurement Period (other than, for avoidance of doubt, such shares that were outstanding or reserved under the Plan immediately prior to the Closing), minus (z) that number of shares of capital stock that are repurchased or cancelled by Purchaser between the Closing Date and the last day of the Measurement Period that do not otherwise become available for issuance pursuant to any equity incentive plan, after giving effect to the issuance of the Milestone Shares (the “Milestone Common Shares,” and together with the Milestone Preferred Shares, the “Milestone Shares”).

3.2 Issuance and Delivery of Milestone Shares.

(a) If, during the period beginning July 3, 2008 and ending July 3, 2009 (the “Measurement Period”), the total revenue of Purchaser generated from the sale of the Products and any additional products of Purchaser derived from the Purchased Assets (the “RFID Revenue”) shall equal or exceed Seven Million Dollars ($7,000,000) (the “Maximum Threshold”), then, at the Milestone Payment Date, Purchaser shall deliver to Seller stock certificates validly issued in the name of Seller pursuant to the Stock Purchase Agreement

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representing 100% of the Milestone Preferred Shares and 100% of the Milestone Common Shares.

(b) If the RFID Revenue generated during the Measurement Period shall be equal to or less than Two Million Five Hundred Thousand Dollars ($2,500,000) (the “Minimum Threshold”), then no Milestone Shares shall be issued to Seller.

(c) If the RFID Revenue generated during the Measurement Period shall be greater than Two Million Five Hundred Thousand Dollars ($2,500,000) but less than Seven Million Dollars ($7,000,000), then the number of Milestone Shares issuable to Seller by Purchaser (as represented in validly issued in stock certificates pursuant to the Stock Purchase Agreement) at the Milestone Payment Date shall be determined in accordance with subclauses (i) and (ii) below:

(i) The number of Milestone Preferred Shares issuable to Seller shall equal the number obtained by the following formula:

100% of the Milestone Preferred Shares	X	RFID Revenue – Minimum Threshold
		Maximum Threshold – Minimum Threshold

(ii) The number of Milestone Common Shares issuable to Seller shall equal the number obtained by the following formula:

100% of the Milestone Common Shares	X	RFID Revenue – Minimum Threshold
		Maximum Threshold – Minimum Threshold

(d) Purchaser shall deliver to Seller Purchaser’s calculation of the number of Milestone Shares (based on Purchaser’s calculation of the RFID Revenue during the Measurement Period as determined from Purchaser’s internal management financial statements) as promptly as practicable but no later than 30 days after the expiration of the Measurement Period. Upon receipt of Purchaser’s audited financial statements for the year ended December 31, 2009, the number of Milestone Shares shall be recomputed on the basis of such audit, and if such recalculation results in an adjustment in the number of Milestone Shares, then any excess Milestone Shares previously issued shall be cancelled or additional Milestone Shares shall promptly be issued, as the case may be, and the parties shall make the appropriate substitution and exchange of stock certificates as may be required to evidence such cancellation or additional issuance. Any calculation of the number of Milestone Shares shall be accompanied by a detailed statement of sales of relevant products and copies of relevant work papers detailing the calculation. Seller shall have the right to review and dispute any calculation or measurement relevant to the number of Milestone Shares issuable to Seller and Purchaser shall grant Seller such access to Purchaser’s financial and sales records and to Purchaser’s employees as Seller may reasonably request for such purpose. Any such request by Seller for such additional information or access shall be made within 10 days following Purchaser’s initial delivery of the Milestone Shares and within 10 days following Purchaser’s delivery of any recomputation of such Milestone Shares following the audit for fiscal year 2009. Any challenge by Seller to

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Purchaser’s calculation or recomputation must be made within 30 days after Purchaser’s delivery of the calculation or recomputation, together with all relevant supporting materials and any additional information or materials requested by Seller. Any dispute as to the number of the Milestone Shares issuable to Seller under this Section 3.2 and the means of determination thereof shall be resolved in accordance with Section 11.3 hereof.

3.3 Escrowed Shares.

(a) On the Closing Date, Purchaser shall hold in escrow stock certificates representing (i) 400,616 shares of the Closing Preferred Shares (the “Preferred Escrowed Shares”) and (ii) 473,455 shares of the Closing Common Shares (the “Common Escrowed Shares,” and together with the Preferred Escrowed Shares, the “Escrowed Shares”), all validly issued in the name of Seller pursuant to the Stock Purchase Agreement (but subject to an assignment separate from certificate duly executed and delivered by Seller). Seller shall have all rights of a shareholder with respect to such Escrowed Shares, including without limitation (x) the right to vote all Escrowed Shares and (y) the right to receive all dividends and distributions (other than stock dividends, which shall be retained in escrow and become part of the Escrowed Shares) with respect to the Escrowed Shares.

(b) The Escrowed Shares shall be released to Seller in accordance with Section 10.1(c) hereof.

ARTICLE IV

CLOSING

4.1 Closing Date. The consummation of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article II hereof (the “Closing”) shall take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, located at 701 Fifth Avenue, Suite 5100, Seattle, Washington 98104 (or at such other place as the parties may designate in writing) on the date of this Agreement (the “Closing Date”). The closing under the Stock Purchase Agreement shall occur simultaneously with the Closing under this Agreement. At the Closing the parties shall execute and deliver the documents and agreements, and make the other deliveries, described in Article IX.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as disclosed in a document of even date herewith and delivered by Seller to Purchaser prior to the execution and delivery of this Agreement and referring by numbered section (and, where applicable, by lettered subsection) of the representations and warranties in this Agreement (the “Seller Disclosure Schedule”) (provided, that any disclosure shall qualify the disclosure under the numbered section referred to in the Seller Disclosure Schedule as well as all other sections in this Agreement when it is reasonably apparent from a reading of such disclosure that it also qualifies or applies to such other sections), Seller hereby represents and

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warrants to Purchaser as of the Closing Date (except to the extent any of the following representations and warranties specifically relate to an earlier date) as follows:

5.1 Organization and Good Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate the Purchased Assets as now owned and operated by it. Seller is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns, leases or conducts business with any Purchased Assets, except where the failure to be so qualified, authorized or in good standing would not have a Seller Material Adverse Effect. Schedule 5.1 of the Seller Disclosure Schedule sets forth each state or country in which Seller owns or leases any of the Purchased Assets or has Employees.

5.2 Authorization of Agreement. Seller has all requisite power and authority to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or the Stock Purchase Agreement or to be executed by Seller in connection with the consummation of the transactions contemplated by this Agreement or the Stock Purchase Agreement (the “Seller Documents”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each of the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite corporate action on the part of Seller, and no other action on the part of the board of directors or stockholders of Seller is required to authorize the execution and delivery by Seller of this Agreement and the Seller Documents to which it is a party. This Agreement has been, and each of the Seller Documents will be at or prior to the Closing, duly and validly executed and delivered by Seller and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

5.3 Conflicts; Consents of Third Parties.

(a) Except as set forth on Schedule 5.3(a) of the Seller Disclosure Schedule, none of the execution, delivery and performance by Seller of this Agreement or any of the other Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by Seller with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation, acceleration or modification, an additional material contractual right or entitlement to any increased, additional, accelerated or guaranteed payment, or the loss of any material benefit, or the imposition of any Lien on any of the Purchased Assets, under, any provision of: (i) the certificate of incorporation and by-laws or comparable organizational documents of Seller; (ii) any Purchased Contract or Permit included in the Purchased Assets; (iii) any Order of any Governmental Body applicable to Seller or by which

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any of the properties or assets of Seller are bound; or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or cancellations that would not have a Seller Material Adverse Effect.

(b) Except as set forth on Schedule 5.3(b) of the Seller Disclosure Schedule, no consent, waiver, approval, Order, Permit or authorization of, or filing with, or notification to, any Person or Governmental Body is required on the part of Seller in connection with the execution and delivery of this Agreement or the other Seller Documents, the compliance by Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except for such consents, waivers, approvals, Orders, Permits or authorizations the failure to obtain which would not have a Seller Material Adverse Effect.

5.4 Title to and Condition of Purchased Assets. Except as set forth in Schedule 5.4 of the Seller Disclosure Schedule, and subject to the limitations set forth in Section 2.1, Seller owns and has good and valid title to each of the Purchased Assets, free and clear of all Liens other than Permitted Exceptions. Seller has provided to Purchaser a complete and accurate list of those physical assets and tools of Seller that are, to the best Knowledge of Seller, used in the Ordinary Course of Business with respect to the Products during the twelve (12) month period immediately preceding the Closing Date, other than (a) physical assets or tools of a type used for common business purposes that are not unique to Seller’s RFID business, including (by way of example and without limitation), office furniture and equipment, enterprise computers and other tools and equipment used for accounting, human resources management, payroll and other common business purposes, and (b) physical assets or tools having a value less than $10,000. Each item of tangible personal property included in the Purchased Assets has been, in all material respects, maintained in accordance with normal industry practice, is in reasonable operating condition in light of its age and is suitable for the purposes for which it presently is used. Each item of Inventory is in a condition that complies with Seller’s specifications for the Products and is consistent with the Products sold by Seller prior to the Closing.

5.5 Taxes.

(a) Except as set forth on Schedule 5.5(a) of the Seller Disclosure Schedule, and to the extent that failure to do so would have a Seller Material Adverse Effect, (i) Seller has timely filed, or there have been timely filed on Seller’s behalf, all Tax Returns required to be filed with the appropriate Taxing Authorities in all jurisdictions in which such Tax Returns are required to be filed (taking into account any extension of time to file granted or to be obtained on behalf of Seller); and (ii) all material Taxes payable with respect to such Tax Returns have been paid.

(b) Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

(c) To the Knowledge of Seller, no Claim, action, suit, proceeding or audit is pending against or with respect to the Purchased Assets regarding Taxes.

(d) Neither Seller nor any of its Affiliates has waived any statute of limitations or agreed to any extension of time with respect to a Tax assessment or deficiency that would have a Seller Material Adverse Effect.

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(e) There are no Liens for Taxes on any of the Purchased Assets (other than Liens for current Taxes not yet due and payable).

(f) To the Knowledge of Seller, Seller does not have any Liabilities for unpaid Taxes with respect to the Purchased Assets for which Purchaser may become liable as a result of the transactions contemplated by this Agreement, other than Taxes contemplated by Section 11.1(a).

This Section 5.5 represents the sole and exclusive representation and warranty of Seller regarding Tax matters.

5.6 Intellectual Property.

(a) To the Knowledge of Seller, except as set forth on Schedule 5.6(a) of the Seller Disclosure Schedule and subject to the matters set forth in Section 2.1, Seller owns all Purchased Intellectual Property and Purchased Technology.

(b) Except as set forth on Schedule 5.6(b) of the Seller Disclosure Schedule and subject to the matters set forth in Section 2.1, to the Knowledge of Seller, (i) none of the Purchased Intellectual Property, the Purchased Technology or the Products infringes or results from the misappropriation of any third party Intellectual Property, and provided that, for purposes of this Section 5.6(b)(i), the Knowledge of Seller with respect to infringement of any third party Patent shall be based on actual written notice received by Seller, (ii) Seller has no Knowledge of any particular instance of a third party that is infringing or misappropriating any Purchased Intellectual Property or Purchased Technology and (iii) none of the Purchased Intellectual Property, Purchased Technology or Products is the subject of any current claim of infringement or misappropriation received by Seller in writing. For the avoidance of doubt, a Product shall not be deemed to infringe or misappropriate a Copyright, Trade Secret or Patent of any Person, and Seller shall not be deemed to have received a claim from a Person for purposes of this Section 5.6, based on any (A) manufacturing method or process generally used by Seller and not limited to the Purchased Assets, (B) alleged or actual infringement by an underlying component unless such component is material and unique to the Products currently available from Seller, or (C) alleged or actual infringement required for the compliance or advertised compliance with an industry standard or recognized specification available for licensing through a standards body, an adopters group or other organization.

(c) To the Knowledge of Seller, the Purchased Intellectual Property is valid and enforceable. Notwithstanding any of the foregoing in this Section 5.6(c), none of the representations or warranties in this Section 5.6(c) shall be deemed or construed as a representation or warranty of any kind or nature, express or implied, regarding non-infringement or misappropriation of any Intellectual Property, which is addressed exclusively in Section 5.6(b) above.

(d) Except as set forth on Schedule 5.6(d), Seller has taken reasonable steps to maintain the secrecy of material Trade Secrets related to or embodied by the Products.

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(e) Schedule 5.6(e) of the Seller Disclosure Schedule sets forth all Purchased Intellectual Property that is the subject of any application, certificate, filing, registration, or other document issued by, filed with, or recorded by, any Governmental Body.

(f) The Purchased Intellectual Property and Purchased Technology, together with the Patents and Trade Secrets licensed by Seller to Purchaser under the Intellectual Property Agreement, include all material Intellectual Property and material Technology owned by Seller related to the manufacture, sale, promotion, distribution or other disposition of the Products. Notwithstanding any of the foregoing in this Section 5.6(f), none of the representations or warranties in this Section 5.6(f) shall be deemed or construed as a representation or warranty of any kind of nature, express or implied, regarding non-infringement or misappropriation of any Intellectual Property, which is addressed exclusively in Section 5.6(b) above, or regarding the probable success or profitability of the operations related to the development, manufacture and sale of the Products.

(g) Neither this Agreement nor the completion of the transactions contemplated by this Agreement (solely in and of themselves and without further action by Purchaser) will result in any of the following to the extent that the following would not have occurred in the absence of this Agreement or the completion of the transactions contemplated by this Agreement: (i) Purchaser granting to any third Person any right to any Purchased Intellectual Property (ii) Purchaser becoming bound by or made subject to any non-compete or other restriction on the operation or scope of its business related to the Products; or (iii) Purchaser becoming subject to the right of any third Person to receive source code used in the Products without an obligation of confidentiality by such third Person.

(h) Except as set forth on Schedule 5.6(h) of the Seller Disclosure Schedule, Seller has not incorporated Open Source Materials into any proprietary software included in the Purchased Technology or Products. “Open Source Materials” are any copyrighted materials that are licensed to Seller under terms that require, as a condition of use, modification and/or distribution of such Open Source Materials, that other software incorporated into, derived from or distributed with such Open Source Materials must be (i) disclosed or distributed to any third party in source code form, (ii) licensed to third parties with the right to make derivative works without restrictions, or (iii) redistributable at no charge (including the GNU General Public License (GPL) and GNU Lesser General Public License (LGPL)). Except as set forth on Schedule 5.6(h) of the Seller Disclosure Schedule, Seller has not disclosed to any third Person any source code used in the Products without an obligation of confidentiality by such third Person.

(i) To the Knowledge of Seller, Schedule 5.6(i) of the Seller Disclosure Schedule lists all Standards Bodies in which the business unit of Seller conducting the business related to the Products has participated or is participating, or is or has been a member, where, as a result of such participation or membership, the Purchased Intellectual Property or Purchased Technology is required to be non-exclusively licensed to third parties, with or without payment. “Standards Body” means any formal or informal organization, body or group, including Special Interest Groups (SIGs), Standard Definition Organizations (SDOs) and any similar organization, which is engaged in or which has been, or is in the process of, setting, establishing or promulgating any industry or product standards or the terms under which Intellectual Property

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will be licensed or establishing any rules binding on members under which Patents essential to the practice of such standard must be licensed.

5.7 Purchased Contracts. Seller has delivered to Purchaser true and complete copies of the Purchased Contracts, including all amendments, modifications and supplements thereto. Each Purchased Contract is a valid and binding obligation of Seller or one of its subsidiaries that is a party thereto and, to the Knowledge of Seller, is a valid and binding obligation of each other Person who is a party thereto, enforceable against it in accordance with its material terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally or to general principles of equity and is in full force and effect, and, none of Seller, any of its subsidiaries or, to the Knowledge of Seller, any other party thereto is in material breach under any Purchased Contract. To the Knowledge of Seller, no event or circumstance has occurred that, with notice or lapse of time, or both, could reasonably be expected to constitute any event of default thereunder. Seller has fulfilled all material obligations required pursuant to each Purchased Contract to have been performed by Seller prior to the date hereof. Schedule 5.7 of the Seller Disclosure Schedule sets forth an accurate and complete list of all types of Contracts used in the Ordinary Course of Operation and exclusively with respect to the Products during the twelve (12) month period immediately preceding the Closing Date other than those used for common business purposes that are not unique to Seller’s RFID business. Subject to Section 2.5 above, Seller has obtained all necessary consents, waivers and approvals of parties to any Purchased Contract as are required thereunder in connection with the Closing.

5.8 Employee Matters.

(a) Employees. Seller has provided Purchaser with a spreadsheet containing complete and accurate information with respect to: (i) Transferred Employee name, position held, annual base salary, target incentive compensation and equity compensation; (ii) net credited service date; (iii) vacation eligibility for calendar year 2008; (iv) visa status; (v) leave status (including type of leave, expected return date for non-disability related leaves and expiration dates for disability leaves); and (vi) the name of any union, collective bargaining agreement or other similar labor agreement, if any, covering such Transferred Employee.

(b) Seller is in material compliance with all applicable foreign, federal, state and local laws, rules and regulations respecting employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work, in each case, with respect to Transferred Employees.

(c) There are no actions, suits, claims or administrative matters by a governmental authority pending or, to the Knowledge of Seller, threatened against Seller relating to any Transferred Employee, Employee Agreement or Employment Plan with regard to Transferred Employees, other than claims for benefits in the ordinary course. There are no pending or threatened or reasonably anticipated claims or actions against Seller under any worker’s compensation policy or long-term disability policy with regard to Transferred Employees. Seller is not a party to a conciliation agreement, consent decree or other agreement

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or order with any federal, state or local agency or governmental authority with respect to employment practices regarding the Transferred Employees.

(d) Except as set forth in Schedule 5.8(d) of the Seller Disclosure Schedule, the services provided by each of the Transferred Employees are terminable at the will of Seller.

5.9 Labor.

(a) Except as set forth on Schedule 5.9(a) of the Seller Disclosure Schedule, Seller is not a party to any labor or collective bargaining agreement with respect to the Employees, and no labor or collective bargaining agreement is being negotiated by Seller or any of its Subsidiaries.

(b) Except as set forth on Schedule 5.9(b) of the Seller Disclosure Schedule, there are no (i) strikes, labor disputes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge of Seller, threatened against Seller involving any of the Employees, or (ii) unfair labor practice charges, grievances or complaints pending or, to the Knowledge of Seller, threatened by or on behalf of any Employees. Except as would not reasonably be anticipated to have a Seller Material Adverse Effect, Seller has not engaged in any material unfair labor practices within the meaning of the National Labor Relations Act with respect to the Employees.

5.10 Litigation. Except as set forth on Schedule 5.10 of the Seller Disclosure Schedule, there are no Legal Proceedings pending or, to the Knowledge of Seller, threatened in writing against Seller before any Governmental Body with respect to any of the Purchased Assets. To the Knowledge of Seller, Seller is not subject to any Order of any Governmental Body with respect to any of the Purchased Assets, other than Orders that would not reasonably be anticipated to have a Seller Material Adverse Effect.

5.11 Compliance with Laws; Permits.

(a) Seller is in compliance with all Laws applicable to the ownership and use of the Purchased Assets, other than non-compliance, if any, that would not reasonably be anticipated to have a Seller Material Adverse Effect. Seller has not received any written notice of or been charged with the violation of any Laws with respect to its ownership and use of the Purchased Assets.

(b) Seller is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any material Permit included in the Purchased Assets, other than defaults and violations, if any, that would not reasonably be anticipated to have a Seller Material Adverse Effect.

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5.12 Financial Advisors. Except as set forth on Schedule 5.12 of the Seller Disclosure Schedule, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for Seller or any of its Affiliates in connection with the transactions contemplated by this Agreement and no such Person is entitled to any fee or commission or like payment in respect thereof.

5.13 Customers and Suppliers; Change in Practices. Schedule 5.13 of the Seller Disclosure Schedule lists the top ten (10) customers with respect to the Products, by revenues, during the twelve (12) month period ending 30 days prior to the Closing Date and the top five (5) suppliers with respect to the Products, by expense, during the twelve (12) month period ending 30 days prior to the Closing Date. Except as disclosed in writing to Purchaser prior to the Closing, no such customer or supplier has ceased or materially reduced its purchases from or sales or provision of services to Seller since the beginning of such 12-month period or given any written notice during such 12-month period of its intention to cease or materially reduce such purchases or sales or provision of services, and Seller is not engaged in any dispute with respect to a material provision of a Contract relating to the Purchased Assets or the Products with any such customer or supplier. Since the date that is 90 days prior to the Closing Date, Seller has not changed the prices of the Products, offered any discount or incentive with respect thereto, changed its practices or procedures with respect to its collection of accounts receivable, offered to discount the amount of any account receivable or extended any other incentive (whether to the account debtor or any employee or third party responsible for the collection of receivables) with respect to thereto. Schedule 5.13 of the Seller Disclosure Schedule lists by invoice number, Product sold and sales price for all sales made with respect to the Products during the 30 day period immediately prior to the Closing Date.

5.14 Restrictions on Business Activities. Except as may be set forth in the Purchased Contracts, there is no agreement (noncompetition, field of use, most favored nation or otherwise), commitment, judgment, injunction, order or decree to which Seller is party or which is otherwise binding upon Seller or relates to the Purchased Assets which, by its terms in effect as of the Closing, will have the effect of prohibiting or impairing (a) the conduct of Purchaser’s business following the Closing Date, (b) any acquisition of property (tangible or intangible) by Purchaser in connection with the operation of its business or the Purchased Assets, or (c) the transactions contemplated by this Agreement or the Transaction Documents. Seller has not entered into any agreement which, by its terms in effect as of the Closing, restricts or will restrict Purchaser’s use or operation of the Purchased Assets or sale of the Products following the Closing Date or Seller or Purchaser with respect to selling, licensing or otherwise distributing any of the Purchased Assets or the Products to, or providing services to, customers or potential customers or any class of customers, in any geographic area, during any period of time or in any segment of the market.

5.15 Products. Schedule 5.15(a) of the Seller Disclosure Schedule contains a complete list of each of the products currently being marketed or sold with respect to Seller’s RFID business. Schedule 5.15(b) of the Seller Disclosure Schedule contains a complete list of each of the products in development with respect to Seller’s RFID business. Schedule 5.15(c) of the Seller Disclosure Schedule includes copies of the standard terms and conditions of sale, license or lease for the Products (containing any applicable guaranty, warranty and indemnity provisions).

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5.16 No Other Representations or Warranties; Schedules. EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS ARTICLE V, ALL OF THE PURCHASED ASSETS ARE BEING TRANSFERRED ON A “WHERE IS” AND, AS TO CONDITION, “AS IS” BASIS AND SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WHETHER OF MERCHANTABILITY, SUITABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE PURCHASED ASSETS OR ANY PART OR ITEM THEREOF, OR AS TO THE CONDITION, DESIGN, OBSOLESCENCE, WORKING ORDER OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR OTHERWISE, AND PURCHASER HAS RELIED ON ITS OWN EXAMINATION THEREOF (INCLUDING COPIES OF THE PURCHASED CONTRACTS) IN ELECTING TO ACQUIRE THE PURCHASED ASSETS ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS AGREEMENT; PROVIDED, THAT THE FOREGOING SHALL NOT BE DEEMED TO LIMIT THE WARRANTIES PROVIDED BY ANY THIRD PARTY WITH RESPECT TO THE PURCHASED ASSETS OR PURCHASER’S REMEDIES WITH RESPECT THERETO, TO THE EXTENT SUCH THIRD PARTY WARRANTIES ARE ASSIGNABLE AND ASSIGNED TO PURCHASER UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER TRANSFER DOCUMENTS, SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE TRANSFER DOCUMENTS. SELLER MAKES NO REPRESENTATIONS OR WARRANTIES TO PURCHASER REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF THE OPERATIONS RELATED TO THE DEVELOPMENT, MANUFACTURE AND SALE OF THE PRODUCTS. THE DISCLOSURE OF ANY MATTER OR ITEM IN ANY SCHEDULE HERETO SHALL NOT BE DEEMED TO CONSTITUTE AN ACKNOWLEDGMENT THAT ANY SUCH MATTER IS REQUIRED TO BE DISCLOSED.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as of the Closing Date (except to the extent any of the following representations and warranties specifically relate to an earlier date) as follows:

6.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted. Purchaser is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Purchaser Material Adverse Effect.

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6.2 Authorization of Agreement. Purchaser has all requisite power and authority to execute and deliver this Agreement and has all requisite power, authority and legal capacity to execute and deliver each other agreement, document, or instrument or certificate contemplated by this Agreement or the Stock Purchase Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated by this Agreement or the Stock Purchase Agreement (the “Purchaser Documents”), and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and each Purchaser Document have been duly authorized by all necessary corporate action on behalf of Purchaser, and no other action on the part of the board of directors or stockholders of Purchaser is required to authorize the execution and delivery by Purchaser of this Agreement and Purchaser Documents to which it is a party. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

6.3 Conflicts; Consents of Third Parties.

(a) Except as set forth on Schedule 6.3 of the Purchaser Disclosure Schedule, none of the execution and delivery by Purchaser of this Agreement or any of the other Purchaser Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws (or other organizational and governing documents) of Purchaser, (ii) any Contract or Permit to which Purchaser is a party or by which Purchaser or its properties or assets are bound, (iii) any Order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound or (iv) any applicable Law.

(b) No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the other Purchaser Documents, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby.

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6.4 Litigation. There are no Legal Proceedings pending or, to the knowledge of Purchaser, threatened against Purchaser, or to which Purchaser is otherwise a party before any Governmental Body, which would reasonably be expected to have a Purchaser Material Adverse Effect. Purchaser is not subject to any Order of any Governmental Body, except to the extent the same would not reasonably be expected to have a Purchaser Material Adverse Effect.

6.5 Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.

6.6 Compliance with Applicable Laws. Purchaser and its Affiliates have complied in all material respects with any applicable Laws relating to their business and properties, except where the failure to comply would not reasonably be expected to have a Purchaser Material Adverse Effect.

6.7 Investigation. Purchaser is a sophisticated purchaser and has conducted such investigation and inspection of the Purchased Assets, the Assumed Liabilities and the Products that Purchaser has deemed necessary or appropriate for the purpose of entering into this Agreement and consummating the transactions contemplated by this Agreement. In executing this Agreement, Purchaser is relying on its own investigation in electing to acquire the Purchased Assets on the terms and subject to the conditions set forth in this Agreement and other Transfer Documents, on the provisions set forth herein and therein, and not on any other statements, presentations, representations, warranties or assurances of any kind made by Seller, any of its Affiliates, its or their representatives or any other Person; provided, that the foregoing shall not be deemed to excuse Seller’s liability for fraud by Seller or its Affiliates.

6.8 Condition of the Purchased Assets. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER IS NOT MAKING ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN BY SELLER IN ARTICLE V HEREOF (AS MODIFIED BY THE SCHEDULES HERETO AS SUPPLEMENTED OR AMENDED), AND PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED THEREIN, THE PURCHASED ASSETS ARE BEING TRANSFERRED ON A “WHERE IS” AND, AS TO CONDITION, “AS IS” BASIS; PROVIDED, THAT THE FOREGOING SHALL NOT BE DEEMED TO LIMIT THE WARRANTIES PROVIDED BY ANY THIRD PARTY WITH RESPECT TO THE PURCHASED ASSETS OR PURCHASER’S REMEDIES WITH RESPECT THERETO, TO THE EXTENT SUCH THIRD PARTY WARRANTIES ARE ASSIGNABLE AND ASSIGNED TO PURCHASER UNDER THIS AGREEMENT. ANY CLAIMS PURCHASER MAY HAVE FOR BREACH OF REPRESENTATION OR WARRANTY SHALL BE BASED SOLELY ON THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN ARTICLE V HEREOF (AS MODIFIED BY THE SCHEDULES HERETO AS SUPPLEMENTED OR AMENDED).

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ARTICLE VII

COVENANTS

7.1 Accounts Receivable.

(a) Following the Closing, if Purchaser or any of its Affiliates receives any payment, refund or other amount that is an Excluded Asset or is otherwise properly due and owing to Seller or any of its Affiliates in accordance with the terms of this Agreement or any other Transfer Document including, without limitation, any Seller Accounts Receivable, Purchaser shall forward to Seller, or cause one of its Affiliates to forward to Seller, immediately upon receipt thereof, such amounts to Seller.

(b) In determining whether a payment received by Purchaser is a payment of a Seller Account Receivable, Purchaser may rely on any invoice or contract number referred to on the payment or in correspondence accompanying such payment. To the extent any payment, refund or other amount received by Purchaser from a customer or other account debtor does not specify which outstanding invoice or receivable it is in payment of and does not correspond in amount to a single specific invoice or contract, such payment shall be applied to the earliest invoice outstanding with respect to indebtedness of such customer or other account debtor, except for those invoices which are subject to a dispute to the extent of such dispute. Following the Closing, Purchaser will provide such cooperation as Seller shall reasonably request, and at Seller’s expense, in connection with Seller’s collection of outstanding Seller Accounts Receivable.

7.2 Accounts Payable. Unless otherwise set forth in the Transition Services Agreement, to the extent that Purchaser receives any invoices for Seller Accounts Payable or statements evidencing amounts owed by Seller or any of its Affiliates to another Person, Purchaser will promptly deliver such documents to Seller.

7.3 Cooperation in Third Party Litigation.

(a) After the Closing, each party shall provide such assistance and cooperation as the other party or its counsel may reasonably request in connection with any Claims, Legal Proceedings or investigations relating to the Purchased Assets, the Excluded Assets, the Excluded Liabilities or the Assumed Liabilities; provided that such duty to assist and cooperate shall be at the cost of the party making such request.

(b) Without limiting the generality of the foregoing, with respect to the Transferred Employees, Purchaser shall, upon Seller’s reasonable request, make each such Transferred Employee reasonably available to Seller, at Seller’s expense (actual out-of-pocket expense only, excluding any time-charge or overhead), for meetings and/or teleconferences in preparation for depositions or any Legal Proceedings in connection with any Claims, Legal Proceedings or investigations relating to the Purchased Assets or the Assumed Liabilities. In addition, Seller shall be permitted to retain copies of and use all documents (whether hard copy, electronic or otherwise) transferred as part of the Purchased Assets, or in the possession of the

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Transferred Employees, that relate to any Claims, Legal Proceedings or investigations relating to the Purchased Assets or the Assumed Liabilities.

7.4 Confidentiality. Each of the parties hereto will hold, and will cause its consultants and advisors to hold, in confidence all documents and information furnished to it (a “Recipient”) by or on behalf of another party to this Agreement (a “Discloser”) in connection with the transactions contemplated by this Agreement and each of the other Transfer Documents pursuant to the terms of that certain Corporate Non-disclosure Agreement Number 7137598 entered into by and between Purchaser and Seller as of April 5, 2001, as amended as of June 6, 2007 (the “NDA”) and supplemented by this Section 7.4. The parties hereto acknowledge that the terms and conditions (collectively, the “Transaction Terms”) of this Agreement and other Transfer Documents, including their existence, shall be considered confidential information and shall not be disclosed by either party to any third party except in accordance with the provisions set forth below. In the event that a Recipient is requested or becomes legally compelled (including without limitation, pursuant to securities laws and regulations) to disclose the Transaction Terms or the existence of this Agreement or the Transfer Documents in contravention of the provisions of this Agreement, such Recipient shall provide the Discloser with prompt written notice of that fact before such disclosure and will use commercially reasonable efforts to fully cooperate with Discloser to seek a protective order, confidential treatment, or other appropriate remedy with respect to the disclosure; provided, however, that Recipient shall not be required to expend more than five thousand dollars ($5,000) in good faith legal expenses on seeking a protective order, confidential treatment or other appropriate remedy. To the extent that the aforementioned legal expenses exceeds five thousand dollars ($5,000), Discloser may (at its sole discretion) elect to pay for Recipient’s additional legal expenses in excess of the five thousand dollars ($5,000) solely for the purpose of seeking a protective order, confidential treatment, or other appropriate remedy. If Discloser agrees in writing to pay such additional legal expenses, then Recipient agrees that it will use best efforts to cooperate with Discloser to seek a protective order, confidential treatment, or other appropriate remedy with respect to the disclosure. In such event, Recipient shall furnish for disclosure only that portion of the information which is legally required and shall exercise commercially reasonable efforts (or, to the extent that Seller is paying any legal expenses beyond $5,000, Recipient shall use its best efforts) to obtain reliable assurance that confidential treatment will be accorded such information to the extent reasonably requested by Discloser and to the maximum extent possible under law. Recipient agrees that it will provide Discloser with drafts of any documents, press releases or other filings in which Purchaser is required to disclose this Agreement, the other Transfer Documents, the Transaction Terms or any other confidential information subject to the terms of this Agreement at least two (2) business days prior to the filing or disclosure thereof, and that it will make any changes or redactions to such materials as reasonably requested by Discloser to the extent permitted by law or any rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), as applicable. If confidential treatment is requested by Discloser, Recipient agrees to file such a request on Discloser’s behalf and use commercially reasonable efforts (or, to the extent that Discloser is paying any legal expenses beyond $5,000, Recipient shall use its best efforts) in responding to any SEC comments to pursue assurance that confidential treatment will be granted, in both cases fully cooperating with Discloser (including, without limitation, providing Discloser with the opportunity to review and comment on the request and the responses to any such SEC comments). Neither party will file this Agreement or the other Transfer Documents with any governmental authority or any regulatory body, or

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disclose the identity of the other party or any other Transaction Terms in any filing except as permitted above. To the extent a conflict exists between the NDA and this Agreement, this Agreement shall control.

7.5 Preservation of Records. Seller and Purchaser agree that each of them shall preserve and keep the records held by it or their Affiliates relating to the Purchased Assets for a period of six (6) years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such party in connection with, among other things, any insurance Claims by, Legal Proceedings or Tax audits against or governmental investigations of Seller or Purchaser or any of their Affiliates or in order to enable Seller or Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby. In the event Seller or Purchaser wishes to destroy such records after that time, such party shall first give ninety (90) days prior written notice to the other and such other party shall have the right at its option and expense, upon prior written notice given to such party within that ninety (90) day period, to take possession of the records within one hundred eighty (180) days after the date of such notice.

7.6 Publicity.

(a) Purchaser and Seller shall issue a joint press release as of the Closing Date with respect to the transactions contemplated by this Agreement in substantially the form attached hereto as Exhibit L (the “Press Release”).

(b) Other than with respect the Press Release, each of Purchaser and Seller agrees that the Transaction Terms or any other information regarding Seller shall not be disclosed or otherwise made available to the public and that copies of this Agreement or any other Transfer Documents shall not be publicly filed or otherwise made available to the public, except in accordance with Section 7.4 hereof.

7.7 Use of Name and Marks. Purchaser agrees that, except to the extent expressly provided under the License Agreement and the Transition Services Agreement, it shall have no right to use of the name “Intel Corporation” or any service marks, trademarks, trade names, identifying symbols, logos, emblems, signs or insignia related thereto or containing or comprising the foregoing, including any name or mark confusingly similar thereto (collectively, the “Seller Marks”), and will not at any time hold itself out as having any affiliation with Seller or any of its Affiliates. Except to the extent expressly provided under the License Agreement and the Transition Services Agreement, Purchaser agrees not to use any materials bearing Seller Marks or sell, transfer or ship any products or related materials bearing Seller Marks (a) unless requested to do so by Seller, (b) except to the extent displayed on the hardcopy (non-electronic) form of such materials delivered to Purchaser at the Closing or (c) except as required under Purchased Contracts with customers; provided that Purchaser’s use shall cease, in all cases, not later than the earlier of (i) such time as Purchaser shall have qualified the use of its logo, Trademarks or tradenames with each such customer and (ii) 90 days after the Closing Date, or such later date as may be permitted pursuant to the terms of the Transition Services Agreement solely for the purposes as may be set forth therein, not to exceed one year from the Closing Date. The foregoing rights are subject to Seller’s standard Trademark usage guidelines, a copy of which has been provided to Purchaser, and Seller reserves the right to practice quality control

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with regard to its marks and any products or services marketed or sold thereunder. Upon the expiration of the foregoing license, all materials bearing any Seller Mark in the possession of Purchaser, any of its Affiliates or any of their respective agents shall be promptly destroyed. Prior to any distribution of any materials bearing Seller Marks, Purchaser shall use its best efforts to redact or modify such materials in order to minimize or eliminate the use of the Seller Marks.

7.8 Inventory. Between the Closing and the applicable Inventory Transfer Date, Seller shall perform services under the Transition Services Agreement with respect to the Inventory, including (a) storing and maintaining each item of Inventory for Purchaser’s benefit, (b) delivering such item of Inventory to any customer designated by Purchaser in its sole discretion and (c) providing order processing and fulfillment services with respect to the Inventory (the “Inventory Services”). Title to any item of Inventory sold by Purchaser after the Closing shall pass to Purchaser, without delivery of any further instrument of assignment or conveyance, when such item of Inventory is delivered from Seller’s facility pursuant to the Transition Services Agreement. For avoidance of doubt, the Inventory shall be used first, before the use of any inventory manufactured or processed by Seller pursuant to the Transfer Services Agreement, to fill any orders from Purchaser’s customers that can be filled with the Inventory. Seller shall have no liability to Purchaser arising from performing the Inventory Services other than from Seller’s failure to perform the Inventory Services in the manner required by Sections 2.1 and 2.5 of the Transition Services Agreement. Notwithstanding the foregoing, any Losses incurred by Purchaser arising from Seller’s breach of Section 2.1(d) hereof shall be subject to the procedures and remedies set forth in Article X hereof.

7.9 Disclosure Schedules; Supplementation and Amendment of Schedules. Either parties hereto may, at its option, include in its respective Disclosure Schedule items that are not material in order to avoid any misunderstanding, and such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgement or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement.

ARTICLE VIII

EMPLOYEES AND EMPLOYEE BENEFITS

8.1 Employment. It is expected that prior to the Closing, Purchaser shall make offers of “at-will” employment effective as of the Closing Date to certain of the Employees, provided that Purchaser may elect not to make an offer to any of such Employees in its sole discretion. Any such “at-will” employment offers will: (i) be contingent on Closing; (ii) be subject to and in compliance with Purchaser’s standard human resources policies and procedures, including requirements for proof evidencing a legal right to work in the offeree’s country of current employment; and (iii) have terms, including the position, salary and responsibilities of such Employee, which will be determined by Purchaser in its sole discretion.

8.2 Consent. Seller hereby consents to the hiring and employment of Employees by Purchaser on or following the Closing.

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8.3 Vacation /PTO. As of the Closing Date, Seller shall pay or cause to be paid all Liabilities and obligations of Seller or any of its Affiliates relating to accrued vacation and personal days of Transferred Employees.

8.4 COBRA Continuation Coverage. Seller agrees that it shall be solely responsible for satisfying the continuation coverage requirements of COBRA for all “M&A qualified beneficiaries” as such term is defined in Treasury Regulation § 54.4980B-9.

8.5 Employment Tax Reporting. The Seller and the Purchaser agree that, pursuant to the “Alternative Procedures” provided in Section 5 of Revenue Procedure 2004-53, with respect to the filing and furnishing of Internal Revenue Service Forms W-2, W-3 and 941 for the full calendar year in which the Closing occurs, subject to applicable Law, (i) the Seller and the Purchaser shall report on a “predecessor-successor” basis, as set forth therein, (ii) the Seller shall be relieved from furnishing Forms W-2 to any Transferred Employees, and (iii) the Purchaser shall assume the obligations of the Seller to furnish Forms W-2 to such Transferred Employees and Forms W-2 and W-3 with respect to Transferred Employees to the Social Security Administration; provided, the Seller shall transfer to the Purchaser all Forms W-4 and W-5 with respect to the Transferred Employees, and such other data relating to Transferred Employees as shall be necessary for the Purchaser to assume and satisfy such obligations accurately and in accordance with the law.

ARTICLE IX

CLOSING DELIVERIES

9.1 Closing Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser:

(a) a duly executed Bill of Sale in the form of Exhibit B hereto;

(b) a duly executed assignment separate from certificate with respect to the Escrowed Shares; and

(c) a copy of Seller’s report entitled “***” dated June 6, 2008.

9.2 Purchaser Deliveries. At the Closing, Purchaser shall deliver to Seller:

(a) duly executed certificates representing the Closing Shares validly issued pursuant to this Agreement and the Stock Purchase Agreement; and

(b) a copy of Purchaser’s Certificate of Incorporation in the form of Exhibit G hereto with the Secretary of State of the State of Delaware, which shall have been accepted and be in full force and effect.

9.3 Mutual Deliveries. At the Closing, each of Purchaser and Seller shall deliver:

(a) a duly executed Assignment and Assumption Agreement in the form of Exhibit C hereto;

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

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(b) a duly executed License Agreement in the form of Exhibit D hereto;

(c) a duly executed Transition Services Agreement in the form of Exhibit E hereto;

(d) a duly executed Stock Purchase Agreement in the form of Exhibit F hereto;

(e) a duly executed Investors’ Rights Agreement in the form of Exhibit H hereto;

(f) a duly executed First Refusal and Co-Sale Agreement in the form of Exhibit I hereto;

(g) a duly executed Voting Agreement in the form of Exhibit J hereto; and

(h) a duly executed Board Observer Agreement in the form of Exhibit K hereto.

ARTICLE X

INDEMNIFICATION

10.1 Survival of Certain Provisions; Escrow.

(a) The representations and warranties of the parties contained in this Agreement shall survive the Closing and claims may be asserted with respect thereto to the extent permitted by this Article X. Notice of any claim for indemnification under this Article X based on any representation or warranty contained in this Agreement must be given in writing setting forth the specific claim and the basis therefor in reasonable detail prior to 5:00 p.m., California time, on the date that is eighteen (18) months after the Closing Date (the “Survival Period”); provided, that the representations and warranties set forth in Sections 5.1 and 6.1 (organization and good standing), Sections 5.2 and 6.2 (authorization of agreement), Section 5.4 (title to purchased assets) and Section 5.5 (taxes) (such items being referred to as the “Exceptional Matters”) shall survive the Closing until the expiration of the applicable statue of limitations. Any claim for indemnification based on a representation or warranty contained in this Agreement not made on or prior to the applicable expiration date will be irrevocably and unconditionally released and waived; provided, however, that any obligation to indemnify and hold harmless shall not terminate with respect to any Losses to which the Person to be indemnified shall have given notice in writing setting forth the specific claim and the basis therefor in reasonable detail to the indemnifying party in accordance with Section 10.4(a) before the termination of the Survival Period. All materiality qualifications contained in the representations and warranties made in Articles V and VI of this Agreement or any other Transaction Document, including without limitation the terms “Seller Material Adverse Effect” and “Purchaser Material Adverse Effect,” will be taken into account under this Article X for purposes of determining whether a breach of such representation or warranty has occurred for which an indemnity obligation exists. All such materiality qualifications will be ignored and not

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given effect for purposes of determining the amount of any Losses resulting from any such breach.

(b) All of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent only that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance. Except for the covenants or other agreements contained in Sections 7.4 and 11.1, for which a claim for breach may be made until such covenants or other agreements are fully performed or fulfilled, no claim for a breach of a covenant or other agreement set forth in this Agreement may be made or brought by any party hereto after the six month anniversary of the last date on which each such covenant was required to be performed (in each case, a “Covenant Survival Period”); provided, however, that any obligation to indemnify and hold harmless shall not terminate with respect to any Losses to which the Person to be indemnified shall have given notice in writing setting forth the specific claim and the basis therefor in reasonable detail to the indemnifying party in accordance with Section 10.4(a) before the termination of the applicable Covenant Survival Period.

(c) On the Closing Date, Purchaser shall retain the Escrowed Shares in escrow. The Escrowed Shares will be released to Seller in the following manner:

(i) Subject to Section 10.1(c)(iv), within three (3) Business Days following the one (1) year anniversary of the Closing Date, fifty percent (50%) of the Preferred Escrowed Shares initially placed in escrow and fifty percent (50%) of the Common Escrowed Shares initially placed in escrow (in each case, less the number of shares of the Preferred Escrowed Shares and Common Escrowed Shares previously released to Seller or redeemed by Purchaser in order to satisfy Purchaser’s Losses, in each case in accordance with Section 10.6 hereof) shall be released to Seller; provided that if any Indemnification Claim is made against Seller in accordance with Section 10.4 hereof prior to the one (1) year anniversary of the Closing Date and the Loss is not finally determined as of such date, the number of Escrowed Shares having a Unit Value (as defined in Section 10.6(c) below) equal to the Loss claimed shall remain in escrow until the final determination of the Loss. Any Escrowed Shares that are released pursuant to this Section 10.1(c)(i) shall be released in full Units (as defined in Section 10.6(a) hereof) only. If the claimed Loss amount exceeds the Unit Value of the total Escrowed Shares, no shares of Escrowed Shares shall be released to Seller until the final determination of the Loss.

(ii) Subject to Section 10.1(c)(iv),within three (3) Business Days following the expiration of the Survival Period, any Escrowed Shares remaining in escrow after the release under Section 10.1(c)(i) shall be released to Seller; provided that if any Indemnification Claim is made against Seller in accordance with Section 10.4 hereof prior to the expiration of the Survival Period and the Loss is not finally determined as of the expiration date of the Survival Period, the number of Escrowed Shares having a Unit Value (as defined in Section 10.6(c) below) equal to the Loss claimed shall remain in escrow until the final determination of the Loss. If the claimed Loss amount exceeds the Unit Value of the total Escrowed Shares, no Escrowed Shares shall be released to Seller until the final determination of the Loss.

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(iii) If at any time some but not all of the Escrowed Shares held in escrow are required to be released to Seller under Sections 10.1(c)(i) or (ii), Purchaser shall promptly (A) execute and deliver to Seller certificates evidencing the respective number of shares of Preferred Escrowed Shares and Common Escrowed Shares being released to Seller, (B) execute and place in escrow certificates evidencing the respective number of shares of Preferred Escrowed Shares and Common Escrowed Shares to remain in escrow after such release, and (C) cancel any other certificates evidencing the Escrowed Shares that were held in escrow prior to such release.

(iv) Notwithstanding the foregoing subsections of this Section 10.1(c), any Escrowed Shares remaining in escrow (less the number of Escrowed Shares having a Unit Value equal to the Loss then claimed but not finally determined) shall be released to Seller (A) immediately prior to any liquidation, dissolution or winding-up of Purchaser, or (B) immediately prior to any Change of Control of Purchaser, if such Change of Control occurs after the first anniversary of the Closing Date.

10.2 Indemnification by Seller.

(a) Subject to Sections 10.1, 10.5 and 10.6 hereof, Seller hereby agrees to indemnify, defend and hold Purchaser and its directors, officers, employees, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Purchaser Indemnified Parties”) harmless from and against any and all losses, liabilities, judgments, damages (excluding incidental, consequential and punitive damages), fines, suits, actions, costs, Taxes and expenses (individually, a “Loss” and, collectively, “Losses”):

(i) based upon or resulting from the failure of any of the representations or warranties made by Seller in this Agreement to be true and correct in all respects at and as of the Closing Date;

(ii) based upon or resulting from the breach of any covenant in this Agreement on the part of Seller; and

(iii) based upon or resulting from any Excluded Asset or any Excluded Liability.

(b) Purchaser shall take and shall cause its Affiliates to take all commercially reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.

10.3 Indemnification by Purchaser.

(a) Subject to Sections 10.1, 10.5 and 10.6 hereof, Purchaser hereby agrees to indemnify, defend and hold Seller and its directors, officers, employees, Affiliates, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Seller Indemnified Parties”) harmless from and against, and pay to the applicable Seller Indemnified Parties the amount of, any and all Losses:

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(i) based upon or resulting from the failure of any of the representations or warranties made by Purchaser in this Agreement to be true and correct in all respects at and as of the Closing Date;

(ii) based upon or resulting from the breach of any covenant in this Agreement on the part of Purchaser;

(iii) based upon or resulting from any Assumed Liability; and

(iv) based upon or arising directly from Purchaser’s use of the Purchased Assets after the Closing Date.

(b) Seller shall take and cause its Affiliates to take all commercially reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.

10.4 Indemnification Procedures.

(a) A claim for indemnification for any matter not involving a third-party claim may be asserted by written notice to the party from whom indemnification is sought. The party seeking indemnification shall deliver a written notice (a “Notice of Claim”) to the other party promptly after becoming aware of the facts giving rise to such claim. The Notice of Claim shall (i) specify in reasonable detail the nature of the claim being made, and (ii) state the aggregate dollar amount of such claim. Following receipt of a Notice of Claim, the parties shall promptly meet to agree on the rights of the respective parties with respect to each of such claims. If the parties should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and amounts agreed upon shall be promptly paid. Any unresolved dispute between the parties shall be resolved in accordance with Section 11.3 and the other applicable provisions of this Agreement.

(b) In the event that any Legal Proceedings shall be instituted or that any claim or demand shall be asserted by any third party in respect of which payment may be sought under Sections 10.2 and 10.3 hereof (regardless of the limitations set forth in Section 10.5) (an “Indemnification Claim” ), the indemnified party shall promptly cause written notice of the assertion of any Indemnification Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party. The failure of the indemnified party to give reasonably prompt notice of any Indemnification Claim shall not release, waive or otherwise affect the indemnifying party’s obligations with respect thereto except to the extent that the indemnifying party is prejudiced as a result of such failure. The indemnifying party shall have the right to defend against, control, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against by it hereunder, provided, that such party provides written notice to the other party hereto to such effect not later than ten (10) Business Days following the indemnifying party’s receipt of written notice of the Indemnification Claim together with all information that the indemnifying party may reasonably request with respect to such Indemnification Claim. The indemnifying party shall conduct such defense in a commercially reasonable manner, and shall be authorized to settle any such claim without the consent of the indemnified party; provided, however, that: (i) the indemnifying party

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shall not be authorized to encumber any assets of the indemnified party or agree to any restriction that would apply to the indemnified party or the conduct of the indemnified party’s business; (ii) the indemnifying party shall have paid or caused to be paid any amounts arising out of such settlement; and (iii) a condition to any such settlement shall be a complete release of the indemnified party with respect to such third party claim. If the indemnifying party elects not to defend against, control, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder, the indemnified party may defend against, negotiate or otherwise deal with such Indemnification Claim; provided, that the indemnified party shall not settle such Indemnification Claim without the prior written consent of the indemnifying party, which shall not be unreasonably withheld or delayed. If the indemnifying party shall assume the defense of any Indemnification Claim, the indemnified party may participate (but not control), at his or its own expense, in the defense of such Indemnification Claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim.

(c) After any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have arrived at a mutually binding agreement with respect to an Indemnification Claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter.

10.5 Certain Limitations on Indemnification.

(a) Notwithstanding the provisions of this Article X, except with respect to Losses arising from Exceptional Matters, neither party shall have any indemnification obligations for Losses under Sections 10.2(a)(i)-(ii) or Sections 10.3(a)(i)-(ii) unless the aggregate amount of all such Losses exceeds $125,000 (the “Basket”); provided, that after the Basket is exceeded, the indemnified party shall be entitled to be paid the entire amount of any Losses.

(b) Notwithstanding anything in this Article X, (i) the limitation requiring notice of any Indemnification Claim within a specific time period set forth in Section 10.1(a) shall not apply to claims for indemnification in respect of Losses related to or arising out of the matters set forth in Sections 10.2(a)(iii) or 10.3(a)(iii)-(iv) and (ii) the Basket set forth in Section 10.5(a) shall not apply to claims for indemnification in respect of Losses related to or arising out of the matters set forth in Sections 10.2(a)(iii) or 10.3(a)(iii)-(iv).

(c) Seller shall not be required to indemnify any Purchaser Indemnified Party and Purchaser shall not be required to indemnify any Seller Indemnified Party to the extent of any Losses that a court of competent jurisdiction or a mutually selected arbitrator shall have determined by final judgment to have resulted from the bad faith, gross negligence or willful misconduct of the party seeking indemnification.

(d) No party shall, in any event, be liable to any other Person for any consequential, incidental, indirect, special or punitive damages of such other Person, including

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loss of revenue, income or profits, diminution of value or loss of business opportunity relating to the breach or alleged breach hereof.

(e) Notwithstanding any other provision of this Agreement (but subject to Sections 10.8(b)), the maximum aggregate liability of Seller to the Purchaser Indemnified Parties or the maximum aggregate liability of Purchaser to the Seller Indemnified Parties pursuant to this Article X or otherwise under this Agreement, Applicable Law or otherwise with respect to the purchase and sale of the Purchased Assets shall be limited to Indemnification Cap (as such term is defined below); provided, however, that the Indemnification Cap shall not apply to Losses related to or arising out of the matters set forth in Sections 7.7, 10.2(a)(iii) and 10.3(a)(iii)-(iv). The “Indemnification Cap” shall mean, at the time of any required payment under this Article X, (x) the then-remaining Escrowed Shares, or (y) at Seller’s sole option, an amount in cash equal to the aggregate fair market value of the then-remaining Escrowed Shares, which shall be calculated based on (A) the fair market value per share of the Preferred Escrowed Shares of $2.286 and (B) the fair value per share of the Common Escrowed Shares in effect on the date on which a Notice of Claim (or, in the case of an Indemnification Claim pursuant to Section 10.4(b), the date of the required written notice delivered by the indemnified party) is delivered, as determined by Purchaser’s Board of Directors at or pursuant to the meeting or action of such Board of Directors closest to and prior to such date; provided that, for purposes of Article X and during the Survival Period, the fair market value per share of the Common Escrowed Shares shall not be less than $0.30 or more than $2.286 (the “Common Per Share Value”).

(f) None of the provisions set forth in this Agreement, including the provisions set forth in Article X, will be deemed a waiver by any party to this Agreement of any right or remedy which such party may have at law or equity based on any other party’s fraud, nor will any such provisions limit, or be deemed to limit, (i) the amounts of recovery sought or awarded in any such claim for fraud, (ii) the time period during which a claim for fraud may be brought or (iii) the recourse which any such party may seek against another party with respect to a claim for fraud; provided, that with respect to such rights and remedies at law or equity, the parties further acknowledge and agree that none of the provisions of this Section 10.5(f), nor any reference to this Section 10.5(f) throughout this Agreement, will be deemed a waiver of any defenses which may be available in respect of actions or claims for fraud, including defenses of statutes of limitations or limitations of damages.

10.6 Calculation of Losses; Payment of Losses. Subject to Section 10.5, each time any amount of Loss, taking into account the adjustments set forth in Section 10.6(e), is finally determined in accordance with this Article X (it being agreed that no Escrowed Shares shall be cancelled as a result of any claimed Losses until such Losses have been so finally determined), such Loss shall be paid by the indemnifying party to the indemnified party in accordance with the following procedure:

(a) If Seller is the indemnifying party, Seller may, at its sole election, within five (5) Business Days of the final determination of the Loss and the applicable Unit Value (the “Cash Payment Election Period”), pay in cash by wire transfer of immediately available funds to an account designated in writing by Purchaser, the amount that is the lesser of (x) the amount of such Loss and (y) the aggregate Unit Value of the Escrowed Shares then held in escrow (other than the Escrowed Shares that are reserved for application to another Loss). Upon any such cash

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payment by Seller, Escrowed Shares having a Unit Value equal to the amount paid in cash shall be deemed released from escrow to Seller, and Purchaser shall promptly (A) execute and deliver to Seller certificates evidencing the respective number of shares of Preferred Escrowed Shares and Common Escrowed Shares being released to Seller, (B) execute and place in escrow certificates evidencing the respective number of shares of Preferred Escrowed Shares and Common Escrowed Shares to remain in escrow after such release, and (C) cancel any other certificates evidencing the Escrowed Shares that were held in escrow prior to such release. Any such released Escrowed Shares shall be composed of units consisting of eleven shares of Series E Preferred Stock and thirteen shares of Common Stock (“Units”) and shall be released only in full Units. If the aggregate Unit Value of such Units of Escrowed Shares to be so released cannot equal the amount of the cash payment made by Seller to satisfy the Loss, then the number of Units collectively having the highest possible Unit Value not exceeding the amount of such cash payment shall be released to Seller, and the difference between the Unit Value of the Units so released and the amount of such cash payment will be paid by Purchaser to Seller in cash.

(b) If Seller is the indemnifying party and Seller elects not to pay the Loss in cash by wire transfer within the Cash Payment Election Period, a number of full Units of Escrowed Shares having a Unit Value equal to the amount of the Loss shall be cancelled by Purchaser, and the number of Escrowed Shares that may be returned to Seller upon the expiration of the Survival Period shall be correspondingly reduced. Upon such event, Purchaser shall promptly (A) execute and place in escrow certificates evidencing the respective number of shares of Preferred Escrowed Shares and Common Escrowed Shares to remain in escrow after such reduction (as reduced by the number of Escrowed Shares by a number of Units having a Unit Value equal to the amount of the Loss), and (B) cancel any other certificates evidencing the Escrowed Shares that were held in escrow prior to such reduction. If the aggregate Unit Value of such Units of Escrowed Shares to be cancelled cannot equal the actual amount of the Loss, then the number of Units collectively having the highest possible Unit Value not exceeding the amount of the Loss will be cancelled, and the difference between the Unit Value of the Units so cancelled and the amount of the Loss will be paid by Seller to Purchaser in cash. Notwithstanding the foregoing, in the event of a third party claim against Purchaser indemnifiable by Seller, Purchaser, at its sole election, may require Seller to pay the Loss in cash in accordance with the procedures set forth in Section 10.6(a).

(c) For purposes of this Agreement, the “Unit Value” of each Unit shall equal (x) as of the Closing, $29.046, and (y) at all times thereafter, the sum of (A) $25.146, plus (B) the product of thirteen (13), multiplied by the Common Per Share Value (in each case, as adjusted for stock splits, combinations and the like).

(d) If Purchaser is the indemnifying party, Purchaser shall, within five (5) Business Days of the final determination of the Loss, pay to Seller the amount of the Loss in cash by wire transfer of immediately available funds to an account designated in writing by Seller.

(e) The amount of any Losses for which indemnification is provided under this Article X shall be net of any amounts actually recovered by the indemnified party under insurance policies with respect to such Losses.

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10.7 Tax Treatment of Indemnity Payments. Seller and Purchaser agree to treat any indemnity payment made pursuant to this Article X as an adjustment to the purchase price for federal, state, local and foreign income tax purposes.

10.8 Exclusive Remedy.

(a) Notwithstanding any other provision of this Agreement to the contrary, the provisions of this Article X shall be the sole and exclusive remedy for monetary damages of the parties from and after the Closing Date for any Losses arising under this Agreement, including claims of breach of any representation, warranty or covenant in this Agreement; provided, however, that the foregoing clause of this sentence shall not be deemed a waiver by any party of any right to specific performance or injunctive relief.

(b) Nothing in this Agreement limits or otherwise affects in any way the rights and remedies of either party with respect to causes of action arising under the Stock Purchase Agreement, the Investors’ Rights Agreement, the Right of First Refusal and Co-Sale Agreement, the Voting Agreement, the Board Observer Agreement, the License Agreement or the Transition Services Agreement, or any rights and remedies of Seller or Purchaser vis-à-vis any Person other than Seller or Purchaser or their respective Affiliates with respect to any infringement or misappropriation of any Intellectual Property of Seller or Purchaser, as the case may be (including any right of Seller or Purchaser to seek equitable or injunctive relief in connection therewith), all of which rights and remedies are expressly reserved.

ARTICLE XI

MISCELLANEOUS

11.1 Payment of Sales, Use or Similar Taxes.

(a) Purchaser and Seller shall each be responsible for (and shall indemnify and hold harmless the other party and its directors, officers, employees, Affiliates, agents, successors and permitted assigns against) fifty percent (50%) of any and all excise, value added, registration, stamp, recording, documentary, filing, conveyancing, transfer, sales and use taxes and any other similar fees or governmental charges applicable to the Purchased Assets in connection with the transactions contemplated by this Agreement (other than Taxes measured by or with respect to income imposed on Seller or its Affiliates). The party required by applicable Law to file necessary documents (including all Tax Returns) with respect to all such amounts shall file such documents in a timely manner, and the other party shall cooperate fully and provide any required information in connection with any such filing. Purchaser and Seller shall cooperate in good faith to minimize such amounts to the extent permitted by applicable law.

(b) For purposes of Sections 2.3(f) and 2.4(e), in the case of a taxable period that includes the Closing Date, Taxes relating to the Purchased Assets shall be allocated to the periods before and after the Closing Date as follows: (i) in the case of Taxes such as real property Taxes, personal property Taxes and similar ad valorem Taxes, such Taxes shall be allocated to periods before and after the Closing Date on a per diem basis and (ii) in the case of Taxes based on net income or gross income the portion of such Taxes allocable to the period

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before the Closing Date shall be computed on the assumption that the taxable period ended on the Closing Date.

(c) Taxes described in Section 11.1(a) or Section 11.1(b) shall be timely paid, and all applicable Tax Returns shall be filed, as provided by applicable Law. In the event that either Seller or Purchaser makes a payment of Taxes on behalf of the other party for which it is entitled to reimbursement, the other party shall make such reimbursement promptly, but in no event later than thirty days after the presentation of a statement setting forth the amount of reimbursement to which the presenting party is entitled along with such supporting evidence as is reasonably necessary to calculate the amount of reimbursement. Any payment required under this Section 11.1(c) and not made when due shall bear interest at the rate of ten percent per annum.

11.2 Expenses. Except as otherwise provided in this Agreement, each of Seller and Purchaser shall bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.

11.3 Dispute Resolution; Submission to Jurisdiction; Consent to Service of Process.

(a) All disputes arising directly under this Agreement or the grounds for termination thereof, including whether any payments may be due under this Agreement, shall be resolved as follows: The senior management of both parties shall meet to attempt to resolve any such dispute. If the dispute cannot be resolved by the senior management, either party may make a written demand for formal dispute resolution and specify therein the scope of the dispute. Within thirty (30) days after such written notification, the parties agree to meet for one day with an impartial mediator and consider dispute resolution alternatives other than litigation. If an alternative method of dispute resolution is not agreed upon within thirty (30) days after the one-day mediation, either party may begin litigation proceedings

(b) Notwithstanding the provisions of Section 11.3(a), each party shall have the right, without the requirement of first seeking a remedy through any dispute resolution alternative (including arbitration) that has been agreed upon, to seek preliminary injunctive or other equitable relief in any proper court in the event that such party determines that eventual redress through the dispute resolution alternative will not provide a sufficient remedy for any violation of this Agreement by the other party.

(c) The parties hereby irrevocably submit to the jurisdiction of the courts of the State of Delaware and the federal courts of the United States of America located in the State of Delaware solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. The parties hereby consent to and grant any

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such court jurisdiction over the person of such parties and over the subject matter of such dispute.

(d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (1) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (2) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (3) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (4) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.3.

(e) Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof in accordance with the provisions of Section 11.6.

11.4 Entire Agreement; Amendments and Waivers. This Agreement (including the schedules and exhibits hereto) and the Transfer Documents represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements, understandings and negotiations, both written and oral, express or implied, between and among the parties with respect to the subject matter of this Agreement. No representation, warranty, promise, inducement or statement of intention has been made by either party that is not embodied in this Agreement or the other Transfer Documents, and neither party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement of intention not embodied herein or therein. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

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11.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State without giving effect to the choice of law principles of such State that would require or permit the application of the laws of another jurisdiction.

11.6 Notices. All notices and other communications pursuant to this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied, nationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the addresses set forth below or to such other address as the party to whom notice is to be given may have furnished to the other parties hereto in writing in accordance herewith. Any such notice or communication shall be deemed to have been delivered and received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of telecopier, on the date sent if confirmation of receipt is received and such notice is also promptly mailed by registered or certified mail (return receipt requested), (c) in the case of a nationally-recognized overnight courier in circumstances under which such courier guarantees next Business Day delivery, on the next Business Day after the date when sent and (d) in the case of mailing, on the third Business Day following that on which the piece of mail containing such communication is posted:

if to Seller:	Intel Corporation
	2200 Mission College Boulevard
	Santa Clara, CA 95054
	Telecopier: (408) 765-1859
	Attention: General Counsel
and:	Intel Corporation
	2200 Mission College Boulevard
	Santa Clara, CA 95054
	Telecopier: (408) 765-6038
	Attention: Treasurer
with a copy to:	Weil, Gotshal, Manges LLP
(which shall not constitute	201 Redwood Shores Parkway
notice)	Redwood Shores, California 94065
	Telecopier: (650) 802-3100
	Attention: Richard S. Millard
if to Purchaser:	Impinj, Inc.
	701 North 34th Street, Suite 300
	Seattle, WA 98103
	Telecopier: (206) 517-5262
	Attention: Vice President, Finance

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with a copy to:	Wilson Sonsini Goodrich & Rosati, P.C.
(which shall not constitute	701 Fifth Avenue, Suite 5100
notice)	Seattle, Washington 98104
	Telecopier: (206) 883-2699
	Attention: Patrick J. Schultheis

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

11.7 Notice of Change of Control. Commencing as of the first anniversary of the Closing Date and for so long as any Escrowed Shares remain in escrow pursuant to Section 3.3, then promptly upon the earliest of Purchaser’s approving or entering into any transaction constituting a Change of Control or an announcement by Purchaser or any other Person of a Change of Control of Purchaser, Purchaser shall give Seller written notice thereof, describing in reasonable detail the applicable Change of Control and identifying each “person” or, to the Knowledge of Person, “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) that is a party to such transaction or transactions.

11.8 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any Law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

11.9 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller or Purchaser, directly or indirectly (by operation of law or otherwise), without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void. No assignment of any obligations hereunder shall relieve the parties hereto of any such obligations. Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.

11.10 Third Party Beneficiaries. No provision of this Agreement shall create any third party beneficiary rights in any Person, including any employee or former employee of Seller or any Affiliate thereof (including any beneficiary or dependent thereof).

11.11 Specific Performance. The parties hereby acknowledge and agree that the breach of or failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to the consummation of the transactions contemplated herein, may cause irreparable injury to the other party, for which damages, even if available, may not be an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of

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such party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder.

11.12 No Presumption Against Drafting Party. Each of Purchaser and Seller acknowledges that it has participated jointly in the negotiation and drafting of this Agreement and the Transfer Documents and has been represented by counsel in connection therewith. Accordingly, each of Purchaser and Seller hereby acknowledges that this Agreement and each of the Transfer Documents shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any provision or this Agreement or of any Transfer Document, and any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement or any of the Transfer Documents against the drafting party has no application and is expressly waived.

11.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

[The Remainder of This Page Is Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date first written above.

“SELLER”
INTEL CORPORATION
By:	/s/ Ravi Jacob
	Name:	Ravi Jacob
	Title:	Vice President & Treasurer
“PURCHASER”
IMPINJ, INC.
By:	/s/ Evan Fein
	Name:	Evan Fein
	Title:	VP Finance

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

EX-2.2

Exhibit 2.2

LICENSE AGREEMENT

This License Agreement (“Agreement”) is entered into as of July 3, 2008 (“Effective Date”) by and between Impinj Inc., a Delaware corporation (“Purchaser”), and Intel Corporation, a Delaware corporation (“Seller”). Seller and Purchaser are sometimes referred to as the “Parties” and each individually as a “Party.”

WHEREAS, Seller and Purchaser have entered into an Asset Purchase Agreement dated as of the date hereof (the “Asset Purchase Agreement”), including certain Transfer Documents in connection therewith, pursuant to which Purchaser is to purchase certain specific assets of Seller; and

WHEREAS, Seller owns certain valuable Intellectual Property relevant to the assets that are the subject of the Asset Purchase Agreement; and

WHEREAS, Seller and Purchaser wish to enter into this Agreement with respect to certain of such Intellectual Property in certain products.

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PREMISES CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS

1.1 Definitions. Capitalized terms used in this Agreement shall have the respective meanings ascribed to such terms in Appendix A to this Agreement. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Asset Purchase Agreement.

Defined Terms Generally. The definitions set forth in Appendix A or otherwise referred to in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. References to a Person are also to its permitted successors and assigns. All references herein to Articles, Sections, Exhibits, Appendices and Schedules shall be deemed to be references to Articles and Sections of, and Exhibits, Appendices and Schedules to, this Agreement unless the context shall otherwise require. Unless the context shall otherwise require, any reference to any contract, instrument, statute, rule or regulation is a reference to it as amended and supplemented from time to time (and, in the case of a statute, rule or regulation, to any successor provision). Any reference in this Agreement to a “day” or a number of “days” (without the explicit qualification of “Business”) shall be interpreted as a reference to a calendar day or number of calendar days. If any action is to be taken by any Party hereto pursuant to this Agreement on a day that is not a Business Day, such action shall be taken on the next Business Day following such day.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

CONFIDENTIAL

ARTICLE II

PURCHASER LICENSE RIGHTS

2.1 License to Seller Licensed Patents. Subject to all terms and conditions of this Agreement (including Article V hereof), Seller hereby grants to Purchaser a non-exclusive, perpetual, non-transferable (except as provided in Section 8.2 hereof), non-assignable (except as provided in Section 8.2 hereof), royalty-free, fully paid-up, worldwide, irrevocable (except as provided in Article V hereof) license (without the right to sublicense), under only the Licensed Claims of the Seller Licensed Patents, to:

(a) make, have made, use, sell, offer for sale, import and export, in each case through all levels of manufacturing and distribution channels for the Licensed Products, the Licensed Products; and

(b) practice or have practiced any method or process for the manufacture of the Licensed Products.

For purposes of clarity, (i) the provisions of this Article II are not intended to restrict or expand any right an end user may have to use a Licensed Product manufactured and sold during the Term of this Agreement in strict accordance with the license granted pursuant to this Section 2.1 and (ii) the incorporation of a Licensed Product into another device or the combination of a Licensed Product with any other item(s) shall not negate the license with respect to such Licensed Product, but no license or immunity is granted by Seller under this Agreement directly or by implication, estoppel or otherwise for such device or such combination or the use of such device or such combination.

2.2 Clarification Regarding Patent Laundering. The Parties understand, acknowledge and agree that the Patent license granted by Seller to Purchaser under Section 2.1 above is intended to cover only products of Purchaser that meet the definition of Licensed Products and is not intended to cover any manufacturing activities that Purchaser may undertake on behalf of any third parties (i.e., Patent laundering activities). A product shall not be considered to be a Licensed Product unless such product is manufactured by or on behalf of Purchaser in strict accordance with the license granted by Seller to Purchaser pursuant to Section 2.1 above and sold by Purchaser (either directly or through Purchaser’s distribution channels) as Purchaser’s own product and under Purchaser’s Mark(s) (or, solely as set forth in, and subject to, the Transition Services Agreement between Seller and Purchaser, dated of even date herewith (the “Transition Services Agreement”), Seller’s Mark(s)), and otherwise complies with this Section 2.2 and the other terms and conditions of this Agreement. Similarly, the Patent license granted by Seller to Purchaser under Section 2.1 above is not intended to cover any services provided by Purchaser to the extent that such services are provided to or on behalf of any third party using tangible or intangible materials provided by or on behalf of any third party. Accordingly, by way of clarification, the following non-exhaustive general guidelines are provided to aid the determination of whether a product or portion thereof is a Licensed Product or whether such product or portion thereof is disqualified from being a Licensed Product because circumstances surrounding the manufacture of the product suggest Patent laundering.

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(a) Any products, components or modules that otherwise meet the definition of Licensed Products are disqualified as Licensed Products if such products, components or modules are manufactured on behalf of any third party from designs received in a substantially completed form from any third party for resale to or on behalf of any third party.

(b) Any products, components or modules of Purchaser that otherwise meet the definition of Licensed Products are not disqualified as Licensed Products under the prohibition against Patent laundering set forth in this Section 2.2 if:

(i) Purchaser owns the design of and is under no obligation that restricts the sale of such products, components or modules; or

(ii) Purchaser has an unrestricted license right to the design of such products, components or modules.

2.3 License to Seller Licensed Trade Secrets. Subject to all terms and conditions of this Agreement, Seller hereby grants to Purchaser a non-exclusive, perpetual, irrevocable, worldwide, non-transferable (except as provided in Section 8.2 hereof), non-assignable (except as provided in Section 8.2 hereof), royalty-free, fully paid-up license (without the right to sublicense), under the Seller Licensed Trade Secrets, to use the Seller Licensed Trade Secrets solely within the Field of Use. Purchaser shall maintain in confidence all Seller Licensed Trade Secrets as the Confidential Information of Seller in accordance with the Non-disclosure Agreement. Without limiting the generality of the foregoing in this Section 2.3 or the terms and conditions of the Non-disclosure Agreement, Purchaser shall have no right to disclose to any third party any Seller Licensed Trade Secrets, except as reasonably necessary, and solely to the extent reasonably necessary, in connection with the manufacture, sale, offering for sale, import, export or other disposition of Licensed Products in accordance with the license granted by Seller to Buyer under Section 2.1 above; provided that any such third party has agreed in writing to maintain the confidentiality of the Seller Licensed Trade Secrets pursuant to a confidentiality agreement that is no less restrictive than the confidentiality requirements of the Non-disclosure Agreement.

2.4 Use of Seller Marks. Any use by Purchaser of the Marks of Seller shall be in accordance with and subject to the terms and conditions of the Transition Services Agreement.

2.5 Restrictions on Seller. Except as set forth in the Transition Services Agreement and except as provided in Section 3.2 herein, for a period of *** years after the Effective Date, Seller agrees not to (a) make, have made, sell, license or otherwise provide to any third party the Products or any products derived from and substantially identical to the Products, or (b) sell, license or otherwise provide to any third party the Restricted Documents.

ARTICLE III

SELLER LICENSE RIGHTS

3.1 Transfer of Technical Information. Seller agrees to convey, transfer and assign to Purchaser all right, title, and interest, subject to the license rights granted back to Seller pursuant

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

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to Section 3.2 herein, that Seller may have in the documents and other tangible materials and things set forth on Exhibit A to the Asset Purchase Agreement (“Technical Information”) pursuant to an operative transfer provision in the Asset Purchase Agreement (and/or an instrument of assignment attached thereto). Notwithstanding the foregoing in this Section 3.1, Seller may retain copies of the Technical Information, subject to the license rights granted back to Seller pursuant to Section 3.2 herein. Seller shall maintain in confidence the Technical Information as the Confidential Information of Purchaser in accordance with the terms of the Non-disclosure Agreement.

3.2 License Back to Seller. Purchaser hereby grants to Seller a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, fully paid-up license (without the right to sublicense), under any Intellectual Property or other rights in or to the Technical Information transferred to Purchaser as set forth in Section 3.1 above, to use, reproduce, modify, adapt, create derivative works of, perform, display and otherwise exploit the Technical Information in and in connection with any Seller Products solely outside the Field of Use, and to make, have made, use, sell, offer to sell, import, export and otherwise exploit any such Seller Products. Seller has the right to disclose the Technical Information to third parties for the purpose of the manufacture, sale, offering for sale, import, export or other disposition of Seller Products solely outside the Field of Use in accordance with the license rights granted by Purchaser to Seller under this Section 3.2; provided that any such third party has agreed in writing to maintain the confidentiality of the Technical Information pursuant to a confidentiality agreement that is no less restrictive than the confidentiality requirements of the Non-disclosure Agreement.

3.3 Purchaser Covenant Not to Sue.

(a) From and after the Closing Date, Purchaser hereby covenants and agrees, subject to the terms and conditions of this Agreement (including Section 3.3(b) below), the Asset Purchase Agreement and the Transfer Documents, on behalf of itself and its Affiliates and Purchaser’s and its Affiliates’ respective officers, directors, employees and agents, or any of them in their respective capacity as such, that none of them will Assert (whether in law or in equity) against any Covered Seller Party any claim that the manufacture, use, import, export, offer for sale, sale, distribution or other exploitation of any Seller Product or any process or method employed in the manufacture, testing, distribution, use or other exploitation of any Seller Product infringes, directly or indirectly, any Purchaser Patent (the foregoing covenant, the “Purchaser Covenant”).

(b) (i) If Seller or any of its Affiliates makes a Prohibited Claim against a Covered Purchaser Party, Purchaser shall deliver to Seller a written notice of termination of the Purchaser Covenant. If Seller or its Affiliate, as applicable, fails to dismiss or have dismissed such Prohibited Claim with prejudice within thirty (30) days after Seller’s receipt of such termination notice, the Purchaser Covenant shall terminate and be null and void at the end of such thirty (30) day period with respect to all Covered Seller Parties, without giving rise in and of itself to any right of Seller pursuant to Section 5.3 herein to terminate the Patent license granted by Seller to Purchaser under Section 2.1 above; provided that Purchaser (on behalf of itself and each of its Affiliates) waives any claims, damages or liability with respect to any

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activities of any Covered Seller Parties within the scope of the Purchaser Covenant prior to the date of such termination of the Purchaser Covenant.

(ii) If a Covered Seller Party that is not Seller, an Affiliate of Seller or a Seller Indemnified Party makes a Prohibited Claim against a Covered Purchaser Party, Purchaser shall deliver to Seller and such Covered Seller Party a written notice of termination of the Purchaser Covenant only with respect to such Covered Seller Party. If such a Covered Seller Party fails to dismiss or have dismissed such Prohibited Claim with prejudice within thirty (30) days after such Covered Seller Party’s receipt of such termination notice, the Purchaser Covenant shall terminate and be null and void at the end of such thirty (30) day period with respect only to such Covered Seller Party, without giving rise in and of itself to any right of Seller pursuant to Section 5.3 herein to terminate the Patent license granted by Seller to Purchaser under Section 2.1 above; provided that Purchaser (on behalf of itself and each of its Affiliates) waives any claims, damages or liability with respect to any activities of such Covered Seller Party within the scope of the Purchaser Covenant prior to the date of such termination of such Purchaser Covenant.

(iii) For purposes of this Section 3.3(b), “Prohibited Claim” means an Assertion by a Covered Seller Party against a Covered Purchaser Party of a claim that the manufacture, use, import, export, offer for sale, sale, distribution or other exploitation of any product or any process or method employed in the manufacture, testing, distribution, use or other exploitation thereof, in each of the foregoing cases in the Field of Use, infringes, directly or indirectly, any Patent of such Covered Seller Party.

(iv) For purposes of this Section 3.3(b), “Seller Indemnified Party” means any Covered Seller Party to whom Seller or any of its Affiliates have, as of the Effective Date, an obligation to indemnify in the event Purchaser Asserts against such Covered Seller Party any claim that the manufacture, use, import, export, offer for sale, sale, distribution or other exploitation of any Seller Product or any process or method employed in the manufacture, testing, distribution, use or other exploitation of any Seller Product infringes, directly or indirectly, any Purchaser Patent.

(c) In the event that Purchaser or any of its Affiliates (or any Purchaser Patent Successor) intends to sell, assign, transfer or convey (expressly or by operation of law or otherwise), or exclusively license or grant or convey any right to enforce or Assert, or otherwise dispose of any Purchaser Patent (“Purchaser Patent Sale”) to any third party, then, prior to such Purchaser Patent Sale, Purchaser (or such Purchaser Patent Successor) agrees to cause any such third party to grant a covenant not to sue with respect to such Purchaser Patent(s) in writing of the same scope and having all of the same terms as the covenant not to sue granted by Purchaser to Seller and the Covered Seller Parties in Section 3.3(a) above. In the event Purchaser (or such Purchaser Patent Successor) is unable to cause any such third party to comply in full with the foregoing sentence prior to any such Purchaser Patent Sale, then, effective immediately prior to the closing of such Purchaser Patent Sale, Purchaser (or such Purchaser Patent Successor) agrees to grant and does hereby grant to Seller and its Affiliates a perpetual, irrevocable, non-exclusive, royalty-free, non-assignable (except as provided in Section 8.2 hereof), sublicensable,

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non-transferable (except as provided in Section 8.2 hereof), worldwide license (the rights of which shall extend and apply to Seller’s and its Affiliates’ direct and indirect suppliers, distributors and customers), solely under the Purchaser Patent(s) that is or are the subject of such Purchaser Patent Sale, to:

(i) make, have made, use, sell, offer to sell, import, export and otherwise exploit and dispose of, in each case through all levels of manufacturing and distribution channels for Seller Products, all Seller Products; and

(ii) practice or have practiced any method or process for the manufacture, testing, distribution, use or other exploitation or other disposition of Seller Products;

and such Purchaser Patent Sale of such Purchaser Patent(s) shall be deemed subject to such license to Seller and its Affiliates, and the third party to which such Purchaser Patent Sale is made shall simultaneously assume such license in writing. Any such Purchaser Patent Sale without such written assumption of the foregoing license by such third party shall be null and void ab-initio and of no force or effect. For the avoidance of doubt, this Section 3.3 applies only to Purchaser Patents and does not extend or purport to extend to any Patent of any third party or its Affiliates other than any Purchaser Patent owned by such third party or its Affiliates as a result of a Purchaser Patent Sale. For the purposes of this Section 3.3, “Purchaser Patent Successor” shall mean any Person to which a Purchaser Patent is sold, assigned, transferred, conveyed or otherwise disposed of, or that is granted or conveyed an exclusive license or any right to enforce or Assert a Purchaser Patent.

ARTICLE IV

NO OTHER RIGHTS

4.1 No Other Rights. No other rights are granted or licensed by either Party to the other Party under this Agreement, by implication, estoppel, statute or otherwise, except as expressly provided in Article II and Article III of this Agreement. Without limiting the generality of the foregoing, (a) nothing in the licenses granted in Article II above shall expressly or by implication, estoppel or otherwise give Purchaser any right to license or sublicense any of the Seller Licensed Patents to any third party, and (b) nothing in this Agreement grants or otherwise provides Purchaser with any rights whatsoever under any claims of any Patent other than the Licensed Claims of the Seller Licensed Patents.

4.2 No Delivery or Support. Nothing in this Agreement shall be construed to require any delivery of any physical devices, software, source code, object code or other items by one Party to the other Party, or to require any support obligations whatsoever on the part of Seller with respect to any physical devices, software, source code, object code or other items; to the extent the Parties have agreed upon provisions related to such delivery or such support obligations, such provisions are contained in the Asset Purchase Agreement or another Transfer Document, and are not a part of this Agreement.

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4.3 No Third Party Rights. Notwithstanding any provision of this Agreement to the contrary, the Parties acknowledge and agree that Seller is not transferring to Purchaser hereunder, or purporting to transfer to Purchaser hereunder, ownership of any Intellectual Property rights that are owned by any third party. Notwithstanding any provision of this Agreement to the contrary, the Parties acknowledge and agree that Seller is not licensing to Purchaser hereunder, or purporting to license to Purchaser hereunder (or granting any other rights to Purchaser hereunder with respect to, or purporting to grant any other rights to Purchaser hereunder with respect to) any Intellectual Property rights that are owned by any third party.

4.4 Ownership of Seller Licensed Patents and Seller Licensed Trade Secrets. As between the Parties, and subject only to the licenses granted by Seller to Purchaser under Article II above, Seller retains and owns all right, title and interest in and to the Seller Licensed Patents and the Seller Licensed Trade Secrets.

ARTICLE V

EFFECTIVE DATE, TERM AND TERMINATION

5.1 Term. This Agreement and the rights and licenses granted hereunder shall become effective on the Effective Date. Subject to the survival provisions of Section 5.4 hereof, this Agreement shall continue in effect unless and until terminated pursuant to Section 5.2 or Section 5.3 hereof (the “Term”).

5.2 Termination.

(a) Bankruptcy or Insolvency. Subject to the survival provisions of Section 5.4 hereof, this Agreement shall automatically terminate upon the occurrence of any of the following events:

(i) any adjudication that a Party is bankrupt or insolvent;

(ii) the filing by a Party of a petition in bankruptcy or insolvency, any petition or answer seeking reorganization, readjustment or arrangement of its business under any law relating to bankruptcy or insolvency;

(iii) the appointment of a trustee in bankruptcy for all or substantially all of the property of a Party; or

(iv) the making by a Party of any assignment for the benefit of creditors;

unless such Party continues as an operational entity and, in the case of Purchaser, continues to conduct its business related to the Licensed Products.

(b) Breach. Subject to the survival provisions of Section 5.4 hereof, Seller shall have the right to terminate this Agreement upon thirty (30) days prior written notice to

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Purchaser of the occurrence of any of the following events, if Purchaser does not cure its default within such time:

(i) Purchaser breaches its confidentiality obligations with respect to any Trade Secrets licensed to Purchaser as set forth under this Agreement and the Non-disclosure Agreement; or

(ii) Purchaser breaches Section 2.1, Section 2.2 and/or Section 3.3 hereof.

Prior to Seller’s providing of any such notice pursuant to this Section 5.2(b), the Parties shall attempt to resolve any dispute regarding Seller’s right to terminate this Agreement pursuant to this Section 5.2(b) in accordance with the terms of Section 8.10(a) hereof, provided that Seller may provide such notice immediately after the Parties meet with an impartial mediator as provided in Section 8.10(a) hereof if any disagreement remains after such meeting.

5.3 Termination Due to Proceedings.

(a) The Patent license that is granted to Purchaser under Section 2.1 above is subject to the ongoing condition, which condition is further subject to Section 5.3(b) hereof, that neither Purchaser nor any of its Affiliates shall Assert against any Covered Seller Party any claim that the manufacture, use, import, export, sale, offer for sale, distribution or other exploitation of any Seller Product or any process or method employed in the manufacture, testing, distribution, use or other exploitation of any Seller Product infringes, directly or indirectly, any Patent of Purchaser or any of Purchaser’s Affiliates. Upon any such Assertion by Purchaser or any of its Affiliates (except where Seller or an Affiliate of Seller has first Asserted or threatened in writing to Assert a Patent-related action against Purchaser or a Covered Purchaser Party), Seller shall deliver to Purchaser a written notice of termination of the Patent license granted by Seller under Section 2.1 above. If Purchaser fails to dismiss or have dismissed any such Assertion with prejudice within thirty (30) days after Purchaser’s receipt of such termination notice, the Patent license granted by Seller to Purchaser under Section 2.1 above shall immediately and automatically (without any action required by Seller) terminate at the end of such thirty (30) day period. For the avoidance of doubt, this Section 5.3(a) survives and remains applicable to Purchaser even after any Change of Control.

(b) Notwithstanding the foregoing provisions of Section 5.3(a) above, Seller may not terminate the Patent license granted by Seller to Purchaser under Section 2.1 above as a result of a counterclaim by Purchaser in a Patent infringement lawsuit initiated by Seller.

5.4 Survival. The provisions of Article I, Section 2.3, Section 3.1, Section 3.2, Section 3.3, Article IV, this Section 5.4, Article VI, Article VII and Article VIII will survive any termination of this Agreement.

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ARTICLE VI

DISCLAIMER

6.1 Disclaimer. Excepting only those representations and warranties, if any, that are expressly set forth in the Asset Purchase Agreement, and notwithstanding any provision of this Agreement, any Transfer Document or any other agreement to the contrary, Seller makes no warranty or representation to Purchaser with respect to any Intellectual Property rights. Nothing contained in this Agreement shall be construed as:

(a) a warranty or representation by Seller as to the validity, enforceability or scope of any Patent rights or other Intellectual Property rights; or

(b) a warranty or representation that any manufacture, sale, lease, use or other disposition or exploitation of any Licensed Products will be free from infringement or misappropriation of any Patent rights or other Intellectual Property rights of either Party or any third party; or

(c) (i) an agreement by or obligation of a Party that licensed to the other Party any Intellectual Property or Technology hereunder to bring or prosecute any actions or suits against any third parties for infringement or misappropriation of such Intellectual Property or Technology or to otherwise enforce such Intellectual Property or Technology against any third party, or (ii) conferring any right on a Party licensed under any Intellectual Property or Technology hereunder to bring or prosecute actions or suits against any third parties for infringement or misappropriation of such Intellectual Property or Technology or to otherwise enforce such Intellectual Property or Technology against any third party; or

(d) other than as specifically set forth in the Transition Services Agreement, conferring to either Party any right to use, in advertising, publicity or otherwise, any Mark of the other Party, or any contraction, abbreviation or simulation thereof, or any Mark confusingly similar thereto; or

(e) conferring, by implication, estoppel or otherwise, upon any Party licensed hereunder, any license or other right under any Patent, Copyright, Trade Secret, Mark or other Intellectual Property right except the licenses and rights expressly granted hereunder; or

(f) an obligation on Seller’s part to furnish any know-how to Buyer related to any Patents; or

(g) a requirement that either Party file any Patent application, secure any Patent, or maintain any Patent in force.

6.2 NO IMPLIED WARRANTIES. EXCEPT AS EXPLICITLY SET FORTH IN THE ACCOMPANYING ASSET PURCHASE AGREEMENT, SELLER LICENSES AND PROVIDES THE SELLER LICENSED PATENTS AND SELLER LICENSED TRADE SECRETS, AND PURCHASER LICENSES AND PROVIDES THE TECHNICAL INFORMATION, ON AN “AS IS” BASIS, AND EACH PARTY EXPRESSLY DISCLAIMS

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ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SAME, INCLUDING ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE VII

LIMITATION OF LIABILITY

7.1 NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE TO THE OTHER FOR ANY EXEMPLARY, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING COMPENSATION OR DAMAGES FOR LOSS OF PRESENT OR PROSPECTIVE PROFITS OR REVENUES, OR EXPENDITURES, INVESTMENTS OR COMMITMENTS MADE IN CONNECTION WITH THE ESTABLISHMENT OF THIS AGREEMENT, OR COST OF PROCUREMENT OF SUBSTITUTE INTELLECTUAL PROPERTY, TECHNOLOGY, PRODUCTS OR SERVICES; EVEN IF SUCH PARTY HAS BEEN ADVISED OF ANY SUCH DAMAGES AND REGARDLESS OF THE LEGAL THEORY ON WHICH SUCH DAMAGES MAY BE BASED; PROVIDED, HOWEVER, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE PARTIES HERETO ACKNOWLEDGE THAT PURCHASER SHALL BE ENTITLED TO RECOVER FOR LOSS OF PROFITS RESULTING FROM SELLER’S BREACH OF SECTION 2.5 HEREOF.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

8.1 Authority. Each of the Parties hereto represents and warrants that it has the right to enter into this Agreement and perform all of its obligations hereunder.

8.2 No Assignment. This Agreement is personal to the Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller or Purchaser, directly or indirectly (by operation of law or otherwise), without the prior written consent of the other Party hereto and any attempted assignment without the required consents shall be void, except that either Party may assign this Agreement or any of its rights, interests or obligations hereunder as part of the sale or transfer of all or substantially all of the assets or stock of such Party or the business of such Party to which this Agreement relates. No assignment of this Agreement or any obligations hereunder shall relieve the Parties hereto of any such obligations. Upon any such permitted assignment, the references in this Agreement to Purchaser or Seller shall also apply to any such assignee of Purchaser or Seller, respectively, unless the context otherwise requires.

8.3 Notice of Change of Control. Promptly upon the earlier of a Party’s approving or entering into any transaction constituting a Change of Control or an announcement by such Party or any other Person of a Change of Control of such Party, such Party shall give the other Party written notice thereof, describing in reasonable detail the applicable Change of Control and identifying each Person that is a party to such transaction or transactions.

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8.4 Notices. All notices and other communications pursuant to this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied, nationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the Parties at the addresses set forth below or to such other address as the Party to whom notice is to be given may have furnished to the other Party hereto in writing in accordance herewith. Any such notice or communication shall be deemed to have been delivered and received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of telecopier, on the date sent if confirmation of receipt is received and such notice is also promptly mailed by registered or certified mail (return receipt requested), (c) in the case of a nationally-recognized overnight courier in circumstances under which such courier guarantees next Business Day delivery, on the next Business Day after the date when sent and (d) in the case of mailing, on the third Business Day following that on which the piece of mail containing such communication is posted:

if to Seller:	Intel Corporation 2200 Mission College Boulevard Santa Clara, CA 95054 Telecopier: (408) 765-1859 Attention: General Counsel
and:	Intel Corporation 2200 Mission College Boulevard Santa Clara, CA 95054 Telecopier: (408) 765-6038 Attention: Treasurer
with a copy to: (which shall not constitute notice)	Weil, Gotshal, Manges LLP 201 Redwood Shores Parkway Redwood Shores, California 94065 Telecopier: (650) 802-3100 Attention: Richard S. Millard
if to Purchaser:	Impinj Inc. 701 North 34th Street, Suite 300 Seattle, WA 98103 Telecopier: (206) 517-5262 Attention: Vice President, Finance
with a copy to: (which shall not constitute notice)	Wilson Sonsini Goodrich & Rosati, P.C. 701 Fifth Avenue, Suite 5100 Seattle, Washington 98104 Telecopier: (206) 883-2699 Attention: Patrick J. Schultheis

11

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

8.5 No Presumption Against Drafting Party. Each of Purchaser and Seller acknowledges that it has participated jointly in the negotiation and drafting of this Agreement and has been represented by counsel in connection therewith. Accordingly, each of Purchaser and Seller hereby acknowledges that this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship of any provision or this Agreement, and any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting Party has no application and is expressly waived.

8.6 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any Law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

8.7 Taxes and Expenses. Except as otherwise provided in the Asset Purchase Agreement, all costs and expenses (including any Taxes as defined in the Asset Purchase Agreement) incurred in connection with this Agreement and in closing and carrying out the transactions contemplated hereby and thereby shall be paid by the Party incurring such cost or expense.

8.8 Entire Agreement; Amendments and Waivers. This Agreement (including the Schedules, Exhibits and Appendices hereto), the Asset Purchase Agreement and the other Transfer Documents represent the entire understanding and agreement between the Parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements, understandings and negotiations, both written and oral, express or implied, between and among the Parties with respect to the subject matter of this Agreement. No representation, warranty, promise, inducement or statement of intention has been made by either Party that is not embodied in this Agreement, the Asset Purchase Agreement or the other Transfer Documents, and neither Party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement of intention not embodied herein or therein. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by both Parties. No action taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No

12

failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. In addition, the provisions of Section 5.3 of this Agreement will not be triggered by the initiation of an action by either Party for contractual breach of one or more of this Agreement, the Asset Purchase Agreement, the other Transfer Documents or the Non-disclosure Agreement.

8.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State without giving effect to the choice of law principles of such State that would require or permit the application of the laws of another jurisdiction.

8.10 Dispute Resolution; Submission to Jurisdiction; Consent to Service of Process.

(a) All disputes arising directly under this Agreement or the grounds for termination thereof shall be resolved as follows: The senior management of both Parties shall meet to attempt to resolve any such dispute. If the dispute cannot be resolved by the senior management, either Party may make a written demand for formal dispute resolution and specify therein the scope of the dispute. Within thirty (30) days after such written notification, the Parties agree to meet for one day with an impartial mediator and consider dispute resolution alternatives other than litigation. If an alternative method of dispute resolution is not agreed upon within thirty (30) days after the one-day mediation, either Party may begin litigation proceedings.

(b) Notwithstanding the provisions of Section 8.10(a), each Party shall have the right, without the requirement of first seeking a remedy through any dispute resolution alternative (including arbitration) that has been agreed upon, to seek preliminary injunctive or other equitable relief in any proper court in the event that such Party determines that eventual redress through the dispute resolution alternative will not provide a sufficient remedy for any violation of this Agreement by the other Party.

(c) The Parties hereby irrevocably submit to the jurisdiction of the courts of the State of California and the Federal courts of the United States of America, in each case located in the County of Santa Clara, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. The Parties hereby consent to and grant any such court jurisdiction over the person of such Parties and over the subject matter of such dispute.

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(d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10.

(e) Each of the Parties hereby consents to process being served by any Party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof in accordance with the provisions of Section 8.4.

8.11 Specific Performance. The Parties hereby acknowledge and agree that the breach of or failure of any Party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to the consummation of the transactions contemplated herein, may cause irreparable injury to the other Party, for which damages, even if available, may not be an adequate remedy. Accordingly, each Party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of such Party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder.

8.12 Confidentiality of Terms. The terms of this Agreement shall be expressly subject to the confidentiality requirements of the Asset Purchase Agreement and the Non-disclosure Agreement.

8.13 Compliance with Laws. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the Parties hereto and of the Affiliates of the Parties shall be subject to all laws, present and future, of any government having jurisdiction over the Parties hereto or the Affiliates of the Parties, and to orders, regulations, directions or requests of any such government.

8.14 Force Majeure. The Parties hereto shall be excused from any failure to perform any obligation hereunder to the extent such failure is caused by war, acts of public enemies, strikes or other labor disturbances, fires, floods, acts of God, or any causes of like or different kind beyond the control of the Parties.

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8.15 Third Party Beneficiaries. No provision of this Agreement shall create any third party beneficiary rights in any Person, including any employee or former employee of Seller or any Affiliate thereof (including any beneficiary or dependent thereof).

8.16 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

8.17 Headings. The headings in this Agreement are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.

INTEL CORPORATION		IMPINJ INC.
By:	/s/ Ravi Jacob	By:	/s/ Evan Fein
Name:	Ravi Jacob	Name:	Evan Fein
Title:	Vice President & Treasurer	Title:	VP Finance

[SIGNATURE PAGE TO LICENSE AGREEMENT

BETWEEN INTEL CORPORATION AND IMPINJ, INC.]

Schedule A

RFID Patents of a Purchaser

US APPLICATION FILED AND PENDING — RFID

Item No.	Filed regular - formal title	Filed regular - serial number	Filed regular (non provisional) (date)
1	RFID Tag Systems, RFID Tags and RFID Processes Using N-ary FSK	11/090,961	3/25/2005
2	RFID Tag Systems, RFID Tags and RFID Processes With Branch Node Indexing	11/090,899	3/25/2005
3	RFID TAG UNCOUPLING ONE OF ITS ANTENNA PORTS AND METHODS	10/891,894	7/14/2004
4	INTERFERENCE CANCELLATION IN RFID SYSTEMS	10/981,893	11/5/2004
5	DECODING WITH MEMORY IN RFID SYSTEM	10/861,073	6/4/2004
6	RFID READERS TRANSMITTING PREAMBLES DENOTING DATA RATE AND METHODS	10/890,662	7/13/2004
7	RFID READERS TRANSMITTING PREAMBLES DENOTING COMMUNICATION PARAMETERS AND RFID TAGS INTERPRETING THE SAME AND METHODS	10/890,976	7/13/2004
8	RFID JOINT ACQUISITION OF TIME SYNC AND TIMEBASE	11/136,948	5/24/2005
9	METHOD AND SYSTEM TO CALIBRATE AN OSCILLATOR WITHIN AN RFID CIRCUIT UTILIZING A TEST SIGNAL SUPPLIED TO THE RFID CIRCUIT	10/824,071	4/13/2004
10	On Die RFID Tag Antenna	11/069,005	2/28/2005
11	RFID TAG CIRCUITS OPERABLE AT DIFFERENT SPEEDS	11/707,509	2/15/2007
12	Radio Frequency Identification Tag Antenna Assembly	29/220,504	12/30/2004
13	Conductor For Radio Identification Tag Antenna Assembly	29/220,496	12/30/2004
14	RFID SYSTEM COMPONENTS IMPLEMENTING ADJUSTED BACKSCATTER CALCULATIONS AND METHODS	11/114,614	4/25/2005
15	SELECTING RFID TAGS USING MEMORY-MAPPED PARAMETERS	11/217,616	8/31/2005
16	RFID TAGS WITH POWER RECTIFIERS THAT HAVE BIAS	11/236,709	9/26/2005
17	On Wafer Testing of RFID Tag Circuit With Pseudo Antenna Signal	11/325,988	1/4/2006
18	INVENTORYING RFID TAGS BY EMPLOYING A QUERY PARAMETER Q THAT IS ADJUSTED FOR IMPROVING	11/210,384	8/24/2005
19	CHANGING MANNER OF DETERMINING A QUERY PARAMETER Q USED FOR INVENTORYING RFID TAGS	11/210,575	8/24/2005
20	PREVENTING COMMUNICATION CONFLICT WITH OTHER RFID READERS	11/195,468	8/1/2005
21	ERROR RECOVERY IN RFID READER SYSTEMS	11/388,235	3/22/2006
22	RFID TAG USING UPDATABLE SEED VALUES FOR GENERATING A RANDOM NUMBER	11/251,122	10/13/2005
23	RFID TAG WITH RANDOM NUMBER GENERATOR HAVING A NOISE- BASED INPUT	11/355,665	2/15/2006
24	STORING AND RETRIEVING A QUERY PARAMETER Q USED FOR INVENTORYING RFID TAGS	11/210,418	8/24/2005
25	INVENTORYING RFID TAGS BY EMPLOYING A QUERY PARAMETER Q THAT CONVERGES HEURISTICALLY	11/210,573	8/24/2005
26	INTERFERENCE REJECTION IN RFID TAGS	11/386,177	3/22/2006
27	ADJUSTING RFID WAVEFORM SHAPE IN VIEW OF DETECTED RF ENERGY	11/412,170	4/25/2006
28	RFID TAGS HAVING A RECTIFIER CIRCUIT INCLUDING A DUAL- TERMINAL RECTIFIER DEVICE	11/484,523	7/10/2006
29	AUTOMATIC ON-DIE DEFECT ISOLATION	11/336,161	1/20/2006
30	RFID TAG SWITCHED CAPACITOR SLICER THRESHOLD	11/340,033	1/26/2006
31	ADAPTIVELY ADJUSTING A QUERY PARAMETER Q USED FOR INVENTORYING RFID TAGS	11/210,422	8/24/2005
32	LOCAL PROCESSING OF RECEIVED RFID TAG RESPONSES	11/472,179	6/20/2006
33	CIRCUITS FOR RFID TAGS WITH MULTIPLE NON-INDEPENDENTLY DRIVEN RF PORTS	11/213,631	8/26/2005
34	RFID TAGS COMBINING SIGNALS RECEIVED FROM MULTIPLE RF PORTS	11/213,632	8/26/2005
35	RACE FLAG FEATURE FOR RADIO FREQUENCY IDENTIFICATION TAG ANTENNA LAYOUT	29/239,503	9/30/2005
36	RFID TAG CIRCUITS USING RING FET	11/489,019	7/18/2006

37	HANDLING LEGITIMATE AND UNAUTHORIZED ITEMS IN SUPPLY CHAIN ACCORDING TO AUTHENTICATION OF THEIR RFID TAGS	11/637,372	12/11/2006
38	RFID READER SYSTEMS AIDED BY RF POWER MEASUREMENT	11/622,066	1/11/2007
39	RFID Reader Systems Detecting Pilot Tone	11/622,092	1/11/2007
40	Discontinuous-Loop RFID Reader Antenna and Methods	11/623,403	1/16/2007
41	RFID TAGS CIRCUITS AND METHODS FOR SENSING OWN POWER TO PREDETERMINE FEASIBILITY OF REQUESTED ACTION	11/624,197	1/17/2007
42	ADJUSTING RFID WAVEFORM SHAPE IN VIEW OF SIGNAL FROM ANOTHER READER	11/412,192	4/25/2006
43	ADJUSTING RFID WAVEFORM SHAPE IN VIEW OF SIGNAL FROM AN RFID TAG	11/411,657	4/25/2006
44	PERFORMANCE DRIVEN ADJUSTMENT OF RFID WAVEFORM SHAPE	11/412,172	4/25/2006
45	RECONSTRUCTING RFID WAVEFORM SHAPE FOR REUSE IN INDIVIDUAL CHANNEL	11/412,171	4/25/2006
46	SECURE TWO-WAY RFID COMMUNICATIONS	11/356,885	2/17/2006
47	SEMI-STATIC FLIP-FLOPS FOR RFID TAGS	11/490,671	7/20/2006
48	Adaptable Detection Threshold for RFID Tags and Chips	11/670,587	2/2/2007
49	RFID Reader Systems with Digital Rate Conversion	11/622,140	1/11/2007
50	AHEAD-OF-TIME SCHEDULING OF COMMANDS IN RFID READER SYSTEMS	11/509,290	8/23/2006
51	PREVENTING TIMEOUT OF RFID TAG IN TIMED STATE OF AIR- INTERFACE PROTOCOL	11/503,420	8/11/2006
52	INTEGRATED CIRCUIT TEST RESULT COMMUNICATION	11/470,526	9/6/2006
53	RADIO-FREQUENCY IDENTIFICATION TAG WITH OSCILLATOR CALIBRATION	11/460,200	7/26/2006
54	MULTIPLE RF-PORT MODULATOR FOR RFID TAG	11/712,759	2/28/2007
55	RFID TAG TRAVEL DIRECTION DETERMINATION	11/818,810	6/14/2007
56	RFID ANTENNA MODULES AND METHODS THEREOF	11/807,114	5/25/2007
57	RFID READER SYSTEMS WITH DOUBLE CONVERSION AND METHODS	11/742,650	5/1/2007
58	RFID TAG CIRCUITS TAGS AND METHODS FOR BACKSCATTERING WITH CONTROLLABLE ADMITTANCE	11/765,552	6/20/2007
59	Disabling Poorly Testing RFID ICS	11/519,507	9/11/2006
60	RFID READERS AND SYSTEMS WITH ANTENNA SWITCHING UPON TAG SENSING, AND METHODS	11/749,235	5/16/2007
61	RFID READERS AND SYSTEMS INITIALIZING AFTER FREQUENCY HOP AND METHODS	11/774,285	7/6/2007
62	RFID READER LOW DUTY CYCLE MODE	11/770,987	6/29/2007
63	RFID READERS AND SYSTEMS PERFORMING PARTIAL OPERATION PER ANTENNA AND METHODS	11/769,444	6/27/2007
64	AUTOMATED RFID READER FIRMWARE UPGRADE SYSTEM	11/789959	4/25/2007
65	RFID TAG CHIPS AND TAGS ABLE TO BE PARTIALLY KILLED AND METHODS	11/852,439	9/10/2007
66	RFID TAG CHIPS AND TAGS WITH ALTERNATIVE MEMORY LOCK BITS AND METHODS	11/872,774	10/16/2007
67	RFID TAG CHIPS AND TAGS ARRANGING PROTOCOL-RELATED BIT AND LOCK BIT IN SINGLE NVM MEMORY WORD AND METHODS	11/877,054	10/23/2007
68	Determining Authentication of RFID Tags for Indicating Legitimacy of Their Associated Items	11/637,479	12/11/2006
69	Reporting on Authentication of RFID Tags for Indicating Legitimacy of Their Associated Items	11/637,255	12/11/2006
70	RFID READERS AND SYSTEMS INITIALIZING AFTER ANTENNA SWITCH AND METHODS	11/774,338	7/6/2007
71	RFID Reader Q-Parameter Aided by RF Power Measurement	11/622,686	1/12/2007
72	DECODING WITH MEMORY IN RFID SYSTEM	11/717,477	3/12/2007
73	RFID TAGS WITH SUBSTANTIALLY SIMILAR POWER CONSUMPTION WHEN CHECKING INCOMING PASSWORD BITS	11/707,728	2/16/2007
74	MASKING RFID TAG POWER CONSUMPTION WHEN CHECKING INCOMING PASSWORD BITS	11/707,793	2/16/2007
75	Radio Frequency Identification Tag Antenna Assembly	29/285,843	4/11/2007
76	RFID READERS AND SYSTEMS WITH ANTENNA SWITCHING UPON DETECTING TOO FEW TAGS AND METHODS	11/749,281	5/16/2007
77	RFID TAGS COMBINING SIGNALS RECEIVED FROM MULTIPLE RF PORTS	11/803,995	5/15/2007
78	RFID TAG CIRCUIT DIE WITH SHIELDING LAYER TO CONTROL I/O BUMP FLOW	11/891,391	8/10/2007

79	DEVICES AND METHODS FOR GENERATING REFERENCE CURRENT HAVING LOW TEMPERATURE COEFFICIENT DEPENDENCE	11/981,396	10/30/2007
80	RFID READER DEVICES AND METHODS THEREOF	11/807,115	5/25/2007
81	RFID READER SYSTEMS AND METHODS OF ASSEMBLY	11/807,118	5/25/2007
82	RFID TAGS WITH LONG RANGE ON-CHIP ANTENNAS AND METHODS OF MAKING	11/823,193	6/26/2007
83	RFID READERS SYSTEMS AND METHODS FOR EARLY HOPPING OUT OF A FREQUENCY CHANNEL IN THE PRESENCE OF RF INTERFERENCE	11/849,737	9/4/2007
84	ETCH BEFORE GRIND FOR SEMICONDUCTOR DIE SINGULATION	11/891,392	8/9/2007
85	RFID TAG CHIPS AND TAGS REFRAINING FROM PARTICIPATING IN A SUBSEQUENT INVENTORYING ATTEMPT AND METHODS	12/057,467	3/28/2008
86	SOFTWARE FOR EXPOSING MULTIPLE RFID READER APPLICATION PROGRAMMING INTERFACES	11/ 923,774	10/25/2007
87	DEVICES, SYSTEMS AND METHODS FOR GENERATING REFERENCE CURRENT FROM VOLTAGE DIFFERENTIAL HAVING LOW TEMPERATURE COEFFICIENT	11/981,387	10/30/2007
88	RFID READERS SYSTEMS AND METHODS FOR HOPPING AWAY FROM A FREQUENCY CHANNEL WITH RF INTERFERENCE	11/849,804	9/4/2007
89	RFID-EQUIPPED STATIONS FOR HANDLING PASSING TAGGED ITEMS AND METHODS	11/949,124	12/3/2007
90	RFID TAGS WITH SYNCHRONOUS POWER RECTIFIER	12/042,117	3/4/2008
91	RFID TAG WITH DOUBLE -SWITCH RECTIFIER	12/042,141	3/4/2008
92	EXTENDING AN RFID READER API	11/959,592	12/19/2007
93	RFID TAG CHIPS AND TAGS CAPABLE OF BACKSCATTERING MORE CODES AND METHODS	12/112,699	4/30/2008
94	BROKEN-LOOP RFID READER ANTENNA FOR NEAR FIELD AND FAR FIELD UHF RFID TAGS	29/303,658	2/14/2008
95	BROKEN-LOOP RFID READER ANTENNA FOR NEAR FIELD AND FAR FIELD UHF RFID TAGS	29/303,663	2/14/2008
96	METHODS FOR EXPOSING MULTIPLE RFID READER APPLICATION PROGRAMMING INTERFACES	11/923,968	10/25/2007
97	DISCRIMINATING BETWEEN RFID TAG CODES READ INTENTIONALLY AND UNINTENTIONALLY	11/949,218	12/3/2007
98	READING CODES OF RFID TAGS INCOMING AT PREMISES AND REMOVING THEM LATER AS THEY EXIT	12/018,937	1/24/2008
99	RFID TAG CHIPS AND TAGS COMPLYING WITH ONLY A LIMITED NUMBER OF REMAINING COMMANDS, AND METHODS	12/035,379	2/21/2008
100	CAUSING RFID TAGS TO REPLY USING CHANGED REPLY TIMING	12/035,397	2/21/2008
101	VOLTAGE REFERENCE CIRCUIT WITH LOW-POWER BANDGAP	12/108,311	4/23/2008
102	RFID TAG WITH REDUNDANT NON-VOLATILE MEMORY CELL	12/020,522	1/26/2008
103	RFID TAG HAVING NON-VOLATILE MEMORY DEVICE HAVING FLOATING-GATE FETS WITH DIFFERENT SOURCE-GATE AND DRAIN-GATE BORDER LENGTHS	12/006,330	12/31/2007
104	RFID TAG SEMICONDUCTOR CHIP WITH MEMORY MANAGMENT UNIT (MMU) TO MAKE ONLY ONE TIME PROGRAMMABLE (OTP) MEMORY APPEAR MULTIPLE TIMES PROGRAMMABLE (MTP)	12/006,321	12/31/2007
105	RADIO FREQUENCY IDENTIFICATION DEVICE POWER-ON RESET MANAGEMENT	11/965,359	12/27/2007
106	RADIO FREQUENCY IDENTIFICATION DEVICE ELECTROSTATIC DISCHARGE MANAGEMENT	11/965,307	12/27/2007
107	Radio Frequency (RFID) Tag Including Configurable Single Bit/Dual Bits Memory	12/012,910	2/5/2008
108	PREMISES ADAPTED TO READ CODES OF INCOMING RFID TAGS AND REMOVING THEM LATER AS THEY EXIT	12/019,030	1/24/2008
109	RFID READERS CO-EXISTING WITH OTHER ISM-BAND DEVICES	12/056,120	3/26/2008
110	CAUSING RFID TAG TO CHANGE HOW MANY REMAINING COMMANDS IT WILL COMPLY WITH	12/035,372	2/21/2008
111	RFID TAGS REPLYING USING CHANGED REPLY TIMING	12/035,393	2/21/2008
112	FACILITATING RFID TAGS TO REFRAIN FROM PARTICIPATING IN A SUBSEQUENT INVENTORYING ATTEMPT	12/057,509	3/28/2008
113	CAUSING RFID TAGS TO BACKSCATTER MORE CODES	12/112,832	4/30/2008
114	METHODS TO DISINCENTIVIZE SELLERS FROM SELLING WITHOUT AUTHORIZATION	12/122,327	5/16/2008
115	ADJUSTING COMMUNICATION PARAMETERS WHILE INVENTORYING RFID TAGS	12/133,180	6/4/2008

FOREIGN (INTL & NATL) APPLICATION FILED AND PENDING — RFID

1	RFID READERS TRANSMITTING AND RECEIVING WAVEFORM SEGMENT WITH ENDING-TRIGGERING TRANSITION	5785584.3	8/9/2005
2	RFID READERS SYSTEMS AND METHODS FOR EARLY HOPPING OUT OF A FREQUENCY CHANNEL IN THE PRESENCE OF RF INTERFERENCE	PCT/US2007/019360	9/5/2007
PROVISIONAL APPLICATION FILED AND PENDING — RFID
Item No.	Filed regular - formal title	Filed serial number	Filed date
1	MULTIPLEXING RFID ANTENNA MODULES	61/027,005	2/7/2008
2	REDUNDANT DIFFERENTIAL RFID TAGGING SCHEME FOR ITEM AUTHENTICATION	61/005,521	12/4/2007
3	READER ANTENNA ARRAY PROCESSING FOR HIGH DATA RATE	61/046,614	4/21/2008
	ROBUST RFID
4	EXPEDITED RFID TAG SINGULATION USING GEN2 TRUNCATED EPC	61/039,916	3/27/2008
5	A HV LDMOS DEVICE IN CMOS PROCESS	61/003,017	11/13/2007
6	RFID TAG ASSEMBLY MACHINE AND METHODS	60/997,493	10/3/2007
7	TAG POPULATION ESTIMATION	61/040,922	3/31/2008
8	USE CLASS1 GEN2 (C1G2) AS NETWORK PROTOCOL	61/023,359	1/24/2008
9	RFID SECURITY WITH ACCESS PASSWORD	61/001,257	10/30/2007
10	RFID USING PASSWORD STORED IN TAG FOR AUTHENTICATION	61/021,591	1/16/2008
11	AUTOMATIC TUNING OF RFID TAG COMMISSIONING	60/966,069	8/24/2007
12	RFID BULK-WRITE	61/003,627	11/19/2007
13	BULK WRITE ALGORITHM FOR RFID READER SYSTEM	60/931,180	5/21/2007
14	RFID BULK-WRITE	61/004,275	11/26/2007
15	RFID BULK-WRITE WITH SECONDARY DATA CARRIER	61/005,250	12/4/2007
16	EXPEDITED RFID TAG ASSEMBLY METHOD	61/035,710	3/11/2008
17	RFID TAG WITH POS PASSWORD OF FLEETING VALIDITY FOR EAS	61/031,656	2/26/2008
18	RFID READERS MODIFYING TAG INTERNAL OPERATIONS	61/028,644	2/14/2008
19	LARGER RFID READER TRANSMIT POWER WHILE SUPPLIED BY POWER OVER ETHERNET (POE)	61/027,379	2/8/2008
20	RFID TAG DYNAMICALLY ADJUSTING CLOCK FREQUENCY	61/036,422	3/13/2008
21	RFID TAG HAVING EAS FEATURE WITH PRIVATIZATION	61/043,049	4/7/2008
22	RFID READER SYSTEM WITH ADAPTABLE ANTENNA	61/050,924	5/6/2008
23	RFID READER ANTENNA WITH MEANDER SLOT	61/042,177	4/3/2008
24	RFID TAGS BACKSCATTERING ALTERNATING VERSIONS OF CODE, AND READERS FOR THEM	61/047,653	4/24/2008
25	CACHING RFID TAG TID INFORMATION BY RFID READER	61/048,505	4/28/2008
26	RFID READERS LIMITING PASSWORD THEFT	61/039,040	3/24/2008
27	DETECTING UNAUTHORIZED READERS / TAG ACCESS	61/003,632	11/19/2007
28	DETECTING AND REACTING TO UNAUTHORIZED READERS / TAG ACCESS BY ROGUE IN PREMISES	61/021,595	1/16/2008
29	BUSINESS METHOD OF RFID INSPECTION AND ANTI-COUNTERFEITING	60/966,066	8/24/2007
30	RFID READER ANTENNA DESIGN: “CACTUS”	60/995,042	9/24/2007
31	RFID ANTENNA WITH MULTIMODE RADIATING ELEMENTS	60/995,200	11/1/2007
32	RFID TAGS MADE FROM MOTHER CHIPS AND ONE OR MORE CHIP ANTENNAS AND METHODS OF MAKING	60/956,163	8/16/2007
33	RFID TAGS BACKSCATTERING ALTERNATE VERSIONS OF CODE, AND READERS THEREFOR	61/053,331	5/15/2008
34	RFID TAGS SAFER IN HIGH RF ENERGY ENVIRONMENT AND METHODS FOR MAKING	61/054,412	5/19/2008
35	CONTROLLING NUMBER FILLED IN SLOT COUNTER OF RFID TAGS	61/055,371	5/22/2008
36	RFID TAGS SAFER IN HIGH RF ENERGY ENVIRONMENT AND METHODS FOR MAKING	61/055,800	5/23/2008
37	NOVEL IC DIE FORM FACTOR, AND METHOD OF MAKING	61/058,170	6/2/2008
38	RODS FOR GARMENT HANGERS ALSO IMPLEMENTING RFID READER ANTENNAS	61/059,651	6/6/2008
39	CELL FOR NON-VOLATILE MEMORY	61/061,004	6/12/2008
40	CONTROLLING NUMBER FILLED IN SLOT COUNTER OF RFID TAGS FOR BEING INVENTORIED	61/061,011	6/12/2008
41	RFID ILT MINI-GUARDRAIL ANTENNA	61/061,758	6/16/2008

US ISSUED PATENTS — RFID
1	RFID TAGS ADJUSTING TO DIFFERENT REGULATORY ENVIRONMENTS, AND RFID READERS TO SO ADJUST THEM AND METHODS	7,283,037	10/16/2007
2	METHOD AND APPARATUS TO CONFIGURE AN RFID SYSTEM TO BE ADAPTABLE TO A PLURALITY OF ENVIRONMENTAL CONDITIONS	7,026,935	4/11/2006
3	RFID READER TO SELECT CODE MODULE	7,304,579	12/4/2007
4	METHOD AND APPARATUS FOR CONTROLLED PERSISTENT ID FLAG FOR RFID APPLICATIONS	7,215,251	5/8/2007
5	METHOD AND APPARATUS FOR CONTROLLED PERSISTENT ID FLAG FOR RFID APPLICATIONS	7,116,240	10/3/2006
6	ADAPTABLE BANDWIDTH RFID TAGS	7,183,926	2/27/2007
7	TESTING AND BURN-IN OF IC CHIPS USING RADIO FREQUENCY TRANSMISSION	7,312,622	12/25/2007
8	RFID TAG DESIGN WITH CIRCUITRY FOR WAFER LEVEL TESTING	7,307,528	12/11/2007
9	RFID READERS TRANSMITTING AND RECEIVING WAVEFORM SEGMENT WITH ENDING-TRIGGERING TRANSITION	7,049,964	5/23/2006
10	SINGLE RF OSCILLATOR SINGLE-SIDE BAND MODULATION FOR RFID READERS USING TONE INSERTION DURING READER RECEPTION	7,107,022	9/12/2006
11	RFID READERS AND RFID TAGS COMMUNICATING USING EXTENSIBLE BIT VECTORS	7,030,786	4/18/2006
12	METHOD AND SYSTEM TO CALIBRATE AN OSCILLATOR WITHIN AN RFID CIRCUIT BY SELECTING A CALIBRATION VALUE FROM A PLURALITY OF STORED CALIBRATION VALUES	7,120,550	10/10/2006
13	METHOD AND SYSTEM TO GENERATE MODULATOR AND DEMODULATOR CLOCK SIGNALS WITHIN AN RFID CIRCUIT UTILIZING A MULTI-OSCILLATOR ARCHITECTURE	7,253,719	8/7/2007
14	RFID TAGS CALIBRATING BACKSCATTERING PERIOD ALSO FOR NON-INTEGER DIVIDE RATIOS	7,246,751	7/24/2007
15	RFID READERS AND RFID TAGS EXCHANGING ENCRYPTED PASSWORD	7,245,213	7/17/2007
16	RFID TAGS WITH ELECTRONIC FUSES FOR STORING COMPONENT CONFIGURATION DATA	7,307,529	12/11/2007
17	RFID TAG USING HYBRID NON-VOLATILE MEMORY	7,307,534	12/11/2007
18	RFID READERS TRANSMITTING AND RECEIVING WAVEFORM SEGMENT WITH ENDING-TRIGGERING TRANSITION	7,187,290	3/6/2007
19	RFID READERS AND RFID TAGS COMMUNICATING USING EXTENSIBLE BIT VECTORS	7,123,171	10/17/2006
20	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D548,225	8/7/2007
21	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D546,819	7/17/2007
22	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D546,822	7/17/2007
23	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D546,821	7/17/2007
24	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D546,820	7/17/2007
25	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D547,754	7/31/2007
26	RFID Antenna Design	D543,976	6/5/2007
27	RFID Antenna Design	D547,306	7/24/2007
28	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D563,397	3/4/2008
29	RADIO FREQUENCY IDENTIFICATION TAG ANTENNA ASSEMBLY	D562,810	2/26/2008
30	RFID TAG WITH BIST CIRCUITS	7,380,190	5/27/2008
31	SINGLE RF OSCILLATOR SINGLE-SIDE BAND MODULATION FOR RFID READERS WITH FREQUENCY TRANSLATION AND FILTERING	7,382,257	6/3/2008
32	Broken-Loop RFID Reader Antenna for Near Field and Far Field UHF RFID Tags	D570,337	6/3/2008
33	METHOD AND SYSTEM TO BACKSCATTER MODULATE A RADIO- FREQUENCY SIGNAL FROM AN RFID TAG IN ACORDANCE WITH BOTH AN OSCILLATION FREQUENCY SIGNAL AND A COMMAND SIGNAL	7,388,468	6/17/2008

Appendix A

Defined Terms

The following terms, as used herein, have the following meanings:

“Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Assert” shall mean to bring or initiate any action before any legal, judicial, arbitration, administrative, executive or other type of body or tribunal that has or claims to have authority to adjudicate such action in whole or in part. Examples of such body or tribunal include United States State and Federal Courts, the United States International Trade Commission and any foreign counterparts of any of the foregoing. “Assertion” means the bringing or initiating of any such action.

“Business Day” shall mean any day of the year on which national banking institutions in California are open to the public for conducting business and are not required or authorized to close.

“Change of Control” of a Person shall mean (a) the acquisition of such Person by another Person or group by means of any transaction or series of related transactions (including any stock acquisition, reorganization, merger or consolidation), whether accomplished directly or indirectly, other than a transaction or series of transactions in which the holders of the voting securities of such Person outstanding immediately prior to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in such Person held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of such Person or such surviving entity outstanding immediately after such transaction or series of transactions, or (b) a sale, lease or other conveyance of substantially all of the assets of such Person.

“Covered Purchaser Party” shall mean Purchaser, its Affiliates and any direct or indirect customers, distributors, officers, directors, agents and/or contractors of Purchaser (or its Affiliates).

“Covered Seller Party” shall mean Seller, its Affiliates and any ***, manufacturers, distributors, officers, directors, agents and/or contractors of Seller (or its Affiliates).

“Field of Use” shall mean RFID systems in which ***. For the avoidance of doubt, the Field of Use does not encompass any Seller Proprietary Product.

***  Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

“Flash Memory Products” shall mean non-volatile Integrated Circuits capable of storing data that are electrically programmable and electrically erasable, or magnetically alterable to define a logical state, including both floating gate and non-floating gate designs.

“Intellectual Property” shall mean all intellectual property rights arising from or in respect of the following, whether protected, created or arising under the Laws of the United States or any other jurisdiction or under any international convention: (a) all patents and applications therefor, including all continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations and extensions thereof (collectively, “Patents”); (b) all trademarks, service marks, trade names, trade dress, logos, corporate names and other source or business identifiers, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof (collectively, “Marks”); (c) all Internet domain names; (d) all copyrights and mask works, along with all applications, registrations, reversions, extensions and renewals thereof (collectively, “Copyrights”); and (e) trade secrets and rights in information that is not generally known or readily ascertainable through proper means (“Trade Secrets”).

“Integrated Circuit” shall mean an integrated unit comprising one or more active and/or passive circuit elements associated on one or more substrates, such unit forming, or contributing to the formation of, a circuit for performing electrical functions (including, if provided therewith, housing and/or supporting means). The definition of Integrated Circuit shall also include any and all firmware, microcode or drivers, if needed to cause such circuit to perform substantially all of its intended hardware functionality, whether or not such firmware, microcode or drivers are shipped with such integrated unit or installed at a later time.

“Licensed Claims” shall mean only those claims of the Seller Licensed Patents that would be infringed by the Products in standalone form only as sold by Purchaser, including the manufacture, sale or other disposition thereof. For the avoidance of doubt, Licensed Claims shall not include any claims other than those set forth in the preceding sentence even if contained in the same Seller Licensed Patent as Licensed Claims.

“Licensed Products” shall mean Products and Substantially Identical Products that are offered for sale or sold as a Purchaser product.

“Non-Disclosure Agreement” shall mean Intel Corporate Non-Disclosure Agreement Number 7137598 by and between the Parties, dated as of April 5, 2001, as amended June 6, 2007.

“Person” shall mean any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental body or other entity.

“Processor” shall mean any Integrated Circuit or combination of Integrated Circuits capable of processing digital data, such as a microprocessor or coprocessor (including a math coprocessor, graphics coprocessor, or digital signal processor).

“Product” shall mean: (a) UHF RFID Reader transceiver silicon code-named “Tilden1” ***.

“Purchaser Patents” shall mean all Patents owned or controlled by Purchaser as of the Closing Date, and any other Patents filed by Purchaser after the Closing Date entitled to claim a priority date on or before the Closing Date, excluding the Patents pertaining to RFID, all of which are set forth on Schedule A hereto.

“Restricted Documents” means items listed under the following parts of Exhibit A to the Asset Purchase Agreement: Section 2.1(b), “Marketing Development Kit Assets” listed under Section 2.1(d), Section 2.1(e) and Section 2.1(f) (except third-party software tools and licenses underlying the items listed under the heading “Application Software Code Developed from Third-Party Licenses and Tools”).

“RFID” means radio-frequency identification.

“Seller Architecture Emulator” shall mean software, firmware, or hardware that, through emulation, simulation or any other process, allows a computer that does not contain a Seller Compatible Processor (or a Processor that is not a Seller Compatible Processor) to execute binary code that is capable of being executed on a Seller Compatible Processor.

“Seller Bus” shall mean a proprietary bus or other data path first introduced by Seller or any Seller Affiliate: (a) that is capable of transmitting and/or receiving information within an Integrated Circuit or between two or more Integrated Circuits, together with the set of protocols defining the electrical, physical, timing and functional characteristics, sequences and control procedures of such bus or data path; (b) which neither Seller nor any Seller Affiliate (during any time such Seller Affiliate has met the requirements of being a Affiliate) has granted a license or committed to grant a license through its participation in a government sponsored, industry sponsored, or contractually formed group or any similar organization that is dedicated to creating publicly available standards or specifications; and (c) which neither Seller nor any Seller Affiliate (during any time such Seller Affiliate has met the requirements of being a Affiliate) has publicly disclosed without an obligation of confidentiality.

“Seller Compatible Chipsets” shall mean one or more Integrated Circuits that alone or together are capable of electrically interfacing directly (with or without buffering or pin re-assignment) with a Seller Compatible Processor to form the connection between the Seller Compatible Processor and any other device (or group of devices), including Processors, input/output devices, networks, and memory.

“Seller Compatible Compiler” shall mean a compiler that generates object code that can, with or without additional linkage processing, be executed on any Seller Processor.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

“Seller Compatible Processor” shall mean any Processor that: (a) can perform substantially the same functions as a Seller Processor by compatibly executing or otherwise processing: (i) a substantial portion of the instruction set of a Seller Processor, (ii) object code versions of applications or other software targeted to run on or with an Seller Processor or (iii) binary code that is capable of being executed on a Seller Processor, in order to achieve substantially the same result as a Seller Processor; or (b) is substantially compatible with a Seller Bus.

“Seller Licensed Patents” shall mean Patents owned by Seller as of the Closing, including reissuances thereof, that Seller can license without obligation to pay a royalty. Seller Licensed Patents do not include, however, any Patents that are only embodied in any Seller Product, Seller Chipset, Seller Processor, or third party products that are integrated into a Product.

“Seller Licensed Trade Secrets” shall mean the Trade Secrets (a) known to the Transferred Employees and/or (b) embodied by the Technical Information, and, in each case (a) and (b), to the extent not assigned to Purchaser pursuant to the Asset Purchase Agreement and existing with the Products. Notwithstanding the foregoing sentence, Seller Licensed Trade Secrets shall not include any Trade Secrets related to any Seller proprietary products and technologies not transferred to Purchaser under the Asset Purchase Agreement (including, without limitation, microprocessors, chipsets, flash memory and manufacturing ) or any Seller Proprietary Products.

“Seller Processor” shall mean a Processor, or proprietary extension of a third party Processor, first developed by, for or with substantial participation by Seller or any Seller Affiliate, or the design of which has been purchased or otherwise acquired by Seller or any Seller Affiliate, including without limitation the Intel^® x86 architecture, Core™, Celeron^®, Pentium^®, Xeon™, Itanium^®, MXP, IXP, 80860 and 80960 microprocessor families, and the 8087, 80287, and 80387 math coprocessor families.

“Seller Product” shall mean any product manufactured, sold or distributed under any of Seller’s Marks by or on behalf of Seller or any of its Affiliates.

“Seller Proprietary Product” shall mean Seller Compatible Processors, Seller Architecture Emulators, Seller Compatible Compilers, Seller Compatible Chipsets, Seller Wireless Chipsets (excluding ***), any product that contains or implements any Seller Bus, and Flash Memory Products.

“Seller Wireless Chipsets” shall mean one or more Integrated Circuits that alone or together are capable of implementing one or more wireless communications protocols.

“Substantially Identical Product” shall mean any product that is derived from and is substantially identical to a Product, and that can reasonably be considered the next version of, next generation of or natural successor to a Product, including bug fixes and error corrections for a Product.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

EX-10.31

Exhibit 10.31

PURCHASE AGREEMENT – SERVICES

PHASE 2

Agreement #:
Effective Date:
Expiration Date:
	CNDA #: 7137968

BUYER:	Intel Corporation (and all Intel subsidiaries and affiliates, hereinafter “Buyer” or “Intel”). 200 Mission College Blvd Santa Clara, CA 95054-1549
SUPPLIER	Impinj, Inc. (hereinafter “Supplier” or “Impinj”) 701 N. 34th St. Suite 300 Seattle, WA 98103

incorporated herein by reference	Terms and Conditions of Purchase Agreement Services
(Mark “X” where applicable):	x	A Statement of Work
	x	B Commercial Terms

Buyer may purchase and Supplier shall provide the Services as described in Addendum A at the prices specified, and in accordance with the Terms and Conditions of this Agreement. For avoidance of doubt, this Agreement applies solely to Phase 2 of the *** project currently being contemplated by the parties as described in the Statement of Work (“Phase 2”). All Purchase Orders issued to Supplier by Buyer during the term of this Agreement with respect to Phase 2 shall be governed only by the Terms and Conditions of this Agreement notwithstanding any preprinted terms and conditions on Supplier’s acknowledgment or Buyer’s Purchase Order. Any additional or different terms in Supplier’s documents are hereby deemed to be material alterations and notice of objection to and rejection of them is hereby given. When Buyer is a subsidiary or affiliate of Intel, the obligations of the parties run between such subsidiary and affiliate and the Supplier, and not between Intel Corporation and the Supplier.

INTEL		SUPPLIER: IMPINJ, INC.
Signature:	/s/ Shahrokh Shahidzadeh	Signature:	/s/ Chris Diorio
Printed Name:	Shahrokh Shahidzadeh	Printed Name:	Chris Diorio
Title:	Sr. Principal Technologist	Title:	CTO
Date:	12/23/09	Date:	2008-12-23

LEGAL OK

            12/23/09

Ed Lanton

***   Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

PURCHASE AGREEMENT – SERVICES	-1-
CONFIDENTIAL

TERMS AND CONDITIONS OF PURCHASE AGREEMENT – SERVICES

1. DEFINITIONS

A. “Background IP” means all Intellectual Property belonging to or controlled by either party, (i) developed, conceived, obtained or acquired prior to the Effective Date of this Agreement or (ii) developed, conceived, obtained or acquired independently of this Agreement or not in furtherance of this Agreement.

B. “Improvements” means any improvements to or extensions of the Background IP of either party developed or conceived in furtherance of this Agreement, whether developed or conceived jointly or independently by the parties or from the reliance on any data or confidential information of the other party

C. “Intellectual Property or IP” means, collectively, Patents, Trade Secrets, Copyrights, and all other intellectual property rights and proprietary rights, excluding trademarks, whether arising under the laws of the United States or any other state, country or jurisdiction, now or hereafter existing. For purposes of this Agreement: (i) Patents” mean all classes or types of patents other than design patents (including, without limitation, originals, divisions, continuations, continuations-in-part, extensions or reissues), and applications for these classes or types of patent rights in all countries of the world: (a) that are owned or controlled by the applicable party or any of its Subsidiaries or to which such entities have the right to grant licenses: (b) that have a first effective filing date (including provisional application date) during the term of this Agreement; and (c) to the extent that the applicable party has the right to grant licenses within and of the scope set forth herein and without the requirement to pay consideration to any third party (other than employees of the applicable party or its Subsidiaries) for the grant of a license under this Agreement; (ii) “Trade Secrets” means all right, title and interest in all trade secrets and trade secret rights arising under common law, state law, federal law or laws of foreign countries, now or hereafter existing; and (iii) “Copyrights” means all copyrights, and all right, title and interest in all copyrights, copyright registrations and applications for copyright registration, certificates of copyright and copyrighted interests throughout the world, and all right, title, and interest in related applications and registrations throughout the world, now or hereafter existing.

D. “Hazardous Materials” are or contain dangerous goods, chemicals, contaminants, substances, pollutants, or any other materials that are defined as hazardous by relevant local, state, national, or international law, regulations, and standards.

E. “Jointly Developed Project IP” means Project IP that is Jointly conceived or developed by the parties based on the contribution to the conception or development of the Project IP and not on reduction to practice, constructive or actual.

F. “Purchase Order” is Buyer’s document setting forth specific Services to be rendered and Release information.

G. “Project IP” means all Intellectual Property developed or conceived (a) after the Effective Date of the Statement of Work and (b) in furtherance of such Statement of Work, whether developed or conceived jointly or independently by the parties.

H. “Release” means Buyer’s authorization for Supplier to provide the Services defined in Addendum A in accordance with the Buyer’s Purchase Order.

I. “Service(s)” means the work to be performed as set forth in the Statement of Work Addendum “A”, including any deliverables set forth in Addendum A resulting from such Services. “Item(s)” means all such deliverables.

J. “Solely Developed Project IP” means Project IP that is solely conceived or developed by a party without contribution from any other party.

2. TERM OF AGREEMENT. The term of this Agreement shall begin on the Effective Date and continue through the earlier of 1) the Expiration Date or 2) the acceptance of deliverables and completion of Phase 2.

3. PRICING

A. Pricing for Services provided under this Agreement is set forth in the Statement of Work Addendum.

B. All applicable taxes shall be stated separately on Supplier’s invoice. Supplier shall remit all such taxes to the appropriate tax authority unless Buyer provides sufficient proof of tax exemption. In the event that Buyer is prohibited by law from making payments to Supplier unless Buyer deducts or withholds taxes therefrom and remits such taxes to the local taxing jurisdiction, then Buyer shall duly withhold such taxes and shall pay to Supplier the remaining net amount after the taxes have been withheld. Buyer shall not reimburse Supplier for the amount of such taxes withheld. When property is delivered and/or services are provided or the benefit of services occurs within jurisdictions in which Supplier collection and remittance of taxes is required by law, Supplier shall have sole responsibility for payment of said taxes to the appropriate tax authorities. In the event Supplier does not collect tax from Buyer, and is subsequently audited by any tax authority, liability of Buyer will be limited to the tax assessment, with no reimbursement for penalty or interest charges. Each party is responsible for its own respective income taxes or taxes based upon gross revenues, including but not limited to business and occupation taxes. Buyer shall not reimburse Supplier for the amount of such taxes withheld.

C. Additional costs, except those described in the Statement of Work Addendum will not be reimbursed without Buyer’s prior written approval.

4. INVOICING AND PAYMENT

A. Payment is made when Buyer’s check is mailed or EDI funds transfer initiated. Except as provided in Addendum A, Buyer shall make payment within sixty (60) days of Buyer’s receipt of the proper original invoice or performance Buyer’s receipt of the applicable Services or Items, whichever is later.

B. Supplier agrees to invoice Buyer no later than one hundred eighty (180) days after completion of Services. Buyer will not be obligated to make payment against any invoices submitted after such period. Supplier shall be responsible for all payments to its vendors of subcontractors utilized in the performance of Services.

5. TERMINATION FOR CONVENIENCE

A. Buyer may terminate this Agreement or any Purchase Order or Release issued, or any part thereof, at any time for its sole convenience by giving written notice of termination to Supplier. Upon Supplier’s receipt of such notice, Supplier shall, unless otherwise specified in such notice, immediately stop all work hereunder and give prompt written notice to, and cause all of, its suppliers or subcontractors to cease all related work.

B. There shall be no charges for termination of orders for standard Items or for Services not yet provided.

C. Any claim for termination charges for custom items, along with a summary of all mitigation efforts, must be submitted to Buyer in writing within thirty (30) days after receipt of Buyer’s termination notice

6. DELIVERY, RELEASES, AND SCHEDULING Supplier shall promptly perform Services as scheduled or shall promptly notify Buyer if unable to perform any scheduled Services and shall state the reasons therefor. The absence of such notice constitutes acceptance of the Purchase Order and commitment to its Release terms.

PURCHASE AGREEMENT – SERVICES	-2-
CONFIDENTIAL

7. NO WARRANTY

No promises are made, express or implied, nor are any obligations assumed or created by either party, except as expressly provided herein. Any information provided for performance in connection with this Agreement as well as any deliverables by either party are provided “As Is” without warranty or condition of any kind, express or implied. EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT.

8. CONFIDENTIALITY AND PUBLICITY

A. During the course of this Agreement, either party may have or may be provided access to the other’s confidential information and materials. Each party agrees to maintain such information in accordance with the terms of this Agreement, and the Corporate Non-Disclosure Agreement referenced on the signature page of this Agreement and any other applicable separate nondisclosure agreement between Buyer and Supplier. At a minimum, each party agrees to maintain such information in confidence and limit disclosure on a need to know basis, to take all reasonable precautions to prevent unauthorized disclosure, and to treat such information as it treats its own information of a similar nature, until the information becomes rightfully available to the public through no fault of the non disclosing party. Supplier’s employees who access Buyer’s facilities may be required to sign a separate access agreement prior to admittance to Buyer’s facilities. Furthermore, Supplier will advise each of its employees and subcontractors assigned to or contracted for Buyer work of the confidentiality restrictions and will take reasonable steps to assure Buyer that all such employees and subcontractors have read and understood such restrictions. Supplier shall not use any of the confidential information of Buyer other than for Buyer.

B. The parties agree that neither will disclose the existence of this Agreement, nor any of its details, or the existence of the relationship created by this Agreement, to any third party without the specific, written consent of the other. The parties may disclose this Agreement in confidence to their respective legal counsel, accountants, bankers, and financing sources as necessary in connection with obtaining services from such third parties. Neither party may use the other party’s name or trademarks in any way or publish any project reference or client listings without the other party’s written consent

C. The obligations stated in this Section 8 shall survive the expiration or termination of this Agreement.

9. INTELLECTUAL PROPERTY OWNERSHIP AND LICENSING.

A. Disposition and Ownership. Any and all Project IP shall be owned as follows:

(1)***

(a) Subject to subsections (b) arid (c), Project IP consisting of *** shall be owned solely by Buyer, ***.

(b) Subject to subsections (c), Project IP consisting of *** shall be owned by Supplier, ***.

(c) Any Project IP consisting of *** shall be jointly owned by the parties. Such jointly owned IP shall be subject to the same restrictions and obligations as Jointly Owned Project IP set forth in subsections (3) and (4) below.

(2)*** Project IP:

(a) Solely Developed Project IP. ***, Solely Developed Project IP shall be owned by the party that developed or conceived such Solely Developed Project IP.

(b) Jointly Developed Project IP. ***, all Jointly Developed Project IP shall be owned jointly by the parties and be referred to hereafter as “Jointly Owned Project IP”.

(3) Responsibilities Concerning Jointly Owned Project IP

(a) Each party shall protect Jointly Owned Project IP to the same extent that it protects its own proprietary information and Intellectual Property similar in nature.

(b) Except as expressly provided otherwise herein, any Jointly Owned Project IP may be used without restriction by the parties for any purpose without the consent of the other party and without accounting for royalties, including disclosure to third parties, provided that, a party does not disclose any confidential information associated with the Background IP of another party.

(4) Disposition of Jointly Owned Project IP

Jointly Owned Project IP will be subject to prior review by the parties to determine whether to seek patent protection or hold as a Trade Secret and formulate other procedures related to the protection of intellectual property as may be deemed appropriate. If the parties, at each party’s sole discretion, agree to seek patent protection, then the parties agree to negotiate in good faith in the jurisdictions in which the patents will be prosecuted, who will bear the application and maintenance costs, how the patents will be owned and any licenses that may be required. If the parties are unable to agree on the terms and conditions for seeking patent protection, then the Jointly Owned Project IP will be maintained as a Trade Secret, provided that, if either party (the “Disclosing Party”) discloses a Trade Secret to a third party, the third party must first execute an appropriate non-disclosure agreement containing confidentiality terms and conditions at least as restrictive as those contained in this Agreement, whereby the third party agrees not to disclose the Trade Secret to any other third party without the prior written consent of the Disclosing Party.

B. Licenses

(1) Supplier hereby grants to Buyer a non-exclusive, non-transferable (except to a successor as provided in Section 14), royalty-free, fully paid-up, wordwide license, without the right to sublicense, under any and all Supplier’s Intellectual Property rights in Project IP owned by Supplier under this Agreement, to make, have made, use, sell, offer to sell and import products or services made by, made for or distributed by Buyer.

(2) Subject to the exclusivity obligations set forth in Section 9.B.(3) and any mutually agreed extension thereof, Buyer hereby grants to Supplier a perpetual, non-exclusive, non-transferable (except to a successor as provided in Section 14), royalty-free, fully paid-up, wordwide license, without the right to sublicense, under any and all Buyer’s Intellectual Property rights in Project IP owned by Buyer under this Agreement, to make, have made, use, sell, offer to sell and import products or services made by, made for or distributed by Supplier.

(3) Exclusivity. During a period beginning on the Effective Date and ending *** months after Supplier has completed the final milestone deliverable set forth in Section 7 of Addendum A (or the termination of this Agreement, if earlier), Supplier agrees not to license or otherwise transfer Project IP owned by Supplier for use in the Intel Field of Use or to sample, sell or offer to sell to any third party any goods within the Intel Field of Use that contain or would infringe such Project IP owned by Supplier. For purposes of this Agreement, the “Intel Field of Use” is a semiconductor chip that ***.

(4) For clarity, the licenses granted in subsections (1) and (2) above shall not be deemed in any way to grant a license or any other right under any intellectual property right developed, conceived or acquired prior to the Effective Date or acquired independently or not in furtherance of this Agreement. Each party reserves all rights not expressly granted in this Agreement, and no licenses are granted by either party to the other party under this Agreement, whether by implication, estoppel or otherwise, except as expressly set forth herein.

10. ADDITIONAL COMMERCIAL TERMS

While this Agreement does not impose any obligation on Intel to purchase or on Supplier to sell any goods, the parties anticipate that the successful completion of Phase 2 could result in the purchase and sale of goods arising, in whole or part, from the collaboration between the parties. Any such goods would be purchased by Intel will be purchased pursuant to an applicable Purchase Agreement – Goods to be negotiated between the parties (“Purchase Agreement”). The terms and conditions of the Purchase Agreement shall include, but shall not be limited to, the Commercial Terms set forth in Addendum B, Commercial Terms.

11. HAZARDOUS MATERIALS

***
  Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

PURCHASE AGREEMENT –SERVICES -3-

CONFIDENTIAL

A. If any Services provided hereunder include Hazardous Materials, Supplier represents and warrants that Supplier and its personnel providing Services to Buyer understand the nature of and hazards associated with such Services including handling, transportation, and use of such Hazardous Materials. Prior to causing Hazardous Materials to be on Buyer’s property, Supplier shall obtain written approval from Buyer’s Site Environmental/Health/Safety organization. Supplier will be fully responsible for and indemnify Buyer from any liability resulting from the actions of Supplier or its contractors in connection with: (i) providing such Hazardous Materials to Buyer, and/or (ii) the use of such Hazardous Materials in providing Services to Buyer.

B. Supplier will provide Buyer with material safety data sheets and any other documentation reasonably necessary to enable Buyer to comply with applicable laws and regulations.

C. Supplier hereby certifies that items supplied to Buyer comply with all applicable requirements of Buyer’s Environmental Product Content Specification for Supplier’s and Outsourced Manufacturers (Spec number BS-MTN — 0001, available at http://supplier.intel.com/ehs/environmental.htm

12. RESERVED.

13. COMPLIANCE WITH LAWS

A. Supplier shall comply with all national, state, and local laws and regulations governing the manufacture, transportation, import, export, and/or sale of items and/or the performance of Services in the course of this Agreement. In the United States, these may include, but are not limited to, Department of Commerce, including U.S. Export Administration regulations, Securities Exchange Commission, Environmental Protection Agency, and Department of Transportation regulations applicable to Hazardous Materials. Neither Supplier nor any of its subsidiaries will export/re-export any technical data, process, product, or service, directly or indirectly (including the release of controlled technology to foreign nationals from controlled countries), to any country for which the United States government or any agency thereof requires an export license or other government approval without first obtaining such license.

B. For services in the U.S., Supplier agrees not to provide foreign nationals (non U.S. citizens or U.S. permanent residents) as employees or contractors for work on any Buyer site unless that foreign national is covered under a valid U.S. Export License or is not exposed to controlled technology. For services outside of the U.S. Supplier agrees not to provide foreign nationals as employees or contractors for work on any Buyer site unless that foreign national is a citizen of the country of that Buyer site and/or is covered under a valid U.S. Export License or is not exposed to controlled technology. It is a requirement of this Agreement that the Supplier shall be responsible for obtaining all such approvals, authorizations, permits and licenses and shall indemnify and hold Intel harmless from any failure to comply with such requirement.

C. Supplier shall comply with all applicable laws regarding non-discrimination in terms and conditions of employment, payment of minimum wage and legally mandated employee benefits and compliance with mandated work hours. Supplier shall comply with all applicable laws regarding employment of underage or child labor and shall not employ children under the age of 16.

D. Supplier agrees to fully comply with Buyer’s Code of Conduct and Electronic Industries Code of Conduct as set forth at http://www.supplier.intel.com.

14. ASSIGNMENT

Buyer may assign or delegate its rights and/or obligations, or any part thereof under this Agreement to any or all of its wholly-owned subsidiaries. Supplier may not assign its rights and obligations hereunder without written consent of Buyer, which will not be unreasonably withheld. Supplier shall provide Buyer thirty (30) days written notice prior to the assignment by Supplier of this Agreement to a successor-in-interest in connection with a merger, acquisition or sale of all or substantially al of its assets to which this Agreement relates. If Buyer does not consent to the assignment of this Agreement within thirty days of the receipt of such notice, this Agreement shall terminate effective thirty (30) days after the receipt of such notice. Notwithstanding the foregoing, Supplier may engage third parties to provide services to Supplier typical with fabless semiconductor process flows, including manufacturing, test, post-processing and package service providers. Otherwise, neither party may assign or delegate its rights and obligations under this Agreement without the prior written consent of the other.

15. APPLICABLE LAW

This Agreement is to be construed and interpreted according to the laws of the State of Delaware, excluding its conflict of laws provisions.

16. NOTICES

Unless otherwise agreed in writing by the parties, all notices to Buyer regarding this Agreement shall be sent to Buyer’s Materials General Counsel and to the Buyer’s Materials Representative, all at the address on the signature page of this Agreement.

17. RESERVED

18. DISPUTE RESOLUTION

All disputes arising directly under the express terms of this Agreement or the grounds for termination thereof shall be resolved as follows: The senior management of both parties shall meet to attempt to resolve such disputes. If the disputes cannot be resolved by the senior management, either party may make a written demand for formal dispute resolution and specify therein the scope of the dispute. Within thirty (30) days after such written notification, the parties agree to meet for one (1) day with an impartial mediator and consider dispute resolution alternatives other than litigation, including referral to the National Patent Board. If an alternative method of dispute resolution is not agreed upon within thirty (30) days after the one day mediation, either party may begin litigation proceedings.

19. INDEPENDENT CONTRACTOR

In performing Services under this Agreement, Supplier is an independent contractor and its personnel and other representatives shall not act as nor be agents or employees of Buyer. As an independent contractor, Supplier will be solely responsible for determining the means and methods for performing the required Services. Supplier shall have complete charge and responsibility for personnel employed by Supplier.

20. ORDER OF PRECEDENCE.

In the event of any of a conflict between the terms and conditions of this Purchase Agreement and those of a Statement of Work Addendum, the terms and conditions of this Purchase Agreement will prevail, unless the Statement of Work Addendum expressly lists the provisions that are to supersede (e.g. a blanket recital that the terms of Statement of Work Addendum supersede all other written agreements will have no force and effect).

PURCHASE AGREEMENT – SERVICES	-4-
CONFIDENTIAL

21. SURVIVAL

The provisions of Sections: 1, 2, 7, 8, 9, 13.A, 14, 15, 16, 18, 19, 20, 21 and 22 shall survive the termination or expiration of this Agreement. In addition, any right or legal obligation of a party contained in any Addendum or Amendment, that by its express term or nature would reasonably extend for a period beyond the term of the Agreement, shall also survive the termination of the Agreement for such extended period.

22. MERGER, MODIFICATION

This Agreement contains the entire understanding between Buyer and Supplier with respect to the subject matter hereof and merges and supersedes all prior and contemporaneous agreements, dealings and negotiations. No modification, alteration, or amendment shall be effective unless made in writing, dated and signed by duly authorized representatives of both parties.

PURCHASE AGREEMENT – SERVICES	-5-
CONFIDENTIAL

Impinj and Intel Proprietary and Confidential 2009-12-21

ADDENDUM A

Statement of Work for Purchase Agreement – Services

Phase 2: Design of ***

1. Overview

This SOW describes development work to be performed by Impinj for delivering phase 2 of a ***. This SOW:

• States the project goal

• Defines the roles and responsibilities for the project team members

• Lists the deliverables and associated fees

• Lists the product performance criteria (in Appendix A)

2. Project Goal

The goal of phase 2 of this project is to develop a *** that meets the specification included in Appendix A of this document. This *** may be referred to under the code-name “Hannegan.”

3. Roles and Responsibilities

The project team shall comprise personnel from Intel and lmpinj.

Intel shall:

• Assign a project lead to provide project guidance and responses to Impinj’s questions and who has the authority to accept Impinj deliverables

• To the extent Intel deems necessary or desirable, assign engineering resources on a full or part-time basis and provide the name of Intel’s engineering lead at SOW signing

• Travel to lmpinj facilities as Intel deems necessary or desirable for engineering meetings and review of contract deliverables

Impinj shall:

• Assign a technical project lead acceptable to Intel who shall have the authority to execute all deliverable commitments

• Assign engineering resources on a full or part-time basis and provide the name of lmpinj’s engineering lead at SOW signing

• Travel to Intel facilities as necessary for engineering meetings and review of deliverables

• Use commercially reasonable efforts to demonstrate performance of the Hannegan *** that meets or exceeds the specifications included in Appendix A

• Impinj shall not be responsible of ***

4. Definitions:

Acceptance Criteria: Objective acceptance criteria, agreed to in writing by both Intel and Impinj, for deliverables delivered under this SOW.

Project Requirements Document (PRO): Appendix A is the project requirements document (PRD).

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

5. Project Scope, Fees, and Acceptance Criteria

The project scope shall be for Impinj to deliver the deliverables defined in this SOW.

The project fee shall be $***, payable as set forth in the Project Milestones and Deliverables table below. Intel will also reimburse Impinj for additional project-related costs actually incurred by Impinj and approved in advance by Intel, such as travel expenses.

In the event a third party is contracted by Intel to provide ***, Impinj shall actively participate in the design reviews and integration reviews as required by Intel.

The “Acceptance Criteria” for each milestone are defined in the Project Milestones and Deliverables table below. A deliverable will be accepted if it substantially conforms to each of the final Acceptance Criteria for that deliverable. Intel will provide notice of acceptance or rejection of each deliverable within 15 days following receipt by Intel, and if such notice is not provided within 15 days following receipt, the deliverable will be deemed accepted.

Impinj will provide the deliverables under this SoW “as is” and without warranty of any kind, and lmpinj disclaims any implied warranties. Each party’s liability under this SoW will be limited to the total amount of fees paid or payable by Intel as set forth above, and neither party will have any liability for incidental or consequential damages under this SoW. Notwithstanding the foregoing, this Section regarding limitation of liability shall not apply to claims or damages arising from death or personal injury or tangible property damage, from any breaches of obligations of confidentiality, or payments to third parties under the indemnity with respect to hazardous materials.

6. Project Management

The project managers for the project are:

For Intel:	For Impinj:
Shahrokh Shahidzadeh	[TBD]
Intel Corporation	Impinj, Inc.
MS RA1 – 331	701 North 34th Street
2501 NW 229th Avenue	Suite 300
Hillsboro, OR 97124	Seattle, WA 98103
Shahroka.Shahidzadeh@intel.com	@Impinj.com
971-214-1193	206-834-1100

7. Project Milestones and Deliverables

The project milestones are defined below. Prior to completion of work, Intel shall review and either accept or request reasonable changes to the deliverables. Impinj shall make reasonable efforts to accompdate Intel’s requested changes.

	Milestone	Date		Deliverables	Acceptance Criteria	Payment Upon Completion of Milestone
1	Finalize PRD		10/15/09	PRD which is attached as Appendix A hereto	Mutual agreement on functional and technical specifications
2	PO from Intel		On or before 12/31/09			$	*	**
3	Support of *** Qualification by Third Party				Help Third Party Pass Intel *** qualification tests (test description and acceptance criteria not part of this document)
4	***		6/9/10	***	***	$	*	**
5	***		8/30/10	***	***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

	Milestone	Date		Deliverables	Acceptance Criteria	Payment Upon Completion of Milestone
6	***		8/30/10	***	***	$	*	**

Optional Non-Milestone Deliverable Intel may purchase *** samples *** at a cost of $***.

The parties hereto have caused this SOW to be executed by their respective authorized representatives to be effective as of the date last written below.

“Impinj”		“Intel”
Name:	Chris Diorio	Name:	Shahrokh Shahidzadeh
Title:	CTO	Title:	Sr. Principal
Signature:	/s/ Chris Diorio	Signature:	/s/ Shahrokh Shahidzadeh
Date:	2009-12-23	Date:	12/23/09

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Appendix A – Project Requirements Document

For the purpose of this Appendix A, “Intel Specific Field of Use” means a semiconductor chip that ***.

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

RF Functionality

***

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

All

*

**

RF Performance

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

***

*

**

*

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*

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*

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*

**

*

**

*

**

*

**

*

**

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

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*

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*

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*

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*

**

***

*

**

*

**

*

**

*

**

*** to comply with the Intel Specific Field of Use

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

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*

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*

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*

**

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

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*

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*

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**

DCI

***

*

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*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

Physical

***

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

Environmental

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

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*

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*

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*

**

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Hannegan *** and proposed ***.

***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

ADDENDUM B

Commercial Terms

As provided in Section 10, while this Agreement does not impose any obligation on Intel to purchase or on Supplier to sell any goods, if the Parties enter into an agreement for the purchase of goods, the terms and conditions of such purchase agreement will include, but shall not be limited to the following terms and conditions:

1. PRICING

A. Prices for Items (excluding engineering samples) provided under this Agreement are set forth on the Pricing Addendum. At Buyer’s request, such prices may be modified in writing pursuant to periodic negotiations between the parties. Additional costs, except those described on the Pricing Addendum, will not be reimbursed without Buyer’s prior written approval.

B. Most Favored Customer

i. The price charged Buyer for any Item shall always be Supplier’s lowest price charged any customer for that Item regardless of any special terms, conditions, rebates, or allowances of any nature (other than annual purchase volumes as described below). If Supplier sells any similar Item to any customer at a price less than that set forth herein, Supplier shall adjust its price to the lower price for any un-invoiced Item and for all outstanding and future invoices for such Item, and shall rebate to Buyer an amount equal to the difference in the price paid by Buyer and the lower price for any invoices already paid by Buyer for such Item. Each of the above adjustments and the rebate shall be calculated from the date Supplier first sells the Item at the lower price.

ii. Supplier will provide reasonable commercial evidence that the items being compared are not “similar”. For Items designated as custom Items, for purposes of comparing price under this Section, the price of the Item shall include those Supplier cost components that are generic to the Item as compared to other similar items generally sold by Supplier. Such comparison shall be made to the extent items have similar characteristics, such as form, fit, function (e.g., memory size), manufacturing process, annual purchase volumes and other specific comparison criteria agreed upon by the parties. For the purpose of this Section 1.B.ii, the Buyer’s annual purchase volume shall be considered identical if it is within twenty five percent (25%) of the annual purchase volume for the comparable item by the comparison buyer.

iii. In the event Supplier offers for the Item or a similar Item a lower price either as a general price drop or only to some customer(s) for any reason, Supplier shall immediately inform Buyer of this price and price protect Buyer’s inventory of affected Items by rebating to Buyer an amount equal to the difference in the price paid by Buyer and the lower price for all such Items pulled into Buyer’s manufacturing process for consumption retroactive to the date Supplier first sells the Item at a lower price.

iv. Buyer reserves the right to have Supplier’s records inspected and audited to ensure compliance with this Section 1.B (Most Favored Customer). At Buyer’s option or upon Supplier’s written demand, such audit will be performed by an independent third party at Buyer’s expense. However, if Supplier is found not to be complying with this Agreement in any way, Supplier shall reimburse Buyer for all costs associated with the audit, along with any discrepancies discovered, within thirty (30) days after completion of the audit. Supplier shall have the option to review the independent third party’s findings prior to the release of such findings to Buyer. If Supplier disagrees with the findings for any reason, Supplier shall have the right to issue a letter in response, which will be included with the third party’s findings to the Buyer. The results of such audit shall be kept confidential by the auditor and, if conducted by a third party, only Supplier’s failures to abide by the obligations of this Agreement shall be reported to Buyer.

C. Inventory Protection

Buyer may return up to ***percent (***%) of its inventory of non-custom Items purchased from Supplier during the previous ninety (90) days in unopened, original, individual Item packaging for a credit against any outstanding or future Supplier invoices.

D. Taxes

i. All applicable taxes, including but not limited to sales/use taxes, transaction privilege taxes, gross receipts taxes, and other charges such as duties, customs, tariffs, imposts, and government imposed surcharges shall be stated separately on Supplier’s invoice Supplier shall remit all such charges to the appropriate tax authority unless Buyer provides sufficient proof of tax exemption. In the event that Buyer is prohibited by law from making payments to Supplier unless Buyer deducts or withholds taxes therefrom and remits such taxes to the local taxing jurisdiction, then Buyer shall duly withhold such taxes and shall pay to Supplier the remaining net amount after the taxes have been withheld. Buyer shall not reimburse Supplier for the amount of such taxes withheld.

ii. When property is delivered and/or services are provided or the benefit of services occurs within jurisdictions in which Supplier collection and remittance of taxes is required by law, Supplier shall have sole responsibility for payment of said taxes to the appropriate tax authorities. In the event Supplier does not collect tax from Buyer, and is subsequently audited by any tax authority, liability of Buyer will be limited to the tax assessment, with no reimbursement for penalty or interest charges. Each party is responsible for its own

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

respective income taxes or taxes based upon gross revenues, including but not limited to business and occupation taxes.

2. ACCEPTANCE AND WARRANTY

A. Buyer may inspect and test all Items at reasonable times before, during, and after manufacture. If any inspection or test is made on Supplier’s premises, Supplier shall provide reasonable facilities and assistance for the safety and convenience of Buyer’s inspectors in such manner as shall not unreasonably hinder or delay Supplier’s performance. All Items shall be received subject to Buyer’s inspection, testing, approval, and acceptance at Buyer’s premises notwithstanding any inspection or testing at Supplier’s premises or any prior payment for such Items. Items rejected by Buyer as not conforming to this Agreement or Item specifications, whether provided by Buyer or furnished with the Item, may be returned to Supplier at Supplier’s risk and expense and, at Buyer’s request, shall immediately be repaired or replaced.

B. Supplier makes the following warranties regarding Items furnished hereunder, which warranties shall survive any delivery, inspection, acceptance, payment, or resale of the Items:

(i) Items will not infringe any party’s intellectual property rights;

(ii) Supplier has the necessary right, title, and interest to provide said Items to Buyer, and the Items will be free of liens and encumbrances;

(iii) Items are new, and of the grade and quality specified in writing by the parties;

(iv) Items are free from defects in workmanship and material, conform to all drawings, descriptions, and specifications furnished or published by Supplier in writing and to any other agreed-to written specifications;

(v) Items conform to the manufacturing quality provisions set forth in the QR Addendum as attached to the agreement;

C. If Supplier breaches any of the foregoing warranties, or Items are otherwise defective or non-conforming, during a period of three (3) years after Buyer’s delivery of Items, as Buyer’s sole remedy, Supplier shall, at Buyer’s option, promptly repair, replace, or credit the amount paid for such Items. Any unused credit remaining after two (2) quarters shall be refunded to Buyer. Supplier shall bear the cost of shipping and shall bear the risk of loss of all defective or non-conforming Items while in transit.

3. INTELLECTUAL PROPERTY INDEMNIFICATION

A. Subject to Section D, Supplier shall indemnify and hold Buyer and its customers harmless from any costs, expenses (including attorneys’ fees), losses, damages, or liabilities incurred because of actual or alleged infringement of any patent, copyright, trade secret, trademark, maskwork, or other intellectual property right to the extent arising out of any of the following:

i) the Items or their use or sale by Buyer or Buyer’s subcontractors, distributors, or agents; or

ii) the performance of any Services provided by Supplier, its agents, or subcontractors under the agreement.

B. Buyer shall notify Supplier of such claim or demand and shall permit Supplier to assume sole control of the defense or settlement thereof. If an injunction issues as a result of any claim or action and Supplier has not already performed (i), (ii), (iii) or (iv) below, Supplier agrees at its expense and Buyer’s option to either:

(i) if reasonably available, procure for Buyer and Buyer’s customers the right to continue using and selling Items;

(ii) replace them with non-infringing Items; or

(iii) modify them so they become non-infringing; or;

(iv) if (i), (ii) or (iii) are not reasonably available, credit to Buyer the amount paid for any Items to the extent representing actual costs, expenses (including attorneys’ fees), losses, damages, or liabilities subject to indemnification under Section A above. Any unused credit remaining after two (2) quarters shall be refunded to Buyer.

C. Regardless of which of the foregoing remedies is implemented, and without limiting any other remedies available to Buyer at law or in equity, if Buyer incurs out-of-pocket rework expenses and incremental costs to procure alternative products for the Items (as long as such products are commercially available), Supplier shall reimburse Buyer such expenses and costs incurred by Buyer as required to fill any orders placed by Buyer as of the effective date of the injunction.

D. Buyer’s right to indemnification shall not apply to the extent that:

(i) Custom Items are manufactured to Buyer’s detailed specifications, including, but not limited to the detailed specifications of ***, pursuant to a collaboration or other form of co-development agreement between the parties and such infringement would not have occurred but for complying with such detailed specifications, or

(ii) Items are used in combination with other equipment, software or other products not manufactured, supplied, required or recommended in writing by Seller and such infringement would not have occurred but for such combination.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

E. THE FOREGOING STATES THE ENTIRE SET OF OBLIGATIONS AND REMEDIES FLOWING BETWEEN BUYER AND SUPPLIER ARISING FROM ANY INTELLECTUAL PROPERTY CLAIM BY A THIRD PARTY.

4. TERMINATION FOR CONVENIENCE

A. Buyer may terminate this Agreement or any Purchase Order or Release issued, or any part thereof, at any time for its sole convenience by giving written notice of termination to Supplier. Upon Supplier’s receipt of such notice, Supplier shall, unless otherwise specified in such notice, immediately stop all work hereunder and give prompt written notice to and cause all of its suppliers or subcontractors to cease all related work.

B. There shall be no charges for termination of orders for standard Items. Paragraphs C through E of this Section 5 shall govern Buyer’s payment obligation for custom Items. Custom Items are Items manufactured to Buyer’s specifications solely for Buyer and offered or sold to no other customer. Notwithstanding anything to the contrary, Supplier shall not be compensated in any way for any work done after receipt of Buyer’s notice, nor for any costs incurred by Supplier’s vendors or subcontractors after Supplier receives the notice, nor for any costs Supplier could reasonably have avoided.

C. Any claim for termination charges for custom Items, along with a summary of all mitigation efforts, must be submitted to Buyer in writing within forty five (45) days after receipt of Buyer’s termination notice

D. Supplier’s claim may include the net cost of custom work in process scheduled to be delivered within fifteen (15) days and that must be scrapped due to the termination. Supplier shall, wherever possible, place such custom work in process in its inventory and sell it to other customers. In no event shall such claim exceed the total price for the Items terminated. Upon payment of Supplier’s claim, Buyer shall be entitled to all work and materials paid for.

E. Before assuming any payment obligation under this section, Buyer may inspect Supplier’s work in process and audit all relevant documents.

F. Notwithstanding anything else in this Agreement, failure to meet the delivery date(s) in the Purchase Order shall be considered a material breach of contract and shall allow Buyer to terminate the order for the Item and/or any subsequent Releases in the Purchase Order without any liability whether the Purchase Order was for standard or custom Items.

5. LEAD TIME — INVENTORY MANAGEMENT

Lead Time for production items shall not exceed ninety (90) days for Items *** and one hundred twenty (120) days for Items ***. In the event Supplier anticipates an increase in Lead Time, Supplier shall immediately notify Buyer in writing with sufficient time to place additional orders to prevent a disruption in the flow of items, and provide a plan and timeline to resume original Lead Time production.

6. CAPACITY UPSIDE

Supplier agrees to maintain sufficient manufacturing capacity for Items to accommodate up to *** of Buyer’s forecast needs at agreed-to lead times. If Supplier is not able to accommodate such upside capacity for any forecast, Supplier will provide Buyer with prompt written notice of such inability together with the amount of shortfall in Supplier’s ability to meet the designated upside. Additionally, within thirty (30) days of providing Buyer such notice, Supplier will develop and submit for Buyer approval, a contingency plan and a corrective action plan to eliminate such shortfall(s).

7. LIMITATION OF LIABILTY

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, WHETHER BASED ON CONTRACT OR TORT (INCLUDING NEGLIGENCE), REGARDLESS OF WHETHER SUPPLIER KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY THEREOF. THE FOREGOING LIMITATION OF LIABILTY SHALL NOT APPLY TO ANY BREACH OF THE CONFIDENTIAL OBLIGATIONS SET FORTH IN SECTION 12 (CONFIDENTIALITY AND PUBLICITY), ANY OBLIGATION OF INDEMNITY UNDER SECTION 13 (INTELLECTUAL PROPERTY) OR SECTION 16 (HAZARDOUS MATERIALS) OR ANY CLAIM ARISING FROM DEATH, BODILY INJURY OR TANGIBLE PROPERTY DAMAGE.

Note. The actual section numbers in the final purchase agreement may vary from the section numbers stated above.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

PRICING ADDENDUM

Production Units

In the calendar years set forth below, production units of the “Hannegan” RFID Product (as described in Exhibit A which are delivered as ***) from Impinj may not exceed the pricing set forth in the tables below.

RFID Production Unit Pricing: Q1’10 to 04’14

	*** Cost in US$
*** with all features outlined in Appendix A	Volume (M units/year)	2010	2011	2012	2013	2014
	***	***	***	***	***	***
	***	***	***	***	***	***
	***	***	***	***	***	***
	*** Cost in US$
*** with all features outlined in Appendix A	Volume (M units/year)	2010	2011	2012	2013	2014
	***	***	***	***	***	***
	***	***	***	***	***	***
	***	***	***	***	***	***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Impinj and Intel Proprietary and Confidential 2009-12-21

Q&R Addendum

PERFORMANCE STANDARDS/QUALITY REQUIREMENTS

SPECIFICATION NUMBER	SPECIFICATION TITLE
***	***
***	***
***	***
***	***
***	***
***	***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

EX-10.32

Exhibit 10.32

AMENDMENT NO. 1 TO

PURCHASE AGREEMENT – SERVICES PHASE 2 # CW1882970

BETWEEN

INTEL CORPORATION AND IMPINJ, INC.

For valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge Intel Corporation (“Intel”) and Impinj, Inc. (“Impinj”) hereby amend the above referenced Purchase Agreement – Services Phase 2 dated on or about December 23, 2009 # CW1882970 (the “Agreement”) as set forth hereafter.

1. EFFECTIVE DATE

The Effective Date of this amendment (“Amendment”) shall be March 24, 2010.

2. DEFINITIONS

Unless provided otherwise in this Amendment, each term appearing in this Amendment shall have the same meaning as given in the Agreement.

3. AMENDMENTS

By executing this Amendment, Intel and lmpinj are amending the Agreement to:

Include Addendum A-1 (Statement of Work for Development of ***) of the Agreement which is attached hereto and incorporated herein by this reference.

4. LEGAL EFFECT ON AGREEMENT

As amended by this Amendment, all provisions of the Agreement shall remain in full force and effect. In the event of a conflict between this Amendment and the Agreement, this Amendment shall take precedence.

INTEL CORPORATION		IMPINJ, INC.
BY:	/s/ Shahrokh Shahidzadeh	BY:	/s/ Evan Fein
NAME: Shahrokh Shahidzadeh		NAME: Evan Fein
TITLE: Sr. Principal Technologist		TITLE: SVP Finance
DATE: 3/26/10		DATE: 3/26/10

LEGAL OK

Ed Lanton

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Amendment No.1 Purchase Agreement #CW1882970 Page 1

ADDENDUM A-1

STATEMENT OF WORK FOR DEVELOPMENT

OF ***

1. TERMS AND CONDITIONS

Supplier sole compensation under this Agreement shall be a onetime non-recurring engineering (“NRE”) fee of $***. Supplier will fund any and all tooling for the program. Supplier shall invoice Intel for the entire NRE amount promptly upon execution of this Amendment. Intel is not required to fund any capacity requirements.

2. SCOPE

Scope of the RFID *** project is to develop a *** meeting *** standards; with ***. Development includes design and fabrication of *** as well as the ***. As a part of qualifications, Supplier will be conducting ***, required *** failure analysis (FA), as well as ‘Final’ test at ***. Supplier may select to utilize current *** to meet the time table provided in section 6. Final *** design *** the final *** shall incur no additional NRE charges.

Deliverables:

Intel contributions/responsibilities include but not limited to:

i. Final design review and approval.

ii. Final BOM review and approval.

iii. Shipping requirements

Supplier contributions/responsibilities include but are not limited to:

iv. Complete set of *** to be approved by Intel prior to fabrication. See section 3 - *** Development

v. All other necessary facilities, technical resources, equipment, materials, tooling, and manpower required to develop, manufacture, & test the RFID *** as required by this SOW.

vi. Shipping of finished *** per Intel’s instruction to Intel’s forwarder.

3. *** DEVELOPMENT

The *** development includes the design and fabrication of the ***, and the design and fabrication of the ***.

The following sets forth the specifications of the ***. Any change is subject to mutual written agreement by the parties, which may include a change in schedule or price depending on the change.

Figure 1 shows the ***.

***

Figure: ***

The ***, which are located on ***, are included in this view for reference only. All dimensions are in ***, and the dimensions are shown ***. Notice that the *** dimensions of this *** are designed as a ***, which is smaller than the ***, but is one of the custom design constraints of this ***.

Figure 2 shows the ***.

***

Figure 2: ***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Amendment No.1 Purchase Agreement #CW1882970 Page 2

Figure 3 shows the ***. Notice that the *** dimension of this *** is designed with a ***, which is smaller than the ***, but is one of the custom design constraints of this ***.

***

Figure 3: ***

Figure 4 shows the ***

***

Figure 4: ***

4. TOOLING

Assembly and test tooling charges to be paid by Supplier:

5. ENGINEERING CHARGES

4000 *** sample *** parts are included at no additional charge per this SOW. 1000 Hannegan *** parts will be made available per existing agreement number CW1882970. Hannegan and *** parts will be in the ***, which is detailed in this SOW (***).

6. PROJECT TIMELINE

The project timeline (Table 1) must be met in order to guarantee timely completion of the overall RFID project. Intel and Supplier will meet periodically to revise the project timeline as may be necessary. Supplier agrees *** if required to meet required timeline. Both parties agree that reasonable effort will be made to avoid this and will only be used as final option.

Table 1: Project timeline

Milestone	Date
SOW signed an PO issued	3/04/10
Final design & BOM approved *** artwork complete; Artwork to fabricate the *** is complete and ready to build ***	3/21/10
***	6/5/10
*** samples delivered in Tape & Reel	6/25/10

7. PROJECT DELIVERABLES / RESOURCES

Impinj will provide all resources necessary to bring this SOW to completion by the dates listed in section 6, as may be modified by mutual agreement

• Supplier will provide resources to support all design reviews as reasonably required for the *** development hereunder.

• Supplier will provide resources to support all test development reviews, as reasonably needed for the *** development hereunder.

• Supplier will use same ***.

Impinj will provide the deliverables under this SOW “as is” and without warranty of any kind and Impinj disclaims any implied warranties. Each party’s liability under this SOW will be limited to the total amount of fees paid or payable by Intel as set forth above, and neither party will have any liability for incidental or consequential damages under this SoW. Notwithstanding the foregoing, this Section regarding limitation of liability shall not apply to claims or damages arising from death or personal injury or tangible property damage, from any breaches of obligations of confidentiality, or payments to third parties under the indemnity with respect to hazardous materials.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Amendment No.1 Purchase Agreement #CW1882970 Page 3

8. TEST REQUIREMENTS

At time of ***, it is expected that the Supplier and Intel will agree on the definition and development of all *** requirements as part of the Purchase Agreement.

9. PRICING

*** pricing to be documented as an Amendment to the Agreement; pricing will reflect final product ***.

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Amendment No.1 Purchase Agreement #CW1882970 Page 4

EX-10.33

Exhibit 10.33

AMENDMENT NO. 2 TO

PURCHASE AGREEMENT – SERVICES PHASE 2 # CW1882970

BETWEEN

INTEL CORPORATION AND IMPINJ, INC.

For valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge Intel Corporation (“Intel”) and Impinj, Inc. (“Impinj”) hereby amend the above referenced Purchase Agreement – Services Phase 2 dated on or about December 23, 2009 # CW1882970 (the “Agreement”) as set forth hereafter.

1. EFFECTIVE/EXPIRATION DATE

The Effective Date of this amendment (“Amendment”) shall be April 20, 2011.

The new Expiration Date of the Agreement shall be March 31, 2012.

2. DEFINITIONS

Unless provided otherwise in this Amendment, each term appearing in this Amendment shall have the same meaning as given in the Agreement.

The term “Service(s)” shall be expanded to include the work to be performed as set forth in Addendum “C”, including any deliverables set forth in Addendum C resulting from such Services.

3. AMENDMENTS

By executing this Amendment, Intel and Impinj are amending the Agreement to:

Include Addendum C (Hannegan1 *** and Hannegan2 ***) of the Agreement which is attached hereto and incorporated herein by this reference.

4. LEGAL EFFECT ON AGREEMENT

As amended by this Amendment, all provisions of the Agreement shall remain in full force and effect. In the event of a conflict between this Amendment and the Agreement, this Amendment shall take precedence.

INTEL CORPORATION		IMPINJ, INC.
BY:	/s/ Shahrokh Shahidzadeh	BY:	/s/ Kerry Krause
NAME: Shahrokh Shahidzadeh		NAME: Kerry Krause
TITLE: Sr. Principal Technologist		TITLE: VP Marketing
DATE: 4/20/11		DATE: 4/20/11

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

ADDENDUM C

Hannegan1 *** and Hannegan2 ***

Statement of Work for Purchase Agreement – Services:

1. Overview

This SoW describes work that Impinj will perform to *** Hannegan1 and *** for Hannegan2. This SoW:

• States the project goal

• Defines the roles and responsibilities for the project team members

• Lists the deliverables and associated fees

2. Project Goal

This project has two goals:

1. *** Hannegan1 according to the requirements in Appendix C-1 of this Addendum C, which replaces Appendix A of Addendum A of the Agreement in its entirety.

2. Develop Hannegan2 ***, including use cases for *** as well as ***.

3. Roles and Responsibilities

The project team shall comprise personnel from Intel and Impinj.

Intel shall:

• Assign a project lead to provide project guidance and responses to Impinj’s questions and who has the authority to accept Impinj deliverables

• To the extent Intel deems necessary or desirable, assign engineering resources on a full or part-time basis and provide the name of Intel’s engineering lead at SOW signing

• Travel to Impinj facilities as necessary or desirable for engineering meetings and reviewing contract deliverables

• Be responsible for ***

Impinj shall:

• Assign a project lead acceptable to Intel who shall have the authority to execute all deliverable commitments

• Assign engineering resources on a full or part-time basis and provide the name of Impinj’s engineering lead at SoW signing

• Travel to Intel facilities as necessary for engineering meetings and review of deliverables

• Use commercially reasonable efforts to demonstrate performance of the Hannegan *** that meets or exceeds the specifications in Appendix C-1 of this Addendum C

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

4. Definitions:

Acceptance Criteria: Objective acceptance criteria, agreed to in writing by both Intel and Impinj, for deliverables under this SOW.

5. Project Scope, Fees, and Acceptance Criteria

The project scope shall be for Impinj to *** Hannegan1 and develop *** for Hannegan2.

The project fee shall be $***, payable as set forth in the Project Milestones and Deliverables table below. Intel will also reimburse Impinj for additional project-related costs actually incurred by Impinj and approved in advance by Intel, such as travel expenses.

The “Acceptance Criteria” for each milestone are defined in the Project Milestones and Deliverables table below. A deliverable will be accepted if it substantially conforms to each of the Acceptance Criteria for that deliverable. Intel will provide notice of acceptance or rejection of each deliverable within 15 days following Intel’s receipt of the deliverable, and if such notice is not provided within 15 days following receipt the deliverable will be deemed accepted.

Impinj will provide the deliverables under this SoW “as is” and without warranty of any kind, and Impinj disclaims any implied warranties. Each party’s liability under this SoW will be limited to the total amount of fees paid or payable by Intel as set forth above, and neither party will have any liability for incidental or consequential damages under this SoW. Notwithstanding the foregoing, this Section regarding limitation of liability shall not apply to claims or damages arising from death or personal injury or tangible property damage, from any breaches of obligations of confidentiality, or payments to third parties under the indemnity with respect to hazardous materials.

6. Project Management

The project managers are:

For Intel:	For Impinj:
Shahrokh Shahidzadeh	Ron Paulsen
Intel Corporation	Impinj, Inc.
MS RA1 - 331	701 North 34th Street
2111 NE 25th Avenue	Suite 300
Hillsboro, OR 97124	Seattle, WA 98103
Shahrokh.Shahidzadeh@intel.com	@Impinj.com
(503) 712-8022	206-834-1100

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

7. Project Milestones and Deliverables

The project milestones shall be as defined below. Prior to Impinj’s completion of work, Intel shall review and either accept or request reasonable changes to the deliverables. Impinj shall make reasonable efforts to accommodate Intel’s requested changes.

Hannegan 1 ***
	Milestone	Date	Deliverables	Acceptance Criteria	Payment Upon Milestone Completion
1	PO from Intel	***			$***
2	*** tapeout of Hannegan1	***	Tapeout to TSMC	TSMC notification of receipt of GDSII tapeout data	$***
3	*** Hannegan1	***	*** including performance and environmental characterization over process corners	*** showing that samples from process corners meet the requirements in Appendix C-1 of this Addendum C
4	*** Hannegan 1	***	*** Hannegan1 ***	*** *** sample ***	$***
Hannegan2 Requirements
	Milestone	Date	Deliverables	Acceptance Criteria	Payment Upon Completion of Milestone
1	PO from Intel	***			***
2	Hannegan2 ***	***	Intel define the Hannegan2 ***	None – Intel-provided document
3	Hannegan2 ***	***	Impinj define the Hannegan2 ***	Hannegan2 ***	$***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.ih2

Appendix C-1 – Hannegan1 Requirements

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

RF Functionality

***

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

***

*

**

*

**

*

**

RF Performance

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

***

***

*

**

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Parameter

Description

Condition

Min

Nom

Max

Units

Comments

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*** to comply with the Intel Specific Field of Use

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

DCI

*** ***

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

Physical

***

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

Environmental

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*

**

***

*

**

*

**

*

**

*

**

*

**

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

Hannegan1 ***

***

*** Indicates text has been omitted from this Exhibit pursuant to a confidential treatment request and has been filed separately with the Securities and Exchange Commission.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 3 to the Registration Statement on Form S-1 of Impinj, Inc. of our report dated April 21, 2011 relating to the financial statements of Impinj, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington

July 14, 2011