LITIGATION AND OTHER LEGAL MATTERS

Litigation Related to Proposed Merger with Lam Research.

这California Class Actions. In connection with the October 21, 2015 announcement of the Merger transaction, four purported KLA-Tencor stockholders filed putative class actions on behalf of all KLA-Tencor stockholders. Three 在加利福尼亚州Santa Clara县的加州高级法院提出了行动，并被标题， Hedgecock v。KLA-Tencor Corp.等。， Case No. 115CV287329, karr v。kla-tencor corporation等。 , Case No. 115CV287331, (both filed on October 28, 2015) and Spoleto Corp. v. Wallace, et al., Case No. 115CV289552 (filed on December 29, 2015) (collectively, the “California Class Actions”). Plaintiffs in the Hedgecock. 和 Karr actions filed amended complaints on December 21, 2015. The California Class Actions all name KLA-Tencor, the members of the KLA-Tencor Board, Lam Research, Merger Sub 1, and Merger Sub 2 (together with Merger Sub 1 and Lam Research, the “Lam Group”) as defendants. The California Class Actions allege that the members of the KLA-Tencor Board breached their fiduciary duties by, among other things, causing KLA-Tencor to agree to a merger transaction with the Lam Group at an unfair price and pursuant to an unfair process, and by making disclosures concerning the transaction that are materially misleading. Plaintiffs allege that the Lam Group aided and abetted such breaches. Plaintiffs seek to enjoin or rescind KLA-Tencor’s transaction with the Lam Group, as applicable, as well as an award of damages and attorneys’ fees, in addition to other relief.

特拉华州校政法院课程行动。 One putative class action was filed on November 10, 2015, in the Court of Chancery in the State of Delaware and is captioned, Rooney v. Wallace, et al. ，案例第11700号。2015年12月23日，原告鲁尼提出了经修正的投诉。这 Rooney 采取行动根据KLA-Tencor委员会成员提出，类似于加州课程诉讼，据称KLA-Tencor委员会成员违反了他们的信托职责，其中包括克拉腾阁同意合并交易LAM研究以不公平的价格和根据不公平的流程，并通过披露有关实质性误导的交易披露。原告Rooney旨在谴责或撤销Kla-Tencor的交易，以及LAM研究，除了其他救济外，还适用的律师的费用以及律师的费用。KLA-Tencor对此进行了应计 Hedgecock，Spoleto 和 Rooney 行动。

协议原则上解决合并相关的诉讼。 2015年12月29日或大约在2015年12月29日，所有人都在原告 four actions agreed to coordinate and proceed in the California Superior Court. On February 5, 2016, an agreement in principle was reached with the plaintiffs in the Rooney Action, Hedgecock. Action, and Spoleto Action to settle those actions. Pursuant to the agreement in principle, as set forth in a signed memorandum of understanding, the parties agreed to resolve disputed legal claims and KLA-Tencor and Lam agreed to make certain supplemental disclosures regarding the proposed Merger, as set forth in the Form 8-K filed by KLA-Tencor on February 5, 2016. None of the defendants in these actions has admitted wrongdoing of any kind, including that there were any inadequacies in any disclosure, any breach of any fiduciary duty, or aiding or abetting any of the foregoing. On February 17, 2016, the California Superior Court dismissed the Karr action pursuant to a stipulation by the parties.

这agreement in principle is expected to be further memorialized in a stipulation of settlement, which will be subject to customary terms and conditions, including court approval, and will include an agreement by the plaintiffs, on behalf of a class of KLA-Tencor stockholders, to provide a release of claims of KLA stockholders against KLA-Tencor, the Lam Group and their respective officers and directors. Following final approval of the settlement by the court, the Hedgecock. , Spoleto , and Rooney actions will be dismissed. The settlement will not affect the Merger consideration to be paid to stockholders of KLA-Tencor in connection with the acquisition of KLA-Tencor by Lam. KLA-Tencor has made an accrual with respect to the Hedgecock，Spoleto 和 Rooney 行动。KLA-Tencor确定了超过累计的量的潜在损失是合理的;然而，根据目前的知识，KLA-Tencor并不相信这种可能的损失或潜在损失范围的数量合理估计。

Other Legal Matters

这Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of its business. Actions filed against the Company include commercial, intellectual property, customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, legal proceedings and claims, regardless of their merit, and associated internal investigations (especially those relating to intellectual property or confidential information disputes) are often expensive to prosecute, defend or conduct and may divert management’s attention and other company resources. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. The Company believes the amounts provided in its consolidated financial statements are adequate in light of the probable and estimated liabilities. However, because such matters are subject to many uncertainties, the ultimate outcomes are not predictable, and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in the Company’s consolidated financial statements or will not have a material adverse effect on its results of operations, financial condition or cash flows.