Exhibit 10.3
FORM OF
EXECUTIVE EMPLOYMENT AGREEMENT
     This Agreement is entered into as of [DATE] (the “Effective Date”) by and
between the Company and [NAME] (“Executive”).
     1.    Duties and Scope of Employment.
            (a)    Position and Duties. As of the Effective Date, Executive will
[continue to] serve as [TITLE] of the Company, reporting to the Chief Executive
Officer [or his delegate]. Executive will render such business and professional
services in the performance of his or her duties, consistent with Executive’s
position within the Company, as shall reasonably be assigned to him by the Chief
Executive Officer [and/or the Company’s Board of Directors (the “Board”)].
Executive’s [title,] duties and responsibilities may be altered, modified and
changed as the [Chief Executive Officer and/or Board] deems appropriate.
            (b)    Obligations. During the Term, Executive will perform his or
her duties faithfully and to the best of his or her ability and will devote his
or her full business efforts and time to the Company. For the duration of the
Term, Executive agrees not to engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without the prior
written approval of [the Board and/or the Chief Executive Officer].
            (c)    Conflicting Employment. Executive agrees that, while employed
by the Company, he or she will not engage in any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of Executive’s
employment, nor will Executive engage in any other activities that conflict with
Executive’s obligations to the Company.
     2.    Term. Executive’s employment with the Company pursuant to this
Agreement (the “Term”) will commence on the Effective Date and will continue,
unless otherwise terminated earlier as provided herein, until the date that is
twenty-four (24) months1 from the Effective Date. Notwithstanding the foregoing,
the parties agree that Executive’s employment with the Company will be “at-will”
employment and may be terminated at any time with or without cause by giving the
Executive a written notice. Executive understands and agrees that neither his or
her job performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for continuation,
modification, amendment, or extension, by implication or otherwise, of his or
her employment with the Company. However, as described in this Agreement,
Executive may be entitled to severance benefits depending on the circumstances
of Executive’s termination of employment with the Company as expressly provided
in Sections 6 and 7 of this Agreement.
     3.    Compensation.
            (a)    Base Salary. During the Term, the Company will pay Executive
as compensation for his or her services, a base salary at the annualized rate of
$[EXECUTIVE’S
 

1 The term of Paul Judy’s agreement is twenty-one (21) months.    

 

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SALARY AMOUNT] 2(the “Base Salary”). The Base Salary will be paid periodically
in accordance with the Company’s normal payroll practices and is subject to
lawfully required withholdings. Annual adjustments to the Base Salary may be
made in the Company’s sole discretion.
            (b) Target Incentive Plan.    Executive will be eligible to
participate in the Company’s Target Incentive Plan, and for such annual bonuses
as are payable under the plan (“Incentive Bonus”).
     4.    Employee Benefits. During the Term, Executive will continue to be
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability [to other senior executives
of the Company, including, without limitation, the Company’s group medical,
dental, vision, disability, life insurance, vacation and flexible-spending
account plans and programs] [as identified in his letter of appointment]. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.
     5.    Equity. Executive may from time to time be eligible to receive a
grant of stock options and/or restricted stock, as the Board of Directors deems
appropriate.
     6.    Severance.
            (a)    Involuntary Termination Without Cause Prior to a Change of
Control or More than 6 Months Following a Change of Control. If Executive’s
employment with the Company terminates other than voluntarily or for “Cause”
prior to a “Change of Control” (both as defined herein) or more than six months
following a Change of Control, and Executive signs and does not revoke a release
of claims with the Company in the form provided by the Company, the Company
shall provide severance pay and benefits, subject to certain conditions, as
follows:
       (i)    The Company shall provide monetary severance to Executive equal to
[twelve (12) months’ of Base Salary for the Executive Vice President and Chief
Technical Officer, the Chief Operating Officer, Executive Vice Presidents,
Senior Vice Presidents and the covered Vice President] [twenty-four (24) months
of Base Salary for the Chief Executive Officer]. Such severance shall be paid
over a period of [twelve (12) months or twenty-four (24) months, as applicable]
following the date of termination (the “Severance Period”) through Severance
Payments made in the same installments and subject to the same deductions as
Executive’s Base Salary at the time of termination. The Severance Payments shall
be subject to offset for any amounts then owed to the Company by Executive. [In
lieu of the foregoing paragraph the following text is included in the agreement
with an officer based in Malaysia: The Company shall provide monetary severance
to Executive equal to one month of Base Salary for each year of service plus
 

2 The specific salaries for the Executives who are party to this Agreement are
as follows: TH Tan, Chief Executive Officer - $550,000; Tim Harris, Executive VP
& Chief Operating Officer — $365,000; Michael Russak, Executive VP, Chief
Technical Officer — $390,000; Ray Martin, Executive VP, Customer Sales & Service
— $345,000; Peter Norris, Executive VP, Strategic Business Development —
$190,000; Kathleen Bayless, Senior VP, Chief Financial Officer — $296,800;
Tsutomu Yamashita, Senior VP, Process Development - $290,000; William Hammack,
Senior VP, Human Resources — $203,496; Kheng Huat Oung, VP, Managing Director,
Media Operations, Komag USA (Malaysia) Sdn. - $136,084; Paul Judy, Vice
President, Corporate Controller & Chief Accounting Officer — $200,000.  

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one month of contractual bonus plus 8 (eight) weeks of pay in lieu of notice.
Such severance shall be paid in a lump sum within 30 (thirty) days of the last
day of employment. The Severance Payments shall be subject to offset for any
amounts then owed to the Company by Executive.]
       (ii)    If Executive elects to continue his/her benefits under the
Company’s Employee Benefits Plans, including life, disability and health
insurance, through COBRA, the Company shall pay the cost of COBRA continuation
coverage for Executive (and, where applicable, Executive’s dependents) during
the Severance Period as if Executive were still employed by the Company (the
“COBRA Continuation Payments”). Executive will continue to pay the same portion
of the cost of such benefits as he or she currently pays as of the last day of
his/her employment with the Company. The COBRA Continuation Payments will cease,
and the Company will have no further obligations with respect to the payment of
any premiums for continuation coverage to Executive, as of the earlier of
(a) Executive becoming eligible for comparable coverage (for example, through
obtaining alternative employment); (b) the conclusion of the Severance Period;
or (c) the cessation of Executive’s COBRA eligibility. [In lieu of the foregoing
paragraph the following text is included in the agreement with an officer based
in Malaysia: All insurance benefits will cease upon the termination of
employment.]
       (iii)    Any outstanding and unvested non-qualified stock options and any
restricted stock previously granted Executive shall immediately vest and become
exercisable as to the number of shares that would have otherwise vested had
Executive remained employed by the Company through the end of the Severance
Period. Thereafter, any such awards will remain subject to the terms of the
applicable stock plan, grant and/or agreement.
       (iv)    If Executive is entitled to compensation and benefits arising
from termination of employment due to change of control pursuant to Section 7
below, compensation and benefits under that change of control provision shall be
in lieu of and not in addition to compensation under this Section 6.
       (v)    Notwithstanding the foregoing, the Company’s obligation to make
severance payments, pay bonus payments, provide benefits and vest stock and/or
options hereunder is expressly conditioned upon Executive’s ongoing compliance
with the provisions of the Employee Invention, Authorship, Proprietary and
Confidential Information Agreement. In the event Executive breaches the terms of
such agreement, the Company’s obligations hereunder shall automatically
terminate, without any notice to Executive, and, in addition to any other
damages to which the Company may be entitled, the Company shall be entitled to
recover from Executive any payments already made to Executive hereunder.
       (vi)    Executive agrees that severance as provided herein shall be the
sole consideration to which he or she is entitled in the event of the
termination of his or her employment without Cause, and that severance will not
be paid in the event of termination with Cause, and Executive expressly waives
and relinquishes any claim to other or further consideration. [The following
sentence is included only in the Executive Vice President, Chief Technical
Officer’s form: Executive agrees that a change in title alone shall not mean
that a position is not comparable.]

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       (vii)    Severance pay, bonus pay, benefits and/or stock/option vesting
are expressly conditioned upon Executive’s execution and delivery of a release
of all claims Executive may have against the Company in a form provided by the
Company.
              (b)    Voluntary Termination; Termination for Cause. If
Executive’s employment with the Company terminates voluntarily by Executive or
for Cause by the Company, then (i) all vesting of any restricted stock or
options to purchase shares of the Company’s common stock held by Executive will
terminate immediately and all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned, including unused and accrued vacation); and (ii) Executive shall not be
eligible for severance or other benefits, except in accordance with any
generally applicable Company plans or policies as are then in effect. [The
provision for voluntary termination in the foregoing paragraph is not included
in the agreement with the Chief Operating Officer. In lieu thereof, the
following separate paragraph is included in that agreement: “Should Executive
voluntarily terminate employment within six (6) months of the first day of
employment in of a new Chief Executive Officer, other than Executive, the
Executive will be eligible to receive six (6) months of severance pay from the
date of resignation. Severance pay is expressly conditioned upon Executive’s
execution and delivery of a release of all claims Executive may have again the
Company in a form provided by the Company. Beyond the sixth (6th) month, should
Executive resign, then (i) all vesting of any restricted stock or options to
purchase shares of the Company’s common stock held by Executive will terminate
immediately and all payments of compensation by the Company to Executive
hereunder will terminate immediately (except as to amounts already earned,
including unused and accrued vacation); and (ii) Executive shall not be eligible
for severance or other benefits, except in accordance with any generally
applicable Company plans or policies as are then in effect.”]
     7.    Change of Control Severance Benefits. In the event of a “Change of
Control” (as defined herein) followed by Executive’s termination other than
voluntarily or for “Cause” within six (6) months following the consummation of a
Change of Control, Executive shall be entitled to receive benefits as set forth
below, provided he or she signs and does not revoke a release of claims with the
Company in a form provided by the Company. For the purpose of this Section 7,
Executive shall be deemed to have been terminated other than for “Cause” if
Executive is not provided with an offer of employment with the Company or
successor entity following the Change of Control with comparable duties,
position, responsibilities, pay and location relative to the Executive’s duties,
position, responsibilities, pay and location in effect immediately prior to such
Change of Control and, within thirty (30) days thereafter, Executive elects to
voluntarily terminate his or her employment with the Company. Executive agrees
that (1) a change in title alone shall not mean that a position is not
comparable; (2) a change in duties and responsibilities that is not material
shall not mean that a position is not comparable; (3) for purposes of pay, a
position shall be deemed comparable if it involves a reduction of no more than
ten percent (10%) of Executive’s base compensation unless in connection with
similar decreases of other similarly situated employees of the Company; and
(4) for purposes of location, a position shall be deemed comparable if it is
within fifty (50) miles from Executive’s current work location.
              (a)    A lump sum payment within thirty (30) days of such
termination equal to the Severance Payment as set forth in section 6(a)(i)
above.

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              (b)    An additional lump sum payment within thirty (30) days of
such termination in an amount equal to the annual Incentive Bonus, calculated on
the basis of all targets under the current Target Incentive Plan being met.
              (c)    On the date of termination, all stock options and
restricted stock previously granted to Executive shall become immediately and
fully vested and exercisable by Executive or his or her representative. Such
exercise shall be governed by and shall be in accordance with the terms of the
applicable agreement, whose terms are incorporated herein by reference.
              (d)    Executive (and, where applicable, Executive’s dependents)
shall be entitled to COBRA Continuation Payments in accordance with the
provisions of section 6(a)(ii) above. 3
              (e)    In the event that the benefits provided for in this
agreement (a) constitute “parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), (b) would be
subject to the excise tax imposed by Section 4999 of the Code, and (c) the
aggregate value of such parachute payments, as determined in accordance with
Section 280G of the Code and the Treasury Regulations thereunder is less than
the product obtained by multiplying 3.59 by Executive’s “base amount” within the
meaning of Code Section 280G(b)(3), then such benefits shall be reduced to the
extent necessary (but only to that extent) so that no portion of such benefits
will be subject to excise tax under Section 4999 of the Code. In the event that
the benefits provided for in this agreement (a) constitute “parachute payments”
within the meaning of Section 280G of the Code, (b) would be subject to the
excise tax imposed by Section 4999 of the Code, and (c) the aggregate value of
such parachute payments, as determined in accordance with Section 280G of the
Code and the Treasury Regulations thereunder is equal to or greater than the
product obtained by multiplying 3.59 by Executive’s “base amount” within the
meaning of Code Section 280G(b)(3), then the Executive shall receive (i) a
payment from the Company sufficient to pay such excise tax plus any interest or
penalties incurred by Executive with respect to such excise tax, plus (ii) an
additional payment from the Company sufficient to pay the excise tax and federal
and state income and employment taxes arising from the payments made by the
Company to Executive pursuant to this sentence. Unless the Company and the
Executive otherwise agree in writing, the determination of Executive’s excise
tax liability and the amount required to be paid or reduced under this Section
shall be made in writing by the Company’s independent auditors who are primarily
used by the Company immediately prior to the Change of Control (the
“Accountants”). For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.4
              (f)    Notwithstanding the foregoing, if Executive receives the
Severance Payment pursuant to this Section, he or she shall not be entitled to
receive an additional Severance Payment pursuant to Section 6 hereof.
 

3 This paragraph is not included in the agreement with an officer based in
Malaysia.       4 This paragraph is not included in the agreement with an
officer based in Malaysia.    

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            (g)    Change of control benefits under this Section 7 are expressly
conditioned upon Executive’s execution and delivery of a release of all claims
Executive may have against the Company in a form provided by the Company.
     8.    Non-Solicitation. For a period of twelve (12) months following
Executive’s termination of employment, Executive shall not, directly or
indirectly, without the prior written consent of the Company, solicit any
employee or customer of the Company, its parent or its subsidiaries to terminate
his or her employment with or customer relationship to the Company, its parent
or its subsidiaries.
     9.    Definitions.
            (a)    Cause. For purposes of this Agreement, “Cause” is defined as
(i) an act of dishonesty made by Executive in connection with Executive’s
responsibilities as an employee, (ii) Executive’s conviction of or plea of nolo
contendere to, a felony or any crime involving fraud, embezzlement or any other
act of moral turpitude, (iii) Executive’s gross misconduct, (iv) Executive’s
unauthorized use or disclosure of any proprietary information or trade secrets
of the Company or any other party to whom Executive owes an obligation of
nondisclosure as a result of Executive’s relationship with the Company;
(v) Executive’s willful breach of any obligations under any written agreement or
covenant with the Company; or (vi) Executive’s continued failure to perform his
or her employment duties after Executive has received a written demand of
performance from the Company with specifically sets forth the factual basis for
the Company’s belief that Executive has not substantially performed his or her
duties and has failed to cure such non-performance to the Company’s satisfaction
within 30 days after receiving such notice.
            (b)    Change of Control. For purposes of this Agreement, “Change of
Control” of the Company is defined as: (1) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of
the total voting power represented by the Company’s then outstanding voting
securities; or (ii) the date of the consummation of a merger or consolidation of
the Company with any other corporation that has been approved by the
stockholders of the Company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the company; or (iii) the date of the consummation of the sale or
disposition by the Company of all or substantially all the Company’s assets.
     10.    Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive’s death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, “successor” means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or other, directly or indirectly acquires all or substantially
all of the assets or business of the Company. None of the rights of Executive to
receive any form of compensation payable pursuant to this Agreement may be
assigned or transferred except by will of the laws of

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descent and distribution. Any other attempted assignment, transfer, conveyance
or other disposition of Executive’s right to compensation or other benefits will
be null and void.
     11.    Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successor at the following addresses, or
at such other addresses as the parties may later designate in writing:
  If to the Company:
  Komag, Inc.
  1710 Automation Parkway
  San Jose, CA 95131
  If to Executive:
  [NAME]
  [ADDRESS]
     12.    Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
     13.    Arbitration:
              (a)    General. In consideration of Executive’s services to the
Company and Executive’s receipt of the compensation, pay raises and other
benefits paid to Executive by the Company, at present and in the future, the
Company and Executive agree that any and all controversies, claims, or disputes
between them (including any dispute Executive may have with any employee,
officer, director, shareholder or benefit plan of the Company in their capacity
as such or otherwise) arising out of, relating to, or resulting from Executive’s
service with the Company, including any breach of this Agreement, shall be
subject to binding arbitration as set forth below. [Disputes which the Company
and Executive agree to arbitrate, and thereby agree to waive any right to a
trial by jury, include any statutory claims under state or federal law,
including but not limited to, claims under Title VII of the Civil Rights Act of
1964, the American with Disabilities Act of 1990, the Age Discrimination in
Employment Act of 1967, the Older Workers Benefits Protection Act, the
California Fair Employment and Housing Act, the California Labor Code, claims of
harassment, discrimination or wrongful termination and any other statutory or
common law claims.]5 Executive further understands that this Agreement to
arbitrate also applies to any disputes that the Company may have with Executive,
including but not limited to claims of misappropriation, fraud, conversion,
interference with economic advantage or contract, breach of fiduciary duty,
defamation, misrepresentation, or fraud.
              (b)    Procedure. Executive agrees that any arbitration will be
administered by JAMS and that a neutral arbitrator will be selected in a manner
consistent with its Employment Arbitration Rules and Procedures. Executive
agrees that any arbitration hearing pursuant to this Agreement shall be
conducted in San Jose, California. Executive agrees that the
 

5 Bracketed text is not included in the agreement with an officer based in
Malaysia.    

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arbitrator shall issue a written decision on the merits. Executive also agrees
that the arbitrator shall have the power to award any remedies, including
attorneys’ fees and costs, available under applicable law. Executive understands
the Company will pay for any administrative or hearing fees charged by the
arbitrator or JAMS except that Executive shall pay the first $200.00 of any
filing fees associated with any arbitration Executive initiates. Executive
agrees that the arbitration shall be conducted in accordance with the JAMS
Employment Arbitration Rules and Procedures provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure section 1283.05 or any other discovery required by law in arbitration
proceedings. Also, to the extent that any of the JAMS Employment Arbitration
Rules and Procedures conflict with any arbitration procedures required by
applicable law, the arbitration procedures required by applicable law shall
govern. Executive agrees that nothing in this Section 13 relieves him or her
from any obligation he or she may have to exhaust certain administrative
remedies before arbitrating any claims or disputes under this Section 13.
          (c)    Remedy. Except as provided elsewhere in this Agreement,
arbitration shall be the sole, exclusive and final remedy for any dispute
between Executive and the Company. Accordingly, except as provided elsewhere in
this Agreement, neither Executive nor the Company will be permitted to pursue
court action regarding claims that are subject to arbitration. Notwithstanding,
the arbitrator will not have the authority to disregard or refuse to enforce any
lawful Company policy, and that the arbitrator shall not order or require the
Company to adopt a policy not otherwise required by law which the Company has
not adopted.
          (d)    Availability of Injunctive Relief. The parties agree that they
shall have the right to seek judicial relief in the form of injunctive and/or
other equitable relief under the California Arbitration Act, Code of Civil
Procedure section 1281.8(b), including but not limited to relief for threatened
or actual misappropriation of trade secrets, violation of this Agreement or the
Confidentiality Agreement or any other agreement regarding trade secrets,
confidential information, nonsolicitation or Labor Code §2870. In the event
either party seeks injunctive relief, the prevailing party shall be entitled to
recover reasonable costs and attorneys’ fees.
          (e)    Administrative Relief. Executive understands that this
Agreement does not prohibit Executive from pursuing an administrative claim with
a local, state or federal administrative body [such as the Department of Fair
Employment and Housing, the Equal Employment Opportunity Commission or the
workers’ compensation board. This Agreement, does, however, preclude Executive
from pursuing court action regarding any such claim].6
          (f)    Voluntary Nature of Agreement. Executive acknowledges and
agrees that Executive is executing this Agreement voluntarily and without any
duress or undue influence by the Company or anyone else. Executive further
acknowledges and agrees that Executive has carefully read this Agreement and
that Executive has asked any questions needed for Executive to understand the
terms, consequences and binding effect of this Agreement and fully understand
it, including that Executive is waiving Executive’s right to a jury trial.
Finally, Executive agrees that Executive has been provided an opportunity to
seek the advice of an attorney of Executive’s choice before singing this
Agreement.
 

6 Bracketed text is not included in the agreement with an officer based in
Malaysia.    

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     14.    Existing Agreements. This Agreement supersedes and replaces any
prior severance or retention plans, employment agreements and offer letters that
Executive may have entered into with the Company prior to the Effective Date.
     15.    Integration. This Agreement, Executive’s stock option and restricted
stock agreements with the Company, and the Employee Invention, Authorship,
Proprietary and Confidential Information Agreement by and between Executive and
the Company represent the entire agreement and understanding between the parties
as to the subject matter herein and supersede all prior or contemporaneous
agreements whether written or oral. No waiver, alteration, or modification of
any of the provisions of this Agreement will be binding unless in writing and
signed by duly authorized representatives of the parties hereto.
     16.    Tax Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.
     17.    409A Compliance. Because of the uncertainty of the application of
Section 409A of the Code to any severance benefits to be paid or provided to
Executive under this Agreement, Executive and the Company agree that if Treasury
Regulations or other official guidance interpreting Section 409A of the Code
would subject such benefits to Section 409A and require that such benefits be
provided in a different form or manner to avoid the application of Section 409A,
they shall agree in writing to a different form or manner of payment in order to
avoid such application.7
     18.    Governing Law. This Agreement will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions.)
     19.    Acknowledgment. Executive acknowledges that he or she has had the
opportunity to discuss this matter with and obtain advice from his or her
private attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

        EXECUTIVE                KOMAG, INCORPORATED  

 
  By        
 
[NAME]      
  Dated:  
 

            Dated                                              
                                 
 

7 This paragraph is not included in the agreement with an officer based in
Malaysia.    

9