The purpose for the Audit Committee of the Board of Directors (the “Board”) of Komag, Incorporated (the “Company”) shall be to:

  1. Assist the Board in oversight and monitoring of

                                                        i.            the integrity of the Company’s financial statements,

                                                       ii.            the Company’s compliance with legal and regulatory requirements,

                                                     iii.            the independent auditor’s qualifications, independence and performance, and

                                                    iv.            the Company’s internal accounting and financial controls, improvements made or to be made in such controls.

  1. Prepare the Audit Committee report required in the annual proxy statement as set forth in the rules of the Securities & Exchange Commission (the “SEC”);
  2. Make such examinations as are necessary to monitor the corporate financial reporting and external audit requirements of Komag, Incorporated and its subsidiaries;
  3. Provide to the Board the results of its monitoring and examining and recommendations derived therefrom;
  4. Appoint the independent auditors, determine and approve the auditing fees, and oversee the engagement and work of the independent auditors;
  5. Provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require its attention; and
  6. Undertake those specific duties and responsibilities described in this charter as well as such other duties as the Board from time to time prescribe.


The Audit Committee will consist of at least three members of the Board, each of whom will be appointed by and serve at the discretion of the Board and shall meet the following requirements, as well as any requirements promulgated by the SEC now or in the future:

  1. Each member will be independent,

                                                        i.            as defined by Nasdaq Rule 4200 and

                                                       ii.            pursuant to the criteria provided in Rule 10A-3(b)(1) of the Securities and Exchange Act of 1934, and under any other applicable rule or regulation prescribed by the SEC or Nasdaq;

  1. Each member will be able to read and understand fundamental financial statements, in accordance with the Nasdaq Audit Committee requirements;
  2. At least one member will have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background, including a current or past position as a principal financial officer or other senior officer with financial oversight responsibilities, in accordance with the Nasdaq Audit Committee requirements.


The responsibilities of the Audit Committee shall include:

  1. Reviewing, on a periodic basis, the adequacy of the Company’s system of internal controls, including meeting periodically with the Company’s management and the independent auditors to review the adequacy of such controls and to review before release the disclosure regarding such system of internal controls required under SEC rules to be contained in the Company’s periodic filings and the attestations or reports by the independent auditors relating to such disclosure;
  2. Appointing, compensating and overseeing the work of the independent auditors (including resolving disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
  3. Pre-approving audit and permissible non-audit services provided to the Company by the independent auditors (or subsequently approving permissible non-audit services in those circumstances where a subsequent approval is necessary and permissible);
  4. The Audit Committee shall have the sole authority to approve the hiring and firing of the independent auditors, all audit engagement fees and terms and all non-audit engagements, as may be permissible, with the independent auditors;
  5. Reviewing and providing guidance with respect to the external audit and the Company’s relationship with its independent auditors by

                                                        i.            reviewing the independent auditors’ proposed audit scope, approach and independence;

                                                       ii.            obtaining on a periodic basis a statement from the independent auditors regarding relationships and services with the Company which may impact independence and presenting this statement to the Board, and to the extent there are relationships, monitoring and investigating them;

                                                     iii.            reviewing the independent auditors’ peer review conducted every three years;

                                                    iv.            discussing with the Company’s independent auditors the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management and any other matters described in SAS No. 61, as may be modified or supplemented;

                                                      v.            reviewing reports submitted to the Audit Committee by the independent auditors in accordance with the applicable SEC requirements; and

                                                    vi.            reviewing and discussing with management and the independent auditors the annual audited financial statements and quarterly unaudited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” prior to filing the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively, with the SEC;

  1. Directing the Company’s independent auditors to review before filing with the SEC the Company’s interim financial statements included in Quarterly Reports on Form 10-Q, using professional standards and procedures for conducting such reviews;
  2. Conducting a post-audit review of the financial statements and audit findings, including any significant suggestions for improvements provided to management by the independent auditors;
  3. Reviewing before release the unaudited quarterly operating results in the Company’s quarterly earnings release;
  4. Overseeing compliance with the requirements of the SEC for disclosure of auditor’s services and Audit Committee members, member qualifications and activities;
  5. Establishing procedures for the receipt, retention and treatment of complaints and concerns regarding accounting, internal accounting controls, or auditing matters and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters in accordance with SEC rules and regulations;
  6. Reviewing, in conjunction with counsel, any legal matters that could have a significant effect on the Company’s financial statements;
  7. Reviewing the performance of the independent auditors and ensuring that the independent auditors are accountable directly to the Audit Committee;
  8. Ensuring receipt from the independent auditors of a formal written statement delineating between the auditor and the Company, consistent with Independence Standards Board Standard 1, as well as actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may affect the objectivity and independence of the independent auditor;
  9. Reviewing and approving in advance any proposed related party transactions for potential conflicts of interest;
  10. Reviewing and reassessing the adequacy of this formal written charter on an annual basis;
  11. Reviewing its own performance, structure, processes and membership requirements;
  12. Providing an Audit Committee report for inclusion in the Company’s annual proxy statement in accordance with SEC rules;
  13. Reviewing, approving and monitoring the Company’s code of ethics for its senior financial officers;
  14. Reviewing management’s monitoring of compliance with the Company’s standards of business conduct and with the Foreign Corrupt Practices Act;
  15. If necessary, instituting special investigations with full access to all books, records, facilities and personnel of the Company; and
  16. Performing other oversight functions as requested by the full Board.

In addition to the above responsibilities, the Audit Committee will undertake such other duties as the Board delegates to it, and will report, at least annually, to the Board regarding the Committee’s examinations and recommendations.

The Audit Committee may retain, as it determines necessary, independent legal, accounting or other advisors to advise or assist the Audit Committee in the performance of any of the responsibilities or duties set forth above.


The Audit Committee will meet at least four times each year. The Audit Committee may establish its own schedule that it will provide to the Board in advance.

The Audit Committee will meet separately with the Chief Executive Officer and separately with the Chief Financial Officer of the Company at such times as are appropriate to review the financial affairs of the Company. The Audit Committee will meet separately with the independent auditors of the Company, at such times as it deems appropriate, to review the independent auditor’s examination and management report and to otherwise fulfill its responsibilities under the charter.


The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.


Members of the Audit Committee shall receive such fees, if any, for their service as Audit Committee members as may be determined by the Board. Members of the Audit Committee may not receive any compensation from the Company except the fees that they receive for service as members of the Board or any committee thereof.