10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended June 29, 2003

OR

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

FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission file number 0-12933

LAM RESEARCH CORPORATION

(Exact name of Registrant as Specified in its Charter)

Delaware	94-2634797
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

4650 Cushing Parkway

Fremont, California 94538

(Address of Principal Executive Offices including Zip Code)

(510) 572-0200

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $0.001 Per Share

(Title of Class)

     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 [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X]   No [  ]

     The aggregate market value of the Registrant’s Common Stock, $0.001 par value, held by non-affiliates of the Registrant, as of December 27, 2002, the last business day of the second fiscal quarter was $914,250,412. Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock has been excluded from this computation in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination of such status for other purposes.

     As of September 16, 2003, the Registrant had 129,543,254 outstanding shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

     Parts of Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on November 6, 2003 are incorporated by reference into Part III of this Form 10-K Report. (The Report of the Audit Committee, Compensation Committee, and the Comparative Stock Performance graph of the Registrant’s Proxy Statement are expressly not incorporated by reference herein.)

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters
	Item 6. Selected Consolidated Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Consolidated Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Controls and Procedures
PART IV
	Item 15. Exhibits, Consolidated Consolidated Financial Statement Schedules, and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 3.2
EXHIBIT 10.86
EXHIBIT 10.87
EXHIBIT 10.88
EXHIBIT 10.89
EXHIBIT 10.90
EXHIBIT 10.91
EXHIBIT 10.92
EXHIBIT 10.93
EXHIBIT 10.94
EXHIBIT 10.95
EXHIBIT 21
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

LAM RESEARCH CORPORATION

2003 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
Part I.
	Item 1.     Business		2
	Item 2.     Properties		10
	Item 3.     Legal Proceedings		10
	Item 4.     Submission of Matters to a Vote of Security Holders		11
Part II.
	Item 5.     Market for the Registrant’s Common Stock and Related Stockholder Matters		11
	Item 6.     Selected Consolidated Financial Data		12
	Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
	Item 7a.   Quantitative and Qualitative Disclosures about Market Risk		45
	Item 8.     Consolidated Financial Statements and Supplementary Data		47
	Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		47
Part III.
	Item 10.    Directors and Executive Officers of the Registrant		47
	Item 11.    Executive Compensation		47
	Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		47
	Item 13.    Certain Relationships and Related Transactions		48
	Item 14.    Controls and Procedures		48
Part IV.
	Item 15.    Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K		49
Signatures			91
Exhibit Index			94

1

PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     With the exception of historical facts, the statements contained in this discussion are forward-looking statements, which are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, competitiveness, gross margins, levels of research and development (R&D), outsourcing plans and operating expenses, our management’s plans and objectives for our current and future operations, the effects of our restructurings and consolidation of operations and facilities, our ability to complete contemplated restructurings or consolidations on time or within anticipated costs, the levels of customer spending or R&D activities, general economic conditions, and the sufficiency of financial resources to support future operations and capital expenditures. Such statements are based on current expectations and are subject to risks, uncertainties and changes in condition, significance, value and effect, including those discussed below and under the heading “Risk Factors” within the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other documents we file from time to time with the Securities and Exchange Commission such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and of information currently and reasonably known. We undertake no obligation to release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances which occur after the date hereof or to reflect the occurrence or effect of anticipated or unanticipated events. All references to fiscal years apply to our fiscal years, which ended June 29, 2003, June 30, 2002, and June 24, 2001.

Item 1. Business

     Lam Research Corporation (Lam or the Company), a Delaware corporation, was founded in 1980 and is headquartered in Fremont, California. The mailing address for our principal executive offices is 4650 Cushing Parkway, Fremont, California 94538, and our telephone number is (510) 572-0200. Additional information about Lam is available on our web site at http://www.lamrc.com. Our Forms 10-K, Forms 10-Q, and Forms 8-K are available online at the Securities and Exchange Commission (SEC) web site on the Internet. The address of that site is http://www.sec.gov. We also make available free of charge the Forms 10-K, Forms 10-Q, and Forms 8-K and amendments to those reports on our corporate web site at http://www.lamrc.com, as soon as reasonably practicable after we electronically file the reports with, or furnish them to, the SEC.

     We design, manufacture, market, and service semiconductor processing equipment used in the fabrication of integrated circuits and are recognized as a major supplier of such equipment to the worldwide semiconductor industry. Semiconductor wafers are subjected to a complex series of process steps that result in the simultaneous creation of many individual integrated circuits. Our etch and chemical mechanical planarization (CMP) products selectively remove portions of various films from the wafer to create semiconductors. We leverage our expertise in these areas to also develop

2

intellectual property (IP) for integrated processing solutions.

     Etch processes, which are repeated numerous times during the wafer fabrication cycle, are required to manufacture every type of semiconductor device produced today. Our current range of etch systems employ Lam’s TCP^® high density and Dual Frequency Confined^TM (DFC^TM) medium density plasma sources to etch device features at current generation geometries and smaller than 100 nanometers (nm) in size.

     CMP products are used to planarize the surface of the wafer to prepare it for further processing. Our Teres^® CMP products utilize a linear planarization technology for manufacturing complex integrated circuits with features 0.13 microns (130 nm) and smaller with multiple metal layers. Our 200/300-mm CMP systems provide integrated polishing and post-CMP cleaning solutions.

Etch Process

     The etch process defines linewidths and other microscopic features on integrated circuits. Plasma etching was developed to meet the demand for device geometries smaller than 3 microns. Plasma consists of ions and neutral species that react with exposed portions of the wafer surface to remove dielectric, metal, or polysilicon material and produce the finely delineated features and patterns of an integrated circuit.

     Advanced integrated circuit manufacturing requires etch systems capable of creating 0.13-micron features for current-generation products and below 100 nm for future semiconductor products. The trend toward feature sizes in the 100-nm range accompanies a transition from aluminum to copper conductive lines for faster device processing speeds. Subsequent feature size reductions below 100 nm will begin to integrate more fragile insulating dielectric materials (low k and porous low k) in between conductive lines. In addition to continually shrinking feature sizes, advanced manufacturing facilities are now producing integrated circuits on 200-mm (8-inch) silicon wafers as well as on wafer diameters of 300 mm (12 inch). To accommodate these decreasing linewidths and increasing wafer diameters, semiconductor manufacturers will continue to require more precise control over the etching process.

     Several of our etch products are available as standalone (one chamber) systems or as clusters (multi-chamber systems) using the Alliance^® or 2300^TM Etch Series platforms.

Dielectric Etch Products

     4520 Series Systems. The 4520 system processes wafer sizes up to 200 mm.

     4520XLE^TM System. The 4520XLE system introduced Lam’s proprietary DFC plasma technology, which reduces plasma volume and sidewall polymer accumulation for cleaner, low-cost operation. Additionally, it offers a wider process window than the 4520 system with capability to etch geometries below 0.18 microns.

     Exelan^®, Exelan^® High Performance, Exelan^® HPT, and 2300 Exelan^® Systems. The Exelan family of products extends DFC technology to create smaller feature sizes and mixes sequential etch process steps in the same chamber. These integrated capabilities developed by Lam improve productivity and lower the cost of ownership for our customers. Exelan was introduced in July 1999 to define the structures required for manufacturing copper conductive lines in semiconductors utilizing traditional insulating dielectric films. Exelan High Performance, introduced in 2001, extends Exelan’s capabilities for etching newer low k insulating dielectric films. Exelan HPT, introduced early in 2002, targets sub-0.13 micron geometries.

     The 2300 Exelan system addresses process requirements down to sub-65 nm for 200-mm and 300-mm wafer sizes. Process chambers can be converted within our customers’ fabrication

3

facilities from 200 mm to 300 mm, which has the advantage of providing greater flexibility and lowering costs. This capability, combined with an overall system footprint comparable to 200-mm systems, allows semiconductor manufacturers to develop integrated circuits using 200-mm wafers instead of expensive 300-mm wafers and later scale up to 300-mm wafer processing.

Conductor Etch Products

     TCP^® 9400 and TCP^® 9600 Series and 2300 Versys^TM Series Systems. The first TCP products were introduced in late 1992. They use Lam’s patented Transformer Coupled Plasma source technology, a high-density, low-pressure plasma source that can etch features well below 100 nm. For 200-mm wafer sizes, we offer the TCP^® 9400PTX and TCP^® 9400DFM for silicon etch applications and the TCP^® 9600PTX and TCP^® 9600DFM for metal etch applications. These systems are used in the production of a broad range of advanced logic and memory devices with feature sizes below 0.13 microns.

     The 2300 Versys system for etching silicon and metal films employs a scaled design of TCP technology to address leading-edge device structure requirements. The 2300 Versys system has the capability to process 200- or 300-mm wafer sizes. The 2300 Versys Star^TM silicon etch system enables sequential step tuning of gas flow and wafer temperature, which provides the critical dimension uniformity required for geometries down to sub-65 nm.

CMP and CMP Wafer Cleaning Processes

     With increasingly smaller geometries, more layers are required to connect the individual devices of an integrated circuit. Each additional layer exaggerates the uneven topography of the previous ones. This effect creates a depth-of-focus problem for subsequent photolithographic steps, which diminishes the precision of the linewidth dimensions. The CMP process removes excess material from the wafer surface by a combination of chemical and abrasive actions to provide a flatter surface, improving photolithography results. Additionally, CMP processes are required for the creation of copper conductive lines. Removing the residue of the abrasive and chemical materials used in CMP requires special cleaning techniques following processing.

CMP with Integrated Clean Products

     Teres and 200/300-mm CMP systems. We offer 200-mm Teres and 200/300-mm CMP systems with integrated Synergy^TM based cleaning systems. These tools target advanced copper/low k and shallow trench isolation (STI) applications as well as high-productivity interlayer dielectric (ILD) processes. The systems incorporate our Linear Planarization Technology^TM (LPT^TM), which uses a high-speed belt combined with patented air-bearing platen capability. These features achieve uniformity control across the wafer surface by changing the shape of the belt (pad) using air pressure. Independent zones can be adjusted to change the pad pressure instead of bending the wafer backside so that expensive 300-mm wafers and fragile multi-layer low k film stacks are not unnecessarily stressed during processing.

Standalone Clean Products

     Synergy. Synergy products combine DSS^® technology and Chemical Mechanical Cleaning^TM (CMC^TM) technology to perform mechanical and chemical cleaning in a single-step process. The Synergy Integra^TM incorporates Synergy’s cleaning technology with a platform that can be integrated with other suppliers’ polishing systems. Certain integrated systems in the industry are the result of development relationships between Lam and other polishing vendors. In addition to handling the clean step following CMP applications, the Synergy standalone clean system is used to clean wafers both before and after a range of semiconductor processing steps.

4

Lam, 2300, 4520XLE, Chemical Mechanical Cleaning, CMC, DFC, Dual Frequency Confined, Lam Research, Linear Planarization Technology, LPT, Synergy, Synergy Integra, Transformer Coupled Plasma, Versys, and Versys Star are trademarks of Lam Research Corporation. 2300 Exelan, Alliance, DSS, Exelan, Exelan High Performance, Exelan HPT, the Lam Research logo, TCP, TCP 9400, TCP 9400DFM, TCP 9400PTX, TCP 9600, TCP 9600DFM, TCP 9600PTX, and Teres are registered trademarks of Lam Research Corporation.

Research and Development

     The market for semiconductor capital equipment is characterized by rapid technological change and product innovation. Our ability to maintain competitive advantage depends in part on our continued and timely development of new products and enhancements to existing products. Accordingly, we devote a significant portion of our personnel and financial resources to R&D programs and seek to maintain close relationships with our customers and be responsive to their wafer processing needs.

     Our R&D expenses during fiscal 2003, 2002, and 2001 were $160.5 million, $179.2 million, and $227.2 million, respectively, and represented 21.3%, 19.0%, and 15.0% of total revenue, respectively. Expenditures are targeted at continued development of advanced etch, CMP and post-CMP clean applications and enhancements to our existing products, including developing the technology necessary to support our customers’ transition to smaller feature sizes, (90 nm and 65 nm), new materials, copper-based devices, and 300-mm wafers.

     We expect to continue to make substantial investments in R&D to meet our customers’ product needs and enhance our competitive position.

Marketing, Sales, and Service

     Our marketing and sales efforts are focused on building long-term relationships with our customers. These efforts are supported by a team of product marketing and sales professionals as well as equipment and process engineers that work closely with individual customers to develop solutions to their processing needs. We maintain ongoing support relationships with our customers and have an extensive network of field service personnel in place throughout the United States, Europe, Japan, and Asia Pacific. We believe that comprehensive support programs and close working relationships with customers are essential to maintaining high customer satisfaction and our competitiveness in the marketplace. We have 37 sales and support centers around the world, through which technical personnel sell and/or service our products.

     We provide standard warranties for our systems that run generally for a period of 12 months from system acceptance, not to exceed 14 months from shipment of the system to the customer. The warranty provides that systems shall be free from defects in material and workmanship and conform to our published specifications. The warranty is limited to repair of the defect or replacement with new or like-new equivalent goods and is valid when the buyer provides prompt notification within the warranty period of the claimed defect or non-conformity and also makes the items available for inspection and repair. We make comprehensive warranty packages on all released products available to our customers.

Export Sales

     Export sales accounted for approximately 47%, 44%, and 50% of our net sales in fiscal 2003, 2002, and 2001, respectively. Export sales consist of sales from any of our U.S. operating subsidiaries to non-affiliated customers outside the U.S. As a result, a significant portion of our sales and operations may be subject to certain risks, including tariffs and other barriers, difficulties

5

in staffing and managing non-U.S. subsidiary and branch operations, potentially adverse tax consequences, exchange rate fluctuations, and the potential for difficulty in accounts receivable collection. There can be no assurance that any of these factors will not have a material adverse effect on our business, financial position, and results of operations and cash flows. Refer to Note 20 of our Consolidated Financial Statements, included in Item 8 herein, for further information concerning export sales.

Customers

     Our customers include many of the world’s leading semiconductor manufacturers. In fiscal year 2003, revenues from Samsung Electronics Company, Ltd., accounted for approximately 15% of total revenues, and, in fiscal year 2001, revenues from STMicroelectronics accounted for approximately 15% of our total revenue. No individual customer accounted for more than 10% of our total revenue in fiscal 2002.

     A material reduction in orders from several of our customers, due to market or business conditions in the semiconductor industry could adversely affect our results of operations and projected financial condition. Our business depends upon the capital expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits and products utilizing integrated circuits. Beginning in the second half of fiscal 2001, a slowing U.S. economy and worldwide decline in demand for integrated circuits resulted in excess capacity in the semiconductor industry and a severe contraction of the manufacturing equipment market. Our customers reduced their level of capital expenditures, which caused a steep decline in demand for our products in fiscal 2002, and demand has remained relatively flat during fiscal 2003 due to our customers’ continuing cautious posture about their levels of capital expenditures.

Backlog

     Company backlog includes orders for systems, spares, and services where written customer requests have been accepted and the delivery of products or provision of services is anticipated within the next 12 months. Our policy is to make adjustments to our backlog to reflect, among other things, customer delivery date changes as well as order cancellations. We schedule production of our systems based upon purchase orders in backlog and our customers’ delivery requirements. Included in our systems backlog are orders for which written requests have been accepted, prices have been agreed upon, and shipment of systems is expected within one year. The spares and services backlog includes customer orders for products that have not yet shipped and for services that have not yet been provided. Where specific customer service and spare parts purchase contracts do not contain specific delivery dates, we use volume estimates at the contract price and over the contract period, not exceeding 12 months, in calculating backlog amounts.

     As of June 29, 2003 and June 30, 2002, our backlog was approximately $239 million and $287 million, respectively. Generally, orders for our products and services are subject to cancellation by our customers with limited penalties. Because some orders are received for shipments in the same quarter and due to possible customer changes in delivery dates and cancellations of orders, our backlog at any particular date is not necessarily indicative of actual revenues for succeeding periods.

Manufacturing

     Our manufacturing operations consist mainly of assembling and testing components and modules that are then integrated into finished systems. We are seeing the effects of our outsourcing programs, as certain system assemblies and modules are now received by us from third

6

party providers to be incorporated by us into system builds. Most of the assembly and testing of our products is conducted in cleanroom environments. Although infrequent, prior to shipping a completed system, customer representatives may perform system acceptance tests at our facility.

     Beginning in fiscal 2002 and continuing in fiscal 2003, we entered into agreements with third parties to outsource certain elements of our manufacturing, production warehousing, and logistics functions. We believe that entering into these outsourcing contracts will provide us more flexibility to scale our operations up and down in a more timely and cost effective manner, enabling us to respond to the cyclical nature of our business. We believe that we have selected reputable providers and are securing their performance on terms documented in written contracts. However, it is possible that one or more of these providers could fail to perform as we expect, and such failure could have an adverse impact on our business. In addition, the expanded role of outsource providers has required us to implement changes to our existing supply chain management operations and to adopt new procedures to manage effectively the performance of those outsource providers. We believe that we have implemented adequate oversight procedures. Even so, any delay or failure in the implementation of our operational changes could adversely affect our customer relationships and have a negative effect on our operating results and financial condition. Refer to Note 17 of our Consolidated Financial Statements, included in Item 8 herein, for further information concerning our outsourcing commitments.

     As is often the case in the high technology industry, due to limited availability of suppliers of certain proprietary or patented technologies, certain of the components and subassemblies included in our products are obtained from a single supplier or a limited group of suppliers. We believe that, in many cases, alternative sources could be obtained and qualified to supply these products. Nevertheless, a prolonged inability to obtain certain components could have an adverse short-term effect on our operating results and could unfavorably impact our customer relationships.

Environmental Matters

     We are subject to a variety of governmental regulations related to the management of hazardous materials. We are currently not aware of any pending notices of violation, fines, lawsuits, or investigations arising from environmental matters that would have any material effect on our business. We believe that we are in general compliance with these regulations and that we have obtained (or will obtain or are otherwise addressing) all necessary environmental permits to conduct our business. Nevertheless, the failure to comply with present or future regulations could result in fines being imposed on us, suspension of production, cessation of our operations or reduction in our customers’ acceptance of our products. These regulations could require us to alter our current operations, to acquire significant equipment, or to incur substantial other expenses to comply with environmental regulations. Our failure to control the use, sale, transport or disposal of hazardous substances could subject us to future liabilities.

Employees

     As of September 16, 2003, we had approximately 2,100 regular full-time employees.

     Each of our employees signs an agreement to maintain the confidentiality of our proprietary information, and most of our employees have stock or stock option arrangements with us that generally provide for the vesting of their options over multiple years.

     In the semiconductor and semiconductor equipment industries, competition for highly skilled employees is intense. Our future success depends to a significant extent upon our continued ability to attract and retain qualified employees, particularly in the R&D and customer support functions. We believe that the ability to offer compensation in the form of stock options is an

7

important component of our key-employee retention programs.

Competition

     The semiconductor capital equipment industry is characterized by rapid change and is highly competitive throughout the world. In order to compete effectively, we must invest significant financial resources to offer a broad range of products, to maintain customer service and support centers globally, and to develop enhanced product capabilities. Semiconductor manufacturers will evaluate equipment suppliers in many areas, including, but not limited to, process performance, productivity, customer support, defect control, and overall cost of ownership, which can be affected by many factors such as equipment design, reliability, software automation, etc. Our ability to succeed in the marketplace will depend upon our ability to introduce product enhancements and new products on a timely basis. In addition, semiconductor manufacturers must make a substantial investment to qualify and integrate new processing equipment into a semiconductor production line. As a result, once a semiconductor manufacturer has selected a particular supplier’s tool set and qualified it for production, the manufacturer generally maintains that selection for that specific production application. Accordingly, we may experience difficulty in selling to a given customer if that customer has qualified a competitor’s system.

     We face significant competition with all of our products. Certain of our existing and potential competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing, and customer service and support organizations. We expect our competitors to continue to improve the design and performance of their current products and processes and to introduce new products and processes with enhanced price performance characteristics. If our competitors make acquisitions or enter into strategic relationships with leading semiconductor manufacturers covering etch or products similar to those we sell, our ability to sell our products to those customers could be adversely affected. There can be no assurance that we will continue to compete successfully in the future. Our primary competitors in the etch market are Applied Materials, Inc. and Tokyo Electron Limited. Our CMP integrated polishing system faces significant competition from Applied Materials, Inc., Ebara Corp., and Novellus Systems, Inc.

Patents and Licenses

     Our policy is to seek patents on inventions relating to new or enhanced products and processes developed as part of our ongoing research, engineering, manufacturing, and support activities. We hold United States patents and corresponding non-U.S. patents covering various aspects of our products and processes. We believe that the duration of our patents generally exceeds the useful life of the technologies and processes disclosed and claimed therein. Our patents, which cover material aspects of our past and present core products, have current durations ranging from approximately 6 to 17 years. We believe that, although the patents we own and may obtain in the future will be of value, they will not alone determine our success, which depends principally upon our engineering, marketing, support, and delivery skills. However, in the absence of patent protection, we may be vulnerable to competitors who attempt to imitate our products, manufacturing techniques, and processes. In addition, other companies and inventors may receive patents that contain claims applicable or similar to our products and processes. The sale of products covered by patents of others could require licenses that may not be available on acceptable terms, or at all.

     From time to time, we have received notices from third parties alleging infringement of such parties’ patent or other intellectual property rights by our products. In such cases, it is our policy to defend the claims, or if considered appropriate, negotiate licenses on commercially reasonable terms. However, no assurance can be given that we will be able, in the future, to negotiate necessary licenses on commercially reasonable terms, or at all, or that any litigation resulting from

8

such claims would not have a material adverse effect on our business and financial results. For further discussion of legal matters, see Item 3, “Legal Proceedings,” of this Form 10-K.

Other Cautionary Statements

     See the discussion of risks in the section of this report entitled Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

EXECUTIVE OFFICERS OF THE COMPANY

     As of September 16, 2003, the executive officers of Lam, who are elected by and serve at the discretion of the Board of Directors, were as follows:

Name	Age		Title
James W. Bagley		64	Chairman and Chief Executive Officer
Stephen G. Newberry		49	President and Chief Operating Officer
Mercedes Johnson		49	Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer
Nicolas J. Bright		47	Senior Vice President and General Manager, Global Products
Steven A. Lindsay		64	Vice President, Global Field Operations and Corporate Marketing
Ernest Maddock		45	Vice President, Customer Support Business Group

     James W. Bagley became Chief Executive Officer and a Director of Lam upon consummation of the merger with OnTrak Systems, Inc., in 1997. Effective September 1, 1998, Mr. Bagley was appointed Chairman of the Board of Lam. Mr. Bagley currently is a director of Teradyne, Inc., Micron Technology, Inc., and Wind River Systems, Inc. From June 1996 to August 1997, Mr. Bagley served as Chairman of the Board and Chief Executive Officer of OnTrak Systems, Inc. He was formerly Chief Operating Officer and Vice Chairman of the Board of Applied Materials, Inc., where he also served in other senior executive positions during his 15-year tenure. Mr. Bagley held various management positions at Texas Instruments, Inc., before he joined Applied Materials, Inc.

     Stephen G. Newberry joined the Company in August 1997 as Executive Vice President and Chief Operating Officer. In July 1998, Mr. Newberry was promoted to President of Lam. Mr. Newberry currently is a director on the board of Nextest Systems Corporation. Previously, he was employed by Applied Materials, Inc., for 17 years, most recently as Group Vice President of Global Operations and Planning. From 1990 to 1992, Mr. Newberry served as Vice President of Applied Materials Japan and was responsible for customer service, engineering and manufacturing activities in that region. Upon his return to the United States, Mr. Newberry served in a variety of executive management positions at Applied Materials, Inc.

     Mercedes Johnson joined the Company in April 1997 and was appointed Chief Financial Officer in May 1997. She was formerly Vice President and Worldwide Operations Controller of Applied Materials, Inc., where she also served in several senior financial management positions since 1986. Prior to joining Applied Materials, Inc., Ms. Johnson held managerial and controller positions at Nanometrics, Inc., NCR Corporation, and Hewlett-Packard Company.

9

     Nicolas J. Bright joined the Company in May 1998 as Vice President of Technology and Engineering. He currently holds the position of Senior Vice President and General Manager, Global Products. Prior to joining Lam, Mr. Bright was employed by Applied Materials, Inc. During his 16-year tenure at that firm, Mr. Bright held senior management positions in engineering and technology within etch, ion implant, and automation business units. He has also held positions at General Electric Co. in the United Kingdom and ABB in Sweden. Mr. Bright holds numerous patents in semiconductor manufacturing disciplines.

     Steven A. Lindsay, Vice President of Global Field Operations and Corporate Marketing since November 2001, joined the Company in September 1999 as Vice President of Corporate Marketing. Previously, Mr. Lindsay was employed by Applied Materials, Inc., where, during his 22-year tenure, he held numerous senior management positions in sales and marketing. Most recently, he was President, Applied Materials North America and Group Vice President, Applied Materials, Inc. He has also held sales management positions at Fairchild Semiconductor and ITT Semiconductor.

     Ernest Maddock, Vice President of the Customer Support Business Group, joined the Company in November 1997. Mr. Maddock’s previously held positions include Managing Director, Global Logistics and Repair Services Operations, and Chief Financial Officer, Software Products Division, of NCR Corporation. He has also held a variety of executive roles in finance and operations in several industries ranging from commercial real estate to telecommunications.

Item 2. Properties

     Our executive offices and principal operating and R&D facilities are located in Fremont, California, and are under operating leases expiring from 2003 to 2008. As a result of the restructuring of our operations, we have subleased some of our idle facilities, (refer to Note 21 of our Consolidated Financial Statements, included in Item 8 herein, for further information concerning our property leases). In addition, we lease properties for our service, technical support and sales personnel throughout the United States, Europe, Japan, and Asia Pacific. Our fiscal 2003 rental payments for the space occupied during that period aggregated approximately $12.7 million, net of sublease income of $1.6 million. Our facilities lease obligations are subject to periodic increases, and we believe that our existing facilities are well maintained and in good operating condition.

Item 3. Legal Proceedings

     In September 1999, Tegal Corporation (Tegal) brought suit against us seeking monetary damages and injunctive relief based on our alleged infringement of certain patents held by Tegal. Specifically, Tegal identified our 4520XLE and Exelan products as infringing the patents Tegal is asserting. On our motion, the case was transferred to the United States District Court for the Northern District of California (the Court). In August of 2002, Tegal voluntarily dismissed its claims asserted against the 4520XLE. In January of 2003, the Court granted summary judgment on Tegal’s remaining claim asserted against the Exelan. On June 17, 2003, the Court entered a final judgment in this case, dismissing Tegal’s Exelan claim. The time for filing an appeal of the decision has now passed, and neither party filed an appeal.

     From time to time, we have received notices from third parties alleging infringement of such parties’ patent or other intellectual property rights by our products. In such cases it is our policy to defend the claims, or if considered appropriate, negotiate licenses on commercially reasonable terms. However, no assurance can be given that we will be able to negotiate necessary licenses on commercially reasonable terms, or at all, or that any litigation resulting from such claims would not have a material adverse effect on our consolidated financial position, liquidity, operating results, or our consolidated financial statements taken as a whole.

10

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

     PART II

Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters

The information required by this Item is incorporated by reference from Item 6, “Selected Consolidated Financial Data,” below.

11

Item 6. Selected Consolidated Financial Data

				Year Ended
				June 29,			June 30,			June 24,			June 25,			June 30,
				2003			2002			2001			2000			1999
				(in thousands, except per share data)
OPERATIONS:
Total revenue (1)				$	755,234		$	943,114		$	1,519,789		$	1,230,767		$	647,955
Gross margin					303,829			266,089			653,479			541,855			233,364
Restructuring charges, net (2)					15,901			44,850			12,780			(33,691	)		53,372
Purchased technology for research and development					—			—			8,000			7,460			5,000
Operating income (loss)					(5,385	)		(119,838	)		186,532			229,842			(113,201	)
Loss on equity derivative contracts in Company stock (EITF 00-19)					(16,407	)		(8,236	)		—			—			—
Income (loss) before cumulative effect of changes in accounting principles					(7,739	)		(90,051	)		141,137			204,756			(112,913	)
Cumulative effect of EITF 00-19 (3)					—			—			33,074			—			—
Cumulative effect of SAB 101, net of tax (4)					—			—			(122,105	)		—			—
Net income (loss)					(7,739	)		(90,051	)		52,106			204,756			(112,913	)
Net income (loss) per share:
Income (loss) before cumulative effect of changes in accounting principles
	Basic			$	(0.06	)	$	(0.71	)	$	1.14		$	1.69		$	(0.98	)
	Diluted			$	(0.06	)	$	(0.71	)	$	1.07		$	1.53		$	(0.98	)
Cumulative effect of EITF 00-19 (3)
	Basic				—			—		$	0.27			—			—
	Diluted				—			—		$	0.25			—			—
Cumulative effect of SAB 101, net of tax (4)
	Basic				—			—		$	(0.99	)		—			—
	Diluted				—			—		$	(0.92	)		—			—
Net income (loss)
	Basic			$	(0.06	)	$	(0.71	)	$	0.42		$	1.69		$	(0.98	)
	Diluted			$	(0.06	)	$	(0.71	)	$	0.39		$	1.53		$	(0.98	)
Pro forma amounts with the change in accounting principle related to revenue recognition applied retroactively (unaudited):
		Total revenues			n/a			n/a		$	1,519,789		$	1,009,006		$	761,000
		Net income (loss)			n/a			n/a			174,211			108,133			(66,277	)
		Net income (loss) per share:
			Basic		n/a			n/a		$	1.41		$	0.89		$	(0.57	)
			Diluted		n/a			n/a		$	1.32		$	0.81		$	(0.57	)
BALANCE SHEET:
Working capital				$	655,794		$	757,880		$	1,076,922		$	733,579		$	494,875
Total assets					1,198,275			1,632,291			1,871,775			1,244,837			979,451
Long-term obligations, less current portion					332,209			359,691			659,718			321,657			326,500

(1) We changed our revenue recognition policy in the fourth quarter of fiscal 2001, effective June 26, 2000, based on guidance provided in Securities and Exchange Commission Staff

12

	Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.” Refer to our discussion of “Critical Accounting Policies” for additional information about our revenue recognition policy and see item (4) below.
(2)	Restructuring charges, net exclude restructuring charges (recoveries) included in cost of goods sold and reflected in gross margin of ($1.0) million, $5.9 million, $4.0 million, and ($2.2) million, for the years ended June 29, 2003, June 30, 2002, June 24, 2001, and June 25, 2000, respectively. These amounts relate to the write-off of selected, older product line inventories in connection with our restructuring plans and the partial recovery of the charges from the subsequent sale of a portion of such inventories. These restructuring charges/(recoveries) are included as a component of cost of goods sold in accordance with Emerging Issues Task Force 96-9, “Classification of Inventory Markdowns and Other Costs Associated with a Restructuring” (EITF 96-9).
(3)	We recorded a non-cash gain of $33.1 million (no related tax), or $0.25 per diluted share, to reflect the cumulative effect of the accounting change as of June 24, 2001, related to the adoption of Emerging Issues Task Force 00-19, “Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (EITF 00-19).
(4)	We recorded a non-cash charge of $122.1 million, after reduction for income tax benefits of $81.4 million, or ($0.92) per diluted share, to reflect the cumulative effect of the accounting change as of June 26, 2000, related to the adoption of SAB 101.

13

UNAUDITED SELECTED QUARTERLY FINANCIAL DATA

		1ST			2ND			3RD			4TH
					(in thousands, except per share data)
QUARTERLY FISCAL 2003:
Total revenue		$	197,520		$	184,569		$	187,059		$	186,086
Gross margin			78,994			72,490			75,221			77,124
Restructuring charges, net (1)			—			2,053			4,043			9,805
Operating income (loss)			4,253			(1,017	)		(1,048	)		(7,573	)
Income (loss) on equity derivative contracts in Company stock			(16,407	)		—			—			—
Net income (loss)			(13,714	)		1,479			797			3,699
Net income (loss) per share
	Basic	$	(0.11	)	$	0.01		$	0.01		$	0.03
	Diluted	$	(0.11	)	$	0.01		$	0.01		$	0.03
Price range per share		$	8.61 - $18.60		$	6.63 - $17.31		$	10.70 - $14.38		$	10.77 - $20.20
Number of shares used in per share calculations:
	Basic		126,931			125,411			125,988			126,872
	Diluted		126,931			128,537			129,550			131,420

		1ST			2ND			3RD			4TH
					(in thousands, except per share data)
QUARTERLY FISCAL 2002:
Total revenue		$	339,580		$	259,173		$	164,105		$	180,256
Gross margin			118,111			26,648			54,987			66,343
Restructuring charges/(recoveries) (1)			13,448			33,773			—			(2,371	)
Operating income (loss)			10,268			(100,383	)		(22,414	)		(7,309	)
Income (loss) on equity derivative contracts in Company stock			(17,994	)		18,884			16,828			(25,954	)
Net income (loss)			(8,920	)		(51,655	)		1,569			(31,045	)
Net income (loss) per share
	Basic	$	(0.07	)	$	(0.41	)	$	0.01		$	(0.24	)
	Diluted	$	(0.07	)	$	(0.41	)	$	0.01		$	(0.24	)
Price range per share		$	14.73 - $30.80		$	15.37 - $25.82		$	20.52 - $29.74		$	16.63 - $29.98
Number of shares used in per share calculations:
	Basic		125,340			125,674			126,747			127,661
	Diluted		125,340			125,674			134,420			127,661

(1) Restructuring charges, net exclude restructuring charges (recoveries) included in cost of goods sold and reflected in gross margin of ($1.0) million, and $5.9 million, for the years ended June 29, 2003 and June 30, 2002, respectively. These amounts relate to the write-off of selected, older product line inventories in connection with our restructuring plans and the partial recovery of these charges from the subsequent sale of a portion of such inventories. The restructuring charges (recoveries) are included as a component of cost of goods sold in accordance with EITF 96-9.

14

Stock and Dividend Information:

     Our Common Stock is traded on the Nasdaq National Market under the symbol LRCX. The price range per share is the highest and lowest bid prices, as reported by the National Association of Security Dealers, Inc., on any trading day during the respective quarter.

     As of September 16, 2003, we had 608 stockholders of record.

     In fiscal 2003 and 2002 we did not declare or pay cash dividends to our stockholders. We currently have no plans to declare and pay cash dividends.

15

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     With the exception of historical facts, the statements contained in this discussion are forward-looking statements, which are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, competitiveness, gross margins, levels of research and development (R&D), outsourcing plans and operating expenses, our management’s plans and objectives for our current and future operations, the effects of our restructurings and consolidation of operations and facilities, our ability to complete contemplated restructurings or consolidations on time or within anticipated costs, the levels of customer spending or R&D activities, general economic conditions and the sufficiency of financial resources to support future operations, and capital expenditures. Such statements are based on current expectations and are subject to risks, uncertainties and changes in condition, significance, value and effect, including those discussed below and under the heading “Risk Factors” within the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other documents we file from time to time with the Securities and Exchange Commission such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and of information currently and reasonably known. We undertake no obligation to release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances which occur after the date hereof or to reflect the occurrence or effect of anticipated or unanticipated events. All references to fiscal years apply to our fiscal years, which ended June 29, 2003, June 30, 2002, and June 24, 2001.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     Lam Research Corporation (Lam or the Company) is a major supplier of semiconductor capital equipment. Our product offerings include single-wafer plasma etch systems with a wide range of applications, CMP and CMP wafer cleaning systems, and an array of services designed to optimize the utilization of these systems by our customers.

     The semiconductor industry is cyclical in nature and has historically experienced periodic downturns and upturns. Over the past 3 business cycles, their severity has increased, and today’s leading indicators of changes in customer investment patterns are no more reliable than in prior years. Demand for our equipment can fluctuate significantly from period to period as a result of various factors, including, but not limited to, economic conditions, supply, demand, and price for semiconductors, customer capacity requirements, and our ability to develop and market competitive products. For these and other reasons, our results of operations for fiscal 2003, 2002, and 2001 may not necessarily be indicative of future operating results.

16

Total Revenue

	Year Ended						Percent Change
							2003			2002
	June 29,		June 30,		June 24,		versus			versus
	2003		2002		2001		2002			2001
	(in thousands)
Revenue	$	755,234	$	943,114	$	1,519,789		(19.9	%)		(37.9	%)

     The sequential decrease in revenue for fiscal year 2003 and fiscal year 2002 compared to fiscal year 2001 reflects our customers’ response to excess capacity in the semiconductor industry, which was significantly influenced by the continued retrenchment of the global economy and levels of end-user demand for products servicing telecommunications, computer, and consumer electronics markets. Semiconductor manufacturers have selectively invested in leading-edge technology equipment through fiscal 2003 and are in the early stages of ramping these new capabilities at production volumes. Overall, demand has remained relatively flat during fiscal 2003 as reflected in the pattern of our quarterly revenues. Our current estimate for the September 2003 quarter is for revenues to be approximately at the same levels as the June 2003 quarter revenues.

     The downturn that began in the second half of fiscal 2001 resulted in decreased revenues across nearly all product lines in fiscal 2002. The reduction in revenue for fiscal 2002 compared to fiscal 2001 was due to a worldwide decline in demand for integrated circuits which resulted in excess capacity in the semiconductor industry and severe contraction in capital investments.

     We changed our revenue recognition policy in the fourth quarter of fiscal 2001, effective June 26, 2000, based on guidance provided in SEC Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.” Refer to our discussion of “Critical Accounting Policies” for additional information about our revenue recognition policy. Based on the guidance provided by SAB 101, we generally recognize new systems revenue upon customer acceptance. As a result, the fiscal period in which we are able to recognize systems revenue is subject to the length of time that our customers require to evaluate the performance of our equipment to agreed standards and specifications, after system installation. Systems revenue recognition generally occurs from two to seven months after the date of shipment. Spares revenues generally are recognized on the date of shipment, and service revenues are recognized generally upon performance of the activities requested by the customer, including training, upgrades, and extended warranty support.

     Regional geographic breakdown of revenue is as follows:

	Year ended
	June 29,			June 30,			June 24,
	2003			2002			2001
North America		28	%		29	%		30	%
Europe		20	%		21	%		28	%
Asia Pacific		44	%		35	%		33	%
Japan		8	%		15	%		9	%

     The growth of Asia Pacific revenues reflects expanded foundry operations and investments by memory chip manufacturers to lower their operating costs by introducing latest-generation manufacturing equipment.

17

Gross Margin

										Percent Change
	Year Ended
										2003			2002
	June 29,			June 30,			June 24,			versus			versus
	2003			2002			2001			2002			2001
	(in thousands)
Gross Margin	$	303,829		$	266,089		$	653,479			14.2	%		(59.3	%)
Percent of total revenue		40.2	%		28.2	%		43.0	%

     The increase in gross margin as a percent of total revenues of 12 percentage points in fiscal 2003 compared to fiscal 2002 was accomplished with an approximate 20 percent reduction in revenues over the same periods. We have focused on implementing strategies to outsource manufacturing activities in order to lower our breakeven point to approximately $180 million in quarterly revenues at the end of fiscal 2003. Further outsourcing of manufacturing assembly activities was accomplished throughout fiscal 2003, continuing the trend toward achieving a more variable cost structure, by establishing transaction-based pricing agreements with vendors, and, additionally enabling the elimination of infrastructure costs such as facilities. The same strategy has provided opportunities to achieve lower material and assembly costs through improved systems design and leverage from a more focused supplier base.

     The manufacturing assembly outsourcing model has required fundamental changes within the supply chain and within our business processes. One objective of this strategy is to minimize certain costs related to holding inventories and managing product lifecycles. Specifically related to this point, in fiscal 2002, we incurred incremental excess and obsolete inventory charges of $24.1 million in the second fiscal quarter of 2002, and in addition we incurred $5.9 million of inventory restructuring expenses, contributing to approximately a 450 basis points improvement in the gross margin percentage compared to fiscal 2003. The charges in fiscal 2002 reflected the known and anticipated impact of the downturn on our business at that point in time. The reduction in excess and obsolete inventory costs in fiscal 2003 reflects more stability in quarter on-quarter business levels during the year and other inventory management efforts. Our current outlook for the September 2003 quarter is for essentially flat gross margin as a percentage of revenues compared to the June 2003 quarter.

     Approximately 500 basis points of the improvement in gross margin as a percentage of revenues for fiscal 2003 compared to the corresponding period a year ago is a result of $38.8 million of charges to cost of goods sold related to a patent litigation settlement in fiscal 2002. In the second fiscal quarter of 2002, we signed a final settlement agreement in connection with a patent infringement claim by Varian Semiconductor Equipment Associates, Inc. (Varian). We agreed to pay Varian $20.0 million in cash and issued Varian a warrant to purchase 2,000,000 shares of our common stock with a fair value of $21.5 million. In connection with this settlement, we recorded a charge of $38.8 million, and the remaining amount of the settlement, $2.7 million, represented the value of future licensed use of patents we received. The $2.7 million relating to the license will continue to be amortized ratably over the subsequent 10 quarters as a charge to cost of goods sold. Accumulated amortization as of the end of fiscal 2003 was $1.6 million.

     Additionally, our restructuring plans, combined with ongoing cost management activities have supported improved utilization rates in our manufacturing operations, contributing to the improvement in gross margin as a percentage of revenue in fiscal 2003 over fiscal 2002.

     The decrease in gross margin percentage in fiscal 2002 compared to fiscal 2001 stems from

18

patent litigation settlement charges and obsolete inventory charges within cost of goods sold as well as unabsorbed manufacturing overhead costs due to lower production volumes. In the second fiscal quarter of 2002, we recorded a charge for excess and obsolete inventory of $24.1 million. We recorded the charge based on the results of our customary quarterly analysis of inventories and their net realizable value based on current market conditions and forecasted customer demand for related products. This analysis highlighted limited anticipated consumption of our older generation equipment due to accelerated technological and product design changes.

Research and Development

										Percent Change
	Year Ended
										2003			2002
	June 29,			June 30,			June 24,			versus			versus
	2003			2002			2001			2002			2001
	(in thousands)
Research & Development	$	160,493		$	179,217		$	227,248			(10.4	%)		(21.1	%)
Percent of total revenue		21.3	%		19.0	%		15.0	%

     The reduction in absolute dollars in fiscal 2003, compared to fiscal 2002, illustrates ongoing efforts to focus expenditures primarily on the development of critical next-generation products. Spending in fiscal 2003 decreased compared to fiscal 2002 and included a reduction in employee-related expenses and supplies expenses of approximately $6 million, and lower infrastructure costs, principally reflected in reduced depreciation and amortization of another $6 million. Additionally, R&D expenses in fiscal 2002 of approximately $5 million related to impairment charges and write-downs in the value of selected laboratory equipment, which was determined to be no longer useful due to technological changes. The increase in R&D expenses as a percentage of revenues in fiscal 2003 compared to fiscal 2002 is the result of the lower sales volume in fiscal 2003.

     The decrease in R&D expenses in absolute dollars in fiscal 2002 compared to fiscal 2001 results from alignment of spending on general R&D programs with the downturn in the business cycle.

     Approximately, 60% of fiscal 2003 systems revenues are derived from products introduced over the previous two years. We believe that in order to remain competitive, we must continue to invest substantially in engineering and technology development. Accordingly, we devote a significant portion of our personnel and financial resources to these programs, which will result in sizeable levels of investment in next-generation products and enhancement of existing products.

Selling, General and Administrative

										Percent Change
	Year Ended
										2003			2002
	June 29,			June 30,			June 24,			versus			versus
	2003			2002			2001			2002			2001
	(in thousands)
Selling General & Administrative	$	132,820		$	161,860		$	218,919			(17.9	%)		(26.1	%)
Percent of total revenue		17.6	%		17.2	%		14.4	%

     The reduction in Selling, General and Administrative (SG&A) expenses in fiscal 2003, compared to the prior year, reflects the structural change in the targeted administrative functions that have been outsourced. Reduced salaries and benefits and supply costs have been significantly substituted with variable, largely transaction-based pricing from selected providers.

19

Infrastructure rationalization, including reduced facilities, has contributed the majority of the annual cost reduction from fiscal 2002 to fiscal 2003. In addition, SG&A expenses in fiscal 2002 included a $4.2 million impairment charge related to the write-down in value of certain demonstration equipment used in sales and marketing activities, which was determined to be no longer useful due to technological changes.

     In the quarter ended December 29, 2002, we modified the contractual life of and added additional vesting requirements to one of our Chairman and Chief Executive Officer’s stock option awards. As a result of the modification, we recorded deferred stock-based compensation of $3.4 million, which is being amortized ratably over the vesting period of the modified options, or 16 quarters. As of June 29, 2003, approximately $2.8 million remained in deferred compensation within stockholders’ equity. As modified, the option award provided for accelerated vesting triggered when the Nasdaq National Market closing price of our common stock reaches or exceeds $20.00 per share. At such time when vesting is accelerated, all unvested shares will immediately vest and become exercisable, and all remaining deferred compensation would then be recognized as compensation expense within SG&A. In the quarter ended September 2003 we modified the vesting requirements to this same option award by adding a second condition to the accelerated vesting provision. Refer to the subsequent event discussion included in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

     The decrease in absolute dollars of SG&A expenses in fiscal 2002 compared to fiscal 2001 was largely due to manpower reductions, lower incentive payments to employees, shutdown days, and other cost reduction programs in response to the contraction in our levels of revenue. The increase in SG&A expenses as a percentage of revenue for the same periods comparison was primarily the result of lower sales volume in fiscal 2002.

Restructuring Charges

     We have developed and implemented restructuring plans in response to changes in business outlook with the intent to align our cost structure with anticipated revenue levels. The frequency of our restructuring plans has been driven by the unpredictable and substantial changes in the semiconductor industry as a whole and the market for semiconductor processing equipment in particular. These dynamic changes in the semiconductor industry and our business have required multiple integrated responses, including those activities within our restructuring plans, based on the best information and industry-expert forecasts available at that point in time. Although management makes every attempt to consolidate all known restructuring activities into one plan, the extreme nature of our industry’s business cycles and the rapidly changing forecasting environment places practical limitations on achieving this objective. The implementation of restructuring activities and recognition of their impact in our financial statements does not preclude similar but unrelated actions from being necessary in future periods. We distinguish regular operating cost management activities from restructuring activities. Accounting for restructuring activities requires an evaluation of formally committed and approved plans. Restructuring activities have comparatively greater strategic significance and materiality and may involve exit activities, whereas regular cost containment activities are more tactical in nature and are rarely characterized by formal and integrated action plans or exiting a particular product, facility, or service.

20

     During fiscal 2003, we incurred $14.9 million of restructuring charges, net, associated with our fiscal 2003, 2002, and 2001 restructuring plans. As of June 29, 2003, the remaining restructuring reserve consisted of approximately $11.0 million related to restructurings implemented during fiscal 2003 and approximately $8.3 million related to restructurings implemented during fiscal 2002.

Fiscal 2003 Restructuring Activities

     We have developed programs and incurred restructuring charges in response to the depressed levels of capital investment by the semiconductor industry. This situation has caused us to evaluate our revenue outlook and forecasts, employment levels, facilities utilization and outsourcing activities and the impact on manufacturing and administrative facilities. Based on these evaluations, our senior management committed to cost reduction and exit activities in the quarters ended June 29, 2003 (the June 2003 Plan), March 30, 2003 (the March 2003 Plan), and December 29, 2002 (the December 2002 Plan). Prior to the end of the June 29, 2003, March 30, 2003, and December 29, 2002 quarters, management with the proper level of authority approved specific actions under the respective Plans and communicated the severance packages to potentially impacted employees in enough detail such that the employees could determine their type and amount of benefits. None of the severance payments were contingent on employee’s future service to the Company. The termination of the impacted employees occurred as soon as practical after the restructuring plans were announced. The amount of remaining future lease payments for facilities we ceased to use and included in the restructuring charges are based on management’s estimates using known prevailing real estate market conditions at that time. Leasehold improvements relating to the vacated buildings were written off, as these items will have no future economic benefit to us and have been abandoned.

     We applied the accounting provisions of Statement of Financial Accounting Standards No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” (FAS 146) to the fiscal 2003 restructuring activities as we early-adopted FAS 146 during the December 2002 quarter. Under the provisions of FAS 146, the restructuring charges for the remaining contractual lease payments, computed as the present value of remaining contractual payments less estimated sublease income, on vacated facilities were recognized in the quarter in which the Company ceased to use the facility. As a result of the fiscal 2003 restructuring activities, we expect quarterly savings in total expenses of approximately $1.0 million from the June 2003 Plan, $1.0 million from the March 2003 Plan, and $3.0 million from the December 2002 Plan. These estimated savings from the Plans’ discrete actions are primarily related to lower employee payroll, facilities, and depreciation expenses. Actual savings may vary from anticipated savings, depending upon future events and circumstances, such as differences in actual sublease income versus estimated amounts. Through June 29, 2003, we believe actual savings are largely consistent with estimated savings. However, other activities and factors may significantly

21

influence our future cost structure and may offset savings from the Plans.

June 2003 Plan

     During the fourth quarter of fiscal 2003, we reduced our workforce in North America, and Europe by approximately 30 people and vacated selected sales and office facilities located in North America, Europe, and Asia determined to be no longer critical to our operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with approximately 80% from North America and approximately 20% from our European locations. We recorded a restructuring charge of approximately $7.6 million, consisting of $0.8 million of severance and benefits for involuntarily terminated employees, $5.7 million of charges for the present value of remaining lease payments on vacated facilities, a $1.0 million loss on the fair value of a vacated facility, and $0.2 million for the write-off of related leasehold improvements. In June 2003, two lease agreements covering four properties were amended, combined, restated, and transferred to a new lessor under a single lease structure. One of the transferred leases covered one of our vacated facilities at our Fremont, California campus. At the time of the amendment, the leased facility’s fair value was less than its original cost by approximately $1.0 million. Accordingly, this amount was recorded as a loss on the fair value of the vacated facility and included in the $6.7 million facility-related restructuring charge.

     Below is a table summarizing activity relating to the June 2003 Plan:

	Severance						Abandoned
	And						Fixed
	Benefits			Facilities			Assets			Total
				(in thousands)
June 2003 provision	$	783		$	6,656		$	210		$	7,649
Cash payments		(366	)		(388	)		—			(754	)
Non-cash charges		—			—			(210	)		(210	)
Balance at June 29, 2003	$	417		$	6,268		$	—		$	6,685

     The remainder of the Severance and Benefits reserve balance of $0.4 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $6.3 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2008.

March 2003 Plan

     During the third quarter of fiscal 2003, we reduced our workforce in North America and Europe by approximately 50 people and vacated selected sales and office facilities located in North America determined to be no longer critical to our operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with the majority of the reductions in North America. We recorded a restructuring charge of approximately $4.7 million, consisting of $1.6 million of severance and benefits for involuntarily terminated employees, $2.9 million of charges for remaining lease payments on vacated facilities, and $0.2 million for the write-off of related leasehold improvements.

22

Below is a table summarizing activity relating to the March 2003 Plan:

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
				(in thousands)
March 2003 provision	$	1,658		$	2,913		$	171		$	4,742
Cash payments		(855	)		(757	)		—			(1,612	)
Non-cash charges		(228	)		—			(171	)		(399	)
Balance at June 29, 2003	$	575		$	2,156		$	—		$	2,731

     The remainder of the Severance and Benefits reserve balance of $0.6 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $2.2 million as of June 29, 2003 is anticipated to be utilized by the end of fiscal 2007.

December 2002 Plan

     During the second quarter of fiscal 2003, we reduced our workforce in North America, Europe, and Asia by approximately 120 employees and vacated selected sales and office facilities located in North America, Europe, and Asia determined to be no longer critical to our operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company with approximately 65% from North America and approximately 35% from Asia and Europe locations. We recorded a restructuring charge of approximately $5.7 million, consisting of $3.3 million of severance and benefits for involuntarily terminated employees, $1.9 million of charges for remaining lease payments on vacated facilities, and $0.5 million for the write-off of related leasehold improvements.

     Below is a table summarizing activity relating to the December 2002 Plan:

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
				(in thousands)
December 2002 provision	$	3,257		$	1,945		$	474		$	5,676
Cash payments		(3,112	)		(487	)		—			(3,599	)
Non-cash charges		—			(49	)		(474	)		(523	)
Balance at June 29, 2003	$	145		$	1,409		$	—		$	1,554

     The remainder of the Severance and Benefits reserve balance of $0.1 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $1.4 million as of June 29, 2003, is anticipated to be utilized by the end of calendar year 2004.

Fiscal 2002 Restructuring Activities

     In response to the deterioration in semiconductor sales in the first half of fiscal 2002, which resulted in a contraction in outlook for the wafer fabrication equipment market and, therefore, in our revenues, our senior management committed to cost reduction and exit activities in the quarters ended December 30, 2001 (the December 2001 Plan), and September 23, 2001 (the September 2001 Plan). Prior to the end of the December 30, 2001 and September 23, 2001

23

quarters, management, with the proper level of authority, approved specific actions of the respective Plans and communicated the severance packages to potentially impacted employees in enough detail such that the employees could determine their type and amount of benefits. The termination of the impacted employees occurred as soon as practical after the plans of restructuring were announced. Lease payments on vacated facilities are based on management’s estimates using prevailing real estate market conditions. We initially estimated under the plans that, given prevailing real estate market conditions at that time, it would take approximately 24 months to sublease our vacated facilities. We revised the original estimates for lease payments on vacated facilities if prevailing real estate market conditions were different than the initial estimate. Leasehold improvements and certain fixed assets relating to the vacated buildings were written off as these items have no future economic benefit to us and have been abandoned.

December 2001 Plan

     During the second fiscal quarter of 2002, we began implementing restructuring activities that included reducing our workforce by approximately 470 employees in North America, Europe, and Asia, vacating selected office and warehouse facilities at our Fremont, California campus determined to be no longer critical to our operations, and the closure of certain offices in Asia. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company with approximately 80% from North America and approximately 20% from Asia and Europe locations. We recorded a restructuring charge of approximately $33.8 million, consisting of $14.2 million of severance and benefits for involuntarily terminated employees, $9.6 million of charges for remaining lease payments on vacated facilities, and $9.9 million for the write-off of related leasehold improvements and fixed assets.

     During fiscal 2003, we recovered approximately $3.8 million of restructuring charges originally accrued under the December 2001 Plan, $2.1 million for benefits and services that were not utilized by the terminated employees, and $1.7 million related to a revision to the net amount of lease payments remaining to be paid on the vacated facilities. In addition, during fiscal 2003, we recorded approximately $3.0 million of additional restructuring charges of which $2.5 million was due to revisions we made for the length of time required to sublease two of our vacated buildings in Fremont, California that were included in the December 2001 Plan and approximately $0.1 million due to additional facility restoration costs incurred to fulfill our contractual obligations under the terms of a lease agreement. Additionally, we revised our estimates related to employee termination costs and recorded $0.4 million of additional employee termination costs.

Below is a table summarizing activity relating to the December 2001 Plan:

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
	(in thousands)
December 2001 provision	$	14,208		$	9,637		$	9,928		$	33,773
Cash payments		(9,122	)		(386	)		—			(9,508	)
Non-cash charges		(1,529	)		(127	)		(9,928	)		(11,584	)
Balance at June 30, 2002		3,557			9,124			—			12,681
Recovery of assets		—			—			18			18
Cash payments		(1,773	)		(2,482	)		—			(4,255	)
Reversal of restructuring charges		(2,118	)		(1,704	)		(18	)		(3,840	)
Additional restructuring charges		390			2,604			—			2,994
Balance at June 29, 2003	$	56		$	7,542		$	—		$	7,598

24

     The remainder of the Severance and Benefits reserve balance as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $7.5 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2008.

September 2001 Plan

     During the first quarter of fiscal 2002, we began implementing restructuring activities which included a reduction of approximately 550 employees in North America, Europe and Asia, vacating selected facilities at our headquarters in Fremont, California determined to be no longer critical to our operations and discontinuance of the manufacture of specific products within our etch product lines. The employees were from a broad range of organizations and at multiple levels throughout the Company, with approximately 85% from North America and 15% from Asia and Europe locations. We recorded a restructuring charge of approximately $21.0 million consisting of $10.8 million of severance and benefits for involuntarily terminated employees, $1.7 million of charges for remaining lease payments on vacated facilities, $7.6 million for discontinued inventory charges related to our decision to discontinue manufacture of specific products within our etch product lines and $0.9 million for the write-off of related leasehold improvements and fixed assets. In fiscal 2003 and 2002, we recovered approximately $1.7 million from unanticipated subsequent sales to our installed base of customers of certain portions of the inventory. In addition, in fiscal 2003 and 2002, we physically disposed of approximately $2.7 million of this inventory. We plan to disposition the remaining quantities of this discontinued, obsolete inventory by the end of the 2003 calendar year.

     During fiscal 2002, we also recovered approximately $1.0 million of the September 2001 Plan charge due to lower than estimated employee termination costs of $0.7 million and lower than estimated expenses relating to a vacated facility lease of $0.3 million. During fiscal 2003, approximately $0.9 million was recovered due to $0.6 million of lower than previously estimated employee severance and termination costs and $0.3 million was recovered due to actual expenses being lower than estimated for vacated facility leases. In addition, during fiscal 2003, we recorded additional charges for the September 2001 Plan based on a revision of our estimate of the length of time required to sublease one of our vacated buildings in Fremont, California. Based on prevailing market conditions, we extended the accrual for lease payments to the end of the lease in June 2004 and recorded an additional $0.6 million relating to these remaining lease payments.

     Below is a table summarizing activity relating to the September 2001 Plan:

25

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed			Discontinued
	Benefits			Facilities			Assets			Inventory			Total
	(in thousands)
September 2001 provision	$	10,767		$	1,746		$	935		$	7,600		$	21,048
Recovery of assets		—			—			—			785			785
Cash payments		(8,135	)		(762	)		—			—			(8,897	)
Non-cash charges		(1,035	)		—			(935	)		(7,600	)		(9,570	)
Reversal of restructuring charges		(695	)		(317	)		—			(785	)		(1,797	)
Balance at June 30, 2002		902			667			—			—			1,569
Recovery of assets		—			—			—			933			933
Cash payments		(159	)		(524	)		—			—			(683	)
Reversal of restructuring charges		(572	)		(286	)		—			(933	)		(1,791	)
Additional restructuring charges		—			636			—			—			636
Balance at June 29, 2003	$	171		$	493		$	—		$	—		$	664

     The remainder of the Severance and Benefits reserve balance of $0.2 million, as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $0.5 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2004.

Fiscal 2001 Restructuring Activities

     During the quarter ended December 29, 2002, we completed the restructuring activities associated with the June 2001 Plan. An additional $1.1 million of restructuring charges was recovered due to lower than estimated employee termination costs.

Purchased Technology for Research & Development

     During the second quarter of fiscal 2001, we made an equity investment in and purchased a portfolio of CMP intellectual property rights and research and development technology from Strasbaugh. We recognized a one-time charge to income of $8.0 million for the purchase of in-process research and development technology and recorded a $6.0 million investment in preferred stock and intangible assets. Our equity interest in Strasbaugh, representing approximately 20% of Strasbaugh’s total capital stock, is accounted for under the equity method, and the intellectual property rights are being amortized ratably over five years.

     Based on our analysis of Strasbaugh’s current and expected financial performance, we determined in the third quarter of fiscal 2002 that the carrying value of our equity investment had experienced an other-than-temporary impairment and recorded a $2.0 million charge in other expense to write down the investment to its estimated fair value.

     Our equity in the income (loss) from Strasbaugh as of the end of fiscal 2003, 2002, and 2001 was ($0.8) million, ($0.8) million and $0.7 million, respectively. The income (loss) has not been material, and, therefore, has been included in other income, net, but not presented as a separate caption on the accompanying statements of operations.

Other Income (Expense), net

     Other income (expense), net, was ($10.3) million, ($8.2) million and $15.1 million in fiscal year 2003, 2002, and 2001, respectively. The change in net other expense in fiscal 2003 compared to fiscal 2002 was primarily due to the settlement of our equity derivative instruments indexed to Lam stock and lower yields on investments due to declining interest rates partially offset by lower interest expense due to the redemption of our 5% $300 million subordinated

26

debentures in September 2002. The increase in net other expense in fiscal 2002 compared to fiscal 2001 was driven by the non-taxable loss on our equity derivatives indexed to Lam stock, and smaller foreign currency exchange gains due to lower foreign currency balances.

     On August 23, 2002, we settled our outstanding equity derivative contracts by purchasing approximately 3.5 million shares of Lam common stock at an average price of $11.19 per share for a total cash payment of $39.1 million. By settling the equity derivative contracts, we were able to repurchase the shares recording a life to date gain of $8.4 million ($2.41 per share) from their then market value. Resulting from this transaction, we recognized an increase in treasury stock of $47.6 million.

     Based on the $13.60 market price of our common stock at the contract settlement date (August 23, 2002), the fair value of the equity derivative contracts declined by $16.4 million to $8.4 million, from their June 30, 2002 fair value of $24.8 million. This $16.4 million reduction in the equity derivative contracts’ fair value was recorded as a non-taxable loss in other expense in fiscal 2003.

Tax Expense (Benefit)

    Our annual income tax expense (benefit) was ($7.9) million, ($37.9) million, and $60.5 million in fiscal years 2003, 2002, and 2001, respectively. The gains and losses in fiscal years 2003, 2002, and 2001 resulting from the change in fair value of our equity derivatives indexed to our stock were non-taxable. In April 2003, the Internal Revenue Service (IRS) closed its examination of our tax returns for fiscal years up to and including the fiscal year ended June 30, 1998. Resolution was reached on a number of issues including adjustments related to R&D tax credits resulting in our recording a $24.9 million tax benefit in the fourth quarter. In addition, a tax expense of approximately $17.0 million associated with implementing strategies to, in the longer-term, limit our tax liability on the sale of our products worldwide, was recorded in the fourth quarter of fiscal 2003. These tax strategies are structured to align the asset ownership and functions of our various legal entities around the world, with our expectations of the level, timing, and sources of future revenues and profits. In fiscal 2002, we recorded an income tax benefit of $37.9 million related to net losses incurred. In addition, in the first quarter of fiscal 2002, we increased our tax benefit rate to 30%. The increase resulted from the tax benefit of the R&D credit being proportionately greater in subsequent quarters due to lower projected pretax income and investment in engineering and development programs qualifying for R&D tax benefits. For fiscal year 2001, we recorded an income tax expense of $60.5 million, which was 30% of income before taxes.

Deferred Tax Assets

     We had gross deferred tax assets arising from non-deductible temporary differences, net operating losses, and tax credit carryforwards of $287.5 million and $290.4 million in fiscal 2003 and 2002. The gross deferred tax assets are offset by valuation allowances of $36.7 million and $52.2 million and deferred tax liabilities of $30.7 million and $26.7 million in fiscal 2003 and 2002. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. We evaluate the realizability of the deferred tax assets quarterly and will continue to assess the need for additional valuation allowances, if any.

Outsourcing

     We define aspects of our business as either core or critical capabilities and those that are in support of these activities. We have identified as critical for success in the marketplace our ability to develop leading edge products, to market and sell what we develop, and to service and

27

support directly what we sell. Most other activities in the Company are in support of product development, marketing and selling and customer service. Consequently, in the fourth quarter of fiscal 2001, we began implementation of an outsourcing strategy to obtain certain support services from third parties. Accordingly, during fiscal 2002, we began to enter into agreements to outsource elements of our manufacturing, warehousing, logistics, facilities management and information technology functions. During fiscal 2003, we continued to enter into agreements to outsource certain elements of our transactional general and administrative functions. We believe that entering into these outsourcing programs will provide us with more flexibility to scale our operations in a more timely manner to respond to the cyclical nature of our business. Implementing this outsourcing strategy is intended to lead to proportionally more of our employees supporting core activities and decrease our reliance on temporary workforce during peak business cycles as well as reduce the fluctuation in employment that occurs due to the cyclical nature of our business.

Related Party Transactions

     During fiscal year 2001, our President and Chief Operating Officer signed a promissory note with Lam entitling him to borrow up to $1.0 million dollars at 6.75% simple interest. At June 29, 2003, the entire principal amount, $1.0 million, and accrued interest was outstanding. The loan is secured by a mortgage on his personal residence and is repayable, in full, together with accrued interest, at any time, but no later than May 8, 2005.

Subsequent Events

     During the quarter ending September 2003, we added a second condition to the accelerated vesting provision contained in one of our Chairman and Chief Executive Officer’s stock option awards that was previously modified in the December 2002 quarter. When and if the vesting of the award is accelerated, all unvested shares shall immediately become fully vested and exercisable, and any remaining deferred compensation would then be recognized as compensation expense within SG&A. The award now provides for accelerated vesting when each of the following conditions is met: (1) the Nasdaq national market closing price of Lam common stock reaches or exceeds $20.00 per share, and (2) applying U.S. generally accepted accounting principles, Lam’s fiscal quarter net income exceeds $2.5 million after deducting any incremental amortization expense that results from acceleration of these same options. The two conditions need not be met simultaneously nor in a specific order.

Critical Accounting Policies and Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make certain judgments, estimates and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We based our estimates and assumptions on historical experience and on various other assumptions believed to be applicable, and evaluated them on an on-going basis to ensure they remained reasonable under current conditions. Actual results could differ significantly from those estimates.

     The significant accounting policies used in the preparation of our financial statements are described in Note 2 of our Notes to Consolidated Financial Statements. Some of these significant accounting polices are considered to be critical accounting policies. A critical accounting policy is defined as one that has both a material impact on our financial condition and results of operations and requires us to make difficult, complex and subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain.

     We believe that the following critical accounting policies reflect the more significant

28

judgments and estimates used in the preparation of our consolidated financial statements.

     Revenue Recognition: We recognize all revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, collectibility is reasonably assured, and we have completed our system installation obligations, received customer acceptance, or are otherwise released from our installation or customer acceptance obligations. In the event that terms of the sale provide for a lapsing customer acceptance period, we recognize revenue upon the expiration of the lapsing acceptance period or customer acceptance, whichever occurs first. In circumstances where the practices of a customer do not provide for a written acceptance and in addition, the terms of sale do not include a lapsing acceptance provision, we recognize revenue where it can be reliably demonstrated that the delivered system meets all of the customer specifications. Revenue related to sales of spare parts, system upgrade kits, and remanufactured systems is generally recognized upon shipment. Revenue related to services is generally recognized upon completion of performance of the services requested by a customer order. Revenue for extended maintenance service contracts with a fixed payment amount and a term more than one month is recognized on a straight-line basis over the term of the contract.

     We changed our revenue recognition policy in the fourth quarter of fiscal 2001, effective June 26, 2000, based on guidance provided in SAB 101.

     Inventory Valuation: Inventories are stated at the lower of cost or market using standard costs, which approximate actual cost on a first-in, first-out basis. We maintain a perpetual inventory system and continuously record the quantity on-hand and standard cost for each product, including purchased components, subassemblies and finished goods. We maintain the integrity of perpetual inventory records through periodic physical counts of quantities on hand. Finished goods are reported as inventories until the point of title transfer to the customer. Generally, title transfer is documented in the terms of sale. When the terms of sale do not specify when title transfers, we assume title transfers when we complete physical delivery of the products unless other customer practices prevail.

     Standard costs are generally re-assessed at least annually and reflect achievable acquisition costs, generally the most recent vendor contract prices for purchased parts, currently obtainable assembly and test labor, and overhead for internally manufactured products. Manufacturing labor and overhead costs are attributed to individual product standard costs at a level planned to absorb spending at average utilization volumes. All intercompany profits related to the sale and purchase of inventory between our legal entities are eliminated from our consolidated financial statements.

     Management evaluates the need to record adjustments for impairment of inventory at least quarterly. Our policy is to assess the valuation of all inventories, including manufacturing raw materials, work-in-process, finished goods and spare parts in each reporting period. Obsolete inventory or inventory in excess of management’s estimated usage requirements over the next 12 to 36 months is written-down to its estimated market value, if less than cost. Inherent in the estimates of market value are management’s forecasts related to our future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, possible alternative uses and ultimate realization of excess inventory. If future customer demand or market conditions are less favorable than our projections, additional inventory write-downs may be required, and would be reflected in cost of sales in the period the revision is made.

     Warranty: Typically, marketing and selling semiconductor capital equipment includes providing parts and service warranty to customers as part of the overall price of the system. We provide standard warranties for our systems that run generally for a period of 12 months from

29

system acceptance, not to exceed 14 months from shipment of the system to the customer. We record a provision for estimated warranty expenses to cost of sales for each system upon revenue recognition. The amount recorded is based on an analysis of historical activity, which uses factors such as type of system, customer, geographic region, and any known differences such as tool reliability improvements. All actual parts and labor costs incurred in subsequent periods are charged to those established reserves through the application of detailed project record keeping.

     Actual warranty expenses are incurred on a system-by-system basis, and may differ from our original estimates. While we periodically monitor the performance and cost of warranty activities, if actual costs incurred are different than our estimates, we may recognize adjustments to provisions in the period in which those differences arise or are identified. Accordingly, actual costs that exceed the estimates are expensed as incurred, and at the same time, additional probable and estimable liabilities may be recorded.

     We do not maintain general or unspecified reserves; all warranty reserves are related to specific systems. Historically, including the most recent 12 months ended June 29, 2003, all warranty obligations have been determined with reasonable estimates.

     In addition to the provision of standard warranties, we offer customer-paid extended warranty services. Revenues for extended maintenance and warranty services with a fixed payment amount and a term of more than one month are recognized on a straight-line basis over the term of the contract. Related costs are recorded either as incurred or when related liabilities are determined to be probable and estimable.

     Employee Stock Purchase Plan and Employee Stock Option Plans: We account for our employee stock purchase plan (ESPP) and stock option plans under the provisions of Accounting Principles Board Opinion No. 25 “Accounting For Stock Issued to Employees” (APB 25) and Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation — an Interpretation of APB Opinion No. 25” (FIN 44) and make pro forma footnote disclosures as required by Statement of Financial Accounting Standards No. 148, “Accounting For Stock-Based Compensation — Transition and Disclosure” (FAS 148), which amends Statement of Financial Accounting Standards No. 123, “Accounting For Stock-Based Compensation” (FAS 123). Our ESPP is a non-compensatory plan, and our stock option plans are accounted for using the intrinsic value method under the provisions of APB 25.

     Pro forma net income (loss) and pro forma net income (loss) per share disclosed in the footnotes to our annual consolidated financial statements are estimated using a Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and which are fully transferable. In addition, the Black-Scholes model requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each option. Because our stock-based awards to employees have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion the existing models do not necessarily provide a reliable measure of the fair value of our stock-based awards to employees.

     Deferred Income Taxes: We record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets, an adjustment would be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that the deferred tax assets would be realized, then the previously provided valuation allowance would be reversed. Our current valuation allowance of $36.7 million covers the tax benefit from the exercise of employee stock options and foreign tax credits. When the stock option tax benefits are realized, a portion of the valuation allowance will be reversed and credited to capital in excess of par value. When the foreign tax credits are realized, the remaining portion of the valuation allowance will be reversed through the tax provision (benefit) in the statement of operations as a reduction of income tax expense.

30

Recent Accounting Pronouncements

     Costs associated with Exit or Disposal Activities: In July 2002, the Financial Accounting Standards Board (FASB) issued FAS 146. FAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (EITF 94-3). The principal difference between FAS 146 and EITF 94-3 relates to FAS 146’s requirements for the timing of recognizing a liability for a cost associated with an exit or disposal activity. FAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3 a liability for an exit cost was recognized at the date of an entity’s commitment to an exit plan. FAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption encouraged. We early-adopted FAS 146 in the quarter ended December 29, 2002 and applied its accounting provisions to the restructuring activities initiated during the quarters ended December 29, 2002, March 30, 2003 and June 29, 2003 (see Note 21 to the Consolidated Financial Statements included in Item 8 in this Form 10-K). No restructuring activities were initiated during the quarter ended September 29, 2002.

     Accounting for Revenue Arrangements with Multiple Deliverables: In November 2002, the FASB’s Emerging Issues Task Force reached a consensus on EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (EITF 00-21). EITF 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple deliverables (products, services and/or rights to use assets). The provisions of EITF 00-21 will be applicable for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 is not currently anticipated to have a material affect on our financial position or results of operations.

     Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others: In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). FIN 45 requires a company that is a guarantor to make specific disclosures about its obligations under certain guarantees that it has issued. FIN 45 also requires the guarantor to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken in issuing the guarantee. FIN 45 also incorporates, without change, the guidance in FASB Interpretation No. 34, “Disclosure of Indirect Guarantees of Indebtedness of Others” which is superseded by FIN 45. FIN 45’s disclosure requirements are effective for financial statements for periods ending after December 15, 2002. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued after December 31, 2002. The provisions of FIN 45 did not have a material impact on our financial position or results of operations upon adoption. (See Note 18 to the Consolidated Financial Statements included in Item 8 in this Form 10-K).

     Accounting for Stock-Based Compensation Transition and Disclosure: In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (FAS 148), which amends FAS 123, “Accounting for Stock-Based Compensation”. FAS 148 provides alternative methods of transition for a voluntary change to the “fair value” method of accounting for stock-based employee compensation. In addition, FAS 148 amends the disclosure requirements of FAS 123 and requires prominent disclosure in both annual and interim financial statements of the method of accounting for stock-based employee compensation and the effect of the method used on a company’s financial position and results of operations. The transition guidance and annual

31

disclosure requirements of FAS 148 are effective for fiscal years ending after December 15, 2002. We adopted the interim disclosure requirements of FAS 148 for financial statements in our fiscal quarter ended March 30, 2003. We intend to continue to account for our stock option plans and stock purchase plan under the provisions of APB 25 and FIN 44. Accordingly, the adoption of FAS 148 did not have a material impact on our financial position or results of operations.

     Consolidation of Variable Interest Entities: In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46), an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements”. FIN 46 establishes accounting guidance for consolidation of a variable interest entity (VIE), sometimes formerly referred to as a special purpose entity. In general, a VIE is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 applies to any business enterprise, both public and private, that has a controlling interest, contractual relationship, or other business relationship with a VIE. FIN 46 provides guidance for determining when an entity, the Primary Beneficiary, should consolidate another entity, a VIE, that functions to support the activities of the Primary Beneficiary. FIN 46 will require the consolidation of a VIE by a company if that company is subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the VIE’s residual returns or both.

     The effective date of the new rules under FIN 46 on our existing operating leases was immediate on any new leases entered into after January 31, 2003, which utilize VIEs or equivalent lease structures and otherwise effective the first quarter of fiscal 2004. FIN 46 is not anticipated to have a material impact on our financial position or results of operations because we have transferred certain of our operating lease agreements to a new lessor that does not qualify as a VIE (See Note 17 to the Consolidated Financial Statements included in Item 8 in this Form 10-K).

     Amendment of Statement 133 on Derivative Instruments and Hedging Activities: In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” (FAS 149). FAS 149 amends Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (FAS 133) for decisions made as part of the Derivatives Implementation Group (DIG) and changes financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. Specifically, FAS 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in FAS 133, (2) clarifies when a derivative contains a financing component that requires reporting as cash flows from financing activities in the statement of cash flows, and (3) amends the definition of an “underlying"(to include a variable such as the occurrence or nonoccurrence of a specified event) to correspond to the language in FIN 45. These changes will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that require separate accounting. FAS 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. However, the provisions of FAS 149 that codify the previous decisions made by the DIG are already effective and should continue to be applied in accordance with their prior respective effective dates. The adoption of FAS 149 is not anticipated to have a material impact on our financial position or results of operations.

     Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity: In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and

32

Equity”, (FAS 150). FAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. FAS 150 represents a significant change in practice in the accounting for a number of financial instruments including mandatorily redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. FAS 150 generally requires liability classification for two broad classes of financial instruments: (1) Instruments that represent, or indexed to, an obligation to buy back the issuer’s shares, regardless of whether the instrument is settled on a net-cash or gross physical basis, (2) Obligations that can be settled in shares but meet one of the following conditions: (a) derive their value predominately from some other underlying, or (b) have a fixed value, or have a value to the counterparty that moves in the opposite direction as the issuer’s shares. Many of the instruments within the scope of FAS 150 were previously classified by the issuer as equity or temporary equity. FAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective in the first quarter of fiscal 2004. The adoption of FAS 150 is not anticipated to have a material impact on our financial position or results of operations.

Off -Balance Sheet Arrangements and Contractual Obligations

     We have certain obligations, some of which are recorded on our balance sheet and some which are not, to make future payments under various contracts such as debt agreements, lease agreements, consignment materials and outsourcing agreements. In addition, our off-balance sheet arrangements include contractual relationships for which we have an obligation under certain guarantee contracts. Our contractual cash obligations and commitments relating to these agreements, and our guarantees are included in the following table:

	Debt and Other
	Long-term		Operating		Purchase
	Liabilities		Leases		Obligations
			(in thousands)
Fiscal years ended:
Through June 27, 2004	$	5,011	$	15,349	$	35,760
2005 through 2007		332,144		28,626		40,771
2008 through 2010		65		101,856		10,419
Thereafter		—		309		—
Total	$	337,220	$	146,140	$	86,950

Debt and Other Long-Term Liabilities

     Refer to “Liquidity and Capital Resources” included in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information concerning our debt and other long-term liabilities.

Operating Leases

     We lease most of our administrative, R&D and operating facilities, regional sales/services offices and certain equipment under non-cancelable operating leases, which expire at various dates through 2021. Refer to Note 17 of our Consolidated Financial Statements, included in Item 8 in this Form 10-K, for further information concerning our operating leases.

     In March 2003, a lease agreement (the Agreement) relating to two properties (land and buildings) at our Fremont, California campus was transferred to a new lessor and amended and restated. The Agreement replaces the former lease that was due to expire in March 2003. As

33

part of the Agreement, we have the option to purchase the buildings at any time for approximately $54.4 million. In addition, we are required to guarantee the lessor a residual value on the properties of up to $48.4 million at the end of the lease term in fiscal 2008 (in the case that the lease is not renewed, we do not exercise our purchase option, and the lessor sells the property and the sale price is less than the lessor’s cost). We maintain cash collateral of $54.4 million as of June 29, 2003 in separate specified interest-bearing accounts. The lessor is a substantive independent leasing company that does not have the characteristics of a VIE as defined by FIN 46, and, therefore, we do not consolidate its operations.

     In June 2003, two lease agreements relating to four properties (land and buildings) at our Fremont, California campus were transferred to a new lessor and amended and restated (the Lease Agreement). In connection with this transaction, the leases were combined and transferred from the existing lessors to a new lessor, under a single lease structure. As part of the Lease Agreement, we have the option to purchase the buildings at any time for approximately $58.0 million. In addition, the Lease Agreement requires that we guarantee the lessor a residual value on the properties of up to $50.3 million at the end of the lease term in fiscal 2008 (in the case that the lease is not renewed, we do not exercise our purchase option, and the lessor sells the property and the sale price is less than the lessor’s cost). Additionally, as part of the Lease Agreement, we maintain cash collateral of approximately $58.0 million in separate specified interest bearing accounts. The lessor is a substantive independent leasing company that does not have the characteristics of a VIE as defined by FIN 46, and, therefore, we do not consolidate its operations.

Purchase Obligations

     During the second half of fiscal 2002, we began to enter into agreements with third parties to outsource certain elements of our manufacturing, warehousing, logistics, facilities maintenance, and information technology functions. During fiscal 2003, we continued to enter into agreements to outsource certain elements of our transactional, general and administrative functions. We believe that these outsourced services will provide us with more flexibility to scale our operations in a more timely manner to respond to the cyclical nature of our business. In addition to minimum spending commitments, certain of these agreements provide for potential cancellation charges including the potential assumption of leases, assets and employees. Refer to Note 17 of our Consolidated Financial Statements, included in Item 8 in this Form for additional information.

     We have certain guaranteed purchase agreements in place that contractually obligate us to purchase a minimum amount of materials related to the manufacturing of our products. At June 29, 2003, our outstanding purchase obligation for these agreements was approximately $10.5 million.

     Consignment inventories, which are owned by vendors but located in our discrete storage locations and warehouses, are not reported as inventory until title is transferred to us, or our purchase obligation is determined. At June 29, 2003, vendor owned inventories held at Lam and not reported as inventory were approximately $6.4 million.

Guarantees

     The transferred lease agreements relating to various properties at our Fremont, California campus and discussed above under “Operating Leases” require us to guarantee residual values of the leased properties to the lessors at the end of the lease terms of up to $98.7 million. The terms of these guarantees, five years, are equal to the remaining terms of the related lease agreements. Under the accounting provisions of FIN 45, we recognized a liability of approximately $1.0 million for the related residual value guarantees under these leases. This liability, determined by computing the present value of estimated probability weighted cash flows to be paid by us over

34

the term of the guarantees, was recorded as prepaid rent, with the offset recorded as a liability, and the amount is being amortized to rent expense (for the prepaid rent) and to income (for the liability) on a ratable basis over the five-year period of the leases. Refer to Note 18 of our Consolidated Financial Statements, included in Item 8 in this Form 10-K, for further information concerning our guaranteed residual values.

     We have issued certain indemnifications to our lessors under certain of our operating lease agreements, such as, indemnification for certain environmental matters. We have entered into certain insurance contracts to minimize our exposure related to such indemnifications. As of June 29, 2003, we have not recorded any liability on our financial statements in connection with these indemnifications, as we do not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     We have agreements with two financial institutions where our U.S. operating company guarantees payment of our Japanese subsidiary’s overdraft protection obligation. The maximum potential amount of future payments that we could be required to make under these agreements at June 29, 2003, is approximately $5.2 million, the amount available under the overdraft protection agreement. As of June 29, 2003, our Japanese subsidiary did not owe any amounts under this agreement. We have not recorded any liability on our financial statements in connection with these guarantees, as we do not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     We have an agreement with a financial institution to sell certain U.S. Dollar-denominated receivables generated from the sale of our systems, subject to recourse provisions. We insure these sold receivables for approximately 90% of their value and guarantee payment of the remaining uninsured receivable value in the event that the payment obligation is not satisfied. Based on historical payment patterns, we have experienced negligible default on payment obligations and therefore, believe the risk of loss from default is minimal. The terms of these guarantees are from 90 days past the due date of the receivable, until collected. At June 29, 2003, the maximum potential amount of future payments we could be required to make under this agreement is approximately $2.8 million. As of June 29, 2003, we have not recorded any liability on our financial statements in connection with these guarantees, as we do not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     Generally, we indemnify our customers, under pre-determined conditions and limitations, for infringement of third-party intellectual property rights by our products or services. We seek to limit our liability for such indemnity to an amount not to exceed the sales prices of the products or services. We do not believe, based on information available, that it is probable that any material amounts will be paid under these guarantees.

     See Note 18 of our Consolidated Financial Statements, included in Item 8 in this Form 10K, for discussion relating to our product warranty reserves.

Liquidity and Capital Resources

     As of June 29, 2003, we had $625.9 million in cash, cash equivalents, short-term investments, and restricted cash compared with $945.2 million at June 30, 2002.

     Net cash provided by operating activities was $69.2 million in fiscal 2003, which consists of a net loss for the year of $7.7 million, adjusted for non-cash charges of $70.3 million and sources of working capital of $6.6 million. Non-cash charges include items such as depreciation and amortization, restructuring charges, deferred income taxes, and the adjustment for the loss on equity derivative contracts in our stock.

35

     Significant changes in current assets and liabilities include a $23.7 million improvement in accounts receivable resulting from continued improvement in accounts receivable turnover. Additionally, our outsourcing strategy and asset management efforts contributed to reduction of inventory levels of approximately $63.5 million. Trade payables declined by $24.3 million due to reduced spending resulting from our cost containment activities and lower inventory purchases. Accrued liabilities declined by $34.9 million due in part to tax payments and lower interest payable resulting from the redemption of our 5% Convertible Subordinated Notes. Deferred profits for shipments not yet recognized as revenue fell $18.4 million, due to lower rates of shipments and the reduced cycle time in customer acceptances.

     Net cash provided by investing activities during fiscal 2003 was $296.4 million. We sold $355.5 million, net, of short-term investments that were primarily used to repay our 5% Convertible Subordinated Notes (5% Notes) in September 2002. Net capital expenditures were $12.3 million, and our restricted cash increased $47.5 million primarily due to increased cash collateralization requirements under certain of our operating lease agreements.

     Net property and equipment was $48.8 million at June 29, 2003, compared to $67.5 million at June 30, 2002. The decrease in property and equipment in fiscal 2003 compared to fiscal 2002 is primarily due to minimized expenditures for capital projects during fiscal 2003 and write-offs of leasehold improvements and certain fixed assets related to buildings that we have vacated due to restructuring activities.

     Net cash used by financing activities in fiscal 2003 was $373.3 million and consisted primarily of the repayment of our 5% Notes in the amount of $309.8 million and repayment of our Japanese subsidiary’s long-term loan for approximately $51.1 million. In connection with the settlement of our equity derivative contract, we repurchased approximately 3.5 million shares of our common stock for $39.1 million. We also reissued $12.5 million from treasury stock through our employee stock purchase program. Net proceeds from the issuance of our common stock from stock option exercises totaled $14.7 million.

     During fiscal 2003, we settled our outstanding equity derivative contracts that were recorded in other short-term assets. Based on the market price of our common stock at the contract settlement date (August 23, 2002), the fair value of the equity derivative contracts decreased by $16.4 million to $8.4 million from their June 30, 2002 fair value of $24.8 million.

     Currently outstanding debt obligations primarily consist of our 4% Notes.

Details of the 4% Notes are:

Offering Date	May 2001
Offering Amount	$300.0 million
Maturity Date	June 1, 2006
Offering Expenses	$8.5 million incurred at the time of offering, ratably amortized to other expense over the term of the 4% Notes. Remaining unamortized balance of $5.0 million and $6.7 million at June 29, 2003 and June 30, 2002, respectively.
Interest Rate terms	4% payable on June 1 and December 1 of each year, commencing December 1, 2001
Conversion Rights	Convertible into Lam Common Stock at any time prior to close of business on the maturity date, unless previously redeemed, at a

36

	conversion price of $44.93 per share subject to anti-dilution adjustments
Redemption Terms	Redeemable at Lam’s option, beginning June 5, 2004 with at least 20 days and no more than 60 days notice, at redemption prices starting at 101.0% and at diminishing prices thereafter, plus accrued interest
Security	4% Notes are unsecured and subordinated in right of payment in full to all existing and future senior indebtedness of Lam.

     During the third quarter of fiscal 2002, we entered into an interest rate swap agreement (the swap) with a notional amount of $300 million in order to hedge changes in the fair value of our 4% Notes, attributable to changes in the benchmark interest rate. The transaction swapped 4% fixed interest payments for variable interest payments based on the London Interbank Offered Rate (LIBOR), resulting in interest expense savings of approximately $10.7 million for the fiscal year ended June 29, 2003. Should 6-month LIBOR interest rates rise above approximately 5% per annum in future periods, we would incur incremental interest expense. Under the terms of the transaction, we must provide collateral to match any unfavorable mark-to-market exposure (fair value) on the swap. The amount of collateral required totals a minimum of $6.0 million plus an amount equal to the unfavorable mark-to-market exposure (fair value) on the swap. Therefore, the amount of cash collateral we will have to post in the future will fluctuate from quarter to quarter commensurate with the mark-to-market exposure (fair value) on the swap instrument. Generally, the required collateral will rise as interest rates rise. At the end of fiscal 2003, we have posted $6.0 million of collateral under this swap agreement which is included in restricted cash on our balance sheet (classified as a long-term asset).

     We have designated this swap as a fair value hedge under the provisions of FAS 133. This discussion should be read in conjunction with Note 5 of our Consolidated Financial Statements, included in Item 8 of this Form 10 K.

     During the second quarter of fiscal 2002, we signed a final settlement agreement with Varian Semiconductor Equipment Associates, Inc. (Varian) in connection with the patent infringement litigation filed by Varian in October 1993. Under the terms of the settlement agreement, Varian granted us a nonexclusive license to the patents involved in the litigation. We agreed to pay Varian $20.0 million in cash ($5.0 million in December 2001 and the remainder to be paid in equal quarterly installments of $1.25 million over a three-year period). These payments began in the third quarter of fiscal 2002. As of June 29, 2003, a total amount of $12.5 million had been paid to Varian, which included the initial $5.0 million in December 2001 and six additional quarterly installment payments of $1.25 million each, totaling $7.5 million as of June 29, 2003. The total obligation remaining as of June 29, 2003 is $7.5 million, which will be paid through December 2004.

     Given the cyclical nature of the semiconductor equipment industry, we believe that maintaining sufficient liquidity reserves is important to ensure our ability to sustain levels of investment in R&D and capital infrastructure through ensuing business cycles. Based upon our current business outlook, our levels of cash, cash equivalents, and short-term investments at June 29, 2003, combined with cash conservation activities, are expected to be sufficient to support our presently anticipated levels of operations, investments, and capital expenditures, through at least the next 12 months.

     In the longer term, liquidity will depend to a great extent on our future revenues and our ability to appropriately size our business based on demand for our products.

37

Risk Factors

Our Quarterly Revenues and Operating Results are Unpredictable

     Our revenues and operating results may fluctuate significantly from quarter to quarter due to a number of factors, not all of which are in our control. We manage our expense levels based in part on our expectations of future revenues. If revenue levels in a particular quarter do not meet our expectations, our operating results may be adversely affected. Because our operating expenses are based in part on anticipated future revenues, and a certain amount of those expenses are relatively fixed, a change in the timing of recognition of revenue and/or the level of gross profit from a single transaction can unfavorably affect operating results in a particular quarter.

     Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to:

• economic conditions in the electronics and semiconductor industry generally and the equipment industry specifically;

• the extent that customers use our products and services in their business;

• timing of customer acceptances of equipment;

• the size and timing of orders from customers;

• customer cancellations or delays in our shipments, installations, and/or acceptances;

• changes in average selling prices and product mix;

• our ability in a timely manner to develop, introduce and market new, enhanced and competitive products;

• our competitors’ introduction of new products;

• legal or technical challenges to our products and technology;

• changes in import/export regulations;

• transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as Acts of God, wars, terrorist activities and natural disasters;

• legislative, tax, or regulatory changes or changes in their interpretation;

• procurement shortages;

• manufacturing difficulties;

• the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations;

• new or modified accounting regulations;

• exchange rate fluctuations; and

• exposure on interest rate swap agreements.

38

     Further, because a significant amount of our R&D and administrative operations and capacity is located at our Fremont, California, facility, natural, physical, logistical or other events or disruptions affecting this facility (including labor disruptions, earthquakes and power failures) could adversely impact our financial performance.

We Derive Our Revenues Primarily from a Relatively Small Number of High-Priced Systems

     System sales constitute a significant portion of our total revenue. Our systems can range in price from approximately $400,000 to $4 million per unit, and our revenues in any given quarter are dependent upon the acceptance of a rather limited number of such systems. As a result, the inability to declare revenue on even a few systems can cause a significant adverse impact on our revenues for that quarter.

Variations in the Amount of Time it Takes for Our Customers to Accept Our Systems May Cause Fluctuation in Our Operating Results

     We generally recognize revenue for new system sales on the date of customer acceptance or the date the contractual customer acceptance provisions lapse. As a result, the fiscal period in which we are able to recognize new systems revenues is subject to the length of time that our customers require to evaluate the performance of our equipment after shipment and installation, which could cause our quarterly operating results to fluctuate.

The Semiconductor Equipment Industry Is Volatile and Reduced Product Demand Has a Negative Impact on Shipments

     Our business depends on the capital equipment expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits and products using integrated circuits. The semiconductor industry is cyclical in nature and historically experiences periodic downturns. During calendar year 2001 and the first half of calendar year 2002, semiconductor manufacturers canceled or delayed delivery of orders as a result of overcapacity. The resulting demand contraction had a negative impact on the level of system shipments during fiscal 2002 compared to fiscal 2001. The semiconductor industry is experiencing a continued and prolonged downturn, and as of the end of fiscal 2003, our customers continue to remain cautious about their levels of capital expenditures.

     Fluctuating levels of investment by the semiconductor manufacturers could continue to materially affect our aggregate shipments, revenues and operating results. We will attempt to respond to these fluctuations with cost management programs aimed at aligning our expenditures with anticipated revenue streams, which sometimes result in restructuring charges. Even during periods of reduced revenues, we must continue to invest in research and development and maintain extensive ongoing worldwide customer service and support capabilities to remain competitive, which may temporarily harm our financial results.

We Depend on New Products and Processes for Our Success. Consequently, We are Subject to Risks Associated with Rapid Technological Change

     Rapid technological changes in semiconductor manufacturing processes subject us to increased pressure to develop technological advances enabling such processes. We believe that our future success depends in part upon our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products have reliability or quality problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance of and payment for new products, and additional service and warranty expenses. We may be unable to develop and have new products manufactured successfully, or new products that we introduce may fail in the marketplace. Our

39

failure to complete commercialization of these new products in a timely manner could result in unanticipated costs and inventory obsolescence, which would adversely affect our financial results.

     In order to develop new products and processes, we expect to continue to make significant investments in R&D and to pursue joint development relationships with customers or other members of the industry. We must manage product transitions and joint development relationships successfully, as introduction of new products could adversely affect our sales of existing products. Future technologies, processes or product developments may render our current product offerings obsolete, leaving us with non-competitive products, or obsolete inventory, or both.

We Are Subject to Risks Relating to Product Concentration and Lack of Product Revenue Diversification

     We derive a substantial percentage of our revenues from a limited number of products, and we expect these products to continue to account for a large percentage of our revenues in the near term. Continued market acceptance of our primary products is, therefore, critical to our future success. Our business, operating results, financial condition, and cash flows could therefore be adversely affected by:

• a decline in demand for even a limited number of our products;

• a failure to achieve continued market acceptance of our key products;

• an improved version of products being offered by a competitor in the market we participate in;

• technological change that we are unable to address with our products; and

• a failure to release new enhanced versions of our products on a timely basis.

We Have a Limited Number of Key Customers

     Sales to a limited number of large customers constitute a significant portion of our overall revenue. As a result, the actions of even one customer may subject us to revenue swings that are difficult to predict or prepare for. Similarly, significant portions of our credit risk may, at any given time, be concentrated among a limited number of customers.

We Are Dependent Upon a Limited Number of Key Suppliers

     We obtain certain components and sub-assemblies included in our products from a single supplier or a limited group of suppliers. We have established long-term contracts with many of these suppliers. These long-term contracts can take a variety of forms. We may renew these contracts periodically. In some cases, these component suppliers sold us products during at least the last four years, and we expect that we will continue to renew these contracts in the future or that we will otherwise replace them with competent alternative source suppliers. However, several of our outsourced assembly suppliers are new providers to us so that our experience with them and their performance is limited. Where practical, our intent is to establish alternative sources to mitigate the risk that the failure of any single supplier will adversely affect our business. Nevertheless, a prolonged inability to obtain certain components could impair our ability to ship products, lower our revenues and thus adversely affect our operating results and result in damage to our customer relationships.

Our Outsource Providers May Fail to Perform as We Expect

40

     We are expanding the roles that outsource providers play in our business. We anticipate that these outsource providers will play key roles in our manufacturing operations and in many of our transactional and administrative functions. Although we aim at selecting reputable providers and secure their performance on terms documented in written contracts, it is possible that one or more of these providers could fail to perform as we expect and such failure could have an adverse impact on our business. In addition, the expanded role of outsource providers has and will require us to implement changes to our existing operations and to adopt new procedures to deal with and manage the performance of these outsource providers. Any delay or failure in the implementation of our operational changes and new procedures could adversely affect our customer relationships and/or have a negative effect on our operating results.

Once a Semiconductor Manufacturer Commits to Purchase a Competitor’s Semiconductor Manufacturing Equipment, the Manufacturer Typically Continues to Purchase That Competitor’s Equipment, Making It More Difficult for Us to Sell our Equipment to That Customer

     Semiconductor manufacturers must make a substantial investment to qualify and integrate wafer processing equipment into a semiconductor production line. We believe that once a semiconductor manufacturer selects a particular supplier’s processing equipment, the manufacturer generally relies upon that equipment for that specific production line application. Accordingly, we expect it to be more difficult to sell to a given customer if that customer initially selects a competitor’s equipment.

We Are Subject to Risks Associated with Our Competitors’ Introduction of New Products and We May Lack the Financial Resources or Technological Capabilities of Certain of Our Competitors Needed to Capture Increased Market Share

     We expect to face significant competition from multiple current and future competitors. We believe that other companies are developing systems and products that are competitive to ours and are planning to introduce new products, which may affect our ability to sell our existing products. We face a greater risk if our competitors enter into strategic relationships with leading semiconductor manufacturers covering products similar to those we sell or may develop, as this could adversely affect our ability to sell products to those manufacturers.

     We believe that to remain competitive we will require significant financial resources to offer a broad range of products, to maintain customer service and support centers worldwide, and to invest in product and process R&D. Certain of our competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing, and customer service and support resources than we do and therefore have the potential to increasingly dominate the semiconductor equipment industry. These competitors may deeply discount or give away products similar to those that we sell, challenging or even exceeding our ability to make similar accommodations and threatening our ability to sell those products. For these reasons, we may fail to continue to compete successfully worldwide.

     In addition, our competitors may provide innovative technology that may have performance advantages over systems we currently, or expect to, offer. They may be able to develop products comparable or superior to those we offer or may adapt more quickly to new technologies or evolving customer requirements. In particular, while we currently are developing additional product enhancements that we believe will address future customer requirements, we may fail in a timely manner to complete the development or introduction of these additional product enhancements successfully, or these product enhancements may not achieve market acceptance or be competitive. Accordingly, we may be unable to continue to compete in our markets, competition may intensify, or future competition may have a material adverse effect on our revenues, operating results, financial condition, and/or cash flows.

41

Our Future Success Depends on International Sales

     Non-U.S. sales accounted for approximately 72% of our total revenue in fiscal 2003, 71% in fiscal 2002, and 70% in fiscal 2001. We expect that international sales will continue to account for a significant portion of our total revenue in future years. International sales are subject to risks, including, but not limited to:

• foreign exchange risks;

• changing import/export requirements;

• foreign trade disputes; and

• economic, political, banking and currency problems in the relevant region.

     We currently enter into foreign currency forward contracts to minimize the short-term impact of exchange rate fluctuations on Japanese Yen-denominated assets and will continue to enter into hedging transactions for the purposes outlined in the foreseeable future.

A Failure to Comply with Environmental Regulations May Adversely Affect Our Operating Results

     We are subject to a variety of governmental regulations related to the discharge or disposal of toxic, volatile or otherwise hazardous chemicals. We believe that we are in general compliance with these regulations and that we have obtained (or will obtain or are otherwise addressing) all necessary environmental permits to conduct our business. These permits generally relate to the disposal of hazardous wastes. Nevertheless, the failure to comply with present or future regulations could result in fines being imposed on us, suspension of production, cessation of our operations or reduction in our customers’ acceptance of our products. These regulations could require us to alter our current operations, to acquire significant equipment or to incur substantial other expenses to comply with environmental regulations. Our failure to control the use, sale, transport or disposal of hazardous substances could subject us to future liabilities.

If We Are Unable to Adjust the Scale of Our Business in Response to Rapid Changes in Demand in the Semiconductor Equipment Industry, Our Operating Results and Our Ability to Compete Successfully May Be Impaired

     The business cycle in the semiconductor equipment industry is characterized by frequent periods of rapid change in demand that challenge our management to adjust spending on operating activities. During periods of rapid growth or decline in demand for our products and services, we face significant challenges in maintaining adequate financial and business controls, management processes, information systems and procedures on a timely basis and training, managing, and appropriately sizing our work force. Our success will depend, to a significant extent, on the ability of our executive officers and other members of our senior management to identify and respond to these challenges effectively. If we do not adequately meet these challenges, our gross margins and earnings may be impaired during periods of demand decline, and we may lack the infrastructure and resources to scale up our business to meet customer expectations and compete successfully during periods of demand growth.

If We Choose to Acquire or Dispose of Product Lines and Technologies, We May Encounter Unforeseen Costs and Difficulties That Could Impair Our Financial Performance

     An important element of our management strategy is to review acquisition prospects that would complement our existing products, augment our market coverage and distribution ability, or enhance our technological capabilities. As a result, we may make acquisitions of

42

complementary companies, products or technologies, or we may reduce or dispose of certain product lines or technologies, which no longer fit our long-term strategies. Managing an acquired business, disposing of product technologies or reducing personnel entails numerous operational and financial risks, including difficulties in assimilating acquired operations and new personnel or separating existing business or product groups, diversion of management’s attention away from other business concerns, amortization of acquired intangible assets and potential loss of key employees or customers of acquired or disposed operations among others. There can be no assurance that we will be able to achieve and manage successfully any such integration of potential acquisitions, disposition of product lines or technologies, or reduction in personnel or that our management, personnel, or systems will be adequate to support continued operations. Any such inabilities or inadequacies could have a material adverse effect on our business, operating results, financial condition, and cash flows.

     In addition, any acquisitions could result in changes such as potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, the amortization of related intangible assets, and goodwill impairment charges, any of which could materially adversely affect our business, financial condition, and results of operations and/or the price of our Common Stock.

The Market for Our Common Stock is Extremely Volatile, Which May Affect Our Ability to Raise Capital or Make Acquisitions

     The market price for our Common Stock is extremely volatile and has fluctuated significantly over the past years. The trading price of our Common Stock could continue to be highly volatile and fluctuate widely in response to factors, including but not limited to the following:

• general market, semiconductor, or semiconductor equipment industry conditions;

• global economic fluctuations;

• variations in our quarterly operating results;

• variations in our revenues or earnings from levels that securities analysts forecast;

• announcements of restructurings, technological innovations, reductions in force, departure of key employees, consolidations of operations, or introduction of new products;

• government regulations;

• developments in, or claims relating to, patent or other proprietary rights;

• disruptions with key customers or suppliers; or

• political, economic, or environmental events occurring globally or in any of our key sales regions.

     In addition, the stock market experiences significant price and volume fluctuations. Historically, we have witnessed significant volatility in the price of our Common Stock due in part to the actual or anticipated movement in interest rates and the price of and markets for semiconductors. These broad market and industry factors have and may again adversely affect the price of our Common Stock, regardless of our actual operating performance. In the past, following volatile periods in the price of stock, many companies became the object of securities class action litigation. If we are sued in a securities class action, we could incur substantial costs, and it could divert a management’s attention and resources and have an unfavorable impact on the

43

price for our Common Stock.

We Rely Upon Certain Critical Information Systems for the Operation of our Business

     We maintain and rely upon certain critical Information Systems for the effective operation of our business. These Information Systems include telecommunications, the internet, our corporate intranet, various computer hardware and software applications, network communications, and email. These Information Systems may be owned by us or by our outsource providers or even third parties such as vendors and contractors and may be maintained by us or by such providers and third parties. These Information Systems are subject to attacks, failures, and access denials from a number of potential sources including viruses, destructive or inadequate code, power failures, and physical damage to computers, hard drives, communication lines, and networking equipment. We have security procedures, such as virus protection software and emergency recovery processes, that are believed to be adequate to cover the outlined risks; however, our inability to use or access these Information Systems at critical points in time could unfavorably impact the timely and efficient operation of our business.

Risk Associated with Our Interest Rate Swap Agreement

     We aim to limit the impact of interest rate exposure associated with our interest rate sensitive investments and debt obligations. To minimize the effect of the interest rate exposure associated with our 4% convertible subordinated notes, we have entered into an interest rate swap agreement with a notional amount of $300 million. We entered into the swap in order to hedge changes in the fair value of our 4% Notes, attributable to changes in the benchmark interest rate, by swapping 4% fixed interest payments for variable interest payments based on the LIBOR based interest rate.

     If 6-month LIBOR based interest rates remain at current levels or decrease we expect the swap will result in interest savings. However, a rise in 6-month LIBOR based interest rates above approximately 5% per annum in future periods would result in incremental levels of interest expense.

The Potential Anti-Takeover Effects of Our Bylaws Provisions and the Rights Plan We Have in Place May Affect Our Stock Price and Inhibit a Change of Control Desired by Some of Our Stockholders

     In 1997, we adopted a Rights Plan (the Rights Plan) in which rights were distributed as a dividend at the rate of one right for each share of our Common Stock, held by stockholders of record as of the close of business on January 31, 1997, and thereafter. In connection with the adoption of the Rights Plan, our Board of Directors also adopted a number of amendments to our Bylaws, including amendments requiring advance notice of stockholder nominations of directors and stockholder proposals.

     Our Rights Plan may have certain anti-takeover effects. Our Rights Plan will cause substantial dilution to a person or group that attempts to acquire Lam in certain circumstances. Accordingly, the existence of the Rights Plan and the issuance of the related rights may deter certain acquirers from making takeover proposals or tender offers. The Rights Plan, however, is not intended to prevent a takeover. Rather it is designed to enhance the ability of our Board of Directors to negotiate with a potential acquirer on behalf of all of our stockholders.

     In addition, our Certificate of Incorporation authorizes issuance of 5,000,000 shares of undesignated Preferred Stock. Our Board of Directors, without further stockholder approval, may issue this Preferred Stock on such terms as the Board of Directors may determine, which also could have the effect of delaying or preventing a change in control of Lam. The issuance of Preferred Stock could also adversely affect the voting power of the holders of our Common Stock, including causing the loss of voting control. Moreover, Section 203 of the Delaware General Corporation Law restricts certain business combinations with “interested stockholders”, as defined by that statute.

Intellectual Property and Other Claims Against Us Can Be Costly and Could Result in the Loss of Significant Rights Which Are Necessary to Our Continued Business and Profitability

     Third parties may assert infringement, unfair competition or other claims against us. From time to time, other parties send us notices alleging that our products infringe their patent or other intellectual property rights. In addition, our Bylaws and indemnity agreements with certain officers, directors and key employees provide that we will indemnify officers and directors against losses that they may incur in legal proceedings resulting from their service to Lam. In such cases, it is our policy either to defend the claims or to negotiate licenses on commercially reasonable terms. However, we may be unable in the future to negotiate necessary licenses on commercially reasonable terms, or at all, and any litigation resulting from these claims by other

44

parties may materially adversely affect our business and financial results.

We May Fail to Protect Our Proprietary Technology Rights, Which Would Affect Our Business

     Our success depends in part on our proprietary technology. While we attempt to protect our proprietary technology through patents, copyrights and trade secret protection, we believe that our success also depends on increasing our technological expertise, continuing our development of new systems, increasing market penetration and growth of our installed base, and providing comprehensive support and service to our customers. However, we may be unable to protect our technology in all instances, or our competitors may develop similar or more competitive technology independently. We currently hold a number of United States and foreign patents and pending patent applications. However, other parties may challenge or attempt to invalidate or circumvent any patents the United States or foreign governments issue to us or these governments may fail to issue pending applications. In addition, the rights granted or anticipated under any of these patents or pending patent applications may be narrower than we expect or, in fact provide no competitive advantages.

     Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and long-term debt obligations. We maintain a conservative investment policy, which focuses on the safety and preservation of our invested funds by limiting default risk, market risk, and reinvestment risk. The table below presents principal amounts and related weighted-average interest rates by year of maturity for our investment portfolio, long-term assets and long-term debt obligations at June 29, 2003 and June 30, 2002:

45

		June 29,																						June 30,
		2003																						2002
																	There-					Fair
		2004			2005			2006			2007			2008			After		Total			Value		Total
		($ in thousands)
Cash equivalents
	Fixed rate	$	119,805		$	—		$	—		$	—		$	—		$	—	$	119,805		$	119,805	$	145,700
Average rate			1.14	%		—			—			—			—			—	$	1.14	%		—		1.87	%
Short-term investments
	Fixed rate	$	90,304		$	104,852			21,773		$	11,562		$	4,227		$	—	$	232,718		$	233,884	$	499,225
Average rate			2.76	%		1.81	%		1.75	%		2.15	%		2.16	%		—	$	2.20	%		—		4.04	%
	Auction rate preferreds
	Variable rate	$	98,919		$	7,267		$	—		$	—		$	—		$	—	$	106,186		$	106,186	$	202,549
Average rate			1.49	%		1.32	%		—			—			—			—		1.48	%		—		2.13	%
Restricted cash
	Fixed rate	$	118,468		$	—		$	—		$	—		$	—		$	—	$	118,468		$	118,468	$	70,983
Average rate			1.06	%		—			—			—			—			—		1.06	%		—		2.52	%
Total investment
	Securities	$	427,496		$	112,119		$	21,773		$	11,562		$	4,227		$	—	$	577,177		$	578,343	$	918,457
Average rate			1.54	%		1.78	%		1.75	%		2.15	%		2.16	%		—		1.61	%		—		3.15	%
Long-term debt
	Fixed rate	$	—		$	—		$	300,000		$	—		$	—		$	—	$	300,000		$	292,841	$	610,260
Average rate			—			—			4.00	%		—			—			—		4.00	%		—		4.51	%
	Variable rate	$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	48,535
Average rate			—			—			—			—			—			—		—			—		2.61	%
Total long-term debt		$	—		$	—		$	300,000		$	—		$	—		$	—	$	300,000		$	292,841	$	658,795
Average rate			—			—			4.00	%		—			—			—		4.00	%		—		4.37	%

     We mitigate default risk by investing in high credit quality securities and by constantly positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to achieve portfolio liquidity and maintain a prudent amount of diversification.

     We have no foreign exchange cash flow exposure related to our fixed rate $300.0 million convertible subordinated notes.

     We conduct business on a global basis in several major international currencies. As such, we are potentially exposed to adverse as well as beneficial movements in foreign currency exchange rates. For this reason, we enter into foreign currency forward contracts to minimize the impact of exchange rate fluctuations on the value of our Japanese Yen-denominated assets. The changes in the fair value of these contracts are recorded in other income and expense. In addition, we periodically hedge anticipated cash flow transactions with foreign currency forward contracts. We defer the gains and losses on these contracts and recognize them in income during the same period as the hedged transaction is recognized in income.

     On June 29, 2003, the notional amount of outstanding Japanese Yen forward contracts that are designated as cash flow hedges was $2.2 million. The unrealized loss on the contracts on June 29, 2003, was $0.1 million. A 15% appreciation of the Japanese Yen would result in an unrealized loss of $0.4 million, while depreciation in the exchange rate of the Japanese Yen of approximately 15% would result in an unrealized gain of $0.3 million.

     On June 29, 2003, the notional amount of outstanding Japanese Yen forward contracts that are designated as balance sheet hedges was $16.4 million. The unrealized gain on the contracts on June 29, 2003, was $0.3 million. A 15% appreciation of the Japanese Yen would result in an unrealized loss of $2.9 million. Depreciation in the exchange rate of the Japanese Yen of

46

approximately 15% would result in an unrealized gain of $2.1 million.

     During the third quarter of fiscal 2002, we entered into an interest rate swap agreement with a notional amount of $300.0 million in order to hedge changes in the fair value of the Company’s 4% Notes, attributable to changes in the benchmark interest rate, by swapping 4% fixed interest payments for variable interest rates payments based on LIBOR. At June 29, 2003, the fair value of the swap, $19.2 million, was recorded in other long-term assets. An increase in rates by 1% would result in a decline in the fair value of the swap of $7.7 million. A decrease in rates by 1% would result in an increase in the fair value of the swap of $9.0 million.

Item 8. Consolidated Financial Statements and Supplementary Data

     The Consolidated Financial Statements required by this Item are set forth on the pages indicated at Item 14(a). The unaudited quarterly results of our operations for our two most recent fiscal years are incorporated herein by reference under Item 6, “Selected Consolidated Financial Data”.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Not applicable.

PART III

     We have omitted from this Report certain information required by Part III because we, as the Registrant, will file a definitive proxy statement with the Securities and Exchange Commission (SEC) within 120 days after the end of our fiscal year, pursuant to Regulation 14A, as promulgated by the SEC, for our Annual Meeting of Stockholders to be held November 6, 2003 (the Proxy Statement), and certain information included therein is incorporated herein by reference. (However, the Report of the Audit Committee, Compensation Committee and the Comparative Stock Performance graph of the Registrant’s Proxy Statement are expressly not incorporated by reference herein.) For information regarding our executive officers, see Part I of this Form 10-K under the caption “Executive Officers of the Company”, which information is incorporated herein by this reference.

Item 10. Directors and Executive Officers of the Registrant

     The information concerning our directors required by this Item is incorporated by reference to our Proxy Statement under the heading “Proposal No. 1-Election of Directors.”

Item 11. Executive Compensation

     The information required by this Item is incorporated by reference to our Proxy Statement under the heading “Executive Compensation and Other Information.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     The information required by this Item is incorporated by reference to our Proxy Statement under the headings “Proposal No. 1-Election of Directors”, “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans.”

47

Item 13. Certain Relationships and Related Transactions

     The information required by this Item is incorporated by reference to our Proxy Statement under the heading “Certain Relationships and Related Transactions”.

Item 14. Controls and Procedures

     As of the close of our fiscal year ended June 29, 2003, we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-14 and 13a-15. Based upon that evaluation, our Chairman and Chief Executive Officer along with our Chief Financial Officer concluded that our disclosure controls and procedures are reasonably effective in timely alerting them to material information relating to the Company (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

     We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis and to correct any material deficiencies that we may discover. Our goal is to ensure that our senior management has timely access to material information that could affect our business. While we believe the present design of our disclosure controls and procedures is reasonably effective to achieve our goal, future events affecting our business may cause us to modify our disclosure controls and procedures. The effectiveness of controls cannot be absolute because the cost to design and implement a control to identify errors or mitigate the risk of errors occurring should not outweigh the potential loss caused by the errors that would likely be detected by the control. Moreover, we believe that disclosure controls and procedures cannot be guaranteed to be 100% effective all of the time. Accordingly, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

48

PART IV

Item 15. Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K

     (a)  1. Index to Financial Statements

	Page
Consolidated Balance Sheets – June 29, 2003 and June 30, 2002		50
Consolidated Statements of Operations – Years Ended June 29, 2003, June 30, 2002, and June 24, 2001		51
Consolidated Statements of Cash Flows – Years Ended June 29, 2003, June 30, 2002, and June 24, 2001		52
Consolidated Statements of Stockholders’ Equity — Years Ended June 29, 2003, June 30, 2002, and June 24, 2001		53
Notes to Consolidated Financial Statements		54
Report of Ernst & Young LLP, Independent Auditors		90

     2.     Index to Financial Statement Schedules

	Page
Schedule II—Valuation and Qualifying Accounts		93

     Schedules, other than those listed above, have been omitted since they are not applicable/not required, or the information is included elsewhere herein.

     3.     See (c) of this Item 14, which is incorporated herein by reference.

     (b) Reports on Form 8-K

          The following reports on Form 8-K furnished information to the Securities and Exchange Commission during the fiscal fourth quarter ending June 29, 2003:

     On April 16, 2003, we furnished information on a Current Report on Form 8-K to the Securities and Exchange Commission reported under “Item 12. Results of Operations and Financial Condition”, that on April 16, 2003, Lam Research Corporation had issued a press release announcing its fiscal 2003 third quarter results.

     On April 23, 2003, we furnished information on a Current Report on Form 8-K to the Securities and Exchange Commission reported under “Item 12. Results of Operations and Financial Condition”, that had been disclosed at our April 16, 2003, conference call complementary to our April 16, 2003, financial press release for our fiscal 2003 third quarter.

     (c)  The list of Exhibits is set forth on pages 94 to 100 of this Form 10-K and are incorporated herein by this reference.

49

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

			June 29,			June 30,
			2003			2002
ASSETS
Cash and cash equivalents			$	167,343		$	172,431
Short-term investments				340,070			701,774
Accounts receivable, less allowance for doubtful accounts of $3,789 in 2003 and $4,995 in 2002				107,602			132,113
Inventories				112,016			180,799
Prepaid expenses and other assets				12,679			43,080
Deferred income taxes				133,066			125,227
		Total current assets		872,776			1,355,424
Property and equipment, net				48,771			67,496
Restricted cash				118,468			70,983
Deferred income taxes				87,032			86,231
Other assets				71,228			52,157
		Total assets	$	1,198,275		$	1,632,291
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable			$	35,518		$	59,806
Accrued expenses and other liabilities				131,144			159,012
Deferred profit				45,309			63,435
Current portion of long-term debt and other long-term liabilities				5,011			315,291
		Total current liabilities		216,982			597,544
Long-term debt and other long-term liabilities, less current portion				332,209			359,691
Commitments and contingencies
Stockholders’ equity:
	Preferred stock at par value of $0.001 per share; 5,000 shares authorized, none outstanding			—			—
Common stock at par value of $0.001 per share
	Authorized — 400,000 shares; issued and outstanding, 127,435 shares at June 29, 2003 and 127,978 shares at June 30, 2002			127			128
Additional paid-in capital				560,273			542,228
Deferred stock-based compensation				(2,769	)		—
Treasury stock, at cost; 2,712 and 478 shares in 2003 and 2002, respectively				(38,670	)		(9,100	)
Accumulated other comprehensive loss				(13,694	)		(15,240	)
Retained earnings				143,817			157,040
		Total stockholders’ equity		649,084			675,056
		Total liabilities and stockholders’ equity	$	1,198,275		$	1,632,291

See Notes to Consolidated Financial Statements.

50

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

					Year Ended
					June 29,			June 30,			June 24,
					2003			2002			2001
Total revenue					$	755,234		$	943,114		$	1,519,789
	Cost of goods sold					452,369			632,319			862,321
	Cost of goods sold — restructuring charges (recoveries)					(964	)		5,926			3,989
	Cost of goods sold — patent settlement					—			38,780			—
		Total cost of goods sold				451,405			677,025			866,310
		Gross margin				303,829			266,089			653,479
	Research and development					160,493			179,217			227,248
	Selling, general and administrative					132,820			161,860			218,919
	Restructuring charges, net					15,901			44,850			12,780
	Purchased technology for research and development					—			—			8,000
		Total operating expenses				309,214			385,927			466,947
		Operating income (loss)				(5,385	)		(119,838	)		186,532
Other income (expense):
	Interest income					15,804			31,703			31,950
	Interest expense					(6,096	)		(26,185	)		(19,980	)
	Loss on equity derivative contracts in Company stock (EITF 00-19)					(16,407	)		(8,236	)		—
	Other, net					(3,561	)		(5,439	)		3,132
						(10,260	)		(8,157	)		15,102
		Income (loss) before income taxes and cumulative effect adjustments				(15,645	)		(127,995	)		201,634
Income tax expense (benefit)						(7,906	)		(37,944	)		60,497
		Income (loss) before cumulative effect adjustments				(7,739	)		(90,051	)		141,137
Cumulative effect of EITF 00-19, no related tax						—			—			33,074
Cumulative effect of SAB 101, net of $81,441 related tax benefit						—			—			(122,105	)
		Net income (loss)			$	(7,739	)	$	(90,051	)	$	52,106
Net income (loss) per share:
	Basic:
	Income (loss) before cumulative effect of changes in accounting principles				$	(0.06	)	$	(0.71	)	$	1.14
	Cumulative effect of EITF 00-19					—			—		$	0.27
	Cumulative effect of SAB 101					—			—		$	(0.99	)
	Basic net income (loss) per share				$	(0.06	)	$	(0.71	)	$	0.42
	Diluted:
	Income (loss) before cumulative effect of changes in accounting principles				$	(0.06	)	$	(0.71	)	$	1.07
	Cumulative effect of EITF 00-19					—			—		$	0.25
	Cumulative effect of SAB 101					—			—		$	(0.92	)
	Diluted net income (loss) per share				$	(0.06	)	$	(0.71	)	$	0.39
Number of shares used in per share calculations:
	Basic					126,300			126,356			123,856
	Diluted					126,300			126,356			132,243
Pro forma amounts with the change in accounting principle related to SAB 101 applied retroactively (unaudited):
			Total revenue			—			—		$	1,519,789
			Net income			—			—		$	174,211
			Net income per share:
				Basic		—			—		$	1.41
				Diluted		—			—		$	1.32
Number of shares used in pro forma per share calculations:
	Basic					—			—			123,856
	Diluted					—			—			132,243

See Notes to Consolidated Financial Statements.

51

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

				Year Ended
				June 29,			June 30,			June 24,
				2003			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)				$	(7,739	)	$	(90,051	)	$	52,106
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Cumulative effect of change in accounting principle, EITF 00-19				—			—			(33,074	)
	Cumulative effect of change in accounting principle, SAB 101 net of tax				—			—			122,105
	Loss on equity derivative contracts in Company stock				16,407			8,236			—
	Depreciation and amortization				38,753			57,814			58,727
	Deferred income taxes				(8,640	)		(34,166	)		(7,027	)
	Restructuring charges, net				14,937			50,776			16,769
	Amortization of premiums on securities				6,214			6,524			—
	Patent settlement				—			33,780			—
	Asset impairment charge				—			9,500			—
	Loss on disposal of long-lived assets				1,372			3,124			—
	Purchased technology for research and development				—			—			8,000
	Other				1,272			2,835			(442	)
	Changes in working capital accounts:
		Accounts receivable, net of allowance			(84,516	)		44,468			(168,048	)
		Sales of accounts receivable			108,175			73,778			236,608
		Inventories			63,454			96,511			(73,118	)
		Prepaid expenses and other assets			(2,852	)		6,255			(122	)
		Trade accounts payable			(24,306	)		5,237			(17,828	)
		Deferred profit			(18,390	)		(187,435	)		45,776
		Accrued expenses and other liabilities			(34,899	)		(65,389	)		(28,557	)
		Tax benefit from employee stock options			—			—			49,412
		Net cash provided by operating activities			69,242			21,797			261,287
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures					(12,264	)		(10,619	)		(64,395	)
Purchases of available-for-sale securities					(671,068	)		(2,734,748	)		(1,359,095	)
Sales and maturities of available-for-sale securities					1,026,558			2,669,349			1,017,861
Purchase of investments for restricted cash, net					(47,485	)		(10,500	)		—
Strategic investments					—			—			(14,000	)
Other, net					617			(1,609	)		(7,915	)
			Net cash provided by/(used for) investing activities		296,358			(88,127	)		(427,544	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of debt					—			—			359,604
Principal payments on long-term debt and capital lease obligations					(361,407	)		(8,693	)		(23,876	)
Treasury stock purchases					(39,122	)		(10,678	)		(45,070	)
Reissuances of treasury stock					12,499			16,292			24,489
Proceeds from issuance of common stock					14,683			19,383			6,706
			Net cash provided by/(used for) financing activities		(373,347	)		16,304			321,853
Effect of exchange rate changes on cash					2,659			798			(3,993	)
Net increase (decrease) in cash and cash equivalents					(5,088	)		(49,228	)		151,603
Cash and cash equivalents at beginning of year					172,431			221,659			70,056
Cash and cash equivalents at end of year				$	167,343		$	172,431		$	221,659
Supplemental disclosures:
Cash payments for interest				$	20,036		$	28,717		$	20,111
Cash payments for income taxes				$	5,674		$	4,564		$	14,968

See Notes to Consolidated Financial Statements.

52

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)

														Deferred			Accumulated
			Common						Additional					Stock-			Other
			Stock			Common			Paid-In		Treasury			Based			Comprehensive			Retained
			Shares			Stock			Capital		Stock			Compensation			Income/(Loss)			Earnings			Total
Balance at June 25, 2000				124,389		$	124		$	441,949	$	(26,438	)	$	—		$	(7,501	)	$	227,290		$	635,424
Sale of common stock				1,756			2			6,705		—			—			—			—			6,707
Income tax benefit from stock option transactions				—			—			49,412		—			—			—			—			49,412
Purchase of treasury stock				(2,405	)		(2	)				(45,070	)		—			—			—			(45,072	)
Reissuance of treasury stock				1,177			1			—		49,604			—			—			(25,115	)		24,490
Components of comprehensive income:
	Net income			—			—					—			—			—			52,106			52,106
	Foreign currency translation adjustment			—			—			—		—			—			(15,631	)		—			(15,631	)
	Unrealized gain on fair value of derivative financial instruments, net			—			—			—		—			—			4,937			—			4,937
		Total comprehensive income																						41,412
Balance at June 24, 2001				124,917			125			498,066		(21,904	)		—			(18,195	)		254,281			712,373
Sale of common stock				2,491			3			22,682		—			—			—			—			22,685
Warrant issued				—			—			21,480		—			—			—			—			21,480
Purchase of treasury stock				(615	)		(1	)		—		(10,678	)		—			—			—			(10,679	)
Reissuance of treasury stock				1,185			1			—		23,482			—			—			(7,190	)		16,293
Components of comprehensive loss:
	Net loss			—			—			—		—			—			—			(90,051	)		(90,051	)
	Foreign currency translation adjustment			—			—			—		—			—			6,674			—			6,674
	Unrealized loss on fair value of derivative financial instruments, net			—			—			—		—			—			(3,719	)		—			(3,719	)
		Total comprehensive loss																						(87,096	)
Balance at June 30, 2002				127,978			128			542,228		(9,100	)		—			(15,240	)		157,040			675,056
Sale of common stock				1,696			2			14,683		—			—			—			—			14,685
Purchase of treasury stock				(3,497	)		(4	)		—		(47,553	)		—			—			—			(47,557	)
Reissuance of treasury stock				1,258			1			—		17,983			—			—			(5,484	)		12,500
Deferred stock-based compensation				—			—			3,362		—			(3,362	)		—			—			—
Amortization of deferred compensation				—			—			—		—			593			—			—			593
Components of comprehensive loss:
	Net loss			—			—			—		—			—			—			(7,739	)		(7,739	)
	Foreign currency translation adjustment			—			—			—		—			—			1,305			—			1,305
	Unrealized loss on fair value of derivative financial instruments, net			—			—			—		—			—			(925	)		—			(925	)
	Unrealized gain on financial instruments, net			—			—			—		—			—			1,166			—			1,166
		Total comprehensive loss																						(6,193	)
Balance at June 29, 2003				127,435		$	127		$	560,273	$	(38,670	)	$	(2,769	)	$	(13,694	)	$	143,817		$	649,084

See Notes to Consolidated Financial Statements.

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 2003

Note 1: Company and Industry Information

     Lam Research Corporation (the Company) designs, manufactures, markets, and services semiconductor processing equipment used in the fabrication of integrated circuits. The Company’s product offerings include etch systems with a wide range of applications, chemical mechanical planarization (CMP) and post-CMP wafer cleaning systems as well as post-sale services and support for these systems. The Company sells its products primarily to companies involved in the production of semiconductors in the United States, Europe, Japan and Asia Pacific. Credit risk evaluations, including trade references, bank references and Dunn & Bradstreet ratings are performed on all new customers, and subsequent to credit application approval, the Company monitors its customers’ financial statements and payment performance. In general, the Company does not require collateral on sales.

     The semiconductor industry has historically been cyclical and has experienced periodic downturns, which have had a material adverse effect on the semiconductor industry’s demand for wafer processing equipment, including equipment manufactured and marketed by the Company. Certain of the components and subassemblies included in the Company’s products are obtained from a single supplier or a limited group of suppliers. The Company believes that alternative sources could be obtained and qualified to supply these products. Nevertheless, a prolonged inability to obtain certain components could have a severe near-term effect on the Company’s operating results and could result in damage to customer relationships.

Note 2: Summary of Significant Accounting Policies

     The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make judgments, estimates, and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company based its estimates and assumptions on historical experience and on various other assumptions believed to be applicable, and evaluates them on an on-going basis to ensure they remain reasonable under current conditions. Actual results could differ significantly from those estimates.

     Revenue Recognition: The Company recognizes all revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, collectibility is reasonably assured, and the Company has completed its system installation obligations, received customer acceptance, or is otherwise released from its installation or customer acceptance obligations. In the event that terms of the sale provide for a lapsing customer acceptance period, the Company recognizes revenue upon the expiration of the lapsing acceptance period or customer acceptance, whichever occurs first. In circumstances where the practices of a customer do not provide for a written acceptance and in addition, the terms of sale do not include a lapsing acceptance provision, the Company recognizes revenue where it can be reliably demonstrated that the delivered system meets all of the customer specifications. Revenue related to sales of spare parts, system upgrade kits, and remanufactured systems is generally recognized upon shipment. Revenue related to services is generally recognized upon performance of the services requested by a customer order. Revenue for extended maintenance service contracts with a fixed payment amount and a term of more than one month is recognized on a straight-line basis over the term of the contract.

     The Company changed its revenue recognition policy in the fourth quarter of fiscal 2001,

54

effective June 26, 2000, based on guidance provided in Securities and Exchange Commission (SEC), Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.”

     Inventory Valuation: Inventories are stated at the lower of cost or market using standard costs, which approximate actual cost on a first-in, first-out basis. The Company maintains a perpetual inventory system and continuously records the quantity on-hand and standard cost for each product, including purchased components, subassemblies and finished goods. The Company maintains the integrity of perpetual inventory records through periodic physical counts of quantities on hand. Finished goods are reported as inventories until the point of title transfer to the customer. Generally, title transfer is documented in the terms of sale. When the terms of sale do not specify when title transfers, the Company assumes title transfers when it completes physical delivery of the products unless other customer practices prevail.

     Management evaluates the need to record adjustments for impairment of inventory at least quarterly. The Company’s policy is to assess the valuation of all inventories, including manufacturing raw materials, work-in-process, finished goods and spare parts in each reporting period. Obsolete inventory or inventory in excess of management’s estimated usage requirements over the next 12 to 36 months is written-down to its estimated market value, if less than cost. Inherent in the estimates of market value are management’s forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, possible alternative uses and ultimate realization of excess inventory. If future customer demand or market conditions are less favorable than the Company’s projections, additional inventory write-downs may be required, and would be reflected in cost of sales in the period the revision is made.

     Warranty: Typically, marketing and selling semiconductor capital equipment includes providing parts and service warranty to customers as part of the overall price of the system. The Company provides standard warranties on its systems that run generally for a period of 12 months from acceptance, not to exceed 14 months from shipment of the system to the customer. The Company records a provision for estimated warranty expenses to cost of sales for each system upon revenue recognition. The amount recorded is based on an analysis of historical activity, which uses factors such as type of system, customer, geographic region and any known differences such as tool reliability improvements. All actual parts and labor costs incurred in subsequent periods are charged to those established reserves through the application of detailed project record keeping.

     In addition to the provision of standard warranties, the Company provides customer-paid extended warranty services. Revenues for extended maintenance and warranty services, with a fixed payment amount and a term of more than one month, are recognized on a straight-line basis over the term of the contract. Related costs are recorded either as incurred or when related liabilities are determined to be probable and estimable.

     Employee Stock Purchase Plan and Employee Stock Option Plans: The Company accounts for its employee stock purchase plan (ESPP) and stock option plans under the provisions of Accounting Principles Board Opinion No. 25 “Accounting For Stock Issued to Employees” (APB 25) and Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation — an Interpretation of APB Opinion No. 25” (FIN 44) and makes pro forma footnote disclosures as required by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (FAS 148), which amends Statement of Financial Accounting Standards No. 123, “Accounting For Stock-Based Compensation” (FAS 123). The Company’s ESPP is a non-compensatory plan, and the Company’s stock option plans are accounted for using the intrinsic value method under the provisions of APB 25.

55

     Pro forma information regarding net income (loss) and net income (loss) per share is required by FAS 123 and FAS 148 as if the Company had accounted for its stock option and stock purchase plans under the fair value method of FAS 123 and FAS 148. The fair value of the Company’s stock-based awards to employees was estimated using a Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and which are fully transferable and requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each option. The fair value of the Company’s stock-based awards to employees was estimated assuming no expected dividends and the following weighted-average assumptions:

	Options									ESPP
	June 29,			June 30,			June 24,			June 29,			June 30,			June 24,
	2003			2002			2001			2003			2002			2001
Expected life (years)		2.4			3.8			3.0			0.63			0.42			0.54
Expected stock price volatility		74.0	%		71.0	%		83.0	%		74.0	%		71.0	%		83.0	%
Risk-free interest rate		1.5	%		4.1	%		4.9	%		1.5	%		4.1	%		4.9	%

     The weighted-average fair value of options granted during 2003, 2002, and 2001 was $4.47, $11.77, and $12.15 per share, respectively. The weighted-average fair value of shares granted under the ESPP plans during fiscal 2003, 2002, and 2001, was $5.07, $6.34, and $6.08 per share, respectively.

     For pro forma purposes, the estimated fair value of the Company’s stock-based awards is amortized over the option’s vesting period (for options) and the respective four, six, twelve, or sixteen-month purchase periods (for stock purchases under the employee stock purchase plan). The following table illustrates the effect on net income (loss) and net income (loss) per share if the Company had accounted for its stock option and stock purchase plans under the fair value method of accounting under FAS 123, as amended by FAS 148:

56

	June 29,			June 30,			June 24,
	2003			2002			2001
	(in thousands, except per share amounts)
Income (loss) before cumulative effect of changes in accounting principles — as reported	$	(7,739	)	$	(90,051	)	$	141,137
Add: compensation expense recorded under APB 25, net of tax		616			1,724			542
Deduct: FAS 123 compensation expense, net of tax		43,226			34,524			41,606
Income (loss) before cumulative effect of changes in accounting principles — pro forma		(50,349	)		(122,851	)		100,073
Net income (loss) — as reported		(7,739	)		(90,051	)		52,106
Net income (loss) — pro forma		(50,349	)		(122,851	)		11,042
Basic income (loss) per share before cumulative effect of changes in accounting principles — as reported		(0.06	)		(0.71	)		1.14
Basic income (loss) per share before cumulative effect of changes in accounting principles — pro forma		(0.40	)		(0.97	)		0.81
Basic net income (loss) per share — as reported		(0.06	)		(0.71	)		0.42
Basic net income (loss) per share — pro forma		(0.40	)		(0.97	)		0.09
Diluted income (loss) per share before cumulative effect of changes in accounting principles — as reported		(0.06	)		(0.71	)		1.07
Diluted income (loss) per share before cumulative effect of changes in accounting principles — pro forma		(0.40	)		(0.97	)		0.76
Diluted net income (loss) per share — as reported		(0.06	)		(0.71	)		0.39
Diluted net income (loss) per share — pro forma	$	(0.40	)	$	(0.97	)	$	0.08

     Deferred Income Taxes: The Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized, $220.1 million at June 29, 2003. Realization of the Company’s net deferred tax assets is dependent on future taxable income. The Company believes it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. In the event that the Company determines that it would not be able to realize all or part of its net deferred tax assets, an adjustment would be charged to earnings in the period such determination is made. Likewise, if the Company later determines that it is more likely than not that the deferred tax assets would be realized, then the previously provided valuation allowance would be reversed. The Company’s current valuation allowance of $36.7 million covers the tax benefit from the exercise of employee stock options and foreign tax credits. When the stock option tax benefits are realized, a portion of the valuation allowance will be reversed and credited to capital in excess of par value. When the foreign tax credits are realized, the remaining portion of the valuation allowance will be reversed through the tax provision (benefit) in the statement of operations as a reduction of income tax expense.

     Fiscal Year: The Company follows a 52/53-week fiscal reporting calendar and its fiscal year ends on the last Sunday of June each year. The Company’s most recent fiscal year ended on June 29, 2003 and included 52 weeks. The fiscal year ended on June 30, 2002, included 53 weeks, and the extra week did not have a material impact on the Company’s consolidated financial statements. The Company’s next fiscal year, ending on June 27, 2004, will include 52 weeks.

     Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

     Cash Equivalents and Short-Term Investments: All investments purchased with an original maturity of three months or less are considered to be cash equivalents. All of the Company’s

57

short-term investments are classified as available-for-sale at the respective balance sheet dates. The Company marks-to-market its investment portfolio. The investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any material temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the realized gains and losses on investments.

     Property and Equipment: Property and equipment is stated at cost. Equipment is depreciated by the straight-line method over the estimated useful lives of the assets, generally three to seven years. Leasehold improvements are amortized by the straight-line method over the shorter of the life of the related asset or the term of the underlying lease. Amortization of equipment under capital leases is included with depreciation.

     Restructuring Charges: In July 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” (FAS 146). FAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (EITF 94-3). The Company early-adopted FAS 146 in the quarter ended December 29, 2002. FAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, rather than when the exit or disposal plan is approved. Accordingly, restructuring accruals are recorded when management, with the proper level of authority, approves the specific actions under a plan, communicates the reduction activities and severance packages to the affected employees, and vacates the facilities included in the plan. Accruals related to vacated facilities are calculated net of estimated sublease income, and leasehold improvements related to vacated facilities are written off as these items have no future economic benefit. Sublease income is estimated based on current market estimates. If the Company is unable to sublet the vacated properties on a timely basis, the Company adjusts the accrual accordingly.

     Impairment of Long-Lived Assets: The Company routinely considers whether indicators of impairment of long-lived assets are present. If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value. If the sum is less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. If the assets determined to be impaired are to be held and used, the Company recognizes an impairment charge to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset’s carrying value. The fair value of the asset then becomes the asset’s new carrying value, which the Company depreciates over the remaining estimated useful life of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

     Investments in Derivative Financial Instruments Indexed to Lam Research Corporation Stock: In November 2000, the FASB’s Emerging Issues Task Force (EITF) reached final consensus on EITF Issue No. 00-19, “Determination of Whether Share Settlement is Within the Control of the Issuer,” for the purposes of applying EITF Issue No. 96-13, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (EITF 00-19). EITF Issue No. 96-13 addresses accounting for equity derivative contracts indexed

58

to, and potentially settled in, a company’s own stock (equity derivatives) by providing guidance for distinguishing between permanent equity, temporary equity and assets and liabilities.

     The Company’s equity derivatives included certain put and call options indexed to its own stock. Application of EITF 00-19 required these instruments to be recorded at their fair value at the end of each reporting period and the changes in fair value recorded as a gain or loss on the Company’s statement of operations. These equity derivatives were collateralized by restricted cash and could not be settled in unregistered shares. They were classified as other short-term assets and were settled in the first quarter of fiscal 2003 (See Note 6).

     Derivative Financial Instruments: The Company holds derivative financial instruments to hedge a variety of risk exposures including interest rate risks associated with its long-term debt, foreign currency exchange rate fluctuations on the value of its cash flows from forecasted revenue denominated in Japanese Yen and foreign currency denominated assets. Derivatives that qualify for hedge accounting are discussed in detail in Note 5 to these consolidated financial statements.

     The Company does not purchase derivatives for speculative or for trading purposes. To qualify for hedge accounting, the hedge relationship must meet criteria relating both to the derivative instrument and the hedged item. These include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured.

     When derivative instruments are designated and qualify as effective hedges of identified fair value exposures, the Company is able to offset changes in the fair value of the identified exposures by changes in the fair value of the hedging instruments. When derivative instruments are designated and qualify as effective cash flow hedges, the Company is able to defer changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, with the exception of hedge ineffectiveness recognized, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that forecasted transactions would occur, the Company may not be able to account for its investments in derivative instruments as hedges. If this were to occur in a future period, changes in the fair values of the Company’s derivative instruments would be recognized in operations without the benefits of offsets or deferrals of changes in fair value arising from hedge accounting treatment.

     To hedge foreign currency risks, the Company uses foreign currency exchange forward contracts. These forward contracts are valued using standard valuation formulas with assumptions about future foreign currency exchange rates derived from existing exchange rates and interest rates observed in the market.

     The Company considers its most current outlook in determining the level of foreign currency denominated intercompany revenues to hedge. The Company combines these forecasts with historical trends to establish the portion of its expected volume to be hedged. The revenues are hedged for exposures to fluctuations in foreign currency exchange rates. Should the level of revenues expected not occur, the Company’s investments in derivatives used to hedge changes in foreign currency exchange rates may not qualify for hedge accounting.

     To hedge interest rate risk, an interest rate swap is used in connection with the Company’s Convertible Subordinated Notes (4% Notes) in which the Company pays a variable interest rate and receives a fixed interest rate. This instrument is valued using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected

59

variable cash payments arising under the swap. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate curves. The Company has not changed its methods of calculating fair values or developing the underlying assumptions. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change. In future periods, if changes in the fair value of the swap are no longer effective at hedging changes in the fair value of its fixed rate 4% Notes, the interest rate swap may no longer qualify for hedge accounting treatment. Information about the fair values, notional amounts, and contractual terms of these instruments can be found in Note 5 to these consolidated financial statements.

     The Company does not believe that it is exposed to more than a nominal amount of credit risk in its interest rate and foreign currency hedges, as counterparties are established and well-capitalized financial institutions. The Company’s exposures are in liquid currencies (Japanese Yen), so there is minimal risk that appropriate derivatives to maintain our hedging program would not be available in the future.

     Foreign Currency: Through fiscal year 2003, the functional currencies of the Company’s European, Japanese and Asia Pacific subsidiaries are generally the individual subsidiaries’ local currencies. The Company’s subsidiaries primarily generate and expend cash in their local currency; billings and receipts for their labor and services are primarily denominated in the local currency (workforce is paid in local currency); their individual assets and liabilities are primarily denominated in the local foreign currency and do not materially impact the Company’s cash flows and there is an active local sales market for the foreign subsidiaries’ products and services. Accordingly, all balance sheet accounts of these local functional currency subsidiaries are translated at the fiscal period-end exchange rate, and income statement accounts are translated at an average rate for the period. The resulting translation adjustments are recorded as cumulative translation adjustments, which are a component of accumulated other comprehensive income (loss).

     Reclassifications: Certain amounts presented in the comparative financial statements for prior years have been reclassified to conform to the fiscal year 2003 presentation.

Note 3: Recent Accounting Pronouncements

     Costs associated with Exit or Disposal Activities: FAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF 94-3. The principal difference between FAS 146 and EITF 94-3 relates to FAS 146’s requirements for the timing of recognizing a liability for a cost associated with an exit or disposal activity. FAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3 a liability for an exit cost was recognized at the date of an entity’s commitment to an exit plan. FAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption encouraged. The Company early-adopted FAS 146 in the quarter ended December 29, 2002 and applied its accounting provisions to the restructuring activities initiated during the quarters ended December 29, 2002, March 30, 2003, and June 29, 2003 (see Note 21). No restructuring activities were initiated during the quarter ended September 29, 2002.

     Accounting for Revenue Arrangements with Multiple Deliverables: In November 2002, the FASB’s Emerging Issues Task Force reached a consensus on EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (EITF 00-21). EITF 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple deliverables (products, services, and/or rights to use assets). The provisions of EITF 00-21 will be applicable for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 is not anticipated to have a material impact on the

60

Company’s financial position or results of operations.

     Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others: In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). FIN 45 requires a company that is a guarantor to make specific disclosures about its obligations under certain guarantees that it has issued. FIN 45 also requires the guarantor to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken in issuing the guarantee. FIN 45 also incorporates, without change, the guidance in FASB Interpretation No. 34, “Disclosure of Indirect Guarantees of Indebtedness of Others” which is superseded by FIN 45. FIN 45’s disclosure requirements are effective for financial statements for periods ending after December 15, 2002. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued after December 31, 2002. The provisions of FIN 45 did not have a material impact on the Company’s financial position or results of operations upon adoption. (See Note 18).

     Accounting for Stock-Based Compensation - Transition and Disclosure: In December 2002, the FASB issued FAS 148, which amends FAS 123, “Accounting for Stock-Based Compensation”. FAS 148 provides alternative methods of transition for a voluntary change to the “fair value” method of accounting for stock-based employee compensation. In addition, FAS 148 amends the disclosure requirements of FAS 123 and requires prominent disclosure in both annual and interim financial statements of the method of accounting for stock-based employee compensation and the effect of the method used on a company’s financial position and results of operations. The transition guidance and annual disclosure requirements of FAS 148 are effective for fiscal years ending after December 15, 2002. The Company adopted the interim disclosure requirements of FAS 148 for financial statements in its fiscal quarter ended March 30, 2003. The Company intends to continue to account for its stock option plans and stock purchase plans under the provisions of APB 25 and FIN 44. Accordingly, the adoption of FAS 148 did not have a material impact on the Company’s financial position or results of operations.

     Consolidation of Variable Interest Entities: In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46), an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements”. FIN 46 establishes accounting guidance for consolidation of a variable interest entity (VIE), sometimes formerly referred to as a special-purpose entity. In general, a VIE is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 applies to any business enterprise, both public and private, that has a controlling interest, contractual relationship or other business relationship with a VIE. FIN 46 provides guidance for determining when an entity, the Primary Beneficiary, should consolidate another entity, a VIE, that functions to support the activities of the Primary Beneficiary. FIN 46 requires the consolidation of a VIE by a company if that company is subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the VIE’s residual returns or both.

     The effective date of the new rules under FIN 46 on the Company’s existing operating leases is the first quarter of fiscal 2004, and immediately on any new leases entered into after January 31, 2003, which utilize VIEs or equivalent lease structures. FIN 46 is not anticipated to have a material impact on the Company’s financial position or results of operations because the Company has transferred certain of its operating lease agreements to a new lessor that does not qualify as a VIE (See Note 17).

     Amendment of Statement 133 on Derivative Instruments and Hedging Activities: In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149, “Amendment of

61

Statement 133 on Derivative Instruments and Hedging Activities”, (FAS 149). FAS 149 amends FAS 133 for decisions made as part of the Derivatives Implementation Group (DIG) and changes financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. Specifically, FAS 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in FAS 133, (2) clarifies when a derivative contains a financing component that requires reporting as cash flows from financing activities in the statement of cash flows and (3) amends the definition of an “underlying” to correspond to the language in FIN 45. These changes will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that require separate accounting. FAS 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. However, the provisions of FAS 149 that codify the previous decisions made by the DIG are already effective and should continue to be applied in accordance with their prior respective effective dates. The adoption of FAS 149 is not anticipated to have a material impact on the Company’s financial position or results of operations.

     Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity: In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”, (FAS 150). FAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. FAS 150 represents a significant change in practice in the accounting for a number of financial instruments including mandatorily redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. FAS 150 generally requires liability classification for two broad classes of financial instruments: (1) instruments that represent, or indexed to, an obligation to buy back the issuer’s shares, regardless of whether the instrument is settled on a net-cash or gross physical basis, (2) obligations that can be settled in shares but meet one of the following conditions: (a) derive their value predominately from some other underlying, or (b) have a fixed value, or have a value to the counterparty that moves in the opposite direction as the issuer’s shares. Many of the instruments within the scope of FAS 150 were previously classified by the issuer as equity or temporary equity. FAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective the first quarter of fiscal 2004. The adoption of FAS 150 is not anticipated to have a material impact on the Company’s financial position or results of operations.

Note 4: Financial Instruments

Investments at June 29, 2003 and June 30, 2002, consist of the following:

62

			June 29,						June 30,
			2003						2002
					Unrealized		Fair				Unrealized		Fair
			Cost		Gains		Value		Cost		Gains		Value
			(in thousands)
Available-for-sale:
	Institutional Money Market Funds		$	119,805	$	—	$	119,805	$	145,700	$	—	$	145,700
	Amounts included in cash and cash equivalents			119,805		—		119,805		145,700		—		145,700
	Auction Rate Notes and Preferred Stock			106,186		—		106,186		202,549		—		202,549
	Municipal Bonds and Notes			83,773		603		84,376		112,650		—		112,650
	Treasury and Agency Notes			54,344		364		54,708		—		—		—
	Bank and Corporate Notes			53,862		79		53,941		197,445		—		197,445
	International - $US Denominated			40,739		120		40,859		189,130		—		189,130
	Amounts included in short-term investments			338,904		1,166		340,070		701,774		—		701,774
	Institutional Money Market Funds			118,468		—		118,468		51,357		—		51,357
	Agency Notes			—		—		—		19,626		—		19,626
	Amounts included in restricted cash			118,468		—		118,468		70,983		—		70,983
		Total Available-for-sale	$	577,177	$	1,166	$	578,343	$	918,457	$	—	$	918,457

     The Company marks-to-market its investment portfolio. At June 30, 2002, it was management’s estimate that the fair market values of the Company’s investments in debt securities and restricted cash materially approximated their carrying values (cost). Realized gains and (losses) from investments sold were approximately $196,000 and ($92,000) in fiscal 2003 and $326,000 in fiscal 2002. Realized gains and (losses) for investments sold are based on specific identification. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company also considers whether changes in the credit ratings of the issuer could impact the assessment of fair value. The fair value of the Company’s investments in auction rate preferred securities is based upon par value, which approximates fair value due to the nature of the instruments.

     The Company’s available-for-sale securities are invested in financial instruments with a minimum rating of A2 or A, as rated by Moody’s or Standard & Poor’s (S&P), respectively.

     The amortized cost of investments in debt securities with contractual maturities is as follows:

63

		June 29,				June 30,
		2003				2002
				Estimated				Estimated
				Fair				Fair
		Cost		Value		Cost		Value
		(in thousands)
Due in less than one year		$	328,577	$	328,922	$	574,602	$	574,602
Due after one year through five years			142,414		143,235		141,306		141,306
	Total investments in debt securities	$	470,991	$	472,157	$	715,908	$	715,908

     Management has the ability and intent, if necessary, to liquidate any of its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase have been classified as short-term on the accompanying consolidated balance sheets.

     The carrying and fair values of the Company’s other financial instruments are as follows:

	June 29, 2003						June 30, 2002
				Estimated						Estimated
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
	(in thousands)
Equity derivative contracts in Company stock	$	—		$	—		$	24,838		$	24,838
Convertible subordinated notes		(319,322	)		(292,841	)		(613,268	)		(565,513	)
Other debt		(248	)		(248	)		(49,032	)		(49,032	)
Foreign currency forward contracts		128			128			(779	)		(779	)
Interest rate swaps	$	19,215		$	19,215		$	3,203		$	3,203

     The fair value of the Company’s convertible subordinated notes and the Company’s other long-term debt is estimated based on the current rates available for debt instruments with comparable terms and maturities. The fair value of the Company’s foreign currency forward contracts is estimated based upon the Japanese Yen exchange rates at June 29, 2003 and June 30, 2002, respectively. See Note 6 for a discussion of the equity derivative contracts in the Company’s stock and its fair value.

     At June 29, 2003, and June 30, 2002, the notional amount of outstanding Japanese Yen forward contracts that are designated as cash flow hedges was $2.2 million and $48.3 million respectively. On the same dates, the notional amount of Japanese Yen forward contracts that are designated as balance sheet hedges was $16.4 million and $13.7 million, respectively.

     The Company has an agreement to sell specific U.S. Dollar-denominated receivables, subject to recourse provisions to a financial institution. At June 29, 2003 and June 30, 2002, $37.5 million and $36.0 million of these receivables, respectively, remained uncollected, of which $2.8 million and $3.6 million at June 29, 2003 and June 30, 2002, respectively, were subject to recourse provisions.

     The Company had a similar agreement with a bank to sell specific Japanese Yen-denominated receivables, subject to recourse provisions. At June 29, 2003 no sold Japanese Yen-denominated receivables were outstanding. At June 30, 2002, $2.0 million of these receivables sold to the bank remained uncollected, of which there were no amounts subject to recourse provisions.

64

Note 5: Derivative Financial Instruments and Hedging

     The Company carries derivative financial instruments (derivatives) on the balance sheet at their fair values. The Company has acquired and holds derivative financial instruments to hedge a variety of risks and exposures including interest rate fluctuation risks associated with our long-term debt, foreign currency exchange rate fluctuations on the value of expected cash flows from forecasted revenue transactions denominated in Japanese Yen and foreign currency denominated assets. Changes in the fair value of derivatives that are not designated or that do not qualify as hedges under Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (FAS 133) are recognized in earnings immediately. The Company does not use derivatives for trading purposes.

     The Company’s policy is to attempt to minimize short-term business exposure to foreign exchange risks using the most effective and efficient methods to eliminate or reduce such exposures. In Japan, the Company generally sells its systems, spare parts and services under contracts denominated in Japanese Yen. Therefore, in the normal course of business, the Company’s financial position is routinely subjected to market risk associated with foreign currency rate fluctuations. To protect against the reduction in value of forecasted Japanese Yen-denominated cash flows resulting from sales in Japanese Yen, the Company instituted a foreign currency cash flow hedging program. The Company entered into foreign currency forward exchange contracts that generally expired within 12 months, and no later than 24 months. These foreign currency forward exchange contracts, were designated as cash flow hedges and carried on the Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in earnings in the same period the hedged revenue is recognized.

     For the fiscal years ended June 29, 2003 and June 30, 2002, the Company recognized net losses of $0.1 million and net gains of $2.2 million, respectively, for cash flow hedges that had been discontinued, because the original forecasted transactions did not or are not expected to occur. The losses and gains are recorded in other income (expense) in the respective June 29, 2003 and June 30, 2002, consolidated statements of operations. Additionally, for the fiscal year ended June 30, 2002, the Company recognized net losses of $0.1 million related to the time value excluded from the assessment of hedge ineffectiveness.

     The following table summarizes activity in accumulated other comprehensive income (loss), net of tax, related to derivatives classified solely as cash flow hedges held by the Company:

		June 29,			June 30,
		2003			2002
		(in thousands)
Deferred cash flow hedging gains, beginning of year		$	1,218		$	4,937
Reclassified into earnings from accumulated other comprehensive loss			141			(3,446	)
Changes in fair value of derivative financial instruments, net			(1,066	)		(273	)
	Deferred cash flow hedging gains, end of year	$	293		$	1,218

     At June 29, 2003, the Company expects to reclassify the balance of deferred hedging gains and losses, net, included in accumulated other comprehensive income (loss) to earnings during the next 12 months due to the recognition in earnings of the hedged forecasted transactions.

     The Company also enters into foreign currency forward contracts to hedge the gains and

65

losses generated by the remeasurement of Japanese Yen-denominated intercompany receivables. Under FAS 133, these are not designated hedges. Therefore, the change in fair value of these derivatives is recorded into earnings as a component of other income (expense) and offsets the change in fair value of the foreign currency denominated intercompany receivables.

     See Note 4 for a summary of the aggregate fair value of all outstanding foreign currency forward contracts.

     The Company also has a policy to minimize, where possible and practical, the impact of interest rate exposure associated with its interest rate sensitive investments and debt obligations. To limit the impact relating to interest rate exposure associated with its fixed rate 4% Notes, the Company is a party to an interest rate swap agreement (the swap) with a notional amount of $300.0 million. Under the terms of the swap, the Company exchanges the fixed interest payments on its 4% Notes for variable interest payments based on the London Interbank Offered Rate (LIBOR). The swap is accounted for as a fair value hedge under the provisions of FAS 133. Fluctuations in the fair value of the 4% Notes, resulting from changes in the LIBOR interest rate sensitive component, are recorded in earnings, and offset by changes in the fair value of the swap, which are also recorded in earnings.

     As a result of designating the swap as a hedge of its 4% Notes, the carrying value of the 4% Notes is adjusted to reflect changes in fair value attributable to changes in the benchmark interest rate. For the fiscal years ended June 29, 2003 and June 30, 2002, the carrying value of the 4% Notes included in long-term debt and other long-term liabilities increased by approximately $15.8 million and $ 3.5 million, respectively. Over the same 12 month periods, the fair value of the swap, included in long-term assets, increased by approximately $16.0 million and $3.2 million, respectively, with the corresponding gains and losses for the twelve- month periods recorded in other income (expense). For the fiscal years ended June 29, 2003, and June 30, 2002, the Company recognized net gains of $0.2 million and net losses of $0.3 million, respectively, in other income (expense) resulting from hedge ineffectiveness related to differences in changes in the fair value of the swap and changes in the fair value of the 4% Notes.

Note 6: Equity Derivative Contracts In Company Stock

     The Company’s equity derivatives included certain put and call options indexed to its own stock that were acquired in June 1999. Application of EITF 00-19, “Determination of Whether Share Settlement is Within the Control of the Issuer”, for the purposes of applying EITF Issue No. 96-13, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, required these previously purchased instruments to be recorded at their fair value at the end of each reporting period, commencing in June 2001, with the change in fair value recorded as a gain or loss in the Company’s statement of operations. The Company’s equity derivatives were collateralized by restricted cash of $9.1 million and could not be settled in unregistered shares. They were classified as other short-term assets ($24.8 million), at the end of fiscal 2002.

     On August 23, 2002, the Company settled its outstanding equity derivative contracts by purchasing approximately 3.5 million shares of the Company’s common stock at an average price of $11.19 per share for a total cash payment of $39.1 million. By settling the equity derivative contracts, the Company was able to repurchase the shares recording a life to date gain of $8.4 million ($2.41 per share) from their then market value. As a result of this transaction, the Company recognized an increase in treasury stock of $47.6 million.

     Based on the $13.60 market price of the Company’s common stock at the contract settlement date (August 23, 2002), the fair value of the equity derivative contracts declined by $16.4 million

66

to $8.4 million, from their June 30, 2002 fair value of $24.8 million. This $16.4 million reduction in the equity derivative contracts’ fair value was recorded as a non-taxable loss in other expense in the June 29, 2003 consolidated statements of operations.

Note 7: Inventories

     Inventories consist of the following:

	June 29,		June 30,
	2003		2002
	(in thousands)
Raw Materials	$	67,259	$	108,595
Work-in-process		27,034		45,309
Finished goods	$	17,723	$	26,895
	$	112,016	$	180,799

Note 8: Property and Equipment

     Property and equipment consists of the following:

	June 29,			June 30,
	2003			2002
	(in thousands)
Manufacturing and office equipment	$	114,609		$	123,117
Leasehold improvements		57,497			65,749
Furniture and fixtures		5,031			5,246
Computer equipment and software		67,624			73,769
		244,761			267,881
Less accumulated depreciation and amortization		(195,990	)		(200,385	)
	$	48,771		$	67,496

Note 9: Accrued Expenses and Other Liabilities

     The significant components of accrued expenses and other liabilities consist of the following:

	June 29,		June 30,
	2003		2002
	(in thousands)
Accrued compensation	$	55,610	$	51,853
Warranty reserves		16,985		16,762
Income and other taxes payable		23,796		24,500
Restructuring charges		9,840		15,434
Other		24,913		50,463
	$	131,144	$	159,012

     No individual component of “Other” exceeds 5% of total current liabilities for the periods presented.

Note 10: Intangible Assets

     Effective with the beginning of fiscal 2003, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142). FAS 142 requires that goodwill and certain other intangible assets be tested for impairment at least annually and written down only when determined to be impaired, replacing the previous

67

accounting practice of ratably amortizing these items over their estimated useful lives. Intangible assets other than goodwill that have a finite life continue to be amortized over their useful lives. The Company has no goodwill or intangible assets with indefinite lives. The Company’s finite-lived intangible assets consist of purchased intellectual property rights and the licensed use of patents that are being amortized over their expected useful lives. Consequently, there was no impact on the Company’s financial position or results of operations upon the adoption of FAS 142. The Company performed an annual test for impairment of these assets during fiscal 2003 and as of June 29, 2003, no impairment has been recorded.

     The Company’s finite-lived intangible assets consist of the following:

	June 29, 2003				June 30, 2002
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
	(in thousands)
Intellectual property rights	$	3,500	$	2,050	$	3,500	$	1,350
Licenses		2,700		1,620		2,700		540
	$	6,200	$	3,670	$	6,200	$	1,890

     Total amortization expense for the fiscal years ended June 29, 2003 and June 30, 2002, was $1.8 million and $1.2 million, respectively. Intellectual property rights have an estimated useful life of 5 years and licenses have an estimated useful life of 2.5 years. The weighted-average amortization period of all intangible assets is approximately 4.0 years.

     Estimated future intangible asset amortization expense for the next five fiscal years, is as follows:

Period	Amount
	(in thousands)
Fiscal 2004	$	1,780
Fiscal 2005		550
Fiscal 2006		200
Thereafter		—
	$	2,530

Note 11: Long-Term Debt and Other Long-Term Liabilities

     Long-term debt and other long-term liabilities consist of the following:

68

	June 29,			June 30,
	2003			2002
	(in thousands)
4% Convertible subordinated notes, interest payable semi-annually, due June 2006	$	319,322		$	303,505
5% Convertible subordinated notes, interest payable semi-annually, due September 2002		—			309,763
Japanese Yen-denominated bank loans with fixed interest rates from 2.08% to 4.25%, principal payable in quarterly and semi-annual installments from September 2001 to April 2004		—			497
Japanese Yen-denominated bank loan with floating interest rate		—			48,535
Other (1)		17,898			12,682
		337,220			674,982
Less current portion		(5,011	)		(315,291	)
	$	332,209		$	359,691

(1)  Other, in fiscal 2003 includes a long-term patent settlement obligation of approximately $7.5 million (See Note 25) and the long-term portion of the restructuring accrual related to vacated facilities of approximately $9.4 million (See Note 21). Other, in fiscal 2002 includes a long-term patent settlement obligation of approximately $12.5 million (See Note 25).

     The Company’s 5% Convertible Subordinated Notes matured on September 2, 2002 and were repaid in full.

     On January 28, 2003, the Company’s Japanese subsidiary repaid its ¥6.0 billion ($51.1 million at January 28, 2003) Japanese long-term loan in full.

     At June 29, 2003, obligations under debt financing consist primarily of our 4% Notes. Details of the 4% Notes are:

Offering Date	May 2001
Offering Amount	$300.0 million
Maturity Date	June 1, 2006
Offering Expenses	$8.5 million incurred at the time of offering, ratably amortized to other expense over the term of the 4% Notes. Remaining unamortized balance of $5.0 million and $6.7 million at June 29, 2003 and June 30, 2002, respectively.
Interest Rate Terms	4% payable on June 1 and December 1 of each year, commencing December 1, 2001
Conversion Rights	Convertible into the Company’s Common Stock at any time prior to close of business on the maturity date, unless previously redeemed, at a conversion price of $44.93 per share subject to anti-dilution adjustments
Redemption Terms	Redeemable at the Company’s option, beginning June 5, 2004 with at least 20 days and no more than 60 days notice, at redemption prices starting at 101.0% and at diminishing prices

69

	thereafter, plus accrued interest
Security	4% Notes are unsecured and subordinated in right of payment in full to all existing and future senior indebtedness of the Company

     The carrying value of the 4% Notes is adjusted to reflect changes in fair value attributable to changes in the benchmark interest rate in connection with the Company’s fair value hedge accomplished through the swap transaction discussed in Note 5. At June 29, 2003 and June 30, 2002, the carrying value of the 4% Notes was increased by $15.8 million and $3.5 million, respectively (to $319.3 million and $303.5 million, respectively), with the corresponding losses recorded in other income (expense), offset by recorded gains of $16.0 million and $3.2 million on the carrying value of the swap.

     Under the terms of the transaction, the Company must provide collateral to match any unfavorable mark-to-market exposure on the swap. The amount of collateral required totals a minimum of $6.0 million plus an amount equal to unfavorable the mark-to-market exposure on the swap. Therefore, the amount of cash collateral the Company will have to post in the future will fluctuate from quarter to quarter commensurate with the mark-to-market exposure on the swap instrument. Generally, the required collateral will rise as interest rates rise. At the end of fiscal 2003 and fiscal 2002, the Company had $6.0 million and $10.5 million, respectively, of collateral (reflected as restricted cash) recorded on the consolidated balance sheet related to this transaction.

     At June 29, 2003, future maturities of debt obligations and other long-term liabilities are as follows:

		Short/Long-term
		Debt and Other
		Long-term
		Liabilities
		(in thousands)
Fiscal Year
	2004	$	5,011
	2005		6,328
	2006		322,397
	2007		3,419
	2008		65
		$	337,220

Note 12: Stockholders’ Equity

     During fiscal 2003, the Company settled its equity derivative contracts by purchasing approximately 3.5 million shares of the Company’s common stock for a total cash payment of $39.1 million, which represented a discount from the market price of the stock of approximately $2.41 per share. During fiscal 2002, the Company repurchased 600,000 shares of its common stock for $10.7 million under a share repurchase program approved by the Board of Directors on September 30, 1998, authorizing management to acquire up to 6.0 million shares of the Company’s common stock. During fiscal 2001, the Company repurchased approximately 2.4 million shares of the Company’s common stock for approximately $45.1 million. At June 29, 2003, 476,000 shares remain authorized for repurchase under this program.

     During the quarter ended December 29, 2002, the Company recorded $3.4 million of deferred stock-based compensation in stockholders’ equity, which was offset by a corresponding entry in additional paid-in capital in stockholders’ equity, in connection with the modification of terms of a fixed stock option award previously issued to the Company’s Chairman and Chief Executive Officer. The

70

modification extended the contractual life of the stock option for a period of three years and modified the vesting requirements. However, no changes were made to either the number of shares of the Company’s stock subject to the option, or the option’s exercise price. Accordingly, the modification resulted in the remeasurement of compensation expense based on the option’s intrinsic value on the date of modification in accordance with the provisions of APB 25 and FIN 44. The deferred compensation balance of $3.4 million is being amortized ratably over the vesting period of the modified options, or 16 quarters. Under the terms of this modification, if the Nasdaq National Market closing price of the Company’s common stock reaches or exceeds $20.00 per share, all unvested shares will immediately vest and become exercisable and all remaining deferred compensation will be immediately recognized as compensation expense. Total compensation expense recognized for the fiscal year ended June 29, 2003 was $593,000. Refer to Note 26 regarding an additional modification to the accelerated vesting provision of this stock option award subsequent to June 29, 2003.

Note 13: Net Income (Loss) Per Share

     Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. The computation of basic net income (loss) per share for all periods presented is derived from the information on the face of the income statement, and there are no reconciling items in either the numerator or denominator.

     Diluted net income (loss) per share is computed as though all potential common shares that are dilutive were outstanding during the period. The following table provides a reconciliation of the denominators of the basic and diluted computations for net income (loss) per share.

				Year Ended
				June 29,			June 30,			June 24,
				2003			2002			2001
				(in thousands, except per share data)
Numerator:
	Income (loss) before cumulative effect of changes in accounting principle			$	(7,739	)	$	(90,051	)	$	141,137
Denominator:
	Basic average shares outstanding				126,300			126,356			123,856
		Effect of potential dilutive securities:
			Employee stock plans and warrant		—			—			8,387
	Diluted average shares outstanding				126,300			126,356			132,243
Income (loss) per share before cumulative effect of changes in accounting principle - Basic				$	(0.06	)	$	(0.71	)	$	1.14
Income (loss) per share before cumulative effect of changes in accounting principle - Diluted				$	(0.06	)	$	(0.71	)	$	1.07
Antidilutive securities excluded from the calculation (1)					18,166			5,064			4,838

(1)  For purposes of computing diluted net income per share, weighted-average potential common shares do not include outstanding warrants or stock options whose exercise prices exceed the average market value of the Company’s common stock for the period.

     Options, warrants and convertible securities were outstanding during fiscal 2003 and 2002, but approximately 10,395,000 and 24,715,000 potential common shares were excluded from the computation of diluted net loss per common share for fiscal 2003 and 2002 respectively, because the effect would have been antidilutive. For fiscal year 2001, diluted net income per share includes the

71

assumed exercise of employee stock options. The assumed conversion of the 4% and 5% Convertible Subordinated Notes into 11,192,000 shares was antidilutive and therefore excluded from the computation of diluted net income per share in fiscal 2001.

Note 14: Comprehensive Income (Loss)

     The components of comprehensive income (loss), are as follows:

	Year Ended
	June 29,			June 30,			June 24,
	2003			2002			2001
	(in thousands)
Net income (loss)	$	(7,739	)	$	(90,051	)	$	52,106
Foreign currency translation adjustment		1,305			6,674			(15,631	)
Unrealized gain (loss) on fair value of derivative financial instruments, net		(925	)		(3,719	)		4,937
Unrealized gain on financial instruments,net		1,166			—			—
Comprehensive income(loss)	$	(6,193	)	$	(87,096	)	$	41,412

     Accumulated other comprehensive income (loss), is as follows:

	June 29,			June 30,
	2003			2002
	(in thousands)
Accumulated foreign currency translation adjustment	$	(15,153	)	$	(16,458	)
Accumulated unrealized gain on derivative financial instruments		293			1,218
Accumulated unrealized gain on financial instruments		1,166			—
Accumulated other comprehensive loss	$	(13,694	)	$	(15,240	)

Note 15: Stock Option Plans and Stock Purchase Plan

     The Company has adopted stock option plans that provide for the grant to key employees of options to purchase shares of the Company’s Common Stock. In addition, the plans permit the grant of nonstatutory stock options to paid consultants and employees, and provide for the automatic grant of nonstatutory stock options to outside directors. The option price is determined by the Board of Directors or its designee, the plan administrator, but in no event will it be less than the fair market value of the Company’s Common Stock on the date of grant (no less than 85% of the fair market value at the date of grant in the case of nonstatutory options). Options granted under the plans vest over a period determined by the Board of Directors or the plan administrator. Under the automatic grant program, each outside director receives an option immediately exercisable for 12,000 shares of the Company’s Common Stock during December of each year during which the outside director serves, with the exercise price equal to the fair market value on the date of grant.

     A summary of stock option plan transactions follows:

72

	Available					Option		Weighted-
	For Grant			Outstanding			Price		Average
June 25, 2000		1,841,926		25,876,963		$	1.75-53.00	$	13.41
Additional amount authorized		909,428		—			—		—
Granted		(2,963,388	)	2,963,388			14.38-40.25		21.94
Exercised		—		(1,747,566	)		1.75-29.58		7.94
Canceled		2,173,636		(2,173,636	)		3.33-53.00		21.43
Expired		(1,310	)	—			—		—
June 24, 2001		1,960,292		24,919,149		$	1.75-53.00	$	14.13
Additional amount authorized		9,000,000		—			—		—
Granted		(9,736,347	)	9,736,347			16.00-29.87		21.81
Exercised		—		(2,453,796	)		1.75-29.58		7.85
Canceled		2,579,527		(2,579,527	)		3.33-53.00		19.48
Expired		(347,836	)	—			—		—
June 30, 2002		3,455,636		29,622,173		$	3.33-53.00	$	16.68
Additional amount authorized		3,000,000		—			—		—
Granted		(4,661,372	)	4,661,372			7.03-22.74		11.12
Exercised		—		(1,719,354	)		3.33-18.58		8.63
Canceled		1,862,396		(1,862,396	)		6.33-50.46		21.61
Expired		(59,568	)	—			—		—
June 29, 2003		3,597,092		30,701,795		$	3.33-53.00	$	16.02

     At June 29, 2003, 34,298,887 shares of Lam Common Stock were reserved for future issuance under the various stock option plans.

     Outstanding and exercisable options presented by price range at June 29, 2003 are as follows:

				Options Outstanding						Options Exercisable
						Weighted-
						Average		Weighted-				Weighted-
Range Of				Number Of		Remaining		Average		Number Of		Average
Exercise				Options		Life		Exercise		Options		Exercise
Prices				Outstanding		(Years)		Price		Exercisable		Price
$	3.33	-	4.82		2,155,696		5.35	$	4.77		2,155,696	$	4.77
	5.97	-	6.33		2,875,392		5.50		6.30		2,864,187		6.31
	6.38	-	6.96		3,172,766		4.05		6.91		1,487,579		6.90
	7.03	-	18.47		9,040,432		5.89		12.96		4,964,280		12.53
	18.48	-	26.44		11,848,820		6.11		22.65		2,487,834		22.96
	26.44	-	53.00		1,608,689		6.72		34.59		978,725		34.65
$	3.33	-	53.00		30,701,795		5.75	$	16.02		14,938,301	$	13.22

     The 1997 Stock Incentive Plan and the 1999 Stock Option Plan provide for the grant of non-qualified stock option awards to eligible employees, consultants and advisors, and non-employee directors of the Company and its subsidiaries. Initially, 9.0 million shares were reserved for issuance. The Board of Directors approved an additional 3.0 million shares, 9.0 million shares, and 500,000 shares, in fiscal years 2003, 2002, and 2001 respectively.

     The 1999 Employee Stock Purchase Plan (the 1999 ESPP) allows employees to designate a portion of their base compensation to be used to purchase the Company’s Common Stock at a purchase price per share of the lower of 85% of the fair market value of the Company’s Common

73

Stock on the first or last day of the applicable offering period. Typically, each offering period lasts 12 months and comprises three interim purchase dates. During fiscal 2003, the Board approved an extension of the offering period to 16 months. The 1999 ESPP, approved by the Company’s stockholders at the Annual Meeting of Stockholders on November 5, 1998, replaced the existing 1984 Employee Stock Purchase Plan (the 1984 ESPP). The Company has 9.0 million shares of Lam Common Stock reserved for issuance under the 1999 ESPP: 3.0 million shares may be issued at any time and additional shares (up to 6.0 million total additional shares) may be issued for each share of the Company’s Common Stock which the Company redeems in public-market at private purchases and designated for this purpose.

     During fiscal 2003, 1,257,840 shares of the Company’s Common Stock were sold to employees under the 1999 ESPP. A total of 13,909,562 shares of the Company’s Common Stock were issued under the 1999 and 1984 ESPP Plans through June 29, 2003, at prices ranging from $0.09 to $31.84 per share. At June 29, 2003, 2,162,272 shares are available for purchase under all employee stock purchase plans.

     The Company’s Performance-Based Restricted Stock Plan (the RSP) was designed to reward executives based upon the achievement of certain predetermined goals. Grants are based on the fair market value of the Company’s Common Stock at the end of the quarter, provided the predetermined goals are met. The Company authorized 450,000 shares to be reserved for issuance under the RSP. During fiscal 2000 the Board of Directors approved that 409,428 shares, the balance in the 1996 RSP, be made available for issuance as stock options. At June 29, 2003, 55,220 of these shares are available for issuance as stock options, and 15,687 shares are subject to repurchase.

Note 16: Profit Sharing and Benefit Plans

     Profit sharing is awarded to employees based upon performance against certain corporate financial and operating goals. Distributions to employees by the Company are made semi-annually based upon a percentage of base salary, provided that a threshold level of the Company’s financial and performance goals are met. In addition to profit sharing the Company has other bonus plans based on achievement of profitability and other specific performance criteria. Charges to expense under these plans were $8.8 million, $2.7 million, and $43.4 million during fiscal years 2003, 2002, and 2001, respectively.

     The Company maintains a 401(k)-retirement savings plan for its full-time employees in North America. Each participant in the plan may elect to contribute from 2% to 20% in fiscal 2003 and from 2% to 15% in fiscal 2002 and 2001 of his or her annual salary to the plan, subject to statutory limitations. The Company makes matching employee contributions in cash to the plan at the rate of 50% of the first 6% of salary contributed. Employees participating in the 401(k)-retirement savings plan are 100% vested in the Company matching contributions and investments are participant directed. The Company made matching contributions of approximately $3.1 million, $4.0 million, and $4.7 million in fiscal 2003, 2002, and 2001, respectively.

Note 17: Commitments

Leases

     The Company leases most of its administrative, research and development (R&D) and manufacturing facilities, regional sales/service offices and certain equipment under non-cancelable operating leases, which expire at various dates through 2021. All of the Company’s facility leases for buildings located at its Fremont, California headquarters and certain other facility leases provide the Company an option to extend the leases for additional periods. Additionally, certain of the Company’s facility leases provide for periodic rent increases based on the general rate of

74

inflation.

     Future minimum lease payments under operating leases agreements are as follows:

	(in thousands)
2004	$	15,349
2005		12,635
2006		9,275
2007		6,716
2008		101,548
Thereafter		617
	$	146,140

     Total rent expense, net of sublease income, for all leases amounted to approximately $14.9 million, $19.7 million, and $31.2 million, for fiscal years 2003, 2002, and 2001, respectively.

     The Company has subleased some of its buildings and currently is entitled to receive income of approximately $2.1 million, $2.6 million, $2.0 million, and $0.8 million for the fiscal years 2004, 2005, 2006, and 2007, respectively.

     For the fiscal years ended June 29, 2003, June 30, 2002 and June 24, 2001, the Company received sublease payments totaling $2.8 million, $3.9 million, and $4.4 million, respectively, on its subleased facilities.

     In March 2003, a lease agreement (the Agreement) relating to two properties (land and buildings) at the Company’s Fremont, California campus was transferred to a new lessor and amended and restated. The Agreement replaces the former lease that was due to expire in March 2003. As part of the Agreement, the Company has the option to purchase the buildings at any time for approximately $54.4 million. In addition, the Company is required to guarantee the lessor a residual value on the property of up to $48.4 million at the end of the lease term in fiscal 2008 (in the case that the lease is not renewed, the Company does not exercise its purchase option, and the lessor sells the property and the sale price is less than the lessor’s cost), which is reflected in the above future minimum lease payment table. Additionally, as part of the lease agreement, the Company maintains cash collateral of $54.4 million as of June 29, 2003 in separate, specified interest-bearing accounts. The lessor under the Agreement is a substantive independent leasing company that does not have the characteristics of a VIE as defined by FIN 46, and is therefore not consolidated by the Company.

     In June 2003, two lease agreements relating to four properties (land and buildings) at the Company’s Fremont, California campus were transferred to a new lessor and amended and restated (the Lease Agreement). In connection with this transaction, the leases were combined and transferred from the existing lessors to a new lessor, under a single lease structure. At the time of the amendment, one of the leased property’s current fair value was less than its original cost by approximately $1.0 million. The leased property was a building that had been part of the Company’s past restructuring activities, and the loss was recorded as a restructuring charge during fiscal 2003. As a result, the Company recorded a $1.0 million liability for the loss on the leased property. As part of the Lease Agreement, the Company has the option to purchase the buildings at any time for approximately $58.0 million. In addition, the Lease Agreement requires the Company guarantee the lessor a residual value on the property of up to $50.3 million at the end of the lease term in fiscal 2008 (in the case that the lease is not renewed, the Company does not exercise its purchase option, and the lessor sells the property and the sale price is less than the lessor’s cost) which is reflected in the above future minimum lease payment table. Additionally, as part of the Lease Agreement, the Company maintains cash collateral of approximately $58.0 million in separate specified interest bearing accounts.

75

The lessor under the Lease Agreement is a substantive independent leasing company that does not have the characteristics of a VIE as defined by FIN 46, and is therefore not consolidated by the Company.

Purchase Obligations

     The Company’s contractual cash obligations relating to its purchase obligations as of June 29, 2003 are as follow:

		(in thousands)
2004		$	35,760
2005			16,450
2006			14,126
2007			10,195
2008			7,864
Thereafter			2,555
	Total	$	86,950

     During the second half of fiscal 2002, the Company began to enter into agreements with third parties to outsource certain elements of its manufacturing, warehousing, logistics, facilities maintenance, and information technology functions. During fiscal 2003, the Company continued to enter into agreements to outsource certain elements of its transactional and general and administrative functions. Actual expenditures will vary based on the volume of transactions and length of contractual service provided. In addition to minimum spending commitments, certain of these agreements provide for potential cancellation charges including the potential assumption of leases, assets and employees. In addition to the minimum spending commitments, these agreements provide for one-time transition charges of approximately $0.7 million in fiscal 2003, and $3.1 million in fiscal 2002. Transition charges are expensed in the period in which they are incurred.

     The Company has certain guaranteed purchase agreements in place where the Company is contractually obligated to purchase a minimum amount of materials related to the manufacture of its products. At June 29, 2003, the Company’s outstanding guaranteed purchase agreements for these agreements was approximately $10.5 million.

     Consignment inventories, which are owned by vendors but located in the Company’s discrete storage locations and warehouses, are not reported as inventory until title is transferred to the Company or its purchase obligation is determined. At June 29, 2003, vendor owned inventories held at the Company and not reported as inventory were approximately $6.4 million.

Note 18: Guarantees

     In November 2002, the FASB issued FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires a company that is a guarantor to make specific disclosures about its obligations under certain guarantees that it has issued. FIN 45 also requires a company (the Guarantor) to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken in issuing the guarantee.

     In March 2003 and June 2003, the Company transferred certain lease agreements relating to various properties at its Fremont, California campus to a new lessor (See Note 17). These agreements require the Company to guarantee residual values of the leased properties to the lessors at the end of the lease terms in fiscal 2008 (in the case that the leases are not renewed, the Company does not exercise the purchase options and the lessors sell the properties and the sale price is less than the lessors’ costs) of up to $98.7 million ($48.4 million and $50.3 million,

76

respectively). The terms of the guarantees, are equal to the remaining terms of the related lease agreements. Under the accounting provisions of FIN 45, the Company recognized a liability of approximately $1.0 million ($0.5 million in March 2003 and $0.5 million in June 2003) for the related residual value guarantees under the leases. The value of these guarantees was determined by computing the estimated present value of the respective probability-weighted cash flows that might be expended under the guarantees over the respective leases’ term, discounted using the Company’s risk adjusted borrowing rate of approximately 2%. The values of these respective guarantees have been recorded as prepaid rent, with the offset recorded as a liability, and the amounts are being amortized to income (for the liability) and to expense (for the prepaid rent) on a ratable basis over the five-year period of the leases.

     The Company has issued certain indemnifications to its lessors under certain of its operating lease agreements, such as, indemnification for certain environmental matters. The Company has entered into certain insurance contracts to minimize its exposure related to such indemnifications. As of June 29, 2003 the Company has not recorded any liability on its financial statements in connection with these indemnifications, as the Company does not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     The Company has agreements with two financial institutions that guarantee payment of its Japanese subsidiary’s overdraft protection obligation. The maximum potential amount of future payments the Company could be required to make under these agreements at June 29, 2003, is approximately $5.2 million, the amount available under the overdraft protection agreement. As of June 29, 2003, the Company’s Japanese subsidiary did not owe any amounts under this agreement. The Company has not recorded any liability in connection with these guarantees, as the Company does not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     The Company has an agreement with a financial institution to sell to the institution certain U.S. Dollar-denominated receivables generated from the sale of its systems, subject to recourse provisions. The Company insures these sold receivables for approximately 90% of their value and guarantees payment of the remaining uninsured receivable value in the event that the payment obligation is not satisfied. Based on historical payment patterns, the Company has experienced negligible default on payment obligations and therefore, believes the risk of loss from default is minimal. The terms of these guarantees are from 90 days past the due date of the receivable, until collected. At June 29, 2003 the maximum potential amount of future payments the Company could be required to make under this agreement is approximately $2.8 million. As of June 29, 2003, the Company has not recorded any liability in connection with these guarantees, as the Company does not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

     Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by its products or services. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services. The Company does not believe, based on information available, that it is probable that any material amounts will be paid under these guarantees.

     The Company provides standard warranties on its systems that run generally for a period of 12 months from system acceptance, not to exceed 14 months from the date of shipment of the system to the customer. The liability amount is based on actual historical warranty spending activity by type of system, customer, and geographic region, modified for any known differences such as the impact of system reliability improvements.

77

     Changes in the Company’s product warranty reserves during the fiscal year ended June 29, 2003, were as follows:

	(in thousands)
Balance at June 30, 2002	$	16,762
Warranties issued during the period		19,380
Settlements made during the period		(18,226	)
Change in liability for pre-existing warranties during the period, including expirations		(931	)
Balance at June 29, 2003	$	16,985

Note 19: Income Taxes

     Significant components of the provision (benefit) for income taxes attributable to income before income taxes and cumulative effects of changes in accounting principles are as follows:

	Year Ended
	June 29,			June 30,			June 24,
	2003			2002			2001
				(in thousands)
Federal:
Current	$	1,016		$	(1,527	)	$	58,595
Deferred		(5,856	)		(45,074	)		(309	)
		(4,840	)		(46,601	)		58,286
State:
Current		(3,214	)		175			206
Deferred		(2,581	)		4,109			(5,218	)
		(5,795	)		4,284			(5,012	)
Foreign:
Current		2,932			(2,742	)		8,723
Deferred		(203	)		7,115			(1,500	)
		2,729			4,373			7,223
	$	(7,906	)	$	(37,944	)	$	60,497

     Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets as of June 29, 2003 and June 30, 2002 are as follows:

78

		2003			2002
		(in thousands)
Deferred tax assets:
	Tax benefit carryforwards	$	164,286		$	149,872
	Accounting reserves and accruals deductible in different periods		59,264			65,648
	Inventory valuation differences		37,836			52,061
	Capitalized R&D expenses		17,808			15,151
	Net undistributed profits of foreign subsidiaries		—			7,672
	Warrants issued to Varian		8,270			—
Gross deferred tax assets			287,464			290,404
Deferred tax liabilities:
	Temporary differences for capital assets		(8,326	)		(5,784	)
	Unrealized gain		(2,856	)		(3,311	)
	State cumulative temporary differences		(14,786	)		(13,883	)
	Other		(4,743	)		(3,734	)
Gross deferred tax liabilities			(30,711	)		(26,712	)
Valuation allowance for deferred tax assets			(36,655	)		(52,234	)
Net deferred tax assets		$	220,098		$	211,458

     Approximately $23.9 million and $24.9 million of the valuation allowance for deferred tax assets, for fiscal 2003 and 2002, respectively, are attributable to stock option deductions, the benefit of which will be credited to equity when realized. The change (increase/(decrease)) in valuation allowance year over year was ($15.6) million, $21.0 million, and ($63.5) million for fiscal 2003, 2002, and 2001, respectively

     Realization of the Company’s net deferred tax assets is dependent on future taxable income. The Company believes it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time.

     At June 29, 2003, the Company has federal tax loss carryforwards of approximately $262.0 million, which will expire in varying amounts between 2019 and 2023. The Company also has federal and state tax credit carryforwards of approximately $81.6 million, of which approximately $67.4 million of credits, will expire in varying amounts between 2005 and 2023. The remaining balance of $14.2 million of credit carryforwards may be carried forward indefinitely. A valuation allowance of approximately $12.8 million in 2003 and $27.3 million in 2002 is attributable to the portion of the deferred tax assets related to the carryforwards.

     A reconciliation of income tax provision (benefit) provided at the federal statutory rate (35% in 2003, 2002 and 2001) to actual income tax provision (benefit) follows:

79

	2003			2002			2001
	(in thousands)
Income tax provision (benefit) computed at federal statutory rate	$	(5,476	)	$	(44,798	)	$	70,572
Tax carryforwards unbenefited		—			9,184			—
Tax exempt interest		(805	)		(1,447	)		(801	)
Tax credits		(1,700	)		(7,000	)		(8,000	)
State income tax provision (benefit), net of federal tax provision		(3,767	)		2,785			(3,258	)
Equity derivatives, indexed to Company stock		5,742			2,883			—
Foreign income taxed at different rates		23,080			—			—
IRS audit settlement		(24,892	)		—			—
Other		(88	)		449			1,984
	$	(7,906	)	$	(37,944	)	$	60,497

     Income before income taxes from foreign operations for fiscal years 2003, 2002, and 2001 was $(69.5) million, $(3.7) million, and $18.4 million, respectively. In addition, the Company received royalty and other income from foreign sources of $4.9 million, $0.3 million, and $0.9 million, in fiscal years 2003, 2002, and 2001, respectively, which is subject to foreign tax withholding.

     In April 2003, the Internal Revenue Service (IRS) closed its examination of the Company’s tax returns for fiscal years up to and including the fiscal year ended June 30, 1998. Resolution was reached on a number of issues including adjustments related to research and development tax credits, resulting in a reported approximate $24.9 million tax benefit. In addition, tax expense of approximately $17.0 million associated with implementing strategies to, in the longer-term, limit the Company’s tax liability on the sale of the Company’s products worldwide, was recorded in the fourth quarter of fiscal 2003. These tax strategies are structured to align the asset ownership and functions of the Company’s various legal entities around the world with the Company’s expectations of the level, timing, and sources of future revenues and profits.

Note 20: Segment, Geographic Information and Major Customers

     The Company operates in one business segment: manufacturing and servicing of front-end wafer processing semiconductor manufacturing equipment. All products and services are marketed within the geographic regions in which the Company operates. The Company’s current product offerings qualify for aggregation under Financial Accounting Standard No. 131, “Disclosures about Segments of an Enterprise and Related Information,” as its products are manufactured and distributed in the same manner, have similar long-term gross margins and are sold to the same customer base.

     The Company operates in four geographic regions: the United States, Europe, Asia Pacific, and Japan. The following table allocates sales based on the region where products are manufactured or services performed, irrespective of where such products or services are sold for fiscal years 2003, 2002, and 2001:

80

			Year Ended
			June 29,			June 30,			June 24,
			2003			2002			2001
			(in thousands)
Sales to unaffiliated customers:
	United States		$	560,247		$	678,523		$	1,213,583
	Europe			75,236			70,388			96,828
	Asia Pacific			70,514			51,011			69,057
	Japan			49,237			143,192			140,321
		Total sales to unaffiliated customers	$	755,234		$	943,114		$	1,519,789
Operating income (loss):
	United States			(54,604	)		(164,337	)		113,851
	Europe			16,093			18,959			34,579
	Asia Pacific			20,573			8,780			25,267
	Japan			12,553			16,760			12,835
		Total operating income (loss)	$	(5,385	)	$	(119,838	)	$	186,532
Property and equipment, net:
	United States		$	43,913		$	60,445		$	104,427
	Europe			1,333			1,910			2,245
	Asia Pacific			1,779			2,351			4,296
	Japan			1,746			2,790			15,565
		Total property and equipment, net		48,771			67,496			126,533
All other identifiable assets:
	United States			802,162			1,313,438			1,490,739
	Europe			160,714			50,503			62,976
	Asia Pacific			68,970			53,707			39,597
	Japan			117,658			147,147			151,930
		Total all other identifiable assets		1,149,504			1,564,795			1,745,242
		Total identifiable assets	$	1,198,275		$	1,632,291		$	1,871,775

     Sales between geographic regions are accounted for at prices that provide a profit, and are in accordance with the rules and regulations of the respective governing authorities. Intercompany profit and loss is eliminated in consolidation. Revenue in each geographic region is recognized in accordance with the Company’s revenue recognition policy based on SAB 101.

     Total export revenue consisting of sales from the Company’s U.S. operating subsidiaries to non-affiliated customers by geographic region for the three years is as follows:

	Year Ended
	June 29,		June 30,		June 24,
	2003		2002		2001
	(in thousands)
Asia Pacific	$	263,861	$	278,054	$	429,934
Europe		73,048		130,870		326,756
Japan		15,400		1,889		3,105
	$	352,309	$	410,813	$	759,795

     During fiscal 2003 and fiscal 2001, a single distinct customer for each fiscal year accounted for approximately 15% of total sales, respectively. No individual customer accounted for greater than 10% of total sales in fiscal 2002.

Note 21: Restructuring

Fiscal 2003 Restructuring Activities

81

     The Company has developed programs and incurred restructuring charges in response to the depressed levels of capital investment by the semiconductor industry. This situation has caused the Company to evaluate its revenue outlook and forecasts, employment levels, facilities utilization and outsourcing activities, and the impact on manufacturing and administrative facilities. Based on these evaluations, senior management of the Company committed to cost reduction and exit activities in the quarters ended June 29, 2003 (the June 2003 Plan), March 30, 2003 (the March 2003 Plan), and December 29, 2002 (the December 2002 Plan). Prior to the end of the June 29, 2003, March 30, 2003, and December 29, 2002 quarters, management with the proper level of authority approved specific actions under the respective Plans and communicated the severance packages to potentially impacted employees in enough detail such that the employees could determine their type and amount of benefit. None of the severance payments were contingent on the employees’ future service to the Company and were immediately payable. The termination of the impacted employees occurred as soon as practical after the restructuring plans were announced. The amount of remaining future lease payments for facilities the Company ceased to use and included in the restructuring charges are based on management’s estimates using known prevailing real estate market conditions at that time. Leasehold improvements relating to the vacated buildings were written off, as these items will have no future economic benefit to the Company and have been abandoned.

     The Company applied the accounting provisions of FAS 146 to the fiscal 2003 restructuring activities as the Company early-adopted FAS 146 during the December 2002 quarter. Under the provisions of FAS 146, the restructuring charges for the remaining contractual lease payments, computed as the present value of remaining contractual payments less estimated sublease income on vacated facilities were recognized in the quarter in which the Company ceased to use the facility.

     During fiscal 2003, the Company incurred $14.9 million of restructuring charges, net, associated with its fiscal 2003, 2002, and 2001 restructuring plans. As of June 29, 2003, the remaining restructuring reserve consisted of approximately $11.0 million related to restructurings implemented during fiscal 2003 and approximately $8.3 million related to restructurings implemented during fiscal 2002.

June 2003 Plan

82

     The Company began carrying out the announced restructuring activities prior to June 29, 2003, by reducing its workforce in North America, Europe, and Asia by approximately 30 people and by vacating selected sales and office facilities located in North America, Europe, and Asia determined to be no longer critical to the Company’s operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with the majority of the reductions in North America. The Company recorded a restructuring charge during the quarter ended June 29, 2003, of approximately $7.6 million, consisting of severance and benefits for involuntarily terminated employees, charges for the present value of remaining lease payments on vacated facilities, a loss on the fair value of a vacated facility and the write-off of related leasehold improvements. In June 2003, two lease agreements covering four properties were amended, combined, restated, and transferred to a new lessor under a single lease structure. One of the transferred leases covered one of the Company’s vacated facilities at its Fremont, California campus (See Note 17). At the time of the amendment, the leased facility’s fair value was less than its original cost by approximately $1.0 million. Accordingly, this amount was recorded as a loss on the fair value of the vacated facility and included in the $6.7 million facility-related restructuring charge.

     Below is a table summarizing activity relating to the June 2003 Plan:

	Severance						Abandoned
	And						Fixed
	Benefits			Facilities			Assets			Total
	(in thousands)
June 2003 provision	$	783		$	6,656		$	210		$	7,649
Cash payments		(366	)		(388	)		—			(754	)
Non-cash charges		—			—			(210	)		(210	)
Balance at June 29, 2003	$	417		$	6,268		$	—		$	6,685

     The remainder of the Severance and Benefits reserve balance of $0.4 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $6.3 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2008.

March 2003 Plan

     The Company began carrying out the announced restructuring activities prior to March 30, 2003, by reducing its workforce in North America and Europe by approximately 50 people and by vacating selected sales and office facilities located in North America determined to be no longer critical to the Company’s operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with the majority of the reductions in North America. The Company recorded a restructuring charge during the quarter ended March 30, 2003, of approximately $4.7 million, consisting of severance and benefits for involuntarily terminated employees, charges for remaining lease payments on vacated facilities, and the write-off of related leasehold improvements.

     Below is a table summarizing activity relating to the March 2003 Plan:

83

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
	(in thousands)
March 2003 provision	$	1,658		$	2,913		$	171		$	4,742
Cash payments		(855	)		(757	)		—			(1,612	)
Non-cash charges		(228	)		—			(171	)		(399	)
Balance at June 29, 2003	$	575		$	2,156		$	—		$	2,731

     The remainder of the Severance and Benefits reserve balance of $0.6 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $2.2 million as of June 29, 2003 is anticipated to be utilized by the end of fiscal 2007.

December 2002 Plan

     The Company began carrying out the announced restructuring activities prior to December 29, 2002 by reducing its workforce in North America, Europe, and Asia by approximately 120 employees and by vacating selected sales and office facilities located in North America, Europe and Asia determined to be no longer critical to the Company’s operations. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with approximately 65% from North America and approximately 35% from Asia and Europe locations. The Company recorded a restructuring charge of $5.7 million, consisting of severance and benefits for involuntarily terminated employees, charges for remaining lease payments on vacated facilities, and the write-off of related leasehold improvements.

     Below is a table summarizing activity relating to the December 2002 Plan:

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
	(in thousands)
December 2002 provision	$	3,257		$	1,945		$	474		$	5,676
Cash payments		(3,112	)		(487	)		—			(3,599	)
Non-cash charges		—			(49	)		(474	)		(523	)
Balance at June 29, 2003	$	145		$	1,409		$	—		$	1,554

     The remainder of the Severance and Benefits reserve balance of $0.1 million as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $1.4 million as of June 29, 2003, is anticipated to be utilized by the end of calendar year 2004.

Fiscal 2002 Restructuring Activities

     In response to the deterioration in semiconductor sales in the first half of fiscal 2002 which resulted in a contraction in outlook for the wafer fabrication equipment market and therefore in the Company’s revenues, senior management of the Company committed to cost reduction and exit activities in the quarters ended December 30, 2001 (the December 2001 Plan) and September 23, 2001 (the September 2001 Plan). Prior to the end of the December 30, 2001 and September 23, 2001 quarters, management, with the proper level of authority, approved specific

84

actions of the respective Plans and communicated the severance packages to potentially impacted employees in enough detail such that the employees could determine their type and amount of benefit. The termination of the impacted employees occurred as soon as practical after the plans of restructuring were announced. Lease payments on vacated facilities are based on management’s estimates using prevailing real estate market conditions. The Company initially estimated under the plans that, given prevailing real estate market conditions at that time, it would take approximately 24 months to sublease its vacated facilities. The Company revised the original estimates for lease payments on vacated facilities if prevailing real estate market conditions were subsequently determined to be different than the initial estimate. Leasehold improvements and certain fixed assets relating to the vacated buildings were written off as these items have no future economic benefit to the Company and have been abandoned.

December 2001 Plan

     During the second fiscal quarter of 2002, the Company began implementing restructuring activities which included reducing its workforce by approximately 470 employees in North America, Europe, and Asia, vacating selected office and warehouse facilities at the Company’s Fremont, California campus determined to be no longer critical to the Company’s operations, and the closure of certain offices in Asia. The employees included in the Plan were from a broad range of organizations and at multiple levels throughout the Company, with approximately 80% from North America and approximately 20% from Asia and Europe locations. The Company recorded a restructuring charge of $33.8 million relating to severance and benefits for involuntarily terminated employees, charges for remaining lease payments on vacated facilities and the write-off of related leasehold improvements and fixed assets.

     During fiscal 2003, the Company recovered approximately $3.8 million of restructuring charges originally accrued under the December 2001 Plan, $2.1 million for benefits and services offered by the Company that were not utilized by the terminated employees and approximately $1.7 million related to a revision to the net amount of lease payments remaining to be paid on the vacated facilities. In addition, during fiscal 2003, the Company recorded approximately $3.0 million of additional restructuring charges of which $2.5 million was due to revisions the Company made for the length of time required to sublease two of its vacated buildings in Fremont, California and approximately $0.1 million due to additional facility restoration costs incurred to fulfill the Company’s contractual obligations under the terms of a lease agreement. Additionally, the Company revised its estimates related to employee termination costs and recorded $0.4 million of additional employee termination costs.

     Below is a table summarizing activity relating to the December 2001 Plan:

85

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed
	Benefits			Facilities			Assets			Total
	(in thousands)
December 2001 provision	$	14,208		$	9,637		$	9,928		$	33,773
Cash payments		(9,122	)		(386	)		—			(9,508	)
Non-cash charges		(1,529	)		(127	)		(9,928	)		(11,584	)
Balance at June 30, 2002		3,557			9,124			—			12,681
Recovery of assets		—			—			18			18
Cash payments		(1,773	)		(2,482	)		—			(4,255	)
Reversal of restructuring charges		(2,118	)		(1,704	)		(18	)		(3,840	)
Additional restructuring charges		390			2,604			—			2,994
Balance at June 29, 2003	$	56		$	7,542		$	—		$	7,598

The remainder of the Severance and Benefits reserve balance as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $7.5 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2008.

September 2001 Plan

     During the first quarter of fiscal 2002, the Company began implementing restructuring activities which included a reduction of approximately 550 employees in North America, Europe and Asia, vacating selected facilities at the Company’s headquarters in Fremont, California determined to be no longer critical to the Company’s operations and discontinuance of the manufacture of specific products within the Company’s etch product lines. The employees were from a broad range of organizations and at multiple levels throughout the Company, with approximately 85% from North America and 15% from Asia and Europe locations. The Company recorded a restructuring charge of $21.0 million which included severance and benefits for involuntarily terminated employees, charges for remaining lease payments and write-offs of leasehold improvements on vacated facilities, and write-offs for inventories of older etch product inventories that were discontinued. The discontinued inventory charges of approximately $7.6 million related to the Company’s decision to discontinue manufacture of specific products within the Company’s etch product lines. In fiscal 2003 and 2002, the Company recovered approximately $1.7 million from unanticipated subsequent sales to the Company’s installed base of customers of certain portions of the inventory. In addition, in fiscal 2003 and 2002, the Company physically disposed of approximately $2.7 million of this inventory. The Company plans to complete its disposition of the remaining quantities of the discontinued, obsolete inventory by the end of the 2003 calendar year.

     During fiscal 2002, the Company also recovered approximately $1.0 million of the September 2001 Plan charge due to lower than estimated employee termination costs of $0.7 million and lower than estimated expenses relating to a vacated facility lease of $0.3 million. During fiscal 2003, approximately $0.9 million was recovered due to $0.6 million of lower than previously estimated employee severance and termination costs and $0.3 million was recovered due to actual expenses being lower than estimated for vacated facility leases. In addition, in the second quarter of fiscal 2003, the Company recorded additional charges for the September 2001 Plan based on a revision of its estimate of the length of time required to sublease one of its vacated buildings in Fremont, California. Based on prevailing market conditions, the Company extended the accrual for lease payments to the end of the lease in June 2004 and recorded an additional $0.6 million relating to these remaining lease payments.

86

     Below is a table summarizing activity relating to the September 2001 Plan:

				Lease
	Severance			Payments			Abandoned
	And			On Vacated			Fixed			Discontinued
	Benefits			Facilities			Assets			Inventory			Total
	(in thousands)
September 2001 provision	$	10,767		$	1,746		$	935		$	7,600		$	21,048
Recovery of assets		—			—			—			785			785
Cash payments		(8,135	)		(762	)		—			—			(8,897	)
Non-cash charges		(1,035	)		—			(935	)		(7,600	)		(9,570	)
Reversal of restructuring charges		(695	)		(317	)		—			(785	)		(1,797	)
Balance at June 30, 2002		902			667			—			—			1,569
Recovery of assets		—			—			—			933			933
Cash payments		(159	)		(524	)		—			—			(683	)
Reversal of restructuring charges		(572	)		(286	)		—			(933	)		(1,791	)
Additional restructuring charges		—			636			—			—			636
Balance at June 29, 2003	$	171		$	493		$	—		$	—		$	664

     The remainder of the Severance and Benefits reserve balance of $0.2 million, as of June 29, 2003, is anticipated to be utilized by the end of the 2003 calendar year. The remainder of the reserve balance for Lease Payments on Vacated Facilities of $0.5 million as of June 29, 2003, is anticipated to be utilized by the end of fiscal 2004.

Fiscal 2001 Restructuring Activities

     During the second quarter of fiscal 2003, the Company completed the remaining elements of its restructuring activities under the June 2001 Plan. An additional $1.1 million of restructuring charges was recovered due to lower than estimated employee termination costs.

Note 22: Purchased Technology for R&D

     During the second quarter of fiscal 2001, the Company made an equity investment in, and purchased a portfolio of CMP intellectual property rights and research and development technology from Strasbaugh. The Company recognized a one-time charge to income of $8.0 million for the purchase of in-process research and development technology and recorded a $6.0 million investment in preferred stock and intangible assets. The Company’s equity interest in Strasbaugh, representing approximately 20% of its total capital stock, is accounted for under the equity method, and the intellectual property rights are being amortized ratably over five years. Accumulated amortization as of the end of fiscal 2003 and 2002 was $1.0 million and $0.6 million, respectively.

     Based on the Company’s analysis of Strasbaugh’s current and expected financial performance, the Company determined in the third quarter of fiscal 2002 that the carrying value of its equity investment had experienced an other-than-temporary impairment and recorded a $2.0 million charge in other expense to write down the investment to its estimated fair value.

     The Company’s equity in the income (loss) from Strasbaugh as of the end of fiscal 2003, 2002 and 2001 was ($0.8) million, ($0.8) million and $0.7 million, respectively. The income (loss) from the investment in Strasbaugh has not been material, and, therefore, has not been itemized in other income, net, on the accompanying statements of operations.

Note 23: Asset Impairment Charge

     During the second quarter of fiscal 2002, the Company determined that the carrying value of

87

certain of its laboratory and demonstration equipment exceeded its fair value less costs to sell. Fair value was assessed using the market values of similar used laboratory and demonstration equipment. Impairment occurred due to rapid technological changes. In accordance with Financial Accounting Standards No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” the Company recorded a pre-tax impairment charge of $9.5 million. A $5.3 million write-down to fair value of certain laboratory tools was included in R&D expenses, and $4.2 million of write-downs to fair value of demonstration equipment were included in Selling General and Administrative (SG&A) expenses.

Note 24: Related Party Transactions

     During fiscal year 2001, the Company’s President and Chief Operating Officer signed a promissory note with the Company entitling him to borrow up to $1.0 million dollars from the Company at 6.75% simple interest. As of June 29, 2003, the entire principal amount, $1.0 million, and accrued interest were outstanding. The loan is secured by a mortgage on his personal residence and is repayable, in full, together with accrued interest, at any time, but no later than May 8, 2005.

Note 25: Litigation and Patent Settlement

     During the second quarter of fiscal 2002 the Company signed a final settlement agreement with Varian Semiconductor Equipment Associates, Inc. (Varian) in connection with the patent infringement litigation filed by Varian in October 1993. Under the terms of the settlement agreement, Varian granted the Company nonexclusive license to the patents involved in the litigation. The Company agreed to pay Varian $20.0 million in cash, $5.0 million in December 2001, and the remainder to be paid in equal quarterly installments of $1.25 million over a three-year period. The payments began in the third quarter of fiscal 2002 with a quarterly payment of $1.25 million. As of June 29, 2003, a total amount of $12.5 million was paid to Varian, which included the initial $5.0 million in December 2001 and six additional quarterly installment payments of $1.25 million each, totaling $7.5 million as of June 29, 2003. The total obligation remaining as of June 29, 2003 is $7.5 million, which will be paid $1.25 million per quarter through the second quarter of fiscal 2005 (December 2004). Additionally, the Company issued a warrant with a fair value of $21.5 million that entitled Varian to purchase 2,000,000 shares of the Company’s Common Stock at an exercise price of $21.30 per share. As part of the full and final settlement, Varian and the Company agreed to dismiss all pending claims and counterclaims relating to the litigation.

     In connection with the settlement, the Company recorded a charge of $38.8 million in the quarter ended December 30, 2001, which represents approximately 93% of the total value of the settlement. The remaining portion of the total value of the settlement relating to the future licensed use of the patents, $2.7 million, is being amortized ratably over 10 quarters. Accumulated amortization as of the end of fiscal 2003 and fiscal 2002 was approximately $1.6 million and $0.5 million, respectively.

     The imputed value of the warrant was determined using the Black-Scholes valuation model. The key assumptions used in the valuation model were an expected life of 4 years, an expected stock price volatility of 61% and a risk-free interest rate of 4.5%.

     From time to time, the Company has received notices from third parties alleging infringement of such parties’ patent or other intellectual property rights by the Company’s products. In such cases it is the Company’s policy to defend the claims, or if considered appropriate, negotiate licenses on commercially reasonable terms. However, no assurance can be given that in the future the Company will be able to negotiate necessary licenses on commercially reasonable

88

terms, or at all, or that any litigation resulting from such claims would not have a material adverse effect on the Company’s consolidated financial position, liquidity, operating results or its consolidated financial statements taken as a whole.

Note 26: Subsequent Events (unaudited)

     During the quarter ending September 2003, the Company added a second condition to the accelerated vesting provision contained in one of the Chairman and Chief Executive Officer’s stock option awards that was previously modified in the December 2002 quarter. When and if the vesting of the award is accelerated, all unvested shares shall immediately become fully vested and exercisable, and any remaining deferred compensation would then be recognized as compensation expense within SG&A. The award now provides for accelerated vesting when each of the following conditions is met: (1) the Nasdaq national market closing price of the Company’s Common Stock reaches or exceeds $20.00 per share and (2) applying U.S. generally accepted accounting principles, the Company’s fiscal quarter net income exceeds $2.5 million after deducting any incremental amortization expense that results from acceleration of these same options. The two conditions need not be met simultaneously nor in a specific order.

89

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders of Lam Research Corporation

     We have audited the accompanying consolidated balance sheets of Lam Research Corporation as of June 29, 2003 and June 30, 2002, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended June 29, 2003. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lam Research Corporation at June 29, 2003 and June 30, 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 29, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

San Jose, California
July 18, 2003

90

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LAM RESEARCH CORPORATION
	By /s/ JAMES W. BAGLEY
	James W. Bagley,
	Chairman, Chief Executive Officer
Dated: September 24, 2003

91

POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James W. Bagley and Mercedes Johnson, jointly and severally, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report of Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue thereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signatures	Title	Date
/s/ James W. Bagley      James W. Bagley	Chairman, Chief Executive Officer	September 24, 2003
/s/ Mercedes Johnson      Mercedes Johnson	Senior Vice President, Finance and Chief Financial Officer (Principal Accounting Officer)	September 24, 2003
/s/ David G. Arscott      David G. Arscott	Director	September 24, 2003
/s/ Robert M. Berdahl      Robert M. Berdahl	Director	September 24, 2003
/s/ Richard J. Elkus, Jr.      Richard J. Elkus, Jr.	Director	September 24, 2003
/s/ Jack R. Harris      Jack R. Harris	Director	September 24, 2003
/s/ Grant M. Inman      Grant M. Inman	Director	September 24, 2003

92

LAM RESEARCH CORPORATION

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

		Additions
		Balance		Charged							Balance
		At		To		Charged					At
		Beginning		Costs		To					End
		Of		And		Other		Deductions			Of
DESCRIPTION		Period		Expenses		Describe		Describe			Period
Year Ended June 29, 2003
Deducted from asset accounts:
	Allowance for doubtful accounts	$	4,995,000	$	694,000	$	—	$	1,900,000	(1)(2)	$	3,789,000
Year Ended June 30, 2002
Deducted from asset accounts:
	Allowance for doubtful accounts	$	4,948,000	$	639,000	$	—	$	592,000	(1)	$	4,995,000
Year Ended June 24, 2001
Deducted from asset accounts:
	Allowance for doubtful accounts	$	4,570,000	$	2,047,000	$	—	$	1,669,000	(1)	$	4,948,000

(1)	$0.8 million, $0.6 million, and $1.7 million of specific customer accounts written-off in fiscal 2003, 2002, and 2001, respectively.
(2)	In fiscal 2003, $1.1 million of specific customer accounts previously reserved were recovered.

93

LAM RESEARCH CORPORATION

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 29, 2003
EXHIBIT INDEX

Exhibit	Description
3.1(22)	Certificate of Incorporation of the Registrant, dated September 7, 1989; as amended by the Agreement and Plan of Merger, Dated February 28, 1990; the Certificate of Amendment dated October 28, 1993; the Certificate of Ownership and Merger dated December 15, 1994; the Certificate of Ownership and Merger dated June 25, 1999 and the Certificate of Amendment effective as March 7, 2000.
3.2	Amended and Restated By Laws of the Registrant, dated June 6, 2003.
3.3(22)	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock dated January 27, 1997.
4.2(1)	Amended 1984 Incentive Stock Option Plan and Forms of Stock Option Agreements.
4.4(5)	Amended 1991 Stock Option Plan and Forms of Stock Option Agreements.
4.7(1)	Rights Agreement, dated as of January 23, 1997, between the Registrant and ChaseMellon Shareholder Service, L.L.C., which includes Exhibit B thereto the Form of Right Certificate.
4.8(32)	Amended and restated 1997 Stock Incentive Plan.
4.10(16)	Lam Research Corporation 1999 Employee Stock Purchase Plan.
4.11(18)	Amended and restated 1996 Performance-Based Restricted Stock Plan.
4.12(32)	Amended and restated 1999 Stock Option Plan.
10.3(2)	Form of Indemnification Agreement.
10.12(3)	ECR Technology License Agreement and Rainbow Technology License Agreement by and between Registrant and Sumitomo Metal Industries, Ltd.
10.16(4)	License Agreement effective January 1, 1992 between the Registrant and Tokyo Electron Limited.
10.30(6)	1996 Lease Agreement Between Lam Research Corporation and the Industrial Bank of Japan, Limited, dated March 27, 1996.
10.35(7)	Agreement and Plan of Merger by and among Lam Research Corporation, Omega Acquisition Corporation and OnTrak Systems, Inc., dated as of March 24, 1997.
10.38(8)	Consent and Waiver Agreement between Lam Research Corporation and IBJTC Leasing Corporation-BSC, The Industrial Bank of Japan, Limited, Wells Fargo

94

Exhibit	Description
	Bank, N.A., The Bank of Nova Scotia, and the Nippon Credit Bank, Ltd., dated March 28, 1997.
10.46(9)	Receivables Purchase Agreement between Lam Research Co., Ltd. and ABN AMRO Bank N.V., Tokyo Branch, dated December 26, 1997.
10.49(9)	Guaranty to the Receivables Purchase Agreement between Lam Research Co., Ltd. and ABN AMRO Bank N.V., Tokyo Branch, dated December 26, 1997.
10.50(10)	License Agreement between Lam Research Corporation and Trikon Technologies, Inc., dated March 18, 1998.
10.51(10)	Loan Agreement between Lam Research Corporation and The Industrial Bank of Japan, Limited, dated March 30, 1998.
10.52(11)	Credit Agreement between Lam Research Corporation and Deutsche Bank AG, New York Branch and ABN AMRO Bank N.V., San Francisco Branch, dated April 13, 1998.
10.53(11)	First Amendment to Credit Agreement between Lam Research Corporation and ABN AMRO Bank N.V., San Francisco Branch, dated August 10, 1998.
10.58(12)	Loan Agreement between Lam Research Co., Ltd. and ABN AMRO Bank N.V., dated September 30, 1998.
10.59(12)	Guaranty to Loan Agreement between Lam Research Co., Ltd and ABN AMRO Bank N.V., dated September 30, 1998.
10.61(13)	Second Amendment to Credit Agreement between ABN AMRO BANK, N.V. and Lam Research Corporation, dated December 18, 1998.
10.62(13)	First Amendment to Guaranty between ABN AMRO BANK, N.V. and Lam Research Corporation, dated December 25, 1998.
10.63(13)	Supplemental Agreement of Receivables Purchase Agreement dated December 26, 1997 between ABN AMRO BANK, N.V. and Lam Research Corporation, dated December 25, 1998.
10.64(13)	Supplemental Agreement of Loan Agreement dated September 30, 1998 between ABN AMRO BANK, N.V. and Lam Research Corporation, dated December 25, 1998.

95

Exhibit	Description
10.66(14)	Substitution Certificate for Loan Agreement dated September 30, 1998 between ABN AMRO BANK, N.V. and Lam Research Corporation, dated March 19, 1999.
10.67(15)	OTS Issuer Stock Option Master Agreement between Lam Research Corporation and Goldman Sachs & Co., and Collateral Appendix thereto, dated June 1999.
10.68(15)	Form of ISDA Master Agreement and related documents between Lam Research Corporation and Credit Suisse Financial Products, dated June 1999.
10.69(17)	The First Amendment Agreement between Lam Research Corporation and Credit Suisse Financial Products, dated August 31, 1999.
10.70(19)	Lease Agreement between Lam Research Corporation and Scotiabanc Inc., dated January 10, 2000.
10.71(19)	Participation Agreement between Lam Research Corporation, Scotiabanc Inc., and The Bank of Nova Scotia, dated January 19, 2000.
10.73(20)	Lease Agreement Between Lam Research Corporation and Cushing 2000 Trust, dated December 6, 2000.
10.74(20)	Participation Agreement Between Lam Research Corporation and Cushing 2000 Trust, Dated December 6, 2000.
10.75(21)	Indenture between Lam Research Corporation and LaSalle Bank, National Association, as Trustee, dated May 22, 2001
10.76(21)	Registration Rights Agreement among Lam Research Corporation, Credit Suisse First Boston Corporation and ABN Amro Rothschild LLC, dated May 22, 2001.
10.77 (23)	Warrant to Purchase Common Stock of Lam Research Corporation, dated December 19, 2001, issued to Varian Semiconductor Equipment Associates, Inc.
10.78 (24)	Promissory Note between Lam Research Corporation and Stephen G. Newberry dated May 8, 2001.
10.79 (25)	Amendment to Stock Option Grant for James W. Bagley dated October 16, 2002.
10.80 (26)	Amended and Restated Master Lease and Deed of Trust Between Lam Research Corporation and SELCO Service Corporation, dated March 25, 2003.
10.81 (26)	Lease Supplement No. 1 Between Lam Research Corporation and SELCO Service Corporation, dated March 25, 2003.
10.82 (26)	Participation Agreement Between Lam Research Corporation, SELCO Service Corporation and Key Corporate Capital Inc., dated March 25, 2003.
10.83 (26)	Amendment to Participation Agreement Between Lam Research Corporation, Scotiabanc Inc. and The Bank of Nova Scotia, dated December 27, 2002.
10.84 (26)	Amendment to Participation Agreement Between Lam Research Corporation, the Cushing 2000 Trust, Scotiabanc Inc, The Bank of Nova Scotia and Fleet National Bank, dated December 27, 2002.

96

Exhibit	Description
10.85 (26)	Employment Agreement for Stephen G. Newberry, dated January 1, 2003.
10.86	Amended and Restated Master Lease and Deed of Trust Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.87	Lease Supplement No. 1 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.88	Lease Supplement No. 2 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.89	Lease Supplement No. 3 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.90	Lease Supplement No. 4 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.91	Lease Supplement No. 5 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.92	Lease Supplement No. 6 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.93	Lease Supplement No. 7 Between Lam Research Corporation and SELCO Service Corporation, dated as of June 1, 2003.
10.94	Participation Agreement Between Lam Research Corporation and SELCO Service Corporation, and Key Corporate Capital Inc., dated as of June 1, 2003.
10.95	Employment Agreement for Ernest Maddock, dated April 15, 2003.
21	Subsidiaries of the Registrant.
23.1	Consent of Ernst & Young LLP, Independent Auditors.
24	Power of Attorney (See Signature page)
31.1	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Executive Officer)
31.2	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Financial Officer)
32.1	Certification Pursuant to 18 U.S.C. 1350 (section 906 of the of the Sarbanes-Oxley Act of 2002) - Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. 1350 (section 906 of the of the Sarbanes-Oxley Act of 2002) - Chief Financial Officer

97

(1) Incorporated by reference to Post Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-8 (No. 33-32160) filed with the Securities and Exchange Commission on May 10, 1990.

(2) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 3, 1988.

(3) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1989.

(4) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1991.

(5) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1995.

(6) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.

(7) Incorporated by reference to Registrant’s Report on Form 8-K dated March 31, 1997.

(8) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.

98

(9) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1997.

(10) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.

(11) Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998.

(12) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.

(13) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1998.

(14) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1999.

(15) Incorporated by reference to Registrant’s Report on Form 8-K dated June 22, 1999.

(16) Incorporated by reference to Registrant’s Report on Form S-8 dated November 5, 1998.

(17) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 26, 1999.

(18) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 26, 1999.

(19) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 26, 2000.

(20) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 24, 2000.

(21) Incorporated by reference to Registrant’s Registration Statement on Form S-3 dated July 27, 2001.

(22) Incorporated by reference to Registrant’s Amendment No. 2 to its Annual Report on Form 10K/A for the fiscal year ended June 25, 2000.

(23) Incorporated by reference to Registrant’s Registration Statement on Form S-3 dated January 30, 2002.

(24) Incorporated by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002.

(25) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 29, 2002.

(26) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2003.

99 EX-3.2 3 f93126exv3w2.txt EXHIBIT 3.2 Exhibit 3.2 AMENDED AND RESTATED BYLAWS OF LAM RESEARCH CORPORATION ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is The Corporation Trust company. 1.2 OTHER OFFICES The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such 1 designation, stockholders' meetings shall be held at the registered office of the Corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the second Thursday of November in each year at 2:00 p.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected and any other proper business may be transacted. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation. Nominations of persons for election to the board of directors may be made at any annual meeting of stockholders (a) by or at the direction of the board of directors (or any duly authorized committee thereof) or (b) by any stockholder of the corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.2 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.2. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the corporation. To be timely, a stockholder's notice to the secretary must be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting of stockholders; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given to stockholders, notice by the stockholder to be timely must be so received not 2 later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (ii) the class or series and number of shares of capital stock of the corporation that are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the corporation that are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 3 2.2. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the board of directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.2 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedure set forth in this Section 2.2. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the corporation. To be timely, a stockholder's notice to the secretary must be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting of stockholders; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the secretary must set forth as to each matter such 4 stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the corporation that are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.2, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.2 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. 2.3 SPECIAL MEETING Unless otherwise expressly provided in the Certificate of Incorporation of the corporation, special meetings of the stockholders may only be called by the chairman of the board, by the president or at the request in writing of a majority of the board of directors. Special meetings of stockholders of the corporation may not be called by any other person or persons. If a special meeting is called by any person or persons other than the board of directors, the request shall be in writing, specifying the time of such meeting 5 and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president or the secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5, and that a meeting will be held at the time requested by the person or persons who called the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after the receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the board of directors may be held. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 6 2.6 QUORUM The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. 2.7 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.8 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements). 7 Except as set forth in the immediately following paragraph of this Section 2.8 or otherwise provided in the Certificate of Incorporation, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. The board of directors, in its discretion, or the officer of the corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. At the election of directors of the corporation, each holder of stock or of any class or classes or of a series or series thereof shall be entitled to as many votes as shall equal the number of which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the number for, or for any two or more of them as he may see fit; provided, however, that no stockholder shall be entitled to so cumulate such stockholder's votes unless the candidates for which such stockholder is voting have been placed in nomination in accordance with Section 2.2 of this Article II and a stockholder has given timely notice of an intention to cumulate votes. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. If any one stockholder has given proper notice of an intention to cumulate votes pursuant to this Section 2.8, all stockholders may cumulate their votes for candidates properly in nomination. 8 When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. 2.9 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws. 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. 9 Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the board of directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the secretary, request the board of directors to fix a record date. The board of directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the board of directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, to the attention of the secretary of the corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has 10 been fixed by the board of directors and prior action by the board of directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the board of directors adopts the resolution taking such prior action. In the event of the delivery to the corporation of a written consent or consents purporting to authorize or take corporate action and/or related revocations (each such written consent and any revocation thereof is referred to in this Section 2.10 as a "Consent"), the secretary of the corporation shall provide for the safekeeping of such Consents and shall as soon as practicable thereafter conduct such reasonable investigation as he deems necessary or appropriate for the purpose of ascertaining the validity of such Consents and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the Consents have given consents. No consent to corporate action in writing without a meeting shall be effective unless delivered to the corporation within sixty (60) days following the record date relating thereto fixed pursuant to this Section 2.10. 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. 11 If the board of directors does not so fix a record date: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 2.12 PROXIES Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware. 2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete 12 list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. 2.14 CONDUCT OF BUSINESS The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and the conduct of business. ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. 13 3.2 NUMBER OF DIRECTORS The number of directors of the corporation shall be not less than four (4) nor more than (7). The exact number of directors shall be six (6). No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold. office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Elections of directors need not be by written ballot. 3.4 RESIGNATION AND VACANCIES Any director may resign at any time upon written notice to the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. A vacancy created by the removal of a director by the vote or written consent of the stockholders or by a court order may be filled only by the vote of a majority of the outstanding shares entitled to vote thereon represented at a duly held meeting at which a quorum is 14 present, or by the unanimous written consent of all shares entitled to vote thereon. Each director so elected shall hold office until the next annual meeting of the stockholders and until a successor has been elected and qualified. Unless otherwise provided in the certificate of incorporation or these bylaws: (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time 15 outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. A director elected or appointed to fill a vacancy shall serve until the next annual meeting of stockholders or until a successor shall be elected and qualified. 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 3.6 FIRST MEETINGS The first meeting of each newly elected board. of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors , or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 16 3.7 REGULAR MEETINGS Regular meetings of the board of directors may be held without notice if the times of such meetings are fixed by the board of directors. 3.8 SPECIAL MEETINGS; NOTICE Notice of the time and place of special meetings shall be given to each director at that director's address as it is shown on the records of the corporation. Notice of such special meeting stating the place, date and hour of the meeting shall be given to each director either (i) by mail not less than four (4) days before the date of the meeting, or (ii) personally, by telephone, telecopy, telegram, telex or other similar means of communication on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director whom the person giving the notice has reason to believe will promptly communicate it to the director. 3.9 QUORUM At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. 3.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or 17 of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws. 3.11 ADJOURNED MEETING; NOTICE If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. 18 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee. 3.13 FEES AND COMPENSATION OF DIRECTORS Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attending each meeting of the board of directors and may be paid a fixed sum for attending each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. 3.14 APPROVAL OF LOANS TO OFFICERS The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 19 3.15 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, so long as stockholders of the corporation are entitled to cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect him or her if then cumulatively voted at an election of the entire board of directors. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management 20 of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committees shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to section 253 of the General Corporation Law of Delaware. 4.2 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 4.3 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), and 21 Section 3.12 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meeting of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. ARTICLE V OFFICERS 1. OFFICERS The officers of the corporation shall be a president, one or more vice presidents, a secretary, and a treasurer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more assistant vice presidents, assistant secretaries, assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person. 2. ELECTION OF OFFICERS The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of any officer under any contract of employment. 22 3. SUBORDINATE OFFICERS The board of directors may appoint or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine. 4. REMOVAL AND RESIGNATION OF OFFICERS Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors. Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. 5. VACANCIES IN OFFICES Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 6. CHAIRMAN OF THE BOARD The chairman of the board shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction and control of the business and the officers of the corporation. He shall preside at all meetings of the board of directors and shareholders, except in the event and to the extent the chairman or board designates that the secretary or other officer of 23 the corporation shall preside in place of the chairman. The chairman shall have the general powers and duties of management generally vested in the office of chief executive officer of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws. 7. PRESIDENT The president shall be the chief operating officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the internal affairs and operations of the corporation. He shall have the general powers and duties of management usually vested in the office of chief operating officer of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws. 8. VICE PRESIDENTS In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board. 9. SECRETARY The secretary shall keep or cause to be kept, at the principal office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and shareholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or 24 represented at shareholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the board of directors required to be given by law or by these bylaws. He shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other power and perform such other duties as may be prescribed by the board of directors or by these bylaws. 10. CHIEF FINANCIAL OFFICER The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 25 11. ASSISTANT SECRETARY The assistant secretary, or if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe. 12. ASSISTANT TREASURERS The assistant treasurer, or, if there is more than one, the assistant treasurer, in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the chief financial officer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the chief financial officer and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe. 13. AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated form time to time by the board of directors or the stockholders. ARTICLE VI INDEMNITY 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers 26 against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was servicing at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 2. INDEMNIFICATION OF OTHERS The corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent or another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 3. INSURANCE The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another 27 corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware. ARTICLE VII RECORDS AND REPORTS 1. MAINTENANCE AND INSPECTION OF RECORDS The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its shareholders listing their names and addresses and the number and class of shares held by each shareholder, a copy of these bylaws as amended to date, accounting books, and other records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney of such other writing that authorizes the attorney or other agent to so act on behalf of stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address 28 of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for, a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2. INSPECTION BY DIRECTORS Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 3. ANNUAL STATEMENT TO STOCKHOLDERS The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 29 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. ARTICLE VIII 1. CHECKS From time to time, the board of directors, shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. 2. EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of any officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 30 3. STOCK CERTIFICATES; PARTLY PAID SHARES The shares of the corporation shall be represented by certificates, provided that the board of directors may establish by resolution or resolutions that some or all of any or all classes or series of the corporation's stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice chairman of the board of directors, or the president or vice president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signatures has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 31 4. SPECIAL DESIGNATION CERTIFICATES If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relatives, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 5. LOST CERTIFICATES Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any uncertificated shares. 32 6. CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, the masculine gender includes the feminine, the feminine gender includes the masculine, and the term "Person" includes both a corporation and a natural person. 7. DIVIDENDS The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the corporation's capital. The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserves. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies. 8. FISCAL YEAR The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors. Unless otherwise designated, the fiscal year of the corporation shall end on June 30. 9. SEAL The corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 33 10. TRANSFER OF STOCKS Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 11. STOCK TRANSFER AGREEMENTS The corporation shall have power to enter into and perform, any agreement with any number of shareholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. 12. REGISTERED STOCKHOLDERS The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE IX AMENDMENTS The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote, provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the 34 stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. ARTICLE X DISSOLUTION If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution. At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provision of section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the Federal Corporation Law of Delaware. Upon such certificates becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consents becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent 35 filed with the Secretary of State shall have attached to it the affidavit of the secretary of some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation. ARTICLE XI CUSTODIAN 1. APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when: (i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or (ii) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or (iii) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets. 36 2. DUTIES OF CUSTODIAN The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352 (a)(2) of the General Corporation Law of Delaware. 37 CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS OF LAM RESEARCH CORPORATION Certificate of Adoption The undersigned hereby certifies that he is the duly elected, qualified, and acting Assistant Secretary of Lam Research Corporation (the "Corporation") and that the foregoing Amended and Restated Bylaws, comprising thirty-five (35) pages, were adopted as the Amended and Restated Bylaws of the Company on November 7, 2002 at a duly called meeting of the Board of Directors of the Company. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this 6 day of June, 2003. /s/ GEORGE SCHISLER ------------------------------------------------------ George Schisler, Assistant Secretary 38 EX-10.86 4 f93126exv10w86.txt EXHIBIT 10.86 Exhibit 10.86 ================================================================================ AMENDED AND RESTATED MASTER LEASE AND DEED OF TRUST THIS DOCUMENT SECURES FUTURE ADVANCES Dated as of June 1, 2003 between SELCO SERVICE CORPORATION, doing business in California as "Ohio SELCO Service Corporation", as Lessor and LAM RESEARCH CORPORATION, as Lessee To the extent, if any, that this Master Lease and Deed of Trust constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on this Master Lease and Deed of Trust may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by Key Corporate Capital Inc., as the Administrative Agent, on or following the signature page hereof. This counterpart is NOT the original counterpart. ================================================================================ TABLE OF CONTENTS

SECTION HEADING PAGE ARTICLE I DEFINITIONS........................................................................................... 1 ARTICLE II MASTER LEASE......................................................................................... 2 Section 2.1. Acceptance and Lease of Property.......................................................... 2 Section 2.2. Acceptance Procedure...................................................................... 2 Section 2.3. Lease Term................................................................................ 2 Section 2.4. Title..................................................................................... 2 ARTICLE III PAYMENT OF RENT..................................................................................... 2 Section 3.1. Rent...................................................................................... 2 Section 3.2. Payment of Rent........................................................................... 3 Section 3.3. Supplemental Rent......................................................................... 3 Section 3.4. Method of Payment......................................................................... 3 ARTICLE IV QUIET ENJOYMENT; RIGHT TO INSPECT.................................................................... 3 Section 4.1. Quiet Enjoyment........................................................................... 3 Section 4.2. Right to Inspect.......................................................................... 4 ARTICLE V NET LEASE, ETC........................................................................................ 4 Section 5.1. Net Lease................................................................................. 4 Section 5.2. No Termination or Abatement............................................................... 5 ARTICLE VI SUBLEASES AND ASSIGNMENTS............................................................................ 5 Section 6.1. Subletting................................................................................ 5 Section 6.2 Assignment................................................................................ 6 ARTICLE VII LESSEE ACKNOWLEDGMENTS.............................................................................. 6 Section 7.1. Condition of the Property................................................................. 6 Section 7.2. Risk of Loss.............................................................................. 7 ARTICLE VIII POSSESSION AND USE OF THE PROPERTY, ETC............................................................ 7 Section 8.1. Utility Charges........................................................................... 7 Section 8.2. Possession and Use of the Property........................................................ 7 Section 8.3. Compliance with Requirements of Law and Insurance Requirements............................ 7 ARTICLE IX MAINTENANCE AND REPAIR; RETURN....................................................................... 7 Section 9.1. Maintenance and Repair; Return............................................................ 7

-i- ARTICLE X MODIFICATIONS, ETC.................................................................................... 8 Section 10.1. Modifications, Substitutions and Replacement............................................. 8 Section 10.2. Notice to the Lessor and Administrative Agent............................................ 9 ARTICLE XI DISCHARGE OF LIENS; EASEMENTS........................................................................ 9 Section 11.1. Discharge of Liens....................................................................... 9 Section 11.2. Grants and Releases of Easements; Lessor Waivers......................................... 10 ARTICLE XII PERMITTED CONTESTS.................................................................................. 11 Section 12.1. Permitted Contest........................................................................ 11 ARTICLE XIII INSURANCE.......................................................................................... 11 Section 13.1. Required Insurance....................................................................... 11 Section 13.2. Insurance Coverage....................................................................... 12 ARTICLE XIV CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS.................................................... 13 Section 14.1. Risk of Loss, Damage or Destruction...................................................... 13 Section 14.2. Casualty and Condemnation................................................................ 13 Section 14.3. Environmental Matters.................................................................... 15 Section 14.4. Notice of Environmental Matters.......................................................... 16 ARTICLE XV TERMINATION OF LEASE................................................................................. 16 Section 15.1. Partial Termination Upon Certain Events.................................................. 16 Section 15.2. Partial Termination Procedures........................................................... 16 ARTICLE XVI EVENTS OF DEFAULT................................................................................... 17 Section 16.1. Lease Events of Default.................................................................. 17 Section 16.2. Remedies................................................................................. 19 Section 16.3. Waiver of Certain Rights................................................................. 22 Section 16.4. Deed of Trust Remedies................................................................... 23 Section 16.5. Excess Proceeds; Return of Properties.................................................... 23 ARTICLE XVII LESSOR'S RIGHT TO CURE............................................................................. 23 Section 17.1. The Lessor's Right to Cure the Lessee's Lease Defaults................................... 23 ARTICLE XVIII PURCHASE PROVISIONS............................................................................... 24 Section 18.1. Purchase of Properties................................................................... 24 Section 18.2. Expiration Date Purchase Obligation...................................................... 24 Section 18.3. Acceleration of Purchase Obligation...................................................... 25 Section 18.4. Failure to Elect Options................................................................. 25 -ii- ARTICLE XIX [INTENTIONALLY OMITTED]............................................................................. 25 ARTICLE XX REMARKETING OPTION................................................................................... 25 Section 20.1. Option to Remarket....................................................................... 25 Section 20.2. Procedures During Remarketing............................................................ 26 Section 20.3. Remedies for Failed Remarketing.......................................................... 28 Section 20.4. No Sale of Property...................................................................... 29 Section 20.5. Return of Excess Amounts................................................................. 29 ARTICLE XXI PROCEDURES RELATING TO PURCHASE OR REMARKETING OPTIONS.............................................. 30 Section 21.1. Provisions Relating to the Exercise of Purchase Option or Obligation and Conveyance upon Remarketing; Conveyance upon Certain Other Events......................................... 30 ARTICLE XXII ESTOPPEL CERTIFICATES.............................................................................. 31 Section 22.1. Estoppel Certificates.................................................................... 31 ARTICLE XXIII ACCEPTANCE OF SURRENDER........................................................................... 31 Section 23.1. Acceptance of Surrender.................................................................. 31 ARTICLE XXIV NO MERGER OF TITLE................................................................................. 32 Section 24.1. No Merger of Title....................................................................... 32 ARTICLE XXV INTENT OF THE PARTIES............................................................................... 32 Section 25.1. Ownership of the Properties.............................................................. 32 ARTICLE XXVI MISCELLANEOUS...................................................................................... 33 Section 26.1. Severability; Perpetuities; Etc.......................................................... 33 Section 26.2. Amendments and Modifications............................................................. 33 Section 26.3. No Waiver................................................................................ 33 Section 26.4. Notices.................................................................................. 33 Section 26.6. Headings and Table of Contents........................................................... 33 Section 26.7. Counterparts............................................................................. 34 Section 26.8. Governing Law............................................................................ 34 Section 26.9. Original Lease........................................................................... 34 Section 26.10. Time of Essence......................................................................... 34 Section 26.11. Liability Limited....................................................................... 34 Exhibit A - Form of Lease Supplement -iii- AMENDED AND RESTATED MASTER LEASE AND DEED OF TRUST THIS DOCUMENT SECURES FUTURE ADVANCES THIS AMENDED AND RESTATED MASTER LEASE AND DEED OF TRUST (this "Master Lease"), dated as of June 1, 2003 between LAM RESEARCH CORPORATION, a Delaware corporation, as Lessee and whose principal offices are located at 4650 Cushing Parkway, Fremont, California 94538 (the "Lessee") and SELCO SERVICE CORPORATION, an Ohio corporation, as Lessor, doing business in California as "Ohio SELCO Service Corporation", whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York 12207 (the "Lessor"). W I T N E S S E T H : WHEREAS, pursuant to a Participation Agreement dated as of the date hereof (as amended, modified, restated or supplemented from time to time, the "Participation Agreement"), among the Lessee, the Lessor, Key Corporate Capital Inc., and each other holder from time to time of the Notes, as Lenders (herein, the "Lenders"), and Key Corporate Capital Inc., as Administrative Agent (in such capacity, and together with its successors and assigns, the "Administrative Agent") the Lenders and the Lessor have agreed to finance the acquisition of the Properties; WHEREAS, on the initial Acquisition Date the Lessor shall acquire from Scotiabanc Inc., a Delaware corporation ("SBI"), the real property commonly known as Buildings #8 and #9 at 46555 and 46595 Landing Parkway, Fremont, California and more particularly described in the Lease Supplement attached hereto as Exhibit A, subject to that certain Lease dated as of January 10, 2000 between SBI, as owner, and Lessee, as lessee (as previously amended, the "SBI Lease"); WHEREAS, on the Acquisition Date the Lessor shall acquire from the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust"), the real property commonly known as Buildings 1 and 2 at 4540 and 4650 Cushing Parkway, Fremont, California and more particularly described in the Lease Supplement attached hereto as Exhibit A, subject to that certain Lease dated as of December 6, 2000 between Cushing Trust, as owner, and Lessee, as lessee (as previously amended, the "Cushing Lease"); WHEREAS, this Master Lease shall fully amend, replace and restate the SBI Lease and the Cushing Lease; WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires to lease from the Lessor, the Property specified in each Lease Supplement; and WHEREAS, the Properties will be subject to the terms of this Master Lease and the Lease Supplements; Lam Research Corporation Amended and Restated Master Lease NOW, THEREFORE, in consideration of the foregoing, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the SBI Lease and the Cushing Lease are hereby amended and restated in their entirety as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions; Interpretation. Capitalized terms used but not otherwise defined in this Master Lease have the respective meanings specified in Appendix A to the Participation Agreement; and the rules of interpretation set forth in Appendix A to the Participation Agreement shall apply to this Master Lease. ARTICLE II MASTER LEASE Section 2.1. Acceptance and Lease of Property. Subject to the terms and conditions set forth herein and in the Participation Agreement, including without limitation the satisfaction or waiver of the conditions set forth in Article VI thereof, the Lessor hereby agrees to accept, pursuant to the terms of the Participation Agreement, delivery on each Acquisition Date of a Property from one or more third parties designated by the Lessee and simultaneously to demise and lease to the Lessee hereunder and under the relevant Lease Supplement for the Lease Term, the Lessor's interest in such Property and the Lessee hereby agrees, expressly for the direct benefit of the Lessor, to lease from the Lessor for the Lease Term the interest of the Lessor in such Property identified in the applicable Lease Supplement. Section 2.2. Acceptance Procedure. The Lessee hereby agrees that the execution and delivery by it of a Lease Supplement on or as of each Acquisition Date shall, without further act, constitute the irrevocable acceptance by the Lessee of the Property set forth in such Lease Supplement for all purposes of this Master Lease and the other Operative Documents on the terms set forth therein and herein, and that such Property shall be deemed to be included in the leasehold estate of this Master Lease and shall be subject to the terms and conditions of this Master Lease as of the Acquisition Date thereof. Section 2.3. Lease Term. The Lease Term of this Master Lease for each Property shall commence on (and include) the Acquisition Date of such Property and end on (but exclude) the Expiration Date. Section 2.4. Title. Each Property is leased to the Lessee without any representation or warranty, express or implied, by the Lessor and subject to the rights of parties in possession, the existing state of title (including, without limitation, all Liens) and all applicable Requirements of Law. The Lessee shall not in any event have any recourse against the Lessor for any defect in or -2- Lam Research Corporation Amended and Restated Master Lease exception to title to any Property or leasehold interest therein other than resulting from Lessor Liens attributable to the Lessor. ARTICLE III PAYMENT OF RENT Section 3.1. Rent. (a) During the Lease Term, the Lessee shall pay Basic Rent to the Lessor on each Scheduled Payment Date, on the date required under Section 20.2(h) in connection with the Lessee's exercise of the Remarketing Option and, with respect to any Property, on any date on which this Master Lease shall terminate with respect to such Property. (b) Neither the Lessee's inability or failure to take possession of all or any portion of any Property when delivered by the Lessor, nor the inability or failure of the Lessor to deliver all or any portion of any Property to the Lessee on the Acquisition Date therefor, whether or not attributable to any act or omission of the Lessee or any act or omission of the Lessor, or for any other reason whatsoever, shall delay or otherwise affect the Lessee's obligation to pay Rent for such Property in accordance with the terms of this Master Lease. Section 3.2. Payment of Rent. Rent shall be paid absolutely net to each Person entitled thereto, so that this Master Lease shall yield to such Person the full amount thereof, without setoff, deduction or reduction. Section 3.3. Supplemental Rent. The Lessee shall pay to the Lessor or any other Person entitled thereto any and all Supplemental Rent promptly as the same shall become due and payable, and if the Lessee fails to pay any Supplemental Rent, the Lessor and such other Persons shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee shall pay to the Lessor, as Supplemental Rent, among other things, on demand, to the extent permitted by applicable Requirements of Law, interest at the applicable Overdue Rate on any installment of Basic Rent not paid when due for the period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due for the period from the due date until the same shall be paid. The expiration or other termination of the Lessee's obligations to pay Basic Rent hereunder shall not limit or modify the obligations of the Lessee with respect to Supplemental Rent. Unless expressly provided otherwise in this Master Lease or in the Participation Agreement, in the event of any failure on the part of the Lessee to pay and discharge any Supplemental Rent as and when due, the Lessee shall also promptly pay and discharge, to the extent incurred as a result of such failure on the part of the Lessee, any fine, penalty, interest or cost which may be assessed or added against any Participant by a third party for nonpayment or late payment of such Supplemental Rent, all of which shall also constitute Supplemental Rent. Section 3.4. Method of Payment. Each payment of Rent payable by the Lessee to the Lessor under this Master Lease or any other Operative Document shall be made by the Lessee to the Administrative Agent as assignee of the Lessor under the Assignment of Lease and Rent (or, if all Loans and all other amounts owing to the Lenders under the Loan Agreement and the other -3- Lam Research Corporation Amended and Restated Master Lease Operative Documents have been paid in full and all Commitments of the Lenders have been permanently terminated, to the Lessor) prior to 2:00 p.m. (New York City time) to the Account in immediately available funds consisting of lawful currency of the United States of America on the date when such payment shall be due. ARTICLE IV QUIET ENJOYMENT; RIGHT TO INSPECT Section 4.1. Quiet Enjoyment. Subject to the terms of each of the Operative Documents, the Lessee shall peaceably and quietly have, hold and enjoy each Property for the Lease Term, free of any claim or other action by the Lessor or anyone claiming by, through or under the Lessor with respect to any matters arising from and after the Acquisition Date. Such right of quiet enjoyment is independent of, and shall not affect the rights of the Lessor or any assignee thereof otherwise to initiate legal action to enforce, the obligations of the Lessee under this Master Lease. Section 4.2. Right to Inspect. During the Lease Term, the Lessee shall upon reasonable notice (except that no notice shall be required if a Lease Event of Default has occurred and is continuing), and from time to time, permit the Administrative Agent, any Participant, and their respective authorized representatives to inspect any Property subject to this Master Lease during normal business hours, and the Lessee will, upon the request of the Administrative Agent or any Participant, make available to such Person the books and records of the Lessee relating to such Property; provided that all such inspections shall be at the sole expense of the Administrative Agent or such Participant, as the case may be, unless a Lease Event of Default shall have occurred and is continuing, in which case such inspection shall be at the sole expense of the Lessee. ARTICLE V NET LEASE, ETC. Section 5.1. Net Lease. This Master Lease shall constitute a net lease. Any present or future law to the contrary notwithstanding, this Master Lease shall not terminate, nor shall the Lessee be entitled to any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to the Rent, nor shall the obligations of the Lessee hereunder be affected (except as expressly herein permitted and by performance of the obligations in connection therewith) by reason of: (i) any defect in the condition, merchantability, design, construction, quality or fitness for use of any Property or any part thereof, or the failure of any Property to comply with all Requirements of Law, including any inability to occupy or use any Property by reason of such non-compliance; (ii) any damage to, removal, abandonment, salvage, loss, contamination of or Release from, scrapping or destruction of or any requisition or taking of any Property or any part thereof; (iii) any restriction, prevention or curtailment of or interference with the construction on or any use of any Property or any part thereof including eviction; (iv) any defect in title of or rights to any Property or any Lien on such title or rights or on any -4- Lam Research Corporation Amended and Restated Master Lease Property; (v) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by the Administrative Agent or any Participant; (vi) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to the Lessee, the Administrative Agent, any Participant or any other Person, or any action taken with respect to this Master Lease by any trustee or receiver of the Lessee, the Administrative Agent, any Participant or any other Person, or by any court in any such proceeding; (vii) any claim that the Lessee has or might have against any Person, including, without limitation, the Administrative Agent, any Participant or any vendor, manufacturer, contractor of or for any Property; (viii) any failure on the part of the Lessor to perform or comply with any of the terms of this Master Lease, of any other Operative Document or of any other agreement; (ix) any invalidity or unenforceability or illegality or disaffirmance of this Master Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof; (x) the impossibility or illegality of performance by the Lessee, the Administrative Agent, any Participant or all of them; (xi) any action by any court, administrative agency or other Governmental Authority; or (xii) any other cause or circumstances whether similar or dissimilar to the foregoing and whether or not the Lessee shall have notice or knowledge of any of the foregoing. The Lessee's agreement in this Section 5.1 shall not affect any claim, action or right the Lessee may have against the Lessor or any other Participant. The parties intend that the obligations of the Lessee hereunder shall be covenants and agreements that are separate and independent from any obligations of the Lessor hereunder or under any other Operative Documents, and the obligations of the Lessee shall continue unaffected unless such obligations shall have been modified or terminated in accordance with an express provision of this Master Lease. Section 5.2. No Termination or Abatement. The Lessee shall remain obligated under this Master Lease in accordance with its terms and shall not take any action to terminate, rescind or avoid this Master Lease (except as provided herein), notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting any Participant, or any action with respect to this Master Lease which may be taken by any trustee, receiver or liquidator of any Participant or by any court with respect to any Participant. The Lessee hereby waives, to the extent permitted by law, all right (i) to terminate or surrender this Master Lease (except as provided herein) or (ii) to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to any Rent. The Lessee shall remain obligated under this Master Lease in accordance with its terms and the Lessee hereby waives, to the extent permitted by law, any and all rights now or hereafter conferred by statute or otherwise to modify or to avoid strict compliance with its obligations under this Master Lease. Notwithstanding any such statute or otherwise, the Lessee shall be bound by all of the terms and conditions contained in this Master Lease and the Lease Supplements. ARTICLE VI SUBLEASES AND ASSIGNMENTS Section 6.1. Subletting. The Lessee may sublease a Property or any portion thereof to any Person; provided, however, that: (a) no sublease or other relinquishment of possession of -5- Lam Research Corporation Amended and Restated Master Lease any Property shall in any way discharge or diminish any of the Lessee's obligations to the Lessor hereunder and the Lessee shall remain directly and primarily liable under this Master Lease and each Lease Supplement; (b) each sublease of such Property shall expressly be made subject to and subordinate to this Master Lease and the related Lease Supplement and to the rights of the Lessor hereunder and thereunder; (c) each sublease shall expressly provide for the surrender of the Property or portion thereof by the applicable sublessee at the election of the Administrative Agent or the Lessor (as applicable) after the occurrence of a Lease Event of Default; (d) each sublease shall expressly provide for termination prior to the Expiration Date unless the Lessee elects to purchase all of the Properties pursuant to Section 18.1; and (e) the use or uses under any sublease shall be such that they shall not impair the value or utility of such Property, as certified by a Responsible Officer of the Lessee; provided that such certification shall not be binding on the Lessor in the event the Lessee elects the Remarketing Option. Section 6.2 Assignment. During the Lease Term, the Lessee may assign to any Subsidiary or Affiliate of the Lessee at any time, in whole or in part, any of its right, title or interest in, to or under the Lease or any portion of any Property; provided that no such assignment shall in any way discharge or diminish any of the Lessee's obligations to the Lessor hereunder and the Lessee shall remain directly and primarily liable under this Master Lease and each Lease Supplement. No such assignment shall be effective unless (a) made pursuant to assignment and assumption documents in form and substance satisfactory to the Lessor and the Lenders, (b) an opinion of counsel to the assignee is delivered to the Lessor and the Lenders as to the due authorization, execution and delivery, and the enforceability of such assignment and such other matters as the Lessor and the Lenders may request, (c) the use or uses of any such assignee shall be such that they do not impair the value or utility of such Property, as certified by a Responsible Officer of the Lessee; provided that such certification shall not be binding on the Lessor in the event the Lessee elects the Remarketing Option, and (d) the Lessee or such assignee shall have made all filings and taken all other actions necessary or desirable to preserve and protect the rights and interests of the Lessor, the Administrative Agent and the Lenders under the Operative Documents, all at the Lessee's sole cost and expense. The Lessee shall notify the Lessor promptly, and in any event not less than thirty (30) days prior to, the date of such assignment, and provide the Lessor and the Lenders with the terms of such proposed assignment. ARTICLE VII LESSEE ACKNOWLEDGMENTS Section 7.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT ALTHOUGH THE LESSOR WILL OWN AND HOLD TITLE TO EACH PROPERTY, THE LESSEE IS SOLELY RESPONSIBLE FOR SUCH PROPERTY AND ANY ALTERATIONS OR MODIFICATIONS. THE LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY "AS-IS, WHERE IS, AND WITH ALL FAULTS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE ADMINISTRATIVE AGENT, THE LESSOR OR ANY LENDER AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW -6- Lam Research Corporation Amended and Restated Master Lease AND (D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR ON THE APPLICABLE ACQUISITION DATE. NEITHER THE ADMINISTRATIVE AGENT, NOR THE LESSOR NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO SUCH PERSON), VALUE, SUITABILITY, USE, CONDITION, DESIGN, OPERATION OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NEITHER THE ADMINISTRATIVE AGENT, NOR THE LESSOR NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO SUCH PERSON) OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY REQUIREMENT OF LAW. Section 7.2. Risk of Loss. During the Lease Term the risk of loss of or decrease in the enjoyment and beneficial use of each Property as a result of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is assumed by the Lessee and the Lessor shall not in any event be answerable or accountable therefor. ARTICLE VIII POSSESSION AND USE OF EACH PROPERTY, ETC. Section 8.1. Utility Charges. The Lessee shall pay or cause to be paid all charges for electricity, power, gas, oil, water, telephone, sanitary sewer service and all other rents and utilities used in or on each Property during the Lease Term. The Lessee shall be entitled to receive any credit or refund with respect to any utility charge paid by the Lessee and the amount of any credit or refund received by the Lessor on account of any utility charges paid by the Lessee, net of the costs and expenses reasonably incurred by the Lessor in obtaining such credit or refund, shall be promptly paid over to the Lessee. Section 8.2. Possession and Use of each Property. The Lessee covenants that each Property shall be used as an office facility or an assembly and research and development facility, as applicable, and applying standards of use no lower than the standards applied by the Lessee or its Affiliates for other comparable properties owned or leased by the Lessee or its Affiliates. The Lessee shall pay, or cause to be paid, all charges and costs required in connection with the use of each Property as contemplated by this Master Lease and each Lease Supplement. The Lessee shall not commit or permit any waste of any Property or any part thereof. Section 8.3. Compliance with Requirements of Law and Insurance Requirements. Subject to the terms of Article XII relating to permitted contests, the Lessee, at its sole cost and expense, shall (a) comply in all respects with all Requirements of Law (including all Environmental Laws) and Insurance Requirements relating to each Property, including the use, construction, operation, maintenance, repair and restoration thereof and the remarketing thereof pursuant to Article XX, whether or not compliance therewith shall require structural or extraordinary changes in the Improvements or interfere with the use and enjoyment of each -7- Lam Research Corporation Amended and Restated Master Lease Property and (b) procure, maintain and comply with all licenses, permits, orders, approvals, consents and other authorizations required for the construction, use, maintenance and operation of each Property and for the use, operation, maintenance, repair and restoration of the Improvements. ARTICLE IX MAINTENANCE AND REPAIR; RETURN Section 9.1. Maintenance and Repair; Return. (a) The Lessee, at its sole cost and expense, shall maintain each Property in as good condition as when delivered to the Lessee hereunder (ordinary wear and tear excepted) and make all necessary repairs thereto, of every kind and nature whatsoever, whether ordinary or extraordinary or foreseen or unforeseen, in each case as required by all Requirements of Law and Insurance Requirements and in no event applying standards of maintenance lower than the standards applied by the Lessee in the operation and maintenance of other comparable properties owned or leased by the Lessee or its Affiliates. (b) The Lessor shall not under any circumstances be required to build any improvements on any Property, make any repairs, replacements, alterations or renewals of any nature or description to any Property, make any expenditure whatsoever in connection with this Master Lease or the applicable Lease Supplement or maintain any Property in any way. The Lessee waives any right to (i) require the Lessor to maintain, repair or rebuild all or any part of any Property or (ii) make repairs at the expense of the Lessor pursuant to any Requirement of Law, Insurance Requirement, contract, agreement or covenant, condition or restriction in effect at any time during the Lease Term. (c) The Lessee shall, upon the expiration or earlier termination of this Master Lease with respect to each Property (other than as a result of the Lessee's purchase of the Property from the Lessor as provided herein), vacate and surrender such Property to the Lessor in the condition required by this Master Lease. (d) The Lessee hereby waives any and all rights it may have (i) under Section 1941 of the California Civil Code, (ii) to make repairs at Lessor's expense or to vacate the Property as set forth in Section 1942 of the California Civil Code or (iii) any similar rights under any other Applicable Law. ARTICLE X MODIFICATIONS, ETC. Section 10.1. Modifications, Substitutions and Replacement. During the Lease Term, the Lessee, at its sole cost and expense, may at any time and from time to time make alterations, renovations, improvements and additions to such Property or any part thereof and substitutions and replacements therefor (collectively, "Modifications"); provided, however, that: -8- Lam Research Corporation Amended and Restated Master Lease (a) except for any Modification required to be made pursuant to a Requirement of Law (a "Required Modification"), no Modification shall be made if it would adversely affect the marketability, value, utility or useful life of such Property or any part thereof from that which existed immediately prior to such Modification; (b) the Modification shall be done in a good and workmanlike manner; (c) the Modification shall comply with all Insurance Requirements and all Requirements of Law (including all Environmental Laws) applicable to such Modification, including the obtaining of any necessary permits; (d) subject to the terms of Article XII relating to permitted contests, the Lessee shall pay all costs and expenses and shall discharge (or cause to be insured or bonded over) within thirty (30) days after the same shall be filed (or otherwise become effective) any Liens arising with respect to the Modification; (e) such Modifications shall comply with Sections 8.3 and 9.1(a); and (f) the Lessee shall be required to obtain the prior written approval (which approval shall not be unreasonably withheld) of the Lessor and the Administrative Agent with respect to any structural alterations (other than Required Modifications) that shall cost in excess of 20% of the Property Cost of such Property. All Modifications shall remain part of the realty and shall be subject to this Master Lease and the applicable Lease Supplement(s) and title thereto shall immediately vest in the Lessor. So long as no Lease Event of Default has occurred and is continuing, the Lessee may place upon any Property any trade fixtures, machinery, equipment, inventory or other property belonging to the Lessee or third parties and may remove the same at any time during the Lease Term, subject, however, to the terms of Section 9.1(a); provided, however, that any trade fixtures placed on a Property do not impair the marketability, value, utility or useful life of such Property; provided, further, however, that the Lessee shall keep and maintain at each Property and shall not remove from any Property any Equipment (except for removal in connection with the maintenance, repair or replacement of such Equipment). Section 10.2. Notice to the Lessor and Administrative Agent. If the Lessee reasonably expects the cost of any Modification to exceed 20% of the Property Cost of the relevant Property, the Lessee shall deliver to the Lessor and the Administrative Agent a brief written narrative of the work to be performed in connection with such Modification prior to making such Modification and an Officer's Certificate stating that such work when completed will not impair the marketability, value, utility or useful life of the Property. -9- Lam Research Corporation Amended and Restated Master Lease ARTICLE XI DISCHARGE OF LIENS; EASEMENTS Section 11.1. Discharge of Liens. (a) The Lessee agrees that except as otherwise provided herein and subject to the terms of Article XII relating to permitted contests, the Lessee shall not directly or indirectly create or allow to remain, and shall promptly (and in any event within sixty (60) days after notice thereof is received by the Lessee from any Person) discharge (or cause the same to be insured or otherwise bonded over) at its sole cost and expense, any Lien, defect, attachment, levy, title retention agreement or claim upon any Property or any Lien, attachment, levy or claim with respect to any amounts held by the Lessor or the Administrative Agent pursuant to this Master Lease as collateral security for the Lessee's obligations or pending performance by the Lessee, other than (i) Permitted Property Liens and (ii) Liens on machinery, equipment, inventory, general intangibles and other personal property not financed by the proceeds of the Loans or Lessor Amounts. (b) Nothing contained in this Master Lease shall be construed as constituting the consent or request of the Lessor, the Administrative Agent or any Lender, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to any Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING ANY PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO ANY PROPERTY. Section 11.2. Grants and Releases of Easements; Lessor Waivers. So long as no Lease Event of Default shall have occurred and be continuing and subject to the provisions of Articles VII, IX and X and Section 8.3 hereof, the Lessor hereby consents in each instance to the following actions by the Lessee, in the name and stead of the Lessor, but at the Lessee's sole cost and expense: (a) the granting of easements, licenses, rights-of-way and other rights and privileges in the nature of easements reasonably necessary or desirable for the use, repair, or maintenance of any Property or burdening any Property as herein provided; (b) the release of existing easements or other rights in the nature of easements which are for the benefit of any Property; (c) if required by applicable Governmental Authority, the dedication or transfer of unimproved portions of any Property for road, highway or other public purposes; (d) the execution of amendments to any covenants and restrictions affecting any Property; and (e) the execution or release of any similar agreement; provided, however, that in each case (i) such grant, release, dedication, transfer or amendment does not impair the value, utility or remaining useful life of any Property, (ii) such grant, release, dedication, transfer or amendment is, in the Lessee's judgment, reasonably necessary in connection with the use, maintenance, alteration or improvement of any Property, (iii) such grant, release, dedication, transfer or amendment will not cause any Property or any portion thereof to fail to comply with the provisions of this Master Lease or any other Operative Document or fail to comply in any respect with all Requirements of -10- Lam Research Corporation Amended and Restated Master Lease Law (including, without limitation, all applicable zoning, planning, building and subdivision ordinances, all applicable restrictive covenants and all applicable architectural approval requirements), (iv) all governmental consents or approvals required prior to such grant, release, dedication, transfer, annexation or amendment have been obtained and all filings required prior to such action have been made, (v) the Lessee shall remain obligated under this Master Lease and each of the Lease Supplements in accordance with their respective terms, as though such grant, release, dedication, transfer or amendment had not been effected, and (vi) the Lessee shall pay and perform any obligations of the Lessor under such grant, release, dedication, transfer or amendment. Without limiting the effectiveness of the foregoing, provided that no Lease Event of Default shall have occurred and be continuing, the Lessor shall, upon the request of the Lessee, and at the Lessee's sole cost and expense, execute and deliver any instruments necessary or appropriate to confirm any such grant, release, dedication, transfer, annexation or amendment to any Person permitted under this Section 11.2, including landlord waivers with respect to any of the foregoing. ARTICLE XII PERMITTED CONTESTS Section 12.1. Permitted Contests. If, to the extent and for so long as (a) a test, challenge, appeal or proceeding for review of any Applicable Law or any Lien, encumbrance, levy, attachment or encroachment relating to any Property shall be prosecuted diligently and in good faith in appropriate proceedings by the Lessee or (b) compliance with any Applicable Law shall have been excused or exempted by a valid nonconforming use, variance permit, waiver, extension or forbearance, the Lessee shall not be required to comply with such Applicable Law or remove or discharge any Lien, encumbrance, levy, attachment or encroachment but only if and so long as any such test, challenge, appeal, proceeding, waiver, extension, forbearance or noncompliance shall not (in the reasonable opinion of the Lessor, the Administrative Agent and the Lenders) involve (A) any risk of criminal liability being imposed on the Lessor, the Administrative Agent or any Lender for failure to comply therewith, (B) any risk of (1) foreclosure, forfeiture or loss of any Property, or any part thereof or (2) the nonpayment of Rent or (C) any substantial risk of (1) the creation of any Lien (other than a Permitted Property Lien) on any part of any Property, (2) civil liability being imposed on the Lessor, the Administrative Agent, any Lender or any Property unless the Lessee shall have otherwise bonded or secured such amounts in a manner satisfactory to the Lessor, the Administrative Agent and the Lenders, as the case may be, or (3) enjoinment of, or interference with, the use, possession or disposition of any Property in any respect. Neither the Lessor, the Administrative Agent nor any Lender shall be required to join in any proceedings pursuant to this Section 12.1 unless a provision of any Applicable Law requires that such proceedings be brought by or in the name of such party; and in that event such party will join in the proceedings or permit them or any part thereof to be brought in its name if and so long as (i) the Lessee has not elected the Remarketing Option and (ii) the Lessee pays all related expenses and indemnifies such party (in a manner satisfactory to such party) with respect to such proceedings. -11- Lam Research Corporation Amended and Restated Master Lease ARTICLE XIII INSURANCE Section 13.1. Required Insurance. (a) Liability Insurance. During the Lease Term for each Property, the Lessee shall procure and carry commercial general liability insurance for claims for injuries or death sustained by persons or damage to property while on such Property and such other public liability coverages as are ordinarily procured by the Lessee or its Affiliates who own or operate similar properties, but in any case shall provide liability coverage of at least $50,000,000 per occurrence. Such insurance shall be on terms and in amounts that are no less favorable than insurance maintained by the Lessee or such Affiliates with respect to similar properties that they own or lease. The policy shall also specifically provide that the policy shall be considered primary insurance which shall apply to any loss or claim before any contribution by any insurance which the Lessor, the Administrative Agent and any Lender may have in force. (b) Worker's Compensation Laws. The Lessee shall, in connection with any Modifications and the operation of the Properties, comply with the applicable workers' compensation laws. (c) Hazard and Other Insurance. During the Lease Term for each Property, the Lessee shall keep, or cause to be kept, each Property insured against loss or damage by fire, windstorm, environmental risks and other risks (and during any Modification, builders' all-risk insurance) on terms and in amounts that are no less favorable than insurance covering other similar properties owned or leased by the Lessee or its Affiliates; provided that the Lessee shall also obtain (i) with respect to any Property located at a site that shall have been assigned a seismic zone factor of 4 under the Uniform Building Code published from time to time by the International Conference of Building Officials, coverage for earthquake (provided such coverage is maintained by owners of similar properties and in accordance with normal industry practice) and (ii) with respect to any Property located within an area identified as a special flood hazard area by the Federal Emergency Management Agency, coverage for flood. The Lessor acknowledges that the Lessee does not currently maintain earthquake insurance. Subject to the last sentence of this Section 13.1(c) and the terms of Section 14.2, all insurance proceeds in respect of any loss or occurrence for which the proceeds related thereto are (i) less than or equal to $3,000,000, in the absence of the occurrence and continuance of a Lease Event of Default, shall be adjusted by and paid to the Lessee for application toward the reconstruction, repair or refurbishment of such Property, and (ii) greater than $3,000,000 shall be adjusted by the Lessee and the Lessor working together to jointly resolve such insurance claim (unless a Lease Event of Default has occurred and is continuing, in which case such proceeds shall be adjusted solely by the Lessor) and held by the Lessor for application in accordance with Article XIV. (d) Deductibles. During the Lease Term, the insurance required to be obtained by the Lessee under this Section 13.1 may be subject to such deductible amounts and self-insured retentions as is consistent with the Lessee's or its Affiliates' practice for other properties similar to the Properties owned or leased by the Lessee or its Affiliates; provided that such deductible amounts and self-insured retentions shall not exceed $1,000,000 with respect to the insurance required by Section 13.1(a) and $1,000,000 with respect to the insurance required by Section -12- Lam Research Corporation Amended and Restated Master Lease 13.1(c). Such insurance may be carried under blanket policies maintained by or on behalf of the Lessee so long as such policies otherwise comply with the provisions of this Section 13.1. Section 13.2. Insurance Coverage. During the Lease Term for each Property, the Lessee shall cause the insurance required to be maintained by the Lessee under Section 13.1(a) or 13.1(c), to comply with the provisions of this Section 13.2. All insurance required under Section 13.1 shall be at the sole cost and expense of the Lessee. (a) On each Acquisition Date, the Lessee shall furnish the Lessor and the Administrative Agent with certificates showing the insurance required under Section 13.1 to be in effect. Such certificates shall include a provision for no less than thirty (30) days' advance written notice by the insurer to the Lessor and the Administrative Agent in the event of cancellation or reduction of such insurance. (b) The Lessee agrees that the insurance policy or policies required by Section 13.1(a) shall (i) name the Administrative Agent, the Lessor and each Lender as additional insureds (including any insurance policy maintained in connection with the construction of any Modifications) and (ii) include an appropriate clause pursuant to which such policy shall provide that it will not be invalidated should the Lessee waive, in writing, prior to a loss, any or all rights of recovery against any party for losses covered by such policy, and that the insurance in favor of the Lessor, the Administrative Agent and the Lenders and their respective rights under and interests in such policies shall not be invalidated or reduced by any act or omission (including breach of warranty) or negligence of the Lessee or any other Person having any interest in the Property. The Lessee hereby waives any and all such rights against the Lessor, the Administrative Agent and the Lenders to the extent of payments made under such policies. All insurance policies required by Section 13.1(c) shall name the Administrative Agent as loss payee pursuant to a standard mortgagee loss payee endorsement. (c) All such insurance shall be written by reputable insurance companies that are financially sound and solvent and otherwise reasonably appropriate considering the amount and type of insurance being provided by such companies and which shall have a rating by A.M. Best's Key Rating Guide of not less than "A" and a "Financial Performance Rating" of at least "VIII" and shall be otherwise reasonably acceptable to the Lenders and the Lessor. (d) The Lessee shall pay at its sole cost and expense as they become due all premiums for the insurance required by this Article XIII, and shall renew or replace each policy prior to the expiration date thereof. During the Lease Term, the Lessee shall, at the time each of the Lessee's insurance policies is renewed (but in no event less frequently than once each year), deliver to the Lessor and the Administrative Agent certificates of insurance evidencing that all insurance required by this Article XIII is being maintained by the Lessee and is in effect. Such certificates shall include a provision for no less than thirty (30) days' advance written notice by the insurer to the Administrative Agent and the Lessor in the event of cancellation or any material reduction of such insurance. -13- Lam Research Corporation Amended and Restated Master Lease ARTICLE XIV CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS Section 14.1. Risk of Loss, Damage or Destruction. At all times during the Lease Term for each Property, the Lessee bears all risk of loss, damage, theft, taking, destruction, confiscation, requisition or commandeering, partial or complete, of or to such Property or any part thereof, however caused or occasioned, such risk to be borne by the Lessee from the Acquisition Date for such Property and continuing until such Property has been returned to the Lessor in accordance with the provisions of this Master Lease or has been purchased by the Lessee or another Person in accordance with the provisions of this Master Lease. The Lessee agrees that no occurrence specified in the preceding sentence shall impair, in whole or in part, any obligation of the Lessee under this Master Lease, including the obligation to pay Rent. Section 14.2. Casualty and Condemnation. (a) Insurance Proceeds and Condemnation Awards. Subject to the provisions of Section 13.1 hereof and this Article XIV, (x) if all or a portion of any Property is damaged or destroyed in whole or in part by a Casualty during the Lease Term for such Property, any insurance proceeds payable with respect to such Casualty shall be adjusted by and paid directly to the Lessee, or if received by the Administrative Agent or any Participant, shall be paid over to the Lessee for the reconstruction, refurbishment and repair of the affected Property, and (y) if the use, access, occupancy, easement rights or title to any Property or any part thereof is the subject of a Condemnation during the Lease Term for such Property, then any award or compensation relating thereto shall be adjusted by and paid to the Lessee; provided, however, that, in each case, if (A) any Lease Default shall have occurred and be continuing, (B) such Casualty or Condemnation is an Event of Loss or (C) the amount of such proceeds, award or compensation equals or exceeds $2,000,000, then such award, compensation or insurance proceeds shall be adjusted jointly by the Lessee and the Lessor and paid directly to the Administrative Agent (as assignee of the Lessor) or, if received by the Lessee, shall be held in trust for the Participants and shall be paid over by the Lessee to the Administrative Agent, to be distributed by the Administrative Agent as follows: (x) in the case of a Lease Default, such amounts shall be distributed in accordance with Section 7.6(b) of the Participation Agreement or held as additional security for the Lessee's obligations, and (y) in the case of an Event of Loss, such amounts shall, in the Lessor's and the Administrative Agent's reasonable discretion, either (1) be paid to the Lessee for the repair and restoration of such Property in accordance with Section 14.2(d) or (2) be applied toward the payment of the applicable Property Cost of the affected Property and related amounts on the applicable Partial Termination Date in accordance with Section 15.1, and (z) in the case of proceeds, awards or compensation equal to or in excess of $2,000,000, such amounts shall be paid to and held by the Administrative Agent and, so long as no Lease Default shall have occurred and be continuing, paid to the Lessee upon completion of the repair and restoration of such Property. (b) Participation in Proceedings. The Lessee may appear at its own cost and expense in any proceeding or action to negotiate, prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any Casualty or Condemnation with respect to any Property and shall pay all expenses thereof. At the Lessee's reasonable request, and at the Lessee's sole cost and expense, the Lessor and the Administrative Agent shall participate in any -14- Lam Research Corporation Amended and Restated Master Lease such proceeding, action, negotiation, prosecution or adjustment. The Lessor and the Lessee agree that this Master Lease shall control the rights of the Lessor and the Lessee in and to any such award, compensation or insurance payment. (c) Notices of Casualty or Condemnation. In the event of any Casualty with respect to any Property for which the reasonable anticipated cost of restoration equals or exceeds 5% of the Property Cost of such Property or of an actual, pending or threatened Condemnation of any material interest in the Property, the Lessor or the Lessee, as the case may be, shall give notice thereof to the other and to the Lenders and the Administrative Agent promptly after the receipt of such notice. (d) Repair. If this Master Lease shall continue in full force and effect with respect to any Property following a Casualty or Condemnation affecting such Property which occurs at any time during the Lease Term thereof, then the Lessee shall, so long as such repair may reasonably be expected to be completed with due diligence prior to Expiration Date, at its sole cost and expense (utilizing insurance proceeds and condemnation awards as contemplated hereby; provided, however, that, if any award, compensation or insurance payment is not sufficient to restore such Property in accordance with this clause (d), the Lessee shall pay the shortfall), promptly and diligently repair any damage to such Property caused by such Casualty or Condemnation in conformity with the requirements of Article XIII and Sections 8.3, 9.1 and 10.1 using the Plans and Specifications for such Property (as modified to give effect to any subsequent Modifications, any Condemnation affecting such Property and all Applicable Laws) so as to restore such Property to at least the same or similar condition, operation, function and value as existed immediately prior to such Casualty or Condemnation with such Modifications as the Lessee may elect in accordance with Section 10.1. In such event, title to such Property shall remain with the Lessor subject to the terms of this Master Lease. Upon completion of such restoration, the Lessee shall furnish to the Lessor and the Administrative Agent a Responsible Officer's Certificate confirming that such restoration has been completed pursuant to this Master Lease. (e) Obligations Continue. In no event shall a Casualty or Condemnation affect the Lessee's obligations to pay Rent pursuant to Section 3.1 hereof or to perform its obligations and pay any amounts due on the Expiration Date or pursuant to Articles XVIII and XX hereof. (f) Excess Casualty/Condemnation Proceeds. Upon the earlier of (x) the date on which all damage to a Property caused by a Casualty or Condemnation shall have been repaired in accordance with Section 14.2(d) and (y) the date on which the Property Cost of the applicable Property and all other amounts due and payable under Section 15.1 shall have been paid to the Administrative Agent in connection with an Event of Loss Purchase, any Net Proceeds received by the Lessor, the Administrative Agent or any Lender in respect of such Casualty or Condemnation, to the extent remaining after any application of such Net Proceeds to the repair or restoration of the applicable Property or to the payment of the Property Cost for such Property and such other amounts, as the case may be (any such Net Proceeds remaining after such application, "Excess Casualty/Condemnation Proceeds"), shall be promptly turned over to the Lessee. -15- Lam Research Corporation Amended and Restated Master Lease Section 14.3. Environmental Matters. Promptly upon the Lessee's obtaining knowledge of the existence of an Environmental Violation with respect to any Property the cost of remediation of which the Lessee determines in its reasonable good faith judgment would reasonably be expected to exceed $1,000,000, the Lessee shall notify the Lessor and the Administrative Agent in writing of such Environmental Violation. If the Lessor elects not to terminate this Master Lease with respect to such Property pursuant to Section 15.1, at the Lessee's sole cost and expense, the Lessee shall promptly and diligently commence any response, clean up, remedial or other action necessary to remove, clean up or remediate any such Environmental Violation in accordance with the terms of Section 8.3. The Lessee shall, upon completion of remedial action by the Lessee, cause to be prepared by an environmental consultant reasonably acceptable to the Lessor a report describing the Environmental Violation and the actions taken by the Lessee (or its agents) in response to such Environmental Violation, and a statement by the consultant that the Environmental Violation has been remedied in compliance in all respects with applicable Environmental Laws. Each such Environmental Violation shall be remedied prior to the Expiration Date unless the relevant Property has been purchased by the Lessee in accordance with Section 15.1, 18.1 or 18.2. Nothing in this Article XIV shall reduce or limit the Lessee's obligations under Section 13.1, 13.2 or 13.3 of the Participation Agreement. Section 14.4. Notice of Environmental Matters. Promptly, but in any event within thirty (30) days from the date the Lessee has actual knowledge thereof, the Lessee shall provide to the Lessor and the Administrative Agent written notice of any notice of any pending or threatened claim, action or proceeding involving any Environmental Laws or any Release on or in connection with any Property. All such notices shall describe in reasonable detail the nature of the claim, action or proceeding and the Lessee's proposed response thereto. In addition, the Lessee shall provide to the Lessor and the Administrative Agent, within thirty (30) days of receipt, copies of all written communications with any Governmental Authority relating to any Environmental Violation in connection with any Property. The Lessee shall also promptly provide such detailed reports of any such environmental claims as may reasonably be requested by any Participant. In the event that the Lessor receives written notice of any pending or threatened claim, action or proceeding involving any Environmental Laws or any Release on or in connection with any Property, the Lessor shall promptly give notice thereof to the Lessee. ARTICLE XV TERMINATION OF LEASE Section 15.1. Partial Termination Upon Certain Events. If, with respect to any Property (any such Property, an "Affected Property"): (a) an Event of Loss occurs or (b) an Environmental Violation occurs or is discovered and the cost of remediation of which the Lessee determines in its reasonable good faith judgment would reasonably be expected to exceed $5,000,000 and in either case the Lessor (at the direction of the Required Participants) shall have given fifteen (15) Business Days' prior written notice (a "Partial Termination Notice") to the Lessee that, as a consequence of such event, (x) the Lease Supplement relating to such Property is to be terminated and (y) this Master Lease is to be terminated with respect to such Property, then the Lessee shall on the next occurring Scheduled Payment Date (but in any event not later -16- Lam Research Corporation Amended and Restated Master Lease than the Expiration Date), purchase the interest of the Lessor in the Affected Property by paying to the Administrative Agent (as assignee of the Lessor) an amount equal to the sum of (x) the Property Cost of the Affected Property on such date plus (y) all accrued and unpaid Basic Rent due and owing on such date plus (z) all Supplemental Rent due and owing on such date, and the Lessor shall transfer to the Lessee on such date of payment all of the interest of the Lessor in the Affected Property pursuant to the procedures set forth in Section 15.2 hereof. Section 15.2. Partial Termination Procedures. On the date of the payment by the Lessee of all amounts required to be paid under Section 15.1, in accordance with the procedures set forth in Section 15.1 (such date, the "Partial Termination Date"), this Master Lease shall terminate with respect to such Affected Property. The Lessor shall take the following actions in respect of the applicable Affected Property upon the Administrative Agent's receipt of all amounts due with respect to such Affected Property and all other amounts then due in accordance with Section 15.1: (a) the Lessor shall execute and deliver to the Lessee (or to the Lessee's designee) at the Lessee's cost and expense (which expenses include, without limitation, the payment of any transfer taxes): (i) a deed with respect to the Affected Property containing representations and warranties regarding the absence of Lessor Liens attributable to the Lessor (but no other representations or warranties), (ii) a bill of sale with respect to the interest of the Lessor in any items of personalty or Equipment on such Affected Property, containing representations and warranties regarding the absence of Lessor Liens attributable to the Lessor (but no other representations or warranties), and (iii) an assignment of any and all other interests of the Lessor in such Affected Property not otherwise conveyed in such deed or bill of sale (which shall include an assignment of all of the right, title and interest of the Lessor in and to any Excess Casualty/Condemnation Proceeds), in each case in recordable form and otherwise in conformity with local custom to the extent consistent with the foregoing scope of the Lessor's representations and warranties; (b) such Affected Property shall be conveyed to the Lessee (or to the Lessee's designee) "AS IS" and in its then present physical condition; and (c) at the request of the Lessee, Net Proceeds with respect to such Affected Property shall be applied against amounts due hereunder, and the Lessor shall convey to the Lessee any Excess Casualty/Condemnation Proceeds with respect to the Affected Property. ARTICLE XVI EVENTS OF DEFAULT Section 16.1. Lease Events of Default. The occurrence of any one or more of the following events (whether such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order -17- Lam Research Corporation Amended and Restated Master Lease of any court or any order, rule or regulation of any administrative or governmental body) shall constitute a "Lease Event of Default": (a) (i) the Lessee shall fail to make payment of any Basic Rent upon the same becoming due and payable and such failure shall continue unremedied for a period of three (3) days or (ii) the Lessee shall fail to make payment upon the same becoming due and payable of the Lease Balance, Purchase Option Price, Property Balance, Property Cost or Maximum Recourse Amount or any amounts payable in conjunction with the payment of any of the foregoing including, without limitation, amounts due pursuant to Sections 15.1, 15.2, 18.1, 18.2, 18.3 or 20.2 hereof; or (b) the Lessee shall fail to make payment of any Supplemental Rent (other than as specified in clause (a) above) when due and payable within five (5) days after receipt of notice thereof from the party to whom the Lessee is obligated to pay such Supplemental Rent; or (c) any insurance required to be maintained by the Lessee pursuant to Article XIII of this Master Lease shall fail to be in effect or the Lessee defaults in the compliance with Sections 10.1(i), (j), (k) or (l) of the Participation Agreement; or (d) the Lessee shall fail to observe or perform any term, covenant or condition applicable to it under any Operative Document to which it is a party (other than those described in Section 16.1(a), (b), or (c) hereof) and such failure shall not be remedied within thirty (30) days after notice thereof has been given to the Lessee; provided, that, in the event that such remedy cannot reasonably be completed within such thirty (30) day period, then Lessee shall have such additional time as shall be reasonably necessary, so long as Lessee commences such remedy within such thirty (30) day period and diligently thereafter prosecutes the same to completion, provided, further, in no event shall such period exceed ninety (90) days after such notice; or (e) the Lessee shall fail to observe or perform any term, covenant or condition applicable to it under Article XX of this Master Lease after giving written notice to the Lessor and the Administrative Agent of the Lessee's exercise of the Remarketing Option; or (f) any representation or warranty made or expressly deemed made by the Lessee in any Operative Document to which it is a party or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with any Operative Document shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or expressly deemed made; or (g) a "Default" or failure of the Lessee or any Subsidiary of the Lessee to pay when due Indebtedness or Off-Balance Sheet Obligations in an aggregate amount greater than $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet Obligations denominated in a currency other than Dollars); or the default by the Lessee or -18- Lam Research Corporation Amended and Restated Master Lease any Subsidiary of the Lessee in the performance of any term, provision or condition contained in any agreement under which any Indebtedness or Off-Balance Sheet Obligations in an aggregate amount greater than $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet Obligations denominated in a currency other than Dollars) was created or is governed, the effect of which is to cause, or to permit the holder or holders of any Indebtedness or Off-Balance Sheet Obligations to cause, Indebtedness or Off-Balance Sheet Obligations in an aggregate amount greater than $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet Obligations denominated in a currency other than Dollars) to become due prior to its stated maturity; or Indebtedness or Off-Balance Sheet Obligations in an aggregate amount greater than $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet Obligations denominated in a currency other than Dollars) shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the stated maturity thereof; or (h) the Lessee or any Material Subsidiary shall (i) have an order for relief entered with respect to it under the Bankruptcy Code or any other bankruptcy, insolvency or other similar law as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) fail to pay, or admit in writing its inability to pay, its debts generally as they become due, (iv) apply for, seek, consent to, or acquiesce in the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial portion of its Property, (v) institute any proceeding seeking an order for relief under the Bankruptcy Code or any other bankruptcy, insolvency or other similar law as now or hereafter in effect or seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under the Bankruptcy Code or any other law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action to authorize or effect any of the foregoing actions or (vii) fail to contest in good faith any appointment or proceeding described in Section 16.1(i) below; or (i) without the application, approval or consent of the Lessee or any Material Subsidiary, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Lessee or any Material Subsidiary or any substantial portion of the Property of any such Person, or a proceeding described in Section 16.1(h)(v) shall be instituted against the Lessee or any Material Subsidiary and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) consecutive days; or (j) the Lessee or any Subsidiary of the Lessee shall fail within sixty (60) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $15,000,000 which is not stayed on appeal or otherwise being appropriately contested in good faith; or -19- Lam Research Corporation Amended and Restated Master Lease (k) the Lessee or any other member of the Controlled Group shall fail to pay when due any amount or amounts which it shall have become liable to pay to the PBGC or to any Plan, or any notice of intent to terminate a Plan having aggregate Unfunded Vested Liabilities in excess of $5,000,000 shall be filed by a member of the Controlled Group and/or any Plan administrator, or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any such Plan, or a condition shall exist which would entitle the PBGC to obtain a decree adjudicating that any such Plan must be terminated; or (l) any Operative Document to which the Lessee is a party or any Lien granted by the Lessee under any Operative Document shall, in whole or in part, terminate, cease to be effective against, or (other than as expressly provided therein) cease to be the legal, valid, binding and enforceable obligation of the Lessee other than as permitted under, or pursuant to the terms of, or in connection with a transaction permitted by, any Operative Document; or (m) the Lessee shall directly or indirectly contest the effectiveness, validity, binding nature or enforceability of any Operative Document or any Lien granted under any Operative Document; or any Operative Document shall cease to be a legal, valid and binding obligation of the Lessee or cease to be in full force and effect. Section 16.2. Remedies. Upon the occurrence of any Lease Event of Default and at any time thereafter, the Lessor may, so long as such Lease Event of Default is continuing, do one or more of the following (and in such order) as the Lessor in its sole discretion shall determine, without limiting any other right or remedy the Lessor may have on account of such Lease Event of Default (including, without limitation, the obligation of the Lessee to purchase all of the Properties as set forth in Section 18.3): (a) The Lessor may (i) declare the entire outstanding Lease Balance to be due and payable together with accrued unpaid Rent and any other amounts payable under the Operative Documents, (ii) declare the Commitments to be terminated, whereupon the same shall be of no further force or effect; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Lessee or any of its Subsidiaries under the Bankruptcy Code, (A) the obligation of each Participant to make Advances shall automatically be terminated and (B) the Advances, all interest and Yield thereon and all other amounts payable under the Operative Documents shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Lessee or (iii) make demand upon the Lessee; (b) The Lessor may, by notice to the Lessee, rescind or terminate this Master Lease as of the date specified in such notice; provided, however, (i) no reletting, reentry or taking of possession of any Property (or any portion thereof) by the Lessor (or its agents) will be construed as an election on the Lessor's part to terminate this Master Lease unless a written notice of such intention is given to the Lessee, (ii) notwithstanding -20- Lam Research Corporation Amended and Restated Master Lease any reletting, reentry or taking of possession, the Lessor may at any time thereafter elect to terminate this Master Lease for a continuing Lease Event of Default and (iii) no act or thing done by the Lessor or any of its agents, representatives or employees and no agreement accepting a surrender of any Property shall be valid unless the same be made in writing and executed by the Lessor; (c) The Lessor may (i) demand that the Lessee, and the Lessee shall upon the written demand of the Lessor, return all of the Properties promptly to the Lessor in the manner and condition required by, and otherwise in accordance with all of the provisions of, Articles VII and IX and Section 8.3 hereof as if the Properties were being returned at the end of the Lease Term, and the Lessor shall not be liable for the reimbursement of the Lessee for any costs and expenses incurred by the Lessee in connection therewith, and (ii) without prejudice to any other remedy which the Lessor may have for possession of the Properties, and to the extent and in the manner permitted by Applicable Law, enter upon the Property and take immediate possession of (to the exclusion of the Lessee) the Properties or any part thereof and expel or remove the Lessee and any other Person who may be occupying any Property, by summary proceedings or otherwise, all without liability to the Lessor for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise and, in addition to the other damages of the Lessor, the Lessee shall be responsible for all costs and expenses incurred by the Lessor, the Administrative Agent and/or the Lenders in connection with any reletting, including, without limitation, reasonable brokers' fees and all costs of any alterations or repairs required to be made by the Lessor so that the Properties achieve the standard of condition required by this Master Lease; (d) As more fully set forth in Section 16.4 hereof and in each Lease Supplement (and consistent with the intent of the parties as detailed in Article XXV hereof), the Lessor may exercise all remedies available to a mortgagee, secured party, beneficiary or trustee under law or equity, including, to the extent permitted by law, the right to sell all or any part of the Properties at public or private sale, as the Lessor may determine; (e) The Lessor may, at its option, elect not to terminate this Master Lease and continue to collect all Basic Rent, Supplemental Rent, and all other amounts due to the Lessor (together with all costs of collection) and enforce the Lessee's obligations under this Master Lease as and when the same become due, or are to be performed, and at the option of the Lessor, upon any abandonment of any Property by the Lessee or re-entry of same by the Lessor, the Lessor may, in its sole and absolute discretion, elect not to terminate this Master Lease and may make the necessary repairs in order to relet any Property, and relet such Property or any part thereof for such term or terms (which may be for a term extending beyond the Lease Term of this Master Lease) and at such rental or rentals and upon such other terms and conditions as the Lessor in its reasonable discretion may deem advisable; and upon each such reletting, all rentals actually received by the Lessor from such reletting shall be applied to the Lessee's obligations hereunder and under the other Operative Documents in the manner provided in Section 7.6(a) or (c), as applicable, of the Participation Agreement. If such rentals received from such reletting -21- Lam Research Corporation Amended and Restated Master Lease during any period are less than the Rent to be paid during that period by the Lessee hereunder, the Lessee shall pay any deficiency, as calculated by the Lessor, to the Administrative Agent on the next Scheduled Payment Date; (f) Unless all of the Properties have been sold in their entirety, the Lessor may, whether or not the Lessor shall have exercised or shall thereafter at any time exercise any of its rights under clause (c), (d) or (e) of this Section 16.2 with respect to any or all of the Properties or any portions thereof, demand, by written notice to the Lessee specifying a date not earlier than twenty (20) days after the date of such notice, that the Lessee purchase, on the date specified in such notice, all of the unsold Properties in accordance with the provisions of Article XXI and Section 18.2; (g) The Lessor may exercise any other right or remedy that may be available to it under Applicable Law, or proceed by appropriate court action (legal or equitable) to enforce the terms hereof or to recover damages for the breach hereof. Separate suits may be brought to collect any such damages for any period(s), and such suits shall not in any manner prejudice the Lessor's rights to collect any such damages for any subsequent period(s), or the Lessor may defer any such suit until after the expiration of the Lease Term, in which event such suit shall be deemed not to have accrued until the expiration of the Lease Term; (h) The Lessor may retain and apply against the Lease Balance all sums which the Lessor would, absent such Lease Event of Default, be required to pay to, or turn over to, the Lessee pursuant to the terms of this Master Lease; or (i) The Lessor, to the extent permitted by Applicable Law, as a matter of right and without notice to the Lessee, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of any part of each Property, and the Lessee hereby irrevocably consents to any such appointment. Any such receivers shall have all of the usual powers and duties of receivers in like or similar cases and all of the powers and duties of the Lessor in case of entry, and shall continue as such and exercise such powers until the date of confirmation of the sale of the applicable Property unless such receivership is sooner terminated. The Lessor shall be entitled to enforce payment of the indebtedness and performance of the obligations secured hereby and to exercise all rights and powers under this instrument or under any of the other Operative Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this instrument nor its enforcement shall prejudice or in any manner affect the Lessor's right to realize upon or enforce any other security now or hereafter held by the Lessor, it being agreed that the Lessor shall be entitled to enforce this instrument and any other security now or hereafter held by the Lessor in such order and manner as the Lessor may determine in its absolute discretion. No remedy herein conferred upon or reserved to the Lessor is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other -22- Lam Research Corporation Amended and Restated Master Lease remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Operative Documents to the Lessor or to which it may otherwise be entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Lessor. In no event shall the Lessor, in the exercise of the remedies provided in this instrument (including, without limitation, in connection with the assignment of rents to the Lessor, or the appointment of a receiver and the entry of such receiver onto all or any part of the Properties), be deemed a "mortgagee in possession," and the Lessor shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. If requested by the Lessor in connection with the exercise of its remedies pursuant to this Section 16.2, the Lessee hereby agrees to enter into an operating agreement with respect to the Properties in connection therewith to serve as the operator of the Properties on market terms established in good faith and reasonably acceptable to the Lessor. Section 16.3. Waiver of Certain Rights. (a) To the maximum extent permitted by law, the Lessee hereby waives the benefit of any appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale of any Property or any interest therein and (b) if this Master Lease shall be terminated pursuant to Section 16.2, the Lessee waives, to the fullest extent permitted by law, (i) any notice of re-entry or the institution of legal proceedings to obtain re-entry or possession; (ii) any right of redemption, re-entry or repossession; (iii) the benefit of any laws now or hereafter in force exempting property from liability for rent or for debt or limiting the Lessor with respect to the election of remedies; and (iv) any other rights which might otherwise limit or modify any of the Lessor's rights or remedies under this Article XVI. Section 16.4. Deed of Trust Remedies. Without limiting any other remedies set forth in this Master Lease, and also, without limiting the generality of Article XXV hereof, the Lessor may proceed by a suit or suits in equity or at law, whether for a foreclosure hereunder or under the Lease Supplements, or (to the extent permitted by law) for the sale of each Property, pursuant to a power of sale, or against the Lessee on a recourse basis for the Lease Balance, or for the specific performance of any covenant or agreement contained herein or in aid of the execution of any power granted herein, or for the appointment of a receiver pending any foreclosure hereunder (or under the Lease Supplements) or the sale of any Property, or for the enforcement of any other appropriate legal or equitable remedy. The Lessor shall have all rights available to a beneficiary under a deed of trust or a secured party under the laws of the state where the relevant Property is located, including, without limitation, all rights granted under the specific statutes referenced in each Lease Supplement, if any (each such statute, as amended, is hereinafter referred to as a "Mortgage Foreclosure Act"). In the event that any provisions of this Master Lease shall be inconsistent with any Mortgage Foreclosure Act, the provisions of such Mortgage Foreclosure Act shall take precedence over such provision of this Master Lease, but shall not invalidate or render unenforceable any other provision of this Master Lease that can be construed in a manner consistent with such Mortgage Foreclosure Act. If any provision of this Master Lease shall grant the Lessor any rights or remedies upon default of the Lessee which are more limited than the rights that would otherwise be vested in the Lessor under such Mortgage Foreclosure Act in the absence of such provision, the Lessor shall be vested with the rights -23- Lam Research Corporation Amended and Restated Master Lease granted in such Mortgage Foreclosure Act to the full extent permitted by law. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives, to the fullest extent permitted by law, the defense of laches and any applicable statute of limitations. In the event of foreclosure, the Lessee authorizes and empowers the Lessor to effect insurance upon the Properties in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies required to be maintained under this Master Lease. Section 16.5. Excess Proceeds; Return of Properties. If, pursuant to the exercise by the Lessor of its remedies pursuant to Section 16.2 or 16.4, the Lessor shall have received an amount equal to the Lease Balance, then the Lessor shall promptly remit to the Lessee any excess amounts received by the Lessor and, at the sole cost and expense of the Lessee, transfer to the Lessee (or its designee) all of the Lessor's remaining right, title and interest (if any) in the Properties in accordance with Section 21.1. ARTICLE XVII LESSOR'S RIGHT TO CURE Section 17.1. The Lessor's Right to Cure the Lessee's Lease Defaults. The Lessor, without waiving or releasing any obligation or Lease Event of Default, may (but shall be under no obligation to) remedy any Lease Event of Default for the account and at the sole cost and expense of the Lessee, including the failure by the Lessee to maintain the insurance required by Article XIII, and may, to the fullest extent permitted by law, and notwithstanding any right of quiet enjoyment in favor of the Lessee, enter upon any Property for such purpose and take all such action thereon as may be necessary or appropriate therefor. No such entry shall be deemed an eviction of the Lessee. All reasonable out-of-pocket costs and expenses so incurred (including fees and expenses of counsel), together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid by the Lessor, shall be paid by the Lessee to the Lessor as Supplemental Rent. ARTICLE XVIII PURCHASE PROVISIONS Section 18.1. Purchase of Properties. Subject to the conditions contained herein, and without limitation of the Lessee's purchase obligation pursuant to Section 18.2 or 18.3, the Lessee shall have the irrevocable option on any Scheduled Payment Date during the Lease Term to purchase all, but not less than all (except as set forth in Section 15.14 of the Participation Agreement), of the Properties subject to this Master Lease (the "Purchase Option") at a price equal to the aggregate Lease Balance (or, in the case of the Partial Purchase Option under Section 15.14 of the Participation Agreement, the Property Balance with respect to any such Property) on the date of such purchase (as the case may be, the "Purchase Option Price"). The -24- Lam Research Corporation Amended and Restated Master Lease Lessee's exercise of its option pursuant to this Section 18.1 shall be subject to the following conditions: (i) the Lessee shall have delivered a Purchase Notice to the Lessor and the Administrative Agent not less than thirty (30) days prior to such purchase, specifying the date of such purchase (and, if the purchase is for less than all of the Properties, specify the Property subject to such purchase); and (ii) the Lessee shall not have delivered (or, if delivered, shall not have failed to rescind) a written notice of the Lessee's exercise of the Remarketing Option pursuant to Section 20.1(a). If the Lessee exercises its option pursuant to this Section 18.1 then, upon the Administrative Agent's receipt of all amounts due in connection therewith, the Lessor shall transfer to the Lessee or its designees all of the Lessor's right, title and interest in and to the Properties in accordance with the procedures set forth in Section 21.1(a), such transfer to be effective as of the date specified in the Purchase Notice. The Lessee may designate, in a notice given to the Lessor and the Administrative Agent not less than ten (10) Business Days prior to the closing of such purchase (time being of the essence), the transferee or transferees to whom the conveyance shall be made (if other than to the Lessee), in which case such conveyance shall (subject to the terms and conditions set forth herein) be made to such designee; provided, however, that such designation of a transferee or transferees shall not cause the Lessee to be released, fully or partially, from any of its obligations under this Master Lease, including, without limitation, the obligation to pay to the Lessor the Lease Balance on the date specified in the Purchase Notice. Section 18.2. Expiration Date Purchase Obligation. Unless (a) the Lessee shall have properly exercised its option pursuant to Section 18.1 and purchased all of the Properties pursuant thereto, or (b) the Lessee shall have properly exercised the Remarketing Option and shall have fulfilled all of the requirements of Article XX, then, subject to the terms, conditions and provisions set forth in this Article, and in accordance with the terms of Section 21.1(a), the Lessee (or its designee) shall purchase from the Lessor, and the Lessor shall convey to the Lessee (or its designee), on the Expiration Date all of the interest of the Lessor in all of the Properties for an amount equal to the Lease Balance. The Lessee may designate, in a notice given to the Lessor and the Administrative Agent not less than ten (10) Business Days prior to the closing of such purchase (time being of the essence), the transferee or transferees to whom the conveyance shall be made (if other than to the Lessee), in which case such conveyance shall (subject to the terms and conditions set forth herein) be made to such designee; provided, however, that such designation of a transferee or transferees shall not cause the Lessee to be released, fully or partially, from any of its obligations under this Master Lease, including, without limitation, the obligation to pay the Lessor the Lease Balance on such Expiration Date. Section 18.3. Acceleration of Purchase Obligation. The Lessee shall be obligated to purchase for an amount equal to the Lease Balance all of the interest of the Lessor in all of the Properties (notwithstanding any prior election to exercise its Purchase Option pursuant to Section 18.1) automatically and without notice upon the occurrence of any Lease Event of -25- Lam Research Corporation Amended and Restated Master Lease Default described in clause (i) of Section 16.1. Any purchase under this Section 18.3 shall be in accordance with the procedures set forth in Section 21.1(a). Section 18.4. Failure to Elect Options. IN THE EVENT THE LESSEE FAILS TO ELECT AN OPTION WITH RESPECT TO A PROPERTY UNDER SECTION 18.1 OR 20.1 AT LEAST 180 DAYS PRIOR TO THE END OF THE LEASE TERM THEN IN EFFECT, THE LESSEE WILL BE DEEMED TO HAVE ELECTED TO PURCHASE SUCH PROPERTY PURSUANT TO SECTION 18.2. ARTICLE XIX [INTENTIONALLY OMITTED] ARTICLE XX REMARKETING OPTION Section 20.1. Option to Remarket. Subject to the fulfillment of each of the conditions set forth in this Section 20.1 and Section 20.2 (collectively, the "Return Conditions"), the Lessee shall have the option (the "Remarketing Option") to remarket and complete the sale of all, but not less than all, of the Properties for the Lessor. The Lessee's effective exercise and consummation of the Remarketing Option shall be subject to the due and timely fulfillment of each of the following provisions and the provisions of Section 20.2 as of the dates set forth below: (a) On the date not later than one hundred eighty (180) days prior to the Expiration Date, the Lessee shall give to the Lessor and the Administrative Agent written notice of the Lessee's exercise of the Remarketing Option. (b) Not later than one hundred and twenty (120) days prior to the Expiration Date, the Lessee shall deliver to the Lessor an Environmental Audit for each Property. Each Environmental Audit shall be prepared by an environmental consultant selected by the Lessor in the Lessor's discretion and shall contain conclusions satisfactory to the Lessor as to the environmental status of such Property. If any such Environmental Audit indicates any exceptions calling for a Phase Two environmental assessment, the Lessee shall have also delivered prior to the Expiration Date a Phase Two environmental assessment by such environmental consultant and a written statement by such environmental consultant indicating that all such exceptions have been remedied in compliance with Applicable Law. (c) On the date of the Lessee's notice to the Lessor of the Lessee's exercise of the Remarketing Option, no Lease Event of Default or Lease Default shall exist, and, thereafter, no Lease Event of Default or Lease Default shall occur. -26- Lam Research Corporation Amended and Restated Master Lease (d) The Lessee shall have completed all Modifications, restoration and rebuilding of each Property pursuant to Sections 10.1 and 14.2 (as the case may be) and shall have fulfilled all of the conditions and requirements in connection therewith pursuant to such Sections, in each case prior to the date on which the Lessor receives the Lessee's notice of the Lessee's intention to exercise the Remarketing Option (time being of the essence), regardless of whether the same shall be within the Lessee's control. The Lessee shall have also paid the cost of all Modifications commenced prior to the Expiration Date. The Lessee shall not have been excused pursuant to Section 12.1 from complying with any Applicable Law that involved the extension of the ultimate imposition of such Applicable Law beyond the Expiration Date. Any Permitted Property Liens (other than Lessor Liens) on each Property that were contested by the Lessee shall have been removed and the Lessor shall have received evidence satisfactory to it that all Liens (other than Lessor Liens and uncontested Permitted Property Liens of the type described in clauses (i), (vii), (ix) and (x) of the definition thereof) have been removed. Section 20.2. Procedures During Remarketing. (a) During the Marketing Period, the Lessee shall, as nonexclusive agent for the Lessor, use its best efforts to sell the interest of the Lessor in each Property for which the Remarketing Option has been exercised and will attempt to obtain the highest purchase price therefor and for not less than the Fair Market Sales Value. The Lessee will be responsible for hiring brokers (if the Lessee so elects) and making each Property available for inspection by prospective purchasers. The Lessee shall promptly upon request permit inspection of each Property and any maintenance records relating to each Property by the Lessor, any Participant and any potential purchasers, and the Lessee shall otherwise do all things necessary to sell and deliver possession of each Property to any purchaser. All such marketing of the Properties shall be at the Lessee's sole expense. (b) The Lessee shall use best efforts to procure written bids from one or more bona fide prospective purchasers. No such purchaser shall be the Lessee or any Affiliate thereof. Each written offer must specify the Expiration Date as the closing date. The Lessor shall have the right, but shall be under no duty, to solicit bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to take action in connection with any such sale. (c) The Lessee shall submit all bids to the Lessor promptly upon receipt, and the Lessor will have the right to submit any one or more bids. Any sale by the Lessee shall be for the highest cash bid submitted to the Lessor. The Lessor shall determine the highest bid prior to the end of the Marketing Period, but in any event, the Lessor shall have no obligation to approve any bid for any Property unless the highest bid for such Property equals or exceeds the Property Cost for such Property plus all Permitted Sales Costs therefor. All bids shall be on an all-cash basis. (d) In connection with any such sale of any Property, the Lessee will provide to the purchaser all customary "seller's" indemnities (including, without limitation, an environmental indemnity to the extent the same are required by the purchaser) and representations and warranties regarding title, absence of Liens (other than Permitted Property Liens of the type described in clause (i), (vii), (viii) or (x) of the definition thereof) and the condition of such Property. The Lessee shall have obtained, at its cost and expense, all required governmental and regulatory consents and approvals and shall have made all filings as required by Applicable Law in order to carry out and complete the transfer of such Property. As to the Lessor, any such sale -27- Lam Research Corporation Amended and Restated Master Lease shall be made on an "as is, with all faults" basis without representation or warranty by the Lessor other than the absence of Lessor Liens attributable to the Lessor. (e) Subject to the reimbursement obligations set forth in clause (h) below, the Lessee shall pay directly, and not from the sale proceeds, all prorations, credits, costs and expenses of the sale of each Property, whether incurred by the Lessor or the Lessee, including, without limitation, the cost of all title insurance, surveys, environmental reports, appraisals, transfer taxes, the attorneys' fees of the Lessor, the Lessee's attorneys' fees, commissions, escrow fees, recording fees, and all applicable documentary and other transfer taxes. (f) The Lessee shall pay to the Administrative Agent on or prior to the Expiration Date (or in the case of Supplemental Rent, to the Person entitled thereto) an amount equal to the Maximum Recourse Amount for each Property plus all accrued and unpaid Rent (including Supplemental Rent, if any) for each Property and all other amounts hereunder which have accrued or will accrue prior to or as of the Expiration Date with respect to each Property, in the type of funds specified in Section 3.4 hereof. (g) The Lessee shall pay to the Administrative Agent on or prior to the Expiration Date the amounts, if any, required to be paid pursuant to Section 13.2 of the Participation Agreement. (h) The sale of each Property shall be consummated on the Expiration Date and the gross proceeds (the "Gross Remarketing Proceeds") of the sale of each Property (less any marketing, closing or other costs, prorations or commissions incurred by the Lessor) shall be paid directly to the Administrative Agent. If the sale of any Property is consummated during the Marketing Period, then, upon the Administrative Agent's timely receipt of the Gross Remarketing Proceeds thereof and all other amounts due to the Administrative Agent, the Lessor and the Participants under this Master Lease and the other Operative Documents (including all amounts due pursuant to clause (f) above and Article XIII of the Participation Agreement), the Administrative Agent shall apply such Gross Remarketing Proceeds, first, to the payment of Permitted Sales Costs, and second, as set forth in Section 7.4 of the Participation Agreement. If the Gross Remarketing Proceeds from such sale (if any) of a Property exceeds the sum of (i) the aggregate Property Balance for such Property being sold as of such date minus the Maximum Recourse Amount, and other amounts paid to Administrative Agent pursuant to clause (f) above for such Property plus (ii) all Permitted Sales Costs with respect to such Property, then the excess shall be paid to the Lessee on the Expiration Date. (i) Except as expressly set forth herein, the Lessee shall have no right, power or authority to bind the Lessor or any Participant in connection with any proposed sale of any Property. (j) During the Marketing Period, the obligation of the Lessee to pay Rent (including the installment of Rent due on the Expiration Date) shall continue undiminished until payment in full of the Lease Balance and all other amounts due to the Participants under the Operative Documents to which the Lessee is a party. -28- Lam Research Corporation Amended and Restated Master Lease Section 20.3. Remedies for Failed Remarketing. If the Lessee effectively elects the Remarketing Option with respect to any Property and each of the conditions and requirements in Sections 20.1 and 20.2 shall have been satisfied, but nevertheless the Lessee is unable to obtain bids satisfactory to the Lessor, and the sale of a Property is not consummated prior to the end of the Marketing Period, the Lessor shall by written notice to the Lessee choose one or both of the following remedies (which election may be changed at any time): (a) Continue Remarketing Efforts. At the request of the Lessor, the Lessee shall continue to market such Property on behalf of the Lessor for up to an additional six (6) months and at the sole cost and expense of the Lessee (subject to Section 20.2(h) above), and during such extended marketing period continue to comply with the requirements of Articles IX, X, XI, XIII, XIV and XX at the Lessee's sole cost and expense. The Lessor shall by written notice to the Lessee indicate the duration of such extended marketing period (the last day of such period, the "Extended Expiration Date"), and the Lessor shall have the option to accelerate or shorten such Extended Expiration Date at any time. If such Property shall not have been sold prior to the Extended Expiration Date, the Lessor can then elect the remedies available under Section 20.3(b) hereof with respect to such unsold Property. (b) Return. Demand that such unsold Property be returned to the Lessor, whereupon the Lessee shall do each of the following at its own cost and expense: (i) pay the Maximum Recourse Amount, execute and deliver to the Lessor and the Lessor's title insurance company an affidavit as to the absence of any Liens (other than Permitted Property Liens of the type described in clause (i), (vii), (viii) or (x) of the definition thereof), and execute and deliver to the Lessor a statement of termination of this Master Lease to the extent relating to such Property; (ii) transfer possession of such Property to the Lessor or any Person designated by the Lessor, by surrendering the same into the possession of the Lessor or such Person, as the case may be, in the condition required by this Master Lease and in compliance with Applicable Law; and (iii) cooperate fully with the Lessor and/or any Person designated by the Lessor to receive such Property, which cooperation shall include: if requested by the Lessor, subject to the good faith mutual agreement of the Lessor and the Lessee, the entering into a property management agreement with respect to such Property and in connection therewith serving as the property manager of such Property on market terms established in good faith and reasonably acceptable to the Lessor, providing copies of all books and records regarding the maintenance and ownership of such Property and all non-proprietary data and technical information relating thereto, providing a current copy of the applicable Plans and Specifications, to the extent permitted by Requirements of Law, granting or assigning all assignable licenses necessary for the operation and maintenance of such Property and the seeking and obtaining of all necessary Governmental -29- Lam Research Corporation Amended and Restated Master Lease Action. The obligations of the Lessee under this paragraph shall survive the expiration or termination of this Master Lease. Section 20.4. No Sale of Property. If the Lessee effectively elects the Remarketing Option with respect to the Properties and each of the conditions and requirements in Sections 20.1 and 20.2 shall have been satisfied, but nevertheless the Lessee is unable to obtain a bid at least equal to the Property Balance during the Remarketing Period or any extension thereof pursuant to Section 20.3(a) and the Properties are not sold (due either to the Lessor's rejection of any bids or the failure to obtain any bids), there shall not be deemed to be a Lease Event of Default by virtue of such failure to sell the Properties and the Lessee shall only be obligated to make the payments referred to in Sections 20.2(e), (f) and (g) hereof. Section 20.5. Return of Excess Amounts. If, in connection with an effective election of the Remarketing Option, the Lessee pays the Maximum Recourse Amount and relinquishes its interest in the Properties, in accordance with the provisions hereof and of the other Operative Documents, as applicable, and, at any time thereafter, the Administrative Agent shall have received as of any date of determination (whether through the Lessee's payment of such Maximum Recourse Amount, as the case may be, or through the sale or reletting of the Properties to a third party) an amount exceeding the sum of the following: (i) the Property Balance of each Property on the date of such determination, (ii) if such date of determination occurs after the Expiration Date, an Imputed Return on each Participant's outstanding Loans or Lessor Amounts made with respect to each Property, during the period from the Expiration Date to such date of determination, (iii) all costs and expenses (including, without limitation, legal costs and attorneys' fees) of each of the Participants and the Administrative Agent incurred in connection with each Property (including, without limitation, all costs and expenses incurred in connection with any reletting or sale of each Property or any portion thereof) and (iv) all other amounts owing to each of the Participants and the Administrative Agent under the Operative Documents, to the extent relating to each Property or allocable to each Property, then the Administrative Agent (or, as the case may be, the Lessor) shall pay such excess over to the Lessee. ARTICLE XXI PROCEDURES RELATING TO PURCHASE OR REMARKETING OPTIONS Section 21.1. Provisions Relating to the Exercise of Purchase Option or Obligation and Conveyance upon Remarketing; Conveyance upon Certain Other Events. (a) In connection with any termination of this Master Lease with respect to any Property pursuant to the terms of Article XV, in connection with the Lessee's purchase of each Property in accordance with Section 18.1 or 18.2 hereof, in connection with the Lessee's Expiration Date Purchase Obligation or obligations under Section 16.2(f) or 18.3 or in connection with the Lessor's receipt of an aggregate amount equal to all amounts set forth in Section 16.5 as set forth in such Section or in connection with any sale pursuant to the Remarketing Option in accordance with Article XX, then, upon the date on which this Master Lease is to terminate and upon tender by the Lessee of -30- Lam Research Corporation Amended and Restated Master Lease the amounts set forth in Article XV, Sections 16.2(f), 16.5, 18.1, 18.2 or 18.3 hereof, as applicable: (i) the Lessor shall execute and deliver to the Lessee (or to the Lessee's designee) at the Lessee's cost and expense: (x) a quitclaim deed with respect to the relevant Property containing representations and warranties of grantor regarding the absence of Lessor Liens attributable to the Lessor (but no other representations or warranties), (y) a bill of sale with respect to the interest of the Lessor in any items of personalty or Equipment on such Property, containing representations and warranties of grantor regarding the absence of Lessor Liens attributable to the Lessor (but no other representations or warranties), and (z) an assignment of the entire interest of the Lessor in such Property (which shall include an assignment of all of the right, title and interest of the Lessor in and to any Excess Casualty/Condemnation Proceeds), in each case in recordable form and otherwise in conformity with local custom to the extent consistent with the foregoing scope of the Lessor's representations and warranties and free and clear of the Lien of the Lessor Mortgage, the Mortgage and any Lessor Liens attributable to the Lessor; (ii) such Property shall be conveyed to the Lessee (or to the Lessee's designee) "AS IS" and in its then present physical condition; (iii) the Lessor shall convey to the Lessee any Excess Casualty/Condemnation Proceeds with respect to such Property; and (iv) the Lessor shall execute and deliver to the Lessee (or its designee) and the Lessee's title insurance company an affidavit as to the Lessor's title and Lessor Liens attributable to the Lessor and shall execute and deliver to the Lessee a statement of termination of this Master Lease with respect to such Property and termination of the Lease Supplement (if applicable) covering such Property. (b) If the Lessee properly exercises the Remarketing Option with respect to a Property pursuant to Article XX and a satisfactory purchaser is located, then the Lessee shall, on the Expiration Date, and at its own cost, transfer possession of such Property to the independent purchaser thereof (unless otherwise agreed to by such purchaser and Lessee), by surrendering the same into the possession of such purchaser, free and clear of all Liens other than Permitted Property Liens of the type described in clause (i), (vii), (viii) or (x) of the definition thereof, in good condition (as modified by Modifications permitted by this Master Lease), ordinary wear and tear excepted, and in compliance with Applicable Law. The Lessee shall cooperate with the Lessor and the independent purchaser(s) of such Property in order to facilitate the purchase by such purchaser of such Property, which cooperation shall include, among other things, the following, all of which the Lessee shall do (or cause to be done) on or before the Expiration Date or as soon thereafter as is reasonably practicable: providing copies of all books and records regarding the maintenance and ownership of such Property and all non-proprietary data and technical information relating thereto; providing a current copy of the Plans and Specifications for such Property; to the extent permitted by any Requirement of Law, granting or assigning all assignable licenses necessary for the operation and maintenance of such Property; and seeking -31- Lam Research Corporation Amended and Restated Master Lease and obtaining all necessary Governmental Action. The obligations of the Lessee under this paragraph shall survive the expiration or termination of this Master Lease. The Lessor agrees to cooperate and execute such documents as are necessary to facilitate the foregoing. ARTICLE XXII ESTOPPEL CERTIFICATES Section 22.1. Estoppel Certificates. At any time and from time to time upon not less than twenty (20) Business Days' prior request by the Lessor or the Lessee (the "Requesting Party"), the other party (whichever party shall have received such request, the "Certifying Party") shall furnish to the Requesting Party a certificate signed by an individual having the office of vice president, director or higher certifying that this Master Lease is in full force and effect (or that this Master Lease is in full force and effect as modified and setting forth the modifications); the dates to which the Basic Rent and Supplemental Rent have been paid; to the best knowledge of the signer of such certificate, whether or not the Requesting Party is in default under any of its obligations hereunder and, if so, the nature of such alleged default; and such other matters under this Master Lease as the Requesting Party may reasonably request. Any such certificate furnished pursuant to this Article XXII may be relied upon by the Requesting Party, and any existing or prospective mortgagee, purchaser or lender, and any accountant or auditor, of, from or to the Requesting Party (or any affiliate thereof). ARTICLE XXIII ACCEPTANCE OF SURRENDER Section 23.1. Acceptance of Surrender. No surrender to the Lessor of this Master Lease or of all or any of the Properties or of any part of any thereof or of any interest therein shall be valid or effective unless agreed to and accepted in writing by the Lessor and, prior to the payment or performance of all obligations under the Loan Agreement and termination of the Commitments, the Administrative Agent, and no act by the Lessor or any Lender or any representative or agent of the Lessor or any Lender other than a written acceptance, shall constitute an acceptance of any such surrender. ARTICLE XXIV NO MERGER OF TITLE Section 24.1. No Merger of Title. There shall be no merger of this Master Lease of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, in whole or in part, (a) this Master Lease or the leasehold estate created hereby or any interest in this Master Lease or such leasehold estate, (b) the fee estate in -32- Lam Research Corporation Amended and Restated Master Lease any Property, except as may expressly be stated in a written instrument duly executed and delivered by the appropriate Person or (c) a beneficial interest in the Lessor. ARTICLE XXV INTENT OF THE PARTIES Section 25.1. Ownership of the Properties. (a) The parties hereto intend that (i) for the Lessee's United States' financial accounting purposes, the Lessor will be treated as the owner and lessor of an undivided interest in each Property and the Lessee will be treated as the lessee of each Property leased by it hereunder and (ii) for federal and all state and local income tax purposes, state real estate and commercial law and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by the Properties and (C) the Lessee will be treated as the owner of each Property and will be entitled to all tax benefits ordinarily available to an owner of properties similar to the Properties for such tax purposes. Nevertheless, the Lessee acknowledges and agrees that none of the Administrative Agent, the Lessor, the Arranger or any Lender has made any representations or warranties to the Lessee concerning the tax, the Lessee's accounting or legal characteristics of the Operative Documents and that the Lessee has obtained and relied upon such tax, accounting and legal advice concerning the Operative Documents as it deems appropriate. The parties hereto shall not take any position inconsistent with the intentions expressed herein. (b) It is the intent of the parties hereto that this Master Lease grants a security interest and mortgage or deed of trust, as the case may be, on each Property to the Lessor or for the benefit of the Lessor and the other Participants to secure the performance of the Lessee under and payment of all amounts under the Lease and the other Operative Documents all as more specifically set forth in Section 5 of each Lease Supplement. ARTICLE XXVI MISCELLANEOUS Section 26.1. Severability; Perpetuities; Etc. If any term or provision of this Master Lease or any application thereof shall be declared invalid or unenforceable, the remainder of this Master Lease (or any Lease Supplement) and any other application of such term or provision shall not be affected thereby. If any right or option of the Lessee provided in this Master Lease, including any right or option described in Article XIV, XV, XVIII or XX, would, in the absence of the limitation imposed by this sentence, be invalid or unenforceable as being in violation of the rule against perpetuities or any other rule of law relating to the vesting of an interest in or the suspension of the power of alienation of property, then such right or option shall be exercisable only during the period which shall end twenty-one (21) years after the date of death of the last survivor of the descendants of Franklin D. Roosevelt, the former President of the United States, Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the founder of the -33- Lam Research Corporation Amended and Restated Master Lease Standard Oil Company, known to be alive on the date of the execution, acknowledgment and delivery of this Master Lease. Section 26.2. Amendments and Modifications. Subject to the requirements, restrictions and conditions set forth in the Participation Agreement, neither this Master Lease nor any provision hereof may be amended, waived, discharged or terminated except by an instrument in writing in recordable form signed by the parties hereto. Section 26.3. No Waiver. No failure by the Lessor, the Administrative Agent, any Participant or the Lessee to insist upon the strict performance of any term hereof or to exercise any right, power or remedy upon a default hereunder, and no acceptance of full or partial payment of Rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term. To the fullest extent permitted by law, no waiver of any default shall affect or alter this Master Lease, and this Master Lease shall continue in full force and effect with respect to any other then existing or subsequent default. Section 26.4. Notices. All notices, demands, requests, consents, approvals and other communications hereunder shall be in writing and directed to the address described in, and deemed received in accordance with the provisions of, Section 15.3 of the Participation Agreement. Section 26.5. Successors and Assigns. All the terms and provisions of this Master Lease shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Section 26.6. Headings and Table of Contents. The headings and table of contents in this Master Lease are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 26.7. Counterparts. This Master Lease may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument. SECTION 26.8. GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW (EXCEPT AS OTHERWISE SET FORTH IN THE LEASE SUPPLEMENT WITH RESPECT TO THE CREATION AND PERFECTION OF THE LIENS AND SECURITY INTERESTS IN EACH PROPERTY AND THE RIGHTS AND REMEDIES OF THE LESSOR AND THE PARTICIPANTS WITH RESPECT TO EACH PROPERTY). Section 26.9. Original Lease. The single executed original of this Master Lease marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and containing the receipt thereof of KEY CORPORATE CAPITAL INC., as Administrative Agent for the Lenders therefor on or following the signature page thereof shall be the Original Executed Counterpart of this Master Lease (the "Original Executed Counterpart"). To the extent that this -34- Lam Research Corporation Amended and Restated Master Lease Master Lease constitutes chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest in this Master Lease may be created through the transfer or possession of any counterpart other than the Original Executed Counterpart. Section 26.10. Time of Essence. With respect to each of the Lessee's obligations and the Lessor's obligations hereunder, time is of the essence, and each such party hereby acknowledges and confirms the foregoing. Section 26.11. Liability Limited. The obligations of the Lessor hereunder are subject to the limitations set forth in Section 15.10 of the Participation Agreement. Section 26.12. Related Properties. Notwithstanding anything contained herein or in any other Operative Document to the contrary, in the event the Land or Improvements comprising Property No. 2, Property No. 3 or Property No. 4 are (a) terminated from this Lease pursuant to Section 15.1 hereof or (b) the Lessee elects to exercise the Partial Purchase Option with respect thereto, then the Partial Termination or Partial Purchase Option will be irrevocably deemed to have occurred or have been exercised with respect to the remaining portion of Property No. 2, Property No. 3 or Property No. 4, as applicable. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -35- IN WITNESS WHEREOF, the parties have caused this Master Lease to be duly executed and delivered as of the date first above written. LAM RESEARCH CORPORATION, as Lessee By _________________________________________ Name_____________________________________ Its______________________________________ SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By _________________________________________ Donald C. Davis Its Vice President S-1 THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART, Receipt of this original counterpart of the foregoing Lease is hereby acknowledged as of the date hereof. KEY CORPORATE CAPITAL INC., as Administrative Agent By _________________________________________ Name_____________________________________ Its _____________________________________ S-2 EXHIBIT A TO MASTER LEASE (CALIFORNIA LEASE SUPPLEMENT) THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 1 (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 1 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. W I T N E S S E T H : WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (the "Subject Land") together with all Improvements which hereafter may be constructed on the Subject Land (the "Subject Improvements" and, together with the Subject Land, the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. -2- (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the -3- Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject -4- Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default -5- and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and -6- fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE -7- SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber ---------------- Name Craig Garber Title VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------- Donald C. Davis Its Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) A-1 STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTERIAL SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________ A-2 SCHEDULE I TO LEASE SUPPLEMENT NO. 1 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 1 PARCEL ONE: PARCEL 1, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES 24 THROUGH 26, ALAMEDA COUNTY RECORDS. RESERVING THEREFROM: AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA DESIGNATED "J.A.E." ON SAID MAP. PARCEL FIVE: AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL ONE, ABOVE, OVER THAT PORTION OF PARCEL 2, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP. Property No. 2 PARCEL TWO: PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES 24 THROUGH 26, ALAMEDA COUNTY RECORDS. RESERVING THEREFROM: AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA DESIGNATED "J.A.E." ON SAID MAP. PARCEL THREE: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS: A-3 ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST, 59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST, 15.00 FEET TO THE POINT OF BEGINNING. PARCEL FOUR: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS. ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18 FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE, NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE POINT OF BEGINNING. PARCEL SIX: AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP. A-4 Property No. 8 PARCEL A: PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. Property No. 9 PARCEL A: PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. A-5 EX-10.87 5 f93126exv10w87.txt EXHIBIT 10.87 EXHIBIT 10.87 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 1 (LAND AND IMPROVEMENTS) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 1 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. W I T N E S S E T H : WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (the "Subject Land") together with all Improvements which hereafter may be constructed on the Subject Land (the "Subject Improvements" and, together with the Subject Land, the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. -2- (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on the date June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the -3- Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject -4- Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default -5- and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and -6- fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE -7- SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/Craig Garber ------------------- Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ----------------------- Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) A-1 STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public ________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________ A-2 SCHEDULE I TO LEASE SUPPLEMENT NO. 1 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 1 PARCEL ONE: PARCEL 1, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES 24 THROUGH 26, ALAMEDA COUNTY RECORDS. RESERVING THEREFROM: AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA DESIGNATED "J.A.E." ON SAID MAP. PARCEL FIVE: AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL ONE, ABOVE, OVER THAT PORTION OF PARCEL 2, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP. A-3 EX-10.88 6 f93126exv10w88.txt EXHIBIT 10.88 Exhibit 10.88 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 2 (LAND) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 2 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. W I T N E S S E T H : WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (herein referred to as the "Subject Land" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. -2- (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the -3- Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject -4- Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default -5- and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and -6- fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE -7- SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber -------------------- Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ---------------------- Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) A-1 STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________________ A-2 SCHEDULE I TO LEASE SUPPLEMENT NO. 2 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 2 PARCEL TWO: PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES 24 THROUGH 26, ALAMEDA COUNTY RECORDS. RESERVING THEREFROM: AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA DESIGNATED "J.A.E." ON SAID MAP. PARCEL THREE: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS: ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST, 59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST, 15.00 FEET TO THE POINT OF BEGINNING. PARCEL FOUR: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS FOR THE BENEFIT OF PARCEL 2, HEREIN, A-3 AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS. ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18 FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE, NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE POINT OF BEGINNING. PARCEL SIX: AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP. A-4 EX-10.89 7 f93126exv10w89.txt EXHIBIT 10.89 Exhibit 10.89 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 3 (IMPROVEMENTS) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 3 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. W I T N E S S E T H : WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (the "Subject Land") and all Improvements which are now or hereafter may be constructed on the Subject Land (such Improvements being hereinafter referred to as the "Subject Improvements" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the -2- benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being -3- understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject -4- Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent -5- required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of -6- the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO -7- OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/Craig Garber --------------------- Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------------ Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: _____________________________ -11- SCHEDULE I TO LEASE SUPPLEMENT NO. 3 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 2 PARCEL TWO: PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES 24 THROUGH 26, ALAMEDA COUNTY RECORDS. RESERVING THEREFROM: AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA DESIGNATED "J.A.E." ON SAID MAP. PARCEL THREE: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS: ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST, 59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST, 15.00 FEET TO THE POINT OF BEGINNING. PARCEL FOUR: AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY -12- THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS. ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25 AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18 FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE, NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE) 11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE POINT OF BEGINNING. PARCEL SIX: AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP. -13- EX-10.90 8 f93126exv10w90.txt EXHIBIT 10.90 Exhibit 10.90 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 4 (LAND) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 4 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. WITNESSETH: WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (herein referred to as the "Subject Land" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). -2- 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal -3- amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the -4- Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. -5- After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct -6- any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. -7- 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber ------------------------ Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------------ Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public ________________________________ (TYPE OR PRINT NAME) STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public ____________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________ -11- SCHEDULE I TO LEASE SUPPLEMENT NO. 4 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 8 PARCEL A: PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. -12- EX-10.91 9 f93126exv10w91.txt EXHIBIT 10.91 Exhibit 10.91 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 5 (IMPROVEMENTS) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 5 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. WITNESSETH: WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (the "Subject Land") and all Improvements which are now or hereafter may be constructed on the Subject Land (such Improvements being hereinafter referred to as the "Subject Improvements" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the -2- benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being -3- understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject -4- Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent -5- required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of -6- the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO -7- OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber ------------------------ Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------------ Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________ -11- SCHEDULE I TO LEASE SUPPLEMENT NO. 5 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 8 PARCEL A: PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. -12- EX-10.92 10 f93126exv10w92.txt EXHIBIT 10.92 Exhibit 10.92 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 6 (LAND) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 6 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. WITNESSETH: WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (herein referred to as the "Subject Land" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). -2- 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal -3- amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the -4- Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. -5- After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct -6- any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. -7- 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber ------------------------ Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------------ Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public _________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ____________________ -11- SCHEDULE I TO LEASE SUPPLEMENT NO. 6 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 9 PARCEL A: PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. -12- EX-10.93 11 f93126exv10w93.txt EXHIBIT 10.93 Exhibit 10.93 THIS INSTRUMENT PREPARED BY, RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Sean T. Maloney SCHIFF HARDIN & WAITE 6600 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY - -------------------------------------------------------------------------------- NOTICE: THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE RECORDING DATE HEREOF. NOTICE: THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE. LEASE SUPPLEMENT NO. 7 (IMPROVEMENTS) (Memorandum of Lease Supplement, Memorandum of Amended and Restated Master Lease and Deed of Trust Fixture Filing and Memorandum of Option to Purchase) THIS LEASE SUPPLEMENT NO. 7 (Memorandum of Lease Supplement, Memorandum of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM RESEARCH CORPORATION, a Delaware corporation, having its principal office at 4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California corporation, as trustee (`Trustee"), having its principal office at 110 West Taylor Street, San Jose, California 95110, for the benefit of Lessor and the Lenders ("Beneficiary"). The Amended and Restated Master Lease and Deed of Trust which this Lease Supplement supplements and of which this Lease Supplement is a memorandum, amends, restates, supercedes and replaces the unrecorded leases (a) with a lease balance of $30,000,000, disclosed by the following recorded documents: Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000 Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded in the Official Records of Alameda County, California ("Official Records") on December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease Supplement Land) made by and between the Cushing Trust and the Lessee and recorded in the Official Records on December 7, 2000 as Series No. 2000359110 and (b) with a lease balance of $27,146,185.35, disclosed by the following recorded document: Memorandum of Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the Lessee and recorded in the Official Records on January 21, 2000 as Series No. 2000019027. ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become "fixtures" (as that term is defined in the California Uniform Commercial Code) on the real estate described in Schedule I attached hereto and this instrument, upon being filed for record in the real estate records, shall operate also as a financing statement upon such of the Property which is or may become fixtures. The Lessee has an interest of record in the Property. This instrument is to be recorded in, among other places, the real estate records of the county in which such property is located. WITNESSETH: WHEREAS, the Lessor is the record owner of the land described on Schedule I attached hereto (the "Subject Land") and all Improvements which are now or hereafter may be constructed on the Subject Land (such Improvements being hereinafter referred to as the "Subject Improvements" or the "Subject Property"); WHEREAS, the Lessor desires to lease the Subject Property to the Lessee and the Lessee wishes to lease the Subject Property from the Lessor; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to enter into this Lease Supplement, as follows: 1. Certain Terms. Capitalized terms used but not otherwise defined in this Lease Supplement have the meanings specified in Appendix A to the Participation Agreement dated as of June 1, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Participation Agreement"), and the rules of interpretation specified in Appendix A to the Participation Agreement shall apply to this Lease Supplement. 2. Nature of Transaction. (a) The parties intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and lessor of the respective Properties and the Lessee will be treated as the lessee of such Properties and (ii) for federal, state and local income tax purposes, state real estate and commercial law purposes and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which loans are secured by such Properties and (C) the Lessee will be treated as the owner of such Properties and will be entitled to all tax benefits ordinarily available to an owner of properties like such Properties for such tax purposes. (b) It is the intent of the parties hereto that this Lease Supplement grants a security interest and deed of trust, as the case may be, on the Subject Property to the Trustee for the -2- benefit of the Lessor and the Lenders to secure the Lessee's performance under and payment of all amounts under the Lease and the other Operative Documents (the "Subject Obligations"). 3. Subject Property; Memorandum of Lease. Attached hereto as Schedule I is the description of the Subject Land. Effective upon the execution and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Master Lease. The Master Lease is incorporated by reference herein as if set forth herein in its entirety. Subject to the terms and conditions of the Master Lease, the Lessor hereby leases the Subject Property to the Lessee for the Lease Term (as defined below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to lease the Subject Property from the Lessor for the Lease Term. The Master Lease is dated as of June 1, 2003 and is by and between the Lessor and the Lessee. 4. Lease Term; Option to Purchase. The term of this Lease Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June 23, 2008 (the "Expiration Date"). For and in consideration of good and valuable consideration paid by the Lessee to the Lessor as described in the Master Lease, the Lessor hereby grants to the Lessee the right to purchase the Subject Property during the Lease Term of this Lease Supplement on the terms and subject to the conditions (including, without limitation, payment of the Property Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14 of the Participation Agreement. 5. Liens and Security Interests. (a) Specifically, without limiting the generality of Section 2, the Lessor and the Lessee intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting the Lessee, any Participant or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lenders and the Lessor as unrelated third party lenders to the Lessee secured by respective Properties (it being understood that the Lessee hereby deeds, warrants and grants a security interest in the Subject Property (consisting of a fee deed of trust with respect to the Subject Property) WITH POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to secure all Lessor Amounts and Loans advanced by the Participants for the acquisition of the respective Properties together with Yield or interest, as applicable, thereon, and all other amounts payable under the Operative Documents in connection therewith, effective on the date hereof). (b) Specifically, but without limiting the generality of Section 2, the Lessor and the Lessee further intend and agree that, for the purpose of securing the obligation of the Lessee for the repayment of the above-described loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and the Lease Supplements shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the California Uniform Commercial Code and a real property deed of trust; (ii) the conveyance provided for hereby and in Article II of the Master Lease shall be deemed to be a grant by the Lessee to the Beneficiary of a deed of trust lien and security interest in all of the right, title and interest of the Lessee in and to the Subject Property and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property (it being -3- understood that the Lessee hereby deeds and warrants and grants a security interest in the Subject Property and all proceeds thereof to the Lessor to secure all Loans and Lessor Amounts advanced by the Participants for the acquisition of such Properties (the principal amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at any given time), together with Yield or interest thereon, and all other amounts payable under the Operative Documents in connection therewith) and (iii) the possession by the Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents, goods or tangible chattel paper shall be deemed to be "perfection by possession" for purposes of perfecting the security interest pursuant to Section 9-313 of the California Uniform Commercial Code and the Lessor hereby acknowledges that it holds possession of such instruments, money, negotiable documents, goods or tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the California Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed to have been given for the purpose of perfecting such security interest under all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent with the Master Lease and the Lease Supplements, take such actions and execute, deliver, file and record such other documents, financing statements and deeds of trust as may be necessary to ensure that, if the Lease was deemed to create a security interest in the Subject Property in accordance with this Section, such security interest would be deemed to be a perfected security interest (subject only to Permitted Property Liens) and will be maintained as such throughout the Lease Term. (c) Specifically, but without limiting the foregoing or the generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title and interest in and to the following (collectively, the "Mortgaged Property"): (i) the Subject Property and Appurtenant Rights relating thereto and all proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights, including, without limitation, the stock in any water company providing water for irrigation of the Subject Property, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Subject Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Subject Property or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Lessee from any source; (iii) if and to the extent acquired by the Lessee with the proceeds of Advances (and transferred to the Lessor by SBI or Cushing Trust), all right, title and interest of the Lessee in all furnishings, furniture, fixtures, machinery, apparatus, Equipment, fittings, appliances, building supplies and materials, vehicles (excluding the Lessee's personal automobiles), chattels, goods, consumer goods, farm products, warranties, chattel paper, documents, accounts, general intangibles, and goodwill related thereto, and all other articles of personal property of every kind and nature whatsoever, tangible or intangible, now, heretofore or hereafter acquired and now, heretofore or hereafter (A) arising out of or related to the ownership of the Subject Property, (B) located in, on or about the Subject Property or (C) used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Subject -4- Property; (iv) all right, title and interest of the Lessee in any and all leases, rental agreements and arrangements of any sort now or hereafter affecting the Subject Property or any portion thereof and providing for or resulting in the payment of money to the Lessee for the use of the Subject Property or any portion thereof, whether the user enjoys the Subject Property or any portion thereof as tenant for years, licensee, tenant at sufferance or otherwise, and irrespective of whether such leases, rental agreements and arrangements be oral or written, and including any and all extensions, renewals and modifications thereof (the "Subject Leases") and guaranties of the performance or obligations of any tenants or lessees thereunder, together with all income, rents, issues, profits and revenues from the Subject Leases (including all tenant security deposits and all other tenant deposits, whether held by the Lessee or in a trust account, and all other deposits and escrow funds relating to any Subject Leases), and all the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of the Lessee of, in and to the same; provided, however, that the Lessee shall have a revocable license to collect and apply such rental payments and revenues as provided in the Master Lease and the other Operative Documents; (v) to the extent transferable under any Requirement of Law, all right, title and interest of the Lessee in, to and under all management contracts, service contracts, utility contracts, leases of equipment, documents and agreements relating to the construction of any Improvements (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and governmental approvals) and all other contracts, licenses and permits now or hereafter affecting the Subject Property or any part thereof and all guaranties and warranties with respect to any of the foregoing (the "Subject Contracts"); (vi) all right, title and interest of the Lessee in any insurance policies or binders required to be maintained by the Lessee pursuant to the terms of the Master Lease or now or hereafter relating to the Subject Property, including any unearned premiums thereon, as further provided in the Master Lease; (vii) all right, title and interest of the Lessee in any and all awards, payments, proceeds and the right to receive the same, either before or after any foreclosure hereunder, as a result of any temporary or permanent injury or damage to, taking of or decrease in the value of the Subject Property by reason of casualty, condemnation or otherwise as further provided in the Master Lease; (viii) all claims and causes of action arising from or otherwise related to any of the foregoing, and all rights and judgments related to any legal actions in connection with such claims or causes of action; and (ix) all Modifications, extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds of any of the foregoing; all of which foregoing items are hereby declared and shall be deemed to be a portion of the security for the indebtedness and Subject Obligations herein described, a portion of the above described collateral being located upon the Subject Land; provided however that, without limiting the foregoing, the Mortgaged Property shall not include any inventory of the Lessee. 6. Remedies. Without limiting any other remedies set forth herein, in the event that a court of competent jurisdiction rules that each of the Master Lease and this Lease Supplement constitutes a deed of trust or other secured financing with respect to the Subject Property as is the intent of the parties pursuant to Article XXV of the Master Lease, then the Lessor and the Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all sums secured hereby immediately due and payable by delivery to the Trustee of written declaration of default and demand for the sale and of written notice of default and of election to cause to be sold the Subject Property which notice the Trustee shall cause to be filed for record to the extent -5- required by law. The Beneficiary also shall deposit with the Trustee the Lease Supplement and all documents evidencing the Lease Balance and expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, the Trustee, without demand on the Lessee, shall sell the Mortgaged Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. The Trustee may postpone sale of all or any portion of the Mortgaged Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. The Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Lessee, the Trustee, or the Beneficiary as hereinafter defined, may purchase at such sale. The Lessee shall have all rights available to a Trustor under the laws of the jurisdiction in which the Mortgaged Property is located except to the extent waived in the Operative Documents. The Lessee agrees that the agreements of the Lessee herein contained shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purpose of any suit brought under this subparagraph, the Lessee hereby waives the defense of laches and any applicable statute of limitations. After deducting all costs, fees and expenses of the Trustee and of this trust, including cost of evidence of title in connection with sale, the Trustee shall apply to proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. In the event of foreclosure, the Lessee authorizes and empowers the Trustee or the Beneficiary to effect insurance upon the Subject Property in amounts aforesaid for a period covering the time of redemption from foreclosure sale provided by law, and if necessary therefor, to cancel any or all existing insurance policies. In connection with any sale or sales hereunder, Beneficiary may elect to treat to the fullest extent permitted by law any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the real property covered hereby or any improvements thereon without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of real property. Any sale of any personal property hereunder shall be conducted in any manner permitted by Section 9604 or any other applicable section of the California Commercial Code. Where the Mortgaged Property consists of real and personal property or fixtures whether or not such personal property is located on or within the real property, the Beneficiary may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property, and fixtures in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, the Beneficiary may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted under Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary elects to proceed in the manner permitted under Section 9604(a)(1)(B) of -6- the California Commercial Code, the power of sale herein granted shall be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by the Beneficiary, and the Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where the Mortgaged Property consists of real property and personal property, any reinstatement of the obligation secured hereby, following default and an election by Beneficiary to accelerate the maturity of said obligation, which is made by the Beneficiary or any other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute, shall not, in accordance with the terms of California Commercial Code Section 9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the California Commercial Code; nor shall any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceedings held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code shall be applied to the secured obligation and to the Beneficiary's and the Trustee's reasonable costs and expenses in the manner required by Section 2924c. Should the Beneficiary elect to sell any portion of the Mortgaged Property which is real property or which is personal property or fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the California Commercial Code to sell together with real property in accordance with the laws governing a sale of real property, the Beneficiary or the Trustee shall give such notice of default and election to sell as may then be required by law. Any requirement of the California Commercial Code for reasonable notification shall be met by mailing written notice to the Lessee at its address above set forth at least ten (10) days prior to the sale or other event for which such notice is required. Notwithstanding anything to the contrary in this Lease Supplement, the Lessee, in accordance with the applicable laws of the State of California and applicable provisions of the California Rules of Procedure, or of any other general or local law or rules or regulations of the State of California relating to deeds of trust does hereby declare and assent to the passage of a decree to sell the Mortgaged Property by the equity court having jurisdiction for the sale thereof and the Trustee appointed by such decree of court shall have, subject to the terms of the decree of court, the same authority and power to sell on the terms and conditions herein set forth. This assent to decree shall not be exhausted in the event the proceeding is dismissed before the indebtedness secured hereby is paid in full. 7. Non-Responsibility. Nothing contained in this Lease Supplement shall be construed as constituting the consent or request of the Lessor, the Administrative Agent, or any other Participant, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Subject Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO -7- OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO THE SUBJECT PROPERTY. 8. Ratification. The terms and provisions of the Master Lease are hereby ratified and confirmed and remain in full force and effect. In the event of any conflict between the terms of the Master Lease and the terms of this Lease Supplement, the terms of the Master Lease shall control. 9. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 10. Counterpart Execution. This Lease Supplement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 11. Maximum Recourse Amount. The percentage applicable to the calculation of the Maximum Recourse Amount for the Subject Property is set forth on Schedule III to the Participation Agreement. -8- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Lease Supplement as of the date first above written. LESSEE: LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber ------------------------ Name: Craig Garber Its: VP and Treasurer LESSOR: SELCO SERVICE CORPORATION, an Ohio corporation, doing business in California as "Ohio SELCO Service Corporation", as Lessor By /s/ Donald C. Davis ------------------------ Donald C. Davis Its: Vice President -9- STATE OF CALIFORNIA ) ) SS.: COUNTY OF ALAMEDA ) On June ___, 2003 before me, _________________________, personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed this instrument. WITNESS my hand and official seal. [SEAL] Notary Public _____________________________ (TYPE OR PRINT NAME) STATE OF COLORADO ) ) SS.: COUNTY OF BOULDER ) I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Donald C. Davis, the Vice President of SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as "Ohio SELCO Service Corporation"), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Vice President, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act and deed of said corporation for the uses and purposes therein set forth. Given under my hand and notarial seal, this _____ day of June, 2003. [NOTARIAL SEAL] Notary Public ________________________________ (TYPE OR PRINT NAME) (SEAL) Commission Expires: ___________________ -11- SCHEDULE I TO LEASE SUPPLEMENT NO. 7 LEGAL DESCRIPTION OF SUBJECT LAND Property No. 9 PARCEL A: PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND 28, ALAMEDA COUNTY RECORDS. PARCEL B: NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16, 1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY 2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS. -12- EX-10.94 12 f93126exv10w94.txt EXHIBIT 10.94 Exhibit 10.94 CONFIDENTIAL TREATMENT REQUESTED ================================================================================ PARTICIPATION AGREEMENT Dated as of June 1, 2003 among LAM RESEARCH CORPORATION, as Lessee, SELCO SERVICE CORPORATION, as Lessor, KEY CORPORATE CAPITAL INC., as Lender, and KEY CORPORATE CAPITAL INC., as Administrative Agent ------------------------- KEY LEASE ADVISORY SERVICES, Arranger ================================================================================ * THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. TABLE OF CONTENTS

SECTION HEADING PAGE Parties......................................................................................................... 1 Recitals........................................................................................................ 1 ARTICLE I DEFINITIONS; INTERPRETATION........................................................................... 1 ARTICLE II DOCUMENTATION DATE.................................................................................. 2 Section 2.1. Documentation Date....................................................................... 2 ARTICLE III FUNDING OF ADVANCES................................................................................. 4 Section 3.1. Advances................................................................................. 4 Section 3.2. Lessor Commitment........................................................................ 4 Section 3.3. Lenders' Commitments..................................................................... 5 Section 3.4. Procedures for Advances.................................................................. 5 Section 3.5. Interest Rate; Yield Rate................................................................ 5 ARTICLE IV YIELD; INTEREST; FEES................................................................................ 6 Section 4.1. Yield.................................................................................... 6 Section 4.2. Interest on Loans........................................................................ 6 Section 4.3. Payments of Rent; Payments and Prepayments of Loans and Lessor Amounts................... 6 Section 4.4. Fees..................................................................................... 6 Section 4.5. Place and Manner of Payments............................................................. 7 Section 4.6. Pro Rata Treatment....................................................................... 7 Section 4.7. Sharing of Payments...................................................................... 7 ARTICLE V CERTAIN INTENTIONS OF THE PARTIES..................................................................... 8 Section 5.1. Nature of Transaction.................................................................... 8 Section 5.2. Amounts Due Under the Lease.............................................................. 9 ARTICLE VI CONDITIONS PRECEDENT: ACQUISITION DATES............................................................. 9 Section 6.1. Acquisition Dates........................................................................ 9 Section 6.2. Delivery of Documents.................................................................... 13 ARTICLE VII DISTRIBUTIONS....................................................................................... 13 Section 7.1. Basic Rent............................................................................... 13 Section 7.2. Purchase Payments by the Lessee.......................................................... 13 Section 7.3. Payment of Maximum Recourse Amounts...................................................... 13 Section 7.4. Sales Proceeds of Remarketing of the Properties.......................................... 14

-i- Section 7.5. Supplemental Rent........................................................................ 14 Section 7.6. Distribution of Payments after Lease Event of Default.................................... 14 Section 7.7. Casualty and Condemnation Amounts........................................................ 16 Section 7.8. Other Payments........................................................................... 16 Section 7.9. Order of Application..................................................................... 17 Section 7.10. Payments to Account..................................................................... 17 ARTICLE VIII REPRESENTATIONS.................................................................................... 17 Section 8.1. Representations of the Lenders........................................................... 17 Section 8.2. Representations of the Lessee............................................................ 17 Section 8.3. Representations of the Lessor............................................................ 21 ARTICLE IX PAYMENT OF CERTAIN EXPENSES.......................................................................... 22 Section 9.1. Transaction Expenses..................................................................... 22 Section 9.2. Brokers' Fees and Stamp Taxes............................................................ 22 Section 9.3. Loan Agreement and Related Obligations................................................... 23 ARTICLE X OTHER COVENANTS AND AGREEMENTS........................................................................ 23 Section 10.1. Covenants of the Lessee................................................................. 23 Section 10.2. SELCO Status............................................................................ 28 Section 10.3. Covenants of Each Participant........................................................... 28 Section 10.4. Release of Properties................................................................... 29 ARTICLE XI [INTENTIONALLY OMITTED].............................................................................. 29 ARTICLE XII TRANSFERS OF PARTICIPANTS' INTERESTS................................................................ 29 Section 12.1. Assignments............................................................................. 29 Section 12.2. Participations.......................................................................... 31 Section 12.3. Withholding Taxes; Disclosure of Information; Pledge Under Regulation A................. 31 ARTICLE XIII INDEMNIFICATION.................................................................................... 32 Section 13.1. General Indemnification................................................................. 32 Section 13.2. End of Term Indemnity................................................................... 33 Section 13.3. Environmental Indemnity................................................................. 34 Section 13.4. Proceedings in Respect of Claims........................................................ 36 Section 13.5. General Tax Indemnity................................................................... 37 Section 13.6. Indemnity Payments in Addition to Lease Obligations..................................... 41 Section 13.7. Eurodollar Rate Lending Unlawful........................................................ 41 -ii- Section 13.8. Deposits Unavailable.................................................................... 41 Section 13.9. Increased Costs, etc.................................................................... 42 Section 13.10. Funding Losses; Break Costs............................................................ 43 Section 13.11. Capital Adequacy....................................................................... 43 ARTICLE XIV [INTENTIONALLY RESERVED]............................................................................ 44 ARTICLE XV MISCELLANEOUS........................................................................................ 44 Section 15.1. Survival of Agreements.................................................................. 44 Section 15.2. No Broker, Etc.......................................................................... 45 Section 15.3. Notices................................................................................. 45 Section 15.4. Counterparts............................................................................ 45 Section 15.5. Amendments, Etc......................................................................... 45 Section 15.6. Headings, Etc........................................................................... 46 Section 15.7. Parties in Interest..................................................................... 46 Section 15.8. Governing Law........................................................................... 47 Section 15.9. Severability............................................................................ 47 Section 15.10. Liability Limited...................................................................... 47 Section 15.11. Submission to Jurisdiction............................................................. 47 Section 15.12. Setoff................................................................................. 47 Section 15.13. No Participant Responsible for Other Participants...................................... 48 Section 15.14. Partial Purchase Option................................................................ 48 Appendix A -- Definitions Schedule I -- Commitments Schedule II -- Notice Information, Wire Instructions and Funding Offices Schedule III -- Lease Balance Allocations Exhibit 8.2(l) -- Disclosure of Certain Matters Exhibit A-1 -- Form of Legal Opinion of In-House Counsel to Lessee Exhibit A-2 -- Form of Legal Opinion of Heller Ehrman White & McAuliffe LLP Exhibit B -- Form of Funding Request Exhibit C -- Form of Master Lease Exhibit D -- Form of Loan Agreement Exhibit E -- Form of Compliance Certificate Exhibit F -- Form of Assignment Agreement Exhibit G -- [Intentionally Reserved] Exhibit H -- Form of Assignment of Lease and Rent Exhibit I -- Form of Mortgage -iii- PARTICIPATION AGREEMENT THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated as of June 1, 2003, is entered into by and among LAM RESEARCH CORPORATION, a Delaware corporation, as Lessee, (the "Lessee"); SELCO SERVICE CORPORATION, an Ohio corporation, as Lessor (the "Lessor"); KEY CORPORATE CAPITAL, INC., a Michigan corporation, as Lender, (together with any other holder of a Note the "Lenders"); and KEY CORPORATE CAPITAL INC., a Michigan corporation, as Administrative Agent (the "Administrative Agent"). W I T N E S S E T H: WHEREAS, on the Acquisition Date, the Lessor will purchase the Properties from one or more third parties designated by the Lessee; WHEREAS, the Lessor desires to lease the Properties to the Lessee, and the Lessee desires to lease the Properties from the Lessor; WHEREAS, the Lessor is willing to provide a portion of the funding of the costs of the acquisition of the Properties; WHEREAS, the Lenders are willing to provide the remaining portion of the funding of the costs of the acquisition of the Properties; and WHEREAS, to secure such financing (a) the Lessor will have the benefit of a first priority Lien on the Properties and the Cash Collateral, and (b) the Lenders will have the benefit of (i) a Lien on the Lessor's right, title and interest in the Properties and the Cash Collateral, and (ii) an assignment of certain of the Lessor's rights against the Lessee under the Lease; NOW THEREFORE, in consideration of the mutual agreements contained in this Participation Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS; INTERPRETATION Unless the context shall otherwise require, capitalized terms used and not defined herein shall have the meanings assigned thereto in Appendix A hereto for all purposes hereof (as such Appendix A may be amended, supplemented, amended and restated or otherwise modified from time to time, "Appendix A to this Participation Agreement"); and the rules of interpretation set forth in Appendix A to this Participation Agreement shall apply to this Participation Agreement. Lam Research Corporation Participation Agreement ARTICLE II DOCUMENTATION DATE Section 2.1. Documentation Date. The Documentation Date (the "Documentation Date") shall be deemed to have occurred and all rights and obligations of the parties to the Operative Documents (each subject to any conditions specified therein) shall be in effect, upon satisfaction or waiver of each of the following conditions precedent: (a) Participation Agreement. This Participation Agreement shall have been duly authorized, executed and delivered by the parties hereto. (b) Master Lease. The Master Lease shall have been duly authorized, executed and delivered by the parties thereto. (c) Loan Agreement and Notes. The Loan Agreement and each Lender's Note shall have been duly authorized, executed and delivered by the parties thereto. (d) Assignment of Lease and Rent. The Assignment of Lease and Rent shall have been duly authorized, executed and delivered by the Lessor, as assignor, to the Administrative Agent, as assignee, and the Assignment of Lease and Rent shall have been consented to and acknowledged by the Lessee. (e) Transaction Expenses and Fees. The applicable Person shall have received all Fees payable on the Documentation Date and all Transaction Expenses, to the extent then invoiced, shall have been paid. (f) Corporate Documents; Certificates. The Lessee shall have delivered, or shall have caused to be delivered, to the Administrative Agent and each Participant the following: (i) Certificate of Incorporation. Copies of its certificate of incorporation, certified to be true and complete as of a recent date by the appropriate governmental authority of the jurisdiction of its incorporation. (ii) Resolutions. Copies of resolutions or other authority documentation of its Board of Directors approving and adopting the Operative Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary as of the Documentation Date to be true and correct and in full force and effect as of such date and evidence of corporate authority of the Lessee with respect to the Operative Documents and the transactions contemplated therein. (iii) Bylaws. A copy of the Lessee's bylaws certified by its secretary or assistant secretary as of the Documentation Date to be true and correct and in full force and effect as of such date. -2- Lam Research Corporation Participation Agreement (iv) Good Standing. Copies of certificates of good standing, existence or its equivalent for the Lessee, certified as of a recent date by the appropriate governmental authority of the jurisdiction of its incorporation. (v) Opinions of Counsel. Opinions of counsel for the Lessee addressed to the Administrative Agent and each of the Participants in forms acceptable to the Administrative Agent and each of the Participants. (g) Lessor Corporate Documents; Certificates. The Lessor shall have delivered, or shall have caused to be delivered to each of the other parties hereto the following: (i) Articles of Incorporation. Copies of its articles of incorporation, certified to be true and complete as of a recent date by the appropriate governmental authority of the state of its incorporation. (ii) Resolutions. Copies of resolutions of its Board of Directors approving and adopting the Operative Documents to which it is or is to be a party, the transactions contemplated therein and authorizing execution and delivery thereof, certified by its secretary or assistant secretary as of the Documentation Date to be true and correct and in full force and effect as of such date. (iii) Regulations. A copy of its regulations certified by its secretary or assistant secretary as of the Documentation Date to be true and correct and in full force and effect as of such date. (iv) Good Standing. A copy of a certificate of good standing, existence or its equivalent, certified as of a recent date by the appropriate governmental authority of the State of Ohio. (h) Representations and Warranties. On the Documentation Date, the representations and warranties of each of the parties hereto contained in Sections 8.1, 8.2 and 8.3 shall be true and correct as though made on and as of such date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date and each of the Lessee and the Lessor shall have delivered a certificate to such effect with respect to its representations and warranties. (i) No Default. No Default or Event of Default shall have occurred and be continuing on the Documentation Date unless such Default or Event of Default shall have been waived in accordance with the Operative Documents. (j) Governmental Approvals. All Governmental Actions required by any Requirement of Law for the purpose of authorizing the Lessee, the Administrative Agent or any Participant to enter into the Operative Documents shall have been obtained or made and be in full force and effect. -3- Lam Research Corporation Participation Agreement (k) Litigation. No action or proceeding shall have been instituted or threatened, nor shall any governmental action be instituted or threatened before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority, to set aside, restrain, enjoin or prevent the performance of this Participation Agreement or any transaction contemplated hereby or by any other Operative Document or which is reasonably likely, in the sole opinion of each Participant, to have a Material Adverse Effect. (l) Requirements of Law. In the opinion of each Participant, no change shall have occurred or been proposed in Applicable Law that would make it uneconomic or illegal for any party to any Operative Document to participate in any of the transactions contemplated by the Operative Documents or otherwise would prohibit the consummation of any transaction contemplated by the Operative Documents or expand the duties, obligations and risks of any Participant. All documents and instruments required to be delivered pursuant to this Section 2.1 shall be delivered at the offices of Schiff Hardin & Waite, 6600 Sears Tower, Chicago, Illinois 60606 or at such other location as may be determined by the Lessee, the Lessor and the Administrative Agent and in such numbers as shall be reasonably requested. Unless otherwise agreed among the Lessee, the Lessor and the Administrative Agent, the Documentation Date shall coincide with the first Acquisition Date. ARTICLE III FUNDING OF ADVANCES Section 3.1. Advances. Subject to the conditions and terms hereof, the Lessor shall take the following actions at the written request of the Lessee: (a) the Lessor shall make Advances (out of funds provided by itself and the Lenders) for the purpose of financing the acquisition by the Lessor of the Properties and the payment of Transaction Expenses and Fees relating thereto; and (b) the Lessor shall lease the Properties to the Lessee under the Master Lease and the respective Lease Supplements. Notwithstanding any other provision hereof, (i) no Advance shall be made with respect to any Property after the Acquisition Date therefor, and (ii) the Participants shall not be obligated to make any Advance with respect to any Property if, after giving effect thereto, (x) the aggregate outstanding amounts of the Loans and the Lessor Amounts would exceed the Aggregate Commitment Amount, or (y) the Property Cost thereof would exceed the Fair Market Sales Value of such Property as set forth in the Appraisal thereof delivered pursuant to Section 6.1(d) hereof. Section 3.2. Lessor Commitment. Subject to the conditions and terms hereof, on each Acquisition Date during the Commitment Period, the Lessor shall make available at the written request of the Lessee during the Commitment Period on each Acquisition Date, an amount (a -4- Lam Research Corporation Participation Agreement "Lessor Amount") in immediately available funds equal to the Lessor's Commitment Percentage of the amount of the Advance being funded on such Acquisition Date. Notwithstanding any other provision hereof, the Lessor shall not be obligated to make available any Lessor Amount if, after giving effect to the proposed Lessor Amount, the outstanding aggregate amount of the Lessor Amounts would exceed the Lessor Commitment. Section 3.3. Lenders' Commitments. Subject to the conditions and terms hereof, on each Acquisition Date during the Commitment Period, each Lender shall make a Loan to the Lessor at the written request of the Lessee in an aggregate amount in immediately available funds equal to such Lender's Commitment Percentage of the amount of the Advance being funded on such Acquisition Date. Notwithstanding any other provision hereof, no Lender shall be obligated to make any Loan if, after giving effect to the proposed Loan, the outstanding amount of such Lender's Loans would exceed such Lender's Commitment. Section 3.4. Procedures for Advances. (a) With respect to each Acquisition Date, the Lessee shall give the Lessor, the Administrative Agent and each Lender prior written notice pursuant to a Funding Request substantially in the form of Exhibit B (a "Funding Request"), which Funding Request shall be delivered not later than 11:00 a.m. (New York time), two (2) Business Days prior to the proposed Acquisition Date. Such Funding Request shall set forth (i) the proposed Acquisition Date, (ii) the amount of the Advance requested, (iii) a description of the Property to which such Funding Request relates, (iv) the seller of the Property being acquired, and (v) wire transfer instructions for the disbursement of the proceeds of such Advance. Subject to timely delivery of a Funding Request and the other terms and conditions of the Operative Documents, (x) each Lender shall make its Commitment Percentage available to the Administrative Agent at the Account by 2:00 p.m. (New York time) on the requested Acquisition Date and (y) the Lessor shall make its Commitment Percentage of the requested Advance available to the Administrative Agent at the Account by 2:00 p.m. (New York time) on the requested Acquisition Date. Promptly upon the Administrative Agent's receipt of such funds from the Participants, the Administrative Agent shall wire such funds on the applicable Acquisition Date to the Persons entitled thereto and to such accounts as the Lessee shall have indicated in the Funding Request. Each Advance shall consist of (i) a Lessor Amount equal to 6.0% of such Advance and (ii) Loans in an aggregate amount equal to 94.0% of such Advance, such Loans to be allocated between Series A Notes and Series B Notes in accordance with Schedule I hereto. (b) Except as the Participants may otherwise agree in writing, Advances shall be made solely to pay the Property Cost of each Property and related Fees and Transaction Expenses. Section 3.5. Interest Rate; Yield Rate. Each Loan shall accrue interest as set forth in Section 2.5 of the Loan Agreement, and each Lessor Amount shall accrue Yield by reference to the Adjusted Eurodollar Rate, in each case subject to the provisions of Sections 13.7, 13.8 and 13.9 (to the extent applicable). -5- Lam Research Corporation Participation Agreement ARTICLE IV YIELD; INTEREST; FEES Section 4.1. Yield. (a) The amount of the Lessor Amounts outstanding from time to time shall accrue yield ("Yield") at the Yield Rate. If all or any portion of the Lessor Amounts, any Yield payable thereon or any other amount payable hereunder shall not be paid when due (whether at stated maturity, acceleration thereof or otherwise), such overdue amount shall bear interest at a rate per annum which is equal to the Overdue Rate. The Lessor shall, as soon as practicable, but in no event later than 11:00 a.m. (New York time) two (2) Business Days before the effectiveness of each recomputation of the Adjusted Eurodollar Rate applicable to Lessor Amounts, cause to be determined such Adjusted Eurodollar Rate. (b) The Administrative Agent shall distribute, in accordance with Article VII, the Lessor Basic Rent and all other amounts due with respect to the Lessor Amounts paid to the Administrative Agent by the Lessee under the Lease from time to time. (c) If not repaid sooner, the outstanding aggregate Lessor Amounts shall be repaid in full on the Maturity Date, subject to the provisions of Article XX of the Master Lease. Section 4.2. Interest on Loans. (a) Each Loan shall accrue interest computed and payable in accordance with the terms of the Loan Agreement. Each Loan shall become due and payable at the dates and times provided under the Loan Agreement. (b) The Administrative Agent shall distribute, in accordance with Article VII, the Lender Basic Rent and all other amounts due with respect to the Loans paid to the Administrative Agent by the Lessee under the Lease from time to time. Section 4.3. Payments of Rent; Payments and Prepayments of Loans and Lessor Amounts. (a) The Lessor hereby directs the Lessee to pay to the Administrative Agent the Rent from time to time (other than Excepted Payments, which the Lessor hereby directs the Lessee to make directly to the applicable Person entitled thereto). (b) All amounts payable by the Lessee pursuant to Article XIV, XV, XVI, XVIII or XX of the Master Lease shall be applied to the Loans and the Lessor Amounts in the manner set forth in Article VII hereof. Each of the Participants hereby acknowledges that its Loans or Lessor Amounts, as the case may be, may be so prepaid without any prepayment premium (other than Break Costs, if any). (c) Notice. The Lessee will provide notice to the Administrative Agent, the Lessor and the Lenders of any voluntary prepayment by 9:00 a.m. (New York time) at least three (3) Business Days prior to the date of such voluntary prepayment. Section 4.4. Fees. The Lessee agrees to pay the fees set forth in this Section 4.4 (collectively, the "Fees"), which as to the Structuring Fee and the Commitment Fee may be paid out of Advances. -6- Lam Research Corporation Participation Agreement (a) Structuring Fee. The Lessee agrees to pay to the Arranger on the Documentation Date the fee (the "Structuring Fee") in the amount specified in the Summary of Terms. (b) Commitment Fee. The Lessee agrees to pay to each Participant a fee (the "Commitment Fee") on the Documentation Date equal to [***]% of the amount of such Participant's Commitment. Section 4.5. Place and Manner of Payments. Except as otherwise specifically provided herein, all payments by the Lessee hereunder, under the Master Lease or under any other Operative Document shall be made to the Administrative Agent in Dollars in immediately available funds, without offset, deduction, counterclaim or withholding of any kind, to the Account in Cleveland, Ohio not later than 2:00 p.m. (New York time) on the date when due. Payments received after such time shall be deemed to have been received on the next succeeding Business Day. The Lessee shall, at the time it makes any payment under any Operative Document, specify to the Administrative Agent the Basic Rent, Property Cost, Fees, Supplemental Rent or other amounts payable by the Lessee hereunder to which such payment is to be applied (and in the event that it fails so to specify, or if such application would be inconsistent with the terms hereof, the Administrative Agent shall distribute such payment to the Participants in such manner as the Administrative Agent may determine to be appropriate in respect of obligations owing by the Lessee subject to the terms of Article VII). The Administrative Agent will distribute such payments to such Participants in accordance with Article VII, if any such payment is received prior to 3:00 p.m. (New York time) on a Business Day in like funds as received prior to such time, and otherwise the Administrative Agent shall distribute such payment to such Participants on the next succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next Business Day (subject to accrual of interest and fees for the period of such extension), except that in the case of Eurodollar Loans/Lessor Amounts, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. Section 4.6. Pro Rata Treatment. Except to the extent otherwise provided herein, each payment or repayment of principal on the outstanding Loans and each payment of interest shall be allocated pro rata among the relevant Lenders in accordance with their respective Loan Balances. THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. -7- Lam Research Corporation Participation Agreement Section 4.7. Sharing of Payments. The Participants agree among themselves that, in the event that any Participant shall obtain payment in respect of any Loan or Lessor Amount or any other obligation owing to such Participant under the Operative Documents through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Participant under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Participation Agreement, such Participant shall promptly pay such excess to the Administrative Agent to pay to the other Participants such that all Participants shall share such payment in accordance with their respective ratable shares as provided for in this Participation Agreement. The Participants further agree among themselves that if payment to a Participant obtained by such Participant through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Participant which shall have shared the benefit of such payment shall, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Participant whose payment shall have been rescinded or otherwise restored. Except as otherwise expressly provided herein, if any Participant or the Administrative Agent shall fail to remit to the Administrative Agent or any other Participant an amount payable by such party to the Administrative Agent or such other Participant pursuant to the Operative Documents on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Administrative Agent or such other Participant at a rate per annum equal to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any Participant receives a secured claim in lieu of a setoff to which this Section 4.7 applies, such Participant shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Participants under this Section 4.7 to share in the benefits of any recovery on such secured claim. ARTICLE V CERTAIN INTENTIONS OF THE PARTIES Section 5.1. Nature of Transaction. (a) The parties hereto intend that (i) for financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner and the lessor of the Properties and the Lessee will be treated as the lessee of the Properties pursuant to an operating lease under GAAP and (ii) for federal and all state and local income tax purposes, state real estate and commercial law and bankruptcy purposes, (A) the Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee in an amount equal to the sum of the Lessor Amounts and the outstanding principal amount of the Loans, which amounts are secured by the Properties, and (C) the Lessee will be treated as the owner of the Properties described in the Lease Supplements and will be entitled to all tax benefits ordinarily available to an owner of properties like the Properties for such tax purposes. Nevertheless, the Lessee acknowledges and agrees that neither the Lessor, the Administrative Agent, the Arranger nor any of the Lenders has made any representations or warranties to the Lessee concerning the tax, Lessee's accounting or legal characteristics of the Operative -8- Lam Research Corporation Participation Agreement Documents and that the Lessee has obtained and relied upon such tax, accounting and legal advice concerning the Operative Documents as it deems appropriate. (b) Specifically, without limiting the generality of clause (a) of this Section 5.1, the parties hereto intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any state or commonwealth thereof affecting the Lessee, the Lessor or the Lenders or any collection actions, the transactions evidenced by the Operative Documents shall be regarded as loans made by the Lessor and the Lenders as unrelated third party lenders of the Lessee. Section 5.2. Amounts Due Under the Lease. Anything herein or elsewhere to the contrary notwithstanding, it is the intention of the Lessee, the Lessor and the Lenders that: (i) the amount and timing of installments of Basic Rent due and payable from time to time from the Lessee under the Lease shall be equal to the aggregate payments due and payable as interest on the Loans and Yield on the Lessor Amounts on each Scheduled Payment Date; (ii) if the Lessee elects the Purchase Option with respect to all of the Properties or the Lessee becomes obligated to purchase all of the Properties under the Lease, the Loans, the Lessor Amounts, and all interest, Yield, Commitment Fees and all other obligations of the Lessee owing to the Administrative Agent, the Lessor and the Lenders shall be due and payable in full by the Lessee on the date set forth in the Lease; (iii) if the Lessee properly elects the Remarketing Option, the Lessee shall only be required to pay to the Administrative Agent the proceeds of the sale of each Property, the Maximum Recourse Amount for such Property and any amounts due pursuant to Article XIII hereof and Section 20.2 of the Master Lease (which aggregate amounts may be less than the Property Cost of such Properties), together with all other due and payable Supplemental Rent; (iv) upon a Lease Event of Default resulting in an acceleration of the Lessee's obligation to purchase each Property under the Lease, the amounts then due and payable by the Lessee under the Lease shall include all amounts necessary to pay in full the aggregate Property Costs of all of the Properties, plus all other amounts then due from the Lessee under the Operative Documents; and (v) if the Lessee elects to purchase or is required to purchase any Property pursuant to Section 14.1, Article XV or XVIII of the Master Lease, the amounts then due and payable by the Lessee shall include all amounts necessary to pay the Property Balance of such Property. ARTICLE VI CONDITIONS PRECEDENT: ACQUISITION DATES Section 6.1. Acquisition Dates. The closing date with respect to the acquisition of any Property (each such date, an "Acquisition Date") shall occur on a Business Day on or after the Documentation Date (but not later than June 24, 2003) on which all the conditions precedent thereto set forth in this Section 6.1 shall have been satisfied or waived by the applicable parties as set forth herein. The obligation of the Lessor to acquire such Property (for purposes of this Article VI, the "Subject Property") on the respective Acquisition Date, the obligation of the Lessor to make available any related Lessor Amount on the respective Acquisition Date and the obligation of each Lender to make any related Loan on the respective Acquisition Date, are subject to satisfaction or waiver of the following conditions precedent (provided that a failure on -9- Lam Research Corporation Participation Agreement the part of any Participant to perform or otherwise satisfy any condition applicable to it shall not be a condition precedent to the performance of its obligations under the Operative Documents): (a) Funding Request. Each of the Administrative Agent and each Participant shall have received a fully executed counterpart of the applicable Funding Request in accordance with Section 3.4. (b) Transaction Expenses. All Fees and Transaction Expenses due and payable by the Lessee to the Participants and the Arranger shall have been paid or will be paid through Advances on such Acquisition Date. (c) Representations and Warranties. On such Acquisition Date, the representations and warranties of the Lessee set forth in Section 8.2 shall be true and correct. (d) Appraisal. On or prior to such Acquisition Date, the Administrative Agent and each Participant shall have received an Appraisal of the Subject Property, in form and substance reasonably satisfactory to such persons, which Appraisal shall show, as of such Acquisition Date, the Fair Market Sales Value of the Subject Property. (e) Governmental Approvals. All necessary Governmental Actions (including pursuant to any Environmental Laws) required by any Requirement of Law as of such Acquisition Date for the purpose of authorizing the Lessor to acquire the Subject Property shall have been obtained or made and be in full force and effect. (f) Responsible Officer's Certificate. Each Participant and the Administrative Agent shall have received a Responsible Officer's Certificate of the Lessee, addressed to the Administrative Agent and each Participant and dated such Acquisition Date, stating that (w) the representations and warranties of the Lessee contained in Section 8.2 hereof, are true and correct on and as of such Acquisition Date; (x) no Lease Default or Lease Event of Default has occurred and is continuing under any Operative Document; (y) each Operative Document to which the Lessee is a party is in full force and effect with respect to it; and (z) the Lessee has duly performed and complied with all conditions contained herein or in any other Operative Document required to be performed and complied with by it on or prior to such Acquisition Date. (g) Evidence of Insurance. Each Participant and the Administrative Agent shall have received evidence that the insurance maintained by the Lessee with respect to the Subject Property satisfies the requirements set forth in Article XIII of the Master Lease setting forth the respective coverage, limits of liability, carrier, policy number and period of coverage, and shall have received a letter and/or certificate signed by the Lessee's insurance broker confirming that the coverage with respect to the Subject Property complies with the requirements of Article XIII of the Master Lease. (h) Environmental Audit. At least five (5) Business Days prior to such Acquisition Date, each Participant and the Administrative Agent shall have received an -10- Lam Research Corporation Participation Agreement Environmental Audit performed by an environmental consultant reasonably acceptable to each Participant and the Administrative Agent and either addressed to such Persons or accompanied by a letter allowing such Persons to rely thereon with respect to the Subject Property and in form and substance reasonably satisfactory to each Participant and the Administrative Agent and stating that the applicable assessment has revealed no evidence of recognized environmental conditions in connection with the site except for specified matters, which matters each Participant, the Administrative Agent and the Lessee reasonably agree are not material. If such Environmental Audit reveals the need for additional review or testing, the Lessee shall have provided such additional assessments as are recommended by such consultant. (i) Deed. The Lessor shall have received at least five (5) Business Days prior to the Acquisition Date a copy of the proposed Deed with respect to the Subject Property, and on or prior to such Acquisition Date, such Deed duly executed conveying fee simple title to such Property to the Lessor and containing customary seller's warranties in the applicable jurisdiction and subject only to Permitted Property Liens. The legal description, tax lot designation and zoning of the related Land shall be reasonably acceptable to the Administrative Agent and each Participant. (j) Bill of Sale. If the Subject Property includes any Equipment, then on or prior to such Acquisition Date, the Lessor shall have received a bill of sale (a "Bill of Sale"), conveying title to the Lessor in any Equipment comprising part of the Subject Property. (k) [Intentionally Reserved]. (l) Lease Supplement; Mortgage. On or prior to such Acquisition Date, the Lessee and the Lessor shall have executed and delivered a Lease Supplement with respect to the Subject Property and shall have delivered the original counterpart of such Lease Supplement to the Administrative Agent, and the Lessor shall have delivered a Mortgage to the Administrative Agent with respect to the Subject Property. (m) Financing Statements. On or prior to such Acquisition Date, the Lessee and the Lessor shall have delivered all UCC financing statements relating to the Subject Property as the Lessor or the Administrative Agent may reasonably request in order to protect the interests of the Lessor under the Lease relating to the Subject Property to the extent the Master Lease constitutes a security agreement and to protect and perfect the interests of the Administrative Agent in the Subject Property. (n) Recordation of Lessor Mortgage; Lessor Financing Statements; Search Results. The Lessor and the Administrative Agent shall have received (x) evidence reasonably satisfactory to it that each of (i) the applicable Lease Supplement and any other instrument constituting a Lessor Mortgage, (ii) the financing statements relating to the Subject Property and (iii) the Mortgage relating to the Subject Property has been, or is being, recorded or filed in a manner sufficient to properly perfect each of their interests therein and (y) copies of file search reports from the Uniform Commercial Code filing -11- Lam Research Corporation Participation Agreement officer in the jurisdiction (i) in which the Subject Property is located and (ii) in which is located the jurisdiction of incorporation of the Lessee, setting forth the results of such Uniform Commercial Code file searches. (o) Property Survey. On or prior to such Acquisition Date, the Lessee shall have delivered to each Participant and the Administrative Agent a 1999 ALTA/ACSM Survey of the Subject Property certified to each Participant and the Administrative Agent and the title company and otherwise in form and substance acceptable to such Persons. (p) Title Insurance. On or prior to such Acquisition Date, the Lessee shall have delivered to the Administrative Agent and the Lessor an ALTA (or, as the case may be, CLTA) owners and ALTA (or, as the case may be, CLTA) lenders title insurance policy covering the Subject Property in favor of the Lessor and the Administrative Agent, respectively, such policies to be in an amount not less than the Property Cost of the Subject Property, and to be reasonably satisfactory to the Lessor and the Administrative Agent with alternative estates endorsements and such other customary endorsements and affirmative assurances issued by the title company as a routine matter (including, without limitation ALTA Form 3.1 (with Parking), ALTA Form 6.2, ALTA Form 9, a survey endorsement, an endorsement deleting the standard exceptions, and an endorsement regarding recharacterization), to the extent reasonably available in the state where the Subject Property is located. (q) No Default. There shall not have occurred and be continuing any Default or Event of Default under any of the Operative Documents, and no Default or Event of Default under any of the Operative Documents will have occurred after giving effect to the acquisition of the Subject Property. (r) Opinion of Counsel and of Local Counsel to the Lessee. Each Participant and the Administrative Agent shall have received an opinion of counsel qualified with respect to the laws of the jurisdiction in which the Subject Property is situated, addressed to such Persons and in form and substance satisfactory to the Administrative Agent and each Participant. (s) Plans and Specifications. On or prior to July 22, 2003, the Lessor and the Administrative Agent shall have received copies of the Plans and Specifications for the Subject Property, certified by the Lessee to be a true, correct and complete copy thereof as in effect on such Acquisition Date. (t) Good Standing Certificates. The Lessee and the Lessor shall have delivered to each Participant and the Administrative Agent a certificate of good standing (or its equivalent) to the effect that the Lessee and the Lessor are qualified to do business in the jurisdiction where the Subject Property is located. (u) Cash Collateral. On or prior to such Acquisition Date, there shall have been delivered to the Administrative Agent the Cash Collateral and the Cash Collateral Documents in form and substance satisfactory to the Administrative Agent and the -12- Lam Research Corporation Participation Agreement Participants, together with a completed Form FR U-1 and any other documents which the Administrative Agent may reasonably require in connection with the Cash Collateral. (v) Additional Matters. On such Acquisition Date each Participant and the Administrative Agent shall have received such additional documents and instruments related to the acquisition and financing of the Subject Property as any of them shall reasonably request in order to establish the rights and interests of the Administrative Agent and each Participant intended to be created under the Operative Documents in respect of the Subject Property and the Cash Collateral. Section 6.2. Delivery of Documents. All documents and instruments required to be delivered pursuant to this Article VI shall be delivered at the offices of Schiff Hardin & Waite, 6600 Sears Tower, Chicago, Illinois 60606, or at such other location as may be determined by the Lessor, the Administrative Agent and the Lessee. ARTICLE VII DISTRIBUTIONS Section 7.1. Basic Rent. Each payment of Basic Rent (and any payment of interest on overdue installments of Basic Rent) received by the Administrative Agent shall be distributed by the Administrative Agent, first, to the Lessor and the Lenders pro rata without priority of one over the other for application to, the Lender Basic Rent and Lessor Basic Rent respectively, then due, and, second, to the Lenders and the Lessor pro rata without priority of one over the other for application to any overdue interest or Yield (to the extent permitted by Applicable Law). Section 7.2. Purchase Payments by the Lessee. Any payment received by the Administrative Agent as a result of: (a) the purchase of all of the Properties in connection with the exercise of the Purchase Option under Section 18.1 of the Master Lease, or compliance with the obligation to purchase (or cause its designee to purchase) all of the Properties in accordance with Section 18.2 or 18.3 of the Master Lease, or (b) compliance with the obligation to purchase all of the Properties in accordance with Section 16.2(f) of the Master Lease, or (c) failure to fulfill one or more of the conditions to the exercise of the Remarketing Option with respect to any Property pursuant to Section 20.1 of the Master Lease and the receipt by the Lessor of the Lease Balance pursuant to the last paragraph of Section 20.2 of the Master Lease, or (d) the payment of the Property Balance with respect to any Property in accordance with Article XV or XVIII of the Master Lease, shall be distributed by the Administrative Agent to the Participants pro rata without priority of one over the other, in the proportion that the Participant Balance of each bears to the aggregate of -13- Lam Research Corporation Participation Agreement all of the Participant Balances provided that if there is a shortfall in payment of any such amount, the Lenders shall be paid in full prior to any payment to the Lessor. Section 7.3. Payment of Maximum Recourse Amounts. The payment of the Maximum Recourse Amount to the Administrative Agent pursuant to Section 20.2(f) of the Master Lease upon the exercise of the Remarketing Option shall be distributed to the Lenders holding Series A Notes for application to the outstanding principal amount of the Series A Notes. Section 7.4. Sales Proceeds of Remarketing of the Properties. Any payments received by the Administrative Agent as proceeds from the sale of each Property sold pursuant to the exercise of the Remarketing Option pursuant to Article XX of the Master Lease, together with any payment made as a result of an End of Term Report pursuant to Section 13.2 and any amounts in excess of the Maximum Recourse Amount (other than amounts in respect of accrued and unpaid Rent) received by the Administrative Agent pursuant to Section 20.2(f) of the Master Lease, shall be distributed by the Administrative Agent in the funds so received in the following order of priority: first, to the Lenders holding Series B Notes, an amount equal to the aggregate principal amount of the Series B Notes then outstanding with respect to such Property for application to the outstanding principal amount of Series B Notes of each such Lender, pro rata among such Lenders without priority of one over the other in the proportion that the outstanding principal amount of Series B Notes of each such Lender bears to the aggregate outstanding principal amount of Series B Notes and, in the case where the amounts so distributed shall be insufficient to pay in full as aforesaid, then pro rata among the Lenders without priority of one over the other in the proportion that the outstanding principal amount of Series B Notes of each such Lender bears to the aggregate outstanding principal amount of Series B Notes; second, to the extent not previously paid as required by Section 7.3 hereof, an amount equal to the Maximum Recourse Amount shall be distributed to the Lenders holding Series A Notes as set forth in Section 7.3; third, an amount equal to the aggregate Lessor Balance shall be distributed to the Lessor for application to pay in full the Lessor Balance; and fourth, the balance, if any, shall be promptly paid to the Lessee as provided in Section 20.5 of the Master Lease. Section 7.5. Supplemental Rent. All payments of Supplemental Rent received by the Administrative Agent (excluding any amounts payable pursuant to the preceding provisions of this Article VII) shall be distributed promptly by the Administrative Agent upon receipt thereof to the Persons entitled thereto pursuant to the Operative Documents. Section 7.6. Distribution of Payments after Lease Event of Default. (a) During the continuance of a Lease Event of Default and subject to clause (b) below, all proceeds from the -14- Lam Research Corporation Participation Agreement sale of the Properties shall be distributed by the Administrative Agent in the following order of priority: first, so much of such payment or amount as shall be required to pay or reimburse the Administrative Agent for any tax, fees, expense, indemnification or other loss incurred by the Administrative Agent (to the extent incurred in connection with any duties as the Administrative Agent), shall be distributed to the Administrative Agent; second, so much of such payments or amounts as shall be required to pay the Participants the amounts payable to them pursuant to any expense reimbursement or indemnification provisions of the Operative Documents shall be distributed to each such Participant without priority of one over the other in accordance with the amount of such payment or payments payable to each such Person; third, to the Lenders for application to pay in full the Loan Balance, pro rata among the Lenders without priority of one over the other in the proportion that the Participant Balance of each such Lender bears to the aggregate Participant Balances of all Lenders and, in the case where the amounts so distributed shall be insufficient to pay in full as aforesaid, then pro rata among the Lenders without priority of one over the other in the proportion that the Participant Balance of each such Lender bears to the aggregate Participant Balances of all Lenders; fourth, an amount equal to the Lessor Balance shall be distributed to the Lessor for application to pay in full the Lessor Balance; fifth, to the Participants and the Administrative Agent for any other amounts payable to them under the Operative Documents, pro rata based on the amounts payable; and sixth, the balance, if any, of such payment or amounts remaining thereafter shall be promptly distributed to, or as directed by, the Lessee. (b) All payments received and amounts realized by the Administrative Agent in connection with any Casualty or Condemnation during the continuance of a Lease Event of Default shall be distributed by the Administrative Agent as follows: (i) in the event that the Lessor and the Administrative Agent elect to pay all or a portion of such amounts to the Lessee for the repair of damage caused by such Casualty or Condemnation in accordance with Section 14.2 of the Master Lease, then such amounts shall be distributed to the Lessee, and (ii) in the event that the Lessor and the Administrative Agent elect to apply all or a portion of such amounts to the purchase price of the related Property in accordance with Section 14.2 and Article XV of the Master Lease, then such amounts shall be distributed in accordance with clause (a). -15- Lam Research Corporation Participation Agreement (c) All amounts (other than amounts described in clause (a) or (b) above) received by the Administrative Agent during the continuance of a Lease Event of Default, including, without limitation, the Cash Collateral, shall be distributed by the Administrative Agent as follows: first, so much of such payment or amount as shall be required to pay or reimburse the Administrative Agent for any tax, fees, expense, indemnification or other loss incurred by the Administrative Agent (to the extent incurred in connection with any duties as the Administrative Agent), shall be distributed to the Administrative Agent; second, so much of such payments or amounts as shall be required to pay the Participants the amounts payable to them pursuant to any expense reimbursement or indemnification provisions of the Operative Documents shall be distributed to each such Lender and the Lessor without priority of one over the other in accordance with the amount of such payment or payments payable to each such Person; third, to the Lenders for application to pay in full the Loan Balance, pro rata among the Lenders without priority of one over the other in the proportion that the Participant Balance of each such Lender bears to the aggregate Participant Balances of all Lenders and, in the case where the amounts so distributed shall be insufficient to pay in full as aforesaid, then pro rata among the Lenders without priority of one over the other in the proportion that the Participant Balance of each such Lenders bears to the aggregate Participant Balances of all Lenders; fourth, to the Lessor in an amount equal to the Lessor Balance shall be distributed to the Lessor for application to the Lessor Balance; fifth, to the Participants and the Administrative Agent for any other amounts payable to them under the Operative Documents, pro rata based on the amounts payable; and sixth, the balance, if any, of such payment or amounts remaining thereafter shall be promptly distributed to, or as directed by, the Lessee. Section 7.7. Casualty and Condemnation Amounts. Subject to Section 7.6(b), any amounts payable to the Administrative Agent as a result of a Casualty or Condemnation pursuant to Section 14.2 of the Master Lease and the Assignment of Lease and Rent shall be distributed as follows: (a) all amounts payable to the Lessee in accordance with Section 14.2(a) of the Master Lease shall be distributed to the Lessee, and (b) all amounts that are to be applied to the purchase price of the related Property in accordance with Section 14.2(a) and Article XV of the Master Lease shall be distributed by the Administrative Agent to the Lenders and the Lessor pro rata without priority of one over the other, in the proportion that the Participant Balance of each bears to the aggregate of all of the Participant Balances. -16- Lam Research Corporation Participation Agreement Section 7.8. Other Payments. (a) Except as otherwise provided in Sections 7.1, 7.2, 7.6 and clause (b) below, any payment received by the Administrative Agent for which no provision as to the application thereof is made in the Operative Documents or elsewhere in this Article VII (including any balance remaining after the application in full of amounts to satisfy any expressed provision) shall be distributed pro rata among the Participants without priority of one over the other, in the proportion that the Participant Balance of each bears to the aggregate of all the Participant Balances. (b) Except as otherwise provided in Sections 7.1, 7.2 and 7.6, all payments received and amounts realized by the Administrative Agent or the Lessor under the Master Lease or otherwise with respect to the Properties to the extent received or realized at any time after the indefeasible payment in full of the Participant Balances of all of the Participants and any other amounts due and owing to the Participants, shall be distributed forthwith by the Administrative Agent or the Lessor, as the case may be, in the order of priority set forth in Section 7.6(a). (c) Except as otherwise provided in Sections 7.1 and 7.2, any payment received by the Administrative Agent or the Lessor for which provisions as to the application thereof is made in an Operative Document but not elsewhere in this Article VII shall be distributed forthwith by the Lessor or the Administrative Agent to the Person and for the purpose for which such payment was made in accordance with the terms of such Operative Document. Section 7.9. Order of Application. To the extent any payment made to any Participant pursuant to Sections 7.2, 7.3, 7.4, 7.6, 7.7, 7.8 or 7.9 is insufficient to pay in full the Participant Balance of such Participant, then each such payment shall first be applied to accrued interest or Yield and then to principal of the Loans or the Lessor Amounts, as applicable. Section 7.10. Payments to Account. All payments made to the Administrative Agent pursuant to the Operative Documents shall be made to the Account. ARTICLE VIII REPRESENTATIONS Section 8.1. Representations of the Lenders. Each Lender represents and warrants to the other parties hereto that: (a) Source of Funds. Such Lender is not and will not be making its Loans hereunder, and is not performing its obligations under the Operative Documents, with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA) or "plan" (as defined in Section 4975(e)(1) of the Code). (b) Acquisition for Investment. Each Lender is participating in the Transactions for its own account and not with a view toward redistribution; provided that disposition of its rights hereunder shall remain in its control and the foregoing shall not affect the ability of any Lender to assign or sell participations in its rights in accordance with the Operative Documents. -17- Lam Research Corporation Participation Agreement Section 8.2. Representations of the Lessee. The Lessee hereby represents and warrants to the other parties hereto that: (a) Corporate Existence and Power. The Lessee is duly incorporated and validly existing in good standing under the laws of the jurisdiction of its incorporation, is duly qualified and in good standing as a foreign corporation in the state where the Properties are located and each other jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it is such that failure to maintain such qualification has resulted or could result in a Material Adverse Effect, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Lessee of this Participation Agreement and the other Operative Documents to which it is a party (i) are within the Lessee's corporate powers and have been duly authorized by all necessary corporate action, (ii) require no action by or in respect of, or filing with, any Governmental Authority and (iii) do not contravene any Requirement of Law or any contractual restriction, order, decree or other instrument binding upon the Lessee or any of its Subsidiaries, except, in the case of clauses (ii) and (iii) above, any such action, filing or contravention which has not resulted in or could not result in a Material Adverse Effect. (c) Binding Effect. This Participation Agreement and each other Operative Document to which the Lessee is a party has been duly executed and delivered by the Lessee and constitutes a legal, valid and binding agreement of the Lessee enforceable in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). (d) Litigation. There is no action, suit or proceeding pending against, or to the knowledge of the Lessee threatened against or affecting the Lessee before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could have a Material Adverse Effect and the Lessee does not have any material contingent obligations not provided for or disclosed in the financial statements referred to in Section 8.2(q) hereof. (e) Margin Stock. The Lessee is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. (f) Use of Proceeds. The proceeds of each Advance will be used only for the purpose of financing the acquisition of the applicable Property and the payment of Transaction Expenses incurred in connection therewith. -18- Lam Research Corporation Participation Agreement (g) Compliance with Law. The Lessee is in compliance in all material respects with all Applicable Laws, including, without limitation, environmental protection laws, ERISA and the Occupational Health and Safety Act, except where the failure to so comply would not have a Material Adverse Effect. (h) Information. All information relating to the Lessee and the Properties heretofore furnished by the Lessee to the Participants and any Appraiser for purposes of or in connection with this Participation Agreement and the other Operative Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by the Lessee to the Participants and any such Appraiser will be, true and accurate in all material respects and does not and will not omit to state any material fact or any fact necessary to make the statements contained therein not misleading. (i) Investment Company. The Lessee is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (j) Liens. The Lessor Mortgage with respect to each Property creates, or upon its execution will create, a valid security interest in and mortgage lien on such Property purported to be covered thereby, and upon recordation of such Lessor Mortgage and the filing of the Lessor Financing Statements relating to such Property, such security interest and mortgage lien will constitute perfected security interests and mortgage liens, prior to all Liens other than Permitted Property Liens. (k) Offer of Securities, etc. Neither the Lessee, nor any Person authorized to act on its behalf has, directly or indirectly, (i) offered any interest in the Properties (or, if such sale or offer would be integrated with the sale or offer of such interest in the Properties, any other interest similar thereto) for sale to any Person or (ii) solicited from any Person any offer to acquire any interest in the Properties (or any such other interest), in either case in violation of the Securities Act. (l) Properties. Except as disclosed on Exhibit 8.2(l) attached hereto, each Property and the contemplated use thereof by the Lessee and its agents, assignees, employees, lessees, sublessees, licensees, tenants and subtenants shall be in material compliance with all Requirements of Law (including, without limitation, all zoning and land use laws and Environmental Laws) and Insurance Requirements, except for such Requirements of Law as it shall be contesting in good faith by appropriate proceedings. There is no action, suit or proceeding (including any proceeding in condemnation or eminent domain or under any Environmental Law) pending or, to Lessee's knowledge, threatened with respect to it, or any Property that materially adversely affects the title to, or the use, operation or value of, such Property. (m) Deed. With respect to the acquisition of a Property on the applicable Acquisition Date, the Deed for such Property will be sufficient to convey good and marketable title to such Property (subject only to Permitted Property Liens) to the Lessor. -19- Lam Research Corporation Participation Agreement (n) Insurance. The Lessee has, on or before the applicable Acquisition Date, obtained insurance coverage covering each Property that meets the requirements set forth in Article XIII of the Master Lease and such coverage is in full force and effect. (o) Flood Hazard Areas. Except as otherwise identified on the applicable survey, plat or map with respect to a Property delivered pursuant to Section 6.1(o), no portion of any Property will be located within an area identified as a special flood hazardous area by the Federal Emergency Management Agency. (p) Solvency. The Lessee is Solvent. (q) Financial Statements. The June 30, 2002 annual financial statements of the Lessee and its Consolidated Subsidiaries and the March 30, 2003 quarterly financial statements of the Lessee and its Consolidated Subsidiaries were prepared in accordance with GAAP and fairly present the financial condition of the Lessee and its Consolidated Subsidiaries at such date and the results of their operations for the period then ended. (r) Material Adverse Change. Since March 30, 2003, there has been no change in the business, properties, condition (financial or otherwise) or results of operations of the Lessee and its Consolidated Subsidiaries which could reasonably be expected to have a Material Adverse Effect. (s) Taxes. The Lessee has filed all United States federal income tax returns and all other material tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Lessee, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. No material tax liens have been filed and no material claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of Lessee in respect of any taxes or other governmental charges are adequate. (t) ERISA. No member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in excess of $15,000,000 in the aggregate. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, no member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. (u) Material Agreements. The Lessee is not a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. The Lessee is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing any Indebtedness or Off-Balance Sheet Obligations with an outstanding principal amount (or implied or attributed principal amount) in excess of $15,000,000. -20- Lam Research Corporation Participation Agreement (v) Environmental Matters. In the ordinary course of its business, the Lessee conducts an ongoing review of the effect of Environmental Laws on the business, operations and properties of the Lessee, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for clean-up or closure of properties presently or previously owned, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat, any costs or liabilities in connection with off-site disposal of wastes or hazardous substances, and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of this review, the Lessee has concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, would not reasonably be expected to have a Material Adverse Effect. Section 8.3. Representations of the Lessor. The Lessor warrants and represents to the other parties hereto that: (a) The Lessor is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and has all requisite corporate power and authority to execute, deliver and perform its obligations under the Operative Documents to which it is a party. (b) The Operative Documents to which it is, or will be, a party have been duly authorized by all requisite corporate action, have been duly executed and delivered by the Lessor, and constitute, and each other Operative Document to which the Lessor is a party when executed and delivered by the Lessor will constitute, the valid and binding obligations of the Lessor enforceable against the Lessor in accordance with the respective terms thereof, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (c) Neither the execution and delivery of the Operative Documents, the consummation of the transactions contemplated thereby nor the fulfillment of or compliance with the provisions thereof will require consent, approval, authorization, filing, registration or qualification under or conflict with or violate any Applicable Law applicable to the Lessor or any of its property, except as contemplated by the Operative Documents. (d) There are no Lessor Liens attributable to the Lessor on the Collateral, the Properties or any part thereof. -21- Lam Research Corporation Participation Agreement (e) The Lessor is not and will not be funding its Lessor Amounts hereunder with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA) or "plan" (as defined in Section 4975(e)(1) of the Code). (f) The Lessor is participating in the Transactions for its own account and not with a view toward redistribution; provided that disposition of its rights hereunder shall remain in its control and the foregoing shall not affect the ability of the Lessor to assign, transfer or sell participations in its rights in accordance with the Operative Documents. (g) There are no actions or proceedings pending, or to the knowledge of the Lessor, threatened, against or affecting the Lessor in or before any Governmental Authority which, if adversely determined, would materially and adversely affect the ability of the Lessor to enter into or perform the Operative Documents to which it is a party. ARTICLE IX PAYMENT OF CERTAIN EXPENSES The Lessee agrees, for the benefit of the Arranger, the Lessor, the Administrative Agent and the Lenders, that: Section 9.1. Transaction Expenses. (a) The Lessee shall pay, or cause to be paid, from time to time all Transaction Expenses in respect of the transactions on the Documentation Date and each Acquisition Date. The Lessor shall deliver or cause to be delivered to the Lessee written invoices therefor at least one (1) Business Day prior to the Documentation Date or such Acquisition Date, as applicable. (b) The Lessee shall pay or cause to be paid (i) all Transaction Expenses incurred by the Lessor, the Administrative Agent or the Lenders in entering into any future amendments or supplements with respect to any of the Operative Documents, whether or not such amendments or supplements are ultimately entered into, or giving or withholding of waivers or consents hereto or thereto, (ii) all Transaction Expenses incurred by the Lessor, the Administrative Agent or the Lenders in connection with the purchase of any Property by the Lessee or other Person pursuant to Articles XV, XVIII and XXI of the Master Lease, (iii) all Transaction Expenses incurred by any of the Lenders, the Lessor or the Administrative Agent in respect of enforcement of any of their rights or remedies in respect of the Operative Documents and (iv) all Transaction Expenses incurred by the Lessor, the Administrative Agent and the Lenders in connection with the negotiation and documentation of any restructuring or "workout", whether or not consummated, of any Operative Document. Section 9.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause to be paid any brokers' fees for which the Lessee is responsible pursuant to Section 15.2 below and any and all stamp, transfer and other similar taxes, fees and excise, if any, including any interest and penalties, which are payable in connection with the transactions contemplated by this Participation Agreement and the other Operative Documents. -22- Lam Research Corporation Participation Agreement Section 9.3. Loan Agreement and Related Obligations. If a Lease Event of Default has occurred and is continuing, the Lessee shall pay, without duplication of any other obligation of the Lessee to pay any such amount under the Operative Documents, before the due date thereof, all costs, expenses and other amounts (other than principal and interest on the Loans which are payable to the extent otherwise required by the Operative Documents) required to be paid by the Lessor, the Administrative Agent or any of the Lenders under the Loan Agreement and the Assignment of Lease and Rent. ARTICLE X OTHER COVENANTS AND AGREEMENTS Section 10.1. Covenants of the Lessee. The Lessee hereby covenants and agrees with the Lessor, the Lenders and the Administrative Agent that it shall comply with the following provisions of this Section 10.1, it being understood that the following covenants are in addition to, and not by way of limitation of, any covenant set forth in the Lease or any other Operative Document. (a) Financial Reporting. The Lessee will maintain, for the Lessee and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to the Lessor, the Administrative Agent and each Lender: (i) Within ninety (90) days after the close of each of the Lessee's fiscal years, an unqualified audit report certified by independent certified public accountants of recognized national standing selected by the Lessee, prepared in accordance with generally accepted accounting principles on a consolidated basis for the Lessee and its Consolidated Subsidiaries, including a consolidated balance sheet as of the end of such period and related consolidated statements of earnings and cash flows; (ii) Within forty-five (45) days after the close of each of the first three quarterly periods of each of the Lessee's fiscal years, for the Lessee and the Consolidated Subsidiaries, an unaudited consolidated balance sheet as at the close of such period and a consolidated statement of earnings and cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified, subject to year-end audit adjustments, by an Authorized Officer; (iii) Together with the financial statements required pursuant to clauses (i) and (ii) above, a compliance certificate in substantially the form of Exhibit E hereto signed by an Authorized Officer showing the calculations necessary to determine compliance with Sections 10.1(j), (k) and (l) of this Participation Agreement and stating that no Lease Default or Lease Event of Default exists, or if any Lease Default or Lease Event of Default exists, stating the nature and status thereof; -23- Lam Research Corporation Participation Agreement (iv) Promptly upon the furnishing thereof to the shareholders of the Lessee, copies of all financial statements, reports and proxy statements so furnished; (v) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly or other regular reports which the Lessee or any of its Subsidiaries files with the Securities and Exchange Commission; (vi) If and when the Lessee or any member of the Controlled Group (A) gives or is required to give notice to the PBGC of any Reportable Event with respect to any Plan which would constitute grounds for a termination of such Plan under ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any Reportable Event, (B) receives notice of complete or partial withdrawal liability under Title IV of ERISA, (C) receives notice that any Multiemployer Plan is in reorganization under Section 4242 of ERISA or may become insolvent under Section 4245 of ERISA, or (D) receives notice from the PBGC that it will institute proceedings asserting liability under Title IV of ERISA or to terminate a Plan under Section 4042 of ERISA or will apply to the appropriate United States District Court to seek the appointment of a trustee to administer any Plan, then, in each such event, copies of such notice given, required to be given or received, as the case may be; and (vii) Promptly after receipt of a request therefor, such other information (including non-financial information) as the Lessor, the Administrative Agent or any Lender may from time to time reasonably request. The Lessee shall be deemed to be in compliance if the information required by Sections 10.1(a)(i), (ii) and (v) is available on "EDGAR" within the time period specified, and such delivery shall satisfy the Lessee's obligations under such Sections. (b) Use of Proceeds. The proceeds of the Advances made under this Participation Agreement will be used to acquire the Properties and to pay Fees and Transaction Expenses. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any "margin stock" within the meaning of Regulation U. (c) Notice of Default. Promptly after any Authorized Officer of the Lessee becomes aware of the occurrence of any Lease Default or Lease Event of Default, the Lessee will give notice in writing to the Lessor and the Administrative Agent of the occurrence of such Lease Default or Lease Event of Default. (d) Existence. The Lessee will, and will cause each of its Subsidiaries to, do all things necessary to remain duly incorporated or otherwise organized, validly existing and (to the extent applicable) in good standing in its jurisdiction of incorporation or organization and maintain all requisite authority to conduct its business in each jurisdiction in which the character of the properties owned or leased by it therein or in -24- Lam Research Corporation Participation Agreement which the transaction of its business is such that failure to maintain such authority has resulted or could result in a Material Adverse Effect; provided, however, that the existence of any Subsidiary may be terminated and any right, franchise or license of any Subsidiary may be terminated or abandoned if in the good faith judgment of the appropriate officer or officers of the Lessee, such termination or abandonment is in its best interest and is not materially disadvantageous to the Lessor or the Lenders. (e) Taxes. The Lessee will, and will cause each of its Subsidiaries to, pay when due all material taxes, assessments and governmental charges and levies upon it or its income, profits or property, except those which are being contested in good faith by appropriate proceedings diligently conducted (or, in the case of any such tax, those the payment of which can be delayed without penalty) and with respect to which adequate reserves have been set aside. (f) Insurance. Without limiting the provisions of Article XIII of the Master Lease, the Lessee will, and will cause each of its Subsidiaries to, maintain with financially sound and reputable insurance companies, insurance on its property in such amounts and covering such risks of loss of a character usually insured by corporations of comparable size and financial strength and with comparable risks. (g) Compliance with Laws. The Lessee will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject (including, without limitation, all laws, rules or regulations under ERISA and all environmental laws and regulations) which, if violated, could reasonably be expected to have a Material Adverse Effect. (h) Inspection. The Lessee will, and will cause each of its Subsidiaries to, permit the Lessor and the Lenders, by their respective representatives and agents, to inspect at all reasonable times, and at the risk and expense of the inspecting party (so long as no Lease Event of Default shall have occurred and be continuing and thereafter at the Lessee's risk and expense), any of the corporate books and financial records of the Lessee and each of its Subsidiaries, to examine and make copies of the books of accounts and other financial records of the Lessee and each of its Subsidiaries, and to discuss the affairs, finances and accounts of the Lessee and each of its Subsidiaries with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lessor and the Lenders may designate. (i) Consolidations, Mergers, Dissolution and Sale of Assets. The Lessee will not sell, lease, transfer or otherwise dispose of all or substantially all of its assets (whether by a single transaction or a number of related transactions and whether at one time or over a period of time) or to dissolve or to consolidate with or merge into any Person or permit any Person to merge into it, except that the Lessee may consolidate with or merge into, any other Person, or permit another Person to merge into it so long as (i) the Lessee shall be the continuing or surviving Person, (ii) immediately after such merger or consolidation or sale, there shall not exist any Lease Default or Lease Event of Default, and (iii) the Lessee shall deliver a certificate or other evidence showing that it is -25- Lam Research Corporation Participation Agreement in pro forma compliance with the covenants set forth in Sections 10.1(j), (k) and (l) as of the effective date of such merger or consolidation or sale after giving effect thereto. (j) Liens. The Lessee will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien in or on (x) any Property, except Permitted Property Liens, and (y) any of its other properties or assets, except: (i) Liens existing on the Documentation Date; (ii) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty or which are being contested in good faith by appropriate proceedings which will prevent the sale or forfeiture of any property of the Lessee or such Subsidiary or any material interference with the use thereof by the Lessee or such Subsidiary and as to which the Lessee or such Subsidiary has set aside on its books reserves deemed by it to be adequate with respect thereto; (iii) Carrier's, warehousemen's, mechanics', landlords', materialmen's, repairmen's, or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith by appropriate proceedings which will prevent the sale or forfeiture of any property of the Lessee or such Subsidiary or any material interference with the use thereof by the Lessee or such Subsidiary and as to which the Lessee or such Subsidiary has set aside on its books reserves deemed by it to be adequate with respect thereto; (iv) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (v) Liens on the property of the Lessee securing (a) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (b) contingent obligations on surety and appeal bonds, and (c) other non-delinquent obligations of a like nature; in each case, incurred in the ordinary course of business; (vi) Liens on the property or assets of any Person which becomes a Subsidiary of the Lessee or which is merged into the Lessee in a manner consistent with Section 10.1(i) above, after the Documentation Date; provided that (a) such Liens exist at the time such Person is acquired by or merged into the Lessee and (b) such Liens were not created in contemplation of such acquisition by or merger into the Lessee; (vii) Judgment Liens, provided that such Liens do not have a value in excess of $15,000,000 or such Liens are released, stayed, vacated or otherwise -26- Lam Research Corporation Participation Agreement dismissed within sixty (60) days after issue or levy and, if so stayed, such stay is not thereafter removed; (viii) Rights of vendors or lessors under conditional sale agreements, Capitalized Leases or other title retention agreements (including synthetic leases) entered into after the Documentation Date, provided that, in such case, (a) such rights secure or otherwise relate to the Lessee's obligations arising therefrom, (b) such rights do not extend to any property other than property acquired or leased with the proceeds of such obligations (other than cash pledged to secure obligations under synthetic leases), and (c) both immediately before and after giving effect to any such Lien, the Lessee shall be in compliance with Section 10.1(k) below; (ix) Liens on the property or assets of any Subsidiary of the Lessee in favor of the Lessee or any other Subsidiary of the Lessee; (x) Liens to secure Indebtedness of the type described in clauses (vi) and (vii) of the definition of "Indebtedness", entered into by the Lessee with respect to obligations otherwise permitted under Section 10.1(k) below; (xi) Liens created after the Documentation Date on Japanese Assets to secure a Yen-Denominated Facility; (xii) Liens on accounts receivable created in connection with a transaction permitted by Section 10.1(l) not to exceed $100,000,000 at any one time; and (xiii) Liens in addition to the Liens permitted by clauses (i) through (xii) above securing additional obligations of the Lessee permitted under Section 10.1(k) below of up to $20,000,000 annually and $50,000,000 in the aggregate. (k) Minimum Cash. The Lessee shall at all times during the Lease Term maintain unrestricted cash balances plus Short Term Investments in an amount equal to the sum of $50,000,000, plus the outstanding non-cash collateralized (i) notional amount of senior Indebtedness, (ii) notional amount of subordinated Indebtedness, (iii) recourse portions of Off-Balance Sheet Obligations, (iv) Guaranties (to the extent not included in clauses (i), (ii) and (iii) above and excluding from this clause (iv) any Guaranties constituting standby letters of credit (which are covered by clause (v) below)), and (v) standby letters of credit of the Lessee and its Subsidiaries to the extent of amounts in excess of $5,000,000, but excluding from this clause (v) any standby letters of credit securing obligations of the types described in Sections 10.1(j)(iv) and (v) (other than leases) arising in the ordinary course of business of the Lessee and its Subsidiaries. (l) Sale of Receivables. The Lessee will not, and will not permit any of its Subsidiaries to, sell or otherwise transfer any of its accounts receivable; provided that the -27- Lam Research Corporation Participation Agreement Lessee and its Subsidiaries may sell accounts receivable on a limited-recourse basis under any receivables purchase agreement in an amount not to exceed $100,000,000 at any one time. For purposes of this Section 10.1(l), "limited-recourse" means that, on an aggregate basis, recourse is limited to less than 20% of the notional amount of the aggregate accounts receivable so sold. (m) Transactions with Affiliates. The Lessee will not, and will not permit any Subsidiary to, directly or indirectly, pay any amount of funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, guarantee or other agreement to pay, purchase or service, directly or indirectly, any Indebtedness, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any Affiliate except on an arms-length basis on terms at least as favorable to the Lessee or such Subsidiary as would have been obtained from a third party who was not an Affiliate. (n) Further Assurances. The Lessee, at its cost and expense, will cause to be promptly and duly taken, executed, acknowledged and delivered all such further acts, documents and assurances as the Lessor, the Administrative Agent or any Lender reasonably may request from time to time in order to carry our more effectively the intent and purposes of this Agreement and the other Operative Documents and the Transactions. The Lessee, at its cost and expense, will cause all financing statements, fixture filings, mortgages and other documents, to be recorded or filed at such places and times in such manner, and will take all such other actions or cause such actions to be taken, as may be necessary or as may be reasonably requested by the Administrative Agent, any Lender or the Lessor in order to establish, preserve, protect and perfect the title and Lien of the Lessor and/or the Administrative Agent in the Properties and the Collateral and the Lessor's, the Administrative Agent's and/or any Lender's rights under this Participation Agreement and the other Operative Documents. Section 10.2. [***] THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. -28- Lam Research Corporation Participation Agreement Section 10.3. Covenants of Each Participant. Subject at all times to the terms and provisions of Section 15.10, each Participant hereby severally agrees that, until payment in full of the Lease Balance or such other time as the Master Lease shall have terminated with respect to all of the Properties: (a) it will not create, incur, assume or suffer to exist any Lessor Lien attributable to it upon any Property; and (b) it will, at its own cost and expense, promptly take such action as may be necessary duly to discharge, or to cause to be discharged, all Lessor Liens on the Properties attributable to it; provided that such Participant may contest any such Lessor Lien in good faith and by appropriate proceedings. Section 10.4. Release of Properties. (a) If the Lessee shall at any time (i) purchase any Affected Property pursuant to Section 15.1 of the Lease, (ii) exercise its Purchase Option with respect to the Properties, or if any or all of the Properties shall be purchased by the Lessee (or its designees) in accordance with the Master Lease, and in each case, the Lessee satisfies each of the obligations and conditions set forth in the Master Lease for the release of a Property therefrom, then, upon application of the proceeds of any such sale pursuant to Article VII and all accrued interest, Yield and any other payments due and owing from the Lessee to the Administrative Agent, the Lenders and the Lessor on such date pursuant to the Operative Documents, including without limitation all amounts due and owing pursuant to Article XIII of this Participation Agreement with respect to such Property or Properties purchased by the Lessee or its designee, (i) each such Property shall be released from the Liens created by the Operative Documents (including any Liens created by the Lease Supplement covering such Property, the Mortgage with respect to such Property and the Assignment of Lease and Rent) and the Administrative Agent and the Lessor shall, at the expense of the Lessee, execute and deliver such instruments as the Lessee may reasonably request to effectuate and evidence such releases, and (ii) the Lessee shall be entitled to the return of a portion of the Funds held under the Cash Collateral Pledge Agreement equal to the amount in excess of the amount then required to be maintained under the terms of Section 4 thereof. (b) In addition, upon the termination of the Commitments of the Lenders and the payment in full of all other amounts owing to the Lenders by the Lessee hereunder or under any other Operative Document, the Properties shall be released from the Liens created by the Mortgages and the Assignment of Lease and Rent. Upon request of either the Lessee or the Lessor following any such release, the Administrative Agent shall, at the sole cost and expense of the Lessee, execute and deliver to the Lessor or the Lessee, as applicable, such documents as the Lessee or the Lessor shall reasonably request to effectuate and evidence such release. ARTICLE XI [INTENTIONALLY OMITTED] ARTICLE XII TRANSFERS OF PARTICIPANTS' INTERESTS Section 12.1. Assignments. (a) Each Lender may, with the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld), assign all or a portion of its rights and obligations hereunder pursuant to an assignment agreement substantially in the form of Exhibit F to one or more Eligible Lender Assignees (or, if a Lease Event of Default has occurred and is continuing, to any Person). Each such assignment shall be of a constant, not varying, percentage of all of the assigning Lender's rights and obligations under the Operative Documents relating to its Series A Notes and/or Series B Notes. Any such assignment shall be in -29- Lam Research Corporation Participation Agreement a minimum aggregate amount of $5,000,000 (or the balance of such Loan Commitment applicable to its Series A Notes and/or Series B Notes, if less). Any assignment hereunder shall be effective upon delivery to the Administrative Agent and the Lessor of written notice of the assignment together with a transfer fee of $3,500.00 payable by the assignor Lender or the assignee Lender to the Administrative Agent for its own account. The assigning Lender will give prompt notice to the Administrative Agent and the Lessee of any such assignment. Upon the effectiveness of any such assignment, the assignee shall become a "Lender" for all purposes of the Operative Documents (including all representations, warranties and covenants which will all be deemed made and agreed to by such assignee) and, to the extent of such assignment, the assigning Lender shall be relieved of its obligations hereunder to the extent of the Loans and Commitment components being assigned. The Administrative Agent agrees that upon notice of any such assignment and surrender of the appropriate Note or Notes, it will promptly provide to the assigning Lender and to the assignee Lender separate promissory notes of the series and in the amount of their respective interests substantially in the form of the original Note (but with notation thereon that it is given in substitution for and replacement of the original Note or any replacement notes thereof). So long as no Lease Event of Default has occurred and is continuing, Key Corporate Capital Inc. agrees that it will not transfer or assign its Notes if after giving affect to such transfer or assignment, the principal amount of Notes held by Key Corporate Capital Inc. plus the Lessor Amounts held by SELCO Service Corporation would be less than $10,000,000. (b) The Lessor may, with the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld), assign all of its rights and obligations hereunder pursuant to an assignment agreement in form and substance reasonably satisfactory to the Lessee and the Administrative Agent (provided that Lessee's approval shall not be required during the continuance of a Lease Event of Default) to an Eligible Lessor Assignee (or, if a Lease Event of Default has occurred and is continuing, to any Person). Any assignment hereunder shall be effective upon the later of (x) delivery to the Administrative Agent and the Lessee of written notice of the assignment and (y) the date on which all required consents thereto shall have been given (or, if applicable, deemed given). The Lessor will deliver written notice to the Administrative Agent and the Lessee of any such proposed assignment at least ten (10) Business Days prior to the proposed date of such assignment, which notice shall contain the name of the proposed assignee and financial information with respect thereto sufficient to determine whether such transferee is an Eligible Lessor Assignee (any such notice, a "Notice of Proposed Assignment"). To the extent any consents to an assignment are required hereunder, such consents shall be deemed to have been given if the party entitled to consent thereto does not object to the proposed transferee within five (5) Business Days of its receipt of the applicable Notice of Proposed Assignment. The Lessor shall make such filings and give such notices as shall be necessary to evidence such assignment in all public offices where filings have been made under the Operative Documents, and the Lessee and the Administrative Agent shall cooperate with the Lessor in effecting such filings and notices. Upon the effectiveness of any such assignment, the assignee shall become the "Lessor" for all purposes of the Operative Documents and the assignor shall be relieved of its obligations hereunder. In connection with any assignment pursuant to this Section 12.1(b), the Lessee and the Administrative Agent will, promptly upon the request of the Lessor and at the Lessor's cost and expense, execute and deliver an acknowledgment of such assignment and the succession of the transferee to all rights -30- Lam Research Corporation Participation Agreement and obligations of the transferor Lessor under the Operative Documents in such form as the transferee may reasonably request. Section 12.2. Participations. Each Participant may sell, transfer, grant or assign participations in all or any part of such Participant's interests and obligations hereunder; provided that (i) such selling Participant shall remain a "Lender" or the "Lessor", as the case may be, for all purposes under the Operative Documents (such selling Participant's obligations under the Operative Documents remaining unchanged) and the sub-participant shall not constitute a Participant hereunder, (ii) no such sub-participant shall have, or be granted, rights to approve any amendment or waiver relating to the Operative Documents except to the extent any such amendment or waiver would (A) reduce the principal of or rate of interest on or fees in respect of any Loans or Lessor Amounts in which the sub-participant is participating, (B) postpone the date fixed for any payment of principal (including extension of the Expiration Date or the date of any mandatory prepayment), interest or fees in which the sub-participant is participating, or (C) release all or substantially all of the collateral or guarantees (except as expressly provided in the Operative Documents) supporting any of the Loans or Lessor Amounts or Commitments in which the sub-participant is participating, (iii) sub-sub-participations by the sub-participant (except to an Affiliate, parent company or Affiliate of a parent company of the sub-participant) shall be prohibited and (iv) written notice of each such participation is given to the Lessee. In the case of any such participation, the sub-participant shall not have any rights under the Operative Documents (the sub-participant's rights against the selling Participant in respect of such participation to be those set forth in the participation agreement with such Participant creating such participation) and all amounts payable by the Lessee hereunder shall be determined as if such Participant had not sold such participation; provided, however, that such sub-participant shall be entitled to receive additional amounts under Sections 13.5, 13.10 and 13.11 on the same basis as if it were a Participant (but only to the extent that the Participant would have been entitled to receive such additional amounts with respect to the interest participated had it not sold such participation). Section 12.3. Withholding Taxes; Disclosure of Information; Pledge Under Regulation A. (a) If the assignee of any Participant pursuant to Section 12.1 or the subparticipant of any Participant pursuant to Section 12.2 is (i) not a citizen or resident of the United States of America, (ii) not a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof), or (iii) not an estate or trust that is subject to federal income taxation regardless of the source of its income (each, a "Non-U.S. Transferee"), then such Non-U.S. Transferee shall deliver (or cause to be delivered) upon the request of the Lessee to each of the Administrative Agent and the Lessee one of the following properly completed and signed U.S. tax forms: (i) a form W-8ECI or (ii) a form W-8BEN claiming a valid exemption under an applicable U.S. tax treaty for all income payable to such Non-U.S. Transferee under the Operative Documents. (b) If the assignee of any Participant pursuant to Section 12.1 or the subparticipant of any Participant pursuant to Section 12.2 is not a Non-U.S. Transferee (each, a "U.S. Transferee"), then such U.S. Transferee shall deliver (or cause to be delivered) to each of the Administrative Agent and the Lessee a properly completed and signed U.S. tax Form W-9. -31- Lam Research Corporation Participation Agreement (c) Any Participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Article XII, disclose to such assignee or participant or proposed assignee or participant, any information relating to the Lessee or the Transactions, subject to appropriate confidentiality requirements relating to such information. (d) Anything in this Article XII to the contrary notwithstanding, any Lender may without the consent of the Lessee, the Administrative Agent or the Lessor, assign and pledge all or any portion of the Notes held by it to any Federal Reserve Bank, the United States Treasury or to any other financial institution as collateral security pursuant to Regulation A of the F.R.S. Board and any operating circular issued by the Federal Reserve System and/or the Federal Reserve Bank or otherwise; provided, any payment by the Lessee for the benefit of the assigning or pledging Participant shall be deemed to satisfy the Lessee's obligations with respect thereto. ARTICLE XIII INDEMNIFICATION Section 13.1. General Indemnification. (a) The Lessee agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and to indemnify, protect, defend, save and keep harmless each Indemnitee, on an After Tax Basis, from and against any and all Claims that may be imposed on, incurred by or asserted against such Indemnitee (whether because of action or omission by such Indemnitee or otherwise) whether or not such Indemnitee shall also be indemnified as to any such Claim by any other Person and whether or not such Claim arises or accrues prior to the Documentation Date or after the Maturity Date, in any way relating to or arising out of the transactions contemplated by this Participation Agreement and the other Operative Documents, including, without limitation: (i) any of the Operative Documents and any amendment, modification or waiver in respect thereof; (ii) the Properties or any part thereof or interest therein; (iii) the purchase, design, construction, preparation, installation, inspection, delivery, nondelivery, acceptance, rejection, ownership, management, possession, operation, rental, lease, sublease, assignment, repossession, maintenance, repair, alteration, modification, addition or substitution, storage, transfer of title, redelivery, use, financing, refinancing, disposition, operation, condition, sale (including without limitation, any sale pursuant to Section 16.2(d) or 16.2(f) of the Master Lease or any sale pursuant to Article XV, XVIII or XX of the Master Lease), return or other disposition of all or any part or any interest in the Properties or the imposition of any Lien thereon, including, without limitation: (1) Claims or penalties arising from any violation of law or in tort (on the basis of strict liability or otherwise), (2) latent or other defects, whether or not discoverable, (3) any Claim based upon a violation or alleged violation of the terms of any restriction, easement, condition or covenant or other matter affecting title to any Property, (4) the making of any Modifications in violation of any standards imposed by any insurance policies required to be maintained by the Lessee pursuant to the Master Lease which are in effect at any time with respect to any Property or any part thereof, -32- Lam Research Corporation Participation Agreement (5) any Claim for patent, trademark or copyright infringement with respect to any Property, and (6) Claims arising from any public improvements with respect to any Property resulting in any change or special assessments being levied against any Property or any plans to widen, modify or realign any street or highway adjacent to any Property, or any Claim for utility "tap-in" fees; (iv) the breach or alleged breach by the Lessee of any covenant, representation or warranty made or deemed made by it in any Operative Document or any certificate required to be delivered by it by any Operative Document; (v) the retaining or employment of any broker, finder or financial advisor by the Lessee to act on its behalf in connection with this Participation Agreement or any other Operative Document; and (vi) the existence of any Lien on or with respect to any Property, any Basic Rent or Supplemental Rent, title thereto, or any interest therein including any Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of any Property or by reason of labor or materials furnished or claimed to have been furnished to the Lessee, or any of its contractors or agents or by reason of the financing of any personality or equipment purchased or leased by the Lessee or Modifications constructed by the Lessee. (b) Notwithstanding the terms of clause (a) of this Section 13.1, the Lessee shall not be required to indemnify any Indemnitee under this Section 13.1 for any Claim to the extent arising or resulting from (1) the willful misconduct or gross negligence of such Indemnitee, (2) Lessor Liens attributable to such Indemnitee, (3) a breach by such Indemnitee of any Operative Document, (4) a breach by such Indemnitee of any agreement entered into in connection with the assignment or participation of any Loan or Lessor Amount, any interest therein or any other interest of such Indemnitee under the Operative Documents, and (5) acts or events occurring in respect of any Property in the period after the Lessee ceases to lease such Property from the Lessor under the Lease to the extent not resulting from any act or event otherwise covered by this indemnity that occurred during the period the Lessee leased such Property. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of and shall be separate and independent from any remedy under the Lease or any other Operative Document. Without limiting the express rights of any Indemnitee under this Section 13.1, this Section 13.1 shall be construed as an indemnity only and not a guaranty of residual value of any Property or as a guaranty of the Notes or the repayment of the Lease Balance. Section 13.2. End of Term Indemnity. (a) If the Lessee elects the Remarketing Option and there would, after giving effect to the proposed remarketing transaction, be a Shortfall Amount, then as a condition to the Lessee's right to complete the remarketing of the Properties pursuant to Article XX of the Master Lease, the Lessee shall cause to be delivered to the Administrative Agent and the Lessor at least one hundred twenty (120) days prior to the Expiration Date, at the Lessee's sole cost and expense, a report from the Appraiser in form and substance satisfactory to the Lessor, the Administrative Agent and the Lenders (the "End of the -33- Lam Research Corporation Participation Agreement Term Report") which shall state the appraiser's conclusions as to the reason for any decline in the Fair Market Sales Value of any Property from the Property Cost thereof. (b) On or prior to the Expiration Date, the Lessee shall pay to the Administrative Agent for the account of each of the Participants an amount (not to exceed the Shortfall Amount) equal to the portion of any Shortfall Amount that the End of the Term Report demonstrates was the result of a decline in the Fair Market Sales Value of any Property due to: (i) extraordinary use; failure to maintain, repair, restore, rebuild or replace; failure to comply with any applicable law; failure to use; workmanship; method of installation or removal or maintenance, repair, rebuilding or replacement (excepting in each case ordinary wear and tear and except as otherwise provided in the Lease); or (ii) any Modification made to, or any rebuilding of, such Property or any part thereof by the Lessee, or any sublessee, whether or not permitted pursuant to the Operative Documents; or (iii) contamination at such Property resulting from any Hazardous Activity, Hazardous Materials or Environmental Violations whether or not such condition existed on the Acquisition Date therefor; or (iv) any restoration or rebuilding carried out by the Lessee; or (v) any condemnation of any portion of such Property pursuant to Article XIV of the Master Lease; or (vi) any use of such Property or any part thereof by the Lessee other than for its intended purposes as contemplated by the applicable Appraisal; or (vii) any grant, release, dedication, transfer, annexation or amendment made pursuant to Section 11.2 of the Master Lease; or (viii) the failure of the Lessor to have good and marketable title to such Property free and clear of all Liens (other than Permitted Property Liens described in clauses (i), (viii) and (x) of the definition thereof); or (ix) the existence of any sublease relating to such Property that shall survive the Expiration Date. Section 13.3. Environmental Indemnity. To the fullest extent permitted by Applicable Law, and without limitation of the other provisions of this Article XIII, the Lessee hereby agrees to indemnify, hold harmless and defend each Indemnitee from and against any and all claims (including, without limitation, third party claims for personal injury or real or personal property damage), losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings, judgments, remedial actions, requirements, enforcement actions of any kind, and all reasonable and documented costs and expenses incurred in connection therewith (including but -34- Lam Research Corporation Participation Agreement not limited to reasonable attorneys' and/or paralegals' fees and expenses and costs incurred in connection with any investigation or monitoring of site conditions or any clean-up, remedial, removal or restoration work with respect to any Property undertaken or required by any federal, state or local Governmental Authority), arising or asserted under any Environmental Laws, and arising in whole or in part, out of: (a) the presence on or under such Property of any Hazardous Materials, or any Releases of any Hazardous Materials on, under, from or at such Property; (b) any activity, including, without limitation, construction, carried on or undertaken on or off such Property, whether by the Lessee (or any predecessor in title) or any employees, agents, contractors or subcontractors of the Lessee (or any predecessor in title), or in connection with the handling, treatment, removal, storage, decontamination, clean-up, transport or disposal of any Hazardous Materials that at any time are located or present on or under or that at any time migrate, flow, percolate, diffuse or in any way move onto or off such Property; (c) with respect to any Hazardous Materials at such Property, loss of or damage to any property or the environment (including, without limitation, clean-up costs, response costs, remediation and removal costs, costs of corrective action, costs of financial assurance, fines and penalties and natural resource damages), or death or injury to any Person, and all expenses associated with the protection of wildlife, aquatic species, vegetation, flora and fauna, and any mitigative action required by or under Environmental Laws; or (d) any noncompliance with Environmental Laws, or any act or omission causing an environmental condition at such Property that requires remediation or causing any Governmental Authority to record a Lien pursuant to Environmental Laws on the land record of such Property; or (e) any residual contamination on or under such Property, including any contamination affecting any natural resources, and any contamination of any property or natural resources arising in connection with the generation, use, handling, storage, transport or disposal of any Hazardous Material associated with such Property, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances; provided, however, that the Lessee shall not be required to indemnify any Indemnitee under this Section 13.3 for (1) any claim to the extent resulting from such Indemnitee's gross negligence or willful misconduct, or (2) any claim arising in respect to such Property to the extent attributable to acts or events occurring in the period after the Lessee ceases to lease the Property from the Lessor; provided that the facts supporting such claim occur after such period. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of the Lease Term with respect to any claim based on facts or circumstances arising prior to or during the Lease Term, and shall be separate and independent from any remedy under the Lease or any other Operative Document. -35- Lam Research Corporation Participation Agreement Without limiting the generality of the foregoing, the Lessee waives all rights and defenses that the Lessee may have because the Lessee's obligations are secured by real property. This means, among other things: (1) The Indemnitees may collect from the Lessee without first foreclosing on any real or, if applicable, personal property collateral pledged by Lessee; (2) If the Indemnitees foreclose on any real property collateral pledged by the Lessee: (A) the amount of the Lessee's obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale (even if the collateral is worth more than the sale price thereof); (B) the Indemnitees may collect from the Lessee even if the Indemnitees, by foreclosing on the real property collateral, have destroyed any right the Lessee may have to collect from third parties. This is an unconditional and irrevocable waiver of any rights and defenses the Lessee may have because Lessee's obligations are secured by real property. Section 13.4. Proceedings in Respect of Claims. In case any action, suit or proceeding shall be brought against any Indemnitee in respect of Claims indemnifiable under Sections 13.1 or 13.3, such Indemnitee shall promptly notify the Lessee of the commencement thereof, and the Lessee shall be entitled, at the Lessee's expense, to participate in, and, to the extent that the Lessee desires to, assume and control the defense thereof; provided, however, that if the Lessee shall have exercised its rights to control the defense of such Claim to the exclusion of the applicable Indemnitee, the Lessee shall have acknowledged in writing its obligation to fully indemnify such Indemnitee in respect of such action, suit or proceeding, and the Lessee shall keep such Indemnitee fully apprised of the status of such action, suit or proceeding and shall provide such Indemnitee with all information with respect to such action, suit or proceeding as such Indemnitee shall reasonably request, and provided, further, that the Lessee shall not be entitled to assume and control the defense of any such action, suit or proceeding if and to the extent that, (A) in the reasonable opinion of such Indemnitee's counsel, (x) such action, suit or proceeding involves any risk of imposition of criminal liability on any Indemnitee or will involve a material risk of imposition of civil liability on any Indemnitee or the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien) on the Properties or any part thereof or any interference with the payment of Rent unless, in the case of civil liability only, the Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Indemnitees in respect of such risk or (y) the control of such action, suit or proceeding would involve an actual or potential conflict of interest, (B) such proceeding involves Claims not fully indemnified by the Lessee that the Lessee and the Indemnitee have been unable to sever from the indemnified claim(s), or (C) a Lease Default or Lease Event of Default has occurred and is continuing. The Indemnitee will join in the Lessee's efforts to sever such action. In the event that an Indemnitee has assumed control of any such proceeding, it shall keep the Lessee fully apprised of the status of such action, suit or proceeding and shall provide the Lessee with all -36- Lam Research Corporation Participation Agreement information with respect to such action, suit or proceeding as the Lessee may reasonably request. The Indemnitee may participate at its own expense and with its own counsel in any proceeding conducted by the Lessee in accordance with the foregoing. The Lessee shall not enter into any settlement or other compromise with respect to any Claim which is entitled to be indemnified under Section 13.1 or 13.3 without prior written consent of the Indemnitee, which consent shall not be unreasonably withheld in the case of a money settlement not involving an admission of liability of such Indemnitee. Upon payment in full of any Claim by the Lessee pursuant to Section 13.1 or 13.3 to or on behalf of an Indemnitee, the Lessee, without any further action, shall be subrogated to any and all claims that such Indemnitee may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnitee at its own expense), and such Indemnitee shall execute such instruments of assignment and conveyance, evidence of claims and payment and such other documents, instruments and agreements as may be necessary to preserve any such claims and otherwise cooperate with the Lessee and give such further assurances as are necessary or advisable to enable the Lessee to pursue such claims. Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3 shall be paid to such Indemnitee promptly upon receipt of a written demand therefor from such Indemnitee, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable. Section 13.5. General Tax Indemnity. (a) Indemnification. Without limitation of the rights of any Tax Indemnitee under any other indemnification provision of this Article XIII, the Lessee shall pay and assume liability for, and does hereby agree to indemnify, protect and defend the applicable Property and all Tax Indemnitees, and hold them harmless, on an After Tax Basis, against all Impositions. (b) Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee may have an indemnity obligation pursuant to this Section 13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 13.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within thirty (30) days) notify the Lessee in writing (provided that failure to so notify the Lessee within thirty (30) days shall not alter such Tax Indemnitee's rights under this Section 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any Impositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall, in such notice to the Lessee, so inform the Lessee and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days -37- Lam Research Corporation Participation Agreement after the receipt of such notice by the Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Lessee is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the Imposition, at the Lessee's sole expense. If (x) such contest can be pursued in the name of the Lessee and independently from any other proceeding involving an Imposition of such Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving an Imposition on such Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of any such contest, if such Tax Indemnitee determines reasonably and in good faith that such contest by the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that by taking control of the contest, the Lessee acknowledges that it is solely responsible for the Imposition ultimately determined to be due by reason of such contest, and provided, further, that in determining the application of clauses (x) and (y) above, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other claims relating to Impositions requested to be contested by the Lessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to the Lessee. Notwithstanding anything to the contrary contained herein, in no event shall the Lessee be permitted to pursue or continue any contest (or such Tax Indemnitee be required to pursue or continue any contest) of any Imposition or claim thereof through any action, suit or proceeding (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel reasonably acceptable to the Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability on any Tax Indemnitee or will involve a material risk of imposition of civil liability on any Tax Indemnitee or the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien) on the Properties or any part thereof or any interference with the payment of Rent unless, with respect to civil liability only, the Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Tax Indemnitees in respect of such risk, (B) if a Lease Default or Lease Event of Default has occurred and is continuing, (C) unless the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand and on an After Tax Basis all reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition or claim thereof, including all reasonable legal, accounting and investigatory fees and disbursements as well as the Impositions which are the subject of such contest to the extent the contest is unsuccessful, or (D) if such contest shall involve the payment of the Imposition prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that the Tax Indemnitee is so required to pay on an After Tax Basis and prior to commencing any contest the Lessee shall have acknowledged its liability for the Imposition (if and to the extent that the Tax Indemnitee or the Lessee, as the case may be, -38- Lam Research Corporation Participation Agreement shall not prevail in the contest in respect of the Imposition). In addition, no contest of any Imposition shall be required: (A) unless the amount of the potential indemnities (taking into account all similar or logically related claims that have been or are likely to be raised in any audit involving any or all of such Tax Indemnitees for which the Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $75,000 and (B) unless, if requested by such Tax Indemnitee, the Lessee shall have provided to such Tax Indemnitee at the Lessee's sole expense, an opinion of independent counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee that a reasonable basis exists to contest such Imposition (or, in the case of an appeal from an adverse judicial determination, that there is substantial authority for a reversal or favorable modification of such decision of such appeal). In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting and controlling the contest of an Imposition shall consult in good faith with the other party and its counsel with respect to such contest (or claim for refund) but the decisions regarding what actions are to be taken with respect to such contest shall be made by the controlling party in its sole judgment. In addition, the party controlling the contest shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant Governmental Authority to the controlling party thereof, relating to such contest. Each Tax Indemnitee shall, at the Lessee's sole expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.5(b) so long as such information or documents are not, in the reasonable judgment of the Tax Indemnitee, confidential information or documents. Notwithstanding anything in this Section 13.5(b) to the contrary, so long as no Lease Event of Default shall have occurred and be continuing, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse determination with respect to any claim for an Imposition for which it is entitled to be indemnified under this Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the prior written consent of the Lessee (which shall not be unreasonably withheld or delayed), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.5 with respect to such claim pursuant to the next paragraph. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee will not be required to contest or continue to contest (and the Lessee shall not be permitted to contest or continue to contest) a claim with respect to any Imposition and shall be permitted to settle or commence any such claim without the consent of the Lessee if (i) such Tax Indemnitee shall waive its right to indemnification under this Section 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is materially adversely affected as a result of such waiver) and the Tax Indemnitee returns to the Lessee all amounts previously advanced to the Indemnitee with respect to the contest of such claim or (ii) such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and the Lessee provides an opinion of independent tax counsel reasonably satisfactory to the Tax Indemnitee to the effect that it is more -39- Lam Research Corporation Participation Agreement likely than not that such change in law or facts will result in a favorable resolution of the claim at issue). (c) [Intentionally omitted] (d) Payments. Any Imposition indemnifiable under this Section 13.5 shall be paid when due directly to the applicable taxing authority if such direct payment is practicable and permitted. If direct payment to the applicable taxing authority is not permitted or is otherwise not made, any amount payable to a Tax Indemnitee pursuant to this Section 13.5 shall be paid to the Tax Indemnitee within thirty (30) days after receipt of a written demand therefor from such Tax Indemnitee, which demand shall be, accompanied by a written statement describing in reasonable detail the amount so payable, but not before ten (10) Business Days prior to the date that the relevant Imposition is due. Any payments made pursuant to this Section 13.5 shall be made directly to such Tax Indemnitee entitled thereto or the Lessee, as the case may be, in immediately available funds at such bank or to such account as specified by the payee in written directions to the payor, or, if no such direction shall have been given, by check of the payor payable to the order of the payee by certified mail, postage prepaid at its address as set forth in Schedule II hereto. Upon the request of any Tax Indemnitee with respect to Impositions that the Lessee is required to pay, the Lessee shall furnish to such Tax Indemnitee the original or a certified copy of a receipt for the Lessee's payment of such Imposition or such other evidence of payment as is reasonably acceptable to such Tax Indemnitee. (e) Reports. In the case of any report, return or statement required to be filed with respect to any Impositions that are subject to indemnification under this Section 13.5, the Lessee shall promptly notify such Tax Indemnitee of such requirement and, at the Lessee's sole expense (i) if the Lessee is permitted by Applicable Law, timely file such report, return or statement in its own name and send a copy of such report, return or statement to the Tax Indemnitee, or (ii) if such report, return or statement is required to be in the name of or filed by such Tax Indemnitee, or the Tax Indemnitee otherwise requests that such report, return or statement be filed in the name of or by such Tax Indemnitee, the Lessee shall prepare and furnish such report, return or statement in such manner as shall be satisfactory to such Tax Indemnitee and shall send the same to such Tax Indemnitee for filing no later than fifteen (15) days prior to the due date therefor. In any case in which such Tax Indemnitee will file any such report, return or statement, the Lessee shall, upon written request of such Tax Indemnitee, provide such Tax Indemnitee with such information as is reasonably necessary to allow such Tax Indemnitee to file such report, return or statement. (f) Tax Ownership. Each Tax Indemnitee represents and warrants that it will not, prior to the termination of the Lease with respect to a Property, claim ownership of (or any tax benefits, including depreciation, with respect to) such Property for any income tax purposes (unless required to do so by a Governmental Authority), it being understood that the Lessee is and will remain the owner of such Property for such income tax purposes until the termination of the Lease with respect thereto. (g) Disclosure. The parties agree that any party to this Participation Agreement (and each employee, representative, or other agent of such party) may disclose the tax aspects of the -40- Lam Research Corporation Participation Agreement transactions contemplated by this Participation Agreement and the structural aspects of these transactions as they relate to such tax aspects without limitation of any kind on such disclosure. Section 13.6. Indemnity Payments in Addition to Lease Obligations. The Lessee acknowledges and agrees that the Lessee's obligations to make indemnity payments under this Article XIII are separate from, in addition to, and do not reduce, the Lessee's obligations to pay any amounts owing from time to time under the Lease. Section 13.7. Eurodollar Rate Lending Unlawful. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof occurring after the Documentation Date shall make it unlawful for any Participant to make, continue or maintain Eurodollar Loans/Lessor Amounts as contemplated by the Operative Documents, (i) such Participant shall promptly give written notice of such circumstances to the Lessee, the Lessor and the Administrative Agent (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Participant hereunder to make, continue or maintain Eurodollar Loans/Lessor Amounts shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Participant to make, continue or maintain Eurodollar Loans/Lessor Amounts, such Participant shall then have a commitment only to make or maintain Base Rate Loans/Lessor Amounts when Eurodollar Loans/Lessor Amounts are requested and (iii) such Participant's Loans and Lessor Amounts then outstanding as Eurodollar Loans/Lessor Amounts, if any, shall be converted automatically to Base Rate Loans/Lessor Amounts on the respective last days of the then current Interest Periods with respect to such Loans and Lessor Amounts or within such earlier period as required by law. If any such conversion of Eurodollar Loans/Lessor Amounts occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Lessee shall pay to such Participant such amounts, if any, as may be required pursuant to Section 13.10. In any such case, interest and principal (if any) shall be payable contemporaneously with the related Eurodollar Loans/Lessor Amounts of the other Participants so affected. Section 13.8. Deposits Unavailable. If any of the Participants shall have determined that: (i) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to such Participant in its relevant market; or (ii) by reason of circumstances affecting such Participant's relevant market adequate means do not exist for ascertaining the interest rate or Yield, as the case may be, applicable to such Participant's Eurodollar Loans/Lessor Amounts; then, upon notice from such Participant to the Lessee, the Administrative Agent and the other Participants, (x) the obligations of such Participant to make or continue any Loans or Lessor Amounts as, or to convert any Loans or Lessor Amounts into Eurodollar Loans/Lessor Amounts shall be suspended, and (y) each outstanding Eurodollar Loan/Lessor Amount held by such Participant shall automatically convert into a Base Rate Loan/Lessor Amount on the last day of the current Interest Period applicable thereto. -41- Lam Research Corporation Participation Agreement Section 13.9. Increased Costs, etc. (a) If the adoption of or any change in a Requirement of Law or in the interpretation or application thereof applicable to any Participant, or compliance by any Participant with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority, in each case made subsequent to the Documentation Date (or, if later, the date on which such Participant becomes a Participant): (i) shall subject such Participant to any tax of any kind whatsoever with respect to any Eurodollar Loans/Lessor Amounts made, continued or maintained by it or its obligation to make, continue or maintain Eurodollar Loans/Lessor Amounts, or change the basis of taxation of payments to such Participant in respect thereof (except for Taxes that would be excluded from the definition of Impositions, any changes in taxes measured by or imposed upon the overall gross or net income, franchise or other taxes (imposed in lieu of such net income tax), of such Participant its applicable lending office, branch, or any affiliate thereof); or (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, Loans, Lessor Amounts, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Participant which is not otherwise included in the determination of the Adjusted Eurodollar Rate hereunder; or (iii) shall impose on such Participant any other condition (excluding any Tax of any kind) whatsoever in connection with the Operative Documents; and the result of any of the foregoing is to increase the cost to such Participant of making, continuing or maintaining Eurodollar Loans/Lessor Amounts or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Lessee from such Participant, the Lessee shall pay such Participant any additional amounts necessary to compensate such Participant for such increased cost or reduced amount receivable; provided that, in any such case, the Lessee may elect to convert the Eurodollar Loans/Lessor Amounts made or held by such Participant hereunder to Base Rate Loans/Lessor Amounts by giving the Administrative Agent at least one (1) Business Day's notice of such election, in which case the Lessee shall promptly pay to such Participant, upon demand, without duplication, such amounts, if any, as may be required pursuant to Section 13.10. All payments required by this Section 13.9(a) shall be made by the Lessee within five (5) Business Days after demand by the applicable Participant. The Lessee shall not be obligated to reimburse any Participant for any increased cost or reduced return incurred more than one hundred eighty (180) days prior to the date that such Participant delivers notice to the Lessee of such increased cost or reduced return unless such Participant gives notice thereof to the Lessee in accordance with this Section 13.9 during such one hundred eighty (180) day period. If any Participant becomes entitled to claim any additional amounts pursuant to this subsection, it shall provide prompt notice thereof to the Lessee, certifying (x) that one of the events described in this clause (a) has occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced amount resulting from such event and (z) as to the additional amount demanded by such Participant and a reasonably detailed explanation of the calculation thereof (including the method by which such Participant allocated such amounts to the Lessee). Such a certificate as to any -42- Lam Research Corporation Participation Agreement additional amounts payable pursuant to this clause submitted by such Participant, through the Administrative Agent, to the Lessee shall be conclusive and binding for all purposes, absent manifest error. This covenant shall survive the termination of this Participation Agreement and the payment of the Loans and Lessor Amounts, as the case may be, and all other amounts payable hereunder. (b) Each Participant shall use its reasonable efforts to reduce or eliminate any unlawfulness or claim for compensation pursuant to Sections 13.7, 13.8 or 13.9(a), including, without limitation, a change in the office of such Participant at which its obligations related to this Participation Agreement are maintained if such change will cure the unlawfulness or avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Participant, be otherwise disadvantageous to it. Section 13.10. Funding Losses; Break Costs. (a) The Lessee agrees to indemnify each Indemnitee and to hold each Indemnitee harmless from any loss or expense which such Indemnitee may sustain or incur as a consequence of (i) default by the Lessee in making a borrowing of Loans or Lessor Amounts which are Eurodollar Loans/Lessor Amounts after Lessee has given a notice requesting the same in accordance with the provisions of this Participation Agreement, (ii) default by the Lessee in making any prepayment of a Loan or Lessor Amount which is a Eurodollar Loan/Lessor Amount after the Lessee has given a notice thereof in accordance with the provisions of this Participation Agreement, or (iii) the making of a payment or prepayment of Loans or Lessor Amounts which are Eurodollar Loans/Lessor Amounts on a day which is not the last day of an Interest Period with respect thereto. This covenant shall survive the termination of this Participation Agreement or any other Operative Document and the payment of the Loans, Lessor Amounts and all other amounts payable under the Operative Documents. (b) The Lessee shall, upon receipt from the Administrative Agent or any Participant of a statement of the amount of any loss, cost or expense constituting Break Costs prepared in good faith and in reasonable detail (which statement shall be binding absent manifest error), pay the amount of such Break Costs to the requesting Person. Section 13.11. Capital Adequacy. (a) If the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Participant with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, in each case made subsequent to the Documentation Date has or will have the effect of reducing the rate of return on any Participant's or its parent company's capital, as a consequence of its commitments or obligations hereunder to a level below that which such Participant or its parent company could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Participant's or its parent company's policies with respect to capital adequacy), then, upon notice from such Participant, the Lessee shall pay to such Participant such additional amount or amounts as will compensate such Participant and its parent company for such reduction (it being understood that such parent company shall not be reimbursed to the extent its subsidiary Participant is -43- Lam Research Corporation Participation Agreement reimbursed by the Lessee in connection with the same or a similar law, rule, regulation, change, request or directive applicable to such Participant). All payments required by this Section 13.11 shall be made by the Lessee within five (5) Business Days after demand by such Participant. The Lessee shall not be obligated to reimburse any Participant for any reduced return incurred more than one hundred eighty (180) days prior to the date that such Participant delivers notice to the Lessee of such reduced return unless such Participant gives notice thereof to the Lessee in accordance with this Section 13.11 during such one hundred eighty (180) day period. If any Participant becomes entitled to claim any additional amounts pursuant to this clause, it shall provide prompt written notice thereof to the Lessee, through the Administrative Agent, certifying (x) that one of the events described in this clause (a) has occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced amount resulting from such event and (z) as to the additional amount demanded by such Participant and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any additional amounts payable pursuant to this clause submitted by such Participant to the Lessee shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Participation Agreement and the other Operative Documents and the payment of the Loans, Lessor Amounts and all other amounts payable hereunder and thereunder. (b) Each Participant shall use its commercially reasonable efforts to reduce or eliminate, any claim for compensation pursuant to this Section 13.11, including, without limitation, a change in the office of such Participant at which its obligations related to the Operative Documents are maintained if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Participant, be otherwise disadvantageous to it. ARTICLE XIV [INTENTIONALLY RESERVED] ARTICLE XV MISCELLANEOUS Section 15.1. Survival of Agreements. The representations, warranties, covenants, indemnities and agreements of the parties provided for in the Operative Documents, and the parties' obligations under any and all thereof, shall survive the execution and delivery of this Participation Agreement, the transfer of any Property to the Lessor, any disposition of any interest of the Lessor or any Lender in any Property and the payment of the Notes and the Lessor Amounts, and shall be and continue in effect to the extent set forth in such Operative Documents notwithstanding any investigation made by any party and the fact that any party may waive compliance with any of the other terms, provisions or conditions of any of the Operative Documents. Except as otherwise expressly set forth herein or in the other Operative Documents, the indemnities of the parties provided for in the Operative Documents shall survive the expiration or termination of any thereof. -44- Lam Research Corporation Participation Agreement Section 15.2. No Broker, Etc. Each of the parties hereto represents to the others that it has not retained or employed any broker, finder or financial adviser to act on its behalf in connection with this Participation Agreement or the transactions contemplated herein or in the other Operative Documents nor has it authorized any broker, finder or financial adviser retained or employed by any other Person so to act, except that the Lessee has engaged the Arranger to act as placement agent. In the event that any party retains any other broker, finder or financial advisor, such party will promptly notify the other parties in writing of such broker, finder or financial advisor and such party shall be responsible for payment in full of such broker, finder or financial advisor. Any party which is in breach of this representation shall indemnify and hold the other parties harmless from and against any liability arising out of such breach of this representation. Section 15.3. Notices. Unless otherwise specifically provided herein, all notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof to be given to any Person (a) shall be directed to the address or facsimile number of such Person as indicated on Schedule II hereof and (b) shall be given in writing by United States mail, by nationally recognized courier service, by hand or by facsimile, and any such notice shall become effective (i) if delivered by United States mail, three (3) Business Days after being deposited in the mail, certified or registered with appropriate postage prepaid, (ii) if delivered by a nationally recognized courier service, upon delivery to the intended recipient, (iii) if delivered by hand, when received, or (iv) if delivered by facsimile, when transmitted (upon electronic confirmation thereof) provided that any facsimile transmitted after 5:00 p.m. (recipient time) shall be deemed to have been received on the next Business Day. From time to time any party may designate a new address or facsimile number for purposes of notice hereunder by written notice to each of the other parties hereto in accordance with this Section. Section 15.4. Counterparts. This Participation Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 15.5. Amendments, Etc. Neither any Operative Document nor any of the terms thereof may be terminated (except as expressly required under the terms of any Operative Document or upon payment in full of the Lease Balance or effective exercise and consummation of the Remarketing Option in accordance with Article XX of the Master Lease and payment in full of all amounts due in accordance therewith), amended, supplemented, waived or modified without the written agreement or consent of the Required Participants; provided, however, that: (a) no such termination, amendment, supplement, waiver or modification shall without written agreement or consent of each Participant: (i) modify any of the provisions of this Section 15.5, change the definition of "Required Participants" or modify or waive any provision of any Operative Document requiring action by the foregoing; -45- Lam Research Corporation Participation Agreement (ii) amend, modify, waive or supplement any of the provisions of Section 2.5, 2.6 or 2.7 of the Loan Agreement; (iii) reduce, modify, amend or waive any fees or indemnities in favor of any Participant, including without limitation amounts payable pursuant to Article XIII (except that any Person may consent to any reduction, modification, amendment or waiver of any indemnity payable to it); (iv) modify, postpone, reduce or forgive, in whole or in part, any payment of Rent (other than pursuant to the terms of any Operative Document), any Loan or Lessor Amount, the Lease Balance, the Loan Balance, the Lessor Balance, Commitment Fees and any other fee payable hereunder, amounts due pursuant to Section 20.2 of the Master Lease, interest or Yield (except that any Person may consent to any modification, postponement, reduction or forgiveness of any payment of any fee payable to it) or, subject to subclause (iii) above, any other amount payable under the Lease or this Participation Agreement, or modify the definition or method of calculation of Rent (other than pursuant to the terms of any Operative Document), Maximum Recourse Amount, Loans or Lessor Amounts, Lease Balance, Loan Balance, Commitment Fees, Shortfall Amount, Participant Balance, or any other definition which would affect the amounts to be advanced or which are payable under the Operative Documents; or (v) consent to any assignment of the Master Lease or any Lease Supplement by the Lessee except as expressly permitted by the Operative Documents, release Lessee from its obligations in respect of the payments of Rent or Lease Balance or change the absolute and unconditional character of such obligations or release any Collateral from the Liens created by the Operative Documents; or (vi) release of any Lien granted by the Lessee or the Lessor under the Operative Documents, except as provided in the Operative Documents. (b) no such termination, amendment, supplement, waiver or modification of any provision of the Operative Documents relating to the Structuring Fee or any indemnity in favor of the Arranger shall be effective without the Arranger's written consent, and the Arranger shall be a third party beneficiary of such provisions and this Section 15.5(b). Section 15.6. Headings, Etc. The Table of Contents and headings of the various Articles and Sections of this Participation Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. Section 15.7. Parties in Interest. Except as expressly provided herein, none of the provisions of this Participation Agreement is intended for the benefit of any Person except the parties hereto. No party hereto shall assign or transfer any of its rights or obligations under the Operative Documents except in accordance with the terms and conditions thereof. -46- Lam Research Corporation Participation Agreement Section 15.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN ANY OPERATIVE DOCUMENT) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. Section 15.9. Severability. Any provision of this Participation Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 15.10. Liability Limited. The parties hereto agree that except as specifically set forth herein or in any other Operative Document, the Lessor shall not have any personal liability whatsoever to the Administrative Agent, the Lessee or any Lender or their respective successors and assigns for any claim based on or in respect hereof or any of the other Operative Documents or arising in any way from the transactions contemplated hereby or thereby and recourse, if any, shall be solely had against the Collateral, including the Properties but excluding the Excluded Payments; provided, however, that Lessor shall be liable in its individual capacity (a) for its own willful misconduct or gross negligence, (b) breach of any of its representations, warranties or covenants under the Operative Documents, or (c) any Lessor Liens attributable to it. It is understood and agreed that, except as provided in the preceding sentence: (i) the Lessor shall not have any personal liability under any of the Operative Documents as a result of acting pursuant to and consistent with any of the Operative Documents; and (ii) all such personal liability of Lessor is expressly waived and released as a condition of, and as consideration for, the execution and delivery of the Operative Documents by Lessor. Section 15.11. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS PARTICIPATION AGREEMENT OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. Section 15.12. Setoff. The Participants shall, upon the occurrence of any Lease Event of Default, have the right to appropriate and, subject to Section 4.7, apply to the payment of Lessee's obligations under the Lease, and the other Operative Documents as security for the payment of such obligations, any and all balances, credits, deposits, accounts or moneys of Lessee then or thereafter maintained with any Participant. The rights of the Participants under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which any such Person may have. -47- Lam Research Corporation Participation Agreement Section 15.13. No Participant Responsible for Other Participants. The obligations of each Participant under this Participation Agreement and the other Operative Documents are several and not joint; and in the event of a failure by a Participant to perform any of its obligations hereunder or under any other Operative Document, neither the Administrative Agent, the Lessor nor any other Lender (other than the defaulting Participant) shall have any liability as a consequence thereof. Section 15.14. Partial Purchase Option. So long as no Default or Event of Default shall have occurred and be continuing, the Lessee shall have the right to purchase any of Property No. 1, Property No. 2, Property No. 3 or Property No. 4 (the "Partial Purchase Option") pursuant to the terms of Section 18.1 of the Master Lease without being required to purchase, at the same time, the remaining portion of the Property; provided, however, that at the exercise and consummation of such purchase, the then remaining Property Balance must be at least $25,000,000; provided, further, that in no event will Lessee be permitted to exercise the Partial Purchase Option unless the remainder of the Properties shall (a) have separate tax identification numbers, (b) constitute properly subdivided parcels pursuant to all Applicable Laws, (c) have adequate and legal access for vehicular and pedestrian ingress and egress and for all necessary utilities, and (d) otherwise comply with all Applicable Laws. In addition to the foregoing, if the Lessee has exercised the Remarketing Option, the Lessee shall promptly rescind the Remarketing Option as a condition precedent to its right to exercise the Partial Purchase Option. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -48- IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. LAM RESEARCH CORPORATION, as Lessee By /s/ Craig Garber --------------------------------- Name Craig Garber Its VP and Treasurer SELCO SERVICE CORPORATION, as Lessor By /s/ Donald C. Davis --------------------------------- Donald C. Davis Its Vice President KEY CORPORATE CAPITAL INC., as Lender By /s/Robert W. Boswell ---------------------------------- Name Robert W. Boswell Its Vice President KEY CORPORATE CAPITAL INC., as Administrative Agent By /s/ Robert W. Boswell ---------------------------------- Name Robert W. Boswell Its Vice President S-1 SCHEDULE I TO PARTICIPATION AGREEMENT COMMITMENTS

COMMITMENT PARTICIPANT COMMITMENT PERCENTAGE LENDERS Key Corporate Capital Inc. Series A $51,533,331.79 88.8% Series B $ 3,017,717.63 5.2% Total Loan Commitment $54,551,049.42 94.0% LESSOR SELCO Service Corporation $ 3,481,981.88 6.0% TOTAL $58,033,031.30 100%

SCHEDULE II TO PARTICIPATION AGREEMENT Notice Information, Wire Instructions and Funding Offices LESSOR: NOTICES: SELCO SERVICE CORPORATION c/o KeyCorp. Leasing 66 South Pearl Street Albany, New York 12207 Attention: Mr. Donald C. Davis Facsimile No.: (720) 304-1479 with a copy to Key Equipment Finance 601 108th Avenue NE Bellevue, Washington 98004 Attention: Mr. James Carney Facsimile No.: (425) 709-4587 and a copy to Key Technology Finance 601 108th Avenue NE Bellevue, Washington 98004 Attention: Mr. Robert Boswell Facsimile No.: (425) 709-4565 ADMINISTRATIVE AGENT: NOTICES: KEY CORPORATE CAPITAL INC. 601 108th Avenue NE Bellevue, Washington 98004 Attention: Mr. Robert Boswell Telephone No.: (425) 709-4580 Facsimile No.: (425) 709-4565 FUNDING, RATE SETS AND OTHER ADMINISTRATIVE: Key Bank National Association 431 East Parkcenter Boulevard Boise, Idaho 83706 Attention: Specialty Services Team Telephone No.: (800) 297-5518 Facsimile No.: (800) 297-5495 WIRE TRANSFER INSTRUCTIONS: Bank: KeyBank National Association Bellevue, Washington ABA Number: 125000574 Account Number: 3072 Ref: Lam Research Corporation - II LENDER: NOTICES: KEY CORPORATE CAPITAL INC., 601 108th Avenue NE Bellevue, Washington 98004 Attention: Mr. Robert Boswell Telephone No.: (425) 709-4580 Facsimile No.: (425) 709-4565 WIRE TRANSFER INSTRUCTIONS: Bank: KeyBank, N.A. Bellevue, Washington ABA Number: 125000574 Account Number: 3072 Ref: Lam Research Corporation - II -2- LESSEE: LAM RESEARCH CORPORATION 4300 Cushing Parkway Fremont, California 94538 Attention: Craig Garber Telephone: (510) 572-1875 Facsimile: (510) 572-1586 -3- SCHEDULE III TO PARTICIPATION AGREEMENT

- ------------------------------------------------------------------------------------------------------------- ALLOCATED PERCENTAGE OF LEASE MAXIMUM RECOURSE AMOUNT PROPERTY BALANCE - ------------------------------------------------------------------------------------------------------------- Property No. 1 ("Property No. 1") 4650 Cushing Parkway, Fremont, 38.09524% 86.0234% California CA-1 - ------------------------------------------------------------------------------------------------------------- Property No. 2 ("Property No. 2") 4540 Cushing Parkway, Fremont, California CA-2 - ------------------------------------------------------------------------------------------------------------- Land 3.79094% 100% - ------------------------------------------------------------------------------------------------------------- Improvements 10.84751% 85.0410% - ------------------------------------------------------------------------------------------------------------- Property No. 3 ("Property No. 3") 46555 Landing Parkway, Fremont, California CA-8 - ------------------------------------------------------------------------------------------------------------- Land 7.40957% 100% - ------------------------------------------------------------------------------------------------------------- Improvements 22.57279% 79.4776% - ------------------------------------------------------------------------------------------------------------- Property No. 4 ("Property No. 4") 46595 Landing Parkway, Fremont, California CA-9 - ------------------------------------------------------------------------------------------------------------- Land 6.20336% 100% - ------------------------------------------------------------------------------------------------------------- Improvements 11.08059% 84.4050% - -------------------------------------------------------------------------------------------------------------

APPENDIX A TO PARTICIPATION AGREEMENT A. Interpretation. In each Operative Document, unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by the Operative Documents, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually; (iii) reference to any gender includes each other gender; (iv) reference to any agreement, document or instrument (including any Operative Document) means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of the other Operative Documents, and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor; (v) reference to any Requirement of Law means such Requirement of Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Requirement of Law means that provision of such Requirement of Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision; (vi) reference in any Operative Document to any Article, Section, Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix, Schedule or Exhibit thereto, and reference in any Section of any Operative Document to any clause means such clause of such Section; (vii) "hereunder," "hereof," "hereto" and words of similar import shall be deemed references to an Operative Document as a whole and not to any particular Article, Section or other provision thereof; -2- (viii) "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; and (ix) with respect to any rights and obligations of the parties under the Operative Documents, all such rights and obligations shall be construed to the extent permitted by Applicable Law. B. Computation of Time Periods. Unless otherwise specified in any Operative Document, for purposes of computation of periods of time under the Operative Documents, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." C. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used therein shall be interpreted, all accounting determinations thereunder shall be made, and all financial statements required to be delivered thereunder shall be prepared in accordance with GAAP, applied on a basis consistent (except for changes concurred in by the Lessee's independent public accountants) with the most recent audited consolidated financial statements of the Lessee and its Subsidiaries delivered to the Participants. D. Conflict in Operative Documents. If there is any conflict between any Operative Documents, such Operative Documents shall be interpreted and construed, if possible, so as to avoid or minimize such conflict but, to the extent (and only to the extent) of such conflict, the Participation Agreement shall prevail and control. E. Legal Representation of the Parties. The Operative Documents were negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring the Operative Documents to be construed or interpreted against any party shall not apply to any construction or interpretation hereof or thereof. F. Defined Terms. Unless a clear contrary intention appears, terms defined herein have the respective indicated meanings when used in each Operative Document. "Account" means the account identified by the Administrative Agent in a writing delivered to the Lessee into which all payments by the Lessee under the Operative Documents shall be made. The Account shall be specified on Schedule II to the Participation Agreement, as such Schedule may from time to time be amended, supplemented, amended and restated or otherwise modified. "Account Control Agreement" means the Account Control Agreement dated as of June 1, 2003 among the Administrative Agent, the Lessee and KeyBank National Association, as depository bank. "Acquisition Date" is defined in Section 6.1 of the Participation Agreement. -3- "Adjusted Eurodollar Rate" means, as applicable to any Interest Period for any Loan or Lessor Amount, (x) a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/16th of it) by dividing (i) the applicable London Interbank Offering Rate for such Interest Period by (ii) 1.00 minus the Eurodollar Reserve Percentage, plus (y) in the case of Loans, the Loan Margin and in the case of Lessor Amounts, the Lessor Margin. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. "Administrative Agent" means Key Corporate Capital Inc., in its capacity as Administrative Agent, and any successors or assigns thereto in such capacity appointed in accordance with Section 7.9 of the Loan Agreement. "Advance" means an advance of funds by the applicable Lenders to the Lessor and the Lessor making funds available to acquire a Property pursuant to Article III of the Participation Agreement. "Affected Property" is defined in Section 15.1 of the Master Lease. "Affiliate" means, as to any Person, (i) any other Person (a "Controlling Person") that directly, or indirectly through one or more intermediaries, controls such Person or (ii) any Person (other than such Person and its Subsidiaries) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "After Tax Basis" means, with respect to any payment to be received, the amount of such payment increased so that, after deduction of the amount of all taxes required to be paid by the recipient (less any tax savings realized and the present value of any tax savings projected to be realized by the recipient as a result of the payment of the indemnified amount) with respect to the receipt by the recipient of such amounts, such increased payment (as so reduced) is equal to the payment otherwise required to be made. "Aggregate Commitment Amount" means, on any date, $58,033,031.30 as such amount may be reduced from time to time pursuant to Section 4.3(b) of the Participation Agreement. "Applicable Law" means all Federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Properties, the Improvements thereon or the demolition, construction, use or alteration thereof, whether now or hereafter enacted and in force, including any that require repairs, modifications or alterations in or to the Properties or in any way limited the use and enjoyment thereof (including all building, zoning and fire codes and the Americans with Disabilities Act of 1990, 42 U.S.C. Sections 1201 et seq., and any other similar Federal, state or local laws or ordinances and the regulations -4- promulgated thereunder) and any that may relate to environmental requirements (including all Environmental Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments that are of record affecting the Properties, the Appurtenant Rights and any easements, licenses or other agreements entered into pursuant to Section 11.2 of the Master Lease. "Appraisal" means, with respect to any Property, an appraisal of the Fair Market Sales Value of such Property, which appraisal complies in all material respects with all of the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto, and all other applicable Requirements of Law, and is addressed to the Administrative Agent, each Lender and the Lessor. Each Appraisal shall be prepared by an Appraiser selected by the Administrative Agent and the Lessor and reasonably acceptable to the Lessee. "Appraiser" means the appraiser that prepared an Appraisal of the Properties or such other Person selected by the Administrative Agent and the Lessor. "Appurtenant Rights" means, with respect to any Land, (i) all agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, and other rights and benefits at any time belonging or pertaining to such Land or the Improvements thereon, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to such Land and (ii) all permits, licenses and rights, whether or not of record, appurtenant to such Land. "Arranger" means Key Lease Advisory Services, in its capacity as arranger. "Assigned Leases" is defined in Section 2(a) of the Assignment of Lease and Rent. "Assignment of Lease and Rent" means the Assignment of Lease and Rent and Security Agreement dated as of June 1, 2003, from the Lessor, as assignor, to the Administrative Agent for the benefit of the Lenders, as assignee, substantially in the form of Exhibit H to the Participation Agreement, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time. "Authorized Officer" means the Chairman of the Board, the President, the Executive Vice President and Chief Financial Officer, the Vice President and Treasurer and any other officer of the Lessee authorized by the board of directors of the Lessee to execute and deliver any Operative Document on behalf of the Lessee. "Available Commitments" means the sum of the Available Loan Commitments and the Available Lessor Commitment. -5- "Available Lessor Commitment" means, at any time, an amount equal to the excess, if any, of (x) the Lessor Commitment, minus (y) the aggregate Lessor Amounts outstanding. "Available Loan Commitment" means, at any time, an amount equal to the excess, if any, of (x) the aggregate amount of the Loan Commitments minus (y) the aggregate principal amount of all Loans outstanding. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy" as now or hereafter in effect or any successor thereto. "Base Rate" means, for any day, the greater of: (i) the rate of interest announced by KeyBank National Association from time to time as its prime commercial rate (the "Prime Rate"), or equivalent, as in effect on such day, with any change in the Prime Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate; and (ii) the sum of (x) the Federal Funds Rate, plus (y)1/2 of 1% (.50%). "Base Rate Loan/ Lessor Amount" means a Loan or Lessor Amount, as the case may be, bearing interest at the Base Rate. "Basic Rent" means the sum of (i) the Lender Basic Rent plus (ii) the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is due. "Bill of Sale" is defined in Section 6.1(j) of the Participation Agreement. "Break Costs" means an amount equal to the amount, if any, required to compensate any Participant for any additional losses (including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or funds acquired by such Participant to fund its obligations under the Operative Documents) it may incur with respect to Eurodollar Loan/Lessor Amounts as a result of (v) the Lessee's payment of Rent other than on a Scheduled Payment Date (except for Rent not due on a Scheduled Payment Date), (w) any Advance not being made on the date specified therefor in the applicable Funding Request (other than as a result of a breach by such Participant of its obligation under Section 3.1, 3.2 or 3.3, as the case may be, of the Participation Agreement to make Lessor Amounts or Loans available), (x) the Lessee's payment of the Lease Balance or any Property Balance on any date other than a Scheduled Payment Date or (y) any conversion of the Eurodollar Loans/Lessor Amounts in accordance with Section 13.7 or 13.8 of the Participation Agreement on a day other than the last day of the then current Interest Period with respect thereto. A statement as -6- to the amount of such loss, cost or expense, prepared in good faith and in reasonable detail and submitted by such Participant, as the case may be, to the Administrative Agent, shall be correct and binding on the Administrative Agent and the Lessee absent manifest error. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in San Francisco, California, Cleveland, Ohio and New York, New York are authorized or required by law to close, except that, when used in connection with a Eurodollar Loan/Lessor Amount, such day shall also be a day on which dealings between banks are carried on in Dollar deposits in London, England. "Capitalized Lease" means any lease in which the obligation for rentals with respect thereto is required to be capitalized on a balance sheet of the lessee in accordance with GAAP. "Cash Collateral" has the meaning specified in the Cash Collateral Pledge Agreement. "Cash Collateral Pledge Agreement" means the Cash Collateral Pledge Agreement dated as of June 1, 2003 between the Lessee and the Administrative Agent. "Cash Collateral Documents" means the Cash Collateral Pledge Agreement, the Account Control Agreement and any other documents or instruments evidencing or relating to the Cash Collateral. "Casualty" means any damage or destruction of all or any portion of any Property as a result of a fire, flood, earthquake or other casualty. "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986. "Certifying Party" is defined in Section 22.1 of the Master Lease. "Claims" means any and all obligations, liabilities, losses, actions, suits, judgments, penalties, fines, claims, demands, settlements, costs and expenses (including, without limitation, reasonable legal fees and expenses) of any nature whatsoever, but shall not include Taxes or Impositions. "Code" means the Internal Revenue Code of 1986 and regulations promulgated thereunder. "Collateral" means any collateral pledged by the Lessor to the Administrative Agent pursuant to the Operative Documents to secure the Lessor's obligations under the Loan Agreement and the Notes, but excluding any Excepted Payments. -7- "Commitment" means (i) as to any Lender, its Loan Commitment, and (ii) as to the Lessor, the Lessor Commitment. "Commitment Fee" is defined in Section 4.4(b) of the Participation Agreement. "Commitment Percentage" means, with respect to any Participant, the percentage set forth opposite such Participant's name under the heading "Commitment Percentage" on Schedule I to the Participation Agreement, as such Schedule may be amended, supplemented, amended and restated or otherwise modified from time to time. "Commitment Period" means the period from and including the Documentation Date to and including the date occurring on the earliest of (i) the date on which the sum of the aggregate outstanding Loans and aggregate outstanding Lessor Amounts equals the Aggregate Commitment Amount, and (ii) June 21, 2003. "Condemnation" means any condemnation, requisition, confiscation, seizure or other taking or sale of the use, access, occupancy, easement rights or title to any Property or any part thereof, wholly or partially (temporarily or permanently), by or on account of any actual or threatened eminent domain proceeding or other taking of action by any Person having the power of eminent domain, including an action by a Governmental Authority to change the grade of, or widen the streets adjacent to, such Property or alter the pedestrian or vehicular traffic flow to such Property so as to result in change in access to such Property, or by or on account of an eviction by paramount title or any transfer made in lieu of any such proceeding or action. A "Condemnation" shall be deemed to have occurred on the earliest of the dates that use, occupancy or title vests in the condemning authority. "Consolidated Subsidiary" means, at any date as of which the same is to be determined, any Subsidiary of the Lessee the account of which would be consolidated with those of the Lessee in its consolidated financial statements if such statements were prepared as of such date in accordance with generally accepted accounting principles. "Contract Rents" is defined in Section 2(b) of the Assignment of Lease and Rent. "Contracts" is defined in Section 2(b) of the Assignment of Lease and Rent. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Lessee or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Deed" means a grant deed with respect to the real property comprising a Property, in conformity with Applicable Law and appropriate for recording with the applicable Governmental Authorities, conveying fee simple title to such real property to the Lessor, subject only to Permitted Property Liens. -8- "Default" means any Event of Default or any condition, occurrence or event that, after notice or lapse of time or both, would constitute an Event of Default. "Documentation Date" is defined in Section 2.1 of the Participation Agreement. "Dollar Amount" of any currency at any date means (i) the amount of such currency if such currency is Dollars or (ii) the equivalent amount of Dollars if such currency is any currency other than Dollars, calculated at approximately 11:00 a.m. (London Time) as set forth on the applicable Telerate Screen on the date of determination; provided that if more than one rate is listed then the applicable conversion rate shall be the arithmetic average of such rates. If for any reason such conversion rates are not available, the Dollar Amount shall be calculated using the arithmetic average of the spot buying rates for such currency in Dollars as quoted to the Administrative Agent by three foreign exchange dealers of recognized standing in the United States selected by the Administrative Agent at approximately 11:00 a.m. (London time) on any date of determination. "Dollars" and "$" mean dollars in lawful currency of the United States. "Eligible Lender Assignee" means (a) a commercial bank organized under the laws of the United States, or any State thereof, and having combined capital and surplus of $100,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development ("OECD"), or a political subdivision of any such country, and having a combined capital and surplus of $100,000,000; provided, however, that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD or the Cayman Islands; and provided, further, that such bank is entitled to a zero percent (0%) United States withholding tax rate; (c) the central bank of any country which is a member of the OECD; provided that such bank is entitled to a zero percent (0%) United States withholding tax rate; (d) a finance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) organized under the laws of the United States, or any State thereof, that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having a combined capital and surplus of $100,000,000; (e) an insurance company organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of $100,000,000; (f) any Lender a party to the Operative Documents; and (g) any Affiliate of a Lender; provided that any Affiliate of the Lessee shall not qualify as an Eligible Lender Assignee. So long as no Lease Event of Default is continuing, the Lessee shall have the right to approve any Eligible Lender Assignee, which approval shall not be unreasonably withheld. "Eligible Lessor Assignee" means, with respect to any assignment by the Lessor pursuant to Section 12.1(b) of the Participation Agreement, any Person that meets all of the following requirements: (i) such Person is (x) a leasing company, bank, bank subsidiary or bank Affiliate, insurance company or other institutional investor with a net worth or, in the case of a bank or lending institution, combined capital and surplus on a -9- consolidated basis at the time of transfer of at least $100,000,000 determined in accordance with GAAP or (y) a Person described in clause (x) that is an Affiliate of a financial institution meeting such net worth or capital and surplus standard, (ii) such assignment to such Person would not result in such Person or the Properties being consolidated onto the balance sheet of the Lessee and (iii) so long as no Lease Event of Default is continuing, such Person is approved by the Lessee, which approval shall not be unreasonably withheld. "End of the Term Report" is defined in Section 13.2(a) of the Participation Agreement. "Environmental Audit" means, with respect to any Property, a Phase One environmental site assessment (the scope and performance of which meets or exceeds the then most current ASTM Standard Practice E1527 for Environmental Site Assessments: Phase One Environmental Site Assessment Process) of such Property. "Environmental Laws" means any and all applicable federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, permits, licenses, authorizations, decrees or other legal requirement regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment or the use, storage, recycling, handling, disposal, discharge, transport, treatment or generation of Hazardous Materials, as now or may at any time be in effect during the Lease Term, including CERCLA, RCRA, the Clean Air Act, 42 USC Sections 7401 et seq., the Toxic Substances Control Act 15 USC Sections 2601 et seq., and any rules and regulations promulgated thereunder. "Environmental Violation" means, with respect to any Property, any activity, occurrence or condition that violates, or results in non-compliance with any Environmental Law. "Equipment" means all equipment, apparatus, fittings and personal property of every kind and nature whatsoever purchased, leased or otherwise acquired by the Lessor using the proceeds of the Loans and/or the Lessor Amounts and now or subsequently attached to, contained in or used or usable in any way in connection with any operation or letting of any Property, including but without limiting the generality of the foregoing, all furniture and furnishings, heating, electrical, switch gear, power supply, lightening, plumbing, ventilation, air conditioning and air cooling systems, refrigerating equipment, generators, locking and unlocking equipment, communication systems, sprinkler system and fire prevention systems, security systems and fixtures of all kinds; provided, however, that the term "Equipment" shall expressly exclude all inventory. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. -10- "Eurodollar Loan/Lessor Amount" means a Loan or Lessor Amount, as the case may be, bearing interest or Yield, respectively, at or based upon the Adjusted Eurodollar Rate. "Eurodollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the F.R.S. Board, for determining the maximum reserve requirement for a member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans/Lessor Amounts is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any bank to United States residents). "Event of Default" means a Lease Event of Default or a Loan Agreement Event of Default. "Event of Loss" means any Significant Casualty or any Significant Condemnation. "Event of Loss Purchase" means the payment by the Lessee of the Property Cost and all other amounts described in Section 15.1 of the Master Lease with respect to any Property. "Excepted Payments" means: (a) all indemnity payments (including indemnity payments made pursuant to Article XIII of the Participation Agreement) to which the Administrative Agent, the Arranger, the Lessor, any Lender or any of their respective Affiliates, agents, officers, directors or employees is entitled; (b) any amounts (other than Basic Rent or amounts payable by the Lessee pursuant to Section 15.1 of the Master Lease or Articles XVI, XVIII or XX of the Master Lease) payable under any Operative Document to reimburse the Administrative Agent, the Arranger, the Lessor, any Lender or any of their respective Affiliates (including the reasonable expenses of the Administrative Agent, the Arranger, the Lessor, any Lender or such Affiliates incurred in connection with any such payment) for performing or complying with any of the obligations of the Lessee under and as permitted by any Operative Document; (c) any insurance proceeds (or payments with respect to risks self-insured or policy deductibles) under liability policies; (d) any insurance proceeds under policies maintained by any Participant; -11- (e) Transaction Expenses or other amounts or expenses paid or payable to or for the benefit of the Administrative Agent, the Lessor, the Arranger or any Lender; and (f) any payments in respect of interest to the extent attributable to payments referred to in clauses (a) through (e) above. "Excess Casualty/Condemnation Proceeds" is defined in Section 14.2(f) of the Master Lease. "Excess Sales Proceeds" means with respect to any Property the excess, if any, of (x) the aggregate of all proceeds received by the Lessor in connection with any sale or reletting of such Property pursuant to the Lessor's exercise of remedies under Section 16.2 of the Master Lease or the Lessee's exercise of the Remarketing Option with respect to such Property under Article XX of the Master Lease (in either case, less, to the extent not reimbursed by the Lessee, all fees, costs and expenses of the Lessor in connection with the exercise of its rights and remedies thereunder or any such sale or reletting), minus (y) the Property Balance of such Property. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and regulations promulgated thereunder. "Expiration Date" means, with respect to the Master Lease, the earlier of (a) the date the Master Lease shall have been terminated in accordance with the provisions thereof and (b) the fifth anniversary of the Documentation Date, provided, however, with respect to Article XX of the Master Lease, the Expiration Date shall be the later of (i) the date set forth in clause (b) above and (ii) the Extended Expiration Date. "Expiration Date Purchase Obligation" means the Lessee's obligation, pursuant to Section 18.2 of the Master Lease, to purchase one or more Properties on the Expiration Date. "Extended Expiration Date" is defined in Section 20.3(a) of the Master Lease. "Fair Market Sales Value" means, with respect to any Property, the amount, which in any event shall not be less than zero, that would be paid in cash in an arm's-length transaction between an informed and willing purchaser and an informed and willing seller, neither of whom is under any compulsion to purchase or sell, respectively, for the ownership of such Property. The Fair Market Sales Value of any Property shall be determined based on the assumption that, except for purposes of Article XVI of the Master Lease and Section 13.2 of the Participation Agreement, such Property is in the condition and state of repair required under Section 9.1 of the Master Lease and the Lessee is in compliance with the other requirements of the Operative Documents relating to the condition of such Property. -12- "Federal Funds Rate" means, for any day or period, as applicable, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of it) at which Federal funds in the amount equal to the principal or analogous amount of the related Loans or Lessor Amounts are offered in the interbank market to the Administrative Agent or the Lessor, as the case may be, as of 11:00 a.m. (New York time) on such day for such day or for such period, as applicable. "Fees" is defined in Section 4.4 of the Participation Agreement. "F.R.S. Board" means the Board of Governors of the Federal Reserve System or any successor thereto. "Funding Office" means the office of each Participant identified on Schedule II to the Participation Agreement as its funding office. "Funding Request" is defined in Section 3.4 of the Participation Agreement. "GAAP" means accounting principles generally accepted in the United States from time to time set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Action" means all permits, authorizations, registrations, consents, approvals, waivers, exceptions, variances, orders, judgments, written interpretations, decrees, licenses, exemptions, publications, filings, notices to and declarations of or with, or required by, any Governmental Authority, or required by any Applicable Law, and shall include, without limitation, all environmental and operating permits and licenses that are required for the full use, occupancy, zoning and operation of any Property. "Governmental Authority" means the United States Federal government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Gross Remarketing Proceeds" is defined in Section 20.2(h) of the Master Lease. "Guaranty" of any Person means any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person -13- or otherwise assures any creditor of such other Person against loss, and shall include, without limitation, the contingent liability of such Person under or in relation to any letter of credit (or similar instrument), but shall exclude endorsements for collection or deposit in the ordinary course of business. "Hazardous Activity" means any activity, process, procedure or undertaking that directly or indirectly (i) produces, generates or creates any Hazardous Material; (ii) causes or results in (or threatens to cause or result in) the Release of any Hazardous Material into the environment (including air, water vapor, surface water, groundwater, drinking water, land (including surface or subsurface), plant, aquatic and animal life); (iii) involves the containment or storage of any Hazardous Material; or (iv) would be regulated as hazardous waste treatment, storage or disposal within the meaning of any Environmental Law. "Hazardous Materials" means any hazardous, toxic or dangerous materials, substances, chemicals, wastes or pollutants that from time to time are defined by or pursuant to or are regulated under any Environmental Laws, including asbestos, polychlorinated biphenyls, petroleum, petroleum derivatives or by-products, other hydrocarbons, urea formaldehyde and any material, substance, pollutant or waste that is defined as a hazardous waste under RCRA or defined as a hazardous substance under CERCLA. "Impositions" means any and all liabilities, losses, expenses and costs of any kind whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or withholdings of any nature whatsoever (all of the foregoing being defined as "Taxes") (including, without limitation, (i) real and personal property taxes, including personal property taxes on any property covered by the Master Lease that is classified by Governmental Authorities as personal property, and real estate or ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes and other similar taxes (including rent taxes and intangibles taxes); (iii) any excise taxes; (iv) real estate transfer taxes, conveyance taxes, mortgage taxes, intangible taxes, stamp taxes and documentary recording taxes and fees; (v) taxes that are or are in the nature of franchise, income, value added, gross receipts, privilege and doing business taxes, license and registration fees; (vi) assessments on any Property, including all assessments for public improvements or benefits (whether or not such improvements are commenced or completed within the Lease Term); and (vii) all filing and reporting fees and expenses relating thereto, for such Property), and all interest, additions to tax and penalties, which at any time may be levied, assessed or imposed by any Federal, state or local authority upon or with respect to (a) any Tax Indemnitee, any Property or any part thereof or interest therein, or the Lessee or any sublessee or user of any Property; (b) the financing, refinancing, demolition, construction, substitution, subleasing, assignment, control, condition, occupancy, servicing, maintenance, repair, ownership, possession, purchase, rental, lease, activity conducted on, delivery, insuring, use, operation, improvement, transfer, return or other disposition of any Property or any part thereof or interest therein; (c) the Notes, the Lessor Amounts or other indebtedness with respect to any Property or any part thereof or interest therein or transfer thereof; (d) the rentals, receipts or earnings arising from any Property or any part thereof or -14- interest therein; (e) the Operative Documents or any payment made or accrued pursuant thereto; (f) the income or other proceeds received with respect to any Property or any part thereof or interest therein upon the sale or disposition thereof; (g) any contract relating to the acquisition or delivery of the Improvements or any part thereof or interest therein; (h) the issuance of the Notes and payments thereon; or (i) otherwise in connection with the transactions contemplated by the Operative Documents. Notwithstanding anything in the first paragraph of this definition (except as provided in the final paragraph of this definition) the term "Imposition" shall not mean or include: (i) Taxes that are based upon or measured by or with respect to the net income of any Tax Indemnitee (including, without limitation, any minimum Taxes, value added Taxes imposed in lieu of net income Taxes, income or capital gains Taxes, excess profits Taxes, items of Tax preference, or capital stock, franchise, business privilege or doing business Taxes), (but Taxes described in this clause (i) shall not include Taxes imposed under Section 1446 of the Code or that are, or are in the nature of, sales, use, rental, transfer or property Taxes), in each case imposed by any Governmental Authority in the jurisdiction of incorporation or residence of such Tax Indemnitee, or the jurisdiction in which such Tax Indemnitee maintains its principal office, applicable lending office or a place of business or a jurisdiction that imposes such Tax because of such Tax Indemnitee's activities in such jurisdiction, provided that this clause (i) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made, provided, further that this clause (i) shall not apply to Taxes imposed on a Tax Indemnitee solely as a result of the Lessee's activities or the location of any Property in the jurisdiction imposing such Taxes; (ii) with respect to any Property, any Tax to the extent such Tax is attributable to any act, event or omission that occurs, or is attributable to a period beginning after the return of such Property to the Lessor in accordance with the terms of the Lease, (x) unless a Lease Event of Default has occurred and is continuing, after the Lease Termination Date or (y) if the Lessee is required to return such Property to the Lessor, provided, that there shall not be excluded from the definition of the term "Impositions" any Taxes to the extent such Taxes are attributable to events or circumstances occurring, or matters arising, prior to or ending with the Expiration Date, or if applicable, the events or circumstances set forth in clause (y) above; (iii) any Tax for so long as, but only for so long as, it is being contested in accordance with the provisions of Section 13.5(b) of the Participation Agreement, provided that the foregoing shall not limit any obligation under such Section to advance to the relevant Tax Indemnitee amounts with respect to Taxes that are being contested in accordance with such Section or any expenses reasonably incurred by such Tax Indemnitee in connection with such contest; -15- (iv) any Taxes (including, without limitation, sales and transfer Taxes) to the extent imposed with respect to any voluntary transfer, sale, financing or other voluntary disposition (x) of any interest in any Property or any part thereof, or any interest therein or any interest or obligation under the Operative Documents (other than any transfer in connection with (1) the exercise by the Lessee of its Purchase Option or Remarketing Option or any termination option or other purchase of such Property by the Lessee, (2) the occurrence of a Lease Event of Default (3) a Casualty or Condemnation affecting such Property or (4) any sublease, modification or addition to such Property by the Lessee); (v) Taxes to the extent resulting from, or to the extent that such Taxes would not have been imposed but for, the gross negligence or willful misconduct of such Tax Indemnitee or Affiliate thereof; (vi) Taxes to the extent imposed solely as a result of a material breach by the Tax Indemnitee or any Affiliate thereof of any representations, warranties or covenants set forth in the Operative Documents (unless such breach is caused by the Lessee's breach of its representations, warranties or covenants set forth in the Operative Documents); (vii) with respect to any Property, Taxes which are included in the Property Balance, if and to the extent actually paid, or property taxes to the extent reimbursable by the Lessor pursuant to the last sentence of Section 12.1(b) of the Participation Agreement; (viii) Taxes imposed by any Governmental Authority to the extent that such Taxes would have been imposed in the absence of the transactions contemplated by the Operative Documents, and Taxes to the extent imposed by any Governmental Authority arising directly out of, or imposed solely as a result of, activities of a Tax Indemnitee or Affiliate thereof unrelated to the Transactions; and (ix) Taxes arising directly out of or resulting solely from, or to the extent that such Taxes would not have been imposed but for the existence of, any Lessor Lien attributable to such Tax Indemnitee. Notwithstanding the foregoing, the exclusions from the definition of Impositions set forth in clauses (i), (ii), (iv), (vii), (viii) and (ix) above, shall not apply to any aggregate increase in Taxes imposed on or paid by, directly or indirectly, a Tax Indemnitee or an entity directly or indirectly owned by a Tax Indemnitee net of any decrease in Taxes realized by such Tax Indemnitee or entity as a direct result of its payment of such Taxes, to the extent that such Tax increase would not have occurred if on each Acquisition Date the Lessor and the Lenders had advanced funds to the Lessee in the form of a loan secured by the Properties in an amount equal to the Advance funded on such Acquisition Date, with interest for such loans equal to the Basic Rent payable on each Scheduled Payment Date on a principal balance at the maturity of such loans in an -16- amount equal to the then outstanding amount of the Advances at the end of the term of the Master Lease. "Improvements" means all buildings, structures, fixtures, Equipment and other improvements of every kind existing at any time and from time to time (including those purchased with amounts advanced by the Participants pursuant to the Participation Agreement) on or under any parcel of Land to be acquired pursuant to the terms of the Operative Documents, together with any and all appurtenances to such buildings, structures or improvements, including sidewalks, utility pipes, conduits and lines, parking areas and roadways, and including all Modifications and other additions to or changes in the Improvements at any time. "Imputed Return" means an amount equal to the Base Rate plus 4% per annum on each Participant's outstanding Loan Amount or Lessor Amount during the period from the Scheduled Lease Termination Date to the date of determination. "Indebtedness" means, without duplication, with respect to the Lessee and each Subsidiary of the Lessee, such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of any of its property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from any property now or hereafter owned or acquired, including via merger, by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) obligations under Capitalized Leases which would be shown as a liability on a balance sheet of such Person, (vi) net liabilities under any agreement, device or arrangement designed to protect at least one of the parties thereto from the fluctuation of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions (including any cancellation, buy back, reversal, termination or assignment thereof), (vii) derivative interests as defined in FAS 133 of the Financial Accounting Standards Board; (viii) Indebtedness of another Person for which such Person is obligated pursuant to a Guaranty, and (ix) the portion of any accounts receivable for which there is recourse to such Person; provided, that "Indebtedness shall not include any overdrafts arising under a Yen-Denominated Facility. "Indemnitee" means each Participant, the Administrative Agent and the Arranger. "Insurance Requirements" means the terms and conditions of any insurance policy, and the requirements of the issuer of any such policy, which insurance policy is required to be maintained by the Lessee under the Master Lease in each case the failure to comply with such terms, conditions and/or requirements would under applicable law or the terms of such insurance policy constitute a valid defense to the insurer against payment of insurance proceeds thereunder. "Interest Period" means (x) with respect to any Loans or Lessor Amounts bearing interest or Yield at the Base Rate, the calendar month immediately preceding a -17- Scheduled Payment Date, or a portion of such calendar month during which the relevant Loans bear interest by reference to the Base Rate and (y) with respect to any Loans or Lessor Amounts bearing interest or Yield at the applicable Adjusted Eurodollar Rate that are funded on any Acquisition Date, initially the period commencing on the Advance date of any such Loan or Lessor Amounts and ending on May 1, 2003, and thereafter each period commencing on the last day of the immediately preceding Interest Period applicable to such Loan or Lessor Amounts and ending one, two, three, or six months thereafter, as selected by the Lessee and confirmed in writing to the Administrative Agent and the Lessor not less than three (3) Business Days prior to the last day of the then current Interest Period with respect thereto; provided that if Lessee fails to provide notice of its selection as provided above for any period, the Lessee shall be deemed to have selected a one-month period. "Japanese Assets" means assets held in Lam Research Co., Ltd., a Japanese joint stock company, or any successor thereto. "Land" means each individual fee interest or leasehold interest, as the case may be, in real property described on Schedule I to each Lease Supplement, and includes all Appurtenant Rights attached thereto. "Lease" means, collectively, the Master Lease and each Lease Supplement. "Lease Balance" means, as of any date of determination, an amount equal to the sum of the Loan Balance and the Lessor Balance and all other amounts owing by the Lessee under the Operative Documents (including without limitation, accrued and unpaid Basic Rent and Supplemental Rent, if any). "Lease Default" means any event or condition that, with the lapse of time or the giving of notice, or both, would constitute a Lease Event of Default. "Lease Event of Default" is defined in Section 16.1 of the Master Lease. "Lease Rents" is defined in Section 2(a)(i) of the Assignment of Lease and Rent. "Lease Supplement" means each Lease Supplement substantially in the form set forth in Exhibit A to the Master Lease, executed by the Lessee, the Lessor and, if appropriate in the applicable jurisdiction, the trustee described therein, dated an Acquisition Date and covering the Property (or, in the case of Property No. 2, Property No. 3 and Property No. 4, the respective Land or Improvements related thereto) described therein as the same may be amended, supplemented, amended and restated or otherwise modified from time to time. "Lease Term" is defined in Section 2.3 of the Master Lease. "Lender Basic Rent" means, as determined as of any Scheduled Payment Date, interest due on the Loans, determined in accordance with Section 2.5 of the Loan -18- Agreement and excluding (i) any interest at the applicable Overdue Rate on any installment of Lender Basic Rent not paid when due and (ii) any fine, penalty, interest or cost assessed or added under any agreement with a third party for nonpayment or late payment of Lender Basic Rent. "Lender Commitment" means the Commitment of each Lender in the amount set forth on Schedule I of the Participation Agreement, as such Schedule may be amended, supplemented, amended and restated, reduced or otherwise modified from time to time. "Lenders" means, collectively, Key Corporate Capital Inc., each Eligible Lender Assignee and each other holder from time to time of a Note. "Lessee" means Lam Research Corporation, a Delaware corporation. "Lessor" means SELCO Service Corporation, an Ohio corporation. "Lessor Amount" is defined in Section 3.2 of the Participation Agreement. "Lessor Balance" means, as of any date of determination, an amount equal to the sum of the outstanding Lessor Amounts together with all accrued and unpaid Yield thereon and all other amounts owing to the Lessor under the Operative Documents. "Lessor Basic Rent" means the amount of accrued and unpaid Yield due on the Lessor Amounts, determined in accordance with Section 4.1 of the Participation Agreement as of any Scheduled Payment Date and excluding (i) any interest at the applicable Overdue Rate on any installment of Lessor Basic Rent not paid when due and (ii) any fine, penalty, interest or cost assessed or added under any agreement with a third party for nonpayment or late payment of Lessor Basic Rent. "Lessor Commitment" means the Commitment of the Lessor in the amount set forth on Schedule I of the Participation Agreement, as such Schedule may be amended, supplemented, amended and restated, reduced or otherwise modified from time to time. "Lessor Financing Statements" means UCC financing statements appropriately completed and executed, if applicable, for filing in the applicable jurisdiction in order to protect the Lessor's and the Administrative Agent's respective interests under the Master Lease and each Lease Supplement to the extent the Master Lease and the Lease Supplements are security agreements. "Lessor Lien" means any Lien arising as a result of (a) any claim against any Participant not resulting from the transactions contemplated by the Operative Documents, (b) any act or omission of any Participant that is not required or permitted by the Operative Documents or is in violation of any of the terms of the Operative Documents or (c) any claim against any Participant with respect to Taxes or Transaction Expenses against which the Lessee is not required to indemnify such Participant pursuant to Article XIII of the Participation Agreement. -19- "Lessor Margin" means, with respect to any Lessor Amount which is a Eurodollar Loan/Lessor Amount, [***] per annum. "Lessor Mortgage" means, with respect to each Property, the applicable Lease Supplement for such Property and any and all other security instruments in appropriate recordable form in the relevant jurisdiction sufficient to grant to the Lessor a first priority Lien on such Property. "Lien" shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on common law, statute or contract, and including but not limited to the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. "Loan Agreement" means the Loan Agreement, dated as of June 1, 2003, among the Lessor, as borrower thereunder, the Lenders, and the Administrative Agent, substantially in the form of Exhibit D to the Participation Agreement, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time. "Loan Agreement Default" means any event, act or condition that with notice or lapse of time, or both, would constitute a Loan Agreement Event of Default. "Loan Agreement Event of Default" is defined in Section 5.1 of the Loan Agreement. "Loan Balance" means, as of any date of determination, an amount equal to the sum of the outstanding Loans together with all accrued and unpaid interest thereon pursuant to the Loan Agreement. "Loan Commitment" means, with respect to each Lender, the aggregate Commitment of such Lender in the amount set forth on Schedule I to the Participation Agreement, as such Schedule may be amended, supplemented, amended and restated or otherwise modified from time to time. "Loan Documents" means the Loan Agreement and the Notes. "Loan Margin" means, with respect to any Loan that is a Eurodollar Loan/Lessor Amount, [***] per annum. The Symbol [***] is used to indicate that a portion of the exhibit has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portion. "Loans" is defined in Section 2.1(a) of the Loan Agreement. -20- "London Interbank Offering Rate" means, as applicable to any Eurodollar Loan/Lessor Amount, for the Interest Period of such Eurodollar Loan/Lessor Amount, the rate per annum determined by the Administrative Agent with respect to Loans and by the Lessor with respect to Lessor Amounts on the basis of the offered rate for deposits in Dollars of amounts equal or comparable to the principal or analogous amount of such Eurodollar Loan/Lessor Amount offered for a term comparable to such Interest Period, which rates appear on the Reuters Screen LIBO Page as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period, provided that (i) if more than one such offered rate appears on the Reuters Screen LIBO Page, the "London Interbank Offering Rate" will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/16th of it) of such offered rates; and (ii) if no such offered rates appear on such page, the "London Interbank Offering Rate" for such Interest Period will be the rate per annum quoted by the Administrative Agent, two (2) Business Days prior to the first day of such Interest Period, for deposits in Dollars offered to leading banks for a period comparable to such Interest Period in an amount comparable to the principal or analogous amount of such Eurodollar Loan/Lessor Amount. "Margin Stock" has the meaning given such term under Regulation U. "Marketing Period" means the period commencing on the date 180 days prior to the Expiration Date and ending on the Expiration Date. "Master Lease" means the Amended and Restated Master Lease and Deed of Trust, dated as of June 1, 2003, between the Lessor and the Lessee, substantially in the form of Exhibit C to the Participation Agreement, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time. "Material" and "Materially" mean material to (i) the ability of the Lessee to perform its obligations under the Operative Documents, (ii) the value, condition, utility or useful life of any Property or (iii) the business, financial condition or results of operations of the Lessee and its Subsidiaries taken as a whole. "Material Adverse Change" means any material adverse change in the financial condition or results of operations of the Lessee and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, property, condition (financial or otherwise) or results of operations of the Lessee and its Subsidiaries taken as a whole, (b) the rights and remedies of the Lessor, the Administrative Agent or any Lender under the Operative Documents, (c) the ability of the Lessee to perform its obligations under the Operative Documents or (d) the value, utility, condition or useful life of any Property. "Material Subsidiary" means any Subsidiary of the Lessee that has assets with a value of not less than 5% of the total value of the assets of the Lessee and its Subsidiaries taken as a whole as of the end of the most recently completed fiscal year of the Lessee. -21- "Maturity Date" means with respect to the Loans and the Lessor Amounts, the fifth anniversary of the Documentation Date. "Maximum Lease Term" means the period ending on the fifth anniversary of the Documentation Date. "Maximum Recourse Amount" means, with respect to any Property (or, in the case of Property No. 2, Property No. 3 and Property No. 4, the respective Land or Improvements related thereto), the Property Cost of such Property (or, in the case of Property No. 2, Property No. 3 and Property No. 4, the respective Land or Improvements related thereto) multiplied by the percentage set forth in Schedule III to the Participation Agreement. "Modifications" is defined in Section 10.1 of the Master Lease. "Moody's" means Moody's Investors Service, Inc. "Mortgage" means any Mortgage or Deed of Trust, as the case may be, between the Lessor and the Administrative Agent, substantially in the form of Exhibit I to the Participation Agreement. "Mortgage Foreclosure Act" is defined in Section 16.4 of the Master Lease. "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Lessee or other member of the Controlled Group is a party and to which more than one employer is obligated to make contributions. "Net Proceeds" means the aggregate of all awards, compensation, insurance proceeds or other amounts received by the Administrative Agent, the Lessor or any Lender in connection with any Casualty or Condemnation of any Property and all interest earned thereon, less, to the extent not previously reimbursed by the Lessee, the expense of claiming and collecting such amounts, including all costs and expenses in connection therewith for which the Lessor, the Administrative Agent or any Lender is entitled to be reimbursed pursuant to the Lease. "Non-U.S. Transferee" is defined in Section 12.3(a) of the Participation Agreement. "Notes" means Series A Notes and Series B Notes, collectively, and "Note" means any of them. "Obligations" means all obligations (monetary or otherwise) of the Lessee arising under or in connection with any of the Operative Documents. -22- "Off-Balance Sheet Obligations" means, with respect to the Lessee and each Subsidiary of the Lessee, (i) the principal portion of such Person's obligations under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product and (ii) the recourse portion of the aggregate amount of uncollected accounts receivable of such Person subject at such time to a sale of receivables (or similar transaction). "Operative Documents" means the following: (a) the Participation Agreement; (b) the Master Lease; (c) each Lease Supplement; (d) the Loan Agreement; (e) each Note; (f) the Assignment of Lease and Rent; (g) each Deed and each Bill of Sale; (h) the Lessor Mortgages; (i) the Lessor Financing Statements; (j) each Mortgage; and (k) the Cash Collateral Documents. "Original Executed Counterpart" is defined in Section 26.9 of the Master Lease. "Overdue Rate" means, with respect to any Loan or Lessor Amount, the Base Rate, or the Adjusted Eurodollar Rate then in effect for such Loan or Lessor Amount, as the case may be, plus [***] per annum. THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. -23- "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Partial Purchase Option" is defined in Section 15.14 of the Participation Agreement. "Partial Termination Date" is defined in Section 15.2 of the Master Lease. "Partial Termination Notice" is defined in Section 15.1 of the Master Lease. "Participant Balance" means, with respect to any Participant as of any date of determination: (i) with respect to any Lender, an amount equal to the aggregate outstanding Loans of such Lender, together with all accrued and unpaid interest thereon or (ii) with respect to the Lessor, an amount equal to the aggregate outstanding Lessor Amounts, together with all amounts of accrued and unpaid Yield thereon. "Participants" means, collectively, each Lender and the Lessor, and their successors and permitted assigns. "Participation Agreement" means the Participation Agreement, dated as of June 1, 2003, among the Lessee, the Lessor, the Lenders and the Administrative Agent as the same may be amended, supplemented, amended and restated or otherwise modified from time to time. "Payment Date" means each Scheduled Payment Date and each other date on which Basic Rent is required to be paid by the Lessee. "Permitted Property Liens" means, with respect to any Property, any of the following: (i) the respective rights and interests of the parties to the Operative Documents as provided in the Operative Documents (including any Lien created pursuant to the Operative Documents); (ii) the rights of any sublessee under a sublease permitted by the terms of the Master Lease; (iii) Liens for Taxes that either are not yet due or are being contested in accordance with the provisions of Section 12.1 of the Master Lease; (iv) Liens arising by operation of law, materialmen's, mechanics', workers', repairmen's, employees', carriers', warehousemen's and other like Liens relating to the construction of the Improvements or in connection with any Modifications or arising in the ordinary course of business for amounts that either -24- are not more than sixty (60) days past due or are being diligently contested in good faith by appropriate proceedings, so long as such proceedings satisfy the conditions for the contest proceedings set forth in Section 12.1 of the Master Lease; (v) Liens of any of the types referred to in clause (iii) or (iv) above that have been bonded for not less than the full amount in dispute (or as to which other security arrangements satisfactory to the Lessor and the Administrative Agent have been made), which bonding (or arrangements) shall comply with applicable Requirements of Law, and has effectively stayed any execution or enforcement of such Liens; (vi) Liens arising out of judgments or awards with respect to which appeals or other proceedings for review are being prosecuted in good faith and for the payment of which adequate reserves have been provided as required by GAAP or other appropriate provisions have been made, so long as such proceedings have the effect of staying the execution of such judgments or awards and satisfy the conditions for contest proceedings set forth in Section 12.1 of the Master Lease; (vii) easements, licenses, rights-of-way and other encumbrances on title to real property permitted pursuant to Section 11.2 of the Master Lease; (viii) Lessor Liens; (ix) Liens created by the Lessee with the consent of the Required Participants or otherwise permitted by the Operative Documents; and (x) Liens described on the title insurance policy delivered with respect to such Property pursuant to Section 6.1(p) of the Participation Agreement, other than Liens described in clause (iv) or (vi) above. "Permitted Sales Costs" means, with respect to each Property, all reasonable costs of sale of such Property incurred by the Lessee pursuant to Section 20.2 of the Master Lease which costs are of a type customarily paid by sellers of properties comparable to the applicable Property in the market where such Property is being sold; provided, however, that "Permitted Sales Costs" shall not include any costs of repairs, alterations or modifications (including Required Modifications) desired by the purchaser of any Property or required to cause any Property to comply with the requirements of the Master Lease. "Person" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof. -25- "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Lessee or any other member of the Controlled Group may have any liability. "Plans and Specifications" means, with respect to each Property the final plans and specifications or detailed construction drawings for such Property. "Property" means (i) the Lessor's fee simple interest in any parcel of Land, (ii) all of the Improvements at any time located on or under such Land and (iii) the Equipment at any time located on or under such Land. "Property Balance" means, with respect to any Property, an amount equal to the outstanding principal or analogous amount of the Loans and Lessor Amounts relating to such Property, plus all accrued and unpaid interest and Yield thereon, plus any Supplemental Rent related to such Property or allocable to such Property plus any other amounts due and owing to the Participants and the Administrative Agent with respect to such Property or allocable to such Property. "Property Cost" means, with respect to any Property, the amount of the Advance made under the Participation Agreement with respect to the acquisition of such Property. "Property No. 1" is defined in Schedule III of the Participation Agreement and legally described on Schedule I to the applicable Lease Supplement. "Property No. 2" is defined in Schedule III of the Participation Agreement and legally described on Schedule I to the applicable Lease Supplement. "Property No. 3" is defined in Schedule III of the Participation Agreement and legally described on Schedule I to the applicable Lease Supplement. "Property No. 4" is defined in Schedule III of the Participation Agreement and legally described on Schedule I to the applicable Lease Supplement. "Purchase Notice" means an irrevocable written notice by the Lessee delivered to the Lessor pursuant to Section 18.1 of the Master Lease, notifying the Lessor of the Lessee's intention to exercise its option pursuant to such Section, and identifying the proposed purchase date therefor. "Purchase Option" means the Lessee's option to purchase any or all of the Properties in accordance with the provisions of Section 18.1 of the Master Lease. "Purchase Option Price" is defined in Section 18.1 of the Master Lease. "RCRA" means the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. Sections 6901 et seq. -26- "Regulation U" means Regulation U of the F.R.S. Board, as in effect from time to time. "Release" means any release, pumping, pouring, emptying, injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or emission of a Hazardous Material. "Remarketing Option" is defined in Section 20.1 of the Master Lease. "Rent" means, collectively, the Basic Rent and the Supplemental Rent. "Rents" is defined in Section 2(b) of the Assignment of Lease and Rent. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section with respect to a Plan, excluding, however, such events as to which the PBGC by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event. "Requesting Party" is defined in Section 22.1 of the Master Lease. "Required Lenders" means, at any time, Lenders having Loan Commitments representing at least 66-2/3% of the aggregate Loan Commitments of the Lenders or, for purposes of acceleration pursuant to Section 5.2(a)(ii)(y) of the Loan Agreement or in the event that the Loan Commitments have been terminated, Lenders representing at least 66-2/3% of the aggregate principal amount of Loans outstanding. "Required Modification" is defined in Section 10.1(a) of the Master Lease. "Required Participants" means the Lessor and the Required Lenders. "Requirement of Law" means, as to any Person (a) the partnership agreement, certificate of incorporation, bylaws, operating agreement or other organizational or governing documents of such Person, and (b) all Federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting any Property, the Improvements or the demolition, construction, use or alteration thereof, whether now or hereafter enacted and in force, including any that require repairs, modifications or alterations in or to any Property or in any way limit the use and enjoyment thereof (including all building, zoning and fire codes and the Americans with Disabilities Act of 1990, 42 U.S.C. Sections 1201 et seq., and any other similar Federal, state or local laws or ordinances and the regulations promulgated thereunder) and any that may relate to environmental requirements (including all Environmental Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments which are of record affecting any -27- Property, the Appurtenant Rights and any easements, licenses or other agreements entered into pursuant to Section 11.2 of the Master Lease. "Responsible Officer" means (a) as to the Lessee, any Authorized Officer and (b) as to any other Person, the chief executive officer, the president, any vice president, the secretary, any assistant secretary or the treasurer of such Person. "Responsible Officer's Certificate" means a certificate signed by any Responsible Officer which certificate shall certify as true and correct the subject matter being certified to in such certificate. "Return Conditions" is defined in Section 20.1 of the Master Lease. "S&P" means Standard & Poor's Rating Service, a division of The McGraw-Hill Companies, Inc. "Scheduled Payment Date" means (x) for funds accruing interest or Yield at the Base Rate, the first (1st) day of each calendar month, or if such day is not a Business Day, the next succeeding Business Day, and (y) for funds accruing interest or Yield at the Adjusted Eurodollar Rate, the last day of the applicable Interest Period, or in the case of any Interest Period greater than three (3) months, three (3) months from the last Scheduled Payment Date, or if such day is not a Business Day, the next succeeding Business Day unless the result would be that the Scheduled Payment Date would be in the next succeeding calendar month, in which case such Payment Date shall be on the next preceding Business Day. "SEC" means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Series A Loans" means that portion of the Loans made by the Lenders allocated as "Series A Loans" pursuant to Schedule I to the Participation Agreement. "Series B Loans" means that portion of the Loans made by the Lenders allocated as "Series B Loans" pursuant to Schedule I to the Participation Agreement. "Series A Notes" means promissory notes of the Lessor substantially in the form of Exhibit A to the Loan Agreement with respect to the amounts of each Lender's Commitment allocated to Series A Loans. "Series B Notes" means promissory notes of the Lessor substantially in the form of Exhibit A to the Loan Agreement with respect to the amounts of each Lender's Commitment allocated to Series B Loans. -28- "Severable Modifications" means modifications (a) that are not Required Modifications and (b) that can be removed from the applicable Property without (i) causing damage to such Property that cannot be readily repaired or (ii) materially impairing the marketability, value, utility or useful life of such Property from that set forth in the Appraisal thereof delivered in connection with the Acquisition Date therefor. "Short-Term Investments" means those assets shown as short term investments on the Lessee's financial statements prepared in accordance with GAAP. "Shortfall Amount" means for each Property, as of the Expiration Date, an amount equal to (i) the Property Balance, minus (ii) the aggregate Maximum Recourse Amount minus (iii) the aggregate amount of the highest, binding, written, unconditional, irrevocable cash offer to purchase such Property obtained by the Lessee pursuant to Section 20.2(c) of the Master Lease; provided, however, that if the sale of such Property to the Person or Persons submitting such offer or offers is not consummated on or prior to the Expiration Date, then the term "Shortfall Amount" shall mean an amount equal to (i) such Property Balance, minus (ii) the Maximum Recourse Amount. "Significant Casualty" with respect to a Property means a Casualty that in the reasonable, good faith judgment of the Administrative Agent and the Lessor (a) renders such Property unsuitable for continued use as an office facility, assembly facility or research and development facility, as applicable or (b) is so substantial in nature that restoration of such Property to substantially its condition as it existed immediately prior to such Casualty would be impracticable or impossible. "Significant Condemnation" with respect to a Property means (a) a Condemnation that involves a taking of the Lessor's entire title to the Land or (b) a Condemnation that in the reasonable, good faith judgment of the Administrative Agent and the Lessor (i) renders such Property unsuitable for continued use as an office facility, assembly facility or research and development facility, as applicable or (ii) is so substantial in nature that restoration of the remaining portion of such Property to substantially its condition as it existed immediately prior to such Condemnation would be impracticable or impossible. "Single Employer Plan" means a Plan maintained by the Lessee or any member of the Controlled Group for employees of the Lessee or any member of the Controlled Group. "Solvent" means with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that -29- it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability taking into account any subrogation and contribution rights. "Structuring Fee" is defined in Section 4.4(a) of the Participation Agreement. "Subject Improvements" is defined in each Lease Supplement. "Subject Land" is defined in each Lease Supplement. "Subject Property" is defined in each Lease Supplement and, as used in the Participation Agreement, means in the case of any Acquisition Date, the Property being acquired by the Lessor on such Acquisition Date. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Lessee. "Summary of Terms" means that certain Summary of Terms and Conditions dated April 24, 2003 between Lessee and the Arranger. "Supplemental Rent" means all amounts, liabilities and obligations (other than Basic Rent) that the Lessee assumes or agrees to pay to the Administrative Agent, any Participant or any other Person under the Master Lease, or under any of the other Operative Documents, including, without limitation, Fees, Break Costs, Maximum Recourse Amounts, Shortfall Amounts, Transaction Expenses, amounts due pursuant to Article XIII of the Participation Agreement and payments pursuant to Sections 15.2 of the Master Lease and Articles XVIII and XX of the Master Lease. "Tax Indemnitee" means each Participant, the Administrative Agent and the Arranger. "Taxes" is defined in the definition of Impositions. "Transaction Expenses" means all costs and expenses incurred in connection with the preparation, execution and delivery of the Operative Documents and the transactions contemplated by the Operative Documents including without limitation: -30- (a) the reasonable fees (subject to the limitation separately agreed to among the parties), out-of-pocket expenses and disbursements of Schiff Hardin & Waite, special counsel for the Lessor and the Arranger, in preparing and negotiating the terms of the Operative Documents and the other transaction documents, preparing for the closing under, and rendering opinions in connection with, the transactions contemplated thereby and in rendering other services customary for counsel representing parties to transactions of the types involved in the transactions contemplated by the Operative Documents; (b) (i) the reasonable fees, out-of-pocket expenses and disbursements of Heller Ehrman White & McAuliff LLP, special counsel for the Lessee, in negotiating the terms of the Operative Documents and the other transaction documents, preparing for the closings under, and rendering opinions in connection with, the transactions contemplated thereby and in rendering other services in connection with the transactions contemplated thereby customary for counsel representing parties to transactions of the types involved in the transactions contemplated by the Operative Documents, and the reasonable fees, out-of-pocket expenses and disbursements of special counsel for the Lessee in connection with the transactions contemplated to occur on each Acquisition Date; and (ii) the reasonable fees, out-of-pocket expenses and disbursements of local counsel for the Lessee in each applicable jurisdiction in negotiating the terms of the Operative Documents and the other transaction documents, preparing for the closings under, and rendering opinions in connection with, the transactions contemplated to occur on each Acquisition Date and the Documentation Date and in rendering other services in connection with the transactions contemplated by the Operative Documents which are customary for counsel representing parties to transactions of the types involved in the transactions contemplated by the Operative Documents; (c) any and all Taxes and fees incurred in recording, registering or filing any Operative Document or any other transaction document, any deed, declaration, mortgage, security agreement, notice or financing statement with any public office, registry or governmental agency required by the Operative Documents in connection with the transactions contemplated by the Operative Documents; (d) all reasonable out-of-pocket expenses, disbursements and costs of the Administrative Agent, the Arranger, the Lenders and the Lessor in connection with the transactions contemplated by the Operative Documents (including without limitation the transactions contemplated to occur on each Acquisition Date); (e) all title fees, premiums and escrow costs and other expenses relating to title insurance and the closing contemplated by the Operative Documents; -31- (f) all expenses relating to Environmental Audits required to be delivered pursuant to Section 6.1(h) of the Participation Agreement; (g) all fees and other expenses relating to Appraisals required to be delivered pursuant to Section 6.1(d) of the Participation Agreement; (h) the Fees payable by the Lessee pursuant to Section 4.4 of the Participation Agreement; (i) the fees and expenses of any rating agency providing a rating with respect to the Notes and/or the Lessor's interest in the Transactions; and (j) any other expenses incurred by the Lessee in connection with the Transactions. "Transactions" shall mean the transactions contemplated under the Participation Agreement and each of the other Operative Documents. "Unfunded Vested Liabilities" means the amount (if any) by which the present value of all currently accrued, vested and nonforfeitable benefits under all Single Employer Plans exceeds the fair market value of all assets of such Plan allocable to such benefits, all determined on an ongoing Plan basis as set forth in the then most recent actuarial valuation for each such Plan. "Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in effect in any applicable jurisdiction. "United States" means the United States of America. "U.S. Transferee" is defined in Section 12.3(b) of the Participation Agreement. "Yen-Denominated Facility" means any credit facility from time to time entered into by Lam Research Co., Ltd., a Japanese joint stock company or any successor thereto. "Yield" is defined in Section 4.1(a) of the Participation Agreement. "Yield Rate" means the Adjusted Eurodollar Rate applicable to Lessor Amounts, subject to the provisions of Sections 13.7, 13.8 and 13.9 of the Participation Agreement. -32- EX-10.95 13 f93126exv10w95.txt EXHIBIT 10.95 Exhibit 10.95 EMPLOYMENT AGREEMENT This Agreement is between Ernie Maddock ("Executive") and Lam Research Corporation ("Company"). RECITALS Whereas, Executive is currently an employee of the Company, and Company wishes for Executive to assume a new position; and Whereas, the parties wish to provide for mutual obligations arising out of the new position for a trial period; The parties therefore agree as follows: 1. EMPLOYMENT PERIOD. The Employment Period shall be from April 15, 2003 until October 15, 2003. 2. EMPLOYMENT. During the Employment Period, Executive shall serve as Vice-President for the Company at the direction of the Office of the Chief Executive Officer ("OCEO", composed of the CEO and the COO). Executive's compensation shall be determined by the OCEO, subject to review or modification by the Compensation Committee of the Company's Board of Directors. 3. RIGHT OF VOLUNTARY RESIGNATION. On or before October 15, 2003, Executive shall be entitled to resign from his position with the Company and, provided that such notice is delivered to the Company before October 15, 2003 and prior to any termination for cause, Executive shall receive the Severance Benefits described in Section 6 below. Executive shall provide at least thirty days notice to Company of his intent to resign, although Company may waive that notice period at its discretion. There is no right to severance under this Agreement for any Voluntary Resignation after October 15, 2003. 4. RIGHT OF INVOLUNTARY TERMINATION. On or before October 15, 2003, Company may terminate Executive's service in the position described in Section 2, above, without cause, and, in such event, Executive shall receive the Severance Benefits described in Section 6, below. No notice period is required for such Involuntary Termination. 5. TERMINATION FOR CAUSE. If Executive is terminated for cause during the Employment Period, the Executive shall not be entitled to any severance benefits except as determined in the Company's unfettered discretion. "Cause" shall be determined by the OCEO of the Company and must be based on a good faith finding by the OCEO of (1) a willful act of personal dishonesty in connection the Executive's Page 1 employment intended to result in his substantial personal enrichment; (2) a willful and knowing act by the Executive that constitutes gross misconduct; (3) a refusal by the Executive to comply with a reasonable written directive from the OCEO; (4) a willful and material violation of a federal or state law or regulation applicable to the business of the Company or constituting criminal conduct by the Executive; or (5) fraud by the Executive that must be reported to the Company's audit committee pursuant to the Sarbanes-Oxley Act of 2002. Inadequate performance or results shall not, without evidence of misconduct or bad faith, constitute cause for termination. 6. SEVERANCE BENEFITS. In the event that Executive is entitled to Severance Benefits due to an employment termination described in Section 3 or 4 above, Executive shall be entitled to a Severance Benefit as follows: A. Executive shall continue to be employed with the Company in a position as determined by the OCEO performing such duties as are mutually agreed to by the parties. The period of continuing employment shall be eighteen months, or such other period as is mutually agreed upon by the parties. Such period shall be referred to as the "Extended Employment Period." B. Executive's salary during the Extended Employment Period shall be equal to one year's salary at the rate he was paid during the last thirty days of the Employment Period; but such one year's salary shall be prorated over the entire duration of the Extended Employment Period. For example, if Executive and OCEO agree that the Extended Employment Period shall be eighteen months, Executive shall receive salary during the Extended Employment Period at the rate of two-thirds (2/3) of the rate that he was receiving such salary during the Employment Period. However, except as determined by the OCEO, Executive shall not be entitled to any bonus during the Extended Employment Period. C. Executive's medical, dental, life and disability benefits during the Extended Employment Period shall be the same as he received during the Employment Period. Any stock options granted to Executive prior to the Extended Employment Period shall continue to vest and be exercisable under the terms described in the grant documents. Executive shall be permitted to continue to participate in the Company's Flexible Spending accounts, Executive Deferred Compensation Plan and the Company's 401(k) plan. 7. RIGHT TO RELEASE. If Executive's employment terminates during the Employment Period, Executive shall execute a release of claims in a form acceptable to the Company at the end of the Extended Employment Period covering all claims arising out of Executive's employment with the Company. 8. INTEGRATED AGREEMENT. This is an integrated agreement that supersedes prior negotiations and discussions. No representations made prior to this Agreement shall modify or amend its terms. Moreover, no representative of the Company has the Page 2 authority to alter this Agreement following its execution except in a written document signed by the COO or CEO. The parties evidence their agreement to these terms by signing below. Executive Company /s/ Ernest Maddock /s/ Terry Bean - ------------------ --------------- Ernest Maddock Terry Bean Page 3 EX-21 14 f93126exv21.txt EXHIBIT 21 . . . Exhibit 21

STATE OR OTHER SUBSIDIARY JURISDICTION OF OPERATION - --------------------------------------- ------------------------- Lam Research International SARL Switzerland Lam Research GmbH Germany Lam Research Co., LTD. Japan Lam Research (Shanghai) Co., LTD China Lam Research Service Company (Shanghai) China Lam Research LTD United Kingdom Lam Research SARL France LAM Research Singapore Pte LTD Singapore LRC International FSC Corporation Barbados Lam Research Korea Limited Korea Lam Research S.R.L. Italy Lam Research (Israel) LTD. Israel Lam Research Co., LTD. Taiwan Lam Research B.V. Netherlands Monkowski-Rhine, Incorporated California, United States Lam Research (Ireland) Limited Ireland

EX-23.1 15 f93126exv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-3 Nos. 333-81664 and 333-66050 and Form S-4 No. 333-30545) and related Prospectuses and Registration Statements (Form S-8 Nos. 333-84638, 333-74500, 333-93115, 333-72751, 333-66833, 333-01011 and 333-32981) pertaining to the amended and restated 1996 Performance-Based Restricted Stock Plan, 1997 Incentive Stock Plan, 1999 Employee Stock Purchase Plan, 1999 Stock Option Plan and the Savings Plus Plan, 401(k) of Lam Research Corporation of our report dated July 18, 2003, with respect to the consolidated financial statements and schedule of Lam Research Corporation included in the Annual Report (Form 10-K) for the year ended June 29, 2003. /s/ ERNST & YOUNG LLP San Jose, California September 22, 2003 EX-31.1 16 f93126exv31w1.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, James W. Bagley, Chairman and Chief Executive Officer of Lam Research Corporation, certify that: 1. I have reviewed this annual report on Form 10-K of Lam Research Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and c) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. September 24, 2003 /s/ James W. Bagley ------------------------------------ James W. Bagley Chairman and Chief Executive Officer 2 EX-31.2 17 f93126exv31w2.txt EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION PURSUANT TO RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Mercedes Johnson, Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer of Lam Research Corporation, certify that: 1. I have reviewed this annual report on Form 10-K of Lam Research Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and c) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. September 24, 2003 /s/ Mercedes Johnson ---------------------------- Mercedes Johnson Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer 2 EX-32.1 18 f93126exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 LAM RESEARCH CORPORATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Lam Research Corporation (the "Company") on Form 10-K for the fiscal period ending June 29, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James W. Bagley, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. September 24, 2003 /s/ James W. Bagley ------------------------------------ James W. Bagley Chairman and Chief Executive Officer EX-32.2 19 f93126exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 LAM RESEARCH CORPORATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Lam Research Corporation (the "Company") on Form 10-K for the fiscal period ending June 29, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mercedes Johnson, Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. September 24, 2003 /s/ Mercedes Johnson -------------------------------------------- Mercedes Johnson Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.2

                                                                     Exhibit 3.2

                              AMENDED AND RESTATED

                                     BYLAWS

                                       OF

                            LAM RESEARCH CORPORATION

                                    ARTICLE I

                                CORPORATE OFFICES

         1.1      REGISTERED OFFICE

         The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust company.

         1.2      OTHER OFFICES

         The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

         2.1      PLACE OF MEETINGS

         Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such

                                       1


designation, stockholders' meetings shall be held at the registered office of
the Corporation.

         2.2      ANNUAL MEETING

         The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Thursday of November in each year at 2:00 p.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected
and any other proper business may be transacted.

         Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the corporation.
Nominations of persons for election to the board of directors may be made at any
annual meeting of stockholders (a) by or at the direction of the board of
directors (or any duly authorized committee thereof) or (b) by any stockholder
of the corporation (i) who is a stockholder of record on the date of the giving
of the notice provided for in this Section 2.2 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth in this Section 2.2.

         In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the secretary of the corporation.

         To be timely, a stockholder's notice to the secretary must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than sixty (60) days nor more than ninety (90) days prior to the date
of the annual meeting of stockholders; provided, however, that in the event that
less than seventy (70) days' notice or prior public disclosure of the date of
the meeting is given to stockholders, notice by the stockholder to be timely
must be so received not

                                       2


later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.

         To be in proper written form, a stockholder's notice to the secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (ii) the class or series and number of shares of capital stock of the
corporation that are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the corporation that are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.

         No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Section

                                       3


2.2. If the chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.

         No business may be transacted at an annual meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the board of directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the board of directors (or
any duly authorized committee thereof) or (c) otherwise properly brought before
the annual meeting by any stockholder of the corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 2.2 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedure set forth in this Section 2.2.

         In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the secretary of
the corporation.

         To be timely, a stockholder's notice to the secretary must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than sixty (60) days nor more than ninety (90) days prior to the date
of the annual meeting of stockholders; provided, however, that in the event that
less than seventy (70) days' notice or prior public disclosure of the date of
the meeting is given to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs.

         To be in proper written form, a stockholder's notice to the secretary
must set forth as to each matter such

                                       4


stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of shares of
capital stock of the corporation that are owned beneficially or of record by
such stockholder, (iv) a description of all arrangements or understandings
between such stockholder and any other person or persons (including their names)
in connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting.

         No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 2.2, provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 2.2 shall be deemed to preclude discussion
by any stockholder of any such business. If the chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.

         2.3      SPECIAL MEETING

         Unless otherwise expressly provided in the Certificate of Incorporation
of the corporation, special meetings of the stockholders may only be called by
the chairman of the board, by the president or at the request in writing of a
majority of the board of directors. Special meetings of stockholders of the
corporation may not be called by any other person or persons.

         If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting

                                       5


and the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president or the secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The officer
receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections 2.4
and 2.5, and that a meeting will be held at the time requested by the person or
persons who called the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of the request. If the notice is not given
within twenty (20) days after the receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this paragraph
of this Section 2.3 shall be construed as limiting, fixing, or affecting the
time when a meeting of stockholders called by action of the board of directors
may be held.

         2.4      NOTICE OF STOCKHOLDERS' MEETINGS

         All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.

         2.5      MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

         Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.

                                       6


         2.6      QUORUM

         The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the chairman of the meeting or (ii)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.

         2.7      ADJOURNED MEETING; NOTICE

         When a meeting is adjourned to another time or place, unless these
Bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

         2.8      VOTING

         The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).

                                       7


         Except as set forth in the immediately following paragraph of this
Section 2.8 or otherwise provided in the Certificate of Incorporation, each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote for each share of the capital stock entitled to vote thereat held by
such stockholder. The board of directors, in its discretion, or the officer of
the corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.

         At the election of directors of the corporation, each holder of stock
or of any class or classes or of a series or series thereof shall be entitled to
as many votes as shall equal the number of which (except for such provision as
to cumulative voting) he would be entitled to cast for the election of directors
with respect to his shares of stock multiplied by the number of directors to be
elected by him, and he may cast all of such votes for a single director or may
distribute them among the number for, or for any two or more of them as he may
see fit; provided, however, that no stockholder shall be entitled to so cumulate
such stockholder's votes unless the candidates for which such stockholder is
voting have been placed in nomination in accordance with Section 2.2 of this
Article II and a stockholder has given timely notice of an intention to cumulate
votes. To be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the corporation not less than
sixty (60) days nor more than ninety (90) days prior to the meeting; provided,
however, that in the event that less than seventy (70) days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth (10th) day following the day on which such notice
of the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. If any one stockholder has given proper notice of an
intention to cumulate votes pursuant to this Section 2.8, all stockholders may
cumulate their votes for candidates properly in nomination.

                                       8


         When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the statutes or of the Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of the question.

         2.9      WAIVER OF NOTICE

         Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.

         2.10     STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.

                                       9


         Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.

         In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
secretary, request the board of directors to fix a record date. The board of
directors shall promptly, but in all events within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the board of directors within ten (10) days
of the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded, to the attention of the secretary of the corporation. Delivery shall
be by hand or by certified or registered mail, return receipt requested. If no
record date has


                                       10



been fixed by the board of directors and prior action by the board of directors
is required by applicable law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the board of directors adopts the
resolution taking such prior action.

         In the event of the delivery to the corporation of a written consent or
consents purporting to authorize or take corporate action and/or related
revocations (each such written consent and any revocation thereof is referred to
in this Section 2.10 as a "Consent"), the secretary of the corporation shall
provide for the safekeeping of such Consents and shall as soon as practicable
thereafter conduct such reasonable investigation as he deems necessary or
appropriate for the purpose of ascertaining the validity of such Consents and
all matters incident thereto, including, without limitation, whether the holders
of shares having the requisite voting power to authorize or take the action
specified in the Consents have given consents. No consent to corporate action in
writing without a meeting shall be effective unless delivered to the corporation
within sixty (60) days following the record date relating thereto fixed pursuant
to this Section 2.10.

         2.11     RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

         In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
be not more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.


                                       11



         If the board of directors does not so fix a record date:

         (i) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.

         (ii) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.

         A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.

         2.12     PROXIES

         Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.

         2.13     LIST OF STOCKHOLDERS ENTITLED TO VOTE

The officer who has charge of the stock ledger of a corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete


                                       12



list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.

         2.14     CONDUCT OF BUSINESS

         The chairman of any meeting of stockholders shall determine the order
of business and the procedures at the meeting, including such matters as the
regulation of the manner of voting and the conduct of business.

                                   ARTICLE III

                                    DIRECTORS

         3.1      POWERS

         Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.


                                       13



         3.2      NUMBER OF DIRECTORS

         The number of directors of the corporation shall be not less than four
(4) nor more than (7). The exact number of directors shall be six (6).

         No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.

         3.3      ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

         Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold. office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.

         Elections of directors need not be by written ballot.

         3.4      RESIGNATION AND VACANCIES

         Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided in this section in the filling of other vacancies.

         A vacancy created by the removal of a director by the vote or written
consent of the stockholders or by a court order may be filled only by the vote
of a majority of the outstanding shares entitled to vote thereon represented at
a duly held meeting at which a quorum is


                                       14


present, or by the unanimous written consent of all shares entitled to vote
thereon. Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified.

         Unless otherwise provided in the certificate of incorporation or these
bylaws:

         (i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.

         (ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.

         If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.

         If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time


                                       15


outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.

         A director elected or appointed to fill a vacancy shall serve until the
next annual meeting of stockholders or until a successor shall be elected and
qualified.

         3.5      PLACE OF MEETINGS; MEETINGS BY TELEPHONE

         The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.

         3.6      FIRST MEETINGS

         The first meeting of each newly elected board. of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors , or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.


                                       16


         3.7      REGULAR MEETINGS

         Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors.

         3.8      SPECIAL MEETINGS; NOTICE

         Notice of the time and place of special meetings shall be given to each
director at that director's address as it is shown on the records of the
corporation. Notice of such special meeting stating the place, date and hour of
the meeting shall be given to each director either (i) by mail not less than
four (4) days before the date of the meeting, or (ii) personally, by telephone,
telecopy, telegram, telex or other similar means of communication on twenty-four
(24) hours' notice, or on such shorter notice as the person or persons calling
such meeting may deem necessary or appropriate in the circumstances. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director whom the person giving the
notice has reason to believe will promptly communicate it to the director.

         3.9      QUORUM

         At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.

         3.10     WAIVER OF NOTICE

         Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or


                                       17


of the certificate of incorporation or these bylaws, a written waiver thereof,
signed by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the directors, or members of a
committee of directors, need be specified in any written waiver of notice unless
so required by the certificate of incorporation or these bylaws.

         3.11     ADJOURNED MEETING; NOTICE

         If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.


                                       18


         3.12     BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.

         3.13     FEES AND COMPENSATION OF DIRECTORS

         Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attending each meeting of the board of directors and may be paid a fixed sum for
attending each meeting of the board of directors or a stated salary as director.
No such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.

         3.14     APPROVAL OF LOANS TO OFFICERS

         The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

                                       19


         3.15     REMOVAL OF DIRECTORS

         Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so long as stockholders of the corporation are entitled to cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his or her removal would be
sufficient to elect him or her if then cumulatively voted at an election of the
entire board of directors.

         No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.

                                   ARTICLE IV

                                   COMMITTEES

         4.1      COMMITTEES OF DIRECTORS

         The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management

                                       20


of the business and affairs of the corporation, and may authorize the seal of
the corporation to be affixed to all papers that may require it; but no such
committees shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution, or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to section 253 of the General
Corporation Law of Delaware.

         4.2      COMMITTEE MINUTES

         Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.

         4.3      MEETINGS AND ACTION OF COMMITTEES

         Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), and

                                       21


Section 3.12 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may also be called by resolution of the board of
directors and that notice of special meeting of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.

                                    ARTICLE V

                                    OFFICERS

         1.       OFFICERS

         The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.

         2.       ELECTION OF OFFICERS

         The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or 5.5 of these
bylaws, shall be chosen by the board of directors, subject to the rights, if
any, of any officer under any contract of employment.

                                       22


         3.       SUBORDINATE OFFICERS

         The board of directors may appoint or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.

         4.       REMOVAL AND RESIGNATION OF OFFICERS

         Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.

         Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; the acceptance of the
resignation shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the corporation under any contract
to which the officer is a party.

         5.       VACANCIES IN OFFICES

         Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.

         6.       CHAIRMAN OF THE BOARD

         The chairman of the board shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and the officers of
the corporation. He shall preside at all meetings of the board of directors and
shareholders, except in the event and to the extent the chairman or board
designates that the secretary or other officer of



                                       23


the corporation shall preside in place of the chairman. The chairman shall have
the general powers and duties of management generally vested in the office of
chief executive officer of a corporation, and shall have such other powers and
duties as may be prescribed by the board of directors or these bylaws.

         7.       PRESIDENT

         The president shall be the chief operating officer of the corporation
and shall, subject to the control of the board of directors, have general
supervision, direction, and control of the internal affairs and operations of
the corporation. He shall have the general powers and duties of management
usually vested in the office of chief operating officer of a corporation, and
shall have such other powers and duties as may be prescribed by the board of
directors or these bylaws.

         8.       VICE PRESIDENTS

         In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.

         9.       SECRETARY

         The secretary shall keep or cause to be kept, at the principal office
of the corporation or such other place as the board of directors may direct, a
book of minutes of all meetings and actions of directors, committees of
directors, and shareholders. The minutes shall show the time and place of each
meeting, whether regular or special (and, if special, how authorized and the
notice given), the names of those present at directors' meetings or committee
meetings, the number of shares present or



                                       24


represented at shareholders' meetings, and the proceedings thereof.

         The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.

         The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other power and perform such other duties as
may be prescribed by the board of directors or by these bylaws.

         10.      CHIEF FINANCIAL OFFICER

         The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.

         The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.


                                       25


         11.      ASSISTANT SECRETARY

         The assistant secretary, or if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.

         12.      ASSISTANT TREASURERS

         The assistant treasurer, or, if there is more than one, the assistant
treasurer, in the order determined by the stockholders or board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the chief financial officer or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
chief financial officer and shall perform such other duties and have such other
powers as the board of directors or the stockholders may from time to time
prescribe.

         13.      AUTHORITY AND DUTIES OF OFFICERS

         In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated form time
to time by the board of directors or the stockholders.

                                   ARTICLE VI

                                    INDEMNITY

         1.       INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers


                                       26


against expenses (including attorneys' fees), judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with any
proceeding, arising by reason of the fact that such person is or was an agent of
the corporation. For purposes of this Section 6.1, a "director" or "officer" of
the corporation includes any person (i) who is or was a director or officer of
the corporation, (ii) who is or was servicing at the request of the corporation
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.

         2.       INDEMNIFICATION OF OTHERS

         The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent or another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.

         3.       INSURANCE

         The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another


                                       27



corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of the
General Corporation Law of Delaware.

                                   ARTICLE VII

                               RECORDS AND REPORTS

         1.       MAINTENANCE AND INSPECTION OF RECORDS

         The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its shareholders listing their names and addresses and the number and class of
shares held by each shareholder, a copy of these bylaws as amended to date,
accounting books, and other records.

         Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney of
such other writing that authorizes the attorney or other agent to so act on
behalf of stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

         The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address


                                       28



of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for, a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

         2.       INSPECTION BY DIRECTORS

         Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.

         3.       ANNUAL STATEMENT TO STOCKHOLDERS

         The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.


                                       29



         4.       REPRESENTATION OF SHARES OF OTHER CORPORATIONS

         The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.

                                  ARTICLE VIII

         1.       CHECKS

         From time to time, the board of directors, shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.

         2.       EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

         The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of any officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.


                                       30



         3.       STOCK CERTIFICATES; PARTLY PAID SHARES

         The shares of the corporation shall be represented by certificates,
provided that the board of directors may establish by resolution or resolutions
that some or all of any or all classes or series of the corporation's stock
shall be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice chairman of
the board of directors, or the president or vice president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signatures has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.

         The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.

                                       31


         4.       SPECIAL DESIGNATION CERTIFICATES

         If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relatives, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

         5.       LOST CERTIFICATES

         Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any uncertificated shares.

                                       32


         6.       CONSTRUCTION; DEFINITIONS

         Unless the context requires otherwise, the general provisions rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, the masculine gender includes the feminine, the feminine gender
includes the masculine, and the term "Person" includes both a corporation and a
natural person.

         7.       DIVIDENDS

         The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital.

         The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserves. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.

         8.       FISCAL YEAR

         The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors. Unless
otherwise designated, the fiscal year of the corporation shall end on June 30.

         9.       SEAL

         The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.

                                       33


         10.      TRANSFER OF STOCKS

         Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.

         11.      STOCK TRANSFER AGREEMENTS

         The corporation shall have power to enter into and perform, any
agreement with any number of shareholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.

         12.      REGISTERED STOCKHOLDERS

         The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

                                   ARTICLE IX

                                   AMENDMENTS

         The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote, provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the

                                       34


stockholders of the power, nor limit their power to adopt, amend or repeal
bylaws.

                                    ARTICLE X

                                   DISSOLUTION

         If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.

         At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provision of
section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the Federal Corporation Law of Delaware. Upon such certificates becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.

         Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consents becoming effective in accordance
with Section 103 of the General Corporation Law of Delaware, the corporation
shall be dissolved. If the consent is signed by an attorney, then the original
power of attorney or a photocopy thereof shall be attached to and filed with the
consent. The consent


                                       35


filed with the Secretary of State shall have attached to it the affidavit of the
secretary of some other officer of the corporation stating that the consent has
been signed by or on behalf of all the stockholders entitled to vote on a
dissolution; in addition, there shall be attached to the consent a certification
by the secretary or some other officer of the corporation setting forth the
names and residences of the directors and officers of the corporation.

                                   ARTICLE XI

                                    CUSTODIAN

         1.       APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

         The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:

                           (i) at any meeting held for the election of directors
         the stockholders are so divided that they have failed to elect
         successors to directors whose terms have expired or would have expired
         upon qualification of their successors; or

                           (ii) the business of the corporation is suffering or
         is threatened with irreparable injury because the directors are so
         divided respecting the management of the affairs of the corporation
         that the required vote for action by the board of directors cannot be
         obtained and the stockholders are unable to terminate this division; or

                           (iii) the corporation has abandoned its business and
         has failed within a reasonable time to take steps to dissolve,
         liquidate or distribute its assets.

                                       36


         2.       DUTIES OF CUSTODIAN

         The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352 (a)(2) of the General Corporation Law of Delaware.

                                       37


             CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS

                                       OF

                            LAM RESEARCH CORPORATION

                             Certificate of Adoption

         The undersigned hereby certifies that he is the duly elected,
         qualified, and acting Assistant Secretary of Lam Research Corporation
         (the "Corporation") and that the foregoing Amended and Restated Bylaws,
         comprising thirty-five (35) pages, were adopted as the Amended and
         Restated Bylaws of the Company on November 7, 2002 at a duly called
         meeting of the Board of Directors of the Company.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this 6 day of June, 2003.

                            /s/ GEORGE SCHISLER
                          ------------------------------------------------------
                          George Schisler, Assistant Secretary


                                       38

EX-10.86

                                                                   Exhibit 10.86
================================================================================

                              AMENDED AND RESTATED

                         MASTER LEASE AND DEED OF TRUST

                      THIS DOCUMENT SECURES FUTURE ADVANCES

                            Dated as of June 1, 2003

                                     between

                           SELCO SERVICE CORPORATION,
        doing business in California as "Ohio SELCO Service Corporation",
                                    as Lessor

                                       and

                            LAM RESEARCH CORPORATION,

                                    as Lessee

         To the extent, if any, that this Master Lease and Deed of Trust
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no lien on this Master Lease
and Deed of Trust may be created through the transfer or possession of any
counterpart other than the original counterpart containing the receipt therefor
executed by Key Corporate Capital Inc., as the Administrative Agent, on or
following the signature page hereof. This counterpart is NOT the original
counterpart.

================================================================================



                                TABLE OF CONTENTS



SECTION                                                HEADING                                                    PAGE
                                                                                                               
ARTICLE I DEFINITIONS...........................................................................................    1
ARTICLE II MASTER LEASE.........................................................................................    2
         Section 2.1. Acceptance and Lease of Property..........................................................    2
         Section 2.2. Acceptance Procedure......................................................................    2
         Section 2.3. Lease Term................................................................................    2
         Section 2.4. Title.....................................................................................    2
ARTICLE III PAYMENT OF RENT.....................................................................................    2
         Section 3.1. Rent......................................................................................    2
         Section 3.2. Payment of Rent...........................................................................    3
         Section 3.3. Supplemental Rent.........................................................................    3
         Section 3.4. Method of Payment.........................................................................    3
ARTICLE IV QUIET ENJOYMENT; RIGHT TO INSPECT....................................................................    3
         Section 4.1. Quiet Enjoyment...........................................................................    3
         Section 4.2. Right to Inspect..........................................................................    4
ARTICLE V NET LEASE, ETC........................................................................................    4
         Section 5.1. Net Lease.................................................................................    4
         Section 5.2. No Termination or Abatement...............................................................    5
ARTICLE VI SUBLEASES AND ASSIGNMENTS............................................................................    5
         Section 6.1. Subletting................................................................................    5
         Section 6.2  Assignment................................................................................    6
ARTICLE VII LESSEE ACKNOWLEDGMENTS..............................................................................    6
         Section 7.1. Condition of the Property.................................................................    6
         Section 7.2. Risk of Loss..............................................................................    7
ARTICLE VIII POSSESSION AND USE OF THE PROPERTY, ETC............................................................    7
         Section 8.1. Utility Charges...........................................................................    7
         Section 8.2. Possession and Use of the Property........................................................    7
         Section 8.3. Compliance with Requirements of Law and Insurance Requirements............................    7
ARTICLE IX MAINTENANCE AND REPAIR; RETURN.......................................................................    7
         Section 9.1. Maintenance and Repair; Return............................................................    7


                                      -i-



                                                                                                               
ARTICLE X MODIFICATIONS, ETC....................................................................................    8
         Section 10.1. Modifications, Substitutions and Replacement.............................................    8
         Section 10.2. Notice to the Lessor and Administrative Agent............................................    9
ARTICLE XI DISCHARGE OF LIENS; EASEMENTS........................................................................    9
         Section 11.1. Discharge of Liens.......................................................................    9
         Section 11.2. Grants and Releases of Easements; Lessor Waivers.........................................   10
ARTICLE XII PERMITTED CONTESTS..................................................................................   11
         Section 12.1. Permitted Contest........................................................................   11
ARTICLE XIII INSURANCE..........................................................................................   11
         Section 13.1. Required Insurance.......................................................................   11
         Section 13.2. Insurance Coverage.......................................................................   12
ARTICLE XIV CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS....................................................   13
         Section 14.1. Risk of Loss, Damage or Destruction......................................................   13
         Section 14.2. Casualty and Condemnation................................................................   13
         Section 14.3. Environmental Matters....................................................................   15
         Section 14.4. Notice of Environmental Matters..........................................................   16
ARTICLE XV TERMINATION OF LEASE.................................................................................   16
         Section 15.1. Partial Termination Upon Certain Events..................................................   16
         Section 15.2. Partial Termination Procedures...........................................................   16
ARTICLE XVI EVENTS OF DEFAULT...................................................................................   17
         Section 16.1. Lease Events of Default..................................................................   17
         Section 16.2. Remedies.................................................................................   19
         Section 16.3. Waiver of Certain Rights.................................................................   22
         Section 16.4. Deed of Trust Remedies...................................................................   23
         Section 16.5. Excess Proceeds; Return of Properties....................................................   23
ARTICLE XVII LESSOR'S RIGHT TO CURE.............................................................................   23
         Section 17.1. The Lessor's Right to Cure the Lessee's Lease Defaults...................................   23
ARTICLE XVIII PURCHASE PROVISIONS...............................................................................   24
         Section 18.1. Purchase of Properties...................................................................   24
         Section 18.2. Expiration Date Purchase Obligation......................................................   24
         Section 18.3. Acceleration of Purchase Obligation......................................................   25
         Section 18.4. Failure to Elect Options.................................................................   25



                                      -ii-



                                                                                                               
ARTICLE XIX [INTENTIONALLY OMITTED].............................................................................   25
ARTICLE XX REMARKETING OPTION...................................................................................   25
         Section 20.1. Option to Remarket.......................................................................   25
         Section 20.2. Procedures During Remarketing............................................................   26
         Section 20.3. Remedies for Failed Remarketing..........................................................   28
         Section 20.4. No Sale of Property......................................................................   29
         Section 20.5. Return of Excess Amounts.................................................................   29
ARTICLE XXI PROCEDURES RELATING TO PURCHASE OR REMARKETING OPTIONS..............................................   30
         Section 21.1. Provisions Relating to the Exercise of Purchase Option or Obligation and Conveyance
                 upon Remarketing; Conveyance upon Certain Other Events.........................................   30
ARTICLE XXII ESTOPPEL CERTIFICATES..............................................................................   31
         Section 22.1. Estoppel Certificates....................................................................   31
ARTICLE XXIII ACCEPTANCE OF SURRENDER...........................................................................   31
         Section 23.1. Acceptance of Surrender..................................................................   31
ARTICLE XXIV NO MERGER OF TITLE.................................................................................   32
         Section 24.1. No Merger of Title.......................................................................   32
ARTICLE XXV INTENT OF THE PARTIES...............................................................................   32
         Section 25.1. Ownership of the Properties..............................................................   32
ARTICLE XXVI MISCELLANEOUS......................................................................................   33
         Section 26.1. Severability; Perpetuities; Etc..........................................................   33
         Section 26.2. Amendments and Modifications.............................................................   33
         Section 26.3. No Waiver................................................................................   33
         Section 26.4. Notices..................................................................................   33
         Section 26.6. Headings and Table of Contents...........................................................   33
         Section 26.7. Counterparts.............................................................................   34
         Section 26.8. Governing Law............................................................................   34
         Section 26.9. Original Lease...........................................................................   34
         Section 26.10. Time of Essence.........................................................................   34
         Section 26.11. Liability Limited.......................................................................   34

Exhibit A - Form of Lease Supplement



                                     -iii-



                              AMENDED AND RESTATED
                         MASTER LEASE AND DEED OF TRUST
                      THIS DOCUMENT SECURES FUTURE ADVANCES

         THIS AMENDED AND RESTATED MASTER LEASE AND DEED OF TRUST (this "Master
Lease"), dated as of June 1, 2003 between LAM RESEARCH CORPORATION, a Delaware
corporation, as Lessee and whose principal offices are located at 4650 Cushing
Parkway, Fremont, California 94538 (the "Lessee") and SELCO SERVICE CORPORATION,
an Ohio corporation, as Lessor, doing business in California as "Ohio SELCO
Service Corporation", whose principal offices are located at c/o KeyCorp
Leasing, 66 South Pearl Street, Albany, New York 12207 (the "Lessor").

                             W I T N E S S E T H :

         WHEREAS, pursuant to a Participation Agreement dated as of the date
hereof (as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), among the Lessee, the Lessor, Key Corporate Capital
Inc., and each other holder from time to time of the Notes, as Lenders (herein,
the "Lenders"), and Key Corporate Capital Inc., as Administrative Agent (in such
capacity, and together with its successors and assigns, the "Administrative
Agent") the Lenders and the Lessor have agreed to finance the acquisition of the
Properties;

         WHEREAS, on the initial Acquisition Date the Lessor shall acquire from
Scotiabanc Inc., a Delaware corporation ("SBI"), the real property commonly
known as Buildings #8 and #9 at 46555 and 46595 Landing Parkway, Fremont,
California and more particularly described in the Lease Supplement attached
hereto as Exhibit A, subject to that certain Lease dated as of January 10, 2000
between SBI, as owner, and Lessee, as lessee (as previously amended, the "SBI
Lease");

         WHEREAS, on the Acquisition Date the Lessor shall acquire from the
Cushing 2000 Trust, a Delaware business trust ("Cushing Trust"), the real
property commonly known as Buildings 1 and 2 at 4540 and 4650 Cushing Parkway,
Fremont, California and more particularly described in the Lease Supplement
attached hereto as Exhibit A, subject to that certain Lease dated as of December
6, 2000 between Cushing Trust, as owner, and Lessee, as lessee (as previously
amended, the "Cushing Lease");

         WHEREAS, this Master Lease shall fully amend, replace and restate the
SBI Lease and the Cushing Lease;

         WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, the Property specified in each Lease
Supplement; and

         WHEREAS, the Properties will be subject to the terms of this Master
Lease and the Lease Supplements;



Lam Research Corporation                       Amended and Restated Master Lease

         NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the SBI Lease and the Cushing Lease
are hereby amended and restated in their entirety as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1.      Definitions; Interpretation. Capitalized terms used
but not otherwise defined in this Master Lease have the respective meanings
specified in Appendix A to the Participation Agreement; and the rules of
interpretation set forth in Appendix A to the Participation Agreement shall
apply to this Master Lease.

                                   ARTICLE II

                                  MASTER LEASE

         Section 2.1.      Acceptance and Lease of Property. Subject to the
terms and conditions set forth herein and in the Participation Agreement,
including without limitation the satisfaction or waiver of the conditions set
forth in Article VI thereof, the Lessor hereby agrees to accept, pursuant to the
terms of the Participation Agreement, delivery on each Acquisition Date of a
Property from one or more third parties designated by the Lessee and
simultaneously to demise and lease to the Lessee hereunder and under the
relevant Lease Supplement for the Lease Term, the Lessor's interest in such
Property and the Lessee hereby agrees, expressly for the direct benefit of the
Lessor, to lease from the Lessor for the Lease Term the interest of the Lessor
in such Property identified in the applicable Lease Supplement.

         Section 2.2.      Acceptance Procedure. The Lessee hereby agrees that
the execution and delivery by it of a Lease Supplement on or as of each
Acquisition Date shall, without further act, constitute the irrevocable
acceptance by the Lessee of the Property set forth in such Lease Supplement for
all purposes of this Master Lease and the other Operative Documents on the terms
set forth therein and herein, and that such Property shall be deemed to be
included in the leasehold estate of this Master Lease and shall be subject to
the terms and conditions of this Master Lease as of the Acquisition Date
thereof.

         Section 2.3.      Lease Term. The Lease Term of this Master Lease for
each Property shall commence on (and include) the Acquisition Date of such
Property and end on (but exclude) the Expiration Date.

         Section 2.4.      Title. Each Property is leased to the Lessee without
any representation or warranty, express or implied, by the Lessor and subject to
the rights of parties in possession, the existing state of title (including,
without limitation, all Liens) and all applicable Requirements of Law. The
Lessee shall not in any event have any recourse against the Lessor for any
defect in or

                                      -2-


Lam Research Corporation                       Amended and Restated Master Lease

exception to title to any Property or leasehold interest therein other than
resulting from Lessor Liens attributable to the Lessor.

                                   ARTICLE III

                                 PAYMENT OF RENT

         Section 3.1.      Rent. (a) During the Lease Term, the Lessee shall pay
Basic Rent to the Lessor on each Scheduled Payment Date, on the date required
under Section 20.2(h) in connection with the Lessee's exercise of the
Remarketing Option and, with respect to any Property, on any date on which this
Master Lease shall terminate with respect to such Property.

         (b)      Neither the Lessee's inability or failure to take possession
of all or any portion of any Property when delivered by the Lessor, nor the
inability or failure of the Lessor to deliver all or any portion of any Property
to the Lessee on the Acquisition Date therefor, whether or not attributable to
any act or omission of the Lessee or any act or omission of the Lessor, or for
any other reason whatsoever, shall delay or otherwise affect the Lessee's
obligation to pay Rent for such Property in accordance with the terms of this
Master Lease.

         Section 3.2.      Payment of Rent. Rent shall be paid absolutely net to
each Person entitled thereto, so that this Master Lease shall yield to such
Person the full amount thereof, without setoff, deduction or reduction.

         Section 3.3.      Supplemental Rent. The Lessee shall pay to the Lessor
or any other Person entitled thereto any and all Supplemental Rent promptly as
the same shall become due and payable, and if the Lessee fails to pay any
Supplemental Rent, the Lessor and such other Persons shall have all rights,
powers and remedies provided for herein or by law or equity or otherwise in the
case of nonpayment of Basic Rent. The Lessee shall pay to the Lessor, as
Supplemental Rent, among other things, on demand, to the extent permitted by
applicable Requirements of Law, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due for
the period from the due date until the same shall be paid. The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent. Unless expressly provided otherwise in this Master Lease or in the
Participation Agreement, in the event of any failure on the part of the Lessee
to pay and discharge any Supplemental Rent as and when due, the Lessee shall
also promptly pay and discharge, to the extent incurred as a result of such
failure on the part of the Lessee, any fine, penalty, interest or cost which may
be assessed or added against any Participant by a third party for nonpayment or
late payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.

         Section 3.4.      Method of Payment. Each payment of Rent payable by
the Lessee to the Lessor under this Master Lease or any other Operative Document
shall be made by the Lessee to the Administrative Agent as assignee of the
Lessor under the Assignment of Lease and Rent (or, if all Loans and all other
amounts owing to the Lenders under the Loan Agreement and the other

                                      -3-


Lam Research Corporation                       Amended and Restated Master Lease

Operative Documents have been paid in full and all Commitments of the Lenders
have been permanently terminated, to the Lessor) prior to 2:00 p.m. (New York
City time) to the Account in immediately available funds consisting of lawful
currency of the United States of America on the date when such payment shall be
due.

                                   ARTICLE IV

                        QUIET ENJOYMENT; RIGHT TO INSPECT

         Section 4.1.      Quiet Enjoyment. Subject to the terms of each of the
Operative Documents, the Lessee shall peaceably and quietly have, hold and enjoy
each Property for the Lease Term, free of any claim or other action by the
Lessor or anyone claiming by, through or under the Lessor with respect to any
matters arising from and after the Acquisition Date. Such right of quiet
enjoyment is independent of, and shall not affect the rights of the Lessor or
any assignee thereof otherwise to initiate legal action to enforce, the
obligations of the Lessee under this Master Lease.

         Section 4.2.      Right to Inspect. During the Lease Term, the Lessee
shall upon reasonable notice (except that no notice shall be required if a Lease
Event of Default has occurred and is continuing), and from time to time, permit
the Administrative Agent, any Participant, and their respective authorized
representatives to inspect any Property subject to this Master Lease during
normal business hours, and the Lessee will, upon the request of the
Administrative Agent or any Participant, make available to such Person the books
and records of the Lessee relating to such Property; provided that all such
inspections shall be at the sole expense of the Administrative Agent or such
Participant, as the case may be, unless a Lease Event of Default shall have
occurred and is continuing, in which case such inspection shall be at the sole
expense of the Lessee.

                                    ARTICLE V

                                 NET LEASE, ETC.

         Section 5.1.      Net Lease. This Master Lease shall constitute a net
lease. Any present or future law to the contrary notwithstanding, this Master
Lease shall not terminate, nor shall the Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim or defense with respect
to the Rent, nor shall the obligations of the Lessee hereunder be affected
(except as expressly herein permitted and by performance of the obligations in
connection therewith) by reason of: (i) any defect in the condition,
merchantability, design, construction, quality or fitness for use of any
Property or any part thereof, or the failure of any Property to comply with all
Requirements of Law, including any inability to occupy or use any Property by
reason of such non-compliance; (ii) any damage to, removal, abandonment,
salvage, loss, contamination of or Release from, scrapping or destruction of or
any requisition or taking of any Property or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with the construction
on or any use of any Property or any part thereof including eviction; (iv) any
defect in title of or rights to any Property or any Lien on such title or rights
or on any

                                      -4-


Lam Research Corporation                       Amended and Restated Master Lease

Property; (v) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by the
Administrative Agent or any Participant; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to the Lessee, the Administrative Agent, any Participant or
any other Person, or any action taken with respect to this Master Lease by any
trustee or receiver of the Lessee, the Administrative Agent, any Participant or
any other Person, or by any court in any such proceeding; (vii) any claim that
the Lessee has or might have against any Person, including, without limitation,
the Administrative Agent, any Participant or any vendor, manufacturer,
contractor of or for any Property; (viii) any failure on the part of the Lessor
to perform or comply with any of the terms of this Master Lease, of any other
Operative Document or of any other agreement; (ix) any invalidity or
unenforceability or illegality or disaffirmance of this Master Lease against or
by the Lessee or any provision hereof or any of the other Operative Documents or
any provision of any thereof; (x) the impossibility or illegality of performance
by the Lessee, the Administrative Agent, any Participant or all of them; (xi)
any action by any court, administrative agency or other Governmental Authority;
or (xii) any other cause or circumstances whether similar or dissimilar to the
foregoing and whether or not the Lessee shall have notice or knowledge of any of
the foregoing. The Lessee's agreement in this Section 5.1 shall not affect any
claim, action or right the Lessee may have against the Lessor or any other
Participant. The parties intend that the obligations of the Lessee hereunder
shall be covenants and agreements that are separate and independent from any
obligations of the Lessor hereunder or under any other Operative Documents, and
the obligations of the Lessee shall continue unaffected unless such obligations
shall have been modified or terminated in accordance with an express provision
of this Master Lease.

         Section 5.2.      No Termination or Abatement. The Lessee shall remain
obligated under this Master Lease in accordance with its terms and shall not
take any action to terminate, rescind or avoid this Master Lease (except as
provided herein), notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding affecting any
Participant, or any action with respect to this Master Lease which may be taken
by any trustee, receiver or liquidator of any Participant or by any court with
respect to any Participant. The Lessee hereby waives, to the extent permitted by
law, all right (i) to terminate or surrender this Master Lease (except as
provided herein) or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
The Lessee shall remain obligated under this Master Lease in accordance with its
terms and the Lessee hereby waives, to the extent permitted by law, any and all
rights now or hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Master Lease. Notwithstanding
any such statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Master Lease and the Lease Supplements.

                                   ARTICLE VI

                            SUBLEASES AND ASSIGNMENTS

         Section 6.1.      Subletting. The Lessee may sublease a Property or any
portion thereof to any Person; provided, however, that: (a) no sublease or other
relinquishment of possession of

                                      -5-


Lam Research Corporation                       Amended and Restated Master Lease

any Property shall in any way discharge or diminish any of the Lessee's
obligations to the Lessor hereunder and the Lessee shall remain directly and
primarily liable under this Master Lease and each Lease Supplement; (b) each
sublease of such Property shall expressly be made subject to and subordinate to
this Master Lease and the related Lease Supplement and to the rights of the
Lessor hereunder and thereunder; (c) each sublease shall expressly provide for
the surrender of the Property or portion thereof by the applicable sublessee at
the election of the Administrative Agent or the Lessor (as applicable) after the
occurrence of a Lease Event of Default; (d) each sublease shall expressly
provide for termination prior to the Expiration Date unless the Lessee elects to
purchase all of the Properties pursuant to Section 18.1; and (e) the use or uses
under any sublease shall be such that they shall not impair the value or utility
of such Property, as certified by a Responsible Officer of the Lessee; provided
that such certification shall not be binding on the Lessor in the event the
Lessee elects the Remarketing Option.

         Section 6.2       Assignment. During the Lease Term, the Lessee may
assign to any Subsidiary or Affiliate of the Lessee at any time, in whole or in
part, any of its right, title or interest in, to or under the Lease or any
portion of any Property; provided that no such assignment shall in any way
discharge or diminish any of the Lessee's obligations to the Lessor hereunder
and the Lessee shall remain directly and primarily liable under this Master
Lease and each Lease Supplement. No such assignment shall be effective unless
(a) made pursuant to assignment and assumption documents in form and substance
satisfactory to the Lessor and the Lenders, (b) an opinion of counsel to the
assignee is delivered to the Lessor and the Lenders as to the due authorization,
execution and delivery, and the enforceability of such assignment and such other
matters as the Lessor and the Lenders may request, (c) the use or uses of any
such assignee shall be such that they do not impair the value or utility of such
Property, as certified by a Responsible Officer of the Lessee; provided that
such certification shall not be binding on the Lessor in the event the Lessee
elects the Remarketing Option, and (d) the Lessee or such assignee shall have
made all filings and taken all other actions necessary or desirable to preserve
and protect the rights and interests of the Lessor, the Administrative Agent and
the Lenders under the Operative Documents, all at the Lessee's sole cost and
expense. The Lessee shall notify the Lessor promptly, and in any event not less
than thirty (30) days prior to, the date of such assignment, and provide the
Lessor and the Lenders with the terms of such proposed assignment.

                                   ARTICLE VII

                             LESSEE ACKNOWLEDGMENTS

         Section 7.1.      Condition of the Property. THE LESSEE ACKNOWLEDGES
AND AGREES THAT ALTHOUGH THE LESSOR WILL OWN AND HOLD TITLE TO EACH PROPERTY,
THE LESSEE IS SOLELY RESPONSIBLE FOR SUCH PROPERTY AND ANY ALTERATIONS OR
MODIFICATIONS. THE LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING
EACH PROPERTY "AS-IS, WHERE IS, AND WITH ALL FAULTS" WITHOUT REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE ADMINISTRATIVE AGENT, THE
LESSOR OR ANY LENDER AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF
TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF
FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW

                                      -6-


Lam Research Corporation                       Amended and Restated Master Lease

AND (D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR
ON THE APPLICABLE ACQUISITION DATE. NEITHER THE ADMINISTRATIVE AGENT, NOR THE
LESSOR NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO
HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS
ATTRIBUTABLE TO SUCH PERSON), VALUE, SUITABILITY, USE, CONDITION, DESIGN,
OPERATION OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NEITHER THE ADMINISTRATIVE
AGENT, NOR THE LESSOR NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR
PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO SUCH PERSON)
OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
REQUIREMENT OF LAW.

         Section 7.2.      Risk of Loss. During the Lease Term the risk of loss
of or decrease in the enjoyment and beneficial use of each Property as a result
of the damage or destruction thereof by fire, the elements, casualties, thefts,
riots, wars or otherwise is assumed by the Lessee and the Lessor shall not in
any event be answerable or accountable therefor.

                                  ARTICLE VIII

                    POSSESSION AND USE OF EACH PROPERTY, ETC.

         Section 8.1.      Utility Charges. The Lessee shall pay or cause
to be paid all charges for electricity, power, gas, oil, water, telephone,
sanitary sewer service and all other rents and utilities used in or on each
Property during the Lease Term. The Lessee shall be entitled to receive any
credit or refund with respect to any utility charge paid by the Lessee and the
amount of any credit or refund received by the Lessor on account of any utility
charges paid by the Lessee, net of the costs and expenses reasonably incurred by
the Lessor in obtaining such credit or refund, shall be promptly paid over to
the Lessee.

         Section 8.2.      Possession and Use of each Property. The Lessee
covenants that each Property shall be used as an office facility or an assembly
and research and development facility, as applicable, and applying standards of
use no lower than the standards applied by the Lessee or its Affiliates for
other comparable properties owned or leased by the Lessee or its Affiliates. The
Lessee shall pay, or cause to be paid, all charges and costs required in
connection with the use of each Property as contemplated by this Master Lease
and each Lease Supplement. The Lessee shall not commit or permit any waste of
any Property or any part thereof.

         Section 8.3.      Compliance with Requirements of Law and Insurance
Requirements. Subject to the terms of Article XII relating to permitted
contests, the Lessee, at its sole cost and expense, shall (a) comply in all
respects with all Requirements of Law (including all Environmental Laws) and
Insurance Requirements relating to each Property, including the use,
construction, operation, maintenance, repair and restoration thereof and the
remarketing thereof pursuant to Article XX, whether or not compliance therewith
shall require structural or extraordinary changes in the Improvements or
interfere with the use and enjoyment of each

                                      -7-


Lam Research Corporation                       Amended and Restated Master Lease

Property and (b) procure, maintain and comply with all licenses, permits,
orders, approvals, consents and other authorizations required for the
construction, use, maintenance and operation of each Property and for the use,
operation, maintenance, repair and restoration of the Improvements.

                                   ARTICLE IX

                         MAINTENANCE AND REPAIR; RETURN

         Section 9.1.      Maintenance and Repair; Return. (a) The Lessee, at
its sole cost and expense, shall maintain each Property in as good condition as
when delivered to the Lessee hereunder (ordinary wear and tear excepted) and
make all necessary repairs thereto, of every kind and nature whatsoever, whether
ordinary or extraordinary or foreseen or unforeseen, in each case as required by
all Requirements of Law and Insurance Requirements and in no event applying
standards of maintenance lower than the standards applied by the Lessee in the
operation and maintenance of other comparable properties owned or leased by the
Lessee or its Affiliates.

         (b)      The Lessor shall not under any circumstances be required to
build any improvements on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property, make any
expenditure whatsoever in connection with this Master Lease or the applicable
Lease Supplement or maintain any Property in any way. The Lessee waives any
right to (i) require the Lessor to maintain, repair or rebuild all or any part
of any Property or (ii) make repairs at the expense of the Lessor pursuant to
any Requirement of Law, Insurance Requirement, contract, agreement or covenant,
condition or restriction in effect at any time during the Lease Term.

         (c)      The Lessee shall, upon the expiration or earlier termination
of this Master Lease with respect to each Property (other than as a result of
the Lessee's purchase of the Property from the Lessor as provided herein),
vacate and surrender such Property to the Lessor in the condition required by
this Master Lease.

         (d)      The Lessee hereby waives any and all rights it may have (i)
under Section 1941 of the California Civil Code, (ii) to make repairs at
Lessor's expense or to vacate the Property as set forth in Section 1942 of the
California Civil Code or (iii) any similar rights under any other Applicable
Law.

                                    ARTICLE X

                               MODIFICATIONS, ETC.

         Section 10.1.     Modifications, Substitutions and Replacement. During
the Lease Term, the Lessee, at its sole cost and expense, may at any time and
from time to time make alterations, renovations, improvements and additions to
such Property or any part thereof and substitutions and replacements therefor
(collectively, "Modifications"); provided, however, that:

                                      -8-


Lam Research Corporation                       Amended and Restated Master Lease

                  (a)      except for any Modification required to be made
         pursuant to a Requirement of Law (a "Required Modification"), no
         Modification shall be made if it would adversely affect the
         marketability, value, utility or useful life of such Property or any
         part thereof from that which existed immediately prior to such
         Modification;

                  (b)      the Modification shall be done in a good and
         workmanlike manner;

                  (c)      the Modification shall comply with all Insurance
         Requirements and all Requirements of Law (including all Environmental
         Laws) applicable to such Modification, including the obtaining of any
         necessary permits;

                  (d)      subject to the terms of Article XII relating to
         permitted contests, the Lessee shall pay all costs and expenses and
         shall discharge (or cause to be insured or bonded over) within thirty
         (30) days after the same shall be filed (or otherwise become effective)
         any Liens arising with respect to the Modification;

                  (e)      such Modifications shall comply with Sections 8.3 and
         9.1(a); and

                  (f)      the Lessee shall be required to obtain the prior
         written approval (which approval shall not be unreasonably withheld) of
         the Lessor and the Administrative Agent with respect to any structural
         alterations (other than Required Modifications) that shall cost in
         excess of 20% of the Property Cost of such Property.

         All Modifications shall remain part of the realty and shall be subject
to this Master Lease and the applicable Lease Supplement(s) and title thereto
shall immediately vest in the Lessor. So long as no Lease Event of Default has
occurred and is continuing, the Lessee may place upon any Property any trade
fixtures, machinery, equipment, inventory or other property belonging to the
Lessee or third parties and may remove the same at any time during the Lease
Term, subject, however, to the terms of Section 9.1(a); provided, however, that
any trade fixtures placed on a Property do not impair the marketability, value,
utility or useful life of such Property; provided, further, however, that the
Lessee shall keep and maintain at each Property and shall not remove from any
Property any Equipment (except for removal in connection with the maintenance,
repair or replacement of such Equipment).

         Section 10.2.     Notice to the Lessor and Administrative Agent. If the
Lessee reasonably expects the cost of any Modification to exceed 20% of the
Property Cost of the relevant Property, the Lessee shall deliver to the Lessor
and the Administrative Agent a brief written narrative of the work to be
performed in connection with such Modification prior to making such Modification
and an Officer's Certificate stating that such work when completed will not
impair the marketability, value, utility or useful life of the Property.

                                      -9-


Lam Research Corporation                       Amended and Restated Master Lease

                                   ARTICLE XI

                          DISCHARGE OF LIENS; EASEMENTS

         Section 11.1.     Discharge of Liens. (a) The Lessee agrees that except
as otherwise provided herein and subject to the terms of Article XII relating to
permitted contests, the Lessee shall not directly or indirectly create or allow
to remain, and shall promptly (and in any event within sixty (60) days after
notice thereof is received by the Lessee from any Person) discharge (or cause
the same to be insured or otherwise bonded over) at its sole cost and expense,
any Lien, defect, attachment, levy, title retention agreement or claim upon any
Property or any Lien, attachment, levy or claim with respect to any amounts held
by the Lessor or the Administrative Agent pursuant to this Master Lease as
collateral security for the Lessee's obligations or pending performance by the
Lessee, other than (i) Permitted Property Liens and (ii) Liens on machinery,
equipment, inventory, general intangibles and other personal property not
financed by the proceeds of the Loans or Lessor Amounts.

         (b)      Nothing contained in this Master Lease shall be construed as
constituting the consent or request of the Lessor, the Administrative Agent or
any Lender, expressed or implied, to or for the performance by any contractor,
mechanic, laborer, materialman, supplier or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to any Property or any part thereof. NOTICE IS HEREBY
GIVEN THAT NEITHER THE LESSOR NOR THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR
SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING ANY PROPERTY OR ANY PART THEREOF
THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE
LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN AND TO ANY PROPERTY.

         Section 11.2.     Grants and Releases of Easements; Lessor Waivers. So
long as no Lease Event of Default shall have occurred and be continuing and
subject to the provisions of Articles VII, IX and X and Section 8.3 hereof, the
Lessor hereby consents in each instance to the following actions by the Lessee,
in the name and stead of the Lessor, but at the Lessee's sole cost and expense:
(a) the granting of easements, licenses, rights-of-way and other rights and
privileges in the nature of easements reasonably necessary or desirable for the
use, repair, or maintenance of any Property or burdening any Property as herein
provided; (b) the release of existing easements or other rights in the nature of
easements which are for the benefit of any Property; (c) if required by
applicable Governmental Authority, the dedication or transfer of unimproved
portions of any Property for road, highway or other public purposes; (d) the
execution of amendments to any covenants and restrictions affecting any
Property; and (e) the execution or release of any similar agreement; provided,
however, that in each case (i) such grant, release, dedication, transfer or
amendment does not impair the value, utility or remaining useful life of any
Property, (ii) such grant, release, dedication, transfer or amendment is, in the
Lessee's judgment, reasonably necessary in connection with the use, maintenance,
alteration or improvement of any Property, (iii) such grant, release,
dedication, transfer or amendment will not cause any Property or any portion
thereof to fail to comply with the provisions of this Master Lease or any other
Operative Document or fail to comply in any respect with all Requirements of

                                      -10-


Lam Research Corporation                       Amended and Restated Master Lease

Law (including, without limitation, all applicable zoning, planning, building
and subdivision ordinances, all applicable restrictive covenants and all
applicable architectural approval requirements), (iv) all governmental consents
or approvals required prior to such grant, release, dedication, transfer,
annexation or amendment have been obtained and all filings required prior to
such action have been made, (v) the Lessee shall remain obligated under this
Master Lease and each of the Lease Supplements in accordance with their
respective terms, as though such grant, release, dedication, transfer or
amendment had not been effected, and (vi) the Lessee shall pay and perform any
obligations of the Lessor under such grant, release, dedication, transfer or
amendment. Without limiting the effectiveness of the foregoing, provided that no
Lease Event of Default shall have occurred and be continuing, the Lessor shall,
upon the request of the Lessee, and at the Lessee's sole cost and expense,
execute and deliver any instruments necessary or appropriate to confirm any such
grant, release, dedication, transfer, annexation or amendment to any Person
permitted under this Section 11.2, including landlord waivers with respect to
any of the foregoing.

                                   ARTICLE XII

                               PERMITTED CONTESTS

         Section 12.1.     Permitted Contests. If, to the extent and for so long
as (a) a test, challenge, appeal or proceeding for review of any Applicable Law
or any Lien, encumbrance, levy, attachment or encroachment relating to any
Property shall be prosecuted diligently and in good faith in appropriate
proceedings by the Lessee or (b) compliance with any Applicable Law shall have
been excused or exempted by a valid nonconforming use, variance permit, waiver,
extension or forbearance, the Lessee shall not be required to comply with such
Applicable Law or remove or discharge any Lien, encumbrance, levy, attachment or
encroachment but only if and so long as any such test, challenge, appeal,
proceeding, waiver, extension, forbearance or noncompliance shall not (in the
reasonable opinion of the Lessor, the Administrative Agent and the Lenders)
involve (A) any risk of criminal liability being imposed on the Lessor, the
Administrative Agent or any Lender for failure to comply therewith, (B) any risk
of (1) foreclosure, forfeiture or loss of any Property, or any part thereof or
(2) the nonpayment of Rent or (C) any substantial risk of (1) the creation of
any Lien (other than a Permitted Property Lien) on any part of any Property, (2)
civil liability being imposed on the Lessor, the Administrative Agent, any
Lender or any Property unless the Lessee shall have otherwise bonded or secured
such amounts in a manner satisfactory to the Lessor, the Administrative Agent
and the Lenders, as the case may be, or (3) enjoinment of, or interference with,
the use, possession or disposition of any Property in any respect.

         Neither the Lessor, the Administrative Agent nor any Lender shall be
required to join in any proceedings pursuant to this Section 12.1 unless a
provision of any Applicable Law requires that such proceedings be brought by or
in the name of such party; and in that event such party will join in the
proceedings or permit them or any part thereof to be brought in its name if and
so long as (i) the Lessee has not elected the Remarketing Option and (ii) the
Lessee pays all related expenses and indemnifies such party (in a manner
satisfactory to such party) with respect to such proceedings.

                                      -11-


Lam Research Corporation                       Amended and Restated Master Lease

                                  ARTICLE XIII

                                    INSURANCE

         Section 13.1.     Required Insurance. (a) Liability Insurance. During
the Lease Term for each Property, the Lessee shall procure and carry commercial
general liability insurance for claims for injuries or death sustained by
persons or damage to property while on such Property and such other public
liability coverages as are ordinarily procured by the Lessee or its Affiliates
who own or operate similar properties, but in any case shall provide liability
coverage of at least $50,000,000 per occurrence. Such insurance shall be on
terms and in amounts that are no less favorable than insurance maintained by the
Lessee or such Affiliates with respect to similar properties that they own or
lease. The policy shall also specifically provide that the policy shall be
considered primary insurance which shall apply to any loss or claim before any
contribution by any insurance which the Lessor, the Administrative Agent and any
Lender may have in force.

         (b)      Worker's Compensation Laws. The Lessee shall, in connection
with any Modifications and the operation of the Properties, comply with the
applicable workers' compensation laws.

         (c)      Hazard and Other Insurance. During the Lease Term for each
Property, the Lessee shall keep, or cause to be kept, each Property insured
against loss or damage by fire, windstorm, environmental risks and other risks
(and during any Modification, builders' all-risk insurance) on terms and in
amounts that are no less favorable than insurance covering other similar
properties owned or leased by the Lessee or its Affiliates; provided that the
Lessee shall also obtain (i) with respect to any Property located at a site that
shall have been assigned a seismic zone factor of 4 under the Uniform Building
Code published from time to time by the International Conference of Building
Officials, coverage for earthquake (provided such coverage is maintained by
owners of similar properties and in accordance with normal industry practice)
and (ii) with respect to any Property located within an area identified as a
special flood hazard area by the Federal Emergency Management Agency, coverage
for flood. The Lessor acknowledges that the Lessee does not currently maintain
earthquake insurance. Subject to the last sentence of this Section 13.1(c) and
the terms of Section 14.2, all insurance proceeds in respect of any loss or
occurrence for which the proceeds related thereto are (i) less than or equal to
$3,000,000, in the absence of the occurrence and continuance of a Lease Event of
Default, shall be adjusted by and paid to the Lessee for application toward the
reconstruction, repair or refurbishment of such Property, and (ii) greater than
$3,000,000 shall be adjusted by the Lessee and the Lessor working together to
jointly resolve such insurance claim (unless a Lease Event of Default has
occurred and is continuing, in which case such proceeds shall be adjusted solely
by the Lessor) and held by the Lessor for application in accordance with Article
XIV.

         (d)      Deductibles. During the Lease Term, the insurance required to
be obtained by the Lessee under this Section 13.1 may be subject to such
deductible amounts and self-insured retentions as is consistent with the
Lessee's or its Affiliates' practice for other properties similar to the
Properties owned or leased by the Lessee or its Affiliates; provided that such
deductible amounts and self-insured retentions shall not exceed $1,000,000 with
respect to the insurance required by Section 13.1(a) and $1,000,000 with respect
to the insurance required by Section

                                      -12-


Lam Research Corporation                       Amended and Restated Master Lease


13.1(c). Such insurance may be carried under blanket policies maintained by or
on behalf of the Lessee so long as such policies otherwise comply with the
provisions of this Section 13.1.

         Section 13.2.     Insurance Coverage. During the Lease Term for each
Property, the Lessee shall cause the insurance required to be maintained by the
Lessee under Section 13.1(a) or 13.1(c), to comply with the provisions of this
Section 13.2. All insurance required under Section 13.1 shall be at the sole
cost and expense of the Lessee.

         (a)      On each Acquisition Date, the Lessee shall furnish the Lessor
and the Administrative Agent with certificates showing the insurance required
under Section 13.1 to be in effect. Such certificates shall include a provision
for no less than thirty (30) days' advance written notice by the insurer to the
Lessor and the Administrative Agent in the event of cancellation or reduction of
such insurance.

         (b)      The Lessee agrees that the insurance policy or policies
required by Section 13.1(a) shall (i) name the Administrative Agent, the Lessor
and each Lender as additional insureds (including any insurance policy
maintained in connection with the construction of any Modifications) and (ii)
include an appropriate clause pursuant to which such policy shall provide that
it will not be invalidated should the Lessee waive, in writing, prior to a loss,
any or all rights of recovery against any party for losses covered by such
policy, and that the insurance in favor of the Lessor, the Administrative Agent
and the Lenders and their respective rights under and interests in such policies
shall not be invalidated or reduced by any act or omission (including breach of
warranty) or negligence of the Lessee or any other Person having any interest in
the Property. The Lessee hereby waives any and all such rights against the
Lessor, the Administrative Agent and the Lenders to the extent of payments made
under such policies. All insurance policies required by Section 13.1(c) shall
name the Administrative Agent as loss payee pursuant to a standard mortgagee
loss payee endorsement.

         (c)      All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise reasonably
appropriate considering the amount and type of insurance being provided by such
companies and which shall have a rating by A.M. Best's Key Rating Guide of not
less than "A" and a "Financial Performance Rating" of at least "VIII" and shall
be otherwise reasonably acceptable to the Lenders and the Lessor.

         (d)      The Lessee shall pay at its sole cost and expense as they
become due all premiums for the insurance required by this Article XIII, and
shall renew or replace each policy prior to the expiration date thereof. During
the Lease Term, the Lessee shall, at the time each of the Lessee's insurance
policies is renewed (but in no event less frequently than once each year),
deliver to the Lessor and the Administrative Agent certificates of insurance
evidencing that all insurance required by this Article XIII is being maintained
by the Lessee and is in effect. Such certificates shall include a provision for
no less than thirty (30) days' advance written notice by the insurer to the
Administrative Agent and the Lessor in the event of cancellation or any material
reduction of such insurance.

                                      -13-


Lam Research Corporation                       Amended and Restated Master Lease

                                   ARTICLE XIV

                CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS

         Section 14.1.     Risk of Loss, Damage or Destruction. At all times
during the Lease Term for each Property, the Lessee bears all risk of loss,
damage, theft, taking, destruction, confiscation, requisition or commandeering,
partial or complete, of or to such Property or any part thereof, however caused
or occasioned, such risk to be borne by the Lessee from the Acquisition Date for
such Property and continuing until such Property has been returned to the Lessor
in accordance with the provisions of this Master Lease or has been purchased by
the Lessee or another Person in accordance with the provisions of this Master
Lease. The Lessee agrees that no occurrence specified in the preceding sentence
shall impair, in whole or in part, any obligation of the Lessee under this
Master Lease, including the obligation to pay Rent.

         Section 14.2.     Casualty and Condemnation. (a) Insurance Proceeds and
Condemnation Awards. Subject to the provisions of Section 13.1 hereof and this
Article XIV, (x) if all or a portion of any Property is damaged or destroyed in
whole or in part by a Casualty during the Lease Term for such Property, any
insurance proceeds payable with respect to such Casualty shall be adjusted by
and paid directly to the Lessee, or if received by the Administrative Agent or
any Participant, shall be paid over to the Lessee for the reconstruction,
refurbishment and repair of the affected Property, and (y) if the use, access,
occupancy, easement rights or title to any Property or any part thereof is the
subject of a Condemnation during the Lease Term for such Property, then any
award or compensation relating thereto shall be adjusted by and paid to the
Lessee; provided, however, that, in each case, if (A) any Lease Default shall
have occurred and be continuing, (B) such Casualty or Condemnation is an Event
of Loss or (C) the amount of such proceeds, award or compensation equals or
exceeds $2,000,000, then such award, compensation or insurance proceeds shall be
adjusted jointly by the Lessee and the Lessor and paid directly to the
Administrative Agent (as assignee of the Lessor) or, if received by the Lessee,
shall be held in trust for the Participants and shall be paid over by the Lessee
to the Administrative Agent, to be distributed by the Administrative Agent as
follows: (x) in the case of a Lease Default, such amounts shall be distributed
in accordance with Section 7.6(b) of the Participation Agreement or held as
additional security for the Lessee's obligations, and (y) in the case of an
Event of Loss, such amounts shall, in the Lessor's and the Administrative
Agent's reasonable discretion, either (1) be paid to the Lessee for the repair
and restoration of such Property in accordance with Section 14.2(d) or (2) be
applied toward the payment of the applicable Property Cost of the affected
Property and related amounts on the applicable Partial Termination Date in
accordance with Section 15.1, and (z) in the case of proceeds, awards or
compensation equal to or in excess of $2,000,000, such amounts shall be paid to
and held by the Administrative Agent and, so long as no Lease Default shall have
occurred and be continuing, paid to the Lessee upon completion of the repair and
restoration of such Property.

         (b)      Participation in Proceedings. The Lessee may appear at its own
cost and expense in any proceeding or action to negotiate, prosecute, adjust or
appeal any claim for any award, compensation or insurance payment on account of
any Casualty or Condemnation with respect to any Property and shall pay all
expenses thereof. At the Lessee's reasonable request, and at the Lessee's sole
cost and expense, the Lessor and the Administrative Agent shall participate in
any

                                      -14-


Lam Research Corporation                       Amended and Restated Master Lease

such proceeding, action, negotiation, prosecution or adjustment. The Lessor and
the Lessee agree that this Master Lease shall control the rights of the Lessor
and the Lessee in and to any such award, compensation or insurance payment.

         (c)      Notices of Casualty or Condemnation. In the event of any
Casualty with respect to any Property for which the reasonable anticipated cost
of restoration equals or exceeds 5% of the Property Cost of such Property or of
an actual, pending or threatened Condemnation of any material interest in the
Property, the Lessor or the Lessee, as the case may be, shall give notice
thereof to the other and to the Lenders and the Administrative Agent promptly
after the receipt of such notice.

         (d)      Repair. If this Master Lease shall continue in full force and
effect with respect to any Property following a Casualty or Condemnation
affecting such Property which occurs at any time during the Lease Term thereof,
then the Lessee shall, so long as such repair may reasonably be expected to be
completed with due diligence prior to Expiration Date, at its sole cost and
expense (utilizing insurance proceeds and condemnation awards as contemplated
hereby; provided, however, that, if any award, compensation or insurance payment
is not sufficient to restore such Property in accordance with this clause (d),
the Lessee shall pay the shortfall), promptly and diligently repair any damage
to such Property caused by such Casualty or Condemnation in conformity with the
requirements of Article XIII and Sections 8.3, 9.1 and 10.1 using the Plans and
Specifications for such Property (as modified to give effect to any subsequent
Modifications, any Condemnation affecting such Property and all Applicable Laws)
so as to restore such Property to at least the same or similar condition,
operation, function and value as existed immediately prior to such Casualty or
Condemnation with such Modifications as the Lessee may elect in accordance with
Section 10.1. In such event, title to such Property shall remain with the Lessor
subject to the terms of this Master Lease. Upon completion of such restoration,
the Lessee shall furnish to the Lessor and the Administrative Agent a
Responsible Officer's Certificate confirming that such restoration has been
completed pursuant to this Master Lease.

         (e)      Obligations Continue. In no event shall a Casualty or
Condemnation affect the Lessee's obligations to pay Rent pursuant to Section 3.1
hereof or to perform its obligations and pay any amounts due on the Expiration
Date or pursuant to Articles XVIII and XX hereof.

         (f)      Excess Casualty/Condemnation Proceeds. Upon the earlier of (x)
the date on which all damage to a Property caused by a Casualty or Condemnation
shall have been repaired in accordance with Section 14.2(d) and (y) the date on
which the Property Cost of the applicable Property and all other amounts due and
payable under Section 15.1 shall have been paid to the Administrative Agent in
connection with an Event of Loss Purchase, any Net Proceeds received by the
Lessor, the Administrative Agent or any Lender in respect of such Casualty or
Condemnation, to the extent remaining after any application of such Net Proceeds
to the repair or restoration of the applicable Property or to the payment of the
Property Cost for such Property and such other amounts, as the case may be (any
such Net Proceeds remaining after such application, "Excess
Casualty/Condemnation Proceeds"), shall be promptly turned over to the Lessee.

                                      -15-


Lam Research Corporation                       Amended and Restated Master Lease

         Section 14.3.     Environmental Matters. Promptly upon the Lessee's
obtaining knowledge of the existence of an Environmental Violation with respect
to any Property the cost of remediation of which the Lessee determines in its
reasonable good faith judgment would reasonably be expected to exceed
$1,000,000, the Lessee shall notify the Lessor and the Administrative Agent in
writing of such Environmental Violation. If the Lessor elects not to terminate
this Master Lease with respect to such Property pursuant to Section 15.1, at the
Lessee's sole cost and expense, the Lessee shall promptly and diligently
commence any response, clean up, remedial or other action necessary to remove,
clean up or remediate any such Environmental Violation in accordance with the
terms of Section 8.3. The Lessee shall, upon completion of remedial action by
the Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to the Lessor a report describing the Environmental Violation and the
actions taken by the Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in compliance in all respects with applicable Environmental
Laws. Each such Environmental Violation shall be remedied prior to the
Expiration Date unless the relevant Property has been purchased by the Lessee in
accordance with Section 15.1, 18.1 or 18.2. Nothing in this Article XIV shall
reduce or limit the Lessee's obligations under Section 13.1, 13.2 or 13.3 of the
Participation Agreement.

         Section 14.4.     Notice of Environmental Matters. Promptly, but in any
event within thirty (30) days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor and the Administrative Agent
written notice of any notice of any pending or threatened claim, action or
proceeding involving any Environmental Laws or any Release on or in connection
with any Property. All such notices shall describe in reasonable detail the
nature of the claim, action or proceeding and the Lessee's proposed response
thereto. In addition, the Lessee shall provide to the Lessor and the
Administrative Agent, within thirty (30) days of receipt, copies of all written
communications with any Governmental Authority relating to any Environmental
Violation in connection with any Property. The Lessee shall also promptly
provide such detailed reports of any such environmental claims as may reasonably
be requested by any Participant. In the event that the Lessor receives written
notice of any pending or threatened claim, action or proceeding involving any
Environmental Laws or any Release on or in connection with any Property, the
Lessor shall promptly give notice thereof to the Lessee.

                                   ARTICLE XV

                              TERMINATION OF LEASE

         Section 15.1.     Partial Termination Upon Certain Events. If, with
respect to any Property (any such Property, an "Affected Property"): (a) an
Event of Loss occurs or (b) an Environmental Violation occurs or is discovered
and the cost of remediation of which the Lessee determines in its reasonable
good faith judgment would reasonably be expected to exceed $5,000,000 and in
either case the Lessor (at the direction of the Required Participants) shall
have given fifteen (15) Business Days' prior written notice (a "Partial
Termination Notice") to the Lessee that, as a consequence of such event, (x) the
Lease Supplement relating to such Property is to be terminated and (y) this
Master Lease is to be terminated with respect to such Property, then the Lessee
shall on the next occurring Scheduled Payment Date (but in any event not later

                                      -16-


Lam Research Corporation                       Amended and Restated Master Lease

than the Expiration Date), purchase the interest of the Lessor in the Affected
Property by paying to the Administrative Agent (as assignee of the Lessor) an
amount equal to the sum of (x) the Property Cost of the Affected Property on
such date plus (y) all accrued and unpaid Basic Rent due and owing on such date
plus (z) all Supplemental Rent due and owing on such date, and the Lessor shall
transfer to the Lessee on such date of payment all of the interest of the Lessor
in the Affected Property pursuant to the procedures set forth in Section 15.2
hereof.

         Section 15.2.     Partial Termination Procedures. On the date of the
payment by the Lessee of all amounts required to be paid under Section 15.1, in
accordance with the procedures set forth in Section 15.1 (such date, the
"Partial Termination Date"), this Master Lease shall terminate with respect to
such Affected Property. The Lessor shall take the following actions in respect
of the applicable Affected Property upon the Administrative Agent's receipt of
all amounts due with respect to such Affected Property and all other amounts
then due in accordance with Section 15.1:

                  (a)      the Lessor shall execute and deliver to the Lessee
         (or to the Lessee's designee) at the Lessee's cost and expense (which
         expenses include, without limitation, the payment of any transfer
         taxes): (i) a deed with respect to the Affected Property containing
         representations and warranties regarding the absence of Lessor Liens
         attributable to the Lessor (but no other representations or
         warranties), (ii) a bill of sale with respect to the interest of the
         Lessor in any items of personalty or Equipment on such Affected
         Property, containing representations and warranties regarding the
         absence of Lessor Liens attributable to the Lessor (but no other
         representations or warranties), and (iii) an assignment of any and all
         other interests of the Lessor in such Affected Property not otherwise
         conveyed in such deed or bill of sale (which shall include an
         assignment of all of the right, title and interest of the Lessor in and
         to any Excess Casualty/Condemnation Proceeds), in each case in
         recordable form and otherwise in conformity with local custom to the
         extent consistent with the foregoing scope of the Lessor's
         representations and warranties;

                  (b)      such Affected Property shall be conveyed to the
         Lessee (or to the Lessee's designee) "AS IS" and in its then present
         physical condition; and

                  (c)      at the request of the Lessee, Net Proceeds with
         respect to such Affected Property shall be applied against amounts due
         hereunder, and the Lessor shall convey to the Lessee any Excess
         Casualty/Condemnation Proceeds with respect to the Affected Property.

                                   ARTICLE XVI

                                EVENTS OF DEFAULT

         Section 16.1.     Lease Events of Default. The occurrence of any one or
more of the following events (whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order

                                      -17-


Lam Research Corporation                       Amended and Restated Master Lease

of any court or any order, rule or regulation of any administrative or
governmental body) shall constitute a "Lease Event of Default":

                  (a)      (i) the Lessee shall fail to make payment of any
         Basic Rent upon the same becoming due and payable and such failure
         shall continue unremedied for a period of three (3) days or (ii) the
         Lessee shall fail to make payment upon the same becoming due and
         payable of the Lease Balance, Purchase Option Price, Property Balance,
         Property Cost or Maximum Recourse Amount or any amounts payable in
         conjunction with the payment of any of the foregoing including, without
         limitation, amounts due pursuant to Sections 15.1, 15.2, 18.1, 18.2,
         18.3 or 20.2 hereof; or

                  (b)      the Lessee shall fail to make payment of any
         Supplemental Rent (other than as specified in clause (a) above) when
         due and payable within five (5) days after receipt of notice thereof
         from the party to whom the Lessee is obligated to pay such Supplemental
         Rent; or

                  (c)      any insurance required to be maintained by the Lessee
         pursuant to Article XIII of this Master Lease shall fail to be in
         effect or the Lessee defaults in the compliance with Sections 10.1(i),
         (j), (k) or (l) of the Participation Agreement; or

                  (d)      the Lessee shall fail to observe or perform any term,
         covenant or condition applicable to it under any Operative Document to
         which it is a party (other than those described in Section 16.1(a),
         (b), or (c) hereof) and such failure shall not be remedied within
         thirty (30) days after notice thereof has been given to the Lessee;
         provided, that, in the event that such remedy cannot reasonably be
         completed within such thirty (30) day period, then Lessee shall have
         such additional time as shall be reasonably necessary, so long as
         Lessee commences such remedy within such thirty (30) day period and
         diligently thereafter prosecutes the same to completion, provided,
         further, in no event shall such period exceed ninety (90) days after
         such notice; or

                  (e)      the Lessee shall fail to observe or perform any term,
         covenant or condition applicable to it under Article XX of this Master
         Lease after giving written notice to the Lessor and the Administrative
         Agent of the Lessee's exercise of the Remarketing Option; or

                  (f)      any representation or warranty made or expressly
         deemed made by the Lessee in any Operative Document to which it is a
         party or which is contained in any certificate, document or financial
         or other statement furnished at any time under or in connection with
         any Operative Document shall prove to have been incorrect, false or
         misleading in any material respect on or as of the date made or
         expressly deemed made; or

                  (g)      a "Default" or failure of the Lessee or any
         Subsidiary of the Lessee to pay when due Indebtedness or Off-Balance
         Sheet Obligations in an aggregate amount greater than $15,000,000 (or
         the Dollar Amount of Indebtedness or Off-Balance Sheet Obligations
         denominated in a currency other than Dollars); or the default by the
         Lessee or

                                      -18-


Lam Research Corporation                       Amended and Restated Master Lease

         any Subsidiary of the Lessee in the performance of any term, provision
         or condition contained in any agreement under which any Indebtedness or
         Off-Balance Sheet Obligations in an aggregate amount greater than
         $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet
         Obligations denominated in a currency other than Dollars) was created
         or is governed, the effect of which is to cause, or to permit the
         holder or holders of any Indebtedness or Off-Balance Sheet Obligations
         to cause, Indebtedness or Off-Balance Sheet Obligations in an aggregate
         amount greater than $15,000,000 (or the Dollar Amount of Indebtedness
         or Off-Balance Sheet Obligations denominated in a currency other than
         Dollars) to become due prior to its stated maturity; or Indebtedness or
         Off-Balance Sheet Obligations in an aggregate amount greater than
         $15,000,000 (or the Dollar Amount of Indebtedness or Off-Balance Sheet
         Obligations denominated in a currency other than Dollars) shall be
         declared to be due and payable or required to be prepaid (other than by
         a regularly scheduled payment) prior to the stated maturity thereof; or

                  (h)      the Lessee or any Material Subsidiary shall (i) have
         an order for relief entered with respect to it under the Bankruptcy
         Code or any other bankruptcy, insolvency or other similar law as now or
         hereafter in effect, (ii) make an assignment for the benefit of
         creditors, (iii) fail to pay, or admit in writing its inability to pay,
         its debts generally as they become due, (iv) apply for, seek, consent
         to, or acquiesce in the appointment of a receiver, custodian, trustee,
         examiner, liquidator or similar official for it or any substantial
         portion of its Property, (v) institute any proceeding seeking an order
         for relief under the Bankruptcy Code or any other bankruptcy,
         insolvency or other similar law as now or hereafter in effect or
         seeking to adjudicate it as bankrupt or insolvent, or seeking
         dissolution, winding up, liquidation, reorganization, arrangement,
         adjustment or composition of it or its debts under the Bankruptcy Code
         or any other law relating to bankruptcy, insolvency or reorganization
         or relief of debtors or fail to file an answer or other pleading
         denying the material allegations of any such proceeding filed against
         it, (vi) take any corporate action to authorize or effect any of the
         foregoing actions or (vii) fail to contest in good faith any
         appointment or proceeding described in Section 16.1(i) below; or

                  (i)      without the application, approval or consent of the
         Lessee or any Material Subsidiary, a receiver, trustee, examiner,
         liquidator or similar official shall be appointed for the Lessee or any
         Material Subsidiary or any substantial portion of the Property of any
         such Person, or a proceeding described in Section 16.1(h)(v) shall be
         instituted against the Lessee or any Material Subsidiary and such
         appointment continues undischarged or such proceeding continues
         undismissed or unstayed for a period of sixty (60) consecutive days; or

                  (j)      the Lessee or any Subsidiary of the Lessee shall fail
         within sixty (60) days to pay, bond or otherwise discharge any judgment
         or order for the payment of money in excess of $15,000,000 which is not
         stayed on appeal or otherwise being appropriately contested in good
         faith; or

                                      -19-


Lam Research Corporation                       Amended and Restated Master Lease

                  (k)      the Lessee or any other member of the Controlled
         Group shall fail to pay when due any amount or amounts which it shall
         have become liable to pay to the PBGC or to any Plan, or any notice of
         intent to terminate a Plan having aggregate Unfunded Vested Liabilities
         in excess of $5,000,000 shall be filed by a member of the Controlled
         Group and/or any Plan administrator, or the PBGC shall institute
         proceedings under Title IV of ERISA to terminate, to impose liability
         (other than for premiums under Section 4007 of ERISA) in respect of, or
         to cause a trustee to be appointed to administer any such Plan, or a
         condition shall exist which would entitle the PBGC to obtain a decree
         adjudicating that any such Plan must be terminated; or

                  (l)      any Operative Document to which the Lessee is a party
         or any Lien granted by the Lessee under any Operative Document shall,
         in whole or in part, terminate, cease to be effective against, or
         (other than as expressly provided therein) cease to be the legal,
         valid, binding and enforceable obligation of the Lessee other than as
         permitted under, or pursuant to the terms of, or in connection with a
         transaction permitted by, any Operative Document; or

                  (m)      the Lessee shall directly or indirectly contest the
         effectiveness, validity, binding nature or enforceability of any
         Operative Document or any Lien granted under any Operative Document; or
         any Operative Document shall cease to be a legal, valid and binding
         obligation of the Lessee or cease to be in full force and effect.

         Section 16.2.     Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter, the Lessor may, so long as such Lease Event
of Default is continuing, do one or more of the following (and in such order) as
the Lessor in its sole discretion shall determine, without limiting any other
right or remedy the Lessor may have on account of such Lease Event of Default
(including, without limitation, the obligation of the Lessee to purchase all of
the Properties as set forth in Section 18.3):

                  (a)      The Lessor may (i) declare the entire outstanding
         Lease Balance to be due and payable together with accrued unpaid Rent
         and any other amounts payable under the Operative Documents, (ii)
         declare the Commitments to be terminated, whereupon the same shall be
         of no further force or effect; provided, however, that in the event of
         an actual or deemed entry of an order for relief with respect to the
         Lessee or any of its Subsidiaries under the Bankruptcy Code, (A) the
         obligation of each Participant to make Advances shall automatically be
         terminated and (B) the Advances, all interest and Yield thereon and all
         other amounts payable under the Operative Documents shall automatically
         become and be due and payable, without presentment, demand, protest or
         any notice of any kind, all of which are hereby expressly waived by the
         Lessee or (iii) make demand upon the Lessee;

                  (b)      The Lessor may, by notice to the Lessee, rescind or
         terminate this Master Lease as of the date specified in such notice;
         provided, however, (i) no reletting, reentry or taking of possession of
         any Property (or any portion thereof) by the Lessor (or its agents)
         will be construed as an election on the Lessor's part to terminate this
         Master Lease unless a written notice of such intention is given to the
         Lessee, (ii) notwithstanding

                                      -20-


Lam Research Corporation                       Amended and Restated Master Lease

         any reletting, reentry or taking of possession, the Lessor may at any
         time thereafter elect to terminate this Master Lease for a continuing
         Lease Event of Default and (iii) no act or thing done by the Lessor or
         any of its agents, representatives or employees and no agreement
         accepting a surrender of any Property shall be valid unless the same be
         made in writing and executed by the Lessor;

                  (c)      The Lessor may (i) demand that the Lessee, and the
         Lessee shall upon the written demand of the Lessor, return all of the
         Properties promptly to the Lessor in the manner and condition required
         by, and otherwise in accordance with all of the provisions of, Articles
         VII and IX and Section 8.3 hereof as if the Properties were being
         returned at the end of the Lease Term, and the Lessor shall not be
         liable for the reimbursement of the Lessee for any costs and expenses
         incurred by the Lessee in connection therewith, and (ii) without
         prejudice to any other remedy which the Lessor may have for possession
         of the Properties, and to the extent and in the manner permitted by
         Applicable Law, enter upon the Property and take immediate possession
         of (to the exclusion of the Lessee) the Properties or any part thereof
         and expel or remove the Lessee and any other Person who may be
         occupying any Property, by summary proceedings or otherwise, all
         without liability to the Lessor for or by reason of such entry or
         taking of possession, whether for the restoration of damage to property
         caused by such taking or otherwise and, in addition to the other
         damages of the Lessor, the Lessee shall be responsible for all costs
         and expenses incurred by the Lessor, the Administrative Agent and/or
         the Lenders in connection with any reletting, including, without
         limitation, reasonable brokers' fees and all costs of any alterations
         or repairs required to be made by the Lessor so that the Properties
         achieve the standard of condition required by this Master Lease;

                  (d)      As more fully set forth in Section 16.4 hereof and in
         each Lease Supplement (and consistent with the intent of the parties as
         detailed in Article XXV hereof), the Lessor may exercise all remedies
         available to a mortgagee, secured party, beneficiary or trustee under
         law or equity, including, to the extent permitted by law, the right to
         sell all or any part of the Properties at public or private sale, as
         the Lessor may determine;

                  (e)      The Lessor may, at its option, elect not to terminate
         this Master Lease and continue to collect all Basic Rent, Supplemental
         Rent, and all other amounts due to the Lessor (together with all costs
         of collection) and enforce the Lessee's obligations under this Master
         Lease as and when the same become due, or are to be performed, and at
         the option of the Lessor, upon any abandonment of any Property by the
         Lessee or re-entry of same by the Lessor, the Lessor may, in its sole
         and absolute discretion, elect not to terminate this Master Lease and
         may make the necessary repairs in order to relet any Property, and
         relet such Property or any part thereof for such term or terms (which
         may be for a term extending beyond the Lease Term of this Master Lease)
         and at such rental or rentals and upon such other terms and conditions
         as the Lessor in its reasonable discretion may deem advisable; and upon
         each such reletting, all rentals actually received by the Lessor from
         such reletting shall be applied to the Lessee's obligations hereunder
         and under the other Operative Documents in the manner provided in
         Section 7.6(a) or (c), as applicable, of the Participation Agreement.
         If such rentals received from such reletting

                                      -21-


Lam Research Corporation                       Amended and Restated Master Lease

         during any period are less than the Rent to be paid during that period
         by the Lessee hereunder, the Lessee shall pay any deficiency, as
         calculated by the Lessor, to the Administrative Agent on the next
         Scheduled Payment Date;

                  (f)      Unless all of the Properties have been sold in their
         entirety, the Lessor may, whether or not the Lessor shall have
         exercised or shall thereafter at any time exercise any of its rights
         under clause (c), (d) or (e) of this Section 16.2 with respect to any
         or all of the Properties or any portions thereof, demand, by written
         notice to the Lessee specifying a date not earlier than twenty (20)
         days after the date of such notice, that the Lessee purchase, on the
         date specified in such notice, all of the unsold Properties in
         accordance with the provisions of Article XXI and Section 18.2;

                  (g)      The Lessor may exercise any other right or remedy
         that may be available to it under Applicable Law, or proceed by
         appropriate court action (legal or equitable) to enforce the terms
         hereof or to recover damages for the breach hereof. Separate suits may
         be brought to collect any such damages for any period(s), and such
         suits shall not in any manner prejudice the Lessor's rights to collect
         any such damages for any subsequent period(s), or the Lessor may defer
         any such suit until after the expiration of the Lease Term, in which
         event such suit shall be deemed not to have accrued until the
         expiration of the Lease Term;

                  (h)      The Lessor may retain and apply against the Lease
         Balance all sums which the Lessor would, absent such Lease Event of
         Default, be required to pay to, or turn over to, the Lessee pursuant to
         the terms of this Master Lease; or

                  (i)      The Lessor, to the extent permitted by Applicable
         Law, as a matter of right and without notice to the Lessee, shall have
         the right to apply to any court having jurisdiction to appoint a
         receiver or receivers of any part of each Property, and the Lessee
         hereby irrevocably consents to any such appointment. Any such receivers
         shall have all of the usual powers and duties of receivers in like or
         similar cases and all of the powers and duties of the Lessor in case of
         entry, and shall continue as such and exercise such powers until the
         date of confirmation of the sale of the applicable Property unless such
         receivership is sooner terminated.

         The Lessor shall be entitled to enforce payment of the indebtedness and
performance of the obligations secured hereby and to exercise all rights and
powers under this instrument or under any of the other Operative Documents or
other agreement or any laws now or hereafter in force, notwithstanding some or
all of the obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, deed of trust, security agreement, pledge, lien, assignment
or otherwise. Neither the acceptance of this instrument nor its enforcement
shall prejudice or in any manner affect the Lessor's right to realize upon or
enforce any other security now or hereafter held by the Lessor, it being agreed
that the Lessor shall be entitled to enforce this instrument and any other
security now or hereafter held by the Lessor in such order and manner as the
Lessor may determine in its absolute discretion. No remedy herein conferred upon
or reserved to the Lessor is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other

                                      -22-


Lam Research Corporation                       Amended and Restated Master Lease

remedy given hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Operative Documents to the
Lessor or to which it may otherwise be entitled, may be exercised, concurrently
or independently, from time to time and as often as may be deemed expedient by
the Lessor. In no event shall the Lessor, in the exercise of the remedies
provided in this instrument (including, without limitation, in connection with
the assignment of rents to the Lessor, or the appointment of a receiver and the
entry of such receiver onto all or any part of the Properties), be deemed a
"mortgagee in possession," and the Lessor shall not in any way be made liable
for any act, either of commission or omission, in connection with the exercise
of such remedies.

         If requested by the Lessor in connection with the exercise of its
remedies pursuant to this Section 16.2, the Lessee hereby agrees to enter into
an operating agreement with respect to the Properties in connection therewith to
serve as the operator of the Properties on market terms established in good
faith and reasonably acceptable to the Lessor.

         Section 16.3.     Waiver of Certain Rights. (a) To the maximum extent
permitted by law, the Lessee hereby waives the benefit of any appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale of any Property
or any interest therein and (b) if this Master Lease shall be terminated
pursuant to Section 16.2, the Lessee waives, to the fullest extent permitted by
law, (i) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (ii) any right of redemption, re-entry or
repossession; (iii) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (iv) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XVI.

         Section 16.4.     Deed of Trust Remedies. Without limiting any other
remedies set forth in this Master Lease, and also, without limiting the
generality of Article XXV hereof, the Lessor may proceed by a suit or suits in
equity or at law, whether for a foreclosure hereunder or under the Lease
Supplements, or (to the extent permitted by law) for the sale of each Property,
pursuant to a power of sale, or against the Lessee on a recourse basis for the
Lease Balance, or for the specific performance of any covenant or agreement
contained herein or in aid of the execution of any power granted herein, or for
the appointment of a receiver pending any foreclosure hereunder (or under the
Lease Supplements) or the sale of any Property, or for the enforcement of any
other appropriate legal or equitable remedy. The Lessor shall have all rights
available to a beneficiary under a deed of trust or a secured party under the
laws of the state where the relevant Property is located, including, without
limitation, all rights granted under the specific statutes referenced in each
Lease Supplement, if any (each such statute, as amended, is hereinafter referred
to as a "Mortgage Foreclosure Act"). In the event that any provisions of this
Master Lease shall be inconsistent with any Mortgage Foreclosure Act, the
provisions of such Mortgage Foreclosure Act shall take precedence over such
provision of this Master Lease, but shall not invalidate or render unenforceable
any other provision of this Master Lease that can be construed in a manner
consistent with such Mortgage Foreclosure Act. If any provision of this Master
Lease shall grant the Lessor any rights or remedies upon default of the Lessee
which are more limited than the rights that would otherwise be vested in the
Lessor under such Mortgage Foreclosure Act in the absence of such provision, the
Lessor shall be vested with the rights

                                      -23-


Lam Research Corporation                       Amended and Restated Master Lease

granted in such Mortgage Foreclosure Act to the full extent permitted by law.
The Lessee agrees that the agreements of the Lessee herein contained shall be
specifically enforceable by injunction or any other appropriate equitable remedy
and that for the purpose of any suit brought under this subparagraph, the Lessee
hereby waives, to the fullest extent permitted by law, the defense of laches and
any applicable statute of limitations. In the event of foreclosure, the Lessee
authorizes and empowers the Lessor to effect insurance upon the Properties in
amounts aforesaid for a period covering the time of redemption from foreclosure
sale provided by law, and if necessary therefor, to cancel any or all existing
insurance policies required to be maintained under this Master Lease.

         Section 16.5.     Excess Proceeds; Return of Properties. If, pursuant
to the exercise by the Lessor of its remedies pursuant to Section 16.2 or 16.4,
the Lessor shall have received an amount equal to the Lease Balance, then the
Lessor shall promptly remit to the Lessee any excess amounts received by the
Lessor and, at the sole cost and expense of the Lessee, transfer to the Lessee
(or its designee) all of the Lessor's remaining right, title and interest (if
any) in the Properties in accordance with Section 21.1.

                                  ARTICLE XVII

                             LESSOR'S RIGHT TO CURE

         Section 17.1.     The Lessor's Right to Cure the Lessee's Lease
Defaults. The Lessor, without waiving or releasing any obligation or Lease Event
of Default, may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of the Lessee,
including the failure by the Lessee to maintain the insurance required by
Article XIII, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of the Lessee, enter upon
any Property for such purpose and take all such action thereon as may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
the Lessee. All reasonable out-of-pocket costs and expenses so incurred
(including fees and expenses of counsel), together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid by the
Lessor, shall be paid by the Lessee to the Lessor as Supplemental Rent.

                                  ARTICLE XVIII

                               PURCHASE PROVISIONS

         Section 18.1.     Purchase of Properties. Subject to the conditions
contained herein, and without limitation of the Lessee's purchase obligation
pursuant to Section 18.2 or 18.3, the Lessee shall have the irrevocable option
on any Scheduled Payment Date during the Lease Term to purchase all, but not
less than all (except as set forth in Section 15.14 of the Participation
Agreement), of the Properties subject to this Master Lease (the "Purchase
Option") at a price equal to the aggregate Lease Balance (or, in the case of the
Partial Purchase Option under Section 15.14 of the Participation Agreement, the
Property Balance with respect to any such Property) on the date of such purchase
(as the case may be, the "Purchase Option Price"). The

                                      -24-


Lam Research Corporation                       Amended and Restated Master Lease

Lessee's exercise of its option pursuant to this Section 18.1 shall be subject
to the following conditions:

                  (i)      the Lessee shall have delivered a Purchase Notice to
         the Lessor and the Administrative Agent not less than thirty (30) days
         prior to such purchase, specifying the date of such purchase (and, if
         the purchase is for less than all of the Properties, specify the
         Property subject to such purchase); and

                  (ii)     the Lessee shall not have delivered (or, if
         delivered, shall not have failed to rescind) a written notice of the
         Lessee's exercise of the Remarketing Option pursuant to Section
         20.1(a).

         If the Lessee exercises its option pursuant to this Section 18.1 then,
upon the Administrative Agent's receipt of all amounts due in connection
therewith, the Lessor shall transfer to the Lessee or its designees all of the
Lessor's right, title and interest in and to the Properties in accordance with
the procedures set forth in Section 21.1(a), such transfer to be effective as of
the date specified in the Purchase Notice. The Lessee may designate, in a notice
given to the Lessor and the Administrative Agent not less than ten (10) Business
Days prior to the closing of such purchase (time being of the essence), the
transferee or transferees to whom the conveyance shall be made (if other than to
the Lessee), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee; provided, however, that
such designation of a transferee or transferees shall not cause the Lessee to be
released, fully or partially, from any of its obligations under this Master
Lease, including, without limitation, the obligation to pay to the Lessor the
Lease Balance on the date specified in the Purchase Notice.

         Section 18.2.     Expiration Date Purchase Obligation. Unless (a) the
Lessee shall have properly exercised its option pursuant to Section 18.1 and
purchased all of the Properties pursuant thereto, or (b) the Lessee shall have
properly exercised the Remarketing Option and shall have fulfilled all of the
requirements of Article XX, then, subject to the terms, conditions and
provisions set forth in this Article, and in accordance with the terms of
Section 21.1(a), the Lessee (or its designee) shall purchase from the Lessor,
and the Lessor shall convey to the Lessee (or its designee), on the Expiration
Date all of the interest of the Lessor in all of the Properties for an amount
equal to the Lease Balance. The Lessee may designate, in a notice given to the
Lessor and the Administrative Agent not less than ten (10) Business Days prior
to the closing of such purchase (time being of the essence), the transferee or
transferees to whom the conveyance shall be made (if other than to the Lessee),
in which case such conveyance shall (subject to the terms and conditions set
forth herein) be made to such designee; provided, however, that such designation
of a transferee or transferees shall not cause the Lessee to be released, fully
or partially, from any of its obligations under this Master Lease, including,
without limitation, the obligation to pay the Lessor the Lease Balance on such
Expiration Date.

         Section 18.3.     Acceleration of Purchase Obligation. The Lessee shall
be obligated to purchase for an amount equal to the Lease Balance all of the
interest of the Lessor in all of the Properties (notwithstanding any prior
election to exercise its Purchase Option pursuant to Section 18.1) automatically
and without notice upon the occurrence of any Lease Event of

                                      -25-


Lam Research Corporation                       Amended and Restated Master Lease

Default described in clause (i) of Section 16.1. Any purchase under this Section
18.3 shall be in accordance with the procedures set forth in Section 21.1(a).

         Section 18.4.     Failure to Elect Options. IN THE EVENT THE LESSEE
FAILS TO ELECT AN OPTION WITH RESPECT TO A PROPERTY UNDER SECTION 18.1 OR 20.1
AT LEAST 180 DAYS PRIOR TO THE END OF THE LEASE TERM THEN IN EFFECT, THE LESSEE
WILL BE DEEMED TO HAVE ELECTED TO PURCHASE SUCH PROPERTY PURSUANT TO SECTION
18.2.

                                   ARTICLE XIX

                             [INTENTIONALLY OMITTED]

                                   ARTICLE XX

                               REMARKETING OPTION

         Section 20.1.     Option to Remarket. Subject to the fulfillment of
each of the conditions set forth in this Section 20.1 and Section 20.2
(collectively, the "Return Conditions"), the Lessee shall have the option (the
"Remarketing Option") to remarket and complete the sale of all, but not less
than all, of the Properties for the Lessor.

         The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions and the provisions of Section 20.2 as of the dates set
forth below:

         (a)      On the date not later than one hundred eighty (180) days prior
to the Expiration Date, the Lessee shall give to the Lessor and the
Administrative Agent written notice of the Lessee's exercise of the Remarketing
Option.

         (b)      Not later than one hundred and twenty (120) days prior to the
Expiration Date, the Lessee shall deliver to the Lessor an Environmental Audit
for each Property. Each Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's discretion and
shall contain conclusions satisfactory to the Lessor as to the environmental
status of such Property. If any such Environmental Audit indicates any
exceptions calling for a Phase Two environmental assessment, the Lessee shall
have also delivered prior to the Expiration Date a Phase Two environmental
assessment by such environmental consultant and a written statement by such
environmental consultant indicating that all such exceptions have been remedied
in compliance with Applicable Law.

         (c)      On the date of the Lessee's notice to the Lessor of the
Lessee's exercise of the Remarketing Option, no Lease Event of Default or Lease
Default shall exist, and, thereafter, no Lease Event of Default or Lease Default
shall occur.

                                      -26-


Lam Research Corporation                       Amended and Restated Master Lease

         (d)      The Lessee shall have completed all Modifications, restoration
and rebuilding of each Property pursuant to Sections 10.1 and 14.2 (as the case
may be) and shall have fulfilled all of the conditions and requirements in
connection therewith pursuant to such Sections, in each case prior to the date
on which the Lessor receives the Lessee's notice of the Lessee's intention to
exercise the Remarketing Option (time being of the essence), regardless of
whether the same shall be within the Lessee's control. The Lessee shall have
also paid the cost of all Modifications commenced prior to the Expiration Date.
The Lessee shall not have been excused pursuant to Section 12.1 from complying
with any Applicable Law that involved the extension of the ultimate imposition
of such Applicable Law beyond the Expiration Date. Any Permitted Property Liens
(other than Lessor Liens) on each Property that were contested by the Lessee
shall have been removed and the Lessor shall have received evidence satisfactory
to it that all Liens (other than Lessor Liens and uncontested Permitted Property
Liens of the type described in clauses (i), (vii), (ix) and (x) of the
definition thereof) have been removed.

         Section 20.2.     Procedures During Remarketing. (a) During the
Marketing Period, the Lessee shall, as nonexclusive agent for the Lessor, use
its best efforts to sell the interest of the Lessor in each Property for which
the Remarketing Option has been exercised and will attempt to obtain the highest
purchase price therefor and for not less than the Fair Market Sales Value. The
Lessee will be responsible for hiring brokers (if the Lessee so elects) and
making each Property available for inspection by prospective purchasers. The
Lessee shall promptly upon request permit inspection of each Property and any
maintenance records relating to each Property by the Lessor, any Participant and
any potential purchasers, and the Lessee shall otherwise do all things necessary
to sell and deliver possession of each Property to any purchaser. All such
marketing of the Properties shall be at the Lessee's sole expense.

         (b)      The Lessee shall use best efforts to procure written bids from
one or more bona fide prospective purchasers. No such purchaser shall be the
Lessee or any Affiliate thereof. Each written offer must specify the Expiration
Date as the closing date. The Lessor shall have the right, but shall be under no
duty, to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take action in connection with any such sale.

         (c)      The Lessee shall submit all bids to the Lessor promptly upon
receipt, and the Lessor will have the right to submit any one or more bids. Any
sale by the Lessee shall be for the highest cash bid submitted to the Lessor.
The Lessor shall determine the highest bid prior to the end of the Marketing
Period, but in any event, the Lessor shall have no obligation to approve any bid
for any Property unless the highest bid for such Property equals or exceeds the
Property Cost for such Property plus all Permitted Sales Costs therefor. All
bids shall be on an all-cash basis.

         (d)      In connection with any such sale of any Property, the Lessee
will provide to the purchaser all customary "seller's" indemnities (including,
without limitation, an environmental indemnity to the extent the same are
required by the purchaser) and representations and warranties regarding title,
absence of Liens (other than Permitted Property Liens of the type described in
clause (i), (vii), (viii) or (x) of the definition thereof) and the condition of
such Property. The Lessee shall have obtained, at its cost and expense, all
required governmental and regulatory consents and approvals and shall have made
all filings as required by Applicable Law in order to carry out and complete the
transfer of such Property. As to the Lessor, any such sale

                                      -27-


Lam Research Corporation                       Amended and Restated Master Lease

shall be made on an "as is, with all faults" basis without representation or
warranty by the Lessor other than the absence of Lessor Liens attributable to
the Lessor.

         (e)      Subject to the reimbursement obligations set forth in clause
(h) below, the Lessee shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of each Property, whether
incurred by the Lessor or the Lessee, including, without limitation, the cost of
all title insurance, surveys, environmental reports, appraisals, transfer taxes,
the attorneys' fees of the Lessor, the Lessee's attorneys' fees, commissions,
escrow fees, recording fees, and all applicable documentary and other transfer
taxes.

         (f)      The Lessee shall pay to the Administrative Agent on or prior
to the Expiration Date (or in the case of Supplemental Rent, to the Person
entitled thereto) an amount equal to the Maximum Recourse Amount for each
Property plus all accrued and unpaid Rent (including Supplemental Rent, if any)
for each Property and all other amounts hereunder which have accrued or will
accrue prior to or as of the Expiration Date with respect to each Property, in
the type of funds specified in Section 3.4 hereof.

         (g)      The Lessee shall pay to the Administrative Agent on or prior
to the Expiration Date the amounts, if any, required to be paid pursuant to
Section 13.2 of the Participation Agreement.

         (h)      The sale of each Property shall be consummated on the
Expiration Date and the gross proceeds (the "Gross Remarketing Proceeds") of the
sale of each Property (less any marketing, closing or other costs, prorations or
commissions incurred by the Lessor) shall be paid directly to the Administrative
Agent. If the sale of any Property is consummated during the Marketing Period,
then, upon the Administrative Agent's timely receipt of the Gross Remarketing
Proceeds thereof and all other amounts due to the Administrative Agent, the
Lessor and the Participants under this Master Lease and the other Operative
Documents (including all amounts due pursuant to clause (f) above and Article
XIII of the Participation Agreement), the Administrative Agent shall apply such
Gross Remarketing Proceeds, first, to the payment of Permitted Sales Costs, and
second, as set forth in Section 7.4 of the Participation Agreement. If the Gross
Remarketing Proceeds from such sale (if any) of a Property exceeds the sum of
(i) the aggregate Property Balance for such Property being sold as of such date
minus the Maximum Recourse Amount, and other amounts paid to Administrative
Agent pursuant to clause (f) above for such Property plus (ii) all Permitted
Sales Costs with respect to such Property, then the excess shall be paid to the
Lessee on the Expiration Date.

         (i)      Except as expressly set forth herein, the Lessee shall have no
right, power or authority to bind the Lessor or any Participant in connection
with any proposed sale of any Property.

         (j)      During the Marketing Period, the obligation of the Lessee to
pay Rent (including the installment of Rent due on the Expiration Date) shall
continue undiminished until payment in full of the Lease Balance and all other
amounts due to the Participants under the Operative Documents to which the
Lessee is a party.

                                      -28-


Lam Research Corporation                       Amended and Restated Master Lease

         Section 20.3.     Remedies for Failed Remarketing. If the Lessee
effectively elects the Remarketing Option with respect to any Property and each
of the conditions and requirements in Sections 20.1 and 20.2 shall have been
satisfied, but nevertheless the Lessee is unable to obtain bids satisfactory to
the Lessor, and the sale of a Property is not consummated prior to the end of
the Marketing Period, the Lessor shall by written notice to the Lessee choose
one or both of the following remedies (which election may be changed at any
time):

                  (a)      Continue Remarketing Efforts. At the request of the
         Lessor, the Lessee shall continue to market such Property on behalf of
         the Lessor for up to an additional six (6) months and at the sole cost
         and expense of the Lessee (subject to Section 20.2(h) above), and
         during such extended marketing period continue to comply with the
         requirements of Articles IX, X, XI, XIII, XIV and XX at the Lessee's
         sole cost and expense. The Lessor shall by written notice to the Lessee
         indicate the duration of such extended marketing period (the last day
         of such period, the "Extended Expiration Date"), and the Lessor shall
         have the option to accelerate or shorten such Extended Expiration Date
         at any time. If such Property shall not have been sold prior to the
         Extended Expiration Date, the Lessor can then elect the remedies
         available under Section 20.3(b) hereof with respect to such unsold
         Property.

                  (b)      Return. Demand that such unsold Property be returned
         to the Lessor, whereupon the Lessee shall do each of the following at
         its own cost and expense:

                           (i)      pay the Maximum Recourse Amount, execute and
                  deliver to the Lessor and the Lessor's title insurance company
                  an affidavit as to the absence of any Liens (other than
                  Permitted Property Liens of the type described in clause (i),
                  (vii), (viii) or (x) of the definition thereof), and execute
                  and deliver to the Lessor a statement of termination of this
                  Master Lease to the extent relating to such Property;

                           (ii)     transfer possession of such Property to the
                  Lessor or any Person designated by the Lessor, by surrendering
                  the same into the possession of the Lessor or such Person, as
                  the case may be, in the condition required by this Master
                  Lease and in compliance with Applicable Law; and

                           (iii)    cooperate fully with the Lessor and/or any
                  Person designated by the Lessor to receive such Property,
                  which cooperation shall include: if requested by the Lessor,
                  subject to the good faith mutual agreement of the Lessor and
                  the Lessee, the entering into a property management agreement
                  with respect to such Property and in connection therewith
                  serving as the property manager of such Property on market
                  terms established in good faith and reasonably acceptable to
                  the Lessor, providing copies of all books and records
                  regarding the maintenance and ownership of such Property and
                  all non-proprietary data and technical information relating
                  thereto, providing a current copy of the applicable Plans and
                  Specifications, to the extent permitted by Requirements of
                  Law, granting or assigning all assignable licenses necessary
                  for the operation and maintenance of such Property and the
                  seeking and obtaining of all necessary Governmental

                                      -29-


Lam Research Corporation                       Amended and Restated Master Lease

                  Action. The obligations of the Lessee under this paragraph
                  shall survive the expiration or termination of this Master
                  Lease.

         Section 20.4.     No Sale of Property. If the Lessee effectively elects
the Remarketing Option with respect to the Properties and each of the conditions
and requirements in Sections 20.1 and 20.2 shall have been satisfied, but
nevertheless the Lessee is unable to obtain a bid at least equal to the Property
Balance during the Remarketing Period or any extension thereof pursuant to
Section 20.3(a) and the Properties are not sold (due either to the Lessor's
rejection of any bids or the failure to obtain any bids), there shall not be
deemed to be a Lease Event of Default by virtue of such failure to sell the
Properties and the Lessee shall only be obligated to make the payments referred
to in Sections 20.2(e), (f) and (g) hereof.

         Section 20.5.     Return of Excess Amounts. If, in connection with an
effective election of the Remarketing Option, the Lessee pays the Maximum
Recourse Amount and relinquishes its interest in the Properties, in accordance
with the provisions hereof and of the other Operative Documents, as applicable,
and, at any time thereafter, the Administrative Agent shall have received as of
any date of determination (whether through the Lessee's payment of such Maximum
Recourse Amount, as the case may be, or through the sale or reletting of the
Properties to a third party) an amount exceeding the sum of the following: (i)
the Property Balance of each Property on the date of such determination, (ii) if
such date of determination occurs after the Expiration Date, an Imputed Return
on each Participant's outstanding Loans or Lessor Amounts made with respect to
each Property, during the period from the Expiration Date to such date of
determination, (iii) all costs and expenses (including, without limitation,
legal costs and attorneys' fees) of each of the Participants and the
Administrative Agent incurred in connection with each Property (including,
without limitation, all costs and expenses incurred in connection with any
reletting or sale of each Property or any portion thereof) and (iv) all other
amounts owing to each of the Participants and the Administrative Agent under the
Operative Documents, to the extent relating to each Property or allocable to
each Property, then the Administrative Agent (or, as the case may be, the
Lessor) shall pay such excess over to the Lessee.

                                   ARTICLE XXI

             PROCEDURES RELATING TO PURCHASE OR REMARKETING OPTIONS

         Section 21.1.     Provisions Relating to the Exercise of Purchase
Option or Obligation and Conveyance upon Remarketing; Conveyance upon Certain
Other Events. (a) In connection with any termination of this Master Lease with
respect to any Property pursuant to the terms of Article XV, in connection with
the Lessee's purchase of each Property in accordance with Section 18.1 or 18.2
hereof, in connection with the Lessee's Expiration Date Purchase Obligation or
obligations under Section 16.2(f) or 18.3 or in connection with the Lessor's
receipt of an aggregate amount equal to all amounts set forth in Section 16.5 as
set forth in such Section or in connection with any sale pursuant to the
Remarketing Option in accordance with Article XX, then, upon the date on which
this Master Lease is to terminate and upon tender by the Lessee of

                                      -30-


Lam Research Corporation                       Amended and Restated Master Lease

the amounts set forth in Article XV, Sections 16.2(f), 16.5, 18.1, 18.2 or 18.3
hereof, as applicable:

                           (i)      the Lessor shall execute and deliver to the
                  Lessee (or to the Lessee's designee) at the Lessee's cost and
                  expense: (x) a quitclaim deed with respect to the relevant
                  Property containing representations and warranties of grantor
                  regarding the absence of Lessor Liens attributable to the
                  Lessor (but no other representations or warranties), (y) a
                  bill of sale with respect to the interest of the Lessor in any
                  items of personalty or Equipment on such Property, containing
                  representations and warranties of grantor regarding the
                  absence of Lessor Liens attributable to the Lessor (but no
                  other representations or warranties), and (z) an assignment of
                  the entire interest of the Lessor in such Property (which
                  shall include an assignment of all of the right, title and
                  interest of the Lessor in and to any Excess
                  Casualty/Condemnation Proceeds), in each case in recordable
                  form and otherwise in conformity with local custom to the
                  extent consistent with the foregoing scope of the Lessor's
                  representations and warranties and free and clear of the Lien
                  of the Lessor Mortgage, the Mortgage and any Lessor Liens
                  attributable to the Lessor;

                           (ii)     such Property shall be conveyed to the
                  Lessee (or to the Lessee's designee) "AS IS" and in its then
                  present physical condition;

                           (iii)    the Lessor shall convey to the Lessee any
                  Excess Casualty/Condemnation Proceeds with respect to such
                  Property; and

                           (iv)     the Lessor shall execute and deliver to the
                  Lessee (or its designee) and the Lessee's title insurance
                  company an affidavit as to the Lessor's title and Lessor Liens
                  attributable to the Lessor and shall execute and deliver to
                  the Lessee a statement of termination of this Master Lease
                  with respect to such Property and termination of the Lease
                  Supplement (if applicable) covering such Property.

         (b)      If the Lessee properly exercises the Remarketing Option with
respect to a Property pursuant to Article XX and a satisfactory purchaser is
located, then the Lessee shall, on the Expiration Date, and at its own cost,
transfer possession of such Property to the independent purchaser thereof
(unless otherwise agreed to by such purchaser and Lessee), by surrendering the
same into the possession of such purchaser, free and clear of all Liens other
than Permitted Property Liens of the type described in clause (i), (vii), (viii)
or (x) of the definition thereof, in good condition (as modified by
Modifications permitted by this Master Lease), ordinary wear and tear excepted,
and in compliance with Applicable Law. The Lessee shall cooperate with the
Lessor and the independent purchaser(s) of such Property in order to facilitate
the purchase by such purchaser of such Property, which cooperation shall
include, among other things, the following, all of which the Lessee shall do (or
cause to be done) on or before the Expiration Date or as soon thereafter as is
reasonably practicable: providing copies of all books and records regarding the
maintenance and ownership of such Property and all non-proprietary data and
technical information relating thereto; providing a current copy of the Plans
and Specifications for such Property; to the extent permitted by any Requirement
of Law, granting or assigning all assignable licenses necessary for the
operation and maintenance of such Property; and seeking

                                      -31-


Lam Research Corporation                       Amended and Restated Master Lease

and obtaining all necessary Governmental Action. The obligations of the Lessee
under this paragraph shall survive the expiration or termination of this Master
Lease. The Lessor agrees to cooperate and execute such documents as are
necessary to facilitate the foregoing.

                                  ARTICLE XXII

                              ESTOPPEL CERTIFICATES

         Section 22.1.     Estoppel Certificates. At any time and from time to
time upon not less than twenty (20) Business Days' prior request by the Lessor
or the Lessee (the "Requesting Party"), the other party (whichever party shall
have received such request, the "Certifying Party") shall furnish to the
Requesting Party a certificate signed by an individual having the office of vice
president, director or higher certifying that this Master Lease is in full force
and effect (or that this Master Lease is in full force and effect as modified
and setting forth the modifications); the dates to which the Basic Rent and
Supplemental Rent have been paid; to the best knowledge of the signer of such
certificate, whether or not the Requesting Party is in default under any of its
obligations hereunder and, if so, the nature of such alleged default; and such
other matters under this Master Lease as the Requesting Party may reasonably
request.

         Any such certificate furnished pursuant to this Article XXII may be
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or to the
Requesting Party (or any affiliate thereof).

                                  ARTICLE XXIII

                             ACCEPTANCE OF SURRENDER

         Section 23.1.     Acceptance of Surrender. No surrender to the Lessor
of this Master Lease or of all or any of the Properties or of any part of any
thereof or of any interest therein shall be valid or effective unless agreed to
and accepted in writing by the Lessor and, prior to the payment or performance
of all obligations under the Loan Agreement and termination of the Commitments,
the Administrative Agent, and no act by the Lessor or any Lender or any
representative or agent of the Lessor or any Lender other than a written
acceptance, shall constitute an acceptance of any such surrender.

                                  ARTICLE XXIV

                               NO MERGER OF TITLE

         Section 24.1.     No Merger of Title. There shall be no merger of this
Master Lease of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly, in whole or in
part, (a) this Master Lease or the leasehold estate created hereby or any
interest in this Master Lease or such leasehold estate, (b) the fee estate in

                                      -32-


Lam Research Corporation                       Amended and Restated Master Lease

any Property, except as may expressly be stated in a written instrument duly
executed and delivered by the appropriate Person or (c) a beneficial interest in
the Lessor.

                                   ARTICLE XXV

                              INTENT OF THE PARTIES

         Section 25.1.     Ownership of the Properties. (a) The parties hereto
intend that (i) for the Lessee's United States' financial accounting purposes,
the Lessor will be treated as the owner and lessor of an undivided interest in
each Property and the Lessee will be treated as the lessee of each Property
leased by it hereunder and (ii) for federal and all state and local income tax
purposes, state real estate and commercial law and bankruptcy purposes, (A) the
Lease will be treated as a financing arrangement, (B) the Lessor and the Lenders
will be deemed lenders making loans to the Lessee in an amount equal to the sum
of the Lessor Amounts and the outstanding principal amount of the Loans, which
loans are secured by the Properties and (C) the Lessee will be treated as the
owner of each Property and will be entitled to all tax benefits ordinarily
available to an owner of properties similar to the Properties for such tax
purposes. Nevertheless, the Lessee acknowledges and agrees that none of the
Administrative Agent, the Lessor, the Arranger or any Lender has made any
representations or warranties to the Lessee concerning the tax, the Lessee's
accounting or legal characteristics of the Operative Documents and that the
Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate. The parties hereto
shall not take any position inconsistent with the intentions expressed herein.

         (b)      It is the intent of the parties hereto that this Master Lease
grants a security interest and mortgage or deed of trust, as the case may be, on
each Property to the Lessor or for the benefit of the Lessor and the other
Participants to secure the performance of the Lessee under and payment of all
amounts under the Lease and the other Operative Documents all as more
specifically set forth in Section 5 of each Lease Supplement.

                                  ARTICLE XXVI

                                  MISCELLANEOUS

         Section 26.1.     Severability; Perpetuities; Etc. If any term or
provision of this Master Lease or any application thereof shall be declared
invalid or unenforceable, the remainder of this Master Lease (or any Lease
Supplement) and any other application of such term or provision shall not be
affected thereby. If any right or option of the Lessee provided in this Master
Lease, including any right or option described in Article XIV, XV, XVIII or XX,
would, in the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule of law relating to the vesting of an interest in or the suspension of
the power of alienation of property, then such right or option shall be
exercisable only during the period which shall end twenty-one (21) years after
the date of death of the last survivor of the descendants of Franklin D.
Roosevelt, the former President of the United States, Henry Ford, the deceased
automobile manufacturer, and John D. Rockefeller, the founder of the

                                      -33-


Lam Research Corporation                       Amended and Restated Master Lease

Standard Oil Company, known to be alive on the date of the execution,
acknowledgment and delivery of this Master Lease.

         Section 26.2.     Amendments and Modifications. Subject to the
requirements, restrictions and conditions set forth in the Participation
Agreement, neither this Master Lease nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing in
recordable form signed by the parties hereto.

         Section 26.3.     No Waiver. No failure by the Lessor, the
Administrative Agent, any Participant or the Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy upon a
default hereunder, and no acceptance of full or partial payment of Rent during
the continuance of any such default, shall constitute a waiver of any such
default or of any such term. To the fullest extent permitted by law, no waiver
of any default shall affect or alter this Master Lease, and this Master Lease
shall continue in full force and effect with respect to any other then existing
or subsequent default.

         Section 26.4.     Notices. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and directed to
the address described in, and deemed received in accordance with the provisions
of, Section 15.3 of the Participation Agreement.

         Section 26.5.     Successors and Assigns. All the terms and provisions
of this Master Lease shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

         Section 26.6.     Headings and Table of Contents. The headings and
table of contents in this Master Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

         Section 26.7.     Counterparts. This Master Lease may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same instrument.

         SECTION 26.8.     GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TITLE 14
OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW (EXCEPT AS OTHERWISE SET
FORTH IN THE LEASE SUPPLEMENT WITH RESPECT TO THE CREATION AND PERFECTION OF THE
LIENS AND SECURITY INTERESTS IN EACH PROPERTY AND THE RIGHTS AND REMEDIES OF THE
LESSOR AND THE PARTICIPANTS WITH RESPECT TO EACH PROPERTY).

         Section 26.9.     Original Lease. The single executed original of this
Master Lease marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on
the signature page thereof and containing the receipt thereof of KEY CORPORATE
CAPITAL INC., as Administrative Agent for the Lenders therefor on or following
the signature page thereof shall be the Original Executed Counterpart of this
Master Lease (the "Original Executed Counterpart"). To the extent that this

                                      -34-


Lam Research Corporation                       Amended and Restated Master Lease

Master Lease constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Master Lease may be created through the transfer or possession
of any counterpart other than the Original Executed Counterpart.

         Section 26.10.    Time of Essence. With respect to each of the Lessee's
obligations and the Lessor's obligations hereunder, time is of the essence, and
each such party hereby acknowledges and confirms the foregoing.

         Section 26.11.    Liability Limited. The obligations of the Lessor
hereunder are subject to the limitations set forth in Section 15.10 of the
Participation Agreement.

         Section 26.12.    Related Properties. Notwithstanding anything
contained herein or in any other Operative Document to the contrary, in the
event the Land or Improvements comprising Property No. 2, Property No. 3 or
Property No. 4 are (a) terminated from this Lease pursuant to Section 15.1
hereof or (b) the Lessee elects to exercise the Partial Purchase Option with
respect thereto, then the Partial Termination or Partial Purchase Option will be
irrevocably deemed to have occurred or have been exercised with respect to the
remaining portion of Property No. 2, Property No. 3 or Property No. 4, as
applicable.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -35-


         IN WITNESS WHEREOF, the parties have caused this Master Lease to be
duly executed and delivered as of the date first above written.

                                LAM RESEARCH CORPORATION, as Lessee

                                By _________________________________________
                                   Name_____________________________________
                                   Its______________________________________

                                SELCO SERVICE CORPORATION, an Ohio
                                   corporation, doing business in California as
                                   "Ohio SELCO Service Corporation", as
                                   Lessor

                                By _________________________________________
                                   Donald C. Davis
                                   Its Vice President

                                      S-1



         THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART, Receipt of this
original counterpart of the foregoing Lease is hereby acknowledged as of the
date hereof.

                                    KEY CORPORATE CAPITAL INC., as
                                        Administrative Agent

                                    By _________________________________________
                                       Name_____________________________________
                                       Its _____________________________________

                                      S-2



                                                                       EXHIBIT A
                                                                 TO MASTER LEASE
                                                   (CALIFORNIA LEASE SUPPLEMENT)

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606

                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                             LEASE SUPPLEMENT NO. 1
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 1 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance



of $27,146,185.35, disclosed by the following recorded document: Memorandum of
Lease (Lease Supplement), made by and between Scotiabanc, Inc., a Delaware
corporation ("SBI") and Lessee and recorded in the Official Records on January
21, 2000 as Series No. 2000019028 and Memorandum of Lease (Land) made by and
between SBI and the Lessee and recorded in the Official Records on January 21,
2000 as Series No. 2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                             W I T N E S S E T H :

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (the "Subject Land") together with all Improvements
which hereafter may be constructed on the Subject Land (the "Subject
Improvements" and, together with the Subject Land, the "Subject Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

                                      -2-


         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the benefit of the Lessor and the
Lenders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents (the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the

                                      -3-


Lessee in and to the Subject Property and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property (it being understood that the Lessee hereby deeds and warrants
and grants a security interest in the Subject Property and all proceeds thereof
to the Lessor to secure all Loans and Lessor Amounts advanced by the
Participants for the acquisition of such Properties (the principal amount of
which shall not exceed in the aggregate $58,033,031.30 outstanding at any given
time), together with Yield or interest thereon, and all other amounts payable
under the Operative Documents in connection therewith) and (iii) the possession
by the Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents, goods or tangible chattel
paper shall be deemed to be "perfection by possession" for purposes of
perfecting the security interest pursuant to Section 9-313 of the California
Uniform Commercial Code and the Lessor hereby acknowledges that it holds
possession of such instruments, money, negotiable documents, goods or tangible
chattel paper for the benefit of the Lessor and the Lenders pursuant to Section
9-313(c) of the California Uniform Commercial Code; and (iv) notifications to
Persons holding such property, and acknowledgments, receipts or confirmations
from financial intermediaries, bankers or agents (as applicable) of the Lessee
shall be deemed to have been given for the purpose of perfecting such security
interest under all Applicable Laws. The Lessor and the Lessee shall, to the
extent consistent with the Master Lease and the Lease Supplements, take such
actions and execute, deliver, file and record such other documents, financing
statements and deeds of trust as may be necessary to ensure that, if the Lease
was deemed to create a security interest in the Subject Property in accordance
with this Section, such security interest would be deemed to be a perfected
security interest (subject only to Permitted Property Liens) and will be
maintained as such throughout the Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject

                                      -4-


Property, (B) located in, on or about the Subject Property or (C) used or
intended to be used with or in connection with the construction, use, operation
or enjoyment of the Subject Property; (iv) all right, title and interest of the
Lessee in any and all leases, rental agreements and arrangements of any sort now
or hereafter affecting the Subject Property or any portion thereof and providing
for or resulting in the payment of money to the Lessee for the use of the
Subject Property or any portion thereof, whether the user enjoys the Subject
Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject Leases") and
guaranties of the performance or obligations of any tenants or lessees
thereunder, together with all income, rents, issues, profits and revenues from
the Subject Leases (including all tenant security deposits and all other tenant
deposits, whether held by the Lessee or in a trust account, and all other
deposits and escrow funds relating to any Subject Leases), and all the estate,
right, title, interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Lessee of, in and to the same; provided,
however, that the Lessee shall have a revocable license to collect and apply
such rental payments and revenues as provided in the Master Lease and the other
Operative Documents; (v) to the extent transferable under any Requirement of
Law, all right, title and interest of the Lessee in, to and under all management
contracts, service contracts, utility contracts, leases of equipment, documents
and agreements relating to the construction of any Improvements (including any
and all construction contracts, architectural contracts, engineering contracts,
designs, plans, specifications, drawings, surveys, tests, reports, bonds and
governmental approvals) and all other contracts, licenses and permits now or
hereafter affecting the Subject Property or any part thereof and all guaranties
and warranties with respect to any of the foregoing (the "Subject Contracts");
(vi) all right, title and interest of the Lessee in any insurance policies or
binders required to be maintained by the Lessee pursuant to the terms of the
Master Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default

                                      -5-


and demand for the sale and of written notice of default and of election to
cause to be sold the Subject Property which notice the Trustee shall cause to be
filed for record to the extent required by law. The Beneficiary also shall
deposit with the Trustee the Lease Supplement and all documents evidencing the
Lease Balance and expenditures secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and

                                      -6-


fixtures in any manner permitted under Section 9604(a)(1) of the California
Commercial Code; and if the Beneficiary elects to proceed in the manner
permitted under Section 9604(a)(1)(B) of the California Commercial Code, the
power of sale herein granted shall be exercisable with respect to all or any of
the real property, personal property and fixtures covered hereby, as designated
by the Beneficiary, and the Trustee is hereby authorized and empowered to
conduct any such sale of any real property, personal property and fixtures in
accordance with the procedures applicable to real property. Where the Mortgaged
Property consists of real property and personal property, any reinstatement of
the obligation secured hereby, following default and an election by Beneficiary
to accelerate the maturity of said obligation, which is made by the Beneficiary
or any other person or entity permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute, shall
not, in accordance with the terms of California Commercial Code Section
9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other
disposition of any personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or fixtures in
any manner permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceedings held, conducted or instituted with respect to any personal
property or fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
secured obligation and to the Beneficiary's and the Trustee's reasonable costs
and expenses in the manner required by Section 2924c. Should the Beneficiary
elect to sell any portion of the Mortgaged Property which is real property or
which is personal property or fixtures that Beneficiary has elected under
Section 9604(a)(1)(b) of the California Commercial Code to sell together with
real property in accordance with the laws governing a sale of real property, the
Beneficiary or the Trustee shall give such notice of default and election to
sell as may then be required by law. Any requirement of the California
Commercial Code for reasonable notification shall be met by mailing written
notice to the Lessee at its address above set forth at least ten (10) days prior
to the sale or other event for which such notice is required. Notwithstanding
anything to the contrary in this Lease Supplement, the Lessee, in accordance
with the applicable laws of the State of California and applicable provisions of
the California Rules of Procedure, or of any other general or local law or rules
or regulations of the State of California relating to deeds of trust does hereby
declare and assent to the passage of a decree to sell the Mortgaged Property by
the equity court having jurisdiction for the sale thereof and the Trustee
appointed by such decree of court shall have, subject to the terms of the decree
of court, the same authority and power to sell on the terms and conditions
herein set forth. This assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE

                                      -7-


SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER
IN AND TO THE SUBJECT PROPERTY.

         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                      -8-


         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                       LESSEE:

                                       LAM RESEARCH CORPORATION, as Lessee

                                       By /s/ Craig Garber
                                          ----------------
                                          Name Craig Garber
                                          Title VP and Treasurer

                                       LESSOR:

                                       SELCO SERVICE CORPORATION, an Ohio
                                         corporation, doing business in
                                         California as "Ohio SELCO Service
                                         Corporation", as Lessor

                                       By /s/ Donald C. Davis
                                          -------------------
                                          Donald C. Davis
                                          Its Vice President

                                      -9-


STATE OF CALIFORNIA                         )
                                            ) SS.:
COUNTY OF ALAMEDA                           )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]

                                                       Notary Public

                                               _________________________________

                                                    (TYPE OR PRINT NAME)

                                       A-1



STATE OF COLORADO                           )
                                            ) SS.:
COUNTY OF BOULDER                           )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTERIAL SEAL]

                                                       Notary Public

                                               _________________________________

                                                    (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________

                                      A-2


SCHEDULE I
TO LEASE SUPPLEMENT NO. 1

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 1

PARCEL ONE:

PARCEL 1, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES
24 THROUGH 26, ALAMEDA COUNTY RECORDS.

RESERVING THEREFROM:

AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA
DESIGNATED "J.A.E." ON SAID MAP.

PARCEL FIVE:

AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL ONE, ABOVE, OVER THAT
PORTION OF PARCEL 2, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP.

Property No. 2

PARCEL TWO:

PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES
24 THROUGH 26, ALAMEDA COUNTY RECORDS.

RESERVING THEREFROM:

AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA
DESIGNATED "J.A.E." ON SAID MAP.

PARCEL THREE:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED
LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN
INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY
RECORDS:

                                      A-3


ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE
WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE
FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00
FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST,
59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE
OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST,
15.00 FEET TO THE POINT OF BEGINNING.

PARCEL FOUR:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS
FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN INSTRUMENT
RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY RECORDS.

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18
FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE,
NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES
AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11'
33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE)
11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE
POINT OF BEGINNING.

PARCEL SIX:

AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT
PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP.

                                      A-4


Property No. 8

PARCEL A:

PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND
28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

Property No. 9

PARCEL A:

PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES
27 AND 28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

                                      A-5

EX-10.87

                                                                   EXHIBIT 10.87

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606
                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                 LEASE SUPPLEMENT NO. 1 (LAND AND IMPROVEMENTS)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 1 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease



Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the
Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of
Lease (Land) made by and between SBI and the Lessee and recorded in the Official
Records on January 21, 2000 as Series No. 2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                             W I T N E S S E T H :

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (the "Subject Land") together with all Improvements
which hereafter may be constructed on the Subject Land (the "Subject
Improvements" and, together with the Subject Land, the "Subject Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

                                      -2-



         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the benefit of the Lessor and the
Lenders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents (the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on the date June 24, 2003 and shall
end on June 23, 2008 (the "Expiration Date"). For and in consideration of good
and valuable consideration paid by the Lessee to the Lessor as described in the
Master Lease, the Lessor hereby grants to the Lessee the right to purchase the
Subject Property during the Lease Term of this Lease Supplement on the terms and
subject to the conditions (including, without limitation, payment of the
Property Balance thereof) set forth in Section 18.1 of the Master Lease.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the

                                      -3-



Lessee in and to the Subject Property and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property (it being understood that the Lessee hereby deeds and warrants
and grants a security interest in the Subject Property and all proceeds thereof
to the Lessor to secure all Loans and Lessor Amounts advanced by the
Participants for the acquisition of such Properties (the principal amount of
which shall not exceed in the aggregate $58,033,031.30 outstanding at any given
time), together with Yield or interest thereon, and all other amounts payable
under the Operative Documents in connection therewith) and (iii) the possession
by the Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents, goods or tangible chattel
paper shall be deemed to be "perfection by possession" for purposes of
perfecting the security interest pursuant to Section 9-313 of the California
Uniform Commercial Code and the Lessor hereby acknowledges that it holds
possession of such instruments, money, negotiable documents, goods or tangible
chattel paper for the benefit of the Lessor and the Lenders pursuant to Section
9-313(c) of the California Uniform Commercial Code; and (iv) notifications to
Persons holding such property, and acknowledgments, receipts or confirmations
from financial intermediaries, bankers or agents (as applicable) of the Lessee
shall be deemed to have been given for the purpose of perfecting such security
interest under all Applicable Laws. The Lessor and the Lessee shall, to the
extent consistent with the Master Lease and the Lease Supplements, take such
actions and execute, deliver, file and record such other documents, financing
statements and deeds of trust as may be necessary to ensure that, if the Lease
was deemed to create a security interest in the Subject Property in accordance
with this Section, such security interest would be deemed to be a perfected
security interest (subject only to Permitted Property Liens) and will be
maintained as such throughout the Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject

                                      -4-



Property, (B) located in, on or about the Subject Property or (C) used or
intended to be used with or in connection with the construction, use, operation
or enjoyment of the Subject Property; (iv) all right, title and interest of the
Lessee in any and all leases, rental agreements and arrangements of any sort now
or hereafter affecting the Subject Property or any portion thereof and providing
for or resulting in the payment of money to the Lessee for the use of the
Subject Property or any portion thereof, whether the user enjoys the Subject
Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject Leases") and
guaranties of the performance or obligations of any tenants or lessees
thereunder, together with all income, rents, issues, profits and revenues from
the Subject Leases (including all tenant security deposits and all other tenant
deposits, whether held by the Lessee or in a trust account, and all other
deposits and escrow funds relating to any Subject Leases), and all the estate,
right, title, interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Lessee of, in and to the same; provided,
however, that the Lessee shall have a revocable license to collect and apply
such rental payments and revenues as provided in the Master Lease and the other
Operative Documents; (v) to the extent transferable under any Requirement of
Law, all right, title and interest of the Lessee in, to and under all management
contracts, service contracts, utility contracts, leases of equipment, documents
and agreements relating to the construction of any Improvements (including any
and all construction contracts, architectural contracts, engineering contracts,
designs, plans, specifications, drawings, surveys, tests, reports, bonds and
governmental approvals) and all other contracts, licenses and permits now or
hereafter affecting the Subject Property or any part thereof and all guaranties
and warranties with respect to any of the foregoing (the "Subject Contracts");
(vi) all right, title and interest of the Lessee in any insurance policies or
binders required to be maintained by the Lessee pursuant to the terms of the
Master Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default

                                      -5-



and demand for the sale and of written notice of default and of election to
cause to be sold the Subject Property which notice the Trustee shall cause to be
filed for record to the extent required by law. The Beneficiary also shall
deposit with the Trustee the Lease Supplement and all documents evidencing the
Lease Balance and expenditures secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and

                                      -6-



fixtures in any manner permitted under Section 9604(a)(1) of the California
Commercial Code; and if the Beneficiary elects to proceed in the manner
permitted under Section 9604(a)(1)(B) of the California Commercial Code, the
power of sale herein granted shall be exercisable with respect to all or any of
the real property, personal property and fixtures covered hereby, as designated
by the Beneficiary, and the Trustee is hereby authorized and empowered to
conduct any such sale of any real property, personal property and fixtures in
accordance with the procedures applicable to real property. Where the Mortgaged
Property consists of real property and personal property, any reinstatement of
the obligation secured hereby, following default and an election by Beneficiary
to accelerate the maturity of said obligation, which is made by the Beneficiary
or any other person or entity permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute, shall
not, in accordance with the terms of California Commercial Code Section
9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other
disposition of any personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or fixtures in
any manner permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceedings held, conducted or instituted with respect to any personal
property or fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
secured obligation and to the Beneficiary's and the Trustee's reasonable costs
and expenses in the manner required by Section 2924c. Should the Beneficiary
elect to sell any portion of the Mortgaged Property which is real property or
which is personal property or fixtures that Beneficiary has elected under
Section 9604(a)(1)(b) of the California Commercial Code to sell together with
real property in accordance with the laws governing a sale of real property, the
Beneficiary or the Trustee shall give such notice of default and election to
sell as may then be required by law. Any requirement of the California
Commercial Code for reasonable notification shall be met by mailing written
notice to the Lessee at its address above set forth at least ten (10) days prior
to the sale or other event for which such notice is required. Notwithstanding
anything to the contrary in this Lease Supplement, the Lessee, in accordance
with the applicable laws of the State of California and applicable provisions of
the California Rules of Procedure, or of any other general or local law or rules
or regulations of the State of California relating to deeds of trust does hereby
declare and assent to the passage of a decree to sell the Mortgaged Property by
the equity court having jurisdiction for the sale thereof and the Trustee
appointed by such decree of court shall have, subject to the terms of the decree
of court, the same authority and power to sell on the terms and conditions
herein set forth. This assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE

                                      -7-



SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER
IN AND TO THE SUBJECT PROPERTY.

         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                      -8-



         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                    LESSEE:

                                    LAM RESEARCH CORPORATION, as Lessee

                                    By /s/Craig Garber
                                       -------------------
                                       Name: Craig Garber
                                    Its: VP and Treasurer

                                    LESSOR:

                                    SELCO SERVICE CORPORATION, an Ohio
                                      corporation, doing business in California
                                      as "Ohio SELCO Service Corporation", as
                                      Lessor

                                    By /s/ Donald C. Davis
                                       -----------------------
                                       Donald C. Davis
                                       Its: Vice President

                                      -9-



STATE OF CALIFORNIA         )
                            ) SS.:
COUNTY OF ALAMEDA           )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                 Notary Public

                                       _________________________________

                                             (TYPE OR PRINT NAME)

                                      A-1



STATE OF COLORADO         )
                          ) SS.:
COUNTY OF BOULDER         )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]
                                                      Notary Public

                                           ________________________________

                                                   (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________

                                      A-2



SCHEDULE I
TO LEASE SUPPLEMENT NO. 1

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 1

PARCEL ONE:

PARCEL 1, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES
24 THROUGH 26, ALAMEDA COUNTY RECORDS.

RESERVING THEREFROM:

AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA
DESIGNATED "J.A.E." ON SAID MAP.

PARCEL FIVE:

AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL ONE, ABOVE, OVER THAT
PORTION OF PARCEL 2, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP.

                                      A-3

EX-10.88

                                                                   Exhibit 10.88

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606
                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                          LEASE SUPPLEMENT NO. 2 (LAND)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 2 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease



Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI") and Lessee and recorded in the
Official Records on January 21, 2000 as Series No. 2000019028 and Memorandum of
Lease (Land) made by and between SBI and the Lessee and recorded in the Official
Records on January 21, 2000 as Series No. 2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                             W I T N E S S E T H :

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (herein referred to as the "Subject Land" or the
"Subject Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

                                      -2-



         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the benefit of the Lessor and the
Lenders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents (the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the

                                      -3-



Lessee in and to the Subject Property and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property (it being understood that the Lessee hereby deeds and warrants
and grants a security interest in the Subject Property and all proceeds thereof
to the Lessor to secure all Loans and Lessor Amounts advanced by the
Participants for the acquisition of such Properties (the principal amount of
which shall not exceed in the aggregate $58,033,031.30 outstanding at any given
time), together with Yield or interest thereon, and all other amounts payable
under the Operative Documents in connection therewith) and (iii) the possession
by the Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents, goods or tangible chattel
paper shall be deemed to be "perfection by possession" for purposes of
perfecting the security interest pursuant to Section 9-313 of the California
Uniform Commercial Code and the Lessor hereby acknowledges that it holds
possession of such instruments, money, negotiable documents, goods or tangible
chattel paper for the benefit of the Lessor and the Lenders pursuant to Section
9-313(c) of the California Uniform Commercial Code; and (iv) notifications to
Persons holding such property, and acknowledgments, receipts or confirmations
from financial intermediaries, bankers or agents (as applicable) of the Lessee
shall be deemed to have been given for the purpose of perfecting such security
interest under all Applicable Laws. The Lessor and the Lessee shall, to the
extent consistent with the Master Lease and the Lease Supplements, take such
actions and execute, deliver, file and record such other documents, financing
statements and deeds of trust as may be necessary to ensure that, if the Lease
was deemed to create a security interest in the Subject Property in accordance
with this Section, such security interest would be deemed to be a perfected
security interest (subject only to Permitted Property Liens) and will be
maintained as such throughout the Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject

                                      -4-



Property, (B) located in, on or about the Subject Property or (C) used or
intended to be used with or in connection with the construction, use, operation
or enjoyment of the Subject Property; (iv) all right, title and interest of the
Lessee in any and all leases, rental agreements and arrangements of any sort now
or hereafter affecting the Subject Property or any portion thereof and providing
for or resulting in the payment of money to the Lessee for the use of the
Subject Property or any portion thereof, whether the user enjoys the Subject
Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject Leases") and
guaranties of the performance or obligations of any tenants or lessees
thereunder, together with all income, rents, issues, profits and revenues from
the Subject Leases (including all tenant security deposits and all other tenant
deposits, whether held by the Lessee or in a trust account, and all other
deposits and escrow funds relating to any Subject Leases), and all the estate,
right, title, interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Lessee of, in and to the same; provided,
however, that the Lessee shall have a revocable license to collect and apply
such rental payments and revenues as provided in the Master Lease and the other
Operative Documents; (v) to the extent transferable under any Requirement of
Law, all right, title and interest of the Lessee in, to and under all management
contracts, service contracts, utility contracts, leases of equipment, documents
and agreements relating to the construction of any Improvements (including any
and all construction contracts, architectural contracts, engineering contracts,
designs, plans, specifications, drawings, surveys, tests, reports, bonds and
governmental approvals) and all other contracts, licenses and permits now or
hereafter affecting the Subject Property or any part thereof and all guaranties
and warranties with respect to any of the foregoing (the "Subject Contracts");
(vi) all right, title and interest of the Lessee in any insurance policies or
binders required to be maintained by the Lessee pursuant to the terms of the
Master Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default

                                      -5-



and demand for the sale and of written notice of default and of election to
cause to be sold the Subject Property which notice the Trustee shall cause to be
filed for record to the extent required by law. The Beneficiary also shall
deposit with the Trustee the Lease Supplement and all documents evidencing the
Lease Balance and expenditures secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and

                                      -6-



fixtures in any manner permitted under Section 9604(a)(1) of the California
Commercial Code; and if the Beneficiary elects to proceed in the manner
permitted under Section 9604(a)(1)(B) of the California Commercial Code, the
power of sale herein granted shall be exercisable with respect to all or any of
the real property, personal property and fixtures covered hereby, as designated
by the Beneficiary, and the Trustee is hereby authorized and empowered to
conduct any such sale of any real property, personal property and fixtures in
accordance with the procedures applicable to real property. Where the Mortgaged
Property consists of real property and personal property, any reinstatement of
the obligation secured hereby, following default and an election by Beneficiary
to accelerate the maturity of said obligation, which is made by the Beneficiary
or any other person or entity permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute, shall
not, in accordance with the terms of California Commercial Code Section
9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other
disposition of any personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or fixtures in
any manner permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceedings held, conducted or instituted with respect to any personal
property or fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
secured obligation and to the Beneficiary's and the Trustee's reasonable costs
and expenses in the manner required by Section 2924c. Should the Beneficiary
elect to sell any portion of the Mortgaged Property which is real property or
which is personal property or fixtures that Beneficiary has elected under
Section 9604(a)(1)(b) of the California Commercial Code to sell together with
real property in accordance with the laws governing a sale of real property, the
Beneficiary or the Trustee shall give such notice of default and election to
sell as may then be required by law. Any requirement of the California
Commercial Code for reasonable notification shall be met by mailing written
notice to the Lessee at its address above set forth at least ten (10) days prior
to the sale or other event for which such notice is required. Notwithstanding
anything to the contrary in this Lease Supplement, the Lessee, in accordance
with the applicable laws of the State of California and applicable provisions of
the California Rules of Procedure, or of any other general or local law or rules
or regulations of the State of California relating to deeds of trust does hereby
declare and assent to the passage of a decree to sell the Mortgaged Property by
the equity court having jurisdiction for the sale thereof and the Trustee
appointed by such decree of court shall have, subject to the terms of the decree
of court, the same authority and power to sell on the terms and conditions
herein set forth. This assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE

                                      -7-



SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER
IN AND TO THE SUBJECT PROPERTY.

          8.      Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

          9.      GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                      -8-



         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                       LESSEE:

                                       LAM RESEARCH CORPORATION, as Lessee

                                       By /s/ Craig Garber
                                          --------------------
                                          Name: Craig Garber
                                          Its: VP and Treasurer

                                       LESSOR:

                                       SELCO SERVICE CORPORATION, an Ohio
                                         corporation, doing business in
                                         California as "Ohio SELCO Service
                                         Corporation", as Lessor

                                       By /s/ Donald C. Davis
                                          ----------------------
                                          Donald C. Davis
                                          Its: Vice President

                                      -9-



STATE OF CALIFORNIA      )
                         ) SS.:
COUNTY OF ALAMEDA        )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                     Notary Public

                                           _________________________________

                                                  (TYPE OR PRINT NAME)

                                      A-1



STATE OF COLORADO      )
                       ) SS.:
COUNTY OF BOULDER      )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]

                                                  Notary Public

                                        _________________________________

                                              (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________________

                                      A-2



SCHEDULE I
TO LEASE SUPPLEMENT NO. 2

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 2

PARCEL TWO:

PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES
24 THROUGH 26, ALAMEDA COUNTY RECORDS.

RESERVING THEREFROM:

AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA
DESIGNATED "J.A.E." ON SAID MAP.

PARCEL THREE:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED
LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN
INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY
RECORDS:

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE
WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE
FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00
FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST,
59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE
OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST,
15.00 FEET TO THE POINT OF BEGINNING.

PARCEL FOUR:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS
FOR THE BENEFIT OF PARCEL 2, HEREIN,

                                      A-3



AS CREATED BY THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO.
94-275492, ALAMEDA COUNTY RECORDS.

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18
FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE,
NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES
AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11'
33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE)
11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE
POINT OF BEGINNING.

PARCEL SIX:

AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT
PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP.

                                      A-4

EX-10.89

                                                                   Exhibit 10.89

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606
                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                      LEASE SUPPLEMENT NO. 3 (IMPROVEMENTS)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 3 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI")



and Lessee and recorded in the Official Records on January 21, 2000 as Series
No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the
Lessee and recorded in the Official Records on January 21, 2000 as Series No.
2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                             W I T N E S S E T H :

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (the "Subject Land") and all Improvements which are
now or hereafter may be constructed on the Subject Land (such Improvements being
hereinafter referred to as the "Subject Improvements" or the "Subject
Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the

                                      -2-



benefit of the Lessor and the Lenders to secure the Lessee's performance under
and payment of all amounts under the Lease and the other Operative Documents
(the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the Lessee in and to the Subject
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it being

                                      -3-



understood that the Lessee hereby deeds and warrants and grants a security
interest in the Subject Property and all proceeds thereof to the Lessor to
secure all Loans and Lessor Amounts advanced by the Participants for the
acquisition of such Properties (the principal amount of which shall not exceed
in the aggregate $58,033,031.30 outstanding at any given time), together with
Yield or interest thereon, and all other amounts payable under the Operative
Documents in connection therewith) and (iii) the possession by the Lessor or any
of its agents of notes and such other items of property as constitute
instruments, money, negotiable documents, goods or tangible chattel paper shall
be deemed to be "perfection by possession" for purposes of perfecting the
security interest pursuant to Section 9-313 of the California Uniform Commercial
Code and the Lessor hereby acknowledges that it holds possession of such
instruments, money, negotiable documents, goods or tangible chattel paper for
the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the
California Uniform Commercial Code; and (iv) notifications to Persons holding
such property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent
with the Master Lease and the Lease Supplements, take such actions and execute,
deliver, file and record such other documents, financing statements and deeds of
trust as may be necessary to ensure that, if the Lease was deemed to create a
security interest in the Subject Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest (subject
only to Permitted Property Liens) and will be maintained as such throughout the
Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject Property, (B) located
in, on or about the Subject Property or (C) used or intended to be used with or
in connection with the construction, use, operation or enjoyment of the Subject

                                      -4-



Property; (iv) all right, title and interest of the Lessee in any and all
leases, rental agreements and arrangements of any sort now or hereafter
affecting the Subject Property or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the Subject
Property or any portion thereof, whether the user enjoys the Subject Property or
any portion thereof as tenant for years, licensee, tenant at sufferance or
otherwise, and irrespective of whether such leases, rental agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof (the "Subject Leases") and guaranties of the
performance or obligations of any tenants or lessees thereunder, together with
all income, rents, issues, profits and revenues from the Subject Leases
(including all tenant security deposits and all other tenant deposits, whether
held by the Lessee or in a trust account, and all other deposits and escrow
funds relating to any Subject Leases), and all the estate, right, title,
interest, property, possession, claim and demand whatsoever at law, as well as
in equity, of the Lessee of, in and to the same; provided, however, that the
Lessee shall have a revocable license to collect and apply such rental payments
and revenues as provided in the Master Lease and the other Operative Documents;
(v) to the extent transferable under any Requirement of Law, all right, title
and interest of the Lessee in, to and under all management contracts, service
contracts, utility contracts, leases of equipment, documents and agreements
relating to the construction of any Improvements (including any and all
construction contracts, architectural contracts, engineering contracts, designs,
plans, specifications, drawings, surveys, tests, reports, bonds and governmental
approvals) and all other contracts, licenses and permits now or hereafter
affecting the Subject Property or any part thereof and all guaranties and
warranties with respect to any of the foregoing (the "Subject Contracts"); (vi)
all right, title and interest of the Lessee in any insurance policies or binders
required to be maintained by the Lessee pursuant to the terms of the Master
Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default and demand for the sale and of written notice of
default and of election to cause to be sold the Subject Property which notice
the Trustee shall cause to be filed for record to the extent

                                      -5-



required by law. The Beneficiary also shall deposit with the Trustee the Lease
Supplement and all documents evidencing the Lease Balance and expenditures
secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and fixtures in any manner permitted under
Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary
elects to proceed in the manner permitted under Section 9604(a)(1)(B) of

                                      -6-



the California Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property, personal property
and fixtures covered hereby, as designated by the Beneficiary, and the Trustee
is hereby authorized and empowered to conduct any such sale of any real
property, personal property and fixtures in accordance with the procedures
applicable to real property. Where the Mortgaged Property consists of real
property and personal property, any reinstatement of the obligation secured
hereby, following default and an election by Beneficiary to accelerate the
maturity of said obligation, which is made by the Beneficiary or any other
person or entity permitted to exercise the right of reinstatement under Section
2924c of the California Civil Code or any successor statute, shall not, in
accordance with the terms of California Commercial Code Section 9604(a)(3)(C),
prohibit the Beneficiary from conducting a sale or other disposition of any
personal property or fixtures or from otherwise proceeding against or continuing
to proceed against any personal property or fixtures in any manner permitted by
the California Commercial Code; nor shall any such reinstatement invalidate,
rescind or otherwise affect any sale, disposition or other proceedings held,
conducted or instituted with respect to any personal property or fixtures prior
to such reinstatement or pending at the time of such reinstatement. Any sums
paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c
of the California Civil Code shall be applied to the secured obligation and to
the Beneficiary's and the Trustee's reasonable costs and expenses in the manner
required by Section 2924c. Should the Beneficiary elect to sell any portion of
the Mortgaged Property which is real property or which is personal property or
fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the
California Commercial Code to sell together with real property in accordance
with the laws governing a sale of real property, the Beneficiary or the Trustee
shall give such notice of default and election to sell as may then be required
by law. Any requirement of the California Commercial Code for reasonable
notification shall be met by mailing written notice to the Lessee at its address
above set forth at least ten (10) days prior to the sale or other event for
which such notice is required. Notwithstanding anything to the contrary in this
Lease Supplement, the Lessee, in accordance with the applicable laws of the
State of California and applicable provisions of the California Rules of
Procedure, or of any other general or local law or rules or regulations of the
State of California relating to deeds of trust does hereby declare and assent to
the passage of a decree to sell the Mortgaged Property by the equity court
having jurisdiction for the sale thereof and the Trustee appointed by such
decree of court shall have, subject to the terms of the decree of court, the
same authority and power to sell on the terms and conditions herein set forth.
This assent to decree shall not be exhausted in the event the proceeding is
dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO

                                      -7-



OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN
AND TO THE SUBJECT PROPERTY.

          8.      Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

          9.      GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                      -8-



         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                 LESSEE:

                                 LAM RESEARCH CORPORATION, as Lessee

                                 By /s/Craig Garber
                                    ---------------------
                                    Name: Craig Garber
                                    Its: VP and Treasurer

                                 LESSOR:

                                 SELCO SERVICE CORPORATION, an Ohio
                                   corporation, doing business in California as
                                   "Ohio SELCO Service Corporation", as
                                   Lessor

                                 By /s/ Donald C. Davis
                                    ------------------------
                                    Donald C. Davis
                                    Its: Vice President

                                      -9-



STATE OF CALIFORNIA      )
                         ) SS.:
COUNTY OF ALAMEDA        )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]

                                                    Notary Public

                                          _________________________________

                                                 (TYPE OR PRINT NAME)



STATE OF COLORADO       )
                        ) SS.:
COUNTY OF BOULDER       )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]

                                             Notary Public

                                   _________________________________

                                          (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

_____________________________

                                      -11-



SCHEDULE I
TO LEASE SUPPLEMENT NO. 3

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 2

PARCEL TWO:

PARCEL 2, PARCEL MAP 5001, FILED MARCH 18, 1987, IN BOOK 168 OF MAPS, AT PAGES
24 THROUGH 26, ALAMEDA COUNTY RECORDS.

RESERVING THEREFROM:

AN EASEMENT FOR PRIVATE ACCESS OVER THAT PORTION LYING WITHIN THE AREA
DESIGNATED "J.A.E." ON SAID MAP.

PARCEL THREE:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED
LANDS, FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY THAT CERTAIN
INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492, ALAMEDA COUNTY
RECORDS:

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3 AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWESTERLY CORNER OF SAID PARCEL 3; THENCE ALONG THE
WESTERLY LINE OF PARCEL 3, SOUTH 7(DEGREE) 11' 33" EAST, 150.00 FEET; THENCE THE
FOLLOWING FOUR (4) COURSES AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00
FEET; NORTH 7(DEGREE) 11' 33" WEST, 45.00 FEET; NORTH 4(DEGREE) 16' 47" WEST,
59.04 FEET; AND NORTH 7(DEGREE) 11' 33" WEST, 46.04 FEET TO THE NORTHERLY LINE
OF PARCEL 3; THENCE ALONG SAID NORTHERLY LINE, SOUTH 82(DEGREE) 48' 27" WEST,
15.00 FEET TO THE POINT OF BEGINNING.

PARCEL FOUR:

AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING DESCRIBED LANDS
FOR THE BENEFIT OF PARCEL 2, HEREIN, AS CREATED BY

                                      -12-



THAT CERTAIN INSTRUMENT RECORDED AUGUST 10, 1994, INSTRUMENT NO. 94-275492,
ALAMEDA COUNTY RECORDS.

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF FREMONT, COUNTY OF
ALAMEDA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL 3, AS SHOWN UPON THAT
CERTAIN PARCEL MAP 5001, FILED FOR RECORD IN BOOK 168 OF MAPS, AT PAGES 24, 25
AND 26, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE WESTERLY LINE OF PARCEL 3, DISTANT NORTHERLY 25.18
FEET FROM THE SOUTHWESTERLY CORNER THEREOF; THENCE ALONG SAID WESTERLY LINE,
NORTH 7(DEGREE) 11' 33" WEST, 281.49 FEET; THENCE THE FOLLOWING FIVE (5) COURSES
AND DISTANCES: NORTH 82(DEGREE) 48' 27" EAST, 12.00 FEET; SOUTH 7(DEGREE) 11'
33" EAST, 168.34 FEET; SOUTH 37(DEGREE) 48' 27" WEST, 5.66 FEET; SOUTH 7(DEGREE)
11' 33" EAST, 110.09 FEET; AND SOUTH 89(DEGREE) 32' 31" WEST, 8.06 FEET TO THE
POINT OF BEGINNING.

PARCEL SIX:

AN EASEMENT FOR PRIVATE ACCESS FOR THE BENEFIT OF PARCEL TWO, ABOVE, OVER THAT
PORTION OF PARCEL 1, PARCEL MAP 5001 DESIGNATED "J.A.E." ON SAID MAP.

                                      -13-

EX-10.90

                                                                   Exhibit 10.90

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606

                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                          LEASE SUPPLEMENT NO. 4 (LAND)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 4 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI")



and Lessee and recorded in the Official Records on January 21, 2000 as Series
No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the
Lessee and recorded in the Official Records on January 21, 2000 as Series No.
2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                                   WITNESSETH:

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (herein referred to as the "Subject Land" or the
"Subject Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the benefit of the Lessor and the
Lenders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents (the "Subject Obligations").

                                       -2-


         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the Lessee in and to the Subject
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it being
understood that the Lessee hereby deeds and warrants and grants a security
interest in the Subject Property and all proceeds thereof to the Lessor to
secure all Loans and Lessor Amounts advanced by the Participants for the
acquisition of such Properties (the principal

                                       -3-


amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at
any given time), together with Yield or interest thereon, and all other amounts
payable under the Operative Documents in connection therewith) and (iii) the
possession by the Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents, goods or
tangible chattel paper shall be deemed to be "perfection by possession" for
purposes of perfecting the security interest pursuant to Section 9-313 of the
California Uniform Commercial Code and the Lessor hereby acknowledges that it
holds possession of such instruments, money, negotiable documents, goods or
tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to
Section 9-313(c) of the California Uniform Commercial Code; and (iv)
notifications to Persons holding such property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as applicable)
of the Lessee shall be deemed to have been given for the purpose of perfecting
such security interest under all Applicable Laws. The Lessor and the Lessee
shall, to the extent consistent with the Master Lease and the Lease Supplements,
take such actions and execute, deliver, file and record such other documents,
financing statements and deeds of trust as may be necessary to ensure that, if
the Lease was deemed to create a security interest in the Subject Property in
accordance with this Section, such security interest would be deemed to be a
perfected security interest (subject only to Permitted Property Liens) and will
be maintained as such throughout the Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject Property, (B) located
in, on or about the Subject Property or (C) used or intended to be used with or
in connection with the construction, use, operation or enjoyment of the Subject
Property; (iv) all right, title and interest of the Lessee in any and all
leases, rental agreements and arrangements of any sort now or hereafter
affecting the Subject Property or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the

                                       -4-


Subject Property or any portion thereof, whether the user enjoys the Subject
Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject Leases") and
guaranties of the performance or obligations of any tenants or lessees
thereunder, together with all income, rents, issues, profits and revenues from
the Subject Leases (including all tenant security deposits and all other tenant
deposits, whether held by the Lessee or in a trust account, and all other
deposits and escrow funds relating to any Subject Leases), and all the estate,
right, title, interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Lessee of, in and to the same; provided,
however, that the Lessee shall have a revocable license to collect and apply
such rental payments and revenues as provided in the Master Lease and the other
Operative Documents; (v) to the extent transferable under any Requirement of
Law, all right, title and interest of the Lessee in, to and under all management
contracts, service contracts, utility contracts, leases of equipment, documents
and agreements relating to the construction of any Improvements (including any
and all construction contracts, architectural contracts, engineering contracts,
designs, plans, specifications, drawings, surveys, tests, reports, bonds and
governmental approvals) and all other contracts, licenses and permits now or
hereafter affecting the Subject Property or any part thereof and all guaranties
and warranties with respect to any of the foregoing (the "Subject Contracts");
(vi) all right, title and interest of the Lessee in any insurance policies or
binders required to be maintained by the Lessee pursuant to the terms of the
Master Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default and demand for the sale and of written notice of
default and of election to cause to be sold the Subject Property which notice
the Trustee shall cause to be filed for record to the extent required by law.
The Beneficiary also shall deposit with the Trustee the Lease Supplement and all
documents evidencing the Lease Balance and expenditures secured hereby.

                                       -5-


         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and fixtures in any manner permitted under
Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary
elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the
California Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property, personal property
and fixtures covered hereby, as designated by the Beneficiary, and the Trustee
is hereby authorized and empowered to conduct

                                       -6-


any such sale of any real property, personal property and fixtures in accordance
with the procedures applicable to real property. Where the Mortgaged Property
consists of real property and personal property, any reinstatement of the
obligation secured hereby, following default and an election by Beneficiary to
accelerate the maturity of said obligation, which is made by the Beneficiary or
any other person or entity permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute, shall
not, in accordance with the terms of California Commercial Code Section
9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other
disposition of any personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or fixtures in
any manner permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceedings held, conducted or instituted with respect to any personal
property or fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
secured obligation and to the Beneficiary's and the Trustee's reasonable costs
and expenses in the manner required by Section 2924c. Should the Beneficiary
elect to sell any portion of the Mortgaged Property which is real property or
which is personal property or fixtures that Beneficiary has elected under
Section 9604(a)(1)(b) of the California Commercial Code to sell together with
real property in accordance with the laws governing a sale of real property, the
Beneficiary or the Trustee shall give such notice of default and election to
sell as may then be required by law. Any requirement of the California
Commercial Code for reasonable notification shall be met by mailing written
notice to the Lessee at its address above set forth at least ten (10) days prior
to the sale or other event for which such notice is required. Notwithstanding
anything to the contrary in this Lease Supplement, the Lessee, in accordance
with the applicable laws of the State of California and applicable provisions of
the California Rules of Procedure, or of any other general or local law or rules
or regulations of the State of California relating to deeds of trust does hereby
declare and assent to the passage of a decree to sell the Mortgaged Property by
the equity court having jurisdiction for the sale thereof and the Trustee
appointed by such decree of court shall have, subject to the terms of the decree
of court, the same authority and power to sell on the terms and conditions
herein set forth. This assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT
OR ANY LENDER IN AND TO THE SUBJECT PROPERTY.

                                       -7-


         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                       -8-


         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                        LESSEE:

                                        LAM RESEARCH CORPORATION, as Lessee

                                        By /s/ Craig Garber
                                           ------------------------
                                           Name: Craig Garber
                                           Its: VP and Treasurer

                                        LESSOR:

                                        SELCO SERVICE CORPORATION, an Ohio
                                           corporation, doing business in
                                           California as "Ohio SELCO Service
                                           Corporation", as Lessor

                                        By /s/ Donald C. Davis
                                           ------------------------
                                           Donald C. Davis
                                           Its: Vice President

                                       -9-


STATE OF CALIFORNIA        )
                           ) SS.:
COUNTY OF ALAMEDA          )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                      Notary Public

                                            ________________________________

                                                   (TYPE OR PRINT NAME)


STATE OF COLORADO          )
                           ) SS.:
COUNTY OF BOULDER          )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]
                                                      Notary Public

                                            ____________________________________

                                                  (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________

                                      -11-


SCHEDULE I
TO LEASE SUPPLEMENT NO. 4

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 8

PARCEL A:

PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND
28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

                                      -12-

EX-10.91

                                                                   Exhibit 10.91

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND AFTER
RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606

                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                      LEASE SUPPLEMENT NO. 5 (IMPROVEMENTS)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 5 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI")



and Lessee and recorded in the Official Records on January 21, 2000 as Series
No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the
Lessee and recorded in the Official Records on January 21, 2000 as Series No.
2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                                   WITNESSETH:

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (the "Subject Land") and all Improvements which are
now or hereafter may be constructed on the Subject Land (such Improvements being
hereinafter referred to as the "Subject Improvements" or the "Subject
Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the

                                       -2-


benefit of the Lessor and the Lenders to secure the Lessee's performance under
and payment of all amounts under the Lease and the other Operative Documents
(the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the Lessee in and to the Subject
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it being

                                       -3-


understood that the Lessee hereby deeds and warrants and grants a security
interest in the Subject Property and all proceeds thereof to the Lessor to
secure all Loans and Lessor Amounts advanced by the Participants for the
acquisition of such Properties (the principal amount of which shall not exceed
in the aggregate $58,033,031.30 outstanding at any given time), together with
Yield or interest thereon, and all other amounts payable under the Operative
Documents in connection therewith) and (iii) the possession by the Lessor or any
of its agents of notes and such other items of property as constitute
instruments, money, negotiable documents, goods or tangible chattel paper shall
be deemed to be "perfection by possession" for purposes of perfecting the
security interest pursuant to Section 9-313 of the California Uniform Commercial
Code and the Lessor hereby acknowledges that it holds possession of such
instruments, money, negotiable documents, goods or tangible chattel paper for
the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the
California Uniform Commercial Code; and (iv) notifications to Persons holding
such property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent
with the Master Lease and the Lease Supplements, take such actions and execute,
deliver, file and record such other documents, financing statements and deeds of
trust as may be necessary to ensure that, if the Lease was deemed to create a
security interest in the Subject Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest (subject
only to Permitted Property Liens) and will be maintained as such throughout the
Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject Property, (B) located
in, on or about the Subject Property or (C) used or intended to be used with or
in connection with the construction, use, operation or enjoyment of the Subject

                                       -4-


Property; (iv) all right, title and interest of the Lessee in any and all
leases, rental agreements and arrangements of any sort now or hereafter
affecting the Subject Property or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the Subject
Property or any portion thereof, whether the user enjoys the Subject Property or
any portion thereof as tenant for years, licensee, tenant at sufferance or
otherwise, and irrespective of whether such leases, rental agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof (the "Subject Leases") and guaranties of the
performance or obligations of any tenants or lessees thereunder, together with
all income, rents, issues, profits and revenues from the Subject Leases
(including all tenant security deposits and all other tenant deposits, whether
held by the Lessee or in a trust account, and all other deposits and escrow
funds relating to any Subject Leases), and all the estate, right, title,
interest, property, possession, claim and demand whatsoever at law, as well as
in equity, of the Lessee of, in and to the same; provided, however, that the
Lessee shall have a revocable license to collect and apply such rental payments
and revenues as provided in the Master Lease and the other Operative Documents;
(v) to the extent transferable under any Requirement of Law, all right, title
and interest of the Lessee in, to and under all management contracts, service
contracts, utility contracts, leases of equipment, documents and agreements
relating to the construction of any Improvements (including any and all
construction contracts, architectural contracts, engineering contracts, designs,
plans, specifications, drawings, surveys, tests, reports, bonds and governmental
approvals) and all other contracts, licenses and permits now or hereafter
affecting the Subject Property or any part thereof and all guaranties and
warranties with respect to any of the foregoing (the "Subject Contracts"); (vi)
all right, title and interest of the Lessee in any insurance policies or binders
required to be maintained by the Lessee pursuant to the terms of the Master
Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default and demand for the sale and of written notice of
default and of election to cause to be sold the Subject Property which notice
the Trustee shall cause to be filed for record to the extent

                                       -5-


required by law. The Beneficiary also shall deposit with the Trustee the Lease
Supplement and all documents evidencing the Lease Balance and expenditures
secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and fixtures in any manner permitted under
Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary
elects to proceed in the manner permitted under Section 9604(a)(1)(B) of

                                       -6-


the California Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property, personal property
and fixtures covered hereby, as designated by the Beneficiary, and the Trustee
is hereby authorized and empowered to conduct any such sale of any real
property, personal property and fixtures in accordance with the procedures
applicable to real property. Where the Mortgaged Property consists of real
property and personal property, any reinstatement of the obligation secured
hereby, following default and an election by Beneficiary to accelerate the
maturity of said obligation, which is made by the Beneficiary or any other
person or entity permitted to exercise the right of reinstatement under Section
2924c of the California Civil Code or any successor statute, shall not, in
accordance with the terms of California Commercial Code Section 9604(a)(3)(C),
prohibit the Beneficiary from conducting a sale or other disposition of any
personal property or fixtures or from otherwise proceeding against or continuing
to proceed against any personal property or fixtures in any manner permitted by
the California Commercial Code; nor shall any such reinstatement invalidate,
rescind or otherwise affect any sale, disposition or other proceedings held,
conducted or instituted with respect to any personal property or fixtures prior
to such reinstatement or pending at the time of such reinstatement. Any sums
paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c
of the California Civil Code shall be applied to the secured obligation and to
the Beneficiary's and the Trustee's reasonable costs and expenses in the manner
required by Section 2924c. Should the Beneficiary elect to sell any portion of
the Mortgaged Property which is real property or which is personal property or
fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the
California Commercial Code to sell together with real property in accordance
with the laws governing a sale of real property, the Beneficiary or the Trustee
shall give such notice of default and election to sell as may then be required
by law. Any requirement of the California Commercial Code for reasonable
notification shall be met by mailing written notice to the Lessee at its address
above set forth at least ten (10) days prior to the sale or other event for
which such notice is required. Notwithstanding anything to the contrary in this
Lease Supplement, the Lessee, in accordance with the applicable laws of the
State of California and applicable provisions of the California Rules of
Procedure, or of any other general or local law or rules or regulations of the
State of California relating to deeds of trust does hereby declare and assent to
the passage of a decree to sell the Mortgaged Property by the equity court
having jurisdiction for the sale thereof and the Trustee appointed by such
decree of court shall have, subject to the terms of the decree of court, the
same authority and power to sell on the terms and conditions herein set forth.
This assent to decree shall not be exhausted in the event the proceeding is
dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO

                                       -7-


OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN
AND TO THE SUBJECT PROPERTY.

         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                       -8-


         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                        LESSEE:

                                        LAM RESEARCH CORPORATION, as Lessee

                                        By /s/ Craig Garber
                                           ------------------------
                                           Name: Craig Garber
                                           Its: VP and Treasurer

                                        LESSOR:

                                        SELCO SERVICE CORPORATION, an Ohio
                                           corporation, doing business in
                                           California as "Ohio SELCO Service
                                           Corporation", as Lessor

                                        By /s/ Donald C. Davis
                                           ------------------------
                                           Donald C. Davis
                                           Its: Vice President

                                       -9-


STATE OF CALIFORNIA        )
                           ) SS.:
COUNTY OF ALAMEDA          )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                     Notary Public

                                            _________________________________

                                                  (TYPE OR PRINT NAME)



STATE OF COLORADO          )
                           ) SS.:
COUNTY OF BOULDER          )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]
                                                      Notary Public

                                            _________________________________

                                                    (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________

                                      -11-


SCHEDULE I
TO LEASE SUPPLEMENT NO. 5

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 8

PARCEL A:

PARCEL 1, MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES 27 AND
28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

                                      -12-

EX-10.92

                                                                   Exhibit 10.92

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606

                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                          LEASE SUPPLEMENT NO. 6 (LAND)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 6 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI")



and Lessee and recorded in the Official Records on January 21, 2000 as Series
No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the
Lessee and recorded in the Official Records on January 21, 2000 as Series No.
2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                                   WITNESSETH:

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (herein referred to as the "Subject Land" or the
"Subject Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the benefit of the Lessor and the
Lenders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Documents (the "Subject Obligations").

                                       -2-


         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the Lessee in and to the Subject
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it being
understood that the Lessee hereby deeds and warrants and grants a security
interest in the Subject Property and all proceeds thereof to the Lessor to
secure all Loans and Lessor Amounts advanced by the Participants for the
acquisition of such Properties (the principal

                                       -3-


amount of which shall not exceed in the aggregate $58,033,031.30 outstanding at
any given time), together with Yield or interest thereon, and all other amounts
payable under the Operative Documents in connection therewith) and (iii) the
possession by the Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents, goods or
tangible chattel paper shall be deemed to be "perfection by possession" for
purposes of perfecting the security interest pursuant to Section 9-313 of the
California Uniform Commercial Code and the Lessor hereby acknowledges that it
holds possession of such instruments, money, negotiable documents, goods or
tangible chattel paper for the benefit of the Lessor and the Lenders pursuant to
Section 9-313(c) of the California Uniform Commercial Code; and (iv)
notifications to Persons holding such property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as applicable)
of the Lessee shall be deemed to have been given for the purpose of perfecting
such security interest under all Applicable Laws. The Lessor and the Lessee
shall, to the extent consistent with the Master Lease and the Lease Supplements,
take such actions and execute, deliver, file and record such other documents,
financing statements and deeds of trust as may be necessary to ensure that, if
the Lease was deemed to create a security interest in the Subject Property in
accordance with this Section, such security interest would be deemed to be a
perfected security interest (subject only to Permitted Property Liens) and will
be maintained as such throughout the Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject Property, (B) located
in, on or about the Subject Property or (C) used or intended to be used with or
in connection with the construction, use, operation or enjoyment of the Subject
Property; (iv) all right, title and interest of the Lessee in any and all
leases, rental agreements and arrangements of any sort now or hereafter
affecting the Subject Property or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the

                                       -4-


Subject Property or any portion thereof, whether the user enjoys the Subject
Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject Leases") and
guaranties of the performance or obligations of any tenants or lessees
thereunder, together with all income, rents, issues, profits and revenues from
the Subject Leases (including all tenant security deposits and all other tenant
deposits, whether held by the Lessee or in a trust account, and all other
deposits and escrow funds relating to any Subject Leases), and all the estate,
right, title, interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Lessee of, in and to the same; provided,
however, that the Lessee shall have a revocable license to collect and apply
such rental payments and revenues as provided in the Master Lease and the other
Operative Documents; (v) to the extent transferable under any Requirement of
Law, all right, title and interest of the Lessee in, to and under all management
contracts, service contracts, utility contracts, leases of equipment, documents
and agreements relating to the construction of any Improvements (including any
and all construction contracts, architectural contracts, engineering contracts,
designs, plans, specifications, drawings, surveys, tests, reports, bonds and
governmental approvals) and all other contracts, licenses and permits now or
hereafter affecting the Subject Property or any part thereof and all guaranties
and warranties with respect to any of the foregoing (the "Subject Contracts");
(vi) all right, title and interest of the Lessee in any insurance policies or
binders required to be maintained by the Lessee pursuant to the terms of the
Master Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default and demand for the sale and of written notice of
default and of election to cause to be sold the Subject Property which notice
the Trustee shall cause to be filed for record to the extent required by law.
The Beneficiary also shall deposit with the Trustee the Lease Supplement and all
documents evidencing the Lease Balance and expenditures secured hereby.

                                       -5-


         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and fixtures in any manner permitted under
Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary
elects to proceed in the manner permitted under Section 9604(a)(1)(B) of the
California Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property, personal property
and fixtures covered hereby, as designated by the Beneficiary, and the Trustee
is hereby authorized and empowered to conduct

                                       -6-


any such sale of any real property, personal property and fixtures in accordance
with the procedures applicable to real property. Where the Mortgaged Property
consists of real property and personal property, any reinstatement of the
obligation secured hereby, following default and an election by Beneficiary to
accelerate the maturity of said obligation, which is made by the Beneficiary or
any other person or entity permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute, shall
not, in accordance with the terms of California Commercial Code Section
9604(a)(3)(C), prohibit the Beneficiary from conducting a sale or other
disposition of any personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or fixtures in
any manner permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceedings held, conducted or instituted with respect to any personal
property or fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Beneficiary in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
secured obligation and to the Beneficiary's and the Trustee's reasonable costs
and expenses in the manner required by Section 2924c. Should the Beneficiary
elect to sell any portion of the Mortgaged Property which is real property or
which is personal property or fixtures that Beneficiary has elected under
Section 9604(a)(1)(b) of the California Commercial Code to sell together with
real property in accordance with the laws governing a sale of real property, the
Beneficiary or the Trustee shall give such notice of default and election to
sell as may then be required by law. Any requirement of the California
Commercial Code for reasonable notification shall be met by mailing written
notice to the Lessee at its address above set forth at least ten (10) days prior
to the sale or other event for which such notice is required. Notwithstanding
anything to the contrary in this Lease Supplement, the Lessee, in accordance
with the applicable laws of the State of California and applicable provisions of
the California Rules of Procedure, or of any other general or local law or rules
or regulations of the State of California relating to deeds of trust does hereby
declare and assent to the passage of a decree to sell the Mortgaged Property by
the equity court having jurisdiction for the sale thereof and the Trustee
appointed by such decree of court shall have, subject to the terms of the decree
of court, the same authority and power to sell on the terms and conditions
herein set forth. This assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT
OR ANY LENDER IN AND TO THE SUBJECT PROPERTY.

                                       -7-


         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                       -8-


         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                        LESSEE:

                                        LAM RESEARCH CORPORATION, as Lessee

                                        By /s/ Craig Garber
                                           ------------------------
                                           Name: Craig Garber
                                           Its: VP and Treasurer

                                        LESSOR:

                                        SELCO SERVICE CORPORATION, an Ohio
                                           corporation, doing business in
                                           California as "Ohio SELCO Service
                                           Corporation", as Lessor

                                        By /s/ Donald C. Davis
                                           ------------------------
                                           Donald C. Davis
                                           Its: Vice President

                                       -9-


STATE OF CALIFORNIA        )
                           ) SS.:
COUNTY OF ALAMEDA          )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                     Notary Public

                                            _________________________________

                                                  (TYPE OR PRINT NAME)



STATE OF COLORADO          )
                           ) SS.:
COUNTY OF BOULDER          )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]
                                                     Notary Public

                                            _________________________________

                                                   (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:

____________________

                                      -11-


SCHEDULE I
TO LEASE SUPPLEMENT NO. 6

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 9

PARCEL A:

PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES
27 AND 28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

                                      -12-

EX-10.93

                                                                   Exhibit 10.93
THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
AFTER RECORDING RETURN TO:

Sean T. Maloney
SCHIFF HARDIN & WAITE
6600 Sears Tower
233 South Wacker Drive
Chicago, Illinois  60606

                          SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE ONLY
- --------------------------------------------------------------------------------

NOTICE:  THIS INSTRUMENT SECURES FUTURE ADVANCES UNDER A CREDIT FACILITY IN THE
         AGGREGATE AMOUNT OF $58,033,031.30, THE PRIORITY OF WHICH DATE TO THE
         RECORDING DATE HEREOF.

NOTICE:  THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS DEED OF
         TRUST PROVIDES FOR A VARIABLE INTEREST RATE.

                      LEASE SUPPLEMENT NO. 7 (IMPROVEMENTS)
                        (Memorandum of Lease Supplement,
        Memorandum of Amended and Restated Master Lease and Deed of Trust
              Fixture Filing and Memorandum of Option to Purchase)

         THIS LEASE SUPPLEMENT NO. 7 (Memorandum of Lease Supplement, Memorandum
of Master Lease and Deed of Trust, Fixture Filing and Memorandum of Option to
Purchase) (this "Lease Supplement") dated as of June 1, 2003, between LAM
RESEARCH CORPORATION, a Delaware corporation, having its principal office at
4300 Cushing Parkway, Fremont, California 94538 Attention: Craig Garber, as the
Lessee, and SELCO SERVICE CORPORATION, an Ohio corporation, doing business in
California as "OHIO SELCO SERVICE CORPORATION", as Lessor (the "Lessor"), and
whose principal offices are located at c/o KeyCorp Leasing, 66 South Pearl
Street, Albany, New York, 12207 and CHICAGO TITLE COMPANY, a California
corporation, as trustee (`Trustee"), having its principal office at 110 West
Taylor Street, San Jose, California 95110, for the benefit of Lessor and the
Lenders ("Beneficiary").

         The Amended and Restated Master Lease and Deed of Trust which this
Lease Supplement supplements and of which this Lease Supplement is a memorandum,
amends, restates, supercedes and replaces the unrecorded leases (a) with a lease
balance of $30,000,000, disclosed by the following recorded documents:
Memorandum of Lease (Lease Supplement), made by and between the Cushing 2000
Trust, a Delaware business trust ("Cushing Trust") and the Lessee and recorded
in the Official Records of Alameda County, California ("Official Records") on
December 7, 2000 as Series No. 2000359109 and Memorandum of Lease (Lease
Supplement Land) made by and between the Cushing Trust and the Lessee and
recorded in the Official Records on December 7, 2000 as Series No. 2000359110
and (b) with a lease balance of $27,146,185.35, disclosed by the following
recorded document: Memorandum of Lease (Lease Supplement), made by and between
Scotiabanc, Inc., a Delaware corporation ("SBI")



and Lessee and recorded in the Official Records on January 21, 2000 as Series
No. 2000019028 and Memorandum of Lease (Land) made by and between SBI and the
Lessee and recorded in the Official Records on January 21, 2000 as Series No.
2000019027.

ATTENTION OF RECORDING OFFICERS: Certain of the Property is or will become
"fixtures" (as that term is defined in the California Uniform Commercial Code)
on the real estate described in Schedule I attached hereto and this instrument,
upon being filed for record in the real estate records, shall operate also as a
financing statement upon such of the Property which is or may become fixtures.
The Lessee has an interest of record in the Property. This instrument is to be
recorded in, among other places, the real estate records of the county in which
such property is located.

                                   WITNESSETH:

         WHEREAS, the Lessor is the record owner of the land described on
Schedule I attached hereto (the "Subject Land") and all Improvements which are
now or hereafter may be constructed on the Subject Land (such Improvements being
hereinafter referred to as the "Subject Improvements" or the "Subject
Property");

         WHEREAS, the Lessor desires to lease the Subject Property to the Lessee
and the Lessee wishes to lease the Subject Property from the Lessor;

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to enter
into this Lease Supplement, as follows:

         1.       Certain Terms. Capitalized terms used but not otherwise
defined in this Lease Supplement have the meanings specified in Appendix A to
the Participation Agreement dated as of June 1, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the "Participation
Agreement"), and the rules of interpretation specified in Appendix A to the
Participation Agreement shall apply to this Lease Supplement.

         2.       Nature of Transaction. (a) The parties intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be
treated as the owner and lessor of the respective Properties and the Lessee will
be treated as the lessee of such Properties and (ii) for federal, state and
local income tax purposes, state real estate and commercial law purposes and
bankruptcy purposes, (A) the Lease will be treated as a financing arrangement,
(B) the Lessor and the Lenders will be deemed lenders making loans to the Lessee
in an amount equal to the sum of the Lessor Amounts and the outstanding
principal amount of the Loans, which loans are secured by such Properties and
(C) the Lessee will be treated as the owner of such Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like
such Properties for such tax purposes.

         (b)      It is the intent of the parties hereto that this Lease
Supplement grants a security interest and deed of trust, as the case may be, on
the Subject Property to the Trustee for the

                                       -2-


benefit of the Lessor and the Lenders to secure the Lessee's performance under
and payment of all amounts under the Lease and the other Operative Documents
(the "Subject Obligations").

         3.       Subject Property; Memorandum of Lease. Attached hereto as
Schedule I is the description of the Subject Land. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee, the Subject
Property shall be subject to the terms and provisions of the Master Lease. The
Master Lease is incorporated by reference herein as if set forth herein in its
entirety. Subject to the terms and conditions of the Master Lease, the Lessor
hereby leases the Subject Property to the Lessee for the Lease Term (as defined
below) of this Lease Supplement, and the Lessee hereby agrees with the Lessor to
lease the Subject Property from the Lessor for the Lease Term. The Master Lease
is dated as of June 1, 2003 and is by and between the Lessor and the Lessee.

         4.       Lease Term; Option to Purchase. The term of this Lease
Supplement (the "Lease Term") shall begin on June 24, 2003 and shall end on June
23, 2008 (the "Expiration Date"). For and in consideration of good and valuable
consideration paid by the Lessee to the Lessor as described in the Master Lease,
the Lessor hereby grants to the Lessee the right to purchase the Subject
Property during the Lease Term of this Lease Supplement on the terms and subject
to the conditions (including, without limitation, payment of the Property
Balance thereof) set forth in Section 18.1 of the Master Lease and Section 15.14
of the Participation Agreement.

         5.       Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 2, the Lessor and the Lessee intend and agree
that in the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any State or Commonwealth thereof
affecting the Lessee, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as loans
made by the Lenders and the Lessor as unrelated third party lenders to the
Lessee secured by respective Properties (it being understood that the Lessee
hereby deeds, warrants and grants a security interest in the Subject Property
(consisting of a fee deed of trust with respect to the Subject Property) WITH
POWER OF SALE to the Trustee for the benefit of the Lessor and the Lenders to
secure all Lessor Amounts and Loans advanced by the Participants for the
acquisition of the respective Properties together with Yield or interest, as
applicable, thereon, and all other amounts payable under the Operative Documents
in connection therewith, effective on the date hereof).

         (b)      Specifically, but without limiting the generality of Section
2, the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans from the Lessor and the Lenders to the Lessee, (i) the Master Lease and
the Lease Supplements shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the California Uniform
Commercial Code and a real property deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Master Lease shall be deemed to be a grant
by the Lessee to the Beneficiary of a deed of trust lien and security interest
in all of the right, title and interest of the Lessee in and to the Subject
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it being

                                       -3-


understood that the Lessee hereby deeds and warrants and grants a security
interest in the Subject Property and all proceeds thereof to the Lessor to
secure all Loans and Lessor Amounts advanced by the Participants for the
acquisition of such Properties (the principal amount of which shall not exceed
in the aggregate $58,033,031.30 outstanding at any given time), together with
Yield or interest thereon, and all other amounts payable under the Operative
Documents in connection therewith) and (iii) the possession by the Lessor or any
of its agents of notes and such other items of property as constitute
instruments, money, negotiable documents, goods or tangible chattel paper shall
be deemed to be "perfection by possession" for purposes of perfecting the
security interest pursuant to Section 9-313 of the California Uniform Commercial
Code and the Lessor hereby acknowledges that it holds possession of such
instruments, money, negotiable documents, goods or tangible chattel paper for
the benefit of the Lessor and the Lenders pursuant to Section 9-313(c) of the
California Uniform Commercial Code; and (iv) notifications to Persons holding
such property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
all Applicable Laws. The Lessor and the Lessee shall, to the extent consistent
with the Master Lease and the Lease Supplements, take such actions and execute,
deliver, file and record such other documents, financing statements and deeds of
trust as may be necessary to ensure that, if the Lease was deemed to create a
security interest in the Subject Property in accordance with this Section, such
security interest would be deemed to be a perfected security interest (subject
only to Permitted Property Liens) and will be maintained as such throughout the
Lease Term.

         (c)      Specifically, but without limiting the foregoing or the
generality of Section 2, the Lessee hereby grants to the Trustee, IN TRUST, WITH
POWER OF SALE, for the benefit of Beneficiary, all of the Lessee's right, title
and interest in and to the following (collectively, the "Mortgaged Property"):
(i) the Subject Property and Appurtenant Rights relating thereto and all
proceeds, both cash and noncash, thereof; (ii) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights,
waters, water courses, water rights, including, without limitation, the stock in
any water company providing water for irrigation of the Subject Property,
minerals, flowers, shrubs, crops, trees, timber and other emblements now or
hereafter located on the Subject Land or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Subject Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Lessee from any source;
(iii) if and to the extent acquired by the Lessee with the proceeds of Advances
(and transferred to the Lessor by SBI or Cushing Trust), all right, title and
interest of the Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
vehicles (excluding the Lessee's personal automobiles), chattels, goods,
consumer goods, farm products, warranties, chattel paper, documents, accounts,
general intangibles, and goodwill related thereto, and all other articles of
personal property of every kind and nature whatsoever, tangible or intangible,
now, heretofore or hereafter acquired and now, heretofore or hereafter (A)
arising out of or related to the ownership of the Subject Property, (B) located
in, on or about the Subject Property or (C) used or intended to be used with or
in connection with the construction, use, operation or enjoyment of the Subject

                                       -4-


Property; (iv) all right, title and interest of the Lessee in any and all
leases, rental agreements and arrangements of any sort now or hereafter
affecting the Subject Property or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the Subject
Property or any portion thereof, whether the user enjoys the Subject Property or
any portion thereof as tenant for years, licensee, tenant at sufferance or
otherwise, and irrespective of whether such leases, rental agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof (the "Subject Leases") and guaranties of the
performance or obligations of any tenants or lessees thereunder, together with
all income, rents, issues, profits and revenues from the Subject Leases
(including all tenant security deposits and all other tenant deposits, whether
held by the Lessee or in a trust account, and all other deposits and escrow
funds relating to any Subject Leases), and all the estate, right, title,
interest, property, possession, claim and demand whatsoever at law, as well as
in equity, of the Lessee of, in and to the same; provided, however, that the
Lessee shall have a revocable license to collect and apply such rental payments
and revenues as provided in the Master Lease and the other Operative Documents;
(v) to the extent transferable under any Requirement of Law, all right, title
and interest of the Lessee in, to and under all management contracts, service
contracts, utility contracts, leases of equipment, documents and agreements
relating to the construction of any Improvements (including any and all
construction contracts, architectural contracts, engineering contracts, designs,
plans, specifications, drawings, surveys, tests, reports, bonds and governmental
approvals) and all other contracts, licenses and permits now or hereafter
affecting the Subject Property or any part thereof and all guaranties and
warranties with respect to any of the foregoing (the "Subject Contracts"); (vi)
all right, title and interest of the Lessee in any insurance policies or binders
required to be maintained by the Lessee pursuant to the terms of the Master
Lease or now or hereafter relating to the Subject Property, including any
unearned premiums thereon, as further provided in the Master Lease; (vii) all
right, title and interest of the Lessee in any and all awards, payments,
proceeds and the right to receive the same, either before or after any
foreclosure hereunder, as a result of any temporary or permanent injury or
damage to, taking of or decrease in the value of the Subject Property by reason
of casualty, condemnation or otherwise as further provided in the Master Lease;
(viii) all claims and causes of action arising from or otherwise related to any
of the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; and (ix) all Modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; all of which foregoing items
are hereby declared and shall be deemed to be a portion of the security for the
indebtedness and Subject Obligations herein described, a portion of the above
described collateral being located upon the Subject Land; provided however that,
without limiting the foregoing, the Mortgaged Property shall not include any
inventory of the Lessee.

         6.       Remedies. Without limiting any other remedies set forth
herein, in the event that a court of competent jurisdiction rules that each of
the Master Lease and this Lease Supplement constitutes a deed of trust or other
secured financing with respect to the Subject Property as is the intent of the
parties pursuant to Article XXV of the Master Lease, then the Lessor and the
Lessee agree that upon a Lease Event of Default, the Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to the Trustee of
written declaration of default and demand for the sale and of written notice of
default and of election to cause to be sold the Subject Property which notice
the Trustee shall cause to be filed for record to the extent

                                       -5-


required by law. The Beneficiary also shall deposit with the Trustee the Lease
Supplement and all documents evidencing the Lease Balance and expenditures
secured hereby.

         After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, the Trustee, without demand on the Lessee, shall sell
the Mortgaged Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. The Trustee may postpone sale of all or any
portion of the Mortgaged Property by public announcement at such time and place
of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. The Trustee shall
deliver to such purchaser its deed conveying the property so sold, but without
any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Lessee, the Trustee, or the Beneficiary as hereinafter
defined, may purchase at such sale. The Lessee shall have all rights available
to a Trustor under the laws of the jurisdiction in which the Mortgaged Property
is located except to the extent waived in the Operative Documents. The Lessee
agrees that the agreements of the Lessee herein contained shall be specifically
enforceable by injunction or any other appropriate equitable remedy and that for
the purpose of any suit brought under this subparagraph, the Lessee hereby
waives the defense of laches and any applicable statute of limitations.

         After deducting all costs, fees and expenses of the Trustee and of this
trust, including cost of evidence of title in connection with sale, the Trustee
shall apply to proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in
effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto. In the
event of foreclosure, the Lessee authorizes and empowers the Trustee or the
Beneficiary to effect insurance upon the Subject Property in amounts aforesaid
for a period covering the time of redemption from foreclosure sale provided by
law, and if necessary therefor, to cancel any or all existing insurance
policies. In connection with any sale or sales hereunder, Beneficiary may elect
to treat to the fullest extent permitted by law any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property. Any sale of any personal property hereunder shall be
conducted in any manner permitted by Section 9604 or any other applicable
section of the California Commercial Code. Where the Mortgaged Property consists
of real and personal property or fixtures whether or not such personal property
is located on or within the real property, the Beneficiary may elect in its
discretion to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the generality of the
foregoing, the Beneficiary may, in its sole and absolute discretion and without
regard to the adequacy of its security, elect to proceed against any or all of
the real property, personal property and fixtures in any manner permitted under
Section 9604(a)(1) of the California Commercial Code; and if the Beneficiary
elects to proceed in the manner permitted under Section 9604(a)(1)(B) of

                                       -6-


the California Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property, personal property
and fixtures covered hereby, as designated by the Beneficiary, and the Trustee
is hereby authorized and empowered to conduct any such sale of any real
property, personal property and fixtures in accordance with the procedures
applicable to real property. Where the Mortgaged Property consists of real
property and personal property, any reinstatement of the obligation secured
hereby, following default and an election by Beneficiary to accelerate the
maturity of said obligation, which is made by the Beneficiary or any other
person or entity permitted to exercise the right of reinstatement under Section
2924c of the California Civil Code or any successor statute, shall not, in
accordance with the terms of California Commercial Code Section 9604(a)(3)(C),
prohibit the Beneficiary from conducting a sale or other disposition of any
personal property or fixtures or from otherwise proceeding against or continuing
to proceed against any personal property or fixtures in any manner permitted by
the California Commercial Code; nor shall any such reinstatement invalidate,
rescind or otherwise affect any sale, disposition or other proceedings held,
conducted or instituted with respect to any personal property or fixtures prior
to such reinstatement or pending at the time of such reinstatement. Any sums
paid to the Beneficiary in effecting any reinstatement pursuant to Section 2924c
of the California Civil Code shall be applied to the secured obligation and to
the Beneficiary's and the Trustee's reasonable costs and expenses in the manner
required by Section 2924c. Should the Beneficiary elect to sell any portion of
the Mortgaged Property which is real property or which is personal property or
fixtures that Beneficiary has elected under Section 9604(a)(1)(b) of the
California Commercial Code to sell together with real property in accordance
with the laws governing a sale of real property, the Beneficiary or the Trustee
shall give such notice of default and election to sell as may then be required
by law. Any requirement of the California Commercial Code for reasonable
notification shall be met by mailing written notice to the Lessee at its address
above set forth at least ten (10) days prior to the sale or other event for
which such notice is required. Notwithstanding anything to the contrary in this
Lease Supplement, the Lessee, in accordance with the applicable laws of the
State of California and applicable provisions of the California Rules of
Procedure, or of any other general or local law or rules or regulations of the
State of California relating to deeds of trust does hereby declare and assent to
the passage of a decree to sell the Mortgaged Property by the equity court
having jurisdiction for the sale thereof and the Trustee appointed by such
decree of court shall have, subject to the terms of the decree of court, the
same authority and power to sell on the terms and conditions herein set forth.
This assent to decree shall not be exhausted in the event the proceeding is
dismissed before the indebtedness secured hereby is paid in full.

         7.       Non-Responsibility. Nothing contained in this Lease Supplement
shall be construed as constituting the consent or request of the Lessor, the
Administrative Agent, or any other Participant, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Subject
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR NOR
THE ADMINISTRATIVE AGENT NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE SUBJECT PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO

                                       -7-


OR AFFECT THE INTEREST OF THE LESSOR, THE ADMINISTRATIVE AGENT OR ANY LENDER IN
AND TO THE SUBJECT PROPERTY.

         8.       Ratification. The terms and provisions of the Master Lease are
hereby ratified and confirmed and remain in full force and effect. In the event
of any conflict between the terms of the Master Lease and the terms of this
Lease Supplement, the terms of the Master Lease shall control.

         9.       GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.

         10.      Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

         11.      Maximum Recourse Amount. The percentage applicable to the
calculation of the Maximum Recourse Amount for the Subject Property is set forth
on Schedule III to the Participation Agreement.

                                       -8-


         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease Supplement as of the date first above written.

                                        LESSEE:

                                        LAM RESEARCH CORPORATION, as Lessee

                                        By /s/ Craig Garber
                                           ------------------------
                                           Name: Craig Garber
                                           Its: VP and Treasurer

                                        LESSOR:

                                        SELCO SERVICE CORPORATION, an Ohio
                                           corporation, doing business in
                                           California as "Ohio SELCO Service
                                           Corporation", as Lessor

                                        By /s/ Donald C. Davis
                                           ------------------------
                                           Donald C. Davis
                                           Its: Vice President

                                       -9-


STATE OF CALIFORNIA        )
                           ) SS.:
COUNTY OF ALAMEDA          )

         On June ___, 2003 before me, _________________________, personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed this instrument.

         WITNESS my hand and official seal.

[SEAL]
                                                    Notary Public

                                            _____________________________

                                                 (TYPE OR PRINT NAME)



STATE OF COLORADO          )
                           ) SS.:
COUNTY OF BOULDER          )

         I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Donald C. Davis, the Vice President of
SELCO SERVICE CORPORATION, an Ohio corporation (doing business in California as
"Ohio SELCO Service Corporation"), who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such Vice
President, appeared before me this day in person and acknowledged that he signed
and delivered the said instrument as his own free and voluntary act and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth.

         Given under my hand and notarial seal, this _____ day of June, 2003.

[NOTARIAL SEAL]
                                                     Notary Public

                                            ________________________________

                                                  (TYPE OR PRINT NAME)

(SEAL)

Commission Expires:
___________________


                                      -11-


SCHEDULE I
TO LEASE SUPPLEMENT NO. 7

                        LEGAL DESCRIPTION OF SUBJECT LAND

Property No. 9

PARCEL A:

PARCEL 2, PARCEL MAP 5736, FILED JULY 29, 1991, BOOK 198 OF PARCEL MAPS, PAGES
27 AND 28, ALAMEDA COUNTY RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON, OVER
AND ACROSS PORTIONS OF PARCELS 1 AND 3, PARCEL MAP 4347, FILED NOVEMBER 16,
1984, BOOK 149 OF PARCEL MAPS, PAGES 21 AND 22, ALAMEDA COUNTY RECORDS, AS
DEFINED AND GRANTED IN THE RECIPROCAL EASEMENT AND MAINTENANCE AGREEMENT
EXECUTED BY AND BETWEEN WESTLAND INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP,
AND BAYSIDE PARK INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP, RECORDED JANUARY
2, 1987, SERIES NO. 87-000118, ALAMEDA COUNTY RECORDS.

                                      -12-

EX-10.94

                                                                   Exhibit 10.94

                        CONFIDENTIAL TREATMENT REQUESTED

================================================================================

                             PARTICIPATION AGREEMENT

                            Dated as of June 1, 2003

                                      among

                            LAM RESEARCH CORPORATION,
                                   as Lessee,

                           SELCO SERVICE CORPORATION,
                                   as Lessor,

                           KEY CORPORATE CAPITAL INC.,
                                   as Lender,

                                       and

                           KEY CORPORATE CAPITAL INC.,
                             as Administrative Agent

                            -------------------------
                          KEY LEASE ADVISORY SERVICES,
                                    Arranger

================================================================================

* THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
  BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.


                                TABLE OF CONTENTS



SECTION HEADING                                                                                                    PAGE
                                                                                                                
Parties.........................................................................................................     1
Recitals........................................................................................................     1
ARTICLE I DEFINITIONS; INTERPRETATION...........................................................................     1

ARTICLE II  DOCUMENTATION DATE..................................................................................     2

          Section 2.1. Documentation Date.......................................................................     2

ARTICLE III FUNDING OF ADVANCES.................................................................................     4

          Section 3.1. Advances.................................................................................     4

          Section 3.2. Lessor Commitment........................................................................     4

          Section 3.3. Lenders' Commitments.....................................................................     5

          Section 3.4. Procedures for Advances..................................................................     5

          Section 3.5. Interest Rate; Yield Rate................................................................     5

ARTICLE IV YIELD; INTEREST; FEES................................................................................     6

          Section 4.1. Yield....................................................................................     6

          Section 4.2. Interest on Loans........................................................................     6

          Section 4.3. Payments of Rent; Payments and Prepayments of Loans and Lessor Amounts...................     6

          Section 4.4. Fees.....................................................................................     6

          Section 4.5. Place and Manner of Payments.............................................................     7

          Section 4.6. Pro Rata Treatment.......................................................................     7

          Section 4.7. Sharing of Payments......................................................................     7

ARTICLE V CERTAIN INTENTIONS OF THE PARTIES.....................................................................     8

          Section 5.1. Nature of Transaction....................................................................     8

          Section 5.2. Amounts Due Under the Lease..............................................................     9

ARTICLE VI CONDITIONS PRECEDENT:  ACQUISITION DATES.............................................................     9

          Section 6.1. Acquisition Dates........................................................................     9

          Section 6.2. Delivery of Documents....................................................................    13

ARTICLE VII DISTRIBUTIONS.......................................................................................    13

          Section 7.1. Basic Rent...............................................................................    13

          Section 7.2. Purchase Payments by the Lessee..........................................................    13

          Section 7.3. Payment of Maximum Recourse Amounts......................................................    13

          Section 7.4. Sales Proceeds of Remarketing of the Properties..........................................    14


                                       -i-



                                                                                                                 
          Section 7.5. Supplemental Rent........................................................................    14

          Section 7.6. Distribution of Payments after Lease Event of Default....................................    14

          Section 7.7. Casualty and Condemnation Amounts........................................................    16

          Section 7.8. Other Payments...........................................................................    16

          Section 7.9. Order of Application.....................................................................    17

          Section 7.10. Payments to Account.....................................................................    17

ARTICLE VIII REPRESENTATIONS....................................................................................    17

          Section 8.1. Representations of the Lenders...........................................................    17

          Section 8.2. Representations of the Lessee............................................................    17

          Section 8.3. Representations of the Lessor............................................................    21

ARTICLE IX PAYMENT OF CERTAIN EXPENSES..........................................................................    22

          Section 9.1. Transaction Expenses.....................................................................    22

          Section 9.2. Brokers' Fees and Stamp Taxes............................................................    22

          Section 9.3. Loan Agreement and Related Obligations...................................................    23

ARTICLE X OTHER COVENANTS AND AGREEMENTS........................................................................    23

          Section 10.1. Covenants of the Lessee.................................................................    23

          Section 10.2. SELCO Status............................................................................    28

          Section 10.3. Covenants of Each Participant...........................................................    28

          Section 10.4. Release of Properties...................................................................    29

ARTICLE XI [INTENTIONALLY OMITTED]..............................................................................    29

ARTICLE XII TRANSFERS OF PARTICIPANTS' INTERESTS................................................................    29

          Section 12.1. Assignments.............................................................................    29

          Section 12.2. Participations..........................................................................    31

          Section 12.3. Withholding Taxes; Disclosure of Information; Pledge Under Regulation A.................    31

ARTICLE XIII INDEMNIFICATION....................................................................................    32

          Section 13.1. General Indemnification.................................................................    32

          Section 13.2. End of Term Indemnity...................................................................    33

          Section 13.3. Environmental Indemnity.................................................................    34

          Section 13.4. Proceedings in Respect of Claims........................................................    36

          Section 13.5. General Tax Indemnity...................................................................    37

          Section 13.6. Indemnity Payments in Addition to Lease Obligations.....................................    41

          Section 13.7. Eurodollar Rate Lending Unlawful........................................................    41



                                      -ii-


                                                                                                                 
          Section 13.8. Deposits Unavailable....................................................................    41

          Section 13.9. Increased Costs, etc....................................................................    42

          Section 13.10. Funding Losses; Break Costs............................................................    43

          Section 13.11. Capital Adequacy.......................................................................    43

ARTICLE XIV [INTENTIONALLY RESERVED]............................................................................    44

ARTICLE XV MISCELLANEOUS........................................................................................    44

          Section 15.1. Survival of Agreements..................................................................    44

          Section 15.2. No Broker, Etc..........................................................................    45

          Section 15.3. Notices.................................................................................    45

          Section 15.4. Counterparts............................................................................    45

          Section 15.5. Amendments, Etc.........................................................................    45

          Section 15.6. Headings, Etc...........................................................................    46

          Section 15.7. Parties in Interest.....................................................................    46

          Section 15.8. Governing Law...........................................................................    47

          Section 15.9. Severability............................................................................    47

          Section 15.10. Liability Limited......................................................................    47

          Section 15.11. Submission to Jurisdiction.............................................................    47

          Section 15.12. Setoff.................................................................................    47

          Section 15.13. No Participant Responsible for Other Participants......................................    48

          Section 15.14. Partial Purchase Option................................................................    48



                          
Appendix A          --       Definitions
Schedule I          --       Commitments
Schedule II         --       Notice Information, Wire Instructions and Funding Offices
Schedule III        --       Lease Balance Allocations
Exhibit 8.2(l)      --       Disclosure of Certain Matters
Exhibit A-1         --       Form of Legal Opinion of In-House Counsel to Lessee
Exhibit A-2         --       Form of Legal Opinion of Heller Ehrman White & McAuliffe LLP
Exhibit B           --       Form of Funding Request
Exhibit C           --       Form of Master Lease
Exhibit D           --       Form of Loan Agreement
Exhibit E           --       Form of Compliance Certificate
Exhibit F           --       Form of Assignment Agreement
Exhibit G           --       [Intentionally Reserved]
Exhibit H           --       Form of Assignment of Lease and Rent
Exhibit I           --       Form of Mortgage



                                     -iii-


                             PARTICIPATION AGREEMENT

         THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated as
of June 1, 2003, is entered into by and among LAM RESEARCH CORPORATION, a
Delaware corporation, as Lessee, (the "Lessee"); SELCO SERVICE CORPORATION, an
Ohio corporation, as Lessor (the "Lessor"); KEY CORPORATE CAPITAL, INC., a
Michigan corporation, as Lender, (together with any other holder of a Note the
"Lenders"); and KEY CORPORATE CAPITAL INC., a Michigan corporation, as
Administrative Agent (the "Administrative Agent").

                              W I T N E S S E T H:

         WHEREAS, on the Acquisition Date, the Lessor will purchase the
Properties from one or more third parties designated by the Lessee;

         WHEREAS, the Lessor desires to lease the Properties to the Lessee, and
the Lessee desires to lease the Properties from the Lessor;

         WHEREAS, the Lessor is willing to provide a portion of the funding of
the costs of the acquisition of the Properties;

         WHEREAS, the Lenders are willing to provide the remaining portion of
the funding of the costs of the acquisition of the Properties; and

         WHEREAS, to secure such financing (a) the Lessor will have the benefit
of a first priority Lien on the Properties and the Cash Collateral, and (b) the
Lenders will have the benefit of (i) a Lien on the Lessor's right, title and
interest in the Properties and the Cash Collateral, and (ii) an assignment of
certain of the Lessor's rights against the Lessee under the Lease;

         NOW THEREFORE, in consideration of the mutual agreements contained in
this Participation Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    ARTICLE I
                           DEFINITIONS; INTERPRETATION

         Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof (as such Appendix A may be amended, supplemented,
amended and restated or otherwise modified from time to time, "Appendix A to
this Participation Agreement"); and the rules of interpretation set forth in
Appendix A to this Participation Agreement shall apply to this Participation
Agreement.



Lam Research Corporation                                 Participation Agreement

                                   ARTICLE II
                               DOCUMENTATION DATE

         Section 2.1. Documentation Date. The Documentation Date (the
"Documentation Date") shall be deemed to have occurred and all rights and
obligations of the parties to the Operative Documents (each subject to any
conditions specified therein) shall be in effect, upon satisfaction or waiver of
each of the following conditions precedent:

                  (a)      Participation Agreement. This Participation Agreement
         shall have been duly authorized, executed and delivered by the parties
         hereto.

                  (b)      Master Lease. The Master Lease shall have been duly
         authorized, executed and delivered by the parties thereto.

                  (c)      Loan Agreement and Notes. The Loan Agreement and each
         Lender's Note shall have been duly authorized, executed and delivered
         by the parties thereto.

                  (d)      Assignment of Lease and Rent. The Assignment of Lease
         and Rent shall have been duly authorized, executed and delivered by the
         Lessor, as assignor, to the Administrative Agent, as assignee, and the
         Assignment of Lease and Rent shall have been consented to and
         acknowledged by the Lessee.

                  (e)      Transaction Expenses and Fees. The applicable Person
         shall have received all Fees payable on the Documentation Date and all
         Transaction Expenses, to the extent then invoiced, shall have been
         paid.

                  (f)      Corporate Documents; Certificates. The Lessee shall
         have delivered, or shall have caused to be delivered, to the
         Administrative Agent and each Participant the following:

                           (i)      Certificate of Incorporation. Copies of its
                  certificate of incorporation, certified to be true and
                  complete as of a recent date by the appropriate governmental
                  authority of the jurisdiction of its incorporation.

                           (ii)     Resolutions. Copies of resolutions or other
                  authority documentation of its Board of Directors approving
                  and adopting the Operative Documents, the transactions
                  contemplated therein and authorizing execution and delivery
                  thereof, certified by a secretary or assistant secretary as of
                  the Documentation Date to be true and correct and in full
                  force and effect as of such date and evidence of corporate
                  authority of the Lessee with respect to the Operative
                  Documents and the transactions contemplated therein.

                           (iii)    Bylaws. A copy of the Lessee's bylaws
                  certified by its secretary or assistant secretary as of the
                  Documentation Date to be true and correct and in full force
                  and effect as of such date.

                                      -2-


Lam Research Corporation                                 Participation Agreement

                           (iv)     Good Standing. Copies of certificates of
                  good standing, existence or its equivalent for the Lessee,
                  certified as of a recent date by the appropriate governmental
                  authority of the jurisdiction of its incorporation.

                           (v)      Opinions of Counsel. Opinions of counsel for
                  the Lessee addressed to the Administrative Agent and each of
                  the Participants in forms acceptable to the Administrative
                  Agent and each of the Participants.

                  (g)      Lessor Corporate Documents; Certificates. The Lessor
         shall have delivered, or shall have caused to be delivered to each of
         the other parties hereto the following:

                           (i)      Articles of Incorporation. Copies of its
                  articles of incorporation, certified to be true and complete
                  as of a recent date by the appropriate governmental authority
                  of the state of its incorporation.

                           (ii)     Resolutions. Copies of resolutions of its
                  Board of Directors approving and adopting the Operative
                  Documents to which it is or is to be a party, the transactions
                  contemplated therein and authorizing execution and delivery
                  thereof, certified by its secretary or assistant secretary as
                  of the Documentation Date to be true and correct and in full
                  force and effect as of such date.

                           (iii)    Regulations. A copy of its regulations
                  certified by its secretary or assistant secretary as of the
                  Documentation Date to be true and correct and in full force
                  and effect as of such date.

                           (iv)     Good Standing. A copy of a certificate of
                  good standing, existence or its equivalent, certified as of a
                  recent date by the appropriate governmental authority of the
                  State of Ohio.

                  (h)      Representations and Warranties. On the Documentation
         Date, the representations and warranties of each of the parties hereto
         contained in Sections 8.1, 8.2 and 8.3 shall be true and correct as
         though made on and as of such date, except to the extent such
         representations or warranties relate solely to an earlier date, in
         which case such representations and warranties shall have been true and
         correct in all material respects on and as of such earlier date and
         each of the Lessee and the Lessor shall have delivered a certificate to
         such effect with respect to its representations and warranties.

                  (i)      No Default. No Default or Event of Default shall have
         occurred and be continuing on the Documentation Date unless such
         Default or Event of Default shall have been waived in accordance with
         the Operative Documents.

                  (j)      Governmental Approvals. All Governmental Actions
         required by any Requirement of Law for the purpose of authorizing the
         Lessee, the Administrative Agent or any Participant to enter into the
         Operative Documents shall have been obtained or made and be in full
         force and effect.

                                      -3-


Lam Research Corporation                                 Participation Agreement

                  (k)      Litigation. No action or proceeding shall have been
         instituted or threatened, nor shall any governmental action be
         instituted or threatened before any Governmental Authority, nor shall
         any order, judgment or decree have been issued or proposed to be issued
         by any Governmental Authority, to set aside, restrain, enjoin or
         prevent the performance of this Participation Agreement or any
         transaction contemplated hereby or by any other Operative Document or
         which is reasonably likely, in the sole opinion of each Participant, to
         have a Material Adverse Effect.

                  (l)      Requirements of Law. In the opinion of each
         Participant, no change shall have occurred or been proposed in
         Applicable Law that would make it uneconomic or illegal for any party
         to any Operative Document to participate in any of the transactions
         contemplated by the Operative Documents or otherwise would prohibit the
         consummation of any transaction contemplated by the Operative Documents
         or expand the duties, obligations and risks of any Participant.

         All documents and instruments required to be delivered pursuant to this
Section 2.1 shall be delivered at the offices of Schiff Hardin & Waite, 6600
Sears Tower, Chicago, Illinois 60606 or at such other location as may be
determined by the Lessee, the Lessor and the Administrative Agent and in such
numbers as shall be reasonably requested. Unless otherwise agreed among the
Lessee, the Lessor and the Administrative Agent, the Documentation Date shall
coincide with the first Acquisition Date.

                                   ARTICLE III
                               FUNDING OF ADVANCES

         Section 3.1. Advances. Subject to the conditions and terms hereof, the
Lessor shall take the following actions at the written request of the Lessee:

                  (a)      the Lessor shall make Advances (out of funds provided
         by itself and the Lenders) for the purpose of financing the acquisition
         by the Lessor of the Properties and the payment of Transaction Expenses
         and Fees relating thereto; and

                  (b)      the Lessor shall lease the Properties to the Lessee
         under the Master Lease and the respective Lease Supplements.

Notwithstanding any other provision hereof, (i) no Advance shall be made with
respect to any Property after the Acquisition Date therefor, and (ii) the
Participants shall not be obligated to make any Advance with respect to any
Property if, after giving effect thereto, (x) the aggregate outstanding amounts
of the Loans and the Lessor Amounts would exceed the Aggregate Commitment
Amount, or (y) the Property Cost thereof would exceed the Fair Market Sales
Value of such Property as set forth in the Appraisal thereof delivered pursuant
to Section 6.1(d) hereof.

         Section 3.2. Lessor Commitment. Subject to the conditions and terms
hereof, on each Acquisition Date during the Commitment Period, the Lessor shall
make available at the written request of the Lessee during the Commitment Period
on each Acquisition Date, an amount (a

                                      -4-


Lam Research Corporation                                 Participation Agreement

"Lessor Amount") in immediately available funds equal to the Lessor's Commitment
Percentage of the amount of the Advance being funded on such Acquisition Date.
Notwithstanding any other provision hereof, the Lessor shall not be obligated to
make available any Lessor Amount if, after giving effect to the proposed Lessor
Amount, the outstanding aggregate amount of the Lessor Amounts would exceed the
Lessor Commitment.

         Section 3.3. Lenders' Commitments. Subject to the conditions and terms
hereof, on each Acquisition Date during the Commitment Period, each Lender shall
make a Loan to the Lessor at the written request of the Lessee in an aggregate
amount in immediately available funds equal to such Lender's Commitment
Percentage of the amount of the Advance being funded on such Acquisition Date.
Notwithstanding any other provision hereof, no Lender shall be obligated to make
any Loan if, after giving effect to the proposed Loan, the outstanding amount of
such Lender's Loans would exceed such Lender's Commitment.

         Section 3.4. Procedures for Advances. (a) With respect to each
Acquisition Date, the Lessee shall give the Lessor, the Administrative Agent and
each Lender prior written notice pursuant to a Funding Request substantially in
the form of Exhibit B (a "Funding Request"), which Funding Request shall be
delivered not later than 11:00 a.m. (New York time), two (2) Business Days prior
to the proposed Acquisition Date. Such Funding Request shall set forth (i) the
proposed Acquisition Date, (ii) the amount of the Advance requested, (iii) a
description of the Property to which such Funding Request relates, (iv) the
seller of the Property being acquired, and (v) wire transfer instructions for
the disbursement of the proceeds of such Advance. Subject to timely delivery of
a Funding Request and the other terms and conditions of the Operative Documents,
(x) each Lender shall make its Commitment Percentage available to the
Administrative Agent at the Account by 2:00 p.m. (New York time) on the
requested Acquisition Date and (y) the Lessor shall make its Commitment
Percentage of the requested Advance available to the Administrative Agent at the
Account by 2:00 p.m. (New York time) on the requested Acquisition Date. Promptly
upon the Administrative Agent's receipt of such funds from the Participants, the
Administrative Agent shall wire such funds on the applicable Acquisition Date to
the Persons entitled thereto and to such accounts as the Lessee shall have
indicated in the Funding Request. Each Advance shall consist of (i) a Lessor
Amount equal to 6.0% of such Advance and (ii) Loans in an aggregate amount equal
to 94.0% of such Advance, such Loans to be allocated between Series A Notes and
Series B Notes in accordance with Schedule I hereto.

         (b)      Except as the Participants may otherwise agree in writing,
Advances shall be made solely to pay the Property Cost of each Property and
related Fees and Transaction Expenses.

         Section 3.5. Interest Rate; Yield Rate. Each Loan shall accrue interest
as set forth in Section 2.5 of the Loan Agreement, and each Lessor Amount shall
accrue Yield by reference to the Adjusted Eurodollar Rate, in each case subject
to the provisions of Sections 13.7, 13.8 and 13.9 (to the extent applicable).

                                      -5-


Lam Research Corporation                                 Participation Agreement

                                   ARTICLE IV
                              YIELD; INTEREST; FEES

         Section 4.1. Yield. (a) The amount of the Lessor Amounts outstanding
from time to time shall accrue yield ("Yield") at the Yield Rate. If all or any
portion of the Lessor Amounts, any Yield payable thereon or any other amount
payable hereunder shall not be paid when due (whether at stated maturity,
acceleration thereof or otherwise), such overdue amount shall bear interest at a
rate per annum which is equal to the Overdue Rate. The Lessor shall, as soon as
practicable, but in no event later than 11:00 a.m. (New York time) two (2)
Business Days before the effectiveness of each recomputation of the Adjusted
Eurodollar Rate applicable to Lessor Amounts, cause to be determined such
Adjusted Eurodollar Rate.

         (b)      The Administrative Agent shall distribute, in accordance with
Article VII, the Lessor Basic Rent and all other amounts due with respect to the
Lessor Amounts paid to the Administrative Agent by the Lessee under the Lease
from time to time.

         (c)      If not repaid sooner, the outstanding aggregate Lessor Amounts
shall be repaid in full on the Maturity Date, subject to the provisions of
Article XX of the Master Lease.

         Section 4.2. Interest on Loans. (a) Each Loan shall accrue interest
computed and payable in accordance with the terms of the Loan Agreement. Each
Loan shall become due and payable at the dates and times provided under the Loan
Agreement.

         (b)      The Administrative Agent shall distribute, in accordance with
Article VII, the Lender Basic Rent and all other amounts due with respect to the
Loans paid to the Administrative Agent by the Lessee under the Lease from time
to time.

         Section 4.3. Payments of Rent; Payments and Prepayments of Loans and
Lessor Amounts. (a) The Lessor hereby directs the Lessee to pay to the
Administrative Agent the Rent from time to time (other than Excepted Payments,
which the Lessor hereby directs the Lessee to make directly to the applicable
Person entitled thereto).

         (b)      All amounts payable by the Lessee pursuant to Article XIV, XV,
XVI, XVIII or XX of the Master Lease shall be applied to the Loans and the
Lessor Amounts in the manner set forth in Article VII hereof. Each of the
Participants hereby acknowledges that its Loans or Lessor Amounts, as the case
may be, may be so prepaid without any prepayment premium (other than Break
Costs, if any).

         (c)      Notice. The Lessee will provide notice to the Administrative
Agent, the Lessor and the Lenders of any voluntary prepayment by 9:00 a.m. (New
York time) at least three (3) Business Days prior to the date of such voluntary
prepayment.

         Section 4.4. Fees. The Lessee agrees to pay the fees set forth in this
Section 4.4 (collectively, the "Fees"), which as to the Structuring Fee and the
Commitment Fee may be paid out of Advances.

                                      -6-


Lam Research Corporation                                 Participation Agreement

                  (a)      Structuring Fee. The Lessee agrees to pay to the
         Arranger on the Documentation Date the fee (the "Structuring Fee") in
         the amount specified in the Summary of Terms.

                  (b)      Commitment Fee. The Lessee agrees to pay to each
         Participant a fee (the "Commitment Fee") on the Documentation Date
         equal to [***]% of the amount of such Participant's Commitment.

         Section 4.5. Place and Manner of Payments. Except as otherwise
specifically provided herein, all payments by the Lessee hereunder, under the
Master Lease or under any other Operative Document shall be made to the
Administrative Agent in Dollars in immediately available funds, without offset,
deduction, counterclaim or withholding of any kind, to the Account in Cleveland,
Ohio not later than 2:00 p.m. (New York time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Lessee shall, at the time it makes any payment
under any Operative Document, specify to the Administrative Agent the Basic
Rent, Property Cost, Fees, Supplemental Rent or other amounts payable by the
Lessee hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent shall distribute such payment to the
Participants in such manner as the Administrative Agent may determine to be
appropriate in respect of obligations owing by the Lessee subject to the terms
of Article VII). The Administrative Agent will distribute such payments to such
Participants in accordance with Article VII, if any such payment is received
prior to 3:00 p.m. (New York time) on a Business Day in like funds as received
prior to such time, and otherwise the Administrative Agent shall distribute such
payment to such Participants on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next Business Day (subject to
accrual of interest and fees for the period of such extension), except that in
the case of Eurodollar Loans/Lessor Amounts, if the extension would cause the
payment to be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day.

         Section 4.6. Pro Rata Treatment. Except to the extent otherwise
provided herein, each payment or repayment of principal on the outstanding Loans
and each payment of interest shall be allocated pro rata among the relevant
Lenders in accordance with their respective Loan Balances.

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

                                      -7-


Lam Research Corporation                                 Participation Agreement

         Section 4.7. Sharing of Payments. The Participants agree among
themselves that, in the event that any Participant shall obtain payment in
respect of any Loan or Lessor Amount or any other obligation owing to such
Participant under the Operative Documents through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Participant under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, in excess of its pro rata share of such payment as provided for in
this Participation Agreement, such Participant shall promptly pay such excess to
the Administrative Agent to pay to the other Participants such that all
Participants shall share such payment in accordance with their respective
ratable shares as provided for in this Participation Agreement. The Participants
further agree among themselves that if payment to a Participant obtained by such
Participant through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or must otherwise be
restored, each Participant which shall have shared the benefit of such payment
shall, return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Participant whose payment shall
have been rescinded or otherwise restored. Except as otherwise expressly
provided herein, if any Participant or the Administrative Agent shall fail to
remit to the Administrative Agent or any other Participant an amount payable by
such party to the Administrative Agent or such other Participant pursuant to the
Operative Documents on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is
due until the date such amount is paid to the Administrative Agent or such other
Participant at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Participant receives
a secured claim in lieu of a setoff to which this Section 4.7 applies, such
Participant shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Participants
under this Section 4.7 to share in the benefits of any recovery on such secured
claim.

                                    ARTICLE V
                        CERTAIN INTENTIONS OF THE PARTIES

         Section 5.1. Nature of Transaction. (a) The parties hereto intend that
(i) for financial accounting purposes with respect to the Lessee, the Lessor
will be treated as the owner and the lessor of the Properties and the Lessee
will be treated as the lessee of the Properties pursuant to an operating lease
under GAAP and (ii) for federal and all state and local income tax purposes,
state real estate and commercial law and bankruptcy purposes,

                  (A)      the Lease will be treated as a financing arrangement,

                  (B)      the Lessor and the Lenders will be deemed lenders
         making loans to the Lessee in an amount equal to the sum of the Lessor
         Amounts and the outstanding principal amount of the Loans, which
         amounts are secured by the Properties, and

                  (C)      the Lessee will be treated as the owner of the
         Properties described in the Lease Supplements and will be entitled to
         all tax benefits ordinarily available to an owner of properties like
         the Properties for such tax purposes. Nevertheless, the Lessee
         acknowledges and agrees that neither the Lessor, the Administrative
         Agent, the Arranger nor any of the Lenders has made any representations
         or warranties to the Lessee concerning the tax, Lessee's accounting or
         legal characteristics of the Operative

                                      -8-


Lam Research Corporation                                 Participation Agreement

         Documents and that the Lessee has obtained and relied upon such tax,
         accounting and legal advice concerning the Operative Documents as it
         deems appropriate.

                  (b)      Specifically, without limiting the generality of
         clause (a) of this Section 5.1, the parties hereto intend and agree
         that in the event of any insolvency or receivership proceedings or a
         petition under the United States bankruptcy laws or any other
         applicable insolvency laws or statute of the United States of America
         or any state or commonwealth thereof affecting the Lessee, the Lessor
         or the Lenders or any collection actions, the transactions evidenced by
         the Operative Documents shall be regarded as loans made by the Lessor
         and the Lenders as unrelated third party lenders of the Lessee.

         Section 5.2. Amounts Due Under the Lease. Anything herein or elsewhere
to the contrary notwithstanding, it is the intention of the Lessee, the Lessor
and the Lenders that: (i) the amount and timing of installments of Basic Rent
due and payable from time to time from the Lessee under the Lease shall be equal
to the aggregate payments due and payable as interest on the Loans and Yield on
the Lessor Amounts on each Scheduled Payment Date; (ii) if the Lessee elects the
Purchase Option with respect to all of the Properties or the Lessee becomes
obligated to purchase all of the Properties under the Lease, the Loans, the
Lessor Amounts, and all interest, Yield, Commitment Fees and all other
obligations of the Lessee owing to the Administrative Agent, the Lessor and the
Lenders shall be due and payable in full by the Lessee on the date set forth in
the Lease; (iii) if the Lessee properly elects the Remarketing Option, the
Lessee shall only be required to pay to the Administrative Agent the proceeds of
the sale of each Property, the Maximum Recourse Amount for such Property and any
amounts due pursuant to Article XIII hereof and Section 20.2 of the Master Lease
(which aggregate amounts may be less than the Property Cost of such Properties),
together with all other due and payable Supplemental Rent; (iv) upon a Lease
Event of Default resulting in an acceleration of the Lessee's obligation to
purchase each Property under the Lease, the amounts then due and payable by the
Lessee under the Lease shall include all amounts necessary to pay in full the
aggregate Property Costs of all of the Properties, plus all other amounts then
due from the Lessee under the Operative Documents; and (v) if the Lessee elects
to purchase or is required to purchase any Property pursuant to Section 14.1,
Article XV or XVIII of the Master Lease, the amounts then due and payable by the
Lessee shall include all amounts necessary to pay the Property Balance of such
Property.

                                   ARTICLE VI
                     CONDITIONS PRECEDENT: ACQUISITION DATES

         Section 6.1. Acquisition Dates. The closing date with respect to the
acquisition of any Property (each such date, an "Acquisition Date") shall occur
on a Business Day on or after the Documentation Date (but not later than June
24, 2003) on which all the conditions precedent thereto set forth in this
Section 6.1 shall have been satisfied or waived by the applicable parties as set
forth herein. The obligation of the Lessor to acquire such Property (for
purposes of this Article VI, the "Subject Property") on the respective
Acquisition Date, the obligation of the Lessor to make available any related
Lessor Amount on the respective Acquisition Date and the obligation of each
Lender to make any related Loan on the respective Acquisition Date, are subject
to satisfaction or waiver of the following conditions precedent (provided that a
failure on

                                      -9-


Lam Research Corporation                                 Participation Agreement

the part of any Participant to perform or otherwise satisfy any condition
applicable to it shall not be a condition precedent to the performance of its
obligations under the Operative Documents):

                  (a)      Funding Request. Each of the Administrative Agent and
         each Participant shall have received a fully executed counterpart of
         the applicable Funding Request in accordance with Section 3.4.

                  (b)      Transaction Expenses. All Fees and Transaction
         Expenses due and payable by the Lessee to the Participants and the
         Arranger shall have been paid or will be paid through Advances on such
         Acquisition Date.

                  (c)      Representations and Warranties. On such Acquisition
         Date, the representations and warranties of the Lessee set forth in
         Section 8.2 shall be true and correct.

                  (d)      Appraisal. On or prior to such Acquisition Date, the
         Administrative Agent and each Participant shall have received an
         Appraisal of the Subject Property, in form and substance reasonably
         satisfactory to such persons, which Appraisal shall show, as of such
         Acquisition Date, the Fair Market Sales Value of the Subject Property.

                  (e)      Governmental Approvals. All necessary Governmental
         Actions (including pursuant to any Environmental Laws) required by any
         Requirement of Law as of such Acquisition Date for the purpose of
         authorizing the Lessor to acquire the Subject Property shall have been
         obtained or made and be in full force and effect.

                  (f)      Responsible Officer's Certificate. Each Participant
         and the Administrative Agent shall have received a Responsible
         Officer's Certificate of the Lessee, addressed to the Administrative
         Agent and each Participant and dated such Acquisition Date, stating
         that (w) the representations and warranties of the Lessee contained in
         Section 8.2 hereof, are true and correct on and as of such Acquisition
         Date; (x) no Lease Default or Lease Event of Default has occurred and
         is continuing under any Operative Document; (y) each Operative Document
         to which the Lessee is a party is in full force and effect with respect
         to it; and (z) the Lessee has duly performed and complied with all
         conditions contained herein or in any other Operative Document required
         to be performed and complied with by it on or prior to such Acquisition
         Date.

                  (g)      Evidence of Insurance. Each Participant and the
         Administrative Agent shall have received evidence that the insurance
         maintained by the Lessee with respect to the Subject Property satisfies
         the requirements set forth in Article XIII of the Master Lease setting
         forth the respective coverage, limits of liability, carrier, policy
         number and period of coverage, and shall have received a letter and/or
         certificate signed by the Lessee's insurance broker confirming that the
         coverage with respect to the Subject Property complies with the
         requirements of Article XIII of the Master Lease.

                  (h)      Environmental Audit. At least five (5) Business Days
         prior to such Acquisition Date, each Participant and the Administrative
         Agent shall have received an

                                      -10-


Lam Research Corporation                                 Participation Agreement

         Environmental Audit performed by an environmental consultant reasonably
         acceptable to each Participant and the Administrative Agent and either
         addressed to such Persons or accompanied by a letter allowing such
         Persons to rely thereon with respect to the Subject Property and in
         form and substance reasonably satisfactory to each Participant and the
         Administrative Agent and stating that the applicable assessment has
         revealed no evidence of recognized environmental conditions in
         connection with the site except for specified matters, which matters
         each Participant, the Administrative Agent and the Lessee reasonably
         agree are not material. If such Environmental Audit reveals the need
         for additional review or testing, the Lessee shall have provided such
         additional assessments as are recommended by such consultant.

                  (i)      Deed. The Lessor shall have received at least five
         (5) Business Days prior to the Acquisition Date a copy of the proposed
         Deed with respect to the Subject Property, and on or prior to such
         Acquisition Date, such Deed duly executed conveying fee simple title to
         such Property to the Lessor and containing customary seller's
         warranties in the applicable jurisdiction and subject only to Permitted
         Property Liens. The legal description, tax lot designation and zoning
         of the related Land shall be reasonably acceptable to the
         Administrative Agent and each Participant.

                  (j)      Bill of Sale. If the Subject Property includes any
         Equipment, then on or prior to such Acquisition Date, the Lessor shall
         have received a bill of sale (a "Bill of Sale"), conveying title to the
         Lessor in any Equipment comprising part of the Subject Property.

                  (k)      [Intentionally Reserved].

                  (l)      Lease Supplement; Mortgage. On or prior to such
         Acquisition Date, the Lessee and the Lessor shall have executed and
         delivered a Lease Supplement with respect to the Subject Property and
         shall have delivered the original counterpart of such Lease Supplement
         to the Administrative Agent, and the Lessor shall have delivered a
         Mortgage to the Administrative Agent with respect to the Subject
         Property.

                  (m)      Financing Statements. On or prior to such Acquisition
         Date, the Lessee and the Lessor shall have delivered all UCC financing
         statements relating to the Subject Property as the Lessor or the
         Administrative Agent may reasonably request in order to protect the
         interests of the Lessor under the Lease relating to the Subject
         Property to the extent the Master Lease constitutes a security
         agreement and to protect and perfect the interests of the
         Administrative Agent in the Subject Property.

                  (n)      Recordation of Lessor Mortgage; Lessor Financing
         Statements; Search Results. The Lessor and the Administrative Agent
         shall have received (x) evidence reasonably satisfactory to it that
         each of (i) the applicable Lease Supplement and any other instrument
         constituting a Lessor Mortgage, (ii) the financing statements relating
         to the Subject Property and (iii) the Mortgage relating to the Subject
         Property has been, or is being, recorded or filed in a manner
         sufficient to properly perfect each of their interests therein and (y)
         copies of file search reports from the Uniform Commercial Code filing

                                      -11-


Lam Research Corporation                                 Participation Agreement

         officer in the jurisdiction (i) in which the Subject Property is
         located and (ii) in which is located the jurisdiction of incorporation
         of the Lessee, setting forth the results of such Uniform Commercial
         Code file searches.

                  (o)      Property Survey. On or prior to such Acquisition
         Date, the Lessee shall have delivered to each Participant and the
         Administrative Agent a 1999 ALTA/ACSM Survey of the Subject Property
         certified to each Participant and the Administrative Agent and the
         title company and otherwise in form and substance acceptable to such
         Persons.

                  (p)      Title Insurance. On or prior to such Acquisition
         Date, the Lessee shall have delivered to the Administrative Agent and
         the Lessor an ALTA (or, as the case may be, CLTA) owners and ALTA (or,
         as the case may be, CLTA) lenders title insurance policy covering the
         Subject Property in favor of the Lessor and the Administrative Agent,
         respectively, such policies to be in an amount not less than the
         Property Cost of the Subject Property, and to be reasonably
         satisfactory to the Lessor and the Administrative Agent with
         alternative estates endorsements and such other customary endorsements
         and affirmative assurances issued by the title company as a routine
         matter (including, without limitation ALTA Form 3.1 (with Parking),
         ALTA Form 6.2, ALTA Form 9, a survey endorsement, an endorsement
         deleting the standard exceptions, and an endorsement regarding
         recharacterization), to the extent reasonably available in the state
         where the Subject Property is located.

                  (q)      No Default. There shall not have occurred and be
         continuing any Default or Event of Default under any of the Operative
         Documents, and no Default or Event of Default under any of the
         Operative Documents will have occurred after giving effect to the
         acquisition of the Subject Property.

                  (r)      Opinion of Counsel and of Local Counsel to the
         Lessee. Each Participant and the Administrative Agent shall have
         received an opinion of counsel qualified with respect to the laws of
         the jurisdiction in which the Subject Property is situated, addressed
         to such Persons and in form and substance satisfactory to the
         Administrative Agent and each Participant.

                  (s)      Plans and Specifications. On or prior to July 22,
         2003, the Lessor and the Administrative Agent shall have received
         copies of the Plans and Specifications for the Subject Property,
         certified by the Lessee to be a true, correct and complete copy thereof
         as in effect on such Acquisition Date.

                  (t)      Good Standing Certificates. The Lessee and the Lessor
         shall have delivered to each Participant and the Administrative Agent a
         certificate of good standing (or its equivalent) to the effect that the
         Lessee and the Lessor are qualified to do business in the jurisdiction
         where the Subject Property is located.

                  (u)      Cash Collateral. On or prior to such Acquisition
         Date, there shall have been delivered to the Administrative Agent the
         Cash Collateral and the Cash Collateral Documents in form and substance
         satisfactory to the Administrative Agent and the

                                      -12-


Lam Research Corporation                                 Participation Agreement

         Participants, together with a completed Form FR U-1 and any other
         documents which the Administrative Agent may reasonably require in
         connection with the Cash Collateral.

                  (v)      Additional Matters. On such Acquisition Date each
         Participant and the Administrative Agent shall have received such
         additional documents and instruments related to the acquisition and
         financing of the Subject Property as any of them shall reasonably
         request in order to establish the rights and interests of the
         Administrative Agent and each Participant intended to be created under
         the Operative Documents in respect of the Subject Property and the Cash
         Collateral.

         Section 6.2. Delivery of Documents. All documents and instruments
required to be delivered pursuant to this Article VI shall be delivered at the
offices of Schiff Hardin & Waite, 6600 Sears Tower, Chicago, Illinois 60606, or
at such other location as may be determined by the Lessor, the Administrative
Agent and the Lessee.

                                   ARTICLE VII
                                  DISTRIBUTIONS

         Section 7.1. Basic Rent. Each payment of Basic Rent (and any payment of
interest on overdue installments of Basic Rent) received by the Administrative
Agent shall be distributed by the Administrative Agent, first, to the Lessor and
the Lenders pro rata without priority of one over the other for application to,
the Lender Basic Rent and Lessor Basic Rent respectively, then due, and, second,
to the Lenders and the Lessor pro rata without priority of one over the other
for application to any overdue interest or Yield (to the extent permitted by
Applicable Law).

         Section 7.2. Purchase Payments by the Lessee. Any payment received by
the Administrative Agent as a result of:

                  (a)      the purchase of all of the Properties in connection
         with the exercise of the Purchase Option under Section 18.1 of the
         Master Lease, or compliance with the obligation to purchase (or cause
         its designee to purchase) all of the Properties in accordance with
         Section 18.2 or 18.3 of the Master Lease, or

                  (b)      compliance with the obligation to purchase all of the
         Properties in accordance with Section 16.2(f) of the Master Lease, or

                  (c)      failure to fulfill one or more of the conditions to
         the exercise of the Remarketing Option with respect to any Property
         pursuant to Section 20.1 of the Master Lease and the receipt by the
         Lessor of the Lease Balance pursuant to the last paragraph of Section
         20.2 of the Master Lease, or

                  (d)      the payment of the Property Balance with respect to
         any Property in accordance with Article XV or XVIII of the Master
         Lease,

shall be distributed by the Administrative Agent to the Participants pro rata
without priority of one over the other, in the proportion that the Participant
Balance of each bears to the aggregate of

                                      -13-


Lam Research Corporation                                 Participation Agreement

all of the Participant Balances provided that if there is a shortfall in payment
of any such amount, the Lenders shall be paid in full prior to any payment to
the Lessor.

         Section 7.3. Payment of Maximum Recourse Amounts. The payment of the
Maximum Recourse Amount to the Administrative Agent pursuant to Section 20.2(f)
of the Master Lease upon the exercise of the Remarketing Option shall be
distributed to the Lenders holding Series A Notes for application to the
outstanding principal amount of the Series A Notes.

         Section 7.4. Sales Proceeds of Remarketing of the Properties. Any
payments received by the Administrative Agent as proceeds from the sale of each
Property sold pursuant to the exercise of the Remarketing Option pursuant to
Article XX of the Master Lease, together with any payment made as a result of an
End of Term Report pursuant to Section 13.2 and any amounts in excess of the
Maximum Recourse Amount (other than amounts in respect of accrued and unpaid
Rent) received by the Administrative Agent pursuant to Section 20.2(f) of the
Master Lease, shall be distributed by the Administrative Agent in the funds so
received in the following order of priority:

                  first, to the Lenders holding Series B Notes, an amount equal
         to the aggregate principal amount of the Series B Notes then
         outstanding with respect to such Property for application to the
         outstanding principal amount of Series B Notes of each such Lender, pro
         rata among such Lenders without priority of one over the other in the
         proportion that the outstanding principal amount of Series B Notes of
         each such Lender bears to the aggregate outstanding principal amount of
         Series B Notes and, in the case where the amounts so distributed shall
         be insufficient to pay in full as aforesaid, then pro rata among the
         Lenders without priority of one over the other in the proportion that
         the outstanding principal amount of Series B Notes of each such Lender
         bears to the aggregate outstanding principal amount of Series B Notes;

                  second, to the extent not previously paid as required by
         Section 7.3 hereof, an amount equal to the Maximum Recourse Amount
         shall be distributed to the Lenders holding Series A Notes as set forth
         in Section 7.3;

                  third, an amount equal to the aggregate Lessor Balance shall
         be distributed to the Lessor for application to pay in full the Lessor
         Balance; and

                  fourth, the balance, if any, shall be promptly paid to the
         Lessee as provided in Section 20.5 of the Master Lease.

         Section 7.5. Supplemental Rent. All payments of Supplemental Rent
received by the Administrative Agent (excluding any amounts payable pursuant to
the preceding provisions of this Article VII) shall be distributed promptly by
the Administrative Agent upon receipt thereof to the Persons entitled thereto
pursuant to the Operative Documents.

         Section 7.6. Distribution of Payments after Lease Event of Default. (a)
During the continuance of a Lease Event of Default and subject to clause (b)
below, all proceeds from the

                                      -14-


Lam Research Corporation                                 Participation Agreement

sale of the Properties shall be distributed by the Administrative Agent in the
following order of priority:

                  first, so much of such payment or amount as shall be required
         to pay or reimburse the Administrative Agent for any tax, fees,
         expense, indemnification or other loss incurred by the Administrative
         Agent (to the extent incurred in connection with any duties as the
         Administrative Agent), shall be distributed to the Administrative
         Agent;

                  second, so much of such payments or amounts as shall be
         required to pay the Participants the amounts payable to them pursuant
         to any expense reimbursement or indemnification provisions of the
         Operative Documents shall be distributed to each such Participant
         without priority of one over the other in accordance with the amount of
         such payment or payments payable to each such Person;

                  third, to the Lenders for application to pay in full the Loan
         Balance, pro rata among the Lenders without priority of one over the
         other in the proportion that the Participant Balance of each such
         Lender bears to the aggregate Participant Balances of all Lenders and,
         in the case where the amounts so distributed shall be insufficient to
         pay in full as aforesaid, then pro rata among the Lenders without
         priority of one over the other in the proportion that the Participant
         Balance of each such Lender bears to the aggregate Participant Balances
         of all Lenders;

                  fourth, an amount equal to the Lessor Balance shall be
         distributed to the Lessor for application to pay in full the Lessor
         Balance;

                  fifth, to the Participants and the Administrative Agent for
         any other amounts payable to them under the Operative Documents, pro
         rata based on the amounts payable; and

                  sixth, the balance, if any, of such payment or amounts
         remaining thereafter shall be promptly distributed to, or as directed
         by, the Lessee.

         (b)      All payments received and amounts realized by the
Administrative Agent in connection with any Casualty or Condemnation during the
continuance of a Lease Event of Default shall be distributed by the
Administrative Agent as follows:

                  (i)      in the event that the Lessor and the Administrative
         Agent elect to pay all or a portion of such amounts to the Lessee for
         the repair of damage caused by such Casualty or Condemnation in
         accordance with Section 14.2 of the Master Lease, then such amounts
         shall be distributed to the Lessee, and

                  (ii)     in the event that the Lessor and the Administrative
         Agent elect to apply all or a portion of such amounts to the purchase
         price of the related Property in accordance with Section 14.2 and
         Article XV of the Master Lease, then such amounts shall be distributed
         in accordance with clause (a).

                                      -15-


Lam Research Corporation                                 Participation Agreement

         (c)      All amounts (other than amounts described in clause (a) or (b)
above) received by the Administrative Agent during the continuance of a Lease
Event of Default, including, without limitation, the Cash Collateral, shall be
distributed by the Administrative Agent as follows:

                  first, so much of such payment or amount as shall be required
         to pay or reimburse the Administrative Agent for any tax, fees,
         expense, indemnification or other loss incurred by the Administrative
         Agent (to the extent incurred in connection with any duties as the
         Administrative Agent), shall be distributed to the Administrative
         Agent;

                  second, so much of such payments or amounts as shall be
         required to pay the Participants the amounts payable to them pursuant
         to any expense reimbursement or indemnification provisions of the
         Operative Documents shall be distributed to each such Lender and the
         Lessor without priority of one over the other in accordance with the
         amount of such payment or payments payable to each such Person;

                  third, to the Lenders for application to pay in full the Loan
         Balance, pro rata among the Lenders without priority of one over the
         other in the proportion that the Participant Balance of each such
         Lender bears to the aggregate Participant Balances of all Lenders and,
         in the case where the amounts so distributed shall be insufficient to
         pay in full as aforesaid, then pro rata among the Lenders without
         priority of one over the other in the proportion that the Participant
         Balance of each such Lenders bears to the aggregate Participant
         Balances of all Lenders;

                  fourth, to the Lessor in an amount equal to the Lessor Balance
         shall be distributed to the Lessor for application to the Lessor
         Balance;

                  fifth, to the Participants and the Administrative Agent for
         any other amounts payable to them under the Operative Documents, pro
         rata based on the amounts payable; and

                  sixth, the balance, if any, of such payment or amounts
         remaining thereafter shall be promptly distributed to, or as directed
         by, the Lessee.

         Section 7.7. Casualty and Condemnation Amounts. Subject to Section
7.6(b), any amounts payable to the Administrative Agent as a result of a
Casualty or Condemnation pursuant to Section 14.2 of the Master Lease and the
Assignment of Lease and Rent shall be distributed as follows:

                  (a)      all amounts payable to the Lessee in accordance with
         Section 14.2(a) of the Master Lease shall be distributed to the Lessee,
         and

                  (b)      all amounts that are to be applied to the purchase
         price of the related Property in accordance with Section 14.2(a) and
         Article XV of the Master Lease shall be distributed by the
         Administrative Agent to the Lenders and the Lessor pro rata without
         priority of one over the other, in the proportion that the Participant
         Balance of each bears to the aggregate of all of the Participant
         Balances.

                                      -16-


Lam Research Corporation                                 Participation Agreement

         Section 7.8. Other Payments. (a) Except as otherwise provided in
Sections 7.1, 7.2, 7.6 and clause (b) below, any payment received by the
Administrative Agent for which no provision as to the application thereof is
made in the Operative Documents or elsewhere in this Article VII (including any
balance remaining after the application in full of amounts to satisfy any
expressed provision) shall be distributed pro rata among the Participants
without priority of one over the other, in the proportion that the Participant
Balance of each bears to the aggregate of all the Participant Balances.

         (b)      Except as otherwise provided in Sections 7.1, 7.2 and 7.6, all
payments received and amounts realized by the Administrative Agent or the Lessor
under the Master Lease or otherwise with respect to the Properties to the extent
received or realized at any time after the indefeasible payment in full of the
Participant Balances of all of the Participants and any other amounts due and
owing to the Participants, shall be distributed forthwith by the Administrative
Agent or the Lessor, as the case may be, in the order of priority set forth in
Section 7.6(a).

         (c)      Except as otherwise provided in Sections 7.1 and 7.2, any
payment received by the Administrative Agent or the Lessor for which provisions
as to the application thereof is made in an Operative Document but not elsewhere
in this Article VII shall be distributed forthwith by the Lessor or the
Administrative Agent to the Person and for the purpose for which such payment
was made in accordance with the terms of such Operative Document.

         Section 7.9. Order of Application. To the extent any payment made to
any Participant pursuant to Sections 7.2, 7.3, 7.4, 7.6, 7.7, 7.8 or 7.9 is
insufficient to pay in full the Participant Balance of such Participant, then
each such payment shall first be applied to accrued interest or Yield and then
to principal of the Loans or the Lessor Amounts, as applicable.

         Section 7.10. Payments to Account. All payments made to the
Administrative Agent pursuant to the Operative Documents shall be made to the
Account.

                                  ARTICLE VIII
                                 REPRESENTATIONS

         Section 8.1. Representations of the Lenders. Each Lender represents and
warrants to the other parties hereto that:

                  (a)      Source of Funds. Such Lender is not and will not be
         making its Loans hereunder, and is not performing its obligations under
         the Operative Documents, with the assets of an "employee benefit plan"
         (as defined in Section 3(3) of ERISA) or "plan" (as defined in Section
         4975(e)(1) of the Code).

                  (b)      Acquisition for Investment. Each Lender is
         participating in the Transactions for its own account and not with a
         view toward redistribution; provided that disposition of its rights
         hereunder shall remain in its control and the foregoing shall not
         affect the ability of any Lender to assign or sell participations in
         its rights in accordance with the Operative Documents.

                                      -17-


Lam Research Corporation                                 Participation Agreement

         Section 8.2. Representations of the Lessee. The Lessee hereby
represents and warrants to the other parties hereto that:

                  (a)      Corporate Existence and Power. The Lessee is duly
         incorporated and validly existing in good standing under the laws of
         the jurisdiction of its incorporation, is duly qualified and in good
         standing as a foreign corporation in the state where the Properties are
         located and each other jurisdiction in which the character of the
         properties owned or leased by it or the nature of the business
         transacted by it is such that failure to maintain such qualification
         has resulted or could result in a Material Adverse Effect, and has all
         corporate powers and all governmental licenses, authorizations,
         consents and approvals required to carry on its business as now
         conducted.

                  (b)      Corporate and Governmental Authorization; No
         Contravention. The execution, delivery and performance by the Lessee of
         this Participation Agreement and the other Operative Documents to which
         it is a party (i) are within the Lessee's corporate powers and have
         been duly authorized by all necessary corporate action, (ii) require no
         action by or in respect of, or filing with, any Governmental Authority
         and (iii) do not contravene any Requirement of Law or any contractual
         restriction, order, decree or other instrument binding upon the Lessee
         or any of its Subsidiaries, except, in the case of clauses (ii) and
         (iii) above, any such action, filing or contravention which has not
         resulted in or could not result in a Material Adverse Effect.

                  (c)      Binding Effect. This Participation Agreement and each
         other Operative Document to which the Lessee is a party has been duly
         executed and delivered by the Lessee and constitutes a legal, valid and
         binding agreement of the Lessee enforceable in accordance with its
         terms, except as such enforceability may be limited by (i) applicable
         bankruptcy, insolvency, reorganization, moratorium or other similar
         laws affecting the enforcement of creditors' rights generally and (ii)
         general principles of equity (regardless of whether such enforceability
         is considered in a proceeding at law or in equity).

                  (d)      Litigation. There is no action, suit or proceeding
         pending against, or to the knowledge of the Lessee threatened against
         or affecting the Lessee before any court or arbitrator or any
         governmental body, agency or official in which there is a reasonable
         possibility of an adverse decision which could have a Material Adverse
         Effect and the Lessee does not have any material contingent obligations
         not provided for or disclosed in the financial statements referred to
         in Section 8.2(q) hereof.

                  (e)      Margin Stock. The Lessee is not engaged in the
         business of extending credit for the purpose of purchasing or carrying
         margin stock (within the meaning of Regulation U issued by the Board of
         Governors of the Federal Reserve System), and no proceeds of any
         Advance will be used to purchase or carry any margin stock or to extend
         credit to others for the purpose of purchasing or carrying any margin
         stock.

                  (f)      Use of Proceeds. The proceeds of each Advance will be
         used only for the purpose of financing the acquisition of the
         applicable Property and the payment of Transaction Expenses incurred in
         connection therewith.

                                      -18-


Lam Research Corporation                                 Participation Agreement

                  (g)      Compliance with Law. The Lessee is in compliance in
         all material respects with all Applicable Laws, including, without
         limitation, environmental protection laws, ERISA and the Occupational
         Health and Safety Act, except where the failure to so comply would not
         have a Material Adverse Effect.

                  (h)      Information. All information relating to the Lessee
         and the Properties heretofore furnished by the Lessee to the
         Participants and any Appraiser for purposes of or in connection with
         this Participation Agreement and the other Operative Documents or any
         transaction contemplated hereby or thereby is, and all such information
         hereafter furnished by the Lessee to the Participants and any such
         Appraiser will be, true and accurate in all material respects and does
         not and will not omit to state any material fact or any fact necessary
         to make the statements contained therein not misleading.

                  (i)      Investment Company. The Lessee is not an "investment
         company", or a company "controlled" by an "investment company", within
         the meaning of the Investment Company Act of 1940, as amended.

                  (j)      Liens. The Lessor Mortgage with respect to each
         Property creates, or upon its execution will create, a valid security
         interest in and mortgage lien on such Property purported to be covered
         thereby, and upon recordation of such Lessor Mortgage and the filing of
         the Lessor Financing Statements relating to such Property, such
         security interest and mortgage lien will constitute perfected security
         interests and mortgage liens, prior to all Liens other than Permitted
         Property Liens.

                  (k)      Offer of Securities, etc. Neither the Lessee, nor any
         Person authorized to act on its behalf has, directly or indirectly, (i)
         offered any interest in the Properties (or, if such sale or offer would
         be integrated with the sale or offer of such interest in the
         Properties, any other interest similar thereto) for sale to any Person
         or (ii) solicited from any Person any offer to acquire any interest in
         the Properties (or any such other interest), in either case in
         violation of the Securities Act.

                  (l)      Properties. Except as disclosed on Exhibit 8.2(l)
         attached hereto, each Property and the contemplated use thereof by the
         Lessee and its agents, assignees, employees, lessees, sublessees,
         licensees, tenants and subtenants shall be in material compliance with
         all Requirements of Law (including, without limitation, all zoning and
         land use laws and Environmental Laws) and Insurance Requirements,
         except for such Requirements of Law as it shall be contesting in good
         faith by appropriate proceedings. There is no action, suit or
         proceeding (including any proceeding in condemnation or eminent domain
         or under any Environmental Law) pending or, to Lessee's knowledge,
         threatened with respect to it, or any Property that materially
         adversely affects the title to, or the use, operation or value of, such
         Property.

                  (m)      Deed. With respect to the acquisition of a Property
         on the applicable Acquisition Date, the Deed for such Property will be
         sufficient to convey good and marketable title to such Property
         (subject only to Permitted Property Liens) to the Lessor.

                                      -19-


Lam Research Corporation                                 Participation Agreement

                  (n)      Insurance. The Lessee has, on or before the
         applicable Acquisition Date, obtained insurance coverage covering each
         Property that meets the requirements set forth in Article XIII of the
         Master Lease and such coverage is in full force and effect.

                  (o)      Flood Hazard Areas. Except as otherwise identified on
         the applicable survey, plat or map with respect to a Property delivered
         pursuant to Section 6.1(o), no portion of any Property will be located
         within an area identified as a special flood hazardous area by the
         Federal Emergency Management Agency.

                  (p)      Solvency. The Lessee is Solvent.

                  (q)      Financial Statements. The June 30, 2002 annual
         financial statements of the Lessee and its Consolidated Subsidiaries
         and the March 30, 2003 quarterly financial statements of the Lessee and
         its Consolidated Subsidiaries were prepared in accordance with GAAP and
         fairly present the financial condition of the Lessee and its
         Consolidated Subsidiaries at such date and the results of their
         operations for the period then ended.

                  (r)      Material Adverse Change. Since March 30, 2003, there
         has been no change in the business, properties, condition (financial or
         otherwise) or results of operations of the Lessee and its Consolidated
         Subsidiaries which could reasonably be expected to have a Material
         Adverse Effect.

                  (s)      Taxes. The Lessee has filed all United States federal
         income tax returns and all other material tax returns which are
         required to be filed and have paid all taxes due pursuant to said
         returns or pursuant to any assessment received by the Lessee, except
         such taxes, if any, as are being contested in good faith and as to
         which adequate reserves have been provided. No material tax liens have
         been filed and no material claims are being asserted with respect to
         any such taxes. The charges, accruals and reserves on the books of
         Lessee in respect of any taxes or other governmental charges are
         adequate.

                  (t)      ERISA. No member of the Controlled Group has
         incurred, or is reasonably expected to incur, any withdrawal liability
         to Multiemployer Plans in excess of $15,000,000 in the aggregate. Each
         Plan complies in all material respects with all applicable requirements
         of law and regulations, no Reportable Event has occurred with respect
         to any Plan, no member of the Controlled Group has withdrawn from any
         Plan or initiated steps to do so, and no steps have been taken to
         reorganize or terminate any Plan.

                  (u)      Material Agreements. The Lessee is not a party to any
         agreement or instrument or subject to any charter or other corporate
         restriction which could reasonably be expected to have a Material
         Adverse Effect. The Lessee is not in default in the performance,
         observance or fulfillment of any of the obligations, covenants or
         conditions contained in (i) any agreement to which it is a party, which
         default could reasonably be expected to have a Material Adverse Effect
         or (ii) any agreement or instrument evidencing or governing any
         Indebtedness or Off-Balance Sheet Obligations with an outstanding
         principal amount (or implied or attributed principal amount) in excess
         of $15,000,000.

                                      -20-


Lam Research Corporation                                 Participation Agreement

                  (v)      Environmental Matters. In the ordinary course of its
         business, the Lessee conducts an ongoing review of the effect of
         Environmental Laws on the business, operations and properties of the
         Lessee, in the course of which it identifies and evaluates associated
         liabilities and costs (including, without limitation, any capital or
         operating expenditures required for clean-up or closure of properties
         presently or previously owned, any capital or operating expenditures
         required to achieve or maintain compliance with environmental
         protection standards imposed by law or as a condition of any license,
         permit or contract, any related constraints on operating activities,
         including any periodic or permanent shutdown of any facility or
         reduction in the level of or change in the nature of operations
         conducted thereat, any costs or liabilities in connection with off-site
         disposal of wastes or hazardous substances, and any actual or potential
         liabilities to third parties, including employees, and any related
         costs and expenses). On the basis of this review, the Lessee has
         concluded that such associated liabilities and costs, including the
         costs of compliance with Environmental Laws, would not reasonably be
         expected to have a Material Adverse Effect.

         Section 8.3. Representations of the Lessor. The Lessor warrants and
represents to the other parties hereto that:

                  (a)      The Lessor is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Ohio and
         has all requisite corporate power and authority to execute, deliver and
         perform its obligations under the Operative Documents to which it is a
         party.

                  (b)      The Operative Documents to which it is, or will be, a
         party have been duly authorized by all requisite corporate action, have
         been duly executed and delivered by the Lessor, and constitute, and
         each other Operative Document to which the Lessor is a party when
         executed and delivered by the Lessor will constitute, the valid and
         binding obligations of the Lessor enforceable against the Lessor in
         accordance with the respective terms thereof, except as such
         enforceability may be limited by (i) applicable bankruptcy, insolvency,
         reorganization, moratorium or other similar laws affecting the
         enforcement of creditors' rights generally and (ii) general principles
         of equity (regardless of whether such enforceability is considered in a
         proceeding in equity or at law).

                  (c)      Neither the execution and delivery of the Operative
         Documents, the consummation of the transactions contemplated thereby
         nor the fulfillment of or compliance with the provisions thereof will
         require consent, approval, authorization, filing, registration or
         qualification under or conflict with or violate any Applicable Law
         applicable to the Lessor or any of its property, except as contemplated
         by the Operative Documents.

                  (d)      There are no Lessor Liens attributable to the Lessor
         on the Collateral, the Properties or any part thereof.

                                      -21-


Lam Research Corporation                                 Participation Agreement

                  (e)      The Lessor is not and will not be funding its Lessor
         Amounts hereunder with the assets of an "employee benefit plan" (as
         defined in Section 3(3) of ERISA) or "plan" (as defined in Section
         4975(e)(1) of the Code).

                  (f)      The Lessor is participating in the Transactions for
         its own account and not with a view toward redistribution; provided
         that disposition of its rights hereunder shall remain in its control
         and the foregoing shall not affect the ability of the Lessor to assign,
         transfer or sell participations in its rights in accordance with the
         Operative Documents.

                  (g)      There are no actions or proceedings pending, or to
         the knowledge of the Lessor, threatened, against or affecting the
         Lessor in or before any Governmental Authority which, if adversely
         determined, would materially and adversely affect the ability of the
         Lessor to enter into or perform the Operative Documents to which it is
         a party.

                                   ARTICLE IX
                           PAYMENT OF CERTAIN EXPENSES

         The Lessee agrees, for the benefit of the Arranger, the Lessor, the
Administrative Agent and the Lenders, that:

         Section 9.1. Transaction Expenses. (a) The Lessee shall pay, or cause
to be paid, from time to time all Transaction Expenses in respect of the
transactions on the Documentation Date and each Acquisition Date. The Lessor
shall deliver or cause to be delivered to the Lessee written invoices therefor
at least one (1) Business Day prior to the Documentation Date or such
Acquisition Date, as applicable.

         (b)      The Lessee shall pay or cause to be paid (i) all Transaction
Expenses incurred by the Lessor, the Administrative Agent or the Lenders in
entering into any future amendments or supplements with respect to any of the
Operative Documents, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers or consents hereto
or thereto, (ii) all Transaction Expenses incurred by the Lessor, the
Administrative Agent or the Lenders in connection with the purchase of any
Property by the Lessee or other Person pursuant to Articles XV, XVIII and XXI of
the Master Lease, (iii) all Transaction Expenses incurred by any of the Lenders,
the Lessor or the Administrative Agent in respect of enforcement of any of their
rights or remedies in respect of the Operative Documents and (iv) all
Transaction Expenses incurred by the Lessor, the Administrative Agent and the
Lenders in connection with the negotiation and documentation of any
restructuring or "workout", whether or not consummated, of any Operative
Document.

         Section 9.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or
cause to be paid any brokers' fees for which the Lessee is responsible pursuant
to Section 15.2 below and any and all stamp, transfer and other similar taxes,
fees and excise, if any, including any interest and penalties, which are payable
in connection with the transactions contemplated by this Participation Agreement
and the other Operative Documents.

                                      -22-


Lam Research Corporation                                 Participation Agreement

         Section 9.3. Loan Agreement and Related Obligations. If a Lease Event
of Default has occurred and is continuing, the Lessee shall pay, without
duplication of any other obligation of the Lessee to pay any such amount under
the Operative Documents, before the due date thereof, all costs, expenses and
other amounts (other than principal and interest on the Loans which are payable
to the extent otherwise required by the Operative Documents) required to be paid
by the Lessor, the Administrative Agent or any of the Lenders under the Loan
Agreement and the Assignment of Lease and Rent.

                                    ARTICLE X
                         OTHER COVENANTS AND AGREEMENTS

         Section 10.1. Covenants of the Lessee. The Lessee hereby covenants and
agrees with the Lessor, the Lenders and the Administrative Agent that it shall
comply with the following provisions of this Section 10.1, it being understood
that the following covenants are in addition to, and not by way of limitation
of, any covenant set forth in the Lease or any other Operative Document.

                  (a)      Financial Reporting. The Lessee will maintain, for
         the Lessee and each of its Subsidiaries, a system of accounting
         established and administered in accordance with GAAP, and furnish to
         the Lessor, the Administrative Agent and each Lender:

                           (i)      Within ninety (90) days after the close of
                  each of the Lessee's fiscal years, an unqualified audit report
                  certified by independent certified public accountants of
                  recognized national standing selected by the Lessee, prepared
                  in accordance with generally accepted accounting principles on
                  a consolidated basis for the Lessee and its Consolidated
                  Subsidiaries, including a consolidated balance sheet as of the
                  end of such period and related consolidated statements of
                  earnings and cash flows;

                           (ii)     Within forty-five (45) days after the close
                  of each of the first three quarterly periods of each of the
                  Lessee's fiscal years, for the Lessee and the Consolidated
                  Subsidiaries, an unaudited consolidated balance sheet as at
                  the close of such period and a consolidated statement of
                  earnings and cash flows for the period from the beginning of
                  such fiscal year to the end of such quarter, all certified,
                  subject to year-end audit adjustments, by an Authorized
                  Officer;

                           (iii)    Together with the financial statements
                  required pursuant to clauses (i) and (ii) above, a compliance
                  certificate in substantially the form of Exhibit E hereto
                  signed by an Authorized Officer showing the calculations
                  necessary to determine compliance with Sections 10.1(j), (k)
                  and (l) of this Participation Agreement and stating that no
                  Lease Default or Lease Event of Default exists, or if any
                  Lease Default or Lease Event of Default exists, stating the
                  nature and status thereof;

                                      -23-


Lam Research Corporation                                 Participation Agreement

                           (iv)     Promptly upon the furnishing thereof to the
                  shareholders of the Lessee, copies of all financial
                  statements, reports and proxy statements so furnished;

                           (v)      Promptly upon the filing thereof, copies of
                  all registration statements and annual, quarterly or other
                  regular reports which the Lessee or any of its Subsidiaries
                  files with the Securities and Exchange Commission;

                           (vi)     If and when the Lessee or any member of the
                  Controlled Group (A) gives or is required to give notice to
                  the PBGC of any Reportable Event with respect to any Plan
                  which would constitute grounds for a termination of such Plan
                  under ERISA, or knows that the plan administrator of any Plan
                  has given or is required to give notice of any Reportable
                  Event, (B) receives notice of complete or partial withdrawal
                  liability under Title IV of ERISA, (C) receives notice that
                  any Multiemployer Plan is in reorganization under Section 4242
                  of ERISA or may become insolvent under Section 4245 of ERISA,
                  or (D) receives notice from the PBGC that it will institute
                  proceedings asserting liability under Title IV of ERISA or to
                  terminate a Plan under Section 4042 of ERISA or will apply to
                  the appropriate United States District Court to seek the
                  appointment of a trustee to administer any Plan, then, in each
                  such event, copies of such notice given, required to be given
                  or received, as the case may be; and

                           (vii)    Promptly after receipt of a request
                  therefor, such other information (including non-financial
                  information) as the Lessor, the Administrative Agent or any
                  Lender may from time to time reasonably request.

         The Lessee shall be deemed to be in compliance if the information
         required by Sections 10.1(a)(i), (ii) and (v) is available on "EDGAR"
         within the time period specified, and such delivery shall satisfy the
         Lessee's obligations under such Sections.

                  (b)      Use of Proceeds. The proceeds of the Advances made
         under this Participation Agreement will be used to acquire the
         Properties and to pay Fees and Transaction Expenses. None of such
         proceeds will be used, directly or indirectly, for the purpose, whether
         immediate, incidental or ultimate, of buying or carrying any "margin
         stock" within the meaning of Regulation U.

                  (c)      Notice of Default. Promptly after any Authorized
         Officer of the Lessee becomes aware of the occurrence of any Lease
         Default or Lease Event of Default, the Lessee will give notice in
         writing to the Lessor and the Administrative Agent of the occurrence of
         such Lease Default or Lease Event of Default.

                  (d)      Existence. The Lessee will, and will cause each of
         its Subsidiaries to, do all things necessary to remain duly
         incorporated or otherwise organized, validly existing and (to the
         extent applicable) in good standing in its jurisdiction of
         incorporation or organization and maintain all requisite authority to
         conduct its business in each jurisdiction in which the character of the
         properties owned or leased by it therein or in

                                      -24-


Lam Research Corporation                                 Participation Agreement

         which the transaction of its business is such that failure to maintain
         such authority has resulted or could result in a Material Adverse
         Effect; provided, however, that the existence of any Subsidiary may be
         terminated and any right, franchise or license of any Subsidiary may be
         terminated or abandoned if in the good faith judgment of the
         appropriate officer or officers of the Lessee, such termination or
         abandonment is in its best interest and is not materially
         disadvantageous to the Lessor or the Lenders.

                  (e)      Taxes. The Lessee will, and will cause each of its
         Subsidiaries to, pay when due all material taxes, assessments and
         governmental charges and levies upon it or its income, profits or
         property, except those which are being contested in good faith by
         appropriate proceedings diligently conducted (or, in the case of any
         such tax, those the payment of which can be delayed without penalty)
         and with respect to which adequate reserves have been set aside.

                  (f)      Insurance. Without limiting the provisions of Article
         XIII of the Master Lease, the Lessee will, and will cause each of its
         Subsidiaries to, maintain with financially sound and reputable
         insurance companies, insurance on its property in such amounts and
         covering such risks of loss of a character usually insured by
         corporations of comparable size and financial strength and with
         comparable risks.

                  (g)      Compliance with Laws. The Lessee will, and will cause
         each of its Subsidiaries to, comply with all laws, rules, regulations,
         orders, writs, judgments, injunctions, decrees or awards to which it
         may be subject (including, without limitation, all laws, rules or
         regulations under ERISA and all environmental laws and regulations)
         which, if violated, could reasonably be expected to have a Material
         Adverse Effect.

                  (h)      Inspection. The Lessee will, and will cause each of
         its Subsidiaries to, permit the Lessor and the Lenders, by their
         respective representatives and agents, to inspect at all reasonable
         times, and at the risk and expense of the inspecting party (so long as
         no Lease Event of Default shall have occurred and be continuing and
         thereafter at the Lessee's risk and expense), any of the corporate
         books and financial records of the Lessee and each of its Subsidiaries,
         to examine and make copies of the books of accounts and other financial
         records of the Lessee and each of its Subsidiaries, and to discuss the
         affairs, finances and accounts of the Lessee and each of its
         Subsidiaries with, and to be advised as to the same by, their
         respective officers at such reasonable times and intervals as the
         Lessor and the Lenders may designate.

                  (i)      Consolidations, Mergers, Dissolution and Sale of
         Assets. The Lessee will not sell, lease, transfer or otherwise dispose
         of all or substantially all of its assets (whether by a single
         transaction or a number of related transactions and whether at one time
         or over a period of time) or to dissolve or to consolidate with or
         merge into any Person or permit any Person to merge into it, except
         that the Lessee may consolidate with or merge into, any other Person,
         or permit another Person to merge into it so long as (i) the Lessee
         shall be the continuing or surviving Person, (ii) immediately after
         such merger or consolidation or sale, there shall not exist any Lease
         Default or Lease Event of Default, and (iii) the Lessee shall deliver a
         certificate or other evidence showing that it is

                                      -25-


Lam Research Corporation                                 Participation Agreement

         in pro forma compliance with the covenants set forth in Sections
         10.1(j), (k) and (l) as of the effective date of such merger or
         consolidation or sale after giving effect thereto.

                  (j)      Liens. The Lessee will not, and will not permit any
         of its Subsidiaries to, create, incur, assume or suffer to exist any
         Lien in or on (x) any Property, except Permitted Property Liens, and
         (y) any of its other properties or assets, except:

                           (i)      Liens existing on the Documentation Date;

                           (ii)     Liens for taxes, fees, assessments or other
                  governmental charges which are not delinquent or remain
                  payable without penalty or which are being contested in good
                  faith by appropriate proceedings which will prevent the sale
                  or forfeiture of any property of the Lessee or such Subsidiary
                  or any material interference with the use thereof by the
                  Lessee or such Subsidiary and as to which the Lessee or such
                  Subsidiary has set aside on its books reserves deemed by it to
                  be adequate with respect thereto;

                           (iii)    Carrier's, warehousemen's, mechanics',
                  landlords', materialmen's, repairmen's, or other similar Liens
                  arising in the ordinary course of business which are not
                  delinquent or remain payable without penalty or which are
                  being contested in good faith by appropriate proceedings which
                  will prevent the sale or forfeiture of any property of the
                  Lessee or such Subsidiary or any material interference with
                  the use thereof by the Lessee or such Subsidiary and as to
                  which the Lessee or such Subsidiary has set aside on its books
                  reserves deemed by it to be adequate with respect thereto;

                           (iv)     Liens (other than any Lien imposed by ERISA)
                  consisting of pledges or deposits required in the ordinary
                  course of business in connection with workers' compensation,
                  unemployment insurance and other social security legislation;

                           (v)      Liens on the property of the Lessee securing
                  (a) the non-delinquent performance of bids, trade contracts
                  (other than for borrowed money), leases, statutory
                  obligations, (b) contingent obligations on surety and appeal
                  bonds, and (c) other non-delinquent obligations of a like
                  nature; in each case, incurred in the ordinary course of
                  business;

                           (vi)     Liens on the property or assets of any
                  Person which becomes a Subsidiary of the Lessee or which is
                  merged into the Lessee in a manner consistent with Section
                  10.1(i) above, after the Documentation Date; provided that (a)
                  such Liens exist at the time such Person is acquired by or
                  merged into the Lessee and (b) such Liens were not created in
                  contemplation of such acquisition by or merger into the
                  Lessee;

                           (vii)    Judgment Liens, provided that such Liens do
                  not have a value in excess of $15,000,000 or such Liens are
                  released, stayed, vacated or otherwise

                                      -26-


Lam Research Corporation                                 Participation Agreement

                  dismissed within sixty (60) days after issue or levy and, if
                  so stayed, such stay is not thereafter removed;

                           (viii)   Rights of vendors or lessors under
                  conditional sale agreements, Capitalized Leases or other title
                  retention agreements (including synthetic leases) entered into
                  after the Documentation Date, provided that, in such case, (a)
                  such rights secure or otherwise relate to the Lessee's
                  obligations arising therefrom, (b) such rights do not extend
                  to any property other than property acquired or leased with
                  the proceeds of such obligations (other than cash pledged to
                  secure obligations under synthetic leases), and (c) both
                  immediately before and after giving effect to any such Lien,
                  the Lessee shall be in compliance with Section 10.1(k) below;

                           (ix)     Liens on the property or assets of any
                  Subsidiary of the Lessee in favor of the Lessee or any other
                  Subsidiary of the Lessee;

                           (x)      Liens to secure Indebtedness of the type
                  described in clauses (vi) and (vii) of the definition of
                  "Indebtedness", entered into by the Lessee with respect to
                  obligations otherwise permitted under Section 10.1(k) below;

                           (xi)     Liens created after the Documentation Date
                  on Japanese Assets to secure a Yen-Denominated Facility;

                           (xii)    Liens on accounts receivable created in
                  connection with a transaction permitted by Section 10.1(l) not
                  to exceed $100,000,000 at any one time; and

                           (xiii)   Liens in addition to the Liens permitted by
                  clauses (i) through (xii) above securing additional
                  obligations of the Lessee permitted under Section 10.1(k)
                  below of up to $20,000,000 annually and $50,000,000 in the
                  aggregate.

                  (k)      Minimum Cash. The Lessee shall at all times during
         the Lease Term maintain unrestricted cash balances plus Short Term
         Investments in an amount equal to the sum of $50,000,000, plus the
         outstanding non-cash collateralized (i) notional amount of senior
         Indebtedness, (ii) notional amount of subordinated Indebtedness, (iii)
         recourse portions of Off-Balance Sheet Obligations, (iv) Guaranties (to
         the extent not included in clauses (i), (ii) and (iii) above and
         excluding from this clause (iv) any Guaranties constituting standby
         letters of credit (which are covered by clause (v) below)), and (v)
         standby letters of credit of the Lessee and its Subsidiaries to the
         extent of amounts in excess of $5,000,000, but excluding from this
         clause (v) any standby letters of credit securing obligations of the
         types described in Sections 10.1(j)(iv) and (v) (other than leases)
         arising in the ordinary course of business of the Lessee and its
         Subsidiaries.

                  (l)      Sale of Receivables. The Lessee will not, and will
         not permit any of its Subsidiaries to, sell or otherwise transfer any
         of its accounts receivable; provided that the

                                      -27-


Lam Research Corporation                                 Participation Agreement

         Lessee and its Subsidiaries may sell accounts receivable on a
         limited-recourse basis under any receivables purchase agreement in an
         amount not to exceed $100,000,000 at any one time. For purposes of this
         Section 10.1(l), "limited-recourse" means that, on an aggregate basis,
         recourse is limited to less than 20% of the notional amount of the
         aggregate accounts receivable so sold.

                  (m)      Transactions with Affiliates. The Lessee will not,
         and will not permit any Subsidiary to, directly or indirectly, pay any
         amount of funds to or for the account of, make any investment (whether
         by acquisition of stock or indebtedness, by loan, advance, transfer of
         property, guarantee or other agreement to pay, purchase or service,
         directly or indirectly, any Indebtedness, or otherwise) in, lease,
         sell, transfer or otherwise dispose of any assets, tangible or
         intangible, to, or participate in, or effect, any transaction with, any
         Affiliate except on an arms-length basis on terms at least as favorable
         to the Lessee or such Subsidiary as would have been obtained from a
         third party who was not an Affiliate.

                  (n)      Further Assurances. The Lessee, at its cost and
         expense, will cause to be promptly and duly taken, executed,
         acknowledged and delivered all such further acts, documents and
         assurances as the Lessor, the Administrative Agent or any Lender
         reasonably may request from time to time in order to carry our more
         effectively the intent and purposes of this Agreement and the other
         Operative Documents and the Transactions. The Lessee, at its cost and
         expense, will cause all financing statements, fixture filings,
         mortgages and other documents, to be recorded or filed at such places
         and times in such manner, and will take all such other actions or cause
         such actions to be taken, as may be necessary or as may be reasonably
         requested by the Administrative Agent, any Lender or the Lessor in
         order to establish, preserve, protect and perfect the title and Lien of
         the Lessor and/or the Administrative Agent in the Properties and the
         Collateral and the Lessor's, the Administrative Agent's and/or any
         Lender's rights under this Participation Agreement and the other
         Operative Documents.

         Section 10.2. [***]

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

                                      -28-


Lam Research Corporation                                 Participation Agreement

         Section 10.3. Covenants of Each Participant. Subject at all times to
the terms and provisions of Section 15.10, each Participant hereby severally
agrees that, until payment in full of the Lease Balance or such other time as
the Master Lease shall have terminated with respect to all of the Properties:

                  (a)      it will not create, incur, assume or suffer to exist
         any Lessor Lien attributable to it upon any Property; and

                  (b)      it will, at its own cost and expense, promptly take
         such action as may be necessary duly to discharge, or to cause to be
         discharged, all Lessor Liens on the Properties attributable to it;
         provided that such Participant may contest any such Lessor Lien in good
         faith and by appropriate proceedings.

         Section 10.4. Release of Properties. (a) If the Lessee shall at any
time (i) purchase any Affected Property pursuant to Section 15.1 of the Lease,
(ii) exercise its Purchase Option with respect to the Properties, or if any or
all of the Properties shall be purchased by the Lessee (or its designees) in
accordance with the Master Lease, and in each case, the Lessee satisfies each of
the obligations and conditions set forth in the Master Lease for the release of
a Property therefrom, then, upon application of the proceeds of any such sale
pursuant to Article VII and all accrued interest, Yield and any other payments
due and owing from the Lessee to the Administrative Agent, the Lenders and the
Lessor on such date pursuant to the Operative Documents, including without
limitation all amounts due and owing pursuant to Article XIII of this
Participation Agreement with respect to such Property or Properties purchased by
the Lessee or its designee, (i) each such Property shall be released from the
Liens created by the Operative Documents (including any Liens created by the
Lease Supplement covering such Property, the Mortgage with respect to such
Property and the Assignment of Lease and Rent) and the Administrative Agent and
the Lessor shall, at the expense of the Lessee, execute and deliver such
instruments as the Lessee may reasonably request to effectuate and evidence such
releases, and (ii) the Lessee shall be entitled to the return of a portion of
the Funds held under the Cash Collateral Pledge Agreement equal to the amount in
excess of the amount then required to be maintained under the terms of Section 4
thereof.

         (b)      In addition, upon the termination of the Commitments of the
Lenders and the payment in full of all other amounts owing to the Lenders by the
Lessee hereunder or under any other Operative Document, the Properties shall be
released from the Liens created by the Mortgages and the Assignment of Lease and
Rent. Upon request of either the Lessee or the Lessor following any such
release, the Administrative Agent shall, at the sole cost and expense of the
Lessee, execute and deliver to the Lessor or the Lessee, as applicable, such
documents as the Lessee or the Lessor shall reasonably request to effectuate and
evidence such release.

                                   ARTICLE XI
                             [INTENTIONALLY OMITTED]

                                   ARTICLE XII
                      TRANSFERS OF PARTICIPANTS' INTERESTS

         Section 12.1. Assignments. (a) Each Lender may, with the prior written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld), assign all or a portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in the form of Exhibit F to
one or more Eligible Lender Assignees (or, if a Lease Event of Default has
occurred and is continuing, to any Person). Each such assignment shall be of a
constant, not varying, percentage of all of the assigning Lender's rights and
obligations under the Operative Documents relating to its Series A Notes and/or
Series B Notes. Any such assignment shall be in

                                      -29-


Lam Research Corporation                                 Participation Agreement

a minimum aggregate amount of $5,000,000 (or the balance of such Loan Commitment
applicable to its Series A Notes and/or Series B Notes, if less). Any assignment
hereunder shall be effective upon delivery to the Administrative Agent and the
Lessor of written notice of the assignment together with a transfer fee of
$3,500.00 payable by the assignor Lender or the assignee Lender to the
Administrative Agent for its own account. The assigning Lender will give prompt
notice to the Administrative Agent and the Lessee of any such assignment. Upon
the effectiveness of any such assignment, the assignee shall become a "Lender"
for all purposes of the Operative Documents (including all representations,
warranties and covenants which will all be deemed made and agreed to by such
assignee) and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and Commitment
components being assigned. The Administrative Agent agrees that upon notice of
any such assignment and surrender of the appropriate Note or Notes, it will
promptly provide to the assigning Lender and to the assignee Lender separate
promissory notes of the series and in the amount of their respective interests
substantially in the form of the original Note (but with notation thereon that
it is given in substitution for and replacement of the original Note or any
replacement notes thereof). So long as no Lease Event of Default has occurred
and is continuing, Key Corporate Capital Inc. agrees that it will not transfer
or assign its Notes if after giving affect to such transfer or assignment, the
principal amount of Notes held by Key Corporate Capital Inc. plus the Lessor
Amounts held by SELCO Service Corporation would be less than $10,000,000.

         (b)      The Lessor may, with the prior written consent of the
Administrative Agent (which consent shall not be unreasonably withheld), assign
all of its rights and obligations hereunder pursuant to an assignment agreement
in form and substance reasonably satisfactory to the Lessee and the
Administrative Agent (provided that Lessee's approval shall not be required
during the continuance of a Lease Event of Default) to an Eligible Lessor
Assignee (or, if a Lease Event of Default has occurred and is continuing, to any
Person). Any assignment hereunder shall be effective upon the later of (x)
delivery to the Administrative Agent and the Lessee of written notice of the
assignment and (y) the date on which all required consents thereto shall have
been given (or, if applicable, deemed given). The Lessor will deliver written
notice to the Administrative Agent and the Lessee of any such proposed
assignment at least ten (10) Business Days prior to the proposed date of such
assignment, which notice shall contain the name of the proposed assignee and
financial information with respect thereto sufficient to determine whether such
transferee is an Eligible Lessor Assignee (any such notice, a "Notice of
Proposed Assignment"). To the extent any consents to an assignment are required
hereunder, such consents shall be deemed to have been given if the party
entitled to consent thereto does not object to the proposed transferee within
five (5) Business Days of its receipt of the applicable Notice of Proposed
Assignment. The Lessor shall make such filings and give such notices as shall be
necessary to evidence such assignment in all public offices where filings have
been made under the Operative Documents, and the Lessee and the Administrative
Agent shall cooperate with the Lessor in effecting such filings and notices.
Upon the effectiveness of any such assignment, the assignee shall become the
"Lessor" for all purposes of the Operative Documents and the assignor shall be
relieved of its obligations hereunder. In connection with any assignment
pursuant to this Section 12.1(b), the Lessee and the Administrative Agent will,
promptly upon the request of the Lessor and at the Lessor's cost and expense,
execute and deliver an acknowledgment of such assignment and the succession of
the transferee to all rights

                                      -30-


Lam Research Corporation                                 Participation Agreement

and obligations of the transferor Lessor under the Operative Documents in such
form as the transferee may reasonably request.

         Section 12.2. Participations. Each Participant may sell, transfer,
grant or assign participations in all or any part of such Participant's
interests and obligations hereunder; provided that (i) such selling Participant
shall remain a "Lender" or the "Lessor", as the case may be, for all purposes
under the Operative Documents (such selling Participant's obligations under the
Operative Documents remaining unchanged) and the sub-participant shall not
constitute a Participant hereunder, (ii) no such sub-participant shall have, or
be granted, rights to approve any amendment or waiver relating to the Operative
Documents except to the extent any such amendment or waiver would (A) reduce the
principal of or rate of interest on or fees in respect of any Loans or Lessor
Amounts in which the sub-participant is participating, (B) postpone the date
fixed for any payment of principal (including extension of the Expiration Date
or the date of any mandatory prepayment), interest or fees in which the
sub-participant is participating, or (C) release all or substantially all of the
collateral or guarantees (except as expressly provided in the Operative
Documents) supporting any of the Loans or Lessor Amounts or Commitments in which
the sub-participant is participating, (iii) sub-sub-participations by the
sub-participant (except to an Affiliate, parent company or Affiliate of a parent
company of the sub-participant) shall be prohibited and (iv) written notice of
each such participation is given to the Lessee. In the case of any such
participation, the sub-participant shall not have any rights under the Operative
Documents (the sub-participant's rights against the selling Participant in
respect of such participation to be those set forth in the participation
agreement with such Participant creating such participation) and all amounts
payable by the Lessee hereunder shall be determined as if such Participant had
not sold such participation; provided, however, that such sub-participant shall
be entitled to receive additional amounts under Sections 13.5, 13.10 and 13.11
on the same basis as if it were a Participant (but only to the extent that the
Participant would have been entitled to receive such additional amounts with
respect to the interest participated had it not sold such participation).

         Section 12.3. Withholding Taxes; Disclosure of Information; Pledge
Under Regulation A. (a) If the assignee of any Participant pursuant to Section
12.1 or the subparticipant of any Participant pursuant to Section 12.2 is (i)
not a citizen or resident of the United States of America, (ii) not a
corporation, partnership or other entity created or organized in or under the
laws of the United States of America (or any jurisdiction thereof), or (iii) not
an estate or trust that is subject to federal income taxation regardless of the
source of its income (each, a "Non-U.S. Transferee"), then such Non-U.S.
Transferee shall deliver (or cause to be delivered) upon the request of the
Lessee to each of the Administrative Agent and the Lessee one of the following
properly completed and signed U.S. tax forms: (i) a form W-8ECI or (ii) a form
W-8BEN claiming a valid exemption under an applicable U.S. tax treaty for all
income payable to such Non-U.S. Transferee under the Operative Documents.

         (b)      If the assignee of any Participant pursuant to Section 12.1 or
the subparticipant of any Participant pursuant to Section 12.2 is not a Non-U.S.
Transferee (each, a "U.S. Transferee"), then such U.S. Transferee shall deliver
(or cause to be delivered) to each of the Administrative Agent and the Lessee a
properly completed and signed U.S. tax Form W-9.

                                      -31-


Lam Research Corporation                                 Participation Agreement

         (c)      Any Participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Article
XII, disclose to such assignee or participant or proposed assignee or
participant, any information relating to the Lessee or the Transactions, subject
to appropriate confidentiality requirements relating to such information.

         (d)      Anything in this Article XII to the contrary notwithstanding,
any Lender may without the consent of the Lessee, the Administrative Agent or
the Lessor, assign and pledge all or any portion of the Notes held by it to any
Federal Reserve Bank, the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of the F.R.S. Board
and any operating circular issued by the Federal Reserve System and/or the
Federal Reserve Bank or otherwise; provided, any payment by the Lessee for the
benefit of the assigning or pledging Participant shall be deemed to satisfy the
Lessee's obligations with respect thereto.

                                  ARTICLE XIII
                                 INDEMNIFICATION

         Section 13.1. General Indemnification. (a) The Lessee agrees, whether
or not any of the transactions contemplated hereby shall be consummated, to
assume liability for, and to indemnify, protect, defend, save and keep harmless
each Indemnitee, on an After Tax Basis, from and against any and all Claims that
may be imposed on, incurred by or asserted against such Indemnitee (whether
because of action or omission by such Indemnitee or otherwise) whether or not
such Indemnitee shall also be indemnified as to any such Claim by any other
Person and whether or not such Claim arises or accrues prior to the
Documentation Date or after the Maturity Date, in any way relating to or arising
out of the transactions contemplated by this Participation Agreement and the
other Operative Documents, including, without limitation:

                  (i)      any of the Operative Documents and any amendment,
         modification or waiver in respect thereof;

                  (ii)     the Properties or any part thereof or interest
         therein;

                  (iii)    the purchase, design, construction, preparation,
         installation, inspection, delivery, nondelivery, acceptance, rejection,
         ownership, management, possession, operation, rental, lease, sublease,
         assignment, repossession, maintenance, repair, alteration,
         modification, addition or substitution, storage, transfer of title,
         redelivery, use, financing, refinancing, disposition, operation,
         condition, sale (including without limitation, any sale pursuant to
         Section 16.2(d) or 16.2(f) of the Master Lease or any sale pursuant to
         Article XV, XVIII or XX of the Master Lease), return or other
         disposition of all or any part or any interest in the Properties or the
         imposition of any Lien thereon, including, without limitation: (1)
         Claims or penalties arising from any violation of law or in tort (on
         the basis of strict liability or otherwise), (2) latent or other
         defects, whether or not discoverable, (3) any Claim based upon a
         violation or alleged violation of the terms of any restriction,
         easement, condition or covenant or other matter affecting title to any
         Property, (4) the making of any Modifications in violation of any
         standards imposed by any insurance policies required to be maintained
         by the Lessee pursuant to the Master Lease which are in effect at any
         time with respect to any Property or any part thereof,

                                      -32-


Lam Research Corporation                                 Participation Agreement

         (5) any Claim for patent, trademark or copyright infringement with
         respect to any Property, and (6) Claims arising from any public
         improvements with respect to any Property resulting in any change or
         special assessments being levied against any Property or any plans to
         widen, modify or realign any street or highway adjacent to any
         Property, or any Claim for utility "tap-in" fees;

                  (iv)     the breach or alleged breach by the Lessee of any
         covenant, representation or warranty made or deemed made by it in any
         Operative Document or any certificate required to be delivered by it by
         any Operative Document;

                  (v)      the retaining or employment of any broker, finder or
         financial advisor by the Lessee to act on its behalf in connection with
         this Participation Agreement or any other Operative Document; and

                  (vi)     the existence of any Lien on or with respect to any
         Property, any Basic Rent or Supplemental Rent, title thereto, or any
         interest therein including any Liens which arise out of the possession,
         use, occupancy, construction, repair or rebuilding of any Property or
         by reason of labor or materials furnished or claimed to have been
         furnished to the Lessee, or any of its contractors or agents or by
         reason of the financing of any personality or equipment purchased or
         leased by the Lessee or Modifications constructed by the Lessee.

         (b)      Notwithstanding the terms of clause (a) of this Section 13.1,
the Lessee shall not be required to indemnify any Indemnitee under this Section
13.1 for any Claim to the extent arising or resulting from (1) the willful
misconduct or gross negligence of such Indemnitee, (2) Lessor Liens attributable
to such Indemnitee, (3) a breach by such Indemnitee of any Operative Document,
(4) a breach by such Indemnitee of any agreement entered into in connection with
the assignment or participation of any Loan or Lessor Amount, any interest
therein or any other interest of such Indemnitee under the Operative Documents,
and (5) acts or events occurring in respect of any Property in the period after
the Lessee ceases to lease such Property from the Lessor under the Lease to the
extent not resulting from any act or event otherwise covered by this indemnity
that occurred during the period the Lessee leased such Property. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under the Lease or any other Operative Document. Without limiting the
express rights of any Indemnitee under this Section 13.1, this Section 13.1
shall be construed as an indemnity only and not a guaranty of residual value of
any Property or as a guaranty of the Notes or the repayment of the Lease
Balance.

         Section 13.2. End of Term Indemnity. (a) If the Lessee elects the
Remarketing Option and there would, after giving effect to the proposed
remarketing transaction, be a Shortfall Amount, then as a condition to the
Lessee's right to complete the remarketing of the Properties pursuant to Article
XX of the Master Lease, the Lessee shall cause to be delivered to the
Administrative Agent and the Lessor at least one hundred twenty (120) days prior
to the Expiration Date, at the Lessee's sole cost and expense, a report from the
Appraiser in form and substance satisfactory to the Lessor, the Administrative
Agent and the Lenders (the "End of the

                                      -33-


Lam Research Corporation                                 Participation Agreement

Term Report") which shall state the appraiser's conclusions as to the reason for
any decline in the Fair Market Sales Value of any Property from the Property
Cost thereof.

         (b)      On or prior to the Expiration Date, the Lessee shall pay to
the Administrative Agent for the account of each of the Participants an amount
(not to exceed the Shortfall Amount) equal to the portion of any Shortfall
Amount that the End of the Term Report demonstrates was the result of a decline
in the Fair Market Sales Value of any Property due to:

                  (i)      extraordinary use; failure to maintain, repair,
         restore, rebuild or replace; failure to comply with any applicable law;
         failure to use; workmanship; method of installation or removal or
         maintenance, repair, rebuilding or replacement (excepting in each case
         ordinary wear and tear and except as otherwise provided in the Lease);
         or

                  (ii)     any Modification made to, or any rebuilding of, such
         Property or any part thereof by the Lessee, or any sublessee, whether
         or not permitted pursuant to the Operative Documents; or

                  (iii)    contamination at such Property resulting from any
         Hazardous Activity, Hazardous Materials or Environmental Violations
         whether or not such condition existed on the Acquisition Date therefor;
         or

                  (iv)     any restoration or rebuilding carried out by the
         Lessee; or

                  (v)      any condemnation of any portion of such Property
         pursuant to Article XIV of the Master Lease; or

                  (vi)     any use of such Property or any part thereof by the
         Lessee other than for its intended purposes as contemplated by the
         applicable Appraisal; or

                  (vii)    any grant, release, dedication, transfer, annexation
         or amendment made pursuant to Section 11.2 of the Master Lease; or

                  (viii)   the failure of the Lessor to have good and marketable
         title to such Property free and clear of all Liens (other than
         Permitted Property Liens described in clauses (i), (viii) and (x) of
         the definition thereof); or

                  (ix)     the existence of any sublease relating to such
         Property that shall survive the Expiration Date.

         Section 13.3. Environmental Indemnity. To the fullest extent permitted
by Applicable Law, and without limitation of the other provisions of this
Article XIII, the Lessee hereby agrees to indemnify, hold harmless and defend
each Indemnitee from and against any and all claims (including, without
limitation, third party claims for personal injury or real or personal property
damage), losses, damages, liabilities, fines, penalties, charges, administrative
and judicial proceedings, judgments, remedial actions, requirements, enforcement
actions of any kind, and all reasonable and documented costs and expenses
incurred in connection therewith (including but

                                      -34-


Lam Research Corporation                                 Participation Agreement

not limited to reasonable attorneys' and/or paralegals' fees and expenses and
costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up, remedial, removal or restoration work with respect
to any Property undertaken or required by any federal, state or local
Governmental Authority), arising or asserted under any Environmental Laws, and
arising in whole or in part, out of:

                  (a)      the presence on or under such Property of any
         Hazardous Materials, or any Releases of any Hazardous Materials on,
         under, from or at such Property;

                  (b)      any activity, including, without limitation,
         construction, carried on or undertaken on or off such Property, whether
         by the Lessee (or any predecessor in title) or any employees, agents,
         contractors or subcontractors of the Lessee (or any predecessor in
         title), or in connection with the handling, treatment, removal,
         storage, decontamination, clean-up, transport or disposal of any
         Hazardous Materials that at any time are located or present on or under
         or that at any time migrate, flow, percolate, diffuse or in any way
         move onto or off such Property;

                  (c)      with respect to any Hazardous Materials at such
         Property, loss of or damage to any property or the environment
         (including, without limitation, clean-up costs, response costs,
         remediation and removal costs, costs of corrective action, costs of
         financial assurance, fines and penalties and natural resource damages),
         or death or injury to any Person, and all expenses associated with the
         protection of wildlife, aquatic species, vegetation, flora and fauna,
         and any mitigative action required by or under Environmental Laws; or

                  (d)      any noncompliance with Environmental Laws, or any act
         or omission causing an environmental condition at such Property that
         requires remediation or causing any Governmental Authority to record a
         Lien pursuant to Environmental Laws on the land record of such
         Property; or

                  (e)      any residual contamination on or under such Property,
         including any contamination affecting any natural resources, and any
         contamination of any property or natural resources arising in
         connection with the generation, use, handling, storage, transport or
         disposal of any Hazardous Material associated with such Property, and
         irrespective of whether any of such activities were or will be
         undertaken in accordance with applicable laws, regulations, codes and
         ordinances;

provided, however, that the Lessee shall not be required to indemnify any
Indemnitee under this Section 13.3 for (1) any claim to the extent resulting
from such Indemnitee's gross negligence or willful misconduct, or (2) any claim
arising in respect to such Property to the extent attributable to acts or events
occurring in the period after the Lessee ceases to lease the Property from the
Lessor; provided that the facts supporting such claim occur after such period.
It is expressly understood and agreed that the indemnity provided for herein
shall survive the expiration or termination of the Lease Term with respect to
any claim based on facts or circumstances arising prior to or during the Lease
Term, and shall be separate and independent from any remedy under the Lease or
any other Operative Document.

                                      -35-


Lam Research Corporation                                 Participation Agreement

         Without limiting the generality of the foregoing, the Lessee waives all
rights and defenses that the Lessee may have because the Lessee's obligations
are secured by real property. This means, among other things:

                  (1)      The Indemnitees may collect from the Lessee without
         first foreclosing on any real or, if applicable, personal property
         collateral pledged by Lessee;

                  (2)      If the Indemnitees foreclose on any real property
         collateral pledged by the Lessee:

                           (A)      the amount of the Lessee's obligations may
                  be reduced only by the price for which that collateral is sold
                  at the foreclosure sale (even if the collateral is worth more
                  than the sale price thereof);

                           (B)      the Indemnitees may collect from the Lessee
                  even if the Indemnitees, by foreclosing on the real property
                  collateral, have destroyed any right the Lessee may have to
                  collect from third parties.

This is an unconditional and irrevocable waiver of any rights and defenses the
Lessee may have because Lessee's obligations are secured by real property.

         Section 13.4. Proceedings in Respect of Claims. In case any action,
suit or proceeding shall be brought against any Indemnitee in respect of Claims
indemnifiable under Sections 13.1 or 13.3, such Indemnitee shall promptly notify
the Lessee of the commencement thereof, and the Lessee shall be entitled, at the
Lessee's expense, to participate in, and, to the extent that the Lessee desires
to, assume and control the defense thereof; provided, however, that if the
Lessee shall have exercised its rights to control the defense of such Claim to
the exclusion of the applicable Indemnitee, the Lessee shall have acknowledged
in writing its obligation to fully indemnify such Indemnitee in respect of such
action, suit or proceeding, and the Lessee shall keep such Indemnitee fully
apprised of the status of such action, suit or proceeding and shall provide such
Indemnitee with all information with respect to such action, suit or proceeding
as such Indemnitee shall reasonably request, and provided, further, that the
Lessee shall not be entitled to assume and control the defense of any such
action, suit or proceeding if and to the extent that, (A) in the reasonable
opinion of such Indemnitee's counsel, (x) such action, suit or proceeding
involves any risk of imposition of criminal liability on any Indemnitee or will
involve a material risk of imposition of civil liability on any Indemnitee or
the sale, forfeiture or loss of, or the creation of any Lien (other than a
Permitted Property Lien) on the Properties or any part thereof or any
interference with the payment of Rent unless, in the case of civil liability
only, the Lessee shall have posted a bond or other security reasonably
satisfactory to the relevant Indemnitees in respect of such risk or (y) the
control of such action, suit or proceeding would involve an actual or potential
conflict of interest, (B) such proceeding involves Claims not fully indemnified
by the Lessee that the Lessee and the Indemnitee have been unable to sever from
the indemnified claim(s), or (C) a Lease Default or Lease Event of Default has
occurred and is continuing. The Indemnitee will join in the Lessee's efforts to
sever such action. In the event that an Indemnitee has assumed control of any
such proceeding, it shall keep the Lessee fully apprised of the status of such
action, suit or proceeding and shall provide the Lessee with all

                                      -36-


Lam Research Corporation                                 Participation Agreement

information with respect to such action, suit or proceeding as the Lessee may
reasonably request. The Indemnitee may participate at its own expense and with
its own counsel in any proceeding conducted by the Lessee in accordance with the
foregoing. The Lessee shall not enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 13.1
or 13.3 without prior written consent of the Indemnitee, which consent shall not
be unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee.

         Upon payment in full of any Claim by the Lessee pursuant to Section
13.1 or 13.3 to or on behalf of an Indemnitee, the Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee to pursue such
claims.

         Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.

         Section 13.5. General Tax Indemnity.

         (a)      Indemnification. Without limitation of the rights of any Tax
Indemnitee under any other indemnification provision of this Article XIII, the
Lessee shall pay and assume liability for, and does hereby agree to indemnify,
protect and defend the applicable Property and all Tax Indemnitees, and hold
them harmless, on an After Tax Basis, against all Impositions.

         (b)      Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to which
the Lessee may have an indemnity obligation pursuant to this Section 13.5, or if
any Tax Indemnitee shall determine that any Imposition to which the Lessee may
have an indemnity obligation pursuant to this Section 13.5 may be payable, such
Tax Indemnitee shall promptly (and in any event, within thirty (30) days) notify
the Lessee in writing (provided that failure to so notify the Lessee within
thirty (30) days shall not alter such Tax Indemnitee's rights under this Section
13.5 except to the extent such failure precludes or materially adversely affects
the ability to conduct a contest of any Impositions) and shall not take any
action with respect to such claim, proceeding or Imposition without the written
consent of the Lessee (such consent not to be unreasonably withheld or
unreasonably delayed) for thirty (30) days after the receipt of such notice by
the Lessee; provided, however, that in the case of any such claim or proceeding,
if such Tax Indemnitee shall be required by law or regulation to take action
prior to the end of such thirty (30) day period, such Tax Indemnitee shall, in
such notice to the Lessee, so inform the Lessee and such Tax Indemnitee shall
not take any action with respect to such claim, proceeding or Imposition without
the consent of the Lessee (such consent not to be unreasonably withheld or
unreasonably delayed) for ten (10) days

                                      -37-


Lam Research Corporation                                 Participation Agreement

after the receipt of such notice by the Lessee unless such Tax Indemnitee shall
be required by law or regulation to take action prior to the end of such ten
(10) day period.

         The Lessee shall be entitled for a period of thirty (30) days from
receipt of such notice from such Tax Indemnitee (or such shorter period as such
Tax Indemnitee has notified the Lessee is required by law or regulation for such
Tax Indemnitee to commence such contest), to request in writing that such Tax
Indemnitee contest the Imposition, at the Lessee's sole expense. If (x) such
contest can be pursued in the name of the Lessee and independently from any
other proceeding involving an Imposition of such Tax Indemnitee for which the
Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be
pursued in the name of such Tax Indemnitee, but can be pursued independently
from any other proceeding involving an Imposition on such Tax Indemnitee for
which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax
Indemnitee so requests, then the Lessee shall be permitted to control the
contest of such claim, provided that in the case of any such contest, if such
Tax Indemnitee determines reasonably and in good faith that such contest by the
Lessee could have a material adverse impact on the business or operations of
such Tax Indemnitee and provides a written explanation to the Lessee of such
determination, such Tax Indemnitee may elect to control or reassert control of
the contest, and provided that by taking control of the contest, the Lessee
acknowledges that it is solely responsible for the Imposition ultimately
determined to be due by reason of such contest, and provided, further, that in
determining the application of clauses (x) and (y) above, each Tax Indemnitee
shall take any and all reasonable steps to segregate claims for any Taxes for
which the Lessee indemnifies hereunder from Taxes for which the Lessee is not
obligated to indemnify hereunder, so that the Lessee can control the contest of
the former. In all other claims relating to Impositions requested to be
contested by the Lessee, such Tax Indemnitee shall control the contest of such
claim, acting through counsel reasonably acceptable to the Lessee.
Notwithstanding anything to the contrary contained herein, in no event shall the
Lessee be permitted to pursue or continue any contest (or such Tax Indemnitee be
required to pursue or continue any contest) of any Imposition or claim thereof
through any action, suit or proceeding (A) if such Tax Indemnitee provides the
Lessee with a legal opinion of independent counsel reasonably acceptable to the
Lessee that such action, suit or proceeding involves a risk of imposition of
criminal liability on any Tax Indemnitee or will involve a material risk of
imposition of civil liability on any Tax Indemnitee or the sale, forfeiture or
loss of, or the creation of any Lien (other than a Permitted Property Lien) on
the Properties or any part thereof or any interference with the payment of Rent
unless, with respect to civil liability only, the Lessee shall have posted a
bond or other security reasonably satisfactory to the relevant Tax Indemnitees
in respect of such risk, (B) if a Lease Default or Lease Event of Default has
occurred and is continuing, (C) unless the Lessee shall have agreed to pay and
shall pay to such Tax Indemnitee on demand and on an After Tax Basis all
reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may
incur in connection with contesting such Imposition or claim thereof, including
all reasonable legal, accounting and investigatory fees and disbursements as
well as the Impositions which are the subject of such contest to the extent the
contest is unsuccessful, or (D) if such contest shall involve the payment of the
Imposition prior to the contest, unless the Lessee shall provide to such Tax
Indemnitee an interest-free advance in an amount equal to the Imposition that
the Tax Indemnitee is so required to pay on an After Tax Basis and prior to
commencing any contest the Lessee shall have acknowledged its liability for the
Imposition (if and to the extent that the Tax Indemnitee or the Lessee, as the
case may be,

                                      -38-


Lam Research Corporation                                 Participation Agreement

shall not prevail in the contest in respect of the Imposition). In addition, no
contest of any Imposition shall be required: (A) unless the amount of the
potential indemnities (taking into account all similar or logically related
claims that have been or are likely to be raised in any audit involving any or
all of such Tax Indemnitees for which the Lessee may be liable to pay an
indemnity under this Section 13.5(b)) exceeds $75,000 and (B) unless, if
requested by such Tax Indemnitee, the Lessee shall have provided to such Tax
Indemnitee at the Lessee's sole expense, an opinion of independent counsel
selected by the Lessee and reasonably acceptable to the Tax Indemnitee that a
reasonable basis exists to contest such Imposition (or, in the case of an appeal
from an adverse judicial determination, that there is substantial authority for
a reversal or favorable modification of such decision of such appeal). In no
event shall a Tax Indemnitee be required to appeal an adverse judicial
determination to the United States Supreme Court.

         The party conducting and controlling the contest of an Imposition shall
consult in good faith with the other party and its counsel with respect to such
contest (or claim for refund) but the decisions regarding what actions are to be
taken with respect to such contest shall be made by the controlling party in its
sole judgment. In addition, the party controlling the contest shall keep the
non-controlling party reasonably informed as to the progress of the contest, and
shall provide the noncontrolling party with a copy of (or appropriate excerpts
from) any reports or claims issued by the relevant Governmental Authority to the
controlling party thereof, relating to such contest.

         Each Tax Indemnitee shall, at the Lessee's sole expense, supply the
Lessee with such information and documents reasonably requested by the Lessee as
are necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by this Section 13.5(b) so long as such
information or documents are not, in the reasonable judgment of the Tax
Indemnitee, confidential information or documents. Notwithstanding anything in
this Section 13.5(b) to the contrary, so long as no Lease Event of Default shall
have occurred and be continuing, no Tax Indemnitee shall enter into any
settlement or other compromise or fail to appeal an adverse determination with
respect to any claim for an Imposition for which it is entitled to be
indemnified under this Section 13.5 (and with respect to which contest is
required under this Section 13.5(b)) without the prior written consent of the
Lessee (which shall not be unreasonably withheld or delayed), unless such Tax
Indemnitee waives its right to be indemnified under this Section 13.5 with
respect to such claim pursuant to the next paragraph.

         Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest or continue to contest (and the
Lessee shall not be permitted to contest or continue to contest) a claim with
respect to any Imposition and shall be permitted to settle or commence any such
claim without the consent of the Lessee if (i) such Tax Indemnitee shall waive
its right to indemnification under this Section 13.5 with respect to such claim
(and any claim with respect to such year or any other taxable year the contest
of which is materially adversely affected as a result of such waiver) and the
Tax Indemnitee returns to the Lessee all amounts previously advanced to the
Indemnitee with respect to the contest of such claim or (ii) such Imposition is
the sole result of a claim of a continuing and consistent nature, which claim
has previously been resolved against the relevant Tax Indemnitee (unless a
change in law or facts has occurred since such prior adverse resolution and the
Lessee provides an opinion of independent tax counsel reasonably satisfactory to
the Tax Indemnitee to the effect that it is more

                                      -39-


Lam Research Corporation                                 Participation Agreement

likely than not that such change in law or facts will result in a favorable
resolution of the claim at issue).

         (c)      [Intentionally omitted]

         (d)      Payments. Any Imposition indemnifiable under this Section 13.5
shall be paid when due directly to the applicable taxing authority if such
direct payment is practicable and permitted. If direct payment to the applicable
taxing authority is not permitted or is otherwise not made, any amount payable
to a Tax Indemnitee pursuant to this Section 13.5 shall be paid to the Tax
Indemnitee within thirty (30) days after receipt of a written demand therefor
from such Tax Indemnitee, which demand shall be, accompanied by a written
statement describing in reasonable detail the amount so payable, but not before
ten (10) Business Days prior to the date that the relevant Imposition is due.
Any payments made pursuant to this Section 13.5 shall be made directly to such
Tax Indemnitee entitled thereto or the Lessee, as the case may be, in
immediately available funds at such bank or to such account as specified by the
payee in written directions to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of the payee by certified
mail, postage prepaid at its address as set forth in Schedule II hereto. Upon
the request of any Tax Indemnitee with respect to Impositions that the Lessee is
required to pay, the Lessee shall furnish to such Tax Indemnitee the original or
a certified copy of a receipt for the Lessee's payment of such Imposition or
such other evidence of payment as is reasonably acceptable to such Tax
Indemnitee.

         (e)      Reports. In the case of any report, return or statement
required to be filed with respect to any Impositions that are subject to
indemnification under this Section 13.5, the Lessee shall promptly notify such
Tax Indemnitee of such requirement and, at the Lessee's sole expense (i) if the
Lessee is permitted by Applicable Law, timely file such report, return or
statement in its own name and send a copy of such report, return or statement to
the Tax Indemnitee, or (ii) if such report, return or statement is required to
be in the name of or filed by such Tax Indemnitee, or the Tax Indemnitee
otherwise requests that such report, return or statement be filed in the name of
or by such Tax Indemnitee, the Lessee shall prepare and furnish such report,
return or statement in such manner as shall be satisfactory to such Tax
Indemnitee and shall send the same to such Tax Indemnitee for filing no later
than fifteen (15) days prior to the due date therefor. In any case in which such
Tax Indemnitee will file any such report, return or statement, the Lessee shall,
upon written request of such Tax Indemnitee, provide such Tax Indemnitee with
such information as is reasonably necessary to allow such Tax Indemnitee to file
such report, return or statement.

         (f)      Tax Ownership. Each Tax Indemnitee represents and warrants
that it will not, prior to the termination of the Lease with respect to a
Property, claim ownership of (or any tax benefits, including depreciation, with
respect to) such Property for any income tax purposes (unless required to do so
by a Governmental Authority), it being understood that the Lessee is and will
remain the owner of such Property for such income tax purposes until the
termination of the Lease with respect thereto.

         (g)      Disclosure. The parties agree that any party to this
Participation Agreement (and each employee, representative, or other agent of
such party) may disclose the tax aspects of the

                                      -40-


Lam Research Corporation                                 Participation Agreement

transactions contemplated by this Participation Agreement and the structural
aspects of these transactions as they relate to such tax aspects without
limitation of any kind on such disclosure.

         Section 13.6. Indemnity Payments in Addition to Lease Obligations. The
Lessee acknowledges and agrees that the Lessee's obligations to make indemnity
payments under this Article XIII are separate from, in addition to, and do not
reduce, the Lessee's obligations to pay any amounts owing from time to time
under the Lease.

         Section 13.7. Eurodollar Rate Lending Unlawful. Notwithstanding any
other provision herein, if the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof occurring after the
Documentation Date shall make it unlawful for any Participant to make, continue
or maintain Eurodollar Loans/Lessor Amounts as contemplated by the Operative
Documents, (i) such Participant shall promptly give written notice of such
circumstances to the Lessee, the Lessor and the Administrative Agent (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Participant hereunder to make, continue or maintain
Eurodollar Loans/Lessor Amounts shall forthwith be canceled and, until such time
as it shall no longer be unlawful for such Participant to make, continue or
maintain Eurodollar Loans/Lessor Amounts, such Participant shall then have a
commitment only to make or maintain Base Rate Loans/Lessor Amounts when
Eurodollar Loans/Lessor Amounts are requested and (iii) such Participant's Loans
and Lessor Amounts then outstanding as Eurodollar Loans/Lessor Amounts, if any,
shall be converted automatically to Base Rate Loans/Lessor Amounts on the
respective last days of the then current Interest Periods with respect to such
Loans and Lessor Amounts or within such earlier period as required by law. If
any such conversion of Eurodollar Loans/Lessor Amounts occurs on a day which is
not the last day of the then current Interest Period with respect thereto, the
Lessee shall pay to such Participant such amounts, if any, as may be required
pursuant to Section 13.10. In any such case, interest and principal (if any)
shall be payable contemporaneously with the related Eurodollar Loans/Lessor
Amounts of the other Participants so affected.

         Section 13.8. Deposits Unavailable. If any of the Participants shall
have determined that:

                  (i)      Dollar deposits in the relevant amount and for the
         relevant Interest Period are not available to such Participant in its
         relevant market; or

                  (ii)     by reason of circumstances affecting such
         Participant's relevant market adequate means do not exist for
         ascertaining the interest rate or Yield, as the case may be, applicable
         to such Participant's Eurodollar Loans/Lessor Amounts;

then, upon notice from such Participant to the Lessee, the Administrative Agent
and the other Participants, (x) the obligations of such Participant to make or
continue any Loans or Lessor Amounts as, or to convert any Loans or Lessor
Amounts into Eurodollar Loans/Lessor Amounts shall be suspended, and (y) each
outstanding Eurodollar Loan/Lessor Amount held by such Participant shall
automatically convert into a Base Rate Loan/Lessor Amount on the last day of the
current Interest Period applicable thereto.

                                      -41-


Lam Research Corporation                                 Participation Agreement

         Section 13.9. Increased Costs, etc. (a) If the adoption of or any
change in a Requirement of Law or in the interpretation or application thereof
applicable to any Participant, or compliance by any Participant with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Documentation
Date (or, if later, the date on which such Participant becomes a Participant):

                  (i)      shall subject such Participant to any tax of any kind
         whatsoever with respect to any Eurodollar Loans/Lessor Amounts made,
         continued or maintained by it or its obligation to make, continue or
         maintain Eurodollar Loans/Lessor Amounts, or change the basis of
         taxation of payments to such Participant in respect thereof (except for
         Taxes that would be excluded from the definition of Impositions, any
         changes in taxes measured by or imposed upon the overall gross or net
         income, franchise or other taxes (imposed in lieu of such net income
         tax), of such Participant its applicable lending office, branch, or any
         affiliate thereof); or

                  (ii)     shall impose, modify or hold applicable any reserve,
         special deposit, compulsory loan or similar requirement against assets
         held by, or deposits or other liabilities in or for the account of,
         Loans, Lessor Amounts, loans or other extensions of credit by, or any
         other acquisition of funds by, any office of such Participant which is
         not otherwise included in the determination of the Adjusted Eurodollar
         Rate hereunder; or

                  (iii)    shall impose on such Participant any other condition
         (excluding any Tax of any kind) whatsoever in connection with the
         Operative Documents;

and the result of any of the foregoing is to increase the cost to such
Participant of making, continuing or maintaining Eurodollar Loans/Lessor Amounts
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, upon notice to the Lessee from such Participant, the Lessee shall pay
such Participant any additional amounts necessary to compensate such Participant
for such increased cost or reduced amount receivable; provided that, in any such
case, the Lessee may elect to convert the Eurodollar Loans/Lessor Amounts made
or held by such Participant hereunder to Base Rate Loans/Lessor Amounts by
giving the Administrative Agent at least one (1) Business Day's notice of such
election, in which case the Lessee shall promptly pay to such Participant, upon
demand, without duplication, such amounts, if any, as may be required pursuant
to Section 13.10. All payments required by this Section 13.9(a) shall be made by
the Lessee within five (5) Business Days after demand by the applicable
Participant. The Lessee shall not be obligated to reimburse any Participant for
any increased cost or reduced return incurred more than one hundred eighty (180)
days prior to the date that such Participant delivers notice to the Lessee of
such increased cost or reduced return unless such Participant gives notice
thereof to the Lessee in accordance with this Section 13.9 during such one
hundred eighty (180) day period. If any Participant becomes entitled to claim
any additional amounts pursuant to this subsection, it shall provide prompt
notice thereof to the Lessee, certifying (x) that one of the events described in
this clause (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount resulting from such
event and (z) as to the additional amount demanded by such Participant and a
reasonably detailed explanation of the calculation thereof (including the method
by which such Participant allocated such amounts to the Lessee). Such a
certificate as to any

                                      -42-


Lam Research Corporation                                 Participation Agreement

additional amounts payable pursuant to this clause submitted by such
Participant, through the Administrative Agent, to the Lessee shall be conclusive
and binding for all purposes, absent manifest error. This covenant shall survive
the termination of this Participation Agreement and the payment of the Loans and
Lessor Amounts, as the case may be, and all other amounts payable hereunder.

         (b)      Each Participant shall use its reasonable efforts to reduce or
eliminate any unlawfulness or claim for compensation pursuant to Sections 13.7,
13.8 or 13.9(a), including, without limitation, a change in the office of such
Participant at which its obligations related to this Participation Agreement are
maintained if such change will cure the unlawfulness or avoid the need for, or
reduce the amount of, such compensation and will not, in the reasonable judgment
of such Participant, be otherwise disadvantageous to it.

         Section 13.10. Funding Losses; Break Costs. (a) The Lessee agrees to
indemnify each Indemnitee and to hold each Indemnitee harmless from any loss or
expense which such Indemnitee may sustain or incur as a consequence of (i)
default by the Lessee in making a borrowing of Loans or Lessor Amounts which are
Eurodollar Loans/Lessor Amounts after Lessee has given a notice requesting the
same in accordance with the provisions of this Participation Agreement, (ii)
default by the Lessee in making any prepayment of a Loan or Lessor Amount which
is a Eurodollar Loan/Lessor Amount after the Lessee has given a notice thereof
in accordance with the provisions of this Participation Agreement, or (iii) the
making of a payment or prepayment of Loans or Lessor Amounts which are
Eurodollar Loans/Lessor Amounts on a day which is not the last day of an
Interest Period with respect thereto. This covenant shall survive the
termination of this Participation Agreement or any other Operative Document and
the payment of the Loans, Lessor Amounts and all other amounts payable under the
Operative Documents.

         (b)      The Lessee shall, upon receipt from the Administrative Agent
or any Participant of a statement of the amount of any loss, cost or expense
constituting Break Costs prepared in good faith and in reasonable detail (which
statement shall be binding absent manifest error), pay the amount of such Break
Costs to the requesting Person.

         Section 13.11. Capital Adequacy. (a) If the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Participant with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, in each case made
subsequent to the Documentation Date has or will have the effect of reducing the
rate of return on any Participant's or its parent company's capital, as a
consequence of its commitments or obligations hereunder to a level below that
which such Participant or its parent company could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Participant's or its parent company's policies with respect to capital
adequacy), then, upon notice from such Participant, the Lessee shall pay to such
Participant such additional amount or amounts as will compensate such
Participant and its parent company for such reduction (it being understood that
such parent company shall not be reimbursed to the extent its subsidiary
Participant is

                                      -43-


Lam Research Corporation                                 Participation Agreement

reimbursed by the Lessee in connection with the same or a similar law, rule,
regulation, change, request or directive applicable to such Participant). All
payments required by this Section 13.11 shall be made by the Lessee within five
(5) Business Days after demand by such Participant. The Lessee shall not be
obligated to reimburse any Participant for any reduced return incurred more than
one hundred eighty (180) days prior to the date that such Participant delivers
notice to the Lessee of such reduced return unless such Participant gives notice
thereof to the Lessee in accordance with this Section 13.11 during such one
hundred eighty (180) day period. If any Participant becomes entitled to claim
any additional amounts pursuant to this clause, it shall provide prompt written
notice thereof to the Lessee, through the Administrative Agent, certifying (x)
that one of the events described in this clause (a) has occurred and describing
in reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by such Participant and a reasonably detailed explanation of the
calculation thereof. Such a certificate as to any additional amounts payable
pursuant to this clause submitted by such Participant to the Lessee shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Participation Agreement and the other Operative Documents
and the payment of the Loans, Lessor Amounts and all other amounts payable
hereunder and thereunder.

         (b)      Each Participant shall use its commercially reasonable efforts
to reduce or eliminate, any claim for compensation pursuant to this Section
13.11, including, without limitation, a change in the office of such Participant
at which its obligations related to the Operative Documents are maintained if
such change will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable judgment of such Participant, be otherwise
disadvantageous to it.

                                   ARTICLE XIV
                            [INTENTIONALLY RESERVED]

                                   ARTICLE XV

                                  MISCELLANEOUS

         Section 15.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of any Property to the Lessor, any disposition of any interest of the
Lessor or any Lender in any Property and the payment of the Notes and the Lessor
Amounts, and shall be and continue in effect to the extent set forth in such
Operative Documents notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Documents. Except as otherwise expressly
set forth herein or in the other Operative Documents, the indemnities of the
parties provided for in the Operative Documents shall survive the expiration or
termination of any thereof.

                                      -44-


Lam Research Corporation                                 Participation Agreement

         Section 15.2. No Broker, Etc. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Participation Agreement or
the transactions contemplated herein or in the other Operative Documents nor has
it authorized any broker, finder or financial adviser retained or employed by
any other Person so to act, except that the Lessee has engaged the Arranger to
act as placement agent. In the event that any party retains any other broker,
finder or financial advisor, such party will promptly notify the other parties
in writing of such broker, finder or financial advisor and such party shall be
responsible for payment in full of such broker, finder or financial advisor. Any
party which is in breach of this representation shall indemnify and hold the
other parties harmless from and against any liability arising out of such breach
of this representation.

         Section 15.3. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person (a) shall be directed to the address or facsimile number of such Person
as indicated on Schedule II hereof and (b) shall be given in writing by United
States mail, by nationally recognized courier service, by hand or by facsimile,
and any such notice shall become effective (i) if delivered by United States
mail, three (3) Business Days after being deposited in the mail, certified or
registered with appropriate postage prepaid, (ii) if delivered by a nationally
recognized courier service, upon delivery to the intended recipient, (iii) if
delivered by hand, when received, or (iv) if delivered by facsimile, when
transmitted (upon electronic confirmation thereof) provided that any facsimile
transmitted after 5:00 p.m. (recipient time) shall be deemed to have been
received on the next Business Day. From time to time any party may designate a
new address or facsimile number for purposes of notice hereunder by written
notice to each of the other parties hereto in accordance with this Section.

         Section 15.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.

         Section 15.5. Amendments, Etc. Neither any Operative Document nor any
of the terms thereof may be terminated (except as expressly required under the
terms of any Operative Document or upon payment in full of the Lease Balance or
effective exercise and consummation of the Remarketing Option in accordance with
Article XX of the Master Lease and payment in full of all amounts due in
accordance therewith), amended, supplemented, waived or modified without the
written agreement or consent of the Required Participants; provided, however,
that:

                  (a)      no such termination, amendment, supplement, waiver or
         modification shall without written agreement or consent of each
         Participant:

                           (i)      modify any of the provisions of this Section
                  15.5, change the definition of "Required Participants" or
                  modify or waive any provision of any Operative Document
                  requiring action by the foregoing;

                                      -45-


Lam Research Corporation                                 Participation Agreement

                           (ii)     amend, modify, waive or supplement any of
                  the provisions of Section 2.5, 2.6 or 2.7 of the Loan
                  Agreement;

                           (iii)    reduce, modify, amend or waive any fees or
                  indemnities in favor of any Participant, including without
                  limitation amounts payable pursuant to Article XIII (except
                  that any Person may consent to any reduction, modification,
                  amendment or waiver of any indemnity payable to it);

                           (iv)     modify, postpone, reduce or forgive, in
                  whole or in part, any payment of Rent (other than pursuant to
                  the terms of any Operative Document), any Loan or Lessor
                  Amount, the Lease Balance, the Loan Balance, the Lessor
                  Balance, Commitment Fees and any other fee payable hereunder,
                  amounts due pursuant to Section 20.2 of the Master Lease,
                  interest or Yield (except that any Person may consent to any
                  modification, postponement, reduction or forgiveness of any
                  payment of any fee payable to it) or, subject to subclause
                  (iii) above, any other amount payable under the Lease or this
                  Participation Agreement, or modify the definition or method of
                  calculation of Rent (other than pursuant to the terms of any
                  Operative Document), Maximum Recourse Amount, Loans or Lessor
                  Amounts, Lease Balance, Loan Balance, Commitment Fees,
                  Shortfall Amount, Participant Balance, or any other definition
                  which would affect the amounts to be advanced or which are
                  payable under the Operative Documents; or

                           (v)      consent to any assignment of the Master
                  Lease or any Lease Supplement by the Lessee except as
                  expressly permitted by the Operative Documents, release Lessee
                  from its obligations in respect of the payments of Rent or
                  Lease Balance or change the absolute and unconditional
                  character of such obligations or release any Collateral from
                  the Liens created by the Operative Documents; or

                           (vi)     release of any Lien granted by the Lessee or
                  the Lessor under the Operative Documents, except as provided
                  in the Operative Documents.

                  (b)      no such termination, amendment, supplement, waiver or
         modification of any provision of the Operative Documents relating to
         the Structuring Fee or any indemnity in favor of the Arranger shall be
         effective without the Arranger's written consent, and the Arranger
         shall be a third party beneficiary of such provisions and this Section
         15.5(b).

         Section 15.6. Headings, Etc. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.

         Section 15.7. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the parties hereto. No party hereto shall assign or
transfer any of its rights or obligations under the Operative Documents except
in accordance with the terms and conditions thereof.

                                      -46-


Lam Research Corporation                                 Participation Agreement

         Section 15.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT AND THE OTHER
OPERATIVE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN ANY OPERATIVE DOCUMENT) AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

         Section 15.9. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         Section 15.10. Liability Limited. The parties hereto agree that except
as specifically set forth herein or in any other Operative Document, the Lessor
shall not have any personal liability whatsoever to the Administrative Agent,
the Lessee or any Lender or their respective successors and assigns for any
claim based on or in respect hereof or any of the other Operative Documents or
arising in any way from the transactions contemplated hereby or thereby and
recourse, if any, shall be solely had against the Collateral, including the
Properties but excluding the Excluded Payments; provided, however, that Lessor
shall be liable in its individual capacity (a) for its own willful misconduct or
gross negligence, (b) breach of any of its representations, warranties or
covenants under the Operative Documents, or (c) any Lessor Liens attributable to
it. It is understood and agreed that, except as provided in the preceding
sentence: (i) the Lessor shall not have any personal liability under any of the
Operative Documents as a result of acting pursuant to and consistent with any of
the Operative Documents; and (ii) all such personal liability of Lessor is
expressly waived and released as a condition of, and as consideration for, the
execution and delivery of the Operative Documents by Lessor.

         Section 15.11. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS PARTICIPATION AGREEMENT OR ANY OF THE OTHER OPERATIVE
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

         Section 15.12. Setoff. The Participants shall, upon the occurrence of
any Lease Event of Default, have the right to appropriate and, subject to
Section 4.7, apply to the payment of Lessee's obligations under the Lease, and
the other Operative Documents as security for the payment of such obligations,
any and all balances, credits, deposits, accounts or moneys of Lessee then or
thereafter maintained with any Participant. The rights of the Participants under
this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which any such Person may
have.

                                      -47-


Lam Research Corporation                                 Participation Agreement

         Section 15.13. No Participant Responsible for Other Participants. The
obligations of each Participant under this Participation Agreement and the other
Operative Documents are several and not joint; and in the event of a failure by
a Participant to perform any of its obligations hereunder or under any other
Operative Document, neither the Administrative Agent, the Lessor nor any other
Lender (other than the defaulting Participant) shall have any liability as a
consequence thereof.

         Section 15.14. Partial Purchase Option. So long as no Default or Event
of Default shall have occurred and be continuing, the Lessee shall have the
right to purchase any of Property No. 1, Property No. 2, Property No. 3 or
Property No. 4 (the "Partial Purchase Option") pursuant to the terms of Section
18.1 of the Master Lease without being required to purchase, at the same time,
the remaining portion of the Property; provided, however, that at the exercise
and consummation of such purchase, the then remaining Property Balance must be
at least $25,000,000; provided, further, that in no event will Lessee be
permitted to exercise the Partial Purchase Option unless the remainder of the
Properties shall (a) have separate tax identification numbers, (b) constitute
properly subdivided parcels pursuant to all Applicable Laws, (c) have adequate
and legal access for vehicular and pedestrian ingress and egress and for all
necessary utilities, and (d) otherwise comply with all Applicable Laws. In
addition to the foregoing, if the Lessee has exercised the Remarketing Option,
the Lessee shall promptly rescind the Remarketing Option as a condition
precedent to its right to exercise the Partial Purchase Option.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -48-


         IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.

                                LAM RESEARCH CORPORATION, as Lessee

                                By /s/ Craig Garber
                                   ---------------------------------
                                   Name Craig Garber
                                   Its VP and Treasurer

                                SELCO SERVICE CORPORATION, as Lessor

                                By /s/ Donald C. Davis
                                   ---------------------------------
                                   Donald C. Davis
                                   Its  Vice President

                                KEY CORPORATE CAPITAL INC., as Lender

                                By /s/Robert W. Boswell
                                   ----------------------------------
                                   Name  Robert W. Boswell
                                   Its Vice President

                                KEY CORPORATE CAPITAL INC., as
                                   Administrative Agent

                                By /s/ Robert W. Boswell
                                   ----------------------------------
                                   Name  Robert W. Boswell
                                   Its Vice President

                                      S-1



                                   SCHEDULE I
                           TO PARTICIPATION AGREEMENT

                                   COMMITMENTS



                                                                                     COMMITMENT
        PARTICIPANT                            COMMITMENT                            PERCENTAGE
                                                                               
          LENDERS

Key Corporate Capital Inc.             Series A $51,533,331.79                          88.8%

                                       Series B $ 3,017,717.63                           5.2%

   Total Loan Commitment                    $54,551,049.42                              94.0%

          LESSOR

SELCO Service Corporation                   $ 3,481,981.88                               6.0%

         TOTAL                              $58,033,031.30                               100%




                                   SCHEDULE II
                           TO PARTICIPATION AGREEMENT

            Notice Information, Wire Instructions and Funding Offices

LESSOR:

NOTICES:

SELCO SERVICE CORPORATION
c/o KeyCorp. Leasing
66 South Pearl Street
Albany, New York  12207
Attention: Mr. Donald C. Davis
Facsimile No.: (720) 304-1479

with a copy to

Key Equipment Finance
601 108th Avenue NE
Bellevue, Washington  98004
Attention: Mr. James Carney
Facsimile No.: (425) 709-4587

and a copy to

Key Technology Finance
601 108th Avenue NE
Bellevue, Washington  98004
Attention: Mr. Robert Boswell
Facsimile No.: (425) 709-4565

ADMINISTRATIVE AGENT:

NOTICES:

KEY CORPORATE CAPITAL INC.
601 108th Avenue NE
Bellevue, Washington  98004
Attention: Mr. Robert Boswell
Telephone No.: (425) 709-4580
Facsimile No.: (425) 709-4565



FUNDING, RATE SETS AND OTHER ADMINISTRATIVE:

Key Bank National Association
431 East Parkcenter Boulevard
Boise, Idaho 83706
Attention: Specialty Services Team
Telephone No.: (800) 297-5518
Facsimile No.: (800) 297-5495

WIRE TRANSFER INSTRUCTIONS:

Bank:  KeyBank National Association
Bellevue, Washington
ABA Number:  125000574
Account Number:  3072
Ref: Lam Research Corporation - II

LENDER:

NOTICES:

KEY CORPORATE CAPITAL INC.,
601 108th Avenue NE
Bellevue, Washington  98004
Attention:  Mr. Robert Boswell
Telephone No.: (425) 709-4580
Facsimile No.: (425) 709-4565

WIRE TRANSFER INSTRUCTIONS:

Bank: KeyBank, N.A.
Bellevue, Washington
ABA Number:  125000574
Account Number:  3072
Ref: Lam Research Corporation - II

                                       -2-


LESSEE:

LAM RESEARCH CORPORATION
4300 Cushing Parkway
Fremont, California 94538
Attention: Craig Garber
Telephone: (510) 572-1875
Facsimile: (510) 572-1586

                                      -3-



                                  SCHEDULE III
                           TO PARTICIPATION AGREEMENT



- -------------------------------------------------------------------------------------------------------------
                                                 ALLOCATED PERCENTAGE OF LEASE     MAXIMUM RECOURSE AMOUNT
                   PROPERTY                                 BALANCE
- -------------------------------------------------------------------------------------------------------------
                                                                             
Property No. 1 ("Property No. 1")
4650 Cushing Parkway, Fremont,                             38.09524%                      86.0234%
California CA-1
- -------------------------------------------------------------------------------------------------------------
Property No. 2 ("Property No. 2") 4540
Cushing Parkway, Fremont,
California CA-2
- -------------------------------------------------------------------------------------------------------------
         Land                                               3.79094%                          100%
- -------------------------------------------------------------------------------------------------------------
         Improvements                                      10.84751%                      85.0410%
- -------------------------------------------------------------------------------------------------------------
Property No. 3 ("Property No. 3")
46555 Landing Parkway, Fremont,
California CA-8
- -------------------------------------------------------------------------------------------------------------
         Land                                               7.40957%                          100%
- -------------------------------------------------------------------------------------------------------------
         Improvements                                      22.57279%                      79.4776%
- -------------------------------------------------------------------------------------------------------------
Property No. 4 ("Property No. 4") 46595
Landing Parkway, Fremont,
California CA-9
- -------------------------------------------------------------------------------------------------------------
         Land                                               6.20336%                          100%
- -------------------------------------------------------------------------------------------------------------
         Improvements                                      11.08059%                      84.4050%
- -------------------------------------------------------------------------------------------------------------



                                   APPENDIX A

                           TO PARTICIPATION AGREEMENT

         A.    Interpretation. In each Operative Document, unless a clear
contrary intention appears:

                  (i)      the singular number includes the plural number and
         vice versa;

                  (ii)     reference to any Person includes such Person's
         successors and assigns but, if applicable, only if such successors and
         assigns are permitted by the Operative Documents, and reference to a
         Person in a particular capacity excludes such Person in any other
         capacity or individually;

                  (iii)    reference to any gender includes each other gender;

                  (iv)     reference to any agreement, document or instrument
         (including any Operative Document) means such agreement, document or
         instrument as amended or modified and in effect from time to time in
         accordance with the terms thereof and, if applicable, the terms of the
         other Operative Documents, and reference to any promissory note
         includes any promissory note which is an extension or renewal thereof
         or a substitute or replacement therefor;

                  (v)      reference to any Requirement of Law means such
         Requirement of Law as amended, modified, codified, replaced or
         reenacted, in whole or in part, and in effect from time to time,
         including rules and regulations promulgated thereunder, and reference
         to any section or other provision of any Requirement of Law means that
         provision of such Requirement of Law from time to time in effect and
         constituting the substantive amendment, modification, codification,
         replacement or reenactment of such section or other provision;

                  (vi)     reference in any Operative Document to any Article,
         Section, Appendix, Schedule or Exhibit means such Article or Section
         thereof or Appendix, Schedule or Exhibit thereto, and reference in any
         Section of any Operative Document to any clause means such clause of
         such Section;

                  (vii)    "hereunder," "hereof," "hereto" and words of similar
         import shall be deemed references to an Operative Document as a whole
         and not to any particular Article, Section or other provision thereof;

                                      -2-


                  (viii)   "including" (and with correlative meaning "include")
         means including without limiting the generality of any description
         preceding such term; and

                  (ix)     with respect to any rights and obligations of the
         parties under the Operative Documents, all such rights and obligations
         shall be construed to the extent permitted by Applicable Law.

         B.       Computation of Time Periods. Unless otherwise specified in any
Operative Document, for purposes of computation of periods of time under the
Operative Documents, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."

         C.       Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used therein shall be interpreted, all
accounting determinations thereunder shall be made, and all financial statements
required to be delivered thereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes concurred in by the Lessee's
independent public accountants) with the most recent audited consolidated
financial statements of the Lessee and its Subsidiaries delivered to the
Participants.

         D.       Conflict in Operative Documents. If there is any conflict
between any Operative Documents, such Operative Documents shall be interpreted
and construed, if possible, so as to avoid or minimize such conflict but, to the
extent (and only to the extent) of such conflict, the Participation Agreement
shall prevail and control.

         E.       Legal Representation of the Parties. The Operative Documents
were negotiated by the parties with the benefit of legal representation and any
rule of construction or interpretation otherwise requiring the Operative
Documents to be construed or interpreted against any party shall not apply to
any construction or interpretation hereof or thereof.

         F.       Defined Terms. Unless a clear contrary intention appears,
terms defined herein have the respective indicated meanings when used in each
Operative Document.

         "Account" means the account identified by the Administrative Agent in a
writing delivered to the Lessee into which all payments by the Lessee under the
Operative Documents shall be made. The Account shall be specified on Schedule II
to the Participation Agreement, as such Schedule may from time to time be
amended, supplemented, amended and restated or otherwise modified.

         "Account Control Agreement" means the Account Control Agreement dated
as of June 1, 2003 among the Administrative Agent, the Lessee and KeyBank
National Association, as depository bank.

          "Acquisition Date" is defined in Section 6.1 of the Participation
Agreement.

                                      -3-


         "Adjusted Eurodollar Rate" means, as applicable to any Interest Period
for any Loan or Lessor Amount, (x) a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/16th of it) by
dividing (i) the applicable London Interbank Offering Rate for such Interest
Period by (ii) 1.00 minus the Eurodollar Reserve Percentage, plus (y) in the
case of Loans, the Loan Margin and in the case of Lessor Amounts, the Lessor
Margin. The Adjusted Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Reserve Percentage.

         "Administrative Agent" means Key Corporate Capital Inc., in its
capacity as Administrative Agent, and any successors or assigns thereto in such
capacity appointed in accordance with Section 7.9 of the Loan Agreement.

         "Advance" means an advance of funds by the applicable Lenders to the
Lessor and the Lessor making funds available to acquire a Property pursuant to
Article III of the Participation Agreement.

         "Affected Property" is defined in Section 15.1 of the Master Lease.

         "Affiliate" means, as to any Person, (i) any other Person (a
"Controlling Person") that directly, or indirectly through one or more
intermediaries, controls such Person or (ii) any Person (other than such Person
and its Subsidiaries) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

         "After Tax Basis" means, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient (less any tax savings realized
and the present value of any tax savings projected to be realized by the
recipient as a result of the payment of the indemnified amount) with respect to
the receipt by the recipient of such amounts, such increased payment (as so
reduced) is equal to the payment otherwise required to be made.

         "Aggregate Commitment Amount" means, on any date, $58,033,031.30 as
such amount may be reduced from time to time pursuant to Section 4.3(b) of the
Participation Agreement.

         "Applicable Law" means all Federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Properties, the Improvements thereon or
the demolition, construction, use or alteration thereof, whether now or
hereafter enacted and in force, including any that require repairs,
modifications or alterations in or to the Properties or in any way limited the
use and enjoyment thereof (including all building, zoning and fire codes and the
Americans with Disabilities Act of 1990, 42 U.S.C. Sections 1201 et seq., and
any other similar Federal, state or local laws or ordinances and the regulations

                                      -4-


promulgated thereunder) and any that may relate to environmental requirements
(including all Environmental Laws), and all permits, certificates of occupancy,
licenses, authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments that are
of record affecting the Properties, the Appurtenant Rights and any easements,
licenses or other agreements entered into pursuant to Section 11.2 of the Master
Lease.

         "Appraisal" means, with respect to any Property, an appraisal of the
Fair Market Sales Value of such Property, which appraisal complies in all
material respects with all of the provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended, the rules and
regulations adopted pursuant thereto, and all other applicable Requirements of
Law, and is addressed to the Administrative Agent, each Lender and the Lessor.
Each Appraisal shall be prepared by an Appraiser selected by the Administrative
Agent and the Lessor and reasonably acceptable to the Lessee.

         "Appraiser" means the appraiser that prepared an Appraisal of the
Properties or such other Person selected by the Administrative Agent and the
Lessor.

         "Appurtenant Rights" means, with respect to any Land, (i) all
agreements, easements, rights of way or use, rights of ingress or egress,
privileges, appurtenances, tenements, and other rights and benefits at any time
belonging or pertaining to such Land or the Improvements thereon, including,
without limitation, the use of any streets, ways, alleys, vaults or strips of
land adjoining, abutting, adjacent or contiguous to such Land and (ii) all
permits, licenses and rights, whether or not of record, appurtenant to such
Land.

         "Arranger" means Key Lease Advisory Services, in its capacity as
arranger.

         "Assigned Leases" is defined in Section 2(a) of the Assignment of Lease
and Rent.

         "Assignment of Lease and Rent" means the Assignment of Lease and Rent
and Security Agreement dated as of June 1, 2003, from the Lessor, as assignor,
to the Administrative Agent for the benefit of the Lenders, as assignee,
substantially in the form of Exhibit H to the Participation Agreement, as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time.

         "Authorized Officer" means the Chairman of the Board, the President,
the Executive Vice President and Chief Financial Officer, the Vice President and
Treasurer and any other officer of the Lessee authorized by the board of
directors of the Lessee to execute and deliver any Operative Document on behalf
of the Lessee.

         "Available Commitments" means the sum of the Available Loan Commitments
and the Available Lessor Commitment.

                                      -5-


         "Available Lessor Commitment" means, at any time, an amount equal to
the excess, if any, of (x) the Lessor Commitment, minus (y) the aggregate Lessor
Amounts outstanding.

         "Available Loan Commitment" means, at any time, an amount equal to the
excess, if any, of (x) the aggregate amount of the Loan Commitments minus (y)
the aggregate principal amount of all Loans outstanding.

         "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect or any successor thereto.

         "Base Rate" means, for any day, the greater of:

                           (i)      the rate of interest announced by KeyBank
                  National Association from time to time as its prime commercial
                  rate (the "Prime Rate"), or equivalent, as in effect on such
                  day, with any change in the Prime Rate resulting from a change
                  in said prime commercial rate to be effective as of the date
                  of the relevant change in said prime commercial rate; and

                           (ii)     the sum of (x) the Federal Funds Rate, plus
                  (y)1/2 of 1% (.50%).

         "Base Rate Loan/ Lessor Amount" means a Loan or Lessor Amount, as the
case may be, bearing interest at the Base Rate.

         "Basic Rent" means the sum of (i) the Lender Basic Rent plus (ii) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.

         "Bill of Sale" is defined in Section 6.1(j) of the Participation
Agreement.

         "Break Costs" means an amount equal to the amount, if any, required to
compensate any Participant for any additional losses (including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
redeployment of deposits or funds acquired by such Participant to fund its
obligations under the Operative Documents) it may incur with respect to
Eurodollar Loan/Lessor Amounts as a result of (v) the Lessee's payment of Rent
other than on a Scheduled Payment Date (except for Rent not due on a Scheduled
Payment Date), (w) any Advance not being made on the date specified therefor in
the applicable Funding Request (other than as a result of a breach by such
Participant of its obligation under Section 3.1, 3.2 or 3.3, as the case may be,
of the Participation Agreement to make Lessor Amounts or Loans available), (x)
the Lessee's payment of the Lease Balance or any Property Balance on any date
other than a Scheduled Payment Date or (y) any conversion of the Eurodollar
Loans/Lessor Amounts in accordance with Section 13.7 or 13.8 of the
Participation Agreement on a day other than the last day of the then current
Interest Period with respect thereto. A statement as

                                      -6-


to the amount of such loss, cost or expense, prepared in good faith and in
reasonable detail and submitted by such Participant, as the case may be, to the
Administrative Agent, shall be correct and binding on the Administrative Agent
and the Lessee absent manifest error.

         "Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in San Francisco, California, Cleveland, Ohio and New
York, New York are authorized or required by law to close, except that, when
used in connection with a Eurodollar Loan/Lessor Amount, such day shall also be
a day on which dealings between banks are carried on in Dollar deposits in
London, England.

         "Capitalized Lease" means any lease in which the obligation for rentals
with respect thereto is required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.

         "Cash Collateral" has the meaning specified in the Cash Collateral
Pledge Agreement.

         "Cash Collateral Pledge Agreement" means the Cash Collateral Pledge
Agreement dated as of June 1, 2003 between the Lessee and the Administrative
Agent.

         "Cash Collateral Documents" means the Cash Collateral Pledge Agreement,
the Account Control Agreement and any other documents or instruments evidencing
or relating to the Cash Collateral.

         "Casualty" means any damage or destruction of all or any portion of any
Property as a result of a fire, flood, earthquake or other casualty.

         "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.

         "Certifying Party" is defined in Section 22.1 of the Master Lease.

         "Claims" means any and all obligations, liabilities, losses, actions,
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever, but shall not include Taxes or Impositions.

         "Code" means the Internal Revenue Code of 1986 and regulations
promulgated thereunder.

         "Collateral" means any collateral pledged by the Lessor to the
Administrative Agent pursuant to the Operative Documents to secure the Lessor's
obligations under the Loan Agreement and the Notes, but excluding any Excepted
Payments.

                                      -7-


         "Commitment" means (i) as to any Lender, its Loan Commitment, and (ii)
as to the Lessor, the Lessor Commitment.

         "Commitment Fee" is defined in Section 4.4(b) of the Participation
Agreement.

         "Commitment Percentage" means, with respect to any Participant, the
percentage set forth opposite such Participant's name under the heading
"Commitment Percentage" on Schedule I to the Participation Agreement, as such
Schedule may be amended, supplemented, amended and restated or otherwise
modified from time to time.

         "Commitment Period" means the period from and including the
Documentation Date to and including the date occurring on the earliest of (i)
the date on which the sum of the aggregate outstanding Loans and aggregate
outstanding Lessor Amounts equals the Aggregate Commitment Amount, and (ii) June
21, 2003.

         "Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy, easement rights
or title to any Property or any part thereof, wholly or partially (temporarily
or permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, such Property or alter the pedestrian or
vehicular traffic flow to such Property so as to result in change in access to
such Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.

         "Consolidated Subsidiary" means, at any date as of which the same is to
be determined, any Subsidiary of the Lessee the account of which would be
consolidated with those of the Lessee in its consolidated financial statements
if such statements were prepared as of such date in accordance with generally
accepted accounting principles.

         "Contract Rents" is defined in Section 2(b) of the Assignment of Lease
and Rent.

         "Contracts" is defined in Section 2(b) of the Assignment of Lease and
Rent.

         "Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Lessee or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.

         "Deed" means a grant deed with respect to the real property comprising
a Property, in conformity with Applicable Law and appropriate for recording with
the applicable Governmental Authorities, conveying fee simple title to such real
property to the Lessor, subject only to Permitted Property Liens.

                                      -8-


         "Default" means any Event of Default or any condition, occurrence or
event that, after notice or lapse of time or both, would constitute an Event of
Default.

         "Documentation Date" is defined in Section 2.1 of the Participation
Agreement.

         "Dollar Amount" of any currency at any date means (i) the amount of
such currency if such currency is Dollars or (ii) the equivalent amount of
Dollars if such currency is any currency other than Dollars, calculated at
approximately 11:00 a.m. (London Time) as set forth on the applicable Telerate
Screen on the date of determination; provided that if more than one rate is
listed then the applicable conversion rate shall be the arithmetic average of
such rates. If for any reason such conversion rates are not available, the
Dollar Amount shall be calculated using the arithmetic average of the spot
buying rates for such currency in Dollars as quoted to the Administrative Agent
by three foreign exchange dealers of recognized standing in the United States
selected by the Administrative Agent at approximately 11:00 a.m. (London time)
on any date of determination.

         "Dollars" and "$" mean dollars in lawful currency of the United States.

         "Eligible Lender Assignee" means (a) a commercial bank organized under
the laws of the United States, or any State thereof, and having combined capital
and surplus of $100,000,000; (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development ("OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of $100,000,000; provided, however, that
such bank is acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the OECD or the
Cayman Islands; and provided, further, that such bank is entitled to a zero
percent (0%) United States withholding tax rate; (c) the central bank of any
country which is a member of the OECD; provided that such bank is entitled to a
zero percent (0%) United States withholding tax rate; (d) a finance company or
other financial institution or fund (whether a corporation, partnership, trust
or other entity) organized under the laws of the United States, or any State
thereof, that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having a combined
capital and surplus of $100,000,000; (e) an insurance company organized under
the laws of the United States, or any State thereof, and having a combined
capital and surplus of $100,000,000; (f) any Lender a party to the Operative
Documents; and (g) any Affiliate of a Lender; provided that any Affiliate of the
Lessee shall not qualify as an Eligible Lender Assignee. So long as no Lease
Event of Default is continuing, the Lessee shall have the right to approve any
Eligible Lender Assignee, which approval shall not be unreasonably withheld.

         "Eligible Lessor Assignee" means, with respect to any assignment by the
Lessor pursuant to Section 12.1(b) of the Participation Agreement, any Person
that meets all of the following requirements: (i) such Person is (x) a leasing
company, bank, bank subsidiary or bank Affiliate, insurance company or other
institutional investor with a net worth or, in the case of a bank or lending
institution, combined capital and surplus on a

                                      -9-


consolidated basis at the time of transfer of at least $100,000,000 determined
in accordance with GAAP or (y) a Person described in clause (x) that is an
Affiliate of a financial institution meeting such net worth or capital and
surplus standard, (ii) such assignment to such Person would not result in such
Person or the Properties being consolidated onto the balance sheet of the Lessee
and (iii) so long as no Lease Event of Default is continuing, such Person is
approved by the Lessee, which approval shall not be unreasonably withheld.

         "End of the Term Report" is defined in Section 13.2(a) of the
Participation Agreement.

         "Environmental Audit" means, with respect to any Property, a Phase One
environmental site assessment (the scope and performance of which meets or
exceeds the then most current ASTM Standard Practice E1527 for Environmental
Site Assessments: Phase One Environmental Site Assessment Process) of such
Property.

         "Environmental Laws" means any and all applicable federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
permits, licenses, authorizations, decrees or other legal requirement
regulating, relating to or imposing liability or standards of conduct concerning
protection of human health or the environment or the use, storage, recycling,
handling, disposal, discharge, transport, treatment or generation of Hazardous
Materials, as now or may at any time be in effect during the Lease Term,
including CERCLA, RCRA, the Clean Air Act, 42 USC Sections 7401 et seq., the
Toxic Substances Control Act 15 USC Sections 2601 et seq., and any rules and
regulations promulgated thereunder.

         "Environmental Violation" means, with respect to any Property, any
activity, occurrence or condition that violates, or results in non-compliance
with any Environmental Law.

         "Equipment" means all equipment, apparatus, fittings and personal
property of every kind and nature whatsoever purchased, leased or otherwise
acquired by the Lessor using the proceeds of the Loans and/or the Lessor Amounts
and now or subsequently attached to, contained in or used or usable in any way
in connection with any operation or letting of any Property, including but
without limiting the generality of the foregoing, all furniture and furnishings,
heating, electrical, switch gear, power supply, lightening, plumbing,
ventilation, air conditioning and air cooling systems, refrigerating equipment,
generators, locking and unlocking equipment, communication systems, sprinkler
system and fire prevention systems, security systems and fixtures of all kinds;
provided, however, that the term "Equipment" shall expressly exclude all
inventory.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

                                      -10-


         "Eurodollar Loan/Lessor Amount" means a Loan or Lessor Amount, as the
case may be, bearing interest or Yield, respectively, at or based upon the
Adjusted Eurodollar Rate.

         "Eurodollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
F.R.S. Board, for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Loans/Lessor Amounts is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to United States
residents).

         "Event of Default" means a Lease Event of Default or a Loan Agreement
Event of Default.

         "Event of Loss" means any Significant Casualty or any Significant
Condemnation.

         "Event of Loss Purchase" means the payment by the Lessee of the
Property Cost and all other amounts described in Section 15.1 of the Master
Lease with respect to any Property.

         "Excepted Payments" means:

                  (a)      all indemnity payments (including indemnity payments
         made pursuant to Article XIII of the Participation Agreement) to which
         the Administrative Agent, the Arranger, the Lessor, any Lender or any
         of their respective Affiliates, agents, officers, directors or
         employees is entitled;

                  (b)      any amounts (other than Basic Rent or amounts payable
         by the Lessee pursuant to Section 15.1 of the Master Lease or Articles
         XVI, XVIII or XX of the Master Lease) payable under any Operative
         Document to reimburse the Administrative Agent, the Arranger, the
         Lessor, any Lender or any of their respective Affiliates (including the
         reasonable expenses of the Administrative Agent, the Arranger, the
         Lessor, any Lender or such Affiliates incurred in connection with any
         such payment) for performing or complying with any of the obligations
         of the Lessee under and as permitted by any Operative Document;

                  (c)      any insurance proceeds (or payments with respect to
         risks self-insured or policy deductibles) under liability policies;

                  (d)      any insurance proceeds under policies maintained by
         any Participant;

                                      -11-


                  (e)      Transaction Expenses or other amounts or expenses
         paid or payable to or for the benefit of the Administrative Agent, the
         Lessor, the Arranger or any Lender; and

                  (f)      any payments in respect of interest to the extent
         attributable to payments referred to in clauses (a) through (e) above.

         "Excess Casualty/Condemnation Proceeds" is defined in Section 14.2(f)
of the Master Lease.

         "Excess Sales Proceeds" means with respect to any Property the excess,
if any, of (x) the aggregate of all proceeds received by the Lessor in
connection with any sale or reletting of such Property pursuant to the Lessor's
exercise of remedies under Section 16.2 of the Master Lease or the Lessee's
exercise of the Remarketing Option with respect to such Property under Article
XX of the Master Lease (in either case, less, to the extent not reimbursed by
the Lessee, all fees, costs and expenses of the Lessor in connection with the
exercise of its rights and remedies thereunder or any such sale or reletting),
minus (y) the Property Balance of such Property.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.

         "Expiration Date" means, with respect to the Master Lease, the earlier
of (a) the date the Master Lease shall have been terminated in accordance with
the provisions thereof and (b) the fifth anniversary of the Documentation Date,
provided, however, with respect to Article XX of the Master Lease, the
Expiration Date shall be the later of (i) the date set forth in clause (b) above
and (ii) the Extended Expiration Date.

         "Expiration Date Purchase Obligation" means the Lessee's obligation,
pursuant to Section 18.2 of the Master Lease, to purchase one or more Properties
on the Expiration Date.

         "Extended Expiration Date" is defined in Section 20.3(a) of the Master
Lease.

         "Fair Market Sales Value" means, with respect to any Property, the
amount, which in any event shall not be less than zero, that would be paid in
cash in an arm's-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, for the ownership of such Property. The Fair
Market Sales Value of any Property shall be determined based on the assumption
that, except for purposes of Article XVI of the Master Lease and Section 13.2 of
the Participation Agreement, such Property is in the condition and state of
repair required under Section 9.1 of the Master Lease and the Lessee is in
compliance with the other requirements of the Operative Documents relating to
the condition of such Property.

                                      -12-


         "Federal Funds Rate" means, for any day or period, as applicable, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of it) at
which Federal funds in the amount equal to the principal or analogous amount of
the related Loans or Lessor Amounts are offered in the interbank market to the
Administrative Agent or the Lessor, as the case may be, as of 11:00 a.m. (New
York time) on such day for such day or for such period, as applicable.

         "Fees" is defined in Section 4.4 of the Participation Agreement.

         "F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.

         "Funding Office" means the office of each Participant identified on
Schedule II to the Participation Agreement as its funding office.

         "Funding Request" is defined in Section 3.4 of the Participation
Agreement.

         "GAAP" means accounting principles generally accepted in the United
States from time to time set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.

         "Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of any Property.

         "Governmental Authority" means the United States Federal government,
any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

         "Gross Remarketing Proceeds" is defined in Section 20.2(h) of the
Master Lease.

         "Guaranty" of any Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person

                                      -13-


or otherwise assures any creditor of such other Person against loss, and shall
include, without limitation, the contingent liability of such Person under or in
relation to any letter of credit (or similar instrument), but shall exclude
endorsements for collection or deposit in the ordinary course of business.

         "Hazardous Activity" means any activity, process, procedure or
undertaking that directly or indirectly (i) produces, generates or creates any
Hazardous Material; (ii) causes or results in (or threatens to cause or result
in) the Release of any Hazardous Material into the environment (including air,
water vapor, surface water, groundwater, drinking water, land (including surface
or subsurface), plant, aquatic and animal life); (iii) involves the containment
or storage of any Hazardous Material; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.

         "Hazardous Materials" means any hazardous, toxic or dangerous
materials, substances, chemicals, wastes or pollutants that from time to time
are defined by or pursuant to or are regulated under any Environmental Laws,
including asbestos, polychlorinated biphenyls, petroleum, petroleum derivatives
or by-products, other hydrocarbons, urea formaldehyde and any material,
substance, pollutant or waste that is defined as a hazardous waste under RCRA or
defined as a hazardous substance under CERCLA.

         "Impositions" means any and all liabilities, losses, expenses and costs
of any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever (all of the foregoing being
defined as "Taxes") (including, without limitation, (i) real and personal
property taxes, including personal property taxes on any property covered by the
Master Lease that is classified by Governmental Authorities as personal
property, and real estate or ad valorem taxes in the nature of property taxes;
(ii) sales taxes, use taxes and other similar taxes (including rent taxes and
intangibles taxes); (iii) any excise taxes; (iv) real estate transfer taxes,
conveyance taxes, mortgage taxes, intangible taxes, stamp taxes and documentary
recording taxes and fees; (v) taxes that are or are in the nature of franchise,
income, value added, gross receipts, privilege and doing business taxes, license
and registration fees; (vi) assessments on any Property, including all
assessments for public improvements or benefits (whether or not such
improvements are commenced or completed within the Lease Term); and (vii) all
filing and reporting fees and expenses relating thereto, for such Property), and
all interest, additions to tax and penalties, which at any time may be levied,
assessed or imposed by any Federal, state or local authority upon or with
respect to (a) any Tax Indemnitee, any Property or any part thereof or interest
therein, or the Lessee or any sublessee or user of any Property; (b) the
financing, refinancing, demolition, construction, substitution, subleasing,
assignment, control, condition, occupancy, servicing, maintenance, repair,
ownership, possession, purchase, rental, lease, activity conducted on, delivery,
insuring, use, operation, improvement, transfer, return or other disposition of
any Property or any part thereof or interest therein; (c) the Notes, the Lessor
Amounts or other indebtedness with respect to any Property or any part thereof
or interest therein or transfer thereof; (d) the rentals, receipts or earnings
arising from any Property or any part thereof or

                                      -14-


interest therein; (e) the Operative Documents or any payment made or accrued
pursuant thereto; (f) the income or other proceeds received with respect to any
Property or any part thereof or interest therein upon the sale or disposition
thereof; (g) any contract relating to the acquisition or delivery of the
Improvements or any part thereof or interest therein; (h) the issuance of the
Notes and payments thereon; or (i) otherwise in connection with the transactions
contemplated by the Operative Documents.

         Notwithstanding anything in the first paragraph of this definition
(except as provided in the final paragraph of this definition) the term
"Imposition" shall not mean or include:

                  (i)      Taxes that are based upon or measured by or with
         respect to the net income of any Tax Indemnitee (including, without
         limitation, any minimum Taxes, value added Taxes imposed in lieu of net
         income Taxes, income or capital gains Taxes, excess profits Taxes,
         items of Tax preference, or capital stock, franchise, business
         privilege or doing business Taxes), (but Taxes described in this clause
         (i) shall not include Taxes imposed under Section 1446 of the Code or
         that are, or are in the nature of, sales, use, rental, transfer or
         property Taxes), in each case imposed by any Governmental Authority in
         the jurisdiction of incorporation or residence of such Tax Indemnitee,
         or the jurisdiction in which such Tax Indemnitee maintains its
         principal office, applicable lending office or a place of business or a
         jurisdiction that imposes such Tax because of such Tax Indemnitee's
         activities in such jurisdiction, provided that this clause (i) shall
         not be interpreted to prevent a payment from being made on an After Tax
         Basis if such payment is otherwise required to be so made, provided,
         further that this clause (i) shall not apply to Taxes imposed on a Tax
         Indemnitee solely as a result of the Lessee's activities or the
         location of any Property in the jurisdiction imposing such Taxes;

                  (ii)     with respect to any Property, any Tax to the extent
         such Tax is attributable to any act, event or omission that occurs, or
         is attributable to a period beginning after the return of such Property
         to the Lessor in accordance with the terms of the Lease, (x) unless a
         Lease Event of Default has occurred and is continuing, after the Lease
         Termination Date or (y) if the Lessee is required to return such
         Property to the Lessor, provided, that there shall not be excluded from
         the definition of the term "Impositions" any Taxes to the extent such
         Taxes are attributable to events or circumstances occurring, or matters
         arising, prior to or ending with the Expiration Date, or if applicable,
         the events or circumstances set forth in clause (y) above;

                  (iii)    any Tax for so long as, but only for so long as, it
         is being contested in accordance with the provisions of Section 13.5(b)
         of the Participation Agreement, provided that the foregoing shall not
         limit any obligation under such Section to advance to the relevant Tax
         Indemnitee amounts with respect to Taxes that are being contested in
         accordance with such Section or any expenses reasonably incurred by
         such Tax Indemnitee in connection with such contest;

                                      -15-


                  (iv)     any Taxes (including, without limitation, sales and
         transfer Taxes) to the extent imposed with respect to any voluntary
         transfer, sale, financing or other voluntary disposition (x) of any
         interest in any Property or any part thereof, or any interest therein
         or any interest or obligation under the Operative Documents (other than
         any transfer in connection with (1) the exercise by the Lessee of its
         Purchase Option or Remarketing Option or any termination option or
         other purchase of such Property by the Lessee, (2) the occurrence of a
         Lease Event of Default (3) a Casualty or Condemnation affecting such
         Property or (4) any sublease, modification or addition to such Property
         by the Lessee);

                  (v)      Taxes to the extent resulting from, or to the extent
         that such Taxes would not have been imposed but for, the gross
         negligence or willful misconduct of such Tax Indemnitee or Affiliate
         thereof;

                  (vi)     Taxes to the extent imposed solely as a result of a
         material breach by the Tax Indemnitee or any Affiliate thereof of any
         representations, warranties or covenants set forth in the Operative
         Documents (unless such breach is caused by the Lessee's breach of its
         representations, warranties or covenants set forth in the Operative
         Documents);

                  (vii)    with respect to any Property, Taxes which are
         included in the Property Balance, if and to the extent actually paid,
         or property taxes to the extent reimbursable by the Lessor pursuant to
         the last sentence of Section 12.1(b) of the Participation Agreement;

                  (viii)   Taxes imposed by any Governmental Authority to the
         extent that such Taxes would have been imposed in the absence of the
         transactions contemplated by the Operative Documents, and Taxes to the
         extent imposed by any Governmental Authority arising directly out of,
         or imposed solely as a result of, activities of a Tax Indemnitee or
         Affiliate thereof unrelated to the Transactions; and

                  (ix)     Taxes arising directly out of or resulting solely
         from, or to the extent that such Taxes would not have been imposed but
         for the existence of, any Lessor Lien attributable to such Tax
         Indemnitee.

         Notwithstanding the foregoing, the exclusions from the definition of
Impositions set forth in clauses (i), (ii), (iv), (vii), (viii) and (ix) above,
shall not apply to any aggregate increase in Taxes imposed on or paid by,
directly or indirectly, a Tax Indemnitee or an entity directly or indirectly
owned by a Tax Indemnitee net of any decrease in Taxes realized by such Tax
Indemnitee or entity as a direct result of its payment of such Taxes, to the
extent that such Tax increase would not have occurred if on each Acquisition
Date the Lessor and the Lenders had advanced funds to the Lessee in the form of
a loan secured by the Properties in an amount equal to the Advance funded on
such Acquisition Date, with interest for such loans equal to the Basic Rent
payable on each Scheduled Payment Date on a principal balance at the maturity of
such loans in an

                                      -16-


amount equal to the then outstanding amount of the Advances at the end of the
term of the Master Lease.

         "Improvements" means all buildings, structures, fixtures, Equipment and
other improvements of every kind existing at any time and from time to time
(including those purchased with amounts advanced by the Participants pursuant to
the Participation Agreement) on or under any parcel of Land to be acquired
pursuant to the terms of the Operative Documents, together with any and all
appurtenances to such buildings, structures or improvements, including
sidewalks, utility pipes, conduits and lines, parking areas and roadways, and
including all Modifications and other additions to or changes in the
Improvements at any time.

         "Imputed Return" means an amount equal to the Base Rate plus 4% per
annum on each Participant's outstanding Loan Amount or Lessor Amount during the
period from the Scheduled Lease Termination Date to the date of determination.

         "Indebtedness" means, without duplication, with respect to the Lessee
and each Subsidiary of the Lessee, such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of any of its
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from any property now or hereafter owned or acquired,
including via merger, by such Person, (iv) obligations which are evidenced by
notes, acceptances, or other instruments, (v) obligations under Capitalized
Leases which would be shown as a liability on a balance sheet of such Person,
(vi) net liabilities under any agreement, device or arrangement designed to
protect at least one of the parties thereto from the fluctuation of interest
rates, exchange rates or forward rates applicable to such party's assets,
liabilities or exchange transactions (including any cancellation, buy back,
reversal, termination or assignment thereof), (vii) derivative interests as
defined in FAS 133 of the Financial Accounting Standards Board; (viii)
Indebtedness of another Person for which such Person is obligated pursuant to a
Guaranty, and (ix) the portion of any accounts receivable for which there is
recourse to such Person; provided, that "Indebtedness shall not include any
overdrafts arising under a Yen-Denominated Facility.

         "Indemnitee" means each Participant, the Administrative Agent and the
Arranger.

         "Insurance Requirements" means the terms and conditions of any
insurance policy, and the requirements of the issuer of any such policy, which
insurance policy is required to be maintained by the Lessee under the Master
Lease in each case the failure to comply with such terms, conditions and/or
requirements would under applicable law or the terms of such insurance policy
constitute a valid defense to the insurer against payment of insurance proceeds
thereunder.

         "Interest Period" means (x) with respect to any Loans or Lessor Amounts
bearing interest or Yield at the Base Rate, the calendar month immediately
preceding a

                                      -17-


Scheduled Payment Date, or a portion of such calendar month during which the
relevant Loans bear interest by reference to the Base Rate and (y) with respect
to any Loans or Lessor Amounts bearing interest or Yield at the applicable
Adjusted Eurodollar Rate that are funded on any Acquisition Date, initially the
period commencing on the Advance date of any such Loan or Lessor Amounts and
ending on May 1, 2003, and thereafter each period commencing on the last day of
the immediately preceding Interest Period applicable to such Loan or Lessor
Amounts and ending one, two, three, or six months thereafter, as selected by the
Lessee and confirmed in writing to the Administrative Agent and the Lessor not
less than three (3) Business Days prior to the last day of the then current
Interest Period with respect thereto; provided that if Lessee fails to provide
notice of its selection as provided above for any period, the Lessee shall be
deemed to have selected a one-month period.

         "Japanese Assets" means assets held in Lam Research Co., Ltd., a
Japanese joint stock company, or any successor thereto.

         "Land" means each individual fee interest or leasehold interest, as the
case may be, in real property described on Schedule I to each Lease Supplement,
and includes all Appurtenant Rights attached thereto.

         "Lease" means, collectively, the Master Lease and each Lease
Supplement.

         "Lease Balance" means, as of any date of determination, an amount equal
to the sum of the Loan Balance and the Lessor Balance and all other amounts
owing by the Lessee under the Operative Documents (including without limitation,
accrued and unpaid Basic Rent and Supplemental Rent, if any).

         "Lease Default" means any event or condition that, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.

         "Lease Event of Default" is defined in Section 16.1 of the Master
Lease.

         "Lease Rents" is defined in Section 2(a)(i) of the Assignment of Lease
and Rent.

         "Lease Supplement" means each Lease Supplement substantially in the
form set forth in Exhibit A to the Master Lease, executed by the Lessee, the
Lessor and, if appropriate in the applicable jurisdiction, the trustee described
therein, dated an Acquisition Date and covering the Property (or, in the case of
Property No. 2, Property No. 3 and Property No. 4, the respective Land or
Improvements related thereto) described therein as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time.

         "Lease Term" is defined in Section 2.3 of the Master Lease.

         "Lender Basic Rent" means, as determined as of any Scheduled Payment
Date, interest due on the Loans, determined in accordance with Section 2.5 of
the Loan

                                      -18-


Agreement and excluding (i) any interest at the applicable Overdue Rate on any
installment of Lender Basic Rent not paid when due and (ii) any fine, penalty,
interest or cost assessed or added under any agreement with a third party for
nonpayment or late payment of Lender Basic Rent.

         "Lender Commitment" means the Commitment of each Lender in the amount
set forth on Schedule I of the Participation Agreement, as such Schedule may be
amended, supplemented, amended and restated, reduced or otherwise modified from
time to time.

         "Lenders" means, collectively, Key Corporate Capital Inc., each
Eligible Lender Assignee and each other holder from time to time of a Note.

         "Lessee" means Lam Research Corporation, a Delaware corporation.

         "Lessor" means SELCO Service Corporation, an Ohio corporation.

         "Lessor Amount" is defined in Section 3.2 of the Participation
Agreement.

         "Lessor Balance" means, as of any date of determination, an amount
equal to the sum of the outstanding Lessor Amounts together with all accrued and
unpaid Yield thereon and all other amounts owing to the Lessor under the
Operative Documents.

         "Lessor Basic Rent" means the amount of accrued and unpaid Yield due on
the Lessor Amounts, determined in accordance with Section 4.1 of the
Participation Agreement as of any Scheduled Payment Date and excluding (i) any
interest at the applicable Overdue Rate on any installment of Lessor Basic Rent
not paid when due and (ii) any fine, penalty, interest or cost assessed or added
under any agreement with a third party for nonpayment or late payment of Lessor
Basic Rent.

         "Lessor Commitment" means the Commitment of the Lessor in the amount
set forth on Schedule I of the Participation Agreement, as such Schedule may be
amended, supplemented, amended and restated, reduced or otherwise modified from
time to time.

         "Lessor Financing Statements" means UCC financing statements
appropriately completed and executed, if applicable, for filing in the
applicable jurisdiction in order to protect the Lessor's and the Administrative
Agent's respective interests under the Master Lease and each Lease Supplement to
the extent the Master Lease and the Lease Supplements are security agreements.

         "Lessor Lien" means any Lien arising as a result of (a) any claim
against any Participant not resulting from the transactions contemplated by the
Operative Documents, (b) any act or omission of any Participant that is not
required or permitted by the Operative Documents or is in violation of any of
the terms of the Operative Documents or (c) any claim against any Participant
with respect to Taxes or Transaction Expenses against which the Lessee is not
required to indemnify such Participant pursuant to Article XIII of the
Participation Agreement.

                                      -19-


         "Lessor Margin" means, with respect to any Lessor Amount which is a
Eurodollar Loan/Lessor Amount, [***] per annum.

         "Lessor Mortgage" means, with respect to each Property, the applicable
Lease Supplement for such Property and any and all other security instruments in
appropriate recordable form in the relevant jurisdiction sufficient to grant to
the Lessor a first priority Lien on such Property.

         "Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property.

         "Loan Agreement" means the Loan Agreement, dated as of June 1, 2003,
among the Lessor, as borrower thereunder, the Lenders, and the Administrative
Agent, substantially in the form of Exhibit D to the Participation Agreement, as
the same may be amended, supplemented, amended and restated or otherwise
modified from time to time.

         "Loan Agreement Default" means any event, act or condition that with
notice or lapse of time, or both, would constitute a Loan Agreement Event of
Default.

         "Loan Agreement Event of Default" is defined in Section 5.1 of the Loan
Agreement.

         "Loan Balance" means, as of any date of determination, an amount equal
to the sum of the outstanding Loans together with all accrued and unpaid
interest thereon pursuant to the Loan Agreement.

         "Loan Commitment" means, with respect to each Lender, the aggregate
Commitment of such Lender in the amount set forth on Schedule I to the
Participation Agreement, as such Schedule may be amended, supplemented, amended
and restated or otherwise modified from time to time.

         "Loan Documents" means the Loan Agreement and the Notes.

         "Loan Margin" means, with respect to any Loan that is a Eurodollar
Loan/Lessor Amount, [***] per annum.

         The Symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed separately with the commission. Confidential treatment
has been requested with respect to the omitted portion.

         "Loans" is defined in Section 2.1(a) of the Loan Agreement.

                                      -20-




         "London Interbank Offering Rate" means, as applicable to any Eurodollar
Loan/Lessor Amount, for the Interest Period of such Eurodollar Loan/Lessor
Amount, the rate per annum determined by the Administrative Agent with respect
to Loans and by the Lessor with respect to Lessor Amounts on the basis of the
offered rate for deposits in Dollars of amounts equal or comparable to the
principal or analogous amount of such Eurodollar Loan/Lessor Amount offered for
a term comparable to such Interest Period, which rates appear on the Reuters
Screen LIBO Page as of 11:00 a.m. (London time) two (2) Business Days prior to
the first day of such Interest Period, provided that (i) if more than one such
offered rate appears on the Reuters Screen LIBO Page, the "London Interbank
Offering Rate" will be the arithmetic average (rounded upwards, if necessary, to
the next higher 1/16th of it) of such offered rates; and (ii) if no such offered
rates appear on such page, the "London Interbank Offering Rate" for such
Interest Period will be the rate per annum quoted by the Administrative Agent,
two (2) Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading banks for a period comparable to such
Interest Period in an amount comparable to the principal or analogous amount of
such Eurodollar Loan/Lessor Amount.

         "Margin Stock" has the meaning given such term under Regulation U.

         "Marketing Period" means the period commencing on the date 180 days
prior to the Expiration Date and ending on the Expiration Date.

         "Master Lease" means the Amended and Restated Master Lease and Deed of
Trust, dated as of June 1, 2003, between the Lessor and the Lessee,
substantially in the form of Exhibit C to the Participation Agreement, as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time.

         "Material" and "Materially" mean material to (i) the ability of the
Lessee to perform its obligations under the Operative Documents, (ii) the value,
condition, utility or useful life of any Property or (iii) the business,
financial condition or results of operations of the Lessee and its Subsidiaries
taken as a whole.

         "Material Adverse Change" means any material adverse change in the
financial condition or results of operations of the Lessee and its Subsidiaries
taken as a whole.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, property, condition (financial or otherwise) or results of operations
of the Lessee and its Subsidiaries taken as a whole, (b) the rights and remedies
of the Lessor, the Administrative Agent or any Lender under the Operative
Documents, (c) the ability of the Lessee to perform its obligations under the
Operative Documents or (d) the value, utility, condition or useful life of any
Property.

         "Material Subsidiary" means any Subsidiary of the Lessee that has
assets with a value of not less than 5% of the total value of the assets of the
Lessee and its Subsidiaries taken as a whole as of the end of the most recently
completed fiscal year of the Lessee.

                                      -21-


         "Maturity Date" means with respect to the Loans and the Lessor Amounts,
the fifth anniversary of the Documentation Date.

         "Maximum Lease Term" means the period ending on the fifth anniversary
of the Documentation Date.

         "Maximum Recourse Amount" means, with respect to any Property (or, in
the case of Property No. 2, Property No. 3 and Property No. 4, the respective
Land or Improvements related thereto), the Property Cost of such Property (or,
in the case of Property No. 2, Property No. 3 and Property No. 4, the respective
Land or Improvements related thereto) multiplied by the percentage set forth in
Schedule III to the Participation Agreement.

         "Modifications" is defined in Section 10.1 of the Master Lease.

         "Moody's" means Moody's Investors Service, Inc.

         "Mortgage" means any Mortgage or Deed of Trust, as the case may be,
between the Lessor and the Administrative Agent, substantially in the form of
Exhibit I to the Participation Agreement.

         "Mortgage Foreclosure Act" is defined in Section 16.4 of the Master
Lease.

         "Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Lessee or other
member of the Controlled Group is a party and to which more than one employer is
obligated to make contributions.

         "Net Proceeds" means the aggregate of all awards, compensation,
insurance proceeds or other amounts received by the Administrative Agent, the
Lessor or any Lender in connection with any Casualty or Condemnation of any
Property and all interest earned thereon, less, to the extent not previously
reimbursed by the Lessee, the expense of claiming and collecting such amounts,
including all costs and expenses in connection therewith for which the Lessor,
the Administrative Agent or any Lender is entitled to be reimbursed pursuant to
the Lease.

         "Non-U.S. Transferee" is defined in Section 12.3(a) of the
Participation Agreement.

         "Notes" means Series A Notes and Series B Notes, collectively, and
"Note" means any of them.

         "Obligations" means all obligations (monetary or otherwise) of the
Lessee arising under or in connection with any of the Operative Documents.

                                      -22-


         "Off-Balance Sheet Obligations" means, with respect to the Lessee and
each Subsidiary of the Lessee, (i) the principal portion of such Person's
obligations under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product and (ii)
the recourse portion of the aggregate amount of uncollected accounts receivable
of such Person subject at such time to a sale of receivables (or similar
transaction).

         "Operative Documents" means the following:

                  (a)      the Participation Agreement;

                  (b)      the Master Lease;

                  (c)      each Lease Supplement;

                  (d)      the Loan Agreement;

                  (e)      each Note;

                  (f)      the Assignment of Lease and Rent;

                  (g)      each Deed and each Bill of Sale;

                  (h)      the Lessor Mortgages;

                  (i)      the Lessor Financing Statements;

                  (j)      each Mortgage; and

                  (k)      the Cash Collateral Documents.

         "Original Executed Counterpart" is defined in Section 26.9 of the
Master Lease.

         "Overdue Rate" means, with respect to any Loan or Lessor Amount, the
Base Rate, or the Adjusted Eurodollar Rate then in effect for such Loan or
Lessor Amount, as the case may be, plus [***] per annum.

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

                                      -23-


         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Partial Purchase Option" is defined in Section 15.14 of the
Participation Agreement.

         "Partial Termination Date" is defined in Section 15.2 of the Master
Lease.

         "Partial Termination Notice" is defined in Section 15.1 of the Master
Lease.

         "Participant Balance" means, with respect to any Participant as of any
date of determination: (i) with respect to any Lender, an amount equal to the
aggregate outstanding Loans of such Lender, together with all accrued and unpaid
interest thereon or (ii) with respect to the Lessor, an amount equal to the
aggregate outstanding Lessor Amounts, together with all amounts of accrued and
unpaid Yield thereon.

         "Participants" means, collectively, each Lender and the Lessor, and
their successors and permitted assigns.

         "Participation Agreement" means the Participation Agreement, dated as
of June 1, 2003, among the Lessee, the Lessor, the Lenders and the
Administrative Agent as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time.

         "Payment Date" means each Scheduled Payment Date and each other date on
which Basic Rent is required to be paid by the Lessee.

         "Permitted Property Liens" means, with respect to any Property, any of
the following:

                  (i)      the respective rights and interests of the parties to
         the Operative Documents as provided in the Operative Documents
         (including any Lien created pursuant to the Operative Documents);

                  (ii)     the rights of any sublessee under a sublease
         permitted by the terms of the Master Lease;

                  (iii)    Liens for Taxes that either are not yet due or are
         being contested in accordance with the provisions of Section 12.1 of
         the Master Lease;

                  (iv)     Liens arising by operation of law, materialmen's,
         mechanics', workers', repairmen's, employees', carriers',
         warehousemen's and other like Liens relating to the construction of the
         Improvements or in connection with any Modifications or arising in the
         ordinary course of business for amounts that either

                                      -24-


         are not more than sixty (60) days past due or are being diligently
         contested in good faith by appropriate proceedings, so long as such
         proceedings satisfy the conditions for the contest proceedings set
         forth in Section 12.1 of the Master Lease;

                  (v)      Liens of any of the types referred to in clause (iii)
         or (iv) above that have been bonded for not less than the full amount
         in dispute (or as to which other security arrangements satisfactory to
         the Lessor and the Administrative Agent have been made), which bonding
         (or arrangements) shall comply with applicable Requirements of Law, and
         has effectively stayed any execution or enforcement of such Liens;

                  (vi)     Liens arising out of judgments or awards with respect
         to which appeals or other proceedings for review are being prosecuted
         in good faith and for the payment of which adequate reserves have been
         provided as required by GAAP or other appropriate provisions have been
         made, so long as such proceedings have the effect of staying the
         execution of such judgments or awards and satisfy the conditions for
         contest proceedings set forth in Section 12.1 of the Master Lease;

                  (vii)    easements, licenses, rights-of-way and other
         encumbrances on title to real property permitted pursuant to Section
         11.2 of the Master Lease;

                  (viii)   Lessor Liens;

                  (ix)     Liens created by the Lessee with the consent of the
         Required Participants or otherwise permitted by the Operative
         Documents; and

                  (x)      Liens described on the title insurance policy
         delivered with respect to such Property pursuant to Section 6.1(p) of
         the Participation Agreement, other than Liens described in clause (iv)
         or (vi) above.

         "Permitted Sales Costs" means, with respect to each Property, all
reasonable costs of sale of such Property incurred by the Lessee pursuant to
Section 20.2 of the Master Lease which costs are of a type customarily paid by
sellers of properties comparable to the applicable Property in the market where
such Property is being sold; provided, however, that "Permitted Sales Costs"
shall not include any costs of repairs, alterations or modifications (including
Required Modifications) desired by the purchaser of any Property or required to
cause any Property to comply with the requirements of the Master Lease.

         "Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.

                                      -25-


         "Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Lessee or any other member of the Controlled Group may have
any liability.

         "Plans and Specifications" means, with respect to each Property the
final plans and specifications or detailed construction drawings for such
Property.

         "Property" means (i) the Lessor's fee simple interest in any parcel of
Land, (ii) all of the Improvements at any time located on or under such Land and
(iii) the Equipment at any time located on or under such Land.

         "Property Balance" means, with respect to any Property, an amount equal
to the outstanding principal or analogous amount of the Loans and Lessor Amounts
relating to such Property, plus all accrued and unpaid interest and Yield
thereon, plus any Supplemental Rent related to such Property or allocable to
such Property plus any other amounts due and owing to the Participants and the
Administrative Agent with respect to such Property or allocable to such
Property.

         "Property Cost" means, with respect to any Property, the amount of the
Advance made under the Participation Agreement with respect to the acquisition
of such Property.

         "Property No. 1" is defined in Schedule III of the Participation
Agreement and legally described on Schedule I to the applicable Lease
Supplement.

         "Property No. 2" is defined in Schedule III of the Participation
Agreement and legally described on Schedule I to the applicable Lease
Supplement.

         "Property No. 3" is defined in Schedule III of the Participation
Agreement and legally described on Schedule I to the applicable Lease
Supplement.

         "Property No. 4" is defined in Schedule III of the Participation
Agreement and legally described on Schedule I to the applicable Lease
Supplement.

         "Purchase Notice" means an irrevocable written notice by the Lessee
delivered to the Lessor pursuant to Section 18.1 of the Master Lease, notifying
the Lessor of the Lessee's intention to exercise its option pursuant to such
Section, and identifying the proposed purchase date therefor.

         "Purchase Option" means the Lessee's option to purchase any or all of
the Properties in accordance with the provisions of Section 18.1 of the Master
Lease.

         "Purchase Option Price" is defined in Section 18.1 of the Master Lease.

         "RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. Sections
6901 et seq.

                                      -26-


         "Regulation U" means Regulation U of the F.R.S. Board, as in effect
from time to time.

         "Release" means any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Material.

         "Remarketing Option" is defined in Section 20.1 of the Master Lease.

         "Rent" means, collectively, the Basic Rent and the Supplemental Rent.

         "Rents" is defined in Section 2(b) of the Assignment of Lease and Rent.

         "Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30)
days of the occurrence of such event.

         "Requesting Party" is defined in Section 22.1 of the Master Lease.

         "Required Lenders" means, at any time, Lenders having Loan Commitments
representing at least 66-2/3% of the aggregate Loan Commitments of the Lenders
or, for purposes of acceleration pursuant to Section 5.2(a)(ii)(y) of the Loan
Agreement or in the event that the Loan Commitments have been terminated,
Lenders representing at least 66-2/3% of the aggregate principal amount of Loans
outstanding.

         "Required Modification" is defined in Section 10.1(a) of the Master
Lease.

         "Required Participants" means the Lessor and the Required Lenders.

         "Requirement of Law" means, as to any Person (a) the partnership
agreement, certificate of incorporation, bylaws, operating agreement or other
organizational or governing documents of such Person, and (b) all Federal,
state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting any
Property, the Improvements or the demolition, construction, use or alteration
thereof, whether now or hereafter enacted and in force, including any that
require repairs, modifications or alterations in or to any Property or in any
way limit the use and enjoyment thereof (including all building, zoning and fire
codes and the Americans with Disabilities Act of 1990, 42 U.S.C. Sections 1201
et seq., and any other similar Federal, state or local laws or ordinances and
the regulations promulgated thereunder) and any that may relate to environmental
requirements (including all Environmental Laws), and all permits, certificates
of occupancy, licenses, authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments which are of record affecting any

                                      -27-


Property, the Appurtenant Rights and any easements, licenses or other agreements
entered into pursuant to Section 11.2 of the Master Lease.

         "Responsible Officer" means (a) as to the Lessee, any Authorized
Officer and (b) as to any other Person, the chief executive officer, the
president, any vice president, the secretary, any assistant secretary or the
treasurer of such Person.

         "Responsible Officer's Certificate" means a certificate signed by any
Responsible Officer which certificate shall certify as true and correct the
subject matter being certified to in such certificate.

         "Return Conditions" is defined in Section 20.1 of the Master Lease.

         "S&P" means Standard & Poor's Rating Service, a division of The
McGraw-Hill Companies, Inc.

         "Scheduled Payment Date" means (x) for funds accruing interest or Yield
at the Base Rate, the first (1st) day of each calendar month, or if such day is
not a Business Day, the next succeeding Business Day, and (y) for funds accruing
interest or Yield at the Adjusted Eurodollar Rate, the last day of the
applicable Interest Period, or in the case of any Interest Period greater than
three (3) months, three (3) months from the last Scheduled Payment Date, or if
such day is not a Business Day, the next succeeding Business Day unless the
result would be that the Scheduled Payment Date would be in the next succeeding
calendar month, in which case such Payment Date shall be on the next preceding
Business Day.

         "SEC" means the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its principal functions.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Series A Loans" means that portion of the Loans made by the Lenders
allocated as "Series A Loans" pursuant to Schedule I to the Participation
Agreement.

         "Series B Loans" means that portion of the Loans made by the Lenders
allocated as "Series B Loans" pursuant to Schedule I to the Participation
Agreement.

         "Series A Notes" means promissory notes of the Lessor substantially in
the form of Exhibit A to the Loan Agreement with respect to the amounts of each
Lender's Commitment allocated to Series A Loans.

         "Series B Notes" means promissory notes of the Lessor substantially in
the form of Exhibit A to the Loan Agreement with respect to the amounts of each
Lender's Commitment allocated to Series B Loans.

                                      -28-


         "Severable Modifications" means modifications (a) that are not Required
Modifications and (b) that can be removed from the applicable Property without
(i) causing damage to such Property that cannot be readily repaired or (ii)
materially impairing the marketability, value, utility or useful life of such
Property from that set forth in the Appraisal thereof delivered in connection
with the Acquisition Date therefor.

         "Short-Term Investments" means those assets shown as short term
investments on the Lessee's financial statements prepared in accordance with
GAAP.

         "Shortfall Amount" means for each Property, as of the Expiration Date,
an amount equal to (i) the Property Balance, minus (ii) the aggregate Maximum
Recourse Amount minus (iii) the aggregate amount of the highest, binding,
written, unconditional, irrevocable cash offer to purchase such Property
obtained by the Lessee pursuant to Section 20.2(c) of the Master Lease;
provided, however, that if the sale of such Property to the Person or Persons
submitting such offer or offers is not consummated on or prior to the Expiration
Date, then the term "Shortfall Amount" shall mean an amount equal to (i) such
Property Balance, minus (ii) the Maximum Recourse Amount.

         "Significant Casualty" with respect to a Property means a Casualty that
in the reasonable, good faith judgment of the Administrative Agent and the
Lessor (a) renders such Property unsuitable for continued use as an office
facility, assembly facility or research and development facility, as applicable
or (b) is so substantial in nature that restoration of such Property to
substantially its condition as it existed immediately prior to such Casualty
would be impracticable or impossible.

         "Significant Condemnation" with respect to a Property means (a) a
Condemnation that involves a taking of the Lessor's entire title to the Land or
(b) a Condemnation that in the reasonable, good faith judgment of the
Administrative Agent and the Lessor (i) renders such Property unsuitable for
continued use as an office facility, assembly facility or research and
development facility, as applicable or (ii) is so substantial in nature that
restoration of the remaining portion of such Property to substantially its
condition as it existed immediately prior to such Condemnation would be
impracticable or impossible.

         "Single Employer Plan" means a Plan maintained by the Lessee or any
member of the Controlled Group for employees of the Lessee or any member of the
Controlled Group.

         "Solvent" means with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities of such Person, (ii) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and does not believe that

                                      -29-


it will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (v) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in which such
Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability taking into account any subrogation and contribution rights.

         "Structuring Fee" is defined in Section 4.4(a) of the Participation
Agreement.

         "Subject Improvements" is defined in each Lease Supplement.

         "Subject Land" is defined in each Lease Supplement.

         "Subject Property" is defined in each Lease Supplement and, as used in
the Participation Agreement, means in the case of any Acquisition Date, the
Property being acquired by the Lessor on such Acquisition Date.

         "Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Lessee.

         "Summary of Terms" means that certain Summary of Terms and Conditions
dated April 24, 2003 between Lessee and the Arranger.

         "Supplemental Rent" means all amounts, liabilities and obligations
(other than Basic Rent) that the Lessee assumes or agrees to pay to the
Administrative Agent, any Participant or any other Person under the Master
Lease, or under any of the other Operative Documents, including, without
limitation, Fees, Break Costs, Maximum Recourse Amounts, Shortfall Amounts,
Transaction Expenses, amounts due pursuant to Article XIII of the Participation
Agreement and payments pursuant to Sections 15.2 of the Master Lease and
Articles XVIII and XX of the Master Lease.

         "Tax Indemnitee" means each Participant, the Administrative Agent and
the Arranger.

         "Taxes" is defined in the definition of Impositions.

         "Transaction Expenses" means all costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents including
without limitation:

                                      -30-


                  (a)      the reasonable fees (subject to the limitation
         separately agreed to among the parties), out-of-pocket expenses and
         disbursements of Schiff Hardin & Waite, special counsel for the Lessor
         and the Arranger, in preparing and negotiating the terms of the
         Operative Documents and the other transaction documents, preparing for
         the closing under, and rendering opinions in connection with, the
         transactions contemplated thereby and in rendering other services
         customary for counsel representing parties to transactions of the types
         involved in the transactions contemplated by the Operative Documents;

                  (b)      (i) the reasonable fees, out-of-pocket expenses and
         disbursements of Heller Ehrman White & McAuliff LLP, special counsel
         for the Lessee, in negotiating the terms of the Operative Documents and
         the other transaction documents, preparing for the closings under, and
         rendering opinions in connection with, the transactions contemplated
         thereby and in rendering other services in connection with the
         transactions contemplated thereby customary for counsel representing
         parties to transactions of the types involved in the transactions
         contemplated by the Operative Documents, and the reasonable fees,
         out-of-pocket expenses and disbursements of special counsel for the
         Lessee in connection with the transactions contemplated to occur on
         each Acquisition Date; and (ii) the reasonable fees, out-of-pocket
         expenses and disbursements of local counsel for the Lessee in each
         applicable jurisdiction in negotiating the terms of the Operative
         Documents and the other transaction documents, preparing for the
         closings under, and rendering opinions in connection with, the
         transactions contemplated to occur on each Acquisition Date and the
         Documentation Date and in rendering other services in connection with
         the transactions contemplated by the Operative Documents which are
         customary for counsel representing parties to transactions of the types
         involved in the transactions contemplated by the Operative Documents;

                  (c)      any and all Taxes and fees incurred in recording,
         registering or filing any Operative Document or any other transaction
         document, any deed, declaration, mortgage, security agreement, notice
         or financing statement with any public office, registry or governmental
         agency required by the Operative Documents in connection with the
         transactions contemplated by the Operative Documents;

                  (d)      all reasonable out-of-pocket expenses, disbursements
         and costs of the Administrative Agent, the Arranger, the Lenders and
         the Lessor in connection with the transactions contemplated by the
         Operative Documents (including without limitation the transactions
         contemplated to occur on each Acquisition Date);

                  (e)      all title fees, premiums and escrow costs and other
         expenses relating to title insurance and the closing contemplated by
         the Operative Documents;

                                      -31-


                  (f)      all expenses relating to Environmental Audits
         required to be delivered pursuant to Section 6.1(h) of the
         Participation Agreement;

                  (g)      all fees and other expenses relating to Appraisals
         required to be delivered pursuant to Section 6.1(d) of the
         Participation Agreement;

                  (h)      the Fees payable by the Lessee pursuant to Section
         4.4 of the Participation Agreement;

                  (i)      the fees and expenses of any rating agency providing
         a rating with respect to the Notes and/or the Lessor's interest in the
         Transactions; and

                  (j)      any other expenses incurred by the Lessee in
         connection with the Transactions.

         "Transactions" shall mean the transactions contemplated under the
Participation Agreement and each of the other Operative Documents.

         "Unfunded Vested Liabilities" means the amount (if any) by which the
present value of all currently accrued, vested and nonforfeitable benefits under
all Single Employer Plans exceeds the fair market value of all assets of such
Plan allocable to such benefits, all determined on an ongoing Plan basis as set
forth in the then most recent actuarial valuation for each such Plan.

         "Uniform Commercial Code" and "UCC" means the Uniform Commercial Code
as in effect in any applicable jurisdiction.

         "United States" means the United States of America.

         "U.S. Transferee" is defined in Section 12.3(b) of the Participation
Agreement.

         "Yen-Denominated Facility" means any credit facility from time to time
entered into by Lam Research Co., Ltd., a Japanese joint stock company or any
successor thereto.

         "Yield" is defined in Section 4.1(a) of the Participation Agreement.

         "Yield Rate" means the Adjusted Eurodollar Rate applicable to Lessor
Amounts, subject to the provisions of Sections 13.7, 13.8 and 13.9 of the
Participation Agreement.

                                      -32-

EX-10.95

                                                                   Exhibit 10.95

                              EMPLOYMENT AGREEMENT

                  This Agreement is between Ernie Maddock ("Executive") and Lam
Research Corporation ("Company").

                                    RECITALS

                  Whereas, Executive is currently an employee of the Company,
and Company wishes for Executive to assume a new position; and

                  Whereas, the parties wish to provide for mutual obligations
arising out of the new position for a trial period;

                  The parties therefore agree as follows:

                  1. EMPLOYMENT PERIOD. The Employment Period shall be from
April 15, 2003 until October 15, 2003.

                  2. EMPLOYMENT. During the Employment Period, Executive shall
serve as Vice-President for the Company at the direction of the Office of the
Chief Executive Officer ("OCEO", composed of the CEO and the COO). Executive's
compensation shall be determined by the OCEO, subject to review or modification
by the Compensation Committee of the Company's Board of Directors.

                  3. RIGHT OF VOLUNTARY RESIGNATION. On or before October 15,
2003, Executive shall be entitled to resign from his position with the Company
and, provided that such notice is delivered to the Company before October 15,
2003 and prior to any termination for cause, Executive shall receive the
Severance Benefits described in Section 6 below. Executive shall provide at
least thirty days notice to Company of his intent to resign, although Company
may waive that notice period at its discretion. There is no right to severance
under this Agreement for any Voluntary Resignation after October 15, 2003.

                  4. RIGHT OF INVOLUNTARY TERMINATION. On or before October 15,
2003, Company may terminate Executive's service in the position described in
Section 2, above, without cause, and, in such event, Executive shall receive the
Severance Benefits described in Section 6, below. No notice period is required
for such Involuntary Termination.

                  5. TERMINATION FOR CAUSE. If Executive is terminated for cause
during the Employment Period, the Executive shall not be entitled to any
severance benefits except as determined in the Company's unfettered discretion.
"Cause" shall be determined by the OCEO of the Company and must be based on a
good faith finding by the OCEO of (1) a willful act of personal dishonesty in
connection the Executive's

                                                                          Page 1


employment intended to result in his substantial personal enrichment; (2) a
willful and knowing act by the Executive that constitutes gross misconduct; (3)
a refusal by the Executive to comply with a reasonable written directive from
the OCEO; (4) a willful and material violation of a federal or state law or
regulation applicable to the business of the Company or constituting criminal
conduct by the Executive; or (5) fraud by the Executive that must be reported to
the Company's audit committee pursuant to the Sarbanes-Oxley Act of 2002.
Inadequate performance or results shall not, without evidence of misconduct or
bad faith, constitute cause for termination.

                  6. SEVERANCE BENEFITS. In the event that Executive is entitled
to Severance Benefits due to an employment termination described in Section 3 or
4 above, Executive shall be entitled to a Severance Benefit as follows:

                  A. Executive shall continue to be employed with the Company in
a position as determined by the OCEO performing such duties as are mutually
agreed to by the parties. The period of continuing employment shall be eighteen
months, or such other period as is mutually agreed upon by the parties. Such
period shall be referred to as the "Extended Employment Period."

                  B. Executive's salary during the Extended Employment Period
shall be equal to one year's salary at the rate he was paid during the last
thirty days of the Employment Period; but such one year's salary shall be
prorated over the entire duration of the Extended Employment Period. For
example, if Executive and OCEO agree that the Extended Employment Period shall
be eighteen months, Executive shall receive salary during the Extended
Employment Period at the rate of two-thirds (2/3) of the rate that he was
receiving such salary during the Employment Period. However, except as
determined by the OCEO, Executive shall not be entitled to any bonus during the
Extended Employment Period.

                  C. Executive's medical, dental, life and disability benefits
during the Extended Employment Period shall be the same as he received during
the Employment Period. Any stock options granted to Executive prior to the
Extended Employment Period shall continue to vest and be exercisable under the
terms described in the grant documents. Executive shall be permitted to continue
to participate in the Company's Flexible Spending accounts, Executive Deferred
Compensation Plan and the Company's 401(k) plan.

                  7. RIGHT TO RELEASE. If Executive's employment terminates
during the Employment Period, Executive shall execute a release of claims in a
form acceptable to the Company at the end of the Extended Employment Period
covering all claims arising out of Executive's employment with the Company.

                  8. INTEGRATED AGREEMENT. This is an integrated agreement that
supersedes prior negotiations and discussions. No representations made prior to
this Agreement shall modify or amend its terms. Moreover, no representative of
the Company has the

                                                                          Page 2


authority to alter this Agreement following its execution except in a written
document signed by the COO or CEO.

                  The parties evidence their agreement to these terms by signing
below.

Executive                                            Company

/s/ Ernest Maddock                                   /s/ Terry Bean
- ------------------                                   ---------------
Ernest Maddock                                       Terry Bean

                                                                          Page 3

EX-21

                                                                               .
                                                                               .
                                                                               .

                                                                      Exhibit 21



                                               STATE OR OTHER
              SUBSIDIARY                 JURISDICTION OF OPERATION
- ---------------------------------------  -------------------------
                                      
Lam Research International SARL                        Switzerland
Lam Research GmbH                                          Germany
Lam Research Co., LTD.                                       Japan
Lam Research (Shanghai) Co., LTD                             China
Lam Research Service Company (Shanghai)                      China
Lam Research LTD                                    United Kingdom
Lam Research SARL                                           France
LAM Research Singapore Pte LTD                           Singapore
LRC International FSC Corporation                         Barbados
Lam Research Korea Limited                                   Korea
Lam Research S.R.L.                                          Italy
Lam Research (Israel) LTD.                                  Israel
Lam Research Co., LTD.                                      Taiwan
Lam Research B.V.                                      Netherlands
Monkowski-Rhine, Incorporated            California, United States
Lam Research (Ireland) Limited                             Ireland

EX-23.1

                                                                    EXHIBIT 23.1


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

      We consent to the incorporation by reference in the Registration
Statements (Form S-3 Nos. 333-81664 and 333-66050 and Form S-4 No. 333-30545)
and related Prospectuses and Registration Statements (Form S-8 Nos. 333-84638,
333-74500, 333-93115, 333-72751, 333-66833, 333-01011 and 333-32981) pertaining
to the amended and restated 1996 Performance-Based Restricted Stock Plan, 1997
Incentive Stock Plan, 1999 Employee Stock Purchase Plan, 1999 Stock Option Plan
and the Savings Plus Plan, 401(k) of Lam Research Corporation of our report
dated July 18, 2003, with respect to the consolidated financial statements and
schedule of Lam Research Corporation included in the Annual Report (Form 10-K)
for the year ended June 29, 2003.

            /s/ ERNST & YOUNG LLP



San Jose, California
September 22, 2003

EX-31.1

                                                                    Exhibit 31.1

                      CERTIFICATION PURSUANT TO RULE 15d-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, James W. Bagley, Chairman and Chief Executive Officer of Lam
Research Corporation, certify that:

         1. I have reviewed this annual report on Form 10-K of Lam Research
Corporation;

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

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

         4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

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

                  b) evaluated the effectiveness of the registrant's disclosure
         controls and procedures and presented in this annual report our
         conclusions about the effectiveness of the disclosure controls and
         procedures, as of the end of the period covered by this annual report
         based on such evaluation; and

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

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



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

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

September 24, 2003

                                            /s/ James W. Bagley
                                            ------------------------------------
                                            James W. Bagley
                                            Chairman and Chief Executive Officer

                                       2

EX-31.2

                                                                    Exhibit 31.2

                      CERTIFICATION PURSUANT TO RULE 15d-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, Mercedes Johnson, Senior Vice President, Finance, Chief Financial
Officer and Chief Accounting Officer of Lam Research Corporation, certify that:

         1. I have reviewed this annual report on Form 10-K of Lam Research
Corporation;

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

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

         4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

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

                  b) evaluated the effectiveness of the registrant's disclosure
         controls and procedures and presented in this annual report our
         conclusions about the effectiveness of the disclosure controls and
         procedures, as of the end of the period covered by this annual report
         based on such evaluation; and

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

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



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

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

September 24, 2003

                                 /s/ Mercedes Johnson
                                 ----------------------------
                                 Mercedes Johnson
                                 Senior Vice President, Finance, Chief Financial
                                 Officer and Chief Accounting Officer

                                       2

EX-32.1

                                                                    EXHIBIT 32.1

                            LAM RESEARCH CORPORATION

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Annual Report of Lam Research Corporation (the
"Company") on Form 10-K for the fiscal period ending June 29, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
James W. Bagley, Chairman and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

September 24, 2003

                                            /s/ James W. Bagley
                                            ------------------------------------
                                            James W. Bagley
                                            Chairman and Chief Executive Officer

EX-32.2

                                                                    EXHIBIT 32.2

                            LAM RESEARCH CORPORATION

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Annual Report of Lam Research Corporation (the
"Company") on Form 10-K for the fiscal period ending June 29, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Mercedes Johnson, Senior Vice President, Finance, Chief Financial Officer and
Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

September 24, 2003

                                 /s/ Mercedes Johnson
                                 --------------------------------------------
                                 Mercedes Johnson
                                 Senior Vice President, Finance, Chief Financial
                                 Officer and Chief Accounting Officer