-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C5i4I1YLRcA9ZbRHRQSbOrtYTITLyAvoiaeIqWUexKgpbxUdENgjK1siqs5fmNKQ FnU+93aIKbdoIdskJhHTLA== 0000891618-95-000749.txt : 19951220 0000891618-95-000749.hdr.sgml : 19951220 ACCESSION NUMBER: 0000891618-95-000749 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19951219 EFFECTIVENESS DATE: 19960107 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK EQUIPMENT TECHNOLOGIES INC CENTRAL INDEX KEY: 0000752431 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 942904044 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-65157 FILM NUMBER: 95602703 BUSINESS ADDRESS: STREET 1: 800 SAGINAW DR CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 4153664400 MAIL ADDRESS: STREET 1: 800 SAGINAW DRIVE CITY: REDWOOD CITY STATE: CA ZIP: 94063 S-8 1 FORM S-8 DATED DECEMBER 19, 1995 1 As filed with the Securities and Exchange Commission on December 19, 1995 Registration No. ________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NETWORK EQUIPMENT TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 94-2904044 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 800 Saginaw Drive, Redwood City, California 94063 (Address of Principal Executive Offices) 1993 Stock Option Plan 1988 Restricted Stock Award Plan 1988 U.K. Stock Option Scheme 1989 U.K. Stock Option Plan (Full Title of the Plan) James B. DeGolia, Esq. Vice President and General Counsel 800 Saginaw Drive Redwood City, California 94063 (Name and Address of Agent For Service) (415) 366-4400 (Telephone Number, Including Area Code, of Agent For Service) Copy to: Matthew P. Quilter, Esq. Heller, Ehrman, White & McAuliffe 525 University Avenue Palo Alto, California 94301-1908 (415) 324-7000
CALCULATION OF REGISTRATION FEE ================================================================================== Proposed Proposed Title of maximum maximum securities Amount offering aggregate Amount of to be to be price per offering registration registered registered share (1) price fee - ---------------------------------------------------------------------------------- Common Stock, par value $.001 2,000,000 $29.50 $59,000,000 $20,345 ==================================================================================
(1) Estimated solely for the purpose of computing the amount of registration fee pursuant to Rule 457(c) under the Securities Act, as amended, based on the average of the high and low prices reported of the Registrant's Common Stock on the New York Stock Exchange on December 15, 1995. 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents filed or to be filed with the Commission by the registrant are incorporated by reference in this registration statement: (a) The registrant's latest Annual Report on Form 10-K for the fiscal year ended March 31, 1995 filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b) The registrant's Quarterly Reports on Form 10-Q for the quarters ended June 25, 1995 and September 24, 1995; (c) The description of the Common Stock of the registrant contained in the registration statement filed under the Exchange Act registering such Common Stock under Section 12 of the Exchange Act; and (d) All documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS The registrant has the power to indemnify its officers and directors against liability for certain acts pursuant to Section 145 of the General Corporation Law of the State of Delaware. Section 6 of Article VII of the registrant's By-Laws provides: (a) Indemnification in Actions Other Than Those Brought by the Corporation. The corporation shall indemnify and hold harmless, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment), any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding. Except as provided in paragraph (d) of this Section 6, the corporation shall -2- 3 be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the corporation. (b) Indemnification in Actions Brought By or on Behalf of the Corporation. The corporation shall indemnify and hold harmless, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, against expenses (including attorney's fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit. (c) Expenses; Prepayment. The corporation shall pay the expenses (including attorneys' fees) incurred by a director or officer who has been successful on the merits or otherwise in defending any action, suit or proceeding referenced in paragraphs (a) and (b) of this Section 6 and shall pay such expenses in advance of the final disposition of such matter upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this Article or otherwise. (d) Indemnification Procedure; Claims. Any indemnification under paragraphs (a) and (b) of this Section 6 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director of office is proper in the circumstances because he or she has met the applicable standard of conduct set forth in paragraphs (a) and (b). If a claim for indemnification or payment of expenses under Section 6 of this Article is not paid in full within sixty days after a written claim therefor has been received by the corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. (e) Indemnification of Others. The Board of Directors, in its discretion, shall have the power on behalf of the corporation to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he or she, or his or her testator or intestate, is or was an employee or agent of the corporation and to pay the expenses incurred by any such person in defending such action, suit or proceeding in advance of its final disposition. (f) Non-exclusivity of Rights. The indemnification and advancement of expenses provided by or granted pursuant to Section 6 of this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders, or disinterested directors or otherwise, both as to, action in his or her official capacity and as to action in another capacity while holding such office. -3- 4 (g) Other Indemnification. The corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit enterprise. (h) Insurance. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was; serving at the request of the corporation as a director, officer, employee or agent of another corporation against any liability asserted against him or her and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of this Section 6. (i) Successor Entities. For purposes of Section 6 of this Article VII, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued would have had power and authority to indemnify its directors, officers, employees and agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation shall stand in the same position under the provisions of this Section 6 of Article VII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. (j) Survival of Rights; Amendment or Repeal. The indemnification and advancement of expenses provided by, or granted pursuant to this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of the foregoing provisions of Section 6 of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ITEM 8. EXHIBITS 3.1 Registrant's Bylaws, as amended 5 Opinion of Heller Ehrman White & McAuliffe 23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit 5) 23.2 Independent Auditors' Consent 24 Power of Attorney (see pages 7 and 8)
-4- 5 99.1 1993 Stock Option Plan
ITEM 9. UNDERTAKINGS A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that -5- 6 a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -6- 7 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Redwood City, State of California, on this 18th day of December, 1995. NETWORK EQUIPMENT TECHNOLOGIES, INC. By: /s/ Joseph J. Francesconi ----------------------------- Joseph J. Francesconi, President, Chief Executive Officer, and Director POWER OF ATTORNEY TO SIGN AMENDMENTS KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Joseph J. Francesconi and Craig M. Gentner, or either of them, with full power of substitution, such person's true and lawful attorneys-in-fact and agents for such person in such person's name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as he or such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the dates indicated. /s/ Joseph J. Francesconi President, Chief Executive December 18, 1995 - ----------------------------- Officer, and Director Joseph J. Francesconi (Principal Executive Officer) /s/ Craig M. Gentner Senior Vice President, Chief December 18, 1995 - ----------------------------- Financial Officer and Craig M. Gentner Corporate Secretary (Principal Financial and Accounting Officer)
-7- 8 /s/ John B. Arnold Chairman of the Board December 18, 1995 - ----------------------------- John B. Arnold /s/ Robert H.B. Baldwin Director December 18, 1995 - ----------------------------- Robert H.B. Baldwin /s/ Dixon R. Doll Director December 18, 1995 - ----------------------------- Dixon R. Doll /s/ Walter J. Gill Director December 18, 1995 - ----------------------------- Walter J. Gill /s/ Frank S. Vigilante Director December 18, 1995 - ----------------------------- Frank S. Vigilante /s/ Hans A. Wolf Director December 18, 1995 - ----------------------------- Hans A. Wolf
-8- 9 Index to Exhibits
Sequentially Item No. Description of Item Numbered Page - -------- ------------------- ------------- 3.1 Registrant's Bylaws, as amended . . . . . . . . . . . . 5 Opinion of Heller Ehrman White & McAuliffe . . . . . . . 23.1 Consent of Heller Ehrman White & McAuliffe (filed as part of Exhibit 5) . . . . . . . . . . . . . . 23.2 Independent Auditors' Consent . . . . . . . . . . . . . 24 Power of Attorney (see pages 7 and 8). . . . . . . . . . 99.1 1993 Stock Option Plan . . . . . . . . . . . . . . . . .
EX-3.1 2 REGISTRANT'S BYLAWS, AS AMENDED 1 EXHIBIT 3.1 NETWORK EQUIPMENT TECHNOLOGIES, INC. BY-LAWS 2 NETWORK EQUIPMENT TECHNOLOGIES, INC. BY-LAWS TABLE OF CONTENTS ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 MEETING OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 MEETINGS OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . 7 COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . 9 COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . 10 REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 CERTIFICATE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . 15 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . 16 TRANSFER OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . 17 FIXING RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . 17 REGISTERED STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 18 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 CHECKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
N.E.T. BY-LAWS 1 AS AMENDED AUGUST 8, 1995 3 BY-LAWS OF NETWORK EQUIPMENT TECHNOLOGIES, INC. ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETING OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Redwood City, State of California, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders shall be held on the second Tuesday in August if not a legal holiday, and, if a legal holiday, then on the next secular day following, at 10:00 a.m., or such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which the stockholders shall elect members of the Board of N.E.T. BY-LAWS 2 AS AMENDED AUGUST 8, 1995 4 Directors to succeed those whose terms expire and shall transact such other business as may properly be brought before the meeting. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation at least sixty (60) days prior to the meeting; provided, however, that in the event that less than sixty (60) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth (1Oth) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) such other information regarding the item of business to be proposed by such stockholder as would be required to be disclosed in solicitations for proxies to approve such proposed business pursuant to Schedule 14A under the Securities Exchange Act of 1934, as amended, (iii) the name and record address of the stockholder proposing such N.E.T. BY-LAWS 3 AS AMENDED AUGUST 8, 1995 5 business, (iv) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (v) any material interest of the stockholder in such business. No business shall be conducted at the annual meeting except in accordance with the procedure set forth in this Section 2 of Article II. The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2 of Article II, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and N.E.T. BY-LAWS 4 AS AMENDED AUGUST 8, 1995 6 place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chief executive officer and shall be called by the chief executive officer or secretary at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business N.E.T. BY-LAWS 5 AS AMENDED AUGUST 8, 1995 7 may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting unless the question is one upon which, by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder but no proxy shall be voted on after three years from its date unless the proxy provides for a longer period. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall not be less than five (5) nor more than eight (8). Within the limits above specified, the number of directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his or her successor is elected and qualified. Directors need not be stockholders. Section 1 of this N.E.T. BY-LAWS 6 AS AMENDED AUGUST 8, 1995 8 Article III may only be amended as set forth in Article VI of the Corporation's Certificate of Incorporation. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by two-thirds (2/3) of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. Section 3. The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not proscribed by statute or by the certificate of incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of N.E.T. BY-LAWS 7 AS AMENDED AUGUST 8, 1995 9 Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. Section 7. Special meetings of the Board may be called by the chief executive officer on four (4) days' notice to each director by mail or forty-eight (48) hours notice to each director either personally, via overnight courier service, or by facsimile; special meetings shall be called by the chief executive officer or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director, in which case special meetings shall be called by the chief executive officer or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. N.E.T. BY-LAWS 8 AS AMENDED AUGUST 8, 1995 10 Section 9. Unless otherwise restricted by the certificate of incorporation or these By-Laws any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she, or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. N.E.T. BY-LAWS 9 AS AMENDED AUGUST 8, 1995 11 Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the powers or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-Laws of the Corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these By-Laws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation N.E.T. BY-LAWS 10 AS AMENDED AUGUST 8, 1995 12 therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or these By-Laws, any director or the entire Board of Directors may be removed with cause by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these ByLaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his or her address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors, institutional stockholders and affiliates may also be given via overnight courier service or facsimile. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. N.E.T. BY-LAWS 11 AS AMENDED AUGUST 8, 1995 13 ARTICLE V Section 1. Generally. The officers of the Corporation shall consist of a Chairman of the Board or a Chief Executive Officer or both, one or more Vice Presidents, a Secretary, a Chief Financial Officer or a Treasurer or both and such other officers, including one or more assistant secretaries and assistant treasurers, as may from time to time be appointed by the Board of Directors. Officers shall be elected by the Board of Directors. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Chairman of the Board shall be a member of the Board of Directors. Any number of offices may be held by the same person. Section 2. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time assigned to his or her by the Board and as may be provided by law. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time, assigned to his or her by the Board and as may be provided by law. Section 3. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation. Subject to the provisions of these by-laws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which N.E.T. BY-LAWS 12 AS AMENDED AUGUST 8, 1995 14 are delegated to him or her by the Board of Directors. The Chief Executive Officer shall be responsible for all resolutions, orders, and directives of the Board of Directors being carried into effect and may sign and execute, in the name of the Corporation, all stock certificates, deeds, mortgages, bonds, contracts and other instruments, and shall have general supervision and direction of all of the other officers, employees, and agents of the Corporation. Section 4. Vice President. One or more Vice Presidents shall be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer in the event of the Chief Executive Officer's absence or disability. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, the bylaws, or the Chief Executive Officer. Section 5. Chief Financial Officer. The Chief Financial Officer shall control, audit, and arrange the financial affairs of the Corporation and shall keep and maintain adequate and correct accounts of the Corporation's properties and business transactions and prepare and deliver such financial reports and statements as may be requested by the Board of Directors or as may be required by law and in general shall perform all the duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned by the Board of Directors. The Chief Financial Officer shall also be responsible for all functions and duties of the treasurer of the Corporation, except if and to the extent responsibility for such functions and/or duties is assigned to a separate officer designated by the Board of Directors as the Treasurer of the Corporation. It shall be the duty of the Assistant Treasurers to assist the Chief Financial Officer, and the Treasurer, if any, in the performance of their duties and to perform such other duties N.E.T. BY-LAWS 13 AS AMENDED AUGUST 8, 1995 15 as from time to time as may be assigned by the Board of Directors. Section 6. Secretary. The Secretary shall issue all authorized notices for all meetings of the stockholders and the Board of Directors. The Secretary shall keep minutes of all meetings of the stockholders and the Board of Directors. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall have charge of the corporate books and shall perform such other duties as the Board of Directors may from time to time prescribe. It shall be the duty of the Assistant Secretaries to assist the Secretary in the performance of his or her duties. In addition, the Chief Executive Officer may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time. Section 7. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof. Section 8. Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors. Section 9. Unless otherwise directed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer or any officer of the Corporation N.E.T. BY-LAWS 14 AS AMENDED AUGUST 8, 1995 16 authorized by the Chairman of the Board or the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders with respect to any action of stockholders of any other Corporation which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other Corporation. ARTICLE VI CERTIFICATE OF STOCK Section 1. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman or Vice Chairman of the Board of Directors, or the chief executive officer or a vice president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation, certifying the number of shares owned by his or her in the Corporation. Certificates may be issued for partly paid shares and, in such case, upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be specified. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation N.E.T. BY-LAWS 15 AS AMENDED AUGUST 8, 1995 17 Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may N.E.T. BY-LAWS 16 AS AMENDED AUGUST 8, 1995 18 be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE Section 5. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner and to hold liable for calls and N.E.T. BY-LAWS 17 AS AMENDED AUGUST 8, 1995 19 assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the Corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meetings, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purposes as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. N.E.T. BY-LAWS 18 AS AMENDED AUGUST 8, 1995 20 FISCAL YEAR Section 4. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. SEAL Section 5. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS (a) Indemnification in Actions Other Than Those Brought by the Corporation. The corporation shall indemnify and hold harmless, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment), any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding. Except as provided in N.E.T. BY-LAWS 19 AS AMENDED AUGUST 8, 1995 21 paragraph (d) of this Section 6, the corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the corporation. (b) Indemnification in Actions Brought By or on Behalf of the Corporation. The corporation shall indemnify and hold harmless, to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, against expenses (including attorney's fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit. (c) Expenses; Prepayment. The corporation shall pay the expenses (including attorneys' fees) incurred by a director or officer who has been successful on the merits or otherwise in defending any action, suit or proceeding referenced in paragraphs (a) and (b) of this Section 6 and shall pay such expenses in advance of the final disposition of such matter upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this Article or otherwise. (d) Indemnification Procedure; Claims. Any indemnification under paragraphs (a) and (b) of this Section N.E.T. BY-LAWS 20 AS AMENDED AUGUST 8, 1995 22 6 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or office is proper in the circumstances because he or she has met the applicable standard of conduct set forth in paragraphs (a) and (b). If a claim for indemnification or payment of expenses under Section 6 of this Article is not paid in full within sixty days after a written claim therefor has been received by the corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. (e) Indemnification of Others. The Board of Directors, in its discretion, shall have the power on behalf of the corporation to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he or she, or his or her testator or intestate, is or was an employee or agent of the corporation and to pay the expenses incurred by any such person in defending such action, suit or proceeding in advance of its final disposition. (f) Non-exclusivity of Rights. The indemnification and advancement of expenses provided by or granted pursuant to Section 6 of this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders, or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. (g) Other Indemnification. The corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or N.E.T. BY-LAWS 21 AS AMENDED AUGUST 8, 1995 23 agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit enterprise. (h) Insurance. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation against any liability asserted against him or her and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of this Section 6. (i) Successor Entities. For purposes of Section 6 of this Article VII, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued would have had power and authority to indemnify its directors, officers, employees and agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation shall stand in the same position under the provisions of this Section 6 of Article VII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. N.E.T. BY-LAWS 22 AS AMENDED AUGUST 8, 1995 24 (j) Survival of Rights; Amendment or Repeal. The indemnification and advancement of expenses provided by, or granted pursuant to this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of the foregoing provisions of Section 6 of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ARTICLE VIII AMENDMENTS Section 1. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors pursuant to the provisions of the certificate of incorporation at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. END N.E.T. BY-LAWS 23 AS AMENDED AUGUST 8, 1995 EX-5 3 OPINION OF HELLER EHRMAN WHITE & MCAULIFFE 1 EXHIBIT 5 [HELLER, EHRMAN, WHITE & McAULIFFE LETTERHEAD] December 18, 1995 16308-0003 Network Equipment Technologies, Inc. 800 Saginaw Drive Redwood City, California 94063 Registration Statement on Form S-8: 1993 Stock Option Plan, 1988 Restricted Stock Award Plan, 1988 U.K. Stock Option Scheme, 1989 U.K. Stock Option Plan Ladies and Gentlemen: We have acted as counsel to Network Equipment Technologies, Inc., a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-8 (the "Registration Statement") which the Company proposes to file with the Securities and Exchange Commission on December 19, 1995 for the purpose of registering under the Securities Act of 1933, as amended, an additional 2,000,000 shares (the "Shares") of its $.01 par value Common Stock to be issued to employees, directors and consultants who purchase stock under the Company's 1993 Stock Option Plan, 1988 Restricted Stock Award Plan, 1988 U.K. Stock Option Scheme and 1989 U.K. Stock Option Plan (the "Plans"). In connection with this opinion, we have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all records, documents and instruments submitted to us as copies. We have based our opinion upon our review of the following records, documents and instruments: (a) The Restated Certificate of Incorporation of the Company, as amended, certified by the Secretary of State of the State of Delaware as of July 18, 1995 and certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; 2 Network Equipment Technologies, Inc. December 18, 1995 Page 2 (b) The By-Laws of the Company, certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; (c) A Certificate of the Vice President and General Counsel of the Company (i) attaching records certified to us as constituting all records of proceedings and actions of the Board of Directors and stockholders of the Company relating to the Plans and the Registration Statement, and (ii) certifying as to certain factual matters; (d) The Registration Statement; (e) The Plans; and (f) A letter from First National Bank of Boston, the Company's transfer agent, dated December 15, 1995, as to the number of shares of the Company's Common Stock that were outstanding on December 15, 1995. This opinion is limited to the Delaware General Corporation Law. We disclaim any opinion as to any statute, rule, regulation, ordinance, order or other promulgation of any other jurisdiction or any regional or local governmental body. Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and assuming that (i) the Registration Statement becomes and remains effective during the period when the Shares are offered and issued, (ii) the full consideration stated in the Plans is paid for each Share and that such consideration in respect of each Share includes a cash payment at least equal to the par value thereof, and (iii) all applicable securities laws are complied with, it is our opinion that when issued and sold by the Company, after payment therefor in the manner provided in the Plans and in the Registration Statement, the Shares will be legally issued, fully paid and nonassessable. This opinion is rendered to you in connection with the Registration Statement and is solely for your benefit. This opinion may not be relied upon by you for any other purpose, or relied upon by any other person, firm, corporation or other entity for any purpose, without our prior written consent. We disclaim any obligation to advise you of any change of law that occurs, or any facts of which we become aware, after the date of this opinion. 3 Network Equipment Technologies, Inc. December 18, 1995 Page 3 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, HELLER, EHRMAN, WHITE & McAULIFFE 4 Network Equipment Technologies, Inc. December 18, 1995 Page 4 EX-23.2 4 INDEPENDENT AUDITOR'S CONSENT 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement on Form S-8 of our reports dated April 19, 1995 and June 21, 1995 appearing and incorporated by reference in the Annual Report on Form 10-K of Network Equipment Technologies, Inc. for the year ended March 31, 1995. DELOITTE & TOUCHE LLP San Jose, California December 15, 1995 EX-99.1 5 1993 STOCK OPTION PLAN 1 EXHIBIT 99.1 NETWORK EQUIPMENT TECHNOLOGIES, INC. 1993 Stock Option Plan 2 NETWORK EQUIPMENT TECHNOLOGIES, INC. 1993 STOCK OPTION PLAN TABLE OF CONTENTS ARTICLE ONE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 I. PURPOSES OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 2 II. ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . 2 III. STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE TWO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 DISCRETIONARY OPTION GRANTS . . . . . . . . . . . . . . . . . . . . . . . . 5 I. ELIGIBILITY FOR OPTION GRANTS . . . . . . . . . . . . . . . . . . 5 II. TERMS AND CONDITIONS OF OPTIONS . . . . . . . . . . . . . . . . . 5 III. INCENTIVE OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . 8 IV. CORPORATE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . 9 V. CANCELLATION AND REGRANT OF OPTIONS . . . . . . . . . . . . . . . 10 VI. STOCK APPRECIATION RIGHTS; HOSTILE TAKE-OVER; CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE THREE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 AUTOMATIC OPTION GRANT PROGRAM . . . . . . . . . . . . . . . . . . . . . . 13 I. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS . . . . . . . . . 13 III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER . . . . 16 IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS . . . . . . . . . . . 17 ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 I. AMENDMENT OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 18 II. TAX WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . 18 III. TERM OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 IV. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 19 V. REGULATORY APPROVALS . . . . . . . . . . . . . . . . . . . . . . . 19 VI. NO EMPLOYMENT/SERVICE RIGHTS . . . . . . . . . . . . . . . . . . . 19 VII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . 20
N.E.T. 1993 SOP October 18, 1995 3 NETWORK EQUIPMENT TECHNOLOGIES, INC. 1993 STOCK OPTION PLAN ARTICLE ONE GENERAL PROVISIONS I. PURPOSES OF PLAN A. This 1993 Stock Option Plan (the "Plan") is adopted as of August 11, 1993 (the "Effective Date") to promote the interests of Network Equipment Technologies, Inc., a Delaware corporation (the "Corporation"), by allowing eligible individuals to acquire or increase proprietary interests in the Corporation as an incentive to remain in the service of the Corporation (or its "parent" or "subsidiary" corporations, as defined in Section 424 of the Internal Revenue Code). B. This Plan is the successor to the Network Equipment Technologies, Inc. 1983 Stock Option Plan (the "1983 Plan"). No options shall be granted under the 1983 Plan from and after the Effective Date. The terms and conditions of options granted under the 1983 Plan before the Effective Date are not affected by the adoption of this Plan. II. ADMINISTRATION OF PLAN A. This Plan shall be administered by a committee (the "Plan Administrator" or "Committee") of two or more non-employee Directors appointed by the Corporation's Board of Directors (the "Board"). No Director may serve on the Committee if within 12 months before appointment, he or she has received an option grant or stock issuance under this Plan or any other stock plan of the Corporation or any parent or subsidiary, other than pursuant to the Automatic Option Grant Program set forth in Article Three of this Plan. Committee members shall serve for such periods as the Board may determine and may be removed by the Board at any time. B. The Plan Administrator shall have full authority (subject to the provisions of this Plan) to establish such rules and regulations as it deems appropriate for the proper administration of this Plan and to make such determinations and interpretations concerning this Plan and options granted under this Plan as it deems necessary or advisable. Decisions of the Plan Administrator shall be final and binding upon all parties. N.E.T. 1993 SOP October 18, 1995 4 C. The Plan Administrator shall have full authority to grant options pursuant to Article Two of this Plan and to determine in its sole discretion which eligible individuals are to receive such options, the number of shares to be covered by each such option, whether each option is to be an incentive stock option intended to satisfy the requirements of Section 422 of the Internal Revenue Code ("Incentive Option") or a non-statutory option not intended to satisfy those requirements, the time(s) at which each option is to become exercisable, and the maximum term for which each option is to be outstanding. III. STOCK SUBJECT TO PLAN A. An aggregate of 7,406,415 shares of the Corporation's common stock, par value $0.01 per share ("Common Stock") is available for issuance under this Plan, subject to adjustment from time to time in accordance with this Section III. These shares may be authorized but unissued shares of Common Stock or re acquired shares of Common Stock, including shares repurchased by the Corporation on the open market. The number of shares of Common Stock available for issuance under this Plan shall be reduced, share-for-share, by the number of shares issued with respect to options granted under the 1983 Plan that are outstanding at the Effective Date and are subsequently exercised. B. To the extent that an option granted under this Plan or the 1983 Option Plan expires or terminates for any reason before exercise in full (including any option canceled in accordance with the cancellation-regrant provisions of Section V of Article Two of this Plan), the shares then subject to the option shall again be available for option grants under this Plan. Shares subject to any option or portion thereof surrendered or canceled in accordance with Section VI of Article Two and Section III of Article Three, and shares repurchased by the Corporation pursuant to any repurchase rights available under this Plan, shall not again become available for option grants under this Plan. If the exercise price of an option granted under this Plan (or the 1983 Plan) is paid with shares of Common Stock, or if shares of Common Stock otherwise issuable under this Plan are withheld by the Corporation in satisfaction of withholding taxes incurred upon the exercise of an option, then the number of shares available for issuance under this Plan shall be reduced by the gross number of shares for which the option is exercised and not by the net number of shares issued to the option holder. C. If a change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, or other similar change, then appropriate adjustments shall be made to (i) the number and/or class of shares issuable under this Plan, (ii) the number and/or class of shares and price per share in effect under each then-outstanding option granted N.E.T. 1993 SOP October 18, 1995 5 under this Plan (or the 1983 Plan), and (iii) the number of shares of Common Stock to be made the subject of each subsequent automatic option grant under Article Three of this Plan. The purpose of adjustments to outstanding options shall be to preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding, and conclusive. D. The Corporation may not issue stock options covering in the aggregate more than 350,000 shares of Common Stock (subject to adjustments as required under Article V(C) above) to any one participant in any one-year period. N.E.T. 1993 SOP October 18, 1995 6 ARTICLE TWO DISCRETIONARY OPTION GRANTS I. ELIGIBILITY FOR OPTION GRANTS The following persons are eligible to participate in the Discretionary Option Grant Program under Article Two of this Plan: A. Officers and other key employees of the Corporation (or its parent or subsidiary corporations) whose services contribute to the management, growth, and financial success of the Corporation (or its parent or subsidiary corporations), and B. Those consultants and independent contractors who provide valuable services to the Corporation (or its parent or subsidiary corporations). II. TERMS AND CONDITIONS OF OPTIONS Options granted pursuant to this Article Two may, at the Plan Administrator's discretion, be either Incentive Options or non-statutory options. Individuals who are not employees may be granted only non-statutory options. Each option shall be evidenced by one or more written instruments in a form approved by the Plan Administrator. Each such instrument shall comply with the terms and conditions specified below. Each instrument evidencing an Incentive Option shall also be subject to Section III of this Article Two. Failure to issue, or (if agreement is required) to agree to, an instrument evidencing an option shall not invalidate the option grant; however, the option shall not be exercisable until a written instrument has been issued and (if required) agreed to. A. Option Price. 1. The option price per share shall be fixed by the Plan Administrator, but shall not be less than the "fair market value" (defined below) per share of Common Stock on the date of the option grant. 2. The option price shall, subject to Section III below, be immediately due upon exercise of the option and shall be payable in one or a combination of the following forms: N.E.T. 1993 SOP October 18, 1995 7 (a) cash or check payable to the Corporation; (b) shares of Common Stock held by the optionee for the period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at "fair market value" on the exercise date; or (c) a broker-dealer sale-and-remittance procedure pursuant to which the optionee shall provide irrevocable written instructions (I) to a designated brokerage firm to effect the immediate sale of the option shares and remit to the Corporation, from the sale proceeds available on the settlement date, sufficient funds to cover the aggregate option price plus all income and employment taxes required to be withheld by the Corporation in connection with the exercise and (II) to the Corporation to deliver the certificates for the purchased shares directly to the brokerage firm to complete the transaction. 3. The Plan Administrator may assist any optionee (including any officer) in the exercise of any option granted under this Article Two and the satisfaction of any federal and state income and employment tax obligations arising therefrom, by (a) authorizing a loan to the optionee by the Corporation or (b) permitting the optionee to pay the option price in installments over a period of months or years. The terms of any loan or installment method of payment (including the interest rate and terms of repayment) will be established by the Plan Administrator in its sole discretion. Loans and installment payments may be allowed with or without security or collateral (other than to optionees who are consultants or independent contractors, who must adequately secure any loan by collateral other than the purchased shares), but the maximum credit available to the optionee shall not exceed the sum of (i) the aggregate option price (less par value) of the purchased shares plus (ii) any federal and state income and employment tax liability incurred by the optionee in connection with the exercise of the option. 4. The "fair market value" per share of Common Stock on any relevant date shall be determined as follows: (a) If the Common Stock is listed or admitted to trading on any national stock exchange, then the fair market value shall be the closing selling price per share of Common Stock on the date in question on the stock exchange determined by the Plan Administrator to be the primary market for the Common Stock, as officially quoted on the composite tape of transactions on that exchange. If there is no reported sale of Common Stock on that exchange on the date in question, the fair market value shall be the closing selling price on the exchange on the next preceding date for which a closing selling price is quoted. (b) If the Common Stock is not listed or admitted to trading on any national stock exchange, but is traded on the N.E.T. 1993 SOP October 18, 1995 8 NASDAQ National Market System, the fair market value shall be the closing selling price per share of Common Stock on the date in question as reported on that system. If there is no closing selling price for the Common Stock on the date in question, then the fair market value shall be the closing selling price for the next preceding date for which a closing selling price is quoted. B. Term and Exercise of Options. 1. Each option granted under this Article Two shall be exercisable at such time(s), during such period, and for such number of shares as shall be determined by the Plan Administrator and set forth in the written instrument evidencing the option. No option granted under this Article Two shall have a term in excess of ten years after the grant date. 2. During the lifetime of the optionee, the option shall be exercisable only by the optionee and shall not be assignable or transferable by the optionee otherwise than by will or by the laws of descent and distribution following the optionee's death. 3. Exercise of an option shall be effected by delivery to the Corporation of a written notice in a form approved by the Plan Administrator specifying the number of shares as to which the option is being exercised, accompanied by payment of the exercise price (or provision for payment acceptable to the Plan Administrator), and containing such other provisions as the Plan Administrator approves from time to time. C. Termination of Service. 1. Except as otherwise approved by the Plan Administrator, if the optionee's service to the Corporation is terminated: (a) for cause, each then-outstanding option held by the optionee shall terminate immediately. (b) for any reason other than cause, death, or permanent disability, each then-outstanding option held by the optionee shall expire no later than three months after the termination date. (c) by reason of permanent disability (as defined in Section 22(e)(3) of the Internal Revenue Code), each then-outstanding option held by the optionee shall expire no later than 12 months after the termination date. (d) by reason of the optionee's death, or if the optionee dies during the three months following termination of his or her employment other than for cause or by reason of permanent disability, each then-outstanding option held by the optionee N.E.T. 1993 SOP October 18, 1995 9 shall expire no later than 12 months following the termination date. Following the optionee's death, the option may be exercised by the personal representative of the optionee's estate or by the person(s) to whom the option is transferred pursuant to the optionee's will or in accordance with the laws of descent and distribution. 2. Under no circumstances shall any option be exercisable after the specified expiration date of the option term. 3. Following termination of the optionee's service, an option shall not be exercisable to any greater extent than on the termination date; provided, however, that the Plan Administrator shall have complete discretion, at any time while the option remains outstanding, to permit the option to be exercised, not only with respect to the number of shares for which the option is exercisable at the time of the termination, but also with respect to one or more subsequent installments of purchasable shares for which the option would otherwise have become exercisable had termination not occurred. 4. For purposes of this Plan: (a) An optionee shall be deemed to remain in service to the Corporation for so long as he or she is renders (or in the case of consultants or advisors, has agreed to render) services on a periodic basis to the Corporation (or any parent or subsidiary) as an employee, a non-employee Director, or an independent consultant or advisor. (b) An optionee shall be considered to be an employee for so long as he or she remains in the employ of the Corporation (or any parent or subsidiary) subject to the control and direction of the employer entity as to the work to be performed and the manner and method of performance. D. Stockholder Rights. An optionee shall have no stockholder rights with respect to any option shares until he or she has exercised the option and paid (or made arrangements satisfactory to the Plan Administrator to pay) the option price for the purchased shares. III. INCENTIVE OPTIONS In addition to other application terms and conditions of this Plan, the following provisions shall apply: A. Incentive Options may be granted only to employees. Options specifically designated as "non statutory" options when issued shall not be subject to this Section III. N.E.T. 1993 SOP October 18, 1995 10 B. If any individual to whom an Incentive Option is granted is the owner of stock (as determined under Section 424(d) of the Internal Revenue Code) possessing 10% or more of the total combined voting power of all classes of stock of the Corporation or any of its parent or subsidiary corporation ("10% Stockholder"), then the option price per share shall not be less than 110 percent of the fair market value per share of Common Stock on the grant date, and the option term shall not exceed five years from the grant date. IV. CORPORATE TRANSACTION A. In the event of any of the following stockholder- approved transactions (a "Corporate Transaction"): (i) a merger or consolidation in which the Corporation is not the surviving entity, except for a transaction whose principal purpose is to change the State of the Corporation's incorporation, (ii) the sale, transfer, or other disposition of all or substantially all of the assets of the Corporation in liquidation or dissolution, or (iii) any "reverse" merger in which the Corporation is the surviving entity but in which securities possessing more than 50 percent of the total combined voting power of the Corporation's outstanding securities are transferred to holders other than those who owned such voting power immediately before the merger, then immediately before the effective date of the Corporate Transaction, each option granted under this Article Two shall become fully exercisable ("accelerate") with respect to the total number of shares of Common Stock then subject to the option. However, an option shall not accelerate if and to the extent: (i) the option is, in connection with the Corporate Transaction, either to be assumed by the successor corporation or parent thereof or to be replaced by an equivalent option to purchase shares of the capital stock of the successor corporation or parent thereof, or (ii) acceleration of the option is subject to other limitations imposed by the Plan Administrator at the time of grant. The determination of equivalence under clause (i) above shall be made by the Plan Administrator and shall be final, binding, and conclusive. B. Upon the consummation of the Corporate Transaction, all options granted under this Article Two shall terminate and cease to be outstanding, except to the extent assumed by the successor (or surviving) corporation or its parent company. N.E.T. 1993 SOP October 18, 1995 11 C. Each option granted under this Article Two that is replaced by an equivalent option in a Corporate Transaction or that otherwise continues in effect shall be appropriately adjusted, immediately after the Corporation Transaction, to apply to the number and class of securities that would have been issued in the Corporate Transaction to an actual holder of the number of shares of Common Stock that were subject to the option immediately before the Corporate Transaction. Appropriate adjustment shall also be made to the option price payable per share, provided the aggregate option price payable for such securities shall remain the same. In addition, the class and number of securities available for issuance under this Plan following the consummation of the Corporate Transaction shall be appropriately adjusted. D. The grant of options under this Article Two shall not affect the right of the Corporation to adjust, reclassify, reorganize, or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, or sell or transfer all or any part of its business or assets. V. CANCELLATION AND REGRANT OF OPTIONS The Plan Administrator may, at any time and from time to time, with the consent of the affected optionees, cancel any or all outstanding options granted under this Article Two and grant in substitution new options covering the same or different numbers of shares of common Stock but having an option price per share not less than the fair market value of the Common Stock on the new grant date (or 110 percent of fair market value in the case of an Incentive Option granted to a 10% Stockholder). VI. STOCK APPRECIATION RIGHTS; HOSTILE-TAKE OVER; CHANGE OF CONTROL A. As determined by the Plan Administrator in its sole discretion, one or more optionees may be granted the right, exercisable upon such terms and conditions as the Plan Administrator may establish, to surrender all or part of an unexercised option granted under this Article Two in exchange for a payment by the Corporation of an amount equal to the excess of (i) the fair market value (on the option surrender date) of the number of shares in which the optionee is at the time vested under the surrendered option (or part thereof) over (ii) the aggregate option price payable for those shares. B. No surrender of an option shall be effective hereunder unless it is approved by the Plan Administrator. If the surrender is approved, then the payment to the optionee under this Section VI may be made in shares of Common Stock valued at fair market value on the option surrender date, in cash, or partly in N.E.T. 1993 SOP October 18, 1995 12 shares and partly in cash, as the Plan Administrator determines in its sole discretion. C. If the surrender of an option is rejected by the Plan Administrator, then the optionee shall retain whatever rights he or she had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time before the later of (i) five business days after receipt of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with its terms, but in no event more than ten years after the date of the option grant. D. Each officer of the corporation subject to the short-swing profit restrictions of the Federal securities laws shall have the following limited stock appreciation rights in tandem with each option received under this Article Two. Upon the occurrence of a Hostile Take-Over, each option with such a limited stock appreciation right in effect for at least six months shall automatically be canceled and the optionee shall be entitled to a cash payment by the Corporation in the amount of the excess of (i) the Take-Over Price of the shares of Common Stock subject to the canceled option (whether or not the option is otherwise exercisable for such shares over (ii) the aggregate exercise price payable for such shares. The payment shall be made within five days after consummation of the Hostile Take-Over. Neither the approval of the Plan Administrator nor the consent of the Board shall be required in connection with such option cancellation and cash payment. 1. A "Hostile Take--Over" shall be deemed to occur if (i) any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50 percent of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer that the Board does not recommend that the Corporation's stockholders accept, and (ii) more than 50 percent of the securities so acquired are accepted from holders other than officers and directors of the Corporation subject to Section 16 of the Exchange Act. The "Take-Over Price" per share shall be the greater of (a) the fair market value per share on the date of cancellation, as determined pursuant to the valuation provisions of Section II.A.4 of this Article Two, or (b) the highest reported price per share paid in effecting such Hostile Take-Over. However, if the canceled option is an Incentive Option, the Take-Over Price shall not exceed the clause (a) price per share. E. The Plan Administrator shall have full discretionary authority, exercisable either in advance of, or at the time of, a Change in Control, to provide for the automatic N.E.T. 1993 SOP October 18, 1995 13 acceleration of options granted under this Article Two upon the occurrence of the Change in Control The Plan Administrator shall also have full discretionary authority to condition any such acceleration upon the subsequent termination of the optionee's service to the Corporation (or a parent or subsidiary) within a specified period after the Change in Control. The Plan Administrator hereby exercises such discretion to accelerate vesting of all outstanding options held by Officers of the Corporation whose employment is terminated in conjunction with or within a year of a Change of Control or Corporate Transaction. Any option accelerated in connection with the Change in Control shall remain fully exercisable until the expiration of the option term. For all purposes of this Plan, a Change in Control shall mean a change in control of the Corporation of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Corporation is then subject to such reporting requirement, other than a Corporate Transaction; provided that, without limitation, a Change in Control shall be deemed to have occurred if: (i) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any syndicate or group deemed to be a "person" under Section 14(d)(2) of the Exchange Act, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the corporation representing 40 percent or more of the combined voting power of the Corporation's then-outstanding securities entitled to vote in the election of directors of the Corporation, pursuant to a tender or exchange offer that the Board does not recommend that the Corporation's stockholders accept; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board and any new members of the Board, whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least three-quarters of the directors then in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof. F. The shares of Common Stock subject to any option surrendered or canceled for an appreciation distribution pursuant to this Section VI shall not be available for subsequent option grant under the Plan. N.E.T. 1993 SOP October 18, 1995 14 ARTICLE THREE AUTOMATIC OPTION GRANT PROGRAM I. ELIGIBILITY A. Eligible Optionees. The individuals eligible to receive automatic option grants pursuant to this Article Three shall be limited to (i) Directors who are first elected or appointed as non-employee Directors on or after the Effective Date, whether through appointment by the Board or election by the Corporation's stockholders, and who have not previously been employees of the Corporation (or any parent or subsidiary corporation) and (ii) Directors who continue to serve as non-employee Directors at one or more annual stockholder meetings held while this Automatic Grant Program remains in effect, commencing with the 1994 annual meeting. B. Limitation. Except for the option grants to be made pursuant to this Article Three (and any automatic grants made under the corresponding provisions of the 1983 Plan), non-employee Directors shall not be eligible to receive option grants or stock issuances under this Plan or any other stock plan of the Corporation (or its parent or subsidiaries). II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS A. Grant Dates. Option grants will be made under this Article Three on the dates specified below: (i) Each individual who first becomes a non- employee Director at any time after the Effective Date, whether through election at an annual stockholder meeting or through appointment by the Board, shall automatically be granted upon the terms and conditions of this Article Three, at the time of such initial election or appointment, a non-statutory stock option to purchase the lesser of (a) 12,000 shares of Common stock or (b) a number of shares of Common Stock equal to 12,000 multiplied by a fraction, the numerator of which is the number of partial or whole calendar months remaining between such election or appointment and the next scheduled annual stockholder meeting at which such Director's term will expire and the denominator of which is 36. (ii) Each non-employee Director who first becomes a member of an active standing committee of the Board at any time after the Effective Date shall automatically be granted upon the N.E.T. 1993 SOP October 18, 1995 15 terms and conditions of this Article Three, at the time of such initial appointment, a non-statutory stock option to purchase the lesser of (a) 4,000 shares of Common Stock or (b) a number of shares of Common stock equal to 4,000 multiplied by a fraction, the numerator of which is the number of partial or whole calendar months remaining between such appointment and the next scheduled annual stockholder meeting and the denominator of which is 12. (iii) Each non-employee Director who first becomes chairman of an active standing committee of the Board at any time after the Effective Date shall automatically be granted upon the terms and conditions of this Article Three, at the time of such initial appointment, a non-statutory stock option to purchase the lesser of (a) 4,000 shares of Common Stock or (b) a number of shares of Common Stock equal to 4,000 multiplied by a fraction, the numerator of which is the number of partial or whole calendar months remaining between such appointment and the next scheduled annual stockholder meeting and the denominator of which is 12. (iv) On the date of each annual stockholder meeting held after the Effective Date, beginning with the 1994 annual stockholder meeting, each non-employee Director who is at the time standing for reelection as a non-employee Director shall automatically be granted a non-statutory stock option under this Article Three to purchase 12,000 shares of Common Stock. (v) On the date of each annual stockholder meeting held after the Effective Date, beginning with the 1994 annual stockholder meeting, each non-employee Director shall automatically be granted, whether or not he or she is standing for re-election as a Director at that time, a non-statutory stock option under this Article Three to purchase 4,000 shares of Common Stock for each active standing committee on which he or she serves as a member plus an additional 4,000 shares for each committee on which he or she serves as chairman. The 12,000-share limitation on the initial and periodic automatic option grants and the 4,000-share limitation on committee grants to be made to each non-employee Director shall be subject to adjustment pursuant to Section III.C of Article One. For purposes of this Article Three, a committee shall be deemed to be an active standing committee if so designated by the Board and if it has met or transacted business within the 12 months preceding the date of grant of an automatic option. B. Exercise Price. The exercise price per share shall be equal to 100 percent of the fair market value per share of Common Stock on the automatic grant date. C. Payment. The option price shall become immediately due upon exercise of the option and shall be payable as provided in Section II.A of Article Two. N.E.T. 1993 SOP October 18, 1995 16 D. Option Term. Each option granted under this Article Three shall have a maximum term of ten years measured from the grant date. E. Exercisability. 1. Each option granted under this Article Three shall be come exercisable for one-third of the option shares one year after the date of grant and for the balance of the option shares in a series of 24 equal monthly installments beginning one month thereafter, provided the optionee remains a Director through each such date. 2. Each option granted under this Article Three shall also become fully exercisable upon the date of the optionee's cessation of Board service by reason of death or retirement, provided the option has been outstanding for at least one year, and the optionee has served on the Board for at least three years, at the time of cessation of Board service. A Director shall be deemed to have ceased Board service by reason of retirement if he or she has attained the age of 65 at the time of the cessation. 3. Each option shall remain exercisable until the expiration or sooner termination of the option term. F. Non-Transferability. During the optionee's lifetime, an option granted under this Article Three (together with the limited stock appreciation right pertaining to the option) shall be exercisable only by the optionee and shall not be assignable or transferable by the optionee otherwise than by will or by the laws of descent and distribution following his or her death. G. Effect of Termination of Board Membership. 1. If a Director ceases to be a Board member for any reason (other than death) while holding an option granted under this Article Three, he or she shall have three months following the date of cessation of Board membership in which to exercise the option for any or all of the shares of Common Stock for which the option is exercisable at the time of the cessation. 2. If a Director dies while serving as a Board member or during the three months following his or her cessation of Board service, an option granted under this Article III may be exercised, for any or all of the shares of Common Stock for which the option is exercisable at the time of cessation of Board membership, by the personal representative of his or her estate or by the person(s) to whom the option is transferred pursuant to the Director's will or in accordance with the laws of descent and distribution. Any such exercise must, however, occur within 12 months after the date of the Director's death. N.E.T. 1993 SOP October 18, 1995 17 3. In no event shall any option granted under this Article Three remain exercisable after the specified expiration date of its ten-year term. Upon the expiration of the applicable exercise period in accordance with subparagraphs 1 and 2 above or (if earlier) upon the expiration of the ten-year option term, the option shall terminate and cease to be exercisable. H. Stockholder Rights. The holder of an option granted under this Article Three shall have no stockholder rights with respect to any option shares until he or she has exercised the option and paid (or made arrangement satisfactory to the Plan Administrator to pay) the exercise price for the purchased shares. I. Remaining Terms. The remaining terms and conditions of each option grant under this Article Three shall be as set forth in the form of Director Automatic Grant Agreement attached as Exhibit A to this Plan. III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER A. Each option granted under this Article Three that is outstanding at the time of a Corporate Transaction or a Change in Control shall, immediately before the specified effective date for the Corporation Transaction or Change in Control, become fully exercisable with respect to the total number of shares of Common Stock then subject to the option. Upon the consummation of the Corporation transaction, all options granted under this Article Three shall terminate. B. Upon the occurrence of a Hostile Take-Over, each option that has been outstanding under this Article Three for at least six months shall automatically be canceled and the optionee shall be entitled to a cash payment by the Corporation calculated in accordance with Section VI.D. of Article Two and payable at the time and manner set forth in Section VI.E of Article Two. Neither the approval of the Plan Administrator nor the consent of the Board shall be required in connection with such option cancellation and cash payment. C. The automatic option grants under this Article Three shall in no way affect the right of the Corporation to adjust, reclassify, reorganize, or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. D. The shares of Common Stock subject to each option canceled in connection with a Hostile Take-Over shall not be available for subsequent issuance under this Plan. N.E.T. 1993 SOP October 18, 1995 18 IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS The provisions of this Automatic Option Grant Program, including any automatic option grants outstanding under this Article Three, may not be amended more frequently than once every six months, other than to the extent necessary to comply with applicable federal income tax laws and regulations. N.E.T. 1993 SOP October 18, 1995 19 ARTICLE FOUR MISCELLANEOUS I. AMENDMENT OF PLAN The Board shall have complete and exclusive authority to amend or modify this Plan in any or all respects whatsoever, subject to Section IV of Article Three. However, no such amendment or modification shall, without the consent of the optionees, adversely affect rights and obligations with respect to options at the time outstanding under the Plan. In addition, the Board shall not, without the approval of the Corporation's stockholders, (i) materially increase the maximum number of shares issuable under this Plan, except for permissible adjustments under Section III.C of Article One, (ii) materially modify the eligibility requirements for the grant of options under this Plan or (iii) otherwise materially increase the benefits accruing to participants under this Plan. II. TAX WITHHOLDING A. The Corporation's obligation to deliver shares or cash upon exercise of options or stock appreciation rights granted under this Plan shall be subject to the satisfaction of all federal, state, and local income and employment tax withholding requirements. B. The Plan Administrator may, in its discretion and upon such terms and conditions as it deems appropriate (including the applicable safe-harbor provisions of Rule 16b-3 of the Exchange Act) provide any or all optionees under Article Two with the election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of options, one or more shares with an aggregate fair market value equal to a designated percentage (any whole multiple of five percent specified by the optionee) of the federal and state income taxes ("Taxes") incurred in connection with the acquisition of such shares. In lieu of direst withholding, optionees may be granted the right to deliver shares of Common Stock to the Corporation in satisfaction of such Taxes. The withheld or delivered shares shall be valued at the fair market value on the applicable determination date for such Taxes or such other date required by the applicable safe-harbor provisions of SEC Rule 16b-3. N.E.T. 1993 SOP October 18, 1995 20 III. TERM OF PLAN A. This Plan shall terminate upon the earlier of (i) August 10, 2003 or (ii) the date on which all shares available for issuance under this Plan have been issued pursuant to the exercise of options granted under this Plan and (to the extent outstanding on the Effective Date) the 1983 Plan. If the date of termination is determined under clause (i) above, then no options outstanding on such date shall be affected by the termination of this Plan. B. Options may be granted under this Plan to purchase shares of Common Stock in excess of the number of shares then available for issuance under this Plan, provided each option granted is not to become exercisable, in whole or in part, at any time before stockholder approval of an amendment authorizing a sufficient increase in the number of shares issuable under the Plan. IV. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares pursuant to options granted under this Plan may be used for general corporate purposes. V. REGULATORY APPROVALS A. The implementation of this Plan, the granting of any option hereunder, and the issuance of stock upon the exercise or surrender of any such option shall be subject to the procurement by the Corporation of all approvals and permits required by regulatory authorities having jurisdiction over this Plan, the options granted under it, and the stock issued pursuant to it. B. No shares of Common Stock or other assets shall be issued or delivered under this Plan unless and until there shall have been compliance with all applicable requirements of federal and state securities laws, including the filing and effectiveness of a Form S-8 registration statement for the shares of Common Stock issuable under this Plan, and all applicable listing requirements of any securities exchange on which stock of the same class is then listed. VI. NO EMPLOYMENT/SERVICE RIGHTS Neither the action of the Corporation in establishing this Plan, nor any action taken by the Plan Administrator hereunder, nor any provision of the Plan, shall be construed so as N.E.T. 1993 SOP October 18, 1995 21 to grant any individual the right to remain in the employ or service of the Corporation (or any parent or subsidiary corporation) for any period, and the Corporation (or any parent or subsidiary corporation retaining the services of such individual) may terminate such individual's employment or service at any time and for any reason, with or without cause. VII. MISCELLANEOUS PROVISIONS A. Except as otherwise provided in this Plan, the right to acquire Common Stock or other assets under this Plan may not be assigned, encumbered, or otherwise transferred by any optionee. B. The provisions of this Plan shall be governed by the laws of the State of California, as such laws are applied to contracts entered into and performed in that State. C. The provisions of this Plan shall inure to the benefit of, and be binding upon, the Corporation and its successors or assigns, and the optionees, the legal representatives of their respective estates, their respective heirs or legatees, and their permitted assignees. oOo N.E.T. 1993 SOP October 18, 1995 -----END PRIVACY-ENHANCED MESSAGE-----