Exhibit 10.3
CONSULTING AGREEMENT
     This Consulting Agreement (“Agreement”) is entered into as of October 3,
2006 by and between Komag, Incorporated (the “Company”) and Michael A. Russak
(“Consultant”). The Company desires to retain Consultant as an independent
contractor to perform consulting services for the Company, and Consultant is
willing to perform such services, on the terms described below. In consideration
of the mutual promises contained herein, the parties agree as follows:
     1. Services and Compensation. Consultant agrees to perform for the Company
the services described in Exhibit A (the “Services”), and the Company agrees to
pay Consultant the compensation described in Exhibit A for Consultant’s
performance of the Services.
     2. Confidentiality.
          A. Definition. “Confidential Information” means any non-public
information that relates to the actual or anticipated business or research and
development of the Company, technical data, trade secrets or know-how,
including, but not limited to, research, product plans or other information
regarding Company’s products or services and markets therefor, customer lists
and customers (including, but not limited to, customers of the Company on whom
Consultant called or with whom Consultant became acquainted during the term of
this Agreement), software, developments, inventions, processes, formulas,
technology, designs, drawing, engineering, hardware configuration information,
marketing, finances or other business information. Confidential Information does
not include information that (i) is known to Consultant at the time of
disclosure to Consultant by the Company as evidenced by written records of
Consultant, (ii) has become publicly known and made generally available through
no wrongful act of Consultant or (iii) has been rightfully received by
Consultant from a third party who is authorized to make such disclosure.
          B. Nonuse and Nondisclosure/Non-Compete. Consultant will not, during
or subsequent to the term of this Agreement, (i) use the Confidential
Information for any purpose whatsoever other than the performance of the
Services on behalf of the Company or (ii) disclose the Confidential Information
to any third party. Consultant agrees that all Confidential Information will
remain the sole property of the Company. Consultant also agrees to take all
reasonable precautions to prevent any unauthorized disclosure of such
Confidential Information, including but not limited to, by refraining from
accepting and commencing work for an employer or other entity which would
interfere with his obligations to the Company, which would create a conflict of
interest, and/or which involves providing services directly or indirectly for a
disk maker or the disk making division of a company. Without the Company’s prior
written approval, Consultant will not directly or indirectly disclose to anyone
the existence of this Agreement or the fact that Consultant has this arrangement
with the Company, except as otherwise required by law or if this Agreement is
publicly disclosed by the Company.
          C. Former Client Confidential Information. Consultant agrees that
Consultant will not, during the term of this Agreement, improperly use or
disclose any proprietary information or trade secrets of any former or current
employer of Consultant or other person or entity with which Consultant has an
agreement or duty to keep in confidence information acquired by Consultant, if

 

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any. Consultant also agrees that Consultant will not bring onto the Company’s
premises any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
          D. Third Party Confidential Information. Consultant recognizes that
the Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company’s part
to maintain the confidentiality of such information and to use it only for
certain limited purposes. Consultant agrees that, during the term of this
Agreement and thereafter, Consultant owes the Company and such third parties a
duty to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person, firm or corporation or to use
it except as necessary in carrying out the Services for the Company consistent
with the Company’s agreement with such third party.
          E. Return of Materials. Upon the termination of this Agreement, or
upon Company’s earlier request, Consultant will deliver to the Company all of
the Company’s property, including but not limited to all electronically stored
information and passwords to access such property, or Confidential Information
that Consultant may have in Consultant’s possession or control.
     3. Ownership.
          A. Assignment. Consultant agrees that all copyrightable material,
notes, records, drawings, designs, inventions, improvements, developments,
discoveries and trade secrets conceived, discovered, developed or reduced to
practice by Consultant, solely or in collaboration with others, during the term
of this Agreement that relate in any manner to the business of the Company that
Consultant may be directed to undertake, investigate or experiment with or that
Consultant may become associated with in work, investigation or experimentation
in the Company’s line of business in performing the Services under this
Agreement (collectively, “Inventions”), are the sole property of the Company.
Consultant also agrees to assign (or cause to be assigned) and hereby assigns
fully to the Company all Inventions and any copyrights, patents, mask work
rights or other intellectual property rights relating to all Inventions.
          B. Further Assurances. Consultant agrees to assist Company, or its
designee, at the Company’s expense, in every proper way to secure the Company’s
rights in Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating to all Inventions in any and all
countries, including the disclosure to the Company of all pertinent information
and data with respect to all Inventions, the execution of all applications,
specifications, oaths, assignments and all other instruments that the Company
may deem necessary in order to apply for and obtain such rights and in order to
assign and convey to the Company, its successors, assigns and nominees the sole
and exclusive right, title and interest in and to all Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating to all Inventions. Consultant also agrees that Consultant’s obligation
to execute or cause to be executed any such instrument or papers shall continue
after the termination of this Agreement.
          C. Pre-Existing Materials. Subject to Section 3.A, Consultant agrees
that if, in the course of performing the Services, Consultant incorporates into
any Invention developed under this Agreement any pre-existing invention,
improvement, development, concept, discovery or other

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proprietary information owned by Consultant or in which Consultant has an
interest, (i) Consultant will inform Company, in writing before incorporating
such invention, improvement, development, concept, discovery or other
proprietary information into any Invention, and (ii) the Company is hereby
granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license
to make, have made, modify, use and sell such item as part of or in connection
with such Invention. Consultant will not incorporate any invention, improvement,
development, concept, discovery or other proprietary information owned by any
third party into any Invention without Company’s prior written permission.
          D. Attorney-in-Fact. Consultant agrees that, if the Company is unable
because of Consultant’s unavailability, dissolution, mental or physical
incapacity, or for any other reason, to secure Consultant’s signature for the
purpose of applying for or pursuing any application for any United States or
foreign patents or mask work or copyright registrations covering the Inventions
assigned to the Company in Section 3.A, then Consultant hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Consultant’s agent and attorney-in-fact, to act for and on Consultant’s
behalf to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of patents, copyright and
mask work registrations with the same legal force and effect as if executed by
Consultant.
     4. Conflicting Obligations.
          A. Conflicts. Consultant certifies that Consultant has no outstanding
agreement or obligation that is in conflict with any of the provisions of this
Agreement or that would preclude Consultant from complying with the provisions
of this Agreement. Consultant will not enter into any such conflicting agreement
during the term of this Agreement. Consultant’s violation of this Section 4.A
will be considered a material breach under Section 6.B.
          B. Substantially Similar Designs. In view of Consultant’s access to
the Company’s trade secrets and proprietary know-how, Consultant agrees that
Consultant will not, without Company’s prior written approval, design identical
or substantially similar designs as those developed under this Agreement for any
third party during the term of this Agreement and for a period of 12 months
after the termination of this Agreement. Consultant acknowledges that the
obligations in this Section 4 are ancillary to Consultant’s nondisclosure
obligations under Section 2.
     5. Reports. Consultant also agrees that Consultant will, from time to time
during the term of this Agreement or any extension thereof, keep the Company
advised as to Consultant’s progress in performing the Services under this
Agreement. Consultant further agrees that Consultant will, as requested by the
Company, prepare written reports with respect to such progress. The Company and
Consultant agree that the time required to prepare such written reports will be
considered time devoted to the performance of the Services.
     6. Term and Termination.
          A. Term. The term of this Agreement will begin on the date of this
Agreement and will continue until the earlier of (i) December 31, 2006, or
(ii) termination as provided in Section 6.B.

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          B. Termination. Either party may terminate this Agreement upon giving
the other party 14 days’ prior written notice of such termination pursuant to
Section 11.E of this Agreement. The Company may terminate this Agreement
immediately and without prior notice only if Consultant refuses to perform the
reasonably requested Services or is in breach of the Separation Agreement
entered into by and between the Company and Consultant of approximately even
date herewith (the “Separation Agreement”) or any material provision of this
Agreement.
          C. Survival. Upon such termination, all rights and duties of the
Company and Consultant toward each other shall cease except:
               (1) The Company will pay, within 30 days after the effective date
of termination, all amounts owing to Consultant for Services completed and
accepted by the Company prior to the termination date and related expenses, if
any, submitted in accordance with the Company’s policies and in accordance with
the provisions of Section 1 of this Agreement; and
               (2) Section 2 (Confidentiality), Section 3 (Ownership), Section 4
(Conflicting Obligations), Section 7 (Independent Contractor; Benefits),
Section 8 (Indemnification), Section 9 (Nonsolicitation) and Section 10
(Arbitration and Equitable Relief) will survive termination of this Agreement,
as will the Separation Agreement.
          D. Release. Upon termination of this Agreement, Consultant agrees to
execute a release of claims in favor of the Company in a customary form
reasonably acceptable to the Company relating to his services provided during
the terms of this Agreement upon the request of the Company. In the event the
Company requests such a release, the Company hereby agrees to pay Consultant a
lump sum of One Thousand Dollars ($1000.00) as good and valuable consideration
for such release. This payment will be made to Consultant within ten
(10) business days after the termination of this Agreement, subject to delivery
to the Company of such release.
     7. Independent Contractor. It is the express intention of the Company and
Consultant that Consultant perform the Services as an independent contractor to
the Company. Nothing in this Agreement shall in any way be construed to
constitute Consultant as an agent, employee or representative of the Company.
Without limiting the generality of the foregoing, Consultant is not authorized
to bind the Company to any liability or obligation or to represent that
Consultant has any such authority. Consultant agrees to furnish (or reimburse
the Company for) all tools and materials necessary to accomplish this Agreement
and shall incur all expenses associated with performance, except as expressly
provided in Exhibit A. Consultant acknowledges and agrees that Consultant is
obligated to report as income all compensation received by Consultant pursuant
to this Agreement. Consultant agrees to and acknowledges the obligation to pay
all self-employment and other taxes on such income.
     8. Indemnification. Consultant agrees to indemnify and hold harmless the
Company and its directors, officers and employees from and against all taxes,
losses, damages, liabilities, costs and expenses, including attorneys’ fees and
other legal expenses, arising directly or indirectly from or in connection with
(i) any negligent, reckless or intentionally wrongful act of Consultant or
Consultant’s assistants, employees or agents, (ii) a determination by a court or
agency that the Consultant is not an independent contractor, (iii) any material
breach by the Consultant or

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Consultant’s assistants, employees or agents of any of the covenants contained
in this Agreement, (iv) any failure of Consultant to perform the Services in
accordance with all applicable laws, rules and regulations, or (v) any violation
or claimed violation of a third party’s rights resulting in whole or in part
from the Company’s use of the work product of Consultant under this Agreement.
     10. Arbitration and Equitable Relief.
          A. Arbitration. Consultant agrees that any and all controversies,
claims or disputes with anyone (including the Company and any employee, officer,
director, shareholder or benefit plan of the Company, in its capacity as such or
otherwise) arising out of, relating to or resulting from Consultant’s
performance of the Services under this Agreement or the termination of this
Agreement, including any breach of this Agreement, shall be subject to binding
arbitration under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280 through 1294.2, including Section 1283.05 (the “Rules”)
and pursuant to California law. CONSULTANT AGREES TO ARBITRATE, AND THEREBY
AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO, ALL DISPUTES
ARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY
STATUTORY CLAIMS UNDER STATE OR FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION
ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE,
CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY
CLAIMS. Consultant understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with Consultant.
          B. Procedure. Consultant agrees that any arbitration will be
administered by the American Arbitration Association (“AAA”), and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. Consultant agrees that the arbitrator
will have the power to decide any motions brought by any party to the
arbitration, including discovery motions, motions for summary judgment and/or
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. Consultant agrees that the arbitrator will issue a written decision on
the merits. Consultant also agrees that the arbitrator will have the power to
award any remedies, including attorneys’ fees and costs, available under
applicable law. Consultant understands that the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA, except that
Consultant shall pay the first $200.00 of any filing fees associated with any
arbitration Consultant initiates. Consultant agrees that the arbitrator will
administer and conduct any arbitration in a manner consistent with the Rules and
that, to the extent that the AAA’s National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules will take precedence.
          C. Remedy. Except as provided by the Rules, arbitration will be the
sole, exclusive and final remedy for any dispute between the Company and
Consultant. Accordingly, except as provided for by the Rules, neither the
Company nor Consultant will be permitted to pursue court action regarding claims
that are subject to arbitration. Notwithstanding the foregoing, the arbitrator
will not have the authority to disregard or refuse to enforce any lawful Company
policy, and the

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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. In addition to the right under
the Rules to petition the court for provisional relief, Consultant agrees that
any party may also petition the court for injunctive relief where either party
alleges or claims a violation of Sections 2 (Confidentiality), 3 (Ownership) or
4 (Conflicting Obligations) of this Agreement or any other agreement regarding
trade secrets, confidential information, nonsolicitation or Labor Code §2870. In
the event either the Company or Consultant seeks injunctive relief, the
prevailing party will be entitled to recover reasonable costs and attorneys’
fees.
          E. Administrative Relief. Consultant understands that this Agreement
does not prohibit Consultant 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 Consultant from
pursuing court action regarding any such claim.
          F. Voluntary Nature of Agreement. Consultant acknowledges and agrees
that Consultant is executing this Agreement voluntarily and without any duress
or undue influence by the Company or anyone else. Consultant further
acknowledges and agrees that Consultant has carefully read this Agreement and
has asked any questions needed to understand the terms, consequences and binding
effect of this Agreement and fully understand it, including that Consultant is
waiving its right to a jury trial. Finally, Consultant agrees that Consultant
has been provided an opportunity to seek the advice of an attorney of its choice
before signing this Agreement.
     11. Miscellaneous.
          A. Governing Law. This Agreement shall be governed by the laws of
California without regard to California’s conflicts of law rules.
          B. Assignability. Except as otherwise provided in this Agreement,
Consultant may not sell, assign or delegate any rights or obligations under this
Agreement.
          C. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements between the parties regarding
the subject matter of this Agreement, with the exception of the Separation
Agreement and the agreements referenced therein.
          D. 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.
          E. Headings. Headings are used in this Agreement for reference only
and shall not be considered when interpreting this Agreement.
          F. Notices. Any notice or other communication required or permitted by
this Agreement to be given to a party shall be in writing and shall be deemed
given if delivered personally or by

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commercial messenger or courier service, or mailed by U.S. registered or
certified mail (return receipt requested), or sent via facsimile (with receipt
of confirmation of complete transmission) to the party at the party’s address or
facsimile number written below or at such other address or facsimile number as
the party may have previously specified by like notice. If by mail, delivery
shall be deemed effective 3 business days after mailing in accordance with this
Section 11(E).
               (1) If to the Company, to: Bill Hammack, Komag, Incorporated,
1710 Automation Parkway, San Jose, CA 95131-1873.
               (2) If to Consultant, to the address for notice on the signature
page to this Agreement or, if no such address is provided, to the last address
of Consultant provided by Consultant to the Company.
          G. Attorneys’ Fees. In any court action at law or equity that is
brought by one of the parties to this Agreement to enforce or interpret the
provisions of this Agreement, the prevailing party will be entitled to
reasonable attorneys’ fees, in addition to any other relief to which that party
may be entitled.
          H. Severability. If any provision of this Agreement is found to be
illegal or unenforceable, the other provisions shall remain effective and
enforceable to the greatest extent permitted by law.
(Remainder of page intentionally left blank.)

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     IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.

                      CONSULTANT       KOMAG, INCORPORATED    
 
                   
By:
  /S/ Michael A. Russak
 
      By:   /S/ Tim Harris
 
   
 
                    Name: Michael A. Russak       Name: Tim Harris    
 
                    Title: Consultant       Title: Chief Executive Officer    
 
                    Address for Notice:                
 
                                     
 
                                     
 
                                     

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EXHIBIT A
Services and Compensation
     1. Contact. Consultant’s principal Company contact:
     Name: Michael A. Russak
     Title: Consultant
     2. Services. The Services shall include, but shall not be limited to, the
following:
     Perform work, including travel when necessary, for Michael Russak or for
his designees on subject matters of interest to the Company.
     3. Compensation.
          A. The Company will pay Consultant $200.00 per hour, for up to fifteen
(15) hours per month; provided however, that Consultant may provide greater than
fifteen (15) hours of service per month if both parties agree in writing, and
provided further, that Consultant shall not be required to agree to perform in
excess of fifteen (15) hours of service in any given month.
          B. The Company will reimburse Consultant for all reasonable expenses
incurred by Consultant in performing the Services pursuant to this Agreement, if
Consultant receives written consent from an authorized agent of the Company
prior to incurring such expenses and submits receipts for such expenses to the
Company in accordance with Company policy.
          C. Even though he shall be a Service Provider, Consultant shall not
continue to vest in the Stock Option Agreements and the Restricted Stock
Agreements, each as defined in the Separation Agreement during the period in
which he performs consulting services.
     Every two weeks, Consultant shall submit to the Company a written invoice
for Services and expenses, and such statement shall be subject to the approval
of the contact person listed above or other designated agent of the Company.

                      CONSULTANT       KOMAG, INCORPORATED    
 
                   
By:
  /S/ Michael A. Russak
 
      By:   /S/ Tim Harris
 
   
 
                    Name: Michael A. Russak       Name: Tim Harris    
 
                    Title: Consultant       Title: Chief Executive Officer    
 
                    Date: 10/18/06       Date: 10/25/06    

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