**Exhibit 10.1**PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT**VOLUME PURCHASE AGREEMENT**     This Volume Purchase Agreement (“**VPA**”), dated as of March 31, 2006 (the “**EffectiveDate**”), is made by and between Komag USA (Malaysia) Sdn., a Malaysia unlimited liabilitycompany **(“****Komag****”),**Komag, Incorporated, a Delaware Corporation (“Komag Inc.”), and HitachiGlobal Storage Technologies Singapore Pte., Ltd., a Singapore corporation (“**HITACHI GST**”).**BACKGROUND**     A. HITACHI GST (and/or its Affiliates) desires to purchase certain Media Products inaccordance with the terms of this VPA.     B. Komag desires to sell to HITACHI GST (and/or its Affiliates) certain Media Products inaccordance with the terms of this VPA.     NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakingshereinafter set forth, the parties agree as follows:**ARTICLE 1: DEFINITIONS**     For the purposes of this VPA, unless the context otherwise requires, the following terms willhave the respective meanings set out below and grammatical variations of such terms will havecorresponding meanings:     **1.1**[Intentionally Omitted]     **1.2**“**Affiliate**” of a party means any entity that directly or indirectly controls, isunder common control with, or is controlled by, such party. As used in this definition, “control”means possession, directly or indirectly, of power to direct or cause the direction of managementor policies (whether through beneficial ownership of securities or other ownership interests, bycontract or otherwise).     **1.3**[Intentionally Omitted]     **1.4 “Component”**means a component of a HITACHI GST product.     **1.5**[Intentionally Omitted]     **1.6 “Days”**means consecutive calendar days.     **1.7 “Defect”**has the meaning set forth in Section 5.5.1.
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT     **1.8 “****Delivery Date****”**or **“****Scheduled Delivery Date****”**means the date of delivery ofProducts as specified in Pull Requests.     **1.9**[Intentionally Omitted]     **1.10 “****Disentanglement****”**has the meaning set forth in Section 9.4.1.     **1.11 “****Effective Date**” has the meaning set forth in the opening paragraph of this VPA.     **1.12**[Intentionally Omitted]     **1.13 “****Exhibit****”**means an attachment to this VPA that is referenced in Section2.4. Exhibits are incorporated herein by reference thereto.     **1.14**“**FGI**” has the meaning set forth in Section 5.1.     **1.15**“**First Executive Conference**” has the meaning set forth in Section 12.4.     **1.16 “****Force Majeure Event****”**means an act of nature, civil disruption, power outage,public enemy, government action, or freight embargo beyond the control of a party.     **1.17 “HDDs”**means hard disk drives.     **1.18 “Initial Term”**has the meaning set forth in Section 9.1.     **1.19**“**JIT Hubs”**has the meaning set forth in Section 5.3.     **1.20**“**Komag Group**” means Komag Inc. and all of its subsidiaries.     **1.21 “Komag Shortfall”**has the meaning set forth in Section 4.3.2.     **1.22 “****Komag Shortfall Remedy Trigger****”**has the meaning set forth in Section4.3.3.     **1.23 “****Lead Time****”**means, for purposes of this VPA, the minimum length of time prior toa specific Delivery Date that Komag must receive a Pull Request to ensure delivery by such date,not to exceed 8 hours.     **1.24**[Intentionally Omitted]     **1.25 “****Material Default****”**shall mean the occurrence of any of the following,provided that in the event any of the following conditions are cured within the timeperiods set forth therein, then no Material Default shall have occurred:          1.25.1 Failure of Komag to deliver (subject to the conditions and requirements ofSections 4.3.2 and 6.7) in a given Quarter the Purchase Requirements during theapplicable Quarter, or the failure of Komag to accept a valid and compliant Purchase Order inaccordance with Section 5.2.2 (but subject to Section 5.5), and the
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTfailure byKomag to remedy such condition within ten (10) business days after Komag has received noticethereof (which notice must explicitly assert the existence and the nature of such condition underthis Section 1.25.1);          1.25.2 Failure of HITACHI GST (subject to the conditions and requirements of Sections4.3 and 5.5.1) to timely issue valid and compliant Purchase Orders pursuant toSection 5.2.1 or HITACHI GST’s cancellation of such Purchase Orders, and the failure byHITACHI GST to cure such breach within ten (10) business days after HITACHI GST has received noticeof such default (which notice must explicitly assert the existence and the nature of such conditionunder this Section 1.25.2);          1.25.3 Other than (i) a failure of Komag under Section 1.25.1 above, (ii) a failure ofHITACHI GST under Section 1.25.2 above and (iii) a breach of a payment obligation ofHITACHI GST under Section 6.6, a material breach by either party of any obligation,covenant, or condition under this Agreement that is susceptible of cure, and the failure by thebreaching party to cure such breach within thirty (30) Days after the breaching party has receivednotice of such default (which notice must explicitly assert the existence and the nature of suchcondition under this Section 1.25.3), provided that if the cure requires more thanthirty (30) Days, a Material Default will be deemed to exist if the breaching party fails to (i)promptly take action to cure such breach as quickly as reasonably possible; or (ii) cure suchbreach within sixty (60) Days after the breaching party has received notice of such default;          1.25.4 A failure of HITACHI GST to meet its payment obligations under Section 6.6, or          1.25.5 An assignment or attempted assignment in violation of Section 12.5.     **1.26**“**Media****”**means recording disks, manufactured by any entity, as used in datastorage devices.     **1.27**[Intentionally Omitted]     **1.28**“**New Capacity**” means the increase in media capacity by Komag in connection withthis Agreement.     **1.29 “Next Quarter**” has the meaning set forth in Section 6.1.3.     **1.30 “Offset”**has the meaning set forth in Section 6.5.4.     **1.31 “Overdue”**has the meaning set forth in Section 6.6.     **1.32 “****Price****” or “****Prices****”**means the amount(s) charged for Products, asspecified in Section 6.1.     **1.33 “****Product****”**means the Media manufactured by Komag.
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT     **1.34 “****Program****”**means a HITACHI GST product classification, currently including, forexample, “Vancouver 4” and “Kurofune 2” disk drives. A Program may include various capacities,numbers of disks per drive or drive performance specifications.     **1.35**[Intentionally Omitted]     **1.36 “****Pull Request****”**means a request made by HITACHI GST to Komag for delivery ofProduct(s) to HITACHI GST from a JIT Hub.     **1.37 “****Purchase Order****”**means a purchase order placed by HITACHI GST or any subsidiaryof HITACHI GST to Komag for Products as contemplated by this VPA.     **1.38 “****Purchase Requirements**” has the meaning set forth in Section4.1.1.     **1.39 “****Quarter****”**means the applicable calendar quarter ending on March 31, June 30,September 30 and December 31 of a given calendar year**.**     **1.40**[Intentionally Omitted]     **1.41 “Second Term”**has the meaning set forth in Section 9.1.     **1.42 “Section”**means a numbered section of this VPA.     **1.43 “****Specifications****”**means designs, drawings, prints and written descriptions,specification reviews and requirements for Products that have been developed or mutually acceptedby HITACHI GST and Komag as of the date of this VPA, or which may be developed or mutually acceptedby HITACHI GST and Komag during the term of this VPA.     **1.44 “Tolling Period”**has the meaning set forth in Section 12.2.     **1.45 “Unit**” means a single Product.     **1.46 “Unit Shortfall”**has the meaning set forth in Section 5.5.1.     **1.47 “VPA**” means this Volume Purchase Agreement, including the Exhibits.     **1.48 “****HITACHI GST Shortfall Remedy Trigger****”**has the meaning set forth in Section5.5.1.2.**2 ARTICLE 2: AGREEMENT STRUCTURE**     **2.1 Background**. Each party agrees to diligently cooperate with the other party to accomplishthe objectives of this VPA.     **2.2 Agreement Components**. This VPA consists of this VPA (including its Exhibits), PurchaseOrders and Pull Requests. If there is a conflict among the terms and conditions of the variousdocuments or an ambiguity created by differences therebetween, the order of precedence will be (i)this VPA (excluding its Exhibits), (ii) the Exhibits, and
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT(iii) the Purchase Orders and PullRequests. The VPA does not supersede the existing Goods Agreement #4902SD0054 (“Goods Agreement”),attached as Exhibit E, originally executed between Komag and IBM, which has been assigned by IBM toHitachi Global Storage Technologies, Inc. In addition, this VPA does not supersede any unexpiredStatements of Work to the Goods Agreement entered into between Komag and HITACHI GST and/or itsAffiliates.     **2.3 Purchase Order**. Purchase Orders will be used to convey the Price and number of Units, andaccordingly Purchase Orders must contain the following: Komag-designated part number, Price, Unitsordered, customer name, ship to address (destination), bill to address, and Purchase Order number.The parties acknowledge that such Purchase Orders, as well as confirming documents,acknowledgments, forms, invoices and the like used in the ordinary course of business may containother terms and conditions. Subject to Section 2.2, the parties agree that this VPA will takeprecedence over any such document or other communication, representation or understanding whetheroral or written and that any term or condition relating to the subject matter of this VPA that isinconsistent with this VPA (whether in contradiction to, in addition to, or that would result inany ambiguity with respect to any term or condition in this VPA) will be deemed deleted and be ofno force, including, but not limited to, any term or condition purporting to supersede this VPA inwhole or in part or purporting to make any offer, acceptance, term, condition or other actionconditional upon acceptance of, or indicating agreement to, any inconsistent term or condition.The foregoing may not be modified or waived except by written agreement of the parties,specifically referencing this VPA, and signed by officers of both parties. The parties agree that,without limiting Section 12.1, the foregoing shall not be superseded, altered, oroverridden by any provision in the Uniform Commercial Code as it may have been adopted by anycompetent jurisdiction.     **2.4 Exhibits.**The following Exhibits are incorporated into this VPA by reference and deemed tobe a part hereof:       Exhibit A:Current Prices and Sample Prices       Exhibit B:Progress Milestones       Exhibit C:Warranty Verification and Disposition Flow Chart       Exhibit D:Volume/Purchase Requirements       Exhibit E:Goods Agreement**3 ARTICLE 3: PRODUCT QUALIFICATION AND DEVELOPMENT**     **3.1 Qualification Process.**Each of the parties shall use commercially reasonable efforts toqualify and to keep qualified Komag’s Products on at least one Program at all
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTtimes. Such effortswill require qualification of Products in combination with other Components (such as multiplecombinations of Media and recording heads), as well as the subsequent qualification of HITACHIGST’s disk drives incorporating such combinations.     **3.2 Qualification Locations.**Following the Effective Date, Komag intends to manufactureProducts under this Agreement at factory locations in Penang, Malaysia.**4 ARTICLE 4: PRODUCT PURCHASE AND SALE COMMITMENTS**     **4.1 Volume.**          4.1.1 Subject to Section 4.3, Komag agrees that it shall supply to HITACHI GST (and/orits Affiliates and/or authorized contract manufacturers), and HITACHI GST agrees that it (and/or orits Affiliates and/or authorized contract manufacturers) shall purchase from Komag, at the volumesof Product set forth in **Exhibit D** (the “**Purchase Requirements**”). For purposes ofclarification, any Hitachi GST obligations regarding the Purchase Requirements or proceduresassociated with the purchase of Products may be fulfilled by any HITACHI GST Affiliate.          4.1.2 In an effort to bring the New Capacity up to its operational capacity as soon as ispracticable to both (a) satisfy the Purchase Requirements and (b) maximize the availability ofProduct for HITACHI GST beyond the Purchase Requirements for each Quarter, Komag shall use allcommercially reasonable efforts and assign all commercially reasonable resources to (1) expeditethe completion of the New Capacity and the qualification of Products for HITACHI GST and (2)maximize the utilization of New Capacity and existing capacity to improve yields. HITACHI GSTshall cooperate in good faith with Komag and provide all commercially reasonable assistancenecessary to help achieve such goals. The parties shall meet regularly to review, develop andupdate plans and review progress toward goals. Komag and HITACHI GST agree that if Komag producesany Products, other than sample Products, from the New Capacity in excess of Purchase Requirements,such excess shall first be offered to HITACHI GST for purchase. If HITACHI GST declines topurchase such excess Products, then Komag may use the excess New Capacity to offer Products to itsother customers.          4.1.3[***].     **4.2**[intentionally omitted]     **4.3 Exceptions and Qualifications to Purchase Requirements.** 4.3.1 Provided that Komag remains qualified on a Program pursuant to which HITACHI GST maybe able to use quantities of Products, the purchase of which would be sufficient tosatisfy the Purchase Requirements of Section 4.1, then HITACHI GST must (to theextent commercially and economically reasonable) first satisfy its Purchase Requirementswith purchases of Products for such Programs.
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT 4.3.2 If Komag (a) does not deliver the Purchase Requirements due to failure of a Productor Products to qualify for a particular Program or Programs; or (b) refuses or is unableto deliver Products to satisfy duly accepted Purchase Orders in quantities equal to thePurchase Requirements for the then applicable Quarter, then HITACHI GST shall notify Komagof such condition (or, if Komag becomes aware of such condition prior to HITACHI GSTbecoming aware of such condition, Komag shall notify HITACHI GST immediately) and giveKomag five (5) business days to remedy the condition before electing a remedy inaccordance with Section 4.3.3; provided, however, in the case ofclause (a) and (b) of this Section 4.3.2, if the difference between actual KomagProduct deliveries and the Purchase Requirements for a Quarter (the **“****KomagShortfall****”**) is not more than [***] percent ([***]%) of the Purchase Requirements forsuch Quarter, Komag may increase the Purchase Requirement for the subsequent Quarter by anumber of Units equal to the Komag Shortfall, and no breach of Section 4.1.1 shallhave occurred (it being understood that if Komag fails to make up the full Komag Shortfallin the subsequent Quarter, HITACHI GST may freely elect its remedies pursuant toSection 4.3.3 and this VPA).  4.3.3 In the event that (A) Komag does not make up the Komag Shortfall in the immediatelyfollowing Quarter, or (B) the Komag Shortfall is more than [***] percent ([***]%) of thePurchase Requirements for any Quarter (each a “**Komag Shortfall Remedy Trigger**”),then HITACHI GST and Komag shall meet to discuss an amicable resolution and allocation ofthe Purchase Requirements, which shall be set forth in writing and reference this VPA, andin the event that such resolution has not been reached within five (5) business days ofHITACHI GST’s notice to Komag of the Komag Shortfall Remedy Trigger, then HITACHI GSTshall then be entitled at its sole discretion to elect the following remedies: 4.3.3.1 continue under the terms of this VPA and reduce the PurchaseRequirements for the relevant Quarter only and make allocations toand purchase Units from other suppliers; or  4.3.3.2 continue under the terms of this VPA and allow Komag to increasethe Purchase Requirements for the subsequent Quarter (and for thatQuarter only) by a number of Units determined by HITACHI GST, up to anumber equal to the Komag Shortfall (it being understood that ifKomag fails to make up such Komag Shortfall amount determined byHITACHI GST in the subsequent Quarter, HITACHI GST may freely electits remedies pursuant to this Section 4.3.3 and this VPA); or
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT 4.3.3.3 terminate this VPA in accordance with Section 9.2 and takethe Offset under Section 6.7 below.**5 ARTICLE 5: PURCHASE OF PRODUCTS BY HITACHI GST**     **5.1 Forecasts and Planning Schedules.**HITACHI GST shall provide to Komag a current writtenforecast of demand for Products HITACHI GST expects to purchase during the first twelve (12) monthsof the term of this VPA, which forecast shall include the Purchase Requirements for each Quarterand may include forecasts for additional Product needs. Thereafter during the term of this VPA, ona monthly basis, HITACHI GST shall provide an updated forecast for any quantities of such ProductHITACHI GST expects to purchase in the following twelve (12) months, which forecast shall includethe Purchase Requirements for each Quarter and may include forecasts for additional product needs.The most recently issued forecast will supersede all previous forecasts. Consistent with currentpractice, Komag shall respond within seven (7) days with its supply commitment for the followingtwelve (12) months. Komag shall also provide, on a monthly basis, a daily ship schedule for thefollowing month at least fourteen (14) days prior to each month. In addition, during the term ofthis VPA on a monthly basis, Komag shall provide to HITACHI GST a current written summary of theProduct finished goods inventory (“**FGI**”) intended for HITACHI GST. This summary shall listby Komag manufacturing site and JIT Hub location the amounts and types of FGI being held by Komagfor each of HITACHI GST’s Programs. All such forecasts by HITACHI GST and any confirmations orother written summaries of FGI issued by Komag are intended to be non-binding and designed only toassist the parties in allocating resources.     **5.2 Issuing Purchase Orders and Pull Requests.** 5.2.1 Consistent with the parties’ current practice, HITACHI GST shall submit to Komag a[***] Purchase Order for all Units HITACHI GST must purchase pursuant to the PurchaseRequirements of Section 4.1. Hitachi GST may also include other volumes providedby this VPA on the same Purchase Order.  5.2.2 With respect to Purchase Orders issued pursuant to Section 5.2.1 and in fullcompliance with Section 2.3, no more than two (2) business days after receipt ofeach such Purchase Order, Komag shall issue an acceptance of the Purchase Order in writingconfirming the quantity and other terms thereof; provided, however, thatif such Purchase Orders include quantities that are inconsistent with the PurchaseRequirements or do not meet the requirements of Section 2.3, Komag shall followthe procedures and remedies set forth in Section 5.5.  5.2.3 HITACHI GST shall transmit a Pull Request by facsimile or other agreed upon means tocommunicate to Komag, at the applicable JIT Hub, the part number, quantity, deliverylocation and Delivery Date and time of each
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT   Product required. HITACHI GST’s transmissionof a Pull Request is authorization for Komag to deliver Product to HITACHI GST against thePurchase Order for the part numbers and quantities set forth in the Pull Request. Komagshall deliver Product from the applicable JIT Hub upon receipt of a Pull Request inaccordance with applicable Lead Times. HITACHI GST and Komag shall, prior to thecommencement of each Quarter, establish mutually acceptable Lead Times for Pull Requests,which Lead Times shall in no event exceed eight hours.     **5.3 Komag Production and Inventory.**During the term of this VPA, HITACHI GST will be issuingforecasts and Purchase Orders and Komag will be producing FGI to meet the Purchase Requirements.HITACHI GST’s forecast for a certain Quarter is not, and should not be deemed to be, a commitmentby HITACHI GST to buy or Komag to sell a specific amount of Product in a specific period of time.Komag will use just-in-time delivery hubs located at or near HITACHI GST’s manufacturing ordistribution facilities in China and Thailand (“**JIT Hubs**”) with respect to its obligationsto provide the Purchase Requirements. Komag will: (i) bear all costs associated with warehousingProducts in the JIT Hub(s); (ii) ensure that HITACHI GST may withdraw Products from the JIT Hub(s)in accordance with the terms of this VPA; (iii) retain title to Products until they are physicallydelivered to HITACHI GST or its carrier upon withdrawal from the JIT Hub(s); (iv) fully insure orrequire the JIT Hub operator to fully insure all Products in transit to or stored at a JIT Hubagainst all risk of loss or damage until such time as HITACHI GST takes title to them; and (v)require that the JIT Hub operator take all steps necessary to protect all Products in a JIT Hubconsistent with good commercial warehousing practice. The parties may enter into SOWs or otheragreements regarding JIT hub practices, if needed.     **5.4 End of Life**. HITACHI GST shall use commercially reasonable efforts to notify Komag as soonas possible before the termination of each Program.     **5.5 Liability on Cancellation or Deficient Issuance of a Purchase Order.** **5.5.1** Section 5.2.1 Purchase Orders. **5.5.1.1** HITACHI GST must issue a Purchase Order for Units of Product equalto the Purchase Requirements in each Quarter pursuant to Section5.2.1. In the event that HITACHI GST fails to (i) timely issuesuch Purchase Order, (ii) cancels such Purchase Order in writing or(iii) deficiently issues such Purchase Order (such that the aggregatenumber of Units requested in a given Quarter is less than thePurchase Requirements (such shortfall in the number of Units, the**“****Unit Shortfall****”**), and each of (i), (ii) or (iii), a“**Defect**”), Komag may elect a remedy in accordance withSection 5.5.1.2, provided, however, thatprior to taking any of the foregoing actions, Komag must
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT   (a)give HITACHI GST written notice of the Defect and give HITACHI GST asingle five (5) business day period to correct such Defect and issueor re-issue such Purchase Order, and the time requirement for issuingsuch Purchase Order set forth in Section 5.2.1 shall be extendedaccordingly, and (b) if HITACHI GST’s Unit Shortfall in a givenQuarter is not greater than [***] percent ([***]%) of its PurchaseRequirements for that Quarter, then HITACHI GST may increase thePurchase Requirement for the subsequent Quarter by a number of Unitsequal to the Unit Shortfall, and no breach of Section 4.1.1shall have occurred (it being understood that if HITACHI GST fails tomake up the full Unit Shortfall in the subsequent Quarter, Komag mayfreely elect its remedies pursuant to Section 5.5.1.2 andthis VPA).  **5.5.1.2** In the event that (A) HITACHI GST fails to make up the full UnitShortfall for a Quarter in the following Quarter, or (B) the UnitShortfall in any given Quarter is more than [***] percent ([***]%) ofthe Purchase Requirements for such Quarter (each a “**HITACHI GSTShortfall Remedy Trigger**”), then HITACHI GST and Komag shall meetto discuss an amicable resolution and allocation of the PurchaseRequirements, which shall be set forth in writing and reference thisVPA, and in the event that such resolution has not been reachedwithin five (5) business days of Komag’s notice to HITACHI GST of theHITACHI GST Shortfall Remedy Trigger, then Komag shall then beentitled at its sole discretion to elect the following remedies: **5.5.1.2.1** [Intentionally Omitted]  **5.5.1.2.2** waive the breach and continue under the terms of thisVPA; Komag shall be free to use the Unit Shortfall in thatQuarter only for any other purpose it elects, includingmanufacturing Products to sell to third party purchasers;furthermore, if Komag wishes to reduce the PurchaseRequirements on a going forward basis as a result of the UnitShortfall, the parties shall meet in good faith to discuss amutually acceptable solution, such meeting to include anexecutive from each party if desired by the other
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT   party (theparties may also use the Dispute Resolution method of Section12.4); or  **5.5.1.2.3** waive the breach and continue under the terms of thisVPA and allow HITACHI GST to increase the PurchaseRequirement for the subsequent Quarter by a number of Unitsdetermined by HITACHI GST, up to a number equal to the UnitShortfall, but at least [***]% of the Purchase Requirementsfor that Quarter (it being understood that if HITACHI GSTfails to make up the agreed amount of Unit Shortfall in thesubsequent Quarter, Komag may freely elect its remediespursuant to this Section 5.5.1.1 and this VPA).  **5.5.1.2.4** If Hitachi GST does not make up the Unit Shortfall asset forth in Section 5.5.1.2.3, Komag may invoke the disputeresolution procedures in either 6.2.1 or 12.4. In suchdiscussions, the parties will explore in good faith allavailable options to mitigate harm to Komag, which mayinclude, but are not limited to, reducing or extending theterm of this VPA, reducing or increasing the PurchaseCommitment for future Quarters, and other measures to allowKomag to mitigate its damages, such as transferring capacityto other customers.**6 ARTICLE 6: PRICE AND PAYMENT TERMS FOR PRODUCTS**     **6.1 Product Pricing.**All Prices shall be in U.S. Dollars. 6.1.1 **Current Prices.**The current Unit Prices that HITACHI GST will pay for all Productspurchased during the first Quarter pursuant to this VPA are in U.S. Dollars and set forthin **Exhibit A** (the **“****Prices****”**). The Prices for such Products are subject toadjustment following the first Quarter of the term of this VPA in accordance withSection 6.1.3.  6.1.2 [***]. In the event that HITACHI GST elects to challenge the pricing of theProducts under this Section 6.1.2, the parties shall follow the procedures setforth in Section 6.2 below.  6.1.3 **Subsequent Prices for All Products.**Komag shall make commercially reasonableefforts to increase efficiencies and take other measures so as to
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT   reduce prices on anongoing basis. The parties agree to negotiate in good faith to set the Prices for anyProducts under any Program. Such negotiations must commence on a date beginning no laterthan fifty (50) Days before the beginning of the Quarter following the then currentQuarter (the “**Next Quarter**”) and the parties must conclude such negotiations nolater than twenty (20) Days before the beginning of the Next Quarter. Komag shall, nolater than nineteen (19) Days before the beginning of the Next Quarter, notify HITACHI GSTof the mutually agreed-upon Prices applicable to the Next Quarter by means of a pricingletter. Notwithstanding the foregoing, the parties agree that the review of such Pricesshall not require the parties to modify any of the non-price terms of this VPA.     **6.2 Pricing Disputes.** 6.2.1 In the event the parties cannot agree upon pricing as described in Section6.1.2 or Section 6.1.3, either party may, upon written notice to the other,submit such dispute to the Chief Executive Officer of Komag and the Chief OperatingOfficer of HITACHI GST, or their respective designees, who shall meet to attempt toresolve the dispute by good faith negotiations. The parties may also use the DisputeResolution procedure set forth in Section 12.4.  6.2.2 **Audit Rights**. With respect to [***] Section 6.1.2, HITACHI GST may appointan independent auditor (reasonably acceptable to Komag) to validate Komag’s records [***].     **6.3**[Intentionally Omitted]     **6.4**[Intentionally Omitted]     **6.5 Invoices**. For shipments through Komag’s designated JIT Hub, Komag shall invoice HITACHIGST upon delivery of Product to the delivery location indicated on the Pull Request. For shipmentsdirect to HITACHI GST, Komag will invoice upon shipment. Terms for payment of all invoices will benet [***] Days from date of invoice.     **6.6 Late Payment.**If HITACHI GST fails to make a timely payment on any invoice, Komag willprovide HITACHI GST with a notice of late payment and give HITACHI GST [***] Days to pay theinvoice. If HITACHI GST fails to make full payment on the invoice within the [***] Day period,KOMAG may invoke the dispute resolution procedure of Section 6.2.1 or 12.4. In any event, theexecutives of both HITACHI GST and KOMAG shall attempt in good faith to reach a mutually acceptableresolution within [***] Days.     **6.7 Right of Offset**. HITACHI GST may immediately set off and recoup any amounts HITACHI GST(including its subsidiaries or Affiliates) owes Komag (including its subsidiaries and Affiliates),regardless of when payment is due, against any debt, credit or other obligation or liabilitypayable by Komag to HITACHI GST, including the [***]
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTBalance (regardless of whether such debt, credit, obligation or liability arose out of orrelates to this VPA) (the “**Offset**”), and such Offset will be effective even if a receiver,custodian, trustee, examiner, liquidator or similar official has been appointed for Komag or anysubstantial portion of its assets, upon the occurrence of the following events: 6.7.1.1 ten (10) business days after Komag’s receipt of written noticefrom HITACHI GST of Komag’s Material Default, unless such failure orperformance is corrected within such ten-day period; or  6.7.1.2 Komag’s cessation of business, liquidation or dissolution; or  6.7.1.3 the occurrence of any insolvency event described in Section9.3; or     assignment or attempted assignment in violation of Section 12.4. After the Offset, inthe event the [***] Balance remains positive, Komag shall make a cash payment of the remaining[***] Balance to HITACHI GST in a reasonable period of time not to exceed [***] Days.**7 ARTICLE 7: SHIPMENT AND DELIVERY OF PRODUCTS**     **7.1 Shipment of Product.**Consistent with the existing JIT Hub agreement(s) and pull processes,Product delivery made by Komag will be DDU to the JIT Hub. HITACHI GST will assume title afterProducts have been pulled from JIT Hub. Both parties also understood that Komag will bear risk ofloss or damage during transportation or storage prior to HITACHI GST accepted title transfer. **LateDelivery.**Komag shall notify HITACHI GST immediately if for any reason Komag fails to comply oranticipates that it may fail to comply with the timing terms of a Pull Request (*i.e.,*failure tomeet a Delivery Date). In the event of a late delivery, without limiting the rights and remediesavailable to HITACHI GST under this VPA, the parties will cooperate in good faith to minimize thedisruption caused to HITACHI GST by such late delivery.     **7.2**[Intentionally Omitted]8 **ARTICLE 8: WARRANTIES**     **8.1 General Mutual Warranties.**Each party has the corporate power and authority to own itsproperties and to carry on its business as now being conducted and as contemplated to be conducted.Each party is duly qualified to do business and in good standing as a foreign corporation underthe laws of each jurisdiction in which the failure to be so qualified would have a material adverseeffect on it.     **8.2 KOMAG Warranties**. In addition to the warranty provisions set forth in the Goods Agreementand SOW, for a period of fifteen (15) months from the date of Komag’s invoice for each Unit ofProduct (the “Warranty Period”), Komag represents and warrants
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTthat each Unit of Product is (i) free from defects in materials or workmanship and (ii)conforms to the Specifications.     **8.3 Warranty Procedure.**The parties agree to use the return material authorization processdescribed in the Warranty Verification and Disposition flow chart set forth in **Exhibit C** tomanage and dispose of the Products returned to HITACHI GST under warranty.     **8.4**[Intentionally Omitted]     **8.5**[Intentionally Omitted] **8.5.1** [Intentionally Omitted]  **8.5.2** [Intentionally Omitted]  **8.5.3** [Intentionally Omitted]  **8.5.4** [Intentionally Omitted]  **8.5.5** [Intentionally Omitted]  **8.5.6** [Intentionally Omitted]**9 ARTICLE 9: TERM AND TERMINATION**     **9.1 Term.**The term of this VPA shall begin on the Effective Date and shall continue forthirty-six (36) months from January 1, 2007 (the “**Initial Term**”). The term of the VPAshall automatically be extended for an additional twelve (12) months beyond the Initial Term (the“**Second Term**”) unless either party gives written notice to the other party no later thansix (6) months prior to the end of the Initial Term that it does not want to extend the term of theVPA for the Second Term.     **9.2 Termination for Cause.**Either party may terminate this VPA in the event of a MaterialDefault (including the occurrence of a Force Majeure Event that causes a delay exceeding theTolling Period) of this VPA by the other party, upon notice to such other party, which notice mustdescribe the reason for such termination and must specify the termination date, which terminationdate must be no earlier than five (5) Days after the date of such notice. The parties acknowledgethat neither party will have the right to terminate this Agreement due to any breach of thisAgreement other than a Material Default or insolvency event under Section 9.3 or a ForceMajeure Event beyond the tolling period in Section 12.2.     **9.3 Termination for Insolvency.**This VPA may be terminated by either party by notice to theother party upon (i) the commencement by the other party of a voluntary or involuntary proceedingunder any federal, state, provincial or foreign bankruptcy law or similar law which is notdismissed within ninety (90) Days; (ii) the appointment for the other party of a receiver, trusteeor similar official or a general assignment for the benefit of
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENTsuch party’s creditors; (iii) the winding up or liquidation of the other party; or (iv) aparty becomes unable to pay its debts either because it is subject to a Suspension of Paymentsorder, bankruptcy, or other insolvency proceeding. In the case of (i) to (iv) above, terminationmay also be effected by serving notice on the liquidator, administrator, or receiver, as the casemay be.     **9.4 Rights Upon Termination.**          **9.4.1**Disentanglement. Upon termination by either party for any reason under thisAgreement, Komag shall complete delivery and HITACHI GST shall accept delivery on all open monthlyPurchase Orders for already completed Products included in the Purchase Requirements, and HITACHIGST shall pay for all such Products properly delivered and invoiced in accordance with Article6, and Komag and HITACHI GST shall cooperate to ensure an orderly separation (collectively, a“**Disentanglement****”).**          9.4.2 Termination by Komag or HITACHI GST. In the event that either Komag or HITACHIGST terminates this VPA pursuant to either Section 9.2 or Section 9.3, suchtermination is without prejudice to the terminating party’s rights to recover for damages withrespect to the breach that gave rise to the right to terminate.     **9.5 Survival.**The following provisions will survive the termination or expiration of this VPA:Articles 1, 2, 6, 8, 9.4, 10, 11, and 12, as well as any obligations arising before the effectivedate of termination or expiration.**10 ARTICLE 10: OTHER PROVISIONS**     **10.1**The terms relating to limitation of liability, indemnification and intellectual propertyset forth set forth in the Goods Agreement shall apply to all purchases under this VPA.     **10.2**[Intentionally Omitted]     **10.3**EACH HITACHI GST SUBSIDIARY THAT ISSUES PURCHASE ORDERS TO KOMAG UNDER THIS AGREEMENT ISA THIRD PARTY BENEFICIARY OF THE RIGHTS AND REMEDIES AFFORDED HITACHI GST AS CONTAINED IN THISAGREEMENT.11 **ARTICLE 11: CONFIDENTIALITY**     **11.1**[Intentionally Omitted]     **11.2**[Intentionally Omitted]     **11.3**[Intentionally Omitted]     **11.4**[Intentionally Omitted]
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT     **11.5 Confidentiality of Agreement.**In addition to the confidentiality and exchange ofinformation terms of the Goods Agreement, each party agrees that the terms and conditions, but notthe existence, of this VPA will be treated as the other’s Confidential Information and that noreference to the terms and conditions of this VPA or to activities pertaining thereto can be madein any form of public or commercial advertising without the prior written consent of the otherparty; provided,however, that each party may disclose the terms and conditions ofthis VPA: (i) as required by law, as set forth in the Goods Agreement; (ii) to legal counsel of theparties; (iii) in connection with the requirements of a public offering, secondary offering, debtoffering, or securities filing of the parties, or otherwise as obligated by law; (iv) inconfidence, to accountants, banks, and financing sources and their advisors; or (v) in confidence,in connection with the enforcement of this VPA or rights under this VPA. In the event of (i),(iii) (iv) and (v), each party agrees to redact terms that are not necessary or required by thedisclosure.     **11.6**[Intentionally Omitted]     **11.7**[Intentionally Omitted]**12 ARTICLE 12: GENERAL**     **12.1 Governing Law.**The choice of law for this VPA shall be the same as set forth in the GoodsAgreement.     **12.2 Force Majeure.**Neither party shall be liable for its failure to perform any of itsobligations hereunder due to a Force Majeure Event, provided that the party suffering suchdelay immediately notifies the other party of the delay and providedfurther thatthe period of delay shall not exceed ninety (90) days (the **"****Tolling Period****"**). In the eventthat the delay exceeds the Tolling Period, the non-breaching party may terminate this VPA pursuantto Section 9.2. For avoidance of doubt, this provision is intended to clarify andsupplement the force majeure provision of the Goods Agreement with respect to matters covered bythis VPA.     **12.3 Trademarks.**Nothing in this VPA gives either party a right to use the other party’sname, trademark(s), or trade name(s), directly or indirectly, without the other party’s priorwritten consent, except as may be required by applicable law or court order. In such a case, theparty required to disclose such information shall provide prompt notice of such requirement inorder that the other party may seek appropriate protective orders.     **12.4 Dispute Resolution.**The parties agree that any material dispute between the partiesrelating to this VPA may be handled as follows: **12.4.1** Upon the request of any party, the parties will submit the dispute to a panel of twosenior executives (Vice-President or more senior) of each party. Either party mayinitiate this proceeding by notifying the other party in writing pursuant to the noticeprovisions of Section 12.11. Within five (5) Days from the date of receipt of thenotice, the parties’ executives shall confer (via
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT   telephone or in person) in an effort to resolve such dispute (the “**First ExecutiveConference**”). The decision of the executives shall be final and binding on theparties. Each party’s executives shall be identified by notice to the other party andmay be changed at any time thereafter also by notice to the other party. In the eventthat the dispute cannot resolved in the First Executive Conference, either party isfree to pursue any remedies available to it in law or equity, consistent with the termsof this VPA.     **12.5 Assignment.**Except as set forth in this Section 12.5, neither this Agreement,nor any of the rights or obligations hereunder, may be assigned, transferred, subcontracted ordelegated by a party hereto to any third party (other than an Affiliate of the assigning party),including without limitation, by operation of law or pursuant to a Change of Control, as definedbelow, without the prior written consent of the other party. Notwithstanding the foregoing, (a)Komag may assign this Agreement, and the rights and obligations hereunder, without the priorconsent of HITACHI GST, in connection with a Change of Control and (b) HITACHI GST may assign thisAgreement, and the rights and obligations hereunder, without the prior consent of Komag, to a thirdparty in connection with a Change of Control. However, in the event of such Change in Control, theother party (i.e., the party NOT undergoing the Change in Control) may terminate this Agreementupon ninety (90) days notice, and HITACHI GST may exercise its offset rights for any remaining[***] Balance pursuant to Section 6.7. For purposes of this Section 12.5, **"****Change ofControl****”**shall mean (i) any sale, lease, exchange or other transfer (in one transaction orseries of transactions) of all, or substantially all, of the assets of such party, (ii) anyconsolidation or merger or other combination of a party in which such party is not the continuingor surviving corporation or pursuant to which shares of such party’s common stock would beconverted into cash, securities or other property (other than a merger of such party in which theholders of such party’s common stock immediately prior to the merger hold at least a majority ofthe outstanding securities of the combined entity), or (iii) any transaction (or series of relatedtransactions) pursuant to which any person (as defined in Section 13 of the Securities Exchange Actof 1934, as amended (the **"****Exchange Act****”),**becomes the beneficial owner (as defined in Rule13d-3 under the Exchange Act), directly or indirectly, of 35% or more of such party’s outstandingcommon stock. Any purported assignment of this VPA or the rights or obligations of a party underthis VPA in violation of this Section 12.5 shall be null, void and of no further force oreffect and shall constitute a Material Default.     **12.6 Severability.**If any of the provisions of this VPA are held by a court or other tribunalof competent jurisdiction to be unenforceable, the remaining portions of this VPA will remain infull force and effect.     **12.7 Failure to Enforce.**The failure of either party to enforce at any time or for any periodof time the provisions of this VPA will not be construed to be a waiver of such provisions or ofthe right of such party to enforce each and every provision of this VPA in the future.
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PORTIONS DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT     **12.8 Agency.**This VPA does not create a principal to agent, employer to employee, partnership,joint venture, or any other relationship except that of independent contractors between Komag andHITACHI GST.     **12.9 Request in Writing.**All requests such as Pull Requests, acceptances/rejections, notices,must be made or confirmed in writing. Such writings must take the form of electronic mail (receiptconfirmed), facsimile (receipt-confirmed) and/or posted letter (return-receipt).     **12.10 Counterparts.**This VPA may be executed in one or more counterparts, each of which willbe deemed to be an original, but all of which will be considered one and the same instrument. Aphotocopy of a signature or a facsimile of a signature shall be as valid as an original.     **12.11 Notices.**Except as otherwise provided herein, all notices hereunder will be deemed givenif (a) in writing and delivered personally; or (b) sent by facsimile transmission that is confirmedby return facsimile or e-mail; to the parties at the following addresses (or at such otheraddresses as will be specified by like notice):       (i) if to HITACHI GST, to:         Hitachi Global Storage Technologies, Inc.    5600 Cottle Road    San Jose, CA 95193    Attention: Mr. Ed Kwong, Procurement    Fax No.: (408) 717-9298         With a copy to:    Hitachi Global Storage Technologies, Inc.    Hitachi GST Legal Department    Attention: Paula Gani    5600 Cottle Road    San Jose, CA 95193    Fax No.: (408) 717-9289       (ii) if to Komag to:         Komag USA (Malaysia) Sdn. Bayan Lepas Free Trade Zone    Phase III    11900 Penang    Malaysia    FX: 011-604-643-9881Attention: Kheng Huat Oung, Vice President, GM, Media