Document:

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                                                                EXHIBIT 10.1.1.1

                            SECOND AMENDMENT TO LEASE

      THIS SECOND AMENDMENT TO LEASE (this "SECOND AMENDMENT"), is made
effective as of December 17, 2004, by and between the DIVCO WEST PROPERTIES, a
Delaware limited liability company ("LANDLORD"), and Komag Incorporated, a
Delaware corporation ("TENANT").

                                    Recitals

      A. Tenant and Landlord, as successor in interest to Sobrato Development
Company #960, a California limited partnership, are parties to that certain
Lease, dated as of May 24, 1996, as amended by that certain First Amendment To
Lease, dated February 21, 1997 (as so modified, the "ORIGINAL LEASE").
Capitalized terms not defined in this Second Amendment shall have the meanings
given them in the Original Lease. As used in this Second Amendment, "LEASE"
shall mean the Original Lease, as amended by this Second Amendment.

      B. Landlord and Tenant desire to amend the Original Lease, inter alia, to
provide for (i) a change in the Base Monthly Rent, (ii) an extension of the term
of the Original Lease, and (iii) certain changes in the Tenant's options under
the Lease, all upon and subject to the terms and conditions set forth in this
Second Amendment.

      NOW THEREFORE, in consideration of, and incorporating, the foregoing
recitals and the mutual agreements of the parties herein, Landlord and Tenant
hereby agree as follows:

            1. Expiration Date. For reference purposes under the Lease, the
initial Term of the Lease shall expire on January 26, 2007. Notwithstanding such
fact, the parties hereby agree that the term of the Lease shall be, and hereby
is extended, such that the Expiration Date of the Lease, as defined in Section 4
of the Lease, shall be December 31, 2014.

            2. Base Monthly Rent . Subject to the conditions precedent set forth
in Paragraph 4 below but to be effective as of January 1, 2005 (the "EFFECTIVE
DATE"), the Base Monthly Rent shall be changed to be as follows:

<TABLE>
<CAPTION>
                       Monthly per rentable
Period                 square foot rent         Base Monthly Rent
-------------------    --------------------     -----------------
<S>                    <C>                      <C>
1/1/2005-12/31/2005    $                0.0     $             0.0
1/1/2006-12/31/2008    $               0.90     $      169,472.70
1/1/2009-12/31/2011    $               1.39     $      261,741.17
1/1/2012-12/31/2014    $               1.49     $      280,571.47
</TABLE>

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          3. Options. Sections 37.A and 37.B. of the Lease are hereby deleted
             and replaced with the following:

      "A. Grant and Exercise of Option: Landlord hereby grants to Tenant, upon
and subject to the terms and conditions set forth in this Article 37 two (2)
successive and sequential options (the "Options") to extend the Lease Term for
an additional term (the "Option Term"), each additional Option Term shall be for
a period of sixty (60) months. Each such Option shall be exercised, if at all,
by written notice to Landlord no earlier than the date that is twenty four (24)
months prior to the Expiration Date, as it may have been extended by the prior
exercise of an Option, but no later than the date that is twelve (12) months
prior to the Expiration Date, as it may have been extended. The due and valid
exercise of the first such Option, shall be a condition to the exercise of the
second such Option. Thirteen (13) months prior to the then applicable Expiration
Date Landlord shall provide Tenant with a written notice of the fact that the
Option will expire in thirty (30) days. If Tenant exercises any such Option,
each of the terms, covenants and conditions of this Lease, except this Article
37, shall apply during the Option Term as though the expiration date of the
Option Term was the date originally set forth herein as the Expiration Date,
provided that the Base Monthly Rent to be paid by Tenant during the Option Term
shall be the Fair Market Rental, as hereinafter defined, for the Premises during
the Option Term. Anything contained herein to the contrary notwithstanding, if
Tenant is in monetary or material non-monetary default beyond any applicable
notice and cure period under any of the terms, covenants or conditions of this
Lease at the time Tenant exercises the Option, Landlord shall have, in addition
to all of Landlord's other rights and remedies provided in this Lease, the right
to terminate the Option upon written notice to Tenant, in which event the
expiration date of this Lease shall be and remain the Expiration Date, without
taking into consideration the attempted exercise of such Option. As used herein,
the term "Fair Market Rental" for the Premises shall mean the base rental then
being obtained for leases of space comparable in age, quality, location and
amenities to the Premises in the locality of the Building that Landlord could
obtain during the Option Term from a third party desiring to lease the Premises
for the Option Term based upon the current use and other potential uses of the
Premises. The Fair Market Rental shall specifically exclude any additional
rental attributable to the value of the Tenant Improvements or Alterations paid
for by Tenant and which may be removed by Tenant at the end of the term of the
Lease and otherwise be adjusted to account for variations with respect to: (i)
the length of the Option Term compared to the lease term of the Comparison
Leases; (ii) rental structure, including, without limitation, rental rates per
rentable square foot (including type, gross or net, and if gross, adjusting for
base year or expense stop), additional rental, escalation provisions and all
other payments and escalations; (iii) the size of the Premises compared to the
size of the premises of the Comparison Leases; (iv) location, floor levels and
efficiencies of the floor(s) for which the determination is being made; (v) free
rent, moving expenses and other cash payments, allowances or other monetary
concessions affecting the rental rate; and (vi) the age and quality of
construction of the Building (including compliance with applicable codes on the
applicable floors).

      B. Determination of Fair Market Rental: If Tenant exercises the
Option, Landlord shall send to Tenant a notice setting forth the Fair Market
Rental for the Premises for the Option Term within thirty (30) days of Tenant's
exercise of the Option. If Tenant disputes Landlord's

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determination of the Fair Market Rental for the Option Term, Tenant shall,
within thirty (30) days after the date of Landlord's notice setting forth the
Fair Market Rental for the Option Term, send to Landlord a notice stating that
Tenant either (i) elects to terminate its exercise of the Option, in which event
the Option shall lapse and this Lease shall terminate on then applicable
Expiration Date, or (ii) disagrees with Landlord's determination of Fair Market
Rental for the Option Term and elects to resolve the disagreement as provided in
Article 37.C below. If Tenant does not send to Landlord a notice as provided in
the previous sentence, Landlord's determination of the Fair Market Rental shall
be the basis for determining the Base Monthly Rent to be paid by Tenant
hereunder during the Option Term. If Tenant elects to resolve the disagreement
as provided in Article 37.C below and such procedures shall not have been
concluded prior to the commencement date of the Option Term, Tenant shall pay as
Base Monthly Rent to Landlord during such portion of the Option Term prior to
the determination of the Fair Market Rental (the "Stub Period") the same Monthly
Base Rent due hereunder during the month preceding the then applicable
Expiration Date. If the amount of Fair Market Rental as finally determined
pursuant to Article 37.C below is greater than the Base Monthly Rent being paid
by Tenant during the Stub Period, Tenant shall pay to Landlord the difference
between the amount paid by Tenant and the Fair Market Rental for the Stub Period
as determined pursuant to Article 37.C within thirty (30) days after the
determination of the Fair Market Rental. If the Fair Market Rental as finally
determined in Article 37.C below is less than the Monthly Base Rent being paid
during the Stub Period, the difference between the amount paid by Tenant and the
Fair Market Rental as so determined in Article 37.C for the Stub Period below
shall be credited against the next installments of rent due from Tenant to
Landlord hereunder."

      4. Condition Precedent. The effectiveness of this Second Amendment is
conditioned upon Landlord acquiring the real property and improvements where the
Premises are located from the present owner thereof (the "Closing"). In the
event that the Closing does not occur on or before January 31, 2005, this Second
Amendment shall be null and void and of no further force and effect and neither
party shall have any obligation hereunder. In the event the Closing occurs after
the Effective Date, then the reductions in Monthly Base Rent described above
shall be not commence until the Closing actually occurs and the periods
specified in paragraph 2 above shall not be otherwise extended.

      5. No Assignment. Tenant represents and warrants to Landlord that it is
the tenant under the Lease and that it has not assigned, encumbered, or agreed
to assign or encumber its interest in whole or in part. Tenant also represents
and warrants that as of the date that Tenant has executed this Second Amendment,
there is no default on the part of Tenant under the Lease.

      6. Authority. Each party represents and warrants that the execution and
delivery of this Second Amendment and the performance by such party of its
obligations hereunder have been duly authorized, that this Second Amendment
constitutes the legal, valid and binding obligation of such party, that it has
obtained all consents which may be required in connection with the Second
Amendment and the performance of the obligations thereunder, and that the
individuals executing this Second Amendment on its behalf have been authorized
to execute and deliver this Second Amendment on behalf of such party and have
the power to bind the party for whom he or she is signing.

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      7. Entire Agreement. This Second Amendment, together with the Original
Lease contain the entire agreement of the parties hereto with respect to the
subject matter hereof and may not be changed or terminated orally or by course
of conduct.

      8. Counterparts. This Second Amendment may be executed in counterparts,
each of which shall be deemed an original as against the party whose signature
is affixed thereto, and all of which together shall constitute but one and the
same agreement.

      9. Reaffirmation of Lease. Except as set forth in this Second Amendment,
the Original Lease remains unchanged and, as modified by this Second Amendment,
is in full force and effect. This Second Amendment shall be binding upon and
inure to the benefit to the parties and their respective successors and assigns.
All references in the Original Lease to "this Lease" shall mean the Original
Lease as amended by this Second Amendment.

      IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed
this Second Amendment, effective as of the Effective Date.

LANDLORD:                                  TENANT:

DIVCO WEST PROPERTIES, LLC,                KOMAG INCORPORATED,
a Delaware limited liability company       a Delaware corporation

By: _____________________
Title: __________________
                                           By: ________________
By: _____________________                  Name: ______________
Title :__________________                  Title: _____________

                                       4<PAGE>

                                                                    EXHIBIT 10.7

                               KOMAG, INCORPORATED

                            DISCRETIONARY BONUS PLAN

                             I. PURPOSES OF THE PLAN

1.01 Komag, Incorporated (the "Company") hereby establishes this Discretionary
Bonus Plan ("Plan") as an incentive program pursuant to which discretionary or
other retention-based bonuses may be awarded for one or more fiscal years in
order to retain the services of those employees critical to the Company's
financial success.

1.02 The Company's compensation programs are designed to retain and motivate
staff through the delivery of competitive cash compensation each year.
Accordingly, the Compensation Committee of the Company's Board of Directors as
plan administrator shall, with the assistance of the Company's management and
such outside compensation specialists as the Compensation Committee may deem
appropriate, undertake a competitive analysis for each fiscal year the Plan
remains in effect. If the analysis for any fiscal year suggests that the level
of cash compensation for that year does not adequately reflect the achievements
of the participants during the plan year, the Company's Board of Directors,
through the Compensation Committee of the Board, may establish a separate bonus
pool to reward those who contributed to the Company's performance. The bonus
distribution will be targeted to those employees considered essential to the
Company's continued financial success who would otherwise be vulnerable to
competitor recruiting by offers of more attractive compensation.

                         II. ADMINISTRATION OF THE PLAN

2.01 The Plan is hereby adopted by the Company's Board of Directors (the
"Board"), effective January 31, 2005, and shall be administered by the
Compensation Committee ("Committee") of the Board.

2.02 The interpretation and construction of the Plan and the adoption of rules
and regulations for administering the Plan shall be made by the Committee.
Decisions of the Committee shall be final and binding on all parties who have an
interest in the Plan.

                          III. DISCRETIONARY BONUS POOL

3.01 The Committee shall make an annual assessment of the industry, including
such factors as the financial performance of the Company's competitors, the
expansion plans of those competitors, and a competitive analysis of the
Company's annual cash compensation. Should such analysis suggest that the level
of annual cash compensation for the Company's key employees is not competitive,
resulting in their vulnerability to recruitment by other firms, or should
industry trends reveal that recruiting activity will in the upcoming year be
significant, the Committee shall have full power and authority to create a bonus
pool under the Plan for that fiscal year. The bonus pool shall be in such dollar
amount as the Committee deems appropriate and shall be distributed to selected
employees as an incentive for them to remain in the Company's employ.

                        IV. DETERMINATION OF PARTICIPANTS

4.01 Those individuals in the employ of the Company or any subsidiary who are
significant contributors to the continued and future success of the Company's
business shall be eligible to be selected to receive a distribution from one or
more of the bonus pools established over the term of the Plan. The Company's
Chief Executive Officer shall provide the Committee with recommendations each
fiscal year as to the employees who should receive bonus awards under the Plan
for that fiscal year and the amount to be allocated to each designated employee
(alternatively, the Committee, at its sole discretion, may approve a pool of
dollars to be allocated by the CEO among employees rather than specific amounts
for each designated employee). The Committee shall, on the basis of the
competitive compensation analysis undertaken for that fiscal year, have
authority to accept, modify or reject such recommendations. The Committee may
also recommend a bonus distribution under the Plan to the Company's Chief
Executive Officer. The Compensation Committee shall have the ultimate discretion
and authority to determine all participants and bonus amounts.

                           V. PAYMENT OF BONUS AWARDS

5.01 The individual bonus awarded to each employee, if any, shall be paid to
such employee within thirty (30) days after the completion of the audit of the
fiscal year for which that award is made. Generally, a bonus award shall not be
paid to any individual who does not continue in the Company's employ through the
bonus payment date, unless approved by the Compensation Committee or the CEO.
Any payment to which an employee becomes entitled under the Plan shall be made
in the form of a lump sum cash distribution, subject to the Company's collection
of all applicable federal and state income and employment withholding taxes.

5.02 Payments under the Plan will be included in the definition of pay for
purposes of the Company's Savings and Deferred Profit Sharing Plan and Employee
Stock Purchase Plan. Payments under the Plan will not be taken into account in
determining any other benefits of the Company, such as group insurance, etc.

                                      -1-

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                             VI. GENERAL PROVISIONS

6.01 The Plan is effective as of January 31, 2005, and the initial bonus pool
under the Plan will be established for the Company's 2004 fiscal year. The Board
may at any time amend, suspend or terminate the Plan, provided such action is
effected by written resolution. Neither the implementation of the Plan nor any
amendment to the Plan shall require stockholder approval.

6.02 No bonuses awarded under the Plan shall actually be funded, set aside or
otherwise segregated prior to payment. The obligation to pay the bonuses awarded
hereunder shall at all times be an unfunded and unsecured obligation of the
Company. Plan participants shall have the status of general creditors and shall
look solely to the general assets of the Company for the payment of their bonus
awards.

6.03 No Plan participant shall have the right to alienate, pledge or encumber
his/her interest in any bonus award to which he/she may become entitled under
the Plan, and such interest shall not (to the extent permitted by law) be
subject in any way to the claims of the employee's creditors or to attachment,
execution or other process of law.

6.04 Neither the action of the Company in establishing the Plan, nor any action
taken under the Plan by the Committee, nor any provision of the Plan shall be
construed so as to grant any person the right to remain in the employ of the
Company or its subsidiaries for any period of specific duration. Rather, each
employee of the Company or any subsidiary will be employed "at-will," which
means that either such employee or the Company (or subsidiary) may terminate the
employment relationship of that individual at any time for any reason, with or
without cause.

                                      -2-

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