Document:

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                                                                     EXHIBIT 4.2

                          REGISTRATION RIGHTS AGREEMENT

        REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of May __,
2000, by and among Komag, Incorporated, a Delaware corporation, with
headquarters located at 1710 Automation Parkway, San Jose, California 95131 (the
"COMPANY"), and the undersigned buyers (each, a "BUYER" and collectively, the
"BUYERS").

        WHEREAS:

        A.     In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers convertible notes
(the "INITIAL NOTES"), which will be convertible into shares of the Company's
common stock, par value $0.01 per share (the "COMMON STOCK"), (as converted, the
"INITIAL CONVERSION SHARES") in accordance with the terms of the Initial Notes;

        B.     In connection with the Securities Purchase Agreement, each Buyer
has the right, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to require the Company to issue and sell to such Buyer
additional convertible notes (the "ADDITIONAL NOTES" and, collectively with the
Initial Notes, the "NOTES"), which will be convertible into shares of Common
Stock (as converted, the "ADDITIONAL CONVERSION SHARES" and, collectively with
the Initial Conversion Shares, the "CONVERSION SHARES") in accordance with the
terms of the Additional Notes; and

        C.     To induce each Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:

        1.     DEFINITIONS.

               As used in this Agreement, the following terms shall have the
following meanings:

               a.     "INVESTOR" means a Buyer, any transferee or assignee
thereof to whom a Buyer assigns its rights under this Agreement pursuant to a
transfer of Notes or Registrable Securities and who agrees to become bound by
the provisions of this Agreement in accordance with Section 9.

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               b.     "PERSON" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a governmental or any department or agency thereof.

               c.     "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("RULE 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").

               d.     "INITIAL REGISTRABLE SECURITIES" means (i) the Initial
Conversion Shares issued or issuable upon conversion of the Initial Notes and
(ii) any shares of capital stock issued or issuable with respect to the Initial
Conversion Shares or the Initial Notes, as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, without
regard to any limitations on conversions of the Initial Notes.

               e.     "ADDITIONAL REGISTRABLE SECURITIES" means (i) the
Additional Conversion Shares issued or issuable upon conversion of the
Additional Notes and (ii) any shares of capital stock issued or issuable with
respect to the Additional Conversion Shares or the Additional Notes, as a result
of any stock split, stock dividend, recapitalization, exchange or similar event
or otherwise, without regard to any limitations on conversion of the Additional
Notes.

               f.     "REGISTRABLE SECURITIES" means the Initial Registrable
Securities and the Additional Registrable Securities.

               g.     "INITIAL REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering the Initial Registrable Securities.

               h.     "ADDITIONAL REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering the Additional Registrable Securities.

               i.     "REGISTRATION STATEMENT" means the Initial Registration
Statement and the Additional Registration Statement, as applicable.

               j.     "FILLING DEADLINE" means the Initial Filing Deadline and
the Additional Filling Deadline (each as defined below), as applicable.

               k.     "EFFECTIVENESS DEADLINE" means the Initial Effectiveness
Deadline and the Additional Effectiveness Deadline (each as defined below), as
applicable.

        2.     REGISTRATION.

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        a.     Mandatory Registration.

               (i)    Initial Mandatory Registration. The Company shall prepare,
and, as soon as practicable but in no event later than the date which is 30 days
after the Initial Closing Date (as defined in the Securities Purchase Agreement)
(the "INITIAL FILING DEADLINE"), file with the SEC an Initial Registration
Statement on Form S-3 covering the resale of all of the Initial Registrable
Securities. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration,
subject to the provisions of Section 2(d). The Initial Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to 116% of the number of Initial Conversion Shares
issued or issuable upon conversion of the Initial Notes (without regard to any
limitations on conversions) as of the trading day immediately preceding the date
the Initial Registration Statement is initially filed with the SEC, subject to
adjustment as provided in Section 2(e). The Company shall use its best efforts
to cause such Initial Registration Statement to be declared effective by the SEC
as soon as practicable, but in no event later than the date which is 150 days
after the Initial Closing Date (the "INITIAL EFFECTIVENESS DEADLINE").

               (ii)   Additional Mandatory Registration. The Company shall
prepare, and, as soon as practicable but in no event later than 25 days after
each Additional Closing Date (as defined in the Securities Purchase Agreement)
(the "ADDITIONAL FILING DEADLINE"), file with the SEC an Additional Registration
Statement or Additional Registration Statements (as necessary) on Form S-3
covering the resale of all of the Additional Registrable Securities relating to
the Additional Notes issued on such Additional Closing Date. In the event that
Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). Each Additional Registration Statement prepared pursuant hereto
shall register for resale at least that number of shares of Common Stock equal
to 116% of the number of Additional Conversion Shares issued or issuable upon
conversion of the Additional Notes issued on such Additional Closing Date
(without regard to any limitations on conversions) as of the trading day
immediately preceding the date such Additional Registration Statement is
initially filed with the SEC, subject to adjustment as provided in Section 2(e).
The Company shall use its best efforts to cause such Additional Registration
Statement to be declared effective by the SEC as soon as practicable, but in no
event later than the date which is 145 days after the Additional Closing Date
(the "ADDITIONAL EFFECTIVENESS DEADLINE").

               b.     Allocation of Registrable Securities. The initial number
of Registrable Securities included in any Registration Statement and each
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. Any
shares of Common Stock included in a Registration Statement which remain
allocated to any Person which ceases to

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hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement.

               c.     Legal Counsel. Subject to Section 5 hereof, the Buyers
holding a majority of the Registrable Securities shall have the right to select
one legal counsel to review any offering pursuant to this Section 2 ("LEGAL
COUNSEL"), which shall be Katten Muchin Zavis or such other counsel as
thereafter designated by the holders of a majority of Registrable Securities.
The Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations under this Agreement.

               d.     Ineligibility for Form S-3. In the event that Form S-3 is
not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holders of a
majority of the Registrable Securities and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.

               e.     Sufficient Number of Shares Registered. In the event the
number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration Statement or an Investor's allocated portion
of the Registrable Securities pursuant to Section 2(b), the Company shall amend
the Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover at least 116%
of the number of such Registrable Securities as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) business days after the necessity therefor arises. The Company
shall use it best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof. For purposes of the foregoing provision, the number of shares available
under a Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of Registrable Securities
issued or issuable upon conversion of the Initial Notes or the Additional Notes,
as applicable, covered by such Registration Statement is greater than the number
of shares of Common Stock available for resale under such Registration
Statement. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion of the Notes (other than
pursuant to Section 9 of the Notes) and such calculation shall assume that the
Notes are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Notes), if applicable.

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        3.     RELATED OBLIGATIONS.

        At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2(a) or 2(e), the Company will use
its best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:

               a.     The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the applicable Registrable Securities
(but in no event later than the applicable Filing Deadline) and use its best
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the applicable Effectiveness Deadline). The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"), which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. The term "best efforts"
as used in the first sentence of this Section 3(a) shall mean, among other
things, that the Company shall submit to the SEC, within two (2) business days
after the Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff has no further comments
on the Registration Statement, as the case may be, and the Company has received
the consent of Legal Counsel, a request for acceleration of effectiveness of
such Registration Statement to a time and date not later than 48 hours after the
submission of such request.

               b.     The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form
10-Q or Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the "1934 ACT"), the Company shall have incorporated such
report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is

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filed which created the requirement for the Company to amend or supplement the
Registration Statement.

               c.     The Company shall (A) permit Legal Counsel to review and
comment upon (i) the Initial Registration Statement and each Additional
Registration Statement at least seven (7) days prior to its filing with the SEC
and (ii) all other Registration Statements and all amendments and supplements to
all Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) within a reasonable number of days prior to their filing with
the SEC, and (B) not file any document in a form to which Legal Counsel
reasonably objects. The Company shall not submit a request for acceleration of
the effectiveness of a Registration Statement or any amendment or supplement
thereto without the prior approval of Legal Counsel, which consent shall not be
unreasonably withheld or delayed. The Company shall furnish to Legal Counsel,
without charge, (i) any correspondence from the SEC or the staff of the SEC to
the Company or its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Section
3. Notwithstanding the forgoing, for purposes of supplying Legal Counsel with
information for review which is incorporated by reference from documents
previously filed with the SEC, the Company shall not be required to provide such
documents so long as such documents are available on the EDGAR system.

               d.     The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, and all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.

               e.     The Company shall use its best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
Registrable Securities covered by a Registration Statement under the securities
or "blue sky" laws of each jurisdiction in the United States as required under
the laws of such jurisdiction, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions

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reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to (w) make any change to its
certificate of incorporation or bylaws, (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

               f.     The Company shall notify Legal Counsel and each Investor
in writing of the happening of any event, as promptly as practicable after
becoming aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.

               g.     The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to use its best efforts to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify Legal Counsel
and each Investor who holds Registrable Securities being sold of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

               h.     At the request of any Investor and at such Investor's
expense, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel

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representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to the Investors.

               i.     The Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel and (iii) one firm of accountants (collectively,
the "INSPECTORS"), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the "RECORDS"),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company's officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (b) the information in such Records has been
made generally available to the public other than by disclosure in violation of
this or any other agreement of which the Inspector has knowledge. Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.

               j.     The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

               k.     The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the Nasdaq National Market, or (iii) if,
despite the Company's best efforts to satisfy the preceding clause (i) or (ii),
the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on The Nasdaq SmallCap Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with

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respect to such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(k).

               l.     The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend after the Securities are registered for resale) representing
the Registrable Securities to be offered pursuant to a Registration Statement
and enable such certificates to be in such denominations or amounts, as the case
may be, as the Investors may reasonably request and registered in such names as
the Investors may request.

               m.     The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date of the
applicable Registration Statement.

               n.     If requested by an Investor, the Company shall (i) as soon
as practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the Investor or the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) as soon as practicable make all required
filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as practicable, supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
of such Registrable Securities.

               o.     The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

               p.     The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.

               q.     The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.

               r.     Within two (2) business days after a Registration
Statement which covers applicable Registrable Securities is ordered effective by
the SEC, the Company shall deliver, and shall use its best efforts to cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are

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included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached hereto as
Exhibit A.

               s.     Intentionally Left Blank.

               t.     Notwithstanding anything to the contrary in Section 3(f),
at any time after the applicable Registration Statement has been declared
effective by the SEC, the Company may delay the disclosure of material
non-public information concerning the Company the disclosure of which at the
time is not, in the good faith opinion of the Board of Directors of the Company,
in the best interest of the Company and, in the opinion of counsel to the
Company, otherwise required (a "GRACE PERIOD"); provided, that the Company shall
promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed 45 consecutive
days and during any consecutive 365 day period such Grace Periods shall not
exceed an aggregate of 75 days and the first day of each Grace Period must be at
least two trading days after the last day of any prior Grace Period (an
"ALLOWABLE GRACE PERIOD"). For purposes of determining the length of a Grace
Period above, the Grace Period shall begin on and include the date the holders
receive the notice referred to in clause (i) and shall end on and include the
later of the date the holders receive the notice referred to in clause (ii) and
the date referred to in such notice. The provisions of 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material non-public information is no longer applicable.

        4.     OBLIGATIONS OF THE INVESTORS.

               a.     At least seven (7) business days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company reasonably requires from
each such Investor if such Investor elects to have any of such Investor's
Registrable Securities included in such Registration Statement. It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.

               b.     Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.

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               c.     Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.

        5.     EXPENSES OF REGISTRATION.

               All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
The Company also shall reimburse the Investors for the fees and disbursements of
Legal Counsel in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3 of this Agreement, provided that in the aggregate
all fees and expenses paid to the Investors pursuant to this Section 5 and
Section 4(g) of the Securities Purchase Agreement will not exceed $50,000.

        6.     INDEMNIFICATION.

               In the event any Registrable Securities are included in a
Registration Statement under this Agreement:

               a.     To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the Securities Exchange Act of 1934, as amended (the "1934 ACT") (each, an
"INDEMNIFIED PERSON"), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts
paid in settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the

                                       11
<PAGE>   12

qualification of the offering under the securities or other "blue sky" laws of
any jurisdiction in which Registrable Securities are offered ("BLUE SKY
FILING"), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any material
violation of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, "VIOLATIONS"). Subject to Section 6(c), the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely
delivered to the Investor by the Company pursuant to Section 3(d); and (iii)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.

               b.     In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act (each an
"INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any reasonable legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts

                                       12
<PAGE>   13

paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.

               c.     Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding a majority in interest of
the Registrable Securities included in the Registration Statement to which the
Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of any
such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person which relates to such action or Claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such Claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights

                                       13
<PAGE>   14

of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.

               d.     The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received and paid or Indemnified
Damages are incurred.

               e.     The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

        7.     CONTRIBUTION.

               To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

        8.     REPORTS UNDER THE 1934 ACT.

               With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:

               a.     make and keep public information available, as those terms
are understood and defined in Rule 144;

               b.     file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

                                       14
<PAGE>   15

               c.     furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company unless otherwise available on the EDGAR system, and (iii) such other
information as may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.

        9.     ASSIGNMENT OF REGISTRATION RIGHTS.

               The rights under this Agreement shall be automatically assignable
by the Investors to any transferee of all or any portion of Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the number of securities with respect to which such registration rights are
being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.

        10.    AMENDMENT OF REGISTRATION RIGHTS.

               Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold a majority of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

        11.    MISCELLANEOUS.

               a.     A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

                                       15
<PAGE>   16

               b.     Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

               If to the Company:

                      Komag, Incorporated
                      1710 Automation Parkway
                      San Jose, California 95131
                      Telephone: 408-576-2000
                      Facsimile: 408-944-9234
                      Attention: Edward H. Siegler, C.F.O.

               With a copy to:

                      Wilson Sonsini Goodrich & Rosati
                      650 Page Mill Road
                      Palo Alto, California 94304-1050
                      Telephone: 650-493-9300
                      Facsimile: 650-493-6811
                      Attention: Kathleen Bloch, Esq.

               If to Legal Counsel:

                      Katten Muchin Zavis
                      525 West Monroe Street, Suite 1600
                      Chicago, Illinois 60661-3693
                      Telephone: 312-902-5200
                      Facsimile: 312-902-1061
                      Attention: Robert J. Brantman, Esq.

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image

                                       16
<PAGE>   17

of the first page of such transmission or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

               c.     Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

               d.     All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Illinois, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Illinois or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Illinois. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting the City of Chicago, Cook County for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

               e.     This Agreement, the Securities Purchase Agreement and the
Notes constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Securities Purchase Agreement and the Notes
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

               f.     Subject to the requirements of Section 9, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

               g.     The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

               h.     This Agreement may be executed in identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This

                                       17
<PAGE>   18

Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement.

               i.     Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

               j.     All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investors holding a majority of the Registrable
Securities, determined as if all of the Notes then outstanding have been
converted into Registrable Securities without regard to any limitations on
conversion of the Notes.

               k.     The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.

               l.     This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *

                                       18
<PAGE>   19

        IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

COMPANY:                                  BUYERS:

KOMAG, INCORPORATED                       OLYMPUS SECURITIES LTD.

By:                                       By:
   ---------------------------------         ---------------------------------

Name:                                     Name: Bradford B. Couri
     -------------------------------            ------------------------------

Title:                                    Its: Authorized Signatory
      ------------------------------

                                          NELSON PARTNERS LTD.

                                          By:
                                             ---------------------------------
                                          Name: Bradford B. Couri
                                          Title: Authorized Signatory

                                       19
<PAGE>   20

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                                              INVESTOR'S LEGAL
                                         ADDRESS                          REPRESENTATIVES' ADDRESS
    INVESTOR NAME                 AND FACSIMILE NUMBER                      AND FACSIMILE NUMBER
                            ----------------------------------------------------------------------------
<S>                         <C>                                      <C>
Olympus Securities Ltd.     c/o Citadel Investment Group, L.L.C.     Katten Muchin Zavis
                            225 West Washington Street               525 W. Monroe Street
                            Chicago, Illinois  60606                 Chicago, Illinois 60661-3693
                            Attention: Bradford B. Couri             Attention: Robert J. Brantman, Esq.
                            Telephone: (312) 696-2063                Telephone: (312) 902-5200
                            Facsimile: (312) 368-4650                Facsimile: (312) 902-1061

Nelson Partners Ltd.        c/o Citadel Investment Group, L.L.C.     Katten Muchin & Zavis
                            225 West Washington Street               525 W. Monroe Street
                            Chicago, Illinois  60606                 Chicago, Illinois 60661-3693
                            Attention: Bradford B. Couri             Attention: Robert J. Brantman, Esq.
                            Telephone: (312) 696-2063                Telephone: (312) 902-5200
                            Facsimile: (312) 368-4650                Facsimile: (312) 902-1061
</TABLE>

                                       20
<PAGE>   21

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
ATTN:

               RE:  KOMAG, INCORPORATED

Ladies and Gentlemen:

        We are counsel to Komag, Incorporated, a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and
among the Company and the buyers named therein (collectively, the "HOLDERS")
pursuant to which the Company issued to the Holders convertible notes (the
"NOTES") convertible into shares of the Company's common stock, par value $0.01
per share (the "COMMON STOCK"). Pursuant to the Purchase Agreement, the Company
also has entered into a Registration Rights Agreement with the Holders (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Notes, under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 2000, the Company filed a Registration
Statement on Form S-3 (File No. 333-_____________) (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names each of the Holders as a selling
stockholder thereunder.

        In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                        Very truly yours,

                                        [ISSUER'S COUNSEL]

                                        By:____________________________________

cc:  [LIST NAMES OF HOLDERS]<PAGE>   1
                                                                     EXHIBIT 4.3

                                                                       EXHIBIT A

                                  FORM OF NOTE

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. ANY
TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTION 2(e)(viii) HEREOF. THE PRINCIPAL AMOUNT AND THE INTEREST
THEREON REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 2(e)(viii) OF THIS NOTE.

                                CONVERTIBLE NOTE

______ __, 200_                                                      $__________

        FOR VALUE RECEIVED, KOMAG, INCORPORATED, a Delaware corporation (the
"COMPANY"), hereby promises to pay to the order of __________________ or
registered assigns ("HOLDER") the principal amount of ____________________
Dollars ($___________), on the Maturity Date (as defined below), and to pay
simple interest ("INTEREST") on the unpaid principal balance hereof at the rate
of 8.0% per annum from the date hereof until the same becomes due and payable,
whether at, maturity (or upon payment of principal in full if the Maturity Date
(as defined below) is extended or delayed pursuant to Section 23) or upon
acceleration or by conversion or redemption in accordance with the terms hereof
or otherwise. Interest on this Note shall commence accruing on the Issuance Date
and shall be computed on the basis of a 365-day year and actual days elapsed and
shall be payable at the time of conversion or redemption of the principal to
which such interest relates in accordance with Section 1 hereof. Any amount of
interest on this Note, including Liquidity Default Interest (as Defined in
Section 3), which is not paid when due shall bear interest at the rate of 12.25%
per annum from the date thereof until the same is paid ("DEFAULT INTEREST").

<PAGE>   2

        1. Payments of Principal and Interest. All payments of principal and
interest on this Note (to the extent such principal and/or interest is not
converted into Common Stock in accordance with the terms hereof) shall be made
in lawful money of the United States of America by wire transfer of immediately
available funds to such account as the Holder may from time to time designate by
written notice in accordance with the provisions of this Note. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is
not a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day and, in the case of any interest payment
date which is not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. For purposes of this Note, "BUSINESS
DAY" shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in The City of New York are authorized or required by law or
executive order to remain closed. Each capitalized term used herein, and not
otherwise defined, shall have the meaning ascribed thereto in the Securities
Purchase Agreement, dated June 1, 2000, pursuant to which this Note was
originally issued (the "SECURITIES PURCHASE AGREEMENT"). This Note and the Other
Notes issued by the Company pursuant to the Securities Purchase Agreement are
collectively referred to in this Note as the"NOTES".

        2. Conversion of Notes. This Note shall be convertible into shares of
the Company's common stock, par value $0.01 per share (the "COMMON STOCK"), on
the terms and conditions set forth in this Section 2.

                (a) Certain Defined Terms. For purposes of this Note, the
        following terms shall have the following meanings:

                        (i) "ADDITIONAL AMOUNT" means, with respect to any
                principal amount of the Note, the sum of (A) Interest, (B)
                Liquidity Default Interest and (C) Default Interest, if any, on
                the interest referred to in the immediately preceding clauses
                (A) and (B).

                        (ii) "APPROVED STOCK PLAN" means any employee benefit
                plan which has been approved by the Board of Directors of the
                Company, pursuant to which the Company's securities may be
                issued to any employee, officer, director or consultant for
                services provided to the Company.

                        (iii) "CLOSING SALE PRICE" means, for any security as of
                any date, the last closing trade price for such security on the
                Principal Market as reported by Bloomberg, or, if the Principal
                Market is not the principal securities exchange or trading
                market for such security, the last closing trade

                                      -2-
<PAGE>   3

                price of such security on the principal securities exchange or
                trading market where such security is listed or traded as
                reported by Bloomberg, or if the foregoing do not apply, the
                last closing trade price of such security in the
                over-the-counter market on the electronic bulletin board for
                such security as reported by Bloomberg, or, if no last closing
                trade price is reported for such security by Bloomberg, the last
                closing ask price of such security as reported by Bloomberg, or,
                if no last closing ask price is reported for such security by
                Bloomberg, the average of the lowest ask price and the lowest
                bid price of any market makers for such security as reported in
                the "pink sheets" by the National Quotation Bureau, Inc. If the
                Closing Sale Price cannot be calculated for such security on
                such date on any of the foregoing bases, the Closing Sale Price
                of such security on such date shall be the fair market value as
                mutually determined by the Company and the holders of Notes. If
                the Company and the holders of Notes are unable to agree upon
                the fair market value of the Common Stock, then such dispute
                shall be resolved pursuant to Section 2(e)(iii) below. All such
                determinations to be appropriately adjusted for any stock
                dividend, stock split or other similar transaction during such
                period.

                                      -3-
<PAGE>   4

                        (iv) "CONVERSION PRICE" means, as of any Conversion Date
                (as defined below) or other date of determination (A) with
                respect to any Notes issued on the Initial Issuance Date, 115%
                of the average of the Closing Sale Prices of the Common Stock
                for the five consecutive trading days immediately following the
                first (1st) trading day immediately following the date on which
                the Company files the Bank Debt Form 8-K (as defined in Section
                4(h) of the Securities Purchase Agreement) with the Securities
                Exchange Commission and (B) with respect to any Notes issued
                pursuant to an Additional Note Notice (as defined in the
                Securities Purchase Agreement) given on a related Additional
                Note Notice Date (as defined in the Securities Purchase
                Agreement), the product of (y) the Market Price (as defined
                below) on such Additional Note Notice Date and (z) 115%, in each
                case subject to adjustment as provided herein.

                        (v) "CONVERSION AMOUNT" means the sum of (A) the
                principal amount of this Note to be converted, redeemed or
                otherwise with respect to which this determination is being made
                and (B) the Additional Amount with respect to such principal
                amount.

                        (vi) "CONVERTIBLE SECURITIES" means any stock or
                securities (other than Options) directly or indirectly
                convertible into or exchangeable for Common Stock.

                        (vii) "INITIAL ISSUANCE DATE" means the first date on
                which any Notes are issued pursuant to the Securities Purchase
                Agreement.

                        (viii) "ISSUANCE DATE" means, with respect to each Note,
                the date of issuance of the applicable Note.

                        (ix) "HOLDERS" means, the holder of this Note and the
                holders of the Other Notes.

                        (ix) "MARKET PRICE" means, as of any date of
                determination, the average of the Closing Sale Prices of the
                Common Stock for the five (5) consecutive trading days
                immediately preceding such date of determination.

                        (x) "MATURITY DATE" means the date which is 5 years
                after the Issuance Date of the applicable Note, subject to
                extension pursuant to Section 2(e)(vii).

                        (xi) "MINIMUM CONVERSION AMOUNT" means a Conversion
                Amount equal to $400,000.

                                      -4-
<PAGE>   5

                        (xii) "OTHER NOTES" means the convertible notes, other
                than this Note, issued by the Company pursuant to the Securities
                Purchase Agreement.

                        (xiii) "PERSON" means an individual, a limited liability
                company, a partnership, a joint venture, a corporation, a trust,
                an unincorporated organization and a government or any
                department or agency thereof.

                        (xiv) "PRINCIPAL MARKET" means the Nasdaq National
                Market.

                        (xv) "OPTIONS" means any rights, warrants or options to
                subscribe for or purchase Common Stock or Convertible
                Securities.

                (b) Holder's Conversion Right; Mandatory Redemption. Subject to
        the provisions of Sections 2(d) and 2(e)(i)(A), at any time or times on
        or after the Issuance Date (as defined below), the Holder shall be
        entitled to convert any part of the outstanding and unpaid Conversion
        Amount of this Note into fully paid and nonassessable shares of Common
        Stock in accordance with Section 2(d), at the Conversion Rate (as
        defined below). If any Conversion Amount of this Note remains
        outstanding on the Maturity, then, pursuant to Section 2(e)(vii), all of
        such Conversion Amount shall be redeemed by the Company. The Company
        shall not issue any fraction of a share of Common Stock upon any
        conversion. All shares of Common Stock (including fractions thereof)
        issuable upon conversion of this Note by the Holder shall be aggregated
        for purposes of determining whether the conversion would result in the
        issuance of a fraction of a share of Common Stock. If, after the
        aforementioned aggregation, the issuance would result in the issuance of
        a fraction of a share of Common Stock, the Company shall round such
        fraction of a share of Common Stock down to the nearest whole share.

                (c) Conversion Rate. The number of shares of Common Stock
        issuable upon conversion of a Conversion Amount of this Note pursuant to
        Section 2(b) shall be determined according to the following formula (the
        "CONVERSION RATE"):

<TABLE>
<CAPTION>
                                Conversion Amount
                                -----------------
<S>                             <C>
                                Conversion Price
</TABLE>

                (d) Limitations on Beneficial Ownership. The Company shall not
        effect any conversion of this Note and the Holder shall have no right to
        convert this Note into shares of Common Stock to the extent that, after
        giving effect to such conversion the Holder (together with the Holder's
        affiliates), through conversion of this Note or otherwise, would have
        acquired beneficial ownership of a number of shares of Common Stock
        during the 60-day period ending on and including the date such
        conversion was implemented (the "60 DAY PERIOD"), which, when added to
        the number of shares of Common Stock beneficially owned by the Holder
        and its affiliates at the beginning of the 60 day Period, is in excess
        of 10.00% of the shares of Common Stock outstanding immediately after
        giving effect to such conversion. For purposes of the foregoing
        sentence, the number of shares of Common Stock beneficially owned by the
        Holder and its affiliates shall include the number

                                      -5-
<PAGE>   6

        of shares of Common Stock issuable upon conversion of this Note with
        respect to which the determination of such sentence is being made, but
        shall exclude the number of shares of Common Stock which would be
        issuable upon (i) conversion of the remaining, nonconverted portion of
        this Note beneficially owned by the Holder and its affiliates and (ii)
        exercise or conversion of the unexercised or unconverted portion of any
        other securities of the Company beneficially owned by the Holder and its
        affiliates subject to a limitation on conversion or exercise analogous
        to the limitation contained herein. Except as set forth in the preceding
        sentence, for purposes of this Section 2(d), beneficial ownership shall
        be calculated in accordance with Section 13(d) of the Securities
        Exchange Act of 1934, as amended. For purposes of this Section 2(d), in
        determining the number of outstanding shares of Common Stock the Holder
        may rely on the number of outstanding shares of Common Stock as
        reflected in (1) the Company's most recent Form 10-Q or Form 10-K, as
        the case may be, (2) a more recent public announcement by the Company or
        (3) any other notice by the Company or its Transfer Agent setting forth
        the number of shares of Common Stock outstanding. For any reason at any
        time, upon the written or oral request of the Holder, the Company shall
        within two (2) Business Days confirm orally and in writing to the Holder
        the number of shares of Common Stock then outstanding. In any case, the
        number of outstanding shares of Common Stock shall be determined after
        giving effect to the conversion of this Note by the Holder and its
        affiliates since the date as of which such number of outstanding shares
        of Common Stock was reported.

                (e) Mechanics of Conversion. The conversion of this Note at the
        option of the Holder shall be conducted in the following manner:

                        (i) Holder's Delivery Requirements. To convert this Note
                into shares of Common Stock on any date (the "CONVERSION DATE"),
                the Holder hereof shall (A) transmit by facsimile (or otherwise
                deliver), for receipt on or prior to 3:00 p.m., Pacific Time on
                such date, a copy of a fully executed notice of conversion in
                the form attached hereto as Exhibit I (the "CONVERSION NOTICE")
                to the Company for a Conversion Amount equal to or greater than
                the Minimum Conversion Amount and (B) if required by Section
                2(e)(viii), surrender to a common carrier for delivery to the
                Company as soon as practicable following such date the original
                Note being converted (or an indemnification undertaking with
                respect to such Note in the case of its loss, theft or
                destruction).

                        (ii) Company's Response. Upon receipt by the Company of
                a copy of a Conversion Notice, the Company (1) shall promptly,
                and in no event later than one (1) Business Day after receipt,
                immediately send, via facsimile, a confirmation of receipt of
                such Conversion Notice to such Holder and the Company's
                designated transfer agent (the "TRANSFER AGENT"), which
                confirmation shall constitute an instruction to the Transfer
                Agent to process such Conversion Notice in accordance with the
                terms herein and (2) on or before the second Business Day
                following the date of receipt by the Company of such Conversion
                Notice (the "SHARE DELIVERY DATE"), (A) issue and deliver to the
                address as specified in the Conversion Notice,

                                      -6-
<PAGE>   7

                a certificate, registered in the name of the Holder or its
                designee, for the number of shares of Common Stock to which the
                Holder shall be entitled, or (B) provided the Transfer Agent is
                participating in The Depository Trust Company ("DTC") Fast
                Automated Securities Transfer Program, upon the request of the
                holder, credit such aggregate number of shares of Common Stock
                to which the Holder shall be entitled to the Holder's or its
                designee's balance account with DTC through its Deposit
                Withdrawal Agent Commission system, provided, however, if the
                shares of Common Stock to which a Holder shall be entitled are
                delivered through DTC, the Company shall be in compliance with
                this Section 3(e)(ii) if such shares of Common Stock are
                credited to the Holders or its designee's balance account with
                DTC on or before 12 p.m. Eastern Time on the third Business Day
                following receipt by the Company of such Conversion Notice.
                Subject to Section 2(e)(viii), if less than the Conversion
                Amount of this Note is submitted for conversion, then the
                Company shall, as soon as practicable and in no event later than
                three (3) Business Days after receipt of the Note (the "NOTE
                DELIVERY DATE") and at its own expense, issue and deliver to the
                Holder a new Note for the outstanding principal amount not
                converted.

                        (iii) Dispute Resolution. In the case of a dispute as to
                the determination of the Closing Sale Price or the arithmetic
                calculation of the Conversion Rate, the Company shall instruct
                the Transfer Agent to issue to the Holder the number of shares
                of Common Stock that is not disputed and shall submit the
                disputed determinations or arithmetic calculations to the Holder
                via facsimile within one (1) Business Day of receipt of such
                holder's Conversion Notice. If such Holder and the Company are
                unable to agree upon the determination of the Closing Sale Price
                or arithmetic calculation of the Conversion Rate within one (1)
                Business Day of such disputed determination or arithmetic
                calculation being submitted to the Holder, then the Company
                shall within one (1) Business Day submit via facsimile (A) the
                disputed determination of the Closing Sale Price to an
                independent investment bank selected by the Company and approved
                by the Holders of the Notes representing a majority of the
                Conversion Amounts of the Notes then outstanding or (B) the
                disputed arithmetic calculation of the Conversion Rate to the
                Company's independent, outside accountant. The Company shall use
                its best efforts to cause the investment bank or the accountant,
                as the case may be, to perform the determinations or
                calculations and notify the Company and the Holders of the
                results no later than three (3) Business Days from the time it
                receives the disputed determinations or calculations. Such
                investment bank's or accountant's determination or calculation,
                as the case may be, shall be binding upon all parties absent
                manifest error.

                        (iv) Record Holder. The person or persons entitled to
                receive the shares of Common Stock issuable upon a conversion of
                this Note shall be treated for all purposes as the record holder
                or holders of such shares of Common Stock on the Conversion
                Date.

                                      -7-
<PAGE>   8

                        (v) Company's Failure to Timely Convert.

                                (A) Cash Damages. If within five (5) Business
                        Days after the Company's receipt of a facsimile or other
                        copy of the Conversion Notice the Company shall fail to
                        issue a certificate to the Holder or credit the Holder's
                        balance account with DTC for the number of shares of
                        Common Stock to which such Holder is entitled upon such
                        Holder's conversion of this Note, in addition to all
                        other available remedies which such Holder may pursue
                        hereunder and under the Securities Purchase Agreement,
                        the Company shall pay additional damages to such Holder
                        for each date after the Share Delivery Date such
                        conversion is not timely effected in an amount equal to
                        0.25% of the product of (I) the sum of the number of
                        shares of Common Stock not issued to the Holder on or
                        prior to the Share Delivery Date and to which such
                        Holder is entitled and (II) the Closing Sale Price of
                        the Common Stock on the Share Delivery Date (which
                        damages shall not exceed 18% for each failure to deliver
                        certificates or to credit a Holders balance account with
                        DTC in accordance with Section 2(e)(ii)). If the Company
                        fails to pay the additional damages set forth in this
                        Section 2(e)(v) within five Business Days of the date
                        incurred, then the Holder entitled to such payments
                        shall have the right at any time, so long as the Company
                        continues to fail to make such payments, to require the
                        Company, upon written notice, to immediately issue, in
                        lieu of such cash damages, the number of shares of
                        Common Stock equal to the quotient of (X) the aggregate
                        amount of the damages payments described herein divided
                        by (Y) the Conversion Price in effect on such Conversion
                        Date as specified by the Holder in the Conversion
                        Notice.

                                (B) Void Conversion Notice; Adjustment to
                        Conversion Price. If for any reason the Holder has not
                        received all of the shares of Common Stock prior to the
                        twentieth (20th) Business Day after the expiration of
                        the Share Delivery Date with respect to a conversion of
                        this Note, then the Holder, upon written notice to the
                        Company, may void its Conversion Notice with respect to,
                        and retain or have returned, as the case may be, any
                        principal amount of this Note that has not been
                        converted pursuant to such Holder's Conversion Notice;
                        provided that the voiding of a Holder's Conversion
                        Notice shall not effect the Company's obligations to
                        make any payments which have accrued prior to the date
                        of such notice pursuant to Section 2(e)(v)(A) or
                        otherwise. Thereafter, the Conversion Price of the
                        principal amount of this Note returned or retained by
                        the Holder for failure to timely convert shall be
                        adjusted to the lesser of (I) the Conversion Price as in
                        effect on the date on which the Holder voided the
                        Conversion Notice and (II) the lowest Closing Sale Price
                        during the period beginning on the

                                      -8-
<PAGE>   9

                        Conversion Date and ending on the date such Holder
                        voided the Conversion Notice, subject to further
                        adjustment as provided in this Note.

                        (vi) Pro Rata Conversion. In the event the Company
                receives a Conversion Notice from more than one Holder of the
                Notes for the same Conversion Date and the Company can convert
                some, but not all, of the Notes submitted for conversion, the
                Company shall convert from each Holder electing to have Notes
                converted at such time a pro rata amount of such holder's
                Conversion Amount submitted for conversion based on the
                principal amount of the Notes submitted for conversion on such
                date by such Holder relative to the Conversion Amount of all
                Notes submitted for conversion on such date.

                        (vii) Mandatory Redemption at Maturity. If any
                Conversion Amount of this Note remains outstanding on the
                Maturity Date, then all of the Conversion Amount shall be
                redeemed as of such date (a "MATURITY DATE MANDATORY
                REDEMPTION") for an amount in cash equal to the Conversion
                Amount on the Maturity Date (the "MATURITY DATE REDEMPTION
                PRICE"). On the Maturity Date the Company shall pay to the
                Holder, by wire transfer of immediately available funds, an
                amount equal to the Maturity Date Redemption Price. If the
                Company shall fail to redeem all of the Conversion Amount of
                this Note outstanding on the Maturity Date by payment of the
                Maturity Date Redemption Price, then in addition to any remedy
                the Holder may have under this Note, the Securities Purchase
                Agreement and the Registration Rights Agreement between the
                Company and the initial holders of the Notes (the "REGISTRATION
                RIGHTS AGREEMENT"), the Holder shall have the option to require
                the Company to convert any or all of the Conversion Amount and
                for which the Maturity Date Redemption Price (together with any
                interest thereon) has not been paid into the number of shares of
                Common Stock the Holder would have received if the Holder had
                given a Conversion Notice for such Conversion Amount (together
                with any interest thereon) on the Maturity Date.

                        (viii) Book-Entry. Notwithstanding anything to the
                contrary set forth herein, upon conversion of any portion of
                this Note in accordance with the terms hereof, the Holder
                thereof shall not be required to physically surrender this Note
                to the Company unless the full Conversion Amount represented by
                this Note is being converted. The Holder and the Company shall
                maintain records showing the Conversion Amount so converted and
                the dates of such conversions or shall use such other method,
                reasonably satisfactory to the Holder and the Company, so as not
                to require physical surrender of this Note upon each such
                conversion. In the event of any dispute or discrepancy, such
                records of the Company shall be controlling and determinative in
                the absence of manifest error. Notwithstanding the foregoing, if
                this Note is converted as aforesaid, the Holder may not transfer
                this Note unless the Holder first physically surrenders this
                Note to the Company, whereupon the Company will forthwith issue
                and deliver upon the order of the Holder a new Note of like
                tenor, registered as the Holder may request, representing

                                      -9-
<PAGE>   10

                in the aggregate the remaining Conversion Amount represented by
                this Note. The Holder and any assignee, by acceptance of a this
                Note or such new Note, acknowledge and agree that, by reason of
                the provisions of this paragraph, following conversion of any
                portion of this Note, the Conversion Amount (including the
                principal of this Note) represented by this Note may be less
                than the principal amount and the accrued interest set forth on
                the face hereof. The conversion of any Conversion Amount shall
                reduce both principal and interest under this Note such that the
                sum of the principal so converted and the accrued and unpaid
                interest on such converted principal is equal to such Conversion
                Amount.

                (f) Taxes. The Company shall pay any and all taxes, other than
        income taxes, that may be payable with respect to the issuance and
        delivery of Common Stock upon the conversion of Notes.

                (g) Adjustments to Conversion Price -- Dilution and Other
        Events. In addition to any other adjustments provided herein, the
        Conversion Price will be subject to adjustment from time to time as
        provided in this Section 2(g).

                        (i) Adjustment of Conversion Price upon Subdivision or
                Combination of Common Stock. If the Company at any time
                subdivides (by any stock split, stock dividend, recapitalization
                or otherwise) one or more classes of its outstanding shares of
                Common Stock into a greater number of shares, the Conversion
                Price in effect immediately prior to such subdivision will be
                proportionately reduced. If the Company at any time combines (by
                combination, reverse stock split or otherwise) one or more
                classes of its outstanding shares of Common Stock into a smaller
                number of shares, the Conversion Price in effect immediately
                prior to such combination will be proportionately increased.

                        (ii) Other Events. If any of the following events occur:
                the granting of stock appreciation rights, phantom stock rights
                or other rights with equity features, then the Company's Board
                of Directors will make an appropriate adjustment in the
                Conversion Price so as to protect the rights of the holders of
                the Notes; provided that no such adjustment will increase the
                Conversion Price as otherwise determined pursuant to this
                Section 2(g).

                        (iii) Notices.

                                (A) Promptly upon any adjustment of the
                        Conversion Price, and in no event later than two (2)
                        Business Days after such adjustment, the Company will
                        give written notice thereof to the Holder of this Note
                        setting forth in reasonable detail, and certifying, the
                        calculation of such adjustment.

                                (B) The Company will give written notice to the
                        Holder of this Note at least ten (10) days prior to the
                        date on which the Company closes

                                      -10-
<PAGE>   11

                        its books or takes a record (I) with respect to any
                        dividend or distribution upon the Common Stock, (II)
                        with respect to any pro rata subscription offer to
                        holders of Common Stock or (III) for determining rights
                        to vote with respect to any Organic Change (as defined
                        in Section 4(a)), dissolution or liquidation, provided
                        that such information shall be made known to the public
                        prior to or in conjunction with such notice being
                        provided to each such holder.

                                (C) The Company will also give written notice to
                        the Holder of this Note at least ten (10) days prior to
                        the date on which any Organic Change (as defined below),
                        dissolution or liquidation will take place, provided
                        that such information shall be made known to the public
                        prior to or in conjunction with such notice being
                        provided to each such holder.

        3. Adjustments Upon a Liquidity Default.

                (a) Liquidity Defaults. A "LIQUIDITY DEFAULT" shall be deemed to
have occurred at such time as any of the following events:

                        (i) the failure of a Registration Statement (as defined
                in the Registration Rights Agreement) to be declared effective
                by the Securities and Exchange Commission (the "SEC") on or
                prior to the applicable Effectiveness Deadline (as defined in
                the Registration Rights Agreement);

                        (ii) while a Registration Statement is required to be
                maintained effective pursuant to the terms of the Registration
                Rights Agreement, the effectiveness of such Registration
                Statement lapses for any reason (including, without limitation,
                the issuance of a stop order) or is unavailable to the Holder
                for sale of all of such Holder's Registrable Securities (as
                defined in the Registration Rights Agreement) in accordance with
                the terms of the Registration Rights Agreement (other than due
                to any Allowable Grace Period (as defined in the Registration
                Rights Agreement)), and such lapse or unavailability continues
                for a period of 10 consecutive trading days;

                        (iii) the Company's notice to any Holder of Notes,
                including by way of public announcement, at any time, of its
                intention not to comply with a request for conversion of any
                Notes into shares of Common Stock that is tendered in accordance
                with the provisions of the Notes and other than if such notice
                is to inform the Holder that the Company shall not be obligated
                to issue the shares of Common Stock issuable upon such
                conversion of Notes due to the provisions of Section 9;

                                      -11-
<PAGE>   12

                        (iv) the failure of the Company to deliver all of the
                shares of Common Stock to the Holder with respect to a
                conversion of this Note prior to the tenth (10th) Business Day
                after a Share Delivery Date.

        As soon as practicable but in no event later than one (1) Business Day
        after a Liquidity Default Date (as defined below), the Company shall
        deliver written notice thereof via facsimile and overnight courier to
        each Holder. A "LIQUIDITY DEFAULT DATE" means the date on which a
        Liquidity Default first occurs for each occurrence of a Liquidity
        Default.

                (b) Rights of the Holders upon the Occurrence of a Liquidity
        Default. In addition to any other remedies the Holders of the Notes may
        have at law or in equity, if a Liquidity Default occurs then:

                        (i) Upon the occurrence of each Liquidity Default, the
                Company shall be obligated to pay an additional interest equal
                to Ten and One-Forth Percent (10.25%) per annum on the unpaid
                principal balance from the applicable Liquidity Default Date
                which shall be due and payable in cash on the first day of every
                month following such Liquidity Default Date, subject to increase
                pursuant to Section 3(b)(iii) (each a "LIQUIDITY DEFAULT
                INTEREST"). The Liquidity Default Interest for a specific
                Liquidity Default shall commence accruing on the applicable
                Liquidity Default Date and shall cease to accrue on:

                                (A) for a Liquidity Default resulting from
                        Sections 3(a)(i), 3(a)(ii) or 3(a)(iv), the date such
                        Liquidity Default is cured; and

                                (B) for a Liquidity Default resulting from
                        Section 3(a)(iii), the date the Company notifies the
                        Holders in writing that it will honor requests for
                        conversion of the Notes into shares of Common Stock that
                        are tendered in accordance with the provisions of the
                        Notes.

                Liquidity Default Interest shall be computed on the basis of a
                365-day year and actual days elapsed.

                        (ii) Upon the occurrence of each Liquidity Default (and
                from time to time as applicable), the Conversion Price of the
                Notes shall be permanently adjusted (subject to further
                adjustment pursuant to the Notes subsequent to such adjustment)
                to equal the lesser of (I) the Conversion Price in effect on the
                applicable Liquidity Default Date and (II) the product of (a)
                0.80 multiplied by (b) the Market Price on such Liquidity
                Default Date.

                        (iii) Upon the occurrence of each Liquidity Default and
                so long as Liquidity Default Interest accrues on such Liquidity
                Default, (A) the applicable Liquidity Default Interest rate
                shall be increased by One-Half Percent (0.5%) on the first day
                of every calendar month following the applicable Liquidity
                Default

                                      -12-
<PAGE>   13

                Date and (B) the Conversion Price in effect on each day
                subsequent to a Liquidity Default Date for each Liquidity
                Default shall be permanently reduced (subject to further
                adjustment pursuant to the Notes subsequent to such adjustment)
                by an amount equal to the product of (a) the Conversion Price in
                effect as of such date and (b) 0.0001667. The percentage
                increase to the Liquidity Default Interest provided for in the
                preceding sentence shall be pro rated for the first day of the
                first month following a Liquidity Default Date based on the
                number of days which elapsed from such Liquidity Default Date to
                the first day of the month following such Liquidity Default Date
                divided by 30.

        4. Other Rights of Holder.

                (a) Reorganization, Reclassification, Consolidation, Merger or
        Sale. Any recapitalization, reorganization, reclassification,
        consolidation, merger, sale of all or substantially all of the Company's
        assets to another Person or other transaction which is effected in such
        a way that holders of Common Stock are entitled to receive (either
        directly or upon subsequent liquidation) stock, securities or assets
        with respect to or in exchange for Common Stock is referred to herein as
        "ORGANIC CHANGE." Prior to the consummation of any (i) sale of all or
        substantially all of the Company's assets to an acquiring Person or (ii)
        other Organic Change following which the Company is not a surviving
        entity, the Company will secure from the Person purchasing such assets
        or the successor resulting from such Organic Change (in each case, the
        "ACQUIRING ENTITY") a written agreement (in form and substance
        reasonably satisfactory to the holders of the Notes representing a
        majority of the Conversion Amounts of the Notes then outstanding) to
        deliver to the Holder in exchange for this Note, a security of the
        Acquiring Entity evidenced by a written instrument substantially similar
        in form and substance to this Note, and reasonably satisfactory to the
        holders the Notes representing a majority of the Conversion Amounts of
        the Notes then outstanding. Prior to the consummation of any other
        Organic Change, the Company shall make appropriate provision (in form
        and substance reasonably satisfactory to the holders of Notes
        representing a majority of the Conversion Amounts of the Notes then
        outstanding) to insure that each of the Holder will thereafter have the
        right to acquire and receive in lieu of or in addition to (as the case
        may be) the shares of Common Stock immediately theretofore acquirable
        and receivable upon the conversion of this Note such shares of stock,
        securities or assets that would have been issued or payable in such
        Organic Change with respect to or in exchange for the number of shares
        of Common Stock which would have been acquirable and receivable upon the
        conversion of this Note as of the date of such Organic Change (without
        taking into account any limitations or restrictions on the
        convertibility of this Note).

                (b) Optional Redemption Upon Change of Control. In addition to
        the rights of the Holder under Section 4(a), upon a Change of Control
        (as defined below) of the Company the Holder shall have the right, at
        the Holder's option, to require the Company to redeem all or a portion
        of the Conversion Amount represented by this Note equal to the sum of
        (A) the principle amount of this Note to be redeemed and (B) the
        Additional

                                      -13-
<PAGE>   14

        Amount related to such principle amount ("CHANGE OF CONTROL REDEMPTION
        PRICE"). No sooner than 15 days nor later than 10 days prior to the
        consummation of a Change of Control, but not prior to the public
        announcement of such Change of Control, the Company shall deliver
        written notice thereof via facsimile and overnight courier (a "NOTICE OF
        CHANGE OF CONTROL") to the Holder. At any time during the period
        beginning after receipt of a Notice of Change of Control (or, in the
        event a Notice of Change of Control is not delivered at least 10 days
        prior to a Change of Control, at any time on or after the date which is
        10 days prior to a Change of Control) and ending on the date of such
        Change of Control, the Holder may require the Company to redeem all or a
        portion of the Conversion Amount of this Note then outstanding by
        delivering written notice thereof via facsimile and overnight courier (a
        "NOTICE OF REDEMPTION UPON CHANGE OF CONTROL") to the Company, which
        Notice of Redemption Upon Change of Control shall indicate (i) the
        Conversion Amount the Holder is submitting for redemption, and (ii) the
        applicable Change of Control Redemption Price, as calculated pursuant to
        this Section 4(b). Upon the Company's receipt of a Notice(s) of
        Redemption Upon Change of Control from any Holder of Notes, the Company
        shall promptly, but in no event later than five (5) Business Days
        following such receipt, notify the Holder of this Note by facsimile of
        the Company's receipt of such Notice(s) of Redemption Upon Change of
        Control. The Company shall deliver the applicable Change of Control
        Redemption Price simultaneous with the consummation of the Change of
        Control. Payments provided for in this Section 4(b) shall have priority
        to payments to other stockholders in connection with a Change of
        Control. For purposes of this Section 4(b), "CHANGE OF CONTROL" means
        (i) the consolidation, merger or other business combination of the
        Company with or into another Person (other than (A) a consolidation,
        merger or other business combination in which holders of the Company's
        voting power immediately prior to the transaction will continue after
        the transaction to hold, directly or indirectly, the voting power of the
        surviving entity or entities necessary to elect a majority of the
        members of the board of directors (or their equivalent if other than a
        corporation) of such entity or entities, or (B) pursuant to a migratory
        merger effected solely for the purpose of changing the jurisdiction of
        incorporation of the Company), (ii) the sale or transfer of all or
        substantially all of the Company's assets, or (iii) a purchase, tender
        or exchange offer made to and accepted by the holders of more than the
        50% of the outstanding shares of Common Stock.

                (c) Purchase Rights. If at any time the Company grants, issues
        or sells any Options, Convertible Securities or rights to purchase
        stock, warrants, securities or other property pro rata to the record
        holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the
        Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could
        have acquired if the Holder had held the number of shares of Common
        Stock acquirable upon complete conversion of this Note (without taking
        into account any limitations or restrictions on the convertibility of
        this Note) immediately before the date on which a record is taken for
        the grant, issuance or sale of such Purchase Rights, or, if no such
        record is taken, the date as of which the record holders of Common Stock
        are to be determined for the grant, issue or

                                      -14-
<PAGE>   15

        sale of such Purchase Rights, provided that this section shall not be
        applicable to the exchange or conversion of the Senior Debt into any
        other security of the Company.

                (d) Participation. The Holder shall, as a holder of this Note,
        be entitled to such dividends paid and distributions made to the holders
        of Common Stock to the same extent as if the Holder had held the number
        of shares of Common Stock acquirable upon complete conversion of this
        Note (without taking into account any limitations or restrictions on the
        convertibility of this Note) immediately before the date on which a
        record is taken for such dividends and distributions, or, if no such
        record is taken, the date as of which the record holders of Common Stock
        are to be determined for the dividends or distributions. Payments or
        distributions under the preceding sentence shall be made concurrently
        with the dividends or distributions to the holders of the Common Stock.

        5. Conversion at the Company's Election. Subject to Section 2(d), on any
date which is (A) during the period beginning on the date which is two years
after the Issuance Date of this Note and ending on the Maturity Date and (B) a
date on which the Closing Sale Price of the Common Stock has been greater than
200% of the Conversion Price in effect on the Issuance Date of the applicable
Notes (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar events) on any seven (7) trading days during the
ten (10) consecutive trading days immediately preceding such date, the Company
shall have the right, in its sole discretion, to require that all or any portion
of the outstanding Conversion Amount of this Note be converted ("COMPANY'S
CONVERSION ELECTION") at the applicable Conversion Rate; provided that the
Conditions to Conversion at the Company's Election (as set forth below) are
satisfied. The Company shall exercise its right to Company's Conversion Election
by providing the Holder of the Notes written notice ("COMPANY'S CONVERSION
ELECTION NOTICE") on such date by facsimile and overnight courier. The date on
which each of the holders of the Notes issued on the Issuance Date receives the
Company's Conversion Election Notice is referred to in this Note as the
"COMPANY'S CONVERSION ELECTION NOTICE DATE". If the Company elects to require
conversion of some, but not all, of the Conversion Amounts of the Notes issued
on the Issuance Date then outstanding, the Company shall require conversion of
the pro rata amount from each Holder of such Notes based on the principal amount
of Notes held by such Holder on the Company's Conversion Election Notice Date
relative to the aggregate principal amount of all Notes outstanding on such date
(such amount with respect to the Holder being referred to herein as its "PRO
RATA CONVERSION AMOUNT"). The Company's Conversion Election Notice shall
indicate (x) the Conversion Amount of Notes held by each Holder of Notes the
Company has selected for conversion, (y) the date selected by the Company for
conversion ("COMPANY'S ELECTION CONVERSION DATE"), which date shall be 10
Business Days after the Company's Conversion Election Notice Date, and (z) each
holder's pro rata share of Conversion Amounts of the Notes selected for
conversion as determined in accordance with the immediately preceding sentence.
Subject to the satisfaction of all the conditions of this Section 5, on the
Company's Election Conversion Date the Holder of this Note will be deemed to
have submitted a Conversion Notice in accordance with Section 2(e)(i) for a
Conversion Amount equal to the Holder's Pro Rata Conversion Amount. "CONDITIONS
TO CONVERSION AT THE COMPANY'S ELECTION" means the following conditions: (i)
during the period beginning on and including the Issuance Date and

                                      -15-
<PAGE>   16

ending on and including the Company's Election Conversion Date, the Company
shall not have failed on more than two occasions to deliver shares of Common
Stock upon conversion of the this Note to the Holder within five (5) Business
Days of the Company's Receipt of a facsimile or other copy of a Conversion
Notice; (ii) during the period beginning on and including the date which is 30
days prior to the Company's Conversion Election Notice Date and ending on and
including the Company's Election Conversion Date, the Company shall have
delivered shares of Common Stock upon conversion of this Note to the Holder
within five (5) Business Days of the Company's receipt of a facsimile or other
copy of a Conversion Notice; (iii) during the period beginning on and including
the Company's Conversion Election Notice Date and ending on and including the
Company's Election Conversion Date the Closing Sale Price of the Common Stock is
greater than 150% of the Conversion Price in effect on the Issuance Date of the
applicable Notes (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar events); (iv) during the period beginning on and
including the date which is 30 days prior to the Company's Conversion Election
Notice Date and ending on and including the Company's Election Conversion Date
the Company otherwise has satisfied its obligations in all material respects
under this Note, the Securities Purchase Agreement and the Registration Rights
Agreement; and (v) the Company is not in default in any material respect under
this Note, the Securities Purchase Agreement and the Registration Rights
Agreement.

        6. Reservation of Shares. The Company shall, so long as any principal
amount of the Note is outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all of the principal
amount of the Notes then outstanding; provided that the number of shares of
Common Stock so reserved shall at no time be less than 140% of the number of
shares of Common Stock for which the principal amount of the Notes are at any
time convertible (without regard to any limitations on conversions). The initial
number of shares of Common Stock reserved for conversions of the Notes and each
increase in the number of shares so reserved shall be allocated pro rata among
the Holders of the Notes based on the principal amount of the Notes held by each
Holder at the time of issuance of the Notes or increase in the number of
reserved shares, as the case may be. In the event a Holder shall sell or
otherwise transfer any of such Holder's Notes, each transferee shall be
allocated a pro rata portion of the number of reserved shares of Common Stock
reserved for such transferor. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Notes shall be allocated to the remaining
Holders, pro rata based on the principal amount of the Notes then held by such
Holders.

        7. Voting Rights. Holders shall have no voting rights, except as
required by law, including but not limited to the General Corporation Law of the
State of Delaware, and as expressly provided in this Note.

                                      -16-
<PAGE>   17

        8. Restriction on Redemption and Cash Dividends. Until all of the
Conversion Amount of this Note has been converted, redeemed or otherwise
satisfied as provided herein, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, its capital
stock without the prior express written consent of the holders of Notes
representing at least fifty-one percent (51%) of the Conversion Amount of the
Notes then outstanding, except for payments on convertible securities of the
Company.

        9. Limitation on Number of Conversion Shares. The Company shall not be
obligated to issue any shares of Common Stock upon conversion of this Note in
excess of 19.99% of the number of shares of Common Stock outstanding on the
Initial Issuance Date if the issuance of such shares of Common Stock would
exceed that number of shares of Common Stock which the Company may issue upon
Conversion of the Notes (the "EXCHANGE CAP") without breaching the Company's
obligations under the rules or regulations of the Principal Market, or the
market or exchange where the Common Stock is then traded, except that such
limitation shall not apply in the event that the Company (a) obtains the
approval of its stockholders as required by the applicable rules of the
Principal Market, or the market or exchange where the Common Stock is then
traded, (or any successor rule or regulation) for issuances of Common Stock in
excess of such amount, or (b) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of a majority of the principal amount of
the Notes then outstanding. Until such approval or written opinion is obtained,
or such action is taken by the required number of holders of the Notes, no
purchaser of Notes pursuant to the Securities Purchase Agreement (the
"PURCHASERS") shall be issued, upon conversion of this Note, shares of Common
Stock in an amount greater than the product of (i) the Exchange Cap amount
multiplied by (ii) a fraction, the numerator of which is the principal amount of
the Notes issued to such Purchaser pursuant to the Securities Purchase Agreement
and the denominator of which is the aggregate principal amount of all Notes
issued to the Purchasers pursuant to the Securities Purchase Agreement (the "CAP
ALLOCATION AMOUNT"). In the event that any Purchaser shall sell or otherwise
transfer any of such Purchaser's Notes, the transferee shall be allocated a pro
rata portion of such Purchaser's Cap Allocation Amount. In the event that any
Holder of Notes, shall convert all of such holder's Notes into a number of
shares of Common Stock which, in the aggregate, is less than such holder's Cap
Allocation Amount, then the difference between such holder's Cap Allocation
Amount and the number of shares of Common Stock actually issued to such Holder
shall be allocated to the respective Cap Allocation Amounts of the remaining
Holders of Notes on a pro rata basis in proportion to Conversion Amount of Notes
then held by each such Holder.

        10. Reissuance of Notes. Subject to Section 2(e)(viii) in the event of a
conversion or redemption pursuant to this Note of less than all of the
Conversion Amount represented by this Note, the Company shall promptly cause to
be issued and delivered to the Holder, upon tender by the Holder of the Note
converted or redeemed, a new note of like tenor representing the remaining
principal amount of this Note which has not been so converted or redeemed.

        11. Defaults and Remedies.

                                      -17-
<PAGE>   18

                (a) Events of Default. An "EVENT OF DEFAULT" is: (i) on or after
        the Maturity Date, the default (A) for thirty (30) days in payment of
        Interest, Liquidity Default Interest or Default Interest or (B) in
        payment of principal on this Note; (ii) the default in payment of the
        principal amount of this Note when and as due; (iii) the breach by the
        Company of any representation, warranty, covenant (other than Section
        4(o) of the Securities Purchase Agreement) or other term or condition of
        the Securities Purchase Agreement, the Registration Rights Agreement,
        this Note or any other agreement, document, certificate or other
        instrument delivered in connection with the transactions contemplated
        thereby and hereby, except to the extent that such breach would not have
        a Material Adverse Effect (as defined in Section 3(a) of the Securities
        Purchase Agreement) and except, in the case of a breach of a covenant
        which is curable, only if such breach continues for a period of at least
        30 days; (iv) the occurrence of a Liquidity Default pursuant to Sections
        3(a)(iii) or 3(a)(iv); (v) the occurrence of a Liquidity Default
        pursuant to Sections 3(a)(i) or 3(a)(ii) provided that the Company has
        failed to use its best efforts to avoid such Liquidity Default pursuant
        to Section 3(a)(i) or 3(a)(ii); (vi) any acceleration prior to maturity
        of any mortgage, indenture or instrument under which there may be issued
        or by which there may be secured or evidenced any indebtedness for money
        borrowed of at least $5,000,000 by the Company or for money borrowed the
        repayment of at least $5,000,000 of which is guaranteed by the Company,
        whether such indebtedness or guarantee now exists or shall be created
        hereafter, (vii) if the Company pursuant to or within the meaning of any
        Bankruptcy Law; (A) commences a voluntary case; (B) consents to the
        entry of an order for relief against it in an involuntary case; (C)
        consents to the appointment of a Custodian of it or for all or
        substantially all of its property; (D) makes a general assignment for
        the benefit of its creditors; or (E) admits in writing that it is
        generally unable to pay its debts as the same become due; or (viii) a
        court of competent jurisdiction enters an order or decree under any
        Bankruptcy Law that: (1) is for relief against the Company in an
        involuntary case; (2) appoints a Custodian of the Company or for all or
        substantially all of its property; or (3) orders the liquidation of the
        Company or any subsidiary, and the order or decree remains unstayed and
        in effect for ninety (90) days. The Term "BANKRUPTCY LAW" means Title
        11, U.S. Code, or any similar Federal or State Law for the relief of
        debtors. The term "CUSTODIAN" means any receiver, trustee, assignee,
        liquidator or similar official under any Bankruptcy Law.

                (b) Remedies. If an Event of Default occurs and is continuing,
        the Holders of Notes representing a majority of the Conversion Amounts
        of the Notes then outstanding may declare all of the outstanding
        Conversion Amounts of the Notes, including any Interest, Liquidity
        Default Interest and Default Interest and other amounts due, to be due
        and payable immediately by providing written notice to the Company (an
        "EVENT OF DEFAULT NOTICE"), except that in the case of an Event of
        Default arising from events described in clauses (vi), (vii) and (viii)
        of Section 11(a), this Note shall become due and payable without further
        action or notice. Each Holder shall deliver to the Senior Agent an Event
        of Default Notice promptly after sending such notice to the Company.
        Such notice shall be sent to the Senior Agent by facsimile at (617)
        434-4775 or at such other number provided to such Holder by the Senior
        Agent in writing at least five (5) Business Days

                                      -18-
<PAGE>   19

        prior to such Holder's sending of an Event of Default Notice (written
        confirmation of receipt mechanically or electronically generated by the
        sender's facsimile machine containing the time, date, facsimile number
        referred to above and an image of the first page of such transmission
        shall be rebuttal evidence of receipt by facsimile).

        12. Vote to Change the Terms of Notes. This Note and any provision
hereof may only be amended by an instrument in writing signed by the Company and
holders of Notes representing at least two-thirds (2/3) of the aggregate
Conversion Amount of the Notes then outstanding. The term "Note" and all
reference thereto, as used throughout this instrument, shall mean this
instrument (and the other Notes issued pursuant to the Securities Purchase
Agreement) as originally executed, or if later amended or supplemented, then as
so amended or supplemented.

        13. Lost or Stolen Notes. Promptly upon receipt by the Company of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Note, and, in the case of loss, theft or destruction, of an
indemnification undertaking by the Holder to the Company in a form reasonably
acceptable to the Company and, in the case of mutilation, upon surrender and
cancellation of the Notes, the Company shall execute and deliver new notes of
like tenor and date at the Holder's expense; provided, however, the Company
shall not be obligated to re-issue notes if the Holder contemporaneously
requests the Company to convert such remaining principal amount into Common
Stock.

        14. Payment of Collection, Enforcement and Other Costs. If: (i) this
Note is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; or (ii) an attorney is
retained to represent the Holder of this Note in any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors'
rights and involving a claim under this Note, then the Company shall pay to the
Holder all reasonable attorney's fees, costs and expenses incurred in connection
therewith, in addition to all other amounts due hereunder, provided that the
Company shall only be required to pay such fees, costs and expenses relating to
clause (i) above to the extent that the Holder prevails on the claim, or in the
case of claim for monetary damages or collection, a material dollar judgement
(where the materiality of an award shall be judged in proportion to the amount
of the claim).

        15. Cancellation. After all principal and accrued interest at any time
owed on this Note has been paid in full pursuant to the terms of this Note, this
Note shall automatically be deemed canceled (regardless of whether this Note is
actually surrendered to the Company), shall be surrendered to the Company for
cancellation and shall not be reissued.

        16. Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in principal amounts of at least $500,000)
containing the same terms and conditions and representing in the aggregate the
principal amount of this Note, and each such new Note will represent such
portion of such principal amount as is designated by the Holder at the time of
such surrender. The date the Company initially issues this Note will be deemed
to be the "Issuance Date" hereof regardless of the number of times a new Note
shall be issued.

                                      -19-
<PAGE>   20

        17. Waiver of Notice. To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.

        18. Governing Law. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the laws of
the State of Illinois, without giving effect to provisions thereof regarding
conflict of laws.

        19. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a holder's
right to pursue actual damages for any failure by the Company to comply with the
terms of this Note. The Company covenants to each Holder of Notes that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holders of the Notes
and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holders of the Notes shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

        20. Specific Shall Not Limit General; Construction. No specific
provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by
the Company and all holders and shall not be construed against any person as the
drafter hereof.

        21. Failure or Indulgence Not Waiver. No failure or delay on the part of
this Note in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.

        22. Notices. Whenever notice is required to be given under this Note,
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement.

        23. Subordination.

                                      -20-
<PAGE>   21

                (a) Subordination to Senior Debt. Each Holder, severally
        (together with its respective successors and assigns), and the Company
        covenants and agrees that, to the extent and in the manner hereinafter
        set forth, the payment of any amounts with respect to the Notes or the
        Securities Purchase Agreement (collectively, the "SUBORDINATED
        OBLIGATIONS") is hereby expressly made subordinate and subject in right
        of payment to the prior payment in full of all the Senior Debt (as
        defined below) in the manner set forth in this Section 23. Each Senior
        Lender (as defined below) shall be deemed to have restructured the
        Senior Debt in reliance upon the covenants and provisions contained in
        this Section 23.

                (b) No Payment Upon Insolvency Event. Upon any payment or
        distribution of assets of the Company to its creditors in connection
        with any liquidation, dissolution, winding-up, reorganization,
        assignment for the benefit of creditors, marshaling of assets or
        liabilities, or any bankruptcy, reorganization, receivership, insolvency
        or similar proceedings of the Company or its property, whether voluntary
        or involuntary (each an "INSOLVENCY PROCEEDING"):

                        (i) the Senior Lenders shall receive payment in full in
                cash of all amounts due on or to become due on or in respect of
                all Senior Debt (including any interest accruing thereon at the
                rate provided in the Senior Credit Agreement (as defined below)
                after the commencement of any such Insolvency Proceeding,
                whether or not allowed as a claim against the Company in such
                Insolvency Proceeding) before any Holder receives or accepts any
                payment or distribution, whether by setoff, exercising
                contractual or statutory rights or otherwise and whether in the
                form of cash, securities, property or otherwise (other than a
                distribution of Reorganization Subordinated Securities which a
                Holder may receive and retain); and

                        (ii) any payment or distribution of assets of the
                Company of any kind or character, whether in the form of cash,
                property, securities or otherwise, by set-off, exercising
                contractual or statutory rights or otherwise, to which any
                Holder would be entitled but for the provisions of this Section
                23(b) (other than a distribution of Reorganization Subordinated
                Securities which Holder may receive and retain), shall be paid
                by the Company or the liquidating trustee or agent or other
                person making such payment or distribution, whether a trustee in
                bankruptcy, a receiver or liquidating trustee or otherwise,
                directly to the Senior Agent (as defined below) on behalf of the
                Senior Lenders.

        In the event that after the commencement of an Insolvency Proceeding,
        notwithstanding the foregoing provisions of this Section 23(b), any
        Holder shall receive any payment or distribution of assets of the
        Company of any kind or character, whether in the form of cash, property,
        securities or otherwise (other than a distribution of Reorganization
        Subordinated Securities which a Holder may receive and retain) before
        all the Senior Debt

                                      -21-
<PAGE>   22

        has been paid in full in cash, then such payment or distribution shall
        be held in trust for the benefit of, and be immediately paid over to,
        the Senior Agent on behalf of the Senior Lenders for application to the
        Senior Debt.

                (c) Restriction on Payments for Restructure Events of Default.

                        (i) Senior Payment Defaults. In the event that any
                Senior Payment Default (as defined below) shall have occurred
                and be existing, no Holder shall receive or accept any payment
                or distribution, whether by setoff, exercising contractual or
                statutory rights or otherwise and whether in the form of cash,
                securities, property or otherwise (other than as provided in
                Section 23(m) hereof), on account of the Subordinated
                Obligations until the earlier to occur of (a) such Senior
                Payment Default having been cured or waived in accordance with
                the terms of the Senior Credit Facility and (b) the Senior Debt
                (including, without limitation, amounts that have become and
                remain due by acceleration, together with any interest accruing
                thereon at the rate provided in the Senior Credit Facility)
                having been paid in full in cash. For the avoidance of doubt,
                the provisions of Section 23(b) hereof shall be applicable
                during any Insolvency Proceeding notwithstanding any cure or
                reinstatement of the Senior Debt during, or as a consequence of,
                such Insolvency Proceeding.

                        (ii) Senior Covenant Defaults. In the event that a
                Senior Covenant Default shall have occurred and be existing, no
                Holder shall receive or accept any payment or distribution,
                whether by setoff, exercising contractual or statutory rights or
                otherwise and whether in the form of cash, securities, property
                or otherwise (other than a distribution of Reorganization
                Subordinated Securities, payments pursuant to Section 2(e)(v),
                or pursuant to Section 23(m)), on account of the Subordinated
                Obligations until the earlier to occur of (a) the cure or waiver
                of such Senior Covenant Default in accordance with the terms of
                the Senior Credit Facility, and (b) the expiration of the
                applicable Blockage Period (as defined below), provided however
                that nothing contained in this Section 23(c)(ii) shall prohibit
                the Company from making, and the Holder from receiving, payments
                (whether in cash, property, securities or otherwise) pursuant to
                Section 2(e)(v) hereof. For the avoidance of doubt, the
                provisions of Section 23(b) hereof shall be applicable during
                any Insolvency Proceeding notwithstanding any cure or
                reinstatement of the Senior Debt during, or as a consequence of,
                such Insolvency Proceeding.

                        (iii) Prohibited Payments. In the event that the Company
                shall have made, or the Holder shall have received, any payment
                or distribution of assets of the Company of any kind or
                character, whether in the form of cash, property, securities or
                otherwise at any time when prohibited by the foregoing
                provisions of this Section 23(c), then in such event such
                payment shall be held in trust for the

                                      -22-
<PAGE>   23

                benefit of, and be immediately paid over to, the Senior Agent on
                behalf of the Senior Lenders for application to the Senior Debt.

                        (d) Waiver of Certain Rights. Each Holder (A) hereby
                waives any and all rights that it otherwise might have to
                require the Senior Lenders (i) to marshal any property or assets
                of the Company or (ii) enforce any guaranty or any security
                interest or lien given by any guarantor or other person to
                secure the payment of any or all of the Senior Debt, in each
                case as a condition precedent to enforcing their rights
                hereunder and (B) shall not oppose, interfere or otherwise
                attempt to prevent or impair the Senior Lenders from enforcing
                their security interests on any collateral securing the
                repayment of the Senior Debt or their other rights under the
                Senior Credit Agreement and (C) shall not take, or permit to be
                taken on its behalf, any action that is inconsistent with the
                terms of this Section 23.

                        (e) No Authority to Act During Insolvency Proceedings.
                During the pendency of any Insolvency Proceeding, each Holder
                agrees not to take any action which it is prohibited from taking
                under this Section 23.

                        (f) Subrugation to Rights of Senior Lenders. Subject to
                the prior payment in full in cash of all Senior Debt, in the
                event and to the extent cash, property or securities otherwise
                payable or deliverable to the holders of the Subordinated
                Obligations shall have been applied pursuant to this Section 23
                to the payment of Senior Debt, then and in each such event, the
                holders of the Subordinated Obligations shall be subrogated to
                the rights of each holder of Senior Debt to receive any further
                payment or distribution in respect of or applicable to the
                Senior Debt; and, for the purposes of such subrogation, no
                payment or distribution to the holders of Senior Debt of any
                cash, property or securities to which any holder of Subordinated
                Obligations would be entitled except for the provisions of this
                Section 23 shall, and no payment over to the holders of Senior
                Debt by the holders of the Subordinated Obligations pursuant to
                the provisions of this Section 23 shall be deemed, as between
                and among the Company, their creditors other than the holders of
                Senior Debt and the holders of Subordinated Obligations, to be a
                payment by the Company to or on account of Senior Debt.

                        (g) Provisions Solely To Define Relative Rights. The
                provisions of this Section 23 are intended solely for the
                purpose of defining the relative rights of each Holder, on the
                one hand, and the Senior Lenders, on the other hand. Nothing
                contained in this Section 23 or elsewhere shall impair, as among
                the Company, its creditors (other than the Senior Lenders) and
                the Holders, the obligation of the Company, which is absolute
                and unconditional, to pay the principal of, premium, if any,
                and, interest on the Senior Debt and the Subordinated
                Obligations, in each case in accordance with its terms.

                        (h) No Waiver of Subordination Provisions. Except as
                expressly provided herein, no right of any present or future
                Senior Lender to enforce the subordination provisions provided
                herein shall at any time be prejudiced or impaired in any manner
                by

                                      -23-
<PAGE>   24

                any act or failure to act on the part of the Company or any
                Holder, by any act or failure to act by any Senior Lenders or by
                any noncompliance by the Company or any Holder with the terms,
                provisions and covenants of this Section 23, regardless of any
                knowledge thereof any Senior Lender may have or be otherwise
                charged with.

                        (i) Amendments, etc. No provision which affects the
                superior position of the Senior Lenders will be effective
                against the Senior Lenders without the prior written consent of
                the Senior Lenders in accordance with the terms of the Senior
                Credit Facility.

                        (j) Third Party Beneficiaries; Specific Enforcement.

                                (i) The provisions of this Section 23 are
                        intended for the benefit of, and shall be enforceable
                        directly by, each Senior Lender. Each Holder
                        acknowledges and agrees that the terms of this Section
                        23 are a material inducement to the Senior Lenders to
                        restructure the Senior Debt, that the Senior Lenders
                        would not have restructured the Senior Debt without the
                        benefit of the provisions contained in this Section 23.
                        Accordingly, each Holder agrees that the Senior Lenders
                        are third party beneficiaries of this Section 23 and may
                        enforce all of its terms directly against each Holder.

                                (ii) Each Senior Lender is hereby authorized to
                        demand specific performance of the provisions of this
                        Section 23, whether or not the Company shall have
                        complied with any of the provisions of this Section 23
                        applicable to it, at any time when any Holder shall have
                        failed to comply with any of such provisions of this
                        Section 23 applicable to it. Each Holder hereby
                        irrevocably waives any defense based on the adequacy of
                        a remedy at law that might be asserted as a bar to such
                        remedy of specific performance, it being agreed that the
                        Senior Lenders will suffer irreparable harm if the terms
                        of this Section 23 are not strictly enforced in
                        accordance with its terms.

                        (k) Holder's Right of Alternative Subordination
                Provision. If, in connection with a restructuring or refinancing
                of a portion of the Senior Debt by the Company and one, but not
                more than one, Senior lender (together with such Senior Lender's
                affiliates) pursuant to which the Company in any manner issues
                or sells any debt or convertible securities after the Initial
                Issuance Date which are in exchange for the portion of the
                Senior Debt held by such Senior Lender (and its affiliates if
                applicable) and where the holder of such new debt or convertible
                securities agrees to be subordinated to the remaining Senior
                Debt, the Company shall provide written notice thereof via
                facsimile and overnight courier to the Holder ("SUBORDINATION
                NOTICE") on the date of issuance of such debt or convertible
                securities which notice shall set forth the terms of the
                subordination provisions applicable to such debt or convertible
                securities ("NEW SUBORDINATION PROVISION"). If the Holders of
                two-thirds (b) of the principal amount of the Notes outstanding
                provide written notice via facsimile and overnight courier (the
                "SUBORDINATION ELECTION NOTICE") to the Company within twenty
                (20) Business Days of receiving a Subordination Notice that the
                Holders

                                      -24-
<PAGE>   25

                desire to replace the subordination provision contained in this
                Section 23 with the New Subordination Provision, then from and
                after the date of the Company's receipt of the Subordination
                Election Notice the subordination provision contained in this
                Section 23 will automatically be amended in its entirety and
                replaced with the New Subordination Provision (together with
                such modifications to this Note as may be required to give full
                effect to the substitution of such New Subordination Provision).
                The Holders delivery of a Subordination Election Notice shall
                serve as the consent required to amend this Note required
                pursuant to Section 12.

                        (l) Definitions. For purposes of this Section 23 the
                following terms are defined as follows:

                                (i) "BLOCKAGE PERIOD"means (A) with respect to
                        any payment owing as a result of an Event of Default
                        pursuant to Sections 11(a)(iv) or 11(a)(v) hereof, the
                        expiration of 45 days from the date on which an Event of
                        Default Notice given with respect to Sections 11(a)(iv)
                        or 11(a)(v) was received by the Senior Agent in
                        accordance with Section 11(b) and (B) with regard to
                        payments owing as a result of an Event of Default
                        pursuant to Section 11(a)(i), the expiration of 180 days
                        from, the date on which an Event of Default Notice given
                        with respect to Section 11(a)(i) was received by the
                        Senior Agent in accordance with Section 11(b).

                                (ii) "REORGANIZATION SUBORDINATED SECURITIES"
                        shall mean any debt or equity securities of the Company
                        or any other person that are distributed to the Holder
                        in respect of the Subordinated Obligations pursuant to a
                        confirmed plan of reorganization or adjustment and that
                        (a) are subordinated in right of payment to the Senior
                        Debt (or any debt or equity securities issued in
                        substitution of all or any portion of the Senior Debt)
                        to at least the same extent as the Subordinated
                        Obligation is subordinated to the Senior Debt, (b) do
                        not have the benefit of any obligation of any person
                        (whether as issuer, guarantor or otherwise) unless the
                        Senior Debt has at least the same benefit of the
                        obligation of such person and (c) do not have any terms,
                        and are not subject to or entitled to the benefit of any
                        agreement or instrument that has terms, that are more
                        burdensome to the issuer of or other obligor on such
                        debt or equity securities than are the terms of the
                        Senior Debt.

                                (iii) "SENIOR CREDIT FACILITY" means the Loan
                        Restructure Agreement, among the Company, the various
                        financial institutions as are, or shall from time to
                        time become, parties thereto (together with the Senior
                        Agent, collectively the "Senior Lenders"), and Fleet
                        National Bank f/k/a BankBoston, N.A., as restructure
                        agent (inclusive of all successors thereto, the "Senior
                        Agent") for the Senior Lenders, together with all
                        related documents (including without limitation all
                        guarantees, security agreements, pledge agreements,
                        mortgages, other collateral documents and other
                        agreements entered into in connection therewith or
                        pursuant thereto) as the same may be renewed, extended,
                        modified, amended, supplemented,

                                      -25-
<PAGE>   26

                        deferred or otherwise changed from time to time,
                        including without limitation, any agreements extending
                        the maturity of, or refinancing or refunding, all or any
                        portion of the indebtedness under, or increasing the
                        amount to be borrowed under, any such agreements or
                        successor agreements whether or not by or among the same
                        parties.

                                (iv) "SENIOR COVENANT DEFAULT" means any
                        Restructure Event of Default under, and as defined in,
                        the Senior Credit Facility, other than a Senior Payment
                        Default (as defined below).

                                (v) "SENIOR DEBT" means (a) the principal of,
                        and premium, if any, payable on redemption or prepayment
                        of, and interest on, all indebtedness and letters of
                        credit now existing or hereafter incurred under the
                        Senior Credit Facility and all other obligations under
                        the Senior Credit Facility, including without limitation
                        all fees, expenses (including reasonable fees and
                        expenses of counsel), claims, charges, indemnity
                        obligations and interest accruing subsequent to the
                        commencement of any Insolvency Proceeding, whether or
                        not allowed in such Insolvency Proceeding; and (b) all
                        obligations of the Company under any interest rate swap
                        agreement, currency exchange agreement or similar
                        agreement entered into with any Senior Lender pursuant
                        to the terms and provisions of the Senior Credit
                        Facility, including interest under any such agreement
                        (and including interest accruing subsequent to the
                        commencement of any Insolvency Proceeding), whether or
                        not allowed in such Insolvency Proceeding); and (c) any
                        renewals, extensions, modifications, amendments,
                        supplements, deferrals or other changes to any of the
                        foregoing, including without limitation, any agreement
                        extending the maturity of, or refinancing or refunding
                        of, all or any portion of the indebtedness under, or
                        increasing the amount to be borrowed under any of the
                        foregoing, whether or not by and among the same parties,
                        and the proceeds of any indebtedness used to refinance
                        any of the foregoing. To the extent any payment with
                        respect to the Senior Debt (as proceeds of security,
                        enforcement of any right of setoff or otherwise) is
                        declared to be fraudulent or preferential, set aside or
                        required to be paid to a trustee, receiver or similar
                        person, then such payment or part thereof originally
                        intended to be satisfied shall be deemed to be
                        reinstated and outstanding as if such payment had not
                        occurred.

                                (vi) "SENIOR PAYMENT DEFAULT" means a
                        Restructure Event of Default under, and as defined in,
                        Section 9.1(a) of the Senior Credit Facility.

                (m) Right of Holder to Convert and seek Specific Performance.
        Notwithstanding anything to the contrary contained in this Section 23,
        except for and subject to a payment or distribution of assets of any
        kind pursuant to Sections 23(b)(i) and 23(b)(ii), the Holder of this
        Note may at any time in accordance with the provision of this Note and
        without regard to whether or not any default (including a Senior Payment
        Default or a Senior Covenant Default) exists under the Senior Credit
        Facility (I) convert this Note and any Conversion Amount into shares of

                                      -26-
<PAGE>   27

        Common Stock, (II) exercise the right to seek specific performance,
        (III) acquire or receive those rights and benefits granted to such
        Holder pursuant to Sections 4(c) and 4(d).

                (n) Conflicts. In the event of any conflict between the terms of
        this Section 23 and the Securities Purchase Agreement, the Registration
        Rights Agreement or the Notes, the terms of this Section 23 shall
        prevail in all respects.

                            *   *   *   *   *

                                      -27-
<PAGE>   28

        IN WITNESS WHEREOF, the Company has caused this Note to be signed by
___________________, its _______________________________, as of the ____ day of
____________, ______.

                                            KOMAG, INCORPORATED

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

<PAGE>   29

                                    EXHIBIT I

                               KOMAG, INCORPORATED
                                CONVERSION NOTICE

Reference is made to the Note issued by Komag, Incorporated (the "COMPANY"). In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note, which amount
shall equal or exceed the Minimum Conversion Amount (as defined in the Note),
indicated below into shares of Common Stock, par value $0.01 per share (the
"COMMON STOCK"), of the Company as of the date specified below.

        Date of Conversion:
                           -----------------------------------------------------

        Aggregate Conversion Amount to be converted:
                                                    ----------------------------

        Note no(s). of Note to be converted:
                                            ------------------------------------

Please confirm the following information:

        Conversion Price:
                         -------------------------------------------------------

        Number of shares of Common Stock to be issued:
                                                      --------------------------

Please issue the Common Stock into which the Note is being converted and, if
applicable, any check drawn on an account of the Company in the following name
and to the following address:

        Issue to:
                 ---------------------------------------------------------------

        Facsimile Number:
                         -------------------------------------------------------

        Authorization:
                      ----------------------------------------------------------
                                            By:
                                               ---------------------------------
                                            Title:
                                                  ------------------------------

        Dated:
              ------------------------------------------------------------------

        Account Number:
         (if electronic book entry transfer):
                                             -----------------------------------

        Transaction Code Number
         (if electronic book entry transfer):
                                             -----------------------------------

<PAGE>   30

                                 ACKNOWLEDGMENT

Date:
     ------------------------------

Via Fax (415) 398-7156 (Follow up with hard copy in mail)

Attn:
     ----------------------------
ChaseMellon Shareholder Services
235 Montgomery Street, 23rd Floor
San Francisco, CA  94104

        Re: Issuance                 Control No.
                                                -----------------

Ladies and Gentlemen:

You are hereby authorized to issue and deliver the shares of Common Stock as
indicated below. The shares are being issued pursuant to the agreement dated May
__, 2000 between Komag, Incorporated and _________________________________.

             Date of Issuance:
                                    -----------------------------

             Number of Shares:
                                    -----------------------------
                                    ___ Original Issue or
                                    ___ Transfer from Treasury Acct. No.
                                                                        --------

             Broker Name:
                                    -----------------------------
             Broker's DTC #:
                                    -----------------------------
             (if applicable)

                                    Sincerely,
                                    KOMAG, INCORPORATED

                                    By:
                                       -----------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------

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