As filed with the Securities and Exchange Commission on September 8, 1995
Registration No. 33-____________
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)
275 SOUTH HILLVIEW DRIVE, MILPITAS, CA 95035
(Address of principal executive offices) (Zip Code)
________________________
KMT 1995 STOCK OPTION PLAN
(Full title of the Plan)
________________________
STEPHEN C. JOHNSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
KOMAG, INCORPORATED
275 SOUTH HILLVIEW DRIVE, MILPITAS, CA 95035
(Name and address of agent for service)
(408) 946-2300
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
Options to Purchase Common 60,000 N/A N/A N/A
Stock, $0.01 par value
Common Stock, 60,000 shares $64.9375 $3,896,250.00 $1,343.53
$0.01 par value
<FN>
(1) This Registration Statement shall also cover any
additional shares of Common Stock which become issuable
under the KMT 1995 Stock Option Plan by reason of any
stock dividend, stock split, recapitalization or any
other similar transaction effected without the receipt
of consideration which results in an increase in the
number of outstanding shares of Common Stock of Komag,
Incorporated.
(2) Calculated solely for purposes of this offering under
Rule 457(h) of the Securities Act of 1933, as amended,
on the basis of the average of the high and low selling
prices per share of Common Stock of Komag, Incorporated
on September 5, 1995, as reported on the Nasdaq National
Market.
</FN>
</TABLE>
TOTAL PAGES 5
EXHIBIT INDEX ON PAGE II-2
<PAGE>
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 January 1, 1995, as amended by Amendment No. 1
thereto, filed with the SEC on March 13, 1995;
b. The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended May 4, 1995 and July 2, 1995, filed with
the SEC on May 11, 1995 and July 19, 1995, respectively; and
c. The Registrant's Registration Statement No. 0-16852 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.
Item 4. Description of Securities
Not applicable.
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 a manner involving
intentional misconduct or a knowing violation of law; or
(iv) derived an improper personal benefit.
<PAGE>
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
5 Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
23.2 Consent of Brobeck, Phleger & Harrison is contained
in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4
of this Registration Statement.
99.1 KMT 1995 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement (Employees/Consultants).
99.4 Form of Stock Option Agreement (Officers).
II-2
<PAGE>
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 KMT 1995 Stock Option 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-3
<PAGE>
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 5th day of September, 1995.
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 September 5, 1995
--------------------- Officer and Director
Stephen C. Johnson (Principal Executive Officer)
II-4
<PAGE>
Signatures Title Date
/s/Tu Chen Chairman of the Board September 5, 1995
------------------------
/s/William L. Potts, Jr. Vice President of Finance, September 5, 1995
------------------------ Chief Financial Officer and
William L. Potts, Jr. Secretary (Principal Financial
and Accounting Officer)
/s/Craig R. Barrett Director September 5, 1995
------------------------
Craig R. Barrett
/s/Chris A. Eyre Director September 5, 1995
------------------------
Chris A. Eyre
/s/Irwin Federman Director September 5, 1995
------------------------
Irwin Federman
/s/George A. Neil Director September 5, 1995
------------------------
George A. Neil
/s/ Max Palevsky Director September 5, 1995
------------------------
Max Palevsky
/s/Anthony Sun Director September 5, 1995
------------------------
Anthony Sun
/s/Masayoshi Takebayashi Director September 5, 1995
------------------------
Masayoshi Takebayashi
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
KOMAG, INCORPORATED
<PAGE>
EXHIBIT INDEX
Sequentially Numbered
Exhibit No. Exhibit Page
5 Opinion of Brobeck, Phleger & Harrison.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
23.2 Consent of Brobeck, Phleger & Harrison is contained
in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4
of this Registration Statement.
99.1 KMT 1995 Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement (Employees/Consultants).
99.4 Form of Stock Option Agreement (Officers).
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison
September 7, 1995
KOMAG, INCORPORATED
275 South Hillview Drive
Milpitas, California 95035
RE: KOMAG, INCORPORATED -- REGISTRATION STATEMENT FOR
OFFERING OF 60,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as
amended, of 60,000 shares of the Common Stock of Komag,
Incorporated (the "Company") authorized for issuance under the
KMT 1995 Stock Option Plan (the "Plan"). We advise you that, in
our opinion, when such shares have been issued and sold pursuant
to the provisions of the Plan and in accordance with the
Registration Statement, such shares will be validly issued, fully
paid and nonassessable shares of the Company's Common Stock.
We hereby consent to the filing of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors - Ernst & Young LLP
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8) pertaining to the Komag Material
Technology, Inc. Stock Option Plan of our report dated January 31,
1995, with respect to the consolidated financial statements
and schedule of Komag, Incorporated included in its Annual Report
(Form 10-K) for the year ended January 1, 1995, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
September 5, 1995
<PAGE>
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison is contained in Exhibit 5.
<PAGE>
EXHIBIT 24
Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
EXHIBIT 99.1
KMT 1995 Stock Option Plan
KOMAG MATERIAL TECHNOLOGY, INC.
1995 STOCK OPTION PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to
promote the interests of Komag Material Technology, Inc., a
Delaware corporation, by providing eligible individuals with the
opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in Komag, Incorporated, the
Corporation's parent company, through long-term option grants
designed to provide them with incentive to continue in the
Corporation's service and contribute to the financial success of
both the Corporation and Komag, Incorporated.
Capitalized terms shall have the meanings
assigned to such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered
by the Compensation Committee of the Board. Members of the
Committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any
time.
B. The Compensation Committee as Plan
Administrator shall have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan
and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any
outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Plan.
C. Service as Plan Administrator shall
constitute service as a Board member, and members of the
Compensation Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their
service as the Plan Administrator. No member of the Committee
shall be liable for any act or omission made in good faith with
respect to the Plan or any option grants thereunder.
2.
<PAGE>
III. ELIGIBILITY
A. The persons eligible to receive option
grants under the Plan are as follows:
(i) Employees, and
(ii) consultants or other independent
advisors who provide services to the Corporation (or any
Subsidiary).
B. The Plan Administrator shall have full
authority to determine which eligible persons are to receive
option grants, the time or times when such option grants are to
be made, the number of shares to be covered by each such grant,
the time or times at which each option is to become exercisable,
the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be
shares of Komag Stock, acquired by the Corporation through
(i) direct purchase from Komag or (ii) purchase on the open
market. The maximum number of shares of Komag Stock which may be
issued over the term of the Plan shall not exceed Sixty Thousand
(60,000) shares.
B. Shares of Komag Stock subject to outstanding
options under the Plan shall be available for subsequent issuance
under the Plan to the extent (i) the options expire or terminate
for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions
of Article Two. All shares issued under the Plan, whether or not
those shares are subsequently repurchased by the Corporation
pursuant to its repurchase rights under the Plan, shall reduce on
a share-for-share basis the number of shares of Komag Stock
available for subsequent issuance under the Plan. In addition,
should the exercise price of an option under the Plan be paid
with shares of Komag Stock, then the number of shares of Komag
Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and
not by the net number of shares of Komag Stock issued to the
holder of such option.
C. Should any change be made to the Komag Stock
by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Komag Stock, appropriate adjustments
shall be made to (i) the maximum number and/or class of
securities issuable under the Plan and (ii) the number and/or
class of securities and the exercise price per share in effect
under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.
2.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more
documents in the form approved by the Plan Administrator;
provided, however, that each such document shall comply with the
terms specified below. All options granted under the Plan shall
be Non-Statutory Options.
A. EXERCISE PRICE.
1. The exercise price per
share shall be fixed by the Plan Administrator but shall not be
less than eighty-five percent (85%) of the Fair Market Value per
share of Komag Stock on the option grant date.
2. The exercise price shall
become immediately due upon exercise of the option and shall,
subject to the provisions of Section I of Article Three and the
documents evidencing the option, be payable in one or more of the
forms specified below:
(i) cash or check made
payable to the Corporation,
(ii) shares of Komag
Stock held for the requisite period necessary to avoid a
charge to either the Corporation's or Komag's earnings
for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or
(iii) through a special
sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-designated brokerage
firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for
the purchased shares plus all applicable Federal, state
and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise
and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
Except to the extent such sale and remittance
procedure is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date.
3.
<PAGE>
B. EXERCISE AND TERM OF OPTIONS. Each option shall
be exercisable at such time or times, during such period and for
such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the
option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. EFFECT OF TERMINATION OF SERVICE.
1. The following provisions shall govern the
exercise of any options held by the Optionee at the time of his
or her cessation of Service or death.
(i) Upon the Optionee's
cessation of Service for any reason other than death,
the Optionee shall not have more than a twelve (12)-
month period (or such shorter period determined by the
Plan Administrator and set forth in the agreement
evidencing such option) following the date of such
cessation of Service in which to exercise his or her
outstanding options, but in no event may any such
option be exercised after the specified expiration date
of the option term.
(ii) Any option exercis-
able in whole or in part by the Optionee at the time of
death may be subsequently exercised by the personal
representative of the Optionee's estate or by the
person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with
the laws of descent and distribution. However, the
right to exercise such option shall lapse, and the
option shall cease to be outstanding, upon the earlier
of (i) the first anniversary of the date of the
optionee's death or (ii) the specified expiration date
of the option term.
(iii) During the appli-
cable post-Service exercise period, the option may not
be exercised in the aggregate for more than the number
of shares for which the option is exercisable on the
date of the Optionee's cessation of Service. Upon the
expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for
any exercisable shares for which the option has not
been exercised. However, the option shall, immediately
upon the Optionee's cessation of Service, terminate and
cease to be outstanding with respect to any or all
shares for which the option is not otherwise at that
time exercisable.
(iv) Should the Optionee's
Service be terminated for Misconduct, then all
outstanding options held by the Optionee shall terminate
immediately and cease to be outstanding.
4.
<PAGE>
2. The Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted
or at any time while the option remains outstanding, to:
- extend the period of time for which
the option is to remain exercisable following the
Optionee's cessation of Service from the specified
post-Service exercise period otherwise in effect for
that option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event
beyond the expiration of the option term, and/or
- permit the option to be exercised,
during the applicable post-Service exercise period, not
only with respect to the number of shares of Komag Stock
for which such option is exercisable at the time of the
Optionee's cessation of Service but also with respect to
one or more additional installments for which the option
would have become exercisable had the Optionee continued
in Service.
D. STOCKHOLDER RIGHTS. The holder of an option
shall have no stockholder rights with respect to the shares of
Komag Stock subject to the option until such person shall have
exercised the option, paid the exercise price and become a holder
of record of the purchased shares.
E. REPURCHASE RIGHTS. The Plan Administrator shall
have the discretion to grant options which are exercisable for
unvested shares of Komag Stock. Should the Optionee cease Service
while holding such unvested shares, the Corporation shall have
the right to repurchase, at the exercise price paid per share,
any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for
the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such
repurchase right.
F. LIMITED TRANSFERABILITY OF OPTIONS. During the
lifetime of the Optionee, the option shall be exercisable only by
the Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution following
the Optionee's death.
II. CORPORATE TRANSACTION
A. In the event of any KMT Corporate
Transaction, each outstanding option under the Plan shall either
be assumed by the successor corporation (or parent thereof) or
replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof).
In addition, all repurchase rights outstanding under the Plan at
the time of the KMT Corporate Transaction shall be assigned to
the successor corporation (or parent thereof) in connection with
such Corporate Transaction.
5.
<PAGE>
B. (i) In the event of any Komag Corporate
Transaction, each outstanding option under the Plan shall
automatically accelerate so that each such option shall, for the
five (5) business days immediately prior to the effective date of
the Corporate Transaction, become fully exercisable for all the
shares of Komag Stock at the time subject to such option and may
be exercised for any or all of those shares as fully-vested
shares of Komag Stock. However, an outstanding option shall not
so accelerate if and to the extent:
(i) such option is, in
connection with the Komag Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be
replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof) or
(ii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the
option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.
(ii) All repurchase rights
outstanding under the Plan at the time of the Komag Corporate
Transaction shall also terminate automatically, and the shares of
Komag Stock subject to those terminated rights shall vest in
full, immediately prior to the consummation of such Corporate
Transaction, except to the extent: (i) those repurchase rights
are to be assigned to the successor corporation (or parent
thereof) in connection with the Komag Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase
right is issued.
(iii) Immediately following
the consummation of any Komag Corporate Transaction, all
outstanding options under the Plan shall terminate and cease to
be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).
C. Each option which is assumed in connection
with a KMT or Komag Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply
to the number and class of securities which would have been
issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be
made to (i) the number and class of securities available for
issuance under the Plan following the consummation of such
Corporate Transaction and (ii) the exercise price payable per
share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.
D. The grant of options shall in no way affect
the right of the Corporation or Komag to adjust, reclassify,
reorganize or otherwise change its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
6.
<PAGE>
III. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority
to effect, at any time and from time to time, with the consent of
the affected option holders, the cancellation of any or all
outstanding options under the Plan and to grant in substitution
new options covering the same or different number of shares of
Komag Stock but with an exercise price per share based on the
Fair Market Value per share of Komag Stock on the new option
grant date.
7.
<PAGE>
ARTICLE THREE
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee
to pay the option exercise price by delivering a promissory note
payable in one or more installments. The terms of any such
promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its
sole discretion. Promissory notes may be authorized with or
without security or collateral. In all events, the maximum credit
available to the Optionee may not exceed the sum of (i) the
aggregate option exercise price payable for the purchased shares
plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee in connection with the option
exercise.
II. TAX WITHHOLDING
The Corporation's obligation to deliver shares
of Komag Stock upon the exercise of options under the Plan shall
be subject to the satisfaction of all applicable Federal, state
and local income and employment tax withholding requirements.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective immediately
upon adoption by the Board. However, no options granted under the
Plan may be exercised until the Plan is approved by Komag, acting
through the Komag Board, as the Corporation's majority
stockholder. Should such approval not be obtained within twelve
(12) months after the date of adoption, then all options
previously granted under this Plan shall terminate and cease to
remain outstanding, and no further option grants shall be made
under the Plan.
B. The Plan shall terminate upon the earlier of
(i) May 31, 2005 or (ii) the date on which all shares available
for issuance under the Plan shall have been issued pursuant to
the exercise of the options under the Plan. If the date of
termination is determined under clause (i) above, then all option
grants outstanding on such date shall thereafter continue to have
force and effect in accordance with the provisions of the
documents evidencing such grants.
IV. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all
respects. However, no such amendment or modification shall
adversely affect the rights and obligations with respect to
options at the time outstanding under the Plan unless the
Optionee consents to such amendment or
8.
<PAGE>
modification. In addition, any amendment which would
(i) materially increase the maximum number of shares of Komag
Stock issuable under the Plan, except for permissible adjustments
in the event of certain changes in the Corporation's
capitalization, (ii) materially modify the eligibility
requirements for Plan participation or (iii) materially increase
the benefits accruing to Plan participants shall require the
approval of Komag, acting through the Komag Board, if Komag is at
the time the Corporation's majority stockholder.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation
from the sale of shares of Komag Stock under the Plan shall be
used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting
of any option and the issuance of any shares of Komag Stock upon
the exercise of any option shall be subject to the procurement by
both the Corporation and Komag of all approvals and permits
required by regulatory authorities having jurisdiction over the
Plan, the options and the shares of Komag Stock issued pursuant
to it.
B. No shares of Komag Stock or other assets
shall be issued or delivered under the Plan unless and until
there shall have been compliance with all applicable requirements
of Federal and state securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the
shares of Komag Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq
National Market, if applicable) on which Komag Stock is then
listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the
Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Subsidiary employing or
retaining such person) or of the Optionee, which rights are
hereby expressly reserved by each, to terminate such person's
Service at any time for any reason, with or without cause.
9.
<PAGE>
APPENDIX
The following definitions shall be in effect
under the Plan:
A. BOARD shall mean the Corporation's Board of
Directors.
B. CODE shall mean the Internal Revenue Code of
1986, as amended.
C. CORPORATION shall mean Komag Material
Technology, Inc., a Delaware corporation.
D. EMPLOYEE shall mean an individual who is in
the employ of the Corporation (or any Subsidiary), subject to the
control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.
E. EXERCISE DATE shall mean the date on which
the option is exercised either by written notice delivered to the
Corporation or through the interactive response system
established with a Corporation-designated brokerage firm.
F. FAIR MARKET VALUE per share of Komag Stock
on any relevant date shall be determined in accordance with the
following provisions:
(i) If the Komag Stock
is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling
price per share of Komag Stock on the date in question,
as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling
price for the Komag Stock on the date in question, then
the Fair Market Value shall be the closing selling
price on the last preceding date for which such
quotation exists.
(ii) If the Komag Stock
is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price
per share of Komag Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to
be the primary market for the Komag Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Komag Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
G. KMT CORPORATE TRANSACTION shall mean any of
the following transactions to which the Corporation is a party:
A-1.
<PAGE>
(i) a merger or acquisition in
which the Corporation is not the surviving entity,
except for a transaction the principal purpose of which
is to change the State of incorporation,
(ii) the sale, transfer or other
disposition of all or substantially all of the assets
of the Corporation, or
(iii) any reverse merger in which
the Corporation is the surviving entity.
H. KOMAG shall mean Komag, Incorporated, a
Delaware corporation, in its capacity as the owner of securities
possessing fifty percent (50%) or more of the total combined
voting power of the Corporation's outstanding securities.
I. KOMAG BOARD shall mean the Board of Directors
of Komag.
J. KOMAG CORPORATE TRANSACTION shall mean any of
the following stockholder-approved transactions effected while
Komag is the owner of securities possessing fifty percent (50%)
or more of the total combined voting power of the Corporation's
outstanding securities:
(i) a merger or acquisi-
tion in which Komag is not the surviving entity, except
for a transaction the principal purpose of which is to
change the State of incorporation,
(ii) the sale, transfer
or other disposition of all or substantially all of
Komag's assets, or
(iii) any reverse merger in
which Komag is the surviving entity.
K. KOMAG STOCK shall mean shares of Komag common
stock.
L. KOMAG SUBSIDIARY shall mean any corporation
(other than Komag or the Corporation) in an unbroken chain of
corporations beginning with Komag, provided each corporation
(other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
M. MISCONDUCT shall mean the commission of any act
of fraud, embezzlement or dishonesty by the Optionee, any
unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any
Subsidiary) or Komag, or any other intentional misconduct by such
person adversely affecting the
A-2.
<PAGE>
business or affairs of the Corporation (or any Subsidiary) or
Komag in a material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which the
Corporation (or any Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee or other person in the
Service of the Corporation (or any Subsidiary).
N. 1934 ACT shall mean the Securities Exchange Act
of 1934, as amended.
O. NON-STATUTORY OPTION shall mean an option not
intended to satisfy the requirements of Code Section 422.
P. OPTIONEE shall mean any person to whom an
option is granted under the Plan.
Q. PLAN shall mean the Corporation's 1995 Stock
Option Plan, as set forth in this document.
R. PLAN ADMINISTRATOR shall mean the Compensation
Committee of the Board acting in its capacity as administrator of
the Plan.
S. SERVICE shall mean the Optionee's performance
of services for the Corporation (or any Subsidiary) in the
capacity of an Employee or a consultant or independent advisor,
except to the extent otherwise specifically provided in the
documents evidencing the option grant. An Optionee shall also be
deemed to be engaged in such Service for any period of time the
Optionee performs such services for Komag or any Komag
Subsidiary, provided Komag is at the time the owner of securities
possessing fifty percent (50%) or more of the total combined
voting power of the Corporation's outstanding securities.
T. STOCK EXCHANGE shall mean either the American
Stock Exchange or the New York Stock Exchange.
U. SUBSIDIARY shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. However,
any subsidiary of the Corporation which has adopted a stock
option, stock bonus, or other stock plan shall not be a
Subsidiary for purposes of this Plan.
A-3.
EXHIBIT 99.2
Form of Notice of Grant of Stock Option
KOMAG MATERIAL TECHNOLOGY, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given by Komag Material Technology,
Inc. (the "Corporation") of the following option grant (the
"Option") to purchase shares of the common stock of Komag,
Incorporated ("Komag Stock"):
OPTIONEE: ____________________________________
GRANT DATE: __________________________________
VESTING COMMENCEMENT DATE: ___________________
EXERCISE PRICE: $__________________ per share
NUMBER OF OPTION SHARES: ______________ shares
EXPIRATION DATE: _____________________________
TYPE OF OPTION: Non-Statutory Stock Option
EXERCISE SCHEDULE: The Option shall become
exercisable with respect to (i) twenty-five
percent (25%) of the Option Shares upon
Optionee's completion of one (1) year of
Service measured from the Vesting Commencement
Date and (ii) the balance of the Option Shares
in successive equal monthly installments upon
Optionee's completion of each of the next
thirty-six (36) months of Service measured from
and after the first anniversary of the Vesting
Commencement Date. In no event shall the Option
become exercisable for any additional Option
Shares after Optionee's cessation of Service.
Optionee understands and agrees that the Option is
granted subject to and in accordance with the terms of the Komag
Material Technology, Inc. 1995 Stock Option Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and
the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the
official prospectus for the Plan in the form attached hereto as
Exhibit B. A copy of the Plan is available upon request made to
the Corporate Secretary at the Corporation's principal offices.
<PAGE>
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Notice or in the Plan or in the attached Stock Option Agreement
shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any
Subsidiary employing or retaining Optionee) or Optionee, which
rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason, with or without
cause.
DEFINITIONS. All capitalized terms in this Notice shall
have the meaning assigned to them in this Notice or in the
attached Stock Option Agreement.
Date ____________, 199__
KOMAG MATERIAL TECHNOLOGY, INC.
By: _________________________
Title: ____________________
______________________________
OPTIONEE
Address: ____________________
____________________
ATTACHMENTS
Exhibit A - Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
2.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
PLAN SUMMARY AND PROSPECTUS
EXHIBIT 99.3
Form of Stock Option Agreement (Employees/Consultants)
KOMAG MATERIAL TECHNOLOGY, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of
retaining the services of selected Employees and consultants who
provide valuable services to the Corporation (or any Subsidiary).
B. Optionee is a person who provides such services to the
Corporation (or a Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the
Plan in connection with the Corporation's grant of an option to
Optionee to purchase shares of Komag Stock.
C. All capitalized terms in this Agreement shall have the
meaning assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to
Optionee, as of the Grant Date, an option to purchase up to the
number of Option Shares specified in the Grant Notice. The Option
Shares shall be purchasable from time to time during the option
term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly
expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be
neither transferable nor assignable by Optionee other than by
will or by the laws of descent and distribution following
Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee.
4. DATES OF EXERCISE.
(a) This option shall become exercisable for the
Option Shares in a series of installments as specified in the
Grant Notice. As the option becomes exercisable for one or more
installments, those installments shall accumulate and the option
shall remain exercisable for the accumulated installments until
the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
(b) Should the Optionee cease active Service by
reason of an Unpaid Leave of Absence, then this option shall not
<PAGE>
become exercisable for any additional Option Shares pursuant to
the exercise schedule set forth in the Grant Notice once the
duration of that Unpaid Leave of Absence exceeds thirty (30)
days. Accordingly, upon the expiration of the thirty (30)-day
period measured from the commencement date of the Unpaid Leave of
Absence, the exercise schedule for this option shall be frozen
and shall not be reinstated unless the Optionee returns to active
Service on or before the authorized expiration date of such
leave. Should the Optionee return to active Service on such a
timely basis, then the exercise schedule shall immediately resume
at the point where such schedule was frozen, and the option shall
become exercisable for one or more additional Option Shares on
the basis of the Optionee's Service rendered from and after the
resumption date.
5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date should any of the
following provisions become applicable:
(i) Should Optionee cease to remain in Service for
any reason (other than death or Permanent Disability)
while this option is outstanding, then Optionee shall
have a period of thirty (30) days (commencing with the
date of such cessation of Service) during which to
exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.
(ii) Should Optionee die while this option is
outstanding, then the personal representative of
Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in
accordance with the laws of descent and distribution
shall have the right to exercise this option. Such
right shall lapse and this option shall cease to be
outstanding upon the EARLIER of (A) the first
anniversary of the date of Optionee's death or (B) the
Expiration Date.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding,
then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service)
during which to exercise this option. Such right shall
lapse and this option shall cease to be outstanding
upon the EARLIER of (A) the expiration of the twelve
(12)-month period measured from the date of Optionee's
Permanent Disability or (B) the Expiration Date.
2.
<PAGE>
(iv) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate
immediately and cease to remain outstanding.
(v) During the limited period of post-Service
exercisability, this option may not be exercised in the
aggregate for more than the number of Option Shares for
which the option is exercisable at the time of
Optionee's cessation of Service. However, should
Optionee's Service terminate by reason of death,
Permanent Disability or retirement at or after age
sixty- five (65), then this option may be exercised,
during the applicable period of post-Service
exercisability, for any or all of the Option Shares at
the time subject to this option. Upon the Optionee's
cessation of Service for any other reason, this option
shall immediately terminate and cease to be outstanding
with respect to any or all Option Shares for which this
option is not otherwise at that time exercisable in
accordance with the exercise schedule set forth in the
Grant Notice or the special acceleration provisions of
Paragraph 6.
6. SPECIAL ACCELERATION OF OPTION.
(a) In the event of any KMT Corporate Transaction,
this option shall either be assumed by the successor corporation
(or parent thereof) or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation
(or parent thereof).
(b) In the event of any Komag Corporate
Transaction, this option shall automatically accelerate so that
this option shall, for the five (5) business days immediately
prior to the effective date of the Komag Corporate Transaction,
become fully exercisable for all the shares of Komag Stock at the
time subject to this option and may be exercised for any or all
of those shares as fully-vested shares of Komag Stock. However,
this option shall not so accelerate if and to the extent:
(i) this option is, in connection with the Komag Corporate
Transaction, either to be assumed by the successor corporation
(or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation
(or parent thereof) or (ii) the acceleration of this option is
subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and
conclusive. Immediately following the consummation of the Komag
Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).
3.
<PAGE>
(c) If this option is assumed in connection with a
KMT or Komag Corporate Transaction, then this option shall be
appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately
prior to such Corporate Transaction, and appropriate adjustments
shall also be made to the Exercise Price, PROVIDED the aggregate
Exercise Price shall remain the same.
(d) This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Komag Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Komag Stock as a
class, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and
(ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares
until such person shall have exercised the option, paid the
Exercise Price and become a holder of record of the purchased
shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect
to all or any part of the Option Shares for which this option is
at the time exercisable, Optionee (or any other person or persons
exercising the option) must take the following actions:
(i) Either execute and deliver to the
Corporation a Notice of Exercise for the Option Shares for
which the option is exercised or initiate the exercise
through the interactive response system established with a
Corporation-designated brokerage firm.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation;
4.
<PAGE>
(B) shares of Komag Stock held by Optionee
(or any other person or persons exercising the option)
for the requisite period necessary to avoid a charge to
the Corporation's (or Komag's) earnings for financial
reporting purposes and valued at Fair Market Value on
the Exercise Date; or
(C) through a special sale and remittance
procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall
concurrently provide irrevocable instructions (I) to a
Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased
shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (II) to
the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in
order to complete the sale transaction.
Except to the extent the sale and remittance
procedure is utilized in connection with the option
exercise, payment of the Exercise Price for the
purchased Option Shares must be made at the time the
option is exercised.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the
option (if other than Optionee) have the right to exercise
this option.
(iv) Make appropriate arrangements with the
Corporation (or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state and local income
and employment tax withholding requirements applicable to
the option exercise.
(b) As soon as practical after the Exercise Date,
the Corporation shall issue to or on behalf of Optionee (or any
other person or persons exercising this option) a certificate for
the purchased Option Shares, with the appropriate legends affixed
thereto.
(c) In no event may this option be exercised for
any fractional shares.
5.
<PAGE>
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance
of the Option Shares upon such exercise shall be subject to
compliance by the Corporation, Komag and Optionee with all
applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which shares of Komag Stock
may be listed for trading at the time of such exercise and
issuance.
(b) The inability of the Corporation or Komag to
obtain approval from any regulatory body having authority deemed
by the Corporation or Komag to be necessary to the lawful
issuance and sale of Komag Stock pursuant to this option shall
relieve the Corporation and Komag of any liability with respect
to the non-issuance or sale of Komag Stock as to which such
approval shall not have been obtained. The Corporation and Komag,
however, shall use their best efforts to obtain all such
approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraphs 3 and 6, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns, Komag and its
successors and assigns and Optionee, Optionee's assigns and the
legal representatives, heirs and legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement
shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or
delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed effective upon
personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
13. CONSTRUCTION. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and
are in all respects limited by and subject to the terms of the
Plan. All decisions of the Plan Administrator with respect to any
question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in
this option.
14. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of
the State of California without resort to that State's
conflict-of-laws rules.
6.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Komag Material Technology, Inc. (the
"Corporation") that I elect to purchase ______ shares of the Komag,
Incorporated common stock (the "Purchased Shares") at the option
exercise price of $____ per share (the "Exercise Price") pursuant
to that certain option (the "Option") granted to me under the
Corporation's 1995 Stock Option Plan on ________________, 199_.
Concurrently with the delivery of this Exercise Notice
to the Corporation, I shall hereby pay to the Corporation the
Exercise Price for the Purchased Shares in accordance with the
provisions of my agreement with the Corporation (or other
documents) evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a
condition for exercise. Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my
agreement to effect payment of the Exercise Price.
Date ____________, 199_
____________________________________
Optionee
Address: __________________________
Print name in exact manner
it is to appear on the
stock certificate: ____________________________________
Address to which certificate
is to be sent, if different
from address above: ____________________________________
____________________________________
Social Security Number: ____________________________________
Employee Number: ____________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986,
as amended.
D. CORPORATION shall mean Komag Material Technology,
Inc., a Delaware corporation.
E. EMPLOYEE shall mean an individual who is in the
employ of the Corporation (or any Subsidiary), subject to the
control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.
F. EXERCISE DATE shall mean the date on which the
option shall have been exercised in accordance with Paragraph 9
of the Agreement.
G. EXERCISE PRICE shall mean the exercise price per
share as specified in the Grant Notice.
H. EXPIRATION DATE shall mean the date on which the
option expires as specified in the Grant Notice.
I. FAIR MARKET VALUE per share of Komag Stock on any
relevant date shall be determined in accordance with the
following provisions:
(i) If the Komag Stock is at the time traded on
the Nasdaq National Market, then the Fair Market Value
shall be the closing selling price per share of Komag
Stock on the date in question, as such price is
reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the
Komag Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Komag Stock is at the time listed on
any Stock Exchange, then the Fair Market Value shall be
the closing selling price per share of Komag Stock on
the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for
the
A-1.
<PAGE>
Komag Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If
there is no closing selling price for the Komag Stock
on the date in question, the Fair Market Value shall be
the closing selling price on the last preceding date
for which such quotation exists.
J. GRANT DATE shall mean the date of grant of the
option as specified in the Grant Notice.
K. GRANT NOTICE shall mean the Notice of Grant of Stock
Option accompanying the Agreement, pursuant to which Optionee has
been informed of the basic terms of the option evidenced hereby.
L. KMT CORPORATE TRANSACTION shall mean any of the
following transactions to which the Corporation is a party:
(i) a merger or acquisition in which the
Corporation is not the surviving entity, except for a
transaction the principal purpose of which is to change
the State of incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the
Corporation, or
(iii) any reverse merger in which the Corporation
is the surviving entity.
M. KOMAG shall mean Komag, Incorporated, a Delaware
corporation, in its capacity as the owner of securities
possessing fifty percent (50%) or more of the total combined
voting power of the Corporation's outstanding securities.
N. KOMAG BOARD shall mean the Board of Directors of
Komag.
O. KOMAG CORPORATE TRANSACTION shall mean any of the
following stockholder-approved transactions involving Komag which
is effected while Komag is the owner of securities possessing
fifty percent (50%) or more of the total combined voting power of
the Corporation's outstanding securities:
(i) a merger or acquisition in which Komag is not
the surviving entity, except for a transaction the
principal purpose of which is to change the State of
incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of Komag's assets, or
A-2.
<PAGE>
(iii) any reverse merger in which Komag is the
surviving entity.
P. KOMAG shall mean Komag, Incorporated, a Delaware
corporation.
Q. KOMAG STOCK shall mean share of Komag common stock.
R. KOMAG SUBSIDIARY shall mean any corporation (other
than Komag or the Corporation) in an unbroken chain of
corporations beginning with Komag, provided each corporation
(other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
S. MISCONDUCT shall mean the commission of any act of
fraud, embezzlement or dishonesty by Optionee, any unauthorized
use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Subsidiary) or Komag, or
any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Subsidiary) or
Komag in a material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which the
Corporation (or any Subsidiary) may consider as grounds for the
dismissal or discharge of Optionee or any other individual in the
Service of the Corporation (or any Subsidiary).
T. NON-STATUTORY OPTION shall mean an option not
intended to satisfy the requirements of Code Section 422.
U. NOTICE OF EXERCISE shall mean the notice of exercise
in the form attached hereto as Exhibit I.
V. OPTION SHARES shall mean the number of shares of
Komag Stock subject to the option as specified in the Grant
Notice.
W. OPTIONEE shall mean the person to whom the option is
granted as specified in the Grant Notice.
X. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall
mean the inability of the Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.
Y. PLAN shall mean the Corporation's 1995 Stock Option
Plan.
Z. SERVICE shall mean the Optionee's performance of
services for the Corporation (or any Subsidiary) in the capacity
of an Employee or a consultant or independent advisor. Optionee
shall
A-3.
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also be deemed to be engaged in such Service for any period of
time Optionee performs such services for Komag or any Komag
Subsidiary, provided Komag is at the time the owner of securities
possessing fifty percent (50%) or more of the total combined
voting power of the Corporation's outstanding securities.
AA. STOCK EXCHANGE shall mean the American Stock
Exchange or the New York Stock Exchange.
AB. SUBSIDIARY shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain.
AC. UNPAID LEAVE OF ABSENCE shall mean a temporary work
stoppage or other absence from active Service, authorized by the
Corporation in writing, which shall not constitute a cessation of
Optionee's Service under the Plan or this Agreement, provided
Optionee returns to active Service on or before the authorized
expiration date of such work stoppage or absence.
A-4.
OFFICERS
EXHIBIT 99.4
Form of Stock Option Agreement (Officers)
KOMAG MATERIAL TECHNOLOGY, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of
retaining the services of selected Employees and consultants and
other independent advisors who provide services to the
Corporation (or any Subsidiary).
B. Optionee is to render valuable services to the
Corporation (or a Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the
Plan in connection with the Corporation's grant of an option to
Optionee to purchase shares of Komag Stock.
C. All capitalized terms in this Agreement shall have the
meaning assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to
Optionee, as of the Grant Date, an option to purchase up to the
number of Option Shares specified in the Grant Notice. The Option
Shares shall be purchasable from time to time during the option
term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly
expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be
neither transferable nor assignable by Optionee other than by
will or by the laws of descent and distribution following
Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, this option may also be
assigned in accordance with the terms of a Qualified Domestic
Relations Order. If so assigned, the assigned option shall be
exercisable only by the person or persons who acquire a
proprietary interest in the option pursuant to such Qualified
Domestic Relations Order. The terms applicable to the assigned
option (or portion thereof) shall be the same as those in effect
for this option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
<PAGE>
4. DATES OF EXERCISE.
(a) This option shall become exercisable for the
Option Shares in one or more installments as specified in the
Grant Notice. As the option becomes exercisable for such
installments, those installments shall accumulate and the option
shall remain exercisable for the accumulated installments until
the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
(b) Upon the expiration of the thirty (30)-day
period following the commencement date of any Unpaid Leave of
Absence, the exercise schedule for this option shall cease to
continue and shall be suspended until such time as the Optionee
recommences Service, provided such recommencement is on or prior
to the authorized expiration date of such leave. Upon the
recommencement of Optionee's Service following such Unpaid Leave
of Absence, the exercise schedule for this option shall cease to
remain suspended and this option shall continue to be exercisable
under the recommenced exercise schedule until the expiration or
sooner termination of the option term.
5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date should any of the
following provisions become applicable:
(i) Should Optionee cease to remain in
Service for any reason (other than death or Permanent
Disability) while this option is outstanding, then
Optionee shall have a period of nine (9) months and one
(1) day (commencing with the date of such cessation of
Service) during which to exercise this option, but in
no event shall this option be exercisable at any time
after the Expiration Date.
(ii) Should Optionee die while this option is
outstanding or within the nine (9) months and one
(1)-day period following cessation of Service, then the
personal representative of Optionee's estate or the
person or persons to whom the option is transferred
pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right
to exercise this option. Such right shall lapse and
this option shall cease to be outstanding upon the
EARLIER of (A) the expiration of the twelve (12)-month
period measured from the date of Optionee's death or
(B) the Expiration Date.
(iii) Should Optionee cease Service by reason
of Permanent Disability while this option is
2.
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outstanding, then Optionee shall have a period of
twelve (12) months (commencing with the date of such
cessation of Service) during which to exercise this
option. Such right shall lapse and this option shall
cease to be outstanding upon the EARLIER of (A) the
expiration of the twelve (12)-month period measured
from the date of Optionee's Permanent Disability or
(B) the Expiration Date.
(iv) Should Optionee's Service be terminated
for Misconduct, then this option shall terminate
immediately and cease to remain outstanding.
(v) During the limited period of post-
Service exercisability, this option may not be
exercised in the aggregate for more than the number of
vested Option Shares for which the option is
exercisable at the time of Optionee's cessation of
Service. However, should Optionee's Service be
terminated by reason of death, Permanent Disability, or
retirement at or after age sixty-five (65), then this
option may also be exercised, during the applicable
period of exercisability provided under subparagraph
(ii) or (iii) above, for any or all of the additional
Option Shares for which this option would have become
exercisable had the Optionee continued in Service
through the last date for the normal exercise
provisions specified in the Grant Notice. Upon the
expiration of such exercise periods or (if earlier)
upon the Expiration Date, this option shall terminate
and cease to be outstanding for any vested Option
Shares for which the option has not been exercised.
(vi) In the event of a Corporate Transaction,
the provisions of Paragraph 6 shall govern the period
for which this option is to remain exercisable
following Optionee's cessation of Service and shall
supersede any provisions to the contrary in this
paragraph.
6. SPECIAL ACCELERATION OF OPTION.
(a) In the event of any Corporate Transaction
involving the Corporation (or any Subsidiary), this option shall
either be assumed by the successor corporation (or parent
thereof) or replaced with a comparable option to purchase shares
of the capital stock of the successor corporation (or parent
thereof).
(b) (i) In the event of any Corporate Transaction
involving Komag (only to the extent Komag is, at the time of such
Corporate Transaction, a Parent of the Corporation), this option
shall automatically accelerate so that this option
3.
<PAGE>
shall, for the five (5) business days immediately prior to the
effective date of the Corporate Transaction, become fully
exercisable shares of Komag Stock at the time subject to this
option and may be exercised for any or all of those shares as
fully-vested shares of Komag Stock. However, this option shall
not so accelerate if and to the extent: (i) this option is, in
connection with the Corporate Transaction, either to be assumed
by the successor corporation (or parent thereof) or to be
replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof) or
(ii) the acceleration of this option is subject to other
limitations imposed by the Plan Administrator at the time of the
option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.
(ii) Immediately following the consummation
of the Corporate Transaction under this subsection (b), this
option shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof).
(c) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply
to the number and class of securities which would have been
issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate
Exercise Price shall remain the same.
(d) Upon an Involuntary Termination of Optionee's
Service within eighteen (18) months following a Corporate
Transaction in which this option is assumed or replaced, the
exercisability of this option, to the extent outstanding at such
time but not otherwise fully exercisable, shall automatically
accelerate so that this option shall immediately become fully
exercisable for all the Option Shares at the time subject to this
option as fully-vested shares of Komag Stock and may be exercised
for any or all of those shares at any time prior to the earlier
of (i) the Expiration Date or (ii) the expiration of the one
(1)-year period measured from the effective date of the
Involuntary Termination.
(e) This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
4.
<PAGE>
7. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Komag Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Komag Stock as a
class, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and (ii)
the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares
until such person shall have exercised the option, paid the
Exercise Price and become a holder of record of the purchased
shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect
to all or any part of the Option Shares for which this option is
at the time exercisable, Optionee (or any other person or persons
exercising the option) must take the following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the
option is exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation;
(B) a promissory note payable to the
Corporation, but only to the extent approved by
the Plan Administrator in accordance with
Paragraph 13;
(C) shares of Komag Stock held by
Optionee (or any other person or persons
exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's
(or Komag's) earnings for financial reporting
purposes and valued at Fair Market Value on the
Exercise Date; or
(D) through a special sale and
remittance procedure pursuant to which Optionee
(or any other person or persons exercising the
option) shall concurrently provide irrevocable
written instructions (I) to a
Corporation-designated
5.
<PAGE>
brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise
Price payable for the purchased shares plus all
applicable Federal, state and local income and
employment taxes required to be withheld by the
Corporation by reason of such exercise and (II) to
the Corporation to deliver the certificates for
the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
Except to the extent the sale and
remittance procedure is utilized in connection
with the option exercise, payment of the Exercise
Price must accompany the Notice of Exercise
delivered to the Corporation in connection with
the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the
option (if other than Optionee) have the right to
exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Subsidiary employing or retaining
Optionee) for the satisfaction of all Federal, state
and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date,
the Corporation shall issue to or on behalf of Optionee (or any
other person or persons exercising this option) a certificate for
the purchased Option Shares, with the appropriate legends affixed
thereto.
(c) In no event may this option be exercised for
any fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance
of the Option Shares upon such exercise shall be subject to
compliance by the Corporation, Komag and Optionee with all
applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq
National Market if applicable) on which shares of Komag Stock may
be listed for trading at the time of such exercise and issuance.
(b) The inability of the Corporation or Komag to
obtain approval from any regulatory body having authority deemed
by the Corporation or Komag to be necessary to the lawful
issuance and
6.
<PAGE>
sale of Komag Stock pursuant to this option shall relieve the
Corporation and Komag of any liability with respect to the non-
issuance or sale of Komag Stock as to which such approval shall
not have been obtained. The Corporation and Komag, however, shall
use their best efforts to obtain all such approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraphs 3 and 6, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns, Komag and its
successors and assigns and Optionee, Optionee's assigns and the
legal representatives, heirs and legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement
shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or
delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed effective upon
personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
13. FINANCING. The Plan Administrator may, in its
absolute discretion and without any obligation to do so, permit
Optionee to pay the Exercise Price for the purchased Option
Shares by delivering a promissory note. The terms of any such
promissory note (including the interest rate, the requirements
for collateral and the terms of repayment) shall be established
by the Plan Administrator in its sole discretion.
14. CONSTRUCTION. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and
are in all respects limited by and subject to the terms of the
Plan. All decisions of the Plan Administrator with respect to any
question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in
this option.
15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of
the State of California without resort to that State's
conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of
Komag Stock which may without stockholder approval be issued
under the Plan, then this option shall be void with respect to
such excess shares, unless stockholder approval of an amendment
sufficiently increasing the number of shares of Komag Stock
7.
<PAGE>
issuable under the Plan is obtained in accordance with the
provisions of the Plan.
8.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Komag Material Technology, Inc. (the
"Corporation") that I elect to purchase shares of the Komag,
Incorporated common stock (the "Purchased Shares") at the option
exercise price of $_______ per share (the "Exercise Price") pursuant
to that certain option (the "Option") granted to me under the
Corporation's 1995 Stock Option Plan on ___________, 199_.
Concurrently with the delivery of this Exercise Notice
to the Corporation, I shall hereby pay to the Corporation the
Exercise Price for the Purchased Shares in accordance with the
provisions of my agreement with the Corporation (or other
documents) evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a
condition for exercise. Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my
agreement to effect payment of the Exercise Price.
Date ______________, 199_
____________________________________
Optionee
Address: __________________________
____________________________________
Print name in exact manner
it is to appear on the
stock certificate: ____________________________________
Address to which certificate
is to be sent, if different
from address above: ____________________________________
Social Security Number: ____________________________________
Employee Number: ____________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of
Directors.
C. CODE shall mean the Internal Revenue Code of 1986,
as amended.
D. CORPORATE TRANSACTION shall mean either of the
following stockholder-approved transactions to which either the
Corporation or Komag is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's (or Komag's)
outstanding securities are transferred to a person or
persons different from the persons holding those
immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of
all or substantially all of the Corporation's (or
Komag's) assets in complete liquidation or dissolution
of the Corporation.
E. CORPORATION shall mean Komag Material Technology,
Inc., a California corporation.
F. DOMESTIC RELATIONS ORDER shall mean any judgment,
decree or order (including approval of a property settlement
agreement) which provides or otherwise conveys, pursuant to
applicable State domestic relations laws (including community
property laws), marital property rights to any spouse or former
spouse of the Optionee.
G. EMPLOYEE shall mean an individual who is in the
employ of the Corporation (or any Subsidiary), subject to the
control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.
H. EXERCISE DATE shall mean the date on which the
option shall have been exercised in accordance with Paragraph 9
of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per
share as specified in the Grant Notice.
A-1.
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J. EXPIRATION DATE shall mean the date on which the
option expires as specified in the Grant Notice.
K. FAIR MARKET VALUE per share of Komag Stock on any
relevant date shall be determined in accordance with the
following provisions:
(i) If the Komag Stock is at the time traded on
the Nasdaq National Market, then the Fair Market Value
shall be the closing selling price per share of Komag
Stock on the date in question, as such price is
reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the
Komag Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Komag Stock is at the time listed on
any Stock Exchange, then the Fair Market Value shall be
the closing selling price per share of Komag Stock on
the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for
the Komag Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If
there is no closing selling price for the Komag Stock
on the date in question, then the Fair Market Value
shall be the closing selling price on the last
preceding date for which such quotation exists.
L. GRANT DATE shall mean the date of grant of the
option as specified in the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Stock
Option accompanying the Agreement, pursuant to which Optionee has
been informed of the basic terms of the option evidenced hereby.
N. INVOLUNTARY TERMINATION shall mean the termination
of Optionee's Service which occurs by reason of:
(i) Optionee's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct,
or
(ii) Optionee's voluntary resignation following
(A) a change in Optionee's position with the
Corporation (or any Subsidiary employing Optionee)
which materially reduces Optionee's level of
responsibility, (B) a reduction in Optionee's level of
compensation (including base salary, fringe benefits
and any non-discretionary and objective-standard
incentive payment or bonus award)
A-2.
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by more than fifteen percent (15%) or (C) a relocation of
Optionee's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or
relocation is effected by the Corporation without
Optionee's consent.
O. KOMAG shall mean Komag, Incorporated, a Delaware
corporation, which is, on the date of the Plan's adoption, a
Parent of the Corporation.
P. KOMAG STOCK shall mean Komag common stock.
Q. MISCONDUCT shall mean the commission of any act of
fraud, embezzlement or dishonesty by Optionee, any unauthorized
use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Subsidiary), or any
other intentional misconduct by Optionee adversely affecting the
business or affairs of the Corporation (or any Subsidiary) in a
material manner. The foregoing definition shall not be deemed to
be inclusive of all the acts or omissions which the Corporation
(or any Subsidiary) may consider as grounds for the dismissal or
discharge of Optionee or any other individual in the Service of
the Corporation (or any Subsidiary).
R. NON-STATUTORY OPTION shall mean an option not
intended to satisfy the requirements of Code Section 422.
S. NOTICE OF EXERCISE shall mean the notice of exercise
in the form attached hereto as Exhibit I.
T. OPTION SHARES shall mean the number of shares of
Komag Stock subject to the option as specified in the Grant
Notice.
U. OPTIONEE shall mean the person to whom the option is
granted as specified in the Grant Notice.
V. PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain.
W. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall
mean the inability of the Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.
X. PLAN shall mean the Corporation's 1995 Stock Option
Plan.
A-3.
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Y. PLAN ADMINISTRATOR shall mean either the Board or a
committee of Board members, to the extent the committee is at the
time responsible for the administration of the Plan.
Z. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a
Domestic Relations Order which substantially complies with the
requirements of Code Section 414(p). The Plan Administrator shall
have the sole discretion to determine whether a Domestic
Relations Order is a Qualified Domestic Relations Order.
AA. SERVICE shall mean the provision of services to the
Corporation (or any Subsidiary) by a person in the capacity of an
Employee or a consultant or independent advisor.
AB. STOCK EXCHANGE shall mean the American Stock
Exchange or the New York Stock Exchange.
AC. SUBSIDIARY shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain.
AD. UNPAID LEAVE OF ABSENCE shall mean a temporary work
stoppage, authorized by the Plan Administrator in writing, which
shall not constitute a cessation of Optionee's Service under the
Plan or this Agreement, provided Optionee recommences Service on
or prior to the authorized expiration date of such work stoppage.
A-4.
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