Document:

<PAGE>
                         CONFIDENTIAL TREATMENT REQUEST

* Portions denoted with an asterisk have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for confidential
  treatment.

                                                                   EXHIBIT 10.27

Netgear and Kerry Logistics Operating Agreement

                       DISTRIBUTION OPERATIONS AGREEMENT

Effective Date: December 1st, 2001 Term: 2 years (with possible renewal periods)

         This Distribution Operations Agreement ("Agreement") is entered into
between Netgear. Inc., a Delaware corporation ("Netgear"), and Kerry Logistics
(Hong Kong) Limited, a Hong Kong corporation ("Kerry Logistics"), and is made as
of the Effective Date for the Term. Subject to the terms and conditions set
forth in this Agreement, the parties have caused this Agreement to be executed
by their duly authorized representatives on the date(s) shown below.

Netgear, Inc.                      Kerry Logistics (Hong Kong) Limited

                                             for and on behalf of
                                             KERRY LOGISTICS (HOKG KONG) LIMITED

Signature /s/ BRIAN McGINNIS       Signature /s/ JESSE LUI
          --------------------               ---------------------------
                                                 Authorized Signature(s)
Printed   BRIAN McGINNIS           Printed   JESSE LUI

Tide      DIRECTOR LOGISTICS       Title     DIRECTOR

Date      10-19-01                 Date      Oct 20th, 2001

4500 Great America Parkway       16/F Kerry Cargo Centre
Santa Clara, CA 95054            55 Wing Kei Road, Kwai Chung,
U.S.A.                           N.T. Hong Kong

Netgear, Inc.               CONFIDENTIAL INFORMATION                   Page 1/20

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

         In consideration of their mutual representations, promises and
obligations. Netgear and Kerry Logistics agree as follows;

1.                SCOPE OF THE AGREEMENT

         This Agreement sets forth the terms and conditions pursuant to which
Kerry Logistics shall provide Netgear full warehousing, physical distribution,
and other logistics services, including but not limited to the services set
forth below (the "Services") in a timely, competent and cost effective manner in
and from Hong Kong, as more fully described in the "Standard Operating
Procedures" attached hereto as Exhibit 1:

         -        Receiving;

         -        Warehouse management;

         -        Inventory management;

         -        Quality management;

         -        Product fulfillment and logistics;

         -        System transaction processing;

         -        Return materials authorization ("RMA") processing;

         -        Freight out transportation management services;

         -        Product conversions & repackaging;

         -        Import and export coordination;

         -        Updating Netgear's operating system, Sun System, to manage
                  receipts, shipments and RMA; and

         -        Reporting.

         This Agreement contains those terms that shall pertain to Kerry
Logistics' Facility, as defined below. Kerry Logistics shall conduct all of its
Netgear operations from the Kerry Logistics' Facility.

2.                DEFINITIONS

                  The following words and expressions shall have the meanings
                  set forth below:

                  "Affiliate" means, with respect to a party hereto, a
                  corporation that directly or indirectly controls, is
                  controlled by, or is under common control with, that party.

                  "Confidential Information" means any information, including
                  but not limited to software (in object or source code form),
                  pricing terms, customer lists, technical information, future
                  plans, know-how, proprietary information, trade secrets, and
                  any other information, whether disclosed in writing, orally or
                  otherwise, that is marked "confidential" or should be deemed
                  by its nature to be confidential by a reasonable person in
                  similar circumstances as the parties.

                  "Conversions" means the process of unpacking, changing product
                  accessories and repacking products in accordance with Netgear
                  assembly process instructions.

                  "Customer" means a customer purchasing any Product(s) from
                  Netgear.

                  "Kerry Logistics' Facility" means the facility of Kerry
                  Logistics located at 3 Kin Chuen Street, Kwai Chung, New
                  Territories, Hong Kong.

                  "Kerry Logistics' Systems" means all software and systems used
                  by Kerry Logistics in the performance of this Agreement,
                  excluding any software or systems provided to Kerry Logistics
                  by Netgear.

                  "Netgear Inventory Location" means the physical location
                  identified by Kerry Logistics where Products shall be staged
                  prior to shipment to Customers.

                  "Order" means any order for Products placed by a Customer in
                  accordance with the terms of this

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

                  Agreement.

                  "Product(s)" means the products, commercially supplied by
                  Netgear from time to time.

                  "Sun System" means Netgear`s operating system used by Netgear
                  and Kerry Logistics to manage receiving, inventory control,
                  pick, pack, ship and RMA activities.

                  "Supplier(s)" means manufacturer(s) of products purchased by
                  Netgear.

                  "Undisputed Amounts or Charges" means all amounts or charges
                  in accordance with Exhibit 1 and/or any other amounts or
                  charges with prior written cost approvals from Netgear,
                  including but not be limited to e-mail and fax.

3.                BUSINESS MANAGEMENT PROCEDURES

3.1.              METHODOLOGY

                  Kerry Logistics shall:

                  (a)      Assign an account management team whose goal is to
                           provide consistent and efficient responses to program
                           requirements and to address all operational, business
                           and continuous improvement plans with Netgear;

                  (b)      Conduct quarterly business reviews of performance,
                           cost and continuous improvement opportunities;

                  (c)      Create a process to communicate about and resolve
                           issues promptly and to drive continuous improvement
                           of the day-to-day operation;

                  (d)      Comply with reporting requirements as outlined in
                           this Agreement; and

                  (e)      Meet annually with Netgear at the executive level to
                           exchange business strategies with the specific
                           purpose of working to ensure that each party's
                           business goals can be met.

3.2               QUARTERLY REVIEWS

                  Kerry Logistics and Netgear shall, in conjunction with each
other, conduct quarterly operations reviews of the business processes and
procedures of both Kerry Logistics and Netgear with the intent to improve the
overall performance of the Services. The review shall include, at a minimum,
performance measurements of quality, delivery, customer satisfaction, cost model
review, transportation cost review and update, capacity and innovations. Staff
allocation, and the plan to meet future requirements in these areas, shall also
be reviewed.

                  The quarterly reviews shall be held in person at Kerry
Logistics' Facility.

3.3               TARGET COST REDUCTION

                  Kerry Logistics agrees to participate in periodic cost reviews
with the intent to reduce the costs of operations, which shall include but not
be limited to the costs relating to transportation, transaction processing and
distribution services, as applicable. Such reviews shall be held in person at
Kerry Logistics' Facility. The cost reviews shall be combined with the quarterly
reviews set forth under Section 3.2 hereof.

3.4               LOCATION OF KERRY LOGISTICS' OPERATIONS

                  Kerry Logistics shall perform the Services from the Kerry
Logistics' Facility. Any deviation from this policy must be authorized by
Netgear in writing, Kerry Logistics shall not relocate Netgear inventory without
the written approval of Netgear.

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

4.                PRICES AND PAYMENT

4.1               PRICES FOR SERVICES

                  The price for Services shall be as set forth on the price list
attached hereto as Exhibit 2 (the "Price List"). Kerry Logistics and Netgear
agree that the price shall include all costs associated with the Services and
Kerry Logistics' service fee. The parties acknowledge that Kerry Logistics'
service fee includes all overheads, allocations, services and profits, as set
forth in Exhibit 2 attached hereto. Kerry Logistics agrees to provide Netgear
with a detailed statement of the actual cost for each Service in final form
within four (4) weeks after the month in which such costs were incurred.

4.2               PAYMENT

                  All prices and payments shall be in U.S. Dollars. All payments
of Undisputed Amounts or Charges shall be made net thirty (30) days from the
invoice date. Invoices for the Services performed by Kerry Logistics shall be
submitted to Netgear on a monthly basis.

4.3               TAXES, DUTIES AND DECLARATION FEES

                  Netgear shall pay as a separate item on an invoice including
but not limited to tax, duties, declaration fees lawfully imposed on the
import/export or sale of the Products or on the provision of Services to Netgear
or shall provide Kerry Logistics with a certificate of exemption acceptable to
the appropriate authority. Kerry Logistics agrees to provide reasonable
assistance without charge in any proceeding for the refund or abatement of any
such taxes Netgear is required to pay. Without limiting the generality of the
foregoing, Netgear shall have no obligation to pay taxes based upon Kerry
Logistics net income.

5.                ORDER FULFILLMENT

5.1               ORDER FULFILLMENT

                  Netgear's Operations Centers in the U.S. shall handle all of
Netgear's Order Administration functions. Kerry Logistics shall be responsible
for fulfilling Orders including the preparation of all shipping documents and
coordination with appointed carriers/couriers.

5.2               TITLE, RISK OF LOSS AND SHIPMENT

                  Title to the Products shall remain with Netgear in accordance
with the terms of sale and delivery to Netgear's Customers. Prior to title
passing, Kerry Logistics shall bear risk of all loss, damage or theft while the
Products are in the care, custody and control of Kerry Logistics. Shipping
instructions shall be specified and Netgear shall designate default shipping
instructions. Kerry Logistics shall provide Netgear with proof of shipment upon
request and shall provide reasonable assistance to Netgear in any claim Netgear
may bring against a carrier or insurer for misdelivery, loss or damage to the
Products.

                  Kerry Logistics shall check all outer cartons containing the
Products immediately upon delivery thereof to the Kerry Logistics' Facility for
visible loss or damage and quantity. If the Products are damaged or the number
of Products is incorrect, Kerry Logistics shall immediately make a note thereof
on the waybill or other document received from the carrier. Furthermore, Kerry
Logistics shall immediately, but in no event later than two (2) working days
after receipt of the Products, notify Netgear of any such inconsistency. Kerry
Logistics shall take all necessary measures to allow Netgear to claim damages
for any such inconsistencies against the carrier.

                  Upon delivery of the Products to the carrier for distribution
in Hong Kong, Kerry Logistics shall check the number of Products mentioned on
the waybill or other document used by the carrier. In case of an inconsistency.

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

the number mentioned on the waybill or document used by the carrier shall be
amended before departure of the Products from the Kerry Logistics' facility.

                  Kerry Logistics shall be responsible for loading and unloading
of the Products.

6.                INVENTORY MANAGEMENT

                  Products shall be received into the Netgear Inventory Location
using purchase order receipts on Netgear's Sun System. Kerry Logistics shall
maintain its own full warehouse management system in order to control inventory
to ensure back-to-back accuracy with Netgear's Sun System.

                  All Products shall require a cycle count by Kerry Logistics to
be completed on a weekly basis. A joint cycle count to be performed by
representatives of Kerry Logistics and Netgear shall take place on a quarterly
basis.

                  Products returned from Netgear Customers shall be initially
received into the Netgear Inventory Location using the "Sales Order Return"
transaction in Sun System. Kerry Logistics shall have the responsibility to
verify the contents, receive, transact and report all Customer Product returns.
Kerry Logistics shall perform all RMA processing in accordance with the terms
set forth in Exhibit 1 attached hereto.

                  Any Products that are lost or damaged while in the care,
custody and control of Kerry Logistics shall be charged to Kerry Logistics at
the Netgear full inventory standard cost of that inventory as substantiated by
Netgear's Sun System at the time the actual loss took place. Kerry Logistics
shall have access to Netgear inventory standard cost.

                  On a weekly basis, Kerry Logistics and Netgear shall jointly
complete a book inventory reconciliation to support an inventory accuracy of
100% as determined and agreed between the parties from time to time.

                  On a quarterly basis, Kerry Logistics and Netgear shall
jointly complete a reconciliation of book inventory (stock status) and actual
on-hand inventory. Positive variances (additional units found) and negative
variances (missing units) shall be netted against each other. If the total net
variance is positive, Netgear and Kerry Logistics shall adjust their respective
book inventory with no financial charge to either party. If the total net
variance is negative, Netgear shall charge Kerry Logistics at the Netgear full
inventory standard cost of that inventory as substantiated by Netgear's Sun
System to be settled on a quarterly basis, provided that Kerry Logistics'
maximum liability for such inventory variances shall be US$ 1,000,000 per year
in the aggregate. Kerry Logistics shall have access to Netgear inventory
standard cost. Damaged products shall not be a part of the quarterly
reconciliation netting process for positive and negative variances. Damage to
Products shall be charged as it takes place as set forth above.

                  All inventories shall remain the property of Netgear.

7.                TESTING OF PRODUCTS

7.1               SCOPE OF TEST AND INSPECTION

                  Kerry Logistics shall manage the execution of the test and
inspection process for each Product, which includes testing Products, test
capacity planning, and performing preventative maintenance on the test
equipment. Kerry Logistics warrants that it shall perform each and every test
and inspection in accordance with the process and for the quantities identified
in the relevant specification. All Products delivered to Netgear and/or its
Customers shall have passed all applicable tests and inspections see forth in
such specification.

                  At the commencement of production of any Product, Netgear
shall qualify each piece of test equipment and each test process for such
Product. No such equipment or process shall be changed or modified without the
prior written consent of Netgear.

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

                  Netgear shall provide certain Functional Test ("FT") equipment
and test set ups, including test scripts, loop back connectors, and cables to
Kerry Logistics.

                  From time to time, Kerry Logistics shall develop inspection
capacity plans. Kerry Logistics shall consider upside volume percentage,
preventative maintenance time, new Product additions and holding of appropriate
spare parts as part of its inspection capacity plan. Netgear shall provide
reasonably sufficient details to enable Kerry Logistics to perform such capacity
planning.

7.2               TEST EQUIPMENT MAINTENANCE COSTS

                  Kerry Logistics agrees to be responsible for and to pay for
all costs of maintaining all inspection equipment and related materials and
shall perform preventative maintenance, which shall include, without limitation,
repair and replacement of worn loop-back connectors, cables, and back planes or
any other failing components due to normal wear. Notwithstanding the above.
Netgear shall pay to upgrade or replace test equipment or fixtures which are
rendered outdated because of Product design changes or changes in test
requirements. Kerry Logistics shall bill and Netgear shall pay all such costs
incurred plus 10% management fee under item (4) of Exhibit 1 attached hereto.

7.3               TEST RECORDS FOR PRODUCTS

                  Kerry Logistics shall maintain adequate authenticated
inspection and test documents for Products and shall make such documents
available to Netgear upon request for a period of one year after the delivery of
the last Product purchased, unless otherwise directed by Netgear.

8.                PRODUCT CHANGES

                  Either party may propose in writing a change to the test or
packaging assembly procedure of any Product. The other party shall respond in
writing within five (5) business days to any such proposal. Where necessary and
appropriate. Netgear shall initiate either an engineering change order ("ECO")
or a temporary change to the specification. Netgear shall develop a list of the
process steps for Kerry Logistics to follow. Kerry Logistics shall provide an
estimate of the time necessary to complete the change, the hourly rate to
complete the work, any excess or obsolete materials (list and cost), and the
increase or decrease, if any, in the price of the Products affected. Upon
receipt of Kerry Logistics' response, Netgear shall determine whether to
implement the change. If Netgear decides to implement the change, the parties
shall negotiate any open issues and set the implementation date.

                  If either Netgear or Kerry Logistics identifies a change that
must be implemented on a Product for reasons of safety ("Safety Change"), the
parties shall cooperate so as to effect such Safety Change as soon as possible
after discovery. Once such a Safety Change is discovered, no affected Products
shall be tested, packaged, refurbished or shipped until such Safety Change has
been implemented. The parties shall cooperate in the implementation of such
Safety Change on any Products shipped prior to discovery of the hazard, Netgear
shall pay all the costs associated with the Safety Change.

9.                PRODUCT QUALITY

                  Kerry Logistics agrees to adopt the quality assurance
procedures and perform the quality control tests (collectively the "QA
Procedures") described in Exhibit 1. The QA Procedures may be amended by mutual
agreement of the parties from time to time, to ensure that all Products conform
to the specifications.

10.               TOOLING OWNERSHIP AND USE

                  Netgear shall retain title to the internal tooling utilized by
Kerry Logistics in connection with this Agreement, and Kerry Logistics
acknowledges that Netgear shall have the right to use such tooling in the event
of a material default by Kerry Logistics as defined in Section 18 of this
Agreement only in order to fulfill Kerry

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

Logistics obligations hereunder prior to such default. Kerry Logistics agrees
that each Product created is for Netgear's exclusive use and further agrees that
Kerry Logistics has no right to sell or otherwise transfer any interest in a
Product to any party unless Netgear has provided permission in writing prior to
any such sale or transfer.

11.               CAPITAL ASSETS

                  In order to perform the test and repackaging effort, as set
forth in Section 7 of this Agreement and Exhibit 1, Kerry Logistics may have to
use certain capital equipment specified by Netgear. If Kerry Logistics can use
the equipment for current or future applications other than for Netgear
assemblies, such equipment shall be the property of Kerry Logistics and shall be
funded as such. If the capital equipment cannot be used by other non-Netgear
applications, such equipment shall be solely the property of Netgear and shall
have Netgear asset tags affixed to the equipment. Such property shall be funded
by Netgear. Maintenance of all such capital equipment shall be performed in
accordance with the terms of Section 7 of this Agreement.

                  Kerry Logistics shall maintain an inventory of all capital
assets, regardless of ownership, and shall provide inventory records to Netgear
upon request. Inventory records shall include, but not be limited to, the date
of acquisition, description, serial number, and location of the assets.

12.               ACCESS TO KERRY LOGISTICS' FACILITY

                  Netgear shall have the right to access Kerry Logistics'
Facility and review its operations processes at any reasonable time upon
reasonable notice. The costs of opening the Kerry Logistics' Facility at
non-standard hours and the costs of telecommunications incurred by Kerry
Logistics as a result of such visits shall be paid by Netgear, "Netgear and
Kerry Logistics acknowledge that certain Customers and Suppliers may require
access to the Kerry Logistics' Facility from time to time and that the parties
shall cooperate to arrange and coordinate such access under mutually agreeable
terms."

13.               EXPORTS AND CUSTOMS

13.1              EXPORT REGULATIONS

                  Each party agrees that it shall not knowingly (i) export or
re-export, directly or indirectly, any technical data (as defined by the U.S.
Export Administration Regulations), including software, received from the other
party under this Agreement, or (ii) export or re-export, directly or indirectly,
any direct product of such technical data, including software, to any
destination to which such export or re-export is restricted or prohibited by
U.S. or other applicable non-U.S. laws without obtaining prior authorization
from the U.S. Department of Commerce and/or other competent government
authorities to the extent required by such laws. Kerry Logistics shall follow
Netgear's instructions as provided from time to time. This Section 13 shall
survive the termination or expiration of this Agreement for any reason
whatsoever.

13.2              CUSTOMS DOCUMENTATION

                  Kerry Logistics shall be responsible for completing required
export documentation and complying with export formalities based on the
information provided by Netgear and/or Netgear's suppliers. Unless otherwise set
forth in this Agreement, Kerry Logistics shall take all necessary administrative
actions required to comply with all laws, treaties and regulations of both the
exporting country and the importing country. Netgear shall be responsible for
providing timely and correct information in such cases and shall provide Kerry
Logistics with invoices containing the required data. Based on the information
provided by Netgear and/or Netgear suppliers, Kerry Logistics shall be
responsible for timely and correct application of required data to appropriate
authorities.

14.               CONFIDENTIAL INFORMATION

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

14.1              CONFIDENTIALITY OBLIGATIONS

                  During the term of this Agreement, the parties anticipate that
each may disclose certain of its Confidential Information to the other party in
connection with this Agreement. The receiving party shall protect the
Confidential Information of the disclosing party using the same degree of care
to prevent the unauthorized use, dissemination, or publication of such
Confidential Information as the receiving party uses to protect its own
Confidential Information of a like nature, but no less than a reasonable degree
of care. The receiving party's duty to protect the Confidential Information of
the disclosing party shall expire three (3) years from the expiration or
termination of this Agreement, except that any source code disclosed hereunder
shall be protected indefinitely. Except as permitted by this Agreement, the
receiving party shall disclose no part of the disclosing party's Confidential
Information to anyone except to those of its employees or contractors who have
(i) a need to know the Confidential Information in order to accomplish the
purposes of this Agreement, (ii) signed non-disclosure agreements with terms at
least as protective as the terms set forth in this Section 14 under which they
shall keep confidential such Confidential Information, (iii) before receiving
access to such Confidential Information, acknowledged its confidential,
proprietary and trade secret nature, and (iv) agreed to use such Confidential
Information only for purposes of performing the receiving party's obligations
under this Agreement. The terms of this Agreement may also be disclosed to
directors, officers, employees, attorneys, accountants, contractors, banks or
actual or potential financing sources of the receiving party, but only if and to
the extent such persons (i) need to know the disclosing party's Confidential
Information for the performance of their duties, and (ii) are subject to
confidentiality agreements or fiduciary duties of confidentiality to the
receiving party under terms at least as protective as the terms set forth in
this Section 14 and agree to use such Confidential Information only for such
duties.

14.2              EXCEPTIONS TO CONFIDENTIALITY

                  This Agreement imposes no restriction upon the receiving party
with respect to disclosure or use of the disclosing party's Confidential
Information (i) that was in the receiving party's possession before receipt from
the disclosing party; (b) that is or becomes (prior to such disclosure or use) a
matter of public knowledge through no fault of the receiving party; (c) that is
received by the receiving party from a third party without a duty of
confidentiality; (d) that is independently developed by the receiving party; (e)
that is disclosed in accordance with the order or requirement of a court,
administrative agency, or other governmental body; provided, however, that the
receiving party shall provide prompt notice thereof to enable the disclosing
party to seek a protective order or otherwise prevent such disclosure; (f) that
is disclosed by the receiving party with the disclosing party's prior written
approval; or (g) as required by the federal securities law and rules and
regulations promulgated thereunder.

14.3              PUBLICITY

                  All press releases and printed material using the name, logo
or other identifying characteristics of a party shall be subject to prior
approval of the other party.

14.4              SPECIFIC CONFIDENTIAL INFORMATION

                  Each party agrees that the price of any services negotiated by
such party and provided to the other party shall be deemed to be Confidential
Information of that party. Each party agrees not to discuss the origins of such
information with any third party. Each party agrees not to use such information
to solicit a discount from the disclosing supplier, from any of the supplier's
competitors or from any other supplier for use by the receiving party other than
for the purposes of performing its obligations under this Agreement. Each party
acknowledges that unauthorized disclosure of such information may irreparably
damage the disclosing party's relationship with its suppliers and that any
benefit accruing to the receiving party shall belong to the disclosing party.

14.5              RETURN OF CONFIDENTIAL INFORMATION

                  Upon termination or expiration of this Agreement for any
reason whatsoever in accordance with Section 18.3(c) hereof, and upon the
written request of the disclosing party, the receiving party shall (i) promptly
return all of the disclosing party's Confidential Information received from the
disclosing party hereunder, together with all copies of any such Confidential
Information, or (ii) if requested by the disclosing party, certify in writing
that all of the disclosing party's Confidential Information and all copies
thereof have been destroyed.

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

15.               WARRANTY

                  Kerry Logistics warrants that all Services performed under
this Agreement shall be performed in a competent, professional manner and in
accordance with this Agreement and Exhibit 1.

16.               INDEMNIFICATION

16.1              INDEMNIFICATION BY NETGEAR

                  Netgear shall, at its expense and at Kerry Logistics' request,
defend any claim or action brought against Kerry Logistics by a third party (i)
to the extent that it is based on a claim that any specifications provided under
this Agreement infringes or violates any patent, copyright, trademark, trade
secret or other proprietary right of such third party, or (ii) to the extent
such claim is caused by any grossly negligent act or omission or willful
misconduct of Netgear; and Netgear shall indemnify and hold Kerry Logistics
harmless from and against any costs and liability reasonably incurred by Kerry
Logistics that are attributable to such claim, subject to compliance with the
notice provisions set forth in Section 16.3 below.

16.2              INDEMNIFICATION BY KERRY LOGISTICS

                  Kerry Logistics shall, at its expense and at Netgear's
request, defend any claim or action brought against Netgear by a third party to
the extent such claim is caused by breach of this Agreement by, or any negligent
act or omission or willful misconduct of, Kerry Logistics or its Affiliates; and
Kerry Logistics shall indemnify and hold Netgear harmless from and against any
costs and liability reasonably incurred by Netgear that are attributable to such
claim, subject to compliance with the notice provisions set forth in Section
16.3 below.

16.3              PROCEDURE FOR INDEMNIFICATION

                  If any claim, other than a claim based on transport losses or
damages, or action is brought or asserted against an indemnified party as
provided in Section 16.1 and 16.2 (the "Indemnified Party") in respect of which
an indemnity may be sought from an indemnifying party under such sections (the
"Indemnifying Party") the Indemnified Party shall promptly notify the
Indemnifying Party who shall assume the defense thereof and the payment of all
expenses associated therewith; except that any delay or failure to so notify the
Indemnifying Party shall only relieve the Indemnifying Party of its obligations
hereunder to the extent that the Indemnifying Party is prejudiced by reason of
such delay or failure, if at all. The Indemnified Party shall have the right to
employ separate counsel with respect to any such claim or action and participate
in the defense thereof, but the fee and expenses of such counsel shall be at the
expense of the Indemnified Party, unless (i) the employment of such counsel was
specifically directed and required by the Indemnifying Party, or (ii) the
Indemnifying Party elected not to assume the defense of such claim and employ
counsel in connection therewith. Without the consent of the Indemnified Party,
the Indemnifying Party shall have no right to settle any such claim or
compromise on any non-monetary matter associated with such claim; provided that
this consent shall not be unreasonably withheld.

17.               LIMITATION OF LIABILITY

                  EXCEPT FOR BREACHES OF THE PARTIES' OBLIGATIONS UNDER SECTION
14 HEREOF (RELATING TO CONFIDENTIAL INFORMATION) AND OBLIGATIONS UNDER SECTION
16 HEREOF (RELATING TO INDEMNIFICATION), TO THE MAXIMUM EXTENT PERMITTED BY LAW,
UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY. WHETHER IN TORT, CONTRACT, OR
OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT
NOT LIMITED TO LOST PROFITS OR LOSS OF BUSINESS, EVEN IF SUCH PARTY SHALL HAVE
BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.

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NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

18.               TERM AND TERMINATION

18.1              TERM

                  This Agreement shall commence on the Effective Date and shall
continue for an initial period of two (2) years thereafter. Unless terminated
earlier pursuant to the terms of this Section 18, this Agreement shall
automatically be renewed after such initial period for successive one (1) year
periods. Either party may terminate this Agreement upon ninety (90) days written
notice prior to the end of the initial two-year term or any renewal term
thereof.

18.2              TERMINATION

                  A party shall be in material default under this Agreement if
such party:

                  (a)      ceases conducting business in the normal course,
                           makes a general assignment for the benefit of
                           creditors, suffers or permits the appointment of a
                           receiver for its business or assets, or becomes
                           subject to any proceeding under any statute of any
                           governing authority relating to insolvency or the
                           protection of rights of creditors; or

                  (b)      fails to perform any of its material obligations
                           under this Agreement for a period of thirty (30)
                           days after receipt of written notice thereof from the
                           other party.

                  In the event of such default, the non-defaulting party shall
have the right to terminate this Agreement immediately by giving written notice
to the other party.

18.3              EFFECT OF EXPIRATION OR TERMINATION

                  Upon expiration or termination of this Agreement for any
reason whatsoever:

                  (a)      Netgear shall pay all Undisputed Amounts or Charges
                           owed to Kerry Logistics as provided in this
                           Agreement, provided that Netgear shall have the right
                           to offset any such amounts or charges against any
                           Undisputed Amounts or Charges owing to Netgear by
                           Kerry Logistics under this Agreement. If the
                           aggregate amount owing by either party to the other
                           party is less than the aggregate amounts owing by the
                           other party to that either party, the other party
                           shall pay such net amount owing to that either party
                           promptly and in full within forty-five (45) days of
                           the date or expiration or termination of this
                           Agreement, whichever is applicable;

                  (b)      The provisions of this Agreement relating to
                           Confidential Information (Section 14), Warranties
                           (Section 15) and Indemnification (Section 16) and
                           Export Regulations (Section 13.1), shall survive the
                           termination or expiration of this Agreement for any
                           reason whatsoever; and

                  (c)      Kerry Logistics shall upon Netgear's written request
                           (i) return all of Netgear's Confidential Information
                           disclosed to Kerry Logistics hereunder and all copies
                           thereof, as far as legally allowed, or (ii), destroy
                           or erase all such Confidential Information and all
                           copies thereof in the possession of Kerry Logistics
                           or any of its Affiliates or their respective
                           employees, consultants, agents or representatives,
                           including copies on paper or other hard copy and
                           copies on computer or other storage media.

                  Upon termination or expiration of this Agreement for any
reason whatsoever, Kerry Logistics shall place all inventory of the Products
immediately at the disposal of Netgear, and Kerry Logistics shall not have a
right of retention, lien, or any other right to such Products, as set forth in
Section 19.15 hereof.

18.4              DUTY TO FULFILL

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 10/20

<PAGE>

NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

                  Notwithstanding the termination or expiration of this
Agreement for any reason whatsoever, Kerry Logistics agrees to manage all
inventory control functions and to fulfill all Orders placed prior to the date
of such termination or expiration in accordance with the terms of this Agreement
if such Orders have not previously been cancelled.

19.               GENERAL PROVISIONS

19.1              FORCE MAJEURE

                  For purposes of this Section 19.1. "Force Majeure" shall
include all acts or events beyond the control of a party, including but not
limited to acts of God. government restrictions, continuing domestic or
international problems such as wars or insurrections, fires, floods, work
stoppages, and embargoes, which prevent totally or partially the fulfillment of
the obligations of either party.

                  A party affected by an event of Force Majeure shall be
released without any liability on its part from the performance of its
obligations, other than an obligation to pay money, under this Agreement, if
any, but only to the extent and only for the period that its performance of such
obligations is prevented by circumstances of Force Majeure and provided that
such party shall have given prompt notice thereof to the other party. Such
notice shall include a description of the nature of the event of Force Majeure,
its cause, and its possible consequences. The party claiming circumstances of
Force Majeure shall promptly notify the other party of the conclusion of the
event. The period of Force Majeure shall be deemed to commence on the date that
the event of Force Majeure first occurs. Regardless of the excuse of Force
Majeure, if either party is not able to perform its obligations within ninety
(90) days after such event of Force Majeure, the other party may terminate the
Agreement. Termination of this Agreement shall not affect the obligations of
either party that exist as of the date of termination.

19.2              NOTICES

                  All notices or other communications hereunder shall be sent by
certified mail, postage prepaid, by personal delivery, courier service,
facsimile, e-mail or other form of recorded communication to the parties at
their respective addresses set forth below. Any notices given shall be deemed to
have been received as follows: (i) if sent by facsimile or other form of
recorded communication, when transmitted; (ii) if sent by certified mail, on the
date of delivery as shown on the return receipt; and (iii) if by courier
service, on the date delivered. Either party may change its notice address by
written notice to the other party.

If to Kerry Logistics:                              If to Netgear:
Kerry Logistics Hong Kong Limited                   Netgear, Inc.
16/F Kerry Cargo Centre                             4500 Great America Parkway
55 Wing Kei Road, Kwai Chung                        Santa Clara, CA 95054
N.T. Hong Kong                                      U.S.A.
Attention:                                          Attention:
With a copy to:                                     With a copy to:

19.3              AMENDMENT, MODIFICATION OR WAIVER

                  No modification, amendments or supplements to this Agreement
shall be effective for any purpose unless in writing and signed by authorized
representatives of each party.

19.4              DISASTER RECOVERY PLAN

                  Kerry Logistics agrees to do its utmost together with Netgear
to restart the Services following a disaster. Kerry Logistics shall have a
recovery plan which can be in operation after a reasonable period not to exceed
a maximum of one week with respect to any computer system used in connection
with the Services.

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 11/20

<PAGE>

NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

19.5              INDEPENDENT CONTRACTORS

                  This Agreement shall not constitute Kerry Logistics as the
agent or legal representative of Netgear for any purpose and Kerry Logistics
shall not hold itself out as an agent of Netgear other than as expressly
provided in this Agreement. This Agreement creates no relationship of joint
venturers, co-owners, partners, associates, employer and employee, franchisor
and franchisee or principal and agent between the parties, and both parties are
acting as independent contractors. Neither party shall have the right to
exercise any control or direction over the operations, activities, employees or
agents of the other party in connection with this Agreement. Except as expressly
agreed between the parties in writing, neither party is granted any right or
authority to, and shall not attempt to, assume or create any obligation or
responsibility for or on behalf of the other party. Neither party shall have any
authority to bind the other party to any contract, whether of employment or
otherwise, and each party shall bear all of its own expenses for its operations,
including, without limitation, the compensation of its employees and sales
people and the maintenance of its offices, service, warehouse and transportation
facilities. Each party shall be solely responsible for its own employees and
sales people and for their acts and omissions.

19.6              SUBCONTRACTORS

                  The acknowledgment by Netgear of any subcontractors of Kerry
Logistics shall in no way be construed to relieve Kerry Logistics of any of its
duties, responsibilities and obligations to Netgear under this Agreement.

19.7              NO ASSIGNMENT

                  Neither this Agreement nor any right or obligation hereunder
shall be assigned or delegated by Kerry Logistics, voluntarily or by operation
of law, without the prior written consent of Netgear, which consent may not be
unreasonably withheld. Any purported assignment by Kerry Logistics in violation
of this Section 19.7 shall be deemed void. A purported assignment of Kerry
Logistics shall be deemed to occur in the event of a sale or transfer of
substantially all of the assets of, or a majority interest in, the voting shares
to, or the merger or consolidation with or into, any other entity.

19.8              APPLICABLE LAW AND DISPUTES

                  This Agreement, and any disputes arising out of or in
connection with this Agreement, shall be governed by and construed in accordance
with the laws of Hong Kong, excluding its rules governing conflicts of laws. The
courts located within Hong Kong shall have exclusive jurisdiction to adjudicate
any disputes arising out of or in connection with this Agreement; provided,
however, that either party may seek preliminary or permanent injunctive relief
in any court of competent jurisdiction in order to protect its Confidential
Information.

19.9              RIGHTS CUMULATIVE

                  Except as otherwise expressly provided in this Agreement, all
rights and remedies conferred by this Agreement, by any other instrument, or by
law are cumulative and may be exercised singularly or concurrently.

19.10             SEVERABILITY

                  If a court or other competent tribunal in any jurisdiction
holds any provision of this Agreement illegal, invalid or unenforceable in whole
or in part under applicable law, such provision or such portion thereof shall be
ineffective as to such jurisdiction to the extent of its illegality, invalidity
or unenforceability. The illegality, invalidity or unenforceability of such
provision in that jurisdiction shall not in any way affect the legality,
validity or enforceability of any other provision of this Agreement, or of such
provision, in any other jurisdiction, and the parties shall seek in good faith
to agree on replacing any such illegal, invalid or unenforceable provisions with
legal, valid and enforceable provisions that, in effect, shall most nearly and
fairly approach the effect of the invalid provisions.

19.11             ENTIRE AGREEMENT

                  This Agreement, including all Exhibits attached hereto,
constitutes the entire Agreement between the parties pertaining to the subject
matter hereof. This Agreement supersedes all prior agreements and understandings

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 12/20

<PAGE>

(NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT)

between the parties, whether written or oral, with respect to such subject
matter. No representations or statements of any kind made by any representative
of either party which are not stated in this Agreement shall be binding on that
either party. No course of dealing or course of performance shall be relevant to
explain or supplement any term expressed in this contract.

19.12             NO WAIVER

                  The failure by either party to assert any of its rights
hereunder, including, but not limited to, the right to terminate this Agreement
due to a breach or default by the other party hereto, shall not be deemed to
constitute a waiver by that party of its right thereafter to enforce each and
every provision of this Agreement in accordance with its terms.

19.13             HEADINGS

                  The subject headings of this Agreement are included for
purposes of convenience only, and shall not affect the construction or
interpretation of any provision of this Agreement.

19.14             COMPLIANCE WITH APPLICABLE LAWS

                  In the exercise of their respective rights and the performance
of their respective obligations, each party shall comply with all applicable
laws, regulations and governmental orders. Kerry Logistics shall, at its own
expense, obtain, and maintain in full force and effect throughout the
continuance of this Agreement, all licenses, permits, approvals and other
governmental authorizations required with respect to the operation of the Kerry
Logistics' Facility.

19.15             NO COLLATERAL

                  [*]

Netgear. Inc.                CONFIDENTIAL INFORMATION                 Page 13/20

<PAGE>
                         CONFIDENTIAL TREATMENT REQUEST

* Portions denoted with an asterisk have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for confidential
  treatment.

NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

                                    EXHIBIT 1

                          STANDARD OPERATING PROCEDURES

1.1               PROCESS OVERVIEW & ENVIRONMENT

The requirement is to receive, into a bonded warehouse, a regular receipt of
Products, which have been manufactured in Asia. The Products are to be stored,
controlled and accounted for and then picked to match specific customer order
requirements.

REAL TIME OPERATION

At all Kerry Logistics' warehouses operation shall be in real time. The product
flow through the warehouse shall be bar code controlled from handling-in until
the loading of the truck. Kerry Logistics shall update stock immediately when
the Products are put on location and after the pick.

SECURITY SYSTEMS

Kerry Logistics shall use a digital CCTV system throughout the warehouse. The
information captured by such system shall be stored for twenty-four (24) hours
(max. legal time). Kerry Logistics shall use a burglar alarm throughout the
warehouse, and a fire/sprinkler alarm system which are connected to the building
management office.

LEAD-TIME

The standard lead-time shall be such that orders received before 3:00 p.m. Hong
Kong time are ready for shipment the next working day.

1.2               RECEIPT

The parties acknowledge that the majority of volume will be containerized sea
freight. The receipts shall be delivered throughout the week. The remaining
volume will be by ad-hoc airfreight. All pallets shall be 100 x 120 x 160/200
plywood-shipping pallets.

Each shipment shall be verified against the packing list and/or invoice upon
arrival, booked into the storage location and all Sun System receipt
transactions shall be manually data entered on the day of delivery.

The majority of pallets received shall contain single part numbers. If a pallet
contains mixed part numbers it shall be split down into an individual part
number per pallet. Each mixed pallet shall be marked on all four sides with a
label designating it as a "mixed pallet."

Approximately one (1) month's supply of Products shall be held in stock, i.e.,
300 pallets, covering approximately 700 part numbers.

Netgear has five primary stockroom locations within the Sun System: one IQC
location, two finished goods locations, one stock rotation location and one
warranty returns location. Receipts shall be played into the correct location
based on the specific type of transaction. Netgear shall provide to Kerry
Logistics the definition of each stock room location under Sun System.

Kerry Logistics shall provide a safe and secure warehouse environment.

A product identification, not necessarily a bar code identification, shall be
sufficient to handle incoming Products. Trucks and containers arriving before
12:00 p.m. with a pre-alert of a minimum of two (2)

Netgears, Inc.               CONFIDENTIAL INFORMATION                 Page 14/20

<PAGE>

NETGEAR AND KERRY LOGISTICS OPERATING AGREEMENT

working days shall be off-loaded and the Products put on location the same day.
This shall also apply to the stock update.

After discharge, the Products shall be sorted by SKU (stock keeping unit) and
checked for outer damage and quantity. The system shall create a location and a
put away. For the storage of pallets. Kerry Logistics may maintain a random
storage system; provided, however that Netgear's Products shall be stored as
much as possible together. For shelves and bins Kerry Logistics shall maintain a
fixed storage location system.

The individual bringing the Products to their location shall scan the put away
and then the location. If the scanner indicates the correct location, the
individual shall put the Products on location, provide confirmation thereof and
the stock shall be updated.

1.3               ORDER PICKING

The current Netgear customer base is 17. The average number of customer orders
per month is approximately 60. The average number of lines per customer order is
approximately nine (9). Orders shall be placed over night (in the U.S.) and
shall be visible by 7:00 a.m. Hong Kong time (Day 1), at which time an order
requirement report (shippable backlog) shall be produced. The majority of
shipments (+90%) shall be in full case and pallet quantities, but there may be
some shipments that require case breaks.

The order cut-off time is 15:00 hrs (Day 1) for next day fulfillment (Day 2).
All orders shall be picked, made ready for dispatch and confirmed on the system
by 6:00 p.m. Hong Kong time (Day 2), with all stock being picked on a FIFO
basis.

The parties acknowledge that weekly order volumes are expected to fluctuate by
plus or minus twenty-five percent (25%) per week, with the third week of the
month seeing the highest volume.

The required service level shall have the result that all Customer Orders are
dispatched from the distribution hub within forty-eight (48) hours (2 working
days) of entering on the Sun System.

1.4               SHIPMENT QUALITY AND MIS-SHIPS

All packing lists shall be generated from the Kerry Logistics operating system.
The commercial invoices shall be generated from the Sun System. All shipments
shall be audited to confirm 100% accuracy to Customer Order and packing/delivery
specifications (which may vary from Customer to Customer).

Mis-shipments, excluding losses and damage during transportation, are shipments
reported by Netgear's Customers that reportedly do not contain what the packing
list declares. In case of mis-shipments. Netgear shall immediately credit the
customer with an RMA or invoice the Customer according to the actual contents of
the shipment. The Customer shall then either return to Netgear the extra units
received or receive credit from Netgear for any short shipment. Kerry Logistics
and Netgear shall jointly review the audit trail documentation associated with
the mis-shipment. This may include a warehouse cycle count for extra units in
relation to book inventory, proof of delivery for the shipment, pieces, weights,
dimensions, shipping documentation and other related pick and pack documents.

Netgear shall not charge Kerry Logistics for any missing units if Netgear and
Kerry Logistics conclude that:

         A)       The documentation audit trail is consistent with the
                  commercial invoices and Customer order;

         B)       The inventory cycle count does not show any inventory
                  discrepancy for the SKU's at issue.

Netgear shall charge Kerry Logistics for any missing units if Netgear and Kerry
Logistics conclude that:

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 15/20

<PAGE>

Netgear and Kerry Logistics Operating Agreement

         A)       The documentation audit trail is not consistent with the
                  commercial invoices and Customer order:

         B)       The inventory cycle count reveals an inventory discrepancy for
                  the SKU's at issue.

1.5               QUALITY ASSURANCE PROGRAM AND MANAGEMENT

The parties acknowledge that the quality of Netgear's Products and services is
vital to Netgear's continued growth and success. As such, a strong quality
management organization is an absolute requirement. Kerry Logistics quality
management team must be able to:

-        Report to Netgear the measurement of the quality of Products received
         in order for Netgear to take objective corrective actions with
         suppliers, including:

                  -        AQL Sampling Plan;

                  -        Use of Defect Codes;

                  -        Pareto of Defects (at incoming);

                  -        Incoming Defects per Million (DPM) by Product and
                           supplier;

                  -        Warranty return rates, by Product and supplier;

                  -        Pareto of Defects (warranty returns); and

                  -        MRB Coordination (discrepant material disposition),

-        Perform reasonable inspection procedures, including:

                  -        Functional test capability;

                  -        Mechanical/cosmetic inspection standards;

                  -        Workmanship standards; and

1.6               TRANSACTION PROCESSING

All receipts & picks/dispatches shall be transacted daily on Netgear's Sun
System. Kerry Logistics shall provide two administrative resources to play all
receipt and shipment transactions in the Sun System on a daily basis.

1.7               TRANSPORTATION

All import transportation costs shall be paid for and managed by Netgear.

All outbound transportation costs shall be paid by Kerry Logistics and invoiced
to Netgear at the agreed rate schedule set forth in Exhibit 3 of the
Distribution Operations Agreement between Netgear and Kerry Logistics. The
parties acknowledge that transportation costs are over and above the agreed to
cost model for the Services set forth in Exhibit 2 of the Distribution
Operations Agreement between Netgear and Kerry Logistics.

1.8               RMA (RETURN MATERIAL AUTHORIZATION) PROCESSING

Currently, approximately 40 RMA orders per month of "faulty" Products are
returned to the distribution hub from Netgear's Customers. This represents
approximately 1150 line items and 5100 units per month. This is audited against
RMA information in the Sun System and transacted to allow credits to be issued
to Netgear's Customers. A nominated carrier then returns the Products to Hong
Kong.

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 16/20

<PAGE>

Netgear and Kerry Logistics Operating Agreement

The parties acknowledge that the cost to receive, inventory, report, stage and
ship RMAs has been included in the agreed to cost model for the Services set
forth in Exhibit 1 of the Distribution Operations Agreement between Netgear and
Kerry Logistics.

For purposes of this Specific Services and Agreements Addendum, RMA processing
means the management of the receipt, verification, inspection, testing,
disposition, re-packaging and reporting of Product returns from Netgear's
Customers. Netgear issues two types of authorizations to its Customers: (i)
warranty return authorizations for defective Products; and (ii) stock rotation
returns for unsold slow moving Products from Customers' inventory. Kerry
Logistics shall maintain proper separation of such warranty and stock rotation
Products throughout the following functions:

         -        Physical verification of shipments of returned Products from
                  Netgear's Customers;

         -        Verification that returned Products are received in good
                  physical condition, noting any and all shipping damage on the
                  relevant commercial documents (cargo receipt, bills of lading,
                  delivery receipts, etc.) prior to signing delivery documents;

         -        Upon acceptance, verification that a valid RMA exists for
                  returned Products;

         -        Reporting of any unauthorized returns to Netgear on date of
                  receipt;

         -        Verification that returned Products match product and quantity
                  authorized on Netgear's RMA;

         -        Reporting any discrepancy between Products and quantity
                  received and Products and quantity authorized on date of
                  receipt;

         -        Completing and faxing to Netgear the Netgear Returned Material
                  Receipt Form on that date of receipt;

         -        Preparing and submitting to Netgear a daily returns material
                  receipts report, detailing Customer name. RMA number, Product
                  and quantity, and value on the date of receipt. If no receipt
                  activity occurs on any given day, the receipts report shall be
                  sent, noting "no receipts";

         -        Investigating disputed claims by Netgear and/or Netgear's
                  Customers and providing proof of delivery as required;

         -        Performing incoming inspection on all returned Products per
                  agreed processes;

         -        Performing functional tests on all warranty defective Product
                  returns;

         -        Providing returned Product functional test, inspection yields
                  and pareto of defects report to Netgear on a monthly basis;

         -        Maintaining separate inventory locations for Product receipt,
                  work in process test, inspection or test failure Products,
                  inspected and accepted Products, and refurbished Products per
                  agreed processes;

         -        Arranging for timely disposition and return to original
                  manufacturer of all inspection or test failure Products, which
                  are still under manufacturers warranty; and

         -        Establishing procedures and processes to ensure inventory
                  integrity between Netgear's operating system and Kerry
                  Logistics' operating system.

1.9               COST PLUS MODEL

Netgear intends to manage the Hong Kong distribution center on a cost-plus model
basis, as specified further in Exhibit 3 attached hereto. Freight charges shall
be excluded from the cost model and shall be managed separately.

1.10              REPORTING

Netgear shall be provided with direct access to Kerry Logistics' systems,
including but not limited to Netgear Warehouse Control System information, which
shall take place via web. Such direct access shall include but not be limited to
access to on-hand inventory, receipts, shipments, but excluding RMA. Kerry
Logistics shall provide standard or custom reports to Netgear on regular basis
for comparison to Netgear's Sun System database. Kerry Logistics shall provide
Netgear with daily access to web site and account activity. Kerry Logistics
shall provide Netgear with a mutually agreed to set of standard reports on a
daily, weekly and/or monthly basis as required.

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 17/20

<PAGE>

Netgear and Kerry Logistics Operating Agreement

1.11              PERFORMANCE INDICATORS

INBOUND FLOWS

The standard shall be that Products are handled in and stock updated the day of
arrival.

WAREHOUSING

Kerry Logistics agrees to ensure an inventory accuracy of 100%, re-insured at
Netgear's expense, and accepts full responsibility for missing Products.

MEASUREMENT METHOD

The measurement method shall be a cycle count.

ORDER PICKING

The standard shall be that orders received before 15:00 p.m. Hong Kong time are
ready for shipment the next working day. Depending on the number of orders and
lines to be shipped, the parties shall reach an agreement on the percentage of
Orders to be received over night. The measurement method and systems shall
indicate when an Order is ready for shipment.

ORDER CORRECTNESS

Kerry Logistics shall ensure that 99.9 % of the Order lines picked are correct,
provided that the content of the cartons in stock is correct.

DISTRIBUTION

Kerry Logistics shall not have any direct liability for on-time deliveries as
delivery is subcontracted to third parties. However the carriers used offer a
98% on-time delivery but do not guarantee same.

1.12              INSURANCE

Netgear shall provide its own marine and property insurance to cover fires,
flood, and other acts of God. Kerry Logistics shall be insured at its own cost
for workers' compensation and losses and damages caused by Kerry Logistics'
negligence. A copy of Kerry Logistics' insurance policy shall be made available
to Netgear at its first demand.

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 18/20

<PAGE>
                                                  CONFIDENTIAL TREATMENT REQUEST

* Portions denoted with an asterisk have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for confidential
  treatment.

Netgear and Kerry Logistics Operating Agreement

                                    EXHIBIT 2

                                   PRICE LIST

<TABLE>
<CAPTION>
                                                   BASIS          AMOUNT
                                                   -----          ------
<S>                                               <C>         <C>
(1)      Facility Set-up Cost                     One-off     US$  [*]

(2)      Relocation Cost from Celestica's         One-off     US$  [*]
         Facility

(3)      Logistics Services Cost (1)              Monthly     US$  [*]

(4)      Miscellaneous Cost (1) -                 Monthly     US$  [*]
         Quality & RMA

(5)      Miscellaneous Cost (2) -                 Monthly     US$  [*]
         Supply Chain Management (3)
</TABLE>

         ALL MISCELLANEOUS COST (A) AND MISCELLANEOUS COST (B) UNDER ITEMS (4)
         AND (5) INCLUDE 10% MANAGEMENT FEE. SERVICES CHARGES FOR ITEMS (4) &
         (5) HERETO SHALL BE REVIEWED AND AGREED, ON QUARTERLY BASIS, BETWEEN
         NETGEAR AND KERRY LOGISTICS IN WRITING (INCLUDING FAX & EMAIL). THE
         DEADLINES FOR QUARTERLY REVIEW SHALL BE NO LATER THAN THE FIRST DATE OF
         EACH OPERATING QUARTER (I.E., JANUARY 1, APRIL 1, JULY 1, OCTOBER 1).
         UNLESS BEING AGREED IN WRITING OTHERWISE, THE HIGHEST MONTHLY COST
         WITHIN THE PREVIOUS OPERATING QUARTER SHALL BE DEEMED AS THE AGREED
         MONTHLY SERVICE COST FOR THAT CURRENT OPERATING QUARTER.

<TABLE>
<S>                                                      <C>              <C>
(6)      Other Services as Required:-

         6.1      Labour Worker                          as required      US$ [*]/ labor day; overtime: US$ [*]/ labor
                                                                          hour

         6.2      Non-Labour Worker                      as required      US$ [*]/ man day; overtime: US$ [*]/ man hour

         6.3      Pallets                                as required      US$ [*]/pallet

         6.4      Overflow Storage (All-in Rate)         as required      US$ [*]/ pallet: min 10 pallets (all-in rate)

         6.5      Vanning/ Devanning                     as required      US$ [*]
                                                                          US$ [*]

         6.6      Loading / Unloading (Truck)            as required      US$ [*] /CBM. min [*] CBM

         6.7      Forklift Driver                        as required      US$ [*]/[*] hours
</TABLE>

____________________________
(1)      Inclusive of dedicated facility for Netgear operations (approximately
         30,000 sq. ft.), inventory management, basic value-added services,
         utility and office expenses, RF enabled operations, IQC room, test
         equipment maintenance but exclusive of overseas travelling expenses or
         any other ad-hoc services.

(2)      August 2001 actual representation.

(3)      Facility expenses, IT & telecommunications expenses, distribution &
         warehousing expenses, transportation, office supplies & other related
         expenses.

(4)      August 2001 actual representation.

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 19/20

<PAGE>
                                                  CONFIDENTIAL TREATMENT REQUEST

* Portions denoted with an asterisk have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for confidential
  treatment.

Netgear and Kerry Logistics Operating Agreement

                                    EXHIBIT 3

                              TRANSPORTATION COSTS

<TABLE>
<S>                     <C>
Local Haulage           Kwai Chung Container Terminal - Kerry facility in Kwai Chung
                        US$ [*]
                        US$ [*]

Local Truckage          US$ [*]/CBM, min [*] CBM (excluding gate/toll, which will be charged back to
                        Netgear)
</TABLE>

Netgear, Inc.                CONFIDENTIAL INFORMATION                 Page 20/20<PAGE>
                                                  CONFIDENTIAL TREATMENT REQUEST

* Portions denoted with an asterisk have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for confidential
  treatment.

                                                                   EXHIBIT 10.29

Date: August 28, 2002                         Vendor A/P No. ___________________
                                                   Dept. No 24

                   COSTCO WHOLESALE VENDOR AGREEMENT (BASIC)
                              UNITED STATES (2000)

NETGEAR, Inc. ("Vendor") and both Costco Wholesale Corporation and The Price
Company (both referred to as "Costco Wholesale") agree that:

A.       AGREEMENT DOCUMENTS. All sales and deliveries of all products by Vendor
         to Costco Wholesale (or other purchaser under paragraph C below), and
         all purchase orders by Costco Wholesale to Vendor, will be covered by
         and subject to the terms of each of the following documents
         (collectively the "Agreement Documents"):

         -    This Vendor Agreement;

         -    The attached Costco Wholesale Standard Terms United States (2000),
              as they may be amended from time to time ("Standard Terms"); and

         -    Each Vendor Purchase Program Agreement, Item Agreement and special
              program agreements (such as warehouse displays, promotions or
              rebates) that have been or will be signed between the Vendor and
              Costco Wholesale.

B.       INCONSISTENCY. The above Agreement Documents collectively are an
         agreement between us, are part of this Vendor Agreement and are
         incorporated herein by reference. In case of any inconsistency between
         any Agreement Documents, the last such document in the above list will
         take priority over any document higher on the list.

C.       PURCHASER. Each purchase will be made in the trade name of "Costco
         Wholesale," but will be for the account of either Costco Wholesale
         Corporation ("Costco") or The Price Company ("Price") or both, or of
         their affiliates or licensees for whom Costco and Price act as
         purchasing agents.

D.       INSURANCE. The insurance requirements are set forth in Section 16 of
         the Standard Terms.

E.       DISPUTES. Disputes shall be resolved under Sections 20 and 21 of the
         Standard Terms.

F.       RELATIONSHIP OF THE PARTIES. The relationship between Costco Wholesale
         and Vendor is that of an independent contractor and Vendor agrees that
         it has not and shall not hold itself out as, nor shall Vendor be deemed
         to be, an agent of Costco Wholesale.

G.       VENDOR CODE OF CONDUCT. Vendor agrees to comply with Costco Wholesale's
         vendor Code of Conduct (11-1-99) as outlined in the November 1999
         letter from Jim Sinegal, President and CEO, to all Costco Wholesale
         Vendors.

                                                                          Page 1

<PAGE>

H.       OTHER FORMS. The Agreement Documents supersede all terms in Vendor's
         invoices and other forms, and all prior oral or written communications
         between us, for the matters covered in the Agreement Documents. No
         party is entering into these Agreement Documents in reliance on any
         oral or written promises, representations or understandings other than
         those in the Agreement Documents. The Agreement Documents can be
         amended only in a writing signed by an authorized official of each of
         us.

I.       The agreement Documents can be canceled at anytime without cause, by
         either party upon 60 days written notice to the other party. Vendor
         agrees to fulfill all outstanding obligations unless otherwise provided
         in writing by Costco Wholesale.

J.       LIMITATION OF LIABILITY. With the exception of Vendor's indemnification
         obligations set forth in the agreement documents, in no event will
         either party be liable to the other party for special, direct or
         consequential damages.

COSTCO WHOLESALE CORPORATION VENDOR:
THE PRICE COMPANY

By: /s/ illegible                            By: /s/ Ray Robidoux
    -------------------------------              -------------------------------
               (Buyer)                             (Signature of Owner, Officer,
                                                   or other Authorized Employee)

By: /s/ illegible                            By: Ray Robidoux
    -------------------------------              -------------------------------
                (GMM)                                 (Print Name and Title)

                                                                          Page 2

<PAGE>

COSTCO WHOLESALE STANDARD TERMS
UNITED STATES (2000)

         These terms and conditions ("Standard Terms") apply to every shipment
and sale of Merchandise from Vendor either to Costco Wholesale Corporation
("Costco") or The Price Company ("Price") or affiliates or licensees for whom
Costco and Price act as purchasing agents ("Affiliate Purchasers"), unless
otherwise agreed in writing and signed by Costco or Price and by Vendor. Each
purchase will be made in the trade name of "Costco Wholesale," but will be for
the account of either Costco or Price or both, or of one of the Affiliate
Purchasers. The term "Costco Wholesale" as used below means the entity or
entities for which the purchase is being made. The term "Agreement Documents"
refers to all documents as defined in the Basic Vendor Agreement.

         1.       MERCHANDISE AND PALLETS.

         (a)      "Merchandise" includes all goods described in any Costco
Wholesale Purchase Order to Vendor and all packaging, instructions, warnings,
warranties and other materials and services normally included with such
Merchandise. Packing (including pallets) shall comply with all requirements of
the carrier and Costco Wholesale, and its cost is included in the price of the
Merchandise. Vendor shall inspect all Merchandise prior to shipment to ensure
quality, safety and conformity and to ensure that the Merchandise is properly
packed and loaded to prevent transit damage and tampering.

         (b)      "Pallets" must at a minimum, be of standard GMA #1 quality, 4
way entry (40" x 48") or CHEP. In the event pallets do not meet these minimum
standards, Costco Wholesale, at its sole option, may, at Vendor's sole expense,
reject the Merchandise and/or rework the pallets.

         2.       PURCHASE ORDERS. Vendor may ship only against a written Costco
Wholesale Purchase Order ("Purchase Order"). A Purchase Order shall be
considered an acceptance of any offer to sell by Vendor. Also, shipment in
response to a Purchase Order is acceptance of the Purchase Order and of these
Standard Terms. Except as specified in a Purchase Order, projections, any past
purchasing history and representations about quantities to be purchased are not
binding and Costco Wholesale shall not be liable for any act or expenditure
(including expenditures for equipment, labor, materials or packaging) by Vendor
in reliance on them. The relationship between Costco Wholesale and Vendor is
that of an independent contractor and Vendor agrees that it has not and shall
not hold itself out as, nor shall Vendor be deemed to be, an agent of Costco
Wholesale.

         3.       P.O. & ITEM NUMBER. Vendor shall mark all invoices, bills of
lading, and packing lists to show legibly the complete Costco Wholesale Purchase
Order and Item number(s) to which they relate.

         4.       DOCUMENTS. Vendor shall comply with all billing, payment and
document instructions in the Costco Wholesale Vendor Credit Information Packet,
as it may be revised from time to time. On the date any Merchandise is shipped,
Vendor shall send to the "Bill To" address an original invoice which reflects
Costco Wholesale's Purchase Order and accounts payable vendor number. The actual
scale weights shall be shown on all bills of lading and other shipping documents
which must accompany the Merchandise to the shipping destination. Any claims
submitted by Vendor to Costco Wholesale regarding unpaid invoices, partial
payments, RTVs, rebate or audit deductions, etc. must be submitted on a Costco
Wholesale Standard Vendor Claim Form.

         5.       PRICE CHANGES. The prices on Costco Wholesale's Purchase Order
are not subject to any increase or additional charges because of increased cost,
any change in law or any other reason. Also, Vendor must give Costco Wholesale
[*] advance written notice of any price change on future orders.

         6.       PAYMENT. Unless otherwise agreed in writing, Costco Wholesale
shall not be obligated to pay any invoice until [*] after delivery is completed
under Section 7 below. Vendor shall not assign or factor its account without
prior written notice by Vendor to Costco Wholesale. Said assignee or factoring
third party is only entitled to the payment validly owed to Vendor and said
assignment does not confer upon assignee or factor any other rights. Once the
account has been assigned to a third party, the assignment shall not be changed
or discontinued without the prior written consent of both the Vendor and such
third party and prior written notice to Costco Wholesale.

         7.       DELIVERY. Vendor will be responsible for making all claims
with the carrier, in writing, for all losses or damages and/or rework expenses
regardless of whether Costco Wholesale arranges carriage, designates the carrier
and/or pays the freight. Sales are on a delivered basis and Vendor's delivery of
the Merchandise will occur and risk of loss will pass only when and to the
extent conforming Merchandise has been received at the Costco Wholesale
warehouse or depot designated in the Purchase Order and a Costco Wholesale
employee has signed the bill of lading or other shipping document acknowledging
that receipt. However, if the Purchase Order designates an FOB sale with
delivery to an ocean port or carrier for ocean shipment, the terms of sale and
delivery will be FOB Vessel Incoterms 2000. All ocean shipments for Hawaii and
Alaska are FOB Costco Wholesale.

         8.       LATE SHIPMENT. Costco Wholesale [*]. Vendor shall notify
Costco Wholesale immediately if any shipment will not occur in time to arrive by
the "Ship To Arrive Date". Vendor shall ship back orders and late shipments only
to the extent authorized in writing by Costco Wholesale, and only on a freight
prepaid basis at Vendor's expense.

                                                                          Page 1

<PAGE>

COSTCO WHOLESALE STANDARD TERMS                              UNITED STATES(2000)

         9.       COMPLIANCE WITH LAWS. Vendor warrants all Merchandise to be
manufactured, processed, packaged, labeled, tagged, tested, certified,
accurately marked, weighed, inspected, shipped and sold in compliance with all
applicable industry standards and all applicable federal, state, provincial and
local laws, treaties and regulations, including by way of example all laws and
regulations relating to health, safety, environment, serial and identification
numbers, labeling and country of origin designation; and including all FDA,
toxic substances, OSHA and EPA regulations, Federal Meat Inspection Act or
Poultry Products Inspection Act, or any other food safety statute; Customs
requirements; and the requirements of California Proposition 65. Vendor agrees
to execute and/or furnish to Costco Wholesale on reasonable request, all
certifications, guaranties and other documents regarding compliance with such
laws and regulations, including any Material Safety Data Sheet ("MSDS") as
required by OSHA regulations.

         10.      U.L. All electrical Merchandise must be approved by
Underwriter's Laboratories, Inc.

         11.      ABILITY TO SELL. Vendor warrants and represents to Costco
Wholesale that the Merchandise and its resale will not infringe any patent,
trademark, trade dress, trade name, copyright or other right; that the
Merchandise is without defects and has adequate warnings and instructions; and
that Vendor is not a party to any agreement or understanding, and that there is
no other impediment or restriction that limits, prohibits or prevents Vendor
from selling and delivering the Merchandise to Costco Wholesale or limits,
prohibits or prevents Costco Wholesale from reselling the Merchandise.

         12.      REJECTION/MERCHANDISE RETURN.

         (a)      Costco Wholesale [*], any Merchandise, shipment or portion
thereof that is non-conforming, or that is shipped contrary to Costco
Wholesale's instructions, or that is in excess of the quantities covered by the
Purchase Order, or that allegedly contains any defect or inadequate warnings or
instructions, or allegedly violates any law, regulation, or court or
administrative order, or allegedly infringes any patent, trade name, trade
dress, trademark, copyright or other right;

         (b)      [*]. Vendor hereby assumes, and shall bear and pay, all risks
and expenses of unpacking, examining, repacking, storing, holding and/or
reshipping or returning any such Merchandise, and shall reimburse Costco
Wholesale its net landed cost for such Merchandise as shown on the books of
Costco Wholesale, in addition to any other remedies available to Costco
Wholesale. In the event Vendor's payment terms include a cash discount, such
discount is not refundable to Vendor upon return of Merchandise pursuant to this
Section 12;

         (c)      [*]

         (d)      In the event Costco Wholesale cancels any Purchase Order
pursuant to Section 8, rejects any Merchandise due to its non-conformance
pursuant to this Section 12, accepts customer returns pursuant to Section 13, or
exercises its rights under Section 14, Costco Wholesale shall not be liable for
any, damages including consequential or incidental damages or lost profits or
expenses incurred by Vendor as a result of such cancellation, rejection,
acceptance, revocation of acceptance, refund, or offset.

         13.      CUSTOMER RETURNS. Costco Wholesale may reject or revoke
acceptance of any Merchandise returned by Costco Wholesale's customers for any
reason stated in Section 12(a) above.

         14.      REFUND; OFFSETS. At Costco Wholesale's option, Vendor [*]; and
Costco Wholesale may offset any such amounts against amounts Costco Wholesale
owes to Vendor. Costco Wholesale may also offset costs associated with defective
pallets, monies owed for regulatory fines or penalties (including associated
attorneys' fees), any rebates/incentive allowances and any other amounts owed by
Vendor against amounts Costco Wholesale owes to Vendor. Costco Wholesale may, at
the end of a season, at the close of a business relationship, or otherwise, hold
back a reasonable reserve for future claims against amounts owed. In the event
there remains an outstanding balance owed Costco Wholesale after such offset,
Vendor shall immediately pay to Costco Wholesale said balance.

         15.      INDEMNITY. Vendor shall defend, hold harmless and indemnify
Costco Wholesale and its subsidiaries, affiliates, employees, agents and
representatives from and against any and all claims, actions, liabilities,
losses, fines, penalties, costs and expenses (including reasonable attorneys'
fees) arising out of:

         (a)      Any actual or alleged infringement of any patent, trademark,
trade name, trade dress, copyright or other right relating to any Merchandise,
or other breach of these Standard Terms,

         (b)      Any actual or alleged death of or injury to any person, damage
to any property, or any other damage or loss, by whomsoever suffered, claimed to
result in whole or in part from the Merchandise or any actual or alleged defect
in such Merchandise, whether latent or patent, including any alleged failure to
provide adequate warnings, labeling or instructions,

                                                                          Page 2

<PAGE>

COSTCO WHOLESALE STANDARD TERMS                              UNITED STATES(2000)

         (c)      Any actual or alleged violation of any law, statute or
ordinance or any administrative order, rule or regulation relating to the
Merchandise, or to its manufacture, shipment, import, labeling, weights and
measurements, use or sale, or any failure to provide an MSDS or certification,
or

         (d)      Any act, activity or omission of Vendor or any of its
employees, representatives or agents, including activities on Costco Wholesale's
premises and the use of any vehicle, equipment, fixture or material of Vendor in
connection with any sale to or service for Costco Wholesale.

These indemnities and obligations of Vendor shall not be affected or limited in
any way by Costco Wholesale's extension of warranties to its customers, or by
any approval, specification, act or omission of Costco Wholesale. Vendor shall
have no obligation to defend, hold harmless and indemnify Costco Wholesale for
Costco Wholesale's sole negligence or intentional acts.

         16.      INSURANCE.

         (a)      Vendor shall obtain and maintain, at its expense, a policy or
policies of:

                  (i)      Commercial General Liability (including product and
                  completed operations, personal and advertising injury and
                  contractual liability coverage), with a minimum of [*] General
                  Aggregate limit; [*] Products and Completed Operations
                  Aggregate limit; and [*] each occurrence, written on an
                  occurrence form.

                  (ii)     For Vendors whose employees enter Costco Wholesale's
                  premises, Workers' Compensation Insurance with statutory
                  limits and Employers' Liability (Stop-Gap Liability) insurance
                  with minimum limits of [*]; Automobile Liability Insurance
                  with [*] coverage limits for each accident, including owned,
                  non-owned and hired vehicles.

         (b)      Vendor will provide Certificates of Insurance at all times
naming Costco Wholesale Corporation and The Price Company as "Additional
Insureds" with respect to General Liability and Automobile Liability policies,
and attach the Broad Form Vendor Endorsement executed in favor of Costco
Wholesale and The Price Company, to the Certificates of Insurance, and
protecting all parties from the liability set forth in 16(a) above. Vendor's
insurers must be Best's rated B+, VII or better. Vendor shall provide the
Certificates of Insurance, evidencing the required coverage, prior to receiving
a Purchase Order from Costco Wholesale.

         (c)      Policy limits may not be reduced, terms changed, or policy
canceled with less than thirty (30) days' prior written notice to Costco
Wholesale. Vendor's insurance shall be primary with respect to all obligations
assumed by the Vendor pursuant to the Agreement Documents. It shall be the
responsibility of the Vendor to ensure that any of its agents, representatives,
subcontractors, and independent contractors comply with the above insurance
requirements. Coverage and limits referred to above shall not in any way limit
the liability of the Vendor.

         17.      RECALLS. In the event Merchandise is the subject of a recall
(which includes safety notices) initiated by Costco Wholesale, Vendor, or a
government or consumer protection agency, Vendor shall be responsible for all
costs and expenses associated with the recall or notice and shall reimburse
Costco Wholesale for all costs and expenses incurred by Costco Wholesale related
to the recall or notice, including recalling, shipping and/or destroying the
Merchandise (and where applicable, any products with which the Merchandise has
been packaged, consolidated or commingled), including refunds to customers and
Costco Wholesale's net landed cost of unsold Merchandise.

         18.      TAXES. Costco Wholesale's purchase is for resale unless Costco
Wholesale otherwise states in writing. Vendor's pricing should be exclusive of
all sales, use and like taxes. If claiming the resale sales tax exemption,
Costco Wholesale .will provide Vendor with valid tax exemption (resale)
certificates for those states where deliveries are to be made. Vendor's
invoicing Costco Wholesale for any tax or fee shall constitute a warranty that
Vendor is duly registered with the agency which levies the tax or fee. If Vendor
does not remit the tax or fee to the appropriate agency, and/or if the same tax
or fee is subsequently assessed by the agency against Costco Wholesale, Vendor
shall reimburse Costco Wholesale for all amounts of tax or fee Costco Wholesale
has remitted to Vendor to date and Vendor shall defend, indemnify and hold
harmless Costco Wholesale against all losses, penalties, interest and expenses
(including attorneys' fees).

         19.      OTHER REMEDIES. The exercise of any remedy herein shall be
without prejudice to any other right or remedy available to either party.

         20.      DISPUTES AND ARBITRATION. All claims and disputes that (1) are
between Vendor and Costco Wholesale or its affiliates, Affiliate Purchasers,
subsidiaries, parents and/or their employees, and (2) arise out of or relate to
the Agreement Documents or any agreement or transaction or occurrence between
Vendor and Costco Wholesale or to their performance or breach (including any
tort or statutory claim) ("Arbitrable Claims"), shall be arbitrated under the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), in
English at Seattle, Washington, before one neutral arbitrator who may be a
national of any party and who shall be a member of the AAA's Large Complex Case
Panel. All documents and information relevant to the claim or dispute in the
possession of any party shall be made available to the other party not later
than sixty (60) days after the demand for arbitration is served, and the
arbitrator may permit such depositions or other discovery deemed necessary for a
fair hearing. The hearing may not

                                                                          Page 3

<PAGE>

COSTCO WHOLESALE STANDARD TERMS                              UNITED STATES(2000)

exceed two days. The award shall be rendered within 120 days of the demand. The
arbitrator may award interim and final injunctive relief and other remedies, but
may not award punitive damages. No time limit herein is jurisdictional. Any
award of the arbitrator (including awards of interim or final remedies) may be
confirmed or enforced in any court having jurisdiction. Notwithstanding the
above, Costco Wholesale or Vendor may bring court proceedings or claims against
each other (i) solely as part of separate litigation commenced by an unrelated
third party, or (ii) if not first sought from the arbitrator, solely to obtain
in the state or federal courts in King County, Washington, temporary or
preliminary injunctive relief or other interim remedies pending conclusion of
the arbitration. In the case of contradiction between the provisions of this
Section 20 and the Commercial Arbitration Rules of AAA, this Section shall
prevail.

         21.      VENUE; ATTORNEYS' FEES. Vendor consents to the personal
jurisdiction and venue of the federal and state courts in King County,
Washington, for any court action or proceeding. The prevailing party in any
arbitration or court action or proceeding shall be awarded its reasonable
attorneys' fees, expenses and costs.

         22.      GOVERNING LAW. The Agreement Documents and all agreements
between Vendor and Costco Wholesale shall be governed by and construed according
to the laws of the state of Washington without regard to conflicts of laws
principles.

         23.      SEVERABILITY. If any provision of any Agreement Document or of
any agreement between Vendor and Costco Wholesale is held invalid or
unenforceable, it shall be so held to the minimum extent required by law and all
other provisions shall remain valid and enforceable.

         24.      BAR CODES. Vendor shall place on all Merchandise sold to
Costco Wholesale an accurate Universal Product Code ("UPC") that complies with
the written Costco Wholesale Uniform Product Code Requirements, as amended from
time to time. Vendor will promptly supply Costco Wholesale with its 12-digit
manufacturer assigned UPC number. If Vendor fails to place an accurate UPC on
any Merchandise, Costco Wholesale may assess Vendor for Costco Wholesale's
internal costs and any associated fines, costs, expenses or attorneys' fees
levied. If requested by Costco Wholesale, Vendor shall place Costco Wholesale's
assigned item number on all Merchandise supplied to Costco Wholesale.

         25.      CALIF. PROP. 65. Vendor represents it is fully aware of, and
agrees to comply with, California Proposition 65 (Calif. Health & Safety Code
25249.5-25249.13) and its implementing regulations (22 Calif. Code Reg. Section
12000 et seq), including the following:

                  (1)      The Merchandise must not contain chemicals known to
the State of California to cause cancer or reproductive toxicity; or

                  (2)      The quantity of the chemical in question is in
compliance with the Federal and California standards, or the Merchandise must
carry a warning label that complies with California law.

Vendor shall provide Costco Wholesale a current MSDS that meets the requirements
of OSHA regulations and California Admin. Code, Title 8, Section 5194, or a
statement from the manufacturer that no MSDS is legally required for the
Merchandise.

         26.      OZONE LAWS. Vendor represents and certifies that:

                  (1)      No Merchandise contains any foam or other substances
("Banned Substances") banned under regulations adopted by the U.S. Environmental
Protection Agency ("EPA") or under any other U.S. laws or regulations; and

                  (2)      The Merchandise either (a) does not contain and/or is
not manufactured with the use of any Class 1 or Class II Ozone-Depleting
Chemicals ("ODCs"), or (b) is properly labeled in full compliance with EPA
regulations and other applicable laws and regulations.

         27.      TRADEMARKS. The ownership and exclusive use of the trademarks
owned by Costco Wholesale, which include Costco Wholesale and all derivatives
thereof, shall remain vested in Costco Wholesale and Vendor shall have no rights
or interest in them. Vendor agrees that prior to using Costco Wholesale's marks
or logo in any manner, it will obtain prior written consent and comply with
Costco Wholesale's Guidelines.

         28.      CHILD/FORCED PRISON LABOR LAWS AND VENDOR CODE OF CONDUCT.
Vendor, by signing the Vendor Agreement, represents and warrants that it and its
subcontractors/suppliers will comply with all applicable local government
regulations regarding minimum wage, living conditions, overtime, working
conditions, child labor laws and the applicable labor and environmental laws.
Vendor further represents and warrants that it and its subcontractors/suppliers
do not use any form of forced prison labor and/or child labor under the age of
14 or the minimum age required by the local government, whichever is older.
Vendor also agrees to comply with Costco Wholesale's Vendor Code of Conduct.

                                                                          Page 4

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