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To: Rick Rappaport who wrote (4476)	12/19/1998 9:44:00 AM
From: stephen wall	Read Replies (1) \| Respond to of 10081

Rick, Here is an interesting way that Rambus is using warrants/stock to leverage their memory interface technology with customers. Maybe GMGC can do something similar, although granted, their respective stock valuations are in different orbits: techweb.com Rambus gives licensees incentive for success Jennifer L. Baljko Silicon Valley - DRAM suppliers aggressively developing and marketing Direct Rambus devices will have a stake in the success of the architecture-literally. Rambus Inc. has put together a warrants-based incentive program that could give a boost to financially troubled licensing partners. Rambus' board in October authorized the incentive program for 400,000 shares of common stock, according to the company's annual report, which the Mountain View, Calif., company filed Dec. 9 with the Securities and Exchange Commission. The warrants, which have a five-year life, would be priced at $10-a bargain compared with Thursday's closing share price of $97.94. "It's a stroke of genius," said Mark Edelstone, an analyst at Morgan Stanley Dean Witter, San Francisco. "[Rambus was] trying to create an incentive that would make the suppliers as competitive as possible. It was pretty savvy on their part. "With the stock price at about $95, [suppliers] would pick up $85 per share if they could exercise it right now," he said, noting that Rambus' stock will become more attractive over the next three years if the price creeps up to the projected $150- to $200-per-share range. The catch: The warrants will be issued to Direct RDRAM partners only when "certain product qualifications and volume production targets" are met, the SEC filing states. The targets coincide with milestones that have been established for design partner Intel Corp., according to Subodh Toprani, vice president and general manager of Rambus' logic products division. In January 1997, Rambus granted Intel a warrant for 1 million shares of common stock that can be exercised for $10 a share when particular goals are reached. Toprani declined to provide specifics on the qualification or production objectives, which were jointly developed with Rambus' licensees, or how many companies would be the beneficiaries of the warrants. Rambus currently has licensed 14 DRAM companies. "It's been a tough couple of years for DRAM companies, and we wanted to see how we could help them in a tough period," Toprani said. "DRAM companies that have made the investment in Direct Rambus and have achieved certain production and qualification targets, and have begun to sample Direct Rambus products, will be rewarded for their leadership." Additionally, the warrant program will put all the parties on the same schedule to meet demand. The warrants are not expected to be dilutive to Rambus' earnings, Edelstone said. "It's a similar incentive to the one we offered Intel, and it aligns our focus on the customer," Toprani said. "Every milestone is tied to customer needs." Most of the DRAM partners would qualify for the warrants sometime next year, according to Toprani. Mark Hachman contributed to this report. Copyright ® 1998 CMP Media Inc --------------------------------------------------------------------