EXHIBIT 10.31
NETGEAR, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of NOVEMBER 14, 2003, (the "EFFECTIVE
DATE") by and between NETGEAR, INC. (the "COMPANY"), and XXXXXXXXXXX XXXXXXXX
("EXECUTIVE").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date,
Executive will serve as VICE PRESIDENT OF FINANCE of the Company. 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 Company's Chief Financial Officer and/or Board of
Directors (the "BOARD"). The period of Executive's employment under this
Agreement is referred to herein as the "EMPLOYMENT TERM."
(b) Obligations. During the Employment 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 Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board.
2. At-Will Employment. 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 or 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
modification, amendment, or extension, by implication or otherwise, of his
employment with the Company.
3. Compensation.
(a) Base Salary. During the Employment Term, the Company
will pay Executive as compensation for his services a base salary at the
annualized rate of ONE HUNDRED AND NINETY THOUSAND DOLLARS ($190,000.00) (the
"BASE SALARY"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to the usual, required
withholding. Executive's salary will be reviewed by the Company from time to
time (but no more frequently than annually), and may be subject to adjustment
based upon various factors including, but not limited to, Executive's
performance and the Company's profitability. Any adjustment to Executive's
salary shall be in the sole discretion of the Company.
(b) MBO Bonus. Executive will be eligible to receive an
annual target bonus of up to Seventy Six Thousand Dollars ($76,000.00) per year
based upon the Company's achievement of various financial and/or other goals
established by the Board. All MBO bonuses will be subject to applicable
withholding and taxes.
(c) Stock Option. Following Executive's written
acceptance of these terms and subject to the approval of the Board, Executive
will be granted an option, subject to the Board's approval, to purchase 80,000
(Eighty Thousand) of the fully diluted post February 2002 private placement
outstanding shares (post split) of the Company's common stock under the
Company's stock option plan at an exercise price as approved by the Board (the
"OPTION"). The vesting of the Option will be as follows: the option will vest
over a four year period with 25% of the shares vesting on the first anniversary
of the date you commence employment with the Company, and 1/48th of the shares
vesting monthly for three years thereafter. The Option will be subject to the
terms, definitions and provisions of the Company's 2003 Stock Plan (the "OPTION
PLAN") and the stock option agreement by and between Executive and the Company
(the "OPTION AGREEMENT"), both of which documents are incorporated herein by
reference.
4. Employee Benefits. During the Employment Term, Executive will
be entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, and disability plans. The Company reserves the right to cancel or change
the benefit plans and programs it offers to its employees at any time.
5. Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If Executive's employment
with the Company terminates other than voluntarily or for "Cause" (as defined in
Paragraph 9 of this Agreement), and Executive signs and does not revoke a
standard release of claims with the Company, then, Executive shall be entitled
to receive severance payments at Executive's final base salary rate, less
applicable withholding, until twenty-six (26) weeks after the date of
termination without Cause. Severance payments will be made in accordance with
the Company's normal payroll procedures. During the period in which Executive is
receiving severance payments, Company will reimburse Executive and his family
for COBRA premiums, assuming Executive remains eligible during the entire
Severance Period. In addition, if Executive's employment terminates other than
voluntarily or for "Cause" (as defined herein), Executive will be entitled to
continue to have stock options vest during the six month period immediately
following the date of such termination.
7. Voluntary Termination; Termination for Cause. If Executive's
employment with the Company terminates voluntarily by Executive or for Cause by
the Company, then all vesting of the Option and all other options granted to
Executive will terminate immediately and all payments of compensation by the
Company to Executive hereunder and all obligations with respect thereto
(including, without limitations, with respect to base salary, bonuses, employee
benefits, relocation and temporary living reimbursements and other expense
reimbursements) will terminate immediately (except as to amounts already
earned).
8. Change of Control/Good Reason.
(a) If within one year following any Change of Control
(as defined below) Executive's employment is terminated without Cause or
voluntarily by Executive for Good Reason, Executive will receive two years
acceleration of any unvested portion of the Option.
(b) For purposes of this Agreement, a "CHANGE OF CONTROL"
of the Company shall be deemed to have occurred if at any time after the
Effective Date:
(i) any "person" (as such term is used to
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), other than a trustee or other fiduciary holding securities of
the Company under an employee benefit plan of the Company and other than Nortel
Networks Corporation and its affiliates, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of (A) the
outstanding shares of common stock of the company or (B) the combined voting
power of the Company's then-outstanding securities entitled to vote generally in
the election of directors; or
(ii) the Company (A) is party to a merger,
consolidation or exchange of securities which results in the holders of voting
securities of the Company outstanding immediately prior thereto failing to
continue to hold at least 50% of the combined voting power of the voting
securities of the Company, the surviving entity or a parent of the surviving
entity outstanding immediately after such merger, consolidation or exchange, or
(B) sells or disposes of all or substantially all of the Company's assets (or
any transaction having similar effect is consummated), or (C) the individuals
constituting the Board immediately prior to such merger, consolidation,
exchange, sale or disposition shall cease to constitute at least 50% of the
Board, unless the election of each director who was not a director prior to such
merger, consolidation, exchange, sale or disposition was approved by a vote of
at least two-thirds of the directors then in office who were directors prior to
such merger, consolidation, exchange, sale or disposition.
(c) For purposes of this Agreement, "GOOD REASON" means
any of the following conditions, which condition(s) remain(s) in effect 10 days
after written notice to the Board from you of such condition(s):
(i) a material decrease in your target annual
compensation; or
(ii) a material, adverse change in your
authority, responsibilities or duties, as measured against your authority,
responsibilities or duties immediately prior to such change.
(iii) notwithstanding the foregoing, for the
purposes of this Agreement in no event will you have Good Reason to resign due
merely to a change of title or a change in your reporting caused by a change of
control or discontinuance or modification of any duties and responsibilities
solely related to the operation of a public company.
9. Definition of 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, (iii)
Executive's gross misconduct, or (iv) Executive's continued violation of his
employment duties after Executive has received a written demand for performance
from the Company which specifically sets forth the factual basis for the
Company's belief that Executive has not substantially performed his duties.
10. Confidential Information. Executive agrees to enter into the
Company's standard Confidential Information and Invention Assignment Agreement
(the "CONFIDENTIAL INFORMATION AGREEMENT") upon commencing employment hereunder,
and to abide by its terms during and after his employment with the Company.
11. Non-Solicitation. Until the date one (1) year after the
termination of Executive's employment with the Company for any reason, Executive
agrees and acknowledges that Executive's right to receive the severance payments
set forth in Section 6 (to the extent Executive is otherwise entitled to such
payments) shall be conditioned upon Executive not either directly or indirectly
soliciting, inducing, attempting to hire, recruiting, encouraging, taking away,
hiring any employee of the Company or causing an employee to leave his or her
employment either for Executive or for any other entity or person.
12. Assignment. This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company will be deemed substituted for the company under the terms of
this Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, 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 or 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.
13. 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 successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:
If to the Company:
NETGEAR, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
If to Executive:
at the last residential address known by the Company.
14. 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.
15. Co-Employment. Executive acknowledges and agrees that for the
purposes of the provision of human resource services including employee
relations, payroll and the provision of certain employee benefits that the
Company will be in a co-employment relationship with TriNet Employer Group, Inc.
("TRINET"), and to that extent Executive will be in an employment relationship
with the Company and TriNet. Nothing about this paragraph creates any new rights
in your favor, nor any new obligations on the part of either TriNet or the
Company not already contained in, nor otherwise modifies the terms and
conditions of, the Service agreement between the company and TriNet.
16. Arbitration.
(a) General. In consideration of Executive's service to
the Company, its promise to arbitrate all employment related disputes and
Executive's receipt of the compensation, pay raises and other benefits paid to
Executive by the Company, at present and in the future, Executive 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 their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive's service to the Company under the Agreement or
otherwise or the termination of Executive's service with the Company, 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. Disputes which Executive agrees to arbitrate, and thereby agrees
to wave 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 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. Executive further understands that this Agreement to arbitrate also
applies to any disputes that the Company may have with Executive.
(b) Procedure. Executive 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. The arbitration proceedings
will allow for discovery according to the rules set forth in the California Code
of Civil Procedure. Executive agrees that the arbitrator shall have the power to
decide any motions brought by any party to the arbitration, including motions
for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. 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. The Parties understand that the
Arbitrator shall issue a written decision in support of his award. Executive
understands the Company will pay for any administrative or hearing fees charged
by the arbitrator or AAA except that Executive shall pay the first $200.00 of
any filing fees
associated with any arbitration Executive initiates. Executive agrees that the
arbitrator shall 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 shall take
precedence.
(c) Remedy. Except as provided by the Rules, arbitration
shall be the sole, exclusive and final remedy for any dispute between Executive
and the Company. Accordingly, except as provided for by the Rules, 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 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. In addition to the
right under the Rules to petition the court for provisional relief, Executive
agrees that any party may also petition the court for injunctive relief where
either party alleges or claims a violation of this Agreement or the
Confidentiality Agreement or any other agreement regarding trade secrets,
confidential information, nonsolicitation or Labor Code Section 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 signing this
Agreement.
17. Integration. This Agreement, together with the Relocation
Plan, the Option Plan, Option Agreement and the Confidential Information
Agreement represents the entire agreement and understanding between the parties
as to the subject matter herein and supersedes 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.
18. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
19. Governing Laws. This Agreement will be governed by the laws of
the State of California.
20. 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.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.
COMPANY:
NETGEAR, INC.
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Executive Vice President & Date: 11-14-2003
Chief Financial Officer
EXECUTIVE:
/s/ Xxxxxxxxxxx Xxxxxxxx Date: 11-17-2003
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XXXXXXXXXXX XXXXXXXX
