exv10w2



 






Exhibit 10.2




CONFIDENTIAL TREATMENT REQUESTED – PUBLICLY FILED COPY








***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH
OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS [****].
A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.








Addendum to Business Agreement Between Maxtor, Inc and Komag, Inc.

Dated October 6, 2003




     This Addendum (the “Addendum”) to the Business Agreement, effective October 6, 2003, by and
between Maxtor Corporation, a Delaware corporation (“Maxtor”), Komag Inc., a Delaware corporation
(“Komag USA”) and Komag USA (Malaysia) Sdn., a Malaysian unlimited liability company (“Komag
Malaysia” and together with Komag USA, “Komag”) (the “Business Agreement”) is made pursuant to
Section 6.3 of the Business Agreement. All terms not otherwise defined in this Addendum shall have
the meanings ascribed to them in the Business Agreement.




	 	1.	 	Komag will provide incremental media volume to Maxtor of 4 million units per quarter
(the “Quarterly Incremental Capacity”). The Quarterly Incremental Capacity, currently
anticipated to be [****] product, is intended to be over and above that provided under the
terms of the Business Agreement.
	 
	 	2.	 	The tooling installed by Komag to provide the volume of product in Paragraph 1 shall be
defined as “Incremental Tools” as specified in the Business Agreement. Komag will not
necessarily use sputter tooling provided by Intevac, Inc.
	 
	 	3.	 	The detailed plan of acquisition, installation, testing, and qualification (the
“Install Plan”) will be attached hereto. Upon completion of the Install Plan, Komag will
begin to provide the full Quarterly Incremental Capacity to Maxtor, which obligation shall
cease on the earlier of October 6, 2008, which is the termination date of the Business
Agreement, or such earlier date that the Business Agreement may terminate in accordance
with its terms.
	 
	 	4.	 	Maxtor will prepay media purchases in the amount of US$50 million (the “Pre-payment
Amount”), which amount shall be paid back by a per disk payment credit equal to [****] for
each disk invoiced (the “Per Disk Credit”) from the date determined in paragraph 6 below
until such time as the Pre-payment Amount is repaid in full by Komag. Komag will issue
credit memos at the end of each calendar month from the date determined in paragraph 6
below. Komag will use it’s best efforts to insure that the credit memos for all product
shipped in a given Maxtor fiscal quarter are issued before the end of said quarter. In no
case, however, shall Maxtor be required to pay invoices for disks for which the
corresponding credit memo for the Per Disk Credit has not been issued.
	 
	 	5.	 	The Pre-payment Amount will be paid by Maxtor to Komag in four installments of US$12.5
million due on the date set forth in the next sentence, [****]. However, the first payment
due




 









 





PORTIONS
DENOTED WITH [***] HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.



	 	 	 	as listed in the prior sentence shall be made within seven (7) business days after the
Effective Date of this Addendum.
	 
	 	6.	 	The Per Disk Credit will apply to all Maxtor purchases of disks under the Business
Agreement and be effective for all invoices for deliveries made on or after the date of the
first production media delivery from the Quarterly Incremental Capacity agreed to in the
Install Plan. Baseline prices will be those already committed or negotiated in the future
as provided in the Business Agreement. Komag agrees that the prices it shall charge Maxtor
for the purchase of Product under the Business Agreement [****]. Maxtor may appoint an
auditor to validate Komag’s records to confirm that Maxtor is receiving such pricing.
Pricing for 2006 shall be negotiated [****], and shall not exceed the pricing set forth in
[****], for the same or similar products.
	 
	 	7.	 	Komag will use its commercially reasonable efforts to achieve Maxtor’s volume goal 14.5
million units per quarter prior to [****], according to a ramp to be agreed upon in the
Install Plan and negotiated improvements thereafter.
	 
	 	8.	 	In addition to the agreement on assignment of this Addendum covered in Section 6.2 of
the Business Agreement, Komag, Inc. agrees that in the case that any of the conditions
listed in Section 6.2.1 of the Business Agreement occur, and there is a positive
pre-payment balance in favor of Maxtor, then that positive pre payment balance will be
returned to Maxtor [****] prior to the effective date of any such assignment or any such
condition described.
	 
	 	9.	 	In addition to the agreement on termination for cause of this Addendum covered in
Section 6.1.3 of the Business Agreement, Komag, Inc. agrees that in the case that any of
the conditions listed in Section 6.1.3 of the Business Agreement occur such that Maxtor
gives notice of such condition of a termination because of such condition to Komag, and
there is a positive pre-payment balance in favor of Maxtor, then that positive Pre Payment
balance will be returned to Maxtor [****].
	 
	 	10.	 	If Komag is not capable of achieving Maxtor’s volume goal of 14.5 million units per
quarter prior to [****], then the remaining positive pre-payment balance shall be repaid in
full to Maxtor [****].
	 
	 	11.	 	This Addendum is Confidential Information under the Mutual Nondisclosure Agreement
dated October 1, 1997 and amends the Business Agreement. All other terms of the Business
Agreement remain in full force and effect.
	 
	 	12.	 	This Addendum will not become effective until the last date of execution by the duly
authorized signatories of each party (“Effective Date”).




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	Agreed to by Maxtor Corporation

	 	Agreed to by Komag, Inc.	 	 
	 
	 	 	 	 
	/s/ David Beaver

	 	/s/ Michael A. Russak	 	 
	 

	 	 	 	 
	David Beaver

	 	Michael A. Russak	 	 
	Senior Vice President Worldwide
Materials and Chief Procurement
Officer

	 	President and Chief Technical Officer	 	 
	 
	 	 	 	 
	Agreed to by Komag USA (Malaysia) SDN
	 	 	 	 
	 
	 	 	 	 
	/s/ K.H. Oung
	 	 	 	 
	 	 
	 	 	 
	K.H. Oung
	 	 	 	 
	Vice President and Managing Director
	 	 	 	 
	Malaysian Operations
	 	 	 	 
	 
	 	 	 	 
	Dated: July 8, 2005
	 	 	 	 







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