UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 24, 1995, or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ended___________________ or ____________________
Commission File Number 0-15323
NETWORK EQUIPMENT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2904044
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
800 Saginaw Drive
Redwood City, CA 94063
(415) 366-4400
(Address, including zip code, and telephone number
including area code, of registrant's
principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the registrant's Common Stock, $.01
par value, on December 24, 1995 was 20,651,775.
This document consists of 13 pages of which this is page 1.
<Page 2>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
INDEX
Page
Number
------
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheet -
December 24, 1995 and March 31, 1995 ......................... 3
Condensed Consolidated Statement of Income - Quarter and
Nine Months Ended December 24, 1995 and December 25, 1994 .... 4
Condensed Consolidated Statement of Cash Flows - Nine Months
Ended December 24, 1995 and December 25, 1994 ................ 5
Notes to Condensed Consolidated Financial Statements ......... 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition ........... 7
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K ........................ 11
SIGNATURE ........................................................... 12
EXHIBIT 11 Computation of Primary and Fully Diluted
Earnings Per Share ...................................... 13
<Page 3>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheet
(dollars in thousands)
<TABLE>
<CAPTION>
December 24, March 31,
1995 1995
(unaudited)
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 42,032 $ 33,886
Temporary cash investments 58,184 52,734
Accounts receivable, net of allowances of $4,279 at
December 24 and $2,514 at March 31 72,886 56,983
Inventories 34,782 32,314
Deferred income taxes 9,900 9,900
Prepaid expenses and other assets 6,456 4,625
-------- --------
Total current assets 224,240 190,442
Property and equipment, net of accumulated depreciation and
amortization of $90,200 at December 24 and $90,618 at March 31 28,149 27,149
Software production costs, net of accumulated amortization of
$22,761 at December 24 and $20,838 at March 31 3,824 4,691
Other assets 8,350 9,764
-------- -------
$264,563 $232,046
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 21,469 $ 18,315
Accrued liabilities 49,766 43,444
-------- --------
Total current liabilities 71,235 61,759
7-1/4% convertible subordinated debentures 33,526 68,625
Stockholders' equity:
Preferred stock, $.01 par value
Authorized: 5,000,000 shares,
Outstanding: none - -
Common stock to be issued - 32
Common stock, $.01 par value
Authorized: 50,000,000 shares
Outstanding: 20,652,000 shares at December 24 and
18,714,000 shares at March 31 207 187
Additional paid-in capital 150,107 113,846
Unrealized gain (loss) on available-for-sale securities 43 (10)
Accumulated translation adjustment (1,041) (794)
Retained earnings (deficit) 10,486 (11,599)
-------- --------
Total stockholders' equity 159,802 101,662
-------- --------
$264,563 $232,046
-------- --------
-------- --------
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<Page 4>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statement of Income
(in thousands, except per share amounts - unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Product revenue $ 58,602 $ 51,227 $161,583 $135,887
Service and other revenue 25,959 22,612 85,545 66,341
-------- -------- -------- --------
Total revenue 84,561 73,839 247,128 202,228
Cost of sales:
Cost of product revenue 23,361 20,825 64,671 56,025
Cost of service and other revenue 17,529 14,839 58,498 45,543
-------- -------- -------- --------
Total cost of sales 40,890 35,664 123,169 101,568
Gross margin 43,671 38,175 123,959 100,660
Operating expenses:
Sales and marketing 18,612 17,707 54,720 51,724
Research and development 9,456 8,556 26,323 25,100
General and administrative 2,805 3,029 8,845 8,375
-------- -------- -------- --------
Total operating expenses 30,873 29,292 89,888 85,199
Income from operations 12,798 8,883 34,071 15,461
Other income (expense):
Interest income 1,410 625 4,230 1,395
Interest expense (1,494) (1,304) (4,151) (3,906)
Other (75) (135) (173) (535)
-------- -------- -------- --------
Income before income taxes 12,639 8,069 33,977 12,415
Income tax provision 4,424 2,810 11,892 2,810
-------- -------- -------- --------
Net income $ 8,215 $ 5,259 $ 22,085 $ 9,605
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share:
Primary $ .39 $ .27 $ 1.07 $ .52
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted $ .39 $ .27 $ 1.07 $ .49
-------- -------- -------- --------
-------- -------- -------- --------
Shares used in computation:
Primary 21,199 19,567 20,587 18,312
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted 21,199 19,819 20,643 19,596
-------- -------- -------- --------
-------- -------- -------- --------
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<Page 5>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands - unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Dec. 24, Dec. 25,
1995 1994
-------- --------
<S> <C> <C>
Cash and Cash Equivalents at Beginning of Period $ 33,886 $ 23,854
Net Cash Flows from Operating Activities:
Net income 22,085 9,605
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization 11,594 13,270
Restricted stock compensation 269 -
Changes in assets and liabilities:
Accounts receivable (16,444) 1,213
Inventories (2,559) 2,239
Prepaid expenses and other assets (1,901) (805)
Accounts payable 3,236 (6,223)
Accrued liabilities 7,578 3,479
-------- --------
Net cash provided by operations 23,858 22,778
-------- --------
Cash Flows from Investing Activities:
Purchases of temporary cash investments (63,560) (36,608)
Proceeds from maturities of temporary cash investments 58,163 19,068
Additions to property and equipment (10,823) (5,730)
Additions to software production costs (1,056) (1,609)
Other 961 579
-------- --------
Net cash used for investing activities (16,315) (24,300)
-------- --------
Cash Flows from Financing Activities:
Sale of common stock 10,268 7,461
Repurchase of convertible subordinated debentures (10,117) -
Repayments of borrowings - (17)
-------- --------
Net cash provided by financing activities 151 7,444
-------- --------
Effect of exchange rate changes on cash 452 (563)
-------- --------
Net increase in cash and cash equivalents 8,146 5,359
-------- --------
Cash and Cash Equivalents at End of Period $ 42,032 $ 29,213
-------- --------
-------- --------
Other Cash Flow Information:
Cash paid for:
Interest $ 4,162 $ 5,076
Income taxes $ 5,215 $ 1,223
Non-cash investing and financing activities:
Conversion of convertible subordinated debentures to common
stock (including accrued interest and debenture offering costs) $ 25,533 $ -
Net unrealized (gain) loss on available-for-sale securities $ (53) $ 2
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<Page 6>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements include the accounts of the Company
Intercompany accounts and transactions have been eliminated.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
financial position as of December 24, 1995, and the results of operations
and cash flows for the quarter and nine months ended December 24, 1995
and December 25, 1994. These statements should be read in conjunction
with the March 31, 1995 consolidated financial statements and notes
thereto. The results of operations for the nine months ended December
24, 1995 are not necessarily indicative of the results to be expected for
the fiscal year ending March 31, 1996.
2. Reclassification
Certain fiscal 1995 amounts have been reclassified to conform with fiscal
1996 presentation.
3. Inventories
Inventories consist of (in thousands):
December 24, March 31,
1995 1995
(unaudited)
-------- --------
Purchased components $ 13,797 $ 11,498
Work-in-process 18,354 17,175
Finished goods 2,631 3,641
-------- --------
$ 34,782 $ 32,314
-------- --------
-------- --------
4. Earnings Per Share
Net income per share has been computed based upon the weighted average
number of common and common equivalent shares outstanding. For primary
earnings per share, common equivalent shares consist of the incremental
shares issuable upon the assumed exercise of dilutive stock options. For
fully diluted earnings per share, common equivalent shares also include,
if dilutive, the effect of incremental shares issuable upon the
conversion of the 7-1/4% convertible subordinated debentures, and net
income will be adjusted for the interest expense (net of income taxes)
related to the debentures.
<Page 7>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This discussion and analysis should be read in conjunction with Management's
Discussion and Analysis in the Company's 1995 Annual Report to Shareholders
and Part I of the Company's Form 10-K for the fiscal year ended March 31,
1995.
RESULTS OF OPERATIONS
The following table depicts selected data derived from the consolidated
statement of operations expressed as a percentage of revenue for the periods
presented:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
Percent of Revenue 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Product revenue 69.3 69.4 65.4 67.2
Service and other revenue 30.7 30.6 34.6 32.8
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
----- ----- ----- -----
Product revenue gross margin 60.1 59.3 60.0 58.8
Service and other revenue gross margin 32.5 34.4 31.6 31.4
----- ----- ----- -----
Total gross margin 51.6 51.7 50.2 49.8
----- ----- ----- -----
Sales and marketing 22.0 24.0 22.1 25.6
Research and development 11.2 11.6 10.7 12.4
General and administrative 3.3 4.1 3.6 4.2
----- ----- ----- -----
Total operating expenses 36.5 39.7 36.4 42.2
----- ----- ----- -----
Income from operations 15.1 12.0 13.8 7.6
----- ----- ----- -----
Net income 9.7 7.1 8.9 4.7
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Revenue
Total revenue for the third quarter and first nine months of fiscal 1996
increased 14.5% and 22.2%, respectively, from the comparable periods of fiscal
1995. Product revenue for the third quarter and first nine months of fiscal
1996 increased $7.4 million, or 14.4%, and $25.7 million, or 18.9%,
respectively, from the comparable periods of the prior year. The quarter-
over-quarter increase in product revenue is primarily a result of a $7.4
million, or 62.8% increase in sales in the U.S. Federal channel. An increase
in all sales channels, again most predominantly in the U.S. Federal channel,
is the primary driver for the year-to-date increase in product revenue.
Product sales in the U.S. Federal channel for the first nine months of fiscal
1996 have increased $11.7 million, or 35.1%, from the comparable period of the
prior year. International product sales decreased 5.1% to 29.3% of product
revenue for the quarter and increased 13.1% to 32.9% of product revenue year-
to-date.
Service and other revenue for the third quarter and first nine months of
fiscal 1996 increased $3.3 million and $19.2 million, respectively. This
increase is primarily attributable to systems integration services in support
of product sales to the U.S. government. On a year-to-date basis, systems
integration revenue increased by $13.4 million over the prior year.
<Page 8>
Gross Margin
Total gross margin as a percentage of total revenue decreased slightly to
51.6% from 51.7% in the third quarter and increased to 50.2% from 49.8% in the
first nine months of fiscal 1996 from the comparable periods of fiscal 1995.
The quarter-over-quarter decrease is a result of decreased service and other
gross margin while the year-over-year increase is a result of increases in
both product and service and other gross margins. Product gross margin
increased to 60.1% and 60.0% for the third quarter and first nine months of
fiscal 1996 from 59.3% and 58.8%, respectively, for the comparable periods of
fiscal 1995. These increases resulted primarily from a favorable product and
channel mix and a higher revenue base over which to spread manufacturing
costs.
Service and other gross margin decreased to 32.5% and increased to 31.6% for
the third quarter and first nine months of fiscal 1996 from 34.4% and 31.4%,
respectively, in the comparable periods of the prior year. The quarter-over-
quarter decrease is a result of both a decrease in service margin and a higher
mix of lower margin systems integration services provided under U.S.
government contracts. Despite a similar increase in the volume of these
services on a year-to-date basis, the service and other gross margin has
increased as margins on both service and integration services have improved.
Gross margin on integration services has increased to 17.9% and 14.9% for the
third quarter and first nine months of fiscal 1996 from 11.3% and 11.0%,
respectively, for the comparable periods of fiscal 1995. Management expects
service and other gross margin to continue to fluctuate as a result of the
changes in mix between systems integration services and other service revenue.
Operating Expenses
Operating expenses in the third quarter and first nine months of fiscal 1996
increased $1.6 million and $4.7 million from the comparable periods of fiscal
1995, but decreased as a percentage of total revenue to 36.5% and 36.4% from
39.7% and 42.2%, respectively, as a result of higher revenue levels.
Management expects the relationship of operating expenses as a percentage of
total revenue to continue to be favorable over the prior year during the
remainder of fiscal 1996.
Sales and marketing expense in the third quarter and first nine months of
fiscal 1996 increased $.9 million and $3.0 million, respectively, from the
comparable periods of fiscal 1995, but decreased as a percentage of total
revenue to 22.0% and 22.1% for the quarter and first nine months from 24.0%
and 25.6%, respectively. The increase in spending is primarily the result of
the addition of personnel to support expansion of the sales infrastructure.
Management expects sales and marketing expenses to increase during the
remainder of fiscal 1996 while continuing to be favorable over the prior year
as a percentage of planned revenue.
Research and development expense increased $.9 million and $1.2 million,
respectively, in the third quarter and first nine months of fiscal 1996 from
the comparable periods of fiscal 1995, but decreased as a percentage of total
revenue to 11.2% and 10.7%, respectively, from 11.6% and 12.4% in the
comparable periods of fiscal 1995. The increase in spending is primarily a
result of the addition of engineers as well as the purchase of hardware and
software tools to support product development. Management plans to continue
funding research and development efforts at levels necessary to advance
product programs, and expects research and development spending to increase
during the remainder of fiscal 1996.
General and administrative expense decreased $.2 million in the third quarter
and increased $.5 million in the first nine months of fiscal 1996 as compared
to the prior year, but decreased as a percentage of total revenue to 3.3% and
3.6%, respectively, from 4.1% and 4.2% in the comparable periods of fiscal
1995.
<Page 9>
Other Income (Expense)
Interest income for the first nine months of fiscal 1996 increased $2.8
million from the comparable period of fiscal 1995 due to higher cash balances
and higher interest rates. Interest expense, primarily related to the 7-1/4%
convertible subordinated debentures, increased by $.2 million to $4.2 million
due to approximately $.5 million of one-time costs associated with the partial
redemption of the Company's convertible debentures.
Income Taxes
The third quarter and first nine months of fiscal 1996 include a provision for
income tax expense of $4.4 million and $11.9 million, respectively, at an
effective rate of 35%. Tax expense of $2.8 million was recorded in the third
quarter and first nine months of fiscal 1995.
BUSINESS ENVIRONMENT, UNCERTAINTIES AND RISK FACTORS
The Management's Discussion and Analysis portion of this Form 10-Q contains
forward-looking statements, including those concerning management's
expectations regarding future financial performance and future events. These
forward-looking statements involve risks and uncertainties, including those
described below and others as set forth in the Company's periodic reports
filed with the SEC. Actual results may differ materially from such forward-
looking statements.
Historically, the majority of the Company's revenue in each quarter results
from orders received and shipped in that quarter. Because of these ordering
patterns and potential delivery schedule changes, the Company does not believe
that backlog is indicative of future revenue levels. Furthermore, if large
orders do not close when forecasted or if near term demand for the Company's
products weakens, the Company's operating results for that or subsequent
quarters would be adversely affected.
Expense levels are relatively fixed and are set based on expectations
regarding future revenue and margin levels. These expectations involve making
judgments on issues such as future competitive conditions and customer
requirements, a process that involves evaluation of information that is often
unclear and in conflict. All markets for the Company's products are very
competitive and dynamic. The Company has limited visibility into factors that
could influence its revenue and margins, particularly in international markets
that are served primarily by non-exclusive resellers. Moreover, the Company
believes that operating results will depend on successful development or
introduction of new products and enhancements to existing products and service
offerings, and there can be no guarantee that the Company will succeed in such
efforts.
The Company's products include components, assemblies and subassemblies that
are currently available from single sources and, in some cases, are in short
supply. Testing and manufacturing is performed at the Company's Redwood City,
California facility. Availability limitations, price increases or business
interruptions could adversely impact revenue, margins and earnings. In
addition, price competition or changes in the mix of product or other revenue
sources could adversely impact margins and earnings.
Because of the factors described above, as well as others that may affect the
Company's operating results, past financial results may not be an accurate
indicator of future performance.
The most recent version of the Company's SEC reports on Form 8-K; 10-Q or 10-K
can be obtained by contacting the Company at either its Investor Hotline
(1-800-234-4638 - Voice Mail Option 4) and requesting a copy or at its
worldwide web site: http//www.net.com.
<Page 10>
LIQUIDITY AND CAPITAL RESOURCES
As of December 24, 1995, the Company had cash, cash equivalents and temporary
cash investments of $100.2 million, as compared to $86.6 million as of March
31, 1995. Cash provided by operations was $23.9 million during the first nine
months of fiscal 1996, which was a $1.1 million increase in cash provided by
operations from the comparable period of the prior year, primarily as a result
of increased net income offset by an increase in accounts receivable.
Net cash used for investing activities of $16.3 million for the first nine
months of fiscal 1996 primarily consisted of $10.8 million in property and
equipment purchases and $5.4 million in net purchases of temporary cash
investments.
Net cash provided by financing activities of $.2 million for the first nine
months of fiscal 1996 results from the issuance of Common Stock relating to
the employee stock benefit plans, net of $10.1 million used to redeem a
portion of the Company's 7-1/4% Convertible Subordinated Debentures.
As of December 24, 1995, the Company had available an unsecured $10.0 million
line of credit. Borrowings under this committed facility are available
through May 1996 and would bear interest at the bank's base rate (which
approximates prime). At December 24, 1995, there were no outstanding
borrowings under this facility.
In the third quarter of fiscal 1996, the Company completed a partial call of
its outstanding 7-1/4% Convertible Subordinated Debentures due May 15, 2014,
reducing long term debt by $35.1 million to $33.5 million. $10.1 million in
cash was used to redeem the debentures, $.3 million of which represents the
premium paid in excess of principal. An additional $25.3 million of principal
was converted into 802,078 shares of Common Stock at a conversion rate of
31.746 shares for each $1000 of principal.
The Company believes that current cash and cash equivalents, temporary cash
investments and cash flows from operations will be sufficient to fund
operations, purchases of capital equipment and research and development
programs currently planned at least through the next twelve months.
<Page 11>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(i): Restated Certificate of Incorporation
Exhibit 3(ii): By-laws
Exhibit 11: Statement re: Computation of Primary and
Fully Diluted Earnings Per Share
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during its
fiscal quarter ended December 24, 1995.
<Page 12>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
(REGISTRANT) NETWORK EQUIPMENT TECHNOLOGIES, INC.
BY (SIGNATURE) /s/ Craig M. Gentner
(NAME AND TITLE) Craig M. Gentner
Senior Vice President and
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
(DATE) February 7, 1996
<PAGE>
EXHIBIT 11
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Computation of Primary and Fully Diluted Earnings Per Share
(in thousands, except per share amounts - unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary
Earnings:
Net income $ 8,215 $ 5,259 $ 22,085 $ 9,605
-------- -------- -------- --------
-------- -------- -------- --------
Shares:
Weighted average number of common shares
outstanding 20,136 17,906 19,492 17,482
Number of common equivalent shares assuming
exercise of dilutive stock options 1,063 1,661 1,095 830
-------- -------- -------- --------
21,199 19,567 20,587 18,312
-------- -------- -------- --------
-------- -------- -------- --------
Primary earnings per share $ .39 $ .27 $ 1.07 $ .52
-------- -------- -------- --------
-------- -------- -------- --------
Fully Diluted
Earnings:
Net income $ 8,215 $ 5,259 $ 22,085 $ 9,605
-------- -------- -------- --------
-------- -------- -------- --------
Shares:
Weighted average number of common shares
outstanding 20,136 17,906 19,492 17,482
Number of common equivalent shares assuming
exercise of dilutive stock options 1,063 1,913 1,151 2,114
Number of common equivalent shares assuming
conversion of convertible securities (1) - - - -
-------- -------- -------- --------
21,199 19,819 20,643 19,596
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted earnings per share $ .39 $ .27 $ 1.07 $ .49
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
- ----------
(1) The assumed exercise of these common stock equivalents was excluded as it
was anti-dilutive or had no material impact on the earnings per share
calculation.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-24-1995
<CASH> 42032
<SECURITIES> 58184
<RECEIVABLES> 72886
<ALLOWANCES> 4279
<INVENTORY> 34782
<CURRENT-ASSETS> 224240
<PP&E> 28149
<DEPRECIATION> 90200
<TOTAL-ASSETS> 264563
<CURRENT-LIABILITIES> 71235
<BONDS> 33526
<COMMON> 207
0
0
<OTHER-SE> 159595
<TOTAL-LIABILITY-AND-EQUITY> 264563
<SALES> 161583
<TOTAL-REVENUES> 247128
<CGS> 64671
<TOTAL-COSTS> 123169
<OTHER-EXPENSES> 89888
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4151
<INCOME-PRETAX> 33977
<INCOME-TAX> 11892
<INCOME-CONTINUING> 22085
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22085
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
BY-LAWS
TABLE OF CONTENTS
ARTICLE I ..........................................................2
OFFICES ....................................................2
ARTICLE II .........................................................2
MEETING OF STOCKHOLDERS ....................................2
ARTICLE III ........................................................6
DIRECTORS ..................................................6
MEETINGS OF THE BOARD OF DIRECTORS .................7
COMMITTEES OF DIRECTORS ............................9
COMPENSATION OF DIRECTORS .........................10
REMOVAL OF DIRECTORS ..............................11
ARTICLE IV ........................................................11
NOTICES ...................................................11
ARTICLE V .........................................................12
ARTICLE VI ........................................................15
CERTIFICATE OF STOCK ......................................15
LOST CERTIFICATES .........................................16
TRANSFER OF STOCK .........................................17
FIXING RECORD DATE ........................................17
REGISTERED STOCKHOLDERS ...................................17
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
<Page 2>
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
<Page 3>
Directors and stated in the notice of the meeting, at which
the stockholders shall elect members of the Board of
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 (lOth) 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
<Page 4>
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
<Page 5>
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
<Page 6>
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
<Page 7>
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
<Page 8>
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.
<Page 9>
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.
<Page 10>
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
<Page 11>
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
By-Laws, 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.
<Page 12>
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
<Page 13>
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
<Page 14>
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
<Page 15>
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
<Page 16>
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
<Page 17>
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
<Page 18>
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.
<Page 19>
FISCAL YEAR
Section 4. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a
corporate seal having inscribed thereon the name of the
Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
(a) Indemnification in Actions Other Than Those Brought
by the Corporation. The corporation shall indemnify and hold
harmless, to the fullest extent permitted by the Delaware
General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of such amendment, only to the
extent that such amendment permits the corporation to provide
broader indemnification rights than such law permitted the
corporation to provide prior to such amendment), any person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a
director or officer of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation against expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding.
<Page 20>
Except as provided in paragraph (d) of this Section 6, the
corporation shall be required to indemnify a person in
connection with a proceeding (or part thereof) initiated by
such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the corporation.
(b) Indemnification in Actions Brought By or on Behalf
of the Corporation. The corporation shall indemnify and hold
harmless, to the fullest extent permitted by the Delaware
General Corporation Law, as the same exists or may hereafter
be amended, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he
or she is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
against expenses (including attorney's fees) actually and
reasonably incurred by him or her in connection with the
defense or settlement of such action or suit.
(c) Expenses; Prepayment. The corporation shall pay
the expenses (including attorneys' fees) incurred by a
director or officer who has been successful on the merits or
otherwise in defending any action, suit or proceeding
referenced in paragraphs (a) and (b) of this Section 6 and
shall pay such expenses in advance of the final disposition
of such matter upon receipt of an undertaking by the director
or officer to repay all amounts advanced if it should be
ultimately determined that the director or officer is not
entitled to be indemnified under this Article or otherwise.
(d) Indemnification Procedure; Claims. Any
indemnification under paragraphs (a) and (b) of this Section
6 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
<Page 21>
determination that indemnification of the director or office
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in paragraphs (a)
and (b). If a claim for indemnification or payment of
expenses under Section 6 of this Article is not paid in full
within sixty days after a written claim therefor has been
received by the corporation, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of
prosecuting such claim.
(e) Indemnification of Others. The Board of
Directors, in its discretion, shall have the power on behalf
of the corporation to indemnify any person, other than a
director or officer, made a party to any action, suit or
proceeding by reason of the fact that he or she, or his or
her testator or intestate, is or was an employee or agent of
the corporation and to pay the expenses incurred by any such
person in defending such action, suit or proceeding in
advance of its final disposition.
(f) Non-exclusivity of Rights. The indemnification and
advancement of expenses provided by or granted pursuant to
Section 6 of this Article VII shall not be deemed exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders, or disinterested directors
or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding
such office.
(g) Other Indemnification. The corporation's
obligation, if any, to indemnify any person who was or is
serving at its request as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any
<Page 22>
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
<Page 23>
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 AS AMENDED AUGUST 8, 1995
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF NETWORK EQUIPMENT TECHNOLOGIES, INC.
NETWORK EQUIPMENT TECHNOLOGIES, INC., a corporation
organized and existing under the General Corporation Law of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is NETWORK EQUIPMENT
TECHNOLOGIES, INC. The corporation was originally incorporated
under the same name, and the original Certificate of Incorporation
of the corporation was filed with the Secretary of State of the
State of Delaware on October 7, 1986.
2. Pursuant to Sections 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of
Incorporation restates and integrates, but does not further amend,
the provisions of the Certificate of Incorporation of this
corporation as heretofore amended or supplemented, and there is no
discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as
heretofore amended or supplemented is hereby restated to read in
its entirely as follows:
ARTICLE I
The name of this corporation is NETWORK EQUIPMENT
TECHNOLOGIES, INC.
ARTICLE II
The address of the registered office of the corporation
in the State of Delaware is 229 South State Street, in the City of
Dover, County of Kent. The name of its registered agent at such
address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
The nature of the business or purposes to be conducted
or promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
A. Classes of Stock. This corporation is authorized
to issue two classes of stock to be designated, respectively,
"Common Stock" and "Preferred Stock." The total number of shares
which the corporation is authorized to issue is fifty-five million
(55,000,000) shares. Fifty million (50,000,000) shares shall be
Common Stock and five million (5,000,000) shares shall be
Preferred Stock. The Common Stock shall have a par value of $0.01
per share; the Preferred Stock shall have a par value of $0.01 per
share.
B. Rights, Preferences and Restrictions of Preferred
Stock. The Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in series. The
rights, preferences, privileges and restrictions granted to and
imposed on the Series A Junior Participating Preferred Stock (the
"Series A Preferred Stock") are as set forth in this Article
IV(B). The number of shares constituting the Series A Preferred
Stock shall be Five Hundred Thousand (500,000). Such number of
shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding
securities issued by the corporation convertible into Series A
Preferred Stock. Except as otherwise provided in this Certificate
of Incorporation, the Board of Directors is hereby authorized to
fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon such additional series of Preferred
Stock, and the number of shares constituting any such series and
the designations thereof, or any of them. In the case the number
of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had
prior to the adoptions of the resolution originally fixing the
number of shares of such series.
1. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares
of any series of Preferred Stock (or any similar stock) ranking
prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the
corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case
the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (a) of this Section 1 immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
2. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote
of the stockholders of the corporation. In the event the
corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case
the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock
or any similar stock, or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the corporation having general voting
rights shall vote together as one class on all matters submitted
to a vote of stockholders of the corporation.
(c) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
3. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 1 of this Article IV(B) are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred stock, or any
shares of stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The corporation shall not permit any subsidiary of
the corporation to purchase or otherwise acquire for consideration
any shares of stock of the corporation unless the corporation
could, under paragraph (a) of this Section 3, purchase or
otherwise acquire such shares at such, time and in such manner.
4. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set
forth herein or in any other Certificate of Designations creating
a series of Preferred Stock or any similar stock or as otherwise
required by law.
5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no
distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock
shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares
of Common Stock, or (b) to the holders of shares of stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock
and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the
corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case
the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
6. Consolidation, Merger, etc. In case the corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred
Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
7. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
8. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the Preferred
Stock.
9. Amendment. This Certificate of Incorporation shall
not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as
a single class.
ARTICLE V
In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized to make, repeal, alter, amend and rescind from time to
time any or all of the Bylaws of the corporation; provided,
however, any Bylaw amendment adopted by the Board of Directors
increasing or reducing the authorized number of directors shall
require a resolution adopted by the affirmative vote of not less
than two-thirds of the directors. In addition, new Bylaws may be
adopted or the Bylaws may be amended or repealed by a vote of not
less than two-thirds of the outstanding stock of the corporation
entitled to vote thereon unless the Bylaw amendment or repeal has
been previously approved by the Board of Directors, in which case
the Bylaws may be so amended or repealed by a vote of not less
than a majority of the outstanding stock of the corporation
entitled to vote thereon.
ARTICLE VI
The number of directors of the corporation shall be
fixed from time to time by a Bylaw or amendment thereof duly
adopted by the Board of Directors. Except as provided by
applicable law, the Board of Directors shall have the exclusive
power and authority to fill any vacancies or any newly created
directorships on the Board of Directors upon a vote of two-thirds
of the remaining or existing members of the Board of Directors and
the stockholders shall have no right to fill such vacancies,
except that in the event a director is removed by the stockholders
for cause, the stockholders shall be entitled to fill the vacancy
created as a result of such removal. A director appointed by the
Board of Directors to fill a vacancy shall serve for the remainder
of the term of the vacated directorship he is filling.
The Board of Directors shall be and is divided into
three classes, Class I, Class II and Class III. Such classes
shall be as nearly equal in number of directors as possible. Each
director shall serve for a term ending on the third annual meeting
following the annual meeting at which such director was elected;
provided however, that the directors first elected to Class I
shall serve for a term ending on the annual meeting next following
the end of the calendar year 1987, the directors first elected to
Class II shall serve for a term ending on the second annual
meeting next following the end of the calendar year 1987, and the
directors first elected to Class III shall serve for a term ending
on the third annual meeting next following the end of the calendar
year 1987. The foregoing notwithstanding, each director shall
serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled
or shall otherwise be removed.
At each annual election, directors chosen to succeed
those whose terms then expire shall be of the same class as the
directors they succeed, unless by reason of any intervening
changes in the authorized number of directors, the Board shall
designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve
equality of number of directors among the classes.
Notwithstanding the rule that the three classes shall be as
nearly equal in number of directors as possible, in the event of
any change in the authorized number of directors each director
then continuing to serve as such shall nevertheless continue as a
director of the class of which he is a member until the expiration
of his current term, or his prior death, resignation or removal.
If any newly created directorship may, consistently with the rule
that the three classes shall be as nearly equal in number of
directors as possible, be allocated to one of two or more classes,
the Board shall allocate it to that of the available classes whose
term of office is due to expire at the earliest date following
such allocation.
ARTICLE VII
Elections of directors need not be by written ballot
unless the Bylaws of the corporation shall so provide.
ARTICLE VIII
Stockholders of the corporation shall take action by
meetings held pursuant to this Certificate of Incorporation and
the Bylaws and shall have no right to take any action by written
consent without a meeting. Meetings of stockholders may be held
within or outside of the State of Delaware, as the Bylaws may
provide. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware
at such place or places as may be designated from time to time by
the Beard of Directors or in the Bylaws of the corporation.
ARTICLE IX
A director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefit. If the Delaware
General Corporation Law is hereafter amended to authorize, with
the approval of a corporation's stockholders, further reductions
in the liability of the corporation's directors for breach of
fiduciary duty, then a director of the corporation shall not be
liable for any such breach to the fullest extent permitted by the
Delaware General Corporation Law as so amended. Any repeal or
modification of the foregoing provisions of this Article IX by the
stockholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at
the time of such repeal or modification.
ARTICLE X
The corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred on stockholders herein are
granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in Articles V, VI and VIII and
this Article X may not be repealed or amended in any respect
unless such repeal or amendment is approved by the affirmative
vote of not less than two-thirds of the total voting power of all
outstanding shares of stock in the corporation entitled to vote
thereon unless such amendment or repeal has been previously
approved by the Board of Directors, in which case these Articles
of the Certificate of Incorporation may be so amended or repealed
by a vote of not less than a majority of the outstanding stock of
the Corporation entitled to vote thereon.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation has been signed by James B. DeGolia, its authorized
officer, this 6th day of February 1996.
NETWORK EQUIPMENT TECHNOLOGIES, INC.
By: /s/ James B. DeGolia
James B. DeGolia
Vice President and General Counsel
<PAGE>
