RAMBUS INC (Form: 10-Q, Received: 07/22/2016 13:51:39)

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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, 2016

¨ 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 incorporation or organization)		(I.R.S. Employer Identification No.)



1050 Enterprise Way, Suite 700 Sunnyvale, California				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.



Large accelerated filer ý		Accelerated filer o

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

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 109,896,610 as of June 30, 2016 .

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RAMBUS INC.

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	PAGE
Note Regarding Forward-Looking Statements	3
PART I. FINANCIAL INFORMATION	5
Item 1. Financial Statements (Unaudited):	5
Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	5
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015	6
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015	7
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	8
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
Item 4. Controls and Procedures	42
PART II. OTHER INFORMATION	43
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3. Defaults Upon Senior Securities	56
Item 4. Mine Safety Disclosures	56
Item 5. Other Information	56
Item 6. Exhibits	56
Signature	57
Exhibit Index	58

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:


•	Success in the markets of our products and services or our customers’ products;


•	Sources of competition;


•	Research and development costs and improvements in technology;


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


•	Success in signing and renewing license agreements;


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


•	Technology product development;


•	Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts, including our recent acquisition of Smart Card Software Ltd. and our pending acquisitions of Semtech Corporation's Snowbush IP and Inphi Corporation's Memory Interconnect Business;


•	Integration of announced acquisitions;


•	Impairment of goodwill and long-lived assets;


•	Pricing policies of our customers;


•	Changes in our strategy and business model, including the expansion of our portfolio of inventions, products and solutions to address additional markets in lighting, chip and system security;


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


•	Effects of security breaches or failures in our or our customers’ products and services on our business;


•	Engineering, sales 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;


•	Effects of government regulations on our industry and business;


•	Manufacturing and supply partners and/or sale and distribution channels;


•	Growth in our business;


•	Methods, estimates and judgments in accounting policies;


•	Adoption of new accounting pronouncements;


•	Effective tax rates;


•	Restructurings and plans of termination;


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


•	Trading price of our common stock;


•	Internal control environment;


•	The level and terms of our outstanding debt and the repayment or financing of such debt;


•	Litigation expenses;


•	Protection of intellectual property;


•	Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce intellectual property rights;


•	Indemnification and technical support obligations;

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•	Equity repurchase plans;


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


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


•	Likelihood of paying dividends.

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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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



	June 30, 2016			December 31, 2015
	(In thousands, except shares and par value)
ASSETS
Current assets:
Cash and cash equivalents	$	188,011		$	143,764
Marketable securities	71,320			143,942
Accounts receivable	11,326			16,408
Prepaids and other current assets	12,993			11,476
Total current assets	283,650			315,590
Intangible assets, net	100,900			64,266
Goodwill	162,715			116,899
Property, plant and equipment, net	55,056			56,616
Deferred tax assets	159,097			162,485
Other assets	4,365			2,165
Total assets	$	765,783		$	718,021
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,269		$	4,096
Accrued salaries and benefits	10,040			12,278
Deferred revenue	10,347			5,780
Accrued acquisition liability	11,476			—
Other current liabilities	5,850			6,212
Total current liabilities	43,982			28,366
Convertible notes, long-term	122,744			119,418
Long-term imputed financing obligation	38,355			38,625
Long-term income taxes payable	2,800			2,903
Deferred tax liabilities	14,984			—
Other long-term liabilities	556			2,176
Total liabilities	223,421			191,488
Commitments and contingencies (Notes 9 and 13)
Stockholders’ equity:
Convertible preferred stock, $.001 par value:
Authorized: 5,000,000 shares
Issued and outstanding: no shares at June 30, 2016 and December 31, 2015	—			—
Common stock, $.001 par value:
Authorized: 500,000,000 shares
Issued and outstanding: 109,896,610 shares at June 30, 2016 and 109,287,591 shares at December 31, 2015	110			109
Additional paid-in capital	1,164,565			1,130,368
Accumulated deficit	(616,117		)	(604,317		)
Accumulated other comprehensive income (loss)	(6,196		)	373
Total stockholders’ equity	542,362			526,533
Total liabilities and stockholders’ equity	$	765,783		$	718,021

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,
	2016			2015			2016			2015
	(In thousands, except per share amounts)
Revenue:
Royalties	$	62,835		$	62,387		$	125,712		$	129,350
Contract and other revenue	13,666			10,425			23,471			16,376
Total revenue	76,501			72,812			149,183			145,726
Operating costs and expenses:
Cost of revenue*	14,089			12,137			26,296			22,893
Research and development*	28,753			29,188			57,280			57,722
Sales, general and administrative*	21,789			17,339			44,884			35,841
Gain from sale of intellectual property	—			(896		)	—			(3,156		)
Gain from settlement	(138		)	(510		)	(579		)	(1,020		)
Total operating costs and expenses	64,493			57,258			127,881			112,280
Operating income	12,008			15,554			21,302			33,446
Interest income and other income (expense), net	1,138			203			1,380			335
Interest expense	(3,163		)	(3,091		)	(6,304		)	(6,174		)
Interest and other income (expense), net	(2,025		)	(2,888		)	(4,924		)	(5,839		)
Income before income taxes	9,983			12,666			16,378			27,607
Provision for income taxes	6,107			5,805			10,624			11,244
Net income	$	3,876		$	6,861		$	5,754		$	16,363
Net income per share:
Basic	$	0.04		$	0.06		$	0.05		$	0.14
Diluted	$	0.03		$	0.06		$	0.05		$	0.14
Weighted average shares used in per share calculation:
Basic	109,904			116,027			109,818			115,683
Diluted	112,061			120,939			112,202			119,225

_________________________________________

* Includes stock-based compensation:



Cost of revenue	$	14	$	27	$	28	$	39
Research and development	$	2,109	$	1,988	$	4,189	$	3,755
Sales, general and administrative	$	2,926	$	2,400	$	5,696	$	4,387

See Notes to Unaudited Condensed Consolidated Financial Statements

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RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2016			2015			2016			2015
Net income	$	3,876		$	6,861		$	5,754		$	16,363
Other comprehensive income (loss):
Foreign currency translation adjustment	(5,559		)	9			(6,199		)	9
Unrealized gain (loss) on marketable securities, net of tax	(188		)	(26		)	(371		)	27
Total comprehensive income (loss)	$	(1,871	)	$	6,844		$	(816	)	$	16,399

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,
	2016			2015
	(In thousands)
Cash flows from operating activities:
Net income	$	5,754		$	16,363
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	9,913			8,181
Depreciation	5,965			6,295
Amortization of intangible assets	15,871			12,645
Non-cash interest expense and amortization of convertible debt issuance costs	3,326			3,140
Deferred income taxes	2,816			1,233
Excess tax benefits from stock-based compensation	(591		)	(483		)
Gain from sale of intellectual property and property, plant and equipment, net	(37		)	(3,151		)
Effect of exchange rate on assumed cash liability from acquisition	(624		)	—
Change in operating assets and liabilities:
Accounts receivable	14,809			(744		)
Prepaid expenses and other assets	(1,856		)	(2,106		)
Accounts payable	2,167			(1,873		)
Accrued salaries and benefits and other liabilities	(7,422		)	(3,803		)
Income taxes payable	(3,196		)	282
Deferred revenue	1,794			2,418
Net cash provided by operating activities	48,689			38,397
Cash flows from investing activities:
Purchases of property, plant and equipment	(3,557		)	(3,117		)
Purchases of marketable securities	(54,869		)	(97,665		)
Maturities of marketable securities	81,971			70,396
Proceeds from sale of marketable securities	44,546			26,648
Proceeds from sale of intellectual property and property, plant and equipment	—			3,404
Acquisition of business, net of cash acquired	(80,523		)	—
Net cash used in investing activities	(12,432		)	(334		)
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans	8,259			9,053
Principal payments against lease financing obligation	(295		)	(208		)
Excess tax benefits from stock-based compensation	591			483
Net cash provided by financing activities	8,555			9,328
Effect of exchange rate changes on cash and cash equivalents	(565		)	(40		)
Net increase in cash and cash equivalents	44,247			47,351
Cash and cash equivalents at beginning of period	143,764			154,126
Cash and cash equivalents at end of period	$	188,011		$	201,477

Non-cash investing activities during the period:
Property, plant and equipment received and accrued in accounts payable and other liabilities	$	246		$	677
Non-cash financing activities during the period:
Additional purchase consideration from acquisition	$	11,476		$	—

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, 2015 .

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 Interface Division ("MID"), which focuses on the design, development and licensing of technology that is related to memory and interfaces; (2) Cryptography Research Division ("CRD"), which focuses on the design, development and licensing of technologies for chip and system security and anti-counterfeiting; (3) Emerging Solutions Division ("ESD"), which includes the computational sensing and imaging group along with the development efforts in the area of emerging technologies; and (4) Lighting and Display Technologies ("LDT"), which focuses on the design, development and licensing of technologies for lighting.

For the three and six months ended June 30, 2016 , only MID and CRD 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 shown under “Other.”

Reclassifications

Certain prior periods' amounts were reclassified to conform to the current year’s presentation. None of these reclassifications had an impact on reported net income for any of the periods presented. Refer to Note 8 "Convertible Notes" for details.

2. Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13. The purpose of this ASU is to require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In May 2016, the FASB issued ASU No. 2016-12 which amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. This ASU is effective during the same period as ASU 2014-09. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the FASB's new revenue standard, ASU No. 2014-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with adoption of ASU 2014-09 which is effective for annual and interim periods beginning

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after December 15, 2017. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting." This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions, which include the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. This ASU will become effective for the Company on January 1, 2017. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases." This ASU requires assets and liabilities arising from leases, including operating leases, to be recognized on the balance sheet. This ASU will become effective for the Company in the first quarter of fiscal year 2019, and requires adoption using a modified retrospective approach. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes (Topic 740)," to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted this ASU as of December 31, 2015 on a prospective basis. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company has adopted this ASU in the first quarter of 2016 on a retrospective basis. Refer to Note 8, "Convertible Notes" for further details.

In May 2014, the FASB and International Accounting Standards Board issued their converged accounting standards update on revenue recognition. The core principle of the new guidance is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new guidance also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. In August 2015, the FASB deferred the effective date of this accounting standards update by one year. The new accounting standards update becomes effective for the Company on January 1, 2018. The Company is currently evaluating the impact that this guidance will have on its financial condition and results of operations.

3. Earnings Per Share

Basic earnings per share is calculated by dividing the net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the earnings 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.

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income per share:	(In thousands, except per share amounts)
Numerator:
Net income	$	3,876	$	6,861	$	5,754	$	16,363
Denominator:
Weighted-average shares outstanding - basic	109,904		116,027		109,818		115,683
Effect of potential dilutive common shares	2,157		4,912		2,384		3,542
Weighted-average shares outstanding - diluted	112,061		120,939		112,202		119,225
Basic net income per share	$	0.04	$	0.06	$	0.05	$	0.14
Diluted net income per share	$	0.03	$	0.06	$	0.05	$	0.14

For the three months ended June 30, 2016 and 2015 , options to purchase approximately 2.3 million and 2.6 million shares, respectively, and for the six months ended June 30, 2016 and 2015 , options to purchase approximately 2.3 million and 2.6 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.

4. Intangible Assets and Goodwill

Goodwill

The following tables present goodwill information for each of the reportable segments for the six months ended June 30, 2016 :



Reportable Segment:	As of December 31, 2015		Additions to Goodwill (1)		Impairment Charge of Goodwill		Effect of Exchange Rates (2)			As of June 30, 2016
	(In thousands)
MID	$	19,905	$	—	$	—	$	—		$	19,905
CRD	96,994		47,239		—		(1,423		)	142,810
Total	$	116,899	$	47,239	$	—	$	(1,423	)	$	162,715

(1) During the first quarter of 2016, the Company acquired Smart Card Software Limited (“SCS”) which resulted in the addition to goodwill. See Note 16, “Acquisition” for further details.

(2) Effect of exchange rates relates to foreign currency translation adjustments for the period.



	As of
	June 30, 2016
Reportable Segment:	Gross Carrying Amount		Accumulated Impairment Losses			Net Carrying Amount
	(In thousands)
MID	$	19,905	$	—		$	19,905
CRD	142,810		—			142,810
Other	21,770		(21,770		)	—
Total	$	184,485	$	(21,770	)	$	162,715

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Intangible Assets

The components of the Company’s intangible assets as of June 30, 2016 and December 31, 2015 were as follows:



		As of June 30, 2016
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Existing technology (1)	3 to 10 years	$	210,854	$	(139,785	)	$	71,069
Customer contracts and contractual relationships (1)	1 to 10 years	61,886		(32,055		)	29,831
Non-compete agreements and trademarks	3 years	300		(300		)	—
Total intangible assets		$	273,040	$	(172,140	)	$	100,900

(1) Includes intangible assets from the acquisition of SCS. See Note 16, “Acquisition” for further details.



		As of December 31, 2015
	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(In thousands)
Existing technology	3 to 10 years	$	185,321	$	(127,028	)	$	58,293
Customer contracts and contractual relationships	1 to 10 years	31,093		(25,120		)	5,973
Non-compete agreements and trademarks	3 years	300		(300		)	—
Total intangible assets		$	216,714	$	(152,448	)	$	64,266

During the three and six months ended June 30, 2016 , the Company did not sell any intangible assets. During the three and six months ended June 30, 2015 , the Company did not purchase or sell any intangible assets.

Included in customer contracts and contractual relationships are favorable contracts which are acquired software and service agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts reduces the favorable contract intangible asset. For the three months ended June 30, 2016 and 2015, the Company received $2.4 million and $0.1 million , respectively, related to the favorable contracts. For the six months ended June 30, 2016 and 2015, the Company received $4.1 million and $0.1 million , respectively, related to the favorable contracts. As of June 30, 2016 and December 31, 2015 , the net balance of the favorable contract intangible assets was $4.0 million and zero , respectively.

Amortization expense for intangible assets for the three and six months ended June 30, 2016 was $8.2 million and $15.9 million , respectively. Amortization expense for intangible assets for the three and six months ended June 30, 2015 was $6.3 million and $12.6 million , respectively. The estimated future amortization of intangible assets as of June 30, 2016 was as follows (amounts in thousands):



Years Ending December 31:	Amount
2016 (remaining 6 months)	$	18,448
2017	32,684
2018	19,252
2019	10,128
2020	9,598
Thereafter	10,790
	$	100,900

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 Company determines that its goodwill or long-lived assets are impaired, it would be required to record a non-cash charge that could have a material adverse effect on its results of operations and financial position.

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5. Segments and Major Customers

For the three and six months ended June 30, 2016 , MID and CRD were reportable segments as each of them met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining operating segments were shown under “Other.”

The Company evaluates the performance of its segments based on segment operating income (loss), which is defined as revenue minus segment operating expenses. Segment operating expenses are comprised of direct operating expenses.

Segment operating expenses do not include sales, 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 sales, general and administrative expenses as well as corporate level expenses.

The tables below present reported segment operating income (loss) for the three and six months ended June 30, 2016 and 2015 , respectively.



	For the Three Months Ended June 30, 2016										For the Six Months Ended June 30, 2016
	MID		CRD		Other			Total			MID		CRD		Other			Total
	(In thousands)										(In thousands)
Revenues	$	54,467	$	16,407	$	5,627		$	76,501		$	108,012	$	30,508	$	10,663		$	149,183
Segment operating expenses	13,229		13,105		7,092			33,426			25,272		25,015		14,218			64,505
Segment operating income (loss)	$	41,238	$	3,302	$	(1,465	)	$	43,075		$	82,740	$	5,493	$	(3,555	)	$	84,678
Reconciling items								(31,067		)								(63,376		)
Operating income								$	12,008									$	21,302
Interest and other income (expense), net								(2,025		)								(4,924		)
Income before income taxes								$	9,983									$	16,378



	For the Three Months Ended June 30, 2015										For the Six Months Ended June 30, 2015
	MID		CRD		Other			Total			MID		CRD		Other			Total
	(In thousands)										(In thousands)
Revenues	$	54,579	$	11,778	$	6,455		$	72,812		$	109,313	$	24,604	$	11,809		$	145,726
Segment operating expenses	12,801		7,329		8,770			28,900			24,321		14,665		16,029			55,015
Segment operating income (loss)	$	41,778	$	4,449	$	(2,315	)	$	43,912		$	84,992	$	9,939	$	(4,220	)	$	90,711
Reconciling items								(28,358		)								(57,265		)
Operating income								$	15,554									$	33,446
Interest and other income (expense), net								(2,888		)								(5,839		)
Income before income taxes								$	12,666									$	27,607

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

Accounts receivable from the Company's major customers representing 10% or more of total accounts receivable at June 30, 2016 and December 31, 2015 , respectively, was as follows:



	As of
Customer	June 30, 2016		December 31, 2015
Customer 1 (Other segment)	31	%	27	%
Customer 2 (CRD reportable segment)	*		21	%
Customer 3 (MID reportable segment)	*		28	%
Customer 4 (MID reportable segment)	*		16	%

_________________________________________

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

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Revenue from the Company’s major customers representing 10% or more of total revenue for the three and six months ended June 30, 2016 and 2015 , respectively, was as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Customer	2016		2015		2016		2015
Customer A (MID and CRD reportable segments)	20	%	21	%	21	%	21	%
Customer B (MID reportable segment)	21	%	16	%	21	%	16	%
Customer C (MID reportable segment)	13	%	13	%	13	%	13	%

Revenue from customers in the geographic regions based on the location of contracting parties was as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2016		2015		2016		2015
South Korea	$	31,632	$	26,821	$	63,086	$	53,642
USA	26,532		29,677		51,776		57,384
Japan	5,911		7,915		10,898		16,406
Europe	4,377		1,540		8,189		6,715
Canada	1,168		5		1,382		201
Singapore	4,526		5,010		9,145		7,820
Asia-Other	2,355		1,844		4,707		3,558
Total	$	76,501	$	72,812	$	149,183	$	145,726

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, 2016 and December 31, 2015 , 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, 2016
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	128,034	$	128,034	$	—	$	—		0.22	%
U.S. Government bonds and notes	7,002		7,002		1		(1		)	0.44	%
Corporate notes, bonds, commercial paper and other	74,309		74,348		—		(39		)	0.66	%
Total cash equivalents and marketable securities	209,345		209,384		1		(40		)
Cash	49,986		49,986		—		—
Total cash, cash equivalents and marketable securities	$	259,331	$	259,370	$	1	$	(40	)



	As of December 31, 2015
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Weighted Rate of Return
Money market funds	$	77,804	$	77,804	$	—	$	—		0.12	%
U.S. Government bonds and notes	14,110		14,142		—		(32		)	0.48	%
Corporate notes, bonds, commercial paper and other	160,823		160,979		—		(156		)	0.45	%
Total cash equivalents and marketable securities	252,737		252,925		—		(188		)
Cash	34,969		34,969		—		—
Total cash, cash equivalents and marketable securities	$	287,706	$	287,894	$	—	$	(188	)

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



	As of
	June 30, 2016		December 31, 2015
	(In thousands)
Cash equivalents	$	138,025	$	108,795
Short term marketable securities	71,320		143,942
Total cash equivalents and marketable securities	209,345		252,737
Cash	49,986		34,969
Total cash, cash equivalents and marketable securities	$	259,331	$	287,706

The Company continues to invest in highly rated quality, highly liquid debt securities. As of June 30, 2016 , 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, 2016 and December 31, 2015 are as follows:



	Fair Value				Gross Unrealized Loss
	June 30, 2016		December 31, 2015		June 30, 2016			December 31, 2015
	(In thousands)
Less than one year
U.S. Government bonds and notes	$	4,002	$	14,110	$	(1	)	$	(32	)
Corporate notes, bonds and commercial paper	73,771		145,563		(39		)	(156		)
Total Corporate notes, bonds, and commercial paper and U.S. Government bonds and notes	$	77,773	$	159,673	$	(40	)	$	(188	)

The gross unrealized loss at June 30, 2016 and December 31, 2015 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 U.S. government sponsored obligations and corporate notes and bonds. There is no need 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. 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.

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7. Fair Value of Financial Instruments

The Company reviews the pricing inputs by obtaining prices from a different source 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, 2016 and December 31, 2015 :



	As of June 30, 2016
	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	$	128,034	$	128,034	$	—	$	—
U.S. Government bonds and notes	7,002		—		7,002		—
Corporate notes, bonds, commercial paper and other	74,309		538		73,771		—
Total available-for-sale securities	$	209,345	$	128,572	$	80,773	$	—



	As of December 31, 2015
	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	$	77,804	$	77,804	$	—	$	—
U.S. Government bonds and notes	14,110		—		14,110		—
Corporate notes, bonds, commercial paper and other	160,823		1,264		159,559		—
Total available-for-sale securities	$	252,737	$	79,068	$	173,669	$	—

The Company monitors its investments for other-than-temporary impairment and records appropriate reductions in carrying value when necessary. 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, 2016 and 2015 , 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, 2016 and December 31, 2015 :



	As of June 30, 2016						As of December 31, 2015
(In thousands)	Face Value		Carrying Value		Fair Value		Face Value		Carrying Value		Fair Value
1.125% Convertible Senior Notes due 2018 (the "2018 Notes")	$	138,000	$	122,744	$	160,731	$	138,000	$	119,418	$	156,292

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 2 measurement. As discussed in Note 8, "Convertible Notes," as of June 30, 2016 , the 2018 Notes are carried at their face value of $138.0 million , less any unamortized debt discount and unamortized debt issuance costs. The carrying value of other financial instruments, including accounts receivable, accounts payable and other liabilities, approximates fair value due to their short maturities.

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8. Convertible Notes

The Company adopted ASU 2015-03 during the first quarter of 2016. Pursuant to the guidance in ASU 2015-03, the Company has reclassified unamortized debt issuance costs associated with the Company's 2018 Notes in the previously reported Consolidated Balance Sheet as of December 31, 2015 , as follows:



(In thousands)	As presented December 31, 2015		Reclassifications			As adjusted December 31, 2015
Other assets	$	3,648	$	(1,483	)	$	2,165
Convertible notes, long-term	120,901		(1,483		)	119,418

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



(In thousands)	As of June 30, 2016			As of December 31, 2015
1.125% Convertible Senior Notes due 2018	$	138,000		$	138,000
Unamortized discount	(14,054		)	(17,099		)
Unamortized debt issuance costs	(1,202		)	(1,483		)
Total convertible notes	$	122,744		$	119,418
Less current portion	—			—
Total long-term convertible notes	$	122,744		$	119,418

Interest expense related to the notes for the three and six months ended June 30, 2016 and 2015 was as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
	(In thousands)
2018 Notes coupon interest at a rate of 1.125%	$	388	$	388	776		791
2018 Notes amortization of discount and debt issuance costs at an additional effective interest rate of 5.5%	1,675		1,581		3,326		3,140
Total interest expense on convertible notes	$	2,063	$	1,969	$	4,102	$	3,931

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9. Commitments and Contingencies

As of June 30, 2016 , the Company’s material contractual obligations were as follows (in thousands):



	Total		Remainder of 2016		2017		2018		2019		2020		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	25,336	$	3,116	$	6,302	$	6,447	$	6,602	$	2,869	$	—
Leases and other contractual obligations	10,272		2,601		3,221		2,211		1,353		441		445
Software licenses (3)	10,678		2,008		4,235		3,701		734		—		—
Convertible notes	138,000		—		—		138,000		—		—		—
Interest payments related to convertible notes	3,881		776		1,553		1,552		—		—		—
Total	$	188,167	$	8,501	$	15,311	$	151,911	$	8,689	$	3,310	$	445

_________________________________________

(1)

The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $22.4 million including $19.6 million recorded as a reduction of long-term deferred tax assets and $2.8 million in long-term income taxes payable as of June 30, 2016 . As noted below in Note 12, “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 unaudited condensed consolidated balance sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. The amount includes the amended Ohio lease and the amended Sunnyvale lease.


(3)	The Company has commitments with various software vendors for non-cancellable agreements generally having terms longer than one year.

The Company also has commitments related to acquisitions, which are not included in the above table. See Note 16, “Acquisition” for further details.

Building lease expense was approximately $0.9 million and $1.7 million for the three and six months ended June 30, 2016 , respectively. Building lease expense was approximately $0.6 million and $1.3 million for the three and six months ended June 30, 2015 , respectively. Deferred rent of $0.6 million and $0.8 million as of June 30, 2016 and December 31, 2015 , respectively, was included primarily in other long-term liabilities.

Indemnification

From time to time, the Company indemnifies certain customers as 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 intellectual property infringement or any other claim by any third party arising as result of the applicable agreement with the Company. The Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements to the amount of fees received by the Company, however, this is not always possible. The fair value of the liability as of June 30, 2016 and December 31, 2015 is not material.

10. Equity Incentive Plans and Stock-Based Compensation

As of June 30, 2016 , 8,394,855 shares of the 35,400,000 cumulative shares approved under both the current 2015 Equity Incentive Plan (the “2015 Plan”) and past 2006 Equity Incentive Plan (the “2006 Plan”) remain available for grant, which included an increase of 4,000,000 shares approved under the 2015 Plan. On April 23, 2015, the Company's stockholders approved the 2015 Plan, which authorizes 4,000,000 shares for future issuance plus the number of shares that remained available for grant under the 2006 Plan as of the effective date of the 2015 Plan. The 2015 Plan became effective and replaced the 2006 Plan on April 23, 2015. The 2015 Plan was the Company’s only plan for providing stock-based incentive awards to eligible employees, executive officers, non-employee directors and consultants as of June 30, 2016 . No further awards will be made under the 2006 Plan, but the 2006 Plan will continue to govern awards previously granted under it. In addition, any shares subject to stock options or other awards granted under the 2006 Plan that on or after the effective date of the 2015 Plan are forfeited, cancelled, exchanged or surrendered or terminate under the 2006 Plan will become available for grant under the 2015

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Plan. Additionally, the 1997 Stock Option Plan (the “1997 Plan”) continues to govern awards previously granted under that plan.

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, 2015	11,173,545
Stock options granted	(440,000	)
Stock options forfeited	773,912
Stock options expired under former plans	(412,467	)
Nonvested equity stock and stock units granted (1) (2)	(3,336,963	)
Nonvested equity stock and stock units forfeited (1)	636,828
Total available for grant as of June 30, 2016	8,394,855

_________________________________________


(1)	For purposes of determining the number of shares available for grant under the 2015 Plan (and previously the 2006 Plan) against the maximum number of shares authorized, each share of restricted stock granted reduces the number of shares available for grant by 1.5 shares and each share of restricted stock forfeited increases shares available for grant by 1.5 shares.


(2)	Amount includes 300,003 shares that have been reserved for potential future issuance related to certain performance unit awards granted in the first quarter of 2016 and discussed under the section titled "Nonvested Equity Stock and Stock Units" below.

General Stock Option Information

The following table summarizes stock option activity under the 1997 Plan, 2006 Plan and 2015 Plan for the six months ended June 30, 2016 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of June 30, 2016 .



	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, 2015	8,995,017		$	10.01
Options granted	440,000		$	12.31
Options exercised	(749,058	)	$	7.01
Options forfeited	(773,912	)	$	21.81
Outstanding as of June 30, 2016	7,912,047		$	9.27	5.67	$	31,293
Vested or expected to vest at June 30, 2016	7,679,174		$	9.30	5.61	$	30,418
Options exercisable at June 30, 2016	4,989,516		$	10.05	4.72	$	18,970

No stock options that contain a market condition were granted during the three and six months ended June 30, 2016 . As of June 30, 2016 and December 31, 2015 , there were 1,225,000 and 1,315,000 , respectively, stock options outstanding that require the Company to achieve minimum market conditions in order for the options to become exercisable. The fair values of the options granted with a market condition were calculated, on their respective grant dates, using a binomial valuation model, which estimates the potential outcome of reaching the market condition based on simulated future stock prices.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options at June 30, 2016 , based on the $12.08 closing stock price of Rambus’ common stock on June 30, 2016 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, 2016 was 6,148,183 and 3,734,368 , respectively.

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Employee Stock Purchase Plan

Under the 2015 Employee Stock Purchase Plan ("2015 ESPP"), the Company issued 340,349 shares at a price of $8.96 per share during the six months ended June 30, 2016 . Under the 2006 Employee Stock Purchase Plan ("2006 ESPP"), the Company issued 315,100 shares at a price of $9.66 per share during the six months ended June 30, 2015 . As of June 30, 2016 , 1,659,651 shares under the 2015 ESPP remain available for issuance. The 2006 ESPP remained in effect until the Company’s November 2, 2015 offering period, at which time the first offering period under the 2015 ESPP began.

Stock-Based Compensation

For the six months ended June 30, 2016 and 2015 , 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 the 2015 ESPP (and previously the 2006 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 months ended June 30, 2016 , the Company did not grant any stock options. During the six months ended June 30, 2016 , the Company granted 440,000 stock options with an estimated total grant-date fair value of $2.1 million . During the three and six months ended June 30, 2016 , the Company recorded stock-based compensation expense related to stock options of $1.1 million and $2.3 million , respectively.

During the three months ended June 30, 2015 , the Company did not grant any stock options. During the six months ended June 30, 2015 , the Company granted 362,335 stock options, with an estimated total grant-date fair value of $1.7 million . During the three and six months ended June 30, 2015 , the Company recorded stock-based compensation expense related to stock options of and $2.3 million and $4.4 million , respectively.

As of June 30, 2016 , there was $6.2 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 1.7 years. The total fair value of shares vested as of June 30, 2016 was $30.9 million .

The total intrinsic value of options exercised was $0.9 million and $4.0 million for the three and six months ended June 30, 2016 , respectively. The total intrinsic value of options exercised was $3.5 million and $4.6 million for the three and six months ended June 30, 2015 , 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.

During the six months ended June 30, 2016 , net proceeds from employee stock option exercises totaled approximately $5.3 million .

Employee Stock Purchase Plan

For the three and six months ended June 30, 2016 , the Company recorded compensation expense related to the 2015 ESPP of $0.3 million and $0.8 million , respectively. For the three and six months ended June 30, 2015 , the Company recorded compensation expense related to the 2006 ESPP of $0.4 million and $0.8 million , respectively. As of June 30, 2016 , there was $0.4 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under the 2015 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, 2016 and 2015 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.

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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
	Six Months Ended
	June 30,
	2016			2015
Stock Option Plans
Expected stock price volatility	36		%	41		%
Risk free interest rate	1.7		%	1.2		%
Expected term (in years)	6.1			6.0
Weighted-average fair value of stock options granted to employees	$	4.66		$	4.59

There were no stock options granted during the three months ended June 30, 2016 and 2015 .



	Employee Stock Purchase Plan
	Six Months Ended
	June 30,
	2016			2015
Employee Stock Purchase Plan
Expected stock price volatility	33		%	34		%
Risk free interest rate	0.41		%	0.05		%
Expected term (in years)	0.5			0.5
Weighted-average fair value of purchase rights granted under the purchase plan	$	2.86		$	3.48

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, 2016 , the Company granted nonvested equity stock units totaling 184,456 and 2,024,640 shares under the 2015 Plan. During the three and six months ended June 30, 2015 , the Company granted nonvested equity stock units totaling 60,724 and 1,581,902 shares under the 2006 Plan. 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 1 year . For the three and six months ended June 30, 2016 , the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately $2.3 million and $25.0 million . For the three and six months ended June 30, 2015 , the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately $0.9 million and $18.0 million . During the first quarters of 2016 and 2015, the Company granted performance unit awards to certain Company executive officers with vesting subject to the achievement of certain performance conditions. The ultimate number of performance units that can be earned can range from 0% to 150% of target depending on performance relative to target over the applicable period. The shares earned will vest on the third anniversary of the date of grant. The Company's shares available for grant has been reduced to reflect the shares that could be earned at 150% of target. During the three and six months ended June 30, 2016 , the Company recorded $0.7 million and $1.3 million of stock-based compensation expense related to these performance unit awards. During the three and six months ended June 30, 2015 , the Company recorded $0.3 million and $0.5 million of stock-based compensation expense related to these performance unit awards.

For the three and six months ended June 30, 2016 , the Company recorded stock-based compensation expense of approximately $3.7 million and $6.8 million related to all outstanding nonvested equity stock grants. For the three and six months ended June 30, 2015 , the Company recorded stock-based compensation expense of approximately $1.7 million and $2.9 million related to all outstanding nonvested equity stock grants. Unrecognized stock-based compensation related to all nonvested equity stock grants, net of estimated forfeitures, was approximately $34.5 million at June 30, 2016 . This amount is expected to be recognized over a weighted average period of 3.0 years .

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The following table reflects the activity related to nonvested equity stock and stock units for the six months ended June 30, 2016 :



Nonvested Equity Stock and Stock Units	Shares		Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2015	3,008,118		$	11.32
Granted	2,024,640		$	12.34
Vested	(385,984	)	$	10.15
Forfeited	(284,142	)	$	11.59
Nonvested at June 30, 2016	4,362,632		$	11.88

11. Stockholders’ Equity

Share Repurchase Program

During the six months ended June 30, 2016 , the Company repurchased and retired 0.7 million shares of its common stock under its share repurchase program.

On January 21, 2015, the Company's Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the plan may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the plan.

On October 26, 2015, the Company initiated an accelerated share repurchase program with Citibank, N.A. The accelerated share repurchase program is part of the broader share repurchase program previously authorized by the Company's Board on January 21, 2015. Under the accelerated share repurchase program, the Company pre-paid to Citibank, N.A., the $100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 7.8 million shares of its common stock from Citibank, N.A, in the fourth quarter of 2015, which were retired and recorded as a $80.0 million reduction to stockholders' equity. The remaining $20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to the Company's stock. The number of shares to be ultimately purchased by the Company was determined based on the volume weighted average price of the common stock during the terms of the transaction, minus an agreed upon discount between the parties. During the second quarter of 2016, the accelerated share repurchase program was completed and the Company received an additional 0.7 million shares of its common stock as the final settlement of the accelerated share repurchase program.

As of June 30, 2016 , there remained an outstanding authorization to repurchase approximately 11.5 million shares of the Company's outstanding common stock under the current share repurchase program.

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. Income Taxes

The Company recorded a provision for income taxes of $6.1 million and $5.8 million for the three months ended June 30, 2016 and 2015 , respectively, and $10.6 million and $11.2 million for the six months ended June 30, 2016 and 2015 , respectively. The income taxes for the three and six months ended June 30, 2016 is primarily comprised of the Company's U.S. federal, state and foreign taxes and income tax expense recognized from exercises and expiration of out-of-the-money fully vested shares from equity incentive plans. The provision for income taxes for the three and six months ended June 30, 2015 was primarily comprised of withholding taxes, state taxes and other foreign taxes based upon income earned during the period.

During the three and six months ended June 30, 2016 , the Company paid withholding taxes of $5.4 million and $10.9 million , respectively. During the three and six months ended June 30, 2015 , the Company paid withholding taxes of $4.8 million and $9.6 million , respectively.

As of June 30, 2016 , the Company’s unaudited condensed consolidated balance sheets included net deferred tax assets, before valuation allowance, of approximately $165.4 million , which consists of net operating loss carryovers, tax credit

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carryovers, amortization, employee stock-based compensation expenses and certain liabilities, partially reduced by deferred tax liabilities associated with the convertible notes.

As of June 30, 2016, the Company continues to maintain a valuation allowance against the majority of its state 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 realizability of the Company's net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. The Company continues to maintain a deferred tax asset valuation allowance of $21.3 million as of June 30, 2016 .

The Company maintains liabilities for uncertain tax positions within its long-term income taxes payable accounts and as a reduction to existing deferred tax assets to the extent tax attributes are available to offset such liabilities. 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, 2016 , the Company had approximately $22.4 million of unrecognized tax benefits, including $19.6 million recorded as a reduction of long-term deferred tax assets and $2.8 million in long-term income taxes payable. If recognized, approximately $2.8 million would be recorded as an income tax benefit. As of December 31, 2015 , the Company had $20.8 million of unrecognized tax benefits, including $18.6 million recorded as a reduction of long-term deferred tax assets and $2.2 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, 2016 and December 31, 2015 , an immaterial amount of interest and penalties is included in long-term income taxes payable.

Rambus files income tax returns for the U.S., California, India and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2012 and forward. The California returns are subject to examination from 2009 and forward. 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. The India returns are subject to examination from fiscal year ended March 2010 and forward. The Company is currently under examination by California for the 2010 and 2011 tax years. The Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with 2011, except for 2014, which was assessed in the Company's favor. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate.

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.

13. Litigation and Asserted Claims

Rambus is not currently a party to any material pending legal proceeding; however, from time to time, Rambus may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

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.

14. Agreements with SK hynix and Micron

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.

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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 . 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.

In June 2015, the Company s igned an amendment that extends its current agreement with SK hynix for an additional six years for use of Rambus memory-related patented innovations in SK hynix semiconductor products. The Company signed the original agreement with SK hynix for a five-year term in June 2013. Under the amendment, SK hynix has agreed to continue to pay the Company an average quarterly cash payment of $12.0 million which equates to $432.0 million from the signing of the amendment through the term of the agreement ending July 1, 2024, provided that (a) for each of the six full calendar quarters immediately following July 1, 2015, SK hynix will pay the Company a quarterly cash payment of $16.0 million , and (b) in addition, after December 1, 2017, SK hynix will have the option to make six quarterly cash payments of $8.0 million upon six months written notice. In addition, SK hynix has the option to renew the agreement for an additional three-year extension under the existing rate structure.

The agreements with SK hynix are considered a multiple element arrangement for accounting purposes. For a multiple element arrangement under the applicable accounting rules, the Company is required to identify specific elements of the arrangement and then determine when those elements should be recognized. The Company identified three elements in the arrangement: antitrust litigation settlement, settlement of past infringement, and license agreement. The Company considered several factors in determining the accounting fair value of the elements of the SK hynix agreements which included a third party valuation using an income approach (collectively the “SK hynix Fair Value”). The inputs and assumptions used in this accounting valuation were from a market participant perspective and included projected customer revenue, royalty rates, estimated discount rates, useful lives and income tax rates, among others. The development of a number of these inputs and assumptions in the model requires a significant amount of management judgment and discretion, and is based upon a number of factors, including the selection of industry comparables, market growth rates and other relevant factors. Changes in any number of these assumptions may have a substantial impact on the SK hynix Fair Value as assigned to each element. These inputs and assumptions represent management’s best estimates at the time of the transaction.

During the second quarter of 2016, the Company received cash consideration of $16.0 million from SK hynix. The amount was allocated entirely to royalty revenue ( $16.0 million ) and none to gain from settlement based on the elements’ SK hynix Fair Value. During the first half of 2016, the Company received cash consideration of $32.0 million from SK hynix. The amount was allocated between royalty revenue ( $31.9 million ) and gain from settlement ( $0.1 million ) based on the elements’ SK hynix Fair Value.

The cumulative cash receipts through June 30, 2016 and the remaining future cash receipts from the agreements with SK hynix are expected to be recognized as follows assuming no adjustments to the payments under the terms of the agreements (and assuming the option to make the lower payments begins with payments made during the middle of 2018):



	Cumulative Received to-date as of June 30,		Estimated to Be Received in												Total Estimated Cash Receipts
	2016		Remainder of 2016		2017		2018		2019		2020		2021 and Thereafter		Total Estimated Cash Receipts
(in millions)
Royalty revenue	$	158.1	$	32.0	$	48.0	$	40.0	$	32.0	$	48.0	$	168.0	$	526.1
Gain from settlement	1.9		—		—		—		—		—		—		1.9
Total	$	160.0	$	32.0	$	48.0	$	40.0	$	32.0	$	48.0	$	168.0	$	528.0

Micron

On December 9, 2013, Rambus, Micron and certain related entities of Micron entered into a settlement agreement, pursuant to which the parties have agreed that they will release all claims against each other with respect to all outstanding litigation between them and certain other potential claims. Pursuant to the settlement agreement, Rambus and Micron entered into a semiconductor patent license agreement on December 9, 2013. Under the license agreement, Rambus has granted to Micron and its subsidiaries and certain affiliated entities (i) a paid-up perpetual patent license for certain identified Micron DRAM products and (ii) a seven -year term patent license to other memory and semiconductor products.

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The agreements with Micron are considered a multiple element arrangement for accounting purposes. For a multiple element arrangement under the applicable accounting rules, the Company is required to identify specific elements of the arrangement and then determine when those elements should be recognized. The Company identified three elements in the arrangement: antitrust litigation settlement, settlement of past infringement, and license agreement. The Company considered several factors in determining the accounting fair value of the elements of the Micron agreements which included a third party valuation using an income approach (collectively the “Micron Fair Value”). The inputs and assumptions used in this accounting valuation were from a market participant perspective and included projected customer revenue, royalty rates, estimated discount rates, useful lives and income tax rates, among others. The development of a number of these inputs and assumptions in the model requires a significant amount of management judgment and discretion, and is based upon a number of factors, including the selection of industry comparables, market growth rates and other relevant factors. Changes in any number of these assumptions may have a substantial impact on the Micron Fair Value as assigned to each element. These inputs and assumptions represent management’s best estimates at the time of the transaction.

During the second quarter of 2016, the Company received cash consideration of $10.0 million from Micron. The amount was allocated between royalty revenue ( $9.9 million ) and gain from settlement ( $0.1 million ) based on the elements’ Micron Fair Value. During the first half of 2016, the Company received cash consideration of $20.0 million from Micron. The amount was allocated between royalty revenue ( $19.6 million ) and gain from settlement ( $0.4 million ) based on the elements’ Micron Fair Value.

The remaining $174.5 million is expected to be paid in successive quarterly payments of $10.0 million , concluding in the fourth quarter of 2020.

The cumulative cash receipts through June 30, 2016 and the remaining future cash receipts from the agreements with Micron are expected to be recognized as follows assuming no adjustments to the payments under the terms of the agreements:



	Cumulative Received to-date as of June 30,		Estimated to Be Received in										Total Estimated Cash Receipts
	2016		Remainder of 2016		2017		2018		2019		2020		Total Estimated Cash Receipts
(in millions)
Royalty revenue	$	102.2	$	20.0	$	40.0	$	40.0	$	40.0	$	34.5	$	276.7
Gain from settlement	3.3		—		—		—		—		—		3.3
Total	$	105.5	$	20.0	$	40.0	$	40.0	$	40.0	$	34.5	$	280.0

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15. Restructuring Charges

The 2015 Plan

During 2015, the Company initiated a restructuring program to reduce overall corporate expenses which is expected to improve future profitability by reducing spending on sales, general and administrative programs and refining some of its research and development efforts ("the 2015 Plan"). In connection with this restructuring program, the Company initiated a plan of termination resulting in a reduction of 8% of the Company's headcount. The Company estimated that it would incur a cash payout related to the reduction in force of approximately $3.0 million , which is related to severance and termination benefits. The estimated non-cash expense was expected to be approximately $1.0 million . During the year ended December 31, 2015, the Company recorded a charge of $3.6 million related primarily to the reduction in workforce, of which $1.4 million was related to the MID reportable segment, $0.1 million was related to the CRD reportable segment, $1.2 million was related to the Other segment and $0.9 million was related to corporate support functions. The majority of the 2015 Plan was completed in the first quarter of 2016.

The following table summarizes the 2015 Plan restructuring activities during the six months ended June 30, 2016:



	Employee Severance and Related Benefits			Facilities				Total
	(In thousands)
Balance at December 31, 2014	$	—		$	—			$	—
Charges	2,993			583				3,576
Payments	(1,765		)	—				(1,765		)
Non-cash settlements	—			(583		)	*	(583		)
Balance at December 31, 2015	$	1,228		$	—			$	1,228
Payments	(1,205		)	—				(1,205		)
Balance at June 30, 2016	$	23		—				$	23

______________________________________

*The non-cash charge of $583 thousand is related to the write down of fixed assets related to the Other segment.

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16. Acquisition

Smart Card Software Limited

On January 25, 2016, the Company completed its acquisition of Smart Card Software Limited (“SCS”), a privately-held company incorporated in the United Kingdom, by acquiring all issued and outstanding shares of capital stock of SCS. Pursuant to the merger agreement on January 25, 2016, SCS was merged into Rambus, Inc. The transaction was denominated in British pounds. Under the terms of the merger agreement, the total consideration in U.S. dollar equivalent was $104.7 million which included the purchase price of $92.6 million paid on January 25, 2016 and additional purchase consideration to be paid in the third quarter of 2016 totaling $12.1 million and comprised of $11.6 million in cash, $4.0 million in working capital, offset by $3.5 million in liabilities assumed from SCS. Subsequently, the additional purchase consideration was adjusted to $11.5 million based on the period exchange rate as of June 30, 2016 . Of the purchase price, approximately $17.1 million of the consideration was deposited into an escrow account to fund indemnification obligations and other contractual provisions, with releases of portions of the escrow at various intervals through 18 months . SCS is a leader in mobile payments and a leading supplier of smart ticketing systems, which includes Bell Identification Ltd. and Ecebs Ltd. SCS is part of the CRD reporting unit. This acquisition will complement the Company's CRD reporting unit by allowing the Company to leverage its foundational security technology to offer differentiated, value-added security solutions to its customers. As of June 30, 2016 , the Company has incurred approximately $2.0 million in external acquisition costs in connection with the acquisition which were expensed as incurred.

The initial purchase price allocation and related accounting for this acquisition is preliminary. The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations and valuations and the Company's estimates and assumptions for the acquisition are subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The primary area of the preliminary estimates that are not yet finalized, relate to working capital adjustments that could impact the valuation of goodwill and liabilities.

The fair value of the assets acquired has been determined primarily by using valuation methods that discount the expected future cash flows to present value using estimates and assumptions determined by management. The Company performed a valuation of the net assets acquired as of the January 25, 2016 closing date. The total consideration from the business combination was allocated as follows:



	Total
	(in thousands)
Cash	$	12,056
Accounts receivable	6,563
Property and equipment	524
Other tangible assets	1,462
Identified intangible assets	59,700
Goodwill	47,239
Accounts payable and accrued liabilities	(5,996		)
Deferred income taxes	(15,556		)
Deferred revenue	(1,313		)
Total	$	104,679

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of SCS. This goodwill is not expected to be deductible for tax purposes.

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The identified intangible assets assumed in the acquisition of SCS were recognized as follows based upon their estimated fair values as of the acquisition date:



	Total		Estimated Weighted Average Useful Life
	(in thousands)		(in years)
Existing technology	$	24,600	6
Customer contracts and contractual relationships (1)	35,100		6
Total	$	59,700

(1) Includes favorable contracts of $8.3 million with an estimated useful life of 5 years . The favorable contracts are acquired software and service agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts reduces the favorable contract intangible asset.

The following unaudited pro forma financial information presents the combined results of operations for the Company and SCS as if the acquisition had occurred on January 1, 2015. The unaudited pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2015, and should not be taken as indicative of future consolidated operating results. Additionally, the unaudited pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition (unaudited, in thousands, except per share amounts):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenue	$	76,501	$	77,787	$	150,643	$	155,046
Net income	$	3,876	$	3,585	$	7,091	$	8,532
Net income per share - diluted	$	0.03	$	0.03	$	0.06	$	0.07

Pro forma earnings for 2016 were adjusted to exclude $2.0 million of acquisition-related costs incurred in 2016. Consequently, pro forma earnings for 2015 were adjusted to include these costs.

During the second quarter of 2016, the Company signed a definitive agreement to purchase the Memory Interconnect Business from Inphi Corporation (“Inphi”) for $90 million in cash. The acquisition includes all assets of the Inphi Memory Interconnect Business including product inventory, customer contracts, supply chain agreements and intellectual property.

Additionally, in the second quarter of 2016, the Company entered into a definitive agreement to acquire the assets of Semtech Corporation's (“Semtech”) Snowbush IP for $32.5 million in cash as well as additional payments based upon specific new product sales through the end of 2022. Snowbush IP, formerly part of Semtech's Systems Innovation Group, is a provider of silicon-proven, high-performance serial link solutions.

These acquisitions remain subject to customary closing conditions and each is expected to close during the third quarter of 2016. As a result, the Company is unable to provide the amounts to be recognized for the major classes of assets to be acquired and liabilities to be assumed for each of these acquisitions.

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 as described in more detail under “Note Regarding Forward-Looking Statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to

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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:



Differential Power Analysis	DPA
Dynamic Random Access Memory	DRAM
Light Emitting Diodes	LED
Rambus Dynamic Random Access Memory	RDRAM ™
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
Cryptography Research Division	CRD
eASIC Corporation	eASIC
Eaton Corporation plc	Eaton
Elpida Memory, Inc.	Elpida
Emerging Solutions Division	ESD
Freescale Semiconductor Inc.	Freescale
Fujitsu Limited	Fujitsu
General Electric Company	GE
Intel Corporation	Intel
International Business Machines Corporation	IBM
Lighting and Display Technology	LDT
LSI Corporation (now a division of Avago Technologies Limited)	LSI
Memory and Interfaces Division	MID
Micron Technologies, Inc.	Micron
Nanya Technology Corporation	Nanya
Qualcomm Incorporated	Qualcomm
Panasonic Corporation	Panasonic
Renesas Electronics	Renesas
Samsung Electronics Co., Ltd.	Samsung
SK hynix, Inc.	SK hynix
Smart Card Software Ltd.	SCS
Sony Computer Electronics	Sony
ST Microelectronics N.V.	STMicroelectronics
Toshiba Corporation	Toshiba

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Business Overview

Rambus creates cutting-edge semiconductor and IP products, spanning memory and interfaces to security, smart sensors and lighting. Our chips, customizable IP cores, architecture licenses, tools, services, software, training and innovations improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading ASIC and SoC designers, foundries, IP developers, EDA companies and validation labs. Our products are integrated into tens of billions of devices and systems, powering and securing diverse applications, including Big Data, Internet of Things (IoT), mobile, consumer and media platforms. We generate revenue by licensing our inventions and solutions, selling our semiconductor and security products 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 expanded our portfolio of inventions and solutions to address additional markets in lighting, chip and system security, as well as new areas within the semiconductor industry, such as computational sensing and imaging. 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 will be hiring and retaining world-class inventors, scientists and engineers to lead the development of inventions and technology solutions for our fields of focus, and the management and business support personnel necessary to execute our plans and strategies.

We have four operational 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 Division, or CRD, which focuses on the design, development and licensing of technologies for chip and system security, anti-counterfeiting, smart ticketing and mobile payments; (3) Emerging Solutions Division, or ESD, which includes our computational sensing and imaging group along with our development efforts in the area of emerging technologies; and (4) Lighting and Display Technologies, or LDT, which focuses on the design, development and licensing of technologies for lighting. As of June 30, 2016, MID and CRD were considered reportable segments as they met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining operating segments were shown under “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 inventions and technology solutions are primarily offered to our customers through either a patent license or a technology license. Royalties from patent licenses accounted for 76% and 79% of our consolidated revenue for the three and six months ended June 30, 2016, respectively, as compared to 82% and 85% for the three and six months ended June 30, 2015, respectively. Royalties from technology licenses accounted for 6% of our consolidated revenue for both the three and six months ended June 30, 2016 as compared to 4% and 3% for the three and six months ended June 30, 2015, respectively. Today, a majority of our revenues are derived from patent licenses, through which we provide our customers a license to use a certain 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 ranging for periods of up to ten years. Leading consumer product, semiconductor and system companies such as AMD, Broadcom, Cisco, Freescale, Fujitsu, GE, IBM, Intel, LSI, Micron, Nanya, Panasonic, Qualcomm, Renesas, Samsung, SK hynix, STMicroelectronics and Toshiba have licensed our patents for use in their own products. The majority of our intellectual property was developed in-house and we have expanded our business strategy of monetizing our intellectual property to include the sale of select intellectual property. As any sales executed under this expanded strategy represent a component of our ongoing major or central operations and activities, we will record the related proceeds as revenue.

We also offer our customers technology licenses to support the implementation and adoption of our technology in their products or services. Our customers include leading companies such as Eaton, GE, IBM, Panasonic, Qualcomm, Samsung, Sony and Toshiba. Our technology 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 technology licenses which can include know-how and technology transfer, product design and development, system integration, and other services. These technology license agreements may have both a fixed price (non-recurring) component and ongoing use fees and in some cases, royalties. Further, under technology 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 services revenue which includes software license and related implementation, support and maintenance fees, and engineering services fees. 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.

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We intend to continue making significant expenditures associated with engineering, sales, 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.

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. One of our goals is to supplement our patent licensing business with additional licensing opportunities for our technologies, products and services to be incorporated into our customers’ products and/or systems. Our technology licenses are designed to support the implementation and adoption of our technology into our customers’ products or services. As part of these offerings, we can provide a range of services that can include access to technical experts, advanced system design and analysis, hardware and software to enhance design and validation, system IP and specifications, and process-specific hard and soft macros, along with other services. These technology license agreements may have both a fixed price (non-recurring) component and ongoing royalties. Further, under technology 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.

As of June 30, 2016, our semiconductor, lighting, security and other technologies are covered by 1,876 U.S. and foreign patents. Additionally, we have 634 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 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.

Executive Summary

During the second quarter of 2016, we signed a definitive agreement to purchase the Memory Interconnect Business from Inphi for $90 million in cash. The acquisition includes all assets of the Inphi Memory Interconnect Business including product inventory, customer contracts, supply chain agreements and intellectual property. We expect the transaction to close in the third quarter of 2016.

Additionally, in the second quarter of 2016, we entered into a definitive agreement to acquire the assets of Semtech's Snowbush IP for $32.5 million in cash as well as additional payments based upon specific new product sales through the end of 2022. Snowbush IP, formerly part of Semtech's Systems Innovation Group, is a provider of silicon-proven, high-performance serial link solutions. We expect the transaction to close in the third quarter of 2016.

These acquisitions remain subject to customary closing conditions.

Engineering expenses continue to play a key role in our efforts to maintain product innovations. Our engineering expenses for the three months ended June 30, 2016 increased $1.5 million as compared to the same period in 2015 primarily due to increased headcount related expenses of $1.5 million, increased expenses related to software design tools of $0.7 million and increased amortization costs of $0.7 million due to the acquisition of SCS offset by decreased prototyping costs of $0.9 million and decreased bonus accrual expense of $0.4 million. Engineering expenses for the six months ended June 30, 2016 increased $3.0 million as compared to the same period in 2015 primarily due to increased headcount related expenses of $2.1 million, increased expenses related to software design tools of $1.5 million, increased amortization costs of $1.4 million and increased stock-based compensation expense of $0.4 million offset by decreased prototyping costs of $1.2 million, decreased bonus accrual expense of $0.8 million, decreased depreciation expense of $0.2 million and decreased software and equipment maintenance costs of $0.2 million.

Sales, general and administrative expenses for the three months ended June 30, 2016 increased $4.5 million as compared to the same period in 2015 primarily due to increased headcount related expenses of $1.2 million, increased amortization costs of $1.1 million due to the acquisition of SCS, various acquisition related costs of $0.8 million, including legal, accounting and other compliance fees, increased stock-based compensation expense of $0.5 million and increased facilities costs of $0.2 million. Sales, general and administrative expenses for the six months ended June 30, 2016 increased $9.1 million as compared to the same period in 2015 primarily due to various acquisition related costs of $2.6 million, increased headcount related expenses of $2.0 million, increased amortization costs of $1.9 million, increased stock-based compensation expense of $1.3 million and increased facilities costs of $0.3 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. Our top five customers for each reporting period represented approximately 68% and 69% of our revenue for the three and six months ended June 30, 2016, respectively, as compared to 66% and 65% for the three and six months ended June 30, 2015, respectively. As a result of renewing with Samsung in 2013 and settling with SK hynix and Micron in 2013, as well as extending our license agreement with SK hynix in June 2015, Samsung, SK hynix and Micron are expected to account for a significant portion of our ongoing licensing revenue. For both the three and six months ended June 30, 2016, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue. For both the three and six months ended June 30, 2015, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue.

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.

Our licensing cycle is lengthy, costly and unpredictable with any degree of certainty. We may incur costs in any particular period before any associated revenue stream begins, if at all. Our lengthy license negotiation cycles could make our future revenue difficult to predict because we may not be successful in entering into licenses with our customers in the amounts projected, or on our anticipated timelines. 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 or over the next year.

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. 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.

During the third quarter of 2015 we announced that we are in technical development of the buffer chip set which we are currently sampling to key potential customers and critical ecosystem partners. We are currently working to make the chipset commercially available, but we do not expect any material contribution to revenue from the chipset in 2016.

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 CRD is primarily focused on positioning its DPA countermeasures, CryptoFirewall™ and CryptoManager™ technology solutions, and the introduction of mobile payments and smart ticketing solutions to our offerings to capitalize on these trends and growing adoption among technology partners and customers.

The highly fragmented general lighting industry is undergoing a fundamental shift from incandescent technology to cold cathode fluorescent lights and LED driven technology due to the need to reduce energy consumption and to comply with government mandates. LED lighting typically saves energy costs as compared to existing installed lighting. Our LDT group's patents in LED edge-lit light guide technology can be applied in the design of next generation LED lighting products.

The strategy of the LDT group focuses on providing the market with novel, patented light guide technologies and products to customers who are leading the transition to solid-state LED-based general lighting fixtures.

In 2013, we sold a set of patent assets related to our core display patents where the purchaser of the patents can proceed independently with a licensing program. We have a net proceeds-sharing program in place with the purchaser of the patents upon their licensing of these patent assets. We retain the rights to use certain application techniques and may selectively engage with customers to license our intellectual property and technology for use and applications as permitted under our agreement, including without limitation, display panel and designs.

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Our revenue from companies headquartered outside of the United States accounted for approximately 65% of our total revenue for both the three and six months ended June 30, 2016 as compared to 59% and 61% for the three and six months ended June 30, 2015, 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, the majority of the revenue from international customers has 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 revenue. 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 increased and as a percentage of revenue decreased for the three months ended June 30, 2016 as compared to the same period in the prior year. Engineering costs in the aggregate and as a percentage of revenue increased for the six months ended June 30, 2016 as compared to the same period in the prior year. In the near term, we expect engineering costs in the aggregate 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, including costs related to various acquisitions.

Sales, general and administrative expenses in the aggregate and as a percentage of revenue increased for the three months ended June 30, 2016 as compared to the same period in the prior year. Sales, general and administrative expenses in the aggregate and as a percentage of revenue increased for the six months ended June 30, 2016 as compared to the same period in the prior year. In the past, our litigation expenses have been high and difficult to predict. Because we successfully negotiated settlements and license agreements with SK hynix, Micron and Nanya during the course of 2013 and 2014, we have settled all outstanding litigation and should no longer have material litigation expenses related to these specific matters. To the extent litigation is again necessary, our expectations on the amount and timing of any future general and administrative costs is uncertain. In the near term, we expect our sales, general and administrative costs in the aggregate to be higher due to the recently announced acquisitions.

Our continued investment in research and development projects, involvement in any future litigation or other legal proceedings and any lower revenue from our customers in the future, will negatively affect our cash from operations.

To provide us with more flexibility in returning capital back to our shareholders, on January 21, 2015, our Board authorized a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares. In the fourth quarter of 2015, we entered into an accelerated share repurchase program to repurchase an aggregate of $100.0 million of our common stock and received an initial delivery of 7.8 million shares. During the second quarter of 2016, the accelerated share repurchase program was completed and we received an additional 0.7 million shares of our common stock. We may continue to tactically execute the share repurchase program from time to time.

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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:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenue:
Royalties	82.1	%	85.7	%	84.3	%	88.8	%
Contract and other revenue	17.9	%	14.3	%	15.7	%	11.2	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating costs and expenses:
Cost of revenue*	18.4	%	16.7	%	17.6	%	15.7	%
Research and development*	37.6	%	40.1	%	38.4	%	39.6	%
Sales, general and administrative*	28.5	%	23.8	%	30.1	%	24.6	%
Gain from sale of intellectual property	—	%	(1.2	)%	—	%	(2.2	)%
Gain from settlement	(0.2	)%	(0.7	)%	(0.4	)%	(0.7	)%
Total operating costs and expenses	84.3	%	78.7	%	85.7	%	77.0	%
Operating income	15.7	%	21.3	%	14.3	%	23.0	%
Interest income and other income (expense), net	1.5	%	0.3	%	0.9	%	0.2	%
Interest expense	(4.1	)%	(4.2	)%	(4.2	)%	(4.2	)%
Interest and other income (expense), net	(2.6	)%	(3.9	)%	(3.3	)%	(4.0	)%
Income before income taxes	13.1	%	17.4	%	11.0	%	18.9	%
Provision for income taxes	8.0	%	8.0	%	7.1	%	7.7	%
Net income	5.1	%	9.4	%	3.9	%	11.2	%

_________________________________________

* Includes stock-based compensation:



Cost of revenue	0.0	%	0.0	%	0.0	%	0.0	%
Research and development	2.8	%	2.7	%	2.8	%	2.6	%
Sales, general and administrative	3.8	%	3.3	%	3.8	%	3.0	%



	Three Months						Six Months
	Ended June 30,				Change in		Ended June 30,				Change in
(Dollars in millions)	2016		2015		Percentage		2016		2015		Percentage
Total Revenue
Royalties	$	62.8	$	62.4	0.7	%	$	125.7	$	129.4	(2.8	)%
Contract and other revenue	13.7		10.4		31.1	%	23.5		16.3		43.3	%
Total revenue	$	76.5	$	72.8	5.1	%	$	149.2	$	145.7	2.4	%

Royalty Revenue

Patent Licenses

Our patent royalties decreased approximately $1.2 million to $58.2 million for the three months ended June 30, 2016 from $59.4 million for the same period in 2015. The decrease was primarily due to lower royalty revenue from AMD, IBM and Renesas, offset by higher royalty revenue recognized from SK hynix and Toshiba. Of the $58.2 million patent royalties for the three months ended June 30, 2016, $3.9 million is related to past royalty revenue from settlement of past legal proceedings with SK Hynix and Micron.

Our patent royalties decreased approximately $7.1 million to $117.3 million for the six months ended June 30, 2016 from $124.4 million for the same period in 2015. The decrease was primarily due to lower royalty revenue from AMD, IBM, Renesas and STMicroelectronics, offset by higher royalty revenue recognized from SK hynix and Toshiba. Of the $117.3

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million patent royalties for the six months ended June 30, 2016, $21.2 million is related to past royalty revenue from settlement of past legal proceedings with SK Hynix and Micron.

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, renewing or extending existing agreements, 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.

Technology Licenses

Royalties from technology licenses increased approximately $1.7 million to $4.7 million for the three months ended June 30, 2016 from $3.0 million for the same period in 2015. The increase was primarily due to higher royalties from eASIC, Qualcomm and various other security technology license revenue, offset by lower royalties from Nagravision.

Royalties from technology licenses increased approximately $3.5 million to $8.4 million for the six months ended June 30, 2016 from $4.9 million for the same period in 2015. The increase was primarily due to higher royalties from eASIC, Eaton, Qualcomm and various other security technology license revenue, offset by lower royalties from Nagravision.

In the future, we expect technology royalties will continue to 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 technology license royalties, decreased approximately $2.2 million to $51.4 million for the three months ended June 30, 2016 from $53.6 million for the same period in 2015. The decrease was primarily due to lower royalty revenue from AMD, IBM and Renesas, offset by higher royalty revenue recognized from SK hynix and Toshiba.

Royalty revenue from the MID reportable segment decreased approximately $4.5 million to $103.2 million for the six months ended June 30, 2015 from $107.7 million for the same period in 2015. The decrease was primarily due to lower royalty revenue from AMD, IBM, Renesas and STMicroelectronics, offset by higher royalty revenue recognized from SK hynix and Toshiba.

Royalty revenue from the CRD reportable segment, which includes patent and technology license royalties, increased approximately $2.6 million to $10.5 million for the three months ended June 30, 2016 from $7.9 million for the same period in 2015. The increase was primarily due to higher royalty revenue from Qualcomm, Renesas and various other customers, offset by lower royalty revenue from Nagravision.

Royalty revenue from the CRD reportable segment increased $0.3 million to $20.6 million for the six months ended June 30, 2016 from $20.3 million for the same period in 2015. The increase was primarily due to higher royalty revenue from Qualcomm and various other customers, offset by lower royalty revenue from Nagravision, Renesas and STMicroelectronics.

Royalty revenue from the Other segment was immaterial for both the three months ended June 30, 2016 and 2015, and remained relatively flat period over period.

Royalty revenue from the Other segment was immaterial for both the six months ended June 30, 2016 and 2015, and increased period over period.

Contract and Other Revenue

Contract and other revenue consists of revenue from technology development and sale of security and lighting products. Contract and other revenue increased approximately $3.2 million to $13.6 million for the three months ended June 30, 2016 from $10.4 million for the same period in 2015. The increase was primarily due to increased security technology development projects, including revenue from the acquisition of SCS, offset by decreased sales of light guides.

Contract and other revenue increased approximately $7.1 million to $23.5 million for the six months ended June 30, 2016 from $16.4 million for the same period in 2015. The increase was primarily due to increased security technology development projects, including revenue from the acquisition of SCS, offset by decreased sales of light guides.

We believe that contract and other revenue will fluctuate over time based on our ongoing technology development 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.

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Contract and Other Revenue by Reportable Segments

Contract and other revenue from the MID reportable segment increased approximately $2.0 million to $3.0 million for the three months ended June 30, 2016 from $1.0 million for the same period in 2015, primarily due to various new development projects.

Contract and other revenue from the MID reportable segment increased $3.2 million to $4.8 million for the six months ended June 30, 2016 from $1.6 million as compared to the same period in 2015, primarily due to various new development projects.

Contract and other revenue from the CRD reportable segment increased approximately $2.0 million to $5.9 million for the three months ended June 30, 2016 from $3.9 million for the same period in 2015, primarily due to higher revenue from security technology development projects, including revenue from the acquisition of SCS.

Contract and other revenue from the CRD reportable segment increased approximately $5.6 million to $9.9 million for the six months ended June 30, 2016 from $4.3 million for the same period in 2015, primarily due to higher revenue from security technology development projects.

Contract and other revenue from the Other segment decreased approximately $0.9 million to $4.7 million for the three months ended June 30, 2016 from $5.6 million for the same period in 2015. The decrease was primarily due to decreased sales of light guides, offset by increased revenue from lighting technology development projects.

Contract and other revenue from the Other segment decreased approximately $1.7 million to $8.8 million for the six months ended June 30, 2016 from $10.5 million for the same period in 2015. The decrease was primarily due to decreased sales of light guides, offset by increased revenue from lighting technology development projects.

Engineering costs:



	Three Months Ended						Six Months Ended
	June 30,				Change in		June 30,				Change in
(Dollars in millions)	2016		2015		Percentage		2016		2015		Percentage
Engineering costs
Cost of revenue	$	7.7	$	6.4	19.7	%	$	13.5	$	11.5	18.0	%
Amortization of intangible assets	6.4		5.7		12.4	%	12.8		11.4		11.9	%
Stock-based compensation	0.0		0.0		—	%	0.0		0.0		—	%
Total cost of revenue	14.1		12.1		16.1	%	26.3		22.9		14.9	%
Research and development	26.6		27.2		(2.0	)%	53.1		53.9		(1.6	)%
Stock-based compensation	2.1		2.0		6.1	%	4.2		3.8		11.6	%
Total research and development	28.7		29.2		(1.5	)%	57.3		57.7		(0.8	)%
Total engineering costs	$	42.8	$	41.3	3.7	%	$	83.6	$	80.6	3.7	%

Total engineering costs increased $1.5 million for the three months ended June 30, 2016 as compared to the same period in 2015 primarily due to increased headcount related expenses of $1.5 million, increased expenses related to software design tools of $0.7 million and increased amortization costs of $0.7 million due to the acquisition of SCS offset by decreased prototyping costs of $0.9 million and decreased bonus accrual expense of $0.4 million.

Total engineering costs increased $3.0 million for the six months ended June 30, 2016 as compared to the same period in 2015 primarily due to increased headcount related expenses of $2.1 million, increased expenses related to software design tools of $1.5 million, increased amortization costs of $1.4 million and increased stock-based compensation expense of $0.4 million offset by decreased prototyping costs of $1.2 million, decreased bonus accrual expense of $0.8 million, decreased depreciation expense of $0.2 million and decreased software and equipment maintenance costs of $0.2 million.

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

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Sales, general and administrative costs:



	Three Months Ended						Six Months Ended
	June 30,				Change in		June 30,				Change in
(Dollars in millions)	2016		2015		Percentage		2016		2015		Percentage
Sales, general and administrative costs
Sales, general and administrative costs	$	18.9	$	14.9	26.3	%	$	39.2	$	31.4	24.6	%
Stock-based compensation	2.9		2.4		21.9	%	5.7		4.4		29.8	%
Total sales, general and administrative costs	$	21.8	$	17.3	25.7	%	$	44.9	$	35.8	25.2	%

Total sales, general and administrative costs increased $4.5 million for the three months ended June 30, 2016 as compared to the same period in 2015 primarily due to increased headcount related expenses of $1.2 million, increased amortization costs of $1.1 million due to the acquisition of SCS, various acquisition related costs of $0.8 million, including legal, accounting and other compliance fees, increased stock-based compensation expense of $0.5 million and increased facilities costs of $0.2 million.

Total sales, general and administrative costs increased $9.1 million for the six months ended June 30, 2016 as compared to the same period in 2015 primarily due to various acquisition related costs of $2.6 million, increased headcount related expenses of $2.0 million, increased amortization costs of $1.9 million, increased stock-based compensation expense of $1.3 million and increased facilities costs of $0.3 million.

In the future, sales, general and administrative costs will vary from period to period based on the trade shows, advertising, legal, acquisition and other sales, 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 sales, general and administrative costs to be higher due to the recently announced acquisitions.

Gain from sale of intellectual property:



	Three Months Ended						Six Months Ended
	June 30,				Change in		June 30,				Change in
(Dollars in millions)	2016		2015		Percentage		2016		2015		Percentage
Gain from sale of intellectual property	$	—	$	0.9	(100.0	)%	$	—	$	3.2	(100.0	)%

During 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 if and when the purchaser of the patents is successful in licensing that portfolio. During the first half of 2016, we did not receive any payment from the purchaser of the patents related to this transaction.

Gain from settlement:



	Three Months Ended						Six Months Ended
	June 30,				Change in		June 30,				Change in
(Dollars in millions)	2016		2015		Percentage		2016		2015		Percentage
Gain from settlement	$	0.1	$	0.5	(72.9	)%	$	0.6	$	1.0	(43.2	)%

The settlements with SK hynix and Micron are multiple element arrangements for accounting purposes. For a multiple element arrangement, we are required to determine the fair value of the elements. We considered several factors in determining the accounting fair value of the elements of the settlement with SK hynix and the settlement with Micron which included a third party valuation using an income approach (the “SK hynix Fair Value” and "Micron Fair Value", respectively). The total gain from settlement related to the settlements with SK hynix and Micron was $1.9 million and $3.3 million, respectively. During the three months ended June 30, 2016 and 2015, we recognized $0.1 million and $0.5 million, respectively, as gain from settlement, which represents the portion of the SK hynix Fair Value and Micron Fair Value of the cash consideration allocated to the resolution of the antitrust litigation settlements. During the six months ended June 30, 2016 and 2015, we recognized $0.6 million and $1.0 million, respectively, as gain from settlement. Refer to Note 14, “Agreements with SK hynix and Micron,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further discussion.

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Interest and other income (expense), net:



	Three Months								Six Months
	Ended June 30,						Change in		Ended June 30,						Change in
(Dollars in millions)	2016			2015			Percentage		2016			2015			Percentage
Interest income and other income (expense), net	$	1.1		$	0.2		NM*		$	1.4		$	0.3		NM*
Interest expense	(3.1		)	(3.1		)	—	%	(6.3		)	(6.1		)	2.1	%
Interest and other income (expense), net	$	(2.0	)	$	(2.9	)	(29.9	)%	$	(4.9	)	$	(5.8	)	(15.7	)%

______________________________________


*	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 and any gains or losses from the re-measurement of our monetary assets or liabilities denominated in foreign currencies.

Interest expense primarily 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 1.125% convertible senior notes due 2018 (the “2018 Notes”) as well as the coupon interest related to the 2018 Notes. We expect our non-cash interest expense to increase steadily as the 2018 Notes reach maturity.

Provision for income taxes:



	Three Months Ended								Six Months Ended
	June 30,						Change in		June 30,						Change in
(Dollars in millions)	2016			2015			Percentage		2016			2015			Percentage
Provision for income taxes	$	6.1		$	5.8		5.2	%	$	10.6		$	11.2		(5.5	)%
Effective tax rate	61.2		%	45.8		%			64.9		%	40.7		%

Our effective tax rate for the three and six months ended June 30, 2016 was different from the U.S. statutory tax rate primarily due to income tax expense recognized from exercises and expiration of out-of-the-money fully vested shares from our equity incentive plans. Similarly, the effective tax rate was different for the three and six months ended June 30, 2016 as compared to the same period in 2015, due to the exhaustion of our excess tax benefits pool (from equity incentive plan exercises and expirations) in 2015. As such, we recognized income tax expense in situations when the stock-based compensation costs from equity incentive plans exceeded the tax benefits received from the tax deduction from equity incentive plan exercises.

We recorded a provision for income taxes of $6.1 million and $5.8 million for the three months ended June 30, 2016 and 2015, respectively. We recorded a provision for income taxes of $10.6 million and $11.2 million for the six months ended June 30, 2016 and 2015, respectively. During the three months ended June 30, 2016 and 2015, we paid withholding taxes of $5.4 million and $4.8 million, respectively. During the six months ended June 30, 2016 and 2015, we paid withholding taxes of $10.9 million and $9.6 million, respectively.

Our effective tax rates for the three and six months ended June 30, 2015 was different from the U.S. statutory tax rate applied to our pretax income primarily due to a full valuation allowance on our U.S. deferred tax assets, foreign withholding and income taxes, and state income taxes.

As of June 30, 2016, we continue to maintain a valuation allowance against the majority of our state deferred tax assets. We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative. The realizability of our net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

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Liquidity and Capital Resources



	As of
	June 30, 2016		December 31, 2015
	(In millions)
Cash and cash equivalents	$	188.0	$	143.8
Marketable securities	71.3		143.9
Total cash, cash equivalents, and marketable securities	$	259.3	$	287.7



	Six Months Ended
	June 30,
	2016			2015
	(In millions)
Net cash provided by operating activities	$	48.7		$	38.3
Net cash used in investing activities	$	(12.4	)	$	(0.3	)
Net cash provided by financing activities	$	8.6		$	9.3

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, the majority of our cash and cash equivalents is in the United States. Our cash needs for the six months ended June 30, 2016 were funded primarily from cash collected from our customers.

We do not anticipate any liquidity constraints as a result of either the current credit environment or investment fair value fluctuations. Additionally, we have the intent and ability to hold our debt investments that have unrealized losses in accumulated other comprehensive gain (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 a part of our overall business strategy, from time to time, we evaluate businesses and technologies for potential acquisition that are aligned with our core business and designed to supplement our growth, including the acquisition of SCS, and our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect Business. Upon closing of our pending acquisitions, we expect a significant cash outflow within the third quarter of 2016.

To provide us with more flexibility in returning capital back to our shareholders, on January 21, 2015, our Board authorized a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares. In the fourth quarter of 2015, we entered into an accelerated share repurchase program to repurchase an aggregate of $100.0 million of our common stock and received an initial delivery of 7.8 million shares. During the second quarter of 2016, the accelerated share repurchase program was completed and we received an additional 0.7 million shares of our common stock as the final settlement of the accelerated share repurchase program. We may continue to tactically execute the share repurchase program from time to time.

As of June 30, 2016, there remained an outstanding authorization to repurchase approximately 11.5 million shares of our outstanding common stock under the current share repurchase program.

Operating Activities

Cash provided by operating activities of $48.7 million for the six months ended June 30, 2016 was primarily attributable to the cash generated from customer licensing, software license and related implementation, support and maintenance fees, and engineering services fees. Changes in operating assets and liabilities for the six months ended June 30, 2016 primarily included a decrease in accrued salaries and benefits and other liabilities and a decrease in accounts receivable.

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Cash provided by operating activities of $38.3 million for the six months ended June 30, 2015 was primarily attributable to the cash generated from customer licensing. Changes in operating assets and liabilities for the six months ended June 30, 2015 primarily included a decrease in accrued salaries and benefits and other liabilities mainly due to the payout of the 2014 Corporate Incentive Plan, a decrease in accounts payable, an increase in deferred revenue and an increase in prepaids and other current assets.

Investing Activities

Cash used in investing activities of $12.4 million for the six months ended June 30, 2016 primarily consisted of cash paid for the acquisition of SCS of $92.6 million, net of cash acquired of $12.1 million, cash paid for purchases of available-for-sale marketable securities of $54.9 million, $3.6 million paid to acquire property, plant and equipment, offset by proceeds from the maturities and sales of available-for-sale marketable securities of $82.0 million and $44.5 million, respectively.

Cash used in investing activities of $0.3 million for the six months ended June 30, 2015 primarily consisted of cash paid for purchases of available-for-sale marketable securities of $97.7 million and $3.1 million paid to acquire property, plant and equipment, offset by proceeds from the maturities and sales of available-for-sale marketable securities of $70.4 million and $26.6 million, respectively. In addition, we received $3.4 million from the sale of intellectual property.

Financing Activities

Cash provided by financing activities was $8.5 million for the six months ended June 30, 2016. We received proceeds of $8.3 million from the issuance of common stock under equity incentive plans and paid $0.3 million due to principal payments against the lease financing obligation.

Cash provided by financing activities was $9.3 million for the six months ended June 30, 2015. We received proceeds of $9.0 million from the issuance of common stock under equity incentive plans and paid $0.2 million due to principal payments against the lease financing obligation.

Contractual Obligations

As of June 30, 2016 , our material contractual obligations were (in thousands):



	Total		Remainder of 2016		2017		2018		2019		2020		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	25,336	$	3,116	$	6,302	$	6,447	$	6,602	$	2,869	$	—
Leases and other contractual obligations	10,272		2,601		3,221		2,211		1,353		441		445
Software licenses (3)	10,678		2,008		4,235		3,701		734		—		—
Convertible notes	138,000		—		—		138,000		—		—		—
Interest payments related to convertible notes	3,881		776		1,553		1,552		—		—		—
Total	$	188,167	$	8,501	$	15,311	$	151,911	$	8,689	$	3,310	$	445

_________________________________________

(1)

The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $22.4 million including $19.6 million recorded as a reduction of long-term deferred tax assets and $2.8 million in long-term income taxes payable as of June 30, 2016 . As noted in Note 12, “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 agreements generally having terms longer than one year.

We also have commitments related to acquisitions, which are not included in the above table. See Note 16, “Acquisition,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q, for further details.

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Share Repurchase Program

During the six months ended June 30, 2016, we repurchased and retired 0.7 million shares of our common stock under our share repurchase program.

On October 26, 2015, we initiated an accelerated share repurchase program with Citibank, N.A. The accelerated share repurchase program is part of the broader share repurchase program previously authorized by our Board on January 21, 2015. Under the accelerated share repurchase program, we pre-paid to Citibank, N.A., the $100.0 million purchase price for our common stock and, in turn, we received an initial delivery of approximately 7.8 million shares of our common stock from Citibank, N.A, in the fourth quarter of 2015, which were retired and recorded as a $80.0 million reduction to stockholders' equity. The remaining $20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our stock. The number of shares to be ultimately purchased by us was determined based on the volume weighted average price of the common stock during the terms of the transaction, minus an agreed upon discount between the parties. During the second quarter of 2016, the accelerated share repurchase program was completed and we received an additional 0.7 million shares of our common stock as the final settlement of the accelerated share repurchase program.

As of June 30, 2016, there remained an outstanding authorization to repurchase approximately 11.5 million shares of our outstanding common stock under the current share repurchase program.

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 price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common stock.

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 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) goodwill and intangible assets, (3) income taxes and (4) stock-based compensation. 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, 2015.

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

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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, 2016, we had an investment portfolio of fixed income marketable securities of $209.3 million including cash equivalents. If market interest rates were to increase immedia tely and uniformly by 1.0% from the levels as of June 30, 2016, the fair value of the portfolio would decline by approximately $ 0.4 m illion. Actual results may differ materially from this sensitivity analysis.

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.

We invoice the majority of 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 international business operations in the United Kingdom and the Netherlands, design centers in Canada, India, Finland and France and small business development offices in Japan, Korea and Taiwan. We monitor our foreign currency exposure; however, as of June 30, 2016, 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 (the “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.

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, 2016, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2016, 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

We are not currently a party to any material pending legal proceeding; however, from time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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 “Note Regarding Forward-Looking Statements” at the beginning of this report.

Risks Associated With Our Business, Industry and Market Conditions

The success of our business depends on sustaining or growing our licensing 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 technology license fees paid for access to our patents, developed technology and development and support services provided to our customers. Our ability to secure and renew the licenses from which our revenues are derived depends on our customers adopting our technology and using it in the products they sell. Once secured, license revenue may be negatively affected by factors within and outside our control, including reductions in our customers’ sales prices, sales volumes, our failure to timely complete engineering deliverables, and the terms of such licenses. In addition, we cannot provide any assurance that we will be successful in renewing existing license agreements on equal or favorable terms or at all. As an example, for the year ended December 31, 2015, our revenue attributable to royalties declined 3.4% from the year ended December 31, 2014. If we do not achieve our revenue goals, our results of operations could decline.

We have traditionally operated in, and may enter other, 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, DRAM manufacturers, which make up a significant part of our revenue, have suffered material losses and other adverse effects to their businesses, leading to industry consolidation from time-to-time 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 in which we operate and volatility in various economies around the world, we may achieve a reduced number of licenses or may experience tightening of customers' operating budgets, difficulty or inability of our customers to pay our licensing fees, lengthening of the approval process for new licenses and consolidation among our customers. All of these factors may adversely affect the demand for our technology and may cause us to experience substantial fluctuations in our operating results.

We face competition from semiconductor and digital electronics products and systems companies, other semiconductor intellectual property companies that provide security cores and non-edge lit LED lighting options that are available to the market. We believe the principal competition for our technologies may come from our prospective customers, some of whom are evaluating and developing products based on technologies that they contend or may contend will not require a license from us. Some of our competitors use a system-level design approach similar to ours, including activities such as board and package design, power and signal integrity analysis, and thermal management. Many of these companies are larger and may have better access to financial, technical and other resources than we possess.

To the extent that alternatives might provide comparable system performance at lower or similar cost to our technologies, or are perceived to require the payment of no or lower royalties, or to the extent other factors influence the industry, our customers and prospective customers may adopt and promote alternative technologies. Even to the extent we determine that such

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alternative technologies infringe our patents, there can be no assurance that we would be able to negotiate agreements that would result in royalties being paid to us without litigation, which could be costly and the results of which would be uncertain.

In addition, our expansion into new markets subjects us to additional risks. We may have limited or no experience in new products and markets, including our recently announced buffer chip set, our CryptoManager platform and new offerings that will result from our acquisition of SCS in the mobile credential and smart card solution spaces, and our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect Business, and our customers may not adopt our new offerings. These and other new offerings may present new and difficult challenges, which could negatively affect our operating results.

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 would 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 through contract terminations or acquisitions, our revenue may decrease substantially.

We have a high degree of revenue concentration. Our top five customers for each reporting period represented approximately 69% and 65% of our revenue for the six months ended June 30, 2016 and 2015, respectively. For both of the six months ended June 30, 2016 and 2015, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue. Additionally, our top five customers represented approximately 65% and 62% of our revenues for the years ended December 31, 2015 and 2014, respectively. For both of the years ended December 31, 2015 and 2014, revenues from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue in each year. We extended our license agreement with Samsung in December 2013, and we expect Samsung to continue to account for a significant portion of our licensing revenue. We also entered into settlement agreements with each of SK hynix and Micron (which included Elpida, which Micron had acquired in July 2013) in June 2013 and December 2013, respectively. In June 2015, we also extended our license agreement with SK hynix. As a result of the renewal and such settlements, we expect each of Samsung, SK hynix and Micron to account for a significant portion of our licensing revenue in the future. We expect to continue to experience significant revenue concentration for the foreseeable future.

In addition, our license agreements are complex and some 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 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. These clauses may also require us to reduce royalties payable by existing customers when we enter into or amend agreements with other customers. Any adjustment that reduces royalties from current customers or licensees may have a material adverse effect on our operating results and financial condition.

We continue to negotiate with customers and prospective customers to enter into license agreements. Any future agreement may trigger our obligation to offer comparable terms or modifications to agreements with our existing customers, which may be less favorable to us than the existing license terms. We expect licensing fees 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. In particular, under our license agreement with Samsung, the license fees payable by Samsung are subject to certain adjustments and conditions, and we therefore cannot provide assurances that the revenues generated by this license will not decline in the future. In addition, some of our material license agreements may contain rights by the customer to terminate for convenience, or upon certain other events, such as change of control, material breach, insolvency or bankruptcy proceedings. If we are unsuccessful in entering into license agreements with new customers or renewing license agreements with existing customers, on favorable terms or at all, or if they are terminated, our results of operations may decline significantly.

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 and reputation, reduce the value of our

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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.

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

Our products and services are highly technical and complex, and among our various businesses our products and services are crucial to providing security, payment and other critical functions for our customers’ operations. Our products and services have from time to time contained and may in the future contain undetected errors, bugs defects or other security vulnerabilities. Some errors in our products and services may only be discovered after a product or service has been deployed and used by customers, and may in some cases only be detected under certain circumstances or after extended use. In addition, because the techniques used by hackers to access or sabotage our products and services and other technologies change and evolve frequently and generally are not recognized until launched against a target, we may be unable to anticipate, detect or prevent these techniques and may not address them in our data security technologies. Any errors, bugs, defects or security vulnerabilities discovered in our solutions after commercial release could adversely affect our revenue, our customer relationships and the market's perception of our products and services. We may not be able to correct any errors, bugs, defects, security flaws or vulnerabilities promptly, or at all. Any breaches, defects, errors or vulnerabilities in our products and services could result in:


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


•	financial liability to customers for breach of certain contract provisions, including indemnification obligations;


•	loss of existing or potential customers;


•	delayed or lost revenue;


•	delay or failure to attain market acceptance;


•	negative publicity, which would harm our reputation; and


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

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. Any premium charged by our customers in the price of memory and controller chips or other products over alternatives must be reasonable. 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, 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. 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 to obtain or an undue delay in obtaining 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 cycles could make our future revenue difficult to predict because we may not be successful in entering into licenses with our customers on our anticipated timelines.

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 revenue accounting. Contract revenue accounting may result in deferral of the service fees to

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the completion of the contract, or may result in the recognition of service fees over the period in which services are performed on a percentage-of-completion basis.

We may not be successful in entering into new markets, and our new product offerings, such as our recently announced buffer chip set, our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect Business, our CryptoManager platform and new offerings in the mobile credential and smart card solution spaces, may not be adopted. In addition, once we commercially launch our products, the sales volume of such products in any given period will be difficult to predict.

We may fail to meet our publicly announced guidance or other expectations about our business, which would likely cause our stock price to decline.

We provide guidance regarding our expected financial and business performance including our anticipated future revenues and operating expenses. Correctly identifying the key factors affecting business conditions and predicting future events is inherently an uncertain process.

Such guidance may not always be accurate or may vary from actual results due to our inability to meet our assumptions and the impact on our financial performance that could occur as a result of the various risks and uncertainties to our business as set forth in these risk factors. We offer no assurance that such guidance will ultimately be accurate, and investors should treat any such guidance with appropriate caution. If we fail to meet our guidance or if we find it necessary to revise such guidance, even if such failure or revision is seemingly insignificant, investors and analysts may lose confidence in us and the market value of our common stock could be materially adversely affected.

We have in the past made and may in the future make acquisitions or enter into mergers, strategic investments, 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, such as our acquisition of SCS and our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect Business. Many of our acquisitions or strategic investments entail a high degree of risk, including those involving new areas of technology and such investments may not become liquid for several years after the date of the investment, if at all. Our acquisitions or strategic investments may not provide the advantages that we anticipated or generate the financial returns we expect, including if we are unable to close any pending acquisitions. For example, for any pending or completed acquisitions, we may discover unidentified issues not discovered in due diligence, and we may be subject to liabilities that are not covered by indemnification protection 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 and other employees’ attention from ongoing business matters; coordinating geographically separate organizations; consolidating research and development operations; and consolidating corporate and administrative infrastructures.

Our strategic investments in new areas of technology may involve significant risks and uncertainties, including distraction of management from current operations, greater than expected liabilities and expenses, inadequate return of capital, and unidentified issues not discovered in due diligence. These investments are inherently risky and may not be successful.

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.

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

From time to time, we may also divest certain assets, where we may be required to provide certain representations, warranties and covenants to their buyers. While we would seek to ensure the accuracy of such representations and warranties and fulfillment of any ongoing obligations, we may not be completely successful and consequently 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, 2016 and 2015, revenues received from our international customers constituted approximately 65% and 61%, respectively, of our total revenue. Additionally, for the years ended December 31, 2015 and 2014, revenues received from our international customers constituted approximately 60% and 63%, respectively, of our total revenue.

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We expect that future revenue derived from international sources will continue to represent a significant portion of our total revenue.

To the extent that customer sales are not denominated in U.S. dollars, any royalties which are based on a percentage of the customers' 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 business operations in the United Kingdom and the Netherlands, international design operations in Canada, India, Finland and France, and business development operations in Japan, Korea, Singapore and Taiwan. Our international operations and revenue are subject to a variety of risks which are beyond our control, including:


•	hiring, maintaining and managing a workforce and facilities remotely and under various legal systems, including compliance with local labor and employment laws;


•	non-compliance with our code of conduct or other corporate policies;


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


•	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;


•	adverse tax 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;


•	unanticipated changes in foreign government laws and regulations;


•	increased financial accounting and reporting burdens and complexities;


•	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;


•	potential vulnerability to computer system, internet or other systemic attacks, such as denial of service, viruses or other malware which may be caused by criminals, terrorists or other sophisticated organizations;


•	social, political and economic instability;


•	geopolitical 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. Increased uncertainty in the wake of the “Brexit” referendum in the United Kingdom in June 2016, in which the majority of voters voted in favor of an exit from the European Union, have resulted in an increase in volatility in the global financial markets. Uncertainty about global or regional 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 global or regional economic conditions or otherwise, this could result in reduced royalty revenue and our business and results of operations could be harmed.

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 and/or settlement agreements, 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. 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 bankruptcy proceedings.

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,

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especially engineers, senior management and other key personnel. We recently have faced retention issues, such as when our employee turnover accelerated after our reduction-in-force efforts in 2012 and 2013 and subsequent voluntary and involuntary separations. We may experience a similar acceleration in employee turnover due to the restructuring and plan of termination instituted in the fourth quarter of 2015. The loss of the services of any key employees could be disruptive to our development efforts or business relationships and could cause our business and operations to suffer.

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

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 CRD to license its data security technologies to the manufacturers and providers of such products and services in certain markets or may require CRD 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 CRD'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 CRD 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.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established new disclosure and reporting requirements for those companies who use "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These requirements could affect the sourcing and availability of minerals that are used in the manufacture of our products. We have to date incurred costs and expect to incur significant additional costs associated with complying with the disclosure requirements, including for example, due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. Additionally, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement. We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.

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 in the United States, the United Kingdom, the Netherlands and India. 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, so any resultant work 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 physical and cyber damage, and also susceptible to other related vulnerabilities common to networks and computer systems. 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.

We do not have extensive experience in manufacturing and marketing products and, as a result, may be unable to sustain and grow a profitable commercial market for new and existing products.

We do not have extensive experience in creating, manufacturing and marketing products, including our recently announced buffer chip set, our CryptoManager platform and new offerings that will result from our acquisition of SCS in the mobile credential and smart card solution spaces, and our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect

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Business. These and other new offerings may present new and difficult challenges, and we may be subject to claims if customers of these offerings experience failures or other quality issues. In particular, we may experience difficulties with product design, qualification, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new products. Although we intend to design our products to be fully compliant with applicable industry standards, proprietary enhancements may not in the future result in full conformance with existing industry standards under all circumstances.

If we fail to introduce products that meet the demand of our customers or penetrate new markets in which we expend significant resources, our revenues will decrease over time and our financial condition could suffer. Additionally, if we concentrate resources on a new market that does not prove profitable or sustainable, it could damage our reputation and limit our growth, and our financial condition could decline.

We rely on a number of third-party providers for data center hosting facilities, equipment, maintenance and other services, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers.

We rely on third-party providers to supply data center hosting facilities, equipment, maintenance and other services in order to provide some of our services, including in our offerings of our advanced mobile payment platform and smart ticketing platform, and have entered into various agreements for such services. The continuous availability of our service depends on the operations of those facilities, on a variety of network service providers and on third-party vendors. In addition, we depend on our third-party facility providers’ ability to protect these facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, cyber-attacks and similar events. If there are any lapses of service or damage to a facility, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new facilities and services. Even with current and planned disaster recovery arrangements, our business could be harmed. Any interruptions or delays in our service, whether as a result of third-party error, our own error, natural disasters, criminal acts, security breaches or other causes, whether accidental or willful, could harm our relationships with customers, harm our reputation and cause our revenue to decrease and/or our expenses to increase. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause us to lose customers, any of which could materially adversely affect our business.

We rely on third parties for a variety of services, including manufacturing, and these third parties’ failure to perform these services adequately could materially and adversely affect our business.

We rely on third parties for a variety of services, including our manufacturing supply chain partners and third parties within our sales and distribution channels. Certain of these third parties are, and may be, our sole manufacturer or sole source of production materials. If we fail to manage our relationship with these manufacturers and suppliers effectively, or if they experience delays, disruptions, capacity constraints or quality control problems in their operations, our ability to ship products to our customers could be impaired and our competitive position and reputation could be harmed. In addition, any adverse change in any of our manufacturers and suppliers’ financial or business condition could disrupt our ability to supply quality products to our customers. If we are required to change our manufacturers, we may lose revenue, incur increased costs and damage our end-customer relationships. In addition, qualifying a new manufacturer and commencing production can be an expensive and lengthy process. If our third party manufacturers or suppliers are unable to provide us with adequate supplies of high-quality products for any other reason, we could experience a delay in our order fulfillment, and our business, operating results and financial condition would be adversely affected. In the event these and other third parties we rely on fail to provide their services adequately, including as a result of errors in their systems or events beyond their control, or refuse to provide these services on terms acceptable to us or at all, and we are not able to find suitable alternatives, our business may be materially and adversely affected. In addition, our orders may represent a relatively small percentage of the overall orders received by our manufacturers from their customers. As a result, fulfilling our orders may not be considered a priority in the event our manufacturers are constrained in their ability to fulfill all of their customer obligations in a timely manner. If our manufacturers are unable to provide us with adequate supplies of high-quality products, or if we or our manufacturers are unable to obtain adequate quantities of components, it could cause a delay in our order fulfillment, in which case our business, operating results and financial condition could be adversely affected.

Warranty and product liability claims brought against us could cause us to incur significant costs and adversely affect our operating results as well as our reputation and relationships with customers.

We may from time to time be subject to warranty and product liability claims with regard to product performance and our services. We could incur losses as a result of warranty, support, repair or 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

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losses arising from claims and related legal proceedings, warranty and product liability claims could affect our reputation and our relationship with customers.

Any failure in our delivery of high-quality technical support services may adversely affect our relationships with our customers and our financial results.

Our customers depend on our support organization to resolve technical issues and provide ongoing maintenance relating to our products and services. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. Increased customer demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our offerings and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, and our business, operating results and financial position.

Certain software that we use in certain of our products is licensed from third parties and, for that reason, may not be available to us in the future, which has the potential to delay product development and production or cause us to incur additional expense, which could materially adversely affect our business, financial condition, operating results and cash flow.

Some of our products and services contain software licensed from third parties. Some of these licenses may not be available to us in the future on terms that are acceptable to us or allow our products to remain competitive. The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay development of future offerings or the enhancement of existing products and services. We may also choose to pay a premium price for such a license in certain circumstances where continuity of the licensed product would outweigh the premium cost of the license. The unavailability of these licenses or the necessity of agreeing to commercially unreasonable terms for such licenses could materially adversely affect our business, financial condition, operating results and cash flow.

Certain software we use is from open source code sources, which, under certain circumstances, may lead to unintended consequences and, therefore, could materially adversely affect our business, financial condition, operating results and cash flow.

We use open source software in our services, including our advanced mobile payment platform and smart ticketing platform, and we intend to continue to use open source software in the future. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products or alleging that these companies have violated the terms of an open source license. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software or alleging that we have violated the terms of an open source license. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our solutions. In addition, if we were to combine our proprietary software solutions with open source software in certain manners, we could, under certain open source licenses, be required to publicly release the source code of our proprietary software solutions. If we inappropriately use open source software, we may be required to re-engineer our solutions, discontinue the sale of our solutions, release the source code of our proprietary software to the public at no cost or take other remedial actions. There is a risk that open source licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions, which could adversely affect our business, operating results and financial condition.

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

From time to time, we may undertake restructurings of our business, such as the restructuring and plan of termination that we undertook in the fourth quarter of 2015. There are several factors that could cause restructurings to have adverse effects 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. 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 would 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.

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Risks Related to Capitalization Matters and Corporate Governance

The price of our common stock may continue to fluctuate.

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. Some of 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;


•	announcements of 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;


•	new litigation and the unpredictability of litigation results or settlements; 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.

We have outstanding senior convertible notes in an aggregate principal amount totaling $138.0 million. Because these 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 such notes. In addition, the existence of these 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 from 2006 to 2011 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 stated state law claims for fraud and breach of fiduciary duty. Although to date these complaints have either been settled or dismissed, the amount of time to resolve any future 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 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.

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 to meet other needs.

We have material indebtedness. In August 2013, we issued $138.0 million aggregate principal amount of our 2018 Notes which remain outstanding. The degree to which we are leveraged could have negative consequences, including, but not limited to, the following:


•	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;


•	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 may be required for the payment of the principal amount of our existing indebtedness when it becomes due at maturity in August 2018; and

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•	we may be required to make cash payments upon any conversion of the 2018 Notes, which would reduce our cash on hand.

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 outstanding 2018 Notes. Any required repurchase of the 2018 Notes as a result of a fundamental change or acceleration of the 2018 Notes would reduce our 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 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. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

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

Our 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.

Certain provisions of our outstanding 2018 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 such 2018 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 such 2018 Notes, all or a portion of their 2018 Notes. We may also be required to increase the conversion rate of such 2018 Notes in the event of certain fundamental changes.

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 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

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tax authorities and developments in those audits could adversely affect our income tax provision, and we are currently undergoing such audits of certain of our tax returns. 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.

Litigation, Regulation and Business Risks Related to our Intellectual Property

We have in the past, and may in the future, become engaged in litigation stemming from our efforts to protect and enforce our patents and intellectual property and make other claims, which could adversely affect 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 and will continue to do so. While we are not currently involved in intellectual property litigation, any future litigation, whether or not determined in our favor or settled by us, would be expected to be costly, may cause delays applicable to our business (including delays in negotiating licenses with other actual or potential customers), would be expected to tend to discourage future design partners, would tend to impair adoption of our existing technologies and would divert the efforts and attention of our management and technical personnel from other business operations. In addition, we may be unsuccessful in any 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.

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 could 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”). Any re-examination proceedings may be reviewed by the PTO's Patent Trial and Appeal Board (“PTAB”). The PTAB and the related former Board of Patent Appeals and Interferences ("BPAI") have previously issued decisions in a few cases, finding some challenged claims of Rambus' patents to be valid, and others to be invalid. Decisions of the PTAB are subject to further PTO proceedings and/or appeal to the Court of Appeals for the Federal Circuit. A final adverse decision, not subject to further review and/or appeal, could invalidate some or all of the challenged patent claims and could also result in additional adverse consequences affecting other related U.S. or European patents, including in any 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 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 any 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 to paying 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.

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If we are unable to protect our inventions successfully 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;


•	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.

Furthermore, recent patent reform legislation, such as the Leahy-Smith America Invents Act, could increase the uncertainties and costs surrounding the prosecution of any patent applications and the enforcement or defense of our licensed patents. The federal courts, the USPTO, the Federal Trade Commission, and the U.S. International Trade Commission have also recently taken certain actions and issued rulings that have been viewed as unfavorable to patentees. While we cannot predict what form any new patent reform laws or regulations may ultimately take, or what impact recent or future reforms may have on our business, any laws or regulations that restrict or negatively impact our ability to enforce our patent rights against third parties could have a material adverse effect on our business.

In addition, our patents will continue to expire according to their terms, with expiration dates ranging from 2016 to 2038. 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.

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 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.

Effective protection of trademarks, copyrights, domain names, patent rights, and other intellectual property rights is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights. The efforts we have taken to protect our intellectual property rights may not be sufficient or effective. Our intellectual property rights may be infringed, misappropriated, or challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. In addition, the laws or practices of certain countries do not protect our proprietary rights to the same extent as do the laws of the United States. Significant impairments of our intellectual property rights, and limitations on our ability to assert our intellectual property rights against others, could have a material and adverse effect on our business.

Third parties may claim that our products or services infringe on their intellectual property rights, exposing us to litigation that, regardless of merit, may be costly to defend.

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Our success and ability to compete are also dependent upon our ability to operate without infringing upon the patent, trademark and other intellectual property rights of others. Third parties may claim that our current or future products or services infringe upon their intellectual property rights. Any such claim, with or without merit, could be time consuming, divert management’s attention from our business operations and result in significant expenses. We cannot assure you that we would be successful in defending against any such claims. In addition, parties making these claims may be able to obtain injunctive or other equitable relief affecting our ability to license the products that incorporate the challenged intellectual property. As a result of such claims, we may be required to obtain licenses from third parties, develop alternative technology or redesign our products. We cannot be sure that such licenses would be available on terms acceptable to us, if at all. If a successful claim is made against us and we are unable to develop or license alternative technology, our business, financial condition, operating results and cash flows could be materially adversely affected.

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 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 be exposed to indemnification obligations, risks and liabilities that were unknown at the time of acquisitions, including with respect to our acquisition of SCS and our pending acquisitions of Snowbush IP and Inphi’s Memory Interconnect Business, and 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, 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

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Share Repurchase Program

On January 21, 2015, our Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the plan may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the plan. After giving effect to the accelerated share repurchase program detailed in the table below, we had remaining authorization to repurchase approximately 12.2 million shares.



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs

Cumulative shares repurchased as of December 31, 2015 (1)	7,812,500	$11.70	7,812,500	12,187,500
April 1, 2016 - April 30, 2016 (1)	735,861	$11.70	735,861	11,451,639
Cumulative shares repurchased as of June 30, 2016	8,548,361		8,548,361

(1) In the fourth quarter of 2015, we entered into an accelerated share repurchase program with a financial institution to repurchase an aggregate of $100.0 million of our common stock. We made an upfront payment of $100.0 million pursuant to the accelerated share repurchase program and received an initial delivery of 7.8 million shares which were retired. During the second quarter of 2016, the accelerated share repurchase program was completed and we received an additional 0.7 million shares of our common stock, which were retired, as the final settlement of the accelerated share repurchase program. The total shares of our common stock received and retired under the terms of the accelerated share repurchase program were 8.5 million, with an average price paid per share of $11.70. See Note 11, “Stockholders' Equity,”of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further discussion.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

A list of exhibits to this Quarterly Report on Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.

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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 22, 2016	By:	/s/ Satish Rishi
		Satish Rishi
		Senior Vice President, Finance and Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)

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INDEX TO EXHIBITS



Exhibit Number		Description of Document

10.1		Asset Purchase Agreement, dated June 29, 2016, by and among Rambus Inc., Bell ID Singapore Ptd Ltd, Inphi Corporation and Inphi International Pte. Ltd.

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

_________________________________________

The certifications furnished in Exhibit 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

Exhibit 10.1

EXECUTION COPY

* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished to the Securities and Exchange Commission upon request.

ASSET PURCHASE AGREEMENT

by and among

RAMBUS INC.,

BELL ID SINGAPORE PTD LTD

and

INPHI CORPORATION

INPHI INTERNATIONAL PTE. LTD.

Dated as of June 29, 2016

TABLE OF CONTENTS



		Page
Article I. THE ASSET PURCHASE		1
1.1	Certain Definitions	1
1.2	Additional Defined Terms	8
1.3	Purchase and Sale of Assets	11
1.4	Excluded Assets	11
1.5	Assumption of Certain Liabilities; Employees	12
1.6	The Closing	14
1.7	Payment of Purchase Price; Instruments of Sale	14
1.8	Withholding	16
1.9	Asset Allocation	16
1.10	Form of Delivery	16
Article II. REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES		16
2.1	Organization; Power	16
2.2	Subsidiaries	17
2.3	Authority	17
2.4	No Conflict	17
2.5	Consents	18
2.6	Tax Matters	18
2.7	Restrictions on Business Activities	19
2.8	Title to Properties; Absence of Liens and Encumbrances	19
2.9	Intellectual Property	20
2.10	Agreements, Contracts and Commitments	24
2.11	Financial Statements	26
2.12	No Changes	26
2.13	Memory Buffer and Memory Register Product Liability and Recalls	28
2.14	Memory Buffer and Memory Register Product Warranty	29
2.15	Transferred Inventory	29
2.16	Interested Party Transactions	29
2.17	Governmental Authorization	30
2.18	Litigation	30
2.19	Environmental Matters	30
2.20	Brokers’ and Finders’ Fees	30
2.21	Employee Benefit Plans and Compensation	30
2.22	Insurance	31
2.23	Customers and Suppliers	32
2.24	Compliance with Laws	32
2.25	Export Control Laws	32
2.26	Valid Title to Purchased Assets	32
2.27	Corrupt Practices	32

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2.28	Complete Copies of Materials	33
2.29	Sufficiency	33
2.30	Representations Complete	33
Article III. REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES		33
3.1	Organization; Power	33
3.2	Authority	33
3.3	Conflicts	34
3.4	Consents	34
3.5	Adequacy of Funds	34
3.6	Representations Complete	34
Article IV. CONDUCT OF BUSINESS PRIOR TO THE CLOSING		35
4.1	Conduct of the Business	35
4.2	Negative Covenants	37
4.3	Procedures for Requesting Buyer Consent	38
4.4	Notice to the Buyer Parties	38
Article V. ADDITIONAL AGREEMENTS		38
5.1	Taking of Necessary Action; Further Action; Access to Information	38
5.2	Confidentiality	41
5.3	Expenses	41
5.4	Public Disclosure	41
5.5	Tax Matters	41
5.6	Filings	43
5.7	Employee Matters	43
5.8	Licensed Intellectual Property Rights	45
5.9	Regulatory Approvals	45
5.10	Contacts with Suppliers and Customers	46
5.11	Inventory and Trademarks	46
Article VI. CONDITIONS TO THE ASSET PURCHASE		47
6.1	Conditions to Obligations of Each Party to Effect the Asset Purchase	47
6.2	Conditions to the Obligations of the Buyer Parties	47
6.3	Conditions to the Obligations of Seller	48
Article VII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW		48
7.1	Survival of Representations, Warranties and Covenants	48
7.2	Indemnification	49
7.3	Escrow Arrangements	50

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7.4	Indemnification Procedure	51
7.5	No Indemnification Limitations and Other Matters	52
7.6	Tax Treatment	53
Article VIII. TERMINATION, AMENDMENT AND WAIVER		53
8.1	Termination	53
8.2	Effect of Termination	54
8.3	Amendment	54
8.4	Extension; Waiver	54
Article IX. GENERAL PROVISIONS		54
9.1	Notices	54
9.2	Interpretation	55
9.3	Counterparts	56
9.4	Entire Agreement; Assignment	56
9.5	Severability	56
9.6	Governing Law	56
9.7	Rules of Construction	57

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INDEX OF EXHIBITS AND SCHEDULES

Exhibit Description

Exhibit A Bill of Sale

Exhibit B Form of IP Assignment Agreement

Exhibit C Escrow Agreement

Exhibit D Form of Transition Services Agreement

Schedules Description

Disclosure Schedule Seller Disclosure Schedule

Schedule I Transferred Patents

Schedule II Transferred Tangible Assets

Schedule III Transferred Technology

Schedule IV Excluded Technology

Schedule V Transferred Trademarks

Schedule VI Assumed Contracts

Schedule VII Excluded Contracts

Schedule VIII Knowledge Employees and Service Providers

Schedule 1.1(a) Key Employees

Schedule 1.1(b) Offered Employees

Schedule 1.5(a) Excluded Accounts Payable

Schedule 1.7(c) Required Consents

Schedule 2.9(i) Certain Business Products

Schedule 5.1(a) Other Consents

Schedule 7.2(a) Indemnifiable Matters

Schedule 7.2(c)(4) Covered Products

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THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”) is made and entered into as of June 29, 2016 by and among, on the one hand, Rambus, Inc., a Delaware corporation (“ Buyer Parent ”), and Bell ID Singapore Ptd Ltd (“ Buyer ,” and, together with Buyer Parent, the “ Buyer Parties ,” and each a “ Buyer Party ”), and, on the other hand, Inphi Corporation, a Delaware corporation (“ Seller ”) and Inphi International Pte. Ltd., a Singapore entity (“ Seller Sub ” and, together with Seller, the “ Seller Parties ”).

RECITALS

A. Seller Parties are currently engaged in the research and development, prototyping, design, marketing, manufacturing and sales of Business Products that contain intellectual property and technology relating to the Business (as defined below).

B. Upon and subject to the terms and conditions set forth herein, the Seller Parties desire to sell to the Buyer Parties, and the Buyer Parties desire to purchase from Seller Parties, certain assets related to the Business as specified in this Agreement (the “ Asset Purchase ”).

C. In connection with the Asset Purchase, Seller Parties, on the one hand, and Buyer Parties, on the other hand, desire to make certain representations, warranties, covenants and other agreements as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements, covenants and other promises set forth herein, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:

Article I.

THE ASSET PURCHASE

1.1 Certain Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. As used in this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“ ASIC ” means an application specific integrated circuit.

“ Assumed Contracts ” means those agreements between Seller Parties and a third Person listed on Schedule VI hereto.

“ Business ” means all activities, operations, and services related to the Business Products and Technology related to the Business Products, including developing, designing,

manufacturing, having manufactured, procuring, using, assembling, testing, marketing, distributing, licensing, delivering, providing, configuring, installing, supporting, maintaining or otherwise commercializing Business Products as historically conducted, currently conducted, and currently contemplated to be conducted, directly and indirectly by or on behalf of Seller Parties and their Affiliates.

“ Business Day(s) ” means each day that is not a Saturday, Sunday or holiday on which banking institutions located in California are authorized or obligated by law or executive order to close.

“ Business Products ” means all of Seller Parties’ ASIC, intellectual property cores, netlists, Software, demonstration boards, application, reference designs, and other Technology associated with Seller Parties’ and their Affiliates’ Memory Buffer and Memory Register product lines, and all past and present versions thereof, including versions currently being productized.

“ Business Technology ” means all Technology used in or related to the operation of the Business, including all development environments, tools, test frameworks, for which Seller Parties or their Affiliates own or purport to own the underlying Intellectual Property Rights.

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

“ Continuing Employees ” means each of the Key Employees and Offered Employees who execute an offer letter for employment with Buyer Parent or an Affiliate of Buyer Parent and do not revoke such offer letter prior to the Closing Date.

“ Copyrights ” means copyrights and maskwork rights (whether or not registered), and all other rights corresponding thereto in any works of authorship (including software and firmware) throughout the world, including moral and economic rights of authors and inventors, however denominated and regardless of medium of fixation or means of expression.

“ Employee ” means any current or former employee, consultant, or director of Seller or any ERISA Affiliate, who has provided services to the Business.

“ Employee Agreement ” means each management, employment, severance, consulting, relocation, repatriation, expatriation, visa, work permit or other agreement, contract or understanding between Seller Parties or any ERISA Affiliate and any Employee.

“ Employment Liabilities ” means any and all claims, debts, Liabilities, commitments and obligations, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever or however arising, including all costs and expenses relating thereto arising under law, rule, regulation, permit, action or proceeding before any governmental authority, order or consent decree or any award of any arbitrator of any kind relating to any Seller Employee Plan, Employee Agreement or otherwise relating to an Employee and his or her employment with Seller Parties or any ERISA Affiliate.

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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means each subsidiary of Seller and any other person or entity under common control with Seller or any of its subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

“ Excluded Contracts ” means those Contracts between the Seller Parties or their Affiliates and any other Person that are listed on Schedule VII .

“ Excluded Technology ” means the tangible Technology or personal property of the Seller Parties or their Affiliates that is used in the operation of the Business and that is not capable of being copied without significant effort or expense or consent, or that is identified on Schedule IV .

“ Excluded Trademarks ” means any Trademarks owned by Seller Parties or their Affiliates that are not Transferred Trademarks.

“ Governmental or Regulatory Body ” means any court, tribunal, arbitrator or any government or quasi‑governmental entity or municipality or political or other subdivision thereof, whether federal, state, city, county, local, provincial, foreign or multinational, or any agency, department, board, authority, bureau, branch, commission, official or instrumentality of any of the foregoing, including without limitation, the United States Patent and Trademark Office or equivalent authority anywhere in the world.

“ Intellectual Property ” means, collectively, Technology and Intellectual Property Rights.

“ Intellectual Property Rights ” means, collectively, any or all common law or statutory rights in any of the following: Patents, Patent Applications, Copyrights, Mask Work Rights, Trade Secrets and any similar or equivalent rights to any of the foregoing (as applicable) whether now known or hereafter recognized in any jurisdiction worldwide, arising out of, or associated with the foregoing, and Trademarks.

“ Interested Party ” means any officer, director or member of any Seller and any ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership or corporation in which any of such Persons has or has had a material interest.

“ International Employee Plan ” means each Seller Employee Plan that has been adopted or maintained by Seller or any ERISA Affiliate, whether formally or informally, or with respect to which Seller or any ERISA Affiliate will or may have any Liability, for the benefit of Employees who perform or performed services outside the United States.

“ Key Employees ” means those employees of Seller listed in Schedule 1.1(a) .

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“ Knowledge ” means the knowledge of those officers, employees and other service providers of Seller listed on Schedule VIII following due and diligent inquiry of employees having responsibility relating to the relevant matter.

“ Law ” means any law, statute, rule, regulation, ordinance, directive, decree, codes, awards, Orders, and other pronouncement having the effect of law of any country or state, or of any Governmental or Regulatory Body.

“ Liability(ies) ” means any direct or indirect liability, indebtedness, guaranty, claim, loss, damage, deficiency, assessment, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, known or unknown, contingent or otherwise.

“ Licensed Intellectual Property Rights ” means all Intellectual Property Rights (other than Trademarks) owned, controlled, held in the name of, or otherwise licensable by Seller Parties or their Affiliates that are not Purchased Assets.

“ Lien ” means any mortgage, lien, pledge, hypothecation, charge, preference, security interest, attachment, claim, transfer restrictions, put, call, right of first refusal, easement, servitude, right‑of‑way, option, warrant, conditional sale or installment contract or encumbrance of any kind and any financing lease involving substantially the same effect (including, with regard to any shares, any Liens that the issuer of such shares may have on such shares).

“ Made Available ” means that Seller has posted such materials to the virtual data room managed by Seller and accessible to Buyer Parties and their representatives at least one calendar day prior to the date of this Agreement.

“ Mask Work Rights ” means rights in mask works and registrations and applications for registration or renewal thereof.

“ Material Adverse Effect ” means any change, event, circumstance, condition or effect that, individually or in the aggregate with all other changes, events, circumstances, conditions or effects, is or could reasonably be expected to be materially adverse to (i) the Purchased Assets or (ii) the ability of the Seller Parties to perform their obligations under this Agreement and the Related Agreements or to consummate the Asset Purchase; provided, however , that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect: (i) general business, economic or political conditions (or changes therein), in the United States or any other country or region in the world, or globally; (ii) changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world; (iii) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region in the world; (iv) events, circumstances, changes or effects attributable to the consummation of the transactions contemplated by, or the announcement of the execution of, this Agreement; (v) any event, circumstance, change or effect that results from any actions taken or not taken pursuant to or in accordance with this Agreement or at the request of the Buyer Parties; (vi)

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the failure by the Seller or any of its subsidiaries to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period; (vii) changes or modifications in GAAP or applicable Law or the interpretation or enforcement thereof; and (viii) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides or other natural disasters, or other force majeure events.

“ Multiemployer Plan ” means any Pension Plan which is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

“ Object Code ” shall mean computer software, substantially or entirely in binary form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.

“ Offered Employees ” means those employees of Seller listed in Schedule 1.1(b) .

“ Open Source Materials ” means software or other material that is distributed under any license meeting the definition of “Open Source” promulgated by the Open Source Initiative (available online at http://www.opensource.org/osd.html) (including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License) (such license, an “ Open Source License ”).

“ Order ” means any writ, judgment, decree, award, ruling, injunction or similar order of any Governmental or Regulatory Body, in each case whether preliminary or final.

“ Ordinary Course of Business ” or “ Ordinary Course ” or any similar phrase means the ordinary course of the Business, consistent with Seller’s past practices for the Business.

“ Patent ” means any granted patent, certificate of invention, registration, or utility or industrial model or design regardless of jurisdiction, and any Patent Applications.

“ Patent Application ” means any application for a patent, certificate of invention, registration, or utility or industrial model or design including divisions, provisionals, substitutions, continuations, continuations-in-part, and re-examinations regardless of jurisdiction.

“ Patent Related Materials ” means any and all files, documents and materials (whether in electronic or tangible format) that: (i) constitute, comprise or relate to the investigation, evaluation, preparation, prosecution, maintenance, defense, enforcement, filing, issuance or registration of any of the Transferred Patents or any abandoned application or expired provisional application in the same patent family as any of the Transferred Patents or claiming priority from or having priority claims to any of the Transferred Patents; or (ii) help to support or establish the dates of conception or reduction to practice of any inventions, including, but not limited to, laboratory reports, invention disclosures and inventor notebooks, and those portions of the laboratory and inventor notebooks containing such information.

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“ Pension Plan ” means each Seller Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“ Permitted Liens ” means (i) statutory liens for Taxes that are not yet due and payable or liens for Taxes being contested in good faith by any appropriate proceedings for which adequate reserves have been established; (ii) statutory liens to secure obligations to landlords, lessors or renters under leases or rental agreements; (iii) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by applicable Law; and (iv) statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens.

“ Person ” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, company, trust, unincorporated organization, Governmental or Regulatory Body or other entity.

“ Registered IP ” means any Intellectual Property Rights that are registered with (including applications for registration with) any Governmental or Regulatory Body, including Patents, registered Trademarks, registered Copyrights, and applications for registration of any of the foregoing.

“ Related Agreements ” means the Bill of Sale, the Escrow Agreement, the IP Assignment Agreement, the IP Recordation Agreements, Transition Services Agreement, and any other agreements executed in connection herewith.

“ Seller Employee Plan ” means any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, retirement benefits, performance awards, stock or stock‑related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including, without limitation, each “employee benefit plan,” within the meaning of Section 3(3) of ERISA which is or has been maintained, contributed to, or required to be contributed to, by Seller or any ERISA Affiliate for the benefit of any Employee, or with respect to which Seller or any ERISA Affiliate has or may have any Liability.

“ Software ” means any and all computer software and code, including assemblers, applets, compilers, firmware, whether in Source Code or Object Code form, data (including image and sound data), design tools, development kits, and user interfaces, in any form or format, however fixed. “Software” specifically includes Source Code listings and documentation.

“ Source Code ” means computer software and code, in form other than Object Code form, including related programmer comments and annotations, help text, data and data structures, instructions and procedural, object-oriented and other code, which may be printed out or displayed in human readable form.

“ Subsidiary ” means, with respect to any Person, any other Person, whether or not existing on the date hereof, in which such first Person, directly or indirectly, beneficially owns at least fifty percent (50%) of either the equity interest, or voting power of or in such other Person.

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“ Technology ” means any or all instantiations or embodiments of any of the following in any form and embodied in any media: (i) works of authorship including Software, Source Code, and Object Code, architecture, documentation, designs, files, records and data, (ii) inventions (whether or not patentable), discoveries, improvements, invention disclosures, inventor notebooks, records, research and documentation related to inventions, (iii) proprietary and confidential information (whether or not such information is protectable as Trade Secrets), (iv) databases, data compilations and collections, (v) technical data, customer lists, supplier lists, component lists, manufacturing process or procedures descriptions, manuals, schedules, prototypes, methods and processes, and (vi) technology, hardware, tools, manufacturing equipment, molds, casts, masters, templates, or machinery.

“ Third Party(ies) ” means, with respect to the entity(ies) in question, that such entity(ies) and any one or more other referenced entities are not Affiliates.

“ Trade Secrets ” means all trade secrets (including those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and common law) for all business, technical and know-how information, show-how information, non-public information, and confidential information and rights to limit the use or disclosure thereof by any Person including databases and data collections and all rights therein.

“ Trademarks ” means any and all trademark, service mark, and trade dress rights and other rights in trade names, logos, trade dress, slogans, including registrations and applications therefor and all goodwill associated therewith, and any similar or equivalent rights to any of the foregoing (as applicable) whether now known or hereafter recognized in any jurisdiction worldwide, arising out of, or associated with the foregoing.

“ Transferred Inventory ” means all inventory (including works in progress) of any Business Products.

“ Transferred IP ” means, collectively, the Transferred Patents, the Transferred Trademarks (together with the goodwill of the Business appurtenant thereto), and the Transferred Other IP, including, without limitation, the right to license the foregoing, the right to file, prosecute and maintain the foregoing, the right to collect royalties or other payments, and the right to initiate causes of action for injunctive relief and other remedies of any kind for all past, present and future infringement or misappropriation of the foregoing, including any invention or discovery disclosed or included therein.

“ Transferred Other IP ” means all Copyrights and Trade Secrets owned or purported to be owned by Seller Parties or their Affiliates and that are embodied in the Transferred Technology.

“ Transferred Patents ” means (i) all Patents that are owned in whole or in part by the Seller Parties or their Affiliates that would be infringed by the operation of the Business, including without limitation those Patents listed on Schedule I ; (ii) any and all other Patents and Patent Applications that claim priority from such Patents identified in (i), including, without limitation any and all reexaminations, extensions, reissues, divisionals, renewals, provisionals, substitutions, continuations, and continuations-in-part, and foreign Patents and Patent Applications; and (iii) the

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right to file Patent Applications with respect to any invention embodied or disclosed in any of the Transferred Technology. For the avoidance of doubt, the Transferred Patents include all Patents and Patent Applications that are within the patent family of any of the Patents identified on Schedule I .

“ Transferred Registered IP ” means any Transferred IP that is Registered IP.

“ Transferred Tangible Assets ” means all tangible personal property of the Seller Parties or their Affiliates used in the operation of the Business, including without limitation those items identified on Schedule II , but excluding anything which is included in the definition of Excluded Assets.

“ Transferred Technology ” means the Business Products and Business Technology, including the Technology identified on Schedule III , but excluding the Excluded Technology.

“ Transferred Trademarks ” means those Trademarks owned by Seller Parties or their Affiliates (a) listed on Schedule V and (b) all common law trademark rights associated with those Trademarks listed on Schedule V or that are used solely with the Business Products and are not used with any Excluded Technology.

“ Transition Services Agreement ” means a Transition Services Agreement between Buyer Parties and Seller Parties in the form attached hereto as Exhibit D , which shall include a schedule of services to be mutually agreed upon by the Buyer Parties and the Seller Parties prior to the Closing Date and to be set forth on Exhibit A thereto.

“ Validated Warranty Claim ” means a Warranty Claim arising from Business Products which were shipped prior to the Closing, and which have been validated by Seller’s Senior Vice President of Manufacturing Operations or Chief Financial Officer prior to the Buyer Parties agreeing with the applicable third party that such claim is valid.

“ Warranty Claim ” means a claim by a customer for the standard cost associated with the replacement or repair of, or compensation for the non-performance, under-performance or failure to conform with provided specifications, of any Business Product, such failure to conform with provided specifications which shall mean a reproducible defect which causes the Business Product not to function in conformance with the functional description, detail and requirements of the Business Product as defined by the customer in the applicable purchase order and on the JEDEC standard specifications. A Warranty Claim shall not include inventory swaps except to the extent that the returned Business Product is retested and found to be defective.

1.2 Additional Defined Terms . The following capitalized terms shall have the respective meanings set forth in the respective Sections of this Agreement set forth opposite each such respective term below:



Index of Terms	Section
Agreement	Preamble

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Index of Terms	Section
Assumed Accounts Payable	1.5(a)
Asset Purchase	Recitals
Assumed Liabilities	1.5(a)
Assumed Warranty Claims	1.5(a)
Basket Amount	7.2(b)
Bill of Sale	1.7(c)(2)
Business Authorizations	2.17
Buyer Parent	Preamble
Buyer Party(ies)	Preamble
Buyer	Preamble
Cash Amount	1.7(a)
Cap	7.3(c)
Charter Documents	2.1
Closing	1.6
Closing Date	1.6
Confidentiality Agreement	5.2
Conflict	2.4
Consultant Proprietary Information Agreement	2.9(q)
Contract(s)	2.4
Counsel	5.1(c)
Disclosure Schedule	Article II
Escrow Agreement	7.3(a)
Escrow Amount	7.3(a)
Escrow Fund	7.3(a)
Escrow Period	7.3(b)
Employee Proprietary Information Agreement	2.9(q)
Excluded Assets	1.4
GAAP	2.11
Inbound-Licenses	2.9(j)
Indemnified Parties	7.2(a)
Indemnifying Parties	7.2(a)
IP Contracts	2.9(k)
IP Recordation Agreements	1.7(c)(ii)
Key Employee Employment Agreement	1.5(c)
Lease Agreements	2.8(a)
Leased Real Property	2.8(a)
Loss(es)	7.2(a)
Material Contracts	2.10(a)
Malware	2.9(w)
Non-Assignable Asset	5.1(e)
Non-Paying Party	5.5(b)(iii)

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Index of Terms	Section
Objection Notice	7.4(a)
Officer’s Certificate	7.4(a)
Open Source License	1.1
Other Tax Controversy	7.4(c)
Outbound-Licenses	2.9(j)
Paying Party	5.5(b)(iii)
Parent Plan	5.7(e)
Pre-Closing Tax Controversy	7.4(c)
Projections	2.11
Purchase Price	1.7(a)
Purchased Assets	1.3(h)
Regular Quarterly Financial Information	2.11
Retained Liabilities	1.5(b)
Returns	2.6(b)
Seller	Preamble
Seller Parties	Preamble
Seller Secretary Certificate	6.2(f)
Seller Sub	Preamble
Special Representations	7.1
Straddle Period Tax	5.5(b)(iii)
Survival Date	7.1
Tax(es)	2.6(a)
Third Party Claim	7.4(b)
Third Party Expenses	5.3
Transferred Employees	5.7(a)
Transfer Taxes	5.5(a)
WARN	2.21(e)

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1.3 Purchase and Sale of Assets . Subject to the terms and conditions set forth in this Agreement, at the Closing, Seller Parties hereby agree to irrevocably sell, convey, transfer and assign to Buyer Parties, free and clear of all Liens (other than Permitted Liens), and Buyer Parties hereby agree to purchase from Seller Parties all right, title and interest in and to all assets, tangible or intangible, related to the Business including the following assets:

(a) the Transferred IP;

(b) the Transferred Tangible Assets;

(d) the Transferred Inventory;

(e) all rights of Seller Parties under the Assumed Contracts, if any;

(f) all materials, papers, records, research and documentation (in paper or electronic format) to the extent primarily relating to the foregoing assets and the operation of the Business (including, without limitation, the Patent Related Materials but excluding any personnel files), and copies of the Assumed Contracts;

(g) all other goodwill related to any of the foregoing assets or the Business; and

(h) all rights, claims and privileges pertaining to, arising out of, or associated with, the assets described in Sections 1.3(a) through 1.3(g) above. All of the assets referred to in Sections 1.3(a) through 1.3(h) , inclusive, are collectively referred to herein as the “ Purchased Assets .”

1.4 Excluded Assets . Notwithstanding anything to the contrary herein and except as expressly set forth in Section 1.3 above, the Purchased Assets do not include any other assets of the Seller Parties, and all such other assets and properties shall be excluded from the Purchased Assets (the “ Excluded Assets ”). Without limiting the foregoing, Excluded Assets include the following assets and properties of the Seller Parties:

(a) all cash and cash equivalents, bank accounts and securities of Seller Parties;

(b) all accounts receivable of the Seller Parties, including accounts receivable of the Seller Parties related to the Business outstanding on the Closing Date;

(d) all Intellectual Property other than the Transferred IP and Transferred Technology;

(e) all Seller Employee Plans and trusts or other assets attributable thereto;

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(f) those assets listed on Schedule 1.4 ; and

(g) all assets, properties and rights used by Seller Parties in their businesses other than those related to the Business.

1.5 Assumption of Certain Liabilities; Employees .

(a) Buyer Parties shall not assume any Liabilities of Seller Parties except for those Liabilities which Buyer Parties expressly assume pursuant to this Section 1.5(a) . On the terms and subject to the conditions of this Agreement, Buyer Parties shall, on the Closing Date, assume (i) the Assumed Accounts Payable (as defined below), (ii) the Assumed Warranty Claims (as defined below) and (iii) Liabilities of Seller as of the Closing Date, arising after the Closing (collectively, (i), (ii) and (iii), the “ Assumed Liabilities ”). On the Closing Date, the Buyer Parties shall assume the accounts payable (including payables arising from open purchase orders) incurred by Seller Parties in the Ordinary Course of Business for nondelinquent accounts related to the Business that are outstanding as of the Closing Date (or arise after the Closing Date from purchase orders that are open as of the Closing Date) and reflected on Seller’s books, other than any Liability arising out of or relating to a breach of payment of any accounts payable that occurred before the Closing Date, or as provided for on Schedule 1.5(a) (the “ Assumed Accounts Payable ”). In addition, (and as limited by Section 7.2(a)(v) notwithstanding the foregoing, Buyer Parties shall, on the Closing Date, assume any Liabilities related to Warranty Claims arising from the Business Products, whenever incurred (the “ Assumed Warranty Claims ”) and, for the avoidance of doubt, any Liabilities related to Warranty Claims arising from the Business Products after the Closing.

(b) Subject to Section 1.5(a) , Seller Parties shall retain and be responsible for paying, performing and discharging when due, and Buyer Parties shall not assume or have any responsibility for, all Liabilities of Seller Parties other than, as of the Closing Date, the Assumed Liabilities (the “ Retained Liabilities ”). The Retained Liabilities include, but are not limited to:

(i) any Liability arising from or related to the Excluded Assets;

(ii) all Liabilities under any Assumed Contract which relate to any breach or default of such Assumed Contract that occurred prior to the Closing Date; provided , for the sake of clarity, this would not include any performance obligations under Assumed Contracts which are to be performed after Closing, notwithstanding that such performance obligations were agreed to prior to Closing;

(iii) any Liabilities related to Seller Parties’ employees or employment matters including, but not limited to the Employment Liabilities;

(iv) claims for death, personal injury, property damage or consequential, punitive, or other damages relating to or arising out of any business conducted by Seller Parties;

(v) the violation or alleged violation of any Law by Seller Parties, including but not limited to, laws relating to civil rights, health, safety, labor, discrimination, export controls, and protection of the environment;

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(vi) claims of creditors of Seller Parties (other than pursuant to the Assumed Accounts Payable);

(vii) claims relating to the disposal or arrangement for disposal by Seller Parties of any hazardous substance at any site, location or facility (whether or not owned or leased by Seller Parties);

(viii) any obligation of Seller Parties to indemnify any Person (other than pursuant to an Assumed Contract or an Assumed Warranty Claim, or as a result of any action taken by the Buyer after the Closing Date);

(ix) any Taxes of Seller Parties for any taxable period and any liability for Taxes arising from or attributable to the operation of the Business or use or ownership of the Purchased Assets for all taxable periods (or portions thereof) ending on or prior to the Closing, and including any Transfer Taxes and Straddle Period Taxes allocable to Seller Parties pursuant to this Agreement;

(x) any Liability of Seller related to any Intellectual Property Rights retained by Seller, including any Liability arising in connection with litigation related thereto;

(xi) any Liability of Seller arising from or relating to the prosecution, maintenance, renewal, defense and/or enforcement of the Transferred Patents up to and including the Closing Date; and

(xii) any Liability of Seller Parties for costs and expenses incurred in connection with this Agreement, and the transactions contemplated hereby and thereby.

(c) Prior to or concurrent with the execution of this Agreement, the Key Employees shall each have executed an employment agreement for employment with Buyer Parent or an Affiliate of Buyer Parent (the “ Key Employee Employment Agreement ”), with such employment to be conditioned upon the Closing and such employee not having taken any action to rescind or terminate such employment agreement. In addition, prior to the Closing, not less than 62.5% of the Offered Employees shall have executed an offer letter for employment with Buyer Parent or an Affiliate of Buyer Parent, with such employment to be conditioned upon Closing and such employee not having taken any action to rescind or terminate such employment agreement. The employment of the Key Employees and the Offered Employees will (i) be in compliance with any standard human resources policies and procedures of Buyer Parties, including, if necessary, the execution of Buyer’s standard form of employee proprietary information agreement, (ii) have terms as determined by Buyer Parties, and (iii) supersede any prior employment agreements and other arrangements with such Continuing Employees in effect prior to the date thereof with Seller Parties.

(d) Seller Parties will use commercially reasonable efforts to obtain resignation and release letters from each Continuing Employee in a form reasonably satisfactory to Seller and Buyer Parent, which shall provide, inter alia, that such Continuing Employee shall release and forever discharge Seller, its Affiliates and Buyer Parties from any and all claims arising out of or

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in connection with his/her employment with Seller prior to the Closing Date and/or termination of employment with Seller at the Closing Date, whether by contract or otherwise.

(e) On and after the Closing Date and after the Closing, Buyer Parent and its Affiliates shall bear the sole responsibility for instructing and supervising the Continuing Employees for services performed on and after the Closing Date and after the Closing and shall thereafter pay, perform, discharge or otherwise satisfy obligations for the employment of such Continuing Employees. The Liabilities of the Continuing Employees solely relating to their employment with Buyer Parties and/or their Affiliates on and after the Closing Date and after the Closing shall be assumed by Buyer Parent and/or its Affiliates commencing from the Closing.

1.6 The Closing . Unless this Agreement is earlier terminated pursuant to Section 8.1 , the closing of the Asset Purchase (the “ Closing ”) will take place, on the date that is three (3) Business Days following the satisfaction or waiver of the conditions set forth in Article VI hereof at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, CA 94304, unless another time or place is mutually agreed upon in writing by the Buyer Parties and the Seller Parties. The date upon which the Closing actually occurs shall be referred to herein as the “ Closing Date .” The Closing will be effective as of 5:00 p.m. California time on the Closing Date.

1.7 Payment of Purchase Price; Instruments of Sale .

(a) The purchase price for the Asset Purchase (the “ Purchase Price ”) consists of $90,000,000. At Closing, an amount equal to $78,750,000 (the “ Cash Amount ”) of the Purchase Price shall be paid in full in cash by one or more of the Buyer Parties by wire transfer of immediately available funds at the Closing to the bank account designated in writing by Seller at least three (3) Business Days prior to the Closing Date, and an amount equal to $11,250,000 of the Purchase Price shall be paid pursuant to the escrow arrangements contained in Section 7.3 ( such amount, the “ Escrow Amount ”).

(b) At the Closing, the Buyer Parties shall execute, if applicable, and deliver to the Seller Parties:

(i) $7,150,000 of the Cash Amount pursuant to Section 1.7(a) above, which shall be delivered to Seller;

(ii) $71,600,000 of the Cash Amount pursuant to Section 1.7(a) above, which shall be delivered to Seller Sub;

(iii) the Related Agreements to which the Buyer Parties are party;

(iv) an executed copy of the Escrow Agreement; and

(v) such other instruments, documents and certificates referred to in Article VI ;

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(i) all of the Purchased Assets and, (1) in the case of the Transferred Patents, Transferred Trademarks, and Transferred Other IP or other intangible assets, such instruments as are necessary or desirable, in the Buyer Parties’ reasonable discretion, to document and to transfer title to such assets from Seller Parties to the Buyer Parties, and (2) in the case of any tangible Purchased Assets that are in the possession of any Third Party in connection with the manufacture, assembly, testing, or distribution of Business Products, written notices informing such Third Parties of the transfer of ownership, and that such assets are to be used only for the benefit of the Buyer Parties;

(ii) (A) an executed copy of the Key Employee Employment Agreement from each of the Key Employees that remain in effect as of the Closing; (B) executed copies of offer letters from at least 62.5% of the Offered Employees that remain in effect as of the Closing; (C) a duly executed bill of sale for the Purchased Assets substantially in the form of Exhibit A hereto (the “ Bill of Sale ”); (D) assignments of the Transferred Patents, Transferred Trademarks, and Transferred Other IP (to the extent any of the Transferred Other IP are Registered IP) in forms suitable for filing in each relevant jurisdiction and acceptable to the Buyer Parties (collectively, the “ IP Recordation Agreements ”) and such other good and sufficient instruments of conveyance, assignment and transfer, in form and substance reasonably acceptable to the Buyer Parties, as shall be effective to vest in Buyer Parent good and valid title in and to the Transferred Patents; (F) an executed copy of the Escrow Agreement in the form of Exhibit C ; (G) an executed copy of the Transition Services Agreement in the form of Exhibit D ; and (H) such other good and sufficient instruments of conveyance, assignment and transfer, in form and substance reasonably acceptable to the Buyer Parties, as shall be effective to vest in the Buyer Parties good and valid title in and to the Purchased Assets;

(iii) (A) all of the Assumed Contracts on Schedule 1.7(c) and, to the extent obtained by the Closing Date, all other Assumed Contracts and (B) for each such Assumed Contract, to the extent required by its terms, a written agreement in a form satisfactory to Buyer Parties, signed by the party or parties (in addition to the applicable Seller Party) to such Assumed Contract pursuant to which such party or parties thereto consent to the transfer and assignment of such Assumed Contract to Buyer Parties;

(iv) evidence of release of all Liens (other than Permitted Liens) on the Purchased Assets; and

(v) such other instruments, documents and certificates referred to in Article VI .

(d) Immediately and without undue delay following Closing, the Seller Parties shall deliver to the Buyer Parties or representatives of the Buyer Parties designated by Buyer Parent all Patent Related Materials.

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(e) At the Closing, the Buyer Parties shall cause the Escrow Amount to be paid and delivered into the Escrow Fund to be held pursuant to the escrow arrangements contained in Section 7.3 .

1.8 Withholding . The Buyer Parties shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any person such amounts as may be required to be deducted or withheld therefrom under any provision of U.S. federal, state, local or any non-U.S. Tax law or under any applicable legal requirement. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

1.9 Asset Allocation . The parties hereto acknowledge that for United States federal and state tax purposes the consideration received by the Seller Parties for the Purchased Assets hereof shall be allocated in accordance with Section 1060 of the Code. In the event that Buyer and Seller agree on a schedule setting forth such an allocation, then all United States federal and state income and other tax returns and information reports (including IRS Form 8594) will be prepared and filed in a manner consistent with such allocation and no party hereto will take any position for United States federal or state tax purposes inconsistent with such allocation in any subsequent returns or proceedings, except as may be required by law.

1.10 Form of Delivery . The parties hereto agree that to the maximum extent practicable, the Purchased Assets will be delivered in electronic form, which may include download via FTP, SCP, or similar electronic transfer mechanism.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

The Seller Parties represent and warrant to the Buyer Parties, subject to such matters, exceptions and/or qualifications as are disclosed in the disclosure schedule supplied by the Seller Parties to the Buyer Parties (the “ Disclosure Schedule ”) and dated as of the date hereof, as follows:

2.1 Organization; Power . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and Seller has all requisite corporate power and authority to own its properties, to carry on its business (including the Business) as currently conducted. Seller is duly qualified or licensed to do business and is in good standing as a company, or as the case may be, a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications necessary, except where failure to be qualified would not reasonably be expected to result in a Material Adverse Effect. Seller has Made Available true and correct copies of its certificate of incorporation and bylaws, each as amended to date and in full force and effect on the date hereof (collectively, the “ Charter Documents ”), to the Buyer Parties.

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2.2 Subsidiaries . Section 2.2 of the Disclosure Schedule sets forth a list of each Subsidiary of Seller that has title to (or otherwise legally owns) any Purchased Asset or has any Assumed Liability, together with its jurisdiction of organization. Each Subsidiary set forth in Section 2.2 of the Disclosure Schedule is duly organized, validly existing and in good standing (in any jurisdiction that recognizes such concept) under the Laws of its jurisdiction of organization and has all requisite corporate power and authority to own its property, to carry on its business (including the Business) as currently conducted. Each Subsidiary of Seller set forth in Section 2.2 of the Disclosure Schedule is duly qualified or licensed to do business and is in good standing as a company, or as the case may be, a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications necessary, except where such failure to be qualified would not reasonably be expect to result in a Material Adverse Effect. The Subsidiaries listed in Section 2.2 of the Disclosure Schedule are the only Affiliates of Seller that have title to (or otherwise legally owns) any Purchased Asset or any obligation that is an Assumed Liability.

2.3 Authority . Each Seller Party has all requisite power, legal right, capacity and authority to enter into this Agreement and any Related Agreement to which it is a party and to consummate the Asset Purchase and the other transactions contemplated hereby and thereby. This Agreement, the Asset Purchase and the other transactions and grant of rights contemplated hereby have been unanimously approved by the board of directors of Seller. The execution and delivery of this Agreement and any Related Agreement to which the Seller Parties are a party and the consummation of the Asset Purchase and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Seller Parties and no further action is required on the part of the Seller Parties to authorize this Agreement and any Related Agreements to which each of them is a party and the Asset Purchase and the other transactions contemplated hereby and thereby. This Agreement and each of the Related Agreements has been duly executed and delivered by the Seller Parties, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Seller Parties hereto and thereto, enforceable against each in accordance with their respective terms.

2.4 No Conflict . The execution and delivery by Seller of this Agreement and any Related Agreement to which any Seller Party is a party, and the consummation of the Asset Purchase and the other transactions contemplated hereby and thereby, will not (A) result in any breach or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a “ Conflict ”), (i) any provision of any of the Charter Documents, (ii) any mortgage, indenture, lease, contract, covenant, understanding, power of attorney or other agreement, instrument or commitment, permit, concession, non-disclosure agreement, franchise or license (each a “ Contract ” and collectively the “ Contracts ”) binding upon the Seller Parties or any of their assets (whether tangible or intangible) or properties (including the Business), or (iii) any Law or Order applicable to the Seller Parties or any of their respective properties (whether tangible or intangible) or assets (including the Business), except in the cases of clauses (ii) and (iii), as would not adversely affect the ability of the Seller Parties to carry out their obligations under, and to consummate the transactions contemplated by, this Agreement or otherwise have a Material Adverse Effect or

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(B) result in the imposition of any Lien (other than Permitted Liens) upon any of the Purchased Assets. Section 2.4 of the Disclosure Schedule sets forth all necessary consents, waivers and approvals of parties to this Agreement, any Related Agreement and any Assumed Contracts as are required thereunder in connection with the Asset Purchase, or for any such Assumed Contract to remain in full force and effect without limitation, modification or alteration after the Closing so as to preserve all rights of, and benefits to Buyer Parties under such Assumed Contracts from and after the Closing. Following the Closing, Buyer Parties will be permitted to exercise all of Seller Parties’ rights and receive all of Seller Parties’ benefits (including payments) under the Assumed Contracts to the same extent that the Seller Parties would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Seller Parties would otherwise have been required to pay pursuant to the terms of such Assumed Contracts had the transactions contemplated by this Agreement not occurred.

2.5 Consents . The execution, delivery and performance of this Agreement and the Related Agreements does not require a consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with, any Governmental or Regulatory Body.

2.6 Tax Matters .

(a) Definition of Taxes . For the purposes of this Agreement, the term “ Tax ” or, collectively, “ Taxes ” shall mean (i) any and all U.S. federal, state, local and any non-U.S. Taxes, assessments and other governmental charges, duties, impositions and Liabilities, including Taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, escheat, excise, service, wage, solidarity, fringe benefit and property Taxes as well as public imposts, fees and social security charges, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any Liability for the payment of any amounts of the type described in clause (i) of this Section 2.6(a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group, including any arrangement for group or consortium relief or similar arrangement, for any period, and (iii) any Liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 2.6(a) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement with any other Person with respect to such amounts (other than agreements or arrangements entered into in the ordinary course of business which are not primarily related to Taxes) and including any Liability for Taxes of a transferor or predecessor or otherwise by operation of law.

(b) Tax Returns and Audits .

(i) To the extent that failure to do so would adversely impact the Purchased Assets or the Buyer Parties’ ownership of the Purchased Assets or operation of the Business, all required U.S. federal, state, local and any non‑U.S. returns, estimates, information statements and reports (“ Returns ”) relating to any and all Taxes concerning or attributable to Seller’s operation of the Business and the Purchased Assets have been prepared and timely filed and such Returns are true and correct and have been completed in accordance with applicable Law.

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(ii) There are no Liens on the Purchased Assets relating or attributable to Taxes, other than Permitted Liens.

(iii) To the extent that failure to do so would adversely impact the Purchased Assets or the Buyer Parties’ ownership of the Purchased Assets or operation of the Business, Seller has timely paid all Taxes it is required to pay and Seller has timely paid or withheld with respect to its employees and other Third Parties (and timely paid over any withheld amounts to the appropriate Tax authority) any U.S. federal and state income, wage and other Taxes required to be withheld or paid.

(iv) Seller has no Knowledge of any basis for the assertion of any claim for any Liabilities for unpaid Taxes for which the Buyer Parties would become liable as a result of the transactions contemplated by this Agreement or that would result in any Lien (other than Permitted Liens) on any of the Purchased Assets

(v) To the extent applicable to the Purchased Assets or the Buyer Parties’ ownership of the Purchased Assets or operation of the Business, (i) no audit or other examination of any Return of Seller is presently in progress, nor has Seller been notified of any request for such an audit or other examination; (ii) no adjustment relating to any Return filed by Seller has been proposed formally or, to the Knowledge of Seller, informally by any Tax authority to Seller or any representative thereof; and (iii) no claim has ever been made by an authority in a jurisdiction where Seller does not file Returns that it is or may be subject to taxation by that jurisdiction.

2.7 Restrictions on Business Activities . There is no Contract or Order used in, held for, relating to, necessary for, or otherwise benefiting the Purchased Assets which would or may reasonably be expected to have the effect, with respect to the use or ownership of the Purchased Assets, of prohibiting or impairing any business practice, any acquisition of assets (tangible or intangible) or property, or otherwise limiting the freedom to engage in the Business or any other line of business or to compete with any Person or to use and fully exploit any manner the Purchased Assets. Without limiting the generality of the foregoing, with respect to the use or ownership of the Purchased Assets, no agreement has been entered into that is used in, held for, relating to, necessary for, or otherwise benefiting the Purchased Assets under which any Person (i) is restricted from selling, licensing, manufacturing or otherwise distributing any of its Intellectual Property or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market, (ii) is required to provide any price protection, “most favored nation” or similar provisions to any customers or potential customers or any class of customers (that is, required to give pricing to such customers or potential customers or classes of customers that is at least as good or more favorable to that offered to others for similar goods and/or services), (iii) has agreed to purchase a minimum amount of goods or services, or (iv) has agreed to purchase goods or services exclusively from a certain party.

2.8 Title to Properties; Absence of Liens and Encumbrances .

(a) Section 2.8(a) of the Disclosure Schedule sets forth a list of all real property currently leased, subleased or licensed by or from Seller Parties, or otherwise used or occupied by

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Seller Parties and related to the Business (the “ Leased Real Property ”). Seller has Made Available to the Buyer Parties true, correct and complete copies of all lease agreements for Leased Real Property, including all amendments, terminations and modifications thereof (the “ Lease Agreements ”); and there are no other Lease Agreements for real property affecting the Leased Real Property or to which Seller Parties are bound. All such Lease Agreements are valid and effective in accordance with their respective terms, and there is not, under any of such Lease Agreements, any existing default, no rentals are past due, or event of default (or event which with notice or lapse of time, or both, would constitute a default).

(b) The operations of the Business on the Leased Real Property does not violate in any material respect any applicable building code, zoning requirement, ordinance, rule, regulation, statute or other similar Law relating to such property or operations thereon, and any such non‑violation is not dependent on so‑called non‑conforming use exceptions. There is not existing, Seller has not received any notice of, and to the Knowledge of Seller, there is not presently contemplated or proposed, any eminent domain, condemnation or similar action, or, to the Knowledge of Seller, zoning action or proceeding, with respect to any portion of the Leased Real Property.

2.9 Intellectual Property .

(a) Schedule I and Schedule V contains a complete, accurate, and up to date list of all Transferred Registered IP (separated by Patents, Trademarks, and Copyrights, as applicable), in each case listing, as applicable (i) the name of the current owner, (ii) the jurisdiction of registration or application, (iii) the registration or application number, (iv) the title, and (v) the filing date and, if applicable, issue date, and (vi) the current status of such registration or application.

(b) Each item of Transferred Registered IP that is issued is valid and, to the Knowledge of the Seller Parties, enforceable, and Seller Parties and their Affiliates do not have any Knowledge of any material facts or circumstances that would be reasonably expected to render any item of Transferred Registered IP invalid or unenforceable.

(c) There are no actions (including the payment of late fees or penalties) that must be taken by Seller Parties or any other Person on behalf of Seller Parties before the Closing Date or within ninety (90) days thereafter, including the payment of any registration, maintenance or renewal fees or the filing of any responses to any Governmental or Regulatory Body of office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any of the Transferred Registered IP.

(d) None of the Transferred Registered IP has been or is now involved in any interference, reissue, reexamination, opposition or other legal proceeding, including any such proceedings in which the scope, validity, ownership, right to use, or enforceability of any of the Transferred Registered IP is being contested or challenged, in the United States or any foreign jurisdiction, no such action has been threatened in writing, and the Seller Parties and their Affiliates do not have any Knowledge of any facts or circumstances that would reasonably be expected to result in any such action.

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(e) In each case in which Seller Parties have acquired or purport to have acquired ownership of any Transferred IP from any Person (including any employee or contractor providing services on or behalf of Seller Parties or their Affiliates related to the operation of the Business), Seller Parties have obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in the Transferred IP (including the right to seek past and future damages with respect thereto) acquired from such Person, and, with respect to any Transferred Registered IP, Seller Parties have recorded each such assignment with the relevant Governmental or Regulatory Body. All inventions, discoveries, and works of authorship embodying any of the Transferred IP were created solely by either (i) employees of Seller Parties acting within the scope of their employment who have validly and irrevocably assigned all of their rights, including all Intellectual Property Rights therein, to Seller Parties, or (ii) Third Parties who have validly and irrevocably assigned all of their rights, including all Intellectual Property Rights therein, to Seller, and no such Third Party owns or has or has retained any rights to any such Transferred IP.

(f) After the Closing, all Transferred IP will be fully transferable, alienable and licensable by Buyer Parties without restriction and without payment of any kind to any Third Party.

(g) Seller Parties are the exclusive owner of all Transferred IP, free and clear of any Liens other than Permitted Liens. One or more than one of the Seller Parties is listed in the records of the appropriate Governmental or Regulatory Body as the sole owner or sole owners, respectively, of each item of the Transferred Registered IP.

(h) Seller Parties have not transferred (or agreed to transfer) ownership of, or granted (or agreed to grant) any exclusive license of or exclusive right to use, or authorized the retention of any exclusive rights to use or joint ownership of any Intellectual Property Rights that would, but for such transfer or agreement to transfer, would have been Transferred IP.

(i) The operation of the Business has not, does not, and will not, when operated substantially in the manner currently conducted or, solely with regard to Business Products and as set forth on Schedule 2.9(i), currently in development, infringe, violate, or misappropriate the Intellectual Property Rights of any Third Party. Seller Parties and its Affiliates have not received any written notice from any Third Party alleging that the operation of the Business infringes, violates, or misappropriates the Intellectual Property Rights of any Third Party, or offering to license any Intellectual Property Rights or Technology to Seller Parties or their Affiliates in connection with the operation of the Business.

(j) Section 2.9(j)(i) of the Disclosure Schedule lists all Contracts pursuant to which Seller Parties have been granted or have otherwise obtained any right or license to Intellectual Property Rights or Technology of a Third Party that was used in the development of, or relates to, the Business Products or Business Technology, or is otherwise material to the operation of the Business (“ Inbound-Licenses ”). Section 2.9(j)(ii) of the Disclosure Schedule lists all Contracts pursuant to which Seller Parties have granted, or has otherwise provided, any right or license to any Third Party under any Transferred IP (“ Outbound-Licenses ”).

(k) Seller Parties are not, to their Knowledge, in breach of, nor have Seller Parties failed to perform under, any Contracts required to be disclosed pursuant to 2.9(j) (“ IP Contracts ”)

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and, to the Knowledge of Seller Parties, no other party to any such IP Contract is in breach thereof. To the Knowledge of Seller Parties, there are no disputes regarding the scope of or performance under such IP Contracts including with respect to any payments to be made or received by or to Seller Parties thereunder. All such IP Contracts that are Assumed Contracts will continue in full force and effect and to the benefit of Buyer Parties after the transactions contemplated by this Agreement without the need for the consent by or other approval of any Person. The consummation of the transactions contemplated in this Agreement will neither violate nor result in the breach, modification, acceleration, termination or suspension of (or give the other party thereto the right to cause any of the foregoing) any such Assumed Contracts and, following the Closing, Buyer Parties will be permitted to exercise all of the applicable Seller Parties’ rights and receive all of such Seller Parties’ benefits (including payments) under such Assumed Contracts to the same extent that the relevant Seller Party would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than the ongoing fees, royalties or other payments which the relevant Seller Party would otherwise have been required to pay pursuant to the terms of such Assumed Contracts had the transactions contemplated by this Agreement not occurred.

(l) No Technology that constitutes Open Source Materials, or any modification or derivative thereof, was used in, incorporated into, integrated or bundled with any Business Products, Business Technology, or otherwise included in the Purchased Assets, or any modification or derivative thereof, in a manner that has subjected any such Technology (other than the original, unmodified Open Source Materials) to any obligation under any Open Source License to deliver or license such Technology under any Open Source License, or otherwise (i) in Source Code form, (ii) for the purpose of making modifications or derivative works, or (iii) for little or no fee.

(m) No Third Party that has licensed to Seller Parties any Technology or Intellectual Property Rights that was used in the development of, or relates to the Business, or the Business Products or Business Technology has ownership rights or license rights to improvements or derivative works made thereto by Seller Parties, or will have any right of termination, cancellation or modification under any such license that is a Contract relating to the Purchased Assets as a result of this Agreement or the transactions contemplated hereby.

(n) Neither this Agreement nor the transactions contemplated by this Agreement will, because of any Contract to which a Seller Party is or was bound, result in: (i) any Buyer Party granting to any Third Party any right to or with respect to any Intellectual Property Rights owned by, or licensed to, any Buyer Party, (ii) any Buyer Party, being bound by or subject to, any exclusivity obligations, non‑compete or other restriction on the operation or scope of its business, or (iii) any Buyer Party being obligated to pay any royalties or other amounts to any Third Party in excess of those payable by it in the absence of this Agreement or the transactions contemplated hereby.

(o) Following the Closing, Buyer Parties will have and be permitted to exercise all of Seller Parties’ rights under the Transferred Technology and Transferred IP (and will have the same rights with respect to the Intellectual Property of Third Parties licensed under the Assumed Contracts) to the same extent that Seller Parties would have had, and been able to exercise, had this

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Agreement, and any other contracts, documents and instruments to be executed and delivered after the date hereof, not been entered into, and the transactions contemplated herein not consummated.

(p) Seller Parties, to their Knowledge, have taken all commercially reasonable steps to protect the confidential information and Trade Secrets of the Business that relate to the Purchased Assets. To the Knowledge of Seller Parties, there has been no misappropriation or unauthorized disclosure of any confidential information or Trade Secret relating to the Business (or claimed or understood to be so included), or breach of any obligations of confidentiality with respect to the Purchased Assets.

(q) Without limiting the foregoing, (i) Seller Parties require each of its employees that participates in the conception, design, development, manufacture, assembly, test, provision, configuration, installation, support, and/or maintenance of the Purchased Assets to execute proprietary information, confidentiality and assignment agreements substantially in Seller Parties’ standard form for employees (a copy of which is attached as Schedule 2.9(q)(i) (the “ Employee Proprietary Information Agreement ”)), (ii) Seller Parties require each of its consultants and contractors that participates in the conception, design, development, manufacture, assembly, test, provision, configuration, installation, support, and/or maintenance of the Purchased Assets to execute a consulting agreement containing proprietary information, confidentiality and assignment provisions substantially in such Seller’s standard form for consultants or contractors (a copy of which is attached as Schedule 2.9(q)(ii) (the “ Consultant Proprietary Information Agreement ”)) and (iii) all current and former employees, consultants and contractors of Seller Parties that participate or have participated in the conception, design, development, manufacture, assembly, test, provision, configuration, installation, support, and/or maintenance of the Purchased Assets have executed an Employee Proprietary Information Agreement or a Consultant Proprietary Information Agreement, as appropriate.

(r) None of the Transferred IP is subject to any outstanding Order. Without limiting the generality of the foregoing, Seller Parties are not a party to or bound by any Contract or Order that would or could reasonably be expected to require a Seller Party to grant to any Third Party any license, covenant not to sue, immunity or other right with respect to any Transferred IP or any future-developed Technology or Intellectual Property Rights related to the Purchased Assets.

(s) No government funding, facilities or resources of a university, college or other educational institution or research center or funding from Third Parties was used in the development of the Transferred IP or Transferred Technology and no Governmental or Regulatory Body, university, college, other educational institution or research center has any claim, or given notice or proceeded against a Seller Party in respect of any claim or right in or to Transferred IP or Transferred Technology.

(t) No current or former employee, or to the Seller Parties and their Affiliates’ Knowledge any consultant, or independent contractor, of a Seller Party who was involved in, or who contributed to, the creation or development of any Transferred IP or Transferred Technology, has performed services for the government, a university, college or other educational institution, or a research center, during a period of time during which such employee, consultant, or independent

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contractor was also performing services for such Seller Party relating to, necessary for, or otherwise benefiting the Business.

(u) Section 2.9(u)(i) of the Disclosure Schedule lists all industry standards bodies or similar organizations that a Seller Party is now or ever was a member or promoter of, or a contributor to, or otherwise participated in that relate in any way to the Purchased Assets. Seller Parties have provided to Buyer complete and accurate copies of all agreements, policies and rules to which Seller Parties are a party or by which Seller is bound with respect to any Intellectual Property Rights related to each standards body or similar organization identified in Section 2.9(u)(i) of the Disclosure Schedule. Seller Parties are not and could not be, as a result of such activities, (i) obligated to grant or offer to any Third Party any license or right to any Transferred IP, or (ii) otherwise restricted or impaired in its ability to assert or enforce any of the Transferred IP against any Third Party.

(v) Section 2.9(v) of the Disclosure Schedule lists all Assumed Contracts between any Seller Party, on the one hand, and any other Person, on the other hand, wherein or whereby such Seller Party agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any Liability or provide a right of rescission with respect to the infringement or misappropriation of Intellectual Property Rights.

(w) To the Knowledge of Seller Parties, no Transferred Technology that is Software contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “worm,” “spyware” or “adware” (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing or facilitating, any of the following functions: (i) disrupting, disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed, or (ii) compromising the privacy or data security of a user or damaging or destroying any data or file without the user’s consent (“ Malware ”). The Seller Parties and their Affiliates have used reasonable efforts to prevent the introduction of Malware into Software that is Transferred Technology.

(x) The Transferred IP and Transferred Technology constitute all of the Intellectual Property owned or purported to be owned by the Seller and its Affiliates that are used in or would be infringed or misappropriated by the operation of the Business as previously conducted, currently conducted, and currently contemplated to be conducted.

2.10 Agreements, Contracts and Commitments .

(a) Section 2.10(a) of the Disclosure Schedule lists each of the following Contracts to which the Seller Parties are bound as of the date of this Agreement, that relate to the operation of the Business or the Purchased Assets (the “ Material Contracts ”):

(i) any independent contractor or consulting agreement, Contract or commitment with an independent contractor, individual consultant or non-employee salesperson (in all cases in other than Seller Parties’ standard form), or any consulting or sales agreement,

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contract, or commitment with a firm or other organization that provides for annualized compensation in excess of $100,000;

(ii) any lease of personal property;

(iii) any agreement of indemnification or guaranty;

(iv) any Contract involving future payments in excess of $100,000 or that requires the payment of royalties in excess of $100,000;

(v) any Contract relating to the disposition or acquisition of assets (tangible or intangible) or properties of the Business not in the Ordinary Course of Business;

(vi) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money, the extension of credit or the continuing or future grant of any Lien;

(vii) any Contract containing covenants or other obligations granting or containing any current or future commitments regarding exclusive rights, non‑competition, “most favored nations,” restriction on the operation or scope of its businesses or operations, or similar terms;

(viii) any dealer, distribution, marketing, development or joint venture agreement;

(ix) any sales representative, original equipment manufacturer, manufacturing, value added, marketing, remarketer, reseller, or independent software vendor, distribution or other agreement;

(x) any Contract with any customer of the Business;

(xi) IP Contracts and any agreement, Contract or commitment that obligates the Business to provide future deliverables to any Person including, without limitation, licenses to Transferred IP or the performance of services;

(xii) any Contract that restricts or prohibits Seller Parties from hiring or soliciting for hire any individual to perform employment or consulting services for the Business; or

(xiii) any Assumed Contract that does not have a limitation of liability arising from direct damages.

(b) Section 2.10(b) of the Disclosure Schedule sets forth all necessary consents, waivers and approvals of parties in connection with the Asset Purchase or the other transactions contemplated by this Agreement or any Related Agreement.

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(c) There is no breach or default (or right to terminate, accelerate, or modify any rights of the counterparty or obligations of any of the Seller Parties or their Affiliates, or following the Closing, the Buyer Parties) under any Assumed Contract, nor will the execution of this Agreement or the consummation of the transactions contemplated herein give rise to any such breach, default, or right. The Seller Parties and their Affiliates have not received any written notice from any counter party to any Assumed Contract, nor do the Seller Parties or their Affiliates have Knowledge of any facts or circumstances that would reasonably be expected to result in any claim, of any breach or default by the Seller Parties or their Affiliates under any Assumed Contract, or any right of the applicable counterparty to terminate, accelerate, or modify any rights of the counterparty or obligations of any of the Seller Parties or their Affiliates, or, following the Closing, the Buyer Parties.

2.11 Financial Statements . Seller has Made Available to Buyer Parent the unaudited Regular Quarterly Financial Information for the periods January 1, 2015 through December 31, 2015, which to Seller Parties’ Knowledge, fairly presents, in all material respects and has been prepared in accordance with internal practices consistent with United States generally accepted accounting principles consistently applied (“ GAAP ”). The Seller also made available the major reconciling item – stock based compensation to adjust the income statement for the year ended December 31, 2015 to be presented as closely as practicable to the GAAP based company level statements filed with the SEC and the Seller’s summary financial information for the fiscal year ending December 31, 2015, which is based on underlying unaudited financial statements that fairly present in all material respects the inventory, accrued liabilities and deferred revenue at the closing date and at the dates presented in the data room for due diligence have generally been prepared in accordance with GAAP. For purposes hereof, the “ Regular Quarterly Financial Information ” is the Revenue, Costs of Goods Sold, operating expense financial information of the Business that Seller generally includes in the quarterly report that Seller prepares and reviews in its management of the Business. Seller’s revenue forecasts, operating expenses and income projections provided to the Buyer Parent by Seller (collectively, the “ Projections ”) were prepared by Seller in good faith and Seller factored in to such Projections all material revenue forecasts provided to Seller by its customers; however, Seller does not warrant that it will achieve any results projected in the Projections

2.12 No Changes . Since January 1, 2016, there has not been, occurred or arisen, any:

(a) modifications, amendments or changes to the Charter Documents;

(b) expenditure, transaction or commitment exceeding $100,000 individually or $500,000 in the aggregate (excluding, in both cases, any expenditures, transactions or commitments related to the salary or other compensation (including equity-based compensation) payable or to become payable by Seller to any of its respective officers, directors, employees or consultants), in each case as related to the Purchased Assets;

(c) payment, discharge, waiver or satisfaction of any Liability of Seller Parties or of the Business related to the Purchased Assets, other than payments, discharges or satisfactions in the Ordinary Course of Business of Liabilities;

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(d) destruction of, damage to, or loss of any material assets (whether tangible or intangible), material business or material customer of Seller Parties (whether or not covered by insurance), in each case relating to the Purchased Assets;

(e) employment dispute filed or threatened in writing by any individual, Governmental or Regulatory Body, or workers’ representative organization, bargaining unit or union, regarding, claiming or alleging wrongful discharge or any other unlawful employment or labor practice or action with respect to Seller, in each case as related to the Purchased Assets;

(f) adoption of or change in material accounting methods or practices (including any change in depreciation or amortization policies or rates) by Seller other than as required by GAAP and which is primarily related to the Purchased Assets;

(g) adoption of or change in any election in respect of Taxes, adoption or change in any accounting method in respect of Taxes, agreement or settlement of any claim or assessment in respect of Taxes, or extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, in each case as related to the Purchased Assets;

(h) other than in the Ordinary Course of Business, (i) increase in or other change to the salary or other compensation (including equity based compensation) payable or to become payable by Seller to any of the Continuing Employees, or (ii) declaration, payment or commitment or obligation of any kind for the payment (whether in cash or equity) by Seller of a severance payment, termination payment, bonus, special remuneration or other additional salary or compensation (including equity based compensation), in each case to any of the Continuing Employees;

(i) Contract, covenant, instrument, lease, license or commitment to which Seller Parties are a party that relates to the Purchased Assets or by which any of the Purchased Assets are bound or any termination, extension, amendment or modification of the terms of any such Contract, other than in the Ordinary Course of Business;

(j) sale, lease, license or other disposition of any of the Purchased Assets, including the sale of any accounts receivable of Seller Parties related thereto, or any creation of any security interest in such Purchased Assets;

(k) loan by Seller Parties to any Person (except for advances to employees for travel and business expenses in the Ordinary Course of Business consistent with past practices), or purchase by Seller Parties of any debt securities of any Person or amendment to the terms of any outstanding loan agreement, in each case as related to the Purchased Assets;

(l) incurring by Seller Parties of any indebtedness, amendment of the terms of any outstanding loan agreement, guaranteeing by Seller Parties of any indebtedness, issuance or sale of any debt securities of Seller Parties or guaranteeing of any debt securities of others, except for obligations to reimburse employees for travel and business expenses incurred in the Ordinary Course of Business consistent with past practices, in each case as related to the Purchased Assets;

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(m) waiver or release of any material right or claim of Seller Parties relating to the Purchased Assets, including any waiver, release or other compromise of any account receivable of Seller Parties that would reasonably be expected to exceed $100,000;

(n) commencement or settlement of any lawsuit by Seller Parties related to the Purchased Assets, or the commencement, settlement, notice or, to the Knowledge of Seller Parties, threat of any lawsuit or proceeding or other investigation related to the Purchased Assets against Seller Parties or their businesses, properties or assets, or any reasonable basis for any of the foregoing;

(o) notice of any claim or potential claim of ownership, interest or right by any Third Party of any of the Transferred IP, or of infringement or misappropriation by Seller Parties in the operation of the Business of any other Person’s Intellectual Property Rights;

(p) (i) sale, lease, license or transfer of any Purchased Assets or execution, modification or amendment of any agreement with respect to the Purchased Assets with any Person or with respect to the Intellectual Property of any Person, or (ii) purchase or license of any Intellectual Property or execution, modification or amendment of any agreement with respect to the Intellectual Property of any Person, for use by the Business, (iii) agreement or modification or amendment of an existing agreement with respect to the development of any Intellectual Property with a Third Party, for use by the Business or (iv) change in pricing or royalties set or charged by Seller Parties in the Business to its customers or licensees or in pricing or royalties set or charged by Persons who have licensed Intellectual Property to Seller Parties for use in the Business;

(q) event or condition of any character that has had or is reasonably likely to have a Material Adverse Effect;

(r) agreement by Seller Parties to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or corporation, partnership, association or other business organization or division thereof, or other acquisition or agreement to acquire any assets or any equity securities that are material, individually or in the aggregate, to the Business;

(s) execution of any strategic alliance, affiliate or joint marketing arrangement or agreement by Seller Parties related to the Purchased Assets;

(t) cancellation, amendment or renewal of any insurance policy of Seller Parties related to the Purchased Assets;

(u) issuance or agreement to issue any refunds, credits, allowances or other concessions with customers related to the Purchased Assets in excess of $100,000; or

(v) agreement by Seller Parties, or any officer or employees on behalf of Seller Parties, to do any of the things described in the preceding clauses (a) through (y) of this Section 2.12 (other than negotiations with the Buyer Parties and their representatives regarding the transactions contemplated by this Agreement and any Related Agreements).

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2.13 Memory Buffer and Memory Register Product Liability and Recalls .

(a) Each Memory Buffer and Memory Register product produced or sold by Seller Parties or a Subsidiary in connection with the Business is, and at all times up to and including the sale thereof has been, in compliance in all material respects with all applicable Laws. To Seller Parties’ Knowledge, there is no material design or manufacturing defect that has been established or is being investigated with respect to any such Memory Buffer and Memory Register product.

(b) Except as set forth in Section 2.13(b) of the Disclosure Schedule, since January 1, 2015, there has been no action, suit, claim, inquiry, proceeding or investigation in any case by or before any court or Governmental or Regulatory Body pending or, to Seller Parties’ Knowledge, threatened against or involving (i) the Business, (ii) relating to any Memory Buffer and Memory Register product alleged to have been designed, manufactured, marketed, distributed, provided, or sold by the Business, or (iii) alleging that any Memory Buffer and Memory Register product has been defective or improperly designed or manufactured, nor, to Seller Parties’ Knowledge, has there been any pattern of product failure relating to any Memory Buffer and Memory Register product designed, manufactured, marketed, distributed, provided, or sold by the Business.

(c) Except as set forth in Section 2.13(c) of the Disclosure Schedule, since January 1, 2015, there has been no pending, or to Seller Parties’ Knowledge, threatened recall or investigation of any Memory Buffer and Memory Register product and to Seller Parties’ Knowledge no condition or circumstance exists, that (with or without notice or lapse of time) would directly or indirectly be expected to give rise to or serve as the basis for any recall or investigation.

2.14 Memory Buffer and Memory Register Product Warranty . Section 2.14 of the Disclosure Schedules includes copies of the standard terms and conditions of sale for the Memory Buffer and Memory Register products (containing applicable guaranty, warranty and indemnity provisions and support obligations). Except as set forth in Section 2.14 of the Disclosure Schedules, the products manufactured by the Business have been sold by the Business in accordance with the standard terms and conditions of sale except for any such deviations which could not reasonably be expected to materially affect the Business or the Purchased Assets.

2.15 Transferred Inventory . The Transferred Inventory is, and as of the Closing Date will be, valued in accordance with GAAP of quality and quantity usable and saleable in the ordinary course of the Business consistent with past practice, except in each case for excess, obsolete items and items of below-standard quality that have been reserved for or written down to estimated net realizable value in accordance with GAAP applied on a basis consistent with past practices.

2.16 Interested Party Transactions . No Interested Party has, directly or indirectly, an interest in any entity which furnishes or sells or licenses, services, products, Technology or Intellectual Property that is furnished or sold to use or own the Purchased Assets. All transactions pursuant to which any Interested Party has purchased any services, products, or technology from, or sold or furnished any services, products or technology to, Seller Parties that were entered into on or after the inception of Seller have been on an arm’s length basis on terms no less favorable to Seller Parties, as applicable, than would be available from an unaffiliated party, and were duly approved in accordance with applicable Law.

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2.17 Governmental Authorization . Each consent, license, permit, grant or other authorization (i) pursuant to which Seller Parties currently operate or hold any interest in any of the Purchased Assets, or (ii) which is required for the holding of any Purchased Assets (collectively, “ Business Authorizations ”) has been issued or granted to Seller Parties. All material Business Authorizations are in full force and effect and constitute all the Business Authorizations required for Seller Parties to hold their interest in the Purchased Assets.

2.18 Litigation . There is no action, suit, claim, investigation or proceeding of any nature pending, or to the Knowledge of Seller Parties, threatened, against Seller Parties or any of their respective officers or directors related to the Purchased Assets, nor to the Knowledge of Seller Parties is there any reasonable basis therefor.

2.19 Environmental Matters . Each Seller Party has no Knowledge of any fact or circumstance which could result in any environmental liability which could reasonably be expected to result in any Liability on any Buyer Party related to the Purchased Assets. Seller has complied with all environmental disclosure obligations imposed by applicable Law with respect to the Asset Purchase.

2.20 Brokers’ and Finders’ Fees . Except as set forth in Section 2.20 of the Disclosure Schedule, Seller has not incurred, or will incur, directly or indirectly, any Liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services, legal contingency fees or any similar charges in connection with this Agreement, the Related Agreements, the Asset Purchase or any other transaction contemplated hereby and thereby for which any Buyer Party is or could be liable.

2.21 Employee Benefit Plans and Compensation .

(a) Schedule . Schedule 1.1(a) contains an accurate and complete list of each Key Employee. Schedule 1.1(b) contains an accurate and complete list of each Offered Employee and each such Offered Employee’s hire date, annual salary, any commission or bonus for the most recent calendar year. No employee listed on Schedules 1.1(a) or 1.1(b) provided written notice to Seller or any of its Subsidiaries of his or her intent to terminate his or her employment for any reason other than in connection with and as contemplated by this Agreement and the Asset Purchase. Section 2.21(a) of the Disclosure Schedule contains an accurate and complete list of all Persons that have a consulting, independent contractor or advisory relationship with Seller and who have provided services to the Business over the past three (3) years, and who have been paid more than $100,000 in any one such calendar year.

(b) Pension and Benefit Plans .

(i) Neither Seller nor any ERISA Affiliate has, for the prior six (6) years, ever maintained, established, sponsored, participated in, contributed to, or had, for the prior six (6) years, or could have any obligation to, any (A) Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, (B) multiple employer plan or to any plan described in Section 413 of the Code, or (C) Multiemployer Plan;

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(ii) Section 2.21(b)(ii) of the Disclosure Schedule contains a complete list of all material Seller Employee Plans and (including any material International Employee Plans) for which Offered Employees are eligible or that currently provide benefits to Offered Employees. With respect to a Seller Employee Plan that is a 401(k) plan, Seller and, as applicable, its ERISA Affiliates, are in material compliance with such Seller Employee Plan terms and all applicable laws for each such Seller Employee Plan including, but not limited to, ERISA and the Code.

(c) Documents . Seller has Made Available to the Buyer Parties correct and complete copies of all documents embodying each material Seller Employee Plan that currently provides benefits to Offered Employees, the standard forms of employment agreement applicable to the Offered Employees and each non-standard Employee Agreement entered into with the Offered Employees including all amendments thereto and all related trust documents.

(d) Effect of Transaction . No payment or benefit which will or may be made by Seller or its ERISA Affiliates with respect to any Employee or any other “disqualified individual” (as defined in Code Section 280G and the regulations thereunder) will be characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the Code.

(e) Employment Matters . There are no applicable collective bargaining agreements and neither Seller nor any of its Subsidiaries have any duty to bargain with any labor organization with respect to any Offered Employees. To the Seller’s Knowledge, there is no pending demand for recognition or any other request or demand from a labor organization for representative status with respect to any Offered Employee. No strike, labor dispute, slowdown, concerted refusal to work overtime, or work stoppage or labor strike of the Offered Employees is pending, or to the Knowledge of the Seller, threatened, or reasonably anticipated. The Seller has no Knowledge of any activities or proceedings of any labor union to organize any Employees. Neither the Seller nor any of its ERISA Affiliates is presently, nor has it been in the past three (3) years, a party to, or bound by, any collective bargaining agreement or union contract with respect to Offered Employees and no collective bargaining agreement is being negotiated by the Seller or any of its ERISA Affiliates with respect to Offered Employees. Within the past year, neither the Seller nor any of its ERISA Affiliates has incurred any Liability under the Worker Adjustment Retraining and Notification Act of 1988, as amended or any similar state or local law (collectively “ WARN ”) that remains unsatisfied, and no terminations prior to the Closing Date shall result in unsatisfied Liability under WARN provided that the Buyer Parties offers employment to a sufficient number of the Offered Employees on substantially equivalent terms to avoid incurring liability or loss of employment under WARN.

(f) No Interference or Conflict . To the Seller’s Knowledge, (i) no Key Employee is obligated under any contract or agreement or subject to any Order of any court or administrative agency that would interfere with such Person’s efforts to promote the interests of or interfere with the Business as presently conducted by Seller and (ii) neither the execution nor delivery of this Agreement, nor any activity of such Continuing Employees in connection with the Business as presently conducted by Seller will conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract or agreement under which any of such Continuing Employees is bound at the effective time of the Closing.

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2.22 Insurance . Section 2.22 of the Disclosure Schedule lists all insurance policies covering the Purchased Assets. There is no claim relating to the Purchased Assets pending under any of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid (or if installment payments are due, will be paid if incurred prior to the Closing) and Seller are otherwise in compliance in all material respects with the terms of such policies and bonds. Such policies and bonds are in full force and effect.

2.23 Customers and Suppliers . Section 2.23 of the Disclosure Schedule sets forth a list of the ten (10) largest customers of the Business for the year ended December 31, 2015 and the five (5) months ended May 31, 2016 (and the amount of sales with respect to each such customer during such twelve month period), and the nine (9) largest suppliers of any raw material or component for the Business as of the date of this Agreement. As of the date hereof, neither Seller nor any of its Subsidiaries has received any written notice that any such customer has ceased, or will cease to purchase or license the products of the Business, or has reduced, or will reduce, the purchase or license of the products of the Business from Seller or any of its Subsidiaries and, to Seller’s Knowledge, no such customers or suppliers plan to cease or reduce the purchase or license of products of the Business from Seller or any of its Subsidiaries. As of the date hereof, neither Seller nor any of its Subsidiaries has received written notice that any such supplier has taken action to, or will take action to (a) terminate or modify in a manner adverse to Seller its relationship with Seller, (b) reduce the amount of goods or services that it is willing to supply to Seller or any of its Subsidiaries or (c) materially increase the price of any good or services that it has previously supplied to Seller or any of its Subsidiaries. All purchase and sale orders and other commitments for purchases and sales made by Seller or any Subsidiary in connection with the Business have been made in the ordinary course of business in accordance with past practices, and no payments have been made to any supplier or customers or any of their respective representatives other than payments to such suppliers or their representatives for the payment of the invoiced price of supplies purchased or goods sold in the ordinary course of business.

2.24 Compliance with Laws . Each Seller Party has complied with in all material respects, are not in material violation of, and have not received any notices of material violations with respect to, any Laws as they relate to the Purchased Assets.

2.25 Export Control Laws . Seller has at all times complied with (i) all applicable U.S. and foreign export and reexport controls and Laws, including the United States Export Administration Act and Regulations and Foreign Assets Control Regulations and (ii) all other applicable import/export controls and Laws in other countries in which Seller conducts business, each as they primarily relate to the Purchased Assets.

2.26 Valid Title to Purchased Assets . Each Seller Party has good, valid and marketable title to, a valid leasehold interest in, or a valid license or right to use, all of the Purchased Assets, free and clear of all Liens (other than Permitted Liens). Upon Closing, the Buyer Parties will have good, valid and marketable title to, a valid leasehold interest in, or a valid license or right to use, the Purchased Assets, free and clear of all Liens (other than Permitted Liens).

2.27 Corrupt Practices . Neither Seller nor, to Seller’s Knowledge, any of its current employees, agents or representatives in each case, as related to the operation of the Business, has

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directly or indirectly taken any action which would cause it to be in violation of the Foreign Corrupt Practices Act of 1977 (or any similar and applicable foreign Law), as amended, or any rules or regulations thereunder, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made any unlawful payment to foreign or domestic government officials or employees or made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment.

2.28 Complete Copies of Materials . Seller has Made Available to the Buyer Parties all documents listed in the Disclosure Schedule.

2.29 Sufficiency . The Purchased Assets constitute all of the Seller Parties’ properties, assets, tangible and intangible, and all Seller Parties’ rights used or practiced in the operation of the Business, as conducted immediately prior to the date of this Agreement, currently conducted, and currently contemplated to be conducted.

2.30 Representations Complete . None of the representations or warranties made by the Seller Parties (as modified by the Disclosure Schedule) in this Agreement, and none of the statements made in any exhibit, schedule or certificate furnished by the Seller Parties pursuant to this Agreement contains, or will contain, any untrue statement of a material fact, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE II, NONE OF THE SELLER PARTIES, THEIR AFFILIATES OR ANY OF THEIR RESPECTIVE REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SELLER PARTIES OR THEIR SUBSIDIARIES, THE PROPERTIES OR ASSETS OF THE SELLER PARTIES OR THEIR SUBSIDIARIES OR THE BUSINESS OF THE SELLER PARTIES OR THEIR SUBSIDIARIES, AND ANY SUCH REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES

The Buyer Parties hereby represent and warrant to the Seller Parties as follows:

3.1 Organization; Power . Buyer Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each Buyer Party has the corporate or other power to own its properties and to carry on its business as now being conducted and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the failure to be so qualified or licensed would have a material adverse effect on such Buyer Party.

3.2 Authority . Each Buyer Party has all requisite corporate or other power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate

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the Asset Purchase and the other transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreements to which it is a party and the consummation of the Asset Purchase and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or other action on the part of each Buyer Party. This Agreement and any Related Agreements to which any Buyer Party is a party have been duly executed and delivered by such Buyer Party and constitute the valid and binding obligations of such Buyer Party, enforceable against each Buyer Party in accordance with their terms.

3.3 Conflicts . The execution, delivery and performance of this Agreement and any Related Agreements to which any Buyer Party is a party, and the consummation of the Asset Purchase and the other transaction contemplated hereby and thereby, will not:

(a) result in any Conflict under (1) the Certificate of Incorporation, Bylaws or other organizational documents of any Buyer Party, (2) any Contract to which any Buyer Party is a party that Buyer Parent has filed with the Securities and Exchange Commission, (3) any Order to which any Buyer Party is a party or by which any Buyer Party is bound or (4) any Law applicable to any Buyer Party, except such violations, conflicts, breaches or defaults that would not have a material adverse effect on the Buyer Parties; or

(b) assuming the truth and accuracy of the representations and warranties made by the Seller Parties, require the approval, consent, authorization or act of, or the making by the Buyer Parties of any declaration, filing or registration with, any Governmental or Regulatory Body, except for such approvals, consents, authorizations, declarations, filings or registrations, the failure of which to be obtained or made would not materially impair the ability of the Buyer Parties to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated hereunder.

3.4 Consents . Assuming the truth and accuracy of the representation and warranty contained in Section 2.5 , no consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any Governmental or Regulatory Body, is required by or with respect to the Buyer Parties in connection with the execution and delivery of this Agreement and any Related Agreements to which any Buyer Party is a party or the consummation of the Asset Purchase and the other transactions contemplated hereby and thereby, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not have a material adverse effect on the Buyer Parties.

3.5 Adequacy of Funds . The Buyer Parties, collectively, currently have, and will at the Closing have, cash and working capital available in an amount sufficient to fully fund the Asset Purchase.

3.6 Representations Complete . None of the representations or warranties made by the Buyer Parties in this Agreement, and none of the statements made in any exhibit, schedule or certificate furnished by the Buyer Parties pursuant to this Agreement contains, or will contain, any untrue statement of a material fact, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

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ARTICLE IV.

CONDUCT OF BUSINESS PRIOR TO THE CLOSING

4.1 Conduct of the Business . During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, Seller agrees, and agrees to cause its Affiliates, to (i) conduct the Business, except to the extent that the Buyer Parties shall otherwise consent in writing, in the Ordinary Course of Business, (ii) pay the debts and Taxes of the Business when due (subject to Section 4.1(e) below), (iii) pay or perform other obligations of the Business when due, (iv) pay any renewal fees of the Business when due and take all such other steps as may be necessary for maintaining or defending the Transferred IP and (v) preserve intact the present business organization of the Business, use its reasonable best efforts to keep available the services of the present officers and employees of the Business, and use its commercially reasonable efforts to preserve the relationships of the Seller Parties and the Business with customers, suppliers, distributors, licensors, and licensees of the Business, and others having business dealings with the Business, all with the goal of preserving unimpaired the goodwill and ongoing businesses of the Business at the Closing. Seller shall promptly notify the Buyer Parties of any event or occurrence or emergency not in the Ordinary Course of Business and any material event involving the Seller Parties or the Business that arises during the period from the date of this Agreement and continuing until the earlier of the termination date of this Agreement or the Closing. In addition to the foregoing, except as expressly contemplated by this Agreement, except in the Ordinary Course of Business, or except as expressly set forth in Section 4.1 of the Disclosure Schedule, Seller shall not, and shall cause its Affiliates not to, without the prior written consent of Buyer, from and after the date of this Agreement, and only with respect to the Purchased Assets or the Business:

(a) sell inventory related to the Business outside of the Ordinary Course of Business, including with respect to pricing, discounting practices, bundling, sales volume and services levels, and will maintain inventory used by the Business sufficient to meet expected customer requirements, consistent with past practice, including sufficient raw materials, capacity and work in process in light of anticipated demand and customary cycle times and sufficient finished goods inventory related to the Business for satisfaction of customer orders of the Business on hand at Closing;

(b) engage in any transaction relating to the Purchased Assets;

(c) pay, discharge, waive or satisfy any Liability of the Business, other than payments, discharges or satisfactions in the Ordinary Course of Business;

(d) (i) adopt or change material accounting methods, policies or practices (including any change in depreciation or amortization policies) of the Business or (ii) revalue any of the material assets (whether tangible or intangible) or properties of the Business, including writing down the value of inventory or writing off notes or accounts receivable;

(e) make or change any material Tax election, adopt or change any Tax accounting method, enter into any closing agreement, settle any Tax claim or assessment or consent

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to any extension or waiver of the limitation period applicable to any claim or assessment, in each case, with respect to Taxes related to the Business;

(f) create or permit the creation of any Lien (other than Permitted Liens) on the Purchased Assets;

(g) sell, lease, license or otherwise dispose of or grant any security interest in any of the its properties or assets (whether tangible or intangible) related to the Business;

(h) (i) incur on behalf of the Business, any indebtedness, except for advances to employees for travel and business expenses in the Ordinary Course of Business, (ii) amend the terms of any outstanding loan agreement of Seller Parties which relate primarily to the Business, or (iii) guarantee by Seller Parties on behalf of the Business, any indebtedness of any other Person;

(i) waive or release any right or claim of the Business, including any write-off or other compromise of any account receivable of the Business;

(j) commence or settle any lawsuit, threat of any lawsuit or proceeding or other investigation primarily related to the Business;

(k) (i) sell, lease, license or transfer to any Person any rights to any Purchased Assets or enter into any agreement or modify any existing agreement with respect to any Purchased Assets with any Person or with respect to any Intellectual Property of any Person which is related to the Business, (ii) purchase or license any Intellectual Property related to the Business or enter into any agreement or modify any existing agreement with respect to the Intellectual Property of any Person which is related to the Business, (iii) enter into any agreement or modify any existing agreement with respect to the development of any Intellectual Property which is related to the Business with a Third Party, or (iv) change royalties or pricing, set or charged by Seller and used in the Business to its customers or licensees, or the pricing or royalties set or charged by Persons who have licensed Intellectual Property to Seller Parties for use in the Business;

(l) enter into, amend or otherwise modify, or violate the terms of, any Material Contract;

(m) acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the Business;

(n) other than as required by applicable Law or an existing Contract or agreement disclosed in Section 2.21(b)(ii) of the Disclosure Schedule, and with respect to Continuing Employees, enter into any employment contract, pay or agree to pay any bonus, additional salary, severance, termination payment or special remuneration to such Continuing Employee (or change the material terms of employment or engagement thereof), or increase or modify the salaries, wage rates, or other compensation (including any equity-based compensation) of any such Continuing

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Employee, except payments made pursuant to written agreements outstanding on the date hereof and disclosed in Section 4.1(n) of the Disclosure Schedule;

(o) promote, reassign, demote or terminate any Continuing Employees (except for a termination with cause as determined in good faith by the Seller), or encourage any Continuing Employees to resign from Seller;

(p) cancel, amend or renew any insurance policy primarily related to the Business; or

(q) take, or agree in writing or otherwise commit to take, on behalf of Seller or on behalf of the Business, any of the actions described in Sections 4.1(a) through 4.1(p) hereof, or any other action that would (i) prevent the Seller Parties from performing, or cause the Seller Parties not to perform, their respective covenants hereunder or (ii) cause or result in any of its representations and warranties of the Seller Parties contained herein to be untrue or incorrect.

4.2 Negative Covenants . Until the earlier of (i) the Closing, or (ii) the date of termination of this Agreement pursuant to the provisions of Section 8.1 hereof, Seller shall not (nor shall Seller permit, as applicable, any of its respective Affiliates or any officers, directors, employees, stockholders, agents or representatives of any of the foregoing to), directly or indirectly, take any of the following actions with any party other than with the consent of the Buyer Parties and their representatives, advisors and designees: (a) solicit, encourage, seek, entertain, support, assist, initiate or participate in any inquiry, negotiations or discussions, or enter into any agreement, with respect to any offer or proposal to sell all or any part of the Business, whether by merger, consolidation, purchase of shares or assets, tender offer, other business combination, license or otherwise, or effect any such transaction, (b) disclose any information not customarily disclosed to any Person concerning the Business or the Purchased Assets, or afford to any Person access to the properties, technologies, books or records of same, not customarily afforded such access, (c) assist, facilitate or cooperate with any Person to make any proposal regarding the transactions referenced in clause (a), or (d) enter into any agreement with any Person relating to any of the foregoing. Seller shall immediately cease and cause to be terminated any such negotiations, discussions, grants of access, sharing of information or agreements (other than with Buyer) that are the subject matter of clause (a), (b), (c) or (d) above. In the event that Seller, or any of its respective Affiliates shall receive, prior to the Closing or the termination of this Agreement in accordance with Section 8.1 hereof, any offer, proposal, or request, directly or indirectly, of the type referenced in clause (a), (c), or (d) above, or any request for disclosure or access as referenced in clause (b) above, Seller shall immediately (x) suspend any discussions with such offeror or party with regard to such offers, proposals, or requests and (y) notify the Buyer Parties thereof in writing promptly (but in any event within one (1) Business Day of receipt of same), which notice shall include information as to the identity of the offeror or the party making any such offer or proposal and the specific terms of such offer or proposal, as the case may be, and such other information related thereto as the Buyer Parties may reasonably request, to the extent such information is not subject to a contractual obligation of confidentiality or nondisclosure. The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 4.2 were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties hereto that the Buyer

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Parties shall be entitled to an immediate injunction or injunctions, without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Section 4.2 and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof or any foreign court having jurisdiction, this being in addition to any other remedy to which Buyer may be entitled at law or in equity. Without limiting the foregoing, it is understood that any violation of the restrictions set forth above by any officer, director, agent, employee, independent contractor, member, stockholder, agent, representative or Affiliate of Seller shall be deemed to be a breach of this Agreement by Seller.

4.3 Procedures for Requesting Buyer Consent . If Seller or any of its Affiliates desires to take an action which would be prohibited pursuant to Section 4.1 of this Agreement without the written consent of the Buyer Parties, prior to taking such action Seller may request such written consent in accordance with Section 9.1 hereof.

4.4 Notice to the Buyer Parties . If Seller or any of its Affiliates becomes aware of any change to the status of any of the Purchased Assets, including changes in filing status, the receipt of letters disputing the validity of the Transferred IP or any other indications of a change in status affecting the Purchased Assets, then Seller shall notify the Buyer Parties in writing within two (2) Business Days in accordance with Section 9.1 hereof.

ARTICLE V.

ADDITIONAL AGREEMENTS

5.1 Taking of Necessary Action; Further Action; Access to Information .

(a) If at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and the Related Agreements and to vest the Buyer Parties with full right, title and possession to all Purchased Assets, the Buyer Parties, Seller Parties and their respective officers and directors are fully authorized in the name of their respective corporations or companies, as the case may be, or otherwise, to use commercially reasonably efforts to take such actions in accordance with all applicable Laws, including executing and delivering such other agreements and instruments, as may be necessary or desirable in connection with the foregoing. The Buyer Parties and Seller Parties shall work together and use their commercially reasonable efforts to obtain all consents required by the Assumed Contracts (and not just those Assumed Contracts provided for on Schedule 1.7(c) ) provided, however , that neither the Buyer Parties nor the Seller Parties shall be obligated to pay any consideration therefor to any third party from whom consent or approval is requested.

(b) To the extent any of the Seller Parties or Buyer Parties identify any Technology or Intellectual Property Rights that are Purchased Assets but were not listed on the applicable Schedule to this Agreement, or identify Technology, Intellectual Property Rights or other assets that should not be included as Purchased Assets but are so listed in an applicable Schedule to this Agreement, and mutually agree to the characterization of such asset, then the parties agree

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to amend the applicable schedule to include or remove such additional Technology and Intellectual Property Rights, and the parties agrees to deliver and assign any such Technology and Intellectual Property Rights to the other party and to deliver any such instruments of assignment to the other party as reasonably requested, and such assignment shall be deemed to be made effective as of the Closing.

(c) From time to time after the date hereof, Seller shall, and shall cause its Affiliates to, use commercially reasonable efforts to execute and deliver such other instruments of transfer and documents related thereto and take such other action as the Buyer Parties may reasonably request in order to effect the Asset Purchase and effectively transfer to Buyer Parent, and to place Buyer Parent in possession and control of, the Purchased Assets, to enable Buyer Parent to exercise and enjoy all rights and benefits with respect thereto. In addition, there may exist Intellectual Property that, contrary to the intent of this Agreement, any Related Agreement and the agreements entered into in connection with this Agreement, that existed as of the date hereof and is discovered to have been inadvertently retained by Seller Parties or assumed by Buyer Parties. The Seller Parties and the Buyer Parties shall, and shall cause their respective Subsidiaries, if any, and Affiliates to, cooperate in good faith to promptly effect the transfer of such Intellectual Property, to or by the appropriate party and shall not use the determination that remedial actions need to be taken to alter the original intent of the Seller Parties and the Buyer Parties with respect to the Intellectual Property to be transferred to the Buyer Parties. Without limiting the foregoing, each Seller Party further agrees to use commercially reasonable efforts to perform (or cause to be performed) all such lawful acts and to execute (or cause to be executed) all such further assignments and other lawful documents as may reasonably be necessary to effectuate the assignment of, and to perfect and record the assignment of, the Transferred IP to the Buyer Parties in the various jurisdictions and permit for the orderly transition of the prosecution and maintenance of such Transferred IP from Seller Parties to the Buyer Parties. Such assistance shall include, without limitation, Seller Parties providing: (a) a list of contact information for all Third Parties responsible for prosecuting and maintaining the Transferred IP (“ Counsel ”); (b) a letter to all such Counsel informing them of the change of ownership of the Transferred IP from Seller Parties to the Buyer Parties including language reasonably acceptable to the Buyer Parties informing and instructing such Counsel (i) to cooperate with the Buyer Parties, (ii) that it is the Buyer Parties’ desire to continue prosecution uninterrupted with the assistance of such Counsel and that Seller Parties do not object to such Counsel’s representation of the Buyer Parties with respect to prosecution of the Transferred IP, and (iii) that all further actions with respect to the Transferred IP following Closing will be at the expense of the Buyer Parties; (c) powers of attorney and powers to inspect or copy in forms reasonably acceptable to the Buyer Parties with respect to priority documents relating to items of Transferred IP identified by the Buyer Parties; and (d) the re-execution of assignments in a form reasonably acceptable to the Buyer Parties for those items of Transferred IP identified by the Buyer Parties, as required by local law and practice.

(d) To the fullest extent permitted under the applicable IP Contracts, from time to time after the date hereof, Seller Parties shall, and shall cause its Affiliates and each of its Affiliates’ permitted successors and assigns to such IP Contracts, to, promptly seek and obtain the return and protection from disclosure and distribution all applicable Transferred Technology; provided , that where such prompt return of such Transferred Technology is not available pursuant to the terms of

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such IP Contract, Seller Parties shall, and shall cause its Affiliates and each of its and its permitted Affiliates’ permitted successors and assigns to such IP Contracts to, take any and all actions necessary to enforce the terms of such IP Contract on behalf of, and where applicable, at the direction of the Buyer Parties.

(e) Notwithstanding anything to the contrary contained in this Agreement, if the conveyance, assignment, transfer or delivery or attempted conveyance, assignment, transfer or delivery to the Buyer Parties of any of the Purchased Assets (i) is prohibited by any applicable Law or (ii) would require any authorizations, approvals, consents or waivers from another Person to convey, assign, transfer or deliver such asset, and such authorizations, approvals, consents or waivers have not been obtained prior to the Closing Date (each, a “ Non-Assignable Asset ”), in either case, the Closing shall proceed, but the Closing shall not constitute the conveyance, assignment, transfer or delivery of such Non-Assignable Asset, and this Agreement shall not constitute a conveyance, assignment, transfer or delivery of such Non-Assignable Asset unless and until such authorization, approval, consent or waiver is obtained. After the Closing, the parties shall continue to use commercially reasonable efforts and cooperate with each other, without additional consideration, to obtain any such authorization, approval, consent or waiver as promptly as practicable, it being understood that (i) the Seller Parties shall not be required to pay any consideration to any other Person (unless the Buyer Parties agree to reimburse the Seller Parties for such amounts), offer or grant any accommodation (financial or otherwise) to any other Person to obtain any authorization, approval consent or waiver of such other Person and (ii) to the extent the foregoing shall require any action that would, or would continue to negatively affect the Buyer Parties following the Closing, such action shall require the consent of Buyer. Once authorization, approval or waiver of or consent for the conveyance, assignment, transfer or delivery of any such Non-Assignable Asset is obtained, the Seller Parties shall convey, assign, transfer and deliver such Non-Assignable Asset to the Buyer Parties at no additional cost to the Buyer Parties but subject to the immediately foregoing sentence. Pending such transfer, the Seller Parties shall hold in trust such Non-Assignable Asset and provide to Buyer Parties or their designated assignee all of the benefits associated with the ownership thereof, and the Seller Parties shall cause such Non-Assignable Asset to be used or retained as may be reasonably instructed by the Buyer Parties and shall not use or access such Non-Assignable Asset except as necessary to provide the benefit of such Non-Asset to the Buyer Parties.

(f) Without limiting Section 5.1(e) above, with respect to each Assumed Contract that remains a Non-Assignable Asset, the Seller Parties agree to cooperate with the Buyer Parties, as reasonably requested in writing by the Buyer Parties, to extend and make available to the Buyer Parties any rights and/or benefits available under such Assumed Contract to the extent permitted by applicable Law and such Assumed Contract; provided that Buyer Parties agrees to pay and pays all amounts and fulfills all obligations owing to the counterparty to such Non-Assignable Asset as a result of so extending to the Buyer Parties such rights and obligations with respect to such Non-Assignable Assets and the Buyer Parties assume and satisfy any other liabilities with respect to such Non-Assignable Asset. Without limiting the foregoing but to the extent permitted by applicable Law and such Assumed Contract: (i) upon the written request of Buyer, the Seller Parties agree to, or to cause their Affiliates to, exercise rights (for example, elections or options) on Buyer Parties’ behalf under such Assumed Contract, at the Buyer Parties’ expense, and the Seller Parties or their Affiliates, as applicable, shall not exercise any of their rights under such Contract

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unless requested or approved in writing by Buyer Parties; (ii) the Seller Parties shall keep Buyer Parties informed as to the Seller Parties’ written communications from the other party to such Assumed Contract, including notifying Buyer Parties in the event the Seller Parties is notified with respect to matters that require the Seller Parties’ consent (or which trigger an option or an election by the Seller Parties) under such Assumed Contract, or regarding matters that would reasonably negatively affect the Seller Parties’ or Buyer Parties’ rights thereunder; and (iii) in the event that Buyer Parties obtains an agreement from the other party to such Contract to transfer the rights under such contract directly to Buyer Parties, the Seller Parties shall promptly transfer such rights to Buyer Parties in a writing reasonably acceptable to Buyer Parties, at Buyer Parties’ expense.

5.2 Confidentiality . Each of the parties hereto hereby agrees that the information obtained pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated hereby shall be governed by the terms of the Nondisclosure Agreement dated May 20, 2016 by and between Seller and Buyer Parent (the “ Confidentiality Agreement ”), which shall bind each of the other parties hereto as if they were a party to such Confidentiality Agreement. Each of the parties further agrees that following Closing, all of the Purchased Assets shall be considered the Confidential Information of the Buyer Parties, and Seller agrees to not use or disclose the same, subject to the exceptions to the definition of Confidential Information set forth in the Confidentiality Agreement. Each of Buyer Parent and Seller acknowledge that the other party’s common stock is publicly traded and that any information obtained by one party regarding the other party Buyer Parties, including information regarding this Agreement and the transaction contemplated hereby, could be considered to be material non‑public information within the meaning of U.S. federal and state securities Laws. Accordingly, each party acknowledges and agrees not to engage in any transactions in the Buyer Parent’s common stock or Seller’s common stock in violation of applicable securities Laws.

5.3 Expenses . All fees and expenses incurred in connection with the Asset Purchase including all financial advisory, consulting, and all other fees and expenses of Third Parties (including any costs incurred to obtain consents, waivers or approvals as a result of the compliance with the terms hereof) incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby (“ Third Party Expenses ”), shall be the obligation of the respective party incurring such fees and expenses. Notwithstanding the foregoing, Seller shall be responsible for (i) any and all costs related to the virtual data room and (ii) the payment of any transaction related bonus or similar employee carve-out plan triggered by the consummation of the Asset Purchase.

5.4 Public Disclosure . Each of the parties hereto acknowledge and agree that neither it nor any officer, director, employee, independent contractor or representative of the respective party shall issue any statement or communication to the public or the press regarding this Agreement or the Asset Purchase without the prior written consent of the other parties hereto; except, that if any of the parties hereto is required under law to make such a statement or communication, then the disclosing party shall first provide the other parties hereto with an opportunity to review and comment on both the legal requirement to make such statement or communication and the content thereof; provided , however , that the foregoing shall not preclude communications or disclosures

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necessary to comply with accounting, stock exchange or federal securities Law disclosure obligations.

5.5 Tax Matters .

(a) Transfer Taxes. Seller Parties shall be responsible for and shall pay when due any sales, use, value-added, gross receipts, excise, registration, stamp duty, transfer or other similar Taxes or governmental fees (including any interest or penalties related thereto) that may be payable in connection with the Asset Purchase (“ Transfer Taxes ”). The party required by law to file a Return with respect to such Transfer Taxes shall do so within the time period prescribed by law, and Seller Parties shall promptly remit to the Buyer Parties the amount of any Transfer Taxes so payable by the Buyer Parties upon receipt of notice that such Transfer Taxes are payable.

(b) Tax Reporting and Returns; Responsibility for Taxes.

(i) Subject to Section 5.5(b)(iii) , Seller will be responsible for the preparation and filing of all Returns of Seller Parties with respect to Seller Parties’ ownership or use of the Purchased Assets (including Returns required to be filed after the Closing Date), and such Returns shall be true, complete and correct and prepared in accordance with applicable law in all material respects. Seller will be responsible for and will make all payments of Taxes shown to be due on such Returns.

(ii) The Buyer Parties will be responsible for the preparation and filing of all Returns they are required to file with respect to the Buyer Parties’ ownership or use of the Purchased Assets. Such Returns shall be true, complete and correct and prepared in accordance with applicable law in all material respects. The Buyer Parties will be responsible for and will make all payments of Taxes shown to be due on such Returns.

(iii) In the case of any real or personal property Taxes (or other similar Taxes) attributable to the Purchased Assets for which Taxes are reported on a Return covering a period commencing before the Closing Date and ending thereafter (a “ Straddle Period Tax ”), any such Straddle Period Taxes shall be prorated between the Buyer Parties and Seller Parties on a per diem basis. The party required by law to pay any such Straddle Period Tax (the “ Paying Party ”) shall file the Return related to such Straddle Period Tax within the time period prescribed by law and shall timely pay such Straddle Period Tax. To the extent any such payment exceeds the obligation of the Paying Party hereunder, the Paying Party shall provide the other party (the “ Non-Paying Party ”) with notice of payment, and within ten (10) days of receipt of such notice of payment, the Non-Paying Party shall reimburse the Paying Party for the Non-Paying Party’s share of such Straddle Period Taxes.

(c) Cooperation . To the extent relevant to the Purchased Assets, each party shall (i) provide the other with such assistance as may reasonably be required in connection with the preparation of any Return and the conduct of any audit or other examination by any Tax authority or in connection with judicial or administrative proceedings relating to any liability for Taxes and (ii) retain and provide the other with all records or other information that may be relevant to the preparation of any Returns, or the conduct of any audit or examination, or other proceeding relating

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to Taxes. Each party shall retain all documents, including prior years’ Returns, supporting work schedules and other records or information with respect to all sales, use, value added and employment Returns and, absent the receipt by such party of the relevant Tax clearance certificates, shall not destroy or otherwise dispose of any such records for six (6) years after Closing without the prior written consent of the other party.

5.6 Filings . Each Seller Party shall, upon request by a Buyer Party, furnish it with all information concerning itself, its subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary in connection with any statement, filing, notice or application made by or on behalf of the Buyer Parties to any Governmental or Regulatory Body in connection with the transactions contemplated by this Agreement.

5.7 Employee Matters .

(a) Offers and Offer Terms . As promptly as practicable after the date hereof, Buyer Parent shall, or shall cause one of its Subsidiaries to, offer employment to each of the Offered Employees pursuant to a written employment offer letter. Buyer shall use its commercially reasonable efforts to provide each Offered Employee employment on terms that are comparable to other employees of Buyer in a similar position to that of such Offered Employee. The Continuing Employees who commence employment with Buyer Parent, or one of its Subsidiaries, as of the Closing (or such later date specified by Buyer Parent with respect to any Continuing Employees who are on leave from active work as of the Closing provided, however, that such later date be no later than the date 30 days following any such Continuing Employee returning to actively at work status) shall be referred to herein collectively as “ Transferred Employees .”

(b) Retained Liabilities . If any Offered Employee does not accept the offer of employment from Buyer Parent or an Affiliate of Buyer Parent for any reason, and Seller or its Subsidiaries elects to terminate such Offered Employee’s employment, any termination, notice, severance and similar payments will be a Retained Liability. Should any Employee allege at any time that he/she shall automatically transfer employment to Buyer Parent or an Affiliate of Buyer Parent, the parties will use reasonable endeavors to procure that any such Employee enters into a binding written agreement in settlement of any and all claims he/she may have against the Buyer Parties and Seller, and Seller will fund the cost of procuring such Employee’s written agreement in this regard and shall indemnify, defend and hold harmless each Buyer Party in respect of any Liabilities associated with defending and/or settling any claim brought by such an employee, including payments or other costs arising from or in connection with any failure to inform or consult any Employee.

(c) Compliance with Law . Seller or its Subsidiaries and Buyer shall comply with all obligations under applicable Laws to notify and/or consult with Continuing Employees or employee representatives, unions, works councils, or other employee representative bodies, if any, and shall provide such information to the other party as is reasonably required by that party to comply with its notification and/or consultation obligations. Any Liability resulting from the failure by Seller or its Subsidiaries to comply with such obligations shall be borne by Seller, and such Liabilities shall constitute Retained Liabilities.

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(d) Benefits . Seller or its Subsidiaries shall retain responsibility for and continue to pay all medical, life insurance, disability and other welfare plan expenses and benefits for each Continuing Employee with respect to claims incurred by such Continuing Employees or their covered dependents prior to the Closing Date. Expenses and benefits with respect to claims incurred by Transferred Employees or their covered dependents on or after the Closing shall be the responsibility of Buyer. For purposes of this paragraph, a claim is deemed incurred: in the case of medical or dental benefits, when the services that are the subject of the claim are performed; in the case of life insurance, when the death occurs; in the case of long‑term disability benefits, when the disability occurs; in the case of workers compensation or similar benefits, when the event giving rise to the benefits occurs; and otherwise, at the time the Continuing Employee or covered dependent becomes entitled to payment of a benefit (assuming that all procedural requirements are satisfied and claims applications properly and timely completed and submitted).

(e) Parent Plan Waivers and Credits . For purposes of each Transferred Employee’s participation in any employee benefit plan, program, policy or arrangement of Buyer Parent or any of its Subsidiaries (each, a “ Parent Plan ”) following the Closing, Buyer Parent shall, or shall cause its Subsidiaries to use commercially reasonable efforts to: (i) waive any preexisting condition exclusions and waiting periods with respect to participation and coverage requirements applicable to such Transferred Employee (and any eligible dependents thereof) under any Parent Plan providing medical, dental or vision benefits and (ii) use commercially reasonable efforts to provide such Transferred Employee with credit for any copayments, coinsurance and deductibles paid under a Seller Employee Plan prior to such Transferred Employee’s coverage under any Parent Plan during the calendar year in which such amount was paid, to the same extent such credit was given under the Seller Employee Plan that such Transferred Employee participated in immediately to the Closing in satisfying any applicable deductible or out-of-pocket requirements under such Parent Plan and (iii) recognize all service of each Transferred Employee prior to the Closing with the Seller and its Subsidiaries (or any predecessor entities of either) for all purposes including vesting, eligibility and benefit accrual purposes (except for benefit accrual under any defined benefit retirement plan) and for purposes of any equity incentive program.

(f) Assumption of Documentation . Where legally permissible and unless the parties agree otherwise, Buyer will assume any work permits, visas or other immigration documents relating to any Key Employee and Seller will be responsible for the costs associated with the transfer of these documents, including, if necessary, the costs of third-party attorneys and consultants.

(g) Non-Solicitation . None of the Seller Parties, or any of their representatives or Affiliates will at any time prior to the date that is twenty-four (24) months after the Closing Date, directly or indirectly, solicit the employment of any employee of the Buyer Parties working with the Business without Buyer’s prior written consent. None of the Buyer Parties, or any of their representatives or Affiliates will at any time prior to the date that is twenty-four (24) months after the Closing Date, directly or indirectly, solicit the employment of any employee of the Seller Parties who was an employee of the Seller Parties as of immediately following the Closing or within the thirty (30) days thereafter without Seller’s prior written consent. The term “solicit the employment” shall not be deemed to include generalized searches for employees through media advertisements, employment firms or otherwise that are not focused on or directed to the applicable employees.

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This restriction set forth in this Section 5.7(g) shall not apply to any employee whose employment was involuntarily terminated by the Buyer Parties or Seller Parties or their respective successors or assigns, after the Closing.

(h) Non-Competition .

(i) Seller agrees that, as part of the consideration for the payment of the Purchase Price, for a period of twenty-four (24) months immediately following the Closing Date, neither Seller nor any of its subsidiaries will, directly or indirectly, engage in any business (whether as owner, joint venture, reseller or otherwise) that manufactures, licenses, markets distributes or sells any products or Intellectual Property that are competitive with the Business Products.

(ii) The Seller Parties acknowledge that the restrictions set forth in Section 5.7(h)(i) constitute a material inducement to the Buyer Parties entering into and performing this Agreement. Seller Parties further acknowledge, stipulate and agree that a breach of such obligation could result in irreparable harm and continuing damage to the Buyer Parties for which there may be no adequate remedy at Law and further agrees that in the event of any breach of said obligation, the Buyer Parties may be entitled to injunctive relief and to such other relief as is proper under the circumstances.

(iii) If any provision contained in this Section 5.7 shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section 5.7(h) , but this Section 5.7(h) shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the parties hereto that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time which is not permitted by applicable Law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable Law, a court of competent jurisdiction shall construe and interpret or reform this Section 5.7(h) to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable Law.

5.8 Licensed Intellectual Property Rights . Seller, on behalf of itself and its Affiliates, hereby grants to Buyer Parent and its Affiliates an irrevocable, perpetual, worldwide, non-exclusive, royalty-free, fully paid-up, transferable, right and license (including the right to grant and authorize sublicenses) under the Licensed Intellectual Property Rights to: (a) use, make, have made, import, sell, offer for sale and otherwise dispose of any and all products, services and technologies, including, without limitation, any component or subcomponent of any such product, service or technology, and to practice any and all methods and processes in connection therewith; and (b) copy, distribute, modify, make derivative works of (and distribute such derivative works and underlying works), display, perform and or otherwise exploit any and all products, services and technologies, including, without limitation, any component or subcomponent of any such product, service or technology.

5.9 Regulatory Approvals . Seller Parties and Buyer Parties shall timely and promptly make all filings which may be required by each of them in connection with the consummation of

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the transactions contemplated hereby by any U.S., non-U.S. or multinational Governmental or Regulatory Body, including in response to any request by any Governmental or Regulatory Body in contemplation of a review of the transactions contemplated hereby, and the parties hereto shall respectively use all reasonable commercial efforts to cause the receipt of approval. Each party hereto shall furnish to the other such necessary information and assistance as the other party may reasonably request in connection with the preparation of any necessary filings or submissions by it to any Governmental or Regulatory Body. Each party hereto shall provide the other party the opportunity to make copies of all correspondence, filings or communications (or memoranda setting forth the substance thereof) between such party or its representatives, on the one hand, and any state, foreign or multinational Governmental or Regulatory Body or members of their respective staffs, on the other hand, with respect to this Agreement or the transactions contemplated hereby. Each party hereto agrees to inform promptly the other party of any communication made by or on behalf of such party to, or received by or on behalf of such party from, any state, foreign or multinational Governmental or Regulatory Body regarding any of the transactions contemplated hereby.

5.10 Contacts with Suppliers and Customers . In contemplation of the Closing, Seller Parties shall permit the Buyer Parties to discuss and meet, and shall reasonably cooperate in such discussions and meetings, with any customer or supplier of the Business that the Buyer Parties so request. A representative of Seller Parties shall have the right, but not the obligation, to accompany the Buyer Parties’ representative to such meetings and shall participate with the Buyer Parties’ representative in any such discussions. In addition, Seller Parties and the Buyer Parties will prepare a communications plan for business partners of the Business, and agree on a plan to contact any suppliers to, or customers of, the Business in connection with or pertaining to any subject matter of this Agreement, any Assumed Contracts or the Related Agreements and to facilitate the transition of the Business, including the preparation of letters to all customers, suppliers, distributors and other business partners of the to notify them of the Closing and provide information regarding the transition of the Business to the Buyer Parties. Seller Parties will be responsible for contacting parties to any Assumed Contracts for which consent is required in connection with their assignment pursuant to this Agreement. Notwithstanding anything to the contrary contained herein, this Agreement shall not affect Seller Parties’ continuing right to contact customers and suppliers in connection with the operation or conduct of the Business nor the Buyer Parties’ continuing right to contact customers and suppliers in connection with the operation or conduct of its business.

5.11 Inventory and Trademarks . Following the Closing, Buyer Parties shall have the right to sell any Transferred Inventory (and any inventory resulting from any work in progress as of the Closing), notwithstanding any such inventory being marked with any Excluded Trademarks. With respect to any printed materials that are Purchased Assets, including without limitation marketing and collateral materials, packaging, and the like, Buyer Parties shall use reasonable efforts to obscure or replace any Excluded Trademarks, but shall nonetheless have the right to use such materials in unmodified form for ninety (90) days following the Closing. With respect to any Excluded Trademarks that are embedded in any Transferred Technology (including without limitation mask works, reticles, and the like), Buyer Parties will use reasonable efforts to remove or obfuscate such Excluded Trademarks from such products manufactured after the Closing; provided , that to the extent such removal or obfuscation is not reasonably practicable, Buyer Parties may continue to manufacture and sell products notwithstanding the inclusion of such Excluded

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Trademarks where such Excluded Trademarks are not readily viewable by end customers when provided as an end product to customers.

ARTICLE VI.

CONDITIONS TO THE ASSET PURCHASE

6.1 Conditions to Obligations of Each Party to Effect the Asset Purchase . The respective obligations of Seller Parties and the Buyer Parties to effect the Asset Purchase shall be subject to the satisfaction or waiver (as applicable), at or prior to the Closing, of the following conditions:

(a) No Order; Illegality . No Governmental or Regulatory Body shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Asset Purchase (taken as a whole) or the Asset Purchase illegal or otherwise prohibiting consummation of the Asset Purchase (taken as a whole) or the Asset Purchase.

(b) No Injunctions or Restraints . No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Asset Purchase (taken as a whole) or the Asset Purchase shall be in effect, nor shall any proceeding, action, suit, claim or injunction brought by any Governmental or Regulatory Body seeking any of the foregoing be threatened or pending.

6.2 Conditions to the Obligations of the Buyer Parties . The obligations of the Buyer Parties to consummate and affect the Asset Purchase shall be subject to the satisfaction at or prior to the Closing of each of the following conditions in a manner acceptable to the Buyer Parties in their sole discretion, any of which may be waived, in writing, by the Buyer Parties:

(a) Third-Party Consents. Seller shall have delivered to Buyer Parties all necessary consents, waivers and approvals as are required in connection with the Asset Purchase and for any Assumed Contract listed on Schedule 1.7(c) .

(b) Employees .

(i) Each of the Key Employees (A) shall be an employee of the Seller immediately prior to the Closing and shall not have taken any action to rescind or terminate such employee’s employment agreement with Seller (except in connection with accepting an offer of employment from Buyer Parent or an Affiliate of Buyer Parent); (B) shall have entered into a Key Employee Employment Agreement with Buyer Parent or an Affiliate of Buyer Parent and such Key Employee Employment Agreement shall be in full force and effect as of the Closing; and (C) shall not have taken any action, or expressed any intent, to dispute, repudiate, terminate or modify such Key Employee’s Key Employee Employment Agreement with Buyer Parent or an Affiliate of Buyer Parent, as applicable.

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(ii) At least 62.5% of the Offered Employees shall have executed an offer letter for employment with Buyer Parent or an Affiliate of Buyer Parent and each such Offered Employee (A) shall be an employee of the Seller immediately prior to the Closing and shall not having taken any action to rescind or terminate such employee’s employment agreement with Seller (except in connection with accepting accept an offer of employment from Buyer Parent or an Affiliate of Buyer Parent); (B) shall have executed an offer letter for employment with Buyer Parent or an Affiliate of Buyer Parent and such offer letter of employment shall be in full force and effect as of the Closing; and (C) shall not having taken any action to rescind or terminate such Offered Employee’s offer letter of employment agreement with Buyer Parent or an Affiliate of Buyer Parent, as applicable.

(d) Assignment Agreements. Seller shall execute and deliver to the Buyer Parties such quitclaim deeds or other assignment instruments with respect to the Transferred IP, including the IP Recordation Agreements.

(e) No Material Adverse Effect . There shall not have occurred or be continuing any event or condition of any character that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(f) Certificate of Secretary of Seller . The Buyer Parties shall have received one or more certificates, validly executed by each Secretary of Seller, certifying with respect to Seller as to the valid adoption of the resolutions of the board of directors of Seller (whereby the Asset Purchase and the other transactions contemplated hereunder were approved) (the “ Seller Secretary Certificate ”).

6.3 Conditions to the Obligations of Seller Parties . The obligations of Seller Parties to consummate and affect the Asset Purchase shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, by Seller Parties:

(a) Payment of Purchase Price . The Buyer Parties shall have paid to Seller Parties the Cash Amount in accordance with Section 1.7(a) hereof.

(b) Funding of Escrow . The Escrow Amount shall have been deemed paid and delivered into the Escrow Fund to be held pursuant to the escrow arrangements contained in Section 7.3.

ARTICLE VII.

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SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW

7.1 Survival of Representations, Warranties and Covenants . The representations and warranties of the Seller Parties in this Agreement shall survive the Closing until the twelve (12) month anniversary of the Closing Date; provided , however , that in the event of fraud, such representation or warranty that is the subject of such fraud shall survive indefinitely with respect to the Person committing or who has committed such fraud; provided , further , however , that, notwithstanding the foregoing, those representations and warranties contained in Sections 2.3 (Authority), 2.5 (Consents), 2.6 (Tax Matters), 2.8 (Title to Properties; Absence of Liens and Encumbrances), 2.26 (Valid Title to Purchased Assets) and 2.29 (Sufficiency) (collectively, the “ Special Representations ”) shall survive until the expiration of the statute of limitations applicable to the matters referenced therein unless specifically noted otherwise. The representations and warranties of the Buyer Parties contained in this Agreement shall terminate at the Closing. The covenants and agreements of each of the parties hereto contained in this Agreement shall survive the Closing in accordance with their respective terms. The expiration of the periods referenced in this Section 7.1 shall be referred to in this Agreement as the “ Survival Date .”

7.2 Indemnification .

(a) By virtue of the Asset Purchase, from and after the Closing, the Seller Parties (the “ Indemnifying Parties ”) hereby agree to indemnify and hold the Buyer Parties, their Affiliates and their respective officers, directors, and successors (the “ Indemnified Parties ”), harmless against any and all claims, losses, Liabilities, Taxes, damages, deficiencies, costs and expenses, including reasonable attorneys’ fees and expenses of investigation and defense (hereinafter, individually, a “ Loss ” and, collectively, “ Losses ”) paid, suffered, incurred, sustained or accrued by the Indemnified Parties, or any of them, directly or indirectly, as a result of or arising in connection with the following:

(i) any breach or inaccuracy of any representation or warranty of Seller contained in this Agreement (provided, that, in the event of any such breach or inaccuracy of a representation or warranty which includes any qualification as to “materiality,” “Material Adverse Effect,” “knowledge” or “Knowledge” for purposes of determining the amount of any Loss with respect to such breach or inaccuracy, no effect will be given to such qualification as to “materiality,” a “Material Adverse Effect,” “knowledge” or “Knowledge” contained therein (for the avoidance of doubt, such qualifications would continue to apply to the determination as to whether or not a breach or inaccuracy had occurred));

(ii) any failure by any Seller Party to perform or comply with any covenant applicable to any of them contained in this Agreement;

(iii) Liabilities of Seller Parties, whether arising before or after the Closing Date, that are not assumed by the Buyer Parties pursuant to this Agreement including the Retained Liabilities;

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(iv) any claim or cause of action of any Third Party to the extent arising out of any transaction or service or Liability of Seller Parties occurring or existing prior to the Closing (other than any Assumed Liabilities);

(v) any Validated Warranty Claim which is made within twelve (12) months of Closing and which is individually in excess of $100,000;

(vi) Liabilities arising from or related to any failure to comply with laws relating to bulk transfers or bulk sales with respect to the transactions contemplated by this Agreement;

(vii) any matters disclosed on Schedule 7.2(a) , for which the terms of recovery shall be set forth in such schedule;

(viii) any withholding or like Taxes imposed by any Tax authority with respect to any payment made by Buyer Parties to Seller Parties hereunder, together with any reasonable costs and expenses related thereto, to the extent that any payment pursuant to this Agreement is or has not been reduced by deductions or withholdings; and

(ix) any fraud related to this Agreement.

(b) Except as set forth in the following sentence, an Indemnified Party may not recover any Losses under Section 7.2(a) unless and until the aggregate amount of such Losses exceeds $300,000 (the “ Basket Amount ”), in which case Buyer Parties shall be entitled to recover all Losses (including the $300,000). Notwithstanding the foregoing, Buyer Parties shall be entitled to recover for, and the Basket Amount shall not apply as a threshold to, any and all claims or payments made with respect to all Losses related to (i) any breach of the Special Representations, (ii) claims made pursuant to Section 7.2(a)(v ), (iii) claims made pursuant to Section 7.2(a)(vii) or (iv) fraud.

7.3 Escrow Arrangements .

(a) At the Closing, Seller, Buyer Parent and the escrow agent shall enter into the Escrow Agreement in the form attached hereto as Exhibit C (the “ Escrow Agreement ”), and Buyer Parent will deposit with the escrow agent an amount in cash equal to $11,250,000 (the “ Escrow Amount ”) to serve as security for the indemnity obligations provided for in Section 7.2(a) hereof. The deposit of the Escrow Amount to constitute an escrow fund (the “ Escrow Fund ”) to be governed by the terms set forth herein and in the Escrow Agreement.

(b) Escrow Period; Distribution upon Termination of Escrow Period . Subject to the following requirements, the Escrow Fund shall be in existence immediately following the Closing and shall terminate on the twelve (12) month anniversary of the Closing Date (the “ Escrow Period ”); provided , however , that the Escrow Period shall not terminate with respect to any amount which is necessary to satisfy any unsatisfied claims specified in any Officer’s Certificate(s) delivered to Seller and the escrow agent prior to the end of the Escrow Period with respect to facts and circumstances existing prior to such time as specified further in the Escrow Agreement. As soon

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as all such claims have been resolved, the escrow agent shall deliver to Seller the remaining portion of the Escrow Fund, if any, not required to satisfy such claims.

(c) Cap on Indemnification. The aggregate amount to be paid by the Seller for Losses under this Article VII other than as set forth in Section 7.2(c) shall not exceed the Escrow Amount (the “ Cap ”); provided, however, that the Cap shall not apply to any Losses based upon, resulting from or arising out of, or directly or indirectly related to any claims for indemnification involving any breach of those representations and warranties contained in the Special Representations, any Losses provided for in Section 7.2(a)(ii) , (iii) , (iv) or fraud. The aggregate amount to be paid by the Seller for Losses made under Section 7.3(a) with respect to any breach of those representations and warranties contained in the Special Representations and Losses provided for in Section 7.2(a)(ii) , (iii) and (iv) shall not exceed the Purchase Price. The aggregate amount to be paid by the Seller for claims involving fraud by the Seller Parties shall not be capped. For the sake of clarity, the aggregate amount of all Losses for which the Seller Parties shall be liable pursuant to this Article VII (other than Losses related to fraud) shall not exceed the Purchase Price.

7.4 Indemnification Procedure .

(a) In the event a Buyer Party becomes aware of a claim which such Buyer Party reasonably believes will result in a Loss pursuant to this Article VII , such Buyer Party shall notify Seller, before the end of the Escrow Period, of such claim, by providing an Officer’s Certificate. For the purposes hereof, “ Officer’s Certificate ” shall mean a notarized certificate signed by any officer of an Indemnified Party: (1) stating in good faith that such Indemnified Party has paid, sustained, incurred, or accrued Losses; and (2) specifying in reasonable detail the individual items of Losses included in the amount so stated, the date each such item was paid, sustained, incurred, or accrued, or the basis for such anticipated Loss, and the nature of the breach of warranty or covenant to which such item is related. If Seller objects to Buyer Party’s claim for indemnification, Seller shall submit a notice (the “ Objection Notice ”) to such Buyer Party, with a copy to the Escrow Agent, within twenty (20) business days of Seller’s receipt of the Officer’s Certificate indicating in reasonable detail its reasons for objecting to the claim. In the event Seller delivers an Objection Notice to a Buyer Party, with a copy to the Escrow Agent, then the parties shall attempt in good faith to negotiate and agree upon the rights of the respective parties with respect to each of such claims. If the Seller and the Buyer Party should so agree, a memorandum setting forth such agreement shall be prepared and signed by authorized signatories of both parties and submitted to the Escrow Agent for release of all or that portion of the Escrow Funds due in the amount and to the party as indicated in such memorandum. If Seller and the Buyer Party are unable to agree with respect to each of such claims within thirty (30) days following receipt by the Buyer Party of the Objection Notice, any party may handle the dispute pursuant to the terms set forth under this Agreement.

(b) In the event an Indemnified Party receives notice of the assertion or commencement of any action, suit, claim or other legal proceeding made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement (a “ Third Party Claim ”) against an Indemnified Party with respect to which the Seller is obligated to provide indemnification under this Agreement, the Buyer Party shall give the Seller prompt written notice

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thereof. The failure to give such prompt written notice shall not, however, relieve the Seller of its indemnification obligations, except to the extent that the Seller is materially prejudiced by the lack of prompt written notice, or forfeits material rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Seller. Other than with respect to Pre-Closing Tax Controversies which shall be handled as provided in Section 7.4(c) below, Seller shall be entitled, on behalf of the Indemnifying Parties, at its expense, to participate in, but not to determine or conduct the defense of any such claim. Such participation shall include the right to consult with Buyer regarding the selection of outside legal counsel and the budget to be used by such counsel, but Seller shall have no ability to determine, or right to consent to, Buyer's determinations. Except as provided in Section 7.4(c) with respect to any Other Tax Controversy, Buyer shall have the right in its sole discretion to conduct the defense of, and to settle, any such claim; provided, however, that except with the consent of Seller, any settlement of any such Third Party Claim with third party claimants shall (i) not be determinative of the amount of Losses relating to such matter or whether a breach has occurred and (ii) include a complete release of claims against the Indemnifying Parties by such third party (without limiting the rights to indemnification of Buyer against the Indemnifying Parties). In the event that Seller has consented to any such settlement, the Indemnifying Parties shall have no power or authority to object under any provision of this Section 7.4(b) to the amount of any Third Party Claim by Buyer against the Escrow Fund, or against the Indemnifying Parties directly, as the case may be, with respect to such settlement.

(c) If the Third Party Claim relates to Taxes solely for taxable periods or portions thereof ending on or before the Closing Date (a “ Pre-Closing Tax Controversy ”) for which the Buyer Party may be entitled to indemnity from the Seller Party, Seller shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of the Pre-Closing Tax Controversy at the Seller’s expense and by the Seller’s own counsel, and the Indemnified Parties shall cooperate in good faith in such defense. Seller shall not settle any Pre-Closing Tax Controversy without the consent of the applicable Buyer Party if and only if such settlement would result in an increase in Taxes not described in Section 7.2(a) (such consent not to be unreasonably withheld, conditioned or delayed). Buyer shall not settle any Third Party Claim relating to Taxes for taxable periods or portions thereof ending on or before the Closing Date and for taxable periods or portions thereof ending after the Closing Date (an “ Other Tax Controversy ”) without the consent of Seller (such consent not to be unreasonably withheld, conditioned or delayed). The provisions of this Section 7.4(c) shall govern rather than the provisions of Section 7.4(b) in the event of any conflict.

7.5 No Indemnification Limitations and Other Matters .

(a) Nothing in this Agreement shall limit the liability of any Seller Party for any breach of any representation, warranty or covenant set forth in this Agreement if the Asset Purchase are not consummated.

(b) Notwithstanding anything to the contrary set forth in this Agreement, the parties hereto agree and acknowledge that any Indemnified Party may bring a claim for

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indemnification for any Loss under this Article VII notwithstanding the fact that such Indemnified Party had knowledge of the breach, event or circumstances giving rise to such Loss prior to the Closing or waived any condition to the Closing related thereto.

(c) Payments by Seller to the Indemnified Party in respect of any Losses pursuant to this Article VII shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received or reasonably expected to be received by the Indemnified Party in respect of any such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under any existing and available insurance policies or indemnity, contribution or other similar agreements for any Losses prior to seeking indemnification under this Agreement.

(d) In no event shall Seller be liable to any Indemnified Party for any punitive, incidental, consequential, special or indirect damages (except in each case to the extent that such damages are awarded to a third party in a third party claim), including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple. Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall limit the rights of any party hereto to apply for equitable remedies to enforce the other party or parties’ obligations hereunder.

(e) All claims for recovery for any Loss or Losses from the Escrow Fund shall be made pursuant to and in accordance with, and be governed by the terms of, this Agreement and the Escrow Agreement.

(f) The parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from intentional fraud of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VII . Nothing in this Section 7.5(f) shall limit any Person's right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any fraud by any party hereto.

7.6 Tax Treatment . Any indemnification payment made pursuant to this Agreement shall be treated by Buyer Parties and the Seller Parties as an adjustment to the Purchase Price for Tax purposes unless otherwise required by Law.

ARTICLE VIII.

TERMINATION, AMENDMENT AND WAIVER

8.1 Termination . Except as provided in this Section 8.1 hereof, this Agreement may be terminated and the Asset Purchase abandoned at any time prior to the Closing:

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(a) by written agreement of the Seller Parties and the Buyer Parties;

(b) by either the Buyer Parties or the Seller Parties if the Closing Date shall not have occurred by August 29, 2016; provided , however , that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Asset Purchase to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

(d) by the Buyer Parties or the Seller Parties if: (i) there shall be a final non-appealable Order in effect preventing consummation of Asset Purchase, or (ii) there shall be any Law or Order enacted, promulgated or issued or deemed applicable to the Closing by any Governmental or Regulatory Body that would make consummation of the Closing illegal;

(e) by any of the Buyer Parties if such party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement of any of the Seller Parties contained in this Agreement such that the conditions set forth in Section 6.2 hereof would not be satisfied and such breach has not been cured within ten (10) calendar days after written notice thereof to Seller; provided , however , that no cure period shall be required for a breach which by its nature cannot be cured; or

(f) by any of the Seller Parties if such party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement of the Buyer Parties contained in this Agreement such that the conditions set forth in Section 6.3 hereof would not be satisfied and such breach has not been cured within ten (10) calendar days after written notice thereof to the Buyer Parties; provided , however , that no cure period shall be required for a breach which by its nature cannot be cured.

8.2 Effect of Termination . In the event of termination of this Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith become void and there shall be no Liability on the part of the Buyer Parties, Seller Parties, or their respective officers, directors or stockholders, if applicable; provided , however , that each party hereto shall remain liable for breaches of this Agreement prior to its termination in accordance with Article VII ; and provided , further , that the provisions of Sections 4.2 , 4.3 and 4.4 hereof, Article VIII hereof and this Section 8.2 shall remain in full force and effect and survive any termination of this Agreement pursuant to the terms of this Article VIII .

8.3 Amendment . This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each party hereto.

8.4 Extension; Waiver . The Buyer Parties, on the one hand, and the Seller Parties, on the other hand, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations of the other party hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and

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(iii) waive compliance with any of the covenants, agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

ARTICLE IX.

GENERAL PROVISIONS

9.1 Notices . All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with acknowledgment of complete transmission) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided , however , that notices sent by mail will not be deemed given until received:

(a) if to the Buyer Parties, to:

Rambus, Inc.

1050 Enterprise Way

Suite 700

Sunnyvale, CA 94089

Attn: General Counsel

Facsimile No.: (408) 462- 8139

Telephone No.: (408) 462-8000

with a copy (which shall not be deemed notice) to :

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304

Attention: David J. Segre

Michael E. Coke

Facsimile No.: (650) 493‑6811

(b) if to the Seller Parties, to:

Inphi Corporation

2953 Bunker Hill Lane, Suite 300

Santa Clara, California 95054

Attention: Richard Ogawa

Facsimile No.: (408) 217-7350

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with a copy (which shall not be deemed notice) to :

Pillsbury Winthrop Shaw Pittman LLP
2550 Hanover Street

Palo Alto, CA 94304
Attention: Allison Leopold Tilley

Facsimile: (650) 233-4545

9.2 Interpretation .

(a) For purposes of this Agreement, whenever the context requires, the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders.

(b) The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The word “share” or “stock” shall be used interchangeably and shall mean either one as the context may require. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The symbol “ $ ” shall refer to U.S. dollars.

9.3 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

9.4 Entire Agreement; Assignment . This Agreement, the Exhibits hereto, and the Disclosure Schedule, and the documents and instruments, the Related Agreements and the other agreements among the parties hereto referenced herein: (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof, (ii) are not intended to confer upon any other Person any rights or remedies hereunder, and (iii) shall not be assigned by operation of Law or otherwise, except that any Buyer Party may assign its rights and delegate its obligations hereunder to Buyer Parent or any of its Subsidiaries or Affiliates as long as Buyer Parent remains ultimately liable for all the Buyer Parties’ obligations hereunder.

9.5 Severability . In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

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9.6 Governing Law . This Agreement shall be governed in all respects by the internal laws of the State of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to principles of conflicts of law. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in Santa Clara County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Northern District of California). Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in the state courts in Santa Clara County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Northern District of California) and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum. Each of the parties hereto further agrees, (a) to the extent such party is not otherwise subject to service of process in the State of California, to appoint and maintain an agent in the State of California as such party’s agent for acceptance of legal process, and (b) that service of process may also be made on such party at its respective address set forth in Section 9.1 by prepaid certified mail with a proof of mailing receipt validated by U.S. Postal Service constituting evidence of valid service. Service made pursuant to (a) or (b) above shall have the same legal force and effect as if served upon such party personally with the State of California.

9.7 Rules of Construction . The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefor, waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

[ Signature Page Follows. ]

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IN WITNESS WHEREOF, the Buyer Parties and the Seller Parties have caused this Agreement to be signed, all as of the date first written above.

BUYER PARTIES:

RAMBUS INC.

By: /s/ Laura Stark

Name: Laura Stark

Title: SVP

BELL ID SINGAPORE PTD LTD

By: /s/ Jae Kim

Name: Jae Kim

Title: SVP, Director

SIGNATURE PAGE TO ASSET AGREEMENT

IN WITNESS WHEREOF, the Buyer Parties and the Seller Parties have caused this Agreement to be signed, all as of the date first written above.

SELLER PARTIES:

INPHI CORPORATION

By: /s/ Richard Ogawa

Name: Richard Ogawa

Title: General Counsel

INPHI INTERNATIONAL PTE. LTD.

By: /s/ Richard Ogawa

Name: Richard Ogawa

Title: Director

SIGNATURE PAGE TO ASSET AGREEMENT

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 22, 2016

	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 22, 2016

	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, 2016 , 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 22, 2016



	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, 2016 , 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 22, 2016



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