<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1995
Commission File No. 0-12933
LAM RESEARCH CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2634797
- --------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4650 CUSHING PARKWAY, FREMONT, CALIFORNIA 94538
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 659-0200
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 __X__ NO _____
As of March 31, 1995 there were 27,017,724 shares of Registrant's Common Stock
outstanding.
<PAGE>
INDEX
Page
No.
----
PART I. FINANCIAL INFORMATION ................................... 1
Item 1. Financial Statements (unaudited)......................... 1
Condensed Consolidated Balance Sheets............... 1
Condensed Consolidated Statements of Income......... 2
Condensed Consolidated Statements of Cash Flows..... 3
Notes to Condensed Consolidated Financial
Statements..................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 6
Results of Operations............................... 6
Liquidity and Capital Resources..................... 7
PART II. OTHER INFORMATION........................................ 9
Item 1. Legal Proceedings........................................ 9
Item 6. Exhibits and Reports on Form 8-K......................... 9
<PAGE>
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except per share data)
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
(unaudited) (Note)
----------- -----------
<S> <C> <C>
Assets
Cash and cash equivalents $91,704 $24,092
Short-term investments -- 14,194
Accounts receivable, net 184,329 120,326
Inventories 172,085 115,569
Other current assets 30,064 23,560
----------- -----------
Total Current Assets 478,182 297,741
Equipment and leasehold improvements, net 105,124 61,749
Restricted cash 25,092 9,928
Other assets 18,310 12,079
----------- -----------
Total Assets $626,708 $381,497
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity
Trade accounts payable $83,948 $66,127
Accrued expenses and other
current liabilities 88,376 52,866
Current portion of long-term debt and
capital lease obligations 6,481 6,830
----------- -----------
Total Current Liabilities 178,805 125,823
Long-term debt and capital lease
obligations, less current portion 90,887 78,843
----------- -----------
Total Liabilities 269,692 204,666
Preferred stock: 5,000 shares authorized
none outstanding
Common Stock at par value $.001 per share
Authorized -- 90,000 shares; issued and
outstanding 27,018 shares at March 31,
1995 and 23,528 shares at June 30, 1994 27 24
Additional paid-in capital 216,918 95,513
Retained earnings 140,071 81,294
----------- -----------
Total Stockholders' Equity 357,016 176,831
----------- -----------
$626,708 $381,497
----------- -----------
----------- -----------
<FN>
- --------------------
Note -- The Condensed Consolidated Balance Sheet at June 30, 1994 has
been derived from the audited financial statements at that
date.
</TABLE>
See Notes to condensed consolidated financial statements.
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<PAGE>
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 31, March 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $216,465 $125,780 $545,162 $338,701
Royalty income 2,549 1,921 8,104 5,629
------------ ------------ ------------ ------------
Total revenue 219,014 127,701 553,266 344,330
Costs and expenses:
Cost of goods sold 112,049 69,388 285,590 184,904
Research and development 31,921 19,813 84,058 54,140
Selling, general and
administrative 39,586 23,472 98,841 63,620
------------ ------------ ------------ ------------
Operating income 35,458 15,028 84,777 41,666
Other expense, net 40 548 810 2,087
------------ ------------ ------------ ------------
Income before income taxes 35,418 14,480 83,967 39,579
Income taxes 10,625 4,924 25,190 13,459
------------ ------------ ------------ ------------
Net income $24,793 $9,556 $58,777 $26,120
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per share
Primary $0.89 $0.39 $2.18 $1.07
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted $0.83 $0.38 $2.05 $1.05
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Number of shares used in
per share calculations
Primary 27,900 24,385 26,950 24,375
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted 30,600 27,025 29,760 26,925
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to condensed consolidated financial statements.
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<PAGE>
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
March 31, March 31,
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $58,777 $26,120
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 15,360 11,012
Change in certain working capital
accounts (73,692) (37,926)
------------ ------------
Net cash provided by (used in) operating
activities 445 (794)
Cash flows from investing activities:
Capital expenditures (50,504) (15,925)
Acquisition of Drytek, Inc.,
net of cash acquired -- (5,785)
Restricted cash (2,618) (5,700)
Other (3,738) (1,603)
------------ ------------
Net cash used in investing activities (56,860) (29,013)
------------ ------------
Cash flows from financing activities:
Sale of stock, net of issuance
costs 119,669 1,414
Proceeds from long-term debt 7,711 5,951
Principal payments on long-term debt and
capital lease obligations (3,353) (4,643)
------------ ------------
Net cash provided by financing
activities 124,027 2,722
------------ ------------
Net increase (decrease) in cash and
cash equivalents 67,612 (27,085)
Cash and cash equivalents at beginning
of period 24,092 67,253
------------ ------------
Cash and cash equivalents at end of
period $91,704 $40,168
------------ ------------
------------ ------------
</TABLE>
See Notes to condensed consolidated financial statements.
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<PAGE>
LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. The accompanying
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of Lam
Research Corporation(the "Company") for the year ended June 30, 1994, which
are included in the Annual Report on Form 10-K, File number 0-12933.
The results of operations for the three and nine months ended March 31,
1995 are not necessarily indicative of the results that may be expected for
the entire fiscal year ending June 30, 1995.
NOTE B -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
------------ ------------
(in thousands)
<S> <C> <C>
Raw materials $78,315 $52,018
Work-in-process 75,780 50,189
Finished goods 17,990 13,362
------------ ------------
$172,085 $115,569
------------ ------------
------------ ------------
</TABLE>
NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
------------ ------------
(in thousands)
<S> <C> <C>
Equipment $76,629 $65,653
Furniture & fixtures 22,014 14,815
Leasehold improvements 59,302 32,237
------------ ------------
157,945 112,705
Accumulated depreciation and
amortization (52,821) (50,956)
------------ ------------
$105,124 $61,749
------------ ------------
------------ ------------
</TABLE>
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<PAGE>
NOTE D -- INVESTMENT IN EQUITY SECURITIES
During the third quarter of fiscal 1995, the Company exercised warrants
it held to purchase the common stock of another company. That company
consummated the initial public offering of its common stock during the third
quarter, and the shares held by Lam are now freely tradable. The Company is
classifying its investment in these marketable equity securities as available
for sale in accordance with Statement of Financial Accounting Standard No.
115, "Accounting for Certain Investments in Debt and Equity Securities". An
unrealized gain of $3.4 million related to this investment is included as a
separate component of stockholders' equity (combined with Additional Paid in
Capital on the condensed consolidated balance sheet at March 31, 1995).
The Company has determined that all other securities held at March 31,
1995 are classified as held to maturity. The following is a summary of all
securities held at that date:
<TABLE>
<CAPTION>
Gross Estimated
Amortized Unrealized Fair
Cost Gain (Loss) Value
--------- ----------- -----------
<S> <C> <C> <C>
HELD TO MATURITY SECURITIES
Current
Commercial Paper $84,573 -- $84,573
Long-term
U.S. Treasury Bills and Notes $25,092 $(1,412) $23,680
AVAILABLE FOR SALE SECURITIES
Long Term
Marketable Equity Securities $ 800 $ 3,395 $ 4,195
-------- ---------- ----------
</TABLE>
NOTE E -- SALE OF COMMON STOCK
During the first quarter of fiscal year 1995, the Company completed an
additional underwritten public offering of its Common Stock, selling a total
of 3.1 million shares at a price of $38.75 per share. In September 1994, the
Company received $103.4 million in net proceeds from the offering. The
balance of the net proceeds were received in October 1994.
NOTE F -- OTHER EXPENSE, NET
The significant components of other expense, net are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Expense $1,794 $1,361 $4,804 $4,171
Interest Income (1,518) (682) (3,607) (1,614)
Other (236) (131) (387) (470)
---------- ---------- ---------- ----------
$40 $548 $810 $2,087
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
NOTE G -- NET INCOME PER SHARE
For the three and nine month periods ended March 31, 1995 and 1994,
primary net income per share is calculated using the weighted average number
of shares of common stock and common stock equivalents outstanding during the
periods. The common stock equivalents include shares issuable upon the
assumed exercise of stock options reflected under the treasury stock method.
In addition, fully diluted net income per share reflects the assumed
conversion of the Company's convertible subordinated debentures at the
beginning of each period, and also adds the interest expense incurred on the
debentures, net of income tax effect, to the net income amount used in the
fully diluted calculation.
NOTE H -- LITIGATION
See Part II, item 1 for discussion of litigation
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The components of the Company's statements of income, expressed as a percentage
of total revenue, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales 98.8% 98.5% 98.5% 98.4%
Royalty income 1.2 1.5 1.5 1.6
---------- ---------- ---------- ----------
100.0 100.0 100.0 100.0
Cost of goods sold 51.2 54.3 51.6 53.7
Research and development 14.6 15.5 15.2 15.7
Selling, general
& administrative 18.0 18.4 17.9 18.5
---------- ---------- ---------- ----------
Operating income 16.2 11.8 15.3 12.1
Other expense, net -- 0.4 0.1 0.6
---------- ---------- ---------- ----------
Income before taxes 16.2 11.4 15.2 11.5
Income taxes 4.9 3.9 4.6 3.9
---------- ---------- ---------- ----------
Net income 11.3% 7.5% 10.6% 7.6%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
RESULTS OF OPERATIONS
Net sales for the three and nine month periods ended March 31, 1995 increased
by 72% and 61%, respectively, over the comparable prior year periods.
Increased unit sales of Rainbow and Transformer Coupled Plasma (TCP)etch
systems accounted for approximately 60% of the sales increase for the third
quarter of fiscal year 1995 as compared to the comparable prior year period,
as the Company has continued to benefit from the strong semiconductor market.
In addition, the Company completed its first multiple-unit shipments of its
Alliance cluster tool during the third quarter of fiscal year 1995, and
approximately 18% of the net sales increase as compared to the prior year
quarter was related to these shipments. No Alliance machines were shipped in
the prior year quarter. Export sales for the third quarter of fiscal year 1995
represented approximately 60% of total revenue for the quarter (compared to
an average of 45% for the previous six quarters) due primarily to increased
sales in Korea, and (to a lesser extent) Europe. The remainder of the net
increase was due to higher spare parts and service revenue (89% higher than
the comparable prior year quarter and 86% higher than the comparable prior
year nine month period) related to the Company's increased installed machine
base.
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<PAGE>
Royalty income increased by 33% from the year-ago quarter and 44% on a fiscal
year-to-date basis, due to continued improvement in the Japanese
semiconductor market which resulted in increased sales of products
incorporating the Company's technology by Tokyo Electron Limited (TEL) and
Sumitomo Metal Industries (SMI).
The Company's gross margin improved to 48.8% in the third quarter of fiscal
1995 as compared to 45.7% in the comparable quarter of fiscal 1994, and to
48.4% for the nine months ended March 31,1995 as compared to 46.3% in the
nine months ended March 31,1994. The improvement in gross margin percentage
during the three month period ended March 31, 1995 over the comparable prior
year period was due in approximately equal measure to lower average unit
costs on Rainbow machines (due to fewer custom engineered options being
requested by customers) and decreased warranty and installation costs as a
percentage of net sales (as a result of warranty cost reduction programs
instituted by the Company). These improvements were partially offset by the
increased shipments of Alliance machines at lower margins. The improvement
in the nine month period gross margin percentage was slightly less than the
improvement for the three month period but for similar reasons.
Research and development (R&D) expense increased for the three and nine month
periods ended March 31, 1995 by 61% and 55%, respectively, over the prior
year periods, but as a percentage of total revenue was lower than the
comparable prior year periods. The increased expense was due to continued
expenditures on advanced etch applications, continued development of CVD
technologies including EPIC and Integrity, as well as reduced levels of
funding from third parties on joint development programs. The Company's new
research and development facility at its Fremont campus, which the Company
began occupying in the first quarter of fiscal 1995 is now complete and fully
operational.
Selling, general and administrative (S,G&A) expenses for the three and nine
month periods ended March 31, 1995 increased by 69% and 55%, respectively,
over the prior year periods but were lower than the prior year periods
as a percentage of revenue. The Company has added employees in all customer
support, sales and administration areas to accommodate the increased sales
volume which accounted for approximately 50% of the increase from the prior
year quarter. To support the growth in headcount and business volume,
additional expenses related to increasing the Company's facilities and
information systems infrastructures have also been incurred accounting for
approximately 25% of the increase. The remainder of the increase was due
primarily to expenses incurred by the Company's foreign subsidiaries,
particularly in Asia, where the Company has significantly increased its
resources over the prior year.
The effective tax rate for the fiscal 1995 periods was 30% compared to 34%
for the prior year periods due to an increase in estimated business tax
credits available for use in the current year.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $0.4 million for the nine
months ended March 31, 1995. Net income and non-cash depreciation and
amortization expenses totaling $74.1 million were nearly completely offset by
increases in accounts receivable related to increased sales activity since
the end of the prior fiscal year, as well as increased inventory to meet
production demands. Capital expenditures for the current nine month period
were $50.5 million, primarily for new facility leasehold improvements and
furnishings and additional equipment used in new process development and
demonstration.
During the first quarter of fiscal year 1995, the Company completed an
additional underwritten public offering of its Common Stock, selling a
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<PAGE>
total of 3.1 million shares at a price of $38.75 per share; the Company
received $114.7 million in net proceeds from the offering during the first
half of fiscal 1995.
Under the terms of its new R&D facility lease, the Company has set aside
$25.1 million of restricted investments in a collateral fund. The cash set
aside will not be available to the Company over the term of the lease, and is
therefore classified as a long-term asset on the Company's March 31, 1995
balance sheet. The lease expires in September, 2004 and is being accounted
for as an operating lease.
As of March 31, 1995, the Company had $91.7 million in cash and cash
equivalents compared with $24.1 million at June 30, 1994. The Company has a
total of $50.0 million available under four bank lines of credit which expire
between June and October 1995. There were no borrowings on any of the lines
at March 31, 1995.
During the third quarter of fiscal year 1995, the Company sold approximately
$14.0 million of Japanese yen-denominated accounts receivable. The Company
is currently negotiating an additional $50.0 million worth of accounts
receivable sales and expects to complete such negotiations in the fourth
quarter of fiscal year 1995.
New long-term borrowings during fiscal year 1995 have primarily been
yen-denominated borrowings by the Company's Japanese subsidiary and have
totalled $7.7 million.
The Company's cash and cash equivalents and available line of credit at the
end of the third quarter of fiscal 1995 are considered adequate to support
current levels of operations for at least the next twelve months.
-8-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In October 1993, Varian Associates, Inc. ("Varian") brought suit against
the Company in the United States District Court, Northern District of
California, seeking monetary damages and injunctive relief based on the
Company's alleged infringement of certain patents held by Varian. The
lawsuit is in the late stages of discovery. A trial date has been set for
November 28,1995. The Company has asserted defenses of invalidity and
unenforceability of the patents that are the subject of the lawsuit, as well
as noninfringement of such patents by the Company's products. While
litigation is subject to inherent uncertainties and no assurance can be given
that the Company will prevail in such litigation or will obtain a license
under such patents on commercially reasonable terms or at all if such patents
are held valid and infringed by the Company's products, the Company believes
that the Varian lawsuit will not have a material adverse effect on the
Company's Consolidated Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.24 Receivables Purchase Agreement between Lam
Research Corporation and ABN-AMRO Bank N.V.,
Cayman Islands Branch.
Exhibit 11.1 Statement Re: Computation of Earnings Per Share
(b) No reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 1995.
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<PAGE>
SIGNATURES
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.
Date: May 11, 1995
LAM RESEARCH CORPORATION
By:/s/Henk J. Evenhuis
-----------------------------------
Henk J. Evenhuis, Senior Vice
President, Chief Financial Officer
and Secretary (Principal Financial
and Principal Accounting Officer).
-10-
<PAGE>
EXHIBIT 10.24
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
between
LAM RESEARCH CORPORATION
as Seller
ABN AMRO BANK N.V., CAYMAN ISLANDS BRANCH
as Purchaser
and
LAM RESEARCH CORPORATION
as Collection Agent
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
THIS AGREEMENT, dated as of March 23, 1995, is entered into by and among:
(1) LAM RESEARCH CORPORATION, a company incorporated in Delaware and having its
chief executive office at 4650 Cushing Parkway, Fremont, California 94538-
6401 (in its capacity as the seller of receivables hereunder, the
"SELLER");
(2) ABN AMRO BANK N.V., acting through its CAYMAN ISLANDS BRANCH, a branch
licensed in the Cayman Islands and having its office at 335 Madison Avenue,
16th Floor, New York, New York 10017 (the "PURCHASER"); and
(3) LAM RESEARCH CORPORATION, a company incorporated in Delaware and having its
chief executive office at 4650 Cushing Parkway, Fremont, California 94538-
6401 (in its capacity as the collection agent for receivables hereunder,
the "COLLECTION AGENT").
RECITALS:
(A) The Seller has sold to Sumitomo Metal Industries, Ltd., a Japanese
corporation which has acted as the Seller's Japanese distributor (the
"BUYER"), certain semiconductor capital equipment (the "EQUIPMENT") on
account. The Buyer has in turn sold the Equipment to other Japanese
corporations (the "END-USERS") on account.
(B) The Seller and the Purchaser have agreed, upon the terms and subject to the
conditions set forth herein, that the Seller will sell to the Purchaser the
receivables described in the FIRST SCHEDULE hereto, which are receivables
owed to the Seller by the Buyer and arose from the sales by the Seller to
the Buyer of the Equipment (the "RECEIVABLES").
(C) The Collection Agent has agreed, upon the terms and subject to the
conditions set forth herein, to act as the agent of the Purchaser in
connection with the collection of the receivables sold to the Purchaser
pursuant to this Agreement.
THE PARTIES HERETO HEREBY AGREE as follows:
2
<PAGE>
PART 1
INTERPRETATION
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and in the Schedules, unless otherwise defined
therein or unless the context otherwise requires, the following terms shall have
the following meanings:
"ACCEPTANCE" means, for any Equipment, the acceptance by the End-User of
such Equipment in a manner which obligates the End-User to pay to the Buyer
an amount equal to the full Face Amount of the Purchased Receivable arising
out of the sale of such Equipment to the Buyer.
"ADJUSTED LIBO RATE" means, for any period and amount, the per annum rate
equal to the sum of (i) the LIBO Rate for such period and amount plus (ii)
three-fourths of one percent (0.75%).
"ASSIGNMENT" means an assignment substantially in the form of PART 1 OF THE
THIRD SCHEDULE.
"BUYER" has the meaning given to that term in RECITAL (A).
"CAPITAL" means, at any date as of which the amount thereof is to be
determined, the sum of (i) Total Debt and (ii) Tangible Net Worth.
"CLOSING DATE" means March 28, 1995, or such later date as the parties
hereto may agree.
"COLLECTION AGENT" has the meaning given to that term in CLAUSE (3) OF THE
INTRODUCTORY PARAGRAPH hereof.
"COLLECTIONS" means all payments by or on behalf of the Buyer received in
respect of the Receivables, whether in the form of cash, electronic money
transfer or any other form of payment.
"CONTINGENT OBLIGATION" means, as applied to any person, any direct or
indirect liability, contingent or otherwise, of that person with respect to
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit
in the ordinary course of business), co-made or discounted or sold with
recourse by that person, or in respect of which that person is otherwise
directly or indirectly liable. The amount of any Contingent Obligations
shall be equal to the amount of the obligation so guaranteed or otherwise
supported.
3
<PAGE>
"CURRENT LIABILITIES" means, at any date as of which the amount thereof is
to be determined, the consolidated current liabilities of the Seller and
its subsidiaries determined in accordance with generally accepted
accounting principals.
"DAILY RATE" means, for any day, the per annum rate equal to the greater of
(i) the rate quoted on such day by two or more commercial banks in Tokyo as
the short-term prime rate for short-term borrowings in Yen by prime
borrowers in Tokyo and (ii) the Adjusted LIBO Rate for one-week Yen
deposits determined by the Purchaser on such day (for delivery two London
Banking Days after such day), such rate to change on each day as the short-
term prime rate and Adjusted LIBO Rate for one-week Yen deposits shall
change.
"DEBT" of any person means, at any date, without duplication, (i) all
obligations of such person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such person as lessee which are
capitalized in accordance with generally accepted accounting principles,
(v) all obligations of such person as lessee which are not capitalized in
accordance with generally accepted accounting principles but which are
secured by an encumbrance upon any property of such person, and (vi) all
debt secured by an encumbrance on any asset of such person, whether or not
such debt is otherwise guaranteed by such person.
"DISCOUNT AMOUNT" means, for any Purchased Receivable, the product of (i)
the Face Amount of such Purchased Receivable times (ii) the Discount Rate
for the Discount Period and Face Amount for such Purchased Receivable.
"DISCOUNT PERIOD" means, for any Purchased Receivable, the period
commencing on the Closing Date and ending on the Tentative Due Date for
such Purchased Receivable.
"DISCOUNT RATE" means, for any Discount Period and amount, a fraction
(expressed as a percentage rounded up to the nearest one thousandth of one
percent) calculated as follows:
D = L x P/360
---------------
1 + (L x P/360)
Where:
D = the Discount Rate;
L = the Adjusted LIBO Rate (expressed as a decimal number) for such
Discount Period and amount; and
P = the number of days in such Discount Period.
4
<PAGE>
"DISCOUNT REDUCTION AMOUNT" means, with respect to any Purchased Receivable
for which the Payment Date occurs prior to the Tentative Due Date, an
amount equal to the product of (i) the Discount Amount for such Purchased
Receivable times (ii) a fraction (expressed as a percentage rounded down to
the nearest one thousandth of one percent), the numerator of which is the
number of days in the period commencing on the Payment Date and ending on
the Tentative Due Date and the denominator of which is the number of days
in the Discount Period for such Purchased Receivable.
"END-USERS" has the meaning given to that term in RECITAL (A).
"EQUIPMENT" has the meaning given to that term in RECITAL (A).
"FACE AMOUNT" means, for each Receivable, the amount in Yen which is
payable by the Buyer on account of such Receivable, as set forth for such
Receivable in the Assignment.
"FUNDED INTEREST AMOUNT" means, with respect to any Purchased Receivable
for which the Scheduled Due Date is set to occur after the Tentative Due
Date, an amount equal to the interest which would have accrued on the Face
Amount of such Purchased Receivable from the Tentative Due Date through the
Scheduled Due Date at the Adjusted LIBO Rate for such period and such Face
Amount.
"FUNDED INTEREST ACCRUED AMOUNT" means, with respect to any Purchased
Receivable for which the Scheduled Due Date is after the Tentative Due Date
and the Payment Date or the Repurchase Date occurs prior to the Scheduled
Due Date, an amount equal to the product of (i) the Funded Interest Amount
for such Purchased Receivable times (B) a fraction (expressed as a
percentage rounded up to the nearest one thousandth of one percent), the
numerator of which is the number of days in the period commencing on the
Tentative Due Date and ending on the Payment Date or the Repurchase Date,
as the case may be, and the denominator of which is the number of days in
the period commencing on the Tentative Due Date and ending on the Scheduled
Due Date.
"INSOLVENCY EVENT" means, in relation to any person, its winding-up or
dissolution or the judgment or declaration of insolvency or bankruptcy or
the appointment of an administrator, trustee, liquidator, sequestrator or
similar official over its or any of its reserves or assets, the filing or
presentation of a petition in relation to any of the foregoing or the
commencement of any analogous proceedings in relation thereto, and, in the
case of such filing or presentation made by any third party against it,
such filing or presentation (i) having resulted in a
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judgment or declaration of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
dissolution or (ii) having not been dismissed, discharged, stayed or
restrained within thirty (30) days.
"LIBO RATE" means, for any period and amount:
(i) The per annum rate for deposits in Yen for a term comparable to
such period which appears on the Telerate page 3750 as of 11:00
a.m. (London time) on the second London Banking Day prior to the
first day of such period; or
(ii) If such rate does not appear on the Telerate page 3750 at such
time, the arithmetic mean of the rates (expressed as a percentage
rounded up to the nearest one thousandth of one percent),
determined by the Purchaser to be the per annum rates at which
deposits in Yen are offered to ABN AMRO Bank, N.V., London
Branch, by two or more prime banks in the London interbank market
at or about 11:00 a.m. (London time) on the second London Banking
Day prior to the first day of such period (for delivery on the
first day of such period) for a term comparable to such period
and in an amount approximately equal to such amount.
"LONDON BANKING DAY" means a day on which commercial banks are open for
business (including dealing in foreign exchange and foreign currency
deposits) in London.
"MATERIAL ADVERSE EFFECT" means in relation to any matter, event or
circumstance concerning the Seller or the Collection Agent (insofar as Lam
Research Corporation is the Collection Agent), a likely material adverse
effect on the ability of the person concerned to perform its obligations
under this Agreement, the Assignment or any of the other Transaction
Documents.
"ORIGINAL FINANCIAL STATEMENTS OF THE SELLER" means the audited financial
statements of the Seller for the financial year ended June 30, 1994 and the
unaudited interim financial statements of the Seller for the financial
quarter ended December 31, 1994.
"PARTIAL ACCEPTANCE" means, for any Equipment, the acceptance by the End-
User of such Equipment in a manner which obligates the End-User to pay to
the Buyer an amount equal to a portion of the Face Amount of the Purchased
Receivable arising out of the sale of such Equipment to the Buyer.
"PAYMENT DATE" means, for each Purchased Receivable, the date or each of
the dates on which such Purchased Receivable is paid in full or in any part
to the Purchaser in immediately available funds.
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"PERFECTION DOCUMENT" means, for any Purchased Receivable, a written notice
to the Buyer, duly executed by the Seller, notifying the Buyer of the
assignment by the Seller to the Purchaser of such Purchased Receivable,
such notice to be in the form of a document duly date-stamped (KAKUTEI
HIZUKE) by a notary public in accordance with Article 467 (1) and (2) of
the Civil Code of Japan and in form and substance reasonably satisfactory
to the Purchaser.
"POTENTIAL TERMINATION EVENT" means any event or circumstance which, if it
continued after the giving of any notice, the expiration of any grace
period and/or the satisfaction of any other applicable conditions, would
become a Termination Event.
"PURCHASED RECEIVABLES" means all of the Receivables which are actually
purchased by the Purchaser pursuant to this Agreement, other than
Receivables which are repurchased by the Seller pursuant to this Agreement.
"PURCHASE LIMIT" means one billion, four hundred million Yen
(Y1,400,000,000).
"PURCHASE ORDER" means, for any Equipment purchased by the Buyer, the
purchase order (or its equivalent regardless of whether it is titled as
such) for such Equipment duly executed and delivered to the Seller by the
Buyer, which shall specify the specification and the ordered quantity of,
and the payment terms for, such Equipment.
"PURCHASE PRICE" has the meaning given to that term in CLAUSE 4.1.
"PURCHASER" has the meaning given to that term in CLAUSE (2) OF THE
INTRODUCTORY PARAGRAPH hereof.
"QUICK ASSETS" means, at any date as of which the amount thereof is to be
determined, the consolidated cash, cash-equivalents, accounts receivable,
and marketable securities with maturities not to exceed 360 days, of the
Seller and its subsidiaries determined in accordance with generally
accepted accounting principals.
"RECEIVABLES" has the meaning given to that term in RECITAL (B).
"RECORDS" means all Sales Agreements, Purchase Orders, contracts, other
documents, books, records and other information maintained by the Seller
with respect to the Purchased Receivables.
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"RELATED SECURITY" means, for any Purchased Receivable, (i) all of the
Seller's interest, if any, in the Equipment (including returned Equipment),
if any, the sale of which by the Seller gave rise to such Purchased
Receivable, (ii) all other encumbrances and property subject thereto from
time to time, if any, purporting to secure payment of such Purchased
Receivable, whether pursuant to the Sales Agreement relating to such
Purchased Receivable or otherwise and (iii) all guarantees, insurance or
other agreements or arrangements of any kind from time to time supporting
or securing payment of such Purchased Receivable whether pursuant to the
Sales Agreement relating to such Purchased Receivable or otherwise.
"REPURCHASE DISCOUNT AMOUNT" means, for any Purchased Receivable to be
repurchased by the Seller, the product of (i) the Discount Amount for such
Purchased Receivable times (ii) a fraction (expressed as a percentage
rounded down to the nearest one thousandth of one percent), the numerator
of which is the number of days in the period commencing on the date of
repurchase and ending on the Tentative Due Date and the denominator of
which is the number of days in the Discount Period for such Purchased
Receivable.
"REPURCHASE DATE" has the meaning given to that term in CLAUSE 14.2.
"REPURCHASE PRICE" has the meaning given to that term in CLAUSE 14.3.
"REVISED FACE AMOUNT" means, for each Purchased Receivable related to
Equipment for which Partial Acceptance has occurred, the amount in Yen
which the Seller and the Buyer have agreed upon following such Partial
Acceptance as the reduced amount payable by the Buyer on account of such
Purchased Receivable.
"SALES AGREEMENT" means the agreement (whether in writing or oral) between
the Seller and the Buyer with respect to a sale of Equipment governing the
terms and conditions of such sale (including the Purchase Order, if any,
and all other agreements, instruments and documents relating or ancillary
thereto), as such agreement may be amended or modified from time to time.
"SCHEDULED DUE DATE" means, for each Purchased Receivable, the date which
is confirmed or agreed between the Seller and the Buyer following the
Acceptance or Partial Acceptance by the Buyer of the related Equipment as
the date on which the Face Amount or the Revised Face Amount, as the case
may be, of such Purchased Receivable is unconditionally payable by the
Buyer.
"SELLER" has the meaning given to that term in CLAUSE (1) OF THE
INTRODUCTORY PARAGRAPH hereof.
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"SHIPMENT" means, for any Equipment, the shipment by the Seller of such
Equipment to the Buyer in accordance with the relevant Sales Agreement, the
date of which shall be set forth in the Assignment.
"SUBORDINATED DEBT" means any debt subordinated to the obligations of the
Seller hereunder on terms acceptable to the Purchaser.
"TANGIBLE NET WORTH" means, at any date as of which the amount thereof is
to be determined, the consolidated total assets of the Seller and its
subsidiaries MINUS, without duplication, (i) the sum of any amounts
attributable to (A) goodwill, and (B) intangible items such as unamortized
debt discount and expense, patents, trade and service marks and names,
copyrights, franchises, treasury stock, deferred charges and research and
development expenses except prepaid expenses, AND (ii) Total Liabilities.
"TENTATIVE ACCEPTANCE DATE" means, for each Purchased Receivable, the date
which is agreed upon between the Seller and the Purchaser and set forth in
the Assignment as the date on which the Acceptance of the Equipment
relating to such Purchased Receivable is likely to occur, but shall in no
event be later than the date which is 270 days after the date of Shipment
of such Equipment as set forth in the Assignment.
"TENTATIVE CREDIT PERIOD" means, for each Purchased Receivable, the period
commencing on the Tentative Acceptance Date for such Purchased Receivable
and ending on the Tentative Due Date for such Purchased Receivable.
"TENTATIVE DUE DATE" means, for each Purchased Receivable, the date which
is agreed upon between the Seller and the Purchaser (based upon the payment
terms provided in the Sales Agreement for the Equipment relating to such
Purchased Receivable) and set forth in the Assignment as the date on which
the Payment Date for such Purchased Receivable is likely to occur, but
shall in no event be later than the date which is 225 days after the date
of Acceptance or Partial Acceptance, as the case may be, of such Equipment.
"TERMINATION EVENTS" means those events and conditions set forth in the
FOURTH SCHEDULE.
"TOTAL DEBT" means, at any date as of which the amount thereof is to be
determined, the sum of (i) short-term bank debt, (ii) current maturities of
long-term debt and current portion of capitalized leases, (iii) long term
debt, (iv) capitalized leases and (v) all off-balance sheet obligations
including Contingent Obligations and the face amount of all
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outstanding letters of credit (including drawn and unreimbursed amounts).
"TOTAL LIABILITIES" means, at any date as of which the amount thereof is to
be determined, all obligations that should, in accordance with generally
accepted accounting principals be classified as liabilities on the
consolidated balance sheet of the Seller.
"TRANSACTION DOCUMENTS" means this Agreement, the Assignment and all other
agreements and documents entered into pursuant to this Agreement or in
connection with this Agreement or the transactions contemplated hereby.
1.2 In this Agreement:
"business day" means any day (other than a Saturday or a Sunday) on which
banks are open for business in San Francisco, London and Tokyo;
a "Clause", "Part", "Recital" or "Schedule" is, subject to any contrary
indication, a reference to a clause or part hereof or a recital or schedule
hereto;
an "encumbrance" shall be construed as a reference to a mortgage, charge,
pledge, security interest, lien or other encumbrance securing any
obligation of any person or any other type of preferential arrangement
(including, without limitation, title transfer and retention arrangements)
having a similar effect;
a "person" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) or two or
more of the foregoing;
"stamp duty" shall be construed as a reference to any stamp, registration
or to the transaction or documentary tax (including, without limitation any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same);
"tax" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including, without limitation, any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same); and
the "rehabilitation", "bankruptcy", "dissolution", "insolvency",
"liquidation", "receivership" or "winding-up" of any person shall be
construed so as to include any equivalent or analogous proceedings under
the laws of the jurisdiction in which such person is incorporated (or, if
not a company or corporation, domiciled) or any jurisdiction in which such
person carries on business.
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1.3 "Y" and "Yen" denote lawful currency of Japan.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement, or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
(ii) a statute shall be construed as a reference to such statute as
the same may have been, or may from time to time be, amended or
re-enacted; and
(iii) all calculations of interest shall be made on the basis of a year
of 360 days for actual days elapsed.
1.5 Clause, Part and Schedule headings are for ease of reference only.
1.6 The Seller is acting as the Seller and the Collection Agent under this
Agreement and the other Transaction Documents. All references in this Agreement
and the other Transaction Documents to the Seller shall, where the context so
permits, be deemed to be a reference to the Seller acting in each of these
capacities.
PART 2
GENERAL PROVISIONS FOR SALE OF RECEIVABLES
2. TERMS OF PURCHASE
2.1 Subject to the terms and conditions set forth herein, the Seller will
sell, and the Purchaser will purchase, the Receivables, PROVIDED THAT the sum of
the Purchase Prices paid by the Purchaser for all the Receivables does not
exceed the Purchase Limit.
2.2 The sale referred to in PART 3 does not constitute and is not
intended to result in the creation or assumption by the Purchaser of any
obligation of the Seller or any other person in connection with the Receivables
or the Sales Agreements, or under any other agreement or instrument relating
thereto.
2.3 The parties hereto intend that the transactions contemplated by this
Agreement constitute a sale and purchase of the Purchased Receivables. In the
event that any court, any other governmental authority or any other person
should construe
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such transactions as a loan, the parties intend that such loan constitute a
secured loan and, in furtherance of such intent, the Seller hereby grants to the
Purchaser, as security for all obligations of the Seller under this Agreement
and the other Transaction Documents, a security interest in all right, title and
interest of the Seller in and to the Purchased Receivables, all Collections
thereof, all Related Security therefor and all Records relating thereto, whether
now owned or hereafter acquired by the Seller.
PART 3
SALE OF RECEIVABLES
3. SALE AND PURCHASE
3.1 Subject to the terms and conditions of this Agreement, the Seller
hereby agrees to sell on the Closing Date, and the Purchaser agrees to purchase
on such date, all of the Seller's right, title and interest in, to and under the
Receivables including for the avoidance of doubt:
(i) the right to receive all Collections in respect thereof;
(ii) all Related Security with respect to the Receivables and all
proceeds thereof; and
(iii) all Records relating to the Receivables.
3.2 The sale and purchase of each of the Receivables referred to in
CLAUSE 3.1 shall be effected by the completion, execution and delivery of the
Assignment.
4. CONSIDERATION
4.1 Subject to adjustment as provided in CLAUSES 6, 7 AND 8, the
consideration payable by the Purchaser for the sale and purchase of each
Purchased Receivable shall be an amount in Yen equal to the Face Amount of such
Purchased Receivable minus the Discount Amount for such Purchased Receivable
(the "PURCHASE PRICE"). The Purchase Price shall be payable in accordance with
CLAUSE 5.1.
5. CLOSING
5.1 Completion of the sale and purchase contemplated by CLAUSE 3.1 shall
take place on the Closing Date (subject to the satisfaction of the conditions
precedent set out in the SECOND SCHEDULE), whereupon:
(i) the Seller shall assign to the Purchaser each of the Receivables,
by the Seller and the Purchaser executing and delivering to the
other the Assignment;
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(ii) the Seller shall deliver the Sales Agreements to the Purchaser;
(iii) if a promissory note has been issued by the Buyer in favor of the
Seller for the payment of any of the Receivables, the Seller
shall make endorsement without recourse (mutanpo uragaki) on such
promissory note in favor of the Purchaser and deliver such
promissory note to or to the order of the Purchaser; and
(iv) the Purchaser shall pay the aggregate Purchase Price of the
Receivables to the Seller in accordance with CLAUSE 22.1.
PART 4
ADJUSTMENT OF CONSIDERATION
6. ADJUSTMENT AFTER DETERMINATION OF SCHEDULED DUE DATE
6.1 SCHEDULED DUE DATE AFTER TENTATIVE DUE DATE. Except as otherwise
provided in CLAUSE 8.2(ii)(A), if the Seller and the Buyer agree upon the
Scheduled Due Date for any Purchased Receivable prior to the payment of such
Purchased Receivable and such Scheduled Due Date is AFTER the Tentative Due Date
for such Purchased Receivable, then the Seller shall pay to the Purchaser on the
Scheduled Due Date, as a reduction of the Purchase Price for such Purchased
Receivable, the Funded Interest Amount for such Purchased Receivable.
6.2 SCHEDULED DUE DATE PRIOR TO TENTATIVE DUE DATE. If the Seller and the
Buyer agree upon the Scheduled Due Date for any Purchased Receivable prior to
the payment of such Purchased Receivable, such Scheduled Due Date is PRIOR to
the Tentative Due Date for such Purchased Receivable and the Buyer pays such
Purchased Receivable on a day other than the Tentative Due Date, then the
Purchaser and the Seller shall make payments to each other as provided in CLAUSE
8.1 below in the same manner as though the Scheduled Due Date had not been set.
7. ADJUSTMENT AFTER PARTIAL ACCEPTANCE
7.1 If the Seller and the Buyer agree upon the Revised Face Amount of any
Purchased Receivable after a Partial Acceptance of the related Equipment, then
the Seller shall pay to the Purchaser on the Tentative Due Date, as a reduction
of the Purchase Price for such Purchased Receivable, an amount equal to the
difference between the Face Amount and the Revised Face Amount of such Purchased
Receivable.
8. ADJUSTMENT AFTER PAYMENT
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8.1 PAYMENT DATE PRIOR TO DETERMINATION OF SCHEDULED DUE DATE. If the
Buyer pays any Purchased Receivable before the Seller and the Buyer agree upon
the Scheduled Due Date for such Purchased Receivable and such payment is made on
a day other than the Tentative Due Date, then the Purchaser and the Seller shall
make payments to each other as follows:
(i) PAYMENT DATE PRIOR TO TENTATIVE DUE DATE. If the Purchased
Receivable is paid prior to the Tentative Due Date, then the
Purchaser shall pay to the Seller on the Payment Date, as an
increase in the Purchase Price for such Purchased Receivable, the
Discount Reduction Amount for such Purchased Receivable. (In
addition, the Seller shall pay to the Purchaser on the Payment
Date all amounts, if any, payable by the Seller pursuant to
CLAUSE 15.1 as a result of the Purchased Receivable being paid
prior to the Tentative Due Date.)
(ii) PAYMENT DATE AFTER TENTATIVE DUE DATE. If the Purchased
Receivable is paid after the Tentative Due Date, then the Seller
shall pay to the Purchaser on the Payment Date, as a reduction of
the Purchase Price for such Purchased Receivable, an amount equal
to the interest which would have accrued on the Face Amount of
such Purchased Receivable from the Tentative Due Date through the
Payment Date at the Daily Rate in effect from time to time during
such period.
8.2 PAYMENT DATE AFTER DETERMINATION OF SCHEDULED DUE DATE. If the Buyer
pays any Purchased Receivable after the Seller and the Buyer agree upon the
Scheduled Due Date for such Purchased Receivable, then the Purchaser and the
Seller shall make payments to each other as follows:
(i) SCHEDULED DUE DATE PRIOR TO TENTATIVE DUE DATE. If the
Scheduled Due Date is prior to the Tentative Due Date and such
payment is made on a day other than the Tentative Due Date, then
the Purchaser and the Seller shall make payments to each other as
provided in CLAUSE 8.1 above in the same manner as though the
Scheduled Due Date had not been set.
(ii) SCHEDULED DUE DATE AFTER TENTATIVE DUE DATE. If the Scheduled
Due Date is after the Tentative Due Date and such payment is made
on a day other than the Scheduled Due Date, then the Purchaser
and the Seller shall make payments to each other as follows:
(A) PAYMENT DATE PRIOR TO SCHEDULED DUE DATE. If the Purchased
Receivable is paid prior to the Scheduled Due Date, then the
Seller shall pay
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to the Purchaser on the Payment Date (in lieu of the amount
which otherwise would have been payable by the Seller to the
Purchaser on the Scheduled Due Date pursuant to CLAUSE 6.1),
as a reduction of the Purchase Price for such Purchased
Receivable, the Funded Interest Accrued Amount. (In
addition, the Seller shall pay to the Purchaser on the
Payment Date all amounts, if any, payable by the Seller
pursuant to CLAUSE 15.1 as a result of the Purchased
Receivable being paid prior to the Scheduled Due Date.)
(B) PAYMENT DATE AFTER SCHEDULED DUE DATE. If the Purchased
Receivable is paid after the Scheduled Due Date, then the
Seller shall pay to the Purchaser on the Payment Date (in
addition to the amount which is payable by the Seller to the
Purchaser on the Scheduled Due Date pursuant to CLAUSE 6.1),
as a reduction of the Purchase Price for such Purchased
Receivable, an amount equal to the interest which would have
accrued on the Face Amount of such Purchased Receivable from
the Scheduled Due Date through the Payment Date at the Daily
Rate in effect from time to time during such period.
PART 5
REPRESENTATIONS, WARRANTIES AND COVENANTS
9. REPRESENTATIONS AND WARRANTIES
9.1 As of the date hereof, the Closing Date and each day on which any
Purchased Receivable is outstanding until the Scheduled Due Date has been
determined for all of the Purchased Receivables and 60 days have passed after
the last Scheduled Due Date, the Seller represents and warrants to the Purchaser
as follows with respect to each Receivable:
(i) Each Receivable is an obligation of the Buyer to the Seller which
arose from the sale by the Seller to the Buyer of Equipment in
the ordinary course of the Seller's business.
(ii) Each Receivable is payable in Yen in the Face Amount set forth
for such Receivable in the Assignment.
(iii) No Receivable is overdue.
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(iv) Each Receivable is a debt, the rights in which can be transferred
by way of sale and assignment to the Purchaser pursuant to this
Agreement.
(v) Each Receivable is legally and beneficially owned by the Seller
or, after the sale to the Purchaser hereunder, by the Purchaser,
free and clear of any liens, or other encumbrances exercisable
against the Seller or the Purchaser.
(vi) No Receivable is subject to withholding taxes.
(vii) Each Receivable was created in compliance with all applicable
laws and with all required consents, approvals and
authorizations.
(viii) Subject to the terms and conditions of the relevant Sales
Agreement, each Receivable constitutes a legal, valid, binding
and enforceable obligation of the Buyer to pay the full Face
Amount of such Receivable set forth in the Assignment, subject
only to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and are not subject to any defense, dispute,
set-off, counterclaim or discount.
(ix) The sale and assignment of the Receivables will not violate any
law or any agreement by which the Seller or any of its assets may
be bound. Without limiting the generality of the foregoing, the
sale and assignment of the Receivables does not require the
consent or approval of the Buyer or any other person.
(x) The Seller has, in all material respects, performed all of its
obligations under and complied with all of the terms of the Sales
Agreements relating to the Equipment, the sale of which gave rise
to the Receivables (except for any obligations not required to be
performed or any terms not required to be complied with prior to
the effective date of any such representation and warranty).
Shipment of the Equipment relating to each Receivable occurred on
the date set forth in the Assignment.
(xi) The assignment of each Receivable in the manner herein
contemplated is effective to pass to the Purchaser full and
unencumbered title thereto and the benefit thereof and no further
act, condition or thing is required to be done in connection
therewith to enable the Purchaser to require payment of any such
Receivable or the enforcement of any such right in the courts of
the United States or Japan, other than (A) the due
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performance by the Seller of the terms and conditions of the
relevant Sales Agreement and (B) the filing of a Uniform
Commercial Code financing statement.
(xii) The governing law of the Sales Agreement relating to each
Receivable is California or Japanese law.
9.2 As of the date hereof, the Closing Date and each day on which any
Purchased Receivable is outstanding until the Scheduled Due Date has been
determined for all of the Purchased Receivables and 60 days have passed after
the last Scheduled Due Date, the Seller represents and warrants to the Purchaser
that each of the statements set forth in the FIFTH SCHEDULE is true, by
reference to the facts and circumstances existing at the relevant time.
10. FINANCIAL INFORMATION
10.1 The Seller shall, until the date which is 60 days after the last
Scheduled Due Date following the determination of the Scheduled Due Date for all
of the Purchased Receivables:
(i) within 100 days after the end of each of its financial years,
deliver to the Purchaser its financial statements for such
financial year; and
(ii) within 55 days after the end of each of its financial quarters,
deliver to the Purchaser its financial statements for such
financial quarter.
10.2 The Seller shall ensure that:
(i) each set of financial statements delivered by it pursuant to
CLAUSE 10.1(i) is prepared in accordance with accounting
principles generally accepted in the United States and
consistently applied (except for changes disclosed therein);
(ii) each set of financial statements delivered by it pursuant to
CLAUSE 10.1(i) has been audited by an internationally recognized
firm of independent auditors;
(iii) each set of financial statements delivered by it pursuant to
CLAUSE 10.1(i) is accompanied by an unqualified opinion of the
firm of independent auditors which audited such financial
statements; and
(iv) each set of quarterly financial statements delivered by it
pursuant to CLAUSE 10.1(ii) is prepared in accordance with
accounting principles generally accepted in the United States and
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consistently applied (except for changes disclosed therein).
11. SELLER'S COVENANTS
11.1 The Seller shall, until the date which is 60 days after the last
Scheduled Due Date following the determination of the Scheduled Due Date for all
of the Purchased Receivables:
(i) obtain, comply in all material respects with the terms of and do
all that is necessary and reasonably practicable to maintain in
full force and effect all authorizations, approvals, licenses and
consents required in or by the laws and regulations of the United
States and Japan to enable it lawfully to enter into and perform
its obligations under this Agreement and the Assignment from time
to time in respect of the Purchased Receivables or to ensure the
legality, validity, enforceability against the Seller or
admissibility in evidence in the United States and Japan of this
Agreement or the Assignment;
(ii) ensure that at all times the claims against it under this
Agreement rank at least pari passu with the claims of all its
other unsecured creditors save those whose claims are preferred
by any bankruptcy, insolvency or other similar laws of general
application;
(iii) permit audit and inspection under its guidance of its Records by
or on behalf of the Purchaser during normal working hours upon
reasonable notice and with reasonable frequency;
(iv) maintain sufficient operating procedures to manage the
transactions contemplated herein and to perform its obligations
hereunder;
(v) (without prejudice to CLAUSE 13.1) indemnify the Purchaser from
and against all liabilities, losses and fees, costs and expenses
in respect of any breach by the Seller of the representations and
warranties made by it pursuant to the terms of CLAUSE 9;
(vi) furnish to the Purchaser sufficient copies of such other
information relating to its business as may be reasonably
requested in writing by the Purchaser in order to enable it to
carry out its functions hereunder;
(vii) do all things necessary to remain duly organized, validly
existing and in good standing under the laws of Delaware and
maintain all requisite authority to conduct its business in
California;
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(viii) comply in all respects which could be regarded as material in the
context of the transactions contemplated by this Agreement, with
all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject;
(ix) if a promissory note is issued for the payment of any Purchased
Receivable by the Buyer in favor of the Seller, promptly notify
the Purchaser thereof and make endorsement without recourse
(mutanpo uragaki) on such promissory note and deliver, or cause
to be delivered, such promissory note to or to the order of the
Purchaser;
(x) give the Purchaser notice of any material change to its
administrative and operating procedures in relation to the
keeping and maintaining of Records;
(xi) at its expense, in a timely manner fully perform and comply with
all provisions, covenants and other promises required to be
observed by it under the Sales Agreements related to the
Purchased Receivables as if interests in the Purchased
Receivables had not been assigned and sold hereunder;
(xii) promptly after it becomes aware of the occurrence of any
Termination Event or Potential Termination Event, notify the
Purchaser thereof;
(xiii) promptly after it becomes aware of the Acceptance or Partial
Acceptance of any Equipment, the Revised Face Amount of any
Purchased Receivable or the Scheduled Due Date for any Purchased
Receivable, notify the Purchaser thereof;
(xiv) promptly after it becomes aware of any event or condition
relating to any Purchased Receivable set forth in CLAUSE 14.1,
notify the Purchaser thereof; and
(xv) cooperate with the Purchaser and execute and deliver to the
Purchaser such other instruments and documents and take such
other actions as may be reasonably requested from time to time in
order to carry out, evidence and confirm the Purchaser's rights
and the intended purpose of this Agreement, including, but not
limited to, perfecting, protecting or evidencing the Purchaser's
right and interest in or to the Purchased Receivables.
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11.2 The Seller shall not, until the date which is 60 days after the last
Scheduled Due Date following the determination of the Scheduled Due Date for all
of the Purchased Receivables:
(i) sell, assign, convey, transfer, lease or otherwise dispose of any
Purchased Receivables other than pursuant hereto, or attempt,
purport or agree to do any of the foregoing;
(ii) cancel, terminate, amend, modify or waive any material term or
condition of any Sales Agreement relating to Purchased
Receivables, except insofar as the provisions contained in
CLAUSES 7, 13 AND 14 are complied with by the Seller;
(iii) compromise or settle any dispute or claim in respect of any
Purchased Receivable;
(iv) take any action which is reasonably likely to prejudice the
validity or recoverability of any Purchased Receivable;
(v) seek to challenge the validity of any sale of Receivables in any
legal proceedings; or
(vi) do anything which would materially and adversely affect the
interests of the Purchaser hereunder or the maintenance by the
Purchaser of any licenses, exemptions, authorizations or consents
necessary in connection with this Agreement or the transactions
contemplated hereby.
11.3 To assure the Purchaser of its ability to perform its obligations
under this Agreement and the other Transaction Documents, the Seller further
agrees that, until the date which is 60 days after the last Scheduled Due Date
following the determination of the Scheduled Due Date for all of the Purchased
Receivables, it also shall:
(i) maintain, at all times, a ratio of Quick Assets to Current
Liabilities of at least 1.25 to 1.00;
(ii) maintain, at all times, Tangible Net Worth of not less than
$250,000,000; and
(iii) maintain, at all times, a ratio of Total Debt LESS Subordinated
Debt to Capital of no more than 0.50 to 1.00.
12. PURCHASER'S COVENANTS
12.1 The Purchaser shall obtain, comply with the terms of and do all that
is necessary to maintain in full force and effect all authorizations, approvals,
licenses and consents required in or by the laws and regulations of the United
States and Japan to enable it lawfully to enter into and perform its obligations
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under this Agreement or to ensure the legality, validity, enforceability or
admissibility in evidence in the United States and Japan of this Agreement or of
the Assignment pursuant to the terms of this Agreement.
13. SELLER'S INDEMNITY
13.1 Without limiting any other rights which the Purchaser may have
hereunder or under applicable law, the Seller hereby agrees to indemnify the
Purchaser and its officers, directors, agents and employees from and against any
and all damages, losses, claims, liabilities, costs and expenses, including,
without limitation reasonable attorneys' fees and disbursements including any
tax thereon (all of the foregoing being collectively referred to as "INDEMNIFIED
AMOUNTS") awarded against or incurred by any of them in connection with this
Agreement, or the acquisition of an interest by the Purchaser in the Purchased
Receivables, as a result of any breach by the Seller of any representation,
warranty or covenant made or deemed to be made hereunder or in connection
herewith or the transactions contemplated hereby, excluding, however,
Indemnified Amounts to the extent that a final judgment of a court of competent
jurisdiction holds that such Indemnified Amounts resulted from the gross
negligence or wilful misconduct on the part of the Purchaser. Without limiting
the generality of the foregoing (and without prejudice to CLAUSE 14), the Seller
shall indemnify, to the extent not indemnified as a result of the operation of
CLAUSE 14.4, the Purchaser for Indemnified Amounts relating to or resulting
from:
(i) the sale and assignment to the Purchaser hereunder of any
Receivable for which any representation and warranty set forth in
CLAUSE 9.1 is incorrect;
(ii) reliance on any representation or warranty made by the Seller or
any officer of the Seller under or in connection with this
Agreement or any of the other Transaction Documents or any other
material information or report delivered by the Seller or any
officer of the Seller which shall have been false, incorrect or
omitting of any material fact at the time made or deemed made;
(iii) the failure by the Seller or any officer of the Seller to comply
with any applicable law, rule or regulation with respect to any
Purchased Receivable or the related Sales Agreement or the
non-conformity of any Purchased Receivable or the related Sales
Agreement with any such applicable law, rule or regulation;
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(iv) the failure to vest and maintain in the Purchaser the Purchased
Receivables free and clear of any encumbrance;
(v) any dispute, claim, offset or defense of the Buyer to the payment
of a Purchased Receivable, including, without limitation, a
defense based on such Receivable or the related Sales Agreement
not being a legal, valid and binding obligation of such Buyer
enforceable against it in accordance with its terms, any defect
in the Equipment which has been sold under the Sales Agreement or
the failure by the Seller to perform any obligations related to
such related Sales Agreement under any applicable laws, rules or
regulations;
(vi) any failure of the Seller to perform its duties or obligations in
accordance with the provisions of this Agreement and the other
Transaction Documents;
(vii) any disclosure of information regarding the Buyer by the Seller
to the Purchaser or the supply of any Sales Agreements, Records
and all other related documents to the Purchaser; and
(viii) any claim arising from collection activities conducted by the
Seller.
PART 6
REPURCHASE OF RECEIVABLES
14. REPURCHASE OF RECEIVABLES
14.1 The Seller shall, upon the request of the Purchaser, repurchase any
Purchased Receivable if any of the following events or conditions relating to
such Purchased Receivable shall occur or exist:
(i) the obligation of the Buyer to pay the Face Amount or, if
applicable, the Revised Face Amount of such Purchased Receivable
or any other obligation of the Buyer under the related Sales
Agreement is, or the Buyer claims that such obligation is, not
enforceable in full by the Purchaser in accordance with the terms
of the related Sales Agreement for any reason whatsoever,
including, but not limited to, any asserted defense of the Buyer
to such obligation;
(ii) any representation or warranty set forth in the Assignment or in
CLAUSE 9.1 is incorrect with respect to such Purchased
Receivable;
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(iii) the Seller fails, or the Buyer claims that the Seller has failed,
to comply with any applicable law, rule or regulation with
respect to such Purchased Receivable or the related Sales
Agreement or Equipment;
(iv) the Seller fails or is unable, or the Buyer claims that the
Seller has failed or is unable, to perform any of its obligations
under the related Sales Agreement for such Purchased Receivable;
(v) the Seller fails to perform any of its obligations under this
Agreement, the Assignment or any of the other Transactions
Documents with respect to such Purchased Receivable;
(vi) without limiting the scope of any of the foregoing, either (A)
the Seller and the Buyer determine at any time that Acceptance or
Partial Acceptance of the Equipment relating to such Purchased
Receivable will not occur on or before the date which is 270 days
after the date of Shipment of such Equipment or (B) the
Acceptance or Partial Acceptance of the Equipment relating to
such Purchased Receivable does not occur on or before the date
which is 270 days after the date of Shipment of such Equipment;
(vii) without limiting the scope of any of the foregoing, either (A)
the Seller and the Buyer fail to agree upon the Scheduled Due
Date for such Purchased Receivable prior to the Tentative
Acceptance Date or (B) the Seller and the Buyer agree upon a
Scheduled Due Date which is more than 225 days after the date of
Acceptance or Partial Acceptance of the Equipment relating to
such Purchased Receivable; or
(viii) without limiting the scope of any of the foregoing, the Buyer
fails for any reason to pay the full Face Amount, or, if
applicable, the Revised Face Value, of such Purchased Receivable
on or before the date which is 60 days after the Scheduled Due
Date for such Purchased Receivable.
14.2 Completion of any repurchase contemplated by CLAUSE 14.1 shall take
place on a business day (the "REPURCHASE DATE") which is not more than five
business days after the date the Purchaser delivers to the Seller a written
request for such repurchase pursuant to CLAUSE 14.1, whereupon:
(i) The Seller shall pay to the Purchaser the Repurchase Price
(calculated as provided in CLAUSE
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14.3) for the Purchased Receivable to be repurchased;
(ii) the Purchaser shall re-assign to the Seller or its designee such
Purchased Receivable (at the cost of the Seller and without
recourse or warranty, except for the warranty expressly given in
the assignment, on the part of the Purchaser), by the Purchaser
and the Seller executing and delivering to the other an
assignment for such Purchased Receivable substantially in the
form of PART 2 OF THE THIRD SCHEDULE;
(iii) the Purchaser shall deliver to the Seller (or its designee) the
relevant Sales Agreement to the Seller (or its designee); and
(iv) if a promissory note has been issued by the Buyer in favor of the
Seller for the payment of any of the Receivables and such
promissory note has been endorsed and delivered to the Purchaser,
the Purchaser shall make endorsement without recourse (mutanpo
uragaki) on such promissory note in favor of the Seller and
deliver such promissory note to or to the order of the Seller;
and
(v) take all such other steps and comply with all such other
formalities as the Seller may reasonably request to perfect or
more fully to evidence or secure the Seller's (or its designee's)
title to such Purchased Receivable, including, where appropriate,
by giving notice of such reassignment to the Buyer.
14.3 The consideration payable by the Seller for the repurchase of each
Purchased Receivable which is to be repurchased pursuant to CLAUSE 14.1 shall be
an amount in Yen (the "REPURCHASE PRICE") determined as follows:
(i) If the Repurchase Date occurs PRIOR to the Tentative Due Date for
such Purchased Receivable, whether or not the Scheduled Due Date
for such Purchased Receivable has been set, then the Seller shall
pay a Repurchase Price equal to the sum of (A) the Purchase Price
for such Purchased Receivable plus (B) the product of (1) the
Discount Amount for such Purchased Receivable times (2) a
fraction (expressed as a percentage rounded up to the nearest one
thousandth of one percent), the numerator of which is the number
of days in the period commencing on the Closing Date and ending
on the Repurchase Date and the denominator of which is the number
of days in the Discount Period.
(ii) If the Scheduled Due Date HAS NOT been set PRIOR to the
Repurchase Date and the Repurchase Date
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occurs AFTER the Tentative Due Date for such Purchased
Receivable, then the Seller shall pay a Repurchase Price equal to
the sum of (A) the Face Amount of such Purchased Receivable plus
(B) an amount equal to the interest which would have accrued on
such Face Amount from the Tentative Due Date through the
Repurchase Date at the Daily Rate in effect from time to time
during such period.
(iii) If the Scheduled Due Date HAS been set PRIOR to the Repurchase
Date and the Repurchase Date occurs AFTER the Tentative Due Date
but BEFORE the Scheduled Due Date for such Purchased Receivable,
then the Seller shall pay a Repurchase Price equal to the sum of
(A) the Face Amount of such Purchased Receivable plus (B) the
Funded Interest Accrued Amount.
(iv) If the Scheduled Due Date HAS been set PRIOR to the Repurchase
Date and the Repurchase Date occurs AFTER the Tentative Due Date
and AFTER the Scheduled Due Date for such Purchased Receivable,
then the Seller shall pay a Repurchase Price equal to the sum of
(A) the Face Amount of such Purchased Receivable, plus (B) the
Funded Interest Amount for such Purchased Receivable plus (C) an
amount equal to the interest which would have accrued on the Face
Amount from the Scheduled Due Date through the Repurchase Date at
the Daily Rate in effect from time to time during such period.
In addition to the Repurchase Price payable by the Seller to the Purchaser on
any Repurchase Date in connection with the repurchase of any purchased
Receivable hereunder, the Seller shall pay to the Purchaser on such Repurchase
Date all amounts, if any, payable by the Seller pursuant to CLAUSE 15.1 as a
result of such repurchase.
PART 7
INDEMNITY FOR FUNDING LOSSES
15. INDEMNITY BY THE SELLER FOR FUNDING LOSSES
15.1 In addition to other amounts payable by the Seller hereunder, the
Seller shall reimburse the Purchaser on demand for any resulting loss or expense
incurred by it, including (without limitation) any loss incurred in obtaining,
liquidating or redeploying deposits from third parties, PROVIDED THAT the
Purchaser shall have delivered to the Seller a certificate as to the amount of
such loss or expense setting out in reasonable detail the calculations resulting
in such amount, which
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certificate shall be conclusive in the absence of manifest error, if:
(i) any Purchased Receivable is paid or repurchased prior to the
Tentative Due Date for such Purchased Receivable, whether or not
the Scheduled Due Date for such Purchased Receivable has been
set;
(ii) any Purchased Receivable is paid or repurchased prior the
Scheduled Due Date for such Purchased Receivable, if the
Scheduled Due Date for such Purchased Receivable has been set; or
(iii) the Seller fails to sell any of the Receivables to the Purchaser
on the Closing Date (or on any date designated by the Seller as
the Closing Date) in accordance with CLAUSE 5.1 or the
Assignment, whether by reason of non-fulfillment of any of the
conditions set out in the SECOND SCHEDULE or otherwise.
PART 8
COLLECTION OF RECEIVABLES
16. APPOINTMENT OF COLLECTION AGENT
16.1 Lam Research Corporation is hereby appointed by the Purchaser as its
agent to service, collect and administer all Purchased Receivables, to perform
all related functions and to enforce the Purchaser's rights and interests in and
under the Purchased Receivables, and Lam Research Corporation hereby accepts
such appointment as Collection Agent on the terms and subject to the conditions
of this Agreement.
16.2 The Purchaser may at any time after the occurrence of a Termination
Event as provided in CLAUSE 19, remove Lam Research Corporation as Collection
Agent.
16.3 Upon Lam Research Corporation being removed as Collection Agent
pursuant to CLAUSE 19, the Purchaser may appoint a successor to act as
Collection Agent and shall forthwith notify the other parties hereto thereof,
whereupon the parties hereto and such successor shall, upon such successor
confirming in writing to the Purchaser that it agrees so to act, thereafter have
the same rights and obligations among them as would have been the case had they
then entered into an agreement in the form mutatis mutandis of this Agreement.
16.4 For the avoidance of doubt, it is hereby agreed that the Collection
Agent is not authorized to enter into any commitment on behalf of the Purchaser.
16.5 The Collection Agent hereby covenants and undertakes with the
Purchaser as set out in the SIXTH SCHEDULE.
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16.6 The Collection Agent agrees to indemnify the Purchaser, including its
officers, directors and employees from and against any liability, loss, expense,
action, proceeding or claim which may be brought against, or suffered or
sustained, by the Purchaser, and/or such directors, officers and employees by
reason of any wrongful or negligent acts or omissions of the Collection Agent or
any of its directors, officers, employees or agents in the performance of its
duties hereunder.
17. COLLECTION OF RECEIVABLES
17.1 Save as otherwise provided herein, the proceeds of each Purchased
Receivable will, when paid, be collected by the Collection Agent.
17.2 The Collection Agent shall cause the Buyer to make payment in respect
of the Purchased Receivables into an account of the Collection Agent in Tokyo
(or, if a Termination Event has occurred and the Purchaser so directs, into an
account of the Purchaser in Tokyo), PROVIDED THAT, if a promissory note has been
issued for the payment of a Purchased Receivable by the Buyer in favor of the
Seller and delivered to or to the order of the Purchaser in accordance herewith,
the Purchaser may collect on its behalf the amount represented by such
promissory note.
17.3 The Collection Agent shall, as soon as practically possible, pay any
Collection collected by the Collection Agent with respect to a Purchased
Receivable over to the Purchaser in accordance with PART 9.
17.4 If, at any time the Collection Agent receives any Collections in
respect of any Purchased Receivables and the authority of the Collection Agent
to collect such Receivables has been terminated in accordance with this
Agreement, then the Collection Agent shall pay such amount to the credit of such
account in Tokyo as the Purchaser may specify, in each case for value the same
day.
17.5 Any amounts in respect of the collection proceeds of any Purchased
Receivable received by the Collection Agent (whether or not the appointment of
the Collection Agent has been terminated hereunder) shall be held by the
Collection Agent in trust for the benefit of the Purchaser.
18. COST, EXPENSES AND REMUNERATION
18.1 The Purchaser authorizes the Collection Agent on its behalf, and the
Collection Agent undertakes to incur reasonable costs, expenses and charges in
connection with the enforcement of any Purchased Receivable and/or the
Purchaser's rights and remedies in relation thereto, and it is agreed that
notwithstanding any provisions under any applicable laws, rules or regulations,
the Collection Agent shall have no recourse or
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claim for indemnification or payment against the Purchaser in respect of such
reasonable costs, expenses and charges.
18.2 The Collection Agent is not entitled to any remuneration or indemnity
in respect of the performance of its duties under this Agreement.
19. REMOVAL OR TERMINATION OF COLLECTION AGENT
19.1 If a Termination Event occurs, the Purchaser may at any time, without
prejudice to the Purchaser's other rights:
(i) by notice in writing to the Collection Agent terminate the
appointment of the Collection Agent under this Agreement and
designate as a successor collection agent any person to succeed
the Collection Agent; and/or
(ii) notify the Buyer that all payments in respect of Purchased
Receivables shall be made to the Purchaser or a successor
collection agent.
19.2 On and after termination of the appointment of the Collection Agent
under this Agreement pursuant to CLAUSE 19.1, all rights, obligations (other
than liability for breaches of this Agreement by the Collection Agent or
liability in tort or for breach of trust (or other fiduciary duty) on the part
of the Collection Agent prior to such termination and the Collection Agent's
obligations under CLAUSE 19.3 with respect to the performance of its duties
hereunder), authority and power of the Collection Agent under this Agreement
shall be terminated and of no further effect and the Collection Agent shall not
hold itself out in any way as the agent of the Purchaser.
19.3 Upon termination of the appointment of the Collection Agent under this
Agreement pursuant to CLAUSE 19.1, the Collection Agent shall forthwith deliver
to the Purchaser or as it shall direct the Records in its possession or under
its control relating to the affairs of or belonging to the Purchaser and the
Purchased Receivables and any other security therefor and any moneys then held
by the Collection Agent on behalf of the Purchaser and shall take such action as
the Purchaser may reasonably direct.
19.4 The appointment of the Collection Agent under this Agreement shall
terminate (but without affecting any accrued rights and liabilities hereunder)
at such time as (i) the Purchaser has no further interest in any of the
Purchased Receivables and (ii) the Collection Agent is notified by the Purchaser
in accordance with CLAUSE 31 that such is the case.
19.5 If there is any change in the identity of the Collection Agent in
accordance with this Agreement, the new Collection Agent, the retiring
Collection Agent and the Purchaser shall execute such documents and take such
actions as such new Collection Agent and the Purchaser may require for the
purpose of vesting in such new Collection Agent the rights and obligations
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of the Collection Agent under this Agreement and releasing the retiring
Collection Agent from its future obligations under this Agreement.
PART 9
PAYMENTS
20. CURRENCY OF ACCOUNT AND PAYMENT
20.1 Yen is the currency of account and payment for each and every sum at
any time due from any person hereunder, PROVIDED THAT:
(i) each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred; and
(ii) each payment which is expressed herein to be payable in another
currency shall be made in that other currency.
20.2 If any sum due from a person (a "relevant person") under this
Agreement or any order or judgment given or made in relation hereto has to be
converted from the currency (the "first currency") in which the same is payable
hereunder or under such order or judgment into another currency (the "second
currency") for the purpose of (i) making or filing a claim or proof against the
relevant person, (ii) obtaining an order or judgment in any court or other
tribunal or (iii) enforcing any order or judgment given or made in relation
hereto, the relevant person shall indemnify and hold harmless the other person
to whom such sum is due from and against any loss suffered as a result of any
discrepancy between (a) the rate of exchange used for such purpose to convert
the sum in question from the first currency into the second currency and (b) the
best rate or rates of exchange at which such other person is reasonably able to
purchase the first currency with the second currency upon receipt of a sum paid
to it in satisfaction, in whole or in part, of any such order, judgment, claim
or proof. To the extent that the person to whom such payment is due receives an
amount in excess of the amount due to it under this Agreement, such person shall
forthwith pay an amount equal to any such excess to the relevant person.
20.3 All payments made by any person hereunder shall be made free and clear
of and without any deduction for or on account of any set-off or counterclaim.
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21. PAYMENTS BY THE SELLER OR THE COLLECTION AGENT
21.1 On each date upon which this Agreement requires an amount to be paid
by the Seller or the Collection Agent to the Purchaser hereunder, the Seller or
the Collection Agent (as the case may be) shall, save as expressly provided
otherwise herein, make the same available to the Purchaser:
(i) where such amount is denominated in Yen, by payment in Yen and in
immediately available funds to such account and bank in Tokyo as
the Purchaser shall have specified in writing for this purpose at
least two business days prior to such amount becoming payable; or
(ii) where such amount is denominated in a currency other than Yen, by
payment in such currency and in immediately available, freely
transferable, cleared funds to such account with such bank in the
principal financial currency as the Purchaser shall have
specified in writing for this purpose.
22. PAYMENTS BY THE PURCHASER
22.1 On each date upon which this Agreement requires an amount to be paid
to the Seller hereunder by the Purchaser, the Purchaser shall, save as otherwise
provided herein, make the same available to the Seller:
(i) where such amount is denominated in Yen, by payment in Yen and in
immediately available funds to the Seller at such account and
bank as the Seller shall have specified in writing for this
purpose; or
(ii) where such amount is denominated in a currency other than Yen, by
payment in such currency and in immediately available, freely
transferable, cleared funds to such account with such bank in the
principal financial centre of the country of such currency as the
Seller shall have specified in writing for this purpose.
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PART 10
TAXES
23. TAXES
23.1 All payments to be made by or on behalf of the Seller or the
Collection Agent to the Purchaser under or pursuant to any of the provisions of
this Agreement shall be made free and clear of and without deduction for or on
account of tax unless the Seller or the Collection Agent (as the case may be) is
required by any applicable law to make such payment subject to the deduction or
withholding of tax in which case the sum payable by the Seller or the Collection
Agent (as the case may be) in respect of which such deduction or withholding is
required to be made shall be increased to the extent necessary to ensure that,
after the making of such deduction or withholding (including any additional
deduction or withholding on such increased amount), the Purchaser receives and
retains (free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received and so
retained had no such deduction or withholding been made or required to be made.
23.2 If the Seller or the Collection Agent makes any payment to the
Purchaser under or pursuant to this Agreement in respect of which it is required
to make any such deduction or withholding, the Seller or the Collection Agent
(as the case may be) shall deliver to the Purchaser as soon as practicable a
certificate of deduction of tax and/or a receipt or other evidence issued by the
relevant taxation or other authority demonstrating the payment to such authority
of all amounts so required to be deducted or withheld.
23.3 If an event occurs which would result in the Seller or the Collection
Agent becoming obliged to make any payment pursuant to this CLAUSE 23, then each
of the parties hereto shall in good faith use reasonable endeavors to take such
reasonable steps as may be open to it to mitigate or avoid the effects of such
event, PROVIDED THAT nothing in this CLAUSE 23.3 shall:
(i) oblige any party hereto to incur any costs or expenses or to take
or refrain from taking any action where in the reasonable opinion
of such party to take or refrain from taking any action would be
prejudicial to its interests; or
(ii) oblige any party hereto to disclose any confidential information
relating to the organization of its affairs; or
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(iii) interfere with the right of any party hereto to arrange its
internal affairs in whatever manner it thinks fit.
PART 11
TERMINATION
24. CONSEQUENCE OF A TERMINATION EVENT
24.1 Upon the occurrence of any Termination Event, other than the breach of
CLAUSE 11.3 or the occurrence of an Insolvency Event in relation to the Seller,
the Purchaser may, by notice to the Seller:
(i) terminate the obligation of the Purchaser to purchase any
Receivables;
(ii) require the Seller to repurchase immediately all of the Purchased
Receivables for which the Scheduled Due Date has not been
determined, in which event the provisions contained in CLAUSES
14.2 TO 14.4 shall be applied MUTATIS MUTANDIS; and/or
(iii) exercise any and all other rights available to the Purchaser
under this Agreement or any of the other Transaction Documents or
at law or in equity.
24.2 Upon the occurrence of any Insolvency Event in relation to the Seller,
automatically and without any notice to the Seller:
(i) the obligation of the Purchaser to purchase any Receivables shall
terminate;
(ii) the Seller shall repurchase immediately all of the Purchased
Receivables for which the Scheduled Due Date has not been
determined, in which event the provisions contained in CLAUSES
14.2 TO 14.4 shall be applied MUTATIS MUTANDIS; and/or
(iii) the Purchaser may exercise any and all other rights available to
the Purchaser under this Agreement or any of the other
Transaction Documents or at law or in equity.
24.3 Upon the breach of CLAUSE 11.3, the Seller shall, upon the request of
the Purchaser, deliver to the Purchaser either (i) funds in an amount equal to
the Face Amount of the largest Purchased Receivable then unpaid or (ii) a
standby letter of credit with a stated amount equal to the Face Amount of the
largest Purchased Receivable then unpaid.
(i) The Purchaser shall hold any funds delivered to it pursuant to
clause (i) of the first sentence of
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this CLAUSE 24.3 in an interest bearing account in the name of
the Seller as security for the performance by the Seller of its
obligations under this Agreement and the other Transaction
Documents. The Seller hereby grants to the Purchaser, as
security for such obligations, a security interest in such funds
and such account and agrees to perform such other actions as the
Purchaser may request to establish, perfect, maintain and protect
such security interest prior to the rights of others in such
funds and such account.
(ii) Any standby letter of credit delivered to the Purchaser pursuant
to clause (ii) of the first sentence of this CLAUSE 24.3 shall be
in a form and substance and issued by a bank acceptable to the
Purchaser. The Purchaser shall have the right to draw under any
such letter of credit for any amounts payable to the Purchaser
hereunder which are not paid to the Purchaser when due.
Upon the payment or repurchase of all Purchased Receivables and the satisfaction
by the Seller of all its obligations under this Agreement and the other
Transaction Documents, the Purchaser shall (A) deliver to the Seller the funds,
if any, remaining in any account established pursuant to clause (i) above or (B)
return to the Seller any letter of credit delivered to the Purchaser pursuant to
clause (ii) above, if any amounts remain available for drawing thereunder.
PART 12
MISCELLANEOUS
25. DEFAULT INTEREST AND INDEMNITY
25.1 If any sum due and payable by or on behalf of a party hereto (the
"Payer") to the other party (the "Payee") hereunder is not paid on the due date
therefor in accordance with the provisions hereof or if any sum due and payable
by the Payer under any judgment of any court in connection herewith is not paid
on the date of such judgment (the balance of such sum for the time being unpaid
being herein referred to as an "unpaid sum"), an unpaid sum shall bear interest
at the rate PER ANNUM which is equal to the Daily Rate plus two percent (2%),
such rate to change from time to time as the Daily Rate changes, for the period
beginning on, and including, such due date or, as the case may be, the date of
such judgment and ending on, but excluding, the date upon which the obligation
of the Payer to pay such sum is discharged (calculated on the basis of a year of
360 days). Such default interest shall be payable upon demand of the Payee.
33
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25.2 Each of the Seller and the Collection Agent undertakes to indemnify
the Purchaser against any loss or expense, including legal fees reasonably
incurred, which the Purchaser may sustain or incur as a consequence of any
default by the Seller or the Collection Agent (as the case may be) in the
performance of any of the obligations expressed to be assumed by it in this
Agreement.
26. FEES, COSTS AND EXPENSES AND STAMP DUTY
26.1 The Seller shall, from time to time upon demand of the Purchaser
reimburse the Purchaser for all costs and expenses (including reasonable legal
fees) incurred by it in or in connection with the negotiation, preparation and
execution of this Agreement, the Assignment and the other Transaction Documents
or any amendment thereto or any waiver thereof.
26.2 The Seller or the Collection Agent will, upon demand, pay to the
Purchaser and any permitted assignee in accordance with this Agreement, the
amount of any and all reasonable expenses, including all court costs and
attorneys' fees and expenses, which the Purchaser and any permitted assignee may
incur in connection with the exercise or enforcement against the Seller or the
Collection Agent of any of their respective rights or interests under this
Agreement, the Assignment or any other Transaction Document or any amendment
thereto or any waiver thereof.
26.3 The Seller shall be responsible for all stamp duties, registration
fees and taxes to which this Agreement, the Assignment, any other Transaction
Document, any transaction contemplated hereby or thereby or any order or
judgment given in connection herewith or therewith are or at any time may be
subject.
27. BENEFIT OF AGREEMENT
27.1 This Agreement, the Assignment and the other Transaction Documents
shall be binding upon and inure to the benefit of each party hereto and its
successors and permitted assigns.
27.2 The Seller and the Collection Agent shall not be entitled to assign or
transfer all or any of their rights, benefits and obligations under this
Agreement, the Assignment or any other Transaction Document.
27.3 The Purchaser shall be entitled to assign or transfer all or any of
its rights, benefits and obligations under this Agreement, the Assignment and
the other Transaction Documents with the consent of the Seller, which consent
shall not be unreasonably withheld or delayed.
34
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28. REMEDIES AND WAIVERS
28.1 No failure to exercise, nor any delay in exercising, on the part of
any party hereto, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise thereof or the exercise of any other right or
remedy.
28.2 The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
29. PARTIAL INVALIDITY
Without prejudice to any other provision hereof, if one or more provisions
hereof is or becomes invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to such party or parties, it shall not, to the
fullest extent permitted by applicable law, render invalid, illegal or
unenforceable other provisions hereof or such provision or provisions in any
other jurisdiction or with respect to any other party or parties hereto.
30. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.
31. NOTICES
31.1 Unless otherwise stated herein, each communication to be made
hereunder shall be made in writing and may be made by telex, telefax or letter.
31.2 Any communication or document to be made or delivered by any one
person to another pursuant to this Agreement shall (unless that other person has
by fifteen days' written notice to the other parties hereto specified another
address) be made or delivered to that other person at the address or the number
identified with its signature below and shall be deemed to have been made or
delivered when received by that other person Provided that each communication
made by one party hereto to another shall be made to that other person at such
other address or number as notified to such party by that other person from time
to time.
31.3 Each communication and document made or delivered by one person to
another person pursuant hereto shall be in the English language or in Japanese
accompanied by a translation thereof into English certified (by an officer of
the person
35
<PAGE>
making or delivering the same) as being a true and accurate translation thereof.
32. PRIOR UNDERSTANDINGS
32.1 This Agreement and the other Transaction Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
supersede all prior understandings and agreements, whether written or oral.
PART 13
LAW AND JURISDICTION
33. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
34. JURISDICTION
34.1 Each of the parties hereto irrevocably agrees that the courts of the
State of California and the courts of the United States of America for the
Northern District of California shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise out
of or in connection with this Agreement and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
34.2 Each of the parties hereto irrevocably waives any objection which it
might now or hereafter have to the courts referred to in CLAUSE 34.1 being
nominated as the forums to hear and determine any suit, action or proceeding,
and to settle any disputes, which may arise out of or in connection with this
Agreement and agrees not to claim that such courts are not convenient or
appropriate forums.
34.3 The submission to the jurisdiction of the courts referred to in
CLAUSE 34.1 shall not (and shall not be construed so as to) limit the right of
any party hereto to take proceedings against the other party in any other court
of competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
34.4 Each of the parties hereto hereby consents generally in respect of any
legal action or proceedings arising out of or in connection with this Agreement
to the giving of any relief or the issue of any process in connection with such
action or proceeding including, without limitation, the making, enforcement or
execution against any party whatsoever (irrespective of its use or intended use)
of any order or judgment which may be made or given in such action or
proceeding.
[The next page is the signature page.]
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first before written.
THE SELLER AND THE COLLECTION AGENT
LAM RESEARCH CORPORATION
By: ______________________________
Name: ________________________
Title: _______________________
Address: 4650 Cushing Parkway
Fremont, CA 94538-6401
Attn: Yuko Hashimoto
Fax: (510) 659-6454
Tel: (510) 438-4887
THE PURCHASER
ABN AMRO BANK N.V.,
CAYMAN ISLANDS BRANCH
By: ______________________________
Name: ________________________
Title: _______________________
By: ______________________________
Name: ________________________
Title: _______________________
Address: c/o San Francisco
International Branch
101 California Street
Suite 4550
San Francisco, CA 94111
Attn: Robert N. Hartinger/
Gloria Lee
Fax: (415) 362-3524
Tel: (415) 984-3710
37
<PAGE>
THE FIRST SCHEDULE
DESCRIPTION OF RECEIVABLES
1. FIRST RECEIVABLE:
Describe Receivable by:
(i) Face Amount;
(ii) Description of Equipment sold;
(iii) Date of Purchase Order from the Buyer;
(iv) Date of Shipment to the Buyer;
(v) Name of End-User of the Equipment;
(vi) Whether a promissory note has been or is expected to be
issued by the Buyer and, if issued, the date, principal
amount and maturity date thereof.
2. SECOND RECEIVABLE:
Describe Receivable by:
(i) Face Amount;
(ii) Description of Equipment sold;
(iii) Date of Purchase Order from the Buyer;
(iv) Date of Shipment to the Buyer;
(v) Name of End-User of the Equipment;
(vi) Whether a promissory note has been or is expected to be
issued by the Buyer and, if issued, the date, principal
amount and maturity date thereof.
1-1
<PAGE>
THE SECOND SCHEDULE
CONDITIONS PRECEDENT TO THE CLOSING
1. The receipt by the Purchaser on or prior to the Closing Date, each in form
and substance reasonably satisfactory to the Purchaser, of:
(a) a copy, certified as of the Closing Date as a true copy by a duly
authorized officer of the Seller, of the resolutions of the Seller's board
of directors approving:
(i) the outright transfer of all the Seller's right, title and
interest in and to the Receivables; and
(ii) the execution and delivery on behalf of the Seller of this
Agreement, the Assignment and all other Transaction
Documents to which the Seller is to be a signatory;
(b) a copy, certified as of the Closing Date as a true copy by a duly
authorized officer of the Seller, of the Articles of Incorporation and
bylaws of the Seller;
(c) good standing certificates from California and Delaware, as of dates
which are as close as practicably possible to the Closing Date, for the
Seller;
(d) an incumbency certificate, certified as of the Closing Date by a duly
authorized officer of the Seller, setting forth the name(s), title(s) and
specimen signature(s) of individual(s) authorized to execute and deliver on
behalf of the Seller this Agreement, the Assignment and all other
Transaction Documents to which the Seller is to be a signatory;
(e) the Assignment, appropriately completed and duly executed by the
Seller and the Purchaser;
(f) the Purchase Orders, invoices, and other written documents,
instruments and agreements constituting the Sales Agreements and Records
relating to the Receivables and the related Equipment;
(g) such Uniform Commercial Code financing statements (appropriately
completed and executed) for filing in such jurisdictions as the Purchaser
may request to perfect its interests in the Receivables, the Related
Security and the Records;
(h) such Uniform Commercial Code termination statements (appropriately
completed and executed) for filing in such
2-1
<PAGE>
jurisdictions as the Purchaser may request to terminate any financing
statement evidencing interests of other persons in the Receivables, the
Related Security and the Records which are prior to the interests granted
to the Purchaser;
(i) Uniform Commercial Code search certificates from the jurisdictions in
which Uniform Commercial Code financing statements are to be filed pursuant
to ITEM 1.(i) above reflecting no other financing statements or filings
which evidence interests of other persons in the Receivables, the Related
Security and the Records which are prior to the interests granted to the
Purchaser;
(j) the original of any note or other instrument evidencing any Purchased
Receivable, duly endorsed by the Seller to the Purchaser;
(k) the Perfection Document(s) for the assignment of the Receivables, duly
executed by the Seller;
(l) Such other documents, instruments and agreements as the Purchaser may
request to establish and perfect the interests granted to the Purchaser in
this Agreement, the Assignment and the other Transaction Documents;
(m) such financial statements and other financial information for the
Seller as the Purchaser may reasonably request;
(n) an opinion, dated the Closing Date and addressed to the Purchaser,
from Jan Kang, counsel to the Seller, in a form and substance reasonably
satisfactory to the Purchaser; and
(o) such other instruments, agreements, certificates, opinions and other
documents as the Purchaser may reasonably request.
2. The representations and warranties set forth in CLAUSE 9.1 and in the FIFTH
SCHEDULE shall be true and correct on and as of the Closing Date by reference to
the facts and circumstances then existing.
3. Neither a Termination Event nor a Potential Termination Event shall have
occurred and remain unremedied on the Closing Date.
4. No event which could have a Material Adverse Effect on the Seller shall
have occurred and be continuing on the Closing Date.
2-2
<PAGE>
THE THIRD SCHEDULE
PART 1 - FORM OF ASSIGNMENT OF THE RECEIVABLES
THIS ASSIGNMENT made on March __, 1995 BY:
(1) LAM RESEARCH CORPORATION (the "Seller")
IN FAVOR OF:
(2) ABN AMRO BANK N.V., Cayman Islands Branch (the "Purchaser")
WITNESSES as follows:
1. Interpretation
1.1 In this Assignment "Purchase Agreement" means the receivables purchase
agreement dated as of March 23, 1995 among (1) the Seller, in its capacity
as the Seller, (2) the Purchaser and (3) the Seller, in its capacity as the
Collection Agent.
1.2 Terms defined in the Purchase Agreement have the same meaning in this
Assignment.
1.3 Headings in this Assignment are for ease of reference only.
2. Transfer
2.1 Subject to, and in accordance with, the terms and conditions of the
Purchase Agreement, the Seller hereby sells and assigns to the Purchaser
(by way of outright assignment and not merely by way of security) all of
the Seller's right, title and interest in and to each of the Receivables
(the "Assigned Receivables") described in Exhibit A hereto, to all
Collections thereof and to the Related Security relating thereto and all
proceeds thereof.
2.2 The Tentative Acceptance Date, the Tentative Credit Period, the Tentative
Due Date, the Discount Rate and the Purchase Price for each of the Assigned
Receivables shall be as set forth under the description of such Assigned
Receivable in Exhibit A.
2.3 In accordance with Clause 4.1 of the Purchase Agreement, the aggregate
Purchase Price for all of the Assigned Receivable shall be Y
______________.
3. Representations and Warranties
The Seller hereby represents and warrants to the Purchaser as of the date
hereof in the terms set out in Clause 9 of
3(1)-1
<PAGE>
the Purchase Agreement by reference to the facts and circumstances
currently existing.
4. Governing Law and Jurisdiction
4.1 This Assignment is governed by, and shall be construed in accordance with,
the laws of the State of California.
4.2 Both of the parties hereto agree that the courts of the State of California
and the courts of the United States of America for the Northern District of
California shall have jurisdiction to hear and determine any suit, action
or proceedings, and to settle any disputes, which may arise out of or in
connection with this Assignment and, for such purpose, irrevocably submits
to the jurisdiction of such courts.
4.3 Both of the parties hereto irrevocably waive any objection which they might
now or hereafter have to the courts referred to in Clause 4.2 being
nominated as the forums to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Assignment and agree not to claim that such courts are
not convenient or appropriate forums.
4.4 The submission to the jurisdiction of the courts referred to in a Clause
4.2 shall not (and shall not be construed so as to) limit the right of
either of the Seller or the Purchaser to take proceedings against the other
in any other court of competent jurisdiction or shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction (whether concurrently or not) if and
to the extent permitted by applicable law.
4.5 Each of the Seller and the Purchaser hereby consents generally in respect
of any legal action or proceeding arising out of or in connection with this
Assignment to the giving of any relief or the issue of any process in
connection with such action or proceeding including, without limitation,
the making, enforcement or execution against any property whatsoever
(irrespective of its use or intended use) of any order or judgment which
may be made or given in such action or proceeding.
3(1)-2
<PAGE>
AS WITNESS the hands of the duly authorized representative(s) of the parties
hereto the day and year first above written.
LAM RESEARCH CORPORATION
By: ______________________________
Name: ________________________
Title: _______________________
ABN AMRO BANK N.V.,
CAYMAN ISLANDS BRANCH
By: ______________________________
Name: ________________________
Title: _______________________
By: ______________________________
Name: ________________________
Title: _______________________
3(1)-3
<PAGE>
EXHIBIT A TO THE ASSIGNMENT
DESCRIPTION OF ASSIGNED RECEIVABLES
1. FIRST ASSIGNED RECEIVABLE:
(a) Describe Assigned Receivable by:
(i) Face Amount;
(ii) Description of Equipment sold;
(iii) Date of Purchase Order from the Buyer;
(iv) Date of Shipment to the Buyer;
(v) Name of End-User of the Equipment;
(vi) Whether a promissory note has been or is expected to be
issued by the Buyer and, if issued, the date, principal
amount and maturity date thereof.
(b) The Tentative Acceptance Date, the Tentative Credit Period, the
Tentative Due Date, the Discount Rate and the Purchase Price for the
Assigned Receivable described above are as follows:
(i) The Tentative Acceptance Date is _______________;
(ii) The Tentative Credit Period is _______________;
(iii) The Tentative Due Date is _______________;
(iv) The Discount Rate is the LIBOR Based Rate, which is ____
percent (__%) PER ANNUM; and
(v) In accordance with CLAUSE 4.1 of the Purchase Agreement, the
Purchase Price of the Assigned Receivable shall be Y
_____________.
3(1)(A)-1
<PAGE>
2. SECOND ASSIGNED RECEIVABLE:
(a) Describe Assigned Receivable by:
(i) Face Amount;
(ii) Description of Equipment sold;
(iii) Date of Purchase Order from the Buyer;
(iv) Date of Shipment to the Buyer;
(v) Name of End-User of the Equipment;
(vi) Whether a promissory note has been or is expected to be
issued by the Buyer and, if issued, the date, principal
amount and maturity date thereof.
(b) The Tentative Acceptance Date, the Tentative Credit Period, the
Tentative Due Date, the Discount Rate and the Purchase Price for the
Assigned Receivable described above are as follows:
(i) The Tentative Acceptance Date is _______________;
(ii) The Tentative Credit Period is _______________;
(iii) The Tentative Due Date is _______________;
(iv) The Discount Rate is the LIBOR Based Rate, which is ____
percent (__%) PER ANNUM; and
(v) In accordance with CLAUSE 4.1 of the Purchase Agreement, the
Purchase Price of the Assigned Receivable shall be Y
_____________.
3(1)(A)-2
<PAGE>
PART 2 - FORM OF REASSIGNMENT OF RECEIVABLES
THIS ASSIGNMENT made on [date]
By:
(1) ABN AMRO BANK N.V., Cayman Islands Branch ("ABN AMRO")
IN FAVOR OF:
(2) LAM RESEARCH CORPORATION ("LRC")
WITNESSES as follows:
1. Interpretation
1.1 In this Assignment "Purchase Agreement" means the receivables purchase
agreement dated as of March 23, 1995 among (1) LRC, in its capacity as the
Seller, (2) ABN AMRO, in its capacity as the Purchaser and (3) LRC, in its
capacity as the Collection Agent.
1.2 Terms defined in the Purchase Agreement have the same meaning in this
Assignment.
1.3 Headings in this Assignment are for ease of reference only.
2. Transfer
2.1 Subject to, and in accordance with, the terms and conditions of the
Purchase Agreement, ABN AMRO hereby sells and assigns to LRC (by way of
outright assignment and not merely by way of security, and without any
representation or warranty on the part of ABN AMRO except for the
representation set out in Clause 2.2) all of ABN AMRO's right, title and
interest in and to the Receivable (the "Assigned Receivable") described in
Exhibit A hereto, to all Collections thereof and to the Related Security
relating thereto and all proceeds thereof.
2.2 ABN AMRO hereby represents and warrants to LRC that as of the date hereof
ABN AMRO has not sold, transferred, assigned, created security interests in
or otherwise disposed of the Assigned Receivable.
3. Governing Law and Jurisdiction
3.1 This Assignment is governed by, and shall be construed in accordance with,
the laws of the State of California.
3.2 Both of the parties hereto agree that the courts of the State of California
and the courts of the United States of America for the Northern District of
California shall have
3(2)-1
<PAGE>
jurisdiction to hear and determine any suit, action or proceedings, and to
settle any disputes, which may arise out of or in connection with this
Assignment and, for such purpose, irrevocably submits to the jurisdiction
of such courts.
3.3 Both of the parties hereto irrevocably waive any objection which they might
now or hereafter have to the courts referred to in Clause 3.2 being
nominated as the forums to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Assignment and agree not to claim that such courts are
not convenient or appropriate forums.
3.4 The submission to the jurisdiction of the courts referred to in Clause 3.2
shall not (and shall not be construed so as to) limit the right of either
of ABN AMRO or LRC to take proceedings against the other in any other court
of competent jurisdiction or shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted
by applicable law.
AS WITNESS the hands of the duly authorized representatives of the parties
hereto the day and year first above written.
LAM RESEARCH CORPORATION
By: ______________________________
Name: ________________________
Title: _______________________
ABN AMRO BANK N.V.,
CAYMAN ISLANDS BRANCH
By: ______________________________
Name: ________________________
Title: _______________________
By: ______________________________
Name: ________________________
Title: _______________________
3(2)-2
<PAGE>
EXHIBIT A TO THE ASSIGNMENT
DESCRIPTION OF ASSIGNED RECEIVABLE
Describe Assigned Receivable by:
(i) Face Amount;
(ii) Description of Equipment sold;
(iii) Date of Purchase Order from the Buyer;
(iv) Date of Shipment to the Buyer;
(v) Name of End-User of the Equipment;
(vi) Whether a promissory note has been or is expected to be
issued by the Buyer and, if issued, the date, principal
amount and maturity date thereof.
3(2)(A)-1
<PAGE>
THE FOURTH SCHEDULE
TERMINATION EVENTS
1. The Seller breaches any of its obligations under this Agreement or any of
the other Transaction Documents and such breach is not remedied, if it is
capable of being remedied, within five (5) business days in the case of the
obligation to pay monies or ten (10) business days in the case of other
obligations;
2. Any Insolvency Event relating to the Seller occurs or the Seller becomes
unable to pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due or ceases to carry on its
business;
3. Any representation or warranty set forth in CLAUSE 9.1 or in the FIFTH
SCHEDULE is incorrect when made;
4. The adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by
any governmental authority charged with the interpretation or
administration thereof after the date of this Agreement makes it unlawful
or impossible for any party to this Agreement or any of the other
Transaction Documents to perform its obligation hereunder or thereunder;
5. The Seller fails to pay any Debt in the aggregate amount in excess of U.S.
$10,000,000 (or its equivalent in any other currency) when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure continues after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt, or any
other default under any agreement or instrument relating to any such Debt
or any other event occurs and continues after the applicable grace period,
if any, specified in such agreement or instrument if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt, or any such Debt shall be declared to be due and
payable or required to be prepaid (other than by a regularly schedule
required prepayment) prior to the stated maturity thereof; or
6. A material adverse change occurs in the financial condition of the Seller
as shown by the Original Financial Statements of the Seller which has had
or can reasonably be expected to have a Material Adverse Effect.
4-1
<PAGE>
THE FIFTH SCHEDULE
PART 1 : REPRESENTATIONS AS TO MATTERS OF LAW
1. The Seller is a corporation duly organized and is validly existing under
the laws of the State of Delaware with power to enter into this Agreement,
the Assignment and the other Transaction Documents to be entered into by it
in respect of any Receivables assigned or scheduled to be assigned pursuant
hereto and to exercise its rights and perform its obligations hereunder and
thereunder and all corporate and other action required to authorize its
execution of all such documents and its performance of its obligations
hereunder and thereunder has been duly taken.
2. The Seller has all corporate power and all governmental licenses,
authorizations, consents and approvals to carry on its business in
California.
3. The execution and delivery of this Agreement, the Assignment and the other
Transaction Documents and the performance of the transactions contemplated
hereby by the Seller require no action by or in respect of, or filing,
recording or enrolling with, any governmental body, agency, court official
or other authority, and do not contravene, or constitute a default under,
any provision of applicable law or regulation or its Articles of
Incorporation or other internal regulations or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Seller or
any of its assets.
4. The claim of the Purchaser against the Seller under this Agreement will
rank at least pari passu with the claims of all its other unsecured
creditors save those whose claims are preferred solely by any bankruptcy,
insolvency or other similar laws of general application.
5. In any proceedings taken in relation to this Agreement, the Assignment and
the other Transaction Documents, the Seller will not be entitled to claim
for itself or any of its assets immunity from suit, execution, attachment
or other legal process.
6. In any proceedings taken in relation to this Agreement, the Assignment and
the other Transaction Documents, the choice of California law by the Seller
as the governing law of this Agreement, the Assignment and the other
Transaction Documents, as the case may be, will be recognized and enforced
subject to bankruptcy, insolvency, moratorium or other similar laws
affecting creditor's rights generally and to principles of equity.
5-1
<PAGE>
7. All acts, conditions and things required to be done, fulfilled and
performed by the Seller in order (a) to enable the Seller lawfully to enter
into, exercise its rights under and perform and comply with the obligations
expressed to be assumed by it in this Agreement, the Assignment and the
other Transaction Documents, (b) to ensure that the obligations expressed
to be assumed by the Seller in this Agreement, the Assignment and the other
Transaction Documents are legal, valid and binding on it and (c) to make
this Agreement, the Assignment and the other Transaction Documents
admissible in evidence in California and Japan have been done, fulfilled
and performed.
8. Under the laws of Japan in force as at the date of making this
representation, it is not necessary that this Agreement, the Assignment and
the other Transaction Documents be filed, recorded or enrolled with any
court or other authority in Japan or that any stamp, registration or
similar tax be paid on or in relation to this Agreement, the Assignment and
the other Transaction Documents.
9. The obligations expressed to be assumed by the Seller in this Agreement,
the Assignment and the other Transaction Documents are legal and valid
obligations binding on it and enforceable in accordance with their
respective terms.
10. The Seller's chief executive office is located at 4650 Cushing Parkway,
Fremont, California 94538-6401.
PART 2 : REPRESENTATIONS AS TO MATTERS OF FACT
1. The Seller has not taken any corporate action nor have legal proceedings
been started or threatened (to the best of its knowledge and belief)
against the Seller for its winding-up, dissolution, rehabilitation or
reorganization or for the appointment of a receiver, administrator,
administrative receiver, trustee, liquidator, sequestrator or similar
office of it or of any or all of its assets or revenues.
2. No action or administrative proceeding of or before any court or agency has
been started or threatened against the Seller which might, if it were
adversely determined, reasonably be expected to have a Material Adverse
Effect.
3. The Original Financial Statements of the Seller were prepared in accordance
with accounting principles generally accepted in the United States and
consistently applied and give (in conjunction with the notes thereto) a
true and fair view of its financial condition at the date as of which they
were prepared and the results of its operations during the financial year
then ended.
4. Since publication of the Original Financial Statements of the Seller, there
has been no change in its financial condition or operations of the Seller
so as to have a Material Adverse Effect.
5-2
<PAGE>
THE SIXTH SCHEDULE
COVENANTS AND UNDERTAKINGS OF THE COLLECTION AGENT
The Collection Agent hereby covenants with the Purchaser that it shall at all
times:
(i) give such time and attention and exercise the same degree of care,
responsibility, diligence, prudent and skill with respect to the
servicing, collection and administration of the Purchased
Receivables and all related function as if it were performing such
functions on its own behalf;
(ii) take all action to ensure that all Purchased Receivables are paid
promptly in accordance with the terms of this Agreement and the
related Sales Agreements;
(iii) promptly pay to the Purchaser all Collections;
(iv) keep proper, complete, accurate and up to date Records in a manner
acceptable to the Purchaser;
(v) keep and maintain Records, on a Receivable-by-Receivable basis, for
the purposes of identifying, in particular, at any time, any amount
paid by and to the Buyer, any amount due by or to the Buyer and the
source of receipts for all Collections;
(vi) permit audit and inspection under its guidance of its Records by or
on behalf of the Purchaser during normal working hours upon
reasonable notice and with reasonable frequency;
(vii) notify the Purchaser of material developments in the Seller's
performance of its obligations under the Sales Agreements,
including, but not limited to, the Shipment, the Acceptance and the
Partial Acceptance of the Equipment and the refusal thereof by the
Buyer;
(viii) notify the Purchaser of the Scheduled Due Date and (if applicable)
the Revised Face Amount promptly after it is confirmed between the
Seller and the Buyer and, if the payment by the Buyer of the
relevant Purchased Receivable is to be made on the date which is
not the Scheduled Due Date, notify the Purchaser of such date of
payment at least one business day prior to the Scheduled Due Date
or such date of payment, whichever comes earlier;
6-1
<PAGE>
(ix) use its best endeavors to maintain records of all correspondence
with the Buyer in respect of the Purchased Receivables;
(x) promptly obtain, comply in all material respects with the terms of
and do all that is necessary and within its control to maintain in
full force and effect all authorizations, approvals, licenses and
consents required in or by the laws and regulations of the United
States and Japan to enable it lawfully to enter into and perform
its obligations under this Agreement and the other Transaction
Documents or to ensure the legality, validity, enforceability or
admissibility in evidence of such documents;
(xi) do all things necessary to remain duly organized, validly existing
under the laws of Delaware and maintain all requisite authority to
conduct its business in California;
(xii) comply in all respects which could be regarded as material in the
context of the transactions contemplated by this Agreement, with
all laws, rules, regulations, orders, writs, judgements,
injunctions decrees or awards to which it may be subject;
(xiii) maintain sufficient operating procedures, employees and other
resources to perform its obligations as Collection Agent hereunder;
and
(xvi) submit to Purchaser a monthly report relating to the Purchased
Receivables and the Buyer in such a form as is reasonably requested
by the Purchaser.
6-2
<PAGE>
EXHIBIT 11.1
LAM RESEARCH CORPORATION
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
(in thousands except per share data)
------------------------------------------------
March 31, March 31,
1995 1994
---------------------- ----------------------
Fully Fully
Primary Diluted Primary Diluted
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income $24,793 $24,793 $9,556 $9,556
Add interest expense on convertible
subordinated debentures, net of
income tax effect 735 692
--------- --------- --------- ---------
$24,793 $25,528 $9,556 $10,248
--------- --------- --------- ---------
--------- --------- --------- ---------
Average shares outstanding 26,766 26,766 23,500 23,500
Net effect of dilutive
stock options 1,134 1,194 885 885
Assumed conversion of convertible
subordinated debentures 2,640 2,640
--------- --------- --------- ---------
27,900 30,600 24,385 27,025
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per share $0.89 $0.83 $0.39 $0.38
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
Nine Months Ended
(in thousands except per share data)
------------------------------------------------
March 31, March 31,
1995 1994
---------------------- ----------------------
Fully Fully
Primary Diluted Primary Diluted
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income $58,777 $58,777 $26,120 $26,120
Add interest expense on convertible
subordinated debentures, net of
income tax effect 2,205 2,079
--------- --------- --------- ---------
$58,777 $60,982 $26,120 $28,199
--------- --------- --------- ---------
--------- --------- --------- ---------
Average shares outstanding 25,808 25,811 23,350 23,350
Net effect of dilutive
stock options 1,142 1,309 1,025 935
Assumed conversion of convertible
subordinated debentures 2,640 2,640
--------- --------- --------- ---------
26,950 29,760 24,375 26,925
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per share $2.18 $2.05 $1.07 $1.05
--------- --------- --------- ---------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-1-1994
<PERIOD-END> MAR-31-1995
<CASH> 91,704
<SECURITIES> 0
<RECEIVABLES> 184,329
<ALLOWANCES> 0
<INVENTORY> 172,085
<CURRENT-ASSETS> 478,182
<PP&E> 157,945
<DEPRECIATION> 52,821
<TOTAL-ASSETS> 626,708
<CURRENT-LIABILITIES> 178,805
<BONDS> 90,887
<COMMON> 216,945
0
0
<OTHER-SE> 140,071
<TOTAL-LIABILITY-AND-EQUITY> 626,708
<SALES> 545,162
<TOTAL-REVENUES> 553,266
<CGS> 285,590
<TOTAL-COSTS> 285,590
<OTHER-EXPENSES> 172,899
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,804
<INCOME-PRETAX> 83,967
<INCOME-TAX> 25,190
<INCOME-CONTINUING> 58,777
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,777
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.05
</TABLE>
