Document:

Exhibit 10.20

	

	

EXHIBIT 10.20

AGREEMENT 

     This
Agreement ("Agreement") is made and entered as of this 1st day of February, 2001, by and
between Methode Electronics, Inc. ("Methode") and W.T. Jensen ("Jensen"). 

     WHEREAS,
Jensen has been elected as Chairman of the Board of Directors of Methode and has
substantial operational, financial and other knowledge about Methode and its various
business operations;  

     WHEREAS,
Methode desires to compensate Jensen for his services as Chairman of the Board of
Directors; and 

     WHEREAS,
the parties intend this Agreement to govern their relationship for the term of this
Agreement.  

     NOW,
THEREFORE, in consideration of the promise and mutual agreements herein, Methode and
Jensen agree as follows:  

     1.     
Methode hereby retains Jensen and Jensen hereby agrees to provide services as Chairman of
the Board of Directors with such duties and responsibilities as the Board of Directors
shall in its reasonable discretion decide upon. Jensen shall perform these services at
Methode’s offices at 7401 West Wilson Avenue, Chicago, Illinois (the “Office”).  

     2.     
During the term of this Agreement, Jensen shall be compensated for his services as
follows: 

	 	     a.     
Jensen shall be paid a base salary in the annualized amount of $250,000, payable in
substantially equal installments.

	 	     b.     
Jensen shall receive a quarterly bonus equal to .75% of the first $2,000,000 of pretax
profit, plus .375% of the next $2,000,000 of pre-tax profit, plus .25% of all additional
pre-tax profit of the Company. 

	 	     c.     
Jensen shall not be a participant in any employee benefit plans or programs maintained by
Methode, including, but not limited to, group hospitalization, medical and disability
plans.

	 	     d.     
Jensen shall receive a grant of a stock option in the amount of 100,000 shares pursuant
to Methode Electronics 2000 Stock Plan. Such grant shall be made as of the date of a
special meeting of the Compensation Committee to be held as soon as practicable
subsequent to the proposed spin-off of Stratos Lightwave, Inc. 

	

	

     3.     
Methode shall reimburse Jensen for all actual, reasonable, out-of-pocket expenses,
incurred in connection with Jensen’s performance of services under this Agreement
pursuant to Methode’s normal expense reimbursement policy. Jensen shall maintain
records relating to such expenses under this Agreement and incurred in connection
therewith, and shall provide Methode access to such records upon request.  

     4.     
Jensen covenants that in the performance of any services hereunder he will comply with
any and all applicable Methode policies and standards, and that he will perform services
hereunder in a competent and professional manner.  

     5.     
Jensen shall continue to be bound by the provisions of the Employee Confidentiality and
Assignment of Inventions Agreement previously signed by Jensen. 

     6.      All
materials prepared by Jensen for Methode pursuant to this Agreement shall be owned
exclusively by Methode and shall be deemed works “made for hire.” 

     7.     
This Agreement shall be effective as of February 1, 2001, and shall terminate on June 30,
2002, unless the term hereof is extended pursuant to express written agreement of the
parties or terminated pursuant to Section 8 below.  

     8.     
Methode may terminate this Agreement in the event of any of the following: (i) material
breach of this Agreement by Jensen; (ii) death of Jensen; (iii) total and permanent
disability of Jensen; or (iv) Cause. For purposes hereof, “Cause”shall mean
excessive unexcused absenteeism, flagrant neglect of work, serious misconduct, or fraud.
In the event this Agreement is terminated under subsection (iv) above, Methode shall give
thirty (30) days written notice of termination to Jensen identifying specifically the
basis for such notice and Jensen shall be entitled to cure such breach, to the extent
curable, within the following thirty (30) day period.  

     9.     
This Agreement may not be assigned by either party nor may Jensen’s obligations
hereunder be subcontracted, except upon express prior consent in writing by Methode.  

     10.     
Failure of either party to enforce any of the provisions of this Agreement, or any rights
with respect thereto, or failure to exercise any election provided for herein, shall in
no way be considered a waiver of such provisions, rights or elections, or in any way
affect the validity of this Agreement. The failure to either party to enforce any of said
provisions, rights or elections shall not prejudice such party from later enforcing or
exercising the same or any other provisions, rights or elections which it may have under
this Agreement.  

	

	

     11.     
This Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois. 

	METHODE ELECTRONICS, INC.

By: /s/ Douglas A. Koman
——————————————

Douglas A. Koman
Vice President of Corporate Finance		

By: /s/ William T. Jensen
——————————————

William T. Jensen<PAGE>   1

                                                                    EXHIBIT 4.1

                        1988 EMPLOYEE STOCK PURCHASE PLAN

<PAGE>   2

                               KOMAG, INCORPORATED

                        1988 EMPLOYEE STOCK PURCHASE PLAN

        (RESTATED JUNE 29, 1992 AND AMENDED JANUARY 27, 1994, JANUARY 22,
       1997, JANUARY 30, 1998, FEBRUARY 4, 1999 AND THROUGH MAY 15, 2001)

I.      PURPOSE

        The Komag, Incorporated 1988 Employee Stock Purchase Plan (the "Plan")
is intended to provide eligible employees of the Company and one or more of its
Corporate Affiliates with the opportunity to acquire a proprietary interest in
the Company through participation in a plan designed to qualify as an employee
stock purchase plan under Section 423 of the Internal Revenue Code (the "Code").

II.     DEFINITIONS

        For purposes of administration of the Plan, the following terms shall
have the meanings indicated:

        Base Compensation means (i) the regular base earnings paid to a
Participant by one or more Participating Companies, before deduction for any
contributions made on the Participant's behalf to any Code Section 401(k) Plan
maintained by the Company or any Corporate Affiliate. The calculation of Base
Compensation may also include, at the discretion of the Plan Administrator
exercisable prior to the start of any purchase period, bonuses, overtime pay,
shift differentials and other differentials. Base Compensation shall be
calculated on the basis of equivalent bi-weekly straight-time hours (up to a
maximum of 79.50 hours for three-day shift employees and 80.00 hours for all
other employees) multiplied by straight-time rate. In no event shall Base
Compensation include any profit-sharing or other non-salary deferral
contributions made on the Participant's behalf pursuant to any qualified
profit-sharing plan under Code Section 401(a).

        Board means the Board of Directors of the Company.

        Company means Komag, Incorporated, a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Komag, Incorporated, which shall by appropriate action adopt the Plan.

        Corporate Affiliate means any company which is either the parent
corporation or a subsidiary corporation of the Company (as determined in
accordance with Section 424 of the Code), including any parent or subsidiary
corporation which becomes such after the Effective Date.

        Effective Date means, with respect to the 1992 plan restatement, June
29, 1992. However, should any Corporate Affiliate become a Participating Company
in the Plan after such applicable date, then such entity shall designate a
separate Effective Date with respect to its employee-Participants.

        Employee means any person who is regularly engaged, for a period of more
than 20 hours per week for more than 5 months per calendar year, in the
rendition of personal services to the Company or any other Participating Company
for earnings considered wages under Section 3121(a) of the Code.

        Fiscal Quarter means a three-month period corresponding to a fiscal
quarter of the Company, based on the Company's 52-53 week fiscal year ending on
the Sunday closest to December 31st of each year.

        Participant means any Employee of a Participating Company actively
participating in the Plan.

<PAGE>   3

        Participating Company means the Company and such Corporate Affiliate or
Affiliates as may be designated from time to time by the Board. The
Participating Companies in the Plan, as of the Effective Date, are listed in
attached Schedule A.

        Stock means shares of the common stock of the Company.

III.    ADMINISTRATION

        (a) The Plan shall be administered by a committee (the "Committee")
comprised of at least two non-employee members of the Board appointed from time
to time by the Board. The Committee as Plan Administrator shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties who have an interest in the Plan.

        (b) No member of the Committee while serving as such shall be eligible
to participate in the Plan.

IV.     PURCHASE PERIODS

        (a) Stock shall be offered for purchase under the Plan through a series
of successive purchase periods until such time as (i) the maximum number of
shares of Stock available for issuance under the Plan shall have been purchased
or (ii) the Plan shall have been sooner terminated in accordance with Article X
or Article XI.

        (b) The Plan shall be implemented in a series of successive purchase
periods, each of such duration (not to exceed six months) as determined by the
Plan Administrator prior to the start date of the purchase period. Purchase
periods will start, at the Plan Administrator's discretion, either on the first
day or the first Monday of each successive Fiscal Quarter or each alternate
successive Fiscal Quarter. Accordingly, either four (4) or two (2) separate
purchase periods may commence per Fiscal Year.

        (c) The Participant shall be granted a separate purchase right for each
purchase period in which he/she participates. The purchase right shall be
granted on the first day of the purchase period and shall be automatically
exercised in (i) successive quarterly installments on the last day of each
Fiscal Quarter such purchase right remains outstanding, in the case of a
purchase period in which purchases are effected quarterly, or (ii) successive
semi-annual installments on the last day of each alternate Fiscal Quarter such
purchase right remains outstanding, in the case of a purchase period in which
purchases are effected semi-annually.

        (d) An Employee may participate in only one purchase period at a time.
Accordingly, an Employee who wishes to join a new purchase period must withdraw
from the current purchase period in which he/she is participating and must also
enroll in the new purchase period prior to the commencement date for that
period.

        (e) The acquisition of Stock through participation in the Plan for any
purchase period shall neither limit nor require the acquisition of Stock by the
Participant in any subsequent purchase period. However, the acquisition of Stock
through participation in the Plan for any purchase period shall be counted
toward the limitations on the number of purchasable shares as provided in
Section VII(b) and the accrual limitations as provided in Section VIII.

        (f) Under no circumstances shall any purchase rights granted under the
Plan be exercised, nor shall any shares of Stock be issued hereunder, until such
time as (i) the Plan shall have been approved by the Company's shareholders and
(ii) the Company shall have complied with all applicable requirements of the
Securities Act of 1933 (as amended), all applicable listing requirements of any
securities exchange on which the Stock is listed and all other applicable
requirements established by law or regulation.

                                       2
<PAGE>   4

V.      ELIGIBILITY AND PARTICIPATION

        (a) Every Employee of a Participating Company shall be eligible to
participate in the Plan on the first day of the first purchase period following
the Employee's commencement of service with the Company or any Corporate
Affiliate, but in no event shall participation commence prior to the Effective
Date.

        (b) In order to participate in the Plan for a particular purchase
period, the Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) prior to the commencement date of the purchase period. Such
enrollment shall be effective for subsequent, but not overlapping, purchase
periods, unless the Employee notifies the Plan Administrator (or its designate)
to the contrary prior to the commencement date of any such subsequent purchase
period.

        (c) The payroll deduction authorized by a Participant for purposes of
acquiring Stock under the Plan may be any multiple of 1% of the Base
Compensation paid to the Participant during the relevant purchase period, up to
a maximum of 10%. The deduction rate so authorized shall continue in effect for
the entire purchase period and for each subsequent purchase period, unless the
Participant shall, prior to the end of the purchase period for which the
purchase right is in effect, reduce the rate by filing the appropriate form with
the Plan Administrator (or its designate). The reduced rate shall become
effective as soon as practicable following the filing of such form. Each
Participant shall be permitted such a rate reduction only two (2) times in each
purchase period. The reduced rate shall continue in effect for the entire
purchase period and for each subsequent purchase period, unless the Participant
shall, prior to the commencement of any subsequent purchase period designate a
different rate (up to the 10% maximum) by filing the appropriate form with the
Plan Administrator (or its designate). The new rate shall become effective for
the first purchase period commencing after the filing of such form. Payroll
deductions, however, will automatically cease upon the termination of the
Participant's purchase right in accordance with Section VII(d) or (e) below.

VI.     STOCK SUBJECT TO PLAN

        (a) The Stock purchasable by Participants under the Plan shall, solely
in the Board's discretion, be made available from either authorized but unissued
Stock or from reacquired Stock, including shares of Stock purchased on the open
market. The total number of shares of Stock which may be issued under the Plan
shall not exceed 9,500,000 shares (subject to adjustment under Section VI(b)).
Such share reserve includes the 2,550,000-share increase authorized by the Board
on February 4, 1999, and the 2,100,000- share increase authorized by the Board
on January 4, 2001.

        (b) In the event any change is made to the Stock purchasable under the
Plan by reason of any recapitalization, stock dividend, stock split, combination
of shares or other change affecting the outstanding common stock of the Company
as a class without receipt of consideration, then appropriate adjustments shall
be made by the Plan Administrator to the class and maximum number of shares
purchasable under the Plan, the class and maximum number of shares purchasable
per Participant under any purchase right outstanding at the time or purchasable
per Participant over the term of the Plan, and the class and number of shares
and the price per share of the Stock subject to outstanding purchase rights held
by Participants under the Plan.

VII.    PURCHASE RIGHTS

        An Employee who participates in the Plan for a particular purchase
period shall have the right to purchase Stock on the purchase dates designated
by the Plan Administrator for such purchase period upon the terms and conditions
set forth below and shall execute a purchase agreement embodying such terms and
conditions and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.

        (a) Purchase Price. The purchase price per share shall be the lesser of
(i) 85% of the fair market value of a share of Stock on the date on which the
purchase right is granted or (ii) 85% of the fair market value of a share of
Stock on the date the purchase right is exercised. For purposes of determining
such fair market value (and for all other valu-

                                       3
<PAGE>   5

ation purposes under the Plan), the fair market value per share of Stock on any
date shall be determined in accordance with the following provisions:

           (i) If the Stock is not at the time listed or admitted to trading on
any stock exchange but is traded on the Nasdaq National Market, the fair market
value per share shall be the closing selling price per share of Stock on the
date in question, as such prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no reported
closing selling price on the date in question, then the closing selling on the
last preceding date for which such quotation exists shall be determinative of
fair market value.

           (ii) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the fair market value shall be the closing selling price
per share of Stock on the date in question on the stock exchange determined by
the Plan Administrator to be the primary market for the Stock, as such price is
officially quoted on such exchange. If there is no reported sale of Stock on
such exchange on the date in question, then the fair market value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.

        (b) Number of Purchasable Shares. The number of shares purchasable by a
Participant on any particular purchase date shall be the number of whole shares
obtained by dividing the amount collected from the Participant through payroll
deductions during the quarterly or semi-annual period beginning with the start
of the purchase period or the most recent purchase date in the same purchase
period (whichever is applicable), together with any amount carried over from the
preceding purchase date in the same purchase period pursuant to the provisions
of Section VII(f), by the purchase price in effect for such purchase date.
However, the maximum number of shares purchasable by the Participant on any
purchase date shall not exceed 3,000 shares, in the case of a purchase period in
which purchases are effected quarterly, or 6,000 shares, in the case of a
purchase period in which purchases are effected semi-annually (subject in either
instance to adjustment under Section VI(b)). In addition, the maximum number of
shares for which purchase rights may in the aggregate be granted to any
individual who is subject to the short-swing profit restrictions of the Federal
securities laws shall not exceed 50,000 shares (subject to adjustment under
Section VI(b)) over the term of the Plan. Accordingly, no such officer or
director shall be eligible to receive purchase rights for any purchase period if
the number of shares which would otherwise be purchasable by such individual for
that purchase period would result in the issuance to such individual of shares
of Stock in excess of the maximum number of shares purchasable in the aggregate
by such individual over the term of the Plan. Each of the foregoing
share-limitations has been adjusted to reflect the two-for-one forward split of
the Stock effected on December 21, 1995.

           Under no circumstances shall purchase rights be granted under the
Plan to any Employee if such Employee would, immediately after the grant, own
(within the meaning of Section 424(d) of the Code), or hold outstanding options
or other rights to purchase, stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or any of its
Corporate Affiliates.

        (c) Payment. Payment for Stock purchased under the Plan shall be
effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the commencement date of the relevant purchase period and shall
terminate with the pay day ending with or immediately prior to the last day of
the purchase period. The amounts so collected shall be credited to the
Participant's individual account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in the account. The amounts
collected from a Participant may be commingled with the general assets of the
Company and may be used for general corporate purposes.

        (d) Termination of Purchase Rights.

           (i) A Participant may, prior to any purchase date, terminate his/her
outstanding purchase right under the Plan by filing the prescribed notification
form with the Plan Administrator (or its designate). The Company will then
refund all sums previously collected from the Participant and not previously
applied to the purchase of Stock during the purchase period, and no further
amounts will be collected from the Participant with respect to the terminated
purchase right.

           (ii) The termination shall be irrevocable with respect to the
particular purchase period to which it pertains and shall also require the
Participant to re-enroll in the Plan (by making a timely filing of a new
purchase

                                       4
<PAGE>   6

agreement and payroll deduction authorization) if the Participant wishes to
resume participation in a subsequent purchase period.

        (e) Termination of Employment. If a Participant ceases Employee status
during any purchase period, then the Participant's outstanding purchase right
under the Plan shall immediately terminate and all sums previously collected
from the Participant and not previously applied to the purchase of stock during
such purchase period shall be promptly refunded. However, should the Participant
die or become permanently disabled while in Employee status, then the
Participant or the person or persons to whom the rights of the deceased
Participant under the Plan are transferred by will or by the laws of descent and
distribution (the "successor") will have the election, exercisable at any time
prior to the purchase date for the quarterly or semi-annual period in which the
Participant dies or becomes permanently disabled, to (i) withdraw all the funds
in the Participant's payroll account at the time of his/her cessation of
Employee status or (ii) have such funds applied to the purchase of shares of
Stock on the next purchase date. In no event, however, shall any further payroll
deductions be added to the Participant's account following his/her cessation of
Employee status.

           For purposes of the Plan: (a) a Participant shall be considered to be
an Employee for so long as such Participant remains in the employ of the Company
or any other Participating Company under the Plan and (b) a Participant shall be
deemed to be permanently disabled if he/she is unable, by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of at least twelve (12) months, to engage in any
substantial gainful employment.

        (f) Stock Purchase. Outstanding purchase rights shall be automatically
exercised in a series of successive installments as provided in Section IV(c).
The exercise shall be effected by applying the amount credited to the
Participant's account on the last date of the Fiscal Quarter, in the case of a
purchase period in which purchases are effected quarterly, or the last date of
the alternate Fiscal Quarter, in the case of a purchase period in which
purchases are effected semi-annually, to the purchase of whole shares of Stock
(subject to the limitations on the maximum number of purchasable shares set
forth in Section VII(b)) at the purchase price in effect for such purchase date.
Any amount remaining in the Participant's account after such purchase shall be
held for the purchase of Stock on the next quarterly or semi-annual purchase
date within the purchase period; provided, however, that any amount not applied
to the purchase of Stock at the end of a purchase period shall be refunded
promptly after the close of the purchase period, and any amount not applied to
the purchase of stock by reason of the Section VII(b) limitations on the maximum
number of purchasable shares shall be refunded promptly after the quarterly or
semi-annual purchase date.

        (g) Proration of Purchase Rights. Should the total number of shares of
Stock which are to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and any amounts
credited to the accounts of Participants shall, to the extent not applied to the
purchase of Stock, be refunded to the Participants.

        (h) Rights as Shareholder. A Participant shall have no rights as a
shareholder with respect to shares covered by the purchase rights granted to the
Participant under the Plan until the shares are actually purchased on the
Participant's behalf in accordance with Section VII(f). No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.

           A Participant shall be entitled to receive, as soon as practicable
after the date of each purchase, stock certificates for the number of shares
purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.

           In lieu of delivering a stock certificate to each Participant, the
Plan Administrator may, in its discretion, implement a designated broker program
and direct the Company to issue a single stock certificate to a broker
designated by the Plan Administrator. Such designated broker shall establish an
account for each Participant in the Plan and shall effect transfers and sales
from such account at the direction of the Participant. To facilitate the
designated broker program, the Plan Administrator may require, as a condition to
participation in the Plan, that a Participant agree to the issuance of his or
her stock certificates directly to the designated broker.

                                       5
<PAGE>   7

        (i) Assignability. No purchase rights granted under the Plan shall be
assignable or transferable by a Participant except by will or by the laws of
descent and distribution, and the purchase rights shall, during the lifetime of
the Participant, be exercisable only by such Participant.

        (j) Merger or Liquidation of Company. In the event the Company or its
shareholders enter into an agreement to dispose of all or substantially all of
the assets or outstanding capital stock of the Company by means of a sale,
merger or reorganization in which the Company will not be the surviving
corporation (other than a reorganization effected primarily to change the State
in which the Company is incorporated) or in the event the Company is liquidated,
then all outstanding purchase rights under the Plan shall automatically be
exercised immediately prior to such sale, merger, reorganization or liquidation
by applying all sums previously collected from Participants pursuant to their
payroll deductions in effect for such rights to the purchase of whole shares of
Common Stock, subject, however, to the applicable limitations of Section VII(b).

VIII.   ACCRUAL LIMITATIONS

        (a) No Participant shall be entitled to accrue rights to acquire Stock
pursuant to any purchase right under this Plan if and to the extent such
accrual, when aggregated with (I) Stock rights accrued under other purchase
rights outstanding under this Plan and (II) similar rights accrued under other
employee stock purchase plans (within the meaning of Section 423 of the Code) of
the Company or its Corporate Affiliates, would otherwise permit such Participant
to purchase more than $25,000 worth of stock of the Company or any Corporate
Affiliate (determined on the basis of the fair market value of such stock on the
date or dates such rights are granted to the Participant) for each calendar year
such rights are at any time outstanding.

        (b) For purposes of applying the accrual limitations of Section VIII(a),
the right to acquire Stock under each purchase right outstanding under the
restated Plan shall accrue as follows:

        -       The right to acquire Stock under each such purchase right shall
                accrue in a series of successive quarterly or semi-annual
                installments as and when the purchase right first becomes
                exercisable for each installment as provided in Section IV(c).

        -       No right to acquire Stock under any outstanding purchase right
                shall accrue to the extent the Participant has already accrued
                in the same calendar year the right to acquire Stock under that
                purchase right or any other purchase rights held by the
                Participant at the rate of $25,000 worth of Stock (based on the
                fair market value on the date or dates of grant) for each
                calendar year (or portion thereof) for which such purchase
                rights have been outstanding.

        -       If by reason of the Section VIII(a) limitations, the
                Participant's outstanding purchase right does not accrue for a
                particular purchase date of any purchase period, then the
                payroll deductions which the Participant made during that
                quarterly or semi-annual period with respect to such purchase
                right shall be promptly refunded.

        (c) In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.

IX.     STATUS OF PLAN UNDER FEDERAL TAX LAWS

        (a) The Plan is designed to qualify as an employee stock purchase plan
under Code Section 423. However, the Plan Administrator may, at any time in its
discretion, cease to administer the Plan as a qualified employee stock purchase
plan under Code Section 423. Accordingly, share purchases effected under the
Plan at any time after the Plan ceases to be administered as a qualified
employee stock purchase plan under Code Section 423 (whether pursuant to
purchase rights granted before or after the Plan ceases to be qualified) shall
result in taxable income to each Participant equal to the excess of (i) the fair
market value of the purchased shares on the purchase date over (ii) the purchase
price paid for such shares.

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<PAGE>   8

        (b) To the extent required by law, the Company's obligation to deliver
shares to the Participant upon the exercise of any outstanding purchase right
shall be subject to the Participant's satisfaction of all applicable federal,
state and local income and employment tax withholding requirements.

X.      AMENDMENT AND TERMINATION

        (a) The Board may from time to time alter, amend, suspend or discontinue
the Plan; provided, however, that no such action shall become effective prior to
the exercise of outstanding purchase rights at the end of the quarterly or
semi-annual period in which such action is authorized; and provided, further,
that no such action of the Board may, without the approval of the shareholders
of the Company, increase the number of shares issuable under the Plan or the
maximum number of shares which any one Participant may purchase during a single
purchase period or over the term of the Plan (except for adjustments permitted
under Section VI(b)), alter the purchase price formula so as to reduce the
purchase price specified in the Plan, otherwise materially increase the benefits
accruing to Participants under the Plan or materially modify the requirements
for eligibility to participate in the Plan.

        (b) The Company shall have the right, exercisable in the sole discretion
of the Plan Administrator, to terminate the Plan immediately following the end
of a quarterly or semi-annual purchase date. Should the Company elect to
exercise such right, then the Plan shall terminate in its entirety, and no
further purchase rights shall thereafter be granted, and no further payroll
deductions shall thereafter be collected, under the Plan.

XI.     GENERAL PROVISIONS

        (a) The Plan was initially adopted by the Board on January 21, 1988 and
approved by the stockholders on June 7, 1988. In January 1991, the Board
approved a 250,000-share increase in the number of shares of Common Stock
issuable under the Plan, and the stockholders approved such increase in May
1991. The 1992 restatement of the Plan and the 250,000-share increase approved
by the Board on January 23, 1992 became effective on the first day of the first
purchase period which began after the 1992 Annual Stockholders Meeting.
Additional amendments were made to the Plan on January 27, 1994, January 22,
1997, and January 30, 1998 to increase the number of shares of Stock reserved
for issuance under the Plan, and the January 1997 amendment also extended the
term of the Plan to December 31, 2001. On February 4, 1999, the Board authorized
an amendment to the Plan to increase the number of shares of Stock available for
issuance hereunder by an additional 2,550,000 shares. On January 4, 2001, the
Board authorized an amendment to the Plan to increase the number of shares of
Stock available for issuance hereunder by an additional 2,100,000 shares, which
amendment was approved by the stockholders at the 2001 Annual Meeting.

        (b) The provisions of this restated Plan shall apply only to purchase
rights exercised under the Plan from and after the Effective Date of such
restatement. All exercises effected under the Plan prior to such Effective Date
were governed by the terms and conditions of the Plan as in effect on each such
exercise date, and nothing in this restated Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of the shares of
Common Stock acquired thereunder.

        (c) The Plan shall terminate upon the earlier of (i) December 31, 2001
or (ii) the date on which all shares available for issuance under the Plan shall
have been sold pursuant to purchase rights exercised under the Plan.

        (d) All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.

        (e) Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Plan Administrator, nor any provision of the
Plan itself shall be construed so as to grant any person the right to remain in
the employ of the Company or any of its Corporate Affiliates for any period of
specific duration, and such person's employment may be terminated at any time,
with or without cause.

        (f) The provisions of the Plan shall be governed by the laws of the
State of California.

                                       7
<PAGE>   9

                                   SCHEDULE A

                           COMPANIES PARTICIPATING IN
                        1988 EMPLOYEE STOCK PURCHASE PLAN

                             AS OF FEBRUARY 4, 1999

                               Komag, Incorporated

                         Komag Material Technology, Inc.

                          Komag U.S.A. (Malaysia) Sdn.

                            Komag Asia Pacific, Inc.

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