Document:

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                                                                   EXHIBIT 10.28

                               SERVICES AGREEMENT

THIS SERVICES AGREEMENT is made between TRINET Employee Group. In ("TRINET"), a
California corporation, and NETGEAR, Inc. ("NETGEAR"), a Delaware corporation,
as of the Effective Date (hereinafter defined).

                                    RECITALS

WHEREAS, NETGEAR is a subsidiary of Nortel Networks Corporation ("Nortel"),
which has been formed to operate a certain portion of Nortel's business after
Nortel's transfer of certain assets to NETGEAR in accordance with the terms of a
Contribution Agreement to be entered into between NETGEAR and Nortel;

WHEREAS, in connection with NETGEAR's operation of such business, NETGEAR shall
employ NETGEAR Employees (hereinafter defined);

WHEREAS, in connection with NETGEAR's employment of NETGEAR Employees, it wishes
to engage TRINET to provide the Services (hereinafter defined);

WHEREAS, NETGEAR is in the process of selling its securities to parties other
than Nortel (specifically excluding any issuance of securities in NETGEAR or any
right to acquire securities in NETGEAR granted to employees, vendors or
consultants, the "Private Placement"); and

WHEREAS, the parties' entry into this Agreement is conditioned upon the closing
of the aforementioned Private Placement and the effective time of this Agreement
shall be 12:00 a.m. on the day following the closing of the Private Placement;

NOW, THEREFORE, In consideration of the foregoing and the mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

I.       SCOPE.

In consideration of NETGEAR's payment of Service Fees, TRINET agrees to provide
to NETGEAR the employment related services set forth in this Agreement and in
Exhibit A and the Schedule of Due Dates And Special Fees ("Services"), which are
incorporated herein by reference, as may be amended from time to time in writing
by both parties. During the Term, TRINET and NETGEAR may agree to additional
Services, and the Service Fees applicable thereto, or to change the Services or
the Service Fees. Such changes must be made in writing and signed by both TRINET
and NETGEAR.

II.      DEFINITIONS.

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         A.       "ADA" shall mean the Americans with Disabilities Act.

         B.       "Affiliate" shall mean, with respect to any entity, any other
                  entity, which directly or indirectly controls, or is under
                  common control with, or is controlled by, such entity. As used
                  in this definition, "control" shall mean the possession,
                  directly or indirectly, of the power to direct or cause the
                  direction of management or policies of the subject entity
                  (whether through ownership of securities or partnership or
                  other ownership interests, by contract or otherwise).

         C.       "Agreement" shall mean this Services Agreement entered into by
                  NETGEAR and TRINET as of the Effective Date.

         D.       "Benefit Plans" shall mean (i) employee benefit plans (within
                  the meaning of Section 3(8) of Title I of ERISA) that are
                  written and covered or qualified under the Code, ERISA or
                  other applicable Regulation, whether funded or unfunded, which
                  are established, contributed to, sponsored or maintained by an
                  employer, including all welfare, pension, profit sharing,
                  retirement, stock purchase, stock option, stock bonus,
                  severance or deferred compensation plans and (ii) any other
                  plans, funds, programs, policies, arrangements, practices,
                  customs and understandings that provide benefits of economic
                  value to employees, other than Compensation.

         E.       "Claim" shall mean any arbitration, action, litigation, suit,
                  charge, investigation, audit, claim, demand, assessment or
                  other proceeding of or before any court, arbitrator or
                  governmental or regulatory official, body or authority.

         F.       "Claim Notice" shall mean a party's notice to the other of the
                  existence of a claim or demand, which is being asserted or
                  sought to be collected from an NETGEAR Indemnitee or TRINET
                  Indemnitee by a third party, and specifying the nature of such
                  claim or demand and the amount or the estimated amount thereof
                  to the extent then feasible (which estimate shall not be
                  conclusive of the final amount of such claim or demand).

         G.       "COBRA" shall mean the Consolidated Omnibus Budget
                  Reconciliation Act of 1985.

         H.       "Code" shall mean the Internal Revenue Code of 1986, as
                  amended.

         I.       "Compensation" shall mean remuneration, such as wages, salary,
                  bonuses and commissions, paid relatively concurrent with and
                  in consideration for an employee's services.

         J.       "Confidential Information" shall have the meaning ascribed to
                  it in Section VII. A.

         K.       "Dispute" shall mean a claim, controversy or dispute of any
                  kind or nature whatsoever that arises between TRINET and
                  NETGEAR with respect to this Agreement.

         L.       "Effective Date" shall mean the effective date of this
                  Agreement, which shall be 12:00 a.m. on the day following the
                  closing of the Private Placement.

         M.       "NETGEAR" shall have the meaning ascribed to it in the
                  preamble of this Agreement.

         N.       "NETGEAR Benefit Plans" shall mean Benefit Plans adopted by

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                  NETGEAR for the benefit of NETGEAR Employees (excluding TRINET
                  Benefit Plans).

         O.       "NETGEAR Contract Coordinator" shall mean that individual
                  designated as such in Section XV. A. (or such other individual
                  as NETGEAR may specify in a notice duly given to TRINET
                  pursuant to Section XV. A.) to whom TRINET shall address all
                  questions regarding Services and submit all reports and
                  Invoices required under this Agreement.

         P.       "NETGEAR Employee" shall mean any individual jointly employed
                  by NETGEAR and TRINET with respect to whom Services are
                  supplied.

         Q.       "NETGEAR Employment Policies" shall mean NETGEAR
                  employment-related policies, programs, procedures or practices
                  applicable to NETGEAR Employees, such as, but not limited to,
                  policies related to holidays, attendance, performance
                  evaluation, and business expense and travel reimbursement
                  (excluding TRINET Employment Policies).

         R.       "NETGEAR Indemnitee" shall mean NETGEAR, its successors,
                  assigns and Affiliates, and their directors and officers,
                  individually and collectively.

         S.       "NETGEAR Managers" shall mean NETGEAR Employees designated as
                  managers by NETGEAR.

         T.       "NETGEAR's Knowledge" shall mean the knowledge of the NETGEAR
                  Contract Coordinator.

         U.       "Electronic Funds Transfer Agreement" shall mean that
                  agreement entered into by TRINET and NETGEAR as of the
                  Effective Date that is designated as such and is incorporated
                  herein by reference.

         V.       "ERISA" shall mean the Employee Retirement Income Security Act
                  of 1974, as amended.

         W.       "FAR" shall mean Federal Acquisition Regulation.

         X.       "HIPAA" shall mean the Health Insurance Portability and
                  Accountability Act of 1996.

         Y.       "Human Resources Manager" shall mean that qualified Human
                  Resources professional designated by TRINET to perform those
                  Services assigned to Human Resources Manager under this
                  Agreement and to serve as NETGEAR's primary contact with
                  respect to Services. NETGEAR shall submit all reports and
                  records required under this Agreement to the Human Resources
                  Manager or such Individual designated by the Human Resources
                  Manager.

         Z.       "Inventions" shall mean any and all inventions, including but
                  not limited to, improvements, designs, original works of
                  authorship, formulas, processes, compositions of matter,
                  computer software programs, databases, mask works and trade
                  secrets.

         AA.      "Losses" shall mean liabilities, losses, damages or costs
                  (including, without limitation, penalties, fines, costs,
                  attorney fees, liability to third parties and amounts agreed
                  upon in settlement).

         BB.      "Managers" shall mean the NETGEAR Contract Coordinator and the
                  Human Resources Manager.

         CC.      "Nortel" shall mean Nortel Networks Corporation.

         DD.      "Notice" shall mean a party's notice to the other of the
                  existence of a Dispute.

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         EE.      "Notice Period" shall mean the fifteen (15) calendar days from
                  a party's receipt of the Claim Notice.

         FF.      "Private Placement" shall have the meaning described to it in
                  the Recitals to this Agreement.

         GG.      "Prospective NETGEAR Employee" shall mean those individuals
                  who accept and satisfy the conditions of those written offers
                  made by NETGEAR for employment with NETGEAR and TRINET during
                  the Term.

         HH.      "Qualifying Event" shall mean an event which triggers
                  continued health care coverage eligibility under COBRA for
                  NETGEAR Employees or their eligible dependents, including
                  death, termination or reduction of hours, divorce or legal
                  separation, Medicare entitlement, dependent child changing
                  statue, or bankruptcy of NETGEAR.

         II.      "Regulation" shall mean law, ordinance or governmental or
                  regulatory rule, regulation or requirement.

         JJ.      "Service Fees" shall mean those rates or fees for Services set
                  forth in Exhibit A and the Schedule of Due Dates and Special
                  Fees.

         KK.      "Services" shall have the meaning ascribed to it in Section I.

         LL.      "Term" shall have the meaning ascribed to it in Section IV.A.

         MM.      "TRINET" shall have the meaning ascribed to it in the preamble
                  to this Agreement.

         NN.      "TRINET Benefit Plans" shall mean those Benefit Plans included
                  in the Services.

         OO.      "TRINET Corporate Employee" shall mean a TRINET Worker who is
                  an employee solely of TRINET.

         PP.      "TRINET Employee" shall mean any TRINET Corporate Employee or
                  an employee of TRINET and an entity (other than NETGEAR) to
                  which TRINET supplies services similar to the Services.

         QQ.      "TRINET Employment Policies" shall mean those TRINET
                  employment related policies, programs, procedures or practices
                  applicable to NETGEAR Employees under this Agreement, such as,
                  but not limited to, policies related to disciplinary action,
                  termination, safety, hiring, and leaves of absence.

         RR.      "TRINET Indemnitee" shall mean TRINET, its successors, assigns
                  and Affiliates, and their directors and officers, individually
                  and collectively.

         SS.      "TRINET'S Knowledge" shall mean the knowledge of the Human
                  Resources Manager or TRINET'S General Counsel.

         TT.      "TRINET Systems" shall mean any software or systems used by
                  TRINET or TRINET Workers in the supply of Services or
                  performance of this Agreement in any way.

         UU.      "TRINET Workers" shall mean all employees, agents (including,
                  without limitation, employees of such agents) and
                  sub-contractors (including, without limitation, employees of
                  such sub-contractors) of TRINET who supply Services, but
                  excluding any NETGEAR Employees.

         VV.      "WARN" shall mean the Worker Adjustment and Retraining
                  Notification Act.

III.     FEES AND PAYMENTS.

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         A.       In consideration of the Services, NETGEAR shall pay TRINET the
                  Service Fees. NETGEAR agrees to pay all Invoices for these
                  fees through electronic funds transfer pursuant to the
                  Electronic Funds Transfer Agreement. NETGEAR acknowledges its
                  obligation to sign the Electronic Funds Transfer Agreement as
                  a condition precedent to entering into this Agreement.

         B.       A late payment charge of one (1) percent of the unpaid balance
                  of the applicable invoice, plus any additional costs directly
                  incurred by TRINET, shall be applied if insufficient funds
                  are available in NETGEAR's designated account on the date of
                  the electronic funds transfer. The minimum late payment charge
                  is One Hundred Dollars ($100). Such unpaid balance shall also
                  be subject to a periodic charge of one and one half percent
                  (1 1/2%) percent per calendar month, beginning with the next
                  full calendar month, until paid. Such late payment charges
                  shall not be applicable to amounts in dispute until such time
                  as a final determination is made under Section VIII. that
                  NETGEAR owes such amount. If such fund insufficiency is ten
                  percent (10%) or more, and the amount or the default of the
                  payment is not in dispute, TRINET shall have the right, at its
                  option, to suspend performance of the Services on or after the
                  tenth business day Allowing its written notice to NETGEAR of
                  its intent to do so, and such suspension may, at TRINET's
                  discretion, remain in effect until full payment has been made
                  of any amount not in dispute and past due.

         C.       The Service Fees shall remain in effect for the Term. TRINET
                  shall give NETGEAR notice at least ninety (90) days before the
                  anniversary of the Effective Date of its intention to
                  increase these Service Fees. Any revised fees or rates
                  mutually agreed upon by the parties shall be set forth in an
                  amendment to this Agreement.

         D.       TRINET shall invoice NETGEAR on each regular or special
                  payroll for the applicable Service Fees.

         E.       Contribution rates for payroll taxes, workers compensation,
                  and TRINET Benefit Plans are subject to change retroactively
                  or without notice by regulators or Benefit Plan providers. In
                  such cases, TRINET shall notify NETGEAR as soon as TRINET
                  learns of such changes, and a commensurate change shall be
                  made in the Service Fees on the effective date of such
                  changes. Upon NETGEAR's request, TRINET shall provide
                  documentation substantiating such contribution rate changes.

IV.      TERM AND TERMINATION OF AGREEMENT.

         A.       The term of this Agreement is effective on the Effective Date
                  and shall automatically renew on the anniversary date(s) of
                  the Effective Date unless (i) either party gives sixty (60)
                  calendar days written notice prior

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                  to such anniversary date of its intention to terminate on the
                  last day of the calendar month in which such anniversary data
                  occurs or (ii) either party has terminated in accordance with
                  Section IV. B., Section XIII or Section XIV ("Term").

         B.       Upon ninety (90) calendar days prior written notice, either
                  party may terminate this Agreement for its convenience as of
                  the last day of the calendar month in which the ninetieth day
                  following such notice occurs, without obligation or liability
                  of any nature arising out of such termination except, on the
                  part of NETGEAR, to pay TRINET applicable Service Fees for the
                  portion of Services supplied prior to the effective date of
                  termination specified in such notice. If so requested in such
                  written notice of termination, TRINET shall complete any
                  Services specified in the notice, and the terms of this
                  Agreement shall continue to govern such Services; otherwise,
                  TRINET shall use its beat efforts to conclude the Services and
                  minimize any Service Fees prior to the effective date of
                  termination, TRINET may charge a one time fee of One Hundred
                  Dollars ($100) per NETGEAR Employee if NETGEAR fails to give
                  ninety (90) days prior written notice of the termination of
                  thin Agreement for its convenience.

V.       COVENANTS OF THE PARTIES.

         A.       TRINET covenants as follows:

                  1.       In connection with the Services, TRINET shall obtain,
                           create and maintain such records with respect to
                           NETGEAR Employees as required by, and in accordance
                           with, applicable Regulations and/or as necessary to
                           satisfy TRINET's obligations under this Agreement.
                           Such records shall be deemed to be Confidential
                           Information and copies shall be provided to NETGEAR
                           as set forth in Section VII. A.

                  2.       TRINET shall provide, within thirty (30) days
                           following the end of each calendar year, a
                           certification that the representations contained in
                           Section VI. A. hereof are true and correct in all
                           material respects as of the date of such annual
                           certification with the same effect as if such
                           representations were made on and as of such date.

                  3.       TRINET shall provide to NETGEAR a minimum of thirty
                           (30) calendar days notice prior to the implementation
                           of any modification to or addition or elimination of
                           any TRINET Benefit Plans or TRINET Employment
                           Policies. Such notice shall include a copy of
                           relevant documents reflecting such changes.

                  4.       Upon giving one business day's prior notice, NETGEAR
                           and any of its authorized representatives shall have
                           the right during ordinary

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                           business hours to visit and inspect TRINET'S
                           facilities and/or any systems or processes pertaining
                           to the Services, TRINET shall provide all reasonable
                           facilities and assistance for the safety and
                           convenience of such visitors and inspectors during
                           their visits, including making personnel engaged,
                           whether directly or indirectly, in the supply of
                           Services available for consultation at all reasonable
                           times. Every such visitor and inspector present at
                           any facility of TRINET or other relevant site shall
                           comply at all times with all applicable safety and
                           security rules and regulations established by TRINET.

                  5.       TRINET, when in or upon the premises of NETGEAR,
                           shall obey all workplace health, safety and security
                           rules and regulations regarding the conduct of
                           NETGEAR Employees and any additional rules and
                           regulations for non-employees, including without
                           limitation, security rules and regulations.

                  6.       Services supplied under this Agreement shall be
                           supplied in a professional and highly skilled manner
                           and to standards not less than those generally
                           accepted in the industry and shall conform to the
                           specifications or other requirements of this
                           Agreement.

                  7.       If it is necessary for TRINET to have access (either
                           on-site or remotely) to, and use of, any NETGEAR
                           computer systems in supplying Services, TRINET shall
                           limit such access and use solely to the supply of
                           Services and shall not access or attempt to access
                           any computer systems, files, software or services
                           other than those required for the supply of Services.
                           TRINET shall limit such access to those TRINET
                           Workers with an express requirement to have such
                           access in connection with the supply of Services,
                           shall advise NETGEAR in writing of the name of each
                           such TRINET Worker who shall be granted such access
                           and shall strictly follow all security rules and
                           procedures of NETGEAR for restricting access to its
                           computer systems. All user identification numbers and
                           passwords disclosed to TRINET and any information
                           obtained by TRINET as a result of TRINET'S access to,
                           and use of, NETGEAR's computer systems shall be
                           deemed to be, and treated as, Confidential
                           Information. TRINET shall cooperate in the
                           investigation of any apparent unauthorized access to
                           any NETGEAR computer system. The requirements of this
                           Section V. A. 7. shall apply equally to any access
                           and use by TRINET of NETGEAR's electronic mail
                           system, NETGEAR's electronic switched network, either
                           directly or via a direct inward service access (DISA)
                           feature or of any other property, equipment or
                           service of NETGEAR. TRINET shall be liable for any
                           Losses arising from the failure of TRINET Workers to
                           comply with provisions of this Section.

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                  8.       TRINET shall perform background checks on each TRINET
                           Corporate Employee prior to such TRINET Corporate
                           Employee's assignment to supply Services. Such
                           background checks shall be performed in accordance
                           with current industry standards, but in any event
                           shall include at a minimum verification of such
                           TRINET Corporate Employee's employment and
                           educational history and a felony criminal conviction
                           record check. TRINET shall not assign any TRINET
                           Corporate Employee to supply Services who has been
                           found to have a felony criminal conviction which is
                           relevant to the type of Services to be supplied
                           without the express written consent of NETGEAR.
                           TRINET shall provide information to NETGEAR upon
                           request regarding its procedure for performing such
                           background checks.

                  9.       TRINET shall comply with all Regulations applicable
                           to Services, including, without limitation, to the
                           extent applicable, the following Regulations: Title
                           VII of the Civil Rights Act of 1964, the ADA, Family
                           and Medical Leave Act, Age Discrimination in
                           Employment Act, Fair Labor Standards Act, National
                           Labor Relations Act, Immigration Reform and Control
                           Act, the Uniformed Services Employment and
                           Reemployment Rights Act, ERISA, Fair Credit Reporting
                           Act, the Code, COBRA, Equal Pay Act, Personal
                           Responsibility and Work Opportunity Reconciliation
                           Act, HIPPA, Comprehensive Environmental Response,
                           Compensation, and Liability Act of 1980, Toxic
                           Substances Control Act, Occupational Safety and
                           Health Act of 1970, Resource Conservation and
                           Recovery Act of 1976, Clean Air Act, Clean Water Act,
                           Vietnam Era Veterans Readjustment Assistance Act
                           (including, without limitation, the affirmative
                           action clause as set forth in 41 CFR 80-250.4),
                           Rehabilitation Act of 1973 (including, without
                           limitation, the equal opportunity clause a set forth
                           in 41 CFR 60-7415(a)), Executive Order 11246
                           (including, without limitation, the equal opportunity
                           clause as set forth in 41 CFR 60-1.4 (a)), and the
                           clauses set forth in FAR (subject to "Contractor,"
                           "Subcontractor" and "Contract" used in such clauses
                           meaning NETGEAR, TRINET and this Agreement,
                           respectively) 52.219-8, 52.219-9, 52.219-18,
                           52.220-8, 52.220-4, 52.222-1, 52.222-4, 52.222-20,
                           52.222-21, 52.222-26 (subparagraphs b(1)-b(11)),
                           52.222-35,52.222-36 and 52.222-37 (provided, however,
                           if Services are a "commercial item", as defined in
                           the clause set forth in FAR 52.202-1, then only the
                           clauses set forth in the following FARs shall be
                           deemed applicable: 52.222-26, 52.222-35 and
                           52.222-36), which clauses are incorporated by
                           reference, with the same force and effect as if they
                           were given in full text. TRINET shall be liable for
                           any Losses arising from the failure of TRINET Workers
                           to comply with provisions of this Section.

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                  10.      Except as otherwise provided in this Section V.A.10.,
                           TRINET shall employ and commence supplying Services
                           with respect to Prospective Employee upon the
                           employment commencement date set forth in the
                           pre-hire worksheet provided by NETGEAR to TRINET;
                           provided, however, that, if TRINET receives such
                           pre-hire worksheet more than seventy-two (72) hours
                           after such employment commencement date, such
                           employment commencement date shall be the date TRINET
                           receives such worksheet. TRINET shall pay
                           Compensation to NETGEAR Employees at the rate
                           specified by NETGEAR, increased by any legally
                           required premium and reduced by any applicable tax
                           withholdings or authorized deductions, as determined
                           by TRINET as part of the Services. Notwithstanding
                           the foregoing, TRINET shall have the right to refuse
                           to employ a Prospective NETGEAR Employee upon
                           reasonable notice to, but without the consent of,
                           NETGEAR if such employment is not legally permitted,
                           or for other lawful reasons upon reasonable notice
                           to, and consent by, NETGEAR. TRINET shall not employ
                           or supply Services to any individual while such
                           individual is an independent contractor with NETGEAR
                           or supplies services to NETGEAR through a temporary
                           or contract staffing firm.

                  11.      TRINET shall terminate the employment of any NETGEAR
                           Employee, upon receipt of notice from NETGEAR to take
                           such action for a reason that is not unlawful,
                           Notwithstanding the foregoing. TRINET shall have the
                           right to (i) terminate the employment of an NETGEAR
                           Employee upon reasonable notice to, but without the
                           consent of, NETGEAR if the continued employment of
                           such employee is not legally permitted, or for other
                           lawful reasons upon reasonable notice to, and consent
                           by, NETGEAR and (ii) remove any NETGEAR Employee from
                           an NETGEAR worksite upon reasonable notice to, but
                           without the consent of NETGEAR, if such NETGEAR
                           Employee is deemed by TRINET to be exposed to an
                           imminent safety hazard.

                  12.      TRINET agrees to take all actions, or to refrain from
                           taking any action, as may be permitted hereunder, in
                           each case as may be deemed necessary or advisable by
                           NETGEAR, to ensure that NETGEAR Employees are
                           eligible to receive incentive stock options under an
                           incentive stock option plan adopted by NETGEAR, if
                           any, under the Code or other applicable Regulations.
                           As such, TRINET agrees that it shall not grant stock
                           options to any NETGEAR Employee and acknowledges that
                           any NETGEAR Employee shall be an employee of NETGEAR
                           for the purpose of determining such NETGEAR
                           Employee's eligibility for incentive stock options
                           under any incentive stock option plan adopted by
                           NETGEAR.

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                  13.      TRINET shall notify NETGEAR of any Claim or union
                           organization activity, pending or threatened,
                           relating to NETGEAR Employees within three (3)
                           business days immediately following TRINET's
                           knowledge of such Claim or organizing activity.

                  14.      TRINET certifies that each invoice issued by it shall
                           be based solely on Services actually supplied by
                           TRINET or TRINET Workers and that no part or portion
                           of any invoice represents or is attributable to any
                           payment, gift, gratuity or other thing of value given
                           to any person, organization, entity or governmental
                           body (except for those payments required by
                           Regulation), other than as payments made to TRINET
                           Workers for Services or to NETGEAR Employees pursuant
                           to this Agreement. NETGEAR reserves the right to
                           audit all invoices submitted to it and TRINET shall
                           afford NETGEAR reasonable access to all supporting
                           documentation to enable NETGEAR to do so.

         B.       NETGEAR covenants as follows:

                  1.       Upon request by TRINET, NETGEAR shall provide to
                           TRINET such records and/or reports as are necessary
                           for TRINET'S performance of Services. Such records
                           and/or reports shall (i) contain information as
                           specified by TRINET, (ii) be delivered in a format
                           and on a schedule to be agreed upon between TRINET
                           and NETGEAR, (iii) be accurate and (iv) be subject to
                           verification and audit by TRINET.

                  2.       NETGEAR shall provide within thirty (30) days of the
                           end of each calendar year a certification that the
                           representations contained Section VI.B.1. and 2.
                           hereof are true and correct in all material respects
                           as of the date of such annual certification with the
                           same effect as if such representations were made on
                           and as of such date.

                  3.       Upon giving one business day's prior notice, TRINET
                           and any of its authorized representatives shall have
                           the right during ordinary business hours to visit and
                           inspect NETGEAR's facilities and/or any systems or
                           processes pertaining to the Services, including, but
                           not limited to, for the purpose of conducting a
                           safety inspection of NETGEAR's premises and
                           equipment. NETGEAR shall provide all reasonable
                           facilities and assistance for the safety and
                           convenience of such visitors and inspectors during
                           their visits, including making NETGEAR Employees
                           available for consultation at all reasonable times.
                           Every visitor and inspector present at any facility
                           of NETGEAR or other relevant site shall comply at all
                           times with all applicable safety and security rules
                           and regulations.

                  4.       NETGEAR, when in or upon the premises of TRINET,
                           shall obey

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                           all workplace health, safety and security rules and
                           regulations regarding the conduct of TRINET Corporate
                           Employees and any additional rules and regulations
                           for non-employees, including without limitation,
                           security rules and regulations, security rules and
                           regulations.

                  5.       NETGEAR shall provide the daily supervision,
                           direction and control of NETGEAR Employees with
                           respect to the services which NETGEAR Employees
                           provide to NETGEAR. In providing such supervision,
                           direction and control, NETGEAR agrees to follow
                           TRINET Employment Policies, to the extent that
                           NETGEAR receives reasonable notice of such TRINET
                           Employment Policies, including the notice required in
                           Section V. A. 3., and such TRINET Employment Policies
                           are consistent with this Agreement.

                  6.       Except with respect to those NETGEAR Employees
                           employed by an NETGEAR Affiliate immediately
                           preceding the commencement of Services to such
                           employees under this Agreement, NETGEAR shall verify
                           a Prospective NETGEAR Employee's eligibility for
                           employment by conducting an appropriate
                           Investigation, as determined by NETGEAR, of such
                           Prospective Employee's job related background,
                           including, without limitation! skills, education and
                           employment history; provided, however, that nothing
                           in this Section V, B. 6. shall require NETGEAR to
                           engage in any activity included in Services or
                           relieve TRINET of its obligations under this
                           Agreement.

                  7.       NETGEAR shall identify licensing requirements
                           applicable to NETGEAR Employees in relation to the
                           services which they provide to NETGEAR and shall
                           ensure compliance with applicable licensing
                           requirements; provided, however, that nothing in this
                           Section V, B 7, shall require NETGEAR to engage in
                           any activity included in Services or relieve TRINET
                           of its obligations under this Agreement,

                  8.       NETGEAR shall ensure that all NETGEAR Benefit Plans
                           comply with applicable provisions of ERISA, the Code
                           and any other applicable Regulations and are operated
                           in accordance with their terms and in compliance with
                           all applicable Regulations, and shall provide TRINET
                           with appropriate documentation supporting any NETGEAR
                           Employee's authorization for a wage deduction and the
                           amount of such wage deduction with respect to NETGEAR
                           Benefit Plans.

                  9.       With respect to any NETGEAR Employee whose employment
                           is voluntarily terminated during the Term, and who
                           provides NETGEAR with at least seventy-two (72) hours
                           notice of such termination, NETGEAR agrees to inform
                           TRINET of, and provide TRINET with required forms
                           relating to, such termination no

                                       11

<PAGE>

                           later than seventy-two (72) hours prior to its
                           occurrence. Additionally, with respect to any NETGEAR
                           Employee whose employment is terminated during the
                           Term, NETGEAR agrees to reimburse TRINET for its
                           payment of any accrued, but unused, vacation to such
                           employee and for employer premiums due for coverage
                           under TRINET Benefit Plans through the end of the
                           calendar month in which such employment termination
                           occurs.

                  10.      NETGEAR shall ensure that the facilities to which it
                           assigns NETGEAR Employees comply with requirements
                           applicable to such facilities under the ADA. NETGEAR
                           shall provide those reasonable accommodations
                           required by the ADA to any NETGEAR Employee or
                           applicant for employment with NETGEAR; provided,
                           however, that nothing in this Section V. B. 10. shall
                           require NETGEAR to engage in any activity included in
                           Services or relieve TRINET of its obligations under
                           this Agreement.

                  11.      NETGEAR shall comply with all applicable requirements
                           of the WARN Act with respect to NETGEAR Employees if
                           an event which triggers WARN occurs during the Term;
                           provided, however, that, nothing in this section
                           shall relieve TRINET of its indemnification
                           obligations, as specified in Section XI. A. 3. if an
                           event which triggers WARN arises from TRINET8 default
                           under this Agreement or bankruptcy.

                  12.      NETGEAR shall notify TRINET within three (3)
                           business days immediately following NETGEAR's
                           Knowledge of union organizing activity, pending or
                           threatened, among NETGEAR Employees. NETGEAR shall be
                           responsible for the formulation and implementation of
                           a response, if any, to such union organizing
                           activity; provided however, that nothing in this
                           Section V. B. 12, relieves TRINET of its obligations
                           under this Agreement,

                  13.      NETGEAR shall pay TRINET a placement fee of Twenty
                           Five Thousand Dollars ($25,000) if, during the Term,
                           NETGEAR hires any TRINET Corporate Employee who holds
                           a position in field service or sales or management in
                           TRINET's Information Systems, Payroll or Benefits
                           functions or TRINET'S satellite offices and directly
                           sells or supplies Services to NETGEAR, and such hire
                           occurs within the one hundred twenty (120) day period
                           immediately following the termination of such
                           individual's employment as a TRINET Corporate
                           Employee; provided. however, that TRINET shall not be
                           entitled to a placement fee if TRINET consents in
                           writing to such employment

                  14.      NETGEAR shall train NETGEAR Employees regarding the
                           safe performance of their work, including the use of
                           required personal

                                       12

<PAGE>

                           protective equipment and handling or use of hazardous
                           materials, as applicable, and shall comply with
                           TRINET Employment Policies with respect to workplace
                           health and safety including, without limitation,
                           supplying required personal protective equipment to
                           NETGEAR Employees, following requirements in the
                           safety plan provided by TRINET to NETGEAR, and
                           posting notices as directed by TRINET; provided,
                           however, that nothing in this section V.B. 14 shall
                           require NETGEAR to engage in any activity included in
                           the Services or relieve TRINET of its obligations
                           under this Agreement.

                  15.      NETGEAR shall notify TRINET of any Claim, pending or
                           threatened, relating to NETGEAR Employees within
                           three (3) business days immediately following
                           NETGEAR's Knowledge of such Claim.

                  16.      NETGEAR shall provide continued health care coverage
                           for NETGEAR Employees and their eligible dependents
                           as required under COBRA only if such COBRA
                           requirement arises as a result of the termination of
                           this Agreement for a reason other than TRINET's
                           default under this Agreement or bankruptcy. If
                           NETGEAR fails to provide such continued health
                           coverage, NETGEAR shall pay TRINET a one-time fee of
                           Five Hundred Dollars ($500) per NETGEAR Employee who
                           elects to continue such coverage under COBRA in
                           consideration for TRINET providing such COBRA
                           coverage. Additionally, NETGEAR shall notify TRINET
                           of the occurrence of a Qualifying Event within ten
                           (10) calendar days immediately following NETGEAR's
                           receipt of notice of the occurrence of such
                           Qualifying Event so that TRINET can provide required
                           Services related to COBRA. NETGEAR shall provide any
                           continued coverage required under COBRA with respect
                           to NETGEAR Employees that arises from a Qualifying
                           Event which occurred prior to the Effective Date and
                           while such employee was employed by NETGEAR or an
                           NETGEAR Affiliate.

                  17.      With respect to fulfillment of NETGEAR's obligations
                           under this Agreement, NETGEAR shall comply with all
                           applicable Regulations, including, without
                           limitation, to the extent applicable, the following:
                           Title VII of the Civil Rights Act of 1964, the ADA,
                           Family and Medical Leave Act, Age Discrimination in
                           Employment Act, Fair Labor Standards Act, National
                           Labor Relations Act, Immigration Reform and Control
                           Act, the Uniformed Services Employment and
                           Reemployment Rights Act, ERISA, Fair Credit Reporting
                           Act, the Code, COBRA, Equal Pay Act, Comprehensive
                           Environmental Response, Compensation, and Liability
                           Act of 1980, Toxic Substances Control Act,
                           Occupational Safety and Health Act of 1970, Resource
                           Conservation and Recovery Act of 1976, Clean Air Act,
                           Clean Water Act, Vietnam

                                       13

<PAGE>

                           Era Veterans Readjustment Assistance Act (including,
                           without limitation, the affirmative action clause as
                           set forth in 41 CFR 60-250.4), Rehabilitation Act of
                           1978 (including, without limitation, the equal
                           opportunity clause opportunity clause as set forth in
                           41 CFR 60-741.5 (a)), and Executive Order 11246
                           (including, without limitation, the equal opportunity
                           clause as set forth in 41 CFR 60-1.4 (a)).

                  18.      NETGEAR shall ensure that NETGEAR Employment Policies
                           comply with applicable Regulations, are operated in
                           accordance with their terms and in compliance with
                           all applicable Regulations and are not inconsistent
                           with TRINET Employment Policies. NETGEAR shall
                           provide TRINET with true and complete copies of
                           documents setting forth NETGEAR Employment Policies
                           in advance of their implementation and shall only
                           implement such NETGEAR Employment Policies upon
                           TRINET's consent which consent shall not be
                           unreasonably withheld.

VI.      GENERAL WARRANTIES AND REPRESENTATIONS.

         A.       TRINET represents and warrants to NETGEAR that:

                  1.       TRINET is duly authorized to enter into this
                           Agreement and able to perform its obligations under
                           this Agreement.

                  2.       TRINET shall maintain in full force and effect such
                           insurance as required by applicable Regulations or
                           the term or this Agreement.

                  3.       Any TRINET Systems shall (i) process date and time
                           related data without causing any processing
                           interruptions, abnormal terminations, or changes in
                           performance characteristics, and (ii) shall process
                           and manipulate all date and time related functions
                           correctly. Without limiting the generality of the
                           foregoing, such TRINET Systems Shall;

                           (a)      correctly handle date and time related data
                                    before, during and after January 1, 2000,
                                    including but not limited to accepting date
                                    and time input, providing date and time
                                    output, and performing ongoing operations on
                                    dates and times and portions of dates and
                                    times including, but not limited to,
                                    calculating, comparing and sequencing of
                                    dates and times (in both forward and
                                    backward operations spanning century
                                    boundaries);

                           (b)      correctly handle leap year calculations
                                    including, but not limited to,
                                    identification of leap years, interval
                                    calculations (in both forward and backward
                                    operations spanning century boundaries),
                                    day-in-year calculations day-of-the-week
                                    calculations, and week-of-the-year
                                    calculations);

                           (c)      correctly handle all two digit date and time
                                    related input in a manner that resolves
                                    ambiguity as to century in a

                                       14

<PAGE>

                                    disclosed, defined and predetermined manner;
                                    and

                           (d)      correctly store, retrieve and provide output
                                    of all date and time data in a manner that
                                    is unambiguous as to century.

                           TRINET shall correct any failure of TRINET Systems or
                           Services to conform to the above warranties on an
                           emergency basis.

                           Any provisions of this Agreement that tend to limit
                           or eliminate the liability of TRINET shall have no
                           application with respect to the year 2000 compliance
                           warranty set out above.

                  4.       With respect to TRINET Benefit Plans, (i) to TRINET's
                           Knowledge, no material written Claim is pending or
                           threatened that relates to any TRINET Benefit Plans,
                           (ii) TRINET has delivered to NETGEAR prior to the
                           Effective Date true, accurate and complete copies of
                           all plan documents, summary plan descriptions, and
                           other written materials providing the terms of all
                           TRINET Benefit Plans and (iii) the operation of
                           TRINET Benefit Plan is (and has been at all times
                           shall be) in compliance and conforms with their terms
                           and applicable provisions of ERISA, the code, HIPPA
                           and any other applicable Regulations. TRINET further
                           warrants and represent that the Services do not
                           include the participation of NETGEAR Employees in
                           TRINET Benefit Plans which are intended to be
                           qualified under Section 401(a) of the Code and exempt
                           from tax under Section 501(a) of the Code.

                  5.       With respect to TRINET Employment Policies, (i)
                           TRINET has delivered to NETGEAR prior to Effective
                           Date true, accurate and complete copies of all TRINET
                           Employment Policies which are in effect as of the
                           Effective Date; (ii) all TRINET Employment Policies
                           are and shall be operated in accordance with their
                           terms and in compliance with all applicable
                           Regulations; and (iii) to TRINET's Knowledge no
                           material written Claim is pending or threatened which
                           relates to any TRINET Employment Policy.

                  6.       TRINET is not a party to any collective bargaining
                           agreement with respect to, and no such agreement
                           determines the terms and conditions of employment of,
                           any TRINET Employee. Additionally, no collective
                           bargaining agent is certified as representative of
                           any TRINET Employee and no representation campaign is
                           now or is anticipated to be in progress with respect
                           to any TRINET Employee.

                  7.       To TRINET's Knowledge, there are no pending or
                           threatened material Claims in writing relating to
                           TRINET's employment relationship or termination of
                           employment relationship with any TRINET Employee or
                           former TRINET Employee under

                                       15

<PAGE>

                           employment related Regulations, such as, without
                           limitation, Regulations governing wages and hours,
                           payment of Compensation, payment or withholding of
                           employment taxes, fair employment, labor relations,
                           health, safety or leave, or under the common law
                           with respect to wrongful termination, breach of
                           implied contract, negligent or intentional infliction
                           of emotional distress or causes of action of a
                           similar nature.

         B.       NETGEAR represents and warrants to TRINET that:

                  1.       NETGEAR is duly authorized to enter into this
                           Agreement and able to perform its obligations under
                           this Agreement.

                  2.       NETGEAR or its Affiliates shall maintain in full
                           force and effect such insurance as required under the
                           terms of this Agreement or by applicable Regulations,
                           except with respect to any required workers
                           compensation insurance for NETGEAR Employees, such
                           insurance being included in the services.

                  3.       With respect to NETGEAR Employees, NETGEAR or its
                           Affiliates has paid in full, or shall pay in full
                           when due, all compensation, employment taxes,
                           benefits under Benefit plans of NETGEAR or its
                           Affiliates or other obligations which are owed to or
                           for such employees arising out of such employees'
                           employment or termination of employment with NETGEAR
                           or its Affiliates on or prior to the Effective Date.

                  4.       To NETGEAR's Knowledge, with respect to NETGEAR
                           Employees, there are no material pending or
                           threatened Claims in writing relating to the
                           employment relationship or termination of employment
                           relationship between any NETGEAR Employee and NETGEAR
                           or its Affiliates under employment related
                           Regulations, such as, without limitation, Regulations
                           governing wages and hours, payment of Compensation,
                           payment or withholding of employment taxes, fair
                           employment, labor relations, health, safety, workers'
                           compensation or leave, or under the common law with
                           respect to wrongful termination, breach of implied
                           contract, negligent or intentional infliction of
                           emotional distress or causes of action of a similar
                           nature.

                  5.       Neither NETGEAR nor NETGEAR's Affiliates are a party
                           to any collective bargaining agreement with respect
                           to, and no such agreement determines the terms and
                           conditions of employment of, any NETGEAR Employee
                           and no representation campaign is now or is
                           anticipated to be in progress with respect to any
                           NETGEAR Employee.

                                       16

<PAGE>

VII.     CONFIDENTIAL INFORMATION, PUBLICITY AND INTELLECTUAL PROPERTY.

         A.       NETGEAR considers the following categories of information to
                  be confidential ("Confidential Information");

                  1.       information relating to NETGEAR Employees including,
                           without limitation, such employees' Compensation,
                           perquisites, other terms and conditions of employment
                           and any personal information, which is disclosed to
                           or obtained or maintained by TRINET for any purpose
                           under this Agreement, including the negotiation,
                           execution or performance thereof; and

                  2.       any financial and other proprietary information of
                           NETGEAR disclosed to TRINET in the course of its
                           performance of duties and obligations under this
                           Agreement.

                  TRINET agrees to utilize the same degree of care as TRINET
                  uses with respect to its own information of a similar nature
                  to not disclose Confidential Information to parties other than
                  TRINET Workers having a need to know in order to provide
                  Services. In the event that TRINET discloses such Confidential
                  Information to TRINET Workers, TRINET shall advise such TRINET
                  Workers of the confidential nature of such information and
                  direct them not to disclose such Confidential Information to
                  any other person.

                  Any Confidential Information shall be held in confidence by
                  TRINET and TRINET Workers and, if in written form, such
                  Confidential Information shall be returned to NETGEAR upon
                  NETGEAR's request and/or the termination of this Agreement;
                  provided, however, that the return of copies of such records
                  shall be permitted with respect to NETGEAR Employees. TRINET
                  shall not (i) use the Confidential Information for any purpose
                  other than the satisfaction of TRINET's obligations under this
                  Agreement or (ii) divulge the Confidential Information other
                  than to TRINET Workers with a bona fide need to know or as
                  otherwise required by Regulation. TRINET acknowledges that
                  monetary damages may not be adequate in the event of a default
                  of this Section by TRINET, and NETGEAR shall be entitled to
                  injunctive or other affirmative relief and/or to give notice
                  of default pursuant to section XIII. TRINET shall be liable
                  for any Losses arising from the failure of TRINET Workers, for
                  whatever reason, to comply with provisions of this Section.

                  Notwithstanding the above, TRINET shall not be bound by the
                  obligations of confidence set forth in this section with
                  respect to Confidential Information, or any part thereof,
                  which (a) was lawfully known or received by TRINET prior to
                  disclosure, as evidenced by its business records (b) was
                  lawfully in the public domain prior to its disclosure, or
                  becomes publicly available other than through a breach of

                                       17

<PAGE>

                  this Agreement or a breach of any confidentiality obligation
                  to NETGEAR in respect of such information (c) was rightfully
                  obtained by TRINET from third parties, provided that TRINET
                  had no reason to believe such third party, or any other party
                  from whom such third party receives information is in breach
                  of any confidentiality obligation to NETGEAR in respect of
                  such information (d) is independently developed by TRINET, as
                  evidenced by its business records or (e) is disclosed as
                  required by Regulation following TRINET's reasonable efforts
                  to provide notice to NETGEAR to allow it to seek protective or
                  other court orders.

         B.       TRINET shall not in any advertising, sales promotion
                  materials, press releases or any other publicity matters use
                  the name "NETGEAR Networks Inc.", "Northern Telecom", or
                  "NORTEL NETWORKS" or any variation thereof or language from
                  which the connection of such names may be implied, nor shall
                  TRINET disclose or advertise in any manner the nature of
                  Services supplied or the fact that it has entered into this
                  Agreement, unless NETGEAR, in its sole discretion, grants
                  TRINET prior written permission to do so.

         C.       TRINET acknowledges that NETGEAR may enter into an Employee
                  Invention Assignment and Confidentiality Agreement or a
                  similar type agreement with any NETGEAR Employee. Furthermore,
                  the parties acknowledge that any NETGEAR Employee shall be an
                  employee of NETGEAR for the purpose of establishing rights to
                  any and all Inventions made of conceived by such NETGEAR
                  Employee. NETGEAR and TRINET further acknowledge and agree
                  that all rights to any patent, patent application, copyright,
                  mask works, trade secrets, or intellectual property or any
                  interest in any Invention shall be unaffected by this
                  Agreement. Nothing about this Agreement shall create in TRINET
                  any such rights or interests in any Invention now or in the
                  future and, to the extent that such rights or interests are
                  otherwise created in TRINET, TRINET irrevocably assigns and
                  conveys any and all such rights and interests to NETGEAR.

         D.       NETGEAR agrees that the terms and conditions of this Agreement
                  are confidential and shall not be disclosed to a third party
                  without the written permission of TRINET unless such
                  disclosure is required by Regulation or legal process or
                  proceeding; provided, however, that NETGEAR shall not be
                  required to obtain the written permission of TRINET prior to
                  such disclosure to NETGEAR's Affiliates or, on a reasonable
                  need to know basis, to the external auditors, accountants,
                  legal counsel, tax advisors or investors of NETGEAR or its
                  Affiliates. Additionally, nothing in this Agreement shall
                  prevent NETGEAR from using any language included in this
                  Agreement in agreements between NETGEAR and other third
                  parties, whether or not such agreements relate to services
                  similar to the Services; provided, however, that NETGEAR shall
                  not disclose to such third parties an original or copy of this
                  Agreement and the Service Fees under this Agreement.

                                       18

<PAGE>

VIII.    DISPUTE RESOLUTION.

In the event of a Dispute, the Managers shall try to resolve the Dispute
amicably and promptly. In the event that the Managers are unable to resolve the
Dispute within fifteen (15) business days of Notice, the parties shall use best
efforts to reconcile the Dispute through escalation of the Dispute to each
party's senior management. In the event that the Dispute is not resolved through
those escalation procedures within sixty (60) business days of the date of the
Notice, then the Dispute shall be referred to arbitration. If an arbitrator is
appointed pursuant to this Agreement, the parties shall confer in good faith
through their counsel, to attempt to agree upon a single arbitrator. If the
parties are unable to agree upon a person to act as an arbitrator or an
organization to appoint an arbitrator, then the parties shall each appoint an
arbitrator. Those two arbitrators shall each be charged with the responsibility
of selecting a third person. If the third person so selected is acceptable to
both parties, then the arbitration shall proceed as an arbitration before a
single arbitrator, with the person so selected acting as the arbitrator. His or
her decision on the issues shall be final and binding. In the event that the
parties are not satisfied with the single arbitrator so selected, then the
arbitration shall proceed before an arbitration panel of three arbitrators with
the person so selected acting as the Chair. The arbitrator or the arbitration
panel shall not be precluded by any applicable Regulation, to the extent legally
permissible, from attempting to mediate this dispute.

IX.      INDEPENDENT CONTRACTOR.

TRINET and TRINET Workers shall supply Services as an independent contractor,
and nothing contained in this Agreement shall be construed to create or imply a
joint venture, partnership, principal-agent or employer/employee relationship
between the parties or between NETGEAR and TRINET Workers. TRINET and TRINET
Workers shall not take any action or permit any action to be taken on their
behalf which purports to be done in the name of or on behalf of NETGEAR except
as is required in their performance of Services.

X.       INSURANCE.

         A.       TRINET shall have the following obligations:

                  1.       TRINET shall keep in full force and effect at all
                           times during the Term, a comprehensive general
                           liability insurance policy with a minimum combined
                           single limit of One Million Dollars ($1,000,000)
                           including bodily injury, property damage, completed
                           operations, products liability, contractual
                           liability, and personal injury liability. TRINET
                           agrees to cause its insurance carrier to name NETGEAR
                           as an additional insured, consistent with the
                           indemnifications herein, on the policy providing such
                           coverage. TRINET shall provide NETGEAR with
                           certificate(s) of insurance evidencing such coverage
                           and providing for thirty (30) days' notice to NETGEAR
                           in the event of cancellation.

                                       19

<PAGE>

                  2.       TRINET shall obtain and maintain in effect such
                           workers, compensation insurance and other employee
                           insurance coverages with respect to NETGEAR Employees
                           that employers are required by applicable Regulation
                           to provide to their employees. TRINET agrees to cause
                           its workers' compensation carrier to name NETGEAR as
                           an additional insured on TRINET's workers'
                           compensation insurance policy and to include in such
                           policy an endorsement which shall provide payment of
                           workers' compensation benefits on behalf of NETGEAR
                           if applicable Regulation requires that NETGEAR,
                           rather than or in addition to TRINET, pays such
                           workers' compensation benfits to NETGEAR Employees.

         B.       NETGEAR shall have the following obligations:

                  1.       NETGEAR shall keep in full force and effect at all
                           times during the Term, comprehensive automobile
                           liability insurance covering all NETGEAR owned or
                           hired (and non-owned) vehicles with a minimum limit
                           of One Million Dollars ($1,000,000) per occurrence,
                           and providing uninsured motorist insurance with a
                           minimum combined single limit of Sixty Thousand
                           Dollars ($60,000). NETGEAR agrees to cause its
                           insurance carrier to name TRINET as an additional
                           insured on the policy providing such coverage.
                           NETGEAR shall provide TRINET with certificate(s) of
                           insurance evidencing such coverage and providing for
                           thirty (30) days notice to TRINET in the event of
                           cancellation.

                  2.       NETGEAR shall keep in full force and effect at all
                           times during the Term, a comprehensive general
                           liability insurance policy with a minimum combined
                           single limit of one Million Dollars ($1,000,000)
                           including bodily injury, property damage, completed
                           operations, products liability, contractual
                           liability, and personal injury liability. NETGEAR
                           agrees to cause its insurance carrier to name TRINET
                           as an additional insured on the policy providing such
                           coverage with respect only to NETGEAR's operations.
                           NETGEAR shall provide TRINET with certificate(s) of
                           insurance evidencing such coverage and providing for
                           thirty (30) days' notice to TRINET in the event of
                           cancellation.

XI.      INDEMNIFICATIONS.

         A.       From and after the Effective Date, TRINET shall indemnify and
                  hold harmless any NETGEAR Indemnitee from Losses suffered by
                  such NETGEAR Indemnitee resulting from, relating to or arising
                  out of:

                  1.       Any Claim with respect to work-related injuries,
                           illnesses or disabilities of NETGEAR Employees during
                           the Term arising from

                                       20

<PAGE>

                           an allegation that NETGEAR is a third party
                           tortfeasor not entitled to the special immunity
                           afforded employers, whether special or general, under
                           applicable workers' compensation Regulations;

                  2.       Any Claim alleging that an employment relationship
                           exists between NETGEAR and any TRINET Worker except
                           where NETGEAR has affirmatively entered into such
                           employment relationship as evidenced by a written
                           offer of employment, employment agreement or similar
                           written document;

                  3.       Any misrepresentation, breach of warranty or
                           non-fulfillment of any agreement, obligation or
                           covenant of TRINET under this Agreement, or from any
                           misrepresentation in or omission from any written
                           statement, document or instrument furnished by TRINET
                           pursuant hereto or in connection with the
                           negotiation, execution or performance of this
                           Agreement, provided, however, that notwithstanding
                           the fact that TRINET may have disclosed certain
                           matters with respect to the representations and
                           warranties made in Section VI. A., TRINET shall
                           indemnify the NETGEAR Indemnitee, as required by this
                           Agreement, for any and any Losses incurred or
                           suffered by such NETGEAR Indemnitee that result from,
                           relate to or arise out of such disclosed matters;

                  4.       Any services provided by TRINET to any entity other
                           than NETGEAR; and

                  5.       Any negligent acts or omissions or willful misconduct
                           by TRINET or TRINET Workers related to this
                           Agreement.

         B.       NETGEAR's Indemnification Obligations

                  From and after the Effective Date, NETGEAR shall Indemnify and
                  hold harmless any TRINET Indemnitee from Losses suffered by
                  such TRINET Indemnitee resulting from, relating to or arising
                  out of:

                  1.       Any Claim alleging that an employment relationship
                           exists between TRINET and any independent contractor
                           or personnel from a temporary or contract staffing
                           firm supplying services to NETGEAR which are
                           unrelated to this Agreement;

                  2.       Any misrepresentation, breach of warranty or
                           nonfulfilment of any agreement, obligation or
                           covenant or NETGEAR under this Agreement, or from any
                           misrepresentation in or omission from any written
                           statement, document or instrument furnished by
                           NETGEAR pursuant hereto or in connection with the
                           negotiation, execution or performance of this
                           Agreement, provided, however, that notwithstanding
                           the fact that NETGEAR may have disclosed certain
                           matters with respect to the representations and
                           warranties made in Section VI. B., NETGEAR shall
                           indemnify the TRINET Indemnitee, as required by this
                           Agreement, for any and all Losses incurred or
                           suffered by such TRINET Indemnitee that result from,
                           relate to or arise out of such disclosed matters;

                                       21

<PAGE>

                  3.       Any Claim relating to the employment or termination
                           of employment of an NETGEAR Employee By NETGEAR or an
                           NETGEAR Affiliate which exists or arose on or prior
                           to the Effective Date; and

                  4.       Any negligent acts or omission or willful misconduct
                           by NETGEAR related to this Agreement.

         C.       If any claim or demand for which TRINET would be liable to an
                  NETGEAR Indemnitee is asserted against or sought to be
                  collected from an NETGEAR Indemnitee by a third party, NETGEAR
                  shall promptly deliver to TRINET a Claim Notice. The Claim
                  Notice may by be revised to include subsequent or additional
                  information or detail on the bases for the claim or demand.
                  TRINET shall have the Notice Period to deliver to NETGEAR a
                  notice stating (i) whether to not it disputes TRINET'S
                  liability to the NETGEAR Indemnitee with respect to such claim
                  or demand or the amount of such liability and (ii)
                  notwithstanding any such dispute, whether or not TRINET
                  desires, at the sole cost and expense of TRINET, to defend the
                  NETGEAR Indemnitee against such claim or demand.

                  1.       If TRINET disputes liability with respect to such
                           claim or demand or the amount thereof (whether or not
                           TRINET desires to defend the NETGEAR Indemnitee
                           against such claim or demand), such dispute shall be
                           resolved in accordance with Section VIII. Pending the
                           resolution of any dispute of TRINET's liability with
                           respect to any claim or demand, such claim or demand
                           shall not be settled without the prior written
                           consent of NETGEAR.

                  2.       If TRINET notifies NETGEAR within the Notice Period
                           that it desires to defend the NETGEAR Indemnitee
                           against such claim or demand then, except as
                           hereinafter provided, TRINET shall have the right to
                           defend the NETGEAR Indemnitee to a final conclusion
                           or prosecute to a final conclusion in such a manner
                           as to avoid any risk of the NETGEAR Indemnitee
                           becoming subject to liability for any other matter,
                           provided, however, TRINET, shall not, without the
                           prior written consent of NETGEAR, consent to the
                           entry of any judgment against the NETGEAR Indemnitee
                           or enter into any settlement that does not include,
                           as an unconditional term thereof, the giving by the
                           claimant or plaintiff to the NETGEAR Indemnitee of a
                           release, in form and substance satisfactory to
                           NETGEAR, from all liability in respect of such claim
                           or demand. If NETGEAR desires to participate in, but
                           not control, any such defense or settlement, it may
                           do so at its sole cost and expense. If, in the
                           reasonable opinion of NETGEAR, any such claim or
                           demand or resolution of any such claim or demand
                           involves an issue or matter that could have a
                           materially adverse effect on the business, assets or
                           other operations, properties or prospects of an
                           NETGEAR Indemnitee, then NETGEAR shall have the right
                           to

                                       22

<PAGE>

                           control the defense or settlement of any such claim
                           or demand and its reasonable costs and expenses shall
                           be included as part of the indemnification obligation
                           of TRINET; provided, however, that NETGEAR shall not
                           settle any such claim or demand without the prior
                           written consent of TRINET, which consent shall not be
                           unreasonably withheld. If NETGEAR should elect to
                           exercise such right, TRINET shall have the right to
                           participate in, but not control, the defense or
                           settlement of such claim or demands at the sole cost
                           and expense of TRINET.

                  3.       If NETGEAR does not receive a notice within the
                           Notice Period from TRINET disputing TRINET'S
                           liability and/or the amount of the liability for a
                           claim or demand set forth in a Claim Notice, then the
                           following amount shall be conclusively deemed to be a
                           liability of TRINET; (a) if TRINET has not properly
                           elected to defend the NETGEAR Indemnitee against such
                           claim or demand and the NETGEAR Indemnitee (but none
                           of the NETGEAR Indemnitees shall have any obligation
                           to defend any such claim or demand) does not elect to
                           defend itself against such claim or demand, the
                           amount of such claim or demand, (b) if the NETGEAR
                           Indemnitee does elect to defend itself against such
                           claim or demand, that portion thereof as to which
                           such defense is unsuccessful or (c) if TRINET has
                           properly elected to defend the NETGEAR Indemnitee
                           against such claim or demand, that portion thereof as
                           to which such defense is unsuccessful. If NETGEAR
                           receives a notice within the Notice Period from
                           TRINET disputing TRINET'S liability and/or the amount
                           of the liability for a claim or demand set forth in a
                           Claim Notice and such dispute is not subsequently
                           withdrawn, then such dispute shall be resolved as
                           provided in Section VIII.

                  4.       All claims or demands for indemnification by a TRINET
                           Indemnitee under this Agreement shall be asserted and
                           resolved under the procedures set forth above
                           substituting in the appropriate place "TRINET
                           Indemnitee" for "NETGEAR Indemnitee" and, "TRINET for
                           "NETGEAR" and "NETGEAR" for "TRINET".

                  5.       The duty of parties to indemnify and hold harmless as
                           set forth in this Agreement shall extend beyond the
                           term of this Agreement for events occurring within
                           the Term.

XII.     LIMITATION OF LIABILITY.

IN NO EVENT SHALL ANY PARTY (INCLUDING EITHER PARTY'S AFFILIATES, CONTRACTORS,
DIRECTORS, EMPLOYEES AND AGENTS) BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING WITHOUT LIMITATION, LOST
BUSINESS, LOST SAVINGS,

                                       23

<PAGE>

LOST DATA, AND LOST PROFITS, REGARDLESS OF THE CAUSE AND WHETHER ARISING IN
CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT (INCLUDING NEGLIGENCE), OR
OTHERWISE, EVEN IF THE BREACHING PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.

XIII.    DEFAULT.

If either party defaults in performance of a material obligation under this
Agreement and such default shall continue for more than thirty (30) days after
written notice thereof is given to the party in default by the non-breaching
party, the non-breaching party shall be entitled to terminate this Agreement
immediately upon written notice.

XIV.     BANKRUPTCY.

If TRINET shall be declared insolvent or bankrupt, or if any assignment of its
property shall be made for the benefit of creditors or otherwise, or if its
interest herein shall be levied upon under execution or seized by virtue of any
writ of any court, or if a petition is filed in any court to declare TRINET
bankrupt and not dismissed within sixty (60) days, or if a trustee in
bankruptcy, receiver or receiver-manager or similar officer is appointed for
TRINET or for any of TRINET's assets, then NETGEAR may, at its option, terminate
the Agreement without charge and shall thereupon be free from all liability
thereunder. The ability of NETGEAR to terminate in such instances shall be
subject to the applicable bankruptcy and insolvency statutes.

XV.      GENERAL PROVISIONS.

         A.       All notices and consents required to be given or made by the
                  parties under this Agreement shall be sent to the addresses
                  set forth below or such other address as may be established by
                  notice hereunder, and shall be deemed received on the fourth
                  business day after deposit or when actually received,
                  whichever is sooner. Such notices or consents shall be
                  directed to:

                  For NETGEAR:      NETGEAR, Inc.
                                    4401 Great America Parkway
                                    Santa Clara, CA 95052-8185
                                    Attn: Rick Fabiano

                  For TRINET: Grag Hammond
                              TRINET
                              101 Callan Avenue
                              San Leandro, Ca 94577

         B.       This Agreement shall inure to the benefit of and be binding
                  upon the parties hereto and their successors and permitted
                  assigns.

                                       24

<PAGE>

         C.       If any term, warranty, covenant, condition, or provision of
                  this Agreement is held to be invalid or unenforceable, the
                  balance of this Agreement shall remain in force and shall
                  stand as if the unenforceable part did not exist unless such
                  invalidity materially impairs the rights, benefits or
                  obligations of the parties under this Agreement

         D.       Neither party may assign this Agreement or its rights and
                  duties hereunder, without the prior written consent of the
                  other party.

         E.       All obligations and liabilities which, by their nature, are
                  intended to survive the Term shall remain in effect beyond the
                  Term.

         F.       The failure of a party to enforce any provision of this
                  Agreement shall not constitute a waiver of such provision or
                  the right of such party to enforce such provision and every
                  other provision.

         G.       This Agreement shall be governed by the laws of the State of
                  California, notwithstanding its rules regarding the conflict
                  of laws.

         H.       All Section headings contained in this Agreement are inserted
                  solely for convenience of reference, and in no way define,
                  limit, extend, or aid in the construction of the scope, extent
                  or intent of this Agreement or any term or provision thereof.

         I.       This Agreement may be executed in several counterparts, each
                  of which shall be deemed an original, and such counterparts
                  shall together constitute but one and the same Agreement,
                  binding upon all the parties hereto, notwithstanding that all
                  the parties are not signatories to the original of the same
                  counterpart.

         J.       This Agreement, including Exhibit A, Exhibit B, the Schedule
                  of Due Dates and Special Fees, and the Electronic Funds
                  Transfer Agreement, constitutes the entire agreement between
                  the parties with respect to the subject matter hereof and
                  supersedes all prior agreements and communications, written or
                  oral, with respect thereto. This Agreement may not be modified
                  or any right of a party waived, except by means of an
                  amendment, which expressly references this Agreement and is
                  duly executed by each of the parties.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by its duly authorized representative.

                                       25

<PAGE>

NETGEAR, INC.                          TRINET EMPLOYER GROUP, INC.

By: /s/ Patrick Lo                     By: /s/ Craig A. McGannon
    --------------                         ---------------------

Print Name: PATRICK LO                 Print Name: CRAIG A. MCGANNON

Title: CEO                             Title: Division President Venture Group

Date: 2/8/2000                         Date: 2/9/00

                              26<PAGE>
                                                                    EXHIBIT 10.3

                                  VERITY, INC.

                             1995 STOCK OPTION PLAN

                     (AS AMENDED THROUGH NOVEMBER 15, 2002)

         1.       ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

                  1.1      ESTABLISHMENT. The Verity, Inc. 1988 Stock Option
Plan was initially established effective as of August 31, 1988 (the "INITIAL
PLAN"). The Initial Plan is hereby amended and restated in its entirety as the
Verity, Inc. 1995 Stock Option Plan (the "PLAN") effective immediately prior to
the effective date of the initial registration by the Company of its Stock under
Section 12 of the Exchange Act (the "EFFECTIVE DATE").

                  1.2      PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by providing
an incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.

                  1.3      TERM OF PLAN. The Plan shall continue in effect until
the earlier of its termination by the Board or the date on which all of the
shares of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Incentive
Stock Options shall be granted, if at all, within ten (10) years from July 19,
1996. Notwithstanding the foregoing, if the maximum number of shares of Stock
issuable pursuant to the Plan as provided in Section 4.1 has been increased at
any time, all Incentive Stock Options shall be granted, if at all, no later than
the last day preceding the tenth (10th) anniversary of the earlier of (a) the
date on which the latest such increase in the maximum number of shares of Stock
issuable under the Plan was approved by the stockholders of the Company or (b)
the date such amendment was adopted by the Board.

         2.       DEFINITIONS AND CONSTRUCTION.

                  2.1      DEFINITIONS. Whenever used herein, the following
terms shall have their respective meanings set forth below:

                           (a)      "BOARD" means the Board of Directors of the
Company. If one or more Committees have been appointed by the Board to
administer the Plan, "Board" also means such Committee(s).

                           (b)      "CODE" means the Internal Revenue Code of
1986, as amended, and any applicable regulations promulgated thereunder.

                           (c)      "COMMITTEE" means the Compensation Committee
or other committee of the Board duly appointed to administer the Plan and having
such powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to
amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.

                           (d)      "COMPANY" means Verity, Inc., a Delaware
corporation, or any successor corporation thereto.

                           (e)      "CONSULTANT" means any person, including an
advisor, engaged by a Participating Company to render services other than as an
Employee or a Director.

                           (f)      "DIRECTOR" means a member of the Board or of
the board of directors of any other Participating Company.

                           (g)      "EMPLOYEE" means any person treated as an
employee (including an officer or a Director who is also treated as an employee)
in the records of a Participating Company; provided, however, that neither
service as a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.
<PAGE>
                           (h)      "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.

                           (i)      "FAIR MARKET VALUE" means, as of any date,
the value of a share of stock or other property as determined by the Board, in
its sole discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein.

                           (j)      "INCENTIVE STOCK OPTION" means an Option
intended to be (as set forth in the Option Agreement) and which qualifies as an
incentive stock option within the meaning of Section 422(b) of the Code.

                           (k)      "INSIDER" means an officer or a Director of
the Company or any other person whose transactions in Stock are subject to
Section 16 of the Exchange Act.

                           (l)      "NONSTATUTORY STOCK OPTION" means an Option
not intended to be (as set forth in the Option Agreement) or which does not
qualify as an Incentive Stock Option.

                           (m)      "OPTION" means a right to purchase Stock
(subject to adjustment as provided in Section 4.2) pursuant to the terms and
conditions of the Plan. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.

                           (n)      "OPTION AGREEMENT" means a written agreement
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired upon
the exercise thereof.

                           (o)      "OPTION RESERVE INCREASE" means the increase
of four hundred thousand (400,000) shares of Stock issuable under the Plan which
was approved by the Board on July 19, 1996.

                           (p)      "OPTIONEE" means a person who has been
granted one or more Options.

                           (q)      "PARENT CORPORATION" means any present or
future "parent corporation" of the Company, as defined in Section 424(e) of the
Code.

                           (r)      "PARTICIPATING COMPANY" means the Company or
any Parent Corporation or Subsidiary Corporation.

                           (s)      "PARTICIPATING COMPANY GROUP" means, at any
point in time, all corporations collectively which are then Participating
Companies.

                           (t)      "RULE 16B-3" means Rule 16b-3 under the
Exchange Act, as amended from time to time, or any successor rule or regulation.

                           (u)      "SECTION 162(M)" means Section 162(m) of the
Code, as amended by the Revenue Reconciliation Act of 1993 (P.L. 103-66).

                           (v)      "STOCK" means the common stock, $0.001 par
value, of the Company, as adjusted from time to time in accordance with Section
4.2.

                           (w)      "SUBSIDIARY CORPORATION" means any present
or future "subsidiary corporation" of the Company, as defined in Section 424(f)
of the Code.

                           (x)      "TEN PERCENT OWNER OPTIONEE" means an
Optionee who, at the time an Option is granted to the Optionee, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company within the meaning of Section
422(b)(6) of the Code.

                  2.2      CONSTRUCTION. Captions and titles contained herein
are for convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.

         3.       ADMINISTRATION.

                                       2
<PAGE>
                  3.1      ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board, including any duly appointed Committee of the Board.
All questions of interpretation of the Plan or of any Option shall be determined
by the Board, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.

                  3.2      POWERS OF THE BOARD. In addition to any other powers
set forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its sole discretion:

                           (a)      to determine the persons to whom, and the
time or times at which, Options shall be granted and the number of shares of
Stock to be subject to each Option;

                           (b)      to designate Options as Incentive Stock
Options or Nonstatutory Stock Options;

                           (c)      to determine the Fair Market Value of shares
of Stock or other property;

                           (d)      to determine the terms, conditions and
restrictions applicable to each Option (which need not be identical) and any
shares acquired upon the exercise thereof, including, without limitation, (i)
the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction of
any tax withholding obligation arising in connection with the Option or such
shares, including by the withholding or delivery of shares of stock, (iv) the
timing, terms and conditions of the exercisability of the Option or the vesting
of any shares acquired upon the exercise thereof, (v) the time of the expiration
of the Option, (vi) the effect of the Optionee's termination of employment or
service with the Participating Company Group on any of the foregoing, and (vii)
all other terms, conditions and restrictions applicable to the Option or such
shares not inconsistent with the terms of the Plan;

                           (e)      to approve one or more forms of Option
Agreement;

                           (f)      to amend, modify, extend, or renew, or grant
a new Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof, including without limitation (1) the reduction of the exercise price of
any outstanding Option under the Plan to the then Fair Market Value and/or (2)
the cancellation of any outstanding Option under the Plan and the grant in
substitution therefor of (A) a new Option under the Plan covering the same or a
different number of shares of Common Stock, (B) a stock bonus, (C) the right to
acquire restricted stock, (D) cash and/or (E) other valuable consideration (as
determined by the Board, in its sole discretion); provided, however, that
without the approval of the Company's stockholders, the Board may not amend an
Option granted from the Option Reserve Increase to decrease the exercise price
thereof, or grant a new Option in substitution therefor;

                           (g)      to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of employment or service with the Participating Company Group;

                           (h)      to prescribe, amend or rescind rules,
guidelines and policies relating to the Plan, or to adopt supplements to, or
alternative versions of, the Plan, including, without limitation, as the Board
deems necessary or desirable to comply with the laws of, or to accommodate the
tax policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

                           (i)      to correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Option Agreement and to make
all other determinations and take such other actions with respect to the Plan or
any Option as the Board may deem advisable to the extent consistent with the
Plan and applicable law.

                  3.3      COMMITTEE COMPLYING WITH SECTION 162(M). If a
Participating Company is a "publicly held corporation" within the meaning of
Section 162(m), the Board may establish a Committee of "outside directors"
within the meaning of Section 162(m) to approve the grant of any Option which
might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the limit on employee remuneration
deductible for income tax purposes pursuant to Section 162(m).

                                       3
<PAGE>
         4.       SHARES SUBJECT TO PLAN.

                  4.1      MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of
Stock that may be issued under the Plan shall be twelve million one hundred
twenty-one thousand six hundred seventy-two (12,121,672) and shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If an outstanding Option for any reason expires or is terminated or
canceled or shares of Stock acquired, subject to repurchase, upon the exercise
of an Option are repurchased by the Company, the shares of Stock allocable to
the unexercised portion of such Option, or such repurchased shares of Stock,
shall again be available for issuance under the Plan.

                  4.2      ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the
event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan, the Option Reserve Increase and to any outstanding Options,
in the Section 162(m) Grant Limit set forth in Section 5.5, and in the exercise
price per share of any outstanding Options. If a majority of the shares which
are of the same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the outstanding
Options to provide that such Options are exercisable for New Shares. In the
event of any such amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options shall be adjusted in a fair and
equitable manner as determined by the Board, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded up or down to the nearest whole
number, as determined by the Board, and in no event may the exercise price of
any Option be decreased to an amount less than the par value, if any, of the
stock subject to the Option. The adjustments determined by the Board pursuant to
this Section 4.2 shall be final, binding and conclusive.

         5.       ELIGIBILITY AND OPTION LIMITATIONS.

                  5.1      PERSONS ELIGIBLE FOR OPTIONS. Options may be granted
only to Employees, Consultants, and Directors. For purposes of the foregoing
sentence, "Employees" shall include prospective Employees to whom Options are
granted in connection with written offers of employment with the Participating
Company Group, and "Consultants" shall include prospective Consultants to whom
Options are granted in connection with written offers of engagement with the
Participating Company Group. Eligible persons may be granted more than one (1)
Option.

                  5.2      DIRECTORS SERVING ON COMMITTEE. At any time that any
class of equity security of the Company is registered pursuant to Section 12 of
the Exchange Act, no member of a Committee established to administer the Plan in
compliance with the "disinterested administration" requirements of Rule 16b-3,
while a member, shall be eligible to be granted an Option.

                  5.3      OPTION GRANT RESTRICTIONS. Any person who is not an
Employee on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person become an Employee
shall be deemed granted effective on the date such person commences service with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.

                  5.4      FAIR MARKET VALUE LIMITATION. To the extent that the
aggregate Fair Market Value of stock with respect to which options designated as
Incentive Stock Options are exercisable by an Optionee for the first time during
any calendar year (under all stock option plans of the Participating Company
Group, including the Plan) exceeds One Hundred Thousand Dollars ($100,000), the
portion of such options which exceeds such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5.4, options designated
as Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of stock shall be determined as of
the time the option with respect to such stock is granted. If the Code is
amended to provide for a different limitation from that set forth in this
Section 5.4, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section 5.4, the Optionee may designate which
portion of such Option the Optionee is exercising and may request that separate
certificates representing each such portion be issued upon the exercise of the
Option. In the absence of such designation, the Optionee shall be deemed to have
exercised the Incentive Stock Option portion of the Option first.

                  5.5      SECTION 162(M) GRANT LIMIT. Subject to adjustment as
provided in Section 4.2, at any such time as a Participating Company is a
"publicly held corporation" within the meaning of Section 162(m), no Employee
shall be granted one or

                                       4
<PAGE>
more Options within any fiscal year of the Company which in the aggregate are
for the purchase of more than five hundred thousand (500,000) shares (the
"SECTION 162(M) GRANT LIMIT").

         6.       TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
Option Agreements specifying the number of shares of Stock covered thereby, in
such form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

                  6.1      EXERCISE PRICE. The exercise price for each Option
shall be established in the sole discretion of the Board; provided, however,
that (a) the exercise price per share for an Option shall be not less than the
Fair Market Value of a share of Stock on the effective date of grant of the
Option, and (b) no Incentive Stock Option granted to a Ten Percent Owner
Optionee shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether
an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.

                  6.2      EXERCISE PERIOD. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria, and restrictions as shall be determined by the
Board and set forth in the Option Agreement evidencing such Option; provided,
however, that (a) no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option,
(b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the effective date of
grant of such Option, (c) no Option granted to a prospective Employee or
prospective Consultant may become exercisable prior to the date on which such
person commences service with a Participating Company, and (d) no Option granted
from the Option Reserve Increase shall be exercisable after the expiration of
eight (8) years after the effective date of grant of such Option.

                  6.3      PAYMENT OF EXERCISE PRICE.

                           (a)      FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of shares
of Stock being purchased pursuant to any Option shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company of shares of Stock
owned by the Optionee having a Fair Market Value (as determined by the Company
without regard to any restrictions on transferability applicable to such stock
by reason of federal or state securities laws or agreements with an underwriter
for the Company) not less than the exercise price, (iii) by the assignment of
the proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
"CASHLESS EXERCISE"), (iv) by the Optionee's promissory note in a form approved
by the Company, (v) by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described in
Section 7, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.

                           (b)      TENDER OF STOCK. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares of
Stock to the extent such tender of Stock would constitute a violation of the
provisions of any law, regulation or agreement restricting the redemption of the
Company's stock. Unless otherwise provided by the Board, an Option may not be
exercised by tender to the Company of shares of Stock unless such shares either
have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

                           (c)      CASHLESS EXERCISE. The Company reserves, at
any and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

                           (d)      PAYMENT BY PROMISSORY NOTE. No promissory
note shall be permitted if the exercise of an Option using a promissory note
would be a violation of any law. Any permitted promissory note shall be on such
terms as the Board shall determine at the time the Option is granted. The Board
shall have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock acquired
upon the exercise of the Option or with other collateral acceptable to the
Company. Unless otherwise provided by the Board, if the Company at any time is
subject to the regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the extension of
credit in connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the

                                       5
<PAGE>
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.

                  6.4      TAX WITHHOLDING. The Company shall have the right,
but not the obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to accept from the Optionee the tender of, a number of
whole shares of Stock having a Fair Market Value, as determined by the Company,
equal to all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof. Alternatively
or in addition, in its sole discretion, the Company shall have the right to
require the Optionee, through payroll withholding, cash payment or otherwise,
including by means of a Cashless Exercise, to make adequate provision for any
such tax withholding obligations of the Participating Company Group arising in
connection with the Option or the shares acquired upon the exercise thereof. The
Company shall have no obligation to deliver shares of Stock or to release shares
of Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

                  6.5      REPURCHASE RIGHTS. Shares issued under the Plan may
be subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its sole discretion at
the time the Option is granted. The Company shall have the right to assign at
any time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.

         7.       STANDARD FORMS OF OPTION AGREEMENT.

                  7.1      INCENTIVE STOCK OPTIONS. Unless otherwise provided by
the Board at the time the Option is granted, an Option designated as an
"Incentive Stock Option" shall comply with and be subject to the terms and
conditions set forth in the form of Immediately Exercisable Incentive Stock
Option Agreement adopted by the Board concurrently with its adoption of the Plan
and as amended from time to time.

                  7.2      NONSTATUTORY STOCK OPTIONS. Unless otherwise provided
by the Board at the time the Option is granted, an Option designated as a
"Nonstatutory Stock Option" shall comply with and be subject to the terms and
conditions set forth in the form of Immediately Exercisable Nonstatutory Stock
Option Agreement adopted by the Board concurrently with its adoption of the Plan
and as amended from time to time.

                  7.3      STANDARD TERM OF OPTIONS. Except as otherwise
provided in Section 6.2 or by the Board in the grant of an Option, (a) any
Incentive Stock Option granted hereunder (except for Incentive Stock Options
granted from the Option Reserve Increase) shall have a term of ten (10) years
from the effective date of grant of the Option, and (b) any Incentive Stock
Option granted from the Option Reserve Increase shall have a term of eight (8)
years from the effective date of grant of the Option.

                  7.4      AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of any of the standard forms of
Option Agreement described in this Section 7 either in connection with the grant
or amendment of an individual Option or in connection with the authorization of
a new standard form or forms; provided, however, that the terms and conditions
of any such new, revised or amended standard form or forms of Option Agreement
shall be in accordance with the terms of the Plan. Such authority shall include,
but not by way of limitation, the authority to grant Options which are not
immediately exercisable.

         8.       TRANSFER OF CONTROL.

                  8.1      DEFINITIONS.

                           (a)      An "OWNERSHIP CHANGE EVENT" shall be deemed
to have occurred if any of the following occurs with respect to the Company:

                                    (i)      the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;

                                    (ii)     a merger or consolidation in which
the Company is a party;

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                                    (iii)    the sale, exchange, or transfer of
all or substantially all of the assets of the Company; or

                                    (iv)     a liquidation or dissolution of the
Company.

                           (b)      A "TRANSFER OF CONTROL" shall mean an
Ownership Change Event or a series of related Ownership Change Events
(collectively, the "TRANSACTION") wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of shares
of the Company's voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of the Company or the
corporation or corporations to which the assets of the Company were transferred
(the "TRANSFEREE CORPORATION(S)"), as the case may be. For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

                  8.2      EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the
event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and obligations
under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Transfer of Control and any consideration
received pursuant to the Transfer of Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Transfer of Control
is the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its sole discretion.

         9.       PROVISION OF INFORMATION. Each Optionee shall be given access
to information concerning the Company equivalent to that information generally
made available to the Company's common stockholders.

         10.      NONTRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or the Optionee's
guardian or legal representative. No Option shall be assignable or transferable
by the Optionee, except by will or by the laws of descent and distribution.

         11.      INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such person
is liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

         12.      TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or
amend the Plan at any time. However, subject to changes in the law or other
legal requirements that would permit otherwise, without the approval of the
Company's stockholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation
of the provisions of Section 4.2), (b) no change in the class of persons
eligible to receive Incentive Stock Options, and (c) no expansion in the class
of persons eligible to receive Nonstatutory Stock Options. In any event, no
termination or amendment of the

                                       7
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Plan may adversely affect any then outstanding Option or any unexercised portion
thereof, without the consent of the Optionee, unless such termination or
amendment is required to enable an Option designated as an Incentive Stock
Option to qualify as an Incentive Stock Option or is necessary to comply with
any applicable law or government regulation.

         13.      CONTINUATION OF INITIAL PLAN AS TO OUTSTANDING OPTIONS. Any
other provision of the Plan to the contrary notwithstanding, the terms of the
Initial Plan shall remain in effect and apply to all Options granted pursuant to
the Initial Plan.

         IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing is the Verity, Inc. 1995 Stock Option Plan, as amended
through November 15, 2002.

                                                    ____________________________
                                                    Secretary

                                       8

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