exv10w3



 





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




 









 







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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