NETGEAR, INC. STAND-ALONE STOCK OPTION AGREEMENT
Exhibit 99.1
NETGEAR, INC.
STAND-ALONE STOCK OPTION AGREEMENT
| I. | NOTICE OF STOCK OPTION GRANT |
Name:
Address:
You have been granted a Nonstatutory Stock Option to purchase Common Stock of the Company,
subject to the terms and conditions of this Agreement, as follows:
| Date of Grant | ||||||||
| Vesting Commencement Date | ||||||||
| Exercise Price per Share | $ | |||||||
| Total Number of Shares Granted | ||||||||
| Total Exercise Price | $ | |||||||
| Term/Expiration Date: |
Vesting Schedule:
This Option shall vest and may be exercised, in whole or in part, in accordance with the
following schedule:
25% of the Shares subject to the Option shall vest twelve months after the Vesting
Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month
thereafter, subject to the Optionee continuing to be a Service Provider on such dates.
In addition, the vesting of this Option under certain special circumstances is specified in more
detail below.
Termination Period
This Option may be exercised for three months after Optionee ceases to be a Service Provider;
except in the case of death, Retirement or Disability, which are specified in more detail
below. In no event shall this Option be exercised later than the Term/Expiration Date as
provided above.
| II. | AGREEMENT |
1. Definitions. As used herein, the following definitions shall apply:
(a) “Affiliate” shall mean any entity that, directly or indirectly, controls, is
controlled by, or is under common control with, the Company.
(b) “Agreement” means this stock option agreement between the Company and Optionee
evidencing the terms and conditions of this Option.
(c) “Applicable Laws” means the requirements relating to the administration of stock
options under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction that may apply to this Option.
(d) “Board” means the Board of Directors of the Company or any committee of the Board
that has been designated by the Board to administer this Agreement.
(e) “Change in Control” means the occurrence of any of the following events:
(1) The merger or consolidation of the Company with any other corporation following which the
holders of the Company’s common stock immediately prior thereto hold less than 60% of the
outstanding common stock of the surviving or resulting entity; or
(2) The sale of all or substantially all of the assets of the Company to any person or entity
other than a wholly-owned subsidiary; or
(3) Any person or group of persons acting in concert, or any entity, becomes the beneficial
owner, directly or indirectly, of more than 20% of the Company’s outstanding common stock, other
than an acquisition of more than 20%, in one or more transactions, of the Company’s outstanding
common stock by (a) a passive institutional investor where such investor is eligible pursuant to
Rule 13d-1(b) of the Exchange Act to, and does, file a report of ownership on Schedule 13G with the
Securities and Exchange Commission, (b) a trustee or other fiduciary of an employee benefit plan
maintained by the Company, or (c) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the Company; or
(4) Those individuals who, as of the close of the most recent annual meeting of the Company’s
stockholders, are members of the Board (the “Existing Directors”) cease for any reason to
constitute more than 50% of the Board. For purposes of the foregoing, a new director will be
considered an Existing Director if the election, or nomination for election by the Company’s
stockholders, of such new director was approved by a vote of a majority of the Existing Directors.
No individual shall be considered an Existing Director if such individual initially assumed office
as a result of either an actual or threatened election contest subject to Rule 14a-11 under the
Exchange Act or other actual or threatened solicitation of proxies by or on behalf of anyone other
than the Board of Directors, including by reason of any agreement intended to avoid or settle
any election proxy contest; or
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(5) The stockholders of the Company adopt a plan of liquidation.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Common Stock” means the common stock of the Company.
(h) “Company” means NETGEAR, Inc., a Delaware corporation.
(i) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.
(j) “Director” means a member of the Board.
(k) “Disability” shall mean that an Optionee is eligible for Social Security
disability benefits or disability benefits under the Company’s long-term disability plan, based
upon a determination by the Board that the condition arose prior to termination of employment.
(l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. An Employee shall not cease to be such in the
case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.
(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n) “Fair Market Value” shall mean, as of any date, the value of Shares as the Board
may determine in good faith by reference to the price of such stock on any established stock
exchange or a national market system on the day of determination if the Shares are so listed on any
established stock exchange or a national market system. If the Shares are not listed on any
established stock exchange or a national market system, the value of the Shares will be determined
by the Board in good faith.
(o) “Nonstatutory Stock Option” means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(p) “Notice of Grant” means a written notice, in Part I of this Agreement, evidencing
certain the terms and conditions of this Option grant. The Notice of Grant is part of the Option
Agreement.
(q) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(r) “Option” means this stock option.
(s) “Optioned Stock” means the Common Stock subject to this Option.
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(t) “Optionee” means the person named in the Notice of ▇▇▇▇▇ or such person’s
successor.
(u) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(v) “Service Provider” means an Employee, Director or Consultant.
(w) “Share” means a share of the Common Stock, as adjusted in accordance with Section
10 of this Agreement.
(x) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
(y) “Retirement” shall mean termination of a Service Provider’s employment with the
Company and its Affiliates for retirement purposes if such termination occurs (1) on or after his
or her sixty-fifth birthday; or (2) on or after his or her fifty-fifth birthday with the written
consent of the Chief Executive Officer of the Company or, in the case of the Chief Executive
Officer’s retirement, with the consent of the Board. In the case of a Director, “Retirement” shall
be determined by the Board in its discretion. In no event shall termination of a Consultant’s
services with the Company and Affiliates be treated as a Retirement.
2. Grant of Option. The Company hereby grants to the Optionee named in the Notice of
Grant attached as Part I of this Agreement the Option to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the
“Exercise Price”), subject to the terms and conditions of this Agreement.
3. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of this
Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the
election to exercise the Option, the number of Shares in respect of which the Option is being
exercised (the “Exercised Shares”), and such other representations and agreements as may be
required by the Company. The Exercise Notice shall be completed by the Optionee and delivered to
Stock Administration. The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares, together with any applicable withholding taxes. This
Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price and applicable withholding taxes.
(c) Legal Compliance. No Shares shall be issued pursuant to the exercise of this
Option, unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered transferred to
the Optionee on the date the Option is exercised with respect to such Exercised Shares.
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4. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash or check;
(b) consideration received by the Company under a cashless exercise program implemented by the
Company; or
(c) surrender of other Shares, provided ▇▇▇▇▇▇ acquired from the Company, (i) have been vested
and owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
5. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of this Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the terms of this
Agreement.
7. Termination of Relationship as a Service Provider. All unvested portions of the
Option shall be forfeited on the date of the Optionee’s termination of employment for reasons other
than Retirement, Disability or death. Upon the Optionee’s termination of employment by reason of
Retirement, Disability or death, the Option shall become fully vested. If the Optionee ceases to be
a Service Provider (other than for death, Retirement or Disability), this Option may be exercised
for a period of three (3) months after the date of such termination (but in no event later than the
expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option
is vested on the date of such termination. To the extent that the Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.
8. Retirement or Disability of Optionee. If the Optionee ceases to be a Service
Provider as a result of the Optionee’s Retirement or Disability, this Option may be exercised for a
period of three (3) years after the date of such termination (but in no event later than the
expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option
is vested on the date of such termination. To the extent that Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.
9. Death of Optionee. If the Optionee dies while a Service Provider, the Option may
be exercised at any time within twelve (12) months following the date of death (but in no event
later than the expiration date of this Option as set forth in the Notice of Grant), by the
Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, after death, the
Optionee’s estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the Option shall
terminate.
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10. Adjustments Upon Changes in Capitalization or Change in Control.
(a) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs, the Board, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under this
Agreement, may (in its sole discretion) adjust the number, class, and price of Shares covered by
this Agreement.
(b) Change in Control. In the event of a Change in Control, the Option shall become
fully vested. The surviving entity in the event of a Change in Control may assume such fully
vested Option without the consent of the Optionee.
11. Postponement of Issuance and Delivery. The issuance and delivery of any Shares
underlying this Option may be postponed by the Company for such period as may be required to comply
with any applicable requirements under any applicable listing requirement of any national
securities exchange or any law or regulation applicable to the issuance and delivery of Shares, and
the Company shall not be obligated to issue or deliver any Shares if the issuance or delivery of
such Shares shall constitute a violation of any provision of any law or regulation of any
governmental authority or any national securities exchange.
12. No Rights as a Stockholder. The Optionee shall have no rights as a stockholder
with respect to any Shares underlying the Option until the date of the issuance and delivery of
such Shares.
13. Notices. Any notice to be given to the Company hereunder shall be in writing and
shall be addressed to the Company. at its then current principal executive office or to such other
address as the Company may hereafter designate to the Optionee by notice as provided in this
Section. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at
the address set forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall be deemed to have
been duly given when personally delivered or mailed by registered or certified mail to the party
entitled to receive it.
14. Withholding Taxes. Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state, and local income and employment tax withholding requirements applicable to the
Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
15. Entire Agreement; Governing Law. This Agreement[, together with the Employment
Agreement,] constitute the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified adversely to the
Optionee’s
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interest except by means of a writing signed by the Company and Optionee. This Agreement is
governed by the internal substantive laws, but not the choice of law rules, of California.
16. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Optionee’s signature and the signature of the Company’s representative below, Optionee and
the Company agree that this Option is granted under and governed by the terms and conditions of
this Agreement. Optionee has reviewed this Agreement in its entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Agreement and fully understands all provisions
of this Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions relating to this Agreement. Optionee further
agrees to notify the Company upon any change in the residence address indicated below.
OPTIONEE
|
NETGEAR, INC. | |||
Signature
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By | |||
Print Name
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Title | |||
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EXHIBIT A
NETGEAR, INC.
EXERCISE NOTICE
NETGEAR, Inc.
[ADDRESS]
[ADDRESS]
Attention: Stock Administration
1. Exercise of Option. Effective as of today, , 20 ___, the undersigned
(“Purchaser”) hereby elects to purchase shares (the “Shares”) of the Common Stock of
NETGEAR, Inc. (the “Company”) under and pursuant to the Stock Option Agreement dated [DATE] (the
“Option Agreement”).
2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase
price for the Shares together with any required withholding taxes to be paid in connection with the
exercise of the Option.
3. Representations of Purchaser. Purchaser acknowledges that ▇▇▇▇▇▇▇▇▇ has received,
read and understood the Option Agreement and agrees to abide by and be bound by its terms and
conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder shall exist with respect
to the Shares subject to the Option, notwithstanding the exercise of the Option. The Shares so
acquired shall be issued to the Purchaser as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date of issuance, except as provided in Section 10 of the Option Agreement.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.
6. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the
benefit of the successors and assigns of the Company. Subject to the restrictions on transfer
herein set forth, this Exercise Notice shall be binding upon Purchaser and his or her heirs,
executors, administrators, successors and assigns.
7. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Purchaser or by the Company forthwith to the Board of Directors of the
Company
(the “Board”), which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board shall be final and binding on all parties.
8. Entire Agreement; Governing Law. The Option Agreement is incorporated herein by
reference together with any documents incorporated by reference therein. This Agreement, together
with the Option Agreement [and the employment agreement between Purchaser and the Company effective
[DATE],] constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser
with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s
interest except by means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of California.
| Submitted by: | Accepted by: | |||||
| OPTIONEE | NETGEAR, INC. | |||||
Signature |
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Print Name |
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Address
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Address | |||||
| Date Received: | ||||||
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