RAMBUS INC (Form: 10-Q, Received: 07/29/2013 06:01:27)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-Q

_______________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-22339

_______________________________

RAMBUS INC.

(Exact name of registrant as specified in its charter)

_______________________________



Delaware		94-3112828
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1050 Enterprise Way, Suite 700, Sunnyvale, CA 94089

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (408) 462-8000

_______________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

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 o		Accelerated filer ý

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The number of shares outstanding of the registrant’s Common Stock, par value $.001 per share, was 112,460,439 as of June 30, 2013 .

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RAMBUS INC.

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	PAGE
Special Note Regarding Forward-Looking Statements	3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	5
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012	6
Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2013 and 2012	7
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012	8
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures about Market Risk	39
Item 4. Controls and Procedures	40
PART II. OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3. Defaults Upon Senior Securities	51
Item 4. Mine Safety Disclosures	51
Item 5. Other Information	51
Item 6. Exhibits	51
Signature	52
Exhibit Index	53

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:


•	Success in the markets of our or our licensees’ products;


•	Sources of competition;


•	Research and development costs and improvements in technology;


•	Sources, amounts and concentration of revenue, including royalties;


•	Success in renewing license agreements;


•	Technology product development;


•	Outcome and effect of current and potential future intellectual property litigation and other significant litigation;


•	Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts;


•	Write-down of assets;


•	Pricing policies of our licensees;


•	Changes in our strategy and business model;


•	Deterioration of financial health of commercial counterparties and their ability to meet their obligations to us;


•	Engineering, marketing and general and administration expenses;


•	Contract revenue;


•	Operating results;


•	International licenses and operations;


•	Effects of changes in the economy and credit market on our industry and business;


•	Ability to identify, attract, motivate and retain qualified personnel;


•	Growth in our business;


•	Methods, estimates and judgments in accounting policies;


•	Adoption of new accounting pronouncements;


•	Effective tax rates;


•	Realization of deferred tax assets/release of deferred tax valuation allowance;


•	Trading price of our Common Stock;


•	Internal control environment;


•	Corporate governance;


•	The level and terms of our outstanding debt;


•	Resolution of the governmental agency matters involving us;


•	Litigation expenses;


•	Protection of intellectual property;


•	Terms of our licenses and amounts owed under license agreements;


•	Refinancing debt;

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•	Indemnification and technical support obligations;


•	Issuances of our securities, which could involve restrictive covenants or be dilutive to our existing stockholders; and


•	Likelihood of paying dividends or repurchasing securities.

You can identify these and other forward-looking statements by the use of words such as “may,” “future,” “shall,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” “projecting” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.

Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Item 1A, “Risk Factors.” All forward-looking statements included in this document are based on our assessment of information available to us at this time. We assume no obligation to update any forward-looking statements.

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RAMBUS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



	June 30, 2013			December 31, 2012
	(In thousands, except shares and par value)
ASSETS
Current assets:
Cash and cash equivalents	$	155,276		$	148,984
Marketable securities	50,364			54,346
Accounts receivable	1,003			529
Prepaids and other current assets	8,694			10,529
Deferred taxes	788			788
Total current assets	216,125			215,176
Intangible assets, net	139,395			153,173
Goodwill	124,969			124,969
Property, plant and equipment, net	75,831			86,905
Deferred taxes, long-term	4,806			4,458
Other assets	1,718			3,131
Total assets	$	562,844		$	587,812
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,300		$	7,918
Accrued salaries and benefits	29,582			23,992
Accrued litigation expenses	1,673			9,822
Convertible notes, short-term	155,473			—
Other accrued liabilities	5,957			12,402
Total current liabilities	197,985			54,134
Convertible notes, long-term	—			147,556
Long-term imputed financing obligation	39,724			45,919
Long-term income taxes payable	6,483			6,533
Other long-term liabilities	4,117			12,076
Total liabilities	248,309			266,218
Commitments and contingencies (Notes 9 and 14)
Stockholders’ equity:
Convertible preferred stock, $.001 par value:
Authorized: 5,000,000 shares
Issued and outstanding: no shares at June 30, 2013 and December 31, 2012	—			—
Common stock, $.001 par value:
Authorized: 500,000,000 shares
Issued and outstanding: 112,460,439 shares at June 30, 2013 and 111,525,021 shares at December 31, 2012	112			112
Additional paid-in capital	1,086,944			1,075,761
Accumulated deficit	(772,225		)	(753,979		)
Accumulated other comprehensive loss	(296		)	(300		)
Total stockholders’ equity	314,535			321,594
Total liabilities and stockholders’ equity	$	562,844		$	587,812

See Notes to Unaudited Condensed Consolidated Financial Statements

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RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(In thousands, except per share amounts)
Revenue:
Royalties	$	57,009		$	55,723		$	123,231		$	117,766
Contract revenue	910			492			1,554			1,312
Total revenue	57,919			56,215			124,785			119,078
Operating costs and expenses:
Cost of revenue*	7,365			7,340			13,899			14,503
Research and development*	30,777			38,347			63,625			76,741
Marketing, general and administrative*	14,134			32,194			39,239			67,028
Gain from sale of intellectual property	(103		)	—			(1,388		)	—
Costs of restatement and related legal activities	2			83			19			113
Restructuring charges	—			—			2,206			—
Total operating costs and expenses	52,175			77,964			117,600			158,385
Operating income (loss)	5,744			(21,749		)	7,185			(39,307		)
Interest income and other income (expense), net	(1,419		)	89			(1,439		)	187
Interest expense	(7,426		)	(6,719		)	(14,738		)	(13,299		)
Interest and other income (expense), net	(8,845		)	(6,630		)	(16,177		)	(13,112		)
Loss before income taxes	(3,101		)	(28,379		)	(8,992		)	(52,419		)
Provision for income taxes	4,743			3,837			9,254			7,687
Net loss	$	(7,844	)	$	(32,216	)	$	(18,246	)	$	(60,106	)
Net loss per share:
Basic	$	(0.07	)	$	(0.29	)	$	(0.16	)	$	(0.54	)
Diluted	$	(0.07	)	$	(0.29	)	$	(0.16	)	$	(0.54	)
Weighted average shares used in per share calculation:
Basic	112,183			110,553			111,892			110,456
Diluted	112,183			110,553			111,892			110,456

_________________________________________

* Includes stock-based compensation:



Cost of revenue	$	5	$	5	$	5	$	15
Research and development	$	1,660	$	2,631	$	3,536	$	5,351
Marketing, general and administrative	$	1,909	$	3,579	$	4,981	$	7,575

See Notes to Unaudited Condensed Consolidated Financial Statements

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RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2013			2012			2013			2012
Net loss	$	(7,844	)	$	(32,216	)	$	(18,246	)	$	(60,106	)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax	18			(22		)	4			72
Total comprehensive loss	$	(7,826	)	$	(32,238	)	$	(18,242	)	$	(60,034	)

See Notes to Unaudited Condensed Consolidated Financial Statements

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RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Six Months Ended
	June 30,
	2013			2012
	(In thousands)
Cash flows from operating activities:
Net loss	$	(18,246	)	$	(60,106	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation	8,522			12,941
Depreciation	7,671			6,368
Amortization of intangible assets	14,037			15,559
Non-cash interest expense and amortization of convertible debt issuance costs	8,234			7,067
Impairment of investment in non-marketable equity security	1,400			—
Deferred tax benefit	875			—
Non-cash restructuring	653			—
Gain from sale of intellectual property	(1,388		)	—
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(474		)	913
Prepaid expenses and other assets	3,163			5,108
Accounts payable	(865		)	(8,490		)
Accrued salaries and benefits and other accrued liabilities	(10,816		)	(8,666		)
Accrued litigation expenses	(8,149		)	(641		)
Income taxes payable	544			(689		)
Net cash provided by (used in) operating activities	5,161			(30,636		)
Cash flows from investing activities:
Purchases of property, plant and equipment	(5,309		)	(8,348		)
Acquisition of intangible assets	(2,500		)	(1,625		)
Purchases of marketable securities	(60,496		)	(49,642		)
Maturities of marketable securities	64,250			125,836
Proceeds from sale of intellectual property	2,250			—
Acquisition of businesses, net of cash acquired	—			(46,278		)
Net cash provided by (used in) investing activities	(1,805		)	19,943
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans	3,054			1,170
Principal payments against lease financing obligation	(62		)	(16		)
Payments under installment payment arrangement	(56		)	(121		)
Net cash provided by financing activities	2,936			1,033
Net increase (decrease) in cash and cash equivalents	6,292			(9,660		)
Cash and cash equivalents at beginning of period	148,984			162,244
Cash and cash equivalents at end of period	$	155,276		$	152,584

Non-cash investing and financing activities during the period:
Property, plant and equipment received and accrued in accounts payable and other accrued liabilities	$	112		$	3,762
Non-cash obligation for property, plant and equipment	$	—		$	2,008

See Notes to Unaudited Condensed Consolidated Financial Statements

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RAMBUS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Rambus Inc. (“Rambus” or the “Company”) and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. Investments in entities with less than 20% ownership or in which the Company does not have the ability to significantly influence the operations of the investee are being accounted for using the cost method and are included in other assets.

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring items) necessary to state fairly the financial position and results of operations for each interim period presented. Interim results are not necessarily indicative of results for a full year.

The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information. Certain information and Note disclosures included in the financial statements prepared in accordance with generally accepted accounting principles have been omitted in these interim statements pursuant to such SEC rules and regulations. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in Form 10-K for the year ended December 31, 2012 .

Operating Segment Definitions

Operating segments are based upon Rambus' internal organization structure, the manner in which its operations are managed, the criteria used by its Chief Operating Decision Maker ("CODM") to evaluate segment performance and availability of separate financial information regularly reviewed for resource allocation and performance assessment.

The Company determined its CODM to be the Chief Executive Officer and determined its operating segments to be: (1) Memory and Interfaces Division ("MID"), which focuses on the design, development and licensing of technology that is related to memory and interfaces; (2) Cryptography Research, Inc. ("CRI"), which focuses on the design, development and licensing of technologies for chip and system security and anti-counterfeiting; (3) Lighting and Display Technologies ("LDT"), which focuses on the design, development and licensing of technologies for lighting and displays; and (4) CTO, which is a centralized engineering, research and development and business incubation organization that consolidates early-stage investments, longer-term research activities and worldwide engineering, including Mobile Technologies Division ("MTD").

For the three and six months ended June 30, 2013 and 2012 , only MID and CTO were reportable segments as each of them met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining other operating segments were combined and shown under “All Other”.

2. Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU No. 2013-11 is a new accounting standard on the financial statement presentation of unrecognized tax benefits. The new standard provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. The new standard becomes effective for the Company on January 1, 2014 and it should be applied prospectively to unrecognized tax benefits that exist at the effective date with retrospective application permitted. The Company is currently assessing the impacts of this new standard.

In February 2013, the FASB issued ASU No. 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” ASU No. 2013-02 requires an entity to disaggregate the total change of each component of other comprehensive income either on the face of the income statement or as a separate disclosure in the notes. The new guidance became effective for the Company's interim period ended March 31, 2013. The Company adopted this guidance and the adoption did not have any impact on its financial position, results of operations or cash flows as the amounts reclassified out of accumulated other comprehensive loss is not significant.

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In July 2012, the FASB amended its guidance to simplify how an entity tests indefinite-lived intangible assets for impairment. The amendment will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative impairment test. An entity no longer will be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendment became effective for the Company’s interim period ended March 31, 2013. The Company adopted this guidance and the adoption did not have an impact on its financial position or results of operations as it does not have any indefinite-lived intangible assets.

In December 2011, the FASB issued No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”. ASU 2011-11 will require the Company to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The new guidance became effective for the Company's interim period ended March 31, 2013. The Company adopted this guidance and the adoption did not have any impact on its financial position, results of operations or cash flows as it is disclosure-only in nature.

3. Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, restricted stock and restricted stock units and shares issuable upon the conversion of convertible notes. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method. This method includes consideration of the amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the instrument was exercised and the amount of unrecognized stock-based compensation related to future services. No potential dilutive common shares are included in the computation of any diluted per share amount when a net loss is reported.

The following table sets forth the computation of basic and diluted net loss per share:



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Basic and diluted net loss per share:	(In thousands, except per share amounts)
Numerator:
Net Loss	$	(7,844	)	$	(32,216	)	$	(18,246	)	$	(60,106	)
Denominator:
Weighted-average shares outstanding	112,183			110,553			111,892			110,456
Basic and diluted net loss per share	$	(0.07	)	$	(0.29	)	$	(0.16	)	$	(0.54	)

For the three months ended June 30, 2013 and 2012 , options to purchase approximately 10.9 million and 12.5 million shares, respectively, and for the six months ended June 30, 2013 and 2012 , options to purchase approximately 11.2 million and 11.9 million shares, respectively, were excluded from the calculation because they were anti-dilutive after considering proceeds from exercise, taxes and related unrecognized stock-based compensation expense. For the three months ended June 30, 2013 and 2012 , an additional 4.0 million and 6.3 million potentially dilutive shares, respectively, and for the six months ended June 30, 2013 and 2012 , an additional 4.1 million and 6.5 million potentially dilutive shares, respectively, have been excluded from the weighted average dilutive shares because there were net losses for the periods.

4. Intangible Asset and Goodwill

Goodwill

The following table presents goodwill balances and adjustments to those balances for each of the reportable segments for the six months ended June 30, 2013 :

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Reportable Segment:	December 31, 2012		Additions to Goodwill		Impairment Charge of Goodwill		June 30, 2013
	(In thousands)
MID	$	19,905	$	—	$	—	$	19,905
CTO	8,070		—		—		8,070
All Other	96,994		—		—		96,994
Total	$	124,969	$	—	$	—	$	124,969



	As of
	June 30, 2013
Reportable Segment:	Gross Carrying Amount		Accumulated Impairment Losses			Net Carrying Amount
	(In thousands)
MID	$	19,905	$	—		$	19,905
CTO	8,070		—			8,070
All Other	110,694		(13,700		)	96,994
Total	$	138,669	$	(13,700	)	$	124,969

Intangible Assets

The components of the Company’s intangible assets as of June 30, 2013 and December 31, 2012 were as follows:



		As of June 30, 2013
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Existing technology	3 to 10 years	$	193,345	$	(69,728	)	$	123,617
Customer contracts and contractual relationships	1 to 10 years	32,650		(16,964		)	15,686
Non-compete agreements	3 years	300		(208		)	92
Total intangible assets		$	226,295	$	(86,900	)	$	139,395



		As of December 31, 2012
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Existing technology	3 to 10 years	$	191,815	$	(57,240	)	$	134,575
Customer contracts and contractual relationships	1 to 10 years	32,650		(14,194		)	18,456
Non-compete agreements	3 years	300		(158		)	142
Total intangible assets		$	224,765	$	(71,592	)	$	153,173

During the three and six months ended June 30, 2013 , the Company purchased intellectual property of $0.6 million and $2.5 million , respectively, which were recorded as intangible assets on the condensed consolidated balance sheets. During the three and six months ended June 30, 2013 , the Company sold portfolios of its intellectual property covering lighting technologies for $0.3 million and $2.3 million , respectively, and the related gain was recorded as gain from sale of intellectual property in the condensed consolidated statements of operations.

During the six months ended June 30, 2012 , the Company entered into various business combinations and technology asset acquisitions. These transactions had a total purchase price of $48.2 million . These transactions were completed to acquire patents and technology to expand the Company's existing technology for its MID and MTD groups.

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The favorable contracts (included in customer contracts and contractual relationships) are acquired patent licensing agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts reduce the favorable contract intangible asset. For the three months ended June 30, 2013 and 2012 , the Company received an immaterial amount and $1.2 million related to the favorable contracts, respectively. For the six months ended June 30, 2013 and 2012 , the Company received $1.4 million and $3.6 million related to the favorable contracts, respectively. As of June 30, 2013 and December 31, 2012 , the net balance of the favorable contract intangible assets was $3.4 million and $4.8 million , respectively.

Amortization expense for intangible assets for the three and six months ended June 30, 2013 was $7.0 million and $14.0 million , respectively. Amortization expense for intangible assets for the three and six months ended June 30, 2012 was $7.9 million and $15.6 million , respectively.

The estimated future amortization expense of intangible assets as of June 30, 2013 was as follows (amounts in thousands):



Years Ending December 31:	Amount
2013 (remaining 6 months)	$	17,132
2014	27,599
2015	26,949
2016	26,081
2017	24,625
Thereafter	17,009
	$	139,395

It is reasonably possible that the businesses could perform significantly below the Company's expectations or a deterioration of market and economic conditions could occur. This would adversely impact the Company's ability to meet its projected results, which could cause the goodwill in any of its reporting units or long-lived assets in any of its asset groups to become impaired. Significant differences between these estimates and actual cash flows could materially affect the Company's future financial results. If the MTD and LDT reporting units are not successful in commercializing new business arrangements, or if the Company is unsuccessful in signing new license agreements or renewing its existing license agreements for the MID and CRI reporting units, the revenue and income for these reporting units could adversely and materially deviate from their historical trends and could cause goodwill or long-lived assets to become impaired. If the Company determines that its goodwill or long-lived assets are impaired, the Company would be required to record a non-cash charge that could have a material adverse effect on its results of operations and financial position.

5. Segments and Major Customers

The Company evaluates the performance of its segments based on segment operating income (loss), which is defined as customer licensing income ("CLI") minus segment operating expenses. Segment operating expenses are comprised of direct operating expenses and the allocation of certain engineering expenses.

CLI is defined as total cash royalties received from its customers under its licensing agreements with them. In addition, customer licensing income includes other patent royalties received but not recognizable as revenue and proceeds from sale of intellectual property. Since the third quarter of 2011, the Company has received patent royalty payments from certain patent license agreements assumed in the acquisition of CRI which were treated as favorable contracts. Cash received from these acquired favorable contracts reduced the favorable contract intangible asset on the Company's balance sheet. The Company has combined these cash royalty payments as CLI to reflect the total amounts received from its customers.

Segment operating expenses do not include marketing, general and administrative expenses and the allocation of certain expenses managed at the corporate level, such as stock-based compensation, amortization, and certain bonus and acquisition costs. The “Reconciling Items” category includes these unallocated marketing, general and administrative expenses as well as corporate level expenses. The presentation of the three and six months ended June 30, 2012 segment data has been updated to conform with the 2013 segment operating income (loss) definition applied starting in the fourth quarter of 2012.

The tables below present reported segment operating income (loss) for the three and six months ended June 30, 2013 and 2012 , respectively.

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	For the Three Months Ended June 30, 2013											For the Six Months Ended June 30, 2013
	MID		CTO			All Other			Total			MID		CTO			All Other			Total
	(In thousands)											(In thousands)
Revenues	$	49,456	$	—		$	8,463		$	57,919		$	109,131	$	—		$	15,654		$	124,785
Other patent royalties received	3,125		—			267			3,392			5,000		—			3,629			8,629
Customer licensing income	$	52,581	$	—		$	8,730		$	61,311		$	114,131	$	—		$	19,283		$	133,414
Segment operating expenses	9,347		7,074			12,215			28,636			18,272		14,932			22,289			55,493
Segment operating income (loss)	$	43,234	$	(7,074	)	$	(3,485	)	$	32,675		$	95,859	$	(14,932	)	$	(3,006	)	$	77,921
Reconciling items									(26,931		)									(70,736		)
Operating income									$	5,744										$	7,185
Interest and other income (expense), net									(8,845		)									(16,177		)
Loss before income taxes									$	(3,101	)									$	(8,992	)



	For the Three Months Ended June 30, 2012											For the Six Months Ended June 30, 2012
	MID		CTO			All Other			Total			MID		CTO			All Other			Total
	(In thousands)											(In thousands)
Revenues	$	52,137	$	—		$	4,078		$	56,215		$	109,225	$	—		$	9,853		$	119,078
Other patent royalties received	—		—			1,201			1,201			—		—			3,615			3,615
Customer licensing income	$	52,137	$	—		$	5,279		$	57,416		$	109,225	$	—		$	13,468		$	122,693
Segment operating expenses	10,045		7,864			8,117			26,026			21,594		14,368			16,188			52,150
Segment operating income (loss)	$	42,092	$	(7,864	)	$	(2,838	)	$	31,390		$	87,631	$	(14,368	)	$	(2,720	)	$	70,543
Reconciling items									(53,139		)									(109,850		)
Operating loss									$	(21,749	)									$	(39,307	)
Interest and other income (expense), net									(6,630		)									(13,112		)
Loss before income taxes									$	(28,379	)									$	(52,419	)

The CODM does not review information regarding assets on an operating segment basis. Additionally, the Company does not record intersegment revenue or expense.

Revenue from the Company’s major customers representing 10% or more of total revenue for the three and six months ended June 30, 2013 and 2012 , respectively, were as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Customer	2013		2012		2013		2012
Customer A	39	%	38	%	36	%	38	%
Customer B	*		*		*		10	%

_________________________________________

* Customer accounted for less than 10% of total revenue in the period

Revenue from customers in the geographic regions based on the location of customers' headquarters is as follows:

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2013		2012		2013		2012
South Korea	$	22,502	$	21,468	$	44,527	$	44,715
USA	15,106		15,280		40,675		31,469
Japan	12,261		15,902		26,869		33,471
Europe	5,432		943		7,560		2,072
Canada	1,862		1,872		3,648		3,851
Asia-Other	756		750		1,506		3,500
Total	$	57,919	$	56,215	$	124,785	$	119,078

6. Marketable Securities

Rambus invests its excess cash and cash equivalents primarily in U.S. government sponsored obligations, commercial paper, corporate notes and bonds, money market funds and municipal notes and bonds that mature within three years. As of June 30, 2013 and December 31, 2012 , all of the Company’s cash equivalents and marketable securities had a remaining maturity of less than one year .

All cash equivalents and marketable securities are classified as available-for-sale. Total cash, cash equivalents and marketable securities are summarized as follows:



	As of June 30, 2013
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	134,860	$	134,860	$	—	$	—		0.01	%
Corporate notes, bonds and commercial paper	58,864		58,870		—		(6		)	0.11	%
Total cash equivalents and marketable securities	193,724		193,730		—		(6		)
Cash	11,916		11,916		—		—
Total cash, cash equivalents and marketable securities	$	205,640	$	205,646	$	—	$	(6	)



	As of December 31, 2012
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	126,570	$	126,570	$	—	$	—		0.01	%
Corporate notes, bonds and commercial paper	57,345		57,356		4		(15		)	0.17	%
Total cash equivalents and marketable securities	183,915		183,926		4		(15		)
Cash	19,415		19,415		—		—
Total cash, cash equivalents and marketable securities	$	203,330	$	203,341	$	4	$	(15	)

Available-for-sale securities are reported at fair value on the balance sheets and classified as follows:



	As of
	June 30, 2013		December 31, 2012
	(In thousands)
Cash equivalents	$	143,360	$	129,569
Short term marketable securities	50,364		54,346
Total cash equivalents and marketable securities	193,724		183,915
Cash	11,916		19,415
Total cash, cash equivalents and marketable securities	$	205,640	$	203,330

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The Company continues to invest in highly rated quality, highly liquid debt securities. As of June 30, 2013 , these

securities have a remaining maturity of less than one year. The Company holds all of its marketable securities as available-for-sale, marks them to market, and regularly reviews its portfolio to ensure adherence to its investment policy and to monitor

individual investments for risk analysis, proper valuation, and unrealized losses that may be other than temporary.

The estimated fair value of cash equivalents and marketable securities classified by the length of time that the securities have been in a continuous unrealized loss position at June 30, 2013 and December 31, 2012 are as follows:



	Fair Value				Gross Unrealized Loss
	June 30, 2013		December 31, 2012		June 30, 2013			December 31, 2012
	(In thousands)
Less than one year
Corporate notes, bonds and commercial paper	$	43,040	$	51,819	$	(6	)	$	(15	)

The gross unrealized loss at June 30, 2013 and December 31, 2012 was not material in relation to the Company’s total available-for-sale portfolio. The gross unrealized loss can be primarily attributed to a combination of market conditions as well as the demand for and duration of the corporate notes and bonds. The Company has no intent to sell, there is no requirement to sell and the Company believes that it can recover the amortized cost of these investments. The Company has found no evidence of impairment due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive income (loss). However, the Company cannot provide any assurance that its portfolio of cash, cash equivalents and marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results.

See Note 7, “Fair Value of Financial Instruments,” for discussion regarding the fair value of the Company’s cash equivalents and marketable securities.

7. Fair Value of Financial Instruments

The Company tests the pricing inputs by obtaining prices from two different sources for the same security on a sample of its portfolio. The Company has not adjusted the pricing inputs it has obtained. The following table presents the financial instruments that are carried at fair value and summarizes the valuation of its cash equivalents and marketable securities by the above pricing levels as of June 30, 2013 and December 31, 2012 :



	As of June 30, 2013
	Total		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Money market funds	$	134,860	$	134,860	$	—	$	—
Corporate notes, bonds and commercial paper	58,864		—		58,864		—
Total available-for-sale securities	$	193,724	$	134,860	$	58,864	$	—



	As of December 31, 2012
	Total		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Money market funds	$	126,570	$	126,570	$	—	$	—
Corporate notes, bonds and commercial paper	57,345		—		57,345		—
Total available-for-sale securities	$	183,915	$	126,570	$	57,345	$	—

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The Company monitors its investments for other-than-temporary impairment and records appropriate reductions in carrying value when necessary. The Company made an investment of $2.0 million in a non-marketable equity security of a private company during 2009. Prior to the second quarter of 2013, the Company had not recorded any impairment charges related to this investment as there had been no events that caused a decrease in its fair value below the carrying cost. The Company evaluated the fair value of the investment in the non-marketable equity security as of June 30, 2013 , and based on the information provided by the private company, determined that there was a decrease in the security's fair value. The fair value of the non-marketable equity security was determined based on an income approach, using level 3 fair value inputs, as it was deemed to be the most indicative of the security's fair value. Accordingly, the Company recorded an impairment charge of $1.4 million within interest income and other income (expense), net, in the condensed consolidated statements of operations for the three and six months ended June 30, 2013 . Additionally, the Company cannot provide any assurance that its non-marketable equity security will not be further impacted by advers e c hanges in the general market conditions or deterioration in business prospects of the investee , which may require the Company in the future to record additional impairment charges which could adversely impact its financial results.

For the three and six months ended June 30, 2013 and 2012 , there were no transfers of financial instruments between different categories of fair value.

The following table presents the financial instruments that are not carried at fair value but require fair value disclosure as of June 30, 2013 and December 31, 2012 :



	As of June 30, 2013						As of December 31, 2012
(In thousands)	Face Value		Carrying Value		Fair Value		Face Value		Carrying Value		Fair Value
5% Convertible Senior Notes due 2014	$	172,500	$	155,473	$	177,784	$	172,500	$	147,556	$	172,716

The fair value of the convertible notes at each balance sheet date is determined based on recent quoted market prices for these notes which is a level two measurement. As discussed in Note 8, "Convertible Notes," as of June 30, 2013 , the convertible notes are carried at face value of $172.5 million less any unamortized debt discount. The carrying value of other financial instruments, including accounts receivable, accounts payable and other payables, approximates fair value due to their short maturities.

The Company monitors its investments for other than temporary losses by considering current factors, including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, reductions in carrying values when necessary and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in the market. Any other than temporary loss is reported under “Interest and other income (expense), net” in the condensed consolidated statement of operations. For the three and six months ended June 30, 2013 and 2012 , the Company has not incurred impairment loss on its investments.

8. Convertible Notes

The Company’s convertible notes are shown in the following table:



(In thousands)	As of June 30, 2013			As of December 31, 2012
5% Convertible Senior Notes due 2014 (the “2014 Notes”)	$	172,500		$	172,500
Unamortized discount	(17,027		)	(24,944		)
Total convertible notes	$	155,473		$	147,556
Less current portion	155,473			—
Total long-term convertible notes	$	—		$	147,556

As of June 30, 2013, the 2014 Notes were reclassed from a long-term liability to a short-term liability as they will be due on June 15, 2014.

Interest expense related to the notes for the three and six months ended June 30, 2013 and 2012 was as follows:

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
	(In thousands)
2014 Notes coupon interest at a rate of 5%	$	2,156	$	2,156	$	4,313	$	4,313
2014 Notes amortization of discount and debt issuance costs at an additional effective interest rate of 11.7%	4,145		3,557		8,234		7,067
Total interest expense on convertible notes	$	6,301	$	5,713	$	12,547	$	11,380

9. Commitments and Contingencies

As of June 30, 2013 , the Company’s material contractual obligations are as follows (in thousands):



	Total		Remainder of 2013		2014		2015		2016		2017		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	43,253	$	2,993	$	5,874	$	6,010	$	6,156	$	6,302	$	15,918
Leases and other contractual obligations	7,309		1,288		1,874		1,740		1,049		1,018		340
Software licenses (3)	160		80		80		—		—		—		—
Acquisition retention bonuses (4)	19,506		—		18,203		1,303		—		—		—
Convertible notes	172,500		—		172,500		—		—		—		—
Interest payments related to convertible notes	8,625		4,313		4,312		—		—		—		—
Total	$	251,353	$	8,674	$	202,843	$	9,053	$	7,205	$	7,320	$	16,258

_________________________________________

(1)

The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $16.7 million including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.1 million in long-term income taxes payable as of June 30, 2013 . As noted below in Note 13, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

(2)

With respect to the imputed financing obligation, the main components of the difference between the amount reflected in the contractual obligations table and the amount reflected on the condensed consolidated balance sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. Additionally, the amount includes the amended Ohio lease and the amended Sunnyvale lease.


(3)	The Company has commitments with various software vendors for non-cancellable license agreements generally having terms longer than one year. The above table summarizes those contractual obligations as of June 30, 2013 which are also presented on the Company’s condensed consolidated balance sheet under current and other long-term liabilities.


(4)	In connection with its recent acquisitions, the Company is obligated to pay retention bonuses to certain employees and contractors, subject to certain eligibility and acceleration provisions including the condition of employment. The remaining $16.9 million of CRI retention bonuses payable on June 3, 2014 can be paid in cash or stock at the Company’s election.

Building lease expense was approximately $0.9 million and $1.8 million for the three and six months ended June 30, 2013 , respectively. Building lease expense was approximately $1.2 million and $1.9 million for the three and six months ended June 30, 2012 , respectively. Deferred rent of $1.5 million and $0.8 million as of June 30, 2013 and December 31, 2012 , respectively, were included primarily in other long-term liabilities.

Indemnification

The Company enters into standard license agreements in the ordinary course of business. Although the Company does not indemnify most of its customers, there are times when an indemnification is a necessary means of doing business. Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or other

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intellectual property infringement or any other claim by any third party arising as result of the applicable agreement with the Company. The maximum amount of indemnification the Company could be required to make under these agreements is generally limited to fees received by the Company.

Several securities fraud class actions, private lawsuits and shareholder derivative actions were filed in state and federal courts against certain of the Company’s current and former officers and directors related to the stock option granting actions. As permitted under Delaware law, the Company has agreements whereby its officers and directors are indemnified for certain events or occurrences while the officer or director is, or was serving, at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s term in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has a director and officer insurance policy that reduces the Company’s exposure and enables the Company to recover a portion of future amounts to be paid. As a result of these indemnification agreements, the Company continues to make payments on behalf of primarily former officers and some current officers. As of June 30, 2013 , the Company had made cumulative payments of approximately $32.2 million on their behalf, including an immaterial amount made in the quarter ended June 30, 2013 . As of June 30, 2012 , the Company had made cumulative payments of approximately $32.0 million on their behalf, including $0.1 million in the quarter ended June 30, 2012 . These payments were recorded under costs of restatement and related legal activities in the condensed consolidated statements of operations.

10. Equity Incentive Plans and Stock-Based Compensation

As of June 30, 2013 , 1,858,262 shares of the 21,400,000 shares approved under the 2006 Equity Incentive Plan (the “2006 Plan”) remain available for grant which included an increase of 6,500,000 shares approved by stockholders on April 26, 2012. The 2006 Plan is now the Company’s only plan for providing stock-based incentive awards to eligible employees, executive officers, non-employee directors and consultants; however, the 1997 Stock Option Plan (the “1997 Plan”) and the 1999 Non-statutory Stock Option Plan (the “1999 Plan”) will continue to govern awards previously granted under those plans.

A summary of shares available for grant under the Company’s plans is as follows:



	Shares Available for Grant
Shares available as of December 31, 2012	2,729,159
Stock options granted	(1,756,312	)
Stock options forfeited	1,637,125
Stock options expired under former plans	(475,419	)
Nonvested equity stock and stock units granted (1)	(457,428	)
Nonvested equity stock and stock units forfeited (1)	181,137
Total available for grant as of June 30, 2013	1,858,262

_________________________________________


(1)	For purposes of determining the number of shares available for grant under the 2006 Plan against the maximum number of shares authorized, each restricted stock granted reduces the number of shares available for grant by 1.5 shares and each restricted stock forfeited increases shares available for grant by 1.5 shares.

General Stock Option Information

The following table summarizes stock option activity under the 1997 Plan, 1999 Plan and 2006 Plan for the six months ended June 30, 2013 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of June 30, 2013 .

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	Options Outstanding
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
	(In thousands, except per share amounts)
Outstanding as of December 31, 2012	13,094,815		$	12.79
Options granted	1,756,312		5.51
Options exercised	(44,850	)	6.23
Options forfeited	(1,637,125	)	11.17
Outstanding as of June 30, 2013	13,169,152		12.04		5.93	$	21,033
Vested or expected to vest at June 30, 2013	12,273,266		12.47		5.68	18,444
Options exercisable at June 30, 2013	6,615,397		17.59		3.45	3,088

No stock options that contain a market condition were granted during the three and six months ended June 30, 2013 . The fair values of the options granted with a market condition were calculated using a binomial valuation model, which estimates the potential outcome of reaching the market condition based on simulated future stock prices. As of June 30, 2013 and December 31, 2012 , there were 1,535,000 stock options outstanding that require the Company to achieve minimum market conditions in order for the options to become exercisable.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options at June 30, 2013 , based on the $8.59 closing stock price of Rambus’ Common Stock on June 28, 2013 on the NASDAQ Global Select Market, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options outstanding and exercisable as of June 30, 2013 was 8,126,102 and 1,991,014 , respectively.

Employee Stock Purchase Plan

Under the 2006 Employee Stock Purchase Plan (“ESPP”), the Company issued 652,272 shares at a price of $4.28 per share during the six months ended June 30, 2013 . The Company issued 163,398 shares at a price of $4.21 per share during the six months ended June 30, 2012 . As of June 30, 2013 , 430,243 shares under the ESPP remain available for issuance.

Stock-Based Compensation

For the six months ended June 30, 2013 and 2012 , the Company maintained stock plans covering a broad range of potential equity grants including stock options, nonvested equity stock and equity stock units and performance based instruments. In addition, the Company sponsors an ESPP, whereby eligible employees are entitled to purchase Common Stock semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market value of the Common Stock as of specific dates.

Stock Options

During the three and six months ended June 30, 2013 , the Company granted 136,875 and 1,756,312 stock options, respectively, with an estimated total grant-date fair value of $0.3 million and $4.1 million , respectively. During the three and six months ended June 30, 2013 , the Company recorded stock-based compensation expense related to stock options of $2.5 million and $5.6 million , respectively.

During the three and six months ended June 30, 2012 , the Company granted 3,065,198 and 5,002,200 stock options (including options granted in the stock option exchange program), respectively, with an estimated total grant-date fair value of $21.6 million and $29.1 million , respectively. During the three and six months ended June 30, 2012 , the Company recorded stock-based compensation expense related to stock options of $4.0 million and $8.3 million , respectively.

As of June 30, 2013 , there was $23.3 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements granted under the stock option plans. That cost is expected to be recognized over a weighted-average period of 2.7 years. The total fair value of shares vested as of June 30, 2013 was $75.9 million .

The total intrinsic value of options exercised was $0.1 million and $0.1 million for the three and six months ended June 30, 2013 , respectively. The total intrinsic value of options exercised was $0.1 million and $0.2 million for the three and six months ended June 30, 2012 , respectively. Intrinsic value is the total value of exercised shares based on the price of the Company’s common stock at the time of exercise less the cash received from the employees to exercise the options.

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Employee Stock Purchase Plan

For the three and six months ended June 30, 2013 , the Company recorded compensation expense related to the ESPP of $0.5 million and $1.0 million , respectively. For the three and six months ended June 30, 2012 , the Company recorded compensation expense related to the ESPP of $0.6 million and $1.3 million , respectively. As of June 30, 2013 , there was $0.7 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under the ESPP. That cost is expected to be recognized over four months.

There were no tax benefits realized as a result of employee stock option exercises, stock purchase plan purchases, and vesting of equity stock and stock units for the three and six months ended June 30, 2013 and 2012 calculated in accordance with accounting for share-based payments.

Valuation Assumptions

The fair value of stock awards is estimated as of the grant date using the Black-Scholes-Merton (“BSM”) option-pricing model assuming a dividend yield of 0% and the additional weighted-average assumptions as listed in the table below.

The following table presents the weighted-average assumptions used to estimate the fair value of stock options granted that contain only service conditions in the periods presented.



	Stock Option Plans
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Stock Option Plans
Expected stock price volatility	47		%	68		%	47		%	60-68%
Risk free interest rate	0.8		%	0.9		%	0.8-0.9%			0.7-0.9%
Expected term (in years)	5.4			5.7			5.4			5.6 –5.7
Weighted-average fair value of stock options granted to employees	$	2.61		$	3.41		$	2.35		$	3.83



	Employee Stock Purchase Plan
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Employee Stock Purchase Plan
Expected stock price volatility	48		%	63		%	48		%	63		%
Risk free interest rate	0.1		%	0.2		%	0.1		%	0.2		%
Expected term (in years)	0.5			0.5			0.5			0.5
Weighted-average fair value of purchase rights granted under the purchase plan	$	1.94		$	1.61		$	1.94		$	1.61

Nonvested Equity Stock and Stock Units

The Company grants nonvested equity stock units to officers, employees and directors. During the three and six months ended June 30, 2013 , the Company granted nonvested equity stock units totaling 28,456 and 304,952 shares under the 2006 Plan, respectively. During the three and six months ended June 30, 2012 , the Company granted nonvested equity stock units totaling 36,526 and 459,897 shares under the 2006 Plan, respectively. These awards have a service condition, generally a service period of four years , except in the case of grants to directors, for which the service period is one year . For the three and six months ended June 30, 2013 , the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately $0.2 million and $1.7 million , respectively. For the three and six months ended June 30, 2012 , the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately $0.2 million and $3.3 million , respectively. The Company occasionally grants nonvested equity stock units to its employees with vesting subject to the achievement of certain performance conditions. During the three and six months ended June 30, 2013 and 2012 , the achievement of certain performance conditions for certain performance equity stock units was considered probable, and as a result, the Company recognized immaterial amounts of stock-based compensation expense related to these performance stock units for all periods.

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For the three and six months ended June 30, 2013 , the Company recorded stock-based compensation expense of approximately $0.6 million and $1.9 million , respectively, related to all outstanding unvested equity stock grants. For the three and six months ended June 30, 2012 , the Company recorded stock-based compensation expense of approximately $1.5 million and $3.3 million , respectively, related to all outstanding unvested equity stock grants. Unrecognized stock-based compensation related to all nonvested equity stock grants, net of estimated forfeitures, was approximately $4.3 million at June 30, 2013 . This is expected to be recognized over a weighted average period of 2.2 years .

The following table reflects the activity related to nonvested equity stock and stock units for the six months ended June 30, 2013 :



Nonvested Equity Stock and Stock Units	Shares		Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2012	922,491		$	10.24
Granted	304,952		5.51
Vested	(312,070	)	11.25
Forfeited	(120,753	)	11.80
Nonvested at June 30, 2013	794,620		7.79

11. Stockholders’ Equity

Share Repurchase Program

During the six months ended June 30, 2013 , the Company did not repurchase any shares of its Common Stock under its share repurchase program. As of June 30, 2013 , the Company had repurchased a cumulative total of approximately 26.3 million shares of its Common Stock with an aggregate price of approximately $428.9 million since the commencement of the program in 2001. As of June 30, 2013 , there remained an outstanding authorization to repurchase approximately 5.2 million shares of the Company’s outstanding Common Stock.

The Company records stock repurchases as a reduction to stockholders’ equity. The Company records a portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of Common Stock.

12. Restructuring Charges

During the third quarter of 2012, the Company initiated a restructuring program to reduce overall corporate expenses which is expected to improve future profitability by reducing spending on marketing, general and administrative programs and refining some of the Company's research and development efforts. In connection with this restructuring program, the Company estimates that it will incur aggregate costs of approximately $6.0 million to $10.0 million . During the three months ended June 30, 2013, there were no restructuring charges. During the six months ended June 30, 2013 , the Company incurred restructuring charges of $2.2 million related primarily to the consolidation of certain facilities and the reduction in workforce, of which a majority was related to corporate support functions. Since the inception of the program, the Company has incurred $9.5 million in restructuring related charges. The Company expects to substantially complete its restructuring activities by the end of 2013. There were no restructuring charges during the three and six months ended June 30, 2012 .

The following table summarizes the restructuring activities during the six months ended June 30, 2013 :

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	Employee Severance and Related Benefits			Facilities				Total
	(In thousands)
Balance at December 31, 2012	$	906		$	—			$	906
Charges	246			1,960				2,206
Payments	(843		)	(1,216		)		(2,059		)
Non-cash charge	—			(653		)	*	(653		)
Balance at June 30, 2013	$	309		91				$	400

*The non-cash charge of $653 thousand is related to the termination of the Company's financing obligation associated with abandoning a construction asset at one of its facilities.

13. Income Taxes

During the three and six months ended June 30, 2013 and 2012 , the Company calculated its interim tax provision to record taxes incurred by the U.S. entity on a discrete basis because the Company was projecting losses in which a tax benefit cannot be recognized in accordance with FASB Accounting Standards Codification (“ASC”) 740, Income Taxes. The Company recorded a provision for income taxes of $4.7 million and $3.8 million for the three months ended June 30, 2013 and 2012 , respectively, and $9.3 million and $7.7 million for the six months ended June 30, 2013 and 2012 , respectively. The provision for income taxes for the three and six months ended June 30, 2013 and 2012 , is primarily comprised of withholding taxes and other foreign taxes based upon income earned during the period with no tax benefit recorded for the loss jurisdictions.

During the three and six months ended June 30, 2013 , the Company paid withholding taxes of $3.8 million and $7.6 million , respectively. During the three and six months ended June 30, 2012 , the Company paid withholding taxes of $3.7 million and $8.1 million , respectively.

As of June 30, 2013 , the Company’s condensed consolidated balance sheets included net deferred tax assets, before valuation allowance, of approximately $211.0 million , which consists of net operating loss carryovers, tax credit carryovers, amortization, employee stock-based compensation expenses and certain liabilities, partially reduced by deferred tax liabilities associated with the convertible debt instruments. As of June 30, 2013 , a full valuation allowance has been recorded against the U.S. deferred tax assets.

Management periodically evaluates the realizability of the Company's net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax statutes to fully utilize these assets. The Company's forecasted future operating results are highly influenced by, among other factors, assumptions regarding the Company's (1) ability to achieve its forecasted revenue, (2) ability to effectively manage its expenses in line with its forecasted revenue and (3) general trends in the industries in which it operates.

The Company maintains liabilities for uncertain tax positions within its long-term income taxes payable accounts. These liabilities involve judgment and estimation and are monitored by management based on the best information available including changes in tax regulations, the outcome of relevant court cases and other information.

As of June 30, 2013 , the Company had approximately $16.7 million of unrecognized tax benefits, including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.1 million in long-term income taxes payable. If recognized, approximately $2.0 million would be recorded as an income tax benefit. No benefit would be recorded for the remaining unrecognized tax benefits as the recognition would require a corresponding increase in the valuation allowance. As of December 31, 2012 , the Company had $16.8 million of unrecognized tax benefits, including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.2 million recorded in long-term income taxes payable.

Although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. At June 30, 2013 and December 31, 2012 , an immaterial amount of interest and penalties are included in long-term income taxes payable.

Rambus files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company is no longer subject to examination by the Internal Revenue Service (“IRS”) for tax years before 2009. The Company

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is no longer subject to examination by the State of California for tax years before 2008. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination by the IRS and the State of California. The IRS commenced an exam of the Company's 2010 through 2011 tax years during the first quarter of 2013. The Company is also subject to examination in various other foreign jurisdictions, including India, for various periods.

Additionally, the Company's future effective tax rates could be adversely affected by earnings being higher than anticipated in countries where the Company has higher statutory rates or lower than anticipated in countries where it has lower statutory rates, by changes in valuation of its deferred tax assets and liabilities or by changes in tax laws or interpretations of those laws.

14. Litigation and Asserted Claims

SK Hynix Litigation

U.S District Court of the Northern District of California

On August 29, 2000, SK Hynix (formerly Hyundai and Hynix) and various subsidiaries filed suit against Rambus in the U.S. District Court for the Northern District of California. The complaint asserts claims for fraud, violations of federal antitrust laws and deceptive practices in connection with Rambus' participation in a standards setting organization called JEDEC, and seeks a declaratory judgment that the Rambus patents-in-suit are unenforceable, invalid and not infringed by SK Hynix, compensatory and punitive damages, and attorneys' fees. Rambus denied SK Hynix's claims and filed counterclaims for patent infringement against SK Hynix. The case was divided into three phases: (1) unclean hands; (2) patent infringement; and (3) antitrust, equitable estoppel, and other JEDEC-related issues. Rambus prevailed in all three phases and judgment was entered against SK Hynix. On appeal, the Federal Circuit vacated the judgment and remanded the case back to the district court for further proceedings consistent with its unclean hands and spoliation opinions in the SK Hynix and Micron cases. SK Hynix was also awarded costs of appeal; The Company had previously accrued approximately $8.1 million related to those costs.

On remand, the district court found that Rambus engaged in spoliation of evidence. Because the asserted patents were otherwise valid and Rambus did not intentionally destroy particular damaging documents, the court concluded that the appropriate sanction was to strike from the record evidence supporting a royalty in excess of a reasonable, non-discriminatory royalty. Accordingly, the court ordered the parties to submit briefs on what a reasonable and non-discriminatory royalty would be for the patents in suit.

On December 19, 2012, the court held a hearing on the reasonable royalty motion; SK Hynix's motion for summary judgment of invalidity, new trial, or a stay of the case, and Rambus' motion to amend the unclean hands decision. No decisions have issued to date.

SK Hynix subsequently filed a motion for collateral estoppel based on the Micron spoliation decision on remand. On February 27, 2013, the district court issued notice that SK Hynix's motion has been submitted without oral argument from the parties.

On June 11, 2013, Rambus and SK Hynix announced that they had entered into a settlement of all outstanding disputes between the parties, which is described in Note 15 "Agreement with SK Hynix". As a result of the settlement, the Company has reversed the cost accrual of $8.1 million referenced above, which was included in marketing, general and administrative expenses in the condensed consolidated statements of operations.

Micron Litigation

U.S District Court in Delaware: Case No. 00-792-SLR

On August 28, 2000, Micron filed suit against Rambus in the U.S. District Court for Delaware. The suit asserts violations of federal antitrust laws, deceptive trade practices, breach of contract, fraud and negligent misrepresentation in connection with Rambus' participation in JEDEC. Micron seeks a declaration of monopolization by Rambus, compensatory and punitive damages, attorneys' fees, a declaratory judgment that eight Rambus patents are invalid and not infringed, and the award to Micron of a royalty-free license to the Rambus patents. Rambus has filed an answer and counterclaims disputing Micron's claims and asserting infringement by Micron of 12 U.S. patents. Micron prevailed on its unclean hands defense and judgment was entered against Rambus on the patent infringement claims. On appeal, the Federal Circuit remanded the case back to the district court for further proceedings consistent with its opinion.

On January 2, 2013, the court issued its decision finding that Rambus had spoliated documents in bad faith, that Micron's inequitable conduct defense and JEDEC-based claims and defenses related to patent misuse, antitrust, and unfair competition were prejudiced, and that the patents-in-suit are thus unenforceable against Micron. The court issued an order on January 24,

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2013, directing judgment be entered against Rambus on the patent infringement claims in 30 days , and staying the remainder of the case pending appeal. Rambus filed a notice of appeal to the United States Court of Appeals for the Federal Circuit on March 27, 2013. Rambus' opening appellate brief is currently due to be filed in July 2013.

U.S. District Court of the Northern District of California

On January 13, 2006, Rambus filed suit against Micron in the U.S. District Court for the Northern District of California. Rambus alleges that 14 Rambus patents are infringed by Micron's DDR2, DDR3, GDDR3, and other advanced memory products. Rambus seeks compensatory and punitive damages, attorneys' fees, and injunctive relief. This case has been stayed since February 3, 2009.

European Patent Infringement Cases

In 2001, Rambus filed suit against Micron in Mannheim, Germany, for infringement of European patent, EP 1 22 642. That suit has not been active. Two related proceedings in Italy remain active. One relates to Rambus' claim that Micron is infringing European patent, EP 1 4 956. The court in this proceeding has found the '956 patent valid but not infringed. The court also dismissed Micron's claims for unfair competition based on JEDEC as well as abuse of process. Micron did not appeal this decision so this case is now closed. The second case in Italy involves Micron's purported claim resulting from a seizure of evidence in Italy in 2000 carried out by Rambus pursuant to a court order. The court in this proceeding dismissed Micron's claim. Micron has appealed this decision to the Italian Supreme Court.

DDR2, DDR3, gDDR2, GDDR3, GDDR4 Litigation (“DDR2”)

U.S District Court in the Northern District of California

On January 25, 2005, Rambus filed a patent infringement suit in the U.S. District Court for the Northern District of California court against SK Hynix, Infineon, Nanya, and Inotera. Infineon and Inotera were subsequently dismissed from this litigation as was Samsung, which previously had been added as a defendant. Rambus alleges that certain of its patents are infringed by certain of the defendants' SDRAM, DDR, DDR2, DDR3, gDDR2, GDDR3, GDDR4 and other advanced memory products. This case has been stayed since February 3, 2009. On June 11, 2013, Rambus and SK Hynix announced that they had entered into a settlement of all outstanding disputes between the parties.

European Commission Competition Directorate-General

On or about April 22, 2003, Rambus was notified by the European Commission Competition Directorate-General (Directorate) (the “European Commission”) that it had received complaints from Infineon and SK Hynix, which led to a statement of objections from the European Commission alleging that through Rambus' participation in the JEDEC standards setting organization and subsequent conduct, Rambus violated European Union competition law.

On December 9, 2009, the European Commission announced that it had reached a final settlement with Rambus to resolve the pending case. On March 25, 2010, SK Hynix filed appeals with the General Court of the European Union purporting to challenge the settlement and the European Commission's rejection of SK Hynix's complaint.

On June 11, 2013, Rambus and SK Hynix announced that they had entered into a settlement of all outstanding disputes between the parties, which is described in Note 15 "Agreement with SK Hynix".

Superior Court of California for the County of San Francisco

On May 5, 2004, Rambus filed a lawsuit against Micron, SK Hynix, Infineon and Siemens in San Francisco Superior Court (the “San Francisco court”) seeking damages for conspiring to fix prices, conspiring to monopolize under the Cartwright Act, intentional interference with prospective economic advantage, and unfair competition. This lawsuit alleges that there were concerted efforts beginning in the 1990s to deter innovation in the DRAM market and to boycott Rambus and/or deter market acceptance of Rambus' RDRAM product. Subsequently, Infineon and Siemens were dismissed from this action (as a result of a settlement with Infineon) and three Samsung-related entities were added as defendants and later dismissed (as a result of a settlement with Samsung).

A jury trial against Micron and SK Hynix began on June 20, 2011. On November 16, 2011, the jury returned a verdict in favor of Micron and SK Hynix and against Rambus, and judgment was entered by the Court on February 15, 2012. The court issued an order on January 29, 2013, awarding costs to Micron and SK Hynix of $520 thousand and $350 thousand , respectively.

Rambus filed a notice of appeal on April 3, 2012 and thereafter filed its opening brief on appeal on September 19, 2012. Defendants filed their responsive briefs on March 8, 2013. Rambus filed its reply brief on July 12, 2013.

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On June 11, 2013, Rambus and SK Hynix announced that they had entered into a settlement of all outstanding disputes between the parties, which is described in Note 15 "Agreement with SK Hynix". As a result of the settlement, the Company has reversed the cost accrual of $350 thousand referenced above, which was included in marketing, general and administrative expenses in the condensed consolidated statements of operations. Due to this reversal, as of June 30, 2013, $520 thousand of the awarded costs remained accrued.

Broadcom, Freescale, LSI, MediaTek, and STMicroelectronics Litigation

International Trade Commission 2010 Investigation

On December 1, 2010, Rambus filed a complaint with the ITC requesting the commencement of an investigation and seeking an exclusion order barring the importation, sale for importation, or sale after importation of products that incorporate at least DDR, DDR2, DDR3, LPDDR, LPDDR2, mobile DDR, GDDR, GDDR2, and GDDR3memory controllers from Broadcom, Freescale, LSI, MediaTek and STMicroelectronics that infringe patents from the Barth family of patents, and products having certain peripheral interfaces, including PCI Express interfaces, DisplayPort interfaces, and certain Serial AT Attachment (“SATA”) and Serial Attached SCSI (“SAS”) interfaces, from Broadcom, Freescale, LSI and STMicroelectronics that infringe patents from the Dally family of patents. The complaint names, among others, Broadcom, Freescale, LSI, MediaTek and STMicroelectronics as respondents, as well as companies whose products incorporate those companies' accused products and are imported into the United States, including Asustek Computer Inc. and Asus Computer International Inc., Audio Partnership Plc, Cisco Systems, Garmin International, G.B.T. Inc., Giga-Byte Technology Co. Ltd., Gracom Technologies LLC, Hewlett-Packard Company, Hitachi GST, Motorola, Inc., Oppo Digital, Inc., and Seagate Technology. The complaint also names NVIDIA and certain companies whose products incorporate accused NVIDIA products with certain peripheral interfaces, including PCI Express and DisplayPort peripheral interfaces, and seeks to bar their importation, sale for importation, or sale after importation. On December 29, 2010, the ITC instituted the investigation. On June 20, 2011, January 17, 2012, and March 19, 2012, respectively, the administrative law judge granted joint motions to terminate the investigation as to Freescale, Broadcom and Mediatek pursuant to the parties' settlement agreement. A final hearing before the administrative law judge was held October 12-20, 2011.

On July 25, 2012, the ITC issued the notice of its determination to terminate the investigation with a finding of no violation for the following reasons: all of the asserted patent claims were invalid due to anticipation or obviousness, except for certain Dally claims that include multiple-transmitters for which the ITC determined there was no infringement; Rambus did not demonstrate the existence of a domestic industry for both the Barth and Dally patents; the Barth patents were unenforceable under the doctrine of unclean hands; and the Barth patents were exhausted as to one respondent. The ITC's opinion setting forth its determinations issued on July 31, 2012. Rambus filed a notice of appeal on September 21, 2012. Rambus and LSI announced that they had entered into a settlement of their disputes on February 19, 2013. Rambus filed its opening brief on May 23, 2013 and the appeal was dismissed on June 24, 2013 as a result of the settlement with STMicroelectronics as the only remaining respondent.

U.S District Court in the Northern District of California

On December 1, 2010, Rambus filed complaints against Broadcom, Freescale, LSI, MediaTek and STMicroelectronics in the U.S. District Court for the Northern District of California alleging that 1) products that incorporate at least DDR, DDR2, DDR3, LPDDR, LPDDR2, mobile DDR, GDDR, GDDR2, and GDDR3 memory controllers from Broadcom, Freescale, LSI, MediaTek and STMicroelectronics infringe patents from the Barth family of patents; 2) those same products and products from those companies that incorporate SDR memory controllers infringe patents from the Farmwald-Horowitz family; and 3) products having certain peripheral interfaces, including PCI Express, DisplayPort, and certain SATA and SAS interfaces, from Broadcom, Freescale, LSI and STMicroelectronics infringe patents from the Dally family of patents. On March 20, 2011, June 7, 2011, December 29, 2011, and February 26, 2013, respectively, Rambus' complaint against MediaTek, Freescale, Broadcom and LSI was dismissed pursuant to the parties' settlement agreement. Rambus and STMicroelectronics announced that they had entered into a settlement of their disputes on June 17, 2013.

Potential Future Litigation

In addition to the litigation described above, companies continue to adopt Rambus technologies into various products. Rambus has notified many of these companies of their use of Rambus technology and continues to evaluate how to proceed on these matters.

There can be no assurance that any ongoing or future litigation will be successful. Rambus spends substantial company resources defending its intellectual property in litigation, which may continue for the foreseeable future given the multiple pending litigations. The outcomes of these litigations, as well as any delay in their resolution, could affect Rambus' ability to license its intellectual property in the future.

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The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. A reasonably possible loss in excess of amounts accrued is not material to the consolidated financial statements.

15. Agreement with SK Hynix

On June 11, 2013, Rambus, SK Hynix and certain related entities of SK Hynix entered into a settlement agreement, pursuant to which the parties have agreed to release all claims against each other with respect to all outstanding litigation between them. Pursuant to the settlement agreement, Rambus and SK Hynix entered into a semiconductor patent license agreement on June 11, 2013, under which SK Hynix licenses from Rambus non-exclusive rights to certain Rambus patents and has agreed to pay Rambus cash amounts over the next five years as described below. Under the license agreement, Rambus has granted to SK Hynix (i) a paid-up perpetual patent license for certain identified SK Hynix DRAM products and (ii) a five -year term patent license to all other DRAM and other semiconductor products. Each license is a non-exclusive, non-transferable, royalty-bearing, worldwide patent license, without the right to sublicense, solely under the applicable patent claims of Rambus for such licensed products, to make (including have made), use, sell, offer for sale and/or import such licensed products until the expiration or termination of the license pursuant to the terms of the license agreement. The license agreement requires that SK Hynix pay Rambus cash payments over the next five years of a fixed amount of $12 million each quarter, commencing in the quarter ending September 30, 2013. In addition, additional payments or certain adjustments to the payments by SK Hynix to Rambus under the license agreement may be due for certain acquisitions of businesses or assets by SK Hynix involving licensed products. The license agreement and the licenses granted thereunder may be modified under certain conditions and may be terminated upon a material breach by a party of its obligations under the agreement, a bankruptcy event involving a party or a change of control of SK Hynix subject to certain conditions.

The agreement with SK Hynix is a multiple element arrangement for accounting purposes. For a multiple element arrangement, the Company is required to determine the fair value of the elements which include antitrust litigation settlement, settlement of past infringement, and license agreement. The revenue associated with the various elements will be recognized when the first payment is due in July 2013 provided all other revenue recognition criteria are met. The Company is in the process of valuing the multiple elements and expects to complete the valuation by the end of the third quarter of 2013.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including any statements regarding trends in future revenue or results of operations, gross margin or operating margin, expenses, earnings or losses from operations, synergies or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning developments, performance or industry ranking; any statements regarding future economic conditions or performance; any statements regarding negotiations, litigation, investigations, claims, disputes or settlements; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Generally, the words “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “should,” “estimates,” “predicts,” “potential,” “continue,” “projecting” and similar expressions identify forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect. As a result of the factors described herein, and in the documents incorporated herein by reference, including, in particular, those factors described under “Risk Factors,” we undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with the Securities and Exchange Commission.

Rambus, RDRAM ™ , XDR ™ , FlexIO ™ and FlexPhase ™ are trademarks or registered trademarks of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

Industry terminology, used widely throughout this report, has been abbreviated and, as such, these abbreviations are defined below for your convenience:

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Differential Power Analysis	DPA
Double Data Rate	DDR
Dynamic Random Access Memory	DRAM
Graphics Double Data Rate	GDDR
Light Emitting Diodes	LED
Liquid Crystal Display	LCD
Peripheral Component Interconnect	PCI
Rambus Dynamic Random Access Memory	RDRAM ™
Single Data Rate	SDR
Synchronous Dynamic Random Access Memory	SDRAM
eXtreme Data Rate	XDR ™

From time to time we will refer to the abbreviated names of certain entities and, as such, have provided a chart to indicate the full names of those entities for your convenience.



Advanced Micro Devices Inc.	AMD
Broadcom Corporation	Broadcom
Cooper Lighting, LLC	Cooper Lighting
Cryptography Research, Inc.	CRI
Elpida Memory, Inc.	Elpida
EchoStar Technologies L.L.C.	EchoStar
Freescale Semiconductor Inc.	Freescale
Fujitsu Limited	Fujitsu
General Electric Company	GE
Infineon Technologies AG	Infineon
Inotera Memories, Inc.	Inotera
Intel Corporation	Intel
International Business Machines Corporation	IBM
Joint Electronic Device Engineering Councils	JEDEC
Lighting and Display Technology	LDT
LSI Corporation	LSI
MediaTek Inc.	MediaTek
Memory and Interfaces Division	MID
Micron Technologies, Inc.	Micron
Mobile Technology Division	MTD
Nanya Technology Corporation	Nanya
NVIDIA Corporation	NVIDIA
Panasonic Corporation	Panasonic
Renesas Electronics	Renesas
Samsung Electronics Co., Ltd.	Samsung
SK Hynix, Inc.	SK Hynix
Sony Computer Electronics	Sony
ST Microelectronics N.V.	STMicroelectronics
Toshiba Corporation	Toshiba

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Changes to Previously Announced 2013 Second Quarter Results

Subsequent to the filing of our Current Report on Form 8-K on July 18, 2013 that included our press release in which we furnished our unaudited financial results for the quarter ended June 30, 2013, information became available to us concerning a change in the fair value of our investment in a non-marketable equity security of a private company that, consistent with our policy of accounting for subsequent events, resulted in differences between the financial statements contained in this Quarterly Report on Form 10-Q from the information furnished in the July 18, 2013 press release. The adjustment had the effect of increasing other expense within interest income and other income (expense), net, by $1.4 million for both the three and six months ended June 30, 2013. As a result of this adjustment, net loss was increased by $1.4 million for both the three and six months ended June 30, 2013, and both basic and diluted net loss per share were increased by $0.01 per share for both the three and six months ended June 30, 2013.

Business Overview

We are an innovative technology solutions company that brings invention to market. Unleashing the intellectual power of our world-class engineers and scientists in a collaborative and synergistic way, we invent, develop, offer and license solutions that challenge and enable our customers to create the future. While we are best known for creating superior semiconductor memory architectures, we are also developing world-changing products and services in security, advanced LED lighting and displays, and immersive mobile media. We believe we have established an unparalleled business platform and licensing platform that will continue to foster the development of new foundational technologies. In addition to licensing, we are creating new business opportunities through offering products and services where our goal is to perpetuate strong company operating performance and long-term stockholder value. We generate revenue by licensing our inventions and solutions and providing services to market-leading companies.

While we have historically focused our efforts on the development of technologies for electronics memory and chip interfaces, we have been expanding our portfolio of inventions and solutions to address additional markets in lighting, displays, chip and system security, digital media, as well as new areas within the semiconductor industry, such as imaging and non-volatile memory. We intend to continue our growth into new technology fields, consistent with our mission to create great value through our innovations and to make those technologies available through both our licensing and non-licensing business models. Key to our efforts, both in our current businesses and in any new area of diversification, will be hiring and retaining world-class inventors, scientists and engineers to lead the development of inventions and technology solutions for these fields of focus, and the management and business support personnel necessary to execute our plans and strategies.

We have four business units: (1) Memory and Interfaces Division, or MID, which focuses on the design, development and licensing of technology that is related to memory and interfaces; (2) Cryptography Research, Inc., or CRI, which focuses on the design, development and licensing of technologies for chip and system security and anti-counterfeiting; (3) Lighting and Display Technologies, or LDT, which focuses on the design, development and licensing of technologies for lighting and displays; and (4) Mobile Technologies Division, or MTD, which focuses on the design, development and licensing of multi-media solutions. A centralized research and development and business incubation organization ("CTO") has been formed to consolidate early-stage investments, including MTD and longer-term research activities and worldwide engineering. As of June 30, 2013, only MID and CTO were considered reportable segments as each of them met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining other operating segments were combined and shown under “All Other”. For additional information concerning segment reporting, see Note 5, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Our strategy is to evolve from providing primarily patent licenses to providing additional technology, products and services while creating and leveraging strategic synergies to increase revenue. We believe that the successful execution of this strategy requires an exceptional business model that relies on the skills and talent of our employees. Accordingly, we seek to hire and retain world-class scientific and engineering expertise in all of our fields of technological focus, as well as the executive management and operating personnel required to successfully execute our business strategy. In order to attract the quality of employees required for this business model, we have created an environment and culture that encourages, fosters and supports research, development and innovation in breakthrough technologies with significant opportunities for broad industry adoption. We believe we have created a compelling company for inventors and innovators who are able to work within a business model and platform that focuses on technology development to drive strong future growth.

As of June 30, 2013, our semiconductor, lighting, display, security and other technologies are covered by 1,853 U.S. and foreign patents. Additionally, we have 965 patent applications pending. Some of the patents and pending patent applications are derived from a common parent patent application or are foreign counterpart patent applications. We have a program to file applications for and obtain patents in the United States and in selected foreign countries where we believe filing for such protection is appropriate and would further our overall business strategy and objectives. In some instances, obtaining appropriate levels of protection may involve prosecuting continuation and counterpart patent applications based on a common

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parent application. We believe our patented innovations provide our customers with the ability to achieve improved performance, lower risk, greater cost-effectiveness and other benefits in their products and services.

Our inventions and technology solutions are offered to our customers through either a patent license, a solutions license or product sales. Today, our revenues are primarily derived from patent licenses, through which we provide our customers a license to use a portion of our broad portfolio of patented inventions. The license provides our customers with a defined right to use our innovations in the customer's own digital electronics products, systems or services, as applicable. The licenses may also define the specific field of use where our customers may use or employ our inventions in their products. License agreements are structured with fixed, variable or a hybrid of fixed and variable royalty payments over certain defined periods. Leading consumer product, semiconductor and system companies such as AMD, Broadcom, Elpida, Freescale, Fujitsu, GE, SK Hynix, Intel, LSI, Panasonic, Renesas, Samsung, STMicroelectronics and Toshiba have licensed our patents for use in their own products. We intend to expand our business strategy of monetizing our intellectual property to include the sale of selected intellectual property.

We also offer our customers solutions licenses to support the implementation and adoption of our technology in their products or services. Our customers include leading companies such as Cooper Lighting, EchoStar, Elpida, GE, IBM, Panasonic, Samsung, Sony and Toshiba. Our solutions license offerings include a range of technologies for incorporation into our customers' products and systems. We also offer a range of services as part of our solutions licenses which can include know-how and technology transfer, product design and development, system integration, and other services. These solutions license agreements may have both a fixed price (non-recurring) component and ongoing royalties. Further, under solutions licenses, our customers typically receive licenses to our patents necessary to implement these solutions in their products with specific rights and restrictions to the applicable patents elaborated in their individual contracts with us.

The remainder of our revenue is contract revenue which includes license fees, engineering services fees and product sales. The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore have a significant impact on deferred revenue or account receivables in any given period.

We intend to continue making significant expenditures associated with engineering, marketing, general and administration and expect that these costs and expenses will continue to be a significant percentage of revenue in future periods. Whether such expenses increase or decrease as a percentage of revenue will be substantially dependent upon the rate at which our revenue or expenses change.

Executive Summary

During the second quarter of 2013, we signed license agreements with SK Hynix and STMicroelectronics. As a result of the license agreements with SK Hynix and STMicroelectronics, we settled all outstanding legal claims with each company.

Also during the second quarter of 2013, we expanded our family of LED-based bulbs with advanced color temperature change technology.

Research and development continues to play a key role in our efforts to maintain product innovations. Our engineering expenses in the aggregate for the three months ended June 30, 2013 decreased $7.4 million as compared to the same period in 2012 primarily due to decreased accrual of the retention bonuses related to past acquisitions of $3.7 million, decreased legal costs related to patent filings and prosecution costs of $1.3 million, decreased headcount related costs of $1.3 million and decreased stock-based compensation expenses of $1.0 million. Our engineering expenses in the aggregate for the six months ended June 30, 2013 decreased $13.7 million as compared to the same period in 2012 primarily due to decreased accrual of retention bonuses related to past acquisitions of $7.1 million, decreased legal costs related to patent filings and prosecution costs of $2.2 million, decreased stock-based compensation expenses of $1.8 million and decreased headcount related costs of $1.5 million.

Marketing, general and administrative expenses in the aggregate for the three months ended June 30, 2013 decreased $18.1 million as compared to the same period in 2012 which included a decrease in litigation expenses related to ongoing major cases of $10.7 million. Non-litigation related marketing, general and administrative costs decreased in the second quarter of 2013 primarily due to decreased headcount related costs of $1.9 million, decreased stock-based compensation expenses of $1.7 million, decreased consulting costs of $1.3 million, decreased sales and marketing costs of $0.6 million and decreased accrual of the retention bonuses related to past acquisitions of $0.5 million. Marketing, general and administrative expenses in the aggregate for the six months ended June 30, 2013 decreased $27.8 million as compared to the same period in 2012 which included a decrease in litigation expenses related to ongoing major cases of $12.8 million. Non-litigation related marketing, general and administrative costs decreased in the first half of 2013 primarily due to decreased headcount related costs of $2.9 million, decreased stock-based compensation expenses of $2.6 million, decreased sales and marketing costs of $2.2 million, decreased consulting costs of $2.1 million and decreased accrual of retention bonuses related to past acquisitions of $1.5 million.

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Trends

There are a number of trends that may have a material impact on us in the future, including but not limited to, the evolution of memory technology, adoption of LEDs in general lighting, the use and adoption of our inventions or technologies and global economic conditions with the resulting impact on sales of consumer electronic systems.

We have a high degree of revenue concentration, with our top five customers representing approximately 68% and 66% of our revenue for three and six months ended June 30, 2013, respectively, as compared to 71% and 72% for the three and six months ended June 30, 2012, respectively. As a result of our settlement with Samsung in 2010, Samsung is expected to account for a significant portion of our ongoing licensing revenue. For the three and six months ended June 30, 2013 and three months ended June 30, 2012, revenue from Samsung accounted for 10% or more of our total revenue. For the six months ended June 30, 2012, revenue from NVIDIA and Samsung each accounted for 10% or more of our total revenue. We expect to continue to experience significant revenue concentration for the foreseeable future.

The particular customers which account for revenue concentration have varied from period to period as a result of the addition of new contracts, expiration of existing contracts, renewals of existing contracts, industry consolidation and the volumes and prices at which the customers have recently sold to their customers. These variations are expected to continue in the foreseeable future.

The semiconductor industry is intensely competitive and highly cyclical, limiting our visibility with respect to future sales. To the extent that macroeconomic fluctuations negatively affect our principal customers, the demand for our technology may be significantly and adversely impacted, and we may experience substantial period-to-period fluctuations in our operating results. In February 2012, Elpida, one of our top 10 customers by revenue for the past two years, commenced bankruptcy proceedings in Japan as a result of debt loads, competition and declining prices for memory chips. Additionally, our royalty revenue from certain customers in the DRAM market, such as Samsung and Elpida, are variable and are based on our customers' revenue up to two quarters in arrears.

The royalties we receive from our semiconductor customers are partly a function of the adoption of our technologies by system companies. Many system companies purchase semiconductors containing our technologies from our customers and do not have a direct contractual relationship with us. Our customers generally do not provide us with details as to the identity or volume of licensed semiconductors purchased by particular system companies. As a result, we face difficulty in analyzing the extent to which our future revenue will be dependent upon particular system companies. System companies face intense competitive pressure in their markets, which are characterized by extreme volatility, frequent new product introductions and rapidly shifting consumer preferences.

The highly fragmented general lighting industry is undergoing a fundamental shift from incandescent technology to cold cathode fluorescent lights and LED driven technology by the need to reduce energy consumption and to comply with government mandates. LED lighting typically saves energy costs as compared to existing installed lighting.

A recent shift in strategy regarding our core display patents led to selling a set of patent assets to a subsidiary of Acacia Research Corporation ("Acacia") where Acacia can proceed independently with a licensing program. We have a revenue-sharing program in place with Acacia upon their licensing of these patent assets. We retain the rights to use certain application techniques and may selectively engage with customers who need our roll-to-roll manufacturing intellectual property and capability for extra-large display panel designs.

With this shift to focus on the general lighting market, the strategy of the LDT group is to focus on providing the market with novel, patented light guide technologies and products to customers who are leading the transition to solid-state LED-based lamps and fixtures. We are currently focused on three areas: light bulbs, lighting fixtures, and consumer lighting products. We believe our LED edge-lit waveguide technology (MicroLens™ light extraction technology, TruEdge light coupling technology and color temperature change technology) provides us with a sustainable technology advantage in our three areas of focus. In June 2013, we shipped the first order of LED bulbs for distribution in North America. With our transition from a solutions licensing business model to a customer-driven product development model, we believe we can offer our customers and channel partners differentiated products with faster time-to-market and more flexible engagement models.

Global demand for effective security technologies continues to increase. In particular, highly integrated devices such as smart phones and tablets are increasingly used for applications requiring security such as mobile payments, content protection, corporate information and user data. Our CRI group is primarily focused on positioning its DPA countermeasures and CryptoFirewall™ technology solutions to capitalize on these trends and growing adoption among technology partners and customers.

Our revenue from companies headquartered outside of the United States accounted for approximately 74% and 67% of our total revenue for the three and six months ended June 30, 2013, respectively, as compared to 73% and 74% for the three and six

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months ended June 30, 2012, respectively. We expect that revenue derived from international customers will continue to represent a significant portion of our total revenue in the future. To date, all of the revenue from international customers have been denominated in U.S. dollars. However, to the extent that such customers’ sales to their customers are not denominated in U.S. dollars, any revenue that we receive as a result of such sales could be subject to fluctuations in currency exchange rates. In addition, if the effective price of licensed products sold by our foreign customers were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for licensed products could fall, which in turn would reduce our royalties. We do not use financial instruments to hedge foreign exchange rate risk.

For additional information concerning international revenue, see Note 5, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Engineering costs in the aggregate and as a percentage of revenue decreased for the three and six months ended June 30, 2013 as compared to the same period in the prior year. In the near term, we expect engineering costs to be higher as we intend to continue to make investments in the infrastructure and technologies required to maintain our product innovation in semiconductor, lighting, security and other technologies.

Marketing, general and administrative expenses in the aggregate and as a percentage of revenue decreased for the three and six months ended June 30, 2013 as compared to the same period in the prior year. Historically, we have been involved in litigation stemming from the unlicensed use of our inventions. Our litigation expenses have been high in the past and difficult to predict, and future litigation expenses could be significant, volatile and difficult to predict. If we are successful in the litigation and/or related licensing, our revenue could be substantially higher in the future. If we are unsuccessful, our revenue may not grow or may decrease. Furthermore, our success in litigation matters pending before courts and regulatory bodies that relate to our intellectual property rights have impacted and will likely continue to impact our ability and the terms upon which we are able to negotiate new or renegotiate existing licenses for our technology. We may continue to pursue litigation against those companies that have infringed our patented technologies, which in turn may cause us to incur significant litigation expenses until such litigation is resolved. Additionally, in the near term, we expect our non-litigation marketing, general and administrative costs to be lower than the level in 2012 due to our restructuring plan undertaken during the third quarter of 2012.

Our investment in research and development projects, any continued pursuit of litigation and any lower revenue from our customers in the future will negatively affect our cash from operations.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of total revenue represented by certain items reflected in our unaudited condensed consolidated statements of operations:

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenue:
Royalties	98.4	%	99.1	%	98.8	%	98.9	%
Contract revenue	1.6	%	0.9	%	1.2	%	1.1	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating costs and expenses:
Cost of revenue*	12.7	%	13.1	%	11.1	%	12.2	%
Research and development*	53.1	%	68.2	%	51.0	%	64.4	%
Marketing, general and administrative*	24.4	%	57.3	%	31.4	%	56.3	%
Gain from sale of intellectual property	(0.1	)%	—	%	(1.1	)%	—	%
Costs of restatement and related legal activities	0.0	%	0.1	%	0.0	%	0.1	%
Restructuring charges	—	%	—	%	1.8	%	—	%
Total operating costs and expenses	90.1	%	138.7	%	94.2	%	133.0	%
Operating income (loss)	9.9	%	(38.7	)%	5.8	%	(33.0	)%
Interest income and other income (expense), net	(2.4	)%	0.2	%	(1.2	)%	0.2	%
Interest expense	(12.8	)%	(12.0	)%	(11.8	)%	(11.2	)%
Interest and other income (expense), net	(15.2	)%	(11.8	)%	(13.0	)%	(11.0	)%
Loss before income taxes	(5.3	)%	(50.5	)%	(7.2	)%	(44.0	)%
Provision for income taxes	8.2	%	6.8	%	7.4	%	6.5	%
Net loss	(13.5	)%	(57.3	)%	(14.6	)%	(50.5	)%

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* Includes stock-based compensation:



Cost of revenue	0.0	%	0.0	%	0.0	%	0.0	%
Research and development	2.9	%	4.7	%	2.8	%	4.5	%
Marketing, general and administrative	3.3	%	6.4	%	4.0	%	6.4	%



	Three Months						Six Months
	Ended June 30,				Change in		Ended June 30,				Change in
(Dollars in millions)	2013		2012		Percentage		2013		2012		Percentage
Total Revenue
Royalties	$	57.0	$	55.7	2.3	%	$	123.2	$	117.8	4.6	%
Contract revenue	0.9		0.5		85.0	%	1.6		1.3		18.4	%
Total revenue	$	57.9	$	56.2	3.0	%	$	124.8	$	119.1	4.8	%

Royalty Revenue

Patent Licenses

Our patent royalties increased approximately $3.1 million to $54.3 million for the three months ended June 30, 2013 from $51.2 million for the same period in 2012. The increase was primarily due to the increased variable royalties from our semiconductor customers as well as the royalty received from a license agreement signed with STMicroelectronics.

Our patent royalties increased approximately $7.2 million to $116.1 million for the six months ended June 30, 2013 from $108.9 million for the same period in 2012. The increase was primarily due to the recognition of a one-time royalty revenue during the first quarter of 2013 from a license agreement signed with LSI to settle all outstanding claims.

We are continuously in negotiations for licenses with prospective customers. We expect patent royalties will continue to vary from period to period based on our success in adding new customers, as well as the level of variation in our customers' reported shipment volumes, sales price and mix, offset in part by the proportion of customer payments that are fixed or hybrid in nature.

Solutions Licenses

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Royalties from solutions licenses decreased approximately $1.8 million to $2.7 million for the three months ended June 30, 2013 from $4.5 million for the same period in 2012. The decrease was primarily due to lower royalties reported from decreased shipments related to DDR2 technologies, lower royalties from XDR ^TM DRAM associated with decreased shipments of the Sony PlayStation ^® 3 product and lower royalties reported from one of our customers related to serial link-compatible products.

Royalties from solutions licenses decreased approximately $1.8 million to $7.1 million for the six months ended June 30, 2013 from $8.9 million for the same period in 2012. The decrease was primarily due to lower royalties reported from decreased shipments related to DDR2 technologies.

In the future, we expect solutions royalties will vary from period to period based on our customers' shipment volumes, sales prices, and product mix.

Royalty Revenue by Reportable Segments

Royalty revenue from the MID reportable segment, which includes patent and solutions license royalties, decreased approximately $2.4 million to $49.4 million for the three months ended June 30, 2013 from $51.8 million for the same period in 2012. The decrease was primarily due to lower royalties reported from decreased shipments related to DDR2 technologies, lower royalties from XDR ^TM DRAM associated with decreased shipments of the Sony PlayStation®3 product and lower royalties reported from one of our customers related to serial link-compatible products. Royalty revenue from the MID reportable segment increased approximately $0.8 million to $109.1 million for the six months ended June 30, 2013 from $108.3 million for the same period in 2012. The increase was primarily due to the recognition of one-time royalty revenue during the first quarter of 2013 from a patent license agreement with LSI Corporation, partially offset by lower revenue from our customers due to decreased shipments.

Royalty revenue from the "All Other" reportable segment increased approximately $3.7 million to $7.6 million for the three months ended June 30, 2013 from $3.9 million for the same period in 2012. Royalty revenue from the "All Other" reportable segment increased approximately $4.6 million to $14.1 million for the six months ended June 30, 2013 from $9.5 million for the same period in 2012. The increase in both periods was primarily due to the increased revenue from CRI.

Contract Revenue

Contract revenue increased approximately $0.4 million to $0.9 million for the three months ended June 30, 2013 from $0.5 million for the same period in 2012. Contract revenue increased approximately $0.3 million to $1.6 million for the six months ended June 30, 2013 from $1.3 million for the same period in 2012. The increase in both periods was primarily due to new CRI test equipment evaluation contracts and a new LDT technology development project.

We believe that contract revenue recognized will continue to fluctuate over time based on our ongoing contractual requirements, the amount of work performed, the timing of completing engineering deliverables, and the changes to work required, as well as new technology development contracts booked in the future.

Contract Revenue by Reportable Segments

Contract revenue from the MID reportable segment was immaterial for the three months ended June 30, 2013, compared to $0.3 million for the same period in 2012. Contract revenue from the MID reportable segment decreased approximately $0.9 million to $0.1 million for the six months ended June 30, 2013 from $1.0 million for the same period in 2012. The decrease for both periods was primarily due to absence of new technology development contracts.

Contract revenue from the All Other reportable segment increased approximately $0.7 million to $0.9 million for the three months ended June 30, 2013 from $0.2 million for the same period in 2012. Contract revenue from the All Other reportable segment increased approximately $1.2 million to $1.5 million for the six months ended June 30, 2013 from $0.3 million for the same period in 2012. The increase for both periods was primarily due to the increased revenue from CRI and LDT.

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Engineering costs:



	Three Months Ended						Six Months Ended
	June 30,				Change in		June 30,				Change in
(Dollars in millions)	2013		2012		Percentage		2013		2012		Percentage
Engineering costs
Cost of revenue	$	1.0	$	0.1	NM*		$	1.1	$	0.3	NM*
Amortization of intangible assets	6.4		7.2		(12.7	)%	12.8		14.2		(10.4	)%
Stock-based compensation	0.0		0.0		—	%	0.0		0.0		—	%
Total cost of revenue	7.4		7.3		0.3	%	13.9		14.5		(4.2	)%
Research and development	29.1		35.7		(18.5	)%	60.1		71.4		(15.8	)%
Stock-based compensation	1.7		2.6		(36.9	)%	3.5		5.3		(33.9	)%
Total research and development	30.8		38.3		(19.7	)%	63.6		76.7		(17.1	)%
Total engineering costs	$	38.2	$	45.6	(16.5	)%	$	77.5	$	91.2	(15.0	)%

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*	NM — percentage is not meaningful

Total engineering costs decreased $7.4 million for the three months ended June 30, 2013 as compared to the same period in 2012 primarily due to decreased accrual of retention bonuses related to past acquisitions of $3.7 million as a result of the payouts of retention bonuses, decreased legal costs related to patent filings and prosecution costs of $1.3 million, decreased headcount related costs of $1.3 million and decreased stock-based compensation expenses of $1.0 million due to our restructuring efforts in the third quarter of 2012 and cost cutting measures.

Total engineering costs decreased $13.7 million for the six months ended June 30, 2013 as compared to the same period in 2012 primarily due to decreased accrual of retention bonuses related to past acquisitions of $7.1 million as a result of the payouts of retention bonuses, decreased legal costs related to patent filings and prosecution costs of $2.2 million, decreased stock-based compensation expenses of $1.8 million and decreased headcount related costs of $1.5 million due to our restructuring efforts in the third quarter of 2012 and cost cutting measures.

In the near term, we expect engineering costs to be higher as we intend to continue to make investments in the infrastructure and technologies required to maintain our product innovation in semiconductor, lighting, security and other technologies.

Marketing, general and administrative costs:



	Three Months Ended							Six Months Ended
	June 30,					Change in		June 30,					Change in
(Dollars in millions)	2013			2012		Percentage		2013			2012		Percentage
Marketing, general and administrative costs
Marketing, general and administrative costs	$	18.4		$	24.1	(23.5	)%	$	38.4		$	50.8	(24.4	)%
Litigation expense	(6.2		)	4.5		NM*		(4.2		)	8.6		NM*
Stock-based compensation	1.9			3.6		(46.7	)%	5.0			7.6		(34.2	)%
Total marketing, general and administrative costs	$	14.1		$	32.2	(56.1	)%	$	39.2		$	67.0	(41.5	)%

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*	NM — percentage is not meaningful

Total marketing, general and administrative costs decreased $18.1 million for the three months ended June 30, 2013 as compared to the same period in 2012 which included a decrease in litigation expenses related to ongoing major cases of $10.7 million. The decrease in litigation expenses was primarily due to a one-time reversal of accrued SK Hynix related litigation costs of $8.5 million. Non-litigation related marketing, general and administrative costs decreased in the second quarter of 2013 primarily due to decreased headcount related costs of $1.9 million, decreased stock-based compensation expenses of $1.7 million, decreased consulting costs of $1.3 million and decreased sales and marketing costs of $0.6 million from our restructuring efforts in the third quarter of 2012 and cost cutting measures. Additionally, there was a decrease in accrual of the

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retention bonuses related to past acquisitions of $0.5 million as a result of the payouts of retention bonuses.

Total marketing, general and administrative costs decreased $27.8 million for the six months ended June 30, 2013 as compared to the same period in 2012 which included a decrease in litigation expenses related to ongoing major cases of $12.8 million. The decrease in litigation expenses was primarily due to a one-time reversal of accrued SK Hynix related litigation costs of $8.5 million. Non-litigation related marketing, general and administrative costs decreased in the first half of 2013 primarily due to decreased headcount related costs of $2.9 million, decreased stock-based compensation expenses of $2.6 million, decreased sales and marketing costs of $2.2 million and decreased consulting costs of $2.1 million from our restructuring efforts in the third quarter of 2012 and cost cutting measures. Additionally, there is a decrease in accrual of the retention bonuses related to past acquisitions of $1.5 million as a result of the payouts of retention bonuses.

In the future, marketing, general and administrative costs will vary from period to period based on the trade shows, advertising, legal, acquisition and other marketing and administrative activities undertaken, and the change in sales, marketing and administrative headcount in any given period. In the near term, we expect our non-litigation marketing, general and administrative costs to decrease due to our restructuring plan undertaken during the third quarter of 2012. Litigation expenses are expected to vary from period to period due to the variability of litigation activities.

Gain from sale of intellectual property:



	Three Months Ended					Six Months Ended
	June 30,				Change in	June 30,				Change in
(Dollars in millions)	2013		2012		Percentage	2013		2012		Percentage
Gain from sale of intellectual property	$	0.1	$	—	N/A*	$	1.4	$	—	N/A*

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*	N/A — not applicable

During the first half of 2013, we sold portfolios of our patent assets covering lighting technologies. As part of these transactions, we received an initial upfront payment and expect to receive subsequent payments.

Restructuring charges:



	Three Months Ended					Six Months Ended
	June 30,				Change in	June 30,				Change in
(Dollars in millions)	2013		2012		Percentage	2013		2012		Percentage
Restructuring charges	$	—	$	—	N/A*	$	2.2	$	—	N/A*

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*	N/A — not applicable

During the third quarter of 2012, we initiated a restructuring program to reduce overall corporate expenses which is expected to improve future profitability by reducing spending on marketing, general and administrative programs and refining some of our research and development efforts. As a result of the restructuring program, we recorded a pre-tax charge of $2.2 million during the first half of 2013 related primarily to the consolidation of certain facilities and the reduction in workforce, of which a majority was related to corporate support functions. We expect to substantially complete our restructuring activities by the end of 2013. Refer to Note 12, “Restructuring Charges,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further discussion.

Interest and other income (expense), net:



	Three Months								Six Months
	Ended June 30,						Change in		Ended June 30,						Change in
(Dollars in millions)	2013			2012			Percentage		2013			2012			Percentage
Interest income and other income (expense), net	$	(1.4	)	$	0.1		NM*		$	(1.4	)	$	0.2		NM*
Interest expense	(7.4		)	(6.7		)	10.5	%	(14.7		)	(13.3		)	10.8	%
Interest and other income (expense), net	$	(8.8	)	$	(6.6	)	33.4	%	$	(16.1	)	$	(13.1	)	23.4	%

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*	NM — percentage is not meaningful

Interest income and other income (expense), net, consists primarily of interest income generated from investments in high quality fixed income securities. Additionally, for the three months ended June 30, 2013, during our review of the fair value of our $2.0 million investment in a non-marketable equity security of a private company, based on the information provided by the private company, we determined that there was a decrease in the security's fair value. The fair value of the non-marketable equity security was determined based on an income approach, using level 3 fair value inputs, as it was deemed to be the most indicative of the security's fair value. Accordingly, we recorded an impairment charge of $1.4 million related to our investment in the non-marketable equity security for the three and six months ended June 30, 2013.

Interest expense consists of interest expense associated with our imputed facility lease obligations on the Sunnyvale and Ohio facilities and non-cash interest expense related to the amortization of the debt discount and issuance costs on the 5% convertible senior notes due 2014 (the “2014 Notes”) as well as the coupon interest related to the 2014 Notes. We expect our non-cash interest expense to increase steadily as the 2014 Notes reach maturity in June 2014.

Provision for income taxes:



	Three Months Ended								Six Months Ended
	June 30,						Change in		June 30,						Change in
(Dollars in millions)	2013			2012			Percentage		2013			2012			Percentage
Provision for income taxes	$	4.7		$	3.8		23.6	%	$	9.3		$	7.7		20.4	%
Effective tax rate	(153.0		)%	(13.5		)%			(102.9		)%	(14.7		)%

Our effective tax rates for the three and six months ended June 30, 2013 were different from the U.S. statutory tax rate applied to our pretax loss due to a full valuation allowance on our U.S. net deferred tax assets, losses in jurisdictions where no tax benefits are recognized, and foreign withholding and income taxes. During the quarter ended June 30, 2013, we calculated our interim tax provision to record taxes incurred by the U.S. entity on a discrete basis because we are projecting losses in which a tax benefit cannot be recognized.

During the three and six months ended June 30, 2013, we paid withholding taxes of $3.8 million and $7.6 million, respectively. We recorded a provision for income taxes of $4.7 million and $9.3 million, respectively, for the three and six months ended June 30, 2013, which is primarily comprised of withholding taxes and other foreign taxes.

Our effective tax rates for the three and six months ended June 30, 2012 were different from the U.S. statutory tax rate due to foreign withholding taxes, a full valuation allowance on our U.S. net deferred tax assets and foreign losses with no current tax benefit recorded, partially offset by foreign tax credits. During the quarter ended June 30, 2012, we calculated our interim tax provision to record taxes incurred by the U.S. entity on a discrete basis because we were projecting losses in which a tax benefit could not be recognized.

Liquidity and Capital Resources



	As of
	June 30, 2013		December 31, 2012
	(In millions)
Cash and cash equivalents	$	155.3	$	149.0
Marketable securities	50.3		54.3
Total cash, cash equivalents, and marketable securities	$	205.6	$	203.3

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	Six Months Ended
	June 30,
	2013			2012
	(In millions)
Net cash provided by (used in) operating activities	$	5.2		$	(30.6	)
Net cash provided by (used in) investing activities	$	(1.8	)	$	19.9
Net cash provided by financing activities	$	2.9		$	1.0

Liquidity

We currently anticipate that existing cash, cash equivalents and marketable securities balances and cash flows from operations will be adequate to meet our cash needs for at least the next 12 months. Additionally, substantially all of our cash and cash equivalents are in the United States. Our cash needs for the six months ended June 30, 2013 were funded primarily from cash from operations.

We do not anticipate any liquidity constraints as a result of either the current credit environment or investment fair value fluctuations or the repayment of the 2014 Notes in June 2014. We are currently considering various options to repay the 2014 Notes prior to maturity, including possible financing options. Additionally, we have the intent and ability to hold our debt investments that have unrealized losses in accumulated other comprehensive loss for a sufficient period of time to allow for recovery of the principal amounts invested. Additionally, we have no significant exposure to European sovereign debt. We continually monitor the credit risk in our portfolio and mitigate our credit risk exposures in accordance with our policies. As described elsewhere in this “Management's Discussion and Analysis of Financial Condition and Results of Operations” and this Quarterly Report on Form 10-Q, we are involved in ongoing litigation related to our intellectual property. Any adverse settlements or judgments in any of this litigation could have a material adverse impact on our results of operations, cash balances and cash flows in the period in which such events occur.

Operating Activities

Cash provided by operating activities of $5.2 million for the six months ended June 30, 2013 was primarily attributable to the cash generated from customer licensing and changes in operating assets and liabilities. Changes in operating assets and liabilities for the six months ended June 30, 2013 primarily included a decrease in accrued salaries and benefits and other accrued liabilities primarily due to the payment of retention bonuses and a decrease in accrued litigation expenses primarily due to a one-time reversal of accrued SK Hynix related litigation costs.

Cash used in operating activities of $30.6 million for the six months ended June 30, 2012 was primarily attributable to the insufficient cash generated from customer licensing and changes in operating assets and liabilities. Changes in operating assets and liabilities primarily included a decrease in prepaid expenses and other assets, offset by a decrease in accounts payable due to the timing of vendor payments and a decrease in accrued salaries and benefits and other accrued liabilities primarily due to the payment of retention bonuses.

Investing Activities

Cash used in investing activities of $1.8 million for the six months ended June 30, 2013 primarily consisted of proceeds from the maturities of available-for-sale marketable securities of $64.3 million, offset by cash paid for purchases of available-for-sale marketable securities of $60.5 million. In addition, we paid $5.3 million to acquire property, plant and equipment and $2.5 million for intangible assets. We also received $2.3 million from the sale of intellectual property.

Cash provided by investing activities of $19.9 million for the six months ended June 30, 2012 primarily consisted of proceeds from the maturities of available-for-sale marketable securities of $125.8 million, offset by cash paid for purchases of available-for-sale marketable securities of $49.6 million and the acquisition of Unity and other business of $46.3 million, net of cash acquired. In addition, we paid $8.3 million to acquire property, plant and equipment, primarily computer equipment and software, and $1.6 million for intangible assets.

Financing Activities

Cash provided by financing activities of $2.9 million for the six months ended June 30, 2013 was primarily due to proceeds of $3.1 million from issuance of common stock under equity incentive plans.

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Cash provided by financing activities of $1.0 million for the six months ended June 30, 2012 was primarily due to proceeds of $1.2 million from issuance of common stock under equity incentive plans.

Contractual Obligations

As of June 30, 2013 , our material contractual obligations are (in thousands):



	Total		Remainder of 2013		2014		2015		2016		2017		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	43,253	$	2,993	$	5,874	$	6,010	$	6,156	$	6,302	$	15,918
Leases and other contractual obligations	7,309		1,288		1,874		1,740		1,049		1,018		340
Software licenses (3)	160		80		80		—		—		—		—
Acquisition retention bonuses (4)	19,506		—		18,203		1,303		—		—		—
Convertible notes	172,500		—		172,500		—		—		—		—
Interest payments related to convertible notes	8,625		4,313		4,312		—		—		—		—
Total	$	251,353	$	8,674	$	202,843	$	9,053	$	7,205	$	7,320	$	16,258

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(1)

The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $16.7 million including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.1 million in long-term income taxes payable as of June 30, 2013 . As noted in Note 13, “Income Taxes,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, we cannot reasonably estimate the outcome at this time.

(2)


(3)	We have commitments with various software vendors for non-cancellable license agreements generally having terms longer than one year. The above table summarizes those contractual obligations as of June 30, 2013 which are also presented on our condensed consolidated balance sheet under current and other long-term liabilities.


(4)	In connection with our recent acquisitions, we are obligated to pay retention bonuses to certain employees and contractors, subject to certain eligibility and acceleration provisions including the condition of employment. The remaining $16.9 million of CRI retention bonuses payable on June 3, 2014 can be paid in cash or stock at our election.

Share Repurchase Program

During the six months ended June 30, 2013, we did not repurchase any shares of our Common Stock. As of June 30, 2013, we had repurchased a cumulative total of approximately 26.3 million shares of our Common Stock with an aggregate price of approximately $428.9 million since the commencement of the program in 2001. As of June 30, 2013, there remained an outstanding authorization to repurchase approximately 5.2 million shares of our outstanding Common Stock.

We record stock repurchases as a reduction to stockholders’ equity. We record a portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the cost of the shares repurchased exceeds the average original proceeds per share received from the issuance of Common Stock.

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Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, expense accrual, investments, income taxes, litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting estimates include those regarding (1) revenue recognition, (2) litigation, (3) goodwill and intangible assets, (4) income taxes, (5) stock-based compensation, (6) marketable securities and (7) convertible notes. For a discussion of our critical accounting estimates, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2012.

Recent Accounting Pronouncements

See Note 2 “Recent Accounting Pronouncements” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for discussion of recent accounting pronouncements including the respective expected dates of adoption.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to financial market risks, primarily arising from the effect of interest rate fluctuations on our investment portfolio. Interest rate fluctuation may arise from changes in the market’s view of the quality of the security issuer, the overall economic outlook, and the time to maturity of our portfolio. We mitigate this risk by investing only in high quality, highly liquid instruments. Securities with original maturities of one year or less must be rated by two of the three industry standard rating agencies as follows: A1 by Standard & Poor’s, P1 by Moody’s and/or F-1 by Fitch. Securities with original maturities of greater than one year must be rated by two of the following industry standard rating agencies as follows: AA- by Standard & Poor’s, Aa3 by Moody’s and/or AA- by Fitch. By corporate investment policy, we limit the amount of exposure to $15.0 million or 10% of the portfolio, whichever is lower, for any single non-U.S. Government issuer. A single U.S. Agency can represent up to 25% of the portfolio. No more than 20% of the total portfolio may be invested in the securities of an industry sector, with money market fund investments evaluated separately. Our policy requires that at least 10% of the portfolio be in securities with a maturity of 90 days or less. We may make investments in U.S. Treasuries, U.S. Agencies, corporate bonds and municipal bonds and notes with maturities up to 36 months. However, the bias of our investment portfolio is shorter maturities. All investments must be U.S. dollar denominated. Additionally, we have no significant exposure to European sovereign debt.

We invest our cash equivalents and marketable securities in a variety of U.S. dollar financial instruments such as U.S. Treasuries, U.S. Government Agencies, commercial paper and corporate notes. Our policy specifically prohibits trading securities for the sole purposes of realizing trading profits. However, we may liquidate a portion of our portfolio if we experience unforeseen liquidity requirements. In such a case, if the environment has been one of rising interest rates we may experience a realized loss, similarly, if the environment has been one of declining interest rates we may experience a realized gain. As of June 30, 2013, we had an investment portfolio of fixed income marketable securities of $193.7 million including cash equivalents. If market interest rates were to increase immediately and uniformly by 1.0% from the levels as of June 30, 2013, the fair value of the portfolio would decline by approximately $0.1 million. Actual results may differ materially from this sensitivity analysis.

The table below summarizes the amortized cost, fair value, unrealized gains (losses) and related weighted average interest rates for our cash equivalents and marketable securities portfolio as of June 30, 2013 and December 31, 2012:

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	As of June 30, 2013
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	134,860	$	134,860	$	—	$	—		0.01	%
Corporate notes, bonds and commercial paper	58,864		58,870		—		(6		)	0.11	%
Total cash equivalents and marketable securities	193,724		193,730		—		(6		)
Cash	11,916		11,916		—		—
Total cash, cash equivalents and marketable securities	$	205,640	$	205,646	$	—	$	(6	)



	As of December 31, 2012
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	126,570	$	126,570	$	—	$	—		0.01	%
Corporate notes, bonds and commercial paper	57,345		57,356		4		(15		)	0.17	%
Total cash equivalents and marketable securities	183,915		183,926		4		(15		)
Cash	19,415		19,415		—		—
Total cash, cash equivalents and marketable securities	$	203,330	$	203,341	$	4	$	(15	)

The fair value of our convertible notes is subject to interest rate risk, market risk and other factors due to the convertible feature. The fair value of the convertible notes will generally increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the convertible notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The interest and market value changes affect the fair value of our convertible notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we do not carry the convertible notes at fair value. We present the fair value of the convertible notes for required disclosure purposes. The following table summarizes certain information related to our 2014 Notes as of June 30, 2013:



(In thousands)	Fair Value		Fair Value Given a 10% Increase in Market Prices		Fair Value Given a 10% Decrease in Market Prices
5% Convertible Senior Notes due 2014	$	177,784	$	195,562	$	160,005

We invoice our customers in U.S. dollars. Although the fluctuation of currency exchange rates may impact our customers, and thus indirectly impact us, we do not attempt to hedge this indirect and speculative risk. Our overseas operations consist primarily of design centers in India and Italy and small business development offices in Japan, Korea and Taiwan. We monitor our foreign currency exposure; however, as of June 30, 2013, we believe our foreign currency exposure is not material enough to warrant foreign currency hedging.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities and Exchange Act of 1934 as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2013, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this item regarding legal proceedings is incorporated by reference to the information set forth in Note 14 “Litigation and Asserted Claims” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Item 1A. Risk Factors

Because of the following factors, as well as other variables affecting our operating results, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. See also “Special Note Regarding Forward-Looking Statements” elsewhere in this report.

Risks Associated With Our Business, Industry and Market Conditions

The success of our business depends on sustaining or growing our royalty and contract revenue and the failure to achieve such revenue would lead to a material decline in our results of operations.

Our revenue consists mainly of patent and solutions license fees paid for access to our patents and developed technology and development and support services provided to our customers. Our ability to secure the licenses from which our revenues are derived depends on our customers adopting our technology and using it in the products they sell. If we do not achieve our revenue goals, our results of operations could decline.

We have traditionally operated in industries that are highly cyclical and competitive.

Our target customers are companies that develop and market high volume business and consumer products in semiconductors, computing, tablets, handheld devices, mobile applications, gaming and graphics, high definition televisions and displays, general lighting, cryptography and data security. The electronics industry is intensely competitive and has been impacted by price erosion, rapid technological change, short product life cycles, cyclical market patterns and increasing foreign and domestic competition. We are subject to many risks beyond our control that influence whether or not we are successful in winning target customers or retaining existing customers, including, primarily, competition in a particular industry, market acceptance of such customers' products and the financial resources of such customers. In particular, some DRAM manufacturers have suffered material losses and other adverse effects to their businesses, leading to industry consolidation that may result in loss of revenues under our existing license agreements or loss of target customers. As a result of ongoing competition in the industries we operate in and the economic downturn of the past several years, we may achieve a reduced number of licenses, tightening of customers' operating budgets, difficulty or inability of our customers to pay our licensing fees, extensions of the approval process for new licenses and consolidation among our customers, all of which may adversely affect the demand for our technology and may cause us to experience substantial fluctuations in our operating results.

In order to grow, we may have to invest more resources in research and development than anticipated, which could increase our operating expenses and negatively impact our operating results.

If new competitors, technological advances by existing competitors, and/or development of new technologies or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses could increase. If we are required to invest significantly greater resources than anticipated in research and development efforts without an increase in revenue, our operating results could decline. We expect these expenses to increase in the foreseeable future as our technology development efforts continue.

Our revenue is concentrated in a few customers, and if we lose any of these customers, our revenue may decrease substantially.

We continue to have a high degree of revenue concentration. Our top five customers for each reporting period represented approximately 66% and 72% of our revenue for six months ended June 30, 2013 and 2012, respectively. For the six months ended June 30, 2013, revenue from Samsung accounted for 10% or more of our total revenue. For the six months ended June 30, 2012, revenue from NVIDIA and Samsung each accounted for 10% or more of our total revenue. As a result of our settlement with Samsung in January 2010, Samsung accounted for a significant portion of our ongoing licensing revenue since 2010 as reflected above. We expect to continue to experience significant revenue concentration for the foreseeable future as a

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result of the addition of new contracts, expiration of existing contracts, renewal of existing contracts, and industry consolidation.

In addition, our license agreements are complex and some of our license agreements contain terms that require us to provide certain customers with the lowest royalty rate that we provide to other customers for similar technologies, volumes and schedules. These clauses may be subject to interpretation and may limit our ability to effectively price differently among our customers, to respond quickly to market forces, or otherwise to compete on the basis of price.

We continue to be in negotiations with customers and prospective customers to enter into license agreements. We expect royalties will continue to vary based on our success in renewing existing license agreements and adding new customers, as well as the level of variation in our customers' reported shipment volumes, sales price and mix, offset in part by the proportion of customer payments that are fixed. A number of our material license agreements are scheduled to expire in 2015. If we are unsuccessful in renewing any of these license agreements on favorable terms or at all, our results of operations may decline significantly.

If our counterparties are unable to fulfill their financial and other obligations to us, our business and results of operations may be affected adversely.

Any downturn in economic conditions or other business factors could threaten the financial health of our counterparties, including companies with whom we have entered into licensing arrangements, settlement agreements or that have been subject to litigation judgments that provide for payments to us, and their ability to fulfill their financial and other obligations to us. Such financial pressures on our counterparties may eventually lead to bankruptcy proceedings or other attempts to avoid financial obligations that are due to us under licenses, settlement agreements or litigation judgments. Because bankruptcy courts have the power to modify or cancel contracts of the petitioner which remain subject to future performance and alter or discharge payment obligations related to pre-petition debts, we may receive less than all of the payments that we would otherwise be entitled to receive from any such counterparty as a result of a bankruptcy proceedings.

Our business and operations could suffer in the event of security breaches.

Attempts by others to gain unauthorized access to our information technology systems are becoming more sophisticated. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. While we have not identified any material incidents of unauthorized access to date, the theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business. To the extent that any future security breach results in inappropriate disclosure of our customers' confidential information, we may incur liability. We expect to devote additional resources to the security of our information technology systems.

Failures in our products and services or in the products of our customers, including those resulting from security vulnerabilities, defects or errors, could harm our business.

Because the techniques used by hackers to access or sabotage secure chip and other technologies change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques and may not address them in our data security technologies. Furthermore, our data security technologies may also fail to detect or prevent security breaches due to a number of reasons such as the evolving nature of such threats and the continual emergence of new threats. An actual or perceived security breach of our customers or their end-customers, regardless of whether the breach is attributable to the failure of our data security technologies, could adversely affect the market's perception of our security technologies. We may not be able to correct any security flaws or vulnerabilities promptly, or at all. Any breaches, defects, errors or vulnerabilities in our data security technologies could result in:


•	expenditure of significant financial and research and development resources in efforts to analyze, correct, eliminate or work-around breaches, errors or defects or to address and eliminate vulnerabilities;


•	financial liability to customers for breach of certain contract provisions;


•	loss of existing or potential customers;


•	delayed or lost revenue;


•	delay or failure to attain market acceptance;


•	negative publicity, which will harm our reputation; and


•	litigation, regulatory inquiries or investigations that may be costly and harm our reputation.

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We do not have extensive experience in manufacturing and marketing products, and as a result, will rely on sales and distribution channels for our products, such as the light bulb. If we are unable to secure sales and distribution channels or do not manage them successfully, our operating results could be adversely affected.

In order to grow our business, we will need to work with various partners to enable them to sell and deploy our solutions. We may be unable to successfully establish and expand the effectiveness of our distribution channels. If our channel partners do not effectively market and sell our solutions, if they choose to place greater emphasis on products of their own or those offered by our competitors, or if they fail to meet the needs of our customers, our ability to grow our business and our operating results may be adversely affected.

Warranty and product liability claims brought against us could cause us to incur significant costs and affect our results as well as our reputation and relationships with customers. As a result of product liability claims, our operating results could be adversely affected.

We may from time to time be subject to warranty and product liability claims with regard to product performance and effects of the light bulb. We could incur liability losses as a result of repair and replacement costs in response to customer complaints or in connection with the resolution of contemplated or actual legal proceedings relating to such claims. In addition to potential losses arising from claims and related legal proceedings, product liability claims could affect our reputation and our relationship with customers.

Some of our revenue is subject to the pricing policies of our customers over whom we have no control.

We have no control over our customers' pricing of their products and there can be no assurance that licensed products will be competitively priced or will sell in significant volumes. One important requirement for our memory chip interfaces is for any premium charged by our customers in the price of memory and controller chips over alternatives to be reasonable in comparison to the perceived benefits of the chip interfaces. If the benefits of our technology do not match the price premium charged by our customers, the resulting decline in sales of products incorporating our technology could harm our operating results.

Our licensing cycle is lengthy and costly, and our marketing and licensing efforts may be unsuccessful.

The process of persuading customers to adopt and license our chip interface, lighting, display and data security, and other technologies can be lengthy. Even if successful, there can be no assurance that our technologies will be used in a product that is ultimately brought to market, achieves commercial acceptance or results in significant royalties to us. We generally incur significant marketing and sales expenses prior to entering into our license agreements, generating a license fee and establishing a royalty stream from each customer. The length of time it takes to establish a new licensing relationship can take many months or even years. In addition, our ongoing intellectual property litigation and regulatory actions have and will likely continue to have an impact on our ability to enter into new licenses and renewals of licenses. We may incur costs in any particular period before any associated revenue stream begins, if at all. If our marketing and sales efforts are very lengthy or unsuccessful, then we may face a material adverse effect on our business and results of operations as a result of failure or delay to obtain royalties.

Future revenue is difficult to predict for several reasons, and our failure to predict revenue accurately may result in our stock price declining.

Our lengthy license negotiation cycle and our ongoing intellectual property litigation make our future revenue difficult to predict because we may not be successful in entering into licenses with our customers on our estimated timelines and we are reliant on the litigation timelines for any results or settlements.

In addition, while some of our license agreements provide for fixed, quarterly royalty payments, many of our license agreements provide for volume-based royalties, and may also be subject to caps on royalties in a given period. The sales volume and prices of our customers' products in any given period can be difficult to predict. As a result, our actual results may differ substantially from analyst estimates or our forecasts in any given quarter.

Furthermore, a portion of our revenue comes from development and support services provided to our customers. Depending upon the nature of the services, a portion of the related revenue may be recognized ratably over the support period, or may be recognized according to contract accounting. Contract revenue accounting may result in deferral of the service fees to the completion of the contract, or may be recognized over the period in which services are performed on a percentage-of-completion basis. There can be no assurance that the product development schedule for these projects will not be changed or delayed.

All of these factors make it difficult to predict future revenue and may result in our missing previously announced earnings guidance or analysts' estimates which would likely cause our stock price to decline.

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If we are unable to attract and retain qualified personnel, our business and operations could suffer.

Our success is dependent upon our ability to identify, attract, compensate, motivate and retain qualified personnel, especially engineers, senior management and other key personnel. Employee turnover has accelerated for us in the past year as a result of our reduction in our workforce in August 2012 and voluntary separations. The loss of the services of any of these employees could be disruptive to our development efforts or business relationships and could cause our business and operations to suffer.

We have in the past and may in the future make acquisitions or enter into mergers, strategic transactions, sales of assets or other arrangements that may not produce expected operating and financial results.

From time to time, we engage in acquisitions, strategic transactions and strategic investments. We have completed a number of acquisitions from 2009 to 2012, including the acquisition of CRI in 2011, our largest acquisition to date. Many of our acquisitions or strategic investments entail a high degree of risk, and investments may not become liquid for several years after the date of the investment, if at all. Our acquisitions or strategic investments may not generate the financial returns we expect, and we may be subject to liabilities that are not covered by indemnification protection we may obtain or become subject to litigation. Achieving the anticipated benefits of business acquisitions depends in part upon our ability to integrate the acquired businesses in an efficient and effective manner. The integration of companies that have previously operated independently may result in significant challenges, including, among others: retaining key employees; successfully integrating new employees, business systems and technology; retaining customers of the acquired business; minimizing the diversion of management's attention from ongoing business matters; coordinating geographically separate organizations; consolidating research and development operations; and consolidating corporate and administrative infrastructures. In addition, we may record impairment charges related to our acquisitions or strategic investments. Any losses or impairment charges that we incur related to acquisitions, strategic investments or sales of assets will have a negative impact on our financial results, and we may continue to incur new or additional losses related to acquisitions or strategic investments that we have not fully impaired or exited.

We may have to incur debt or issue equity securities to pay for any future acquisition, which debt or equity securities could involve restrictive covenants or be dilutive to our existing stockholders.

From time to time, we may divest assets, where we may provide certain representations, warranties and covenants. While we would ensure the accuracy of such representations and warranties and fulfillment of any ongoing obligations, we may be subject to claims by a purchaser of such assets.

A substantial portion of our revenue is derived from sources outside of the United States and this revenue and our business generally are subject to risks related to international operations that are often beyond our control.

For the six months ended June 30, 2013 and 2012, revenue received from our international customers constituted approximately 67% and 74%, respectively, of our total revenue. We expect that future revenue derived from international sources will continue to represent a significant portion of our total revenue.

To date, all of the revenue from international customers has been denominated in U.S. dollars. However, to the extent that such customers' sales are not denominated in U.S. dollars, any royalties which are based as a percentage of the customer's sales that we receive as a result of such sales could be subject to fluctuations in currency exchange rates. In addition, if the effective price of licensed products sold by our foreign customers were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for licensed products could fall, which in turn would reduce our royalties. We do not use financial instruments to hedge foreign exchange rate risk.

We currently have international design operations in India and Italy and business development operations in Japan, Korea and Taiwan. Our international operations and revenue are subject to a variety of risks which are beyond our control, including:


•	export controls, tariffs, import and licensing restrictions and other trade barriers;


•	profits, if any, earned abroad being subject to local tax laws and not being repatriated to the United States or, if repatriation is possible, limited in amount;


•	treatment of revenue from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions;


•	foreign government laws and regulations and changes in these laws and regulations;


•	lack of protection of our intellectual property and other contract rights by jurisdictions in which we may do business to the same extent as the laws of the United States;


•	hiring, maintaining and managing a workforce remotely and under various legal systems;


•	natural disasters, acts of war, terrorism, widespread illness or security breaches;


•	social, political and economic instability;

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•	geo-political issues, including changes in diplomatic and trade relationships; and


•	cultural differences in the conduct of business both with customers and in conducting business in our international facilities and international sales offices.

We and our customers are subject to many of the risks described above with respect to companies which are located in different countries. There can be no assurance that one or more of the risks associated with our international operations will not result in a material adverse effect on our business, financial condition or results of operations.

Weak global economic conditions may adversely affect demand for the products and services of our customers.

Our operations and performance depend significantly on worldwide economic conditions. The U.S. and world economies have experienced a prolonged period of weak economic conditions and the threats of further regional or worldwide downturn are evident today. Uncertainty about global economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit, negative financial news and declines in income or asset values, which could have a material negative effect on the demand for the products of our customers in the foreseeable future. If our customers experience reduced demand for their products as a result of economic conditions or otherwise, this could result in reduced royalty revenue and our business and results of operations could be harmed.

We are subject to various government restrictions and regulation, including on the sale of products and services that use encryption technology and those related to privacy and other consumer protection matters.

Regulatory initiatives throughout the world can also create new and unforeseen regulatory obligations on us and the technology we develop. The impact of these potential obligations vary based on the jurisdiction, but any such changes could impact whether we enter, maintain or expand our presence in a particular market or with particular potential customers.

Various countries have adopted controls, license requirements and restrictions on the export, import and use of products or services that contain encryption technology. In addition, governmental agencies have proposed additional requirements for encryption technology, such as requiring the escrow and governmental recovery of private encryption keys. Restrictions on the sale or distribution of products or services containing encryption technology may impact the ability of CRI to license its data security technologies to the manufacturers and providers of such products and services in certain markets or may require CRI or its customers to make changes to the licensed data security technology that is embedded in such products to comply with such restrictions. Government restrictions, or changes to the products or services of CRI's customers to comply with such restrictions, could delay or prevent the acceptance and use of such customers' products and services. In addition, the United States and other countries have imposed export controls that prohibit the export of encryption technology to certain countries, entities and individuals. Our failure to comply with export and use regulations concerning encryption technology of CRI could subject us to sanctions and penalties, including fines, and suspension or revocation of export or import privileges.

We are subject to a variety of laws and regulations in the United States, the European Union and other countries that involve, for example, user privacy, data protection and security, content and consumer protection. A number of proposals are pending before federal, state, and foreign legislative and regulatory bodies that could significantly affect our business. Existing and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products, result in negative publicity, increase our operating costs and subject us to claims or other remedies.

Our operations are subject to risks of natural disasters, acts of war, terrorism, widespread illness or security breach at our domestic and international locations, any one of which could result in a business stoppage and negatively affect our operating results.

Our business operations depend on our ability to maintain and protect our facilities, computer systems and personnel, which are primarily located in the San Francisco Bay Area. The San Francisco Bay Area is in close proximity to known earthquake fault zones. Our facilities and transportation for our employees are susceptible to damage from earthquakes and other natural disasters such as fires, floods and similar events. Should a catastrophe disable our facilities, we do not have readily available alternative facilities from which we could conduct our business, which stoppage could have a negative effect on our operating results. We also rely on our network infrastructure and technology systems for operational support and business activities, which are subject to damage from malicious code and other related vulnerabilities common to networks and computer systems, including acts of vandalism and potential security breach by third parties. Acts of terrorism, widespread illness, war and any event that causes failures or interruption in our network infrastructure and technology systems could have a negative effect at our international and domestic facilities and could harm our business, financial condition, and operating results.

Unanticipated changes in our tax rates or in the tax laws and regulations could expose us to additional income tax liabilities which could affect our operating results and financial condition.

We are subject to income taxes in both the United States and various foreign jurisdictions. Significant judgment is required

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in determining our worldwide provision for income taxes and, in the ordinary course of business; there are many transactions and calculations where the ultimate tax determination is uncertain. Our effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations as well as other factors. Our tax determinations are regularly subject to audit by tax authorities and developments in those audits could adversely affect our income tax provision. Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions which could affect our operating results.

Our business and operating results could be harmed if we undertake any restructuring activities.

From time to time, we may undertake to restructure our business, such as the reduction in our workforce that we announced in August 2012. There are several factors that could cause a restructuring to have an adverse effect on our business, financial condition and results of operations. These include potential disruption of our operations, the development of our technology, the deliveries to our customers and other aspects of our business. Employee morale and productivity could also suffer and we may lose employees whom we want to keep. Loss of sales, service and engineering talent, in particular, could damage our business. Any restructuring would require substantial management time and attention and may divert management from other important work. Employee reductions or other restructuring activities also cause us to incur restructuring and related expenses such as severance expenses. Moreover, we could encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.

Risks Related to Capitalization Matters and Corporate Governance

The price of our common stock may continue to fluctuate significantly.

Our common stock is listed on The NASDAQ Global Select Market under the symbol “RMBS.” The trading price of our common stock has at times experienced price volatility and may continue to fluctuate significantly in response to various factors, some of which are beyond our control. These factors include:


•	any progress, or lack of progress, real or perceived, in the development of products that incorporate our innovations and technology companies' acceptance of our products, including the results of our efforts to expand into new target markets;


•	our signing or not signing new licenses and the loss of strategic relationships with any customer;


•	new litigation or developments in current litigation and the unpredictability of litigation results or settlements;


•	announcements of our technological innovations or new products by us, our customers or our competitors;


•	changes in our strategies, including changes in our licensing focus and/or acquisitions of companies with business models or target markets different from our own;


•	positive or negative reports by securities analysts as to our expected financial results and business developments;


•	developments with respect to patents or proprietary rights and other events or factors;


•	trading activity related to our share repurchase plans; and


•	issuance of additional securities by us, including in acquisitions.

In addition, the stock market in general, and prices for companies in our industry in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance.

Because our outstanding senior convertible notes are convertible into shares of our common stock, volatility or depressed prices of our common stock could have a similar effect on the trading price of our notes. In addition, the existence of the notes may encourage short selling in our common stock by market participants because the conversion of the notes could depress the price of our common stock.

We have been party to, and may in the future be subject to, lawsuits relating to securities law matters which may result in unfavorable outcomes and significant judgments, settlements and legal expenses which could cause our business, financial condition and results of operations to suffer.

We and certain of our current and former officers and directors, as well as our current auditors, were subject to several stockholder derivative actions, securities fraud class actions and/or individual lawsuits filed in federal court against us and certain of our current and former officers and directors. The complaints generally alleged that the defendants violated the federal and state securities laws and state law claims for fraud and breach of fiduciary duty. The amount of time to resolve any lawsuits is uncertain, and these matters could require significant management and financial resources. Unfavorable outcomes and significant judgments, settlements and legal expenses in litigation related to our past and any future securities law claims could have material adverse impacts on our business, financial condition, results of operations, cash flows and the trading price of our common stock.

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We are leveraged financially, which could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future research and development needs, to protect and enforce our intellectual property and other needs.

We have indebtedness. In 2009, we issued $172.5 million aggregate principal amount of our 2014 Notes. The degree to which we are leveraged could have important consequences, including, but not limited to, the following:


•	our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;


•	a substantial portion of our cash flows from operations in the future will be dedicated to the payment of the principal of our indebtedness as we are required to pay the principal amount of our 2014 Notes in cash upon conversion if specified conditions are met or when due;


•	if upon any conversion of our 2014 Notes we are required to satisfy our conversion obligation with shares of our common stock or we are required to pay a “make-whole” premium with shares of our common stock, our existing stockholders' interest in us would be diluted; and


•	we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions.

A failure to comply with the covenants and other provisions of our debt instruments could result in events of default under such instruments, which could permit acceleration of all of our notes. Any required repayment of our notes as a result of a fundamental change or other acceleration would lower our current cash on hand such that we would not have those funds available for use in our business.

If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure have historically created uncertainty for companies such as ours. Any new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Our restated certificate of incorporation and bylaws, Delaware law and our outstanding convertible notes contain provisions that could discourage transactions resulting in a change in control, which may negatively affect the market price of our common stock.

Our restated certificate of incorporation, our bylaws and Delaware law contain provisions that might enable our management to discourage, delay or prevent a change in control. In addition, these provisions could limit the price that investors would be willing to pay in the future for shares of our common stock. Pursuant to such provisions:


•	our board of directors is authorized, without prior stockholder approval, to create and issue preferred stock, commonly referred to as “blank check” preferred stock, with rights senior to those of common stock, which means that a stockholder rights plan could be implemented by our board;


•	our board of directors is staggered into two classes, only one of which is elected at each annual meeting;


•	stockholder action by written consent is prohibited;


•	nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements;


•	certain provisions in our bylaws and certificate of incorporation such as notice to stockholders, the ability to call a stockholder meeting, advance notice requirements and action of stockholders by written consent may only be amended with the approval of stockholders holding 66 2/3% of our outstanding voting stock;


•	our stockholders have no authority to call special meetings of stockholders; and


•	our board of directors is expressly authorized to make, alter or repeal our bylaws.

We are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15% or more of our outstanding voting stock, the person is an “interested stockholder” and may not engage in any “business combination” with us for a period of three years from the time the person acquired 15% or more of our outstanding voting stock.

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Certain provisions of our outstanding convertible notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the notes will have the right, at their option, to require us to repurchase, at a cash repurchase price equal to 100% of the principal amount plus accrued and unpaid interest on the notes, all or a portion of their notes. We may also be required to issue additional shares of our common stock upon conversion of such notes in the event of certain fundamental changes.

Litigation, Regulation and Business Risks Related to our Intellectual Property

We face current and potential adverse determinations in litigation stemming from our efforts to protect and enforce our patents and intellectual property and make other claims, which could broadly impact our intellectual property rights, distract our management and cause substantial expenses and declines in our revenue and stock price.

We seek to diligently protect our intellectual property rights. In connection with the extension of our licensing program to SDR SDRAM-compatible and DDR SDRAM-compatible products, we became involved in litigation related to such efforts against different parties in multiple jurisdictions. In each of these cases, we have claimed infringement of certain of our patents, while the manufacturers of such products have generally sought damages and a determination that the patents in suit are invalid, unenforceable and not infringed. Among other things, the opposing parties have alleged that certain of our patents are unenforceable because we engaged in document spoliation, litigation misconduct and/or acted improperly during our 1991 to 1995 participation in the JEDEC standard setting organization (including allegations of antitrust violations and unfair competition). We have also become involved in litigation related to infringement of our patents related to products having certain peripheral interfaces. In addition, we did not prevail at jury trial in our antitrust suit against certain memory manufacturers in November 2011, which caused the market price of our stock to drop significantly. Although we have settled with one party related to its portion of the suit, we face appeals and further proceedings related to the antitrust suit. See Note 14, “Litigation and Asserted Claims,” and Note 15, “Agreement with SK Hynix,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

There can be no assurance that any or all of the opposing parties will not succeed, either at the trial or appellate level, with such claims or counterclaims against us or that they will not in some other way establish broad defenses against our patents, achieve conflicting results or otherwise avoid, delay paying royalties for the use of our patented technology, or obtain orders to require us to pay or reimburse their costs or attorneys' fees in material amounts or post bonds to cover such amounts. Moreover, there is a risk that if one party prevails against us, other parties could use the adverse result to defeat or limit our claims against them; conversely, there can be no assurance that if we prevail against one party, we will succeed against other parties on similar claims, defenses, or counterclaims. In addition, there is the risk that the pending litigations and other circumstances may cause us to accept less than what we now believe to be fair consideration in settlement.

Any of these matters or any future intellectual property litigation, whether or not determined in our favor or settled by us, is costly, may cause delays (including delays in negotiating licenses with other actual or potential customers), will tend to discourage future design partners, will tend to impair adoption of our existing technologies and divert the efforts and attention of our management and technical personnel from other business operations. In addition, we may be unsuccessful in our litigation if we have difficulty obtaining the cooperation of former employees and agents who were involved in our business during the relevant periods related to our litigation and are now needed to assist in cases or testify on our behalf. Furthermore, any adverse determination or other resolution in litigation could result in our losing certain rights beyond the rights at issue in a particular case, including, among other things: our being effectively barred from suing others for violating certain or all of our intellectual property rights; our patents being held invalid or unenforceable or not infringed; our being subjected to significant liabilities; our being required to seek licenses from third parties; our being prevented from licensing our patented technology; or our being required to renegotiate with current customers on a temporary or permanent basis.

Even if we are successful in our litigation, or any settlement of such litigation, there is no guarantee that the applicable opposing parties will be able to pay any damages awards timely or at all as a result of financial difficulties or otherwise. Delay or any or all of these adverse results could cause substantial expenses or declines in our revenue and stock price.

From time to time, we are subject to proceedings by government agencies that may result in adverse determinations against us and could cause our revenue to decline substantially.

An adverse resolution by or with a governmental agency could result in severe limitations on our ability to protect and license our intellectual property, and would cause our revenue to decline substantially. Third parties have and may attempt to use adverse findings by a government agency to limit our ability to enforce or license our patents in private litigations, to challenge or otherwise act against us with respect to such government agency proceedings.

Further, third parties have sought and may seek review and reconsideration of the patentability of inventions claimed in certain of our patents by the U.S. Patent and Trademark Office (“PTO”) and/or the European Patent Office (the “EPO”). Currently, we are subject to numerous re-examination proceedings, including proceedings initiated by SK Hynix and Micron as

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a defensive action in connection with our litigation against those companies. A number of these re-examination proceedings are being reviewed by the PTO's Board of Patent Appeals and Interferences (“BPAI”). The BPAI has issued decisions in a few cases, finding the challenged claims of Rambus's patents to be invalid. Decisions of the BPAI are subject to further PTO proceedings and appeal to the Court of Appeals for the Federal Circuit. A final adverse decision by the PTO or EPO could invalidate some or all of these patent claims and could also result in additional adverse consequences affecting other related U.S. or European patents, including in our intellectual property litigation. If a sufficient number of such patents are impaired, our ability to enforce or license our intellectual property would be significantly weakened and this could cause our revenue to decline substantially.

The pendency of any governmental agency acting as described above may impair our ability to enforce or license our patents or collect royalties from existing or potential customers, as our litigation opponents may attempt to use such proceedings to delay or otherwise impair any pending cases and our existing or potential customers may await the final outcome of any proceedings before agreeing to new licenses or pay royalties.

Litigation or other third-party claims of intellectual property infringement could require us to expend substantial resources and could prevent us from developing or licensing our technology on a cost-effective basis.

Our research and development programs are in highly competitive fields in which numerous third parties have issued patents and patent applications with claims closely related to the subject matter of our programs. We have also been named in the past, and may in the future be named, as a defendant in lawsuits claiming that our technology infringes upon the intellectual property rights of third parties. As we develop additional products and technology, we may face claims of infringement of various patents and other intellectual property rights by third parties. In the event of a third-party claim or a successful infringement action against us, we may be required to pay substantial damages, to stop developing and licensing our infringing technology, to develop non-infringing technology, and to obtain licenses, which could result in our paying substantial royalties or our granting of cross licenses to our technologies. We may not be able to obtain licenses from other parties at a reasonable cost, or at all, which could cause us to expend substantial resources, or result in delays in, or the cancellation of, new products.

If we are unable to successfully protect our inventions through the issuance and enforcement of patents, our operating results could be adversely affected.

We have an active program to protect our proprietary inventions through the filing of patents. There can be no assurance, however, that:


•	any current or future U.S. or foreign patent applications will be approved and not be challenged by third parties;


•	our issued patents will protect our intellectual property and not be challenged by third parties;


•	the validity of our patents will be upheld;


•	our patents will not be declared unenforceable;


•	the patents of others will not have an adverse effect on our ability to do business;


•	Congress or the U.S. courts or foreign countries will not change the nature or scope of rights afforded patents or patent owners or alter in an adverse way the process for seeking or enforcing patents;

•

changes in law will not be implemented, or changes in interpretation of such laws will occur, that will affect our ability to protect and enforce our patents and other intellectual property, including as a result of the passage of the America Invents Act of 2011 (which codifies several significant changes to the U.S. patent laws and will remain subject to certain rule-making and interpretation, including changing from a “first to invent” to a “first inventor to file” system, limiting where a patentee may file a patent suit, requiring the apportionment of patent damages, replacing interference proceedings with derivation actions, and creating a post-grant opposition process to challenge patents after they have issued);


•	new legal theories and strategies utilized by our competitors will not be successful;


•	others will not independently develop similar or competing chip interfaces or design around any patents that may be issued to us; or


•	factors such as difficulty in obtaining cooperation from inventors, pre-existing challenges or litigation, or license or other contract issues will not present additional challenges in securing protection with respect to patents and other intellectual property that we acquire.

If any of the above were to occur, our operating results could be adversely affected.

In addition, our patents will continue to expire according to their terms, with expiration dates ranging from 2013 to 2037. Our failure to continuously develop or acquire successful innovations and obtain patents on those innovations could significantly harm our business, financial condition, results of operations, or cash flows.

Our inability to protect and own the intellectual property we create would cause our business to suffer.

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We rely primarily on a combination of license, development and nondisclosure agreements, trademark, trade secret and copyright law and contractual provisions to protect our non-patentable intellectual property rights. If we fail to protect these intellectual property rights, our customers and others may seek to use our technology without the payment of license fees and royalties, which could weaken our competitive position, reduce our operating results and increase the likelihood of costly litigation. The growth of our business depends in large part on the use of our intellectual property in the products of third party manufacturers, and our ability to enforce intellectual property rights against them to obtain appropriate compensation. In addition, effective trade secret protection may be unavailable or limited in certain foreign countries. Although we intend to protect our rights vigorously, if we fail to do so, our business will suffer.

We rely upon the accuracy of our customers' recordkeeping, and any inaccuracies or payment disputes for amounts owed to us under our licensing agreements may harm our results of operations.

Many of our license agreements require our customers to document the manufacture and sale of products that incorporate our technology and report this data to us on a quarterly basis. While licenses with such terms give us the right to audit books and records of our customers to verify this information, audits rarely are undertaken because they can be expensive, time consuming, and potentially detrimental to our ongoing business relationship with our customers. Therefore, we typically rely on the accuracy of the reports from customers without independently verifying the information in them. Our failure to audit our customers' books and records may result in our receiving more or less royalty revenue than we are entitled to under the terms of our license agreements. If we conduct royalty audits in the future, such audits may trigger disagreements over contract terms with our customers and such disagreements could hamper customer relations, divert the efforts and attention of our management from normal operations and impact our business operations and financial condition.

Any dispute regarding our intellectual property may require us to indemnify certain customers, the cost of which could severely hamper our business operations and financial condition.

In any potential dispute involving our patents or other intellectual property, our customers could also become the target of litigation. While we generally do not indemnify our customers, some of our license agreements provide limited indemnities, and some require us to provide technical support and information to a customer that is involved in litigation involving use of our technology. In addition, we may agree to indemnify others in the future. Any of these indemnification and support obligations could result in substantial expenses. In addition to the time and expense required for us to indemnify or supply such support to our customers, a customer's development, marketing and sales of licensed semiconductors, lighting and display, mobile communications and data security technologies could be severely disrupted or shut down as a result of litigation, which in turn could severely hamper our business operations and financial condition as a result of lower or no royalty payments.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

Refer to the Exhibit Index of this quarterly report on Form 10-Q.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	RAMBUS INC.

Date: July 26, 2013	By:	/s/ Satish Rishi
		Satish Rishi
		Senior Vice President, Finance and
		Chief Financial Officer

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INDEX TO EXHIBITS



Exhibit Number		Description of Document

3.1 (1)		Amended and Restated Certificate of Incorporation of Registrant filed May 29, 1997.

3.2 (2)		Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant filed June 14, 2000.

3.3 (3)		Amended and Restated Bylaws of Registrant dated April 25, 2013.

10.1*		Settlement Agreement, dated June 11, 2013, among Registrant, SK Hynix and certain SK Hynix affiliates.

10.2*		Semiconductor Patent License Agreement, dated June 11, 2013, between Registrant and SK Hynix.

31.1		Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

_________________________________________

*Confidential treatment has been requested with respect to certain portions of this exhibit. These portions have been omitted and submitted separately to the Securities and Exchange Commission.


(1)	Incorporated by reference to the Form 10-K filed on December 15, 1997.


(2)	Incorporated by reference to the Form 10-Q filed on May 4, 2001.


(3)	Incorporated by reference to the Form 8-K filed on April 30, 2013.

Exhibit 10.1

SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT (the “ Agreement ”) is made and entered into as of the July 1, 2013 by and among Rambus Inc., a Delaware corporation (“ Rambus ”), on the one hand, and SK hynix Inc., a corporation organized under the laws of Korea (“ SK hynix ”), SK hynix America Inc., a California corporation (“ SK hynix U.S. ”), Hynix Semiconductor Manufacturing America Inc., a California corporation, SK hynix U.K. Ltd., a corporation organized under the laws of the United Kingdom, and SK hynix Deutschland, GmbH, a corporation organized under the laws of Germany (collectively, “ SK hynix ,” with Rambus and SK hynix each being a “ Party ” and together the “ Parties ”), on the other hand.

WHEREAS , SK hynix and its Subsidiaries (as defined in Article 1) are and will continue to be engaged in the manufacture, use, sale and/or importation of various products and devices (“ SK hynix Products ”) which utilize diverse and varied technologies;

WHEREAS , Rambus and/or its Subsidiaries have and will continue to have rights under Rambus Patents (as defined in Article 1) covering diverse and varied technologies;

WHEREAS , the Parties are currently parties to a number of Disputes (as defined in Article 1) relating to the SK hynix Products and the Rambus Patents, including but not limited to disputes as to whether claims of Rambus Patents are infringed by SK hynix Products, and disputes relating to the validity, enforceability and scope of certain Rambus Patents, the Antitrust Litigation, and the Other Actions (as defined in Article 1);

WHEREAS , the Parties acknowledge that the Disputes have been costly, not only in terms of the out-of-pocket costs incurred by each of them, but also in terms of management time and other resources devoted to such efforts;

WHEREAS , the Parties recognize that, without this Agreement, given the diversity of claims of the Rambus Patents, and the breadth of technologies utilized by the SK hynix Products, Rambus could, after the Effective Date (as defined in Article 1), assert that other claims of Rambus Patents are infringed by SK hynix Products, and that such disputes, if they were to occur, would involve similar costs and business disruptions;

WHEREAS , the Parties recognize that litigation of the Disputes, and of other disputes that may arise between them after the Effective Date, is inherently uncertain, and is subject to certain risks, including but not limited to, (a) whether the Rambus Patents, including Patents which are known to SK hynix but which to date have not been asserted against SK hynix, are determined to be valid, enforceable and infringed in various trial and appellate courts, the U.S. Patent and Trademark Office, the European Patent Office, the International Trade Commission proceedings, and in other proceedings, and (b) whether Rambus prevails in various other court or regulatory proceedings, such as the Antitrust Litigation, and that such events are subject to various possible outcomes;

WHEREAS , the Parties desire to eliminate the risks associated with such litigation and to enter into a comprehensive resolution to compromise, settle and release the Disputes, and to compromise, resolve and avoid other disputes that may arise after the Effective Date with respect to the SK hynix Products and the Rambus Patents;

WHEREAS , as part of the comprehensive resolution of other disputes that may arise after the Effective Date with respect to the SK hynix Products and the Rambus Patents, Rambus and its Subsidiaries desire to grant SK hynix and its Subsidiaries a license to certain of the claims of the Rambus Patents from the Effective Date and SK hynix and its Subsidiaries desire to grant Rambus and its Subsidiaries a license to certain of the claims of the SK hynix Patents (as defined in Article 1) from the Effective Date;

WHEREAS , the Parties acknowledge that in resolving the Disputes, and other disputes that may arise after the Effective Date, each of them is giving up the possibility of more favorable outcomes in exchange for the promises and covenants it will receive under this Agreement and the License Agreement (as defined in Article 1), to ensure that they do not ultimately face less favorable outcomes and to avoid the costs, delays and disruptions associated with

______________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

litigation, and that such promises and covenants represent a package, and are not intended to be severable from each other; in particular, (a) SK hynix is receiving a full and final release of the claims asserted against it in the Disputes, and securing a license to claims of the Rambus Patents, in exchange for making Comprehensive Resolution Payments (as defined in Article 1) and entering into the License Agreement, and (b) Rambus is receiving the Comprehensive Resolution Payments and the benefit of the License Agreement, in exchange for granting the releases and licenses, and entering into the License Agreement;

WHEREAS , the Parties acknowledge that it is therefore essential that their respective obligations under this Agreement and the License Agreement be certain and not subject to collateral attack, or otherwise subject to change or modification except on the terms expressly set forth therein; and

WHEREAS , this Agreement is entered into for the purpose of settlement and compromise only,

NOW, THEREFORE , in consideration of the promises and the mutual covenants herein contained, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, Rambus and SK hynix agree as follows:

Article 1

Definitions

In addition to the terms defined in other parts of this Agreement, the following terms used herein with initial capital letters shall have the respective meanings specified in this Article 1.


1.1	Acquired Business . The term “Acquired Business” means a Third Party, the portion of a Third Party, and/or any portion of the assets or business of a Third Party that a Party or its Subsidiaries acquire in an Acquisition.


1.2	Acquisition . The term “Acquisition” means, as to a Party, a transaction or a series of related transactions in which such Party acquires, through merger (including reverse triangular merger), acquisition of stock, acquisition of assets or otherwise, Control of a Third Party and/or any portion of the assets or business of a Third Party.


1.3	Affiliate . The term “Affiliate” means, for an identified entity, any other entity that (a) is a Subsidiary of such identified entity; or (b) Controls or is under common Control with such identified entity, but only so long as such Control exists.


1.4	Agreement . The term “Agreement” has the meaning set forth in the introductory paragraph.


1.5	Antitrust Litigation . The term “Antitrust Litigation” means the matter entitled Rambus Inc. v. Micron Technology Inc. et al. , No. 04-431105 (Supr. Ct. Cal., San Fran. Filed May 5, 2004) and any appeals and remand proceedings therefrom.

1.6

Change of Control . The term “Change of Control” means a transaction or a series of related transactions in which (a) one or more Third Parties who did not previously Control a Party obtain Control of such Party, or (b) the subject Party merges with or transfers substantially all of its assets to a Third Party where the shareholders of the assigning Party, immediately before the transaction or series of related transactions, own less than a fifty percent (50%) interest in the acquiring or surviving entity immediately after the transaction or series of related transactions.


1.7	Comprehensive Resolution Agreements . The term “Comprehensive Resolution Agreements” means this Agreement and the License Agreement.


1.8	Comprehensive Resolution Payments . The term “Comprehensive Resolution Payments” means the License Payments.


1.9	Control . The term “Control” (including “Controlled” and other forms) of an entity means (a) beneficial ownership (whether directly or indirectly through entities or other means) of more than fifty percent (50%) of the outstanding voting securities of that entity or (b) in the case of an entity that has no

______________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

outstanding voting securities, having the power (whether directly or indirectly through entities or other means) presently to designate more than fifty percent (50%) of the directors of a corporation, or in the case of unincorporated entities, of individuals exercising similar functions. Notwithstanding the foregoing sentence, where SK hynix has fifty percent (50%) of such beneficial ownership or power to designate with respect to any other entity, SK hynix shall be deemed to “Control” such other entity if such other entity is part of the SK Group and such entity is lawfully registered under a corporate name, and lawfully operates and generally and routinely conducts its business under a corporate name, that includes “SK,” provided that , such entity agrees in a writing, delivered to both parties within thirty (30) days of the Effective Date (or if later, within thirty (30) days after formation of such entity), to be bound by all applicable terms and conditions of this Agreement.


1.10	CRI . The term “CRI” means Cryptography Research, Inc., a wholly-owned Subsidiary of Rambus.


1.11	Disputes . The term “Disputes” means the Patent Litigation, the German Patent Litigation, the Antitrust Litigation, the Patent Actions, and the Other Actions, and any and all disputes related thereto.


1.12	Effective Date . The term “Effective Date” means July 1, 2013 except for “Other Actions” the Effective Date shall be June 15, 2013.


1.13	Effective Time Period . The term “Effective Time Period” has the meaning set forth in Section 3.2(b).

1.14

Excluded Entity . The term “Excluded Entity” means Broadcom Corporation, LSI Corporation, MediaTek Inc., Micron Technology, Inc., Micron Semiconductor Products, Inc., Micron Electronics, Inc., Micron Semiconductor (Deutschland) GmbH, Micron Technology Italia Srl, Nanya Technology Corporation, Nanya Technology Corporation U.S.A., NVIDIA Corporation, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., Samsung Austin Semiconductor, L.P., STMicroelectronics N.V., STMicroelectronics Inc., and any other Third Party (including the Affiliates of such Third Party) that is an adverse party to Rambus or its Subsidiaries in any pending lawsuit, litigation or other similar proceedings.


1.15	German Patent Litigation . The term "German Patent Litigation" means the infringement action based on the German part of EP 1 022 642 filed by Rambus Inc. against SK hynix Deutschland, GmbH at the District Court Mannheim/Germany (Court docket 7 O 279/05) on June 2, 2005.


1.16	License Agreement . The term “License Agreement” has the meaning set forth in Article 3.


1.17	License Payments . The term “License Payments” has the meaning set forth in Section 2.1.


1.18	Licensed Product . The term “Licensed Product” has the meaning set forth in the License Agreement.


1.19	Other Action s. The term "Other Actions" means (a) Case T-148/10, SK hynix v Commission , filed on 25 March 2010, Official Journal of the European Union [2010] C 148/41 and (b) Case T-149/10, SK hynix v Commission , filed on 25 March 2010, Official Journal of the European Union [2010] C 148/42.


1.20	Party . The terms “Party” and “Parties” have the meanings set forth in the introductory paragraph.

1.21

Patent Actions . The term “Patent Actions” means all United States Patent and Trademark Office, all European Patent Office and all other governmental reexamination proceedings, oppositions, actions or challenges filed, requested or supported by SK hynix with respect to any Rambus Patents, and any appeals thereof, as of the Effective Date, including without limitation the reexaminations and/or oppositions of U.S. Patent, European Patent and or other governmental Patent numbers listed in Schedule 1.


1.22	Patent Litigation . The term “Patent Litigation” means the matters entitled SK hynix Inc. et al v. Rambus Inc. , No. CV 00-20905 (N.D.Cal. Filed Aug. 29, 2000) and Rambus Inc. v. SK hynix Inc., et al. , No. C-05-00334 (N.D. Cal. Filed Jan. 25, 2005).


1.23	Patents . The term “Patents” means patents, including re-examinations and reissues thereof, and utility models and applications therefor, including, without limitation, all continuations, continuations-in-part and divisionals thereof, in all countries of the world that now or hereafter are (a) owned or controlled

______________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

by the applicable Party hereto and/or one or more of its Subsidiaries and/or (b) otherwise licensable by the applicable Party hereto and its Subsidiaries, in each case of (a) and (b) where such Party and/or one or more of its Subsidiaries have the right to grant the licenses, sublicenses or other rights and covenants of the scope granted in the License Agreement.


1.24	Rambus . The term “Rambus” has the meaning set forth in the introductory paragraph.


1.25	Rambus Patents . The term “Rambus Patents” means Patents owned or controlled or otherwise licenseable, in each case in accordance with Section 1.23 above, by Rambus or any of its Subsidiaries in each case other than those Patents of CRI that have effective filing dates that are earlier than June 6, 2011 (the effective date of Rambus' acquisition of CRI).


1.26	SK hynix . The term “SK hynix” has the meaning set forth in the introductory paragraph.


1.27	SK hynix Patents . The term “SK hynix Patents” means Patents owned or controlled or otherwise licenseable, in each case in accordance with Section 1.23 above, by SK hynix or any of its Subsidiaries.


1.28	SK hynix U.S . The term "SK hynix U.S." has the meaning set forth in the introductory paragraph.


1.29	Subsidiary . The term “Subsidiary” means, with respect to any identified entity (“Identified Entity”), any entity Controlled by such Identified Entity, but only so long as such Control exists.


1.30	Third Party . The term “Third Party” means (a) with respect to Rambus or any Subsidiary of Rambus, any entity that is not a Subsidiary of Rambus and (b) with respect to SK hynix or any Subsidiary of SK hynix, any entity that is not a Subsidiary of SK hynix.

Article 2

Comprehensive Resolution Payments

2.1

License Payments . As described more fully in the License Agreement and as an integral part of the overall consideration received by Rambus in respect of its releases and covenants not to sue under Article 4, and its other obligations under the Comprehensive Resolution Agreements, over the next five (5) years SK hynix will pay Rambus aggregate license fees of Two Hundred Forty Million dollars (US $240,000,000.00), subject to certain adjustments and conditions as described in the License Agreement (the “ License Payments ”). In the event that SK hynix fails to pay any License Payment (and fails to cure such failure within the time period provided for in Section 6.2 of the License Agreement), Rambus shall have the option, at its sole discretion, to either:

(a) exercise its option to terminate the License Agreement in accordance with Section 6.2 therein; or,

(b) upon providing written notice to SK hynix, exercise its option to have SK hynix pay to Rambus, within one-hundred and eighty (180) days of the date of such notice, one-hundred and ten percent (110%) of the Remaining Balance (where the term “Remaining Balance” means the total amounts other than Quarterly Acquisition Adjustment Payments remaining unpaid, if any, under the License Agreement or the Substitute Agreement (as such term is defined in the License Agreement)) as part of the overall consideration received by Rambus under the Comprehensive Resolution Agreements, in order for Rambus to receive the full amount of the overall consideration intended to be received in respect of its releases, covenants not to sue, and other obligations under the Comprehensive Resolution Agreements, in which case (i.e., Rambus' exercise of the option set forth in this subsection (b)):

(i) SK hynix will continue to be obligated, to pay any amounts that become due under Section 3.3 of the License Agreement prior to the Expiration Date of the License Agreement until terminated;

(ii) Rambus and SK hynix agree that it would be impractical and extremely difficult to fix the damages which Rambus may suffer if SK hynix fails to make the License Payments; and,

(iii) that such amount is a reasonable estimate under the circumstances existing as of the date hereof of the total net detriment Rambus would suffer in the event SK hynix fails to make such payments.

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Rambus will apply such amounts to any subsequent License Payments due under the License Agreement.


2.2	No Refunds . Once made, any Comprehensive Resolution Payment shall not be refunded or refundable to SK hynix for any reason except as may be required pursuant to Section 8 of the License Agreement. Notwithstanding the foregoing, in case of clerical error with respect to any payment made under the License Agreement, the Parties agree to remedy any such error through proper payment adjustments.


2.3	Currency . All Comprehensive Resolution Payments shall be made in United States dollars.


2.4	Wire Instructions . All Comprehensive Resolution Payments shall be made in accordance with the terms of the License Agreement.

2.5

Taxes . If the Korean government imposes any withholding tax on any Comprehensive Resolution Payments, such tax shall be borne by Rambus. SK hynix agrees, at its reasonable discretion, to assist Rambus in its efforts to minimize Rambus' tax liability. SK hynix shall withhold the amount of any such taxes levied on such payments to Rambus imposed by the Korean government, shall effect payment of the taxes so withheld to the Korean tax office when due, and SK hynix shall send to Rambus the official certificate of such payment in a form reasonably sufficient to enable Rambus to support a claim for a foreign tax credit with respect to any such taxes so withheld.

Article 3

License Agreement

Concurrent with the execution and delivery of this Agreement, and as an integral part of the overall consideration received by the Parties in respect of their respective releases, covenants not to sue, and other obligations under this Agreement, Rambus and SK hynix shall enter into the License Agreement in the form attached hereto as Exhibit A (the “ License Agreement ”).

3.1

The Parties acknowledge that the licenses granted under the License Agreement are in respect of claims under multiple Rambus Patents and multiple SK hynix Patents, respectively, so that the Parties' rights and obligations under the License Agreement are not dependent upon the validity or enforceability of specific Rambus Patents or specific SK hynix Patents, or upon any specific use of such patents permitted under the License Agreement. Specifically, SK hynix acknowledges that the License Agreement covers a broad array of Rambus Patent claims, and agrees to make the full amount of the Comprehensive Resolution Payments regardless of whether any of the Rambus Patents is determined not to be infringed by any particular Licensed Product or whether any court, United States, European, or other patent office, or United States, European, or other governmental agency determines any Rambus Patent to be invalid or unenforceable in any reexamination, action or other proceeding.

3.2

Each Party acknowledges that its assessment of the value of the Disputes and the License Agreement may depend on certain events that may occur, or that may not occur, after the Effective Date, that it is aware of and has evaluated and considered the uncertainties associated with such events, and that it has agreed to the amount of the Comprehensive Resolution Payments to eliminate such uncertainties so that, for example, SK hynix will be protected from the consequences of Rambus prevailing on infringement and other claims in other proceedings, including the Antitrust Litigation, and Rambus will be protected from the consequences of certain of the Rambus Patents being held to be invalid, unenforceable, and/or not infringed in other proceedings. It is therefore essential that the Parties' obligations under the License Agreement, including but not limited to the amount of the License Payments, be certain and not subject to collateral attack. Accordingly:

(a) SK hynix covenants not to seek, whether through litigation or otherwise, to adjust the amount of the License Payments, or to avoid, defer or modify its obligations under the License Agreement, provided that the foregoing shall not prevent SK hynix from seeking enforcement of the terms and conditions of the License Agreement or taking any action expressly contemplated in the License Agreement.

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(b) SK hynix and its Subsidiaries acknowledge and agree that, for all acts or omissions that occur during the time period up to and including the [***] anniversary of the Effective Date (the “ Effective Time Period ”), Rambus or its Subsidiaries have patent claims that are valid, enforceable and infringed by a substantial portion of the Licensed Products. After the Effective Time Period, Rambus and its Subsidiaries covenant not to rely on such acknowledgement or agreement in any manner against SK hynix or its Subsidiaries or their past, present or future distributors or customers in negotiations, and further covenant that no evidence of such acknowledgement or agreement may be introduced in any negotiation by or on behalf of Rambus or its Subsidiaries against SK hynix or its Subsidiaries or their past, present or future distributors or customers. Rambus and its Subsidiaries further covenant, with respect to any acts or omissions occurring after the Effective Time Period, not to rely on such acknowledgement or agreement in any manner against SK hynix or its Subsidiaries or their past, present or future distributors or customers before any court, government agencies, other regulatory body or arbitrator, and further covenant that no evidence of such acknowledgement or agreement may be introduced in any motion, hearing, trial or other proceeding by or on behalf of Rambus or its Subsidiaries against SK hynix or its Subsidiaries or their past, present or future distributors or customers.

Article 4

Releases


4.1	Release by Rambus .

(a) Rambus, on behalf of itself and its Subsidiaries, hereby irrevocably releases, acquits, and forever discharges SK hynix, its Subsidiaries, its and their respective former or current directors, officers, employees, and attorneys from any claims, counterclaims, defenses, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind that were alleged or that could have been alleged by Rambus in any Dispute.

(b) To the extent not covered in the preceding paragraph, Rambus, on behalf of itself and its Subsidiaries, hereby further irrevocably releases, acquits, and forever discharges SK hynix, its Subsidiaries, and its and their respective former or current directors, officers, employees, and attorneys from any claims, counterclaims, defenses, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind for infringement of the Rambus Patents arising from the manufacture, use, importation, exportation, sale and offer for sale of any products up until the Effective Date, but only to the extent that such activities would have been (i) licensed under the License Agreement if such License Agreement had been in existence at the time of such activity and/or (ii) subject to the covenants set forth in Sections 2.4 and/or 2.5 of the License Agreement if such License Agreement had been in existence at the time of such activity.


4.2	Release by SK hynix .

(a) SK hynix, on behalf of itself and its Subsidiaries, hereby irrevocably releases, acquits and forever discharges Rambus, its Subsidiaries, and its and their respective former or current directors, officers, employees, and attorneys from any claims, counterclaims, defenses, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind that were alleged or that could have been alleged by SK hynix in any Dispute.

(b) To the extent not covered in the preceding paragraph, SK hynix, on behalf of itself and its Subsidiaries, hereby further irrevocably releases, acquits, and forever discharges Rambus, its Subsidiaries, and its and their respective former or current directors, officers, employees, and attorneys from any claims, counterclaims, defenses, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind for infringement of any SK hynix Patents arising from the manufacture, use, importation, exportation, sale and offer for sale of any products up until the Effective Date, but

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only to the extent that such activities would have been licensed under the License Agreement if such License Agreement had been in existence at the time of such activity.


4.3	Additional Releases .

(a) SK hynix, on behalf of itself and its Subsidiaries, hereby irrevocably releases, acquits and forever discharges Rambus and its Subsidiaries from any defenses, claims, counterclaims, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind and nature that SK hynix or its Subsidiaries might raise or assert in an effort to avoid, defer or modify its obligations under the Comprehensive Resolution Agreements, including but not limited to its obligation to make the License Payments, except as expressly permitted under the License Agreement, including for instance and by way of example, claims or defenses based on the allegation, or on the finding, determination or judgment in any reexamination, action or other proceeding, or any appeal thereof, that one or more of the patent claims licensed under the License Agreement is invalid, unenforceable or not infringed, that the License Agreement is not enforceable or should be rescinded or revised, or that Rambus has committed any type of patent misuse.

(b) Rambus, on behalf of itself and its Subsidiaries, hereby irrevocably releases, acquits and forever discharges SK hynix and its Subsidiaries from any defenses, claims, counterclaims, demands, damages, debts, liabilities, accounts, actions and causes of action of any kind and nature that Rambus or its Subsidiaries might or could raise or assert to avoid, defer or modify its obligations under the [***] Release attached as Exhibit C hereto, that any provision of the [***] Release is invalid or unenforceable, or that [***] Release should be rescinded or revised. Rambus agrees that it will never, under any circumstances, bring any lawsuit, action or claim of any nature against SK hynix relating to the [***] Release.

4.4

Releases Shall Remain Effective . Each of Rambus and SK hynix acknowledges that, after entering into this Agreement, they may discover facts different from, or in addition to, those they now believe to be true with respect to the conduct of the other Party. Each of Rambus and SK hynix intends that the releases and discharges set forth in this Article 4 and the [***] Release (attached hereto as Exhibit C hereto) shall be, and shall remain, in effect in all respects as written, notwithstanding the discovery of any different or additional facts.

4.5

Waiver of California Civil Code § 1542 . In connection with the releases and discharges described in this Article 4, each of Rambus and SK hynix acknowledges that it is aware of the provisions of section 1542 of the Civil Code of the State of California, and hereby expressly waives and relinquishes all rights and benefits that it has or may have had under that section (or any equivalent law or rule of any other jurisdiction), which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.


4.6	Covenants Not to Sue .

(a) Rambus, on behalf of itself and its Subsidiaries, hereby covenants not to assert any claims of infringement of the Rambus Patents against SK hynix's distributors and customers and SK hynix's Subsidiaries' distributors and customers solely arising from the use, importation, sale and offer for sale of any products up until the Effective Date to the extent that such distributors or customers would not have been liable for such use, importation, exportation, sale and offer for sale of such products had the License Agreement been in existence at the time of such infringing activity.

(b) SK hynix, on behalf of itself and its Subsidiaries, hereby covenants not to assert any claims of infringement of the SK hynix Patents against Rambus' distributors and customers and Rambus' Subsidiaries' distributors and customers solely arising from the use, importation, exportation, sale

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or offer for sale of any products up until the Effective Date to the extent that such distributors or customers would not have been liable for such use, importation, exportation, sale and offer for sale of such products had the License Agreement been in existence at the time of such infringing activity.


4.7	Certain Exclusions . For the avoidance of doubt:

(a) The releases and covenants not to sue contained in this Article 4 (other than the releases set forth in Section 4.3) shall apply solely to (i) the activities occurring prior to the Effective Date of each of the Parties, and (ii) the activities occurring prior to the Effective Date of each of the Parties' respective Subsidiaries existing on or prior to the Effective Date. In no event shall the releases and covenants not to sue contained in this Article 4 apply to the activities, whether occurring prior to or after the Effective Date, of (1) any Third Party with or into which a Party merges or combines, whether or not such Party remains the surviving entity, or (2) any Acquired Business, in each case, after the Effective Date.

(b) Other than as set forth in the [***] Release, the releases and covenants not to sue contained in this Article 4 are not intended to and do not extend to any defendant in either the Patent Litigation or the Antitrust Litigation (or any of their Subsidiaries), unless that defendant is explicitly named as a Party to this Agreement, or to any Excluded Entity.


4.8	Dismissals and Other Provisions Terminating the Disputes .

(a) On the Effective Date, SK hynix and Rambus, through their respective counsel, shall execute or cause to be executed stipulations for dismissal dismissing with prejudice all of the claims, counterclaims, cross-claims and cross-complaints asserted against one another (but only as to one another and not to the extent asserted against other defendants) in the Patent Litigation and the Antitrust Litigation in the forms attached hereto as Exhibits B-1 through B-3 and within five days, SK hynix and Rambus, through their respective counsel, shall cause such stipulations for dismissal to be entered.

(b) Both Parties shall, within ten (10) business days following the Effective Date, withdraw or discontinue any formal or informal complaints, requests, petitions, actions, or other proceedings they may have pending against the other Party or its Subsidiaries before any regulatory body anywhere in the world related to the claims, counterclaims, demands, damages, debts, liabilities, accounts, actions and causes of action released by this Agreement or that relate in any way to the Rambus Patents or the SK hynix Patents. For the avoidance of doubt, this provision (i) requires Rambus to withdraw and discontinue the German Patent Litigation, (ii) requires SK hynix to withdraw and discontinue the Other Actions, and (iii) does not require Rambus to withdraw any complaint or other proceeding as against parties other than SK hynix or its Subsidiaries, including but not limited to the Antitrust Litigation.

(c) Within ten (10) business days following the Effective Date, SK hynix shall, to the full extent permitted by applicable law, withdraw, cease to prosecute or pursue and notify the U.S. Patent and Trademark Office, the European Patent Office, and/or other governmental agency, that it no longer intends to participate in, the Patent Actions.


4.9	Costs and Attorneys' Fees . For all cases, including but not limited to the Patent Litigation, German Patent Litigation, the Antitrust Litigation and the Other Actions, the Parties agree that each will pay its own costs and attorneys' fees and that neither will file requests for, or otherwise seek to recover, its costs or fees.


4.10	No Admission . Nothing contained in any of the Comprehensive Resolution Agreements, or done or omitted in connection with any of the Comprehensive Resolution Agreements, is intended as, or shall be construed as, an admission by any Party of any fault, liability or wrongdoing.

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4.11	No Further Actions . As part of the settlement of claims and releases contemplated by this Agreement, prior to the Expiration Date set forth in the License Agreement, and in each case unless and to the extent required by subpoena or judicial or regulatory agency order or rule:

(a) SK hynix covenants, except to the extent that it is compelled to do otherwise by court order or summons, not to bring, or aid, assist or participate in, any action challenging or contesting the assertion, enforcement, validity or enforceability of, or any use or infringement by any Third Party of, the Rambus Patents, including but not limited to filing, requesting, participating or assisting in any of the Patent Actions, provided that, notwithstanding the foregoing, SK hynix may assist (e.g., provide prior art and/or non-infringement analyses to) each Third Party to whom SK hynix has Sold a Licensed Product, during the term of the license associated with such Licensed Product as set forth in the License Agreement, in its defense of any claim of a Rambus Patent asserted against such Third Party by Rambus to the extent that SK hynix is obligated to provide such Third Party with such assistance pursuant to an indemnification provision; and

(b) Each Party covenants not to (i) file or bring a complaint against, or formally or informally request or urge investigation of, the other Party or any of its Subsidiaries before any regulatory body, or (ii) support, cooperate with or otherwise assist any entity in any dispute against the other Party or its Subsidiaries, or any regulatory body in any proceeding involving the other Party or its Subsidiaries, in each case in any matter related to the claims, counterclaims, defenses, demands, damages, debts, liabilities, accounts, actions and causes of action released by this Agreement, including but not limited to filing, requesting, participating or assisting in any United States, European, or other patent office reexamination proceedings, actions, challenges, oppositions or interferences with respect to Patents of the other Party or its Subsidiaries, and filing amicus curiae briefs in the Patent Litigation, the Antitrust Litigation, the Other Actions or any other Dispute.

Article 5

Warranties

Each Party represents, warrants and covenants, on behalf of itself and its Subsidiaries, to the other Party during the term of this Agreement:


5.1	Due Incorporation . Such Party is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of formation with the requisite corporate authority to own and use its properties and assets and to carry on its business as currently conducted.

5.2

Due Authorization; Enforceability . Such Party has the requisite corporate or other authority to enter into, and to grant the releases and discharges, make the covenants, and consummate the transactions contemplated by this Agreement, on behalf of itself and its Subsidiaries, and otherwise to carry out its and its Subsidiaries' obligations hereunder. The execution, delivery and performance of this Agreement by such Party and its Subsidiaries have been duly authorized by all necessary action of such Party and its Subsidiaries, and no other act or proceeding on the part of or on behalf of such Party and its Subsidiaries is necessary to approve the execution and delivery of this Agreement, the performance by such Party and its Subsidiaries of their obligations hereunder and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally, by general equity principles or by limitations on indemnification pursuant to public policy.

5.3

No Conflicts; No Consents . The execution, delivery, and performance of this Agreement by such Party and its Subsidiaries, including but not limited to the granting of the releases and discharges contemplated hereby, will not infringe any law, regulation, judgment or order applicable to such Party and its Subsidiaries and are not and will not be contrary to the provisions of the constitutional documents of

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such Party and its Subsidiaries and will not (with or without notice, lapse of time or both) result in any breach of the terms of, or constitute a default under, any instrument or agreement to which such Party and its Subsidiaries is a party or by which it or its property is bound. All consents and approvals of any court, government agencies or other regulatory body required by such Party and its Subsidiaries for the execution, delivery and performance of the terms of this Agreement have been obtained and are in full force and effect.


5.4	No Assignment of Claims . Each Party represents and warrants that it has not assigned, transferred or granted to any Third Party any rights or interests with respect to any claim or cause of action, or any right(s) underlying any claim or cause of action, it had, has, or may have against the other Party or its Subsidiaries as of, or prior to, the Effective Date of this Agreement.

Article 6

Notices and other Communications

6.1

All notices or other communication required or permitted hereunder shall be in writing and shall be (a) mailed by first class air mail (registered or certified if available), postage prepaid, or otherwise delivered by hand, by messenger, addressed to the addresses set forth below, or (b) delivered by facsimile to the facsimile number set forth below. Each Party may change its address or facsimile number for notices by providing a notice to the other Party in the manner set forth herein. Such notices shall be deemed to have been effective when delivered or, if delivery is not accomplished by reason of some fault or refusal of the addressee, when tendered (which tender, in the case of mail, shall be deemed to have occurred upon posting, and in the case of facsimile, shall be deemed to have occurred upon transmission). All notices shall be in English.

If to SK hynix:

SK hynix Inc.

Kyunghyun Min

Vice President, Head of IP Group

10F, Daechi Tower, 424, Teheran-ro, Gangnam-gu

Seoul, 135-738, Korea

Fax: 82)-31-645-8171

If to Rambus:

Rambus Inc.

Jae Kim

General Counsel

1050 Enterprise Way, Suite 700

Sunnyvale, CA 94089

(with a copy, which shall not constitute notice, to the following:)

Satish Rishi

Chief Financial Officer

Rambus Inc.

1050 Enterprise Way, Suite 700

Sunnyvale, CA 94089

Telephone: +1-408-462-8000

Facsimile: +1-408-462-8001

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Article 7

Successors and Assigns

7.1

Subject to the limitation in Sections 4.7 and 9.5, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and assigns, and upon any corporation, limited liability partnership, limited liability company, or other entity into or with which any Party hereto may merge, combine or consolidate. For the avoidance of doubt, this provision does not govern the rights or obligations of successors or assigns of the Parties under the License Agreement. The releases, dismissals and covenants granted by each Party and its Subsidiaries under this Agreement (but not any benefits received by such Party or its Subsidiaries under this Agreement) shall run with (a) in the case of SK hynix, the SK hynix Patents or (b) in the case of Rambus, the Rambus Patents, and remain in full force and effect regardless of any subsequent assignment, sale or other transfer of any such SK hynix Patents or Rambus Patents or any rights or interests therein. Any such assignment, sale, or transfer of rights in contravention of the foregoing shall be null and void ab initio and of no force or effect.

Article 8

Dispute Resolution


8.1	Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to any choice-of-law or conflict-of-law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.


8.2	English Language . This Agreement is executed in the English language and no translation shall have any legal effect.

8.3

Jurisdiction and Venue . Any legal action, suit or proceeding arising under, or relating to, this Agreement, shall be brought in the United States District Court for the Northern District of California or, if such court shall decline to accept jurisdiction over a particular matter, in the Santa Clara County Superior Court, and each Party agrees that any such action, suit or proceeding may be brought only in such courts. Each Party further waives any objection to the laying of jurisdiction and venue for any such suit, action or proceeding in such courts.

Article 9

Miscellaneous


9.1	Entire Agreement . This Agreement and the License Agreement, and all Exhibits thereto, constitute the entire agreement between the Parties regarding the subject matter hereof, and supersede any and all prior negotiations, representations, warranties, undertakings or agreements, written or oral, between the Parties regarding such subject matter.


9.2	Relationship of the Parties . Nothing contained in this Agreement or the License Agreement shall be construed as creating any association, partnership, joint venture or the relation of principal and agent between Rambus and SK hynix. Each Party is acting as an independent contractor, and no Party shall have the authority to bind any other Party or its representatives in any way.

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9.3	Headings and Recitals . The headings of the several articles and sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The recitals to this Agreement are intended to be a part of and affect the meaning and interpretation of this Agreement.


9.4	Amendment . This Agreement may not be modified or amended except in a writing executed by authorized representatives of each of the Parties.

9.5

No Assignment . This Agreement is personal to the Parties, and the Agreement and/or any right or obligation hereunder is not assignable, whether in conjunction with a change in ownership, merger, acquisition, the sale or transfer of all, or substantially all or any part of either Party's or any of their respective Subsidiaries' business or assets or otherwise, voluntarily, by operation of law, reverse triangular merger or otherwise, without the prior written consent of the other Party, which consent may be withheld at the sole discretion of such other Party. Each Party understands that, as a condition to such consent, the other Party may require it to convey, assign or otherwise transfer its rights and obligations under the other Comprehensive Resolution Agreements to the entity assuming such Party's rights and obligations under this Agreement. Any such purported or attempted assignment or transfer in violation of the foregoing shall be deemed a breach of this Agreement and shall be null and void. A Change of Control of either Party shall be deemed an assignment, provided that Articles 2, 4, 8, and 9 shall survive any termination of this Agreement arising from such assignment. Notwithstanding the foregoing, either Party shall be entitled to, and each Party hereby agrees to, assign this Agreement to a successor to all or substantially all of a Party's assets in a transaction entered into solely to change a Party's place of incorporation.

9.6

Interpretation . Each Party confirms that it and its respective counsel have reviewed, negotiated and adopted this Agreement as the agreement and understanding of the Parties hereto and the language used in this Agreement shall be deemed to be the language chosen by the Parties hereto to express their mutual intent. Neither Party shall be considered to be the drafter of this Agreement or any of its provisions for the purpose of any statute, case law, or rule of interpretation or construction that would, or might cause, any provision to be construed against such Party.


9.7	Authority . Each Party represents that it is fully authorized to enter into the terms and conditions of, and to execute, this Agreement.

9.8

No Third Party Beneficiaries . Unless otherwise expressly stated herein or as set forth in the [***] Release, nothing in this Agreement, express or implied, is intended to confer upon any person other than the Parties hereto or their respective permitted assignees, successors in interest, and Subsidiaries any rights or remedies under or by reason of this Agreement. The former and current directors, officers, employees, and attorneys of the Parties and their Subsidiaries are intended beneficiaries of Sections 4.1, 4.2, 4.3, 4.4, and 4.5.

9.9

Severability . If any provision of any Comprehensive Resolution Agreement is held to be invalid or unenforceable, the meaning of such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to effectuate the intent and purpose of the Parties with respect to such invalid or unenforceable provision, and if no feasible interpretation shall save such provision, (a) a suitable and equitable provision shall be substituted therefor in order to effectuate, so far as may be valid and enforceable, the intent and purpose of the Parties with respect to such invalid or unenforceable provision, and (b) the remainder of such Comprehensive Resolution Agreement shall remain in full force and effect.

9.10

No Waiver . The failure of either Party to enforce, at any time, any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions, and shall not be deemed in any way to affect the validity of this Agreement or any part thereof, or the right of either Party to later enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

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9.11	Counterparts; Facsimile Transmission . This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same agreement. Each Party may rely on facsimile or .pdf signature pages as if such facsimile or .pdf pages were originals.


9.12	Further Actions . Each of the Parties hereto agrees to take and cause its Subsidiaries to take any and all actions reasonably necessary in order to effectuate the intent, and to carry out the provisions, of this Agreement.

9.13

Public Disclosures and Confidentiality . The Parties shall issue a press release with respect to the Comprehensive Resolution Agreement in a mutually acceptable form. Each Party agrees that, after the issuance of such press release, each Party shall be entitled to disclose the general nature of this Agreement, but that the terms and conditions of this Agreement, to the extent not already disclosed pursuant to such press release, shall be treated as confidential information and that neither Party will disclose such terms or conditions to any Third Party without the prior written consent of the other Party, provided, however, that each Party may disclose the terms and conditions of this Agreement:

(a) as required by any court or other governmental body;

(b) as otherwise required by law;

(c) as otherwise may be required by applicable securities and other law and regulation, including to legal and financial advisors in their capacity of advising a Party in such matters, so long as the disclosing Party shall seek confidential treatment of such terms and conditions to the extent reasonably possible;

(d) to legal counsel, accountants, and other professional advisors of the Parties;

(e) in confidence, to banks, investors, and other financing sources and their advisors, and to SK Telecom (provided that at the time of any such disclosure to SK Telecom, SK Telecom owns at least twenty (20) percent of the outstanding voting securities of SK hynix);


(f)	in connection with the enforcement of this Agreement or rights under this Agreement;

(g) during the course of litigation so long as the disclosure of such terms and conditions are restricted in the same manner as is the confidential information of other litigating parties and so long as (i) the restrictions are embodied in a court-entered protective order limiting disclosure to outside counsel and (ii) the disclosing Party informs the other Party in writing at least ten (10) business days in advance of the disclosure and discusses the nature and contents of the disclosure, in good faith, with the other Party (for purposes of this provision, the Protective Order entered in the Antitrust Litigation is acceptable, as long as the disclosure is designated as both "Highly Confidential-BP and Highly Confidential-IP");

(h) in confidence, in connection with an actual or prospective merger or acquisition or similar transaction.

(i) in confidence, to the outside legal counsel of Elpida Memory, Inc. (“Elpida”) in connection with a Rambus's obligation(s), if any, under any most favored nation, or similar clause, whereby Rambus is contractually obligated to disclose and offer terms given to Elpida.

In addition, upon execution of this Agreement, or thereafter, Rambus, in its discretion, shall be entitled to file a copy of this Agreement with the U.S. Securities and Exchange Commission, so long as Rambus seeks confidential treatment of such agreement to the extent reasonably possible.

______________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, this Agreement has been duly and executed and delivered by the duly authorized officers of the Parties hereto as of the date first written above.

RAMBUS INC.

By: /s/ Kevin Donnelly

Name: Kevin Donnelly

SK HYNIX INC.

By: /s/ Kyunghyun Min

Name: Kyunghyun Min

______________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Exhibit 10.2

SEMICONDUCTOR PATENT LICENSE AGREEMENT

This SEMICONDUCTOR PATENT LICENSE AGREEMENT (“Agreement”) is effective as of July 1, 2013 (the “Effective Date”) by and between Rambus Inc., a corporation duly organized and existing under the laws of Delaware, U.S.A., having its principal place of business at 1050 Enterprise Way, Suite #700, Sunnyvale, California 94089, U.S.A., (hereinafter “Rambus”) and SK hynix Inc., a corporation duly organized and existing under the laws of Korea., having its principal place of business at 2091, Gyeongchung-daero, Bubal-eub, Icheon-si, Gyeonggi-do, Korea (hereinafter “SK hynix ”).

WHEREAS, the parties are currently parties to a number of disputes relating to the SK hynix products and the Rambus patents, including but not limited to disputes as to whether claims of Rambus patents are infringed by SK hynix products and the Antitrust Litigation, and recognize that, without this Agreement, given the diversity of claims of the Rambus patents, and the breadth of technologies utilized by the SK hynix products, Rambus could, after the Effective Date, assert other claims of Rambus patents that are infringed by SK hynix products;

WHEREAS , the parties recognize that litigation of such is inherently uncertain, and is subject to certain risks and to various possible outcomes, some of which would be more favorable to Rambus, and some of which would be more favorable to SK hynix;

WHEREAS , concurrent with the execution and delivery of this Agreement, the parties have entered into a Settlement Agreement (the “Settlement Agreement”) to eliminate the risks associated with such litigation and to enter into a comprehensive resolution to compromise, settle and release certain existing disputes between them, and to compromise, resolve and avoid other disputes that may arise after the Effective Date with respect to the SK hynix products and the Rambus patents;

WHEREAS , as part of such comprehensive resolution, the parties have agreed to enter into this Agreement; and

WHEREAS , because this Agreement is part of such comprehensive resolution, the parties acknowledge that it is therefore essential that their respective obligations under this Agreement be certain and not subject to collateral attack, or otherwise subject to change or modification except on the terms expressly set forth herein.

NOW, THEREFORE , in consideration of the mutual covenants and premises contained herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, the parties agree as follows:


1.	Definitions


1.1	“Acquired Business” means a Third Party, the portion of a Third Party, and/or any portion of the assets or business of a Third Party that SK hynix or its Subsidiaries acquire in an Acquisition.


1.2	“Acquisition” means, as to a party, a transaction or a series of related transactions in which such party acquires, through merger (including reverse triangular merger), acquisition of stock, acquisition of assets or otherwise, Control of a Third Party and/or any portion of the assets or business of a Third Party.


1.3	“Acquisition Date” means the effective date of any Acquisition completed by SK hynix or any of its Subsidiaries as described under Section 3.3.


1.4	“Antitrust Litigation” means the matter entitled Rambus Inc. v. Micron Technology Inc. et al. , No. 04-431105 (Supr. Ct. Cal., San Fran. Filed May 5, 2004) and any appeals and remand proceedings therefrom.


1.5	“Change of Control” means a transaction or a series of related transactions in which (a) one or more Third Parties who did not previously Control a party obtain Control of such party, or (b) the subject party merges

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

with or transfers substantially all of its assets to a Third Party where the shareholders of the assigning party, immediately before the transaction or series of related transactions, own less than a fifty percent (50%) interest in the acquiring or surviving entity immediately after the transaction or series of related transactions.

1.6

“Combination Product” means either (a) a Component containing two (2) or more Integrated Circuits at least one of which is either a Paid-Up Product or a Term Product and where all other Integrated Circuits contained in such Component are each a Paid-Up Product, a Term Product, or a Permitted Third Party Product, or (b) solely that portion of a Component consisting of a combination of two (2) or more Integrated Circuits that are each a Paid-Up Product or a Term Product (“Eligible Portion”) where such Component also contains an Integrated Circuit that is not a Paid-Up Product, a Term Product, or a Permitted Third Party Product. For clarity, an Eligible Portion may not contain any Integrated Circuit that is neither a Paid-Up Product nor a Term Product.


1.7	“Combination Product License” means the rights and licenses granted under Section 2.1(c).

1.8

“Component” means a product comprised of one or more Integrated Circuits physically connected, stacked, or attached to a unitary substrate or other Integrated Circuit where all other elements of such product are passive elements intended to provide physical support, packaging and/or connectivity with respect to such Integrated Circuits. Examples of Components would include DIMMs, SIMMs and other modules, and cards, multi-chip packages (MCP), system-on-chip, system-in-package, system-on-insulator, solid state storage devices, and other form factors.

1.9

“Control” (including “Controlled” and other forms) of an entity means (a) beneficial ownership (whether directly or indirectly through entities or other means) of more than fifty percent (50%) of the outstanding voting securities of that entity or (b) in the case of an entity that has no outstanding voting securities, having the power (whether directly or indirectly through entities or other means) presently to designate more than fifty percent (50%) of the directors of a corporation, or in the case of unincorporated entities, of individuals exercising similar functions. Notwithstanding the foregoing sentence, where SK hynix has fifty percent (50%) of such beneficial ownership or power to designate with respect to any other entity, SK hynix shall be deemed to “Control” such other entity if such other entity is part of the SK Group and such entity is lawfully registered under a corporate name, and lawfully operates and generally and routinely conducts its business under a corporate name, that includes “SK,” provided that , such entity agrees in a writing, delivered to both parties within thirty (30) days of the Effective Date (or if later, within thirty (30) days after formation of such entity), to be bound by all applicable terms and conditions of this Agreement.


1.10	“CRI” means Cryptography Research, Inc., a wholly-owned Subsidiary of Rambus.

1.11

“DDR DRAM” means each double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for DDR DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x4, x8 and/or x16.

1.12

“DDR2 DRAM” means each double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for DDR2 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x4, x8 and/or x16.

1.13

“DDR3 DRAM” means each double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for DDR3 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than

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x4, x8 and/or x16.


1.14	“DRAM” means a dynamic random access memory Integrated Circuit the primary purpose of which is data storage and retrieval.


1.15	“DRAM Controller” means any Integrated Circuit having circuitry integrated thereon or contained therein that is capable through an Interface of transmitting and/or receiving data from a DRAM.


1.16	“Effective Date” has the meaning ascribed to such term in the first paragraph of this Agreement.


1.17	“Existing Agreement” has the meaning ascribed to such term under Section 3.3(b) below.


1.18	“Expiration Date” means the fifth (5 ^th ) anniversary of the Effective Date.


1.19	“Foundry Product” means any product that would constitute a Paid-Up Product or Term Product but for the fact that such product does not constitute a SK hynix Product.


1.20	“Foundry Product License” means the rights and licenses granted under Section 2.1(d) below.

1.21

“GDDR DRAM” means each graphics double date rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for GDDR DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x16 and x32.

1.22

“GDDR2 DRAM” means each graphics double date rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for GDDR2 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x16 and x32.

1.23

“GDDR3 DRAM” means each graphics double date rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for GDDR3 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x16 and x32.

1.24

“GDDR4 DRAM” means each graphics double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for GDDR4 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x16 and x32.

1.25

“GDDR5 DRAM” means each graphics double data rate DRAM that (a) implements those interface features, parameters, and protocols in the same manner in all material respects as the DRAM Sold by SK hynix or its Subsidiaries on or before the Effective Date as “GDDR5 DRAM” or implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for GDDR5 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol contained in such DRAM Sold by SK hynix or its Subsidiaries on or before the Effective Date as “GDDR5 DRAM”; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; (ii) with a data bit width other than x16 and x32.


1.26	“Indirect Infringement” means any form of alleged patent infringement where the accused infringer is not directly infringing the subject patent right(s), but is in some manner liable for a Third Party's direct infringement of the subject patent right(s) by, for example (without limitation), supplying designs, parts or

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

instructions to the Third Party that enable such Third Party to infringe directly the subject patent right(s). Indirect Infringement includes without limitation contributory infringement and inducing infringement.


1.27	“Integrated Circuit” means a single, discrete integrated circuit chip, whether in wafer, cingulated die or packaged die form.

1.28

“Interface” means an electrical, optical, RF, mechanical, or software data path that is capable of transmitting and/or receiving information between two or more (a) Integrated Circuits or (b) portions of an Integrated Circuit, in each case together with the set of protocols defining the electrical, physical, timing and/or functional characteristics, sequences and/or control procedures of such data path.


1.29	“JEDEC” means the JEDEC Solid State Technology Association, originally known as the Joint Electron Device Engineering Council, a non-stock corporation organized and existing under the laws of the Commonwealth of Virginia.


1.30	“Licensed Product” means a Paid-Up Product, Term Product, or Combination Product made (including have made), used, Sold, offered for Sale, exported and/or imported pursuant to the Paid-Up Product License, the Term Product License and Combination Product License, respectively.

1.31

“LPDDR DRAM” means each low-power double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for LPDDR DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x8, x16 and/or x32.

1.32

“LPDDR2 DRAM” means each low-power double data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for LPDDR2 DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x8, x16 and/or x32.


1.33	“LPSDR DRAM” means each low-power SDR DRAM , but including each such DRAM with a data bit width of x32.


1.34	“Opposition Proceedings” means oppositions filed by SK hynix against the Opposed Rambus Patents, to the extent that they are pending before the European Patent Office as of the Effective Date.


1.35	“Opposed Rambus Patents” means the following Rambus Patents, each of which is subject to one or more of the Opposition Proceedings:

EP 1 997 111 B1 (Application No. 07 758 147.8; “MEMORY DEVICE WITH MODE-SELECTABLE PREFETCH AND CLOCK-TO-CORE TIMING”);

EP 1 653 374 B1 (Application No. 05 022 021.9; “METHOD AND APPARATUS FOR COORDINATING MEMORY OPERATIONS AMONG DIVERSELY-LOCATED MEMORY COMPONENTS”);

EP 2 192 494 B1 (Application No. 10 150 033.8; “METHOD AND APPARATUS FOR COORDINATING MEMORY OPERATIONS AMONG DIVERSELY-LOCATED MEMORY COMPONENTS”); and,

EP 1 981 033 B1 (Application No. 08 153 150.1; “APPARATUS AND METHOD FOR PIPELINED MEMORY OPERATIONS”).


1.36	“Other DRAM” means any DRAM that does not constitute a Paid-Up Product.


1.37	“Paid-Up Product” means each SK hynix Product that is an SDR DRAM, DDR DRAM, DDR2 DRAM, DDR3 DRAM, GDDR DRAM, GDDR2 DRAM, GDDR3 DRAM, GDDR4 DRAM, GDDR5 DRAM, LPSDR DRAM, LPDDR DRAM, and LPDDR2 DRAM. Notwithstanding the foregoing sentence, any product that constitutes a Rambus Leadership Product shall be deemed not to be a Paid-Up Product.

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.


1.38	“Paid-Up Product License” means the rights and licenses granted pursuant to Section 2.1(a).

1.39

“Patents” means patents , including re-examinations and reissues thereof, and utility models and applications therefor, including, without limitation, all continuations, continuations-in-part and divisionals thereof, in all countries of the world that now or hereafter are (a) owned or controlled by the applicable party hereto and its Subsidiaries and/or (b) otherwise licensable by the applicable party hereto and its Subsidiaries, in each case of (a) and (b) where such party and its Subsidiaries have the right to grant the licenses, sublicenses or other rights and covenants of the scope granted herein.


1.40	“Permitted Third Party Product” means any Integrated Circuit that is neither a SK hynix Product nor a DRAM, SerDes IC, DRAM Controller, Synchronous Flash Memory or Synchronous Flash Controller.


1.41	“Quarterly Acquisition Adjustment Payment” means each quarterly fixed amount initially payable by SK hynix under this Agreement upon SK hynix's or any of its Subsidiaries' Acquisition of any Acquired Business as provided for under Section 3.3.


1.42	“Quarterly License Payment” has the meaning ascribed to such term in Section 4.1.


1.43	“Rambus Applicable Manufacturing Claims” are defined and determined separately for each specific product. For each such product, a Rambus Applicable Manufacturing Claim means each process or method claim of a Rambus Patent [***] infringed when such product is made (or have made).


1.44	“Rambus Applicable Patent Claims” means Rambus Applicable Manufacturing Claims and Rambus Applicable Product Claims.


1.45	“Rambus Applicable Product Claims” are defined and determined separately for each specific product. For each such product, a Rambus Applicable Product Claim means:


(a)	each claim of each Opposed Rambus Patent that is [***] by the use, Sale, offer for Sale, export, or import of such product in the form first made (or have made), in each case during the pendency of the Opposition Proceeding associated with such Opposed Rambus Patent and any and all appeals therefrom; and,


(b)	each claim of:


(i)	each Opposed Rambus Patent that is [***] by the use, Sale, offer for Sale, export, or import of such product in the form first made (or have made), in each case following the pendency of the Opposition Proceeding associated with such Opposed Rambus Patent; and,


(ii)	each other Rambus Patent that is [***] by the use, Sale, offer for Sale, export, or import of such product in the form first made (or have made).


1.46	“Rambus Leadership Product” means any product that implements a Rambus Proprietary Specification.


1.47	“Rambus Patents” means Patents owned or controlled or otherwise licenseable, each in accordance with Section 1.39 above by Rambus or any of its Subsidiaries, in each case other than those Patents of CRI that have effective filing dates that are earlier than June 6, 2011 (the effective date of Rambus' acquisition of CRI).


1.48	“Rambus Product Design” means any human or machine readable representation of the design, such as a circuit layout in a drawing or a register transfer level description (RTL) file, for any product, element or instrumentality, including, but not limited to any Rambus Leadership Product.


1.49	“Rambus Product Design License” means the rights and licenses granted under Section 2.2.

1.50

“Rambus Proprietary Specification” means any Technical Specification that is first designed and developed (as demonstrated by customary means, including, but not limited to, engineering notebooks) by, or on behalf of, Rambus or any of its Subsidiaries, over which Rambus and/or any of its Subsidiaries has exclusive control and that neither Rambus nor any of its Subsidiaries has voluntarily (a) disclosed except under a confidentiality or non-disclosure agreement; or (b) proposed or disclosed to any standards setting organization. In addition to the foregoing sentence, Rambus Proprietary Specification also includes any Technical Specification exclusively acquired by Rambus from a Third Party where such Technical Specification would otherwise

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

meet the definition of a Rambus Proprietary Specification had Rambus, and not the relevant Third Party, been the original developer and owner of such Technical Specification. Notwithstanding the above, a Technical Specification independently developed by or on behalf of SK hynix, or by a Third Party, shall not be deemed to be a Rambus Proprietary Specification, even if it describes similar or identical functions. A Technical Specification shall not be deemed to be independently developed for purposes of the preceding sentence to the extent such Technical Specification, or any portion thereof, was developed or derived based on information (i) for which SK hynix or any of its Subsidiaries, or any other Third Party, is bound by an obligation of confidentiality or non-use to Rambus; (ii) obtained from any other Third Party in violation of its obligation of confidentiality or non-use to Rambus; or (iii) obtained by SK hynix, any of its Subsidiaries or any other Third Party based on reverse engineering of any product that implements a Rambus Proprietary Specification.

1.51

“SDR DRAM” means each single data rate DRAM that (a) implements the minimum set of features, parameters, and protocols defined or recommended in any final JEDEC-published specification for SDR DRAM; and (b) is solely capable of communicating with any other Integrated Circuit through the protocol defined or recommended in any such JEDEC-published specification; and (c) is not Sold or specified as being capable of operating: (i) at a data transfer rate exceeding [***]; or (ii) with data bit width other than x4, x8 and/or x16.


1.52	“Sell” (including “Sale” and “Sold” and other forms) means to sell, lease, or otherwise transfer or dispose of a product, or if the product is transferred and used internally by an entity, then such transfer and use shall also be deemed a Sale.

1.53

“SerDes IC” means any Integrated Circuit having circuitry integrated thereon or contained therein that (a) de-serializes data received by such Integrated Circuit from a different Integrated Circuit and/or (b) serializes data originating on such Integrated Circuit prior to transmitting such data to a different Integrated Circuit. Notwithstanding the foregoing, any Integrated Circuit, the primary purpose of which is data storage and/or retrieval shall be deemed not to be a SerDes IC.


1.54	“Settlement Agreement” has the meaning assigned in the recitals to this Agreement.


1.55	“SK hynix Applicable Manufacturing Claims” are defined and determined separately for each specific product. For each such product, a SK hynix Applicable Manufacturing Claim means each process or method claim of a SK hynix Patent [***] when such product is made (or have made).


1.56	“SK hynix Applicable Patent Claims” means SK hynix Applicable Manufacturing Claims and SK hynix Applicable Product Claims.


1.57	“SK hynix Applicable Product Claims” are defined and determined separately for each specific product. For each such product, a SK hynix Applicable Product Claim means each claim of a SK hynix Patent [***] by the use, Sale, offer for Sale, or import of such product in the form first made (or have made).


1.58	“SK hynix Patent” means Patents owned or controlled or otherwise licenseable, each in accordance with Section 1.39 above by SK hynix or any of its Subsidiaries.


1.59	“SK hynix Product” means, an Integrated Circuit, for which SK hynix or any of its Subsidiaries either:


(a)	owns the entire design of such Integrated Circuit with no limitations on how it may use such design; and/or,

(b)

has a license from the party or parties that created or otherwise owns the design of such Integrated Circuit, under which license SK hynix and/or its Subsidiaries (i) can make (and/or have made) such Integrated Circuit; (ii) is free to Sell such made (or have made) Integrated Circuit without restriction as to whom SK hynix and/or its Subsidiaries may Sell such Integrated Circuit; and (iii) is not required or bound to discriminate in price or other terms with respect to such Integrated Circuit.


1.60	“SK hynix Supplied Portion” has the meaning ascribed to in Section 2.1(d)(ii) below.


1.61	“Subsidiary” means with respect to any identified entity (“Identified Entity”), any entity Controlled by such

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Identified Entity, but only so long as such Control exists.


1.62	“Synchronous Flash Controller” means any Integrated Circuit having circuitry integrated thereon or contained therein that is capable through an Interface of transmitting and/or receiving data from a Synchronous Flash Memory.


1.63	“Synchronous Flash Memory” means any Integrated Circuit the primary purpose of which is data storage or retrieval that has a synchronous Interface and Flash memory cells that retain data stored in such Flash memory cells even when it ceases to receive electrical power.

1.64

“Technical Specification” means a final specification for an optical, RF, electrical, mechanical, or software component that describes all of the characteristics of such component necessary for such component to operate. As example, the electrical interface (including timing and signaling parameters and characteristics) for a data bus connecting two (2) Integrated Circuits would meet the definition of a Technical Specification provided that such interface specified all of the signals necessary for such data bus to function.


1.65	“Term” means, as the case may be, the (a) term of the Paid-Up License, (b) the term of the Term Product License; (c) term of the Combination Product License, and/or (d) term of the Foundry Product License in each case of (a), (b), (c) and (d) as provided for under Section 6.1.


1.66	“Term Product” means each SK hynix Product that is an (a) Other DRAM; (b) DRAM Controller; (c) Synchronous Flash Memory; (d) Synchronous Flash Controller; (e) SerDes IC; and (f) any other Integrated Circuit other than a Paid-Up Product. Notwithstanding the foregoing sentence, any product that constitutes a Rambus Leadership Product shall be deemed not to be a Term Product.


1.67	“Term Product License” means the rights and licenses granted under Section 2.1(b).


1.68	“Third Party” means (a) with respect to Rambus or any Subsidiary of Rambus, any entity that is not a Subsidiary of Rambus and (b) with respect to SK hynix or any Subsidiary of SK hynix, any entity that is not a Subsidiary of SK hynix.


2.	G RANT OF R IGHTS


2.1	License to SK hynix .

(a)

Paid-Up Product License . Subject to the terms and conditions of this Agreement, Rambus, on behalf of itself and its Subsidiaries, hereby grants to SK hynix and its Subsidiaries, for each product that falls within the definition of a Paid-Up Product: a non-exclusive, non-transferable, royalty-bearing, worldwide license, without the right to sublicense, solely under the associated Rambus Applicable Patent Claims for such Paid-Up Product, to make (including have made), use, Sell, offer for Sale, export, and/or import such Paid-Up Product until the expiration or termination of this license pursuant to Section 6.1(a).

(b)

Term Product License . Subject to the terms and conditions of this Agreement, Rambus, on behalf of itself and its Subsidiaries, hereby grants to SK hynix and its Subsidiaries, for each product that falls within the definition of a Term Product: a non-exclusive, non-transferable, royalty-bearing, worldwide license, without the right to sublicense, solely under the associated Rambus Applicable Patent Claims for such Term Product, to make (including have made), use, Sell, offer for Sale, export, and/or import such Term Product until the expiration or termination of this license pursuant to Section 6.1(b).

(c)

Combination Product License . Subject to the terms and conditions of this Agreement, Rambus, on behalf of itself and its Subsidiaries, hereby grants to SK hynix and its Subsidiaries, for each product that falls within the definition of a Combination Product: a non-exclusive, non-transferable, royalty-bearing, worldwide license, without the right to sublicense, solely under the associated Rambus Applicable Patent Claims for such Combination Product, to make (including have made), use, Sell, offer for Sale, export, and/or import such Combination Product until the expiration or termination of this license pursuant to Section 6.1(c). For clarity, the grant of the license to Combination Products pursuant to this Section 2.1(c) does not supersede or otherwise limit the licenses granted to each Term Product and Paid-Up Product under Section 2.1(a) and Section 2.1(b), respectively, that may be contained in any such Combination Product.

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.


(d)	Foundry Product License . Except as expressly set forth in Sections 2.1(d)(i) and 2.1(d)(ii) below, all Foundry Products are expressly excluded from the licenses granted under Sections 2.1(a), 2.1(b) and 2.1(c) of this Agreement.

(i)

Manufacturing . Rambus, on behalf of itself and its Subsidiaries, hereby grants to SK hynix and its Subsidiaries, for any product that constitutes a Foundry Product: a non-exclusive, non-transferable, worldwide license, without the right to sublicense, under the associated Rambus Applicable Manufacturing Claims for such Foundry Product, to make (but not have made), use, Sell, offer for Sale, import, and export any such Foundry Product until the expiration or termination of this license pursuant to Section 6.1(d). For the avoidance of doubt, except as expressly set forth in Section 2.1(d)(ii), no license is granted under any Rambus Applicable Product Claims for any Foundry Products.

(ii)

SK hynix Supplied Technology . For any portion of a Foundry Product supplied by SK hynix and/or its Subsidiaries (“SK hynix Supplied Portion”) for which SK hynix or any of its Subsidiaries either (A) owns the entire design of such SK hynix Supplied Portion with no limitations on how it may use such design; and/or (B) has a license from the Third Party (or Third Parties) that created or otherwise owns the design of such SK hynix Supplied Portion, under which license SK hynix and/or its Subsidiaries (I) can make (and/or have made) such SK hynix Supplied Portion; (II) is free to Sell such made SK hynix Supplied Portion without restriction as to whom SK hynix and/or its Subsidiaries may Sell such SK hynix Supplied Portion and (III) is not required or bound to discriminate in price or other terms with respect to such SK hynix Supplied Portion, Rambus, on behalf of itself and its Subsidiaries, hereby grants to SK hynix and its Subsidiaries, a non-exclusive, non-transferable, worldwide license, without the right to sublicense, under the associated Rambus Applicable Product Claims for such SK hynix Supplied Portion, to use, Sell, offer for Sale, or import any such SK hynix Supplied Portion as part of any such Foundry Product until the expiration or termination of this license pursuant to Section 6.1(d).

2.2

Rambus Product Design License . Subject to the terms and conditions of this Agreement, SK hynix, on behalf of itself and its Subsidiaries, hereby grants to Rambus and its Subsidiaries, for each product that falls within the definition of Rambus Product Design: a non-exclusive, non-transferable, worldwide license, without the right to sublicense, solely under the associated SK hynix Applicable Patent Claims for such Rambus Product Design, to make (including have made), use, Sell, offer for Sale, and/or import such Rambus Product Design until the expiration or termination of this license pursuant to Section 6.1(e). For the avoidance of doubt, this license does not in any way, expressly or impliedly, extend, nor is it intended to extend, to any devices or products made essentially based on or incorporating such Rambus Product Design or in combination of such Rambus Product Design.

2.3

Obligations When Transferring Patents . Each party agrees that it shall take all actions necessary to ensure that any Third Party to whom any Patents are transferred, assigned or exclusively licensed or any right to enforce is granted (including any successor in interest thereto) is bound in writing to all covenants, licenses and other rights granted hereunder with respect such transferred, assigned or exclusively licensed Patents, provided further that if Rambus or any of its Subsidiaries transfers to any Third Party ownership of, or otherwise grants any Third Party the right to enforce, any claim of any Rambus Patent that is subject to the Covenant to Sue Last provided for under Section 2.4 below, such claim shall, upon such transfer of ownership or grant of right to enforce, automatically and immediately be deemed to be included in the rights and licenses granted hereunder with respect to Licensed Products and SK hynix Supplied Portions notwithstanding the fact that such claim does not constitute a Rambus Applicable Patent Claim.


2.4	Covenant [*] . For so long as a product constitutes a Licensed Product or a SK hynix Supplied Portion hereunder, Rambus, on behalf of itself and its Subsidiaries, covenants that [*]


2.5	Further Covenant. For so long as a product or portion thereof Sold by SK hynix:

(a) [***];

(b) [***]; or,

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Rambus, on behalf of itself and its Subsidiaries, covenants that [***].

2.6

Full Force and Effect . The parties expressly acknowledge and agree that nothing in this Agreement shall in any way limit or alter the effect of the first sale or patent exhaustion doctrines under U.S. law, and any equivalent or similar doctrines under the law of any jurisdiction with respect to Rambus Applicable Patent Claims with respect to any Licensed Product or SK hynix Supplied Portion based on the Sale of such Licensed Product or SK hynix Supplied Portion.


2.7	No Release, No Implied or Other Rights and Licenses .

(a)

The rights and licenses granted and covenants made herein apply solely to those products and activities expressly licensed during the Term. Nothing in this Agreement shall be deemed to, and shall not be construed to, constitute any release, forbearance, forfeiture or other waiver of any rights of either party or their respective Subsidiaries to enforce any of their respective intellectual property rights with respect to any activities undertaken by either party, their respective Subsidiaries and/or any other Third Party to the extent not expressly granted or made hereunder. Nothing in this Agreement is intended to limit or alter any rights under applicable law relating to patent exhaustion.

(b)

Except as expressly provided for under this Agreement, no authorization, release, license, covenant or other right is granted or made, by implication, estoppel, acquiescence or otherwise under this Agreement, to either party, their respective Subsidiaries and/or any other Third Party under any patents, utility models, patent or utility model claims, or other intellectual property rights now or hereafter owned or controlled by either party or their respective Subsidiaries. Nothing in this Agreement is intended to limit or alter any rights under applicable law relating to patent exhaustion.

(c)

Except as expressly provided for under this Agreement, none of the terms of this Agreement shall be deemed to, and shall not be construed to, constitute, whether by implication, estoppel, acquiescence or otherwise, (i) an authorization by either party, their respective Subsidiaries and/or any other Third Party to Sell, offer for Sale and/or import any product (A) in or for combination with any other element (including, but not limited to any function or feature), product or instrumentality; or (B) unconditionally for use in or for combination with any other element (including, but not limited to any function or feature), product or instrumentality; or (ii) a waiver by either party or their respective Subsidiaries of any liability for infringement based on either party's, their respective Subsidiaries and/or any other Third Party's use, Sale, offer for Sale and/or import of any product in combination with any other element (including, but not limited to any function or feature), product or instrumentality. Nothing in this Agreement is intended to limit or alter any rights under applicable law relating to patent exhaustion.


3.	S UBSIDIARIES, F ORMER S UBSIDIARIES, AND A CQUISITIONS

3.1

Subsidiaries . The parties intend that this Agreement shall extend to all of each party's Subsidiaries. The parties agree that to the extent they are not already bound, each party shall ensure that all of its Subsidiaries (including without limitation all entities that become Subsidiaries after the Effective Date (“New Subsidiaries”)) are bound by the terms of this Agreement. Without limiting the foregoing:


(a)	each party shall ensure that each New Subsidiary's patents, utility models and applications therefor are included within the definition of the applicable party's Patents; and


(b)	each party shall ensure that each New Subsidiary is bound as applicable, by Sections 2.3, 2.4, and 2.5.

3.2

Former Subsidiaries . All rights and licenses granted and covenants made to any Subsidiary of either party shall immediately and automatically terminate upon a party ceasing to Control such entity (“Former Subsidiary”). However, if a Subsidiary of a party that holds any patent or utility model or applications therefor that are subject to the rights and licenses granted or covenants made hereunder becomes a Former Subsidiary, such rights and licenses granted or covenants made by such Former Subsidiary (including every successor entity in interest to any such patents or utility models and applications therefor) shall continue in accordance with the terms of this Agreement after such entity becomes a Former Subsidiary.


3.3	Acquisitions .

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(a)

Acquired Business [***] . If SK hynix or any of its Subsidiaries completes an Acquisition [***], then SK hynix shall pay Rambus a fixed quarterly payment (in addition to SK hynix's Quarterly License Payments or any other Quarterly Acquisition Adjustment Payments owed under this Section 3.3(a) and/or pursuant to Section 3.3(b) below in connection with such Acquisition or any other Acquisition) for each calendar quarter remaining in the Term, based on such Acquisition, starting, on a prorated basis, with the first calendar quarter during which the Acquisition Date occurred, [***]. If iSuppli data as required for the calculations in this Section 3.3(a) is not available for an Acquired Business or for SK hynix, or the most recent version of such data covers a period ending more than twelve (12) months before the Acquisition Date, the parties shall initially meet within thirty (30) days following the associated Acquisition Date and negotiate in good faith an alternate source for the information that was to be provided by iSuppli. If the parties cannot reach agreement on such alternate source within thirty (30) days following the date required for such initial meeting, either party may, as its sole and exclusive remedy to resolve such dispute, submit such dispute to binding arbitration pursuant to the terms of Section 8. For the avoidance of doubt, any Acquired Business that has revenue attributable from the Sale of Acquisition Products of [***] or less (as reported by iSuppli for the most recent twelve (12) months preceding the Acquisition Date for which iSuppli has reported such Sales) shall be licensed without additional payments of any kind.

(b)

Acquired Business [***] . If SK hynix or any of its Subsidiaries completes an Acquisition [***], SK hynix shall pay Rambus a fixed quarterly payment (in addition to SK hynix's Quarterly License Payments or any other Quarterly Acquisition Adjustment Payment owed pursuant to Section 3.3(a) above and/or under this Section 3.3(b) in connection with such Acquisition or any other Acquisition) for each calendar quarter remaining in the Term, based on such Acquisition, starting, on a pro-rated basis with the first calendar quarter during which the Acquisition Date occurred. [***] If the Existing Agreement required payments for less than four (4) quarters prior to the Acquisition Date, the parties shall initially meet within thirty (30) days following the associated Acquisition Date and negotiate in good faith an alternate method to determine the average quarterly payments from the Existing Agreement. If the parties cannot reach agreement on such alternate method within thirty (30) days following the date required for such initial meeting, then either party may, as its sole and exclusive remedy to resolve such dispute, submit such dispute to binding arbitration pursuant to the terms of Section 8.


(c)	Attributable Revenue . For purposes of the calculations in this Section 3.3, [***].

(d)

Dispute Resolution . If the parties fail to resolve any dispute identified in this Section 3.3 as subject to binding arbitration, then either party may, as its sole and exclusive remedy, submit such dispute to binding arbitration pursuant to Section 8 and SK hynix's obligation to remit its Quarterly Acquisition Adjustment Payment based on such disputed Acquisition pursuant to Section 5.1(a)(iii) shall be tolled until the earlier of either the final resolution of such arbitration or the parties' resolution of such dispute, and in either case within thirty (30) days after such resolution SK hynix will make all payments necessary to satisfy its payment obligations under this Section 3.3 from the date such obligations accrued.

3.4

No Release . The releases granted and covenants made under Article 4 of the Settlement Agreement shall not apply to any Acquired Business. None of the rights and licenses granted and covenants made under Section 2 shall apply to any activity of any Acquired Business unless and until such Acquired Business becomes licensed hereunder in accordance with this Section 3, and in any case, none of the rights and licenses granted and covenants made under Section 2 shall apply to nor in any way reduce any liability associated with any activity of any Acquired Business that took place prior to the applicable Acquisition Date, provided that nothing in this Section 3.4 shall have the effect of negating or nullifying any release or license granted in any Existing Agreement. Notwithstanding anything to the contrary contained in Section 3.3, for any Acquisition for which SK hynix wishes to acquire a release of liability for the Acquired Business for infringement of Rambus' patents and/or utility models that took place prior to the applicable Acquisition Date, the parties will negotiate such release in good faith and may consider the calculations set forth in Section 3.3(a) and/or the total past liability for infringing Rambus' patents and/or utility models incurred by such Acquired Business.


4.	C ONSIDERATION

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.


4.1	Quarterly License Payment . For each of the first twenty calendar quarters that occur during the Term, beginning with the third calendar quarter of 2013, SK hynix will pay to Rambus a quarterly license payment of twelve million United States Dollars (US$12,000,000; each such payment, a “Quarterly License Payment”).


4.2	Quarterly Acquisition Adjustment Payment . To the extent required pursuant to Section 3.3, SK hynix shall pay, for each Acquisition occurring during the Term, to Rambus a Quarterly Acquisition Adjustment Payment for each of the calendar quarters that occur between [***].


5.	P AYMENTS


5.1	Payment Terms .


(a)	Timing of Payments .


(i)	First Quarterly License Payment . SK hynix shall pay to Rambus the first Quarterly License Payment within ten (10) United States business days of its receipt (as determined for notices under Section 9.2) of Rambus' invoice therefor. Rambus shall invoice SK hynix for such first Quarterly License Payment no earlier than July 1, 2013.

(ii)

Subsequent Quarterly License Payments . Starting with the Quarterly License Payment associated with the fourth calendar quarter of 2013, SK hynix shall pay Rambus each subsequent Quarterly License Payment within ten (10) United States business days of its receipt (as determined for notices under Section 9.2) of Rambus' invoice therefor. Rambus shall invoice SK hynix for each of the nineteen (19) subsequent Quarterly License Payments no earlier than thirty (30) days after the first day of the quarter to which each such Quarterly License Payment relates.

(iii)

Quarterly Acquisition Adjustment Payments . SK hynix shall pay Rambus each Quarterly Acquisition Adjustment Payment within ten (10) United States business days of its receipt (as determined for notices under Section 9.2) of Rambus' invoice therefor. Rambus shall invoice SK hynix for each Quarterly Acquisition Adjustment Payment no earlier than thirty (30) days after the first day of the quarter to which each such Quarterly Acquisition Adjustment Payment relates, provided that any prorated portion of such payment due in accordance with Section 3.3 above may not be invoiced by Rambus earlier than thirty (30) days after the first day of the calendar quarter following the respective Acquisition Date.


(b)	Method of Payment . SK hynix's payments to Rambus of all amounts hereunder shall be made by electronic transfer either directly to or via the Federal Reserve Bank of San Francisco for credit to the following account or another designated in writing by Rambus:

Rambus Inc.

[***]

5.2

Currency and Late Payments . All payments to Rambus hereunder shall be in United States Dollars. Late payments hereunder shall be subject to interest at the 1-year U.S. Government Treasury Constant Maturity Rate, as published by the Federal Reserve (www.federalreserve.gov) on the date the amount payable was due, plus five percent (5%) (or the maximum interest rate allowed by applicable law, if lower). The amount of interest shall be calculated from the payment due date to the date of electronic transfer.

5.3

Taxes . If the Korean government imposes any withholding tax on any amounts paid by SK hynix to Rambus hereunder, such tax shall be borne by Rambus. SK hynix agrees, at its reasonable discretion, to assist Rambus in its efforts to minimize Rambus' tax liability. SK hynix shall withhold the amount of any such taxes levied on such payments to Rambus imposed by the Korean government, shall effect payment of the taxes so withheld to the Korean tax office when due, and SK hynix shall send to Rambus the official certificate of such payment in a form reasonably sufficient to enable Rambus to support a claim for a foreign tax credit with respect to any such taxes so withheld.


5.4	No Escrow . Payment of amounts due under this Agreement to any person, firm or entity, other than Rambus, including without limitation, any escrow fund or escrow agent, unless agreed by Rambus or ordered by any

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

court or government agency of competent jurisdiction or arbitration panel, shall constitute a material breach of this Agreement by SK hynix. Any payment once made by SK hynix to Rambus shall not be refunded or refundable to SK hynix for any reason except as may be required pursuant to Section 8. Notwithstanding the foregoing, in case of clerical error with respect to any payment made hereunder, the parties agree to remedy any such error through proper payment adjustments.


6.	T ERM & T ERMINATION


6.1	Term .


(a)	Paid-up Product License . The Paid-Up Product License shall commence on the Effective Date and shall continue in full force and effect unless and until terminated in accordance with this Section 6.


(b)	Term Product License . The Term Product License shall commence on the Effective Date and shall continue in full force and effect until the Expiration Date unless earlier terminated in accordance with this Section 6.

(c)

Combination Product License . The Combination Product License shall commence on the Effective Date and shall continue in full force and effect until the Expiration Date unless earlier terminated in accordance with this Section 6. Notwithstanding the foregoing, the Combination Product License shall continue in full force and effect solely for combinations consisting solely of two (2) or more Paid-Up Products for so long as the Paid-Up Product License remains in full force and effect.


(d)	Foundry Product License . The Foundry Product License shall:


(i)	with respect to Foundry Products that are, or contain, products that would constitute Paid-Up Products but for the fact that such products do not constitute SK hynix Products, commence on the Effective Date and shall continue in full force and effect unless and until terminated in accordance with this Section 6; and,


(ii)	otherwise commence on the Effective Date and shall continue in full force and effect until the Expiration Date unless earlier terminated in accordance with this Section 6.


(e)	Rambus Product Design License . The Rambus Product Design License shall commence on the Effective Date and shall continue in full force and effect until the Expiration Date unless earlier terminated in accordance with this Section 6.

The parties shall, starting no later than six (6) months prior to the Expiration Date, negotiate in good faith renewal terms, if any, for the licenses associated with subsections (b)-(e) above.

6.2

Material Breach . A party may terminate this Agreement upon notice if the other party hereto (or any of its Subsidiaries) commits a material breach of Section 3.3(d) with respect to the exclusive resolution though arbitration of disputes regarding alternate sources and/or methods pursuant to Section 8 as provided for in such section and does not correct such breach within thirty (30) days after receiving written notice complaining thereof. In addition, unless it has exercised its option under Section 2.1(b) of the Settlement Agreement and received timely payment thereunder, Rambus may terminate this Agreement upon notice if SK hynix materially breaches its payment obligations under this Agreement and does not correct such breach within thirty (30) days after receiving written notice complaining thereof. Failure of SK hynix to remit any payment due and payable in accordance with the terms of this Agreement shall constitute a material breach of this Agreement. For the avoidance of doubt, any payments tolled in accordance with the terms of this Agreement shall not be due and payable during such tolling period.


6.3	Bankruptcy . Either party may terminate this Agreement effective upon written notice to the other party if the other party becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, or composition for the benefit of creditors, if that petition or proceeding is not dismissed within sixty (60) days after filing.


6.4	Change of Control . In addition to the rights set forth in Sections 6.2 and 6.3 above, if prior to the Expiration Date, SK hynix undergoes a Change of Control, then Rambus may terminate this Agreement effective upon

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

written notice thereof to SK hynix or the relevant successor in interest.

If Rambus receives written notice of such Change of Control from SK hynix (or its successor in interest) no later than ten (10) business days after such Change of Control, Rambus agrees to negotiate in good faith with such successor in interest, for a period of one hundred and eighty (180) days after receipt of such notice, the application of this Agreement to such successor in interest's business activities prior to terminating this Agreement based on such Change of Control.

Rambus' failure to terminate this Agreement after a given Change of Control by SK hynix (or any successor in interest) shall not in any way limit Rambus' right to exercise these rights for any subsequent Change of Control.

Notwithstanding the foregoing, if prior to the Expiration Date or during any renewal term, SK hynix undergoes a Change of Control pursuant to which another member of the SK Group obtains Control of SK hynix (such member, the “Controlling Member”), then Rambus shall have no right to terminate this Agreement in accordance with the preceding sentence, but, in the event that such Controlling Member and/or one or more of its Subsidiaries had revenue from the Sale of Acquisition Products (as defined above) during the most recent twelve (12) calendar months preceding the date of the Change of Control, then:

(i) SK hynix shall provide written notice of such Change of Control to Rambus;

(ii) this Agreement shall automatically be assigned by SK hynix to such Controlling Member (notwithstanding the provisions set forth in Section 9.4 below);

(iii) each reference to SK hynix in this Agreement (including those in the definitions) shall, as of the date of such Change of Control, be deemed to be a reference to such Controlling Member; and,

(iv) such Controlling Member and its Subsidiaries shall be subject to Section 3.3 above as if it (such Controlling Member and such Subsidiaries, collectively) were an Acquired Business (e.g., a Quarterly Acquisition Adjustment Payment will be calculated by using the Sale, if any, by such Controlling Member and its Subsidiaries of Acquisition Products during the twelve (12) calendar months preceding the Acquisition Date).

6.5

Survival . All payment obligations accruing prior to any termination of this Agreement shall survive any such termination. In addition, the following Sections shall survive and remain in full force and effect after any termination of this Agreement: Section 1 (Definitions), Section 2.3 (Obligations When Transferring Patents), Section 2.6 (Full Force and Effect), 2.7 (No Release, No Implied or Other Rights and Licenses), Section 3.1 (Subsidiaries), 3.2 (Former Subsidiaries), 3.3(d) (Dispute Resolution), Section 3.4 (No Release), Section 4 (Consideration) and Section 5 (Payments) (in each case with respect to amounts incurred prior to termination of this Agreement), this Section 6.5 (Survival), Section 7.2 (Confidentiality), Section 8 (Dispute Resolution), and Section 9 (Miscellaneous).


7.	C ONFIDENTIALITY


7.1	Press Release; Additional Obligations . The parties intend to issue a press release as set forth in the Settlement Agreement. The parties shall perform the obligations set forth in Exhibit A in accordance with the terms and conditions contained therein.

7.2

Confidentiality . Each party agrees that only after the announcement referenced in Section 7.1 above, each party shall be entitled to disclose the general nature of this Agreement but that the terms and conditions of this Agreement, to the extent not already disclosed pursuant to Section 7.1 above, shall be treated as Confidential Information and that neither party will disclose such terms or conditions to any Third Party without the prior written consent of the other party, provided, however, that each party may disclose the terms and conditions of this Agreement:


(a)	as required by any court or other governmental body;


(b)	as otherwise required by law;

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.


(c)	as otherwise may be required by applicable securities and other law and regulation, including to legal and financial advisors in their capacity of advising a party in such matters so long as the disclosing party shall seek confidential treatment of such terms and conditions to the extent reasonably possible;


(d)	to legal counsel, accountants, and other professional advisors of the parties;


(e)	in confidence, to banks, investors and other financing sources and their advisors or to SK Telecom (provided that at the time of any such disclosure to SK Telecom, SK Telecom owns at least twenty (20) percent of the outstanding voting securities of SK hynix);


(f)	in connection with the enforcement of this Agreement or rights under this Agreement;

(g)

during the course of litigation so long as the disclosure of such terms and conditions are restricted in the same manner as is the confidential information of other litigating parties and so long as (i) the restrictions are embodied in a court-entered protective order limiting disclosure to outside counsel and (ii) the disclosing party informs the other party in writing at least ten (10) business days in advance of the disclosure and discusses the nature and contents of the disclosure, in good faith, with the other party;


(h)	in confidence, to a Third Party to whom either party assigns one or more of its Patents, but solely to the extent necessary to inform such Third Party of the encumbrances contained herein on such Patents;


(i)	in confidence, in connection with an actual or prospective merger or acquisition or similar transaction; and,


(j)	by Rambus, in confidence, to the outside legal counsel of Elpida Memory, Inc. (“Elpida”) in connection with Rambus' obligation(s) under any most favored nation, or similar clause, whereby Rambus is contractually obligated to disclose and offer terms agreed upon herein with SK hynix.

Upon execution of this Agreement, or thereafter, Rambus, in its discretion, shall be entitled to file a copy of this Agreement with the U.S. Securities and Exchange Commission, so long as Rambus seeks confidential treatment of such agreement to the extent reasonably possible.


8.	D ISPUTE R ESOLUTION

Any dispute submitted to binding arbitration pursuant to Section 3.3(d) or as otherwise identified herein as subject to binding arbitration shall take place in Santa Clara County, California before one arbitrator, and shall be administered by Judicial Arbitration and Mediation Services, Inc. pursuant to its Streamlined Arbitration Rules and Procedures, except that, if such dispute was submitted in accordance with Section 3.3(d), each party shall submit to the arbitrator and exchange with each other in advance of the hearing their last, best alternate sources and/or methods, as applicable, and the arbitrator shall be limited to awarding only one or the other of the two alternate sources and/or methods, as applicable, submitted. Judgment on such award may be entered in any court having jurisdiction.


9.	M ISCELLANEOUS


9.1	Disclaimers . Nothing contained in this Agreement shall be construed as:


(a)	a warranty or representation by either party as to the validity, enforceability, and/or scope of any intellectual property rights;


(b)	imposing upon either party any obligation to institute any suit or action for infringement of any intellectual property right, or to defend any suit or action brought by a Third Party which challenges or concerns the validity, enforceability or scope of any intellectual property rights;


(c)	imposing on either party any obligation to file any application or registration with respect to any intellectual property rights or to secure or maintain in force any intellectual property rights;


(d)	imposing on either party any obligation to furnish any technical information or know-how; or


(e)	imposing or requiring, whether by implication or otherwise, any support, maintenance or any technology deliverable obligations on either party's or their respective Subsidiaries' part under this Agreement (and

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

neither party nor any of their respective Subsidiaries are providing any support, maintenance or technology deliverables under this Agreement).

9.2

Notices . All notices or other communication required or permitted hereunder shall be in writing and shall be (a) mailed by first class air mail (registered or certified if available), postage prepaid, or otherwise delivered by hand, by messenger, addressed to the addresses set forth below, or (b) delivered by facsimile to the facsimile number set forth below. Each Party may change its address or facsimile number for notices by providing a notice to the other Party in the manner set forth herein. Such notices shall be deemed to have been effective when delivered or, if delivery is not accomplished by reason of some fault or refusal of the addressee, when tendered (which tender, in the case of mail, shall be deemed to have occurred upon posting, and in the case of facsimile, shall be deemed to have occurred upon transmission). All notices shall be in English.

If to SK hynix:

SK hynix Inc.

Kyunghyun Min

Vice President, Head of IP Group

10F, Daechi Tower, 424, Teheran-ro, Gangnam-gu

Seoul, 135-738, Korea

Fax: 82)-31-645-8171

If to Rambus:

Rambus Inc.

Jae Kim

General Counsel

1050 Enterprise Way, Suite 700

Sunnyvale, CA 94089

with a copy, which shall not constitute notice, to the following:

Satish Rishi

Chief Financial Officer

Rambus Inc.

1050 Enterprise Way, Suite 700

Sunnyvale, CA 94089

Telephone: +1-408-462-8000

Facsimile: +1-408-462-8001


9.3	Governing Law & Venue .


(a)	This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to any choice-of-law or conflict-of-law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.


(b)	This Agreement is executed in the English language and no translation shall have any legal effect.

(c)

Except for disputes subject to Section 8, any legal action, suit or proceeding arising under, or relating to, this Agreement, shall be brought in the United States District Court for the Northern District of California or, if such court shall decline to accept jurisdiction over a particular matter, in the Santa Clara County Superior Court, and each party agrees that any such action, suit or proceeding may be brought only in such courts. Each party further waives any objection to the laying of jurisdiction and venue for any such suit, action or proceeding in such courts.


9.4	No Assignment . This Agreement is personal to the parties, and the Agreement and/or any right or obligation hereunder is not assignable, whether in conjunction with a change in ownership, merger, acquisition, the

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[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

sale or transfer of all, or substantially all or any part of either party's or any of their respective Subsidiaries business or assets or otherwise, voluntarily, by operation of law, reverse triangular merger or otherwise, without the prior written consent of the other party, which consent may be withheld at the sole discretion of such other party. Any such purported or attempted assignment or transfer in violation of the foregoing shall be deemed a breach of this Agreement and shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Notwithstanding the foregoing, either party shall be entitled to, and each party hereby agrees to, assign this Agreement to a successor to all or substantially all of a party's assets in a transaction entered into solely to change a party's place of incorporation.


9.5	No Rule of Strict Construction . Regardless of which party may have drafted this Agreement or any part thereof, no rule of strict construction shall be applied against either party. For the avoidance of doubt “includes”, “including”, “included”, and other variations of such terms shall be deemed to be followed by the phrase “without limitation”.

9.6

Severability . If any provision of this Agreement is held to be invalid or unenforceable, the meaning of such provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation shall save such provision, (a) a suitable and equitable provision shall be substituted therefore in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision, and (b) the remainder of this Agreement shall remain in full force and effect.

9.7

Entire Agreement . This Agreement and the Settlement Agreement embody the entire understanding of the parties with respect to the subject matter hereof, and merges all prior oral or written communications between them, and neither of the parties shall be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided herein. No oral explanation or oral information by either party hereto shall alter the meaning or interpretation of this Agreement.


9.8	Modification; Waiver . No modification or amendment to this Agreement, nor any waiver of any rights, will be effective unless assented to in writing by the party to be charged, and the waiver of any breach or default will not constitute a waiver of any other right hereunder or any subsequent breach or default.


9.9	Counterparts . This Agreement may be executed in two (2) or more counterparts, all of which, taken together, shall be regarded as one and the same instrument.

9.10

Bankruptcy Code . All rights, licenses, privileges, releases, and immunities granted under this Agreement shall be deemed to be, for the purposes of Section 365(n) of the U.S. Bankruptcy Code, as amended (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The parties agree that each of the parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. The parties further agree that, in the event that any proceeding shall be instituted by or against a party seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of that party or that party's debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking an entry of an order for relief or the appointment of a receiver, trustee or other similar official for that party or any substantial part of its property or if a party hereto shall take any action to authorize any of the foregoing actions, the other party shall have the right to retain and enforce their respective rights under this Agreement.


9.11	Non-Controlled Entity . SK hynix hereby represents and warrants that on the Effective Date it is not a Subsidiary of any entity or person.


9.12	CRI Representation. Rambus represents and warrants that, to the best of its knowledge, SK hynix does not currently infringe or otherwise need a license under those Patents of CRI that have an effective filing date that are earlier than June 6, 2011.

REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by duly authorized officers or representatives as of the date first above written.



RAMBUS INC.		SK HYNIX INC.


By:	/s/ Kevin Donnelly	By:	/s/ Kyunghyun Min

Name:	Kevin Donnelly	Name:	Kyunghyun Min

Title:	SVP	Title:	VP

Date:	June 11, 2013	Date:	June 10, 2013

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT A

ADDITIONAL OBLIGATIONS

A “Triggering Agreement” means, for this Exhibit A, an agreement or a series of agreements, in which each agreement in such series of agreements is fully-executed by the parties within a thirty-day period, entered into between (a) Rambus and/or one or more of its Subsidiaries and (b) [***] or one of its Subsidiaries pursuant to which Rambus grants [***] and each of its Subsidiaries (collectively, “[***]”) a license, under the Rambus Patents, to Sell [***], at any time between the Effective Date of this Agreement and the expiration or termination of the Term Product License contained herein, whether or not such license also covers the Sale of other products and pursuant to which:

(a)

in the event that [***] has not , as of the date of the later authorized signature of Rambus or [***] to such agreement or such series of agreements, [***], the actual average (mean) annual payments due under such agreement or such series of agreements from [***] (or if such payments are based on a running per unit royalty or percentage of total sales, the projected annual average (mean) amount that [***] will pay to Rambus) during the first [***] years of such agreement or such series of agreements immediately following the date of the later authorized signature of Rambus or [***] to such agreement or such series of agreements, irrespective of the term of such agreement or such series of agreements (such average, the “[***]Only Annual Average Payment”) is less than the multiple of [***] dollars (USD [***]) and (w/x), where “w” is the total amount of revenue of [***] and each of its Subsidiaries attributable to the Sale of [***] for the calendar year [***] as reported by iSuppli (USD [***]) and “x” is the total amount of revenue of SK hynix and each of its Subsidiaries attributable to the Sale of [***] for the calendar year [***] as reported by iSuppli (USD [***]) (such agreement or such series of agreements, the “[***] Triggering Agreement”; such (w/x) ratio the “[***] Ratio” ([***]%)); or ,

(b)

in the event that [***] has , as of the date of the later authorized signature of Rambus or [***] to such agreement or such series of agreements, [***], the actual average (mean) annual payments due under such agreement or such series of agreements from [***] (or if such payments are based on a running per unit royalty or percentage of total sales, the projected annual average (mean) amount that [***] will pay to Rambus) during the first [***] years of such agreement or such series of agreements immediately following the date of the later authorized signature of Rambus or [***] to such agreement or such series of agreements, irrespective of the term of such agreement or such series of agreements (such average, the “[***] Annual Average Payment”) is less than the multiple of [***] (USD [***]) and (y/z), where “y” is the total amount of revenue of [***] and each of its Subsidiaries attributable to the Sale of [***] for (i) a half of calendar year [***] (as determined by halving the total such revenue for such calendar year as reported by Gartner) and (ii) calendar years [***] through [***] (as reported by iSuppli) (USD [***]) and “z” is the total amount of revenue of SK hynix and each of its Subsidiaries attributable to the [***] for (i) a half of calendar year [***] (as determined by halving the total such revenue for such calendar year as reported by Gartner) and (ii) calendar years [***] through [***] (as reported by iSuppli) (USD [***]) (such agreement or such series of agreements, the “[***] Triggering Agreement”; such (x/z) ratio, the “[***] Ratio” ([***]%)).

If Rambus enters into a Triggering Agreement at any time between the Effective Date of this Agreement and the earlier of the expiration or the termination of the Term Product License contained herein, Rambus shall, within [***] days after the full execution of the Triggering Agreement, deliver to SK hynix a draft of an agreement that Rambus believes reasonably and in good faith, includes all terms and conditions of such Triggering Agreement that are applicable to the Sales of [***] (“Substitute Agreement”), provided that:


(a)	the term of such Substitute Agreement shall extend until the expiration date of the Term Product License contained herein; and,


(b)	the Substitute Agreement will contain adjusted quarterly payment obligations as calculated by dividing the [*] Annual Average Payment by the [] Ratio (if the Triggering Agreement is a [] Triggering Agreement) or the [] Annual Average Payment by the [] Ratio (if the Triggering Agreement is a [*] Triggering Agreement).

If the Triggering Agreement contains any [***] agreed to by [***] in connection with the Sale of [***] by [***] during the term of the Triggering Agreement, and Rambus believes, reasonably and in good faith, that such [***] cannot be

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

fulfilled by SK hynix, Rambus may provide substitute terms for such [***] [***] for such [***] that Rambus believes, reasonably and in good faith, are [***] in the Triggering Agreement and/or [***] in the Triggering Agreement.

SK hynix shall have [***] days after receipt of such Substitute Agreement to (i) accept, in writing, such Substitute Agreement and request, in writing, the signature of the same, in which case the parties shall exchange originally executed signature pages of the Substitute Agreement within [***] days of such request, or (ii) reject in writing such Substitute Agreement, in which case this Agreement shall remain in full force and effect in accordance with its terms. Upon SK hynix's acceptance or rejection of the Substitute Agreement, SK hynix shall no longer have any right to have its payments restructured (including under most favored customer or similar clauses), even if such restructure provision exists in the Triggering Agreement on which such Substitute Agreement is based.

Upon the first day of the calendar quarter in which the Substitute Agreement is fully executed, the Substitute Agreement shall become effective and this Agreement shall automatically and immediately terminate and, except as set forth in Section 6.5, shall be of no further force or effect, provided that any payments made by SK hynix in accordance with the terms and conditions of this Agreement in such quarter (e.g., the scheduled Quarterly License Payment), less any amounts owed or paid by SK hynix in accordance with the terms and conditions of the Substitute Agreement in such quarter, shall be credited against future amounts due under the Substitute Agreement.

SK hynix agrees that the existence of, and the terms and condition contained in, such Substitute Agreement shall be deemed Rambus Confidential Information subject to Section 7.2.

[***]

________________

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald Black, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Rambus Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	Date: July 26, 2013

	By:	/s/ Ronald Black
	Name:	Ronald Black, Ph.D.
	Title:	Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Satish Rishi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Rambus Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	Date: July 26, 2013

	By:	/s/ Satish Rishi
	Name:	Satish Rishi
	Title:	Senior Vice President, Finance and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald Black, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Rambus Inc. on Form 10-Q for the quarter ended June 30, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Rambus Inc.

Date: July 26, 2013



	By:	/s/ Ronald Black
	Name:	Ronald Black, Ph.D.
	Title:	Chief Executive Officer and President

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Satish Rishi, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Rambus Inc. on Form 10-Q for the quarter ended June 30, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Rambus Inc.

Date: July 26, 2013



	By:	/s/ Satish Rishi
	Name:	Satish Rishi
	Title:	Senior Vice President, Finance and Chief Financial Officer