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