Exhibit 10.3
NETGEAR, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of OCTOBER 18, 2004, (the "EFFECTIVE
DATE") by and between NETGEAR, Inc. (the "Company"), and Xxxxxx Xxx
("Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date, Executive will
serve as GENERAL COUNSEL 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 EIGHTY THOUSAND DOLLARS ($180,000.00) (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 Forty percent (40%) 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 50,000 (Fifty 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 thirteen (13) 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 three 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 Date: 10/18/04
Executive Vice President & ------------
Chief Financial Officer
EXECUTIVE:
/s/ Xxxxxx Xxx Date: 10/18/04
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