**Exhibit 10.3****CONSULTING AGREEMENT**     This Consulting Agreement (“**Agreement**”) is entered into as of October 3, 2006 by and betweenKomag, Incorporated (the “**Company**”) and Michael A. Russak (“**Consultant**”). The Company desires toretain Consultant as an independent contractor to perform consulting services for the Company, andConsultant is willing to perform such services, on the terms described below. In consideration ofthe mutual promises contained herein, the parties agree as follows:     1*. Services and Compensation*. Consultant agrees to perform for the Company the servicesdescribed in Exhibit A (the “**Services**”), and the Company agrees to pay Consultant thecompensation described in Exhibit A for Consultant’s performance of the Services.     2. *Confidentiality*.          A*. Definition*. “**Confidential Information**” means any non-public information that relates tothe 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 otherinformation regarding Company’s products or services and markets therefor, customer lists andcustomers (including, but not limited to, customers of the Company on whom Consultant called orwith whom Consultant became acquainted during the term of this Agreement), software, developments,inventions, processes, formulas, technology, designs, drawing, engineering, hardware configurationinformation, marketing, finances or other business information. Confidential Information does notinclude information that (i) is known to Consultant at the time of disclosure to Consultant by theCompany as evidenced by written records of Consultant, (ii) has become publicly known and madegenerally available through no wrongful act of Consultant or (iii) has been rightfully received byConsultant from a third party who is authorized to make such disclosure.          B. *Nonuse and Nondisclosure/Non-Compete*. Consultant will not, during or subsequent to theterm of this Agreement, (i) use the Confidential Information for any purpose whatsoever other thanthe performance of the Services on behalf of the Company or (ii) disclose the ConfidentialInformation to any third party. Consultant agrees that all Confidential Information will remainthe sole property of the Company. **Consultant also agrees to take all reasonable precautions toprevent 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 wouldinterfere with his obligations to the Company, which would create a conflict of interest, and/orwhich involves providing services directly or indirectly for a disk maker or the disk makingdivision of a company.**Without the Company’s prior written approval, Consultant will not directlyor indirectly disclose to anyone the existence of this Agreement or the fact that Consultant hasthis arrangement with the Company, except as otherwise required by law or if this Agreement ispublicly disclosed by the Company.          C. *Former Client Confidential Information*. Consultant agrees that Consultant will not, duringthe term of this Agreement, improperly use or disclose any proprietary information or trade secretsof any former or current employer of Consultant or other person or entity with which Consultant hasan agreement or duty to keep in confidence information acquired by Consultant, if
 

 
any. Consultant also agrees that Consultant will not bring onto the Company’s premises anyunpublished document or proprietary information belonging to any such employer, person or entityunless consented to in writing by such employer, person or entity.          D. *Third Party Confidential Information*. Consultant recognizes that the Company has receivedand in the future will receive from third parties their confidential or proprietary informationsubject to a duty on the Company’s part to maintain the confidentiality of such information and touse it only for certain limited purposes. Consultant agrees that, during the term of thisAgreement and thereafter, Consultant owes the Company and such third parties a duty to hold allsuch confidential or proprietary information in the strictest confidence and not to disclose it toany person, firm or corporation or to use it except as necessary in carrying out the Services forthe 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 earlierrequest, Consultant will deliver to the Company all of the Company’s property, including but notlimited to all electronically stored information and passwords to access such property, orConfidential 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 thatConsultant may be directed to undertake, investigate or experiment with or that Consultant maybecome associated with in work, investigation or experimentation in the Company’s line of businessin performing the Services under this Agreement (collectively, “**Inventions**”), are the sole propertyof the Company. Consultant also agrees to assign (or cause to be assigned) and hereby assigns fullyto the Company all Inventions and any copyrights, patents, mask work rights or other intellectualproperty rights relating to all Inventions.          B. *Further Assurances*. Consultant agrees to assist Company, or its designee, at the Company’sexpense, 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 anyand all countries, including the disclosure to the Company of all pertinent information and datawith 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 andobtain such rights and in order to assign and convey to the Company, its successors, assigns andnominees the sole and exclusive right, title and interest in and to all Inventions, and anycopyrights, patents, mask work rights or other intellectual property rights relating to allInventions. Consultant also agrees that Consultant’s obligation to execute or cause to be executedany such instrument or papers shall continue after the termination of this Agreement.          C. *Pre-Existing Material*s. Subject to **Section 3.A**, Consultant agrees that if, in the courseof performing the Services, Consultant incorporates into any Invention developed under thisAgreement 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) theCompany is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide licenseto 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 orother proprietary information owned by any third party into any Invention without Company’s priorwritten permission.          D. *Attorney-in-Fact*. Consultant agrees that, if the Company is unable because of Consultant’sunavailability, dissolution, mental or physical incapacity, or for any other reason, to secureConsultant’s signature for the purpose of applying for or pursuing any application for any UnitedStates or foreign patents or mask work or copyright registrations covering the Inventions assignedto the Company in **Section 3.A**, then Consultant hereby irrevocably designates and appoints theCompany and its duly authorized officers and agents as Consultant’s agent and attorney-in-fact, toact for and on Consultant’s behalf to execute and file any such applications and to do all otherlawfully permitted acts to further the prosecution and issuance of patents, copyright and mask workregistrations 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 obligationthat is in conflict with any of the provisions of this Agreement or that would preclude Consultantfrom complying with the provisions of this Agreement. Consultant will not enter into any suchconflicting agreement during the term of this Agreement. Consultant’s violation of this Section4.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 tradesecrets and proprietary know-how, Consultant agrees that Consultant will not, without Company’sprior written approval, design identical or substantially similar designs as those developed underthis Agreement for any third party during the term of this Agreement and for a period of 12 monthsafter 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 ofthis Agreement or any extension thereof, keep the Company advised as to Consultant’s progress inperforming the Services under this Agreement. Consultant further agrees that Consultant will, asrequested by the Company, prepare written reports with respect to such progress. The Company andConsultant agree that the time required to prepare such written reports will be considered timedevoted 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 willcontinue until the earlier of (i) December 31, 2006, or (ii) termination as provided in **Section6.B**.
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          B. *Termination*. Either party may terminate this Agreement upon giving the other party 14days’ prior written notice of such termination pursuant to **Section 11.E**of this Agreement. TheCompany may terminate this Agreement immediately and without prior notice only if Consultantrefuses to perform the reasonably requested Services or is in breach of the Separation Agreemententered 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 Consultanttoward each other shall cease except:               (1) The Company will pay, within 30 days after the effective date of termination, all amountsowing to Consultant for Services completed and accepted by the Company prior to the terminationdate and related expenses, if any, submitted in accordance with the Company’s policies and inaccordance 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 ofthis Agreement, as will the Separation Agreement.          D. *Release*. Upon termination of this Agreement, Consultant agrees to execute a release ofclaims in favor of the Company in a customary form reasonably acceptable to the Company relating tohis services provided during the terms of this Agreement upon the request of the Company. In theevent the Company requests such a release, the Company hereby agrees to pay Consultant a lump sumof One Thousand Dollars ($1000.00) as good and valuable consideration for such release. Thispayment will be made to Consultant within ten (10) business days after the termination of thisAgreement, subject to delivery to the Company of such release.     7. *Independent Contractor*. It is the express intention of the Company and Consultant thatConsultant perform the Services as an independent contractor to the Company. Nothing in thisAgreement shall in any way be construed to constitute Consultant as an agent, employee orrepresentative of the Company. Without limiting the generality of the foregoing, Consultant is notauthorized to bind the Company to any liability or obligation or to represent that Consultant hasany such authority. Consultant agrees to furnish (or reimburse the Company for) all tools andmaterials necessary to accomplish this Agreement and shall incur all expenses associated withperformance, except as expressly provided in Exhibit A. Consultant acknowledges and agreesthat Consultant is obligated to report as income all compensation received by Consultant pursuantto this Agreement. Consultant agrees to and acknowledges the obligation to pay all self-employmentand other taxes on such income.     8. *Indemnification*. Consultant agrees to indemnify and hold harmless the Company and itsdirectors, officers and employees from and against all taxes, losses, damages, liabilities, costsand expenses, including attorneys’ fees and other legal expenses, arising directly or indirectlyfrom or in connection with (i) any negligent, reckless or intentionally wrongful act of Consultantor Consultant’s assistants, employees or agents, (ii) a determination by a court or agency that theConsultant 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 thisAgreement, (iv) any failure of Consultant to perform the Services in accordance with all applicablelaws, rules and regulations, or (v) any violation or claimed violation of a third party’s rightsresulting in whole or in part from the Company’s use of the work product of Consultant under thisAgreement.     10. *Arbitration and Equitable Relief*.          A. *Arbitration*. Consultant agrees that any and all controversies, claims or disputes withanyone (including the Company and any employee, officer, director, shareholder or benefit plan ofthe Company, in its capacity as such or otherwise) arising out of, relating to or resulting fromConsultant’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 theArbitration 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 TOARBITRATE, AND THEREBY AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO, ALL DISPUTESARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY STATUTORY CLAIMS UNDERSTATE OR FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITHDISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERSBENEFIT PROTECTION ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE,CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY CLAIMS. Consultantunderstands that this Agreement to arbitrate also applies to any disputes that the Company may havewith Consultant.          B. *Procedure*. Consultant agrees that any arbitration will be administered by the AmericanArbitration Association (“**AAA**”), and that a neutral arbitrator will be selected in a mannerconsistent with its National Rules for the Resolution of Employment Disputes. Consultant agreesthat the arbitrator will have the power to decide any motions brought by any party to thearbitration, including discovery motions, motions for summary judgment and/or adjudication andmotions to dismiss and demurrers, prior to any arbitration hearing. Consultant agrees that thearbitrator will issue a written decision on the merits. Consultant also agrees that the arbitratorwill have the power to award any remedies, including attorneys’ fees and costs, available underapplicable law. Consultant understands that the Company will pay for any administrative or hearingfees charged by the arbitrator or AAA, except that Consultant shall pay the first $200.00 of anyfiling fees associated with any arbitration Consultant initiates. Consultant agrees that thearbitrator will administer and conduct any arbitration in a manner consistent with the Rules andthat, to the extent that the AAA’s National Rules for the Resolution of Employment Disputesconflict with the Rules, the Rules will take precedence.          C. *Remedy*. Except as provided by the Rules, arbitration will be the sole, exclusive and finalremedy for any dispute between the Company and Consultant. Accordingly, except as provided for bythe Rules, neither the Company nor Consultant will be permitted to pursue court action regardingclaims that are subject to arbitration. Notwithstanding the foregoing, the arbitrator will nothave 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 bylaw which the Company has not adopted.          D. *Availability of Injunctive Relief*. In addition to the right under the Rules to petitionthe court for provisional relief, Consultant agrees that any party may also petition the court forinjunctive 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 regardingtrade secrets, confidential information, nonsolicitation or Labor Code §2870. In the event eitherthe Company or Consultant seeks injunctive relief, the prevailing party will be entitled to recoverreasonable costs and attorneys’ fees.          E. *Administrative Relief*. Consultant understands that this Agreement does not prohibitConsultant from pursuing an administrative claim with a local, state or federal administrative bodysuch as the Department of Fair Employment and Housing, the Equal Employment Opportunity Commissionor the workers’ compensation board. This Agreement does, however, preclude Consultant frompursuing court action regarding any such claim.          F. *Voluntary Nature of Agreement*. Consultant acknowledges and agrees that Consultant isexecuting this Agreement voluntarily and without any duress or undue influence by the Company oranyone else. Consultant further acknowledges and agrees that Consultant has carefully read thisAgreement and has asked any questions needed to understand the terms, consequences and bindingeffect of this Agreement and fully understand it, including that Consultant is waiving its right toa jury trial. Finally, Consultant agrees that Consultant has been provided an opportunity to seekthe 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 regardto 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 withrespect to the subject matter of this Agreement and supersedes all prior written and oralagreements between the parties regarding the subject matter of this Agreement, with the exceptionof the Separation Agreement and the agreements referenced therein.          D. *Modification.*Any modification or amendment of this Agreement, or additional obligationassumed by either party in connection with this Agreement, shall be effective only if placed inwriting 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 beconsidered when interpreting this Agreement.          F. *Notices*. Any notice or other communication required or permitted by this Agreement to begiven 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 completetransmission) to the party at the party’s address or facsimile number written below or at suchother address or facsimile number as the party may have previously specified by like notice. If bymail, delivery shall be deemed effective 3 business days after mailing in accordance with thisSection 11(E).               (1) If to the Company, to: Bill Hammack, Komag, Incorporated, 1710 Automation Parkway, SanJose, CA 95131-1873.               (2) If to Consultant, to the address for notice on the signature pageto this Agreement or, if no such address is provided, to the last address of Consultantprovided by Consultant to the Company.          G. *Attorneys’ Fees*. In any court action at law or equity that is brought by one of theparties to this Agreement to enforce or interpret the provisions of this Agreement, the prevailingparty will be entitled to reasonable attorneys’ fees, in addition to any other relief to which thatparty 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 bylaw.*(Remainder of page intentionally left blank.)*
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     IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement as of thedate 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 AServices 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 onsubject 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 monthif both parties agree in writing, and provided further, that Consultant shall not be required toagree 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 inperforming the Services pursuant to this Agreement, if Consultant receives written consent from anauthorized agent of the Company prior to incurring such expenses and submits receipts for suchexpenses to the Company in accordance with Company policy.          C. Even though he shall be a Service Provider, Consultant shall not continue to vest in theStock Option Agreements and the Restricted Stock Agreements, each as defined in the SeparationAgreement during the period in which he performs consulting services.     Every two weeks, Consultant shall submit to the Company a written invoice for Services andexpenses, and such statement shall be subject to the approval of the contact person listed above orother 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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