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                                                                   EXHIBIT 10(Z)
 
                           INDEMNIFICATION AGREEMENT
 
    This Indemnification Agreement ("Agreement") is made as of          , 1996,
by and between APPLIED MAGNETICS CORPORATION, a Delaware corporation (the
"Company"), and             ("Indemnitee"), with reference to the following
facts:
 
    A. Indemnitee is currently serving as a key executive of the Company.
 
    B.  The Company and Indemnitee recognize the substantial increase in
corporate litigation in general, subjecting key executives to expensive
litigation risks at the same time as the availability and coverage of liability
insurance has been severely limited.
 
    C.  Indemnitee does not regard the current protection available to be
adequate under the present circumstances to protect him or her against the risks
associated with his or her service to the Company and the Company recognizes
that Indemnitee and other key executives of the Company may not be willing to
continue to serve as key executives without additional protection.
 
    D. The Company desires to attract and retain the services of highly
qualified individuals, including Indemnitee, to serve as key executives of the
Company and thus desires to indemnify its key executives to provide them with
the maximum protection permitted by law.
 
    THEREFORE, IN CONSIDERATION OF the foregoing premises, the Company and
Indemnitee hereby agree as follows:
 
    1.  INDEMNIFICATION.
 
    1.1  THIRD PARTY PROCEEDINGS.  The Company shall indemnify Indemnitee if
Indemnitee is or was a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the Company to procure a
judgment in its favor) by reason of the fact that Indemnitee is or was a key
executive of the Company, or any subsidiary of the Company, and such proceeding
relates to any action or inaction on the part of Indemnitee while a key
executive or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a key executive, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including, subject to Section 13 hereof, attorneys' fees and any
expenses of establishing a right to indemnification pursuant to this Agreement
or under Delaware law), judgments, fines, settlements (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) and other amounts actually and reasonably incurred by Indemnitee in
connection with such proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company and, in the case of a criminal proceeding, if
Indemnitee had no reasonable cause to believe Indemnitee's conduct was unlawful.
The termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, or with respect to any criminal proceedings, would not create a
presumption that Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.
 
    1.2  PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.  The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action by or in the right of the
Company or any subsidiary of the Company to procure a judgment in its favor by
reason of the fact that Indemnitee is or was a key executive of the Company, or
any subsidiary of the Company, and such action relates to any action or inaction
on the part of Indemnitee while a key executive, or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including, subject to Section 13
hereof, attorneys' fees and any expenses of
 
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establishing a right to indemnification pursuant to this Agreement or under
Delaware law) and amounts paid in settlement, in each case to the extent
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of the proceeding if Indemnitee acted in good faith and in a manner
Indemnitee believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made with respect to any claim,
issue or matter to which Indemnitee shall have been adjudged to have been liable
to the Company in the performance of Indemnitee's duty to the Company, unless
and only to the extent that the court in which such proceeding is or was pending
shall determine upon application that, in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine is proper.
 
    1.3  SUCCESSFUL DEFENSE ON MERITS.  To the extent that Indemnitee has been
successful on the merits in defense of any proceeding referred to in Section 1.1
or 1.2 above, or in defense of any claim, issue or matter therein, the Company
shall indemnify Indemnitee against expenses (including attorneys' fees) actually
and reasonably incurred by Indemnitee in connection therewith.
 
    1.4  CERTAIN TERMS DEFINED.  For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans, references to "fines"
shall include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan and references to "proceeding" shall include any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative. For purposes of this Agreement, references to
the "Company" shall include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation, so
that an Indemnitee who is or was a director, officer, employee or other agent of
such a constituent corporation, or who, being or having been such a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as an Indemnitee would if he or she had served the resulting or
surviving corporation in the same capacity.
 
    2.  AGREEMENT TO SERVE.  Indemnitee agrees to serve or continue to serve as
a key executive of the Company for so long as he or she is duly elected or
appointed or until such time as he or she voluntarily resigns. Indemnitee agrees
to tender written notice to the Company at least 30 days prior to voluntarily
resigning. The terms of any existing employment agreement between Indemnitee and
the Company shall continue in effect but shall be modified or supplemented by
the terms of this Agreement. Nothing contained in this Agreement is intended to
create in Indemnitee any right to continued employment.
 
    3.  EXPENSES; INDEMNIFICATION PROCEDURE.
 
    3.1  ADVANCEMENT OF EXPENSES.  The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
(excluding amounts actually paid in settlement of any action, suit or
proceeding) or appeal of any civil or criminal action, suit or proceeding
referenced in Section 1.1 or 1.2 hereof. Indemnitee hereby undertakes to repay
such amounts advanced only if, and to the extent that, it shall be determined
ultimately that Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within twenty (20) days following delivery of a written
request therefor by Indemnitee to the Company.
 
    3.2  NOTICE OF CLAIM.  Indemnitee shall, as a condition precedent to his or
her right to be indemnified under this Agreement, give the Company notice in
writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Secretary of the Company at the address shown
on the signature page of this Agreement (or such other address as the Company
shall designate in writing to Indemnitee). In addition, Indemnitee shall give
the Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
 
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    3.3  ENFORCEMENT RIGHTS.  Any indemnification provided for in Section 1
shall be made no later than sixty (60) days after receipt of the written request
of Indemnitee. If a claim or request under this Agreement, under any statute, or
under any provision of the Company's Bylaws providing for indemnification, is
not paid by the Company, or on its behalf, within sixty (60) days after written
request for payment thereof has been received by the Company, Indemnitee may,
but need not, at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim or request, and subject to Section 13, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
action, suit or proceeding in advance of its final disposition) that Indemnitee
has not met the standards of conduct which make it permissible under applicable
law for the Company to indemnify Indemnitee for the amount claimed but the
burden of proving such defense shall be on the Company and Indemnitee shall be
entitled to receive interim payments of expenses pursuant to Section 3.1 unless
and until such defense may be finally adjudicated by court order or judgment for
which no further right of appeal exists. The parties hereto intend that, if the
Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be a decision for the court and no
presumption regarding whether the applicable standard has been met will arise
based on any determination or lack of determination of such by the Company
(including its Board of Directors or any committee thereof, independent legal
counsel or its stockholders).
 
    3.4  ASSUMPTION OF DEFENSE.  In the event the Company shall be obligated to
pay the expenses of any proceeding against Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding with
counsel approved by Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, unless (i) the employment of
counsel by Indemnitee is authorized by the Company, (ii) Indemnitee shall have
reasonably concluded that there may be a conflict of interest of such counsel
retained by the Company between the Company and Indemnitee in the conduct of
such defense, or (iii) the Company ceases or terminates the employment of such
counsel with respect to the defense of such proceeding, in any of which events
then the fees and expenses of Indemnitee's counsel shall be at the expense of
the Company. At all times Indemnitee shall have the right to employ other
counsel in any such proceeding at Indemnitee's expense.
 
    3.5  NOTICE TO INSURERS.  If, at the time of the receipt of a notice of a
claim pursuant to Section 3.2 hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
 
    3.6  SUBROGATION.  In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee, who shall do all things that may be necessary to
secure such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
 
    4.  EXCEPTIONS.  Notwithstanding any other provision herein to the contrary,
the Company shall not be obligated pursuant to the terms of this Agreement:
 
    4.1  CLAIMS INITIATED BY INDEMNITEE.  To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or as otherwise required under the
Delaware General Corporation Law,
 
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but such indemnification or advancement of expenses may be provided by the
Company in specific cases if the Board of Directors has approved the initiation
or bringing of such suit; or
 
    4.2  LACK OF GOOD FAITH.  To indemnify Indemnitee for any expenses incurred
by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce
or interpret this Agreement, if a court of competent jurisdiction determines
that such proceeding was not made in good faith or was frivolous; or
 
    4.3  INSURED CLAIMS.  To indemnify Indemnitee for expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) that have been paid
directly to Indemnitee by an insurance carrier under a policy of officers' and
directors' liability insurance maintained by the Company; or
 
    4.4  CLAIMS UNDER SECTION 16(B).  To indemnify Indemnitee for expenses and
the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
 
    5.  PARTIAL INDEMNIFICATION.  If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by
Indemnitee in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
 
    6.  ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
 
    6.1  SCOPE.  Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by
law, including those circumstances in which indemnification would otherwise be
discretionary and notwithstanding that such indemnification is not specifically
authorized by this Agreement. In the event of any change in any applicable law,
statute or rule which narrows the right of a Delaware corporation to indemnify a
key executive, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement shall have no effect on this
Agreement or the parties' rights and obligations hereunder.
 
    6.2  NON-EXCLUSIVITY.  Nothing herein shall be deemed to diminish or
otherwise restrict any rights to which Indemnitee may be entitled under the
Company's Bylaws, any agreement, any vote of stockholders or disinterested
directors, or under the laws of the State of Delaware.
 
    7.  MUTUAL ACKNOWLEDGEMENT.  Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its key executives under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
 
    8.  OFFICER AND DIRECTOR LIABILITY INSURANCE.  The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors and possibly
certain other key executives of the Company with coverage for losses from
wrongful acts, or to ensure the Company's performance of its indemnification
obligations under this Agreement. Among other considerations, the Company will
weigh the costs of obtaining such insurance coverage against the protection
afforded by such coverage. Notwithstanding the foregoing, the Company shall have
no obligation to obtain or maintain such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.
 
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    9.  SEVERABILITY.  Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company's inability, pursuant to court order, to perform
its obligations under this Agreement shall not constitute a breach of this
Agreement. If this Agreement or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the fullest extent permitted by any
applicable portion of this Agreement that shall not have been invalidated and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
 
    10.  EFFECTIVE DATES.  This Agreement shall be effective as of the date set
forth on the first page and may apply to acts or omissions of Indemnitee which
occurred prior to such date if Indemnitee was a key executive of the Company, or
any predecessor corporation or constituent corporation in a merger involving the
Company, or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, at the time such act or omission occurred.
 
    11.  COVERAGE.  The provisions of this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though Indemnitee may have ceased to serve in such capacity at the
time of any action, suit or other covered proceeding. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of Indemnitee and Indemnitee's estate, heirs, legal representatives and
assigns.
 
    12.  NOTICE.  All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement or
as subsequently modified by written notice.
 
    13.  ATTORNEYS' FEES.  In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that the action was not instituted in good faith or was frivolous. In the event
of an action instituted by or in the name of the Company under this Agreement,
or to enforce or interpret any of the terms of this Agreement, Indemnitee shall
be entitled to be paid all court costs and expenses, including attorneys' fees,
incurred by Indemnitee in defense of such action (including with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that Indemnitee's defenses to such
action were not made in good faith or were frivolous.
 
    14.  GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, as applied to contracts
between Delaware residents entered into and to be performed entirely within
Delaware.
 
    15.  CONSENT TO JURISDICTION.  The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts in the State of Delaware.
 
    16.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
 
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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
 
APPLIED MAGNETICS CORPORATION           Address:
                                        75 Robin Hill Road
                                        Goleta, California 93117
By:
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Title:
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INDEMNITEE                              Address:
 
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                 (Signature)
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           (Printed or typed
name)
 
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