NETWORK EQUIPMENT TECHNOLOGIES INC, S-8, 1995-12-19

NETWORK EQUIPMENT TECHNOLOGIES INC
S-8, 1995-12-19
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE> 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

<TABLE>
<CAPTION>
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
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.001 2,000,000 $29.50 $59,000,000 $20,345
==================================================================================
</TABLE>

(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.

<PAGE> 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

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<PAGE> 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.

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<PAGE> 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

<TABLE>
<S> <C>
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)
</TABLE>

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<PAGE> 5
<TABLE>
<S> <C>
99.1 1993 Stock Option Plan
</TABLE>

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

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<PAGE> 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.

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<PAGE> 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.

<TABLE>
<S> <C> <C>
/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)

</TABLE>

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<PAGE> 8
<TABLE>
<S> <C> <C>
/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
</TABLE>

-8-
<PAGE> 9
Index to Exhibits

<TABLE>
<CAPTION>
Sequentially
Item No. Description of Item Numbered Page
- -------- ------------------- -------------
<S> <C>
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 . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE> 1
EXHIBIT 3.1

NETWORK EQUIPMENT TECHNOLOGIES, INC.
BY-LAWS

<PAGE> 2
NETWORK EQUIPMENT TECHNOLOGIES, INC.
BY-LAWS

TABLE OF CONTENTS

<TABLE>
<S> <C>
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
</TABLE>

N.E.T. BY-LAWS 1 AS AMENDED AUGUST 8, 1995
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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

N.E.T. BY-LAWS 19 AS AMENDED AUGUST 8, 1995
<PAGE> 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.

(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
<PAGE> 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.

(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
<PAGE> 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.

N.E.T. BY-LAWS 22 AS AMENDED AUGUST 8, 1995
<PAGE> 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

<PAGE> 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;

<PAGE> 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.

<PAGE> 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

<PAGE> 4
Network Equipment Technologies, Inc.
December 18, 1995 Page 4

<PAGE> 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

<PAGE> 1
EXHIBIT 99.1

NETWORK EQUIPMENT TECHNOLOGIES, INC.
1993 Stock Option Plan

<PAGE> 2

NETWORK EQUIPMENT TECHNOLOGIES, INC.
1993 STOCK OPTION PLAN

TABLE OF CONTENTS
<TABLE>
<S> <C>
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
</TABLE>

N.E.T. 1993 SOP October 18, 1995
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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