EXHIBIT 10.32
CONTINUING GUARANTY
THIS CONTINUING GUARANTY ("Guaranty") is made and entered into as of June
26, 1996 by LAM RESEARCH CORPORATION, a Delaware corporation ("Guarantor"), in
favor of THE SAKURA BANK, LIMITED, a Japanese banking corporation ("Lender").
RECITALS:
A. Reference is made to that certain Term Loan Agreement of even date
herewith ("Loan Agreement") between Lender and Lam Research Co., Ltd., a
Japanese corporation ("Borrower"). Capitalized terms used herein and not
otherwise defined have the meanings provided therefor in the Loan Agreement.
B. Borrower wishes to borrow up to Two Billion Three Hundred Million Yen
(Y2,300,000,000) ("Loan") from Lender pursuant to the terms and conditions of
the Loan Agreement.
C. The Loan Agreement requires as a condition precedent to the making of
the Loan that Borrower obtain and deliver this Guaranty to Lender.
NOW, THEREFORE, Guarantor, intending to induce Lender to enter into the
Loan Agreement and to make the Loan to Borrower, hereby represents, warrants and
covenants as follows for the benefit of Lender and its successors and assigns.
ARTICLE 1.
REPRESENTATIONS AND WARRANTIES
SECTION 1.1. FINANCIAL BENEFIT. Guarantor hereby acknowledges, warrants
and represents to Lender as of the date hereof and as of the Closing Date that
it has derived or expects to derive a financial advantage from the making of the
Loan by Lender to Borrower and from each and every renewal, extension, release
of collateral or other relinquishment of legal rights made or granted or to be
made or granted by Lender to Borrower in connection with the Obligations (as
hereinafter defined). In connection with the foregoing, Guarantor hereby
warrants and represents to Lender as of the date hereof and as of the Closing
Date that Guarantor currently directly owns and controls, free and clear of all
Liens, all of the Equity Securities of Borrower.
SECTION 1.2. REVIEW OF DOCUMENTS. Guarantor hereby acknowledges and agrees
that Guarantor has copies of and is fully familiar with the Loan Agreement, the
Note and each of the other Loan Documents to be executed and delivered by
Borrower to Lender on the date hereof or on or prior to the Closing Date in
connection with the Loan.
SECTION 1.3. INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION.
Guarantor hereby warrants and represents to Lender as of the date hereof and as
of the Closing Date that Guarantor is a corporation duly incorporated, validly
existing, and in good standing under the laws of State of Delaware; has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged in; and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, including, without
limitation, the State of California.
SECTION 1.4. LOAN AGREEMENT REPRESENTATIONS. Guarantor hereby warrants
and represents to Lender as of the date hereof and as of the Closing Date that
Guarantor has reviewed each of the representations and warranties made by
Borrower and contained in the Loan Agreement. Guarantor hereby warrants and
represents to Lender as of the date hereof and as of the Closing Date that each
such representation and warranty is true and correct.
ARTICLE 2.
GUARANTY
SECTION 2.1. GUARANTY OF THE OBLIGATIONS. Guarantor unconditionally
guarantees and promises to pay to, or cause to be paid to, or to the order of,
Lender, on demand, in lawful money of Japan, any and all of the Obligations of
the Borrower to the Lender. "Obligations" mean any amount due and payable to
Lender (including its successors and assigns) by Borrower (including its
successors and assigns) pursuant to any of the Loan Documents, including,
without limitation, principal and interest payable with respect to the Note,
interest at the Default Rate on late payments, any prepayment charges or
expenses, including Interest Rate Funding Costs and amounts which may become
payable under Section 2.9 (Change in Law), Section 2.10 (Capital Adequacy),
Section 8.5 (Costs and Expenses) and Section 8.7 (Indemnification) of the Loan
Agreement. The unconditional obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor enforceable against it to
the full extent of all its assets and properties.
SECTION 2.2. CONTINUING GUARANTY. This is a continuing guaranty of the
Obligations and is a guaranty of payment and performance of the Obligations and
not of collection only.
SECTION 2.3. NATURE OF GUARANTY. The liability of Guarantor hereunder is
independent of the obligations of Borrower and a separate action or separate
actions may be brought and prosecuted against Guarantor whether or not any
action is brought or prosecuted against Borrower or any other person, including
any other guarantor of the Obligations, or whether Borrower or any other person
is joined in any such action or actions. The liability of Guarantor hereunder
is independent of and not in consideration of or contingent upon the liability
of any other person under this or any similar instrument and the release of, or
cancellation by, any signer of this or a similar
instrument shall not act to release or otherwise affect the liability of
Guarantor hereunder. Guarantor waives the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof to the fullest
extent permitted by law.
SECTION 2.4. AUTHORIZATION. Guarantor hereby authorizes Lender, without
notice or demand and without affecting its liability hereunder, from time to
time to:
(a) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of, the Obligations, or
any part thereof, including increasing or decreasing the rate of interest
thereon (but subject to the approval of Borrower to the extent required
under the Loan Documents);
(b) amend with Borrower or waive any provision or provisions of the
Loan Documents including the Note;
(c) take and hold security for the payment of the Obligations and
exchange, enforce, waive or release any such security or any part thereof,
and apply any such security and direct the order or manner of sale thereof
as Lender, in its sole discretion, may determine; and
(d) release or substitute any one or more endorsers, guarantors
and/or other obligors of this Guaranty and of the Obligations.
SECTION 2.5. WAIVERS.
(a) Guarantor waives the right to require Lender to proceed against
or exhaust any security held from Borrower or any other person, or to
pursue any other remedy in Lender's power whatsoever and Guarantor waives
the right to have the property of Borrower first applied to the discharge
of the Obligations. Lender may at its election exercise any right or
remedy it may have against Borrower or any security now or hereafter held
by Lender, including, without limitation, the right to foreclose upon any
such security by judicial or nonjudicial sale, without affecting or
impairing in any way the liability of Guarantor hereunder, except to the
extent the Obligations have been paid. Guarantor understands that the
exercise by Lender of certain rights and remedies contained in the Loan
Documents (including without limitation, non-judicial foreclosure against
any real property security for the Obligations) may affect or eliminate
Guarantor's right of subrogation, contribution or indemnification against
Borrower and that Guarantor may therefore succeed to a partially or totally
nonreimbursable liability hereunder. Nevertheless, Guarantor hereby
authorizes and empowers Lender to exercise, in its sole discretion any
rights and remedies or any combination of rights and remedies that may then
be available, since it is the intent and purpose of Guarantor that the
obligations hereunder shall be absolute, independent and unconditional
under any and all circumstances. Guarantor waives (i) any defense arising
by reason of any disability or other
defense of Borrower or by reason of the cessation from any cause whatsoever
of the liability, either in whole or in part, of Borrower to Lender for the
Obligations; (ii) any defense based on the discharge of Borrower by
operation of law, notwithstanding any intervention or omission by Lender
and notwithstanding the provisions of section 2825 of the California Civil
Code; (iii) all rights and benefits under section 726 of the California
Code of Civil Procedure; and (iv) any defense based on arising out of the
absence, impairment or loss of any right of reimbursement, contribution or
subrogation or any other right or remedy of Guarantor against Borrower or
any such security, whether resulting from such election by Lender or
otherwise.
(b) Guarantor waives all rights and benefits under (i) section 2822
of the California Civil Code purporting to reduce the obligation of a
surety upon the acceptance by a creditor of anything in partial
satisfaction of an obligation; (ii) section 2819 of the California Civil
Code purporting to exonerate a surety if by any act of the creditor,
without the consent of the surety, the original obligation of the principal
is altered in any respect, or the remedies or rights of the creditor
against the principal, in respect thereto, are in any way impaired or
suspended (it being expressly understood and agreed that Lender may
compromise, settle, alter, extend, waive, amend, suspend or surrender any
Obligation or any right or remedy with respect thereto without notice to or
consent by Guarantor and without affecting Guarantor's obligations
hereunder); and (iii) section 2845 of the California Civil Code purporting
to exonerate the surety to the extent that the creditor does not proceed
against the principal, or pursue any other remedy in the creditor's power
which the surety cannot pursue, and which would lighten the surety's
burden. Guarantor hereby waives, to the fullest extent permitted by law
(a) all rights and benefits under section 2809 of the California Civil Code
purporting to reduce a guarantor's obligations in proportion to the
principal obligation; (b) all rights and benefits under sections 2810, 2899
and 3433 of the California Civil Code; (c) all rights and benefits under
section 580a of the California Code of Civil Procedure; (d) all rights and
benefits under section 580b of the California Code of Civil Procedure
stating that no deficiency may be recovered on a real property purchase
money obligation; and (e) all rights and benefits under section 580d of the
California Code of Civil Procedure stating that no deficiency may be
recovered on a Note secured by a deed of trust on real property in case
such real property is sold under the power of sale contained in such deed
of trust. Guarantor fully understands that, without the waivers set forth
in this Section 2.5, Guarantor would have a defense to a deficiency
judgment under section 580d of the California Code of Civil Procedure
should Lender elect to pursue nonjudicial foreclosure remedies, and
nevertheless Guarantor expressly waives any and all benefits of any such
defense to a deficiency judgment should Lender elect to exercise its
nonjudicial foreclosure remedies (including waiver of Guarantor's defense
under section 580d of the California Code of Civil Procedure).
(c) Without limiting the application of any of the other waivers
contained herein, Guarantor hereby expressly waives all rights and defenses
arising out of an election of remedies by Lender, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for
the guaranteed Obligations, has destroyed Guarantor's rights of subrogation
and reimbursement against the principal (I.E., Borrower) by the operation
of Section 580d of the California Code of Civil Procedure or otherwise.
(d) Guarantor understands and agrees that (i) by waiving the
anti-deficiency protections and the subrogation rights and defenses
referred to in this Section 2.5 and in Section 2.6 below, which
protections, rights and defenses might otherwise afford Guarantor with
protection from a deficiency judgment, Guarantor can be held liable for a
deficiency judgment following a judicial or non-judicial foreclosure sale
(including a judicial or non-judicial foreclosure sale of a purchase
money obligation) even if the price paid for the property at the
non-judicial foreclosure sale is less than the fair value of the
property; (ii) Guarantor is waiving its defense that the price paid for
the property at a judicial or non-judicial foreclosure sale may not be
equal to the fair value of the property; and (iii) by Guarantor waiving
its right to a fair value hearing following the foreclosure sale that
Lender can seek a deficiency against Guarantor up to the entire amount of
the indebtedness secured by any real property collateral with interest
and costs of sale less the amount paid for the property at the judicial
or non-judicial foreclosure sale.
SECTION 2.6. ADDITIONAL WAIVERS; NO SUBROGATION. Until all the
Obligations have been fully satisfied, Guarantor waives, to the fullest extent
permitted by law (i) all rights of subrogation, contribution or indemnification
against Borrower or any other right or remedy against Borrower arising from or
relating to this Guaranty; (ii) all rights and benefits under section 2848 of
the California Civil Code and any right to enforce any remedy which Lender now
has or may hereafter have against Borrower in respect of the Obligations; (iii)
any benefit of, and any right to participate in, any security, whether real or
personal property, now or hereafter held by Lender for the Obligations; and (iv)
all rights and benefits under sections 2849 and 2850 of the California Civil
Code. Guarantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and notices of
acceptance of this Guaranty and of the existence, creation or incurring of new
or additional Obligations, whether existing, created or incurred under the Loan
Agreement, any modification thereof or otherwise. Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Borrower and of all other circumstances bearing upon the risk of nonpayment of
the Obligations which diligent inquiry would reveal, and agrees that Lender
shall have no duty to advise Guarantor of information known to it regarding such
condition or any such circumstances.
SECTION 2.7. BANKRUPTCY NO DISCHARGE; REPAYMENTS. So long as any of the
Obligations remain unpaid and owing to Lender, Guarantor shall not, without the
prior written consent of Lender, commence or join with any other party in
commencing any
bankruptcy, reorganization or insolvency proceedings of or against Borrower.
Guarantor understands and acknowledges that by virtue of this Guaranty,
Guarantor has specifically assumed any and all risks of a bankruptcy or
reorganization case or proceeding with respect to Borrower. As an example and
not in any way of limitation, a subsequent modification of the Obligations in
any reorganization case concerning Borrower shall not affect the obligation of
Guarantor to pay and perform the Obligations in accordance with their respective
original terms. If claim is ever made upon Lender for repayment of any amount
or amounts received by Lender in payment of the obligations under the Loan
Documents or hereunder (whether or not all or any part of such payment is
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid by Lender) and Lender repays all or any part of said amount, then,
notwithstanding any revocation or termination of this Guaranty or the
cancellation of the Note or any other instrument evidencing the Loan, Guarantor
shall be and remain liable to Lender for the amount so repaid to the same extent
as if such amount had never originally been received by Lender.
SECTION 2.8. BORROWER. It is not and shall not be necessary for Lender to
inquire into the powers of Borrower or any of their agents acting or purporting
to act on behalf thereof, and any Obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder. Guarantor
agrees that Lender's books and records showing the account between Lender and
Borrower shall be admissible in any proceeding or action.
ARTICLE 3.
COVENANTS
SECTION 3.1. CERTAIN FINANCIAL COVENANTS.
3.1.1 DEFINITIONS. For purposes of this Section 3.1, the following
terms shall have the following meanings:
"AFFILIATE" means, with respect to any Person (i) each Person
that, directly or indirectly, owns or controls, whether beneficially
or as a trustee, guardian or other fiduciary, ten percent (10%) or
more of any class of Equity Securities of such Person; (ii) each
Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such person; or (iii) each of such
Person's officers, directors, joint venturers and partners; provided,
however, that in no case shall Lender be deemed to be an Affiliate of
Guarantor or any Subsidiary of Guarantor for purposes of this
Guaranty. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"CAPITAL ASSET" means, with respect to any Person, any tangible
fixed or capital asset owned or leased (in the case of a Capital
Lease) by such Person, or any expense incurred by such Person that is
required by GAAP to be reported as a non-current asset on such
Person's balance sheet.
"CAPITAL EXPENDITURES" means, with respect to any Person and any
period, all amounts expended and indebtedness incurred or assumed by
such Person during such period for the acquisition of Capital Assets
(including all amounts expended and indebtedness incurred or assumed
in connection with Capital Leases).
"CAPITAL LEASES" means any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a
lessee.
"CONTINGENT OBLIGATION" means, with respect to any Person,
without duplication (i) any Guaranty Obligation of that Person; and
(ii) any direct or indirect obligation or liability, contingent or
otherwise, of that Person (a) in respect of any letters of credit,
acceptances, bank guaranties, surety bonds or similar instrument
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, (b) as a partner or
joint venturer in any partnership or joint venture, or (c) incurred
pursuant to any interest rate swap, currency swap, forward, cap, floor
or other similar contract that is not entered into in connection with
a bona fide hedging operation that provides offsetting benefits to
such Person. The amount of any Contingent Obligation shall (subject,
in the case of Guaranty Obligations, to the last sentence of the
definition of "Guaranty Obligation") be deemed equal to the maximum
reasonably anticipated liability in respect thereof.
"EBIT" means, with respect to any Person for any period, the sum
of the following, determined on a consolidated basis in accordance
with GAAP where applicable:
(i) the net income or net loss of such Person and its
Subsidiaries for such period before provision for income taxes;
PLUS
(ii) All Interest Expense of such Person and its
Subsidiaries accruing during such period (to the extent deducted
in calculating net income or loss in clause (i) above).
"EQUITY SECURITIES" means (i) all common stock,
preferred stock, participations, shares, partnership interests or
other equity interests in and of such Person (regardless of how
designated and whether or not voting or non-voting); and (ii) all
warrants, options and other rights to acquire any of the foregoing.
"FUNDED DEBT" of any Person means, without duplication, all
Indebtedness of such Person as described in clauses (i) -(iv) of the
definition of Indebtedness.
"GAAP" means generally accepted accounting principles
in the United States.
"GUARANTY OBLIGATION" means, with respect to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent (i) to purchase,
repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor; (ii) to
advance or provide funds (a) for the payment or discharge of any such
primary obligation, or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial
condition of the primary obligor; or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any primary obligation of the ability of the primary obligor to
make payment of such primary obligation; or (iv) otherwise to assure
or hold harmless the holder of any such primary obligation against
loss in respect thereof. The amount of any Guaranty Obligation shall
be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if
not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof.
"INDEBTEDNESS" of any Person means, without duplication:
(i) All obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments and all
other obligations of such Person for borrowed money;
(ii) All obligations of such Person for the
deferred purchase price of property or services (including
obligations under credit facilities which secure or finance such
purchase price and obligations under synthetic leases), other
than trade payables incurred by such Person in the ordinary
course of its business on ordinary terms;
(iii) All obligations of such Person under conditional sale
or other title retention agreements with respect to property
acquired by such Person (to the extent of the value of such
property if the rights and remedies of the seller or lender under
such agreement in the event of default are limited solely to
repossession or sale of such property);
(iv) All obligations of such Person as lessee under or with
respect to Capital Leases;
(v) All obligations of such Person with respect to accounts
receivable and related rights and property sold, assigned or
transferred by such Person with recourse to such Person;
(vi) All Contingent Obligations of such Person; and
(vii) All Indebtedness of other Persons of the types
described in clauses (i) - (vi) above to the extent secured by
(or for which any holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien in any
property (including accounts and contract rights) of such Person,
even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"INTEREST COVERAGE RATIO" means, with respect to any Person for
any period, the ratio, determined on a consolidated basis in
accordance with GAAP where applicable, of:
(i) The remainder of (a) EBIT of such Person and its
Subsidiaries for such period, MINUS (b) all Capital Expenditures
of such Person and its Subsidiaries for such period;
TO
(ii) All Interest Expenses of such Person and its
Subsidiaries for such period.
"INTEREST EXPENSES" means, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with
GAAP, of all interest accruing on the indebtedness of such Person
during such period (including interest attributable to Capital
Leases).
"LEVERAGE RATIO" means, with respect to any Person at any time,
the ratio, determined on a consolidated basis in accordance with GAAP,
of:
(i) The Total Liabilities of such Person and its
Subsidiaries at such time;
TO
(ii) The Tangible Net Worth of such Person and its
Subsidiaries at such time.
"NET PROCEEDS" means, with respect to any sale or issuance of any
Equity Securities by any Person, the aggregate consideration received
by such Person from such sale or issuance LESS the sum of the actual
amount of the reasonable fees and commissions payable to Persons other
than such Person or any Affiliate of such Person, the reasonable legal
expenses and the other reasonable costs and expenses directly related
to such sale or issuance that are to be paid by such Person.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority, or other entity of whatever nature.
"QUICK RATIO" means, with respect to any Person at any time, the
ratio, determined on a consolidated basis in accordance with GAAP, of:
(i) The remainder at such time of (a) the sum of all cash,
cash equivalents (less than ninety (90) days in term), short-term
marketable securities (less than one (1) year in term) and
accounts receivable of such Person and its Subsidiaries (less all
reserves therefor), MINUS (b) the sum of (1) the aggregate amount
of such cash, cash equivalents, short-term marketable securities
and accounts receivable which are subject to any Lien or are
otherwise encumbered or restricted (to the extent such amounts do
not secure a corresponding current liability amount included in
the calculation of subpart (ii) below), and (2) with respect to
any accounts receivable sold, assigned or transferred, to the
extent included under subpart (i) (a) above, the aggregate amount
of any accounts receivable representing the discounted portion of
such accounts receivable so sold, assigned or transferred;
TO
(ii) The sum at such time of (a) the current liabilities of
such Person and its Subsidiaries, (b) the aggregate principal
amounts outstanding under any revolving credit facility
(including, without limitation, in the case of Guarantor, the
aggregate principal amount of all loans then outstanding under
the 1995 Guarantor Credit Agreement), and (c) in the event such
Person or any of its Subsidiaries exercises a purchase option
under a synthetic lease or a purchase payment otherwise becomes
due under a synthetic lease, the portion of any synthetic lease
payment that would be
utilized to purchase the underlying property within one year of
the date of such exercise or acceleration.
"SENIOR FUNDED DEBT" of any Person means any Funded Debt which is
not Subordinated Debt.
"SENIOR INDEBTEDNESS" of any Person means, without duplication:
(i) all Senior Funded Debt of such Person;
(ii) all Contingent Obligations of such Person;
(iii) all obligations of such Person with respect to any
synthetic leases; and
(iv) all obligations of such Person with respect to any
sale, transfer or assignment of accounts receivable and related
rights and property by such Person with recourse to such Person.
"SENIOR INDEBTEDNESS RATIO" means, with respect to any Person at
any time, the ratio, determined on a consolidated basis in accordance
with GAAP, of:
(i) The total Senior Indebtedness of such Person and its
Subsidiaries at such time;
TO
(ii) The sum at such time of (a) the total Senior
Indebtedness and Subordinated Debt of such Person and its
Subsidiaries at such time PLUS (b) the total Tangible Net Worth
of such Person and its Subsidiaries at such time.
"SUBORDINATED DEBT" means any subordinated debt permitted by
Section 6.1(xi) of the Loan Agreement.
"SUBSIDIARY" of any Person means (i) any corporation of which
more than 50% of the issued and outstanding Equity Securities having
ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of
any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries; (ii) any partnership, joint venture,
or other association of which more than 50% of the equity interest
having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time owned
and controlled by such Person, by such Person and one or more of the
other Subsidiaries or by one or more of such Person's other
Subsidiaries; or (iii) any other Person included in the Financial
Statements of such Person on a consolidated basis.
"TANGIBLE NET WORTH" means, with respect to any Person at any
time, the remainder at such time, determined on a consolidated basis
in accordance with GAAP, of (i) the total assets of such Person and
its Subsidiaries MINUS (ii) the sum (without limitation and without
duplication of deductions) of (a) the total liabilities of such Person
and its Subsidiaries, (b) all reserves established by such Person and
its Subsidiaries for anticipated losses and expenses (to the extent
not deducted in calculating total assets in clause (i) above), and (c)
all intangible assets of such Person and its Subsidiaries (to the
extent included in calculating total assets in clause (i) above),
including, without limitation, goodwill (including any amounts,
however designated on the balance sheet, representing the cost of
acquisition of businesses and investments in excess of underlying
tangible assets), trademarks, trademark rights, trade name rights,
copyrights, patents, patent rights, licenses, unamortized debt
discount, marketing expenses, organizational expenses, non-compete
agreements and deferred research and development.
"TOTAL LIABILITIES" of any Person means, without
duplication:
(i) all liabilities of such Person, as determined in
accordance with GAAP;
(ii) all Contingent Obligations of such Person;
(iii) all obligations of such Person with respect to any
synthetic leases; and
(iv) all obligations of such Person with respect to any
sale, assignment or transfer of accounts receivable and related
rights and property by such Person with recourse to such Person.
3.1.2 FINANCIAL COVENANTS. Guarantor covenants that until all
Obligations have been fully and completely satisfied, Guarantor shall
comply with, and cause compliance with, each of the following covenants:
(a) QUICK RATIO. Guarantor shall not permit its Quick Ratio
during any period set forth below to be less than the ratio set forth
opposite such period below:
June 28, 1996 through December 31, 1996 1.05;
Thereafter 1.10.
(b) INTEREST COVERAGE RATIO. Guarantor shall not permit its
Interest Coverage Ratio for each period set forth below to be
less than the ratio set forth opposite such period below:
Each consecutive four quarter period ending June 30, 1996,
September 30, 1996, and December 31, 1996 5.00;
Each consecutive four quarter period ending on the last day
of each quarter thereafter 6.00.
(c) LEVERAGE RATIO. Guarantor shall not permit its Leverage
Ratio during any period set fort below to be greater than the ratio
set forth opposite such period below:
June 28, 1996 through December 31, 1996 1.20;
January 1, 1997 through December 31, 1997 1.00;
Thereafter 0.85.
(d) SENIOR INDEBTEDNESS RATIO. Guarantor shall not permit its
Senior Indebtedness Ratio during any period set forth below to be
greater than the ratio set forth opposite such period below:
June 28, 1996 through December 31, 1996 0.40;
January 1, 1997 through December 31, 1997 0.37;
Thereafter 0.34.
(e) TANGIBLE NET WORTH. Guarantor shall not permit its Tangible
Net Worth on any date of determination (such date to be referred to
herein as a "determination date") which occurs after June 30, 1995
(such date to be referred to herein as the "base date") to be less
than the sum on such determination date of the following:
(i) $375,000,000;
(ii) Seventy-five percent (75%) of the sum of Guarantor's
consolidated quarterly net income (ignoring any quarterly losses)
for each quarter ending after the base date through and including
the quarter ending immediately prior to the determination date;
(iii) One hundred percent (100%) of the Net Proceeds of all
Equity Securities issued by Guarantor and its Subsidiaries during
the period commencing on the base date and ending on the
determination date; and
(iv) One hundred percent (100%) of the aggregate decrease
in the total liabilities of Guarantor and its Subsidiaries
resulting from conversions of convertible Subordinated
Indebtedness or other liabilities of Guarantor and its
Subsidiaries into Equity Securities of Guarantor and its
Subsidiaries during the period commencing on the base date and
ending on the determination date.
(f) NET INCOME. Guarantor shall not permit (i) its net income
for more than two quarters in any consecutive four-quarter period to
be a loss; (ii) its net income for any one or two quarters in any
consecutive four-quarter period to be a loss exceeding an aggregate
amount of $15,000,000 for any one or both such quarters together; or
(iii) its cumulative net income for any consecutive four-quarter
period to be a loss.
SECTION 3.2. LOAN AGREEMENT COVENANTS. Guarantor shall comply with, and
cause compliance with, each of the covenants set forth in Articles 5 and 6 of
the Loan Agreement, including, without limitation, the covenants set forth in
Sections 5.1, 5.4, 5.7, 6.1, 6.2, 6.3 and 6.4 of the Loan Agreement.
ARTICLE 4.
MISCELLANEOUS
SECTION 4.1. CURRENCY. Guarantor shall make all payments due hereunder in
Japanese Yen and this obligation shall not be discharged by any tender or
judgment which is expressed in or converted into any currency other than
Japanese Yen, except to the extent resulting in the actual receipt by Lender of
the full amount of Japanese Yen payable hereunder. Such obligation to pay in
Japanese Yen shall be enforceable as an additional cause of action to recover in
Japanese Yen the amount, if any, by which such actual receipt shall fall short
of the full amount of Japanese Yen payable hereunder. If after the occurrence
of any Event of Default, any sum is due from Guarantor under this Guaranty or if
any order or judgment given or made in relation hereto has to be converted from
the currency ( "first currency") in which the same is payable hereunder or under
such order or judgment into another currency ("second currency") for the purpose
of:
(i) making or filing a claim or proof against the Guarantor;
(ii) obtaining an order or judgment in any court or tribunal; or
(iii) enforcing any order or judgment given or made in relation
hereto,
Guarantor shall indemnify and hold harmless Lender from and against any damages
or losses 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 rate or rates of exchange at
which Lender may in the ordinary
course of business purchase the first currency with the second currency in the
Japanese foreign exchange market upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
SECTION 4.2. PAYMENTS FREE AND CLEAR OF TAXES.
(a) Any and all payments by Guarantor hereunder shall be made free
and clear of and without deduction for any and all taxes, charges or levies
("Taxes"). If Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 4.2) Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Guarantor shall make such
deductions and (iii) Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law. Notwithstanding anything to the contrary contained in this
Section 4.2, Guarantor shall not be liable for the payment of any income,
gross receipts or franchise taxes or other similar taxes with respect to
any payment made by Guarantor pursuant to this Guaranty which is now or
hereafter imposed on the overall net income of Lender.
(b) In addition, Guarantor agrees to pay any present or future stamp
or documentary taxes, recording or filing fees or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution or delivery of or otherwise with respect to
this Guaranty.
(c) Within ten (10) days after the date of any payment of Taxes by a
Guarantor, Guarantor will furnish to Lender, at its principal office, the
original or a certified copy of a receipt evidencing payment thereof.
SECTION 4.3. SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Guaranty.
SECTION 4.4. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of Lender in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
power, right or privilege preclude any other exercise of such powers, rights or
privileges. The powers, rights and privileges hereunder are cumulative to, and
not exclusive of, any powers, rights or privileges otherwise available.
SECTION 4.5. RIGHTS TO SETOFF AND SUBROGATION. In addition to all liens
upon, and rights to setoff against the moneys, securities or other property of
Guarantor given to Lender by law, Lender shall have a lien upon and a right of
setoff against all moneys, securities and other property of Guarantor now or
hereafter in the possession of or on deposit with Lender, whether held in a
general or special account or deposit, or for safekeeping or otherwise; and
every such lien and right of setoff may be exercised
without demand upon or notice to Guarantor. No lien or right of setoff shall be
deemed to have been waived by any act or conduct on the part of Lender, or by
any neglect to exercise such right of setoff or to enforce such lien, or by any
delay in so doing; and every right of setoff and lien shall continue in full
force and effect until specifically waived or released by an instrument in
writing executed by Lender.
SECTION 4.6. NOTICES. All notices and other communications provided for
under this Guaranty shall be in writing and shall be personally delivered or
sent by first class United States mail, by nationally recognized overnight
courier such as Federal Express or DHL, or by telecopy or by other means of
telecommunication, to the following addresses:
to Guarantor: Lam Research Corporation
47300 Bayside Parkway
Fremont, California 94538-6516
Telephone: (510) 572-6910
Facsimile: (510) 572-1586
to Lender: The Sakura Bank, Limited
International Business Promotion Group
Tokyo Main Office, Div 1
1-2, Yurakucho, 1-chome
Chiyoda-ku, Tokyo
100 Japan
Telephone: 011-81-33-595-3781
Facsimile: 011-81-33-501-1219
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and communications shall be deemed received
(i) if personally delivered, upon delivery; (ii) if sent by first class mail,
following deposit in the mail with first class postage prepaid, upon receipt;
(iii) if sent by courier service with next Business Day delivery charges
prepaid, upon receipt; and (iv) if sent by telex, telecopy or similar form of
telecommunications, upon receipt.
SECTION 4.7. SEVERABILITY. In case any provision of this Guaranty shall
be invalid, illegal or unenforceable, such provisions shall be severable from
the rest of this Guaranty and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 4.8. AMENDMENTS. This Guaranty may only be modified or amended by
an instrument in writing duly executed and delivered by the parties or their
duly authorized representatives.
SECTION 4.9. ENTIRE AGREEMENT. The terms and conditions set forth herein
constitute the complete and exclusive statement of the agreement between Lender
and
Guarantor relating to the subject matter of this Guaranty, superseding all
previous negotiations and understandings, and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Guaranty constitutes the complete and exclusive statement of its terms
and that no extrinsic evidence whatsoever may be introduced in any judicial
proceeding, if any, involving this Guaranty.
SECTION 4.10. APPLICABLE LAW. This Guaranty shall be governed by, and
construed in accordance with the internal laws of the State of California,
without reference to principles of conflicts of law.
SECTION 4.11. JURISDICTION. Guarantor hereby irrevocably submits to the
jurisdiction of any California state court located in Santa Clara County, or the
Federal District Court of the Northern District of California in any action or
proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California State or Federal court. Guarantor
further consents to service of process upon it in such manner as shall be
permitted by the laws of the State of California if litigation or other legal
process is commenced in the courts of the State of California or by applicable
federal law (including reference to state law) if litigation or legal process is
commenced in the United States District Court. Guarantor also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to Guarantor at the address set forth
in Section 4.6 above. Guarantor agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in any other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in this
Section 4.11 shall affect the right of the Lender to serve legal process in any
other manner permitted by law or affect the right of the Lender to bring any
action or proceeding against Guarantor or its property in the courts of any
other jurisdiction. To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty.
SECTION 4.12. BINDING EFFECT; ASSIGNABILITY. This Guaranty shall be
binding upon Guarantor and its successors, permitted assigns, heirs, executors,
administrators, conservators, representatives, guardians and estates, and shall
inure to the benefit of Lender and its successors, assigns, heirs, executors,
administrators, conservators, representatives, guardians and estates. Lender
may (i) without the consent of Borrower or Guarantor, grant participations in
this Guaranty and the other Loan Documents or in any of its rights under this
Guaranty and the other Loan Documents; and (ii) with the consent of Borrower
(but no consent of Guarantor required), which consent shall not be unreasonably
withheld by Borrower, negotiate, pledge or hypothecate this Guaranty and the
other Loan Documents or in any of its rights under this Guaranty and the other
Loan Documents. Guarantor shall accord full recognition to any such assignment,
and all rights and remedies of Lender in connection with the
interest so assigned shall be as fully enforceable by such assignee or
participant as they were by Lender before such assignment. In connection with
any proposed assignment or participation, Lender may disclose to the proposed
assignee or participant any information that Guarantor is required to deliver to
Lender pursuant to this Guaranty or any of the other Loan Documents provided
such disclosure is made subject to the same confidentiality restrictions, if
any, applicable to Lender. Guarantor may not assign or otherwise transfer this
Guaranty to any other person without the prior written consent of Lender, which
consent may be withheld in Lender's sole and absolute discretion.
SECTION 4.13. HEADINGS. Headings of the Articles and Sections of this
Guaranty are inserted for convenience only and shall not be deemed to constitute
a part hereof.
SECTION 4.14. EXPENSES AND FEES. Guarantor hereby agrees to be responsible
for and to pay all reasonable costs and expenses, including, without limitation,
attorneys' fees and foreclosure fees, incurred by Lender in connection with the
collection of all the Obligations guaranteed hereunder and the defense or
enforcement of any of Lender's rights hereunder, whether or not suit is filed,
and whether such collection be from Borrower or from Guarantor.
IN WITNESS WHEREOF, the due execution of this Guaranty as of the date first
above written.
GUARANTOR:
LAM RESEARCH CORPORATION,
a Deleware corporation
By:
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Name:
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Title:
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