-----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, PWXREA+BnC+62XikXqSYkFXAqxOKnhBsiSNZMFzfTnGilttugnTOzaRxNbMbigHK itdrhAYfyxEAQb5OyskXpQ== 0000891618-97-001115.txt : 19970312 0000891618-97-001115.hdr.sgml : 19970312 ACCESSION NUMBER: 0000891618-97-001115 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970311 EFFECTIVENESS DATE: 19970311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KOMAG INC /DE/ CENTRAL INDEX KEY: 0000813347 STANDARD INDUSTRIAL CLASSIFICATION: MAGNETIC & OPTICAL RECORDING MEDIA [3695] IRS NUMBER: 942914864 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-23095 FILM NUMBER: 97554450 BUSINESS ADDRESS: STREET 1: 275 S HILLVIEW DR CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4089462300 MAIL ADDRESS: STREET 1: 275 S HILLVIEW DR CITY: MILPITAS STATE: CA ZIP: 95035 S-8 1 FORM S-8 REGISTRATION STATEMENT 1 As filed with the Securities and Exchange Commission on March 11, 1997 Registration No. 333-______________________ ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 _______________________ KOMAG, INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 94-2914864 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization)
1704 AUTOMATION PARKWAY, SAN JOSE, CA 95131 (Address of principal executive offices) (Zip Code) __________________________ DEFERRED COMPENSATION PLAN (Full title of the Plan) _______________________ STEPHEN C. JOHNSON PRESIDENT AND CHIEF EXECUTIVE OFFICER KOMAG, INCORPORATED 1704 AUTOMATION PARKWAY, SAN JOSE, CA 95131 (Name and address of agent for service) (408) 576-2000 (Telephone number, including area code, of agent for service) ________________________ CALCULATION OF REGISTRATION FEE ==============================================================================
PROPOSED PROPOSED TITLE OF MAXIMUM MAXIMUM SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF TO BE TO BE PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER SHARE PRICE FEE ---------- ---------- --------- ----- --- Deferred Compensation Obligations $3,000,000 N/A $3,000,000 $910 --------- --------- ---
============================================================================== 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference Komag, Inc. (the "Registrant") hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the "SEC"): a. The Registrant's Annual Report on Form 10-K for the fiscal year ended December 29, 1996 filed with the SEC on March 7, 1997. b. The Registrant's Registration Statement No. 00-16852 on Form 8-A filed with the SEC on April 29, 1988 in which there is described the terms, rights and provisions applicable to the Registrant's outstanding Common Stock. All reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "1934 Act") after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any subsequently filed document which also is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Item 4. Description of Securities The securities consist of deferred compensation obligations of the Registrant outstanding under the Registrant's Deferred Compensation Plan (the "Plan"). The Plan is a non-qualified deferred compensation program under the Internal Revenue Code which is designed to operate in conjunction with the Registrant's combined Internal Revenue Code Section 401(k) savings program and Internal Revenue Code Section 401(a) deferred profit-sharing plan, the Savings and Deferred Profit-Sharing Plan (the "Qualified Plan"). The principal features of the non-qualified Plan may be summarized as follows: STRUCTURE. The Plan is comprised of two separate programs: DEFERRAL ELECTION PROGRAM. Under this program each selected participant will have the right, by prior irrevocable election, to defer (i) up to twelve percent (12%) of his or her base salary for each calendar year for which the election is in effect plus (ii) up to twelve percent (12%) of any bonus earned under the Registrant's Management Bonus Plan or Discretionary Bonus Plan for that calendar year, less the maximum dollar amount which may be contributed on the participant's behalf to the Qualified Plan for that year in compliance with the applicable limitations of Internal Revenue Code Sections 401(k) and 402(g). 3 SUPPLEMENTAL CONTRIBUTION PROGRAM. This program will supplement the benefits allocated to the participant's account each year under the Qualified Plan by providing such individual with the additional level of benefits which would have otherwise been allocated to his or her Qualified Plan account had that allocation not been reduced by reason of the compensation limitation imposed under Internal Revenue Code Section 401(a)(17). BOOK ACCOUNTS. The Registrant will establish on its books and records a special account for each individual for whom compensation is deferred under the Deferral Election Program or to whom a supplemental benefit is allocated under the Supplemental Contribution Program. However, the Registrant's obligation to pay the balance credited to such account will at all times be an unfunded and unsecured obligation. Accordingly, the Registrant will be under no obligation to establish any trust, escrow arrangement or other fiduciary relationship for the purpose of segregating funds for the payment of the account balances maintained under the Plan. Although the Registrant has established a so-called "rabbi trust" in order to accumulate a reserve for satisfying its liabilities under the Plan, no participant will have any beneficial interest in those trust assets, and the assets will be available for the satisfaction of creditor claims in the event of the Registrant's insolvency or bankruptcy. INVESTMENT RETURN. The balance credited to each participant's account under the Plan will be deemed to be invested in the same investment funds in which the participant's corresponding account under the Qualified Plan is actually invested over the deferral period in effect under the non-qualified Plan. The account balance will be periodically adjusted to reflect the earnings, gains and losses attributable to such deemed investment. The participant will at all times be vested in his or her account balance to the same extent he or she is vested in the corresponding account balance maintained for such individual under the Qualified Plan. DISTRIBUTION. The account balance will become payable in a lump sum following the participant's cessation of employment with the Registrant. The account balance may also be distributed upon the occurrence of an unforeseeable and extraordinary financial hardship for which the participant does not have any other available resources. Accrued benefits may not otherwise be assigned or alienated. AMENDMENT/TERMINATION. The Plan may be amended or terminated at any time, but no such plan amendment or termination will adversely affect the benefits which the participants have accrued to date under the Plan. There is no dollar limit on the total amount of compensation which may be deferred by participants over the term of the Plan. As of February 23, 1997, the total dollar amount of the Registrant's outstanding deferred compensation obligations under the Plan was $879,407. Item 5. Interests of Named Experts and Counsel Not applicable. Item 6. Indemnification of Directors and Officers The Registrant's Restated Certificate of Incorporation provides that no director of the Registrant will be personally liable to the Registrant or any of its stockholders for monetary damages arising from the director's breach of fiduciary duty. However, this provision does not apply with respect to any action in which the director would be liable under Section 174 of Title 8 of the General Corporation Law of Delaware, nor does it apply with respect to any liability resulting from any transaction in which the director (i) breached his duty of loyalty to the Registrant or its stockholders; (ii) did not act in good faith or, in failing to act, did not act in good faith; (iii) acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, acted in II-2 4 a manner involving intentional misconduct or a knowing violation of law; or (iv) derived an improper personal benefit. Pursuant to the provisions of Section 145 of the General Corporation Law of Delaware, every Delaware corporation has power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Registrant or of any corporation, partnership, joint venture, trust or other enterprise for which he is or was serving in such capacity at the request of the Registrant, against any and all expenses, judgments, fines and amounts paid in settlement and reasonably incurred by him in connection with such action, suit or proceeding. The power to indemnify applies only if such person acted in good faith and in a manner he reasonably believed to be in the best interests, or not opposed to the best interests, of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The power to indemnify applies to actions brought by or in the right of the corporation as well, but only to the extent of defense and settlement expenses and not to any satisfaction of a judgment or settlement of the claim itself, and with the further limitation that in such actions no indemnification shall be made in the event of any adjudication of negligence or misconduct unless the court, in its discretion, feels that in the light of all the circumstances indemnification should apply. To the extent any of the persons referred to in the two immediately preceding paragraphs is successful in the defense of the actions referred to therein, such person is, pursuant to Section 145 of the Delaware General Corporation Law, entitled to indemnification as described above. Section 145 also grants power to advance litigation expenses upon receipt of an undertaking to repay such advances in the event no right to indemnification is subsequently shown. A corporation may also obtain insurance at its expense to protect anyone who might be indemnified, or has a right to insist on indemnification, under the statute. The Registrant has entered into indemnification agreements with its then current directors and officers which provide for indemnification to the fullest extent permitted by Delaware General Corporation Law, including Section 145 thereof. Item 7. Exemption from Registration Claimed Not applicable. Item 8. Exhibits
Exhibit Number Exhibit -------------- ------- 4 Instruments Defining Rights of Security Holders: Letter of Participation under Komag, Incorporated Deferred Compensation Plan. 5 Opinion of Brobeck, Phleger & Harrison LLP. 23.1 Consent of Independent Auditors - Ernst & Young LLP. 23.2 Consent of Independent Auditors - Chuo Audit Corporation. 23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Komag, Inc. Deferred Compensation Plan, together with Plan Amendment No. 1.
II-3 5 Item 9. Undertakings A. The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post- effective amendment to this Registration Statement (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "1933 Act"), (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement, and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference into the registration statement; (2) that for the purpose of determining any liability under the 1933 Act each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold upon the termination of the Registrant's Deferred Compensation Plan. B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference into this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers or controlling persons of the Registrant pursuant to the indemnity provisions summarized in Item 6 above, or otherwise, the Registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. II-4 6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milpitas, State of California, on this 7th day of March, 1997. KOMAG, INCORPORATED By: /s/ Stephen C. Johnson ------------------------------ Stephen C. Johnson President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That the undersigned officers and directors of Komag, Incorporated, a Delaware corporation, do hereby constitute and appoint Stephen C. Johnson and William L. Potts, Jr., and each of them, the lawful attorneys and agents, with full power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules or regulations or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned officers and directors in the capacities indicated below to this Registration Statement, to any and all amendments, both pre-effective and post-effective, and supplements to this Registration Statement, and to any and all instruments or documents filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, and each of the undersigned hereby ratifies and confirms all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signatures Title Date - ---------- ----- ---- /s/ Stephen C. Johnson President, Chief Executive Officer March 7, 1997 - -------------------------- and Director (Principal Executive Stephen C. Johnson Officer)
II-5 7
Signatures Title Date - ---------- ----- ---- /s/ Tu Chen Chairman of the Board March 7, 1997 - --------------------------- Tu Chen /s/ William L. Potts, Jr. Vice President of Finance, March 7, 1997 - --------------------------- Chief Financial Officer and William L. Potts, Jr. Secretary (Principal Financial and Accounting Officer) /s/ Craig R. Barrett Director March 7, 1997 - --------------------------- Craig R. Barrett /s/ Chris A. Eyre Director March 7, 1997 - --------------------------- Chris A. Eyre /s/ Irwin Federman Director March 7, 1997 - --------------------------- Irwin Federman /s/ George A. Neil Director March 7, 1997 - --------------------------- George A. Neil /s/ Max Palevsky Director March 7, 1997 - --------------------------- Max Palevsky /s/ Anthony Sun Director March 7, 1997 - --------------------------- Anthony Sun /s/ Masayoshi Takebayashi Director March 7, 1997 - --------------------------- Masayoshi Takebayashi
II-6 8 EXHIBIT INDEX
Exhibit No. Exhibit - ----------- ------- 4 Instruments Defining Rights of Security Holders: Letter of Participation under Komag, Incorporated Deferred Compensation Plan. 5 Opinion of Brobeck, Phleger & Harrison LLP. 23.1 Consent of Independent Auditors - Ernst & Young LLP. 23.2 Consent of Independent Auditors - Chuo Audit Corporation. 23.3 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5. 24 Power of Attorney. Reference is made to page II-4 of this Registration Statement. 99.1 Komag, Inc. Deferred Compensation Plan, together with Plan Amendment No. 1.
EX-4 2 RIGHTS OF SECURITY HOLDERS, PARTICIPATION LETTER 1 EXHIBIT 4 KOMAG, INCORPORATED ___________________________, 1997 ________________________ ________________________ ________________________ Dear ___________: We are pleased to inform you of your selection as a participant in the Company's Deferred Compensation Plan. The Plan is a non-qualified and unfunded program (the "Non-Qualified Plan") which is comprised of two separate programs: - the DEFERRAL ELECTION PROGRAM which will allow you to defer part of your base salary and bonus each year, and - the SUPPLEMENTAL CONTRIBUTION PROGRAM which will supplement the benefits provided you under the deferred profit- sharing program in effect under the Company's existing Savings and Deferred Profit-Sharing Plan, a tax-qualified plan under the Internal Revenue Code (the "Qualified Plan"), and will accordingly protect you against any reduction in the profit-sharing benefits available to you under the Qualified Plan which result from certain limitations imposed by the Internal Revenue Code. As a participant in the Qualified Plan, you may elect to contribute up to 12% of your earnings each pay period on a pre-tax basis to the individual account maintained on your behalf under the Qualified Plan. However, the actual amount you may contribute each year is subject to reduction in accordance with the following limitations imposed under the Internal Revenue Code: - Not more than $150,000 of compensation may be taken into account as the base upon which your percentage contribution may be made, and with a 12% maximum 401(k) election, you could not contribute more than $18,000 to the Qualified Plan by virtue of this particular limitation. 2 __________________________ ________________, 1997 Page 2 - However, you may not contribute more than the maximum dollar amount permitted as a 401(k) contribution under the Internal Revenue Code for each calendar year. For the 1997 calendar year, the limit is $9,500.00. - In addition, your 401(k) contribution may be further limited pursuant to the non-discrimination standards imposed under the Internal Revenue Code so as to assure that the pre-tax contributions made by highly-compensated participants are not significantly greater than the contributions made by the non-highly compensated group. Your participation in the Qualified Plan will also allow you to share in the semi-annual profit-sharing contribution made to that Plan. The contribution is allocated among the participant accounts in accordance with the compensation paid to each participant during the semi-annual interval. However, the Internal Revenue Code will now limit the amount of compensation which may be taken into account per participant for each semi-annual interval to $75,000, subject to future cost-of-living adjustments. Accordingly, your share of each semi- annual profit-sharing contribution to the Qualified Plan is likely to be reduced as a result of this particular limitation. The new Non-Qualified Plan will allow you the opportunity to recover the benefits you would otherwise lose by reason of the foregoing Internal Revenue Code limitations and will operate in the following manner: DEFERRAL ELECTION PROGRAM You will have the right to defer part of the base salary and any Management Bonus Plan or Discretionary Bonus Plan award you earn for each calendar year you participate in the Plan. However, the maximum amount which you may defer each calendar year will be determined in accordance with the following formula: - up to twelve percent (12%) of the base salary earned for the calendar year, plus - up to twelve percent (12%) of any Management Bonus Plan or Discretionary Bonus Plan award earned for that calendar year, less 3 __________________________ ________________, 1997 Page 3 - the maximum amount which may be contributed on your behalf as a Section 401(k) contribution for that calendar year in accordance with the non-discrimination standards of the Internal Revenue Code and the applicable dollar limitation in effect for that year under the Code (currently $9,500). Your deferral election must be made in compliance with all of the following requirements: - The election must be made by filing the attached Deferral Election Form with the Company's Vice President, Finance. The form must be filed prior to the start of the calendar year for which the base salary or bonus subject to such election is earned. - The election, once made, will be irrevocable with respect to the calendar year for which it is made and will apply to any salary increases which occur during that year. NOTE: The actual deferral of base salary pursuant to your deferral election will not begin until such time as the maximum Section 401(k) contribution permissible under the Internal Revenue Code for the calendar year has been made on your behalf to the Qualified Plan in accordance with your Section 401(k) election in effect for that year or would have been made in the absence of any voluntary reduction to your Section 401(k) election for that year. The portion of the bonus which is the subject of your deferral election will be deferred under the Non-Qualified Plan only if the remaining portion of that bonus is paid after the maximum Section 401(k) contribution permissible under the Internal Revenue Code for the calendar year of payment has been made on your behalf to the Qualified Plan in accordance with your Section 401(k) election in effect for that year or would have been made in the absence of any voluntary reduction to your Section 401(k) election for that year. All salary and bonus deferred under the Non-Qualified Plan will be credited to the Deferral Election Account maintained on your behalf on the books and records of the Company. 4 __________________________ ________________, 1997 Page 4 Should any Section 401(k) contribution actually made on your behalf to the Qualified Plan be subsequently refunded in whole or in part by reason of any of the foregoing Internal Revenue Code limitations, then the refunded amount cannot under applicable tax regulations be credited to your Deferral Election Account under the Non-Qualified Plan and will accordingly be taxable to you for the year for which such refund is made. SUPPLEMENTAL CONTRIBUTION PROGRAM A Supplemental Profit-Sharing Account will also be maintained for you under the Non-Qualified Plan and will credited on each semi-annual interval within the Plan Year with an amount equal to the excess of A over B below: A is the dollar amount of the profit-sharing contribution (plus forfeitures) which would have been allocated to your account under the Qualified Plan for such semi-annual interval had the compensation taken into account for you for that semi-annual interval not been limited by the Internal Revenue Code (currently $75,000 per semi-annual period). B is the actual dollar amount of the profit-sharing contribution (plus forfeitures) allocated for such semi- annual interval to the discretionary contribution account maintained for you under the Qualified Plan. ADDITIONAL FEATURES The following additional features of the Non-Qualified Plan should be noted. * Your Deferral Election and Supplemental Profit-Sharing Accounts (the "Non-Qualified Plan Accounts") will be book accounts only. Should the Company elect to establish a trust fund for the payment of your Non-Qualified Plan Accounts, the assets of that trust will remain subject to the claims of the Company's creditors in the event of the Company's insolvency. * The balance credited to your Deferral Election Account will be deemed to be invested in the same investment funds in which your Section 401(k) account under the Qualified Plan is actually invested, and the balance credited to each of your Supplemental 5 __________________________ ________________, 1997 Page 5 Profit-Sharing Account will be deemed to be invested in the same investment funds in which your corresponding profit-sharing account under the Qualified Plan is actually invested. Accordingly, on each valuation date under the Qualified Plan, each of your Non-Qualified Plan Accounts will be adjusted to reflect the investment gains, earnings or losses that Account would have actually realized had it been invested for the valuation period in the same investment funds as your corresponding account under the Qualified Plan. In no event, however, will the Company be obligated to make an actual investment of its assets in the investment fund or funds which serve as the measure of the investment return on your Non-Qualified Plan Accounts. * You will at all times be fully vested in your Deferral Election Account, and you will be vested in your Supplemental Profit-Sharing Account to the same extent your are at the time vested in your profit-sharing account under the Qualified Plan. Upon your termination of employment, any unvested balance of your Supplemental Profit-Sharing Account will be immediately forfeited. * The vested balance of your Non-Qualified Plan Accounts will become due and payable in accordance with the following provisions: - Should your employment terminate by reason of death or disability, then the entire vested balance of your Non-Qualified Plan Accounts will be paid in a lump sum within ninety (90) days after the date of such termination. - Should your employment terminate for any other reason when the vested balance in your Non-Qualified Plan Accounts exceeds Ten Thousand Dollars ($10,000), then that balance will be paid in a lump sum at the end of the one-year period measured from the date your employment terminates. However, if such cessation of employment occurs within eighteen (18) months after certain changes in control or ownership of the Company, then the vested balance of your Non-Qualified Plan Accounts will be paid in a lump sum within thirty (30) days thereafter. - Should your employment terminate other than by reason of death or disability when the vested balance in your Non-Qualified Plan Accounts is Ten Thousand Dollars ($10,000) or less, then that balance will be 6 __________________________ ________________, 1997 Page 6 paid in a lump sum within thirty (30) days after the date your employment terminates. * In the event of an unforeseeable and extraordinary financial hardship, you may apply for an immediate distribution from your Deferral Election Account in an amount necessary to meet such financial hardship. * Should you die before distribution of the entire vested balance of your Non-Qualified Plan Accounts, then the unpaid vested balance will be paid to your designated beneficiary under the Qualified Plan at the same time such balance would have been paid to you under the Non-Qualified Plan had you survived. * All payments made under the Non-Qualified Plan will be immediately taxable and will be subject to the Company's withholding of all required Federal, State and local income and employment taxes. * The Company's obligation to pay the vested balance of your Non-Qualified Plan Accounts will at all times be an unfunded and unsecured obligation, and you must look solely and exclusively to the general assets of the Company for the payment of those Accounts. In the event the Company should elect to establish a grantor trust arrangement for the payment of your benefits under the Non- Qualified Plan, then those benefits will be paid from the assets of that trust, subject, however, to the claims of the Company's creditors should the Company become insolvent. * Your participation in the Non-Qualified Plan will not be deemed to provide you with any right to remain in the employ of the Company for any period of specific duration, and your employment may be terminated at any time, with or without cause. * The Board of Directors may at any time amend the provisions of the Non-Qualified Plan to any extent and in any manner the Board may deem advisable. The Non-Qualified Plan may also be terminated at any time. However, no such plan amendment or termination will adversely affect the benefits you have accrued to date under the Non-Qualified Plan or otherwise reduce the then outstanding balance credited to your Non-Qualified Plan Accounts. 7 __________________________ ________________, 1997 Page 7 * The Non-Qualified Plan contains a formal claims review process should there ever arise an instance where there is a question concerning your benefit entitlements under the Non-Qualified Plan. * You may not transfer, assign, pledge or otherwise encumber your interest in the benefits payable to you under the Non- Qualified Plan. * To the maximum extent possible, the terms and provisions of the Non-Qualified Plan will be applied and interpreted in strict conformity with the terms and provisions of the Qualified Plan so as to assure that the Non-Qualified Plan provides only the amount of benefits which are unavailable to you under the Qualified Plan by reason of the Internal Revenue Code limitations on (i) the dollar amount of compensation which may be taken into account under the Qualified Plan, (ii) the maximum Section 401(k) contribution which may be made per calendar year and (iii) the maximum contribution permitted under the non-discrimination standards of the Internal Revenue Code. * The Non-Qualified Plan is intended to constitute an unfunded deferred compensation arrangement for a highly compensated individual, and all rights under the Non-Qualified Plan are to be construed, administered and governed in all respects in accordance with the provisions of ERISA applicable to such an arrangement and, to the extent not pre-empted thereby, by the laws of the State of California. The foregoing summary is not a complete description of all the applicable terms and conditions of the Non-Qualified Plan. A copy of the complete plan document is attached to this letter, and you should review that document carefully so that you understand all the rights, benefits and limitations in effect for the individuals selected for participation in the Non-Qualified Plan. Should you have any questions concerning the Non-Qualified Plan, pleases address them to _____________________ at the Company's Headquarters in San Jose, CA. The Company is pleased to make the benefits of the Non-Qualified Plan available to you in recognition of the valuable service you have rendered the Company and as an incentive for you to remain in the Company's employ. We believe that your participation in the Non- Qualified Plan will form an important part of your overall compensation package and will provide you with the opportunity to set aside a substantial source of retirement income for your later years. EX-5 3 OPINION OF BROBECK, PHLEGER & HARRISON LLP 1 EXHIBIT 5 OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP March 10, 1997 Komag Incorporated 1704 Automation Parkway San Jose, CA 95131 Re: Komag Incorporated (the "Company") S-8 Registration Statement for Deferred Compensation Obligations Ladies and Gentlemen: We refer to your registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, of the deferred compensation obligations of the Company under the Company's Deferred Compensation Plan (the "Plan"). We advise you that, in our opinion, such obligations are duly authorized and valid obligations of the Company, enforceable in accordance with the terms of the Plan and the letters of participation issued thereunder, subject to (i) the claims of the Company's creditors in any bankruptcy or insolvency proceedings instituted by or against the Company and (ii) bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer and other similar laws affecting the rights of creditors generally. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ BROBECK, PHLEGER & HARRISON LLP -------------------------------------- Brobeck, Phleger & Harrison LLP EX-23.1 4 CONSENT OF INDEPENDENT AUDITORS-ERNST & YOUNG LLP. 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Komag, Incorporated Deferred Compensation Plan of our report dated January 16, 1997, with respect to the consolidated financial statements and schedule of Komag Incorporated included in its Annual Report (Form 10-K) for the year ended December 29, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP San Jose, California March 10, 1997 EX-23.2 5 CONSENT OF INDEPENDENT AUDITORS-CHUO AUDIT CORP. 1 [CHUO AUDIT CORPORATION LETTERHEAD] EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Komag, Incorporated on Form S-8 pertaining to the Komag, Incorporated Deferred Compensation Plan filed on March 10, 1997 of our report dated February 21, 1997 on our audits of the consolidated financial statements of Asahi Komag Co., Ltd. as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, which report is included in the Annual Report on Form 10-K of Komag, Incorporated for the year ended December 31, 1996. /s/ CHUO AUDIT CORPORATION Tokyo, Japan March 5, 1997 EX-99.1 6 KOMAG, INC. DEFERRED COMPENSATION PLAN 1 EXHIBIT 99.1 KOMAG, INCORPORATED DEFERRED COMPENSATION PLAN ARTICLE I NAME AND PURPOSE 1.01 NAME. The Komag, Incorporated Deferred Compensation Plan (the "Plan") is hereby established effective as of March 1, 1995. 1.02 PURPOSE. The purpose of this Plan is to provide a deferred compensation arrangement for certain highly compensated individuals pursuant to which they will have the opportunity to earn deferred compensation payable upon their retirement, death, disability or other termination of employee status. The Plan is comprised of two separate deferred compensation programs: - the DEFERRAL ELECTION PROGRAM which will allow participants to defer part of their base salary and bonus earned for each year of service, and - the SUPPLEMENTAL CONTRIBUTION PROGRAM which will supplement the benefits such individuals earn each year under the deferred profit-sharing program in effect under the Komag, Incorporated Savings and Deferred Profit-Sharing Plan by providing them with the additional level of benefits they would have otherwise received under that program had their profit- sharing allocations not been reduced by reason of the compensation limitation imposed under Section 401(a)(17) of the Internal Revenue Code. The benefits provided under this Plan shall be unfunded, and all amounts which become due under the Plan shall accordingly be paid either directly from the general assets of the Participating Companies or through a grantor trust arrangement established in accordance with the provisions of Article VIII. The interest of each participant (and his or her beneficiary) in any benefits that become payable under this Plan shall be no greater than that of an unsecured creditor of the Participating Company employing such individual. ARTICLE II DEFINITIONS 2.01 "AFFILIATED COMPANY" shall mean (i) the Company, (ii) any other corporation which is a member of the controlled group of corporations which includes the Company, as determined in accordance with the ownership rules of Code Section 1563, without regard, however, to subsections (a)(4) or (e)(3)(C) of such Section 1563, and (iii) any other employer entity which is under common control with the Company, as determined in accordance with Treasury Regulations issued under Code Section 414(c). 2 2.02 "BOARD" shall mean the Company's Board of Directors. 2.03 "BONUS" shall mean the incentive bonus earned for any Year of Service, beginning with the 1995 Year of Service, under the Komag, Incorporated Management Bonus Plan. 2.04 "CHANGE IN CONTROL" shall mean any of the following transactions involving the Company: (i) a merger or consolidation in which the Company is not the surviving entity, unless such merger or consolidation is effected primarily to change the State in which the Company is incorporated, (ii) a sale of all or substantially all of the Company's assets in liquidation or dissolution of the Company, (iii) a reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to person or persons other than the persons holding those securities immediately prior to the reverse merger, (iv) the acquisition by any person or related group of persons, other than the Company or a person that directly or indirectly controls, is controlled by or is under common control with the Company, of beneficial ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the holders of the Company's voting securities, or (v) a change in the composition of the Board over a period of twenty-four (24) consecutive months or less such that a majority of the Board members ceases to be comprised of individuals who either (A) have been members of the Board continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board. 2.05 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. 2. 3 2.06 "COMPANY" shall mean Komag, Incorporated, a Delaware corporation, and any successor or assignee corporation, whether by way of merger, acquisition or other reorganization. 2.07 "DEFERRAL ELECTION" shall mean the irrevocable election filed by the Participant under Article IV of this Plan pursuant to which part of his or her base salary and/or Bonus earned for one or more Years of Service is to be deferred in accordance with the provisions of the Plan. 2.08 "DEFERRED COMPENSATION ACCOUNT" shall mean the account under the Qualified Plan which is maintained on the Participant's behalf in accordance with Section 5.2 thereof. Such account is credited from time to time with the Section 401(k) Contributions made on the Participant's behalf to the Qualified Plan. 2.09 "DISABILITY" shall mean the permanent incapacity of a Participant, by reason of any physical or mental impairment or illness expected to result in death or to continue for a period of not less than twelve (12) consecutive months, to perform his/her usual duties for the Company or other Affiliated Company employing such individual. 2.10 "DISCRETIONARY CONTRIBUTION" shall mean the discretionary profit-sharing contributions made to the Qualified Plan from time to time by one or more Participating Companies pursuant to the provisions of Article VIII thereof. 2.11 "DISCRETIONARY CONTRIBUTION ACCOUNT" shall mean the account under the Qualified Plan which is maintained on the Participant's behalf in accordance with Section 8.5 of the Qualified Plan. Such account is credited from time to time with the Participant's share of the Discretionary Contributions made to the Qualified Plan. 2.12 "EFFECTIVE DATE" shall mean March 1, 1995. 2.13 "ELIGIBLE EMPLOYEE" shall mean any Employee who is an officer of the Company or other highly compensated exempt employee with a salary grade at level 10 or above. 2.14 "EMPLOYEE" shall mean any person who is employed by the Company or any other Affiliated Company to render personal services and whose earnings constitute wages under Section 3401(a) of the Code. 2.15 "PARTICIPANT" shall mean each Eligible Employee who participates in the Plan, whether pursuant to his or her Deferral Election under Article IV or his or her entitlement to the Supplemental Contributions provided under Article V. 3. 4 2.16 "PARTICIPATING COMPANY" shall mean the Company and any other Affiliated Company which, by appropriate resolution, adopts this Plan as an unfunded deferred compensation arrangement for its Eligible Employees. The Participating Companies in the Plan as of the Effective Date are listed in attached Schedule A. 2.17 "PLAN" shall mean the Komag, Incorporated Deferred Compensation Plan, as set forth in this document and in amendments from time to time made hereto. 2.18 "PLAN ACCOUNT" shall mean either or both of the following accounts maintained on the books and records of the Company for each Participant in accordance with the provisions of this Plan: - the Deferral Election Account which shall be credited with any base salary and Bonus deferred under this Plan pursuant to the Participant's Deferral Election, and - the Supplemental Contribution Account which shall be credited with the Supplemental Contributions to which the Participant becomes entitled under this Plan. 2.19 "PLAN ADMINISTRATOR" shall mean the Compensation Committee of the Board in its capacity as administrator of this Plan. 2.20 "PLAN YEAR" shall mean, for purposes of the Qualified Plan and the Supplemental Contribution Program under this Plan, the 52-to-53 week period each year ending on the Sunday closest to December 31. 2.21 "QUALIFIED PLAN" shall mean the Komag, Incorporated Savings and Deferred Profit-Sharing Plan, as amended from time to time. 2.22 "SECTION 401(K) CONTRIBUTION" shall mean, for each individual who is a Participant in this Plan, the aggregate contribution (if any) made by one or more Participating Companies on his or her behalf to the Qualified Plan pursuant to the Section 401(k) Election in effect for that individual for the Plan Year. 2.23 "SECTION 401(K) ELECTION" shall mean, for each individual who is a Participant in this Plan, the election (if any) in effect for that individual under the Qualified Plan, pursuant to which his or her earnings are to be reduced each pay period during the Plan Year by a specified percentage or dollar amount in return for a Section 401(k) Contribution in the same dollar amount to be made on his or her behalf to the Qualified Plan. 4. 5 2.24 "SUPPLEMENTAL CONTRIBUTION" shall mean the contributions credited to the Supplemental Contribution Accounts of Participants in accordance with Section 5.01 of this Plan. 2.25 "VALUATION DATE" shall mean the last business day of each Plan Year and such other date or dates as may be designated for the valuation of outstanding accounts under the Qualified Plan. 2.26 "YEAR OF SERVICE" shall mean, for purposes of the Deferral Election Program, any calendar year during which a Participant renders services for which he or she is compensated as an Employee. However, the earliest Year of Service in effect under the Deferral Election Program shall be the nine (9) calendar-month period measured from March 1, 1995 to December 31, 1995. ARTICLE III PARTICIPATION 3.01 ELIGIBILITY RULES. An Eligible Employee shall become a Participant in this Plan as of the first day of the first calendar year for which he or she is selected for participation by the Plan Administrator. However, the first calendar year for which any Eligible Employee may participate and accrue benefits hereunder shall be the 1995 calendar year, and participation in the Plan for that calendar year shall commence no earlier than the March 1, 1995 Effective Date. The Plan Administrator shall have absolute discretion in selecting the Eligible Employees who are to participate in the Plan from time to time. The initial Participants for the 1995 calendar year shall be selected on or before the Effective Date. Additional individuals may be selected for participation at any time before the start of the calendar year for which they are to commence participation or, for any new hire, before the end of the thirty (30)-day period measured from his or her hire date. 3.02 CESSATION OF PARTICIPATION. Every Eligible Employee who becomes a Participant shall continue to participate in the Plan until the earliest of (i) his or her removal from the Plan upon written notice from the Plan Administrator, (ii) his or her cessation of Employee status or (iii) the termination of the Plan. Any benefits accrued by an individual who ceases participation shall be paid in accordance with the provisions of Article VII following his or her termination of Employee status. 5. 6 ARTICLE IV DEFERRAL ELECTION PROGRAM 4.01 ANNUAL ELECTION. Each Participant shall have the right to file a Deferral Election to defer part of the base salary and/or Bonus earned for one or more Years of Service for which he or she remains a Participant. However, the maximum amount which such Participant may defer for each Year of Service shall be determined in accordance with the following formula: - up to ten percent (10%) of the base salary earned for his or her period of participation during that Year of Service, plus - up to ten percent (10%) of any Bonus earned for such Year of Service, less - the maximum dollar amount which may be contributed on the Participant's behalf as a Section 401(k) Contribution for that Year of Service pursuant to the applicable limitations of Code Sections 401(k) and 402(g). 4.02 ELECTION PROCEDURE. Each Deferral Election shall be made in compliance with all of the following requirements and shall not be effective unless such requirements are met: A. The Deferral Election must be exercised by means of a written notice filed with the Company's Vice President, Finance. The notice shall be substantially in the form of the Deferral Election Notice attached as Exhibit A and must be filed prior to the start of the Year of Service for which the base salary or Bonus subject to that election is earned. However, the following special filing periods shall be in effect: - For the 1995 Year of Service, the election must be filed prior to March 1, 1995 and shall apply only to base salary earned from and after that date and to any Bonus earned for service in the 1995 calendar year and paid in the 1996 calendar year. - For an individual who first becomes a Participant after the start date of the calendar year, the initial Deferral Election must be filed within thirty (30) days following his or her entry into the Plan and shall apply only to any salary or Bonus to be earned for service rendered from and after the filing date of such election. 6. 7 B. The Deferral Election, once made, shall be irrevocable with respect to the Year of Service for which it is made and shall apply to any salary increases which occur during that Year of Service, to the extent the Participant's Deferral Election otherwise pertains to his or her base salary. 4.03 COMMENCEMENT OF DEFERRALS. The actual deferral of base salary pursuant to the Participant's Deferral Election shall not begin until such time as the maximum Section 401(k) Contribution permissible under Code Sections 401(k) and 402(g) for the calendar year in which that base salary is earned shall have been made on the Participant's behalf to the Qualified Plan in accordance with his or her Section 401(k) Election for that year or would have been made in the absence of any voluntary reduction in the Participant's Section 401(k) Election for that year. The portion of the Bonus which is the subject of the Participant's Deferral Election shall in fact be deferred under this Plan only if the remaining portion of that Bonus is paid after the maximum Section 401(k) Contribution permissible under Code Sections 401(k) and 402(g) for the calendar year of such payment shall have been made on the Participant's behalf to the Qualified Plan in accordance with his or her Section 401(k) Election for that year or would have been made in the absence of any reduction in the Participant's Section 401(k) Election for that year. In the event there is no Section 401(k) Election in effect for the Participant at the start of the calendar year to which his or her Deferral Election pertains, then the actual deferral of base salary pursuant to that Deferral Election shall begin at such time as the maximum Section 401(k) Contribution permissible under Code Sections 401(k) and 402(g) for that calendar year would have been made on the Participant's behalf to the Qualified Plan had there been in effect for that individual a Section 401(k) Election covering ten percent (10%) of his or her eligible earnings for the year. The same principle shall be in effect for the portion of any Bonus subject to the Deferral Election filed by such Participant. 4.04 SPECIAL LIMITATION. If any Section 401(k) Contribution actually made to the Qualified Plan is subsequently refunded in whole or in part to the Participant by reason of the limitations in effect under Code Section 401(k) or 402(g), then the refunded amount shall not be credited to the Participant's Deferral Election Account under this Plan and shall constitute taxable income to the Participant for the Plan Year for which such refund is made under the Qualified Plan. 4.05 SUBSEQUENT PAY-OUT. Any compensation deferred under this Article Four shall be paid in accordance with the provisions of Article VII of the Plan. 7. 8 ARTICLE V SUPPLEMENTAL CONTRIBUTION PROGRAM 5.01 SUPPLEMENTAL CONTRIBUTION. The Supplemental Contribution to be credited to the Participant's Supplemental Contribution Account on each semi-annual interval within the Plan Year shall be equal to the excess of A over B below: A is the dollar amount of the Discretionary Contribution (plus forfeitures) which would have been allocated for such semi-annual interval to the Participant's Discretionary Contribution Account under the Qualified Plan in accordance with the provisions of Section 8.4 of the Qualified Plan had the compensation taken into account for the Participant for that semi- annual interval not been limited by Code Section 401(a)(17). B is the actual dollar amount of the Discretionary Contribution (plus forfeitures) allocated for such semi-annual interval to the Participant's Discretionary Contribution Account under the Qualified Plan. No Supplemental Contribution shall credited to the Participant's Supplemental Contribution Account under this Plan for any semi-annual interval within the Plan Year for which the Participant's share of the Discretionary Contributions (plus forfeitures) under the Qualified Plan is not reduced by reason of the Code Section 401(a)(17) limitation in effect for that Plan Year or for which the Participant is not otherwise eligible to share in such Discretionary Contribution under the express provisions of the Qualified Plan. 5.02 PLAN LIMITATION. No Supplemental Contributions shall be credited under this Plan for any Plan Year beginning before January 2, 1995. 5.03 SUBSEQUENT PAY-OUT. Any compensation deferred under this Article Five shall be paid in accordance with the provisions of Article VII of the Plan. ARTICLE VI PLAN ACCOUNTS 6.01 INVESTMENT RETURN. The balance credited to the Participant's Deferral Election Account under this Plan shall be deemed to be invested in the same investment funds in which the Participant's Deferred Compensation Account under the Qualified Plan is actually invested over the period such Deferral Election Account remains outstanding under this Plan. Accordingly, on each Valuation Date under the Qualified Plan, the Deferral Election Account of the Participant shall be adjusted to reflect the investment gains, earnings or losses such Plan Account would have actually realized had it been invested for the valuation period in the same investment funds as the Participant's Deferred Compensation Account under the Qualified Plan. 8. 9 The balance credited to the Participant's Supplemental Contribution Account under this Plan shall be deemed to be invested in the same investment funds in which the Participant's Discretionary Contribution Account under the Qualified Plan is actually invested over the period such Plan Account remains outstanding under this Plan. Accordingly, on each Valuation Date under the Qualified Plan, the Supplemental Contribution Account of the Participant shall be adjusted to reflect the investment gains, earnings or losses such Plan Account would have actually realized had it been invested for the valuation period in the same investment funds as the Participant's Discretionary Contribution Account under the Qualified Plan. For any period for which the Participant does not have an outstanding balance in his or her Deferred Compensation Account or Discretionary Contribution Account under the Qualified Plan but does have a balance credited to his or her corresponding Plan Account under this Plan, then that Plan Account shall continue to be adjusted for the investment earnings, gains and losses such Plan Account would have realized had it been actually invested in the investment funds in which the Deferred Compensation Account or Discretionary Contribution Account, as case may be, was last invested prior to distribution under the Qualified Plan. In no event shall any Participating Company be obligated to make an actual investment of its assets in the investment fund or funds which serve as the measure of the investment return on the Plan Accounts maintained under this Plan. 6.02 VALUE OF PLAN ACCOUNTS. The value of a Participant's Deferral Election Account or Supplemental Contribution Account on any particular date in question shall be deemed to be the balance credited to that Plan Account on the Valuation Date coincident with or immediately preceding the date such value is to be determined, increased by any deferred compensation credited to, or decreased by any payment or forfeiture made from, that Plan Account after such Valuation Date but before the actual date on which the value of the Plan Account is to be determined. The Participant shall receive a written statement of the value of each of his or her Plan Accounts at least once each calendar year. 6.03 VESTED INTEREST. The Participant shall at all times be fully vested in his or her Deferral Election Account and shall be vested in his or her Supplemental Contribution Account to the same extent he or she is at the time vested in his or her Discretionary Contribution Account under the Qualified Plan. Upon the Participant's cessation of Employee status for any reason prior to vesting in his or her Supplemental Contribution Account, the unvested balance of that Plan Account shall be immediately forfeited, and only the vested portion of that Plan Account shall continue to remain outstanding and be credited with an investment return under this Plan. Forfeitures under this Plan shall not be reallocated to the Plan Accounts of any other Participants. 9. 10 ARTICLE VII DISTRIBUTION OF BENEFITS 7.01 TERMINATION OF EMPLOYEE STATUS. The vested balance credited to the Plan Accounts maintained for each Participant under this Plan shall become due and payable in accordance with the following provisions: - Should the Participant cease to be an Employee by reason of death or Disability, then the entire vested balance of his or her Plan Accounts shall be paid in a lump sum within ninety (90) days after the date of such cessation of Employee status. - Should the Participant cease to be an Employee for any other reason when the vested balance of his or her Plan Accounts exceeds Ten Thousand Dollars ($10,000.00), then that balance shall be paid in a lump sum at the end of the one-year period measured from the date of such cessation of Employee status. However, if such cessation of Employee status occurs within eighteen (18) months after a Change in Control, then the vested balance of the Plan Accounts shall be paid in a lump sum within thirty (30) days thereafter. - Should the Participant cease to be an Employee for any reason other than death or Disability when the vested balance of his or her Plan Accounts is Ten Thousand Dollars ($10,000.00) or less, then that balance shall be paid in a lump sum within thirty (30) days after the date of such cessation of Employee status. 7.02 HARDSHIP WITHDRAWAL. If an unforeseeable and extraordinary financial hardship occurs for which the Participant does not have any other resources available, whether through reimbursement (by insurance or otherwise), liquidation of existing assets (to the extent such liquidation would not itself result in financial hardship), termination of his or her Section 401(k) Election under the Qualified Plan or a loan from the Qualified Plan or other commercially reasonable sources, then the Participant may apply to the Plan Administrator for an immediate distribution from his or her Deferral Election Account in an amount necessary to satisfy such financial hardship. The Plan Administrator shall have complete discretion to accept or reject the request and shall in no event authorize a distribution in an amount in excess of that required to meet such financial hardship. 7.03 DEATH BEFORE DISTRIBUTION. If the Participant dies prior to distribution of the vested balance of his or her Plan Accounts, the unpaid vested balance shall be paid to his or her designated beneficiary under the Qualified Plan at the same time as such balance would have been paid to the Participant under this Plan had he or she survived. 10. 11 7.04 WITHHOLDING. All payments made under the Plan shall be subject to the Company's withholding of all required Federal, State and local income and employment taxes, and all such payments shall be net of such tax withholding. ARTICLE VIII MISCELLANEOUS 8.01 BENEFITS NOT FUNDED. The obligation to pay the vested balance of each Participant's Plan Accounts shall at all times be an unfunded and unsecured obligation of the Company. Except to the extent the Plan Administrator may in its sole discretion elect to implement a so-called "Rabbi Trust" for the benefit payments hereunder, the Company shall have no obligation to establish any trust, escrow arrangement or other fiduciary relationship for the purpose of segregating funds for the payment of such Plan Accounts, nor shall the Company be under any obligation to invest any portion of its general assets in mutual funds, stocks, bonds, securities or other similar investments in order to accumulate funds for the satisfaction of its obligations under the Plan. The Participant (or his or her beneficiary) shall look solely and exclusively to the general assets of the Company for the payment of the Plan Accounts maintained on the Participant's behalf under the Plan. However, in connection with any Change in Control, the Company shall, prior to the effective date of that Change in Control, establish a Rabbi Trust and irrevocably contribute to that trust sufficient funds to cover the Company's total accrued liability existing at that time under this Plan, and the contributed funds shall be invested by the trustee to provide for the investment returns contemplated by Article VI. Payments from the Rabbi Trust shall be made as and when benefits become payable to Participants in accordance with the distribution provisions of Article VII of the Plan, with any remaining balance due the Participants to be paid out of the Company's assets. 8.02 NO EMPLOYMENT RIGHT. Neither the action of the Company or any other Participating Company in establishing or maintaining the Plan, nor any action taken under the Plan by the Plan Administrator, nor any provision of the Plan itself shall be construed so as to grant any person the right to remain in the employ of the Company or any other Affiliated Company for any period of specific duration, and the Participant may be discharged at any time, with or without cause. 8.03 AMENDMENT/TERMINATION. The Board may at any time amend the provisions of the Plan to any extent and in any manner the Board shall deem advisable, and such amendment shall become effective at the time of Board action. One or more Participating Companies may at any time terminate the Plan in whole or in part with respect to their Eligible Employees. However, no such plan amendment or termination shall adversely affect the benefits of Participants accrued to date under the Plan nor otherwise reduce the then outstanding balances credited to their Plan Accounts, and all compensation deferred prior to the date of any such plan amendment or termination shall continue to become due and payable in accordance with the distribution provisions of Article VII. 11. 12 8.04 APPLICABLE LAW. The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or other highly compensated persons, and all rights hereunder shall be construed, administered and governed in all respects in accordance with the provisions of the Employee Retirement Income Security Act of 1974 (as amended from time to time) applicable to such an arrangement and, to the extent not pre-empted thereby, by the laws of the State of California without resort to that State's conflict- of-laws provisions. If any provision of this Plan shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions of the Plan shall continue to be fully effective. 8.05 SATISFACTION OF CLAIMS. Any payment made to a Participant or his or her legal representative or beneficiary in accordance with the terms of this Plan shall to the extent thereof be in full satisfaction of all claims with respect to such payment which such person may have against the Plan, the Plan Administrator (or its delegate) and the Affiliated Companies, any of whom may require the Participant or his or her legal representative or beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Plan Administrator. 8.06 ALIENATION OF BENEFITS. No person entitled to any benefits under the Plan shall have the right to alienate, pledge, hypothecate or otherwise encumber his or her interest in such benefits, and such benefits shall not, to the maximum extent permissible by law, be subject to claim of his or her creditors or liable to attachment, execution or other process of law. 8.07 EXPENSES. All costs and expenses incurred in the operation and administration of the Plan shall be borne by the Company. 8.08 SUCCESSORS AND ASSIGNS. The obligations of the Participating Companies to make the payments required hereunder shall be binding upon the successors and assigns of such Participating Companies, whether by merger, consolidation, acquisition or other reorganization. No amendment or termination of the Plan by any such successor or assign shall adversely affect or otherwise impair the rights of Participants to receive benefit payments hereunder, to the extent attributable to compensation deferred prior to the date of such amendment or termination, in accordance with the applicable distribution provisions of Article VII hereof. ARTICLE IX BENEFIT CLAIMS 9.01 CLAIMS PROCEDURE. No application is required for the payment of benefits under the Plan. However, if any Participant (or beneficiary) believes he or she is entitled to a benefit from the Plan which differs from the benefit determined by the Plan Administrator, then such individual may file a written claim for benefits with the Plan 12. 13 Administrator. Each claim shall be acted upon and approved or disapproved within ninety (90) days following receipt by the Plan Administrator. 9.02 DENIAL OF BENEFITS. In the event any claim for benefits is denied, in whole or in part, the Plan Administrator shall notify the claimant in writing of such denial and of his or her right to a review by the Plan Administrator and shall set forth, in a manner calculated to be understood by the claimant, specific reasons for such denial, specific references to pertinent provisions of this Plan on which the denial is based, a description of any additional material or information necessary to perfect the claim, an explanation of why such material or information is necessary, and an explanation of the review procedure. 9.03 REVIEW. A. Any person whose claim for benefits is denied in whole or in part may appeal to the Plan Administrator for a full and fair review of the decision by submitting to the Plan Administrator, within ninety (90) days after receiving written notice from the Plan Administrator of such denial, a written statement: (i) Requesting a review by the Plan Administrator of his or her claim for benefits; (ii) Setting forth all of the grounds upon which the request for review is based and any facts in support thereof; and (iii) Setting forth any issues or comments which the claimant deems pertinent to his or her claim. B. The Plan Administrator shall act upon each such claim within sixty (60) days after receipt of the claimant's request for review by the Plan Administrator, unless special circumstances require an extension of time for processing. If such an extension is required, written notice of the extension shall be furnished to the claimant within the initial sixty (60)-day period, and a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the initial request for review. The Plan Administrator shall make a full and fair review of each such claim and any written materials submitted by the claimant or any Participating Company in connection therewith and may require the Participating Company or the claimant to submit such additional facts, documents or other evidence as the Plan Administrator may, in its sole discretion, deem necessary or advisable in making such a review. On the basis of its review, the Plan Administrator shall make an independent determination of the claimant's eligibility for benefits under the Plan. The decision of the Plan Administrator on any benefit claim shall be final and conclusive upon all persons. 13. 14 C. In the event the Plan Administrator denies an appeal in whole or in part, the Plan Administrator shall give written notice of such decision to the claimant, setting forth in a manner calculated to be understood by the claimant the specific reasons for such denial and specific reference to the pertinent Plan provisions on which the decision of the Plan Administrator was based. 14. 15 SCHEDULE A LIST OF PARTICIPATING COMPANIES KOMAG, INCORPORATED 16 EXHIBIT A 17 KOMAG, INCORPORATED DEFERRED COMPENSATION PLAN DEFERRAL ELECTION FORM 1995 CALENDAR YEAR Please check A or B and complete form as appropriate, including C if applicable. [ ] A. I hereby elect to participate in Deferral Election Program for the 1995 calendar year. I hereby elect to defer payment of a portion of the compensation I earn for services rendered in the 1995 calendar year, in the dollar amount determined in accordance with the following formula: ____% (in increments of one percent up to ten percent maximum) of my 1995 base salary, PLUS ____% (zero to ten percent in one percent increments) of any bonus payable to me in 1996 under the Management Bonus Plan for services rendered in the 1995 calendar year, LESS the maximum dollar amount which can be contributed on my behalf as a Section 401(k) Contribution for the 1995 calendar year in accordance with the anti-discrimination standards of Internal Revenue Code Section 401 (k) and the maximum dollar limitation of Internal Revenued Code Section 402(g) (currently $9,240). I understand that the deferral of my base salary for the calendar year will not in fact begin until such time as the maximum Section 401(k) contribution permissible under Internal Revenue Code Sections 401(k) and 402(g) for that calendar year has been made on my behalf to the Komag Savings and Deferred Profit-Sharing Plan or would have been made on my behalf in the absence of any voluntary reduction to my Section 401(k) election. I also understand that the portion of the bonus subject to my deferral election will in fact be deferred only if the remaining portion of that bonus is paid after the maximum Section 401(k) contribution permissible under Internal Revenue Code Sections 401(k) and 402(g) for the calendar year of payment (1996) has been made on my behalf to the Komag Savings and Deferred Profit-Sharing Plan or would have been made in the absence of any voluntary reduction to my Section 401(k) election. 18 I further understand that should my salary be increased during the calendar year, the deferral percentage in effect for my base salary will remain constant and result in a higher dollar amount of deferred salary for the year. As required by the Federal tax laws, my deferral election is irrevocable and cannot be changed or modified under any circumstances. I understand that in the event my employment should terminate within 18 months following a Change in Control (as defined in the Plan), all amounts deferred by me under the Plan will be paid to me in an immediate lump sum. To the extent my rights under law to the compensation deferred pursuant to this election are greater than the rights of a general unsecured creditor of the Company, I hereby waive those rights and agree that I shall have only the rights of a general unsecured creditor with respect to the payment of my deferred compensation. [ ] B. I hereby elect not to participate in the Deferral Election Program. [ ] C. I hereby elect to have the deferral election specified in Section A above continue for each subsequent calendar year, until I change my deferral election in accordance with the provisions of the Plan. Any such change shall become effective for a particular calendar year only if the new deferral election is filed not later than the December 31 immediately prior to the start of the calendar year for which I earn the compensation subject to my new election. Printed Name: -------------------------------- Signature: -------------------------------- Dated: , 1995 -------------------------------- 2. 19 KOMAG, INCORPORATED DEFERRED COMPENSATION PLAN PLAN AMENDMENT NO. 1 The Komag, Incorporated Deferred Compensation Plan, as established effective March 1, 1995 (the "Plan"), is hereby amended as follows: 1. Section 4.01 is hereby amended, effective January 1, 1997, to read as follows: 4.01 ANNUAL ELECTION. Each Participant shall have the right to file a Deferral Election to defer part of the base salary and/or Bonus earned for one or more Years of Service for which he or she remains a Participant. However, the maximum amount which such Participant may defer for each Year of Service shall be determined in accordance with the following formula: - up to twelve percent (12%) of the base salary earned for his or her period of participation during that Year of Service, plus - up to twelve percent (12%) of any Bonus earned for such Year of Service, less - the maximum dollar amount which may be contributed on the Participant's behalf as a Section 401(k) Contribution for that Year of Service pursuant to the applicable limitations of Code Sections 401(k) and 402(g). 2. Section 4.03 is hereby amended, effective June 1, 1996, to read as follows: 4.03 COMMENCEMENT OF DEFERRALS. The actual deferral of base salary pursuant to the Participant's Deferral Election shall not begin until such time as the maximum Section 401(k) Contribution permissible under the Qualified Plan and Code Section 402(g) for the calendar year in which that base salary is earned shall have been made on the Participant's behalf to the Qualified Plan in accordance with his or her Section 401(k) Election for that year or would have been made in the absence of any voluntary reduction in the Participant's Section 401(k) Election for that year. The portion of the Bonus which is the subject of the Participant's Deferral Election shall in fact 20 be deferred under this Plan only if the remaining portion of that Bonus is paid after the maximum Section 401(k) Contribution permissible under the Qualified Plan and Code Section 402(g) for the calendar year of such payment shall have been made on the Participant's behalf to the Qualified Plan in accordance with his or her Section 401(k) Election for that year or would have been made in the absence of any reduction in the Participant's Section 401(k) Election for that year. In the event there is no Section 401(k) Election in effect for the Participant at the start of the calendar year to which his or her Deferral Election pertains, then the actual deferral of base salary pursuant to that Deferral Election shall begin at such time as the maximum Section 401(k) Contribution permissible under the Qualified Plan and Code Section 402(g) for that calendar year would have been made on the Participant's behalf to the Qualified Plan had there been in effect for that individual a Section 401(k) Election covering ten percent (10%) or (effective January 1, 1997) twelve percent (12%) of his or her eligible earnings for the year, with earnings to be imputed, solely for purposes of such timing determination, to the Participant (based on his or her annualized rate of base salary) for any portion of that year in which such individual was not an Employee. The same principle shall be in effect for the portion of any Bonus subject to the Deferral Election filed by such Participant. 3. Except as modified by this Plan Amendment, all the terms and provisions of the Plan shall continue in full force and effect. 2. -----END PRIVACY-ENHANCED MESSAGE-----