Document:

exv10w1

 

 

Exhibit 10.1

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

EXECUTION COPY

AGREEMENT

     This Agreement is entered into as of January 1, 2007 by and between Williams Advanced
Materials, Inc., a corporation organized under the laws of the State of New York with its principal
place of business at 2978 Main Street, Buffalo, New York 14214 (“WAM”) and Komag, Incorporated, a
corporation organized under the laws of Delaware with its principal place of business at 1710
Automation Parkway, San Jose, CA 95131 and, its wholly-owned subsidiary, Komag USA (Malaysia),
Sdn., a corporation organized under the laws of Malaysia with its principal place of business at
Bayan Lepas Free Industrial Zone, Phase III, 11900 Penang (together “Purchaser”). WAM and
Purchaser may be referred to herein individually as “Party” or collectively as “Parties”.

     The Parties agree as follows:

1. Background

     This Agreement consists of terms and conditions as set forth below and all Exhibits hereto.

     WAM has recognized capabilities in the manufacture and refining of the products specified in
Exhibits A.1 and A.2 hereto (the “Products”). WAM desires to offer the Products to Purchaser for
sale, and Purchaser desires to purchase the Products from WAM.

     [****]

2. Period of Performance

     The term of this Agreement shall commence as of the date set forth above and shall continue
until [****] unless sooner terminated in accordance with this Agreement.

3. Forecast

 

- 2 -

     Purchaser will provide to WAM a [****] forecast for the Products [****] by February 2, 2007
(the “Forecast”), which will be incorporated in this Agreement as Exhibit B. The Forecast is a
legally binding commitment of Purchaser to purchase the Products and/or specified quantities of Ru
in accordance with the terms hereof. The Forecast contains Purchaser’s estimates of new quantities
of Ru necessary for the Products (“Virgin Ru”). [****]

	 	a.	 	WAM is under no obligation to supply Ru material to Purchaser which is
not contained in the Forecast.
	 
	 	b.	 	[****].
	 
	 	c.	 	[****].

4. Pricing

     Purchaser shall pay WAM for the Products as set forth in Exhibit C hereto. The fabrication
prices, as set forth on Exhibit C, shall not be subject to change for the term of the Agreement.
Pricing on Exhibit C is guaranteed only for the quantities specified in Exhibit B (see note on
Exhibit B).

     Payment terms are [****] for Ru metal from date of shipment of fabricated Product(s) and
[****] for fabrication charges.

     Pricing of Ru metal is determined by the metal pricing [****], or other cost basis established
with another qualified supplier from whom the Ru metal has been purchased; provided,
however, that WAM shall use its best efforts to obtain a price for Ru that is equal to or
lower than the price provided by [****] in the event that it elects to acquire Ru from another
qualified supplier. However, the Parties hereto recognize that, despite using its best efforts as
required herein, the price obtained from the qualified supplier by WAM may be greater than the
price provided by [****].

5. Availability, Delivery and Flexibility

     Subject to the terms of this Agreement, WAM shall be obligated to supply the Products to
Purchaser in the monthly quantities stipulated in Exhibit B. Further to Purchaser’s minimum
purchase levels set forth in Exhibit B, Purchaser shall be obligated to accept each shipment per
Purchaser’s Purchase Order delivery schedule, provided, however, the volumes in the
purchase orders in each month must be for the minimum levels set forth in Exhibit B.

 

- 3 -

6A Shipment, Risk of Loss and Title

     Title and risk of loss or damage for all Products shall pass to Purchaser upon [****]. WAM
shall make all arrangements for shipment with a carrier specified by the Purchaser. [****] shall
be responsible for all shipping charges and insurance.

6. Product Refining

     The costs and procedures with regard to the refining of Products are set forth on Exhibit D
hereto.

7. Limited Warranty

     For a period of one year from the date of delivery of the Products (the “Warranty Period”),
WAM represents and warrants that each Product is (i) free from defects in materials or workmanship
and (ii) conforms to the specifications. WAM will, at its option, replace, or furnish credit for
fabrication charges and returned Ru weight, less refining charges, if any, for any Product
purchased by Komag from WAM which, as determined by the parties, fails to meet the foregoing
warranties. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY
INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS OR OF SUITABILITY FOR A
PARTICULAR PURPOSE, AND OF ALL OTHER OBLIGATIONS OR LIABILITIES ON WAM’S PART, AND IT NEITHER
ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME FOR WAM ANY OTHER LIABILITIES IN CONNECTION WITH
THE SALE OF THE PRODUCTS. This provision states Komag’s exclusive and sole remedy for breach of
warranty and the entire extent of WAM’s liability for defective Products. WAM is not obligated to
replace Products under this warranty: (a) when the damage to the Products resulted from improper
use; or (b) if personnel other than WAM’s representatives, without WAM’s prior written permission,
modify the Products in any way.

 

- 4 -

8. Limitation of Liability

     TO THE EXTENT PERMITTED BY APPLICABLE LAW AND NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO
THE CONTRARY, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, ECONOMIC OR
CONSEQUENTIAL DAMAGES OF ANY KIND, OR FOR ANY DAMAGES RESULTING FROM LOSS OR INTERRUPTION OF
BUSINESS OR LOST PROFITS, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, HOWEVER CAUSED, EVEN IF SUCH PARTY WAS ADVISED OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF
SUCH LOSS OR DAMAGE.

9. Confidential Information

     Both WAM and Purchaser shall maintain as confidential and shall not disclose to any person
outside their employ, for use for purposes other than performance of this Agreement, any
specifications, drawings, data, business and financial information, or other Confidential
Information which either Party learns by virtue of this Agreement, except as required by law and
after written notice to the other Party. If requested, upon termination of this Agreement, each
Party shall promptly return to the other Party all confidential information, including working
copies thereof, in its possession and belonging to the other Party. Notwithstanding the foregoing,
each party may disclose the terms and conditions of this Agreement: (i) as required by any court or
other governmental body; (ii) as otherwise required by law (including, without limitation, any
rule, regulation or policy statement of any national securities exchange, market or automated
quotation system on which any of the receiving party’s securities are listed or quoted); (iii) to
legal counsel of the parties; (iv) in connection with the requirements of a public offering,
secondary offering, debt offering, or securities filing of the parties, or otherwise as obligated
by law; (v) in confidence, to accountants, banks, and financing sources and their advisors; or (vi)
in confidence, in connection with the enforcement of this Agreement or rights under this Agreement.
In the event of (i), (ii), (iv) or (vi), each party agrees to redact terms that are not necessary
or required by the disclosure.

     For purposes of this Agreement, “Confidential Information” means, in addition to what is set
forth above any and all information which either Party designates as confidential at the time of
disclosure except: (i) information in the public domain; (ii) information possessed by either
Party prior to disclosure by the other Party, or developed independently, without reference to the
disclosed information; (iii) information furnished to others without restrictions similar to those
imposed herein on the right of WAM or Purchaser to use or disclose it, and (iv) information which
becomes rightfully known to

 

- 5 -

either Party, without confidential restriction, from a source other than WAM or Purchaser. The
undertakings of this paragraph shall survive any expiration or termination of this Agreement.

     THIS AGREEMENT AND ALL EXHIBITS ARE UNDERSTOOD TO BE CONFIDENTIAL INFORMATION NOT TO BE
DISCLOSED OR USED BY WAM OR PURCHASER EXCEPT AS PROVIDED HEREIN.

10. Force Majeure

     Neither Party shall be liable for failure to perform any of its obligations under this
Agreement during any period in which such Party cannot perform due to fire, flood, earthquake, or
other natural disaster, war, embargo, riot, labor dispute, interruption in the supply of raw
materials for reasons beyond the control of WAM, or the intervention of any government authority,
or any other reason beyond the reasonable control of such Party (each a “Force Majeure Event”),
provided that the Party so delayed notifies the other Party of such delay. If WAM’s or Purchaser’s
performance is delayed on account of any Force Majeure Event for [****], the performing Party may
terminate this Agreement by giving the other Party notice, which termination shall become effective
upon receipt of such written notice. In no event, shall exercise of this clause alleviate
Purchaser of payment of any funds owed to WAM for Product already shipped to Purchaser.

11. Termination

     In addition to any rights or remedies available at law or in equity, either Party may
terminate this Agreement upon the occurrence of any one of the following:

     In the event of a breach of a material obligation by either Party in the performance of their
obligations hereunder, the Party alleging the breach shall give written notice specifying the
nature and extent of the breach to the other Party and such Party shall have [****] thereafter to
cure the breach or have an agreed to corrective action plan in place. If the breach is not cured
within the [****] period, termination shall become effective on the [****] following the written
notice.

     In the event of proceedings in bankruptcy or insolvency invoked by or against either Party, or
in the event of the appointment of an assignee for the benefit of creditors or a receiver, the
other party may elect to immediately terminate this Agreement by providing written notice of its
election to terminate.

 

- 6 -

     Termination by WAM for cause will not terminate any obligation Purchaser may have to take and
pay for any previously forecasted Product hereunder.

12. Notices

     Except as otherwise provided herein, all notices hereunder will be deemed given if (a) in
writing and delivered personally; or (b) sent by facsimile transmission that is confirmed by return
facsimile or e-mail; to the parties at the following addresses (or at such other addresses as will
be specified by like notice):

	 	 	 
	(i)

	 	if to WAM, to:
	 

	 	Williams Advanced Materials, Inc.
	 

	 	2978 Main Street
	 

	 	Buffalo, NY 14214
	 

	 	Attention: General Counsel
	 

	 	Fax No.: (716) 835-0130
	 

	 	With a copy to:
	 

	 	Williams Advanced Materials
	 

	 	Thin Film Products Division
	 

	 	42 Mt. Ebo Road South
	 

	 	Brewster, NY 10509
	 

	 	Attention: Matthew Willson, VP and General Manager
	 
	 	 
	(ii)

	 	if to Komag to:
	 

	 	Komag USA (Malaysia) Sdn.
	 

	 	Bayan Lepas Free Trade Zone
	 

	 	Phase III
	 

	 	11900 Penang
	 

	 	Malaysia
	 

	 	FX: 011-604-643-9881
	 

	 	Attention: Kheng Huat Oung, Vice President, GM, Media Operations
	 
	 	 
	 

	 	With a copy to:
	 

	 	Komag, Incorporated
	 

	 	1710 Automation Parkway
	 

	 	San Jose, California 95131 
Attention: Chief Financial Officer
	 

	 	Fax No.: (408) 944-9234
	 
	 	 
	 

	 	and

 

- 7 -

	 	 	 
	 

	 	Wilson Sonsini Goodrich & Rosati, P.C.
	 

	 	650 Page Mill Road
	 

	 	Palo Alto, California 94304
	 

	 	Attention: Page Mailliard, Esq.

Fax No.: (650) 493-6811

Any notice given by mail will be effective when received. Any notice given by electronic mail or
facsimile transmission will be effective when the appropriate electronic mail or facsimile
transmission acknowledgment is received.

13. Assignment

     Except as set forth in this Section 13, neither this Agreement, nor any of the rights or
obligations hereunder, may be assigned, transferred, subcontracted or delegated by a party hereto
to any third party (other than a parent or subsidiary under common control with the assigning
party), including without limitation, by operation of law or pursuant to a Change of Control (as
defined below). Notwithstanding the foregoing, (a) Purchaser may assign this Agreement, and the
rights and obligations hereunder, without the prior consent of WAM, in connection with a Change of
Control and (b) WAM may assign this Agreement, and the rights and obligations hereunder, without
the prior consent of Purchaser, to a third party in connection with a Change of Control; so long as
WAM assigns all obligations under this Agreement to any party that succeeds to all or substantially
all of WAM’s business. For purposes of this Section 13, “Change of Control” shall mean (i) any
sale, lease, exchange or other transfer (in one transaction or series of transactions) of all, or
substantially all, of the assets of such party, (ii) any consolidation or merger or other
combination of a party in which such party is not the continuing or surviving corporation or
pursuant to which shares of such party’s common stock would be converted into cash, securities or
other property (other than a merger of such party in which the holders of such party’s common stock
immediately prior to the merger hold at least a majority of the outstanding securities of the
combined entity), or (iii) any transaction (or series of related transactions) pursuant to which
any person (as defined in Section 13 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 35% or more of such party’s outstanding common stock. Any purported
assignment of this Agreement or the rights or obligations of a party under this Agreement in
violation of this Section 13 shall be null, void and of no further force or effect.
Notwithstanding the foregoing, in the event of an assignment of this Agreement in connection with a
Change of Control of Purchaser by a third party [****], no consent by WAM to such assignment shall
be required, but WAM may require

 

- 8 -

the assignee to acknowledge in writing its acceptance of revised and accelerated payment terms
under Section 4 of this Agreement following such Change of Control.

14. Rights and Remedies

     All rights and remedies conferred by this Agreement or by law are cumulative and may be
exercised singly or concurrently. If any provision of this Agreement is held invalid by any law or
regulation of any government or by any court, such invalidity shall not effect the enforceability
of any other provisions hereof.

15. Applicable Law

     This Agreement shall be governed by and construed under the laws of the State of New York
without regard to its conflicts of law provisions. The exclusive jurisdiction for the resolution
of any dispute arising out of this Agreement by mediation, arbitration or suit shall be in New
York, New York.

16. Disputes

     The parties agree that any material dispute between the parties relating to this Agreement
shall be handled as follows:

16.1 First, the parties will submit the dispute to a panel of two senior executives
(Vice-President or more senior) of each party. Either party may initiate this
proceeding by notifying the other party in writing pursuant to the notice provisions
of Section 12. Within five (5) Days from the date of receipt of the notice, the
parties’ executives shall confer (via telephone or in person) in an effort to
resolve such dispute (the “First Executive Conference”). The decision of the
executives shall be final and binding on the parties. In the event that the
executives are unable to resolve such dispute within twenty (20) Days after the
First Executive Conference, then the parties shall follow the procedures set forth
in Sections 16.2 and 16.3 below. Each party’s executives shall be identified by
notice to the other party and may be changed at any time thereafter also by notice
to the other party.

16.2 In the event that the First Executive Conference does not resolve the dispute,
the parties shall submit the dispute to JAMS, or any other mutually selected
mediator (the “Mediator”) for non-binding mediation. The parties will cooperate
with the Mediator and with one another in selecting the Mediator (in the case of
JAMS, in selecting an individual to mediate from

 

- 9 -

JAM’s panel of neutrals), and in promptly scheduling the mediation proceedings. The
parties covenant that they will participate in the mediation in good faith, and that
they will share equally in its costs. All offers, promises, conduct and statements,
whether oral or written, made in the course of the mediation by any of the parties,
their agents, employees, experts and attorneys, and by the Mediator, are
confidential, privileged and inadmissible for any purpose, including impeachment, in
any arbitration or other proceeding involving the parties, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation. If the dispute is not
resolved within thirty (30) Days from the date of the submission of the dispute to
mediation (or such later date as the parties may mutually agree in writing), the
dispute shall be submitted to arbitration in accordance with Section 16.3 below.
The mediation may continue, if the parties so agree, after the appointment of the
arbitrators. Unless otherwise agreed by the parties, the Mediator shall be
disqualified from serving as arbitrator in the case. The pendency of a mediation
shall not preclude a party from seeking provisional remedies in aid of the
arbitration from a court of appropriate jurisdiction, and the parties agree not to
defend against any application for provisional relief on the ground that a mediation
is pending.

16.3 In the event the parties do not settle the dispute through mediation, the
parties will submit the matter(s) to binding arbitration in New York, New York, in
accordance with the Commercial Arbitration Rules of the AAA. Each party shall
appoint one arbitrator, and the two arbitrators thus appointed will appoint a third
arbitrator. The parties shall instruct the arbitrators to make a determination
within thirty (30) Days after submission of the dispute to arbitration. Each party
shall bear its own arbitration costs and expenses; provided, however, that the
arbitrators may modify the allocation of fees, costs and expenses in the award in
those cases where fairness dictates other than each party bearing its own fees,
costs and expenses. The award shall be final and binding on the parties, and
judgment on the award may be entered in and enforced by any court of competent
jurisdiction.

17. General

     This Agreement is the complete and entire understanding between the Parties on the subject
matter contained herein and supersedes all prior agreements, proposals,

 

- 10 -

representations, statements, or understandings whether written or oral on this subject between
them. The provisions of this Agreement may be amended or waived only by a writing executed by the
authorized representatives of the Parties hereto.

     In the event that either Party to this Agreement shall, on any occasion, fail to perform any
provision of this Agreement, and the other Party does not enforce that provision, the failure to
enforce shall not prevent enforcement of the provision on any other occasion.

     Each Party, including its agents, and employees, is an independent contractor and not an agent
or employee of the other. Without limiting the generality of the foregoing, neither Party is
authorized to represent or make any commitments on behalf of the other, and both Parties expressly
disclaim any liability therefore.

     The headings contained herein are for reference purposes only and shall not in any way effect
the meaning or interpretation of this Agreement. This Agreement shall be construed without regard
to the identity of the Party who drafted it, and each and every provision of this Agreement shall
be construed as though all of the Parties participated equally in the drafting.

     IN WITNESS WHEREOF, the authorized representatives of the Parties represent that they have
read this Agreement, understand it and agree to be bound by it without exception by executing it
below:

	 	 	 	 	 	 	 
	 	 	WILLIAMS ADVANCED MATERIALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature By	 	/s/ Richard W. Sager
	 	 
	 

	 	Printed Name
	 	Richard W. Sager

	 	 
	 

	 	Title
	 	President 

	 	 
	 

	 	Date
	 	2/6/07 

	 	 
	 
	 	 	 	 	 	 
	 	 	KOMAG, INCORPORATED	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature By	 	/s/ Tim Harris
	 	 
	 

	 	Printed Name
	 	Tim Harris 

	 	 
	 

	 	Title
	 	CEO 

	 	 

 

- 11 -

	 	 	 	 	 	 	 
	 

	 	Date	 	2/5/07 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	KOMAG USA (MALAYSIA), SDN	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature By	 	/s/ Tim Harris
	 	 
	 

	 	Printed Name
	 	Tim Harris

	 	 
	 

	 	Title
	 	Director 

	 	 
	 

	 	Date
	 	2/5/07 

	 	 

 

 

Exhibit A.1 (Komag) Rev 1

Williams Ruthenium Announcement – 06/06/06

As a leader in the Ruthenium sputtering target market, Williams Advanced Materials Thin Film
Products, has officially standardized impurity reporting. Effective immediately, target purity
[****] shall be based on [****] will also be reported. [****] will be guaranteed at less than
[****]. [****] will only be reported. Williams Advanced Materials Thin Film Products remains
poised to satisfy the Ru demand of the data storage industry in a very dynamic market. Elemental
impurity limits as follows:

[****]

 

- 2 -

Exhibit A.2 (Komag) Rev 1

Williams Ruthenium Announcement – 06/06/06

[****]

 

 

EXHIBIT B

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 

	 	 	 	Jan
	 	Feb
	 	Mar
	 	Apr
	 	May
	 	Jun
	 	Jul
	 	Aug
	 	Sep
	 	Oct
	 	Nov
	 	Dec
	Purchased Ounces Ru Powder

	 	 	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]

NOTE: [****]

 

 

EXHIBIT C

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Input Weight
	Customer	 	System	 	Size	 	FAB	 	(oz)
	Komag

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 

	 	[****]
	 	[****]
	 	[****]
	 	[****]

Total
price equals Fabrication Charge plus Ru metal.

Ru metal price equals WAM’s cost on [****] WAM.

Target quantities are subject to design and product mix changes by the written agreement of both WAM and Komag.

(notwithstanding the minimum monthly Ru requirements specified in Exhibit B)

Refer to Agreement Paragraph 4 for Payment Terms.

Prices are only firm for allocated quantities in Exhibit “B”. If any additional targets become available,
it is likely pricing premium(s) will apply, increasing the total price per target above those stipulated in the Agreement.
It is impossible to quantify an estimate of these premiums at this time.

 

 

Exhibit D (Komag) Rev 3

Product Refining

	•	 	Purchaser agrees to use WAM as its exclusive recycler/refiner for WAM
manufactured Ru targets only and other Ru scrap material for the term of this
Agreement.
	 
	•	 	The Parties agree that the recycling/refining of spent Ru targets is
critical to the supply of new Ru targets and without the timely return of all targets
to be shipped by Purchaser, that WAM’s ability to supply will be negatively impacted;
therefore, all Products sold to Purchaser shall be returned to WAM for refining on a
[****] basis.
	 
	•	 	Refining Terms for [****]:
	 
	 	 	- [****].
	 
	 	 	- [****]
	 
	 	 	- Settlement lead time shall be within [****] business days.
	 
	•	 	[****] is responsible for all shipping charges/insurance of spent Product
shipments to WAM. . Shipping Terms will be FCA Buffalo, NY USA.
	 
	•	 	Purchaser has the following settlement options for reclaimed RU.
	 
	 	 	- [****].
	 
	 	 	- [****].
	 
	 	 	- [****].exv10w2

 

Exhibit 10.2

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

Amendment # 1

To Media Supply Agreement (the “Amendment”)

     Seagate Technology International (“Seagate”), Komag USA (Malaysia) Sdn. (“Komag Malaysia”) and
Komag, Incorporated (“Komag, Inc.” and with Komag Malaysia collectively “Supplier”) entered into a
Media Supply Agreement dated as of July 4, 2005 (“Agreement”). Seagate and Supplier desire to
amend the Agreement as described in this Amendment.

	 	 	 
	Seagate Technology International
	 
	 	 
	Signature:

	 	4/s/ David A. Wickersham
	 
	 	 
	Print Name:

	 	David A. Wickersham
	 
	 	 
	Title:

	 	President & COO
	 
	Date:

	 	February 23, 2007
	 
	 	 
	Address for
Notices to
Seagate:

	 	Attn: Corporate Contracts

Mailstop SV15A2

c/o Seagate Technology LLC

920 Disc Drive 

Scotts Valley, CA 95066

USA
	 
	 	 
	Phone No.:

	 	831-439-7646 
	 
	 	 
	Fax No.

	 	831-438-7132 
	 
	 	 
	Underlying 

Agreement #:

	 	31036 
	 
	Amendment Agreement

#:

	 	60115 
	 
	 	 
	Effective Date:

	 	January 15, 2007

	 	 	 
	Komag USA (Malaysia) Sdn.
	 
	 	 
	Signature:

	 	4/s/ Oung Kheng Huat
	 
	 	 
	Print Name:

	 	Oung Kheng Huat
	 
	 	 
	Title:

	 	Vice President & Managing Director
	 
	 	 
	Date:

	 	February 23, 2007
	 
	 	 
	Address
for Notices
to Supplier:

	 	Attn: Vice President &
Managing Director

Komag USA Malaysia Sdn.

Bayan Lepas Free Industrial Zone

Phase III

11900 Penang 

Malaysia
	 
	 	 
	Phone No.:

	 	(604) 6439-449 
	 
	 	 
	Fax No.

	 	(604) 8506-125 
	 
	 	 
	Komag, Incorporated
	 
	 	 
	Signature:
	 	/s/ Tim Harris 
	 
	 	 
	Print Name:

	 	Tim Harris
	 
	 	 
	Title:

	 	Chief Executive Officer
	 
	 	 
	Date:

	 	February 23, 2007

1

 

	 	 	 
	Address for Notices
to Supplier:

	 	Komag, Incorporated

1710 Automation Parkway 

San Jose, CA 95131

Attn: Chief Financial Officer
	 
	 	 
	Phone No.:

	 	(408) 576-2000 
	 
	 	 
	Fax No.

	 	(408) 944-9234 

          Concurrently herewith, Maxtor Corporation (“Maxtor”), an indirect subsidiary of Seagate,
and Supplier are terminating a Business Agreement between them dated as of October 6, 2003, as
amended (the “Maxtor Agreement”), which pre-dated Seagate’s acquisition of Maxtor.

          In consideration of the mutual obligations set forth in this Amendment and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

     1. Definitions. Capitalized terms used in this Amendment will have the meanings given
to them in the Agreement, unless otherwise defined.

     2. Line Fallout. Section 9.3 of the Agreement is hereby replaced by the following:

     “9.3 Line Fallout. The parties will work together on an ongoing basis to
determine the cause of any defects in Products that fail Seagate’s drive testing which
Seagate determines are not due to its assembly or disassembly process. Komag will
provide a credit to Seagate based on the performance and RTV guidelines set forth in
Exhibit H.”

     3. Termination for Convenience. Section 14.3 of the Agreement is hereby replaced in
its entirety with:

     “14.3 Termination for Convenience. Either party may terminate this Agreement for
any reason by providing [****] prior written notice to the other. If Komag
terminates for convenience, then Komag must, as a condition thereof, repay to Seagate
the total amount of the Prepayment that remains unpaid (under Exhibit G, Section 4) as
of the date of termination within [****] days after the termination date.”

     4. Volume Commitment. Exhibit G Section 1 of the Agreement is hereby replaced in its
entirety with :

“1. Volume Commitment. Komag agrees to supply Seagate with a minimum [****]
unit Product volume per Quarter beginning the first calendar quarter of 2007 (“CQ107”)
through the end of Agreement term. Komag Product must meet all qualification requirements,
specifications and quality standards. Beginning second calendar quarter of 2007 (“CQ207”)
Komag total supply commitment to Seagate must be [****] capable and qualified by
Seagate.”

     5. Pricing. Exhibit G Section 3 of the Agreement is hereby replaced in its entirety
by the following:

     “3. Longitudinal and Perpendicular Magnetic Recording Pricing. The Committed
Volume must be Product that meets Seagate’s specifications and be capable of use in
Seagate’s perpendicular and longitudinal recording media applications. Pricing for
specified Seagate products is set in part and will be determined in part, in accordance
with the following not to exceed pricing matrix:

2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Seagate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product	 	CQ1’07	 	CQ2’07	 	CQ3’07	 	CQ4’07	 	CQ1’08	 	CQ2’08	 	CQ3’08	 	CQ4’08	 	CQ1’09	 	CQ2’09
	Name	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****] à	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****] à	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	Pricing after CQ107 to be negotiated.
	 
	 	 	 	à [****] and [****] pricing is based on an aggregate volume for both
product types of [****] in CQ1’07.

	 	Both longitudinal and perpendicular pricing will be subject to normal cost reductions
under Section 2.2 of the Agreement. [****]

     6. Prepayments.

          (a) Under the Maxtor Agreement, Maxtor advanced to Supplier, as a prepayment for product
purchases, the amount of [****], to be repaid to Maxtor by means of a per disk credit on
purchases. As of the effective date of this Amendment, [****] of this Maxtor prepayment
has been repaid, leaving the amount of [****] remaining owing to Maxtor.

          (b) As of the effective date of this Amendment, [****] of the [****]
prepayment by Seagate to Komag to secure the Committed Volume, advanced under Exhibit G Section 2
of the Agreement, has been repaid, leaving the amount of [****] remaining due to Seagate.

          (c) In consideration of these prepayments to Komag by Maxtor and Seagate in the total sum of
[****], (collectively, the “Prepayments”) and for the purpose of making the purchasing
relationships with Komag more efficient and consolidating the repayment of the Prepayments for the
benefit of both parties, the parties hereby amend Exhibit G Section 4 of the Agreement by replacing
the first sentence thereof with the following:

	 	 	 	“Beginning on January 15, 2007, Komag will pay [****] to Seagate by means of a
[****] credit for each unit of Product over [****] units in a given
quarter (“Payback”). Komag will update, and publish to Seagate, a Payback Amortization
Tracking Schedule upon each quarter ending disbursement. If Seagate terminates this
Agreement for cause under Section 14.4 or 14.5, then Komag will repay to Seagate in full
the total amount of the Prepayment that remains unpaid as of the date of termination
within [****] days after the termination date.”

	 	(d)	 	The parties hereby ratify and confirm that the balance of Exhibit G Section 4
will remain in full force and effect in accordance with its terms.

3

 

     7. Other Changes

          (a) Section 6.1 of the Agreement is hereby replaced in its entirety with:

     “6.1. Forecasts. Seagate will provide forecasts to Komag from time to time as
agreed between the parties. Seagate’s forecasts are not binding on Seagate.”

          (b) Section 6.2 of the Agreement is hereby replaced in its entirety with:

     “6.2. Capacity Planning. Komag will provide a written notice to Seagate within
[****] working days after receiving Seagate’s forecasts regarding whether
Komag can meet Seagate’s forecasts. Komag will notify Seagate immediately if it is
unable to meet any forecast. Komag will procure and maintain all necessary
equipment, personnel, facilities, and other materials required to manufacture
Products according to the Specifications in volumes sufficient to meet Seagate’s
forecasts, up to the mutually- agreed volumes specified by this Agreement.”

          (c) Section 13.1 of the Agreement is hereby replaced in its entirety with:

     “13.1 Limitation of Amount of Liability. Except for Komag’s liability for the
Prepayments, and the liability of either party for wrongful use or disclosure of the
other party’s intellectual property, indemnification, or willful or reckless
misconduct, Seagate will not be liable to Komag, and Komag will not be liable to
Seagate, regardless of the basis of liability or the form of action,
[****]”

          (d) Section 13.2 of the Agreement is hereby replaced in its entirety with:

     “13.2 Limitation of Type of Liability. Seagate will not be liable to Komag,
and Komag will not be liable to Seagate, for any consequential, incidental,
indirect, special, economic, or punitive damages, or any lost profits or lost
revenues, even if it has been advised of the possibility of such damages. The
parties acknowledge that Seagate’s costs for recalling and returning products for a
product recall caused by Komag are, without limitation, recoverable direct damages.”

          (e) Section 17.3 is hereby replaced in its entirety with:

     “17.3 Assignment. Unless permitted by this Section, neither party may assign
this Agreement in whole or in part without the consent of the other party. A party
will not unreasonably withhold its consent to a request for assignment. Subject to
Seagate’s right to terminate below, either party may assign this Agreement, without
the need for consent, pursuant to a sale of all or substantially all of its assets,
a merger, corporate reorganization of corporate form, or change of control (a
“Change of Control”).
Komag will give Seagate notice of an impending Change of Control as soon as feasible
(subject to confidentiality and other requirements). If Komag undergoes a
Change of Control Seagate will have the right to terminate this Agreement on written

4

 

notice to Komag, which notice shall be effective, at Seagate’s option, either
immediately upon the closing of the transaction that results in the Change of
Control, or on such later date as set forth in the notice. If and to the extent this
Agreement continues for any period of time
following the effective date of such Change of Control, Komag agrees that it will
(i) allow Seagate representatives reasonable access to Komag’s manufacturing
facilities to permit Seagate to monitor and protect its interests under the
Agreement and (ii) ensure that Seagate’s intellectual property, Specifications,
product roadmap and other Confidential Information will not be disclosed to any
third party without Seagate’s prior written consent. No such termination by Seagate
shall be deemed a material breach of the Agreement by either party. If Seagate
elects to terminate this Agreement as aforesaid, then Komag or its successor will
pay to Seagate in full the total amount of the Prepayment that remains unpaid as of
the date of termination, within 90 days after the termination date.”

     8. Pre-production Pricing. Preproduction pricing will not exceed [****] for
all AlMg standard form factors, including LMR and PMR technologies. Standard form factors include
[****]. Any requirement(s) which deviates from AlMg standard form factor may be
negotiated in good faith.

     9 Capacity Flexibility. The parties will cooperate to achieve the capacity
flexibility described in Exhibit I.

     10 Dispute Resolution. Seagate and Supplier will resolve any dispute, controversy, or
claim arising out of or relating to this Amendment in the manner set forth for dispute resolutions
between Seagate and Supplier in the Agreement. Each dispute resolution section of the Agreement is
specifically incorporated by reference as part of this Amendment.

     11 Full Force and Effect. Except as specifically modified or amended by the terms of
this Amendment, the Agreement and all provisions contained in it are, and will continue, in full
force and effect and are ratified and confirmed.

     12 Authorization. Each of the signers certifies that he or she is duly authorized to
execute this Amendment.

     13 Miscellaneous. This Amendment is binding upon Seagate and Supplier and each of
their successors and assigns. This Amendment may be executed in any number of counterparts, each of
which will be an original, but all of which together will constitute one Amendment. The laws of the
State of California, without regard to its conflicts of laws rules, will govern this Amendment, as
well as all disputes arising under this Amendment or the underlying Agreement. This Amendment,
including the matters incorporated by reference into it, is the entire agreement between Seagate
and Supplier regarding its subject matter.

5

 

NEW EXHIBIT H

PERFORMANCE AND RTV GUIDELINES

Komag Media RTV Guidelines

The following represents current Komag – Seagate Media Return to Vendor (RTV) process
guidelines. These guidelines are subject to modification, and expansion, if agreed upon by both
parties. The parties agree that for each of the [****] below, for any new product, the
parties will need to complete an initial failure analysis review before agreeing to the applicable
benchmarks for such new product.

[****]

6

 

NEW
EXHIBIT I

CAPACITY FLEXIBILITY

	 	•	 	Komag shall use reasonable commercial efforts to meet increased media requests from
Seagate.
	 
	 	•	 	Komag shall use reasonable commercial efforts to supply at [****] discs per
quarter upon [****] leadtime from the date of Seagate request.

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]