-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RTrvq/tx6/CvEmSZJOrShBP1M0fkVCZfgxtjJxQoem1TSdM6GxwILRpS9oYXjhJU 3m2MUkNMmwii7fvV/e+tcA== 0000743988-98-000001.txt : 19980206 0000743988-98-000001.hdr.sgml : 19980206 ACCESSION NUMBER: 0000743988-98-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19971227 FILED AS OF DATE: 19980205 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: XILINX INC CENTRAL INDEX KEY: 0000743988 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 770188631 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18548 FILM NUMBER: 98521975 BUSINESS ADDRESS: STREET 1: 2100 LOGIC DR CITY: SAN JOSE STATE: CA ZIP: 95124 BUSINESS PHONE: 4085597778 MAIL ADDRESS: STREET 2: 2100 LOGIC DRIVE CITY: SAN JOSE STATE: CA ZIP: 95124 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 27, 1997 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 0-18548 XILINX, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 77-0188631 (I.R.S. Employer Identification No.) 2100 LOGIC DRIVE, SAN JOSE, CA 95124 (Address of principal executive offices) (Zip Code) (408) 559-7778 (Registrant's telephone number, including area code) 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 requirements for the past 90 days. YES [ X ] NO [ ] Class Shares Outstanding at December 27, 1997 ----- --------------------------------------- Common Stock, $.01 par value 74,236,791 Part I. FINANCIAL INFORMATION Item 1. Financial Statements
XILINX, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in thousands except per share amounts) Three Months Ended Nine Months Ended Dec. 27, Dec. 28, Dec. 27, Dec. 28, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net revenues $ 148,735 $ 135,587 $ 459,768 $ 416,366 Costs and expenses: Cost of revenues 55,668 52,156 172,622 156,139 Write-off of discontinued product family - - - 5,000 Research and development 19,536 17,698 59,424 52,283 Marketing, general and administrative 32,460 28,830 96,352 87,087 ---------- ---------- ---------- ---------- Operating costs and expenses 107,664 98,684 328,398 300,509 ---------- ---------- ---------- ---------- Operating income 41,071 36,903 131,370 115,857 Interest income and other 4,425 5,353 15,514 15,121 Interest expense (3,487) (3,407) (10,474) (10,320) ---------- ---------- ---------- ---------- Income before provision for taxes on income and equity in joint venture 42,009 38,849 136,410 120,658 Provision for taxes on income 13,023 12,626 43,030 40,725 ---------- ---------- ---------- ---------- Income before equity in joint venture 28,986 26,223 93,380 79,933 Equity in net income of joint venture 2,614 - 2,614 - ---------- ---------- ---------- ---------- Net income $ 31,600 $ 26,223 $ 95,994 $ 79,933 ========== ========== ========== ========== Net income per share: Basic $ 0.43 $ 0.36 $ 1.30 $ 1.10 ========== ========== ========== ========== Diluted $ 0.40 $ 0.33 $ 1.19 $ 1.01 ========== ========== ========== ========== Common shares used in computing Basic net income per share amounts 74,196 72,931 73,871 72,653 ========== ========== ========== ========== Common and equivalent shares used in computing Diluted net income per share amounts 79,248 79,791 80,663 79,371 ========== ========== ========== ========== (See accompanying Notes to Consolidated Condensed Financial Statements.)
XILINX, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands except per share amounts) Dec. 27, March 29, 1997 1997 ---------- ----------- ASSETS Current assets: Cash and cash equivalents $ 244,079 $ 215,903 Short-term investments 173,480 209,944 Accounts receivable, net 63,802 72,248 Inventories 54,605 62,367 Advances for wafer purchases 55,000 - Deferred income taxes and other current assets 48,755 41,093 ---------- ----------- Total current assets 639,721 601,555 Property, plant and equipment, at cost 165,518 154,443 Accumulated depreciation and amortization (82,287) (67,863) ---------- ----------- Net property, plant and equipment 83,231 86,580 Restricted investments 36,745 36,257 Investment in joint venture 91,850 35,286 Advances for wafer purchases 65,000 60,000 Developed technology and other assets 50,300 28,015 ---------- ----------- $ 966,847 $ 847,693 ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,042 $ 16,758 Accrued payroll, other accrued liabilities and interest payable 24,210 33,282 Income taxes payable 22,868 10,858 Deferred income on shipments to distributors 49,244 36,355 ---------- ----------- Total current liabilities 121,364 97,253 Long-term debt 250,000 250,000 Deferred tax liabilities 11,228 9,760 Stockholders' equity: Preferred stock, $.01 par value - - Common stock, $.01 par value 742 733 Additional paid-in capital 129,797 114,530 Retained earnings 473,875 377,881 Treasury stock, at cost (4,054) (1,847) Cumulative translation adjustment (16,105) (617) ---------- ----------- Total stockholders' equity 584,255 490,680 ---------- ----------- $ 966,847 $ 847,693 ========== =========== (See accompanying Notes to Consolidated Condensed Financial Statements.)
XILINX, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS Increase (decrease) in cash and cash equivalents (in thousands) Nine Months Ended Dec. 27, Dec. 28, 1997 1996 ---------- ---------- Cash flows from operating activities: Net income $ 95,994 $ 79,933 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,822 20,195 Undistributed earnings of joint venture (3,642) (938) Changes in assets and liabilities: Accounts receivable 8,446 10,979 Inventories 7,762 (21,908) Deferred income taxes and other 8,114 1,607 Accounts payable, accrued liabilities and income taxes payable 11,222 7,044 Deferred income on shipments to distributors 12,889 (8,221) ---------- ---------- Total adjustments 69,613 8,758 ---------- ---------- Net cash provided by operating activities 165,607 88,691 Cash flows from investing activities: Purchases of short-term available-for-sale investments (281,860) (209,111) Proceeds from sale or maturity of short-term available-for-sale investments 318,241 240,650 Purchases of restricted held-to-maturity investments (36,136) (36,097) Proceeds from sale or maturity of restricted held-to maturity investments 35,648 36,092 Advances for wafer purchases (60,000) (60,000) Property, plant and equipment (17,947) (22,300) Investment in joint venture (67,422) - Deposit on building (28,351) - ---------- ---------- Net cash used in investing activities (137,827) (50,766) Cash flows from financing activities: Acquisition of Treasury stock (22,682) (15,729) Principal payments on capital lease obligations - (779) Proceeds from issuance of common stock 23,078 22,693 ---------- ---------- Net cash provided by financing activities 396 6,185 ---------- ---------- Net increase in cash and cash equivalents 28,176 44,110 Cash and cash equivalents at beginning of period 215,903 110,893 ---------- ---------- Cash and cash equivalents at end of period $ 244,079 $ 155,003 ========== ========== Schedule of non-cash transactions: Tax benefit from stock options $ 12,723 $ 5,484 Issuance of Treasury stock under employee stock plans 20,475 15,511 Receipts against advances for wafer purchases - 9,035 Supplemental disclosures of cash flow information: Interest paid 13,195 12,561 Income taxes paid $ 26,489 $ 26,416 (See accompanying Notes to Consolidated Condensed Financial Statements.)
XILINX, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. The accompanying interim consolidated financial statements have been prepared in conformity with generally accepted accounting principles and should be read in conjunction with the Xilinx, Inc. ("Xilinx" or the "Company") consolidated financial statements for the year ended March 29, 1997. The balance sheet at March 29, 1997 is derived from audited financial statements, although certain prior period amounts have been reclassified to conform to the fiscal 1998 presentation. The interim financial statements are unaudited but reflect all adjustments which are in the opinion of management of a normal, recurring nature necessary to present fairly the statements of financial position, results of operations and cash flows for the interim periods presented. The results for the nine-month period ended December 27, 1997 are not necessarily indicative of the results that may be expected for the year ending March 28, 1998. 2. Inventories are stated at the lower of cost (first-in, first-out) or market (estimated net realizable value). Inventories at December 27, 1997 and March 29, 1997 are as follows:
December 27, March 29, 1997 1997 ------------- ---------- Raw materials $ 5,880 $ 4,952 Work-in-process 25,713 30,898 Finished goods 23,012 26,517 ------------- ---------- $ 54,605 $ 62,367 ============= ==========
3. In October 1997, the Company entered into a lease agreement for a facility to be built on property adjacent to the Company's corporate facilities. Building construction and occupancy is expected to be completed in calendar 1998. Upon signing the lease agreement, the Company paid the lessor $31.3 million for prepaid rent and an option to purchase the facility. The rent prepayment covers one year and was discounted to its present value. Additionally, the Company can exercise the lease agreement's purchase option between the sixth and twelfth month following the commencement date of the lease term. If the Company elects to exercise the option, the prepaid purchase option will be considered payment in full. However, if the Company decides not to exercise the purchase option, the prepaid option will be returned without interest at the end of the first year lease. 4. The Company, United Microelectronics Corporation ("UMC") and other parties have entered into a joint venture to construct a wafer fabrication facility in Taiwan, known as United Silicon Inc. ("USIC"). In fiscal 1998, the Company invested additional equity of $67.4 million in USIC in which the Company now holds a 25% equity ownership. UMC has committed to supply and is currently supplying the Company with wafers manufactured in an existing facility until capacity is available in the new facility. The Company records 25% of the net income of USIC as joint venture equity income. To date, USIC's net income has resulted primarily from favorable exchange gains on its foreign currency investments as well as interest earned on its investment portfolio. Net joint venture equity income for the third quarter of fiscal 1998 was $2.6 million. This amount was largely attributable to foreign exchange gains incurred by USIC relating to its US dollar denominated investments. All prior period amounts were immaterial and remain classified as "Interest income and other". 5. In May 1996 the Company entered into an agreement with Seiko Epson. This agreement was amended in December 1997 and now provides for an advance to Seiko Epson of $150.0 million to be used in the construction of a wafer fabrication facility in Japan. Through December 27, 1997, the Company has advanced a total of $120.0 million to Seiko Epson under the agreement. The final installment of $30.0 million was paid on February 2, 1998. 6. During the quarter ended December 27, 1997, the Company adopted the Financial Accounting Standards Board's Statement No. 128, Earnings per Share. The new standard requires the Company to change the method used to compute net income per share and to restate all prior periods. The new requirement includes a calculation of "basic" net income per share, which excludes the dilutive effect of stock options. The calculations of basic and diluted net income per share for the third quarter and first nine months of fiscal 1998 and fiscal 1997 are shown below.
(in thousands except per share amounts) Three Months Ended Nine Months Ended Dec. 27, Dec. 28, Dec. 27, Dec. 28, 1997 1996 1997 1996 --------- --------- --------- --------- BASIC Weighted average number of common shares outstanding 74,196 72,931 73,871 72,653 ========= ========= ========= ========= Net income $ 31,600 $ 26,223 $ 95,994 $ 79,933 ========= ========= ========= ========= Net income per share $ 0.43 $ 0.36 $ 1.30 $ 1.10 ========= ========= ========= ========= DILUTED Weighted average number of common shares outstanding 74,196 72,931 73,871 72,653 Incremental common shares attributable to outstanding options 5,052 6,860 6,792 6,718 --------- --------- --------- --------- Total shares 79,248 79,791 80,663 79,371 ========= ========= ========= ========= Net income $ 31,600 $ 26,223 $ 95,994 $ 79,933 ========= ========= ========= ========= Net income per share $ 0.40 $ 0.33 $ 1.19 $ 1.01 ========= ========= ========= =========
The shares issuable upon conversion of long-term debt to equity, approximately 4.9 million shares, are not included in the calculation of diluted net income per share as their inclusion would have had an anti-dilutive effect for all periods presented. In addition, outstanding options to purchase approximately 3.4 million and 1.0 million shares, for the third quarter of fiscal 1998 and 1997, respectively, under the Company's Stock Option Plan were not included in the treasury stock calculation to derive diluted income per share as their inclusion would have had an anti-dilutive effect. 7. The Company is currently involved in patent litigation with Altera Corporation (see Part II, Item 1, Legal Proceedings). Due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage, the ultimate outcome of these matters cannot be determined at this time. Management believes that it has meritorious defenses to Altera's claims, is defending them vigorously, and has not recorded a provision for the ultimate outcome of these matters in its financial statements. The foregoing is a forward-looking statement subject to risks and uncertainties, and the future outcome could differ materially due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion contains forward-looking statements, which involve numerous risks and uncertainties. Actual results may differ materially. Certain of these risks and uncertainties are discussed under "Risk Factors". RESULTS OF OPERATIONS - THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 1998 COMPARED TO THE THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 1997 Revenues - -------- Revenues for the third quarter of fiscal 1998 were $148.7 million, which represented a $13.1 million, or 9.7%, increase from the corresponding period of fiscal 1997. In addition, revenues for the first nine months of fiscal 1998 were $459.8 million, up 10.4% from the corresponding period of 1997. The revenue increase during the third quarter of fiscal 1998, as compared to the comparable quarter of fiscal 1997, was primarily attributable to increased demand for the Company's XC4000X product family, which includes revenues from the XC4000EX and XC4000XL devices, as well as the XC5200 and XC9500 product families. The increase was offset primarily by reduced demand for the Company's XC3000 and XC4000 families. The XC4000X and XC9500 devices, which constitute the Company's newest product families, represented 13.0% of revenues during the third quarter of fiscal 1998 as compared to 1.7% in the comparable quarter in the prior year. Revenues relating to first generation products, which include the XC2000, XC3000 and XC3100 product families, represented 26.1% and 26.6% of total revenues during the third quarter and first nine months of fiscal 1998, respectively, as compared to 31.4% and 33.4% of total revenues during the third quarter and first nine months of fiscal 1997, respectively. Revenues relating to second generation products, which include the XC4000, XC4000X, XC5200 and XC6200 product families, represented 56.8% and 57.5% of total revenues during the third quarter and first nine months of fiscal 1998, respectively, as compared to 53.0% and 51.7% of total revenues during the third quarter and first nine months of fiscal 1997, respectively. The increase in revenues relating to second generation products is primarily a function of the decreasing requirements for first generation products and the increasing demand for the functionality and performance provided by devices within the second generation product families. Additionally, within the second generation products, demand is increasing for the newer product family members, including the XC4000X devices, and decreasing for mature devices, including the XC4000 product family. Revenues relating to other products, which include HardWire, serial proms and the XC7000 and XC9500 product families, represented 14.1% and 13.1% of total revenues during the third quarter and first nine months of fiscal 1998, respectively, as compared to 12.2% and 11.7% of total revenues during the third quarter and first nine months of fiscal 1997, respectively. Additionally, software revenues represented approximately 3% of total revenues for both the third quarter and first nine month periods of both fiscal 1998 and fiscal 1997. Software revenues include the sale of approximately 4000 revenue seats for the third quarter of fiscal 1998 as compared to approximately 1300 revenue seats for the comparable period in the prior fiscal year. The increase in revenue seats resulted primarily from increased demand for the Company's lower cost, easier to use Foundation Series software introduced in April 1996, as well as increased demand for the software utilized to design high volume logic devices. The percentage increase in software revenues was less than the proportional increase in software revenue seats due primarily to the change in the sales mix towards lower priced products. International revenues constituted approximately 38% of total revenues in the third quarter of both fiscal 1998 and fiscal 1997. Additionally, international revenues were approximately 38% of total revenues for the first nine months of fiscal 1998 as compared to approximately 37% for the prior year comparable period. International revenues are primarily derived from customers in Europe, Japan and Southeast Asia/Rest of World, which represented approximately 22%, 10% and 6% of the Company's worldwide sales, respectively in the December quarter. Revenue growth in the European and Southeast Asian/Rest of World markets was 13.6% and 38.5%, respectively, in the third quarter of 1998 as compared to the third quarter in 1997. When comparing revenues in Japan over the same periods, yen denominated revenues increased approximately 4% but were adversely impacted by the change in exchange rates relative to the prior year period, resulting in an overall decline of approximately 4% in US dollar equivalent revenues. Gross Margin - ------------- Costs of revenues were $55.7 million, or 37.4% of revenues, and $172.6 million, or 37.5% of revenues, for the third quarter and first nine months of fiscal 1998, respectively. Costs of revenues for the comparable periods of fiscal 1997 were $52.2 million, or 38.5% of revenues, and $156.1 million, or 37.5% of revenues, respectively, excluding the impact of the $5.0 million non-recurring write-off of the XC8100 product family in the second quarter of fiscal 1997. The decrease in the cost of revenues as a percentage of revenues from the prior year third quarter was primarily attributable to ongoing yield improvements and the favorable impact of lower wafer costs, including the impact of favorable movements in the yen exchange rate, partially offset by selling price reductions. Historically, Xilinx has been able to offset much of the erosion in gross margin percentages on more mature integrated circuits with increased volumes of newer, proprietary, higher margin products, although there can be no assurance that this will occur in future periods. The Company recognizes that ongoing manufacturing cost reductions for its integrated circuits, which assist the Company in its efforts to lower selling prices while maintaining historical margins, represent a significant element in expanding the market for its products. Company management believes that future gross margin objectives in the range of 60% to 62% of revenues are consistent with expanding market share while realizing acceptable returns, although there can be no assurance that future gross margins will be in this range. Research and Development - -------------------------- Research and development expenditures were $19.5 million for the third quarter and $59.4 million for the first nine months of fiscal 1998, or 13.1% and 12.9% of revenues, respectively. The expenditures for the comparable periods in the prior year were $17.7 million and $52.3 million, or 13.1% and 12.6% of revenues, respectively. The 10.4% and 13.7% increase in expenditures over the prior year third quarter and nine month periods, respectively, resulted primarily from increased testing of products in development and labor-related expenses partially offset by a decline in engineering wafer purchases. The Company remains committed to a significant level of research and development effort in order to continue to compete aggressively in the programmable logic marketplace. Marketing, General and Administrative - ---------------------------------------- Marketing, general and administrative expenses increased as a percentage of revenue to 21.8% and 21.0% of revenues, or $32.5 million and $96.4 million, respectively, during the third quarter and first nine months of fiscal 1998, up from 21.3% and 20.9% of revenues, or $28.8 million and $87.1 million, respectively, during the third quarter and first nine months of fiscal 1997. These expenses have increased in percentage and amount primarily as a result of increased staffing and labor-related expenses as well as increased legal costs. The Company remains committed to controlling administrative expenses and believes that, over time, most of these expenses should grow at a lower rate than revenue growth, although there can be no assurance that the Company will be successful in achieving these strategies. However, the timing and extent of future legal costs associated with the ongoing enforcement of the Company's intellectual property rights are not readily predictable and may significantly increase the level of general and administrative expenses in the future. Operating Income - ----------------- Operating income of $41.1 million, or 27.6% of revenues, was generated during the third quarter of fiscal 1998, an increase of 11.3% from the $36.9 million or 27.2% of revenues, for the comparable prior year period. In addition, operating income for the first nine months of fiscal 1998 increased 13.4% to $131.4 million, or 28.6% of revenues, from $115.9 million or 27.8% of revenues in the comparable fiscal 1997 period. Excluding the impact of the $5.0 million non-recurring write-off of the discontinued product family, for the first nine months of fiscal 1998 operating income was 8.7% higher than the operating income for the comparable prior year period. This increase in operating income in the third quarter of 1998 compared to the third quarter of 1997 is primarily a result of the 9.7% revenue growth and the level of all other expenses. Operating income as a percentage of revenues could be adversely impacted in future years by the factors noted under "Risk Factors". Interest and Other, net - -------------------------- The Company earns interest income on its cash, cash equivalents, short-term investments and restricted investments. The amount of interest earned is a function of the balance of cash invested as well as prevailing interest rates. The Company incurs interest expense on the $250 million of 5 1/4% convertible subordinated notes issued in November 1995. The Company's investment portfolio contains tax-advantaged municipal securities, which have pretax yields that are less than the interest rate on the convertible subordinated notes. For financial reporting purposes, the Company effectively records the difference between the pretax and tax-equivalent yields as a reduction in provision for taxes on income. Net interest and other income declined in the third quarter of fiscal 1998 compared to the third quarter of fiscal 1997 primarily due to decreased interest income resulting from lower investment portfolio balances and to separate disclosure of joint venture equity income beginning in the third quarter of fiscal 1998. See additional information under "Joint Venture Equity Income". For the first nine months of fiscal 1998, net interest and other income was consistent with the comparable prior year period. As a result of the difference in interest income and expense yields and future uses of the Company's investment portfolio, levels of net interest and other income could decrease in the future. Provision for Income Taxes - ----------------------------- The Company recorded a tax provision of $13.0 million (31.0% of income before taxes and equity in joint venture) for the third quarter of fiscal 1998 as compared to $12.6 million (32.5% of income before taxes and equity in joint venture) in the comparable prior year period. For the first nine months of fiscal 1998 the Company recorded a provision of $43.0 million (31.5% of income before taxes and equity in joint venture) as compared to $40.7 million (33.8% of income before taxes and equity in joint venture) for the first nine months of fiscal 1997. The lower tax rate for the first nine months of fiscal 1998 is primarily due to legislation extending the R&D tax credit as well as increased profits in foreign operations. Joint Venture Equity Income - ------------------------------ The Company records 25% of the net income of United Silicon Inc. ("USIC"), a wafer fabrication joint venture located in Taiwan, as joint venture equity income. To date, USIC's net income has resulted primarily from favorable exchange gains on its foreign currency investments as well as interest earned on its investment portfolio. Net joint venture equity income for the third quarter of fiscal 1998 was $2.6 million. This amount was largely attributable to foreign exchange gains incurred by USIC relating to its US dollar denominated investments. All prior period amounts were immaterial and remain classified in "Interest income and other". The Company expects to incur joint venture equity losses as the USIC wafer fabrication facility begins to ramp up production, as many of the expenses associated with full foundry operation will be incurred in the early stages of limited production. The Company expects that profitability will occur, if at all, only after a sufficient volume of wafer production is obtained. RISK FACTORS The following risk factors are associated with the Company's business: Factors Affecting Future Operating Results - ---------------------------------------------- The semiconductor industry is characterized by rapid technological change, intense competitive pressure and cyclical market patterns. The Company's results of operations are affected by a wide variety of factors, including general economic conditions, conditions relating to technology companies, conditions specific to the semiconductor industry, decreases in average selling prices over the life of any particular product, the timing of new product introductions (by the Company, its competitors and others), the ability to manufacture sufficient quantities of a given product in a timely manner, the timely implementation of new manufacturing technologies, the ability to safeguard patents and intellectual property from competitors, and the impact of new technologies resulting in rapid escalation of demand for some products in the face of equally steep decline in demand for others. Market demand for the Company's products, particularly for those most recently introduced, can be difficult to predict, especially in light of customers' demands to shorten product lead times and minimize inventory levels. Unpredictable market demand could lead to revenue volatility if the Company were unable to provide sufficient quantities of specified products in a given quarter. In addition, any difficulty in achieving targeted wafer production yields could adversely impact the Company's financial condition and results of operations. The Company attempts to identify changes in market conditions as soon as possible; however, the dynamics of the market make prediction of and timely reaction to such events difficult. Due to the foregoing and other factors, past results, including those described in this report, are much less reliable predictors of the future than is the case in many older, more stable and less dynamic industries. Based on the factors noted herein, the Company may experience substantial period-to-period fluctuations in future operating results. The semiconductor industry has historically been cyclical and subject to, at various times, significant economic downturns characterized by diminished product demand, limited visibility to demand for products further out than three to nine months, accelerated erosion of average selling prices and overcapacity. The Company may experience substantial period-to-period fluctuations in future operating results due to general semiconductor industry conditions, overall economic conditions or other factors. The Company's future success depends in large part on the continued service of its key technical, sales, marketing and management personnel and on its ability to continue to attract and retain qualified employees. Particularly important are those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes. The competition for such personnel is intense, and the loss of key employees could have a material, adverse effect on the Company's financial condition and results of operations. Sales and operations outside of the United States subject the Company to risks associated with conducting business in foreign economic and regulatory environments. The Company's financial condition and results of operations could be adversely impacted by unfavorable economic conditions in countries in which it does significant business and by changes in foreign currency exchange rates affecting those countries. Specifically, the Company has sales and operations in the Asian markets. The recent instability in the Asian financial markets appears to have adversely impacted sales and may continue to adversely impact sales in those markets in several ways, including reducing access to sources of capital needed by customers to make purchases and creating exchange rate differentials that may adversely effect the customer's ability to purchase or the Company's ability to sell at competitive prices. In addition, the instability may increase credit risks as the recent weakening of certain Asian currencies may impair customers' ability to repay existing obligations. Depending on the situation in Asia in coming quarters, any or all of these factors could adversely impact the Company's financial condition and results of operations in the near future. Additionally, risks include government regulation of exports, tariffs and other potential trade barriers, reduced protection for intellectual property rights in some countries, and generally longer receivable collection periods. The Company's business is also subject to the risks associated with the imposition of legislation and regulations relating specifically to the import or export of semiconductor products. The Company cannot predict whether quotas, duties, taxes or other charges or restrictions will be imposed by the United States or other countries upon the importation or exportation of the Company's products in the future or what, if any, effect such actions would have on the Company's financial condition and results of operations. In order to expand international sales and service, the Company will need to maintain and expand existing foreign operations or establish new foreign operations. This entails hiring additional personnel and maintaining or expanding existing relationships with international distributors and sales representatives. This will require significant management attention and financial resources and could adversely affect the Company's financial condition and results of operations. There can be no assurance that the Company will be successful in its maintenance or expansion of existing foreign operations, in its establishment of new foreign operations or in its efforts to maintain or expand its relationships with international distributors or sales representatives. Many of the Company's operations are centered in an area of California that has been seismically active. Should there be a major earthquake in this area, the Company's operations may be disrupted resulting in the inability of the Company to manufacture or ship products in a timely manner, thereby materially adversely affecting the Company's financial condition and results of operations. In addition, the securities of many high technology companies have historically been subject to extreme price and volume fluctuations, which may adversely affect the market price of the Company's common stock. Dependence Upon Independent Manufacturers and Subcontractors - ----------------------------------------------------------------- The Company does not manufacture the wafers used for its products. During the past two years, most of the Company's wafers have been manufactured by Seiko Epson Corporation ("Seiko Epson") and United Microelectronics Corporation ("UMC"). The Company has depended upon these suppliers and others to produce wafers with competitive performance and cost attributes, including transitioning to advanced process technologies, producing wafers at acceptable yields, and delivering them to the Company in a timely manner. While the timeliness, yield and quality of wafer deliveries have met the Company's requirements to date, there can be no assurance that the Company's wafer suppliers will not experience future manufacturing problems, including delays in the realization of advanced process technologies. The Company is also dependent on subcontractors to provide semiconductor assembly services. Any prolonged inability to obtain wafers or assembly services with competitive performance and cost attributes, adequate yields or timely deliveries from these manufacturers/subcontractors, or any other circumstance that would require the Company to seek alternative sources of supply, could delay shipments, and have a material adverse effect on the Company's financial condition and results of operations. The Company's long-term growth will depend in large part on the Company's ability to obtain increased wafer fabrication capacity and assembly services from suppliers. A significant increase in general industry demand or any interruption of supply could reduce the Company's supply of wafers or increase the Company's cost of such wafers, thereby materially adversely affecting the Company's financial condition and results of operations. In order to secure additional wafer capacity, the Company from time to time considers alternatives, including, without limitation, equity investments in, or loans, deposits, or other financial commitments to, independent wafer manufacturers to secure production capacity, or the use of contracts which commit the Company to purchase specified quantities of wafers over extended periods. Although the Company is currently able to obtain wafers from existing suppliers in a timely manner, the Company has at times been unable, and may in the future be unable, to fully satisfy customer demand because of production constraints, including the ability of suppliers and subcontractors to provide materials and services in satisfaction of customer delivery dates, as well as the ability of the Company to process products for shipment. The Company's future growth will depend in part on its ability to locate and qualify additional suppliers and subcontractors and to increase its own capacity to ship products, and there can be no assurance that the Company will be able to do so. Any increase in these constraints on the Company's production could result in a material adverse impact on the Company's financial condition and results of operations. In this regard, the Company has entered into the USIC joint venture with UMC and other parties to obtain wafer capacity from a new wafer fabrication facility. However, there are many risks associated with the construction of a new facility, and there can be no assurance that such facility will become operational and/or cost effective in a timely manner. In addition, the Company has entered into an agreement with Seiko Epson to obtain additional capacity from a facility currently under construction and expected to provide wafers in calendar 1998. If the Company requires additional capacity and such capacity is unavailable, or unavailable on reasonable terms, the Company's financial condition and results of operations could be materially adversely affected. Litigation - ---------- The Company is currently engaged in patent litigation with Altera Corporation ("Altera"). See "Legal Proceedings" in Part II. Dependence on New Products - ----------------------------- The Company's future success depends in large part on its ability to develop and introduce on a timely basis new products which address customer requirements and compete effectively on the basis of price and performance. The success of new product introductions is dependent upon several factors, including timely completion of new product designs, the ability to utilize advanced process technologies, achievement of acceptable yields, availability of supporting design software and market acceptance. No assurance can be given that the Company's product development efforts will be successful or that its new products will achieve market acceptance. Revenues relating to the Company's mature products are expected to continue to decline in the future as a percentage of aggregate revenues, and the Company will be increasingly dependent on revenues derived from newer or future product generation devices. In addition, the average selling price for any particular product tends to decrease rapidly over the product's life. To offset such decreases, the Company relies primarily on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products and on introducing new products which incorporate advanced features and other price/performance factors such that higher average selling prices and higher margins are achievable relative to mature product lines. To the extent that such cost reductions and new product introductions do not occur in a timely manner, or the Company's products do not achieve market acceptance at prices with higher margins, the Company's financial condition and results of operations could be adversely affected. Competition - ----------- The Company's field programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs) compete in the programmable logic marketplace, with a substantial majority of the Company's revenues derived from its FPGA product families. The industries in which the Company competes are intensely competitive and are characterized by rapid technological change, rapid product obsolescence and continuous price erosion. The Company expects significantly increased competition both from existing competitors and from a number of companies that may enter its market. Xilinx believes that important competitive factors in the programmable logic market include price, product performance and reliability, adaptability of products to specific applications, ease of use and functionality of design software, and the ability to provide timely customer service and support. The Company's strategy for expansion in the programmable logic market includes continued price reductions commensurate with the ability to lower the cost of manufacture for established products and continued introduction of new product architectures which address high volume, low cost applications as well as high performance, leading edge density applications. However, there can be no assurance that the Company will be successful in achieving these strategies. The Company's major sources of competition are comprised of three elements: the manufacturers of custom CMOS gate arrays, providers of high density programmable logic products characterized by FPGA-type architectures and other providers of programmable logic products. The Company competes with custom gate array manufacturers on the basis of lower design costs, shorter development schedules and reduced inventory risks. The primary attributes of custom gate arrays are high density, high speed and low production costs in high volumes. The Company continues to develop lower cost architectures intended to narrow the gap between current custom gate array production costs (in high volumes) and FPGA production costs. The Company competes with high density programmable logic suppliers on the basis of performance, the ability to deliver complete solutions to customers and customer support, taking advantage of the primary characteristics of flexible, high speed implementation and quick time-to-market capabilities of the Company's PLD product offerings. In addition, the Company competes with manufacturers of other programmable logic products on the basis of price, performance, design and software utility. Some of the Company's current or potential competitors have substantially greater financial, manufacturing, marketing and technical resources than Xilinx. To the extent that such efforts to compete are not successful, the Company's financial condition and results of operations could be materially adversely affected. Intellectual Property - ---------------------- The Company relies upon patent, trademark, trade secret and copyright law to protect its intellectual property. There can be no assurance that such intellectual property rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged. From time to time, third parties, including competitors of the Company, have asserted exclusive patent, copyright and other intellectual property rights to technologies that are important to the Company. There can be no assurance that third parties will not assert infringement claims against the Company in the future, that assertions by third parties will not result in costly litigation or that the Company would prevail in such litigation or be able to license any valid and infringed patents from third parties on commercially reasonable terms. Litigation, regardless of its outcome, could result in substantial cost and diversion of resources of the Company. Any infringement claim or other litigation against or by the Company could materially, adversely affect the Company's financial condition and results of operations. Year 2000 Compliance - ---------------------- As is the case with most other companies using computers in their operations, the Company is currently working to resolve the potential impact of the year 2000 on the processing of date-sensitive information by the Company's computerized information systems, as well as the vendor and customer date-sensitive computerized information electronically transferred to the Company. The year 2000 issue is the result of computer programs being written using two digits, rather than four, to define the applicable year. Any of the Company's programs that have time-sensitive software may recognize the year "00" as 1900 rather than the year 2000, which could result in miscalculations, classification errors or system failures. Based on preliminary information, costs of addressing potential problems are not currently expected to have a material adverse impact on the Company's financial position, results of operations or cash flows in future periods. However, if the Company, its customers or vendors are unable to resolve such processing issues timely, it could result in a material financial risk. Accordingly, the Company plans to devote the necessary resources to resolve all significant year 2000 issues in a timely manner. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company's financial condition at December 27, 1997 remained strong. Total current assets exceeded total current liabilities by 5.3 times, compared to 6.2 times at March 29, 1997. Since its inception, the Company has used a combination of equity and debt financing and cash flow from operations to support on-going business activities, make acquisitions and investments in complementary technologies, obtain facilities and capital equipment and finance inventory and accounts receivable. The Company continued to generate positive cash flows from operations during the first nine months of fiscal 1998. As of December 27, 1997, the Company had cash, cash equivalents and short-term investments of $417.6 million and working capital of $518.4 million. Cash generated by operations of $165.6 million for the first nine months of fiscal 1998 was $76.9 million higher than the $88.7 million generated for the first nine months of fiscal 1997. The increase in cash generated by operations during the first nine months of fiscal 1998 over the comparable fiscal 1997 period resulted primarily from the favorable cash flow impact of net income, changes in deferred income on shipments to distributors and the impact of reduced cash expenditures for inventories. Cash flows used for investing activities for the nine months ended December 27, 1997, included an additional equity investment of $67.4 million in the USIC joint venture (see Note 4 of Notes to Consolidated Condensed Financial Statements), $60.0 million in advances to Seiko Epson for wafer purchases, and $17.9 million of property, plant and equipment acquisitions along with a building deposit of $28.4 million (see Note 3 of Notes to Consolidated Condensed Financial Statements), which were partially offset by the net investment maturities of $35.9 million in short-term investments. In the first nine months of fiscal 1997, investing activities used funds for advances to Seiko Epson for wafer purchases of $60.0 million (see Note 5 of Notes to Consolidated Condensed Financial Statements) and acquisitions in property, plant and equipment of $22.3 million, partially offset by net investment maturities of $31.5 million in short-term investments. Significant increases in investing activities when comparing the first nine months of 1997 to 1998 are primarily attributable to the additional $67.4 million investment in the USIC joint venture and the $28.4 million building deposit. Net cash flows provided by financing activities were $0.4 million in the first nine months of fiscal 1998, as the proceeds from the issuance of common stock under employee stock plans of $23.1 million were substantially offset by the acquisition of treasury stock during the nine month period of $22.7 million. For the comparable fiscal 1997 period, financing activities included $22.7 million in proceeds from issuance of common stock under corporate stock plans partially offset by the acquisition of treasury stock during the period of $15.7 million. Stockholders' equity increased by $93.6 million at December 27, 1997, principally as a result of the net income for the nine months ended December 27, 1997. In addition, proceeds from the issuance of common stock under employee stock plans and related tax benefits from stock options contributed to the increase in equity, which was partially offset by the acquisition of treasury stock and the cumulative translation adjustment in the period. The increase during the first nine months of fiscal 1998 of $15.5 million in the cumulative translation adjustment resulted primarily from changes in the exchange rate of the New Taiwan dollar relative to the U.S. dollars. The Company has available credit line facilities for up to $47.0 million of which $7.0 million is intended to meet occasional working capital requirements for the Company's wholly owned Irish subsidiary. At December 27, 1997, no borrowings were outstanding under the lines of credit. Subsequent to December 27, 1997, the Company purchased a 59-acre business park located in Longmont, Colorado, near the Company's current Boulder, Colorado facility. The land was purchased for approximately $7.0 million. Plans for infrastructure and the future development of the new property have not been finalized. In July 1997, the Company invested additional equity of $67.4 million towards the construction of the USIC wafer fabrication facility in Taiwan. UMC has committed to supply the Company with wafers manufactured in an existing facility until capacity is available in the new facility. In October 1997, a fire occurred at a UMC related facility. The Company currently does not anticipate that this event will have an adverse effect on its ability to obtain wafers from UMC in the near future, or adversely impact the USIC joint venture, although there can be no assurance of this. In May 1996 the Company entered into an agreement with Seiko Epson. This agreement was amended in December 1997 and now provides for an advance to Seiko Epson of $150.0 million to be used in the construction of a wafer fabrication facility in Japan. Through December 27, 1997, the Company has advanced a total of $120.0 million to Seiko Epson under the agreement. The final installment of $30.0 million was paid on February 2, 1998. The Company anticipates that existing sources of liquidity and cash flow from operations will be sufficient to satisfy the Company's cash needs for the foreseeable future. The Company will continue to evaluate opportunities to obtain additional wafer capacity, procure additional capital equipment and facilities, develop new products, and acquire businesses, products or technologies that would complement the Company's businesses and may use available cash or other sources of funding for such purposes. Part II. OTHER INFORMATION Item 1. Legal Proceedings On June 7, 1993, the Company filed suit against Altera Corporation ("Altera") in the United States District Court for the Northern District of California for infringement of certain of the Company's patents. Subsequently, Altera filed suit against the Company, alleging that certain of the Company's products infringe certain Altera patents. Fact and expert discovery has been completed in both cases, which have been consolidated. On April 20, 1995, Altera filed an additional suit against the Company in the Federal District Court in Delaware, alleging that the Company's XC5200 family infringes an Altera patent. The Company answered the Delaware suit denying that the XC5200 family infringes the patent in suit, asserting certain affirmative defenses and counterclaiming that the Altera Max 9000 family infringes certain of the Company's patents. The Delaware suit was transferred to the United States District Court for the Northern District of California and is also before the same judge. In October 1997, the Court held a hearing with respect to construction of the claims of the various patents in suit. The ultimate outcome of these matters cannot be determined at this time. Management believes that it has meritorious defenses to such claims and is defending them vigorously. The foregoing is a forward-looking statement subject to risks and uncertainties, and the future outcome could differ materially due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage. There are no other pending legal proceedings of a material nature to which the Company is a party or of which any of its property is the subject. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 10.1: Amended Services and Compensation Exhibit to the Consulting Agreement dated as of June 1, 1996 between the Company and Bernard Vonderschmitt Exhibit 10.2: Second Amendment to the Consulting Agreement dated as of June 1, 1996 between the Company and Bernard Vonderschmitt Exhibit 10.3: Agreement of Purchase and Sale of Land in Longmont Colorado, dated November 24, 1997 Exhibit 10.4: First Amendment to Agreement of Purchase and Sale of Land in Longmont Colorado, dated January 15, 1998 Exhibit 10.5: Amended and Restated Advance Payment Agreement with Seiko Epson dated December 12, 1997 Exhibit 12: Statement of Computation of Ratio of Earning to Fixed Charges (b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date February 4, 1998 XILINX, INC. - ----------------------- ------------------------------------------------- /s/ Gordon M. Steel ------------------------------------------------- Gordon M. Steel Senior Vice President of Finance and Chief Financial Officer (as principal accounting and financial officer and on behalf of Registrant) EX-10.1 2 EXHIBIT 10.1 EXHIBIT A --------- SERVICES AND COMPENSATION ------------------------- 1. Contact Consultant's principal Company contact: ------- Name: Willem P. Roelandts -------------------------------------- Title: Chief Executive Officer -------------------------------------- 2. Services Consultant will render to the Company the following Services: -------- Service as Chairman of the Board of the Company and, as reasonably requested by the Company, provision of advice on issues of importance to the Company including general corporate, technological and marketing issues. 3. Compensation ------------ (a) Continued vesting of all stock options which Consultant received as Chief Executive Officer of the Company. (b) The Company shall reimburse Consultant for all reasonable travel and living expenses incurred by Consultant in performing Services pursuant to this agreement (c) Consultant shall receive $5.00 per quarter. (d) Consultant shall submit all statements for services and expenses in a form prescribed by the Company and such statement shall be approved by the contact person listed above or by his or her supervisor. Amended as of March 6, 1997. Consultant /s/ Bernard V. Vonderschmitt ---------------------------- Bernard V. Vonderschmitt Company /s/ Willem P. Roelandts ---------------------------- Willem P. Roelandts EX-10.2 3 EXHIBIT 10.2 SECOND AMENDMENT TO CONSULTING AGREEMENT THIS SECOND AMENDMENT TO CONSULTING AGREEMENT (this "Amendment"), dated as of October 10, 1997, is entered into by and between Xilinx, Inc. ("Company"), and Bernard V. Vonderschmitt ("Consultant"). WHEREAS, the parties entered into that certain Consulting Agreement dated as of June 1, 1996, as amended March 6, 1997 (as amended, the "Agreement"), providing for, among other things, the provision of consulting services to Company; and WHEREAS, the parties now desire to clarify the terms of the Agreement as more particularly set forth herein. NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree that the Agreement is amended as follows: 1. Compensation. Due to an inadvertent omission, the Agreement did not ------------ include the Company's agreement to provide medical insurance to Consultant. Therefore, to clarify the parties' intent and rectify the omission, retroactive to June 1, 1996, in addition to the compensation provided for in the Agreement, and not in replacement thereof, the Company agrees to provide Consultant and his spouse with medical and dental insurance coverage in the same form available to Company employees. All such coverage shall be taxable to Consultant. 2. References to Agreement. From and after the date hereof, any reference ----------------------- to the Agreement shall mean the Agreement as amended by this Amendment. 3. Limitation of Amendment. Except as expressly clarified and amended ----------------------- hereby, all the terms and provisions of the Agreement are hereby ratified and confirmed in all respects and shall remain in full force and effect. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their authorized officers as of the date first above written. XILINX, INC. CONSULTANT By: /s/ Willem P. Roelandts /s/ Bernard V. Vonderschmitt ------------------------- ---------------------------- Its: President & CEO Bernard V. Vonderschmitt ------------------------- EX-10.3 4 EXHIBIT 10.3 AGREEMENT OF PURCHASE AND SALE THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is dated for reference purposes November 24, 1997, and is made and entered into by and between MICHAEL D. DOLLAGHAN, an individual ("Seller"), and XILINX, INC., a Delaware corporation ("Buyer"). 1. PROPERTY. -------- 1.1 SITE PLAN. Seller is the owner of the real property situated in the --------- City of Longmont, Boulder County, State of Colorado, containing approximately 58.81 acres, which property is commonly known as the Gateway Center and is labeled "Property" and outlined in RED on the site plan attached hereto as Exhibit A and made a part hereof (the "Property"). - --------- 1.2 LEGAL DESCRIPTION. The legal description of the Property is attached ----------------- to the site plan as Exhibit A-1. Such description shall be used in the Deed. ----------- 1.3 WATER RIGHTS. Seller is also the owner of two (2) shares in the Union ------------ Reservoir Company (the "Water Rights"). 2. TOTAL PURCHASE PRICE; DEPOSIT. ------------------------------- 2.1 TOTAL PURCHASE PRICE. The purchase price for the Property and the -------------------- Water Rights is SIX MILLION FOUR HUNDRED THOUSAND DOLLARS ($6,400,000) (the "Total Purchase Price"). The Total Purchase Price shall be payable in part by the Deposit, with the balance payable at the Closing in immediately available U.S. funds. 2.2 DEPOSIT. ------- 2.2.1 Within five (5) days after the execution of this Agreement, Buyer shall deliver to Escrow Agent by check or draft the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) as a deposit towards the Total Purchase Price (said deposit, together with any interest thereon, is referred to in this Agreement as the "Deposit"). The Deposit shall be invested by Escrow Agent in an interest-bearing liquid bank or money market account approved by Seller and Buyer. The Deposit shall be applied towards the Total Purchase Price and/or shall be released from Escrow in accordance with this Agreement. 2.2.2 In the event that Buyer terminates this Agreement under Section 4.1, ----------- the Deposit shall be refunded to Buyer. In the event that Buyer does not terminate this Agreement on or before December 8, 1997, the Deposit shall be deemed earned by Seller on account of Seller's obligations hereunder prior to the Closing and shall be non-refundable to Buyer except for default of Seller and except as otherwise specifically provided herein. 3. ESCROW; TITLE. ------------- 3.1 ESCROW. Longmont Title Company, 850 23rd Avenue, Suite E, Longmont, ------ Colorado 80501 ("Escrow Agent") shall hold the Deposit and shall be the closing agent as provided for herein. Buyer and Seller shall each from time to time execute whatever instructions to the Escrow Agent as are reasonably requested by the other to cause the Escrow Agent to hold and disburse the Deposit in accordance with this Agreement. At the Closing, Escrow Agent shall act as the closing agent for the Property and shall conduct the Closing in accordance with its normal practices and any specific instructions executed jointly by Buyer and Seller. Escrow Agent's services as closing agent shall include the recording of the Deed and any other documents which require recording at the Closing. 3.2 TITLE COMMITMENT. A current title commitment, together with legible ---------------- copies of all record documents referred to in Schedule B thereto (together the "Title Commitment") of the Property has already been issued to Buyer by First American Title Insurance Company (the "Title Company"), through the Escrow Agent. 3.3 SURVEY. Buyer acknowledges receipt of a copy of the survey previously ------ prepared on the Property for Seller. Buyer shall proceed promptly with any additional work required to convert Seller's existing survey into an ALTA survey of the Property (the "Survey") meeting Buyer's requirements and shall cause the Survey to be completed on or before December 8, 1997. 3.4 TITLE DEFECTS. On or before December 4, 1997, Buyer shall give Seller ------------- notice of all title defects shown in the Commitment which are not accepted by Buyer as Permitted Exceptions and shall notify Seller at the earliest practical time of any defects or exceptions shown by the Survey which are not accepted by Buyer as Permitted Exceptions. Any and all exceptions affecting all or any portion of the Property disclosed by the Commitment (as exceptions, requirements, or otherwise) which are not the subject of a notice from Buyer to Seller given within the applicable period of time, shall be deemed accepted by Buyer as Permitted Exceptions and shall be listed in the deed as exceptions to the warranty of title contained in the Deed. In the event Buyer notifies Seller of any title defects shown by the Commitment or the Survey which are not accepted, and have not previously been accepted, by Buyer as Permitted Exceptions, Seller may cure such defects in a manner reasonably acceptable to Buyer; provided that Seller shall not be obligated hereby to cure any such defects or to incur any expense in connection with any such cure. For purposes hereof, a title defect or exception shall be deemed cured if the Title Company deletes the defect from the Title Commitment. If each of the defects objected to by Buyer has not been cured on or before December 8, 1997, Buyer may, by written notice delivered to Seller on or before December 8, 1997, either (a) terminate this Agreement or (b) waive such defects and accept the same as Permitted Exceptions. In the event Buyer does not notify Seller of its decision to terminate or waive on or before December 8, 1997, Buyer shall be deemed to have waived its objection to such defects and to have accepted such defects as Permitted Exceptions and shall be deemed to have waived and accepted as Permitted Exceptions any defects and exceptions shown by the Survey, even if not previously made the subject of a notice to Seller. 3.5 SUBSEQUENT TITLE DEFECTS. If this Contract continues in effect after ------------------------ December 8, 1997, and any update or endorsement to the Title Commitment discloses defects or exceptions (the "New Exceptions") which were not disclosed to Buyer before noon on December 8, 1997 and which are not Permitted Exceptions and Buyer objects to any such New Exceptions, Buyer shall give Seller notice of the New Exceptions to which Buyer objects promptly, and in any event, within five business days after the receipt of the update or endorsement to the Title Commitment first disclosing such New Exceptions. Any and all New Exceptions affecting all or any portion of the Property disclosed by any such update or endorsement to the Commitment (as exceptions, requirements, or otherwise) which are not objected to by Buyer in such a notice from Buyer to Seller given within the applicable period of time shall be deemed accepted by Buyer as Permitted Exceptions and shall be listed in the Deed as exceptions to the warranty of title contained in the Deed. In the event Buyer notifies Seller of any New Exceptions shown by the Commitment or by the Survey which are not accepted, and have not previously been accepted, by Buyer as Permitted Exceptions, Seller may cure such New Exceptions in a manner reasonably acceptable to Buyer; provided that Seller shall not be obligated hereby to cure any such defects or to incur any expense in connection with any such cure. For purposes hereof, a New Exception shall be deemed cured if the Title Company deletes the same from the Title Commitment. If each of the New Exceptions so objected to by Buyer has not been cured on or before the Closing, Buyer may, by written notice delivered to Seller on or before the Closing, either (a) terminate this Agreement or (b) waive such New Exceptions and accept the same as Permitted Exceptions. If Buyer does not notify Seller of its decision to terminate or waive at or before the Closing, Buyer shall be deemed to have waived its objection to such New Exceptions and to have accepted such New Exceptions as Permitted Exceptions. 3.6 DEEDS OF TRUST. Notwithstanding any other provision of this -------------- Agreement, Seller shall be required to cause to be released from the Property at or before the Closing the two deeds of trust (the "Deeds of Trust") encumbering the Property for the benefit of Colorado Community First State Bank recorded on March 17, 1997, as Reception No. 1683715 and recorded on February 7, 1996, as Reception No. 1583215, and Buyer shall not be required to give Seller notice of the Deeds of Trust to require Seller to release the Deeds of Trust and the failure to give any such notice or to terminate this Agreement shall not render the Deeds of Trust to be Permitted Exceptions. Seller may use the proceeds of the Closing to pay off and/or release the Deeds of Trust and the loan(s) secured thereby. 3.7 TITLE. At the Closing, Seller shall convey to Buyer marketable and ----- insurable fee simple title to the Property, subject to the Permitted Exceptions, by general warranty deed (the "Deed"). Promptly after the Closing, Seller shall cause Escrow Agent to issue the standard ALTA Owner's Extended Coverage Policy of Title Insurance ("Title Policy") of First American Title Insurance Company pursuant to the Title Commitment, insuring marketable fee simple title to the Property in Buyer, subject only to the Permitted Exceptions, in the full amount of the Total Purchase Price. The "Permitted Exceptions" shall mean only (i) the standard printed exceptions contained in the Title Policy, except for the standard printed exceptions for mechanic's and materialmen's liens not of record and not created by, through, or under Buyer, and for bankruptcy or insolvency claims, which shall be removed, (ii) a lien to secure payment of real property taxes not delinquent, (iii) matters affecting the condition of title created by, through, or under Buyer or with the written consent of Buyer, and (iv) exceptions which are disclosed by the Title Commitment and Survey and which are approved or deemed approved by Buyer in accordance with Section 3.4 or Section 3.5. ----------- ----------- 3.8 CLOSING DATE. The closing (the "Closing") of the sale of the Property ------------ and the Water Rights from Seller to Buyer (the "Closing Date") shall be January 15, 1998, or such earlier date (which shall not, without Seller's consent, which Seller may withhold in his discretion, be before January 1, 1998) as Buyer shall specify by notice to Seller given at least three business days before such earlier Closing Date. Notwithstanding the foregoing provisions of this Section 3.8, in the event of damage to the Property of the ----------- type which would give Buyer the right to terminate under Section 6.1, the ----------- Closing Date shall be extended until the tenth day after the occurrence of such damage; provided that the Closing Date shall not, in any event, be extended under this Section 3.8 beyond January 26, 1998. ----------- 3.9 PRORATIONS; ESCROW EXPENSES. Rents and water charges, if any, and ---------------------------- real property taxes for the year of the Closing shall be prorated as of the Closing Date. Other charges and costs shall be allocated as follows: If the Property is subject to any special improvement district, for improvements completed or partially completed prior to the execution and delivery of this Agreement, Seller shall pay the same at or before the Closing. Seller shall pay the costs of releasing and recording the releases of the Deeds of Trust and the premium for the Title Policy (excluding any premium for ALTA extended coverage and any costs of any special endorsements). Buyer shall pay any document preparation fees, the documentary transfer tax, any premium for ALTA extended coverage and any costs of special endorsements and the cost of recording the Deed. Buyer and Seller shall each pay one-half of the Escrow fee. 4. PURCHASE CONDITIONS. ------------------- 4.1 INSPECTION PERIOD. Buyer shall have until December 8, 1997 to ----------------- evaluate the Property for its purposes and to determine whether the Property is suitable for Buyer's use. Buyer may (i) terminate this Agreement for any reason by notice given to Seller at any time on or before 5:00 p.m. Denver time on December 8, 1997, or (ii) elect to proceed, in which event Buyer's right to terminate under this Section 4.1 shall be waived. In order to ----------- elect to proceed, Buyer shall be required to give notice to Seller and the Escrow Agent, on or before December 8, 1997, that it has elected to proceed and that its right to terminate under this Section 4.1 has been waived. If ----------- Buyer fails to elect either to terminate or to proceed, Buyer shall be deemed to have elected to terminate this Agreement. Buyer's determination to proceed and not to terminate shall waive any cause of action Buyer may have against Seller for breach of this Agreement. 4.2 EFFECT OF TERMINATION. In the event that Buyer terminates this --------------------- Agreement in accordance with any of Sections 3.4, 3.5, 4.1, 5.3, or 6.1, (i) ----------------------------------- Buyer shall deliver to Seller all copies of the Survey, if a Survey has then been obtained by Buyer, copies of all reports, studies, and tests prepared by or for Buyer relating to the physical characteristics of the Property, (ii) the Deposit shall be paid to Seller or Buyer as otherwise provided in this Agreement, and (iii) both parties shall thereupon be relieved of all further obligation hereunder, except for any obligations of Buyer arising under any of Sections 3.1, 5.2.2, 7.1, 7.3, 10.6, 13.1, 13.3, 13.7, or 13.8, all of which - ------------ shall continue in full force and effect and shall be enforceable by Seller by all remedies available at law or in equity, and except for any obligations of Seller under Sections 3.1, 7.3, 10.6, 13.1, and 13.3, all of which shall ------------ continue in full force and effect and be enforceable by Buyer by all remedies available at law or in equity. 5. REPRESENTATIONS AND WARRANTIES. ------------------------------- 5.1 REPRESENTATIONS AND WARRANTIES Seller hereby represents and warrants ------------------------------- to and from the benefit of Buyer as follows: 5.1.1 To Seller's Knowledge, there are no, and Seller has received no notification of any, suits (including, without limitation, condemnation or eminent domain proceedings or actions), hearings, governmental investigations or other legal proceedings (collectively "Proceeding") pending or threatened against Seller, before any court or governmental department or agency in any way relating to the Property. As used herein, the term "Proceeding" shall not include any proceedings to obtain zoning, annexation, or other governmental approvals with respect to the Property which do not involve the possibility of claims for liability or damages against Seller or the Property. To Seller's Knowledge, there is no pending or threatened proceeding in eminent domain relating to or affecting the Property. Seller has not received any offer ("Offer") from any public or quasi-public authority, having powers of eminent domain over the Property, to purchase or acquire the Property or any portion thereof or interest therein which might lead to a proceeding in eminent domain with respect to the Property. Seller has received no notification ("Notification") that Seller is subject to or in default with respect to, any order, writ, injunction or decree of any court or governmental department or agency directed specifically to Seller relating to the use of the Property. Seller shall give Buyer immediate written notice of any Proceeding, Offer or Notification which may occur prior to the Closing. 5.1.2 Seller is not the subject of any insolvency or bankruptcy proceedings at law or in equity or otherwise, the result of which might affect title to the Property or the right of Seller to transfer and convey, or cause to be transferred and conveyed, the Property to Buyer. 5.1.3 There are no leases, subleases or licenses or occupancy agreements of any kind affecting the Property, other than leases made by Seller to family members in connection with the formation of a business improvement district affecting the Property (the "BID"), all of which shall be terminated at or before the Closing. 5.1.4 Seller has full right, power and authority to enter into this Agreement and to transfer and convey title to the Property to Buyer and to consummate all transactions contemplated hereby. 5.1.5 Seller has previously disclosed to Buyer or shall, on or before November 26, 1997, disclose to Buyer in writing, any and all defects in the physical condition of the land underlying the Property which are within Seller's Knowledge and which would materially and adversely impair the normal development of the Property in the ordinary course. As used herein, "Seller's Knowledge" shall mean Seller's actual knowledge as of the date hereof without any obligation to make further inquiry. 5.2 BUYER REPRESENTATIONS AND WARRANTIES. Buyer hereby represents and ------------------------------------ warrants to and for the benefit of Seller, as follows: 5.2.1 Buyer shall use due diligence in satisfying each of the conditions in this Agreement which were created for Buyer's benefit. In addition, Buyer shall use due diligence in attempting to close the transaction at the earliest possible date. 5.2.2 Buyer shall not allow the creation of any mechanic's liens on the Property as the result of the activities of Buyer, its employees, agents, servants, representatives or contractors on the Property. Buyer agrees to immediately take steps to remove any mechanic's lien filed against the Property as the result of its activities, and to indemnify, defend and hold Seller harmless from damages arising to Seller or its Property as a result of such liens, including attorneys' fees. 5.3 CERTIFICATE AT CLOSING. At the Closing, Seller shall deliver to Buyer ---------------------- a written certificate (the "Certificate") certifying to Buyer, as of the date of the Closing, with such modifications and exclusions as shall be necessary to make the Certificate accurate when given, the accuracy of the matters represented and warranted to in Sections 5.1 and 12.3, except that, as used in ------------ ---- the Certificate, "Seller's Knowledge" shall mean as of the Closing Date. If the Certificate delivered by Seller at the Closing modifies or excludes any of such matters, Buyer may either (i) terminate this Agreement or (ii) accept the Certificate in the form delivered by Seller. If Buyer proceeds to close, Buyer shall be deemed to have elected the option described in clause (ii) above. By accepting the Certificate at the Closing, Buyer shall be deemed to have waived, released, and forever relinquished any and all claims or causes of action arising under the warranties and representations contained in Sections 5.1 and 12.3 but not those contained in the Certificate. Any and all - ------------ ---- claims or causes of action under the Certificate shall be asserted or commenced by Buyer within one year after the date of the Closing and any and all claims or causes of action under the Certificate which are not asserted or commenced within such period of time shall be deemed waived, released, and forever relinquished by Buyer. 5.4 PROPERTY SOLD AS IS. Except for the warranties and representations ------------------- set forth in Sections 5.1 and 12.3, as restated in the Certificate, Buyer is ------------ ---- relying upon its own inspection of the Property to evaluate the condition of the Property and the suitability of the Property for Buyer's intended use and development. Except as specifically set forth in Sections 5.1 and 12.3, (i) ------------ ---- Buyer understands and agrees that the Property will be sold and conveyed to Buyer hereunder as is, without any representation or warranty by Seller of any kind or nature whatsoever, and Buyer hereby acknowledges that Seller hereby disclaims any and all express or implied warranties regarding the Property or the condition thereof, including, without limitation, the fitness of the Property for any particular purpose and (ii) Buyer shall have no remedy or cause of action whatsoever, and Buyer hereby waives any remedies and causes of action otherwise available, against Seller arising from or in any way related to the condition of the Property. Seller shall have no obligation to improve or otherwise alter any portion of the Property from its current condition in any manner whatsoever. 6. RISK OF LOSS. ------------ 6.1 RISK OF LOSS. Seller shall give Buyer prompt notice of any material ------------ or substantial damage to the Property which occurs after the date hereof. If, prior to the Closing, the Property is totally damaged or suffers such material and substantial damage that it cannot thereafter reasonably be used for the purposes for which Buyer intends to use it, Buyer shall have the option, which shall be exercised within ten (10) days after receipt of notice from Seller of such damage or destruction, either (1) to accept the Property in its damaged condition, in which event any insurance proceeds payable to Seller shall be assigned to Buyer, or (2) to terminate this Agreement. Failure of Buyer to terminate within such period shall be deemed to be the election of the alternative set forth in clause (1), not to terminate and to continue this Agreement in full force and effect. 7. TESTS; DOCUMENTS; CONSULTANTS. ----------------------------- 7.1 TESTS. During the Escrow period, Buyer and its employees, agents, ----- servants, representatives and contractors may enter upon the Property at reasonable times and in a reasonable manner for purposes of making or performing, at Buyer's expense, such borings, surveys, engineering studies, soil tests and studies, environmental sampling and/or tests (collectively "Tests"), as Buyer deems necessary or advisable; provided, however, that (i) all such Tests conducted on the Property shall be undertaken in a safe, workmanlike and reasonable manner, and (ii) Buyer shall substantially restore the property which may be disturbed to its condition prior to such Tests. Prior to entering upon the Property, Buyer shall notify Seller of the date, time, duration and purpose of such entry. Buyer agrees to indemnify, defend and hold Seller and Property harmless from any and all damages, claims, liabilities or costs arising from the activities of Buyer, its employees, agents, servants, representatives or contractors on the Property, including attorneys' fees. Buyer shall pay for all work performed on the Property by Buyer, or at Buyer's instance or request, as and when such payments are due and shall remove at Buyer's expenses within fifteen days after notice thereof is given to Buyer any mechanic's and other liens filed against the Property on account of any activities on the Property by Buyer or anyone acting at Buyer's instance or request. 7.2 DELIVERY OF DOCUMENTS. To the extent such items are in the possession --------------------- and/or control of Seller, Seller shall deliver or make available to Buyer for inspection within two (2) days after the execution and delivery of this Agreement copies of all documents relating to the Property such as existing surveys, soils reports, permits, annexation documents, applications to governmental agencies, site plans and tentative parcel maps. Seller makes no representation or warranty as to the accuracy or completeness of any of the above items. Seller agrees to instruct all of its contractors and agents to fully cooperate with Buyer and its agents in connection with Buyer's inspections. 7.3 CONSULTANTS. Seller currently has engaged the consultants (the ----------- "Consultants") listed on Exhibit B attached hereto and by this reference made --------- part hereof who are working with respect to the Property. Seller shall be responsible for payment of all fees and disbursements of the Consultants incurred in connection with such work on or before December 8, 1997. Buyer shall be responsible for the payment of all fees and disbursements incurred by the Consultants for such work from and after December 9, 1997. At Buyer's request, Seller shall assign the contracts Seller has with the Consultants to Buyer on December 9, 1997; provided that, if, for any reason, Buyer does not close the purchaser of the Property hereunder, Buyer shall, at Seller's request, assign to Seller, upon the termination of Buyer's right to purchase the Property, such contracts and all work done thereunder. 8. CLOSING. The closing of the sale of the Property and Water Rights from ------- Seller to Buyer (the "Closing") shall take place on the Closing Date at 10:00 a.m., Denver time, in the offices of the Title Company. At the Closing: 8.1 The parties shall execute instructions to the Escrow Agent to pay the Deposit to Seller, the Deposit shall be paid to Seller, and the Deposit shall be credited against the Purchase Price and paid to Seller. 8.2 Buyer shall pay the balance of the purchase price, as adjusted for prorations, in immediately available U.S. funds acceptable to Seller. 8.3 General ad valorem real property taxes on the Property for the year of the Closing, based on the actual taxes for the preceding year, shall be prorated to the date of the Closing. Such proration shall be final. 8.4 Seller shall (i) endorse to Buyer the certificates for the Water Rights and, as to any of the certificates which are in the name of Constance Dollaghan, also known as Constance E. Dollaghan, cause her to endorse to Buyer the certificates for the Water Rights, (ii) deliver the certificates for the Water Rights to Buyer, (iii) execute and/or deliver to Buyer any other documents required to transfer the Water Rights to Buyer, and (iv) take any other actions required to effect the transfer of the Water Rights to Buyer. 8.5 Seller shall convey the Property to Buyer by the Deed. The Deed shall specifically provide that it is subject to all matters of record. Seller shall cause the Deeds of Trust to be released and shall cause the leases on the Property referenced in Section 5.1.3 to be terminated and surrendered. ------------- 8.6 Seller shall deliver the Certificate to Buyer. 8.7 Seller shall execute and deliver to the Escrow Agent an affidavit and agreement, protecting the Escrow Agent against mechanic's liens arising for work done at the instance of Seller. 8.8 Buyer shall execute and deliver to the Escrow Agent an affidavit and agreement, protecting the Escrow Agent against mechanic's liens arising for work done at the instance of Buyer. 8.9 Buyer and Seller shall each execute and deliver such certificates as shall be necessary with respect to withholding taxes and similar items. 8.10 Seller shall cause the Escrow Agent to deliver to Buyer the Escrow Agent's unconditional written undertaking (which shall be in form approved by both Buyer and Seller) to issue to Buyer its standard form owner's policy (the "Owner's Policy") insuring title to the Property in Buyer in the amount of the Purchase Price, subject only to the Permitted Exceptions. 8.11 Seller shall assign to Buyer all right, title, and interest in all studies, reports, and other documents developed by third parties for Seller relating to the Property. 8.12 The parties shall each do or cause to be done such other matters and things as shall be necessary to close the transaction contemplated herein. 9. TAX-DEFERRED EXCHANGE. Seller may elect to close the sale of the --------------------- Property through one or more exchanges qualifying for tax-deferred treatment under Section 1031 of the Internal Revenue Code through a qualified intermediary as provided for in Treasury Regulation Section 1.1031(k)-1(g). Buyer shall cooperate with Seller in all ways reasonably requested by Seller to assist Seller in effecting any such exchange so long as Buyer is not thereby subjected to any liability or risk of liability and is not required to bear any additional cost or expense. Seller shall indemnify Buyer against all costs and liabilities incurred in so cooperating with Seller to satisfy the requirements of Section 1031. Buyer shall not have any responsibility to Buyer for the tax effect of any such exchange effected by Buyer. 10. ENFORCEMENT. ----------- 10.1 SELLER'S REMEDIES. If Buyer fails to close the purchase of the ----------------- Property and Water Rights on the Closing Date (except for Seller's failure to convey or any other material and substantial default by Seller which has not been cured as of the Closing), and such failure continues uncured for two business days after Seller gives Buyer notice thereof, Seller, as its sole and exclusive remedy for Buyer's failure to close, may terminate this Agreement by written notice to Buyer and Escrow Agent. Upon such termination, the Escrow Agent shall pay the Deposit to Seller and Seller shall be entitled to retain the Deposit as liquidated damages for Buyer's failure to close. In no event shall Buyer be liable for specific performance or for consequential damages for Buyer's failure to close the purchase of the Property and Water Rights. Nothing contained herein shall be construed as limiting Seller's remedies for any failure of Buyer to perform its obligations under any of Sections 3.1, ------------ 5.2.2, 7.1, 7.3, 10.6, 13.1, 13.3, 13.7, or 13.8. 10.2 BUYER'S REMEDIES. If Seller fails to close the conveyance of the ---------------- Property and Water Rights to Buyer at the Closing (except for Buyer's failure to close or any other material and substantial default by Buyer) and such failure continues uncured for two business days after Buyer gives written notice of such failure to Seller, in addition to whatever other remedies are available to Buyer at law or in equity, including the right to have specific performance of this Agreement, Buyer may terminate this Agreement by written notice to Seller. Upon such termination, the Deposit shall be paid to and retained by Buyer and except for Buyer's obligations under any of Sections 3.1 ------------ 5.2.2, 7.1, 7.3, 10.6, 13.1, 13.3, 13.7, or 13.8, Buyer shall be relieved of all further obligations under this Agreement. 10.3 REMEDIES CUMULATIVE. All remedies permitted or available to Buyer ------------------- hereunder, or at law, or in equity, or by statute, shall be cumulative and not alternative. 10.4 NO WAIVER. No waiver by either party of any default under this --------- Agreement by the other party shall be effective or binding upon such party unless given in the form of a written instrument signed by such party, and no such waiver shall be implied from any omission by such party to take action with respect to such default. No express written waiver of any default shall affect any other default or cover any period of time other than the default and/or period of time specified in such express waiver. One or more written waivers of any default under any provision of this Agreement shall not be deemed to be a waiver of any subsequent default in the performance of the same provision or any other term or provision contained in this Agreement. 10.5 GOVERNING LAW. This Agreement shall be governed and enforced by, and ------------- construed in accordance with the laws of the state in which the Property is located. 10.6 ATTORNEYS' FEES. In the event either party hereto finds it necessary --------------- to employ legal counsel or to bring an action at law or other proceedings against the other party to enforce any of the terms, covenants or conditions hereof, the prevailing party in such action or proceeding shall be paid all reasonable attorneys' fees, as determined by the court and not the jury, and in the event any judgment is secured by such prevailing party, all such attorneys' fees shall be included in any such judgment in such action or proceedings. 11. NOTICES. ------- 11.1 NOTICES. All notices and other communications provided for herein ------- shall be in writing. Notices may be given by hand delivery, by successful telecopy transmission, by commercial courier service, or by United States certified or registered mail, to the parties at their respective addresses as follows: If to Seller: Michael D. Dollaghan 7001 Rozena Road Longmont, CO 80503 (303) 776-7140 Fax: (303) 776-2557 James E. Culhane, Esq. Davis, Graham & Stubbs LLP 370 17th Street, Suite 4700 Denver, Colorado 80202 (303) 892-9400 Fax: (303) 893-1379 If to Buyer: Xilinx, Inc. 2100 Logic Drive San Jose, CA 95124 Attention: Forrest James (408) 879-5335 Fax: (408) 879-6535 Xilinx, Inc. 2100 Logic Drive San Jose, CA 95124 Attention: David Granoff (408) 879-4722 Fax: (408) 377-6137 The foregoing addresses may be changed by written notice given pursuant to provisions of this Section. All notices shall be deemed effective when received, or if receipt is frustrated by the recipient, when tendered. As a courtesy, but not as a requirement to effect valid delivery of a notice, notices shall also be given at the following addresses: If to Seller: The Prudential LTM, Realtors 203 S. Main Street Longmont, CO 80501 Attn: Ken Kanemoto Phone: Fax: Larry Green & Associates 10552 Mooring Road Longmont, CO 80501 Attn: Larry Green Phone: Fax: If to Buyer: Colorado Group 3434 47th Street, Suite 220 Boulder, CO 80301 Attn: Gary Aboussie (303) 449-2131 Fax: (303) 449-8250 12. ENVIRONMENTAL PROVISIONS. ------------------------ 12.1 HAZARDOUS MATERIALS. For the purposes of this Agreement, the term ------------------- "Hazardous Materials" shall mean any hazardous or toxic substance, material or waste, including without limitation petroleum oil and its fractions, as defined by any federal, state or local law, regulation or ordinance. 12.2 ENVIRONMENTAL HISTORY AND REPORTS. To the extent such items are in --------------------------------- the possession and/or control of Seller, and to the extent that Seller may not have already done so, Seller shall furnish to Buyer within two (2) days after execution of this Agreement, true, accurate, and complete copies of all sampling and test results obtained from all environmental and/or health samples and tests taken at or around the Property and property adjacent thereto by, or on behalf of or otherwise delivered to Seller. 12.3 REPRESENTATIONS AND WARRANTIES. Seller has delivered to Buyer a copy ------------------------------ of the Phase I environmental Assessment prepared by Empire Laboratories, Inc., dated April 26, 1993, and a letter dated October 15, 1997 from Terracon Consultants Western, Inc. Except as noted in such report and letter, Seller hereby represents, warrants and covenants to Buyer that Seller has no actual knowledge, without an obligation of inquiry, of (i) any underground storage tanks, PCB containing or contaminated equipment, or asbestos containing construction materials on the Property, (ii) any unlawful handling, transportation, storage, treatment or usage of Hazardous Materials that has occurred on the Property, (iii) any leaks, spills, release, discharge, emission or disposal of Hazardous Materials into or upon the Property or property adjacent thereto, or of any migration of Hazardous Materials into or upon the Property from adjacent property (collectively "Hazardous Discharge"), or (iv) any complaint, order, directive, citation or other notice (collectively "Environmental Notice") by any governmental authority or any other person or entity with regard to the matters set forth in above in this Section 12.3. - ------------ 12.4 NOTICE. Seller shall give Buyer immediate written notice of any ------ Hazardous Discharge or Environmental Notice which may occur, of which Seller has actual knowledge, whether before or after the execution and delivery of this Agreement. 13. GENERAL PROVISIONS. ------------------ 13.1 BROKER'S COMMISSION. Seller represents and warrants to Buyer and ------------------- Buyer represents and warrants to Seller that neither has used any broker, agent, finder or other person in connection with the transaction contemplated hereby to whom a brokerage or other commission or fee may be payable, other than The Prudential LTM, Realtors and Larry Green & Associates, as Seller's brokers, and the Colorado Group, as Buyer's broker. At the Closing, Seller shall pay to Seller's brokers the commission payable under Seller's separate agreement with Seller's brokers. Seller's brokers shall pay a portion of that commission to Buyer's broker in accordance with a separate agreement between Buyer's and Seller's brokers or, if none, in accordance with normal commission sharing practices. Both Buyer's broker and Seller's brokers agree to accept such payments in full satisfaction for all services rendered in connection with the transaction contemplated hereby and in connection with the Property and Water Rights. Neither Buyer's broker nor Seller's broker shall be entitled to any fee or other compensation in connection with this transaction unless the Closing provided for herein is consummated. Each party indemnifies and agrees to defend and hold the other harmless from any claims resulting from the breach by the indemnifying party of the warranties and representations in this Section. Seller shall indemnify, defend, and hold Buyer harmless from any claims arising as a result of any failure by Seller to make the payment to Seller's brokers provided for herein. Buyer's broker, and Seller's brokers, by executing below, agree to be bound by the terms of this Section. 13.2 AFFIDAVIT. Prior to the close of Escrow, Seller shall deliver to --------- Escrow Agent for delivery to Buyer at the close of Escrow an affidavit in a form satisfactory to Buyer executed by Seller evidencing Seller's exemption from withholding under the Internal Revenue Code Section 1445. 13.3 CONFIDENTIALITY. Unless and until the Closing is consummated under --------------- this Agreement, Buyer shall, as an ethical commitment to Seller but not as a legally binding obligation, use reasonable good faith efforts to keep all the terms and conditions of this Agreement and, if this Agreement is terminated by Buyer, Buyer's reasons for terminating confidential and to avoid disclosing any of the same except as is otherwise reasonably required in the reasonable and ordinary conduct of Buyer's business. Seller shall, as an ethical commitment to Buyer but not as a legally binding obligation, use reasonable good faith efforts to keep all the terms and conditions of this Agreement confidential until the Closing except as is reasonably and necessarily required in connection with Seller's normal activities (including financing activities) with respect to the Property and as shall reasonably be required to perform his obligations hereunder and prepare for and consummate the Closing. Seller and Buyer both recognize that their ethical obligations under this Section 13.3 shall not be legally binding. Neither Buyer nor Seller ------------ shall have any liability for failing to observe the requirements of this Section 13.3. - ------------ 13.4 SURVIVAL. Except as otherwise provided in Section 5.3, all -------- ----------- covenants, agreements, representations or warranties contained in this Agreement shall survive the close of Escrow and the conveyance of the Property and shall not be deemed to be merged into or waived by the instruments of closing or transfer, but shall expressly survive and be binding upon the parties obligated by the covenant, agreement, representation or warranty. Notwithstanding any other provision of this Agreement, all hold harmless, indemnification, defense and attorney fee provisions of this Agreement shall survive any termination or expiration of this Agreement. 13.5 INTERPRETATION. Whenever used herein, the term "including" shall be -------------- deemed to be followed by the words "without limitation." Words used in the singular number shall include the plural, and vice-versa, and any gender shall be deemed to include each other gender. The captions and headings of the Sections of this Agreement are for convenience of reference only, and shall not be deemed to define or limit the provisions hereof. 13.6 EXECUTION AND MODIFICATION. It is understood and agreed that until -------------------------- this Agreement is fully executed and delivered by the authorized partners, corporate officers or other individuals, as applicable, of the parties hereto, there is not and shall not be an agreement of any kind between the parties hereto upon which any commitment, undertaking or obligation can be founded. It is further agreed that once this Agreement is fully executed and delivered that it contains the entire agreement between the parties hereto and that, in executing it, the parties do not rely upon any statement, promise, or representation not herein expressed and this Agreement once executed and delivered shall not be modified, changed or altered in any respect except by a writing executed and delivered in the same manner as required for this Agreement. 13.7 NO ASSIGNMENT. This Agreement shall be binding and effective on and ------------- inure to the benefit of the successors and assigns of the parties hereto. Buyer shall not, without the prior written consent of Seller, which consent shall not be unreasonably withheld, assign or otherwise transfer or encumber this Agreement or any interest of Buyer herein; except that Buyer may assign this Agreement without obtaining the prior written consent of Seller to (i) any entity that is owned or controlled by Buyer or (ii) any limited partnership in which Buyer, or any entity owned or controlled by Buyer, is the general partner. Buyer shall promptly notify Seller of any proposed assignment of this Agreement. No assignment of this Agreement shall be effective until Buyer has delivered to Seller the written agreement of the proposed assignee, in form reasonably acceptable to Seller, assuming all obligations of Buyer arising hereunder both prior to and after the assignment. Notwithstanding such assumption, Buyer shall remain liable to Seller for all, and shall not be released from any, obligations of Buyer arising hereunder either prior to or after the assignment. Any assignment, transfer, or encumbrance of this Agreement or any interest of Buyer herein by Buyer in violation hereof shall be a material default by Buyer. 13.8 MEMORANDUM; NO OTHER RECORDING. If this Agreement is not terminated ------------------------------ on or before December 8, 1997, Seller and Buyer shall execute a Memorandum of this Agreement which Buyer may record to give notice of this Agreement. Buyer and Seller shall, on or before December 5, 1997, execute the Memorandum and deliver it to the Escrow Agent with written instructions executed by both Buyer and Seller that, if Buyer elects to proceed and not to terminate under Section 4.1 so that the Deposit becomes nonrefundable as contemplated by - ----------- Section 2.2.2 and Buyer gives Escrow Agent notice thereof on or before - ------------- December 8, 1997, Escrow Agent is instructed to record the Memorandum immediately in the real property records of Boulder County, Colorado, and if Escrow Agent has not received such notice or receives notice from Buyer that Buyer has elected to terminate under Section 4.1 so that the Deposit is to be ----------- returned to Buyer under Section 4.2, the Escrow Agent is instructed to mark ----------- void on the Memorandum and return it to Seller without recording it. Buyer shall not otherwise record this Agreement or any evidence thereof. Recording this Agreement or any evidence hereof other than the Memorandum shall constitute a material default by Buyer entitling Seller to all remedies available at law or in equity, including consequential damages. In the event this Contract is terminated, Buyer shall promptly execute and deliver to Seller a quit claim deed conveying the Property to Seller and such other instruments as Seller shall from time to time reasonably request to confirm the termination of this Agreement and any interest of Buyer in the Property hereunder. Delivery of such quit claim deed shall not waive any claim that Buyer may have against Seller for any wrongful failure of Seller to close the sale of the Property hereunder which is made in a lawsuit filed and served within ninety (90) days after the occurrence of such wrongful failure by Seller. Any claim which Buyer might otherwise have hereunder, or which is otherwise available at law or in equity, which is not commenced by Buyer within such ninety-day period shall be deemed to have been waived by Buyer. 13.9 DAYS. If the date for any performance hereunder falls on a day which ---- is a Saturday, Sunday, or bank holiday in Denver, Colorado, the date for performance shall be extended to the next day which is not a Saturday, Sunday, or holiday in Denver, Colorado. 13.10 TIME OF THE ESSENCE. Time is of the essence of this Agreement and ------------------- each and every term, condition and provision hereof. 13.11 NO JOINT VENTURE. It is not intended by this Agreement to, and ---------------- nothing contained in this Agreement shall, create any partnership, joint venture or other joint or equity type agreement between Buyer and Seller. No term or provision of this Agreement is intended to be, or shall be, for the benefit of any person, firm, organization, or corporation not a party hereto, and no such other person, firm, organization or corporation shall have any right or cause of action hereunder. 13.12 FURTHER ACTS. Each party shall, at the request of the other, ------------ execute, acknowledge (if appropriate) and deliver whatever additional documents, and do such other acts, as may be reasonably required in order to accomplish the intent and purposes of this Agreement. 13.13 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and ---------------------- inure to the benefit of, the parties hereto and their respective successors, heirs, administrators and assigns. 13.14 EXECUTION. This Agreement may be executed in counterparts and, when --------- counterparts of this Agreement have been executed and delivered by all of the parties hereto, this Agreement shall be fully binding and effective, just as if all of the parties hereto had executed and delivered a single counterpart hereof. Without limiting the manner in which execution of this Agreement may otherwise be effected hereunder, execution by any party may be effected by facsimile transmission of a signature page hereof executed by such party. If any party effects execution in such manner, such party shall also promptly deliver to the other parties the counterpart physically signed by such party, but the failure of any such party to do so shall not invalidate the execution hereof effected by facsimile transmission. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates set forth below. XILINX, INC., a Delaware corporation /s/ Michael D. Dollaghan By: /s/ Willem P. Roelandts - ------------------------ -------------------------------- MICHAEL D. DOLLAGHAN Its: President -------------------------------- BROKERS' ACKNOWLEDGMENT - ----------------------- The following brokers hereby acknowledge their agreement to the foregoing Agreement, including the provisions of Section 13.1. ------------ THE PRUDENTIAL LTM, REALTORS LARRY GREEN & ASSOCIATES By: /s/ Ken Kanemoto By: /s/ Larry Green ------------------------- -------------------------------- Ken Kanemoto Larry Green COLORADO GROUP By: /s/ Gary Aboussie ------------------ Gary Aboussie ESCROW AGENT'S ACKNOWLEDGMENT - ----------------------------- Escrow Agent, as named in the foregoing Agreement, hereby agrees to hold and disburse the Deposit in accordance with the provisions of the foregoing Agreement. LONGMONT TITLE COMPANY By: /s/ Kathy Williams ------------------------------- EX-10.4 5 EXHIBIT 10.4 FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE THIS FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this "Amendment") is made this 15th day of January, 1998, by and between MICHAEL D. DOLLAGHAN, an individual ("Seller"), and XILINX, INC., a Delaware corporation ("Buyer"). RECITALS -------- This Amendment is made with respect to the following facts: A. Seller and Buyer are the parties to the Agreement of Purchase and Sale (the "Sale Agreement") dated as of November 24, 1997, providing for the sale of the real property situated in the City of Longmont, Boulder County, State of Colorado, described on Exhibit A attached hereto and made a part --------- hereof (the "Property"). Amendment --------- In consideration of the Sale Agreement and the promises and agreements of Buyer and Seller provided in this Agreement, Buyer and Seller do hereby promise and agree as follows: 1. Amendment of Sale Agreement. The Sale Agreement is hereby amended --------------------------- as follows: 1.1 Payment of Encumbrances. Notwithstanding the provisions of ----------------------- Section 8.5 of the Sale Agreement and any other provision of the Sale Agreement requiring Seller to convey the Property at the Closing free and clear of all liens and encumbrances, Buyer shall take title to the Property subject to (i) the deed of trust encumbering the land portion of the Property in favor of Colorado Community First State Bank recorded March 17, 1997 as Reception No. 1683715 (the "Deed of Trust") and the note secured thereby (together the "CCF Loan"), with an outstanding balance of principal and accrued and unpaid interest as of the date hereof in the total amount of $1,419, 527.17 (the "CCF Loan Balance") and (ii) the security interest (the "NW Security Interest") encumbering the water portion of the Property and the note secured thereby (the "NW Loan") in favor of Norwest Bank Colorado, N.A. with an outstanding balance of principal and accrued and unpaid interest as of the date hereof in the total amount of $69,901.88 (the "NW Loan Balance"), and Buyer shall be responsible for paying the CCF Loan Balance and the NW Loan Balance. Buyer shall receive a credit at the Closing in the total amount of the CCF Loan Balance and the NW Loan Balance, against the purchase price for the Property of $6,400,000, with the balance of the purchase price of $4,980,272.83 being payable in cash at the Closing in accordance with the provisions of the Sale Agreement. The parties agree that the Total Purchase Price for the Property remains $6,400,000, and that this Amendment changes only the form and timing of such amount. 1.2 Indemnity. Seller shall protect, defend, indemnify and hold --------- Buyer and the Property harmless from and against any obligation or liability under the Deed of Trust and CCF Loan in excess of the CCF Loan Balance and against any amount in excess of the CCF Loan Balance required to pay off the CCF Loan in full and release the Deed of Trust as of January 15, 1998 and against any costs and expenses which would be incurred in paying off the CCF Loan and releasing the Deed of Trust as of January 15, 1998. Seller shall protect, defend, indemnify and hold Buyer and the Water Rights harmless from and against any obligation or liability under the NW Security Interest and/or NW Loan in excess of the NW Loan Balance and against any amount in excess of the NW Loan Balance required to pay off the NW Loan in full and release the NW Security Interest as of January 15, 1998 and against any costs and expenses which would be incurred in paying off the NW Loan and releasing the NW Security Interest as of January 15, 1998. 1.3 Survival. The obligations of the parties under this Section 1 -------- shall survive the Closing. 2. Effect. Except as specifically provided in Section 1 of this ------ Amendment, the Sale Agreement shall not be modified or amended hereby. As amended by Section 1 of this Agreement, the Sale Agreement shall continue in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the respective dates set forth below. XILINX, INC., a Delaware corporation /s/ Michael D. Dollachan By: /s/ Willem Roelandts - ------------------------------ ------------------------------------ MICHAEL D. DOLLAGHAN Its: President ------------------------------------ January 15, 1998 January 15, 1998 EX-10.5 6 EXHIBIT 10.5 S017.08.02 AMENDED AND RESTATED ADVANCE PAYMENT AGREEMENT AREAS MARKED "***" REPRESENT SECTIONS FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. THESE OMITTED SECTIONS HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. THIS AMENDED AND RESTATED ADVANCE PAYMENT AGREEMENT (this "Agreement"), is entered into as of December 12, 1997, by and between SEIKO EPSON CORPORATION, a Japanese corporation having its principal place of business at 3-5, Owa 3-chome, Suwa-shi, Nagano-ken 392, Japan ("Epson"), Xilinx, Inc., a Delaware corporation having its principal place of business at 2100 Logic Dr., San Jose, CA 95124, U.S.A. ("Xilinx US"), and Xilinx Ireland, a company formed under the laws of Ireland, having its principal place of business at Logic Drive, City West Business Campus, Saggart, Dublin, Ireland ("Xilinx Ireland"). Xilinx US and Xilinx Ireland are collectively referred to herein as "Xilinx". 1 Background ---------- 1.1 Epson. Epson is in the business of designing, manufacturing, testing ----- and selling semiconductor devices, among other products. Epson manufactures such semiconductor devices at its plant located at 281 Fujimi, Fujimi-machi, Suwa-gun, Nagano-ken 399-02, Japan (the "Fujimi Facility") and its plant located at 166-3 Jurizuka, Sakata-shi, Yamagata-ken 998-01, Japan (the "Sakata Facility"). 1.2 Xilinx. Xilinx is in the business of designing, developing and ------ marketing CMOS programmable logic devices and related development system software. 1.3 Prior Agreement. Epson and Xilinx US have an ongoing business --------------- relationship whereby Epson fabricates semiconductor devices for Xilinx US. The parties entered into an advance payment agreement dated April 1, 1994 for development and manufacture of ***. The parties desired to expand their relationship. Specifically, Xilinx desires to develop and sell high performance, advanced architecture semiconductor devices and Epson desires to construct a *** process line in order to fabricate such semiconductor devices (as hereinafter further defined the "New Facility Wafers"). Accordingly, Epson and Xilinx US entered into an Advance Payment Agreement dated as of May 17, 1996 (the "Prior Agreement") which provided that, among other things, Xilinx US would advance money to Epson as an advance payment to be used as a credit to purchase New Facility Wafers from Epson over a specified period of time. 1.4 Prior Ireland Agreement. Epson and Xilinx Ireland entered into an ----------------------- Agreement on Purchase and Sale of *** dated as of May 17, 1996 (the "Prior Ireland Agreement") which provided that, among other things, Xilinx Ireland would purchase a specified number of New Facility Wafers from Epson over a specified period of time. 1.5 Amended Agreement. The parties have agreed to amend certain terms of ----------------- the Prior Agreement pursuant to the terms hereof. This Amended and Restated Agreement amends the Prior Agreement, and shall be a replacement for, and not in addition to, the Prior Agreement. Except as may be otherwise noted, all references to the Prior Agreement shall be deemed to refer to this Agreement. Effective on the date of this Agreement, the Prior Ireland Agreement shall be deemed terminated and void for all purposes. 1.6 Purchase Agreement. The ordering, fabrication, testing and delivery ------------------ requirements for the New Facility Wafers covered by this Agreement will be set forth in a purchase agreement between Xilinx and Epson (as hereafter further defined the "Purchase Agreement"). The parties acknowledge and agree that even though their obligations with respect to the quantity of the Products sold and purchased under this Advance Payment Agreement are stipulated in terms of "wafers", pricing of all Products will be done on a "good die basis" under the Purchase Agreement. 1.7 Responsibility for Process. The parties agree that each party will -------------------------- contribute to the design and implementation of the process line contemplated by this Agreement. Epson expects significant contributions from Xilinx in the construction of the *** process line described above, similar to Xilinx's contributions to previous process generations, and Xilinx expects to be able to make significant contributions to the process in order to optimize the processes for Xilinx products. 2 Definitions ----------- 2.1 "***" will have the meaning ascribed to it in Article 1.3, provided that the term shall not refer to or include *** products. 2.2 "Advance Payment" will mean the One Hundred Fifty Million U.S. Dollar (US$150,000,000) payment to be made by Xilinx to Epson in the manner described in Article 4.1. 2.3 "Equipment" will mean the semiconductor fabrication equipment that Epson will install in the New Facility for purposes of fabricating New Facility Wafers. 2.4 "Existing Agreements" will mean those contracts for the development, fabrication, testing and/or sale of semiconductor devices between Epson and Xilinx in effect as of the date of this Agreement, but not including the Prior Agreement. 2.5 "***" will have the meaning ascribed to it in Article 6.8. 2.6 "Fujimi Facility" will have the meaning ascribed to it in Article 1.1. 2.7 "New Facility" will mean the *** process line constructed at the Site using the Equipment. 2.8 "New Facility Wafers" will mean the semiconductor wafers fabricated by Epson for Xilinx at the New Facility. The parties agree that New Facility Wafers will consist of high performance, advanced architecture semiconductor devices. The parties do not intend that the New Facility will be used to fabricate low performance, less advanced architecture semiconductor devices. 2.9 "Price" will have the meaning ascribed to it in Article 9.1. 2.10 "Products" will mean those specific types of New Facility Wafers and *** Wafers fabricated using the same masks and the same process flow and identified by the same series or product name or number. The Products will be ordered, fabricated, delivered and sold pursuant to the terms and conditions of Purchase Agreement(s). Those Products which the parties desire to fabricate at the New Facility will be negotiated and agreed by and between Epson and Xilinx, referring to the Technology Road Map attached hereto as Exhibit B, which may be reviewed and amended from time to time by mutual agreement of the parties. The parties acknowledge, however, that the final determination of what Products will be fabricated may depend on the results of joint development and product qualification. 2.11 "Projected Completion Schedule" will have the meaning ascribed to it in Article 3.1.2. 2.12 "Purchase Agreement(s)" will mean the agreement(s) by and between Epson and Xilinx pursuant to which Epson agrees to sell and Xilinx agrees to purchase the Products, and the terms of which shall be negotiated and agreed by and between the parties after the execution of this Agreement. 2.13 "Sakata Facility" will have the meaning ascribed to it in Article 1.1. 2.14 "Site" will mean that portion of the Sakata Facility where the New Facility will be constructed. 2.15 "Subsidiary" will mean any corporation, partnership, joint venture or other legal entity which agrees in writing to be bound by the terms and conditions of this Agreement and more than fifty percent (50%) of whose ownership rights are controlled directly or indirectly by Epson or Xilinx, as the case may be, but only so long as such control exists. 2.16 "***" will mean the *** process owned, licensed or developed by Epson which will be used at the New Facility. The *** Process will include (a) all process flow, process steps, process conditions (and modifications thereto) used to manufacture semiconductor wafers at the New Facility as well as (b) all methods, formulae, procedures, technology and know-how associated with such process steps and process conditions. The *** Process will not include any methods, formulae, procedures, technology or know-how licensed or received from Xilinx under this Agreement, the Existing Agreements or other agreements executed between the parties in the future unless otherwise agreed in writing. If the parties find it necessary or convenient to document process flow for any Product, such documentation will be signed by the parties and attached to the appropriate Purchase Agreement as an exhibit. 3 Construction of New Facility ---------------------------- 3.1 Construction and Operation of the New Facility ---------------------------------------------- 3.1.1 Location and Costs. Epson hereby agrees, subject to its receipt of ------------------ the full amount of the Advance Payment as provided in Article 4.1, to construct the New Facility at the Site and to install the Equipment therein. 3.1.2 Completion Schedule. The projected completion schedule for the ------------------- construction of the New Facility (the "Projected Completion Schedule") is set forth in Exhibit A attached hereto. In the event Epson has reason to believe that any item in the Projected Completion Schedule designated as a Construction Milestone will be delayed by more than thirty (30) calendar days, Epson will promptly notify Xilinx in writing and (a) explain the reason for the delay, (b) describe the estimated amount of time that construction will be delayed and (c) describe the action that Epson will take to minimize the delay. 3.1.3 Business Interruption Insurance. Epson will use its best efforts to ------------------------------- obtain business interruption insurance coverage for the New Facility once the construction of the New Facility is complete. The insurance will cover at least such risks as are usually insured against by companies engaged in the manufacture of semiconductor devices in Japan. Epson will maintain such business interruption insurance coverage during the term of this Agreement. Epson will furnish to Xilinx, upon written request, full information concerning the business interruption insurance coverage. 3.1.4 First Shipment Delay. For every month that production shipment of -------------------- New Facility Wafers is delayed beyond *** as specified in Exhibit A, Epson shall, in addition to the *** as prescribed in Article 6.8 hereof, provide additional ***. 3.1.5 Design Requirements. Epson acknowledges that Xilinx's insurers have ------------------- set forth certain safety and security requirements for semiconductor fabrication facilities, and Epson agrees to work with Xilinx to incorporate such requirements into the design of the New Facility to the extent reasonably requested by Xilinx and commercially feasible. 3.2 Representations of Epson. In order to induce Xilinx to enter into this ------------------------ Agreement and to make the Advance Payment hereunder, Epson hereby represents and warrants that: 3.2.1 Corporate Status. Epson (a) is duly organized, validly existing and ---------------- in good standing under the laws of the jurisdiction of its incorporation, (b) has the corporate power to own or lease its assets and to transact the business in which it is currently engaged and (c) is in compliance with all requirements of law except to the extent that the failure to comply therewith will not materially affect the ability of Epson to perform its obligations under this Agreement. 3.2.2 Corporate Authority. (a) Epson has the corporate power, authority ------------------- and legal right to execute, deliver and perform this Agreement and has taken as of the date hereof all necessary corporate action to execute this Agreement, (b) the person executing this Agreement has actual authority to do so on behalf of Epson and (c) there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, that prohibit execution of this Agreement. 3.2.3 Ownership of the Site. Epson has such right, title and interest in --------------------- and to the Site and the structures located thereon as is required to permit the operation of the Site as currently conducted and contemplated to be conducted under this Agreement. 3.3 Representations of Xilinx. In order to induce Epson to enter into this ------------------------- Agreement and to make the Supply Commitment, Xilinx hereby represents and warrants that: 3.3.1 Corporate Status. Xilinx is duly organized, validly existing and in ---------------- good standing under the laws of the jurisdiction of its incorporation, (b) has the corporate power to own or lease its assets and to transact the business in which it is currently engaged and (c) is in compliance with all requirements of law except to the extent that the failure to comply therewith will not materially affect the ability of Xilinx to perform its obligations under this Agreement. 3.3.2 Corporate Authority. (a) Xilinx has the corporate power, authority ------------------- and legal right to execute, deliver and perform this Agreement and has taken as of the date hereof all necessary corporate action to execute this Agreement, (b) the person executing this Agreement has actual authority to do so on behalf of Xilinx and (c) there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, that prohibit execution of this Agreement. 4 Advance Payment --------------- 4.1 Advance Payment. Xilinx shall pay to Epson an amount equal to One --------------- Hundred Fifty Million U.S. Dollars (US$150,000,000) (the "Advance Payment"), which Advance Payment will be credited against certain future purchases by Xilinx of Products as provided in Article 5. The Advance Payment has been and will be made in the following installments, and the parties agree that all payments are current: a) First installment of Thirty Million U.S. Dollars (US$30,000,000) by May 28, 1996 or such later date, which may be designated in writing by Epson. b) Second installment of Thirty Million U.S. Dollars (US$30,000,000) by November 1, 1996. c) Third installment of Thirty Million U.S. Dollars (US$30,000,000) by May 1, 1997. Fourth installment of Thirty Million U.S. Dollars (US$30,000,000) by November 1, 1997 or installment and acceptance of the first wafer stepper, as part of Equipment, whichever is later. d) Fifth installment of Thirty Million U.S. Dollars (US$30,000,000) by February 1, 1998 or mass production start, whichever is later. 4.2 Payment Method. All payments made by Xilinx to Epson will be in -------------- immediately available funds and will be made by wire transfer in U.S. Dollars to a bank account designated by Epson. 4.3 Separate Accounts. Xilinx US will make the first, second and third ----------------- installments, together with Twenty Two Million Five Hundred Thousand U.S. Dollars (US$22,500,000) of the fourth installment. Xilinx Ireland make the fifth installment, together with Seven Million Five Hundred Thousand U.S. Dollars (US$7,500,000) of the fourth installment. Epson will maintain separate balances for all payments, Wafer orders and *** made by or due to each of Xilinx US and Xilinx Ireland. Orders made by Xilinx US shall be offset only against payments made by Xilinx US, and orders made by Xilinx Ireland shall be offset only against payments made by Xilinx Ireland. 4.4 Non-Refund of Advance Payment. The Advance Payment will not be ----------------------------- refundable except as provided in Articles 6.7.1 or 14.4. 5 Application of Advance Payment ------------------------------ 5.1 Purchase of Products. The Purchase price of all Products purchased by -------------------- Xilinx as determined in accordance with Article 9.1 will be credited against the amount of the Advance Payment until the aggregate dollar value of all Products purchased, calculated pursuant to Article 5.2, equals or exceeds the amount of the Advance Payment. 5.2 Calculation of Aggregate Value of Wafers Purchased. The Advance -------------------------------------------------- Payment will be offset and reduced at the end of each calendar month in the manner set forth in Exhibit D attached hereto. 5.3 Timing. Xilinx shall have the right to credit the Advance Payment ------ against all New Facility Wafers purchased under this Agreement, commencing at such time as Epson is able to deliver such New Facility Wafers to Xilinx. Notwithstanding anything to the contrary in this Agreement, however, Xilinx shall not have the right to credit the Advance Payment against purchases of *** Wafers until shipments of *** Wafers on and after ***. 5.4 Obligations After the Completion of Off-setting the Advance Payment. ------------------------------------------------------------------- Xilinx will be required to pay for any Products ordered in accordance with the Purchase Agreement once the Advance Payment has been fully offset and reduced. Xilinx will make the payments to Epson in U.S. Dollars based on the Price. 6 Forecasts; Purchase Orders; Supply Commitment --------------------------------------------- 6.1 Forecasting. On or before the 25th of each month during the term of ----------- this Agreement, Xilinx shall provide Epson with a six (6) month rolling forecast which will set forth the estimated quantity of Products to be fabricated by Epson pursuant to the Purchase Orders from Xilinx. The forecast shall be provided by Xilinx only for forecasting purposes and shall not bind either party legally except as may otherwise be expressly set forth in this Agreement. Each month, Epson shall review any changes in the new 6-month forecast, and determine in good faith whether such changes are acceptable. Xilinx agrees to try to minimize fluctuations in its forecast for the first two months of each forecast. 6.2 Business Meetings; Long-range Forecasts. The parties shall attempt to --------------------------------------- hold business meetings to discuss issues arising under this Agreement quarterly, but in no event less than three times annually. At each such meeting, Xilinx shall provide Epson with a two (2) year forecast setting forth the estimated quantity of Products to be fabricated by Epson, and Epson will provide Xilinx with a two (2) year forecast of its capacity plan by facility and by process. In addition, Xilinx will provide Epson with its tape-out plans for forecasted Products, and Epson will provide Xilinx with its forecasted process technology road map. All of these forecasts and plans shall be provided only for forecasting purposes and shall not bind either party legally. 6.3 Ordering. Xilinx shall place the Purchase Orders for the Products in -------- accordance with one of the two procedures mutually agreed upon by the parties and set forth in Exhibit C. In such Purchase Orders, Xilinx shall, in its sole discretion, determine which of the two procedures is to be used and shall provide Epson with reasonable notice should Xilinx decide to use the other procedure. Xilinx shall specifically set forth the specific type of Products, the number of the Products to be fabricated by Epson, delivery date in release form, delivery place, purchase order number, and unit price of the Products in each Purchase Order. 6.4 Delivery. Epson shall fabricate the Products based on the Purchase -------- Agreement(s) and the Purchase Orders, and shall deliver the Products pursuant to the Purchase Orders. 6.5 Supply Commitment. In the event, and only in the event, Epson and ----------------- Xilinx are unable to agree on the amount of Product to be ordered by Xilinx and delivered by Epson, Epson commits to supply Xilinx with sufficient foundry capacity to deliver the amount of Products necessary to amortize the remaining outstanding Advance Payment over three (3) years from the date of such disagreement, based on a linear amortization (the "Supply Commitment"), and Xilinx shall be obligated to purchase Products in at least such capacities until the Advance Payment has been fully credited to such purchases. 6.6 Excess Capacity. Epson will use its best efforts to provide Xilinx --------------- with excess capacity in the manner specified below: First, in the event that Xilinx desires to purchase Products in excess of its forecast requirements, Xilinx will specify in writing the amount of capacity required, the Product(s) it desires to purchase and the date from which such capacity is required. Second, Epson will then determine how much capacity is available and notify Xilinx of its determination. Epson will give Xilinx priority over third parties for excess capacity of the New Facility except to the extent that Epson is already obligated to provide such third parties with capacity. Third, the parties will then mutually agree upon a preliminary excess capacity allocation. In order to provide Xilinx with first priority for unused capacity, Epson agrees to give Xilinx monthly written notice of any unused capacity for the next six (6) months, and to provide Xilinx the first right to reserve such unused capacity for any New Facility Wafers which Xilinx desires to purchase in excess of its forecast requirements. Xilinx will have a reasonable time to elect to reserve such excess capacity. 6.7 Failure to Meet Supply Commitment --------------------------------- 6.7.1 Failure Due to Epson. In the event that (a) Epson fails to fulfill -------------------- the deliver Products specified in Purchase Orders in the manner specified by this Agreement by the end of any month or (b) Epson has reason to believe that it will be unable to fabricate such Products by the end of such month, then Epson will take the following measures: First, Epson will promptly notify Xilinx in writing and describe the nature of the difficulty. Second, Epson will use its best efforts to remedy the difficulty in an expeditious manner by the end of the second full month following the month in which Epson is unable to deliver such Products (in other words, the third month including the month in which the difficulty occurs). Third, Epson will use its best efforts to make available during the above-referenced three (3) month period sufficient capacity at the Sakata Facility and the Fujimi Facility to cover the deficiency between the Products ordered and the actual capacity subject to completion of product qualification. The parties acknowledge, however, that Epson cannot guarantee the use of capacity at the Sakata Facility or the Fujimi Facility. *** Fifth, in the event that the above measures are insufficient and the parties are unable to negotiate in good faith a resolution of the difficulty, then Xilinx, at its option, may elect to be repaid in U.S. Dollars that portion of the Advance Payment currently outstanding, and Xilinx shall have no further obligations under this Agreement. 6.7.2 Failure Due to Xilinx. Notwithstanding anything contained in Article --------------------- 6.7 to the contrary, in the event that Epson fails to fulfill a Purchase Order in any month due to (a) design defects in Products caused by Xilinx, (b) design changes requested by Xilinx, (c) process flow changes requested by Xilinx or (d) any other reason caused by Xilinx, Epson will only be required to make reasonable efforts to fulfill the Purchase Order in such month. 6.7.3 Failure Due to Both Parties. Notwithstanding anything contained in --------------------------- Article 6.7.1, or 6.7.2 to the contrary, in the event that Epson fails to fulfill a Purchase Order (and Xilinx fails to fulfill the Purchase Commitment) due to difficulties caused jointly by Xilinx and Epson, the parties will mutually agree in writing upon a fair and equitable solution. 6.7.4 Failure Due to Catastrophe. In the event that any fire, flood, -------------------------- earthquake, explosion or any other catastrophe prevents Epson from fabricating Products for Xilinx, (a) Epson will immediately implement the measures required by Article 6.7.1, (b) Epson will permit Xilinx to inspect the New Facility or such other facilities as may be necessary, and (c) the parties will begin good faith negotiations to agree on a corrective action plan. 6.8 Coordination. Xilinx US and Xilinx Ireland agree to work with each ------------ other to make sure that all forecasts and other directions given to Epson are coordinated with each other and do not create any conflicts. If any such conflicts occur, all parties will work together to resolve them. 7 *** 8 Fabrication and Purchase and Sale of the Product ------------------------------------------------ 8.1 General Terms and Conditions. The terms and conditions for the ---------------------------- prototype wafer fabrication, wafer fabrication, order and acceptance, shipping, insurance and warranty for the Products will be set forth in the Purchase Agreements. The parties hereby express their good-faith commitment to sign all Purchase Agreements required to implement the terms and conditions of this Agreement. Epson agrees to provide all Products covered by this Agreement in the manner required by the Purchase Agreements. The parties acknowledge that a best estimation and target of defect densities as at the date of this Agreement is set forth in Exhibit E attached hereto, which will be reviewed and amended from time to time by the parties hereto, and will be incorporated into all Purchase Agreements. 8.2 Start of Production. Qualification testing for the Products will be ------------------- conducted in the manner mutually agreed upon in writing by the parties. Once any Product has been qualified, Epson will begin mass production of such Product. 8.3 Turn Around Time. The parties acknowledge that the lead time for ---------------- shipment of Products, defined as the time from Xilinx's process release until delivery of Products to assembler, known as "turn around time", is of the essence, and agree that the parties shall set annual target turn around time and make their joint efforts to achieve such target in accordance with Exhibit F ("Turn Around Time"). 9 Wafer Pricing and Payment ------------------------- 9.1 Determination of Price. The parties have already expressly agreed to ---------------------- (a) certain procedures to annually determine prices of Products (the "Price") and (b) certain procedures of determining the price of all Products on a per die basis, as described in Exhibit D. The Price herein shall be applicable until Xilinx has received a credit against the full Advance Payment for purchase of Products under the terms of this Agreement. 9.2 Shipping, Insurance, Taxes, Duties and Other Fees. Epson will deliver ------------------------------------------------- the Products to Xilinx's designated facility in Japan or Xilinx's designated carrier in Japan on an F.O.B. basis. Epson will be responsible for paying, in connection with such sale and delivery in Japan (a) all domestic freight, insurance and other shipping expenses and (b) sales, use, excise, ad valorem, withholding or other taxes. The risk of loss will pass to Xilinx at F.O.B. point in Japan. Further, Xilinx will be responsible for paying all freight, insurance, fees, expenses, taxes, tariffs and duties required in connection with the export of the Products from F.O.B. point in Japan and the import into any other country. 9.3 Payment. Other than through offset of the Advance Payment, Xilinx will ------- not be required to pay for any Products delivered under this Agreement or any Purchase Agreement until the Advance Payment has been fully offset and reduced, including the receipt of any applicable ***. Once the Advance Payment is fully offset and reduced, Xilinx will be required to pay Epson in the manner specified in the Purchase Agreements based on the Price for any additional Products purchased. 9.4 Die Based Transaction. Notwithstanding anything to the contrary --------------------- contained herein, the parties acknowledge and agree that all purchases made pursuant to Purchase Agreements, starting with the purchase of *** devices, will be made on a "good die basis" even though the Supply Commitment, the Purchase Commitment and other obligations of this Agreement are described on a wafer basis. Such "good die basis" transaction shall be made in reference to "Die Pricing Mechanism" in Exhibit D and "Defect Density Goal" in Exhibit E. 10 Additional Funding by Xilinx ---------------------------- Subsequent to the final payment of the Advance Payment pursuant to Article 4.1 above, the parties shall meet to review and discuss the terms and conditions of future funding by Xilinx and purchases of Products. Neither party has agreed or committed to any such terms, and neither party shall be bound unless and until an agreement on such subsequent terms and conditions is reached. 11 Technical Cooperation and Support --------------------------------- The parties desire to engage in various types of joint development and technical cooperation activities required to fabricate Products and to effectuate the terms and conditions of this Agreement. The parties agree to negotiate in good faith a joint development and technical cooperation agreement in the future. Also the parties will continue to develop jointly new state of the art CMOS logic processes under the terms of separate agreements to be executed between the parties from time to time for specific projects or product development work. 12 Intellectual Property Rights ---------------------------- Epson warrants that it has all necessary rights to develop, manufacture and sell to Xilinx the Products. Epson will indemnify and hold harmless Xilinx from any loss, damage or expense (including attorney's fees) arising from claims that the sale or use of the Products infringes on the intellectual property rights of third parties except where such infringement is caused by Xilinx's instruction or specifications thereto. 13 Confidential Information ------------------------ 13.1 Definitions. Confidential Information' means technical information, ----------- specifications, data, drawings, designs or know-how disclosed between Epson and Xilinx in connection with this Agreement. Confidential Information does not include information or material that is expressly covered by confidentiality provisions of Existing Agreements, it being understood that such provisions will apply. 13.2 Marking. If Confidential Information is provided in a tangible form, ------- it will be marked as confidential or proprietary. If Confidential Information is provided orally, it will be treated as confidential and proprietary if it is treated as confidential or proprietary at the time of disclosure by the disclosing party and described as such in a writing provided to the other party within thirty (30) days of the oral disclosure, which writing will be marked as confidential or proprietary. Material that is not marked as required by this Article 13.2 will not be deemed Confidential Information. 13.3 Restrictions on Use. During the term of this Agreement and for a ------------------- period of five (5) years following disclosure of any Confidential Information, the receiving party will: (a) hold the Confidential Information in confidence using the same degree of care that it normally exercises to protect its own proprietary information but no less than a reasonable degree of care, (b) restrict disclosure and use of Confidential Information solely to those employees (including any contract employees or consultants) of such party on a need-to-know basis, and not disclose it to other employees or parties, and (c) restrict the number of copies of Confidential Information to the number required to carry out its obligations under this Agreement. 13.4 Exceptions to Confidentiality Obligations. Neither party will use or ----------------------------------------- disclose the other party's Confidential Information except as permitted by this Agreement. The receiving party, however, will have no obligations concerning the disclosing party's Confidentiality Information if the disclosing party's Confidential Information: a) is made public before the disclosing party discloses it to the receiving party; b) is made public after the disclosing party discloses it to the receiving party (unless its publication is a breach of this Agreement or any other agreement between Epson and Xilinx); c) is rightfully in the possession of the receiving party before the disclosing party discloses it to the receiving party; d) is independently developed by the receiving party without the use of the Confidential Information, if such independent development is supported by documentary evidence; or e) is rightfully obtained by the receiving party from a third party who is lawfully in possession of the information and not in violation of any contractual, legal or fiduciary obligation to the disclosing party with respect to the information. 13.5 Return of Confidential Information. Upon termination of this ---------------------------------- Agreement, a party who has received Confidential Information from the other party pursuant to this Agreement will return, within fourteen (14) days of the disclosing party's request for return, all Confidential Information that was obtained or learned by the receiving party from the disposing party, together with all copies, excerpts and translations thereof. 14 Term and Termination of Agreement --------------------------------- 14.1 Term. The term of this Agreement will extend from the date first ---- written above until all of the Advance Payment has been credited against Wafer purchases hereunder and all *** due in connection therewith have been provided, unless terminated earlier pursuant to Article 14.2 or 14.3. After the expiration of this Agreement, Epson and Xilinx shall continue to make efforts to supply and purchase a certain volume of wafers per month under fair and competitive prices to be determined between the parties. 14.2 Termination. Either party may terminate or suspend this Agreement ----------- immediately and without liability upon written notice to the other party if any one of the following events occurs: a) the other party files a voluntary petition in bankruptcy or otherwise seeks protection under any law for the protection of debtors; b) a proceeding is instituted against the other party under any provision of any bankruptcy laws which is not dismissed within ninety (90) days; c) the other party is adjudged bankrupt; d) a court assumes jurisdiction of all or a substantial portion of the assets of the other party under a reorganization law; e) a trustee or receiver is appointed by a court for all or a substantial portion of the assets of the other party; f) the other party becomes insolvent, ceases or suspends all or substantially all of its business; g) the other party makes an assignment of the majority of its assets for the benefit of creditors; or h) a direct competitor of one party acquires, through merger, consolidation, acquisition or otherwise, an interest in excess of fifty percent (50%) of the voting securities or assets of the other party. 14.3 Termination for Cause. If either party fails to perform or violates --------------------- any material obligation of this Agreement, then, sixty (60) days after providing written notice to the breaching party specifying the default (the "Default Notice"), the non-breaching party may terminate this Agreement, without liability, unless: a) the breach specified in the Default Notice has been cured within the sixty (60) day period; or b) the default reasonably required more than sixty (60) days to correct, and the defaulting party has begun substantial corrective action to remedy the default within such sixty (60) day period and diligently pursues such action, in which event, the non-breaching party may not terminate or suspend this Agreement unless one hundred twenty (120) days has expired from the date of the Default Notice without such corrective action being completed and the default remedied. 14.4 Effect of Termination. In the event of any termination of this --------------------- Agreement, Epson shall pay to Xilinx within thirty (30) days after such termination an amount of money in U.S. Dollars equal to the unused balance of the Advance Payment (including the dollar amount equivalent to the outstanding balance of ***, if any, resulting from delays in wafer shipment as prescribed in Articles 3.1.4 and 6.7.1, based on the pricing mechanism set forth in Exhibit D). 14.5 Survival of Obligations. The following Articles will survive any ----------------------- expiration, termination or cancellation of this Agreement and the parties will continue to be bound by the terms and conditions thereof:12, 13, 14.2, 14.3 and 14.4. 15 Miscellaneous ------------- 15.1 Order of Precedence. In the event of any conflicts between this ------------------- Agreement and any Purchase Agreement, any purchase orders, acceptances, correspondence, memoranda, listing sheets or other documents forming part of an order for the Products placed by Xilinx and accepted by Epson, priority will be given first to this Agreement, second to the Purchase Agreements, third to Epson's acceptance, fourth to Xilinx's order and then to any other documents. In no event, however, will either party's standard terms and conditions be applicable to the transactions between the parties, unless expressly accepted in writing by the other party. 15.2 Dispute Resolution ------------------ 15.2.1 Meeting of Executives. In the event that any dispute or --------------------- disagreement between the parties as to any provision of this Agreement arises, prior to taking any other action, the matter will be referred to responsible executives of the parties for consideration and resolution. Any party may commence such proceedings by delivering a written request to the other party for a meeting of such responsible executives. The other party will be required to set a date for the meeting to be held within thirty (30) days after receipt of such request and the parties agree to exercise their best efforts to settle the matter amicably. 15.2.2 Location of Meeting. In the event that Epson initiates the ------------------- proceedings described in Article 15.2.1, the first meeting will be held in San Jose, California and all subsequent meetings will alternate between Tokyo, Japan, and San Jose, California. In the event that Xilinx initiates the proceedings described in Article 15.2.1, the first meeting will be held in Tokyo, Japan and all subsequent meetings will alternate between San Jose, California and Tokyo, Japan. 15.2.3 Demand for Arbitration. Any dispute relating to and/or arising out ---------------------- of this Agreement will be decided exclusively by binding arbitration under procedures which ensure efficient and speedy resolution. Such an arbitration may be commenced by either party involved in the dispute (i) after the expiration of a sixty (60) day period following the written request to resolve the dispute, and/or (ii) at such earlier time as any party involved repudiates and/or refuses to continue with its obligations to negotiate in good faith. The arbitration hearing will be conducted in the State of Hawaii, and will be in the English language (with translations and interpretations as reasonable for the presentation of evidence and/or conduct of the arbitration). Notwithstanding anything to the contrary, any party may apply to any court of competent jurisdiction for interim injunctive relief as may be allowed under applicable law with respect to irreparable harm which cannot be avoided and/or compensated by such arbitration proceedings, without breach of this Article 15.2.3 and without any abridgment of the powers of the arbitrators. The arbitration will be conducted under the Rules of the Asia Pacific Arbitration Center. Notwithstanding anything to the contrary, (i) the arbitrators will have the power to order discovery to the extent they find such discovery necessary to achieve a fair and equitable result and (ii) the arbitrators shall require pre-hearing exchange of documentary evidence to be relied upon by each of the respective parties in their respective cases in chief, and pre-hearing exchange of briefs, witness lists, and summaries of expected testimony. The arbitrators will make their decision in writing. 15.2.4 Arbitrators. The arbitration will be conducted by three (3) ----------- arbitrators. No person with a beneficial interest in the dispute under arbitration may be an arbitrator. The parties will make reasonable efforts to select arbitrators with experience in the field of computers and law. 15.2.5 Binding Effect. The decision or award rendered or made in -------------- connection with such arbitration will be binding upon the parties and judgment thereon may be entered in any court having jurisdiction and/or application may be made to such court for enforcement of such decision or award. However, the arbitrators will not have the authority to create any licenses. They will only be permitted to enforce licenses which the parties have otherwise agreed to in the Agreement or the Existing Agreements. 15.2.6 Expenses. The expenses of the arbitrators will be shared equally by -------- the parties; each party will otherwise be responsible for the costs and attorney's fees incurred by it. 15.3 Consequential Damages. --------------------- IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES (INCLUDING LOST PROFITS) WHETHER BASED ON WARRANTY, CONTRACT, TORT OR ANY OTHER LEGAL THEORY REGARDLESS OF WHETHER SUCH PARTY HAD ACTUAL OR CONSTRUCTIVE NOTICE OF SUCH DAMAGES. 15.4 Assignment. Neither party will assign, transfer or otherwise dispose ---------- of this Agreement in whole or in part without the prior consent of the other party in writing, and such consent will not be unreasonably withheld. Except as the case set forth in Article 14.2(h) above, this Agreement may be assigned in whole or in part to any Subsidiary or to a successor who has acquired a majority of its business or assets of the assigning party. 15.5 Public Announcements. Neither party will publicly announce the -------------------- execution or existence of this Agreement or disclose the terms and conditions of this Agreement without first submitting the text of such announcement to the other party and receiving the approval of the other party of such text, which approval, unless public disclosure is required by a court or a government agency, may be withheld for any reason. However, Xilinx may disclose the existence and the terms of this Agreement in a registration statement filed with the Securities and Exchange Commission or in accordance with generally accepted accounting procedures under the rules of the Securities and Exchange Commission or National Association of Securities Dealers Automated Quotations. 15.6 Notice and Communications. Any notices required or permitted to be ------------------------- given hereunder will be in English and be sent by (i) registered airmail or (ii) cable, facsimile or telex to be confirmed by registered airmail, addressed to: To Epson: Fujimi, Fujimi-machi, Suwa-gun Nagano-ken 399-02, Japan Attn.: Nobuo Hashizume Director and Corporate General Manager Semiconductor Operations Division Tel: 81-266-61-1211 Fax: 81-266-61-1270 To Xilinx: 2100 Logic Dr. San Jose, CA 95124, U.S.A. Attn.: Willem Roelandts President and Chief Executive Officer, Xilinx, Inc. Tel: 1-408-559-7778 Fax: 1-408-559-7114 Any such notice will be deemed given at the time of its receipt by the addressee. 15.7 Relationship of the Parties. Epson and Xilinx are independent --------------------------- contractors and neither of them will be nor represent themselves to be the legal agent, partner or employee of the other party for any purpose. Neither party will have the authority to make any warranty or representation on behalf of the other party nor to execute any contract or otherwise assume any obligation or responsibility in the name of or on behalf of the other party. In addition, neither party will be bound by, nor liable to, any third person for any act or any obligations or debt incurred by the other party, except to the extent specifically agreed to in writing by the parties. 15.8 Waiver and Amendment. Failure by either party, at any time, to -------------------- require performance by the other party or to claim a breach of any provision of this Agreement will not be construed as a waiver of any right accruing under this Agreement, nor will it affect any subsequent breach or the effectiveness of this Agreement or any part hereof, or prejudice either party with respect to any subsequent action. A waiver of any right accruing to either party pursuant to this Agreement will not be effective unless given in writing. 15.9 Severability. In the event that any provision of this Agreement will ------------ be unlawful or otherwise unenforceable, such provision will be severed, and the entire agreement will not fail on account thereof, the balance continuing in full force and effect, and the parties will endeavor to replace the severed provision with a similar provision that is not unlawful or otherwise unenforceable. 15.10 Rights and Remedies Cumulative. The rights and remedies provided ------------------------------ herein will be cumulative and not exclusive of any other rights or remedies provided by law or otherwise. 15.11 Headings. The Article headings in this Agreement are for convenience -------- only and will not be considered a part of, or affect the interpretation of, any provision of this Agreement. 15.12 Governing Language. This Agreement and all communications pursuant ------------------ to it will be in the English language. If there is any conflict between the English version and any translated version of this Agreement, the English version will govern. 15.13 Force Majeure. Except as otherwise expressly provided for herein, no ------------- party will be liable in any manner for failure or delay in fulfillment of all or part of this Agreement directly or indirectly owing to any causes or circumstances beyond its control, including, but not limited to, acts of God, governmental order or restrictions, war, war-like conditions, hostilities, sanctions, revolutions, riot, looting, strike, lockout, plague or other epidemics, fire and flood. 15.14 Counterparts. This Agreement may be executed in any number of ------------ counterparts, and all such counterparts will together constitute but one Agreement. 15.15 Integration. This Agreement sets forth the entire agreement and ----------- understanding between the parties as to its subject matter and supersedes all prior agreements, understandings and memoranda between the parties, except for the Existing Agreements. No amendments or supplements to this Agreement will be effective for any purpose except by a written agreement signed by the parties. 15.16 Government Approvals; Export Control Laws. Epson will file all ----------------------------------------- reports and notifications that may be required to be filed with any agency of the Government of Japan in order to allow the performance of this agreement according to its terms. Xilinx will be responsible for obtaining all licenses and permits required to export the Products from Japan. Neither party will transmit indirectly or directly any Products or technical information contained in the Confidential Information except in accordance with applicable Japanese and United States export control laws, regulations and procedures. IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first above written. SEIKO EPSON CORPORATION By: /s/ Nobuo Hashizume -------------------------------------- Name: Nobuo Hashizume Title: Director and Corporate General Manager Semiconductor Operations Division XILINX, INC. By: /s/ Willem Roelandts -------------------------------------- Name: Willem Roelandts Title: President and Chief Executive Officer XILINX IRELAND By: /s/ Paul McCambridge -------------------------------------- Name: Paul McCambridge Title: Managing Director AREAS MARKED "***" REPRESENT SECTIONS FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. THESE OMITTED SECTIONS HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. EX-12 7 EXHIBIT 12
XILINX, INC. STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (in thousands, except ratios) Three Months Ended Nine Months Ended Dec. 27, Dec. 28, Dec. 27, Dec. 28, 1997 1996 1997 1996 --------- --------- --------- --------- Income before taxes and joint venture $ 42,009 $ 38,849 $ 136,410 $ 120,658 Add fixed charges 3,665 3,614 11,024 10,868 --------- --------- --------- --------- Earnings (as defined) $ 45,674 $ 42,463 $ 147,434 $ 131,526 ========= ========= ========= ========= Fixed charges Interest expense $ 3,270 $ 3,184 $ 9,821 $ 9,655 Amortization of debt issuance costs 218 223 653 664 Estimated interest component of rent expenses 177 207 550 549 --------- --------- --------- --------- Total fixed charges $ 3,665 $ 3,614 $ 11,024 $ 10,868 ========= ========= ========= ========= Ratio of earnings to fixed charges 12.5 11.7 13.4 12.1 ========= ========= ========= =========
EX-27 8
5 1000 3-MOS 9-MOS MAR-28-1998 MAR-28-1998 SEP-28-1997 MAR-30-1997 DEC-27-1997 DEC-27-1997 244,079 244,079 173,480 173,480 70,709 70,709 6,907 6,907 54,605 54,605 639,721 639,721 165,518 165,518 82,287 82,287 966,847 966,847 121,364 121,364 250,000 250,000 0 0 0 0 742 742 583,513 583,513 966,847 966,847 148,735 459,768 148,735 459,768 55,668 172,622 55,668 172,622 51,996 155,776 0 0 3,487 10,474 42,009 136,410 13,023 43,030 31,600 95,994 0 0 0 0 0 0 31,600 95,994 0.43 1.30 0.40 1.19
-----END PRIVACY-ENHANCED MESSAGE-----