Document:

exv10w1

 

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     This Agreement is entered into as of August 1, 2006 (the “Effective Date”) by and between the
Company and Timothy Harris (“Executive”).

     1. Duties and Scope of Employment.

          (a) Position and Duties. As of the Effective Date, Executive will serve as Chief
Executive Officer Elect until October 1, 2006, at which time Executive will assume the position of
Chief Executive Officer of the Company, reporting to the Company’s Board of Directors (the
“Board”). Executive will render such business and professional services in the performance of his
duties, consistent with Executive’s position within the Company, as shall reasonably be assigned to
him by the Board. Executive’s duties and responsibilities may be altered, modified and changed as
the Board deems appropriate.

          (b) Obligations. During the Term, Executive will perform his duties faithfully
and to the best of his ability and will devote his 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.

          (c) Conflicting Employment. Executive agrees that, while employed by the Company, he
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) months 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 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 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 services, a base salary at the annualized rate of $525,000.00 (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 executive of the Company, including, without limitation, the
Company’s group medical, dental, vision, disability, life insurance, vacation and flexible-spending
account plans and programs. 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 twenty-four (24)
months of Base Salary. Such severance shall be paid over a period of twenty-four (24)
months 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.

                (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/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.

                (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.

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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 is entitled in the event of the termination of his 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.

           (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.

     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 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 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

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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.

          (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
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.

          (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

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Section. The Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section.

          (f) Notwithstanding the foregoing, if Executive receives the Severance Payment pursuant to
this Section, he shall not be entitled to receive an additional Severance Payment pursuant to
Section 6 hereof.

          (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 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 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 Act of 19334, 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

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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 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:

Timothy Harris

     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. 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.

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          (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 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.

          (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.

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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.

     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 has had the opportunity to discuss
this matter with and obtain advice from his 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	 	 
	 
	 	 	 	 	 	 
	/S/ Timothy Harris
 

	 	 
	 	By /S/ Richard A. Kashnow
 

	 	 
	Timothy Harris
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated August 16, 2006

	 	 	 	Dated: August 1, 2006	 	 

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Exhibit 10.2

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (this “Agreement”) is made by and between Michael A.
Russak (“Executive”) and Komag, Incorporated (the “Company”) (together referred to as the
“Parties”).

RECITALS

     WHEREAS, Executive is employed by the Company;

     WHEREAS, the Company and Executive entered into a an HMT Technology Corporation Employee
Innovation, Trade Secret and Confidential Information Agreement (the “Confidentiality Agreement”);

     WHEREAS, the Company and Executive entered into an Executive Employment Agreement, dated
August 2, 2005;

     WHEREAS, the Company and Executive entered into an Indemnification Agreement, dated June 30,
2002 (the “Indemnification Agreement”);

     WHEREAS, the Company and Executive entered into Stock Option Agreements dated March 17, 2003,
July 25, 2003 and March 15, 2004, subject to the terms and conditions of the Company’s Amended and
Restated 2002 Qualified Stock Plan (the “Stock Plan”) and the respective Stock Option Agreements
(the “Option Agreements”);

     WHEREAS, the Company and Employee entered into Restricted Stock Purchase Agreements, dated
October 7, 2002, February 16, 2005 and February 15, 2006, pursuant to which Executive purchased
shares of the Company’s common stock, subject to the terms and conditions of the Stock Plan and the
Restricted Stock Purchase Agreements (the “Restricted Stock Agreements,” and together with the
Option Agreements, the “Stock Agreements”), and further subject to a right of repurchase in favor
of the Company as set forth in the respective Restricted Stock Agreements (the “Repurchase
Option”);

     WHEREAS, Executive’s employment with the Company will terminate on October 3, 2006 (the
“Termination Date”); and

     WHEREAS, Executive and the Company mutually desire that Executive continue to provide his
services as an independent consultant following the Termination Date and concurrent with the
execution of this Agreement, Executive and the Company are entering into a Consulting Agreement
(the “Consulting Agreement”); and

     WHEREAS, the Parties, and each of them, wish to resolve any and all disputes, claims,
complaints, grievances, charges, actions, petitions and demands that the Executive may have against
the Company as defined herein, arising or in any way related to Executive’s employment with, or
separation from, the Company.

 

 

     NOW THEREFORE, in consideration of the promises made herein, the Parties hereby agree as
follows:

COVENANTS

     1. Consideration.

          (a) Cash.

               (i) The Company agrees to pay Executive the aggregated sum of Four Hundred One Thousand Seven
Hundred Dollars ($401,700.00), less applicable withholdings, on the following payment schedule:

	 	 	 	 	 
	Payment Date	 	Amount
	January 1, 2007
	 	$	100,425	 
	January 31, 2007
	 	$	33,475	 
	February 28, 2007
	 	$	33,475	 
	March 15, 2007
	 	$	234,325	 

     The period from the Termination Date through March 15, 2007 shall be referred to herein as the
“Payment Period.” Following the Termination Date, Executive will not be entitled to accrual of any
employee benefits, including, but not limited to, vacation benefits or bonuses.

               (ii) The Company agrees to pay Executive a single lump sum cash payment of $70,650 in full
satisfaction of all obligations and amounts owed by the Company to Executive under the Company’s
Target Incentive Plan (“the “TIP”), with such payment being made on or promptly following the date
the Company makes payments for fiscal year 2006 under the TIP to its executive officers and no
earlier than January 1, 2007 and no later than March 15, 2007 (the “TIP Payment Date”); provided
however, that the Company shall only be obligated to make the payments to Executive contemplated by
this Section 1(b)(ii) to the extent Executive is in compliance in all respects (as determined by
the Company in its sole judgment) with the terms and conditions of this Agreement on the TIP
Payment Date, including but not limited to Executive’s obligations under Sections 9, 10, 11 and 12.

               (b) Stock. The Parties agree that for purposes of determining the number of shares of
the Company’s common stock which Executive is entitled to purchase from the Company pursuant to the
exercise of outstanding options, the Executive will be considered to have vested up to the
Termination Date and will be granted twelve (12) months of additional accelerated vesting.
Executive acknowledges that as of the Termination Date, after giving effect to the aforementioned
acceleration of twelve (12) months of vesting, he will be vested in 10,888 options and no more.
The post-termination exercise period and other terms and conditions of Executive’s stock options
will continue to be governed by the terms of those stock options; provided, however, that the
Parties agree that Executive’s stock options shall cease vesting in their entirety and shall
terminate to the extent unvested as of the Termination Date and after

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giving effect to the twelve-month vesting acceleration specified in the previous sentence,
notwithstanding Executive’s continued performance of services to the Company pursuant to the
Consulting Agreement. The Parties further agree that for purposes of determining the number of
shares of the Company’s common stock which have been released from the Repurchase Option under the
Restricted Stock Agreements (the “Released Shares”) the Repurchase Option shall cease lapsing as of
the Termination Date and will lapse as to an additional twelve (12) months worth of shares. After
giving effect to the aforementioned lapsing of the Repurchase Right, Employee shall hold 10,001
shares under the Restricted Stock Agreements which are not subject to the Repurchase Option and the
Repurchase Option shall continue to exist with respect to the remaining 15,332 shares that were
purchased by Executive under the Restricted Stock Agreements. All shares, including those no
longer subject to the Repurchase Option, shall continue to be subject to all other terms of the
Restricted Stock Agreements; provided, however, that the Parties agree that Executive’s Restricted
Stock Agreements shall cease vesting in their entirety and shall terminate to the extent unvested
as of the Termination Date and after giving effect to the twelve-month vesting acceleration
specified above, notwithstanding Executive’s continued performance of services to the Company
pursuant to the Consulting Agreement.

               (c) Benefits. Executive’s health insurance benefits will cease at the end of October
2006, subject to Executive’s right to continue his health insurance under COBRA. Should Executive
so elect, the Company shall reimburse Executive for a maximum of twelve (12) months of COBRA
premium payments to provide coverage for Executive, his spouse and any eligible dependents;
provided that the following apply: (1) Executive timely elects to pay for COBRA coverage and timely
submits documentation to the Company substantiating his payments for COBRA coverage; and (2) the
Company’s obligation to reimburse Executive for COBRA payments will cease, and the Company will
have no further obligations with respect to the payments for continuation coverage to Executive, as
of the earlier of (i) Executive becoming eligible for comparable coverage (for example, through
obtaining alternative employment) or (ii) the cessation of Executive’s COBRA eligibility.
Executive’s participation in all other benefits and incidents of employment ceased on the
Termination Date. Executive ceased accruing employee benefits, including, but not limited to,
vacation time and paid time off, as of the Termination Date.

     2. Confidential Information. Executive shall continue to maintain the confidentiality
of all confidential and proprietary information of the Company and shall comply with the terms and
conditions of the Confidentiality Agreement. Executive shall return all of the Company’s property
and confidential and proprietary information in his possession to the Company on or prior to the
Effective Date of this Agreement. The Company’s obligation to make the severance payments, provide
benefits and vest options under this Agreement is expressly conditioned on Executive’s ongoing
compliance with this paragraph 2. In the event Executive materially breaches the terms of this
paragraph 2, in addition to any other damages to which the Company may be entitled, the Company
shall be entitled to terminate its obligations hereunder and to recover from Executive any payments
already made to Executive hereunder. Executive will not, during or subsequent to the term of this
Agreement, (i) use the Company’s confidential and proprietary information (“Confidential
Information”) for any purpose whatsoever, or (ii) disclose the Confidential Information to any
third party, unless as to either case, the Company authorizes such disclosure in writing or the
information becomes publicly available through no fault of Executive. Executive agrees that all
Confidential Information will remain the sole property of

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the Company. Executive also agrees to take all reasonable precautions to prevent any
unauthorized disclosure of such Confidential Information.

     3. Payment of Salary. Executive acknowledges and represents that the Company has paid
all salary, wages, bonuses, accrued vacation (after giving effect to the Company’s payout to
Executive of his accrued but unused vacation balance), commissions and any and all other benefits
due to Executive once the above noted payments and benefits are received.

     4. Release of Claims. Executive agrees that the foregoing consideration represents
settlement in full of all outstanding obligations owed to Executive by the Company and its current
and former officers, directors, employees, agents, investors, attorneys, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations and
assigns (the “Releasees”). Executive, on his own behalf, and on behalf of his respective heirs,
family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and
agrees not to sue concerning, or in any manner to institute, prosecute or pursue, any claim,
complaint, charge, duty, obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that Executive may possess against any of the
Releasees arising from any omissions, acts or facts that have occurred up until and including the
Effective Date of this Agreement including, without limitation,

          a. any and all claims relating to or arising from Executive’s employment relationship with the
Company and the termination of that relationship;

          b. any and all claims relating to, or arising from, Executive’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;

          c. any and all claims for wrongful discharge of employment; termination in violation of public
policy; discrimination; harassment; retaliation; breach of contract, both express and implied;
breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel;
negligent or intentional infliction of emotional distress; fraud; negligent or intentional
misrepresentation; negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence; personal injury;
assault; battery; invasion of privacy; false imprisonment; conversion; workers’ compensation and
disability benefits;

          d. any and all claims for violation of any federal, state or municipal statute, including, but
not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit Reporting
Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act;
the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the California
Family Rights Act; the California Labor Code, except as prohibited by law; the California Workers’
Compensation Act; and the California Fair Employment and Housing Act;

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          e. any and all claims for violation of the federal, or any state, constitution;

          f. any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination;

          g. any claim for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by Employee as a result of
this Agreement; and

          h. any and all claims for attorneys’ fees and costs.

     Employee agrees that the release set forth in this section shall be and remain in effect in
all respects as a complete general release as to the matters released. This release does not
extend to any obligations incurred under this Agreement. Notwithstanding anything to the contrary
set forth herein, the Company’s obligations under the Indemnification Agreement (or similar
obligations under the Company’s certificate of incorporation or bylaws or by statute) shall survive
the Effective Date to the extent such obligations related to actions or circumstances arising prior
to the Termination Date.

     5. Acknowledgement of Waiver of Claims Under ADEA. Executive acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. Executive and the Company
agree that this waiver and release does not apply to any rights or claims that may arise under ADEA
after the Effective Date of this Agreement. Executive acknowledges that the consideration given
for this waiver and release Agreement is in addition to anything of value to which Executive was
already entitled. Executive further acknowledges that he has been advised by this writing that

          (a) he should consult with an attorney prior to executing this Agreement;

          (b) he has up to twenty-one (21) days within which to consider this Agreement;

          (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement;

          (d) this Agreement shall not be effective until the revocation period has expired; and;

          (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor does it impose any
condition precedent, penalties or costs for doing so, unless specifically authorized by federal
law.

     6. Civil Code Section 1542. Executive represents that he is not aware of any claim by
him other than the claims that are released by this Agreement. Executive acknowledges that he had
the opportunity to seek the advice of legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.

     Executive, being aware of said code section, agrees to expressly waive any rights he may have
thereunder, as well as under any other statute or common law principles of similar effect.

     7. No Pending or Future Lawsuits. Executive represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or entity, against the
Company or any other person or entity referred to herein. Executive also represents that he does
not intend to bring any claims as to the matters herein released on his own behalf or on behalf of
any other person or entity against the Company or any other person or entity referred to herein.

     8. No Cooperation. Executive agrees that, while he is receiving severance benefits
hereunder, he will not act in any manner that might damage the business of the Company. Executive
agrees that he will not counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third
party against the Company and/or any officer, director, employee, agent, representative,
shareholder or attorney of the Company, unless under a subpoena or other court order to do so.
Executive further agrees both to immediately notify the Company upon receipt of any court order,
subpoena, or any legal discovery device that seeks or might require the disclosure or production of
the existence or terms of this Agreement, and to furnish, within three (3) business days of its
receipt, a copy of such subpoena or legal discovery device to the Company.

     9. Non-Defamation. Executive agrees to refrain from any defamation, libel or slander
of the Releasees, and any tortious interference with the contracts, relationships and prospective
economic advantage of the Releasees. Executive agrees that he shall direct all inquiries for a
formal reference from potential employers to Bill Hammack (or his successor). Upon inquiry, Bill
Hammack (or his successor) shall only state the following: Executive’s last position and dates of
employment and that Executive retired from the Company. The Company’s current officers and
directors agree to refrain from any defamation, libel or slander of Executive, and any tortious
interference with the contracts, relationships and prospective economic advantage of Executive for
so long as they remain employed by the Company.

     10. Non-Compete & Non-Solicit.

          (a) Non-Compete. Executive acknowledges that the nature of the Company’s business is
such that if Executive were to become employed by, or substantially involved in, the business of a
competitor of the Company during the Payment Period, it would be very difficult for Executive not
to rely on or use the Company’s trade secrets and confidential information. Thus, to avoid the
inevitable disclosure of the Company’s trade secrets and confidential information, Executive agrees
and acknowledges that Executive’s right to receive the severance benefits set forth in Section 1
(to the extent Executive is otherwise entitled to such payments) shall be conditioned upon
Executive not directly or indirectly engaging in (whether as an

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employee, consultant, agent, proprietor, principal, partner, stockholder, corporate officer,
director or otherwise), nor having any ownership interested in or participating in the financing,
operation, management or control of, any person, firm, corporation or business in Competition (as
defined herein) with Company. Notwithstanding the foregoing, Executive may, without violating this
Section 10, own, as a passive investment, shares of capital stock of a publicly-held corporation
that engages in Competition where the number of shares of such corporation’s capital stock that are
owned by Executive represent less than three percent of the total number of shares of such
corporation’s capital stock outstanding.

     For the purposes of this Agreement, “Competition” shall mean (i) any company, partnership,
limited liability company or other entity any portion of whose business relates to the design,
manufacture, development or sales of thin-film media or (ii) any entity who is a significant client
of the Company.

          (b) Non-Solicit. Executive agrees that for a period of twelve (12) months immediately
following the Termination Date, Executive shall not either directly or indirectly, without the
prior written consent of the Company, solicit any of the Company’s employees to leave their
employment, either for himself or any other person or entity. Executive also acknowledges and
agrees that he has received the Company’s trade secrets in relation to his work with the following
customers of the Company: Western Digital, Seagate, Hitachi, Samsung and Toshiba (the “Customers”).
Thus, Executive agrees that for a period of twelve (12) months immediately following the
Termination Date, Executive shall not either directly or indirectly, without the prior written
consent of the Company, solicit any of the Customers to terminate any of their respective customer
relationships with the Company.

     11. No Admission of Liability. The Parties understand and acknowledge that this
Agreement constitutes a compromise and settlement of actual or potential disputed claims. No
action taken by the Parties hereto, or either of them, either previously or in connection with this
Agreement shall be deemed or construed to be: (i) an admission of the truth or falsity of any
claims heretofore made or (ii) an acknowledgment or admission by either party of any fault or
liability whatsoever to the other party or to any third party.

     12. No Knowledge of Wrongdoing. Executive represents that he has no knowledge of any
wrongdoing involving improper or false claims against a federal or state governmental agency, or
any other wrongdoing that involves Executive or other present or former Company employees.

     13. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees
and other fees incurred in connection with this Agreement.

     14. Arbitration. The Parties agree that any and all disputes arising out of, or
relating to, the terms of this Agreement, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration in the same manner as is specified in the
Consulting Agreement.

     15. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Executive represents and warrants that

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he has the capacity to act on his own behalf and on behalf of all who might claim through him
to bind them to the terms and conditions of this Agreement. Each party warrants and represents
that there are no liens or claims of lien or assignments in law or equity or otherwise of or
against any of the claims or causes of action released herein.

     16. No Representations. Each party represents that it has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this Agreement.

     17. 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 shall continue
in full force and effect without said provision so long as the remaining provisions remain
intelligible and continue to reflect the original intent of the Parties.

     18. Entire Agreement. This Agreement, the Confidentiality Agreement, the Consulting
Agreement, the Indemnification Agreement, and the stock agreements referenced above represent the
entire agreement and understanding between the Company and Executive concerning the subject matter
of this Agreement and Executive’s relationship with the Company, and supersede and replace any and
all prior agreements and understandings between the Parties concerning the subject matter of this
Agreement and Executive’s relationship with the Company, with the exception of the Confidentiality
Agreement, the Consulting Agreement, the Indemnification Agreement and the stock agreements to the
extent such documents are not specifically modified by the terms of this Agreement.

     19. No Waiver. The failure of any party to insist upon the performance of any of the
terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms
and conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms
or conditions.

     20. Modification. Any modification or amendment of this Agreement, or additional
obligation assumed by either party in connection with this Agreement, shall be effective only if
placed in writing and signed by both Parties or by authorized representatives of each party.

     21. Governing Law. This Agreement shall be deemed to have been executed and delivered
within the State of California, and it shall be construed, interpreted, governed, and enforced in
accordance with the laws of the State of California, without regard to conflict of law principles.
To the extent that either party seeks injunctive relief in any court having jurisdiction for any
claim relating to the alleged misuse or misappropriation of trade secrets or confidential or
proprietary information, each party hereby consents to personal and exclusive jurisdiction and
venue in the state and federal courts of the State of California.

     22. Attorneys’ Fees. In the event that either Party brings an action to enforce or
effect its rights under this Agreement, the prevailing party shall be entitled to recover its costs
and expenses, including the costs of mediation, arbitration (except those arbitration costs which
the Company is obligated to pay, litigation, court fees, plus reasonable attorneys’ fees, incurred
in connection with such an action.

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     23. Effective Date. This Agreement is effective after it has been signed by both
parties and after seven (7) days have passed since Executive has signed the Agreement (the
“Effective Date”).

     24. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall constitute an effective,
binding agreement on the part of each of the undersigned.

     25. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties hereto, with the full
intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such
counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it
contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

(remainder of this page intentionally left blank)

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     IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set
forth below.

	 	 	 	 	 	 	 
	 

	 	KOMAG, INCORPORATED	 	 
	 
	 	 	 	 
	Dated: 10/25/06

	 	By	 	 /S/ Tim Harris
 

	 	 
	 

	 	 	 	Tim Harris	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 
	 

	 	MICHAEL A. RUSSAK, an individual	 	 
	 
	 	 	 	 
	Dated: 10/18/06

	 	/S/ Michael A. Russak
 

	 	 
	 

	 	Michael A. Russak	 	 

(signature page to Separation Agreement and Release)

-10-

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