Exhibit 10.4
KOMAG INCORPORATED
SECOND AMENDMENT TO STOCK OPTION AGREEMENTS
     This Second Amendment to Stock Option Agreements (the “Second Amendment”)
is made this 3rd day of October, 2006, by and between Thian H. Tan
(“Participant”) and Komag Incorporated (the “Company”).
     WHEREAS, the Company has previously granted Participant one or more options
(each an “Option” and collectively, the “Options”) to purchase shares of Company
common stock (“Shares”) under the Company’s amended and restated 2002 Qualified
Stock Plan (the “Plan”) and such Options have been memorialized in Participant’s
Stock Option Agreements, including any Notices of Stock Option Grants relating
thereto (the “Option Agreements”) and the Amendment to Stock Option Agreements
dated February 15, 2006 (the “First Amendment” and together with the Option
Agreements, collectively, the “Agreements”);
     WHEREAS, the Participant has resigned as the Company’s Chief Executive
Officer following the commencement of his successor as the Company’s Chief
Executive Officer and is to provide services to the Company under the Consulting
Services Agreement dated February 15, 2006 (the “Consulting Agreement”);
     WHEREAS, the parties agreed, pursuant to the First Amendment, that
Participant would have ninety (90) days to exercise his Options following the
date that Participant’s successor as Chief Executive Officer to the Company
commenced employment with the Company even though Participant would have had
ninety (90) days following his termination as a “Service Provider” (as defined
in the Plan), which would have included providing services under the Consulting
Agreement, to exercise his Options had such amendment not been made pursuant to
the First Amendment; and
     WHEREAS, Participant and the Company desire to extend the period through
which Participant may exercise his Options through March 15, 2007, subject to
earlier termination pursuant to Section 17(c) of the Plan, and to permit
Participant to exercise his Options and satisfy any applicable tax withholding
obligations in connection with the exercise of such Options through the transfer
of shares of Company common stock owned by Participant to the extent such
transfer of shares does not result in adverse financial accounting consequences
to the Company (as determined by the Company in its sole discretion); and
     WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the “Committee”) has determined that it is in the best interests of the
Company and its stockholders to reward Participant for his service as the
Company’s Chief Executive Officer and finding his successor and to ensure that
the Company will have the continued dedication and objectivity of Participant to
provide services to the Company under the Consulting Agreement.
     NOW, THEREFORE, the parties hereto agree that the Agreements are hereby
amended as follows:

 

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     1. Extension of Post-Employment Exercise Period. Notwithstanding anything
to the contrary set forth in the Agreements (especially the First Amendment),
but subject to earlier termination pursuant to Section 17(c) of the Plan,
Participant will have until March 15, 2007 to exercise each outstanding Option.
To the extent Participant does not exercise an Option by March 15, 2007, the
Option will terminate and cease to remain outstanding and Participant will have
no further right to acquire Shares subject thereto.
     2. Use of Shares to Pay Exercise Price and Satisfy Tax Withholding
Obligations. Notwithstanding anything to the contrary in the Agreements and
pursuant to such procedures as the Company establishes in its discretion,
Participant will be permitted to pay the exercise price of each Option and
satisfy any tax withholding obligations that arise upon exercise of an Option
with shares of the Company’s common stock, but only to the extent doing so will
not result adverse financial accounting consequences to the Company, as
determined by the Company in its sole discretion.
     3. Stock Option Agreement. To the extent not expressly amended hereby, the
Agreements will remain in full force and effect.
     4. No Guarantee of Continued Service. Participant acknowledges and agrees
that this Second Amendment and the Agreements do not constitute an express or
implied promise of continued engagement as a Service Provider for any period, or
at all, and shall not interfere in any way with Participant’s right or the right
of the Company (or the Parent or Subsidiary employing or retaining Participant)
to terminate Participant as a Service Provider at any time, with or without
cause or with or without notice.
     5. Assignment. This Second Amendment will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Participant
upon Participant’s death and (b) any successor of the Company. Any such
successor of the Company will be deemed substituted for the Company under the
terms of this Second Amendment for all purposes. For this purpose, “successor”
means any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Participant under this Second Amendment may be assigned or transferred except
by will or the laws of descent and distribution. Any other attempted assignment,
transfer, conveyance or other disposition of Participant’s rights under this
Second Amendment will be null and void.
     6. Entire Agreement. This Second Amendment, taken together with the
Agreements (to the extent not amended hereby), represent the entire agreement of
the parties and will supersede any and all previous contracts, arrangements or
understandings between the parties with respect to the Participant’s stock
option benefits. This Second Amendment may be amended at any time only by mutual
written agreement of the parties hereto.
     7. Counterparts. This Second Amendment may be executed in counterparts, and
each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned. Execution and delivery of this Second Amendment by exchange of
facsimile copies bearing the facsimile signature of a party will

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constitute a valid and binding execution and delivery of the Second Amendment by
such party. Such facsimile copies will constitute enforceable original
documents.
     8. Headings. All captions and section headings used in this Second
Amendment are for convenient reference only and do not form a part of this
Second Amendment.
     9. Governing Law. This Second Amendment will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).
     IN WITNESS WHEREOF, this Second Amendment has been entered into as of the
date first set forth above.

                  KOMAG INCORPORATED       PARTICIPANT    
 
               
By:
  /S/ Jan Schwartz
 
      /S/ Thian H. Tan
 
    Its:   Treasurer       Thian H. Tan    

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