SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NETWORK EQUIPMENT TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[NETWORK EQUIPMENT TECHNOLOGIES, INC. LOGO]
800 SAGINAW DRIVE
REDWOOD CITY, CALIFORNIA 94063
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
MARCH 10, 1998
DEAR STOCKHOLDER:
You are cordially invited to attend a special meeting (the "Special
Meeting") of the stockholders of Network Equipment Technologies, Inc. (the
"Company"), a Delaware corporation, to be held on March 10, 1998, at 10:00 a.m.
local time, at the principal offices of the Company, 800 Saginaw Drive, Redwood
City, California 94063. At the Special Meeting, you will be asked to consider
and vote on a proposal to approve and adopt the Network Equipment Technologies,
Inc. 1998 Employee Stock Purchase Plan (the "1998 Purchase Plan"). No other
business shall be transacted at the Special Meeting.
The 1998 Purchase Plan is more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on January 30, 1998
are entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.
By order of the Board of Directors,
CRAIG M. GENTNER
SECRETARY
Redwood City, California
February 5, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, YOU ARE
URGED TO VOTE, SIGN, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE
IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE>
[NETWORK EQUIPMENT TECHNOLOGIES, INC. LOGO]
800 SAGINAW DRIVE
REDWOOD CITY, CALIFORNIA 94063
PROXY STATEMENT
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
MARCH 10, 1998
The enclosed proxy is solicited by the Board of Directors of Network
Equipment Technologies, Inc. (the "Company"), a Delaware corporation, for use at
the Special Meeting of Stockholders to be held at 10:00 a.m. on March 10, 1998,
and at any postponement or adjournment thereof (the "Special Meeting") at the
principal offices of the Company located at 800 Saginaw Drive, Redwood City,
California 94063. Stockholders of record on January 30, 1998 will be entitled to
notice of and to vote at the Special Meeting.
The Company intends to mail this Proxy Statement and accompanying proxy
card (the "Proxy") on approximately February 6, 1998. On January 30, 1998, there
were outstanding and entitled to vote 21,390,840 shares of Common Stock of the
Company ("Common Stock").
VOTING
By properly marking, dating, signing and returning the enclosed proxy card,
the shares represented on the card will be voted at the Special Meeting in
accordance with the instructions of the stockholder. Each stockholder is
entitled to one (1) vote for each share of Common Stock held by such
stockholder. All votes will be tabulated by the inspector of election appointed
for the Special Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes. Abstentions and broker non-votes will
be counted in determining whether a quorum is present at the Special Meeting. In
addition, abstentions will be counted toward the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes, whereas broker non-votes will not be counted for purposes of
determining whether a proposal has been approved or not.
Any person giving a proxy has the power to revoke it at any time before its
exercise at the Special Meeting by delivering to the Secretary of the Company at
800 Saginaw Drive, Redwood City, California 94063, a written revocation or a
duly executed proxy bearing a later date, or by attending the Special Meeting
and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy and any additional
soliciting materials furnished to stockholders. The Company does not presently
intend to solicit proxies other than by mail. The Company reserves the right to
have an outside solicitor conduct the solicitation of proxies and to pay such
solicitor for its services.
STOCK OWNERSHIP OF FIVE PERCENT STOCKHOLDERS, DIRECTORS, AND CORPORATE OFFICERS
The following table sets forth certain information, as of December 31, 1997
(except as otherwise noted), regarding ownership of the Company's Common Stock
by (i) each person known by the Company
1
<PAGE>
to be the beneficial owner of five percent (5%) or more of the Company's Common
Stock, (ii) each Director, (iii) the Company's Chief Executive Officer and each
of the Company's four other most highly compensated Corporate Officers for the
fiscal year ended March 31, 1997 (the "Named Corporate Officers"), and (iv) all
Corporate Officers and Directors as a group. Unless otherwise indicated, each of
the stockholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
Five Percent (5%) Stockholders, Approximate
Directors, Named Corporate Percentage of
Officers, and all Directors and Number of Outstanding
Corporate Officers as a Group Shares Shares (1)
- ------------------------------- --------- -------------
Kopp Investment Advisors, Inc.(2) 4,142,865 19.4%
6600 France Avenue South #672
Edina, MN 55435
State of Wisconsin Investment Board(3) 2,008,200 9.4%
121 East Wilson Street
Madison, WI 53707
R. Eliot King & Associates, Inc.(4) 1,190,525 5.6%
3000 Sand Hill Road #2, Suite 245
Menlo Park, CA 94025
RCM Capital Managment(5) 1,162,500 5.5%
Four Embarcadero Center
San Francisco, CA 94111
Dixon R. Doll(6) 167,791 *
James K. Dutton(7) 21,698 *
Samuel H. Ezekiel(8) 16,145 *
Joseph J. Francesoni(9) 273,437 1.3%
Craig M. Gentner(10) 35,708 *
Walter J. Gill(11) 85,000 *
Raymond E. Peverell(12) 59,958 *
George M. Scalise(13) 1,000 *
G. Michael Schumacher(14) 27,841 *
Hans A. Wolf(15) 49,383 *
All Corporate Officers and Directors
as a group
(fourteen persons)(16) 905,699 4.2%
2
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- ----------
* Represents less than 1% of the outstanding shares.
(1) Applicable percentage of ownership is based on 21,324,161 shares of Common
Stock outstanding as of December 31, 1997.
(2) Based on information provided to the Company as of January 29, 1998, Kopp
Investment Advisors ("KIA") has sole voting and investment power with
respect to 308,500 of the shares and no voting power or economic ownership
with respect to 3,834,365 of the shares shown opposite its name.
(3) Based on a Schedule 13G/A filed by State of Wisconsin Investment Board
("Wisconsin Investment") with the SEC on January 22, 1998. Wisconsin
Investment has sole voting and dispositive power with respect to all shares
shown opposite its name.
(4) Based on a Schedule 13G filed by R. Eliot King & Associates, Inc. ("King")
on January 28, 1998. King has shared voting and dispositive power with
respect to all of the shares shown opposite its name. John K. Nelson, the
President and a Director of King, is reported to beneficially own 1,150,925
of the shares of the Company, of which Mr. Nelson has sole voting and
dispositive power with respect to 4,825 shares and shared voting and
dispositive power with respect to 1,146,100 shares.
(5) Based on information provided to the Company as of January 29, 1998, RCM
Capital Management has sole voting and investment power with respect to
1,002,400 of the shares opposite its name.
(6) Includes the following shares as to which Dr. Doll disclaims beneficial
ownership: 200 shares owned by a son and 4,800 shares owned by
International Synergies,Ltd., a corporation in which Dr. Doll has a
beneficial interest. Includes 80,994 shares issuable within 60 days of
December 31, 1997, upon exercise of outstanding options.
(7) Includes 17,698 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(8) Includes 12,395 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(9) Includes 253,437 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(10) Includes 27,708 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(11) Includes 10,000 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(12) Includes 53,958 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(13) Includes zero shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(14) Includes 27,004 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(15) Includes 48,883 shares issuable within 60 days of December 31, 1997, upon
exercise of outstanding options.
(16) See notes (6) through (15) above. Includes 666,587 shares issuable within
60 days of December 31, 1997, upon exercise of outstanding options and
27,750 shares purchased under the 1988 Restricted Stock Award Plan that are
unvested as of December 31, 1997.
APPROVAL OF 1998 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors believes that an employee stock purchase plan is
crucial to the Company's ability to retain and recruit highly qualified
employees. The employee stock purchase plan provides a significant incentive to
all employees participating in the plan to perform their responsibilities in
ways that increase return on equity to the Company's stockholders. Stock
purchase plans also foster positive relations by assisting employees in
acquiring Company Common Stock and helping provide for their future financial
security.
The proposed 1998 Employee Stock Purchase Plan (the "1998 Purchase Plan")
will be the successor to the Company's 1990 Employee Stock Purchase Plan (the
"1990 Purchase Plan"). It has been over four years since the stockholders
approved an additional 750,000 shares for issuance under the 1990 Purchase Plan.
The 1990 Purchase Plan will terminate after the current purchase period ends on
April 30, 1998.
The Company is well into a significant product transition and will soon be
moving its headquarters from Redwood City, California to Fremont, California.
Future success of the Company is highly dependent on motivated and focused
employees. The Board of Directors believes that the establishment of a new
employee stock purchase plan will contribute to the Company's success.
The Board of Directors recommends approval of the Company's 1998 Employee
Stock Purchase Plan.
DESCRIPTION OF THE PROPOSAL
The proposed 1998 Purchase Plan provides that a total of 600,000 shares may
be issued to employees who purchase the Company's Common Stock thereunder. In
addition, any shares remaining under the 1990 Purchase Plan after the current
purchase period ends on April 30, 1998 will be issued under the 1998 Purchase
Plan.
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1998 PURCHASE PLAN DESCRIPTION
THE CURRENT TERMS AND PROVISIONS OF THE 1998 PURCHASE PLAN ARE SUMMARIZED
BELOW. THE SUMMARY DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE 1998
PURCHASE PLAN. COPIES OF THE 1998 PURCHASE PLAN DOCUMENT MAY BE OBTAINED BY ANY
STOCKHOLDER UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY AT THE
CORPORATE OFFICE IN REDWOOD CITY, CALIFORNIA.
All employees, including officers and directors who are employees,
regularly employed 20 or more hours per week and five or more months each year
by the Company, or its designated subsidiaries, will be eligible to participate
in the 1998 Purchase Plan as of the first enrollment date following employment
by the Company or a designated subsidiary. Notwithstanding the above, any person
who holds 5% or more of the Common Stock of the Company or any of its
subsidiaries is prohibited from participating in the 1998 Purchase Plan.
Employees who participated in the 1990 Purchase Plan will be eligible to
participate in the 1998 Purchase Plan. Any eligible employee may enroll in the
1998 Purchase Plan on the enrollment dates established by the administrator of
the 1998 Purchase Plan. Currently, the enrollment dates are scheduled to be the
first trading day of May, September or January of each year. As of December 31,
1997, approximately 1,171 employees of the Company were eligible to participate
in the predecessor 1990 Purchase Plan, 521 of whom were participating.
The 1998 Purchase Plan is administered by the Board of Directors (the
"Board") of the Company or a committee established by the Board. The Board may
amend or terminate the 1998 Purchase Plan at any time; however, stockholder
approval is required for amendments which would increase the number of shares
subject to the 1998 Purchase Plan. The Company must also solicit stockholder
approval to the extent required by Section 423 of the Internal Revenue Code of
1986, as amended (the "Code") or other applicable laws, rules or regulations, or
if the Board determines stockholder approval is advisable.
Participating employees may elect to make contributions to the 1998
Purchase Plan at a rate equal to any whole percentage, up to a maximum of 15% of
the employee's gross pay per pay period. Gross pay shall include an employee's
regular basic earnings and shall not include (i) overtime payments, bonuses,
commissions, profit-sharing distributions or other incentive-type payment, and
(ii) any contributions by the Company or its corporate affiliates for the
employee's benefit under a health or welfare plan. The length of each offering
period is established from time to time by the plan administrator, but may not
exceed 24 months. The initial offering period for the 1998 Purchase Plan is
scheduled to be one year commencing on May 1, 1998, and the offering period will
have three purchase periods of four months each. On the last trading day of each
purchase period (or other purchase dates established by the plan administrator
pursuant to the 1998 Purchase Plan), the Company will apply the funds then in
the employee's account to the purchase of shares. The cost for each share
purchased is 85% of the lower of the closing prices of the Common Stock on the
purchase date and the first trading day in the enrollment period in which the
purchase is made.
A participant may elect to terminate contributions to the 1998 Purchase
Plan at any time by giving written notice to the Company. Any such election will
take effect on the soonest practicable payroll date following receipt of such
notice by the Company, and the participant will be deemed to have withdrawn from
the 1998 Purchase Plan immediately following the next purchase date. No employee
is permitted under the 1998 Purchase Plan to purchase Common Stock at a rate
which exceeds the lesser of (i) the rate set by the plan administrator, and (ii)
$25,000 of fair market value of Common Stock (determined as of the enrollment
date).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS
BASED UPON EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS THEREOF. THE
APPLICABLE RULES ARE COMPLEX, AND INCOME TAX CONSEQUENCES
4
<PAGE>
MAY VARY DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH PLAN PARTICIPANT.
THIS PROXY STATEMENT DESCRIBES UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
GENERAL APPLICABILITY, BUT DOES NOT PURPORT TO DESCRIBE EITHER PARTICULAR
CONSEQUENCES TO EACH INDIVIDUAL PLAN PARTICIPANT OR FOREIGN, STATE OR LOCAL
INCOME TAX CONSEQUENCES, WHICH MAY DIFFER FROM THE UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES.
In general, participants will not have taxable income or loss under the
1998 Purchase Plan until they sell or otherwise dispose of shares acquired under
the 1998 Purchase Plan (or die holding such shares). If the shares are held, as
of the date of sale or disposition, for longer than both: (i) two years after
the beginning of the enrollment period during which the shares were purchased;
and (ii) one year following purchase, a participant will have taxable ordinary
income equal to 15% of the fair market value of the shares on the first day of
the enrollment period (but not in excess of the gain on the sale). Any
additional gain from the sale will be long-term capital gain. The Company is not
entitled to an income tax deduction if the holding periods are satisfied.
If the shares are disposed of before the expiration of both of the
foregoing holding periods (a "disqualifying disposition"), a participant will
have taxable ordinary income equal to the excess of the fair market value of the
shares on the purchase date over the purchase price. In addition, the
participant will have taxable capital gain (or loss) measured by the difference
between the sale price and the participant's purchase price plus the amount of
ordinary income recognized, which gain (or loss) will be long-term if the shares
have been held as of the date of sale for more than one year. The Company is
entitled to an income tax deduction equal to the amount of ordinary income
recognized by a participant in a disqualifying disposition.
The tax consequences to non-U.S. employees are governed by foreign law,
which typically does not offer the same tax advantages as United States law.
EMPLOYEE STOCK PURCHASE PLAN BENEFITS
As of January 31, 1998, no shares have been issued under the 1998 Purchase
Plan. The following table shows the number of shares issued under the 1990
Purchase Plan to the persons and the groups named below in the year ended
December 31, 1997 and the "Dollar Value" of those shares. The "Dollar Value" is
the difference between the fair market value of the Common Stock on the dates of
purchase and the participant's purchase price.
<TABLE>
<CAPTION>
PLAN BENEFITS
1990 EMPLOYEE STOCK PURCHASE PLAN
NUMBER OF DOLLAR
NAME AND POSITION SHARES ISSUED VALUE
- ------------------------------------------------------------------------------------- ------------- ----------
<S> <C> <C>
Joseph J. Francesconi, President & Chief Executive Officer........................... 0 0
Raymond E. Peverell, Senior Vice President, Sales & Support.......................... 0 0
G. Michael Schumacher, Senior Vice President, Product Operations..................... 900 $ 13,994
Craig M. Gentner, Senior Vice President & Chief Financial Officer.................... 0 0
Samuel H. Ezekiel, Senior Vice President, Marketing.................................. 0 0
Corporate Officers as a Group........................................................ 1,410 $ 21,926
Non-Officer Employee Group........................................................... 219,033 $3,403,003
</TABLE>
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STOCKHOLDER VOTE
The affirmative vote of a majority of the votes that could be cast by
stockholders who are present or represented at the Special Meeting is required
to adopt the 1998 Purchase Plan. Properly executed, unrevoked proxies will be
voted FOR adoption of the 1998 Purchase Plan unless a vote against adoption of
the 1998 Purchase Plan or abstention is specifically indicated in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE PROPOSED
EMPLOYEE STOCK PURCHASE PLAN.
STOCKHOLDER PROPOSALS
The only business to be conducted and acted upon at the Special Meeting is
the proposal to approve and adopt the 1998 Purchase Plan. Proposals of
stockholders that are intended to be presented at the Company's Annual Meeting
of Stockholders to be held in 1998 must be received by the Company no later than
February 25, 1998 in order to be included, if appropriate, in the Proxy
Statement and Proxy relating to that meeting.
In addition, pursuant to the Company's Bylaws, in order for any stockholder
to propose any business (including nominations for Director) at an annual
meeting, such stockholder is required to provide the Company with advance
written notice at least sixty (60) days prior to such meeting (no later than
June 12, 1998 with respect to the Annual Meeting to be held August 11, 1998).
The notice must contain certain information regarding such stockholder (and any
nominee for Director), any arrangements between the stockholder and the nominee,
and any other information regarding such nominee or each matter of business
proposed by the stockholder that would be required to be disclosed in a proxy
statement filed with the Securities and Exchange Commission for solicitations of
proxies to approve such proposed business.
Any such proposals or notices should be directed to the attention of the
Secretary, N.E.T., 800 Saginaw Drive, Redwood City, California 94063.
By order of the Board of Directors,
CRAIG M. GENTNER
SECRETARY
February 5, 1998
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
PURPOSE. The Network Equipment Technologies Employee Stock Purchase Plan (the
"Plan") is designed to foster continued employee retention and cordial
employee relations, to encourage and assist employees of Network Equipment
Technologies, Inc. (the "Company") and its designated subsidiaries, to
acquire stock in the Company, and to help them provide for their future
financial security. This Plan is the successor to the Company's 1990
Employee Stock Purchase Plan ("1990 Plan").
SHARES SUBJECT TO PLAN.
NUMBER OF SHARES: The Company has reserved for purchase under the Plan a
total of 600,000 shares of its Common Stock (the "Shares") plus shares
remaining under the 1990 Plan after April 30, 1998 (collectively
"share limitation"). Shares sold under the Plan may be newly or
previously issued shares, but all shares issued under the Plan,
regardless of source, shall be counted against the share limitation.
ADJUSTMENTS: In the event of any reorganization, recapitalization, stock
split, reserve stock split, stock dividend, combination of shares,
merger, consolidation, offering of rights or other similar change in
the structure of the capital stock of the Company, the Company may
make such adjustment, if any, as it may deem appropriate in the
number, kind, and subscription price of the securities available for
purchase under the Plan and in the maximum number of securities that a
member is entitled to purchase. The Company may also make further
adjustments to cause the Plan to qualify under Section 423 or any
successor provision of the Internal Revenue Code of 1986, as amended
(the "Code"), if and to the extent that it deems such qualification
necessary or desirable.
ADMINISTRATION. The Plan shall be administered by such officers and employees of
the Company or other persons as the Company's Board of Directors from time
to time may select (the "Plan Committee"). All costs and expenses incurred
in administering the Plan shall be paid by the Company, provided that any
taxes applicable to a member's participation in the Plan may be charged to
the member by the Company.
The Plan Committee may make such rules and regulations as it deems
necessary to administer the Plan and to interpret the provisions of the
Plan. Any determination, decision, or action of the Plan Committee in
connection with the construction, interpretation, administration, or
application of the Plan or any right granted under the Plan shall be final,
conclusive, and binding upon all persons.
<PAGE>
No member of the Plan Committee shall be liable for any determination,
decision, or action made. The Plan Committee may delegate the
administration of the Plan to Corporate Officers and their designees.
The Plan Committee may set date or dates of each "Offering Period", not to
exceed 24 months for each such period, under this Plan. Offering Periods
may have multiple "Purchase Periods" as set by the Plan Committee. Subject
to stockholder approval of this Plan, the initial Offering Period is
scheduled to commence on May 1, 1998 and to end on April 30, 1999 and to
have three Purchase Periods of four months each.
ELIGIBILITY. Any "employee" (as defined below) who regularly is engaged in the
rendition of personal services to the Company or its designated
subsidiaries 20 hours per week or more and five months or more in any
calendar year (except any employee who would own, directly or indirectly,
five percent or more of the total combined voting power or value of all
classes of stock of the Company or any of its subsidiaries immediately
after Shares are purchased under the Plan) shall be an "employee" and
eligible to become a member of and to participate in the Plan beginning on
the first Enrollment Date following his or her employment with the Company
or a designated subsidiary. Employees who participated under the 1990 Plan
and who are employees as defined in this section of this Plan are eligible
to participate under this Plan. Individuals who are classified by the
Company as independent contractors shall not be eligible to be members
unless and until such individuals are reclassified as common law employees
for federal income and federal employment tax purposes.
For purposes of the Plan: "employee" shall mean any individual carried as
an "employee" on the payroll records of the Company or a designated
subsidiary at the relevant time or times; "subsidiary" shall mean any
corporation in an unbroken chain of corporations beginning with the Company
if, as of a given Enrollment Date, each of the corporations other than the
last corporation in the chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain. Employees who participate under the Plan are
referred to herein as "members".
PARTICIPATION.
ENROLLMENT: Any eligible employee may enroll in the Plan as of the first
trading day of each Offering Period or Purchase Period or such other
date or dates chosen by the Plan Committee (each such date is an
"Enrollment Date"). Enrollment during any Offering Period may be
subject to limitations or conditions set by the Plan Committee. To
enroll, an eligible employee must deliver to the Company a completed
and signed Employee Stock Purchase Plan Subscription Agreement,
substantially in the form provided by the Company, indicating the
employee's acceptance
<PAGE>
of the Plan and agreement to participate in the Plan. Forms must be
received by the Company no later than an Enrollment Date and shall be
effective as of such Enrollment Date. Participation in the Plan is
entirely voluntary.
RE-ENROLLMENT UPON EXPIRATION OF OFFERING PERIOD: At the end of a
then-current Offering Period, each member automatically shall be
enrolled in the next succeeding Offering Period (a "Re-enrollment")
unless, in a manner and at a time specified by the Company, but in no
event later than the day before the first day of such succeeding
Offering Period, a member notifies the Company in writing of the
member's desire not to be so enrolled. Re-enrollment shall be at the
same percentage of contributions as the member's prior participation
unless the member by timely written notice changes the percentage of
contribution. No member shall be automatically re-enrolled whose
participation terminates by operation of Section 9 or who, during the
preceding Offering Period, has eliminated his or her percentage of
contribution or has notified the Company in writing of his or her
withdrawal from participation in the Plan.
AUTOMATIC RE-ENROLLMENT ON LOWER PRICE ENROLLMENT DATE: If the fair market
value of the Company's Common Stock is lower on any Enrollment Date
(the "Lower Price Enrollment Date") than it was on the Enrollment Date
on which a participating member last enrolled in the Plan, the member
shall be deemed to have re-enrolled in the Plan on such Lower Price
Enrollment Date for the next succeeding Purchase Period.
MEMBER'S CONTRIBUTIONS. Each member shall make contributions by payroll
deduction of any whole percentage up to a "maximum rate" of fifteen percent
(15%) of the member's gross pay per pay period ("gross pay"), as designated
by the member. Gross pay shall include the regular basic earnings paid to a
member by the Company or a subsidiary. There shall be excluded from the
calculation of gross pay (a) all overtime payments, bonuses, commissions,
profit-sharing distributions and other incentive-type payments, and (b) all
contributions made by the Company or its corporate affiliates for the
member's benefit under any employee benefit or welfare plan now or
hereafter established. Contributions shall not be made other than in
accordance with this Section 6.
At any time, a member may elect in writing to stop making contributions
under the Plan. An election to stop contributions will take effect on the
soonest practicable payroll date following receipt by the Company of the
written election. Any election by a member to stop his or her payroll
deductions shall be deemed to be an election to withdraw from the Plan
effective immediately following the purchase of Shares on the next Purchase
Date. Such member may not re-enroll until the commencement of a new
Offering Period.
<PAGE>
At any time prior to the start of a new Purchase Period, a member may elect
in writing to increase (up to the maximum rate) or decrease (down to 1%)
his or her rate of contribution by any whole percentage, for such
subsequent Purchase Period or Periods.
Notwithstanding any other provision of the Plan, no member may receive a
right to acquire Shares under the Plan (and all other employee stock
purchase plans of the Company and its subsidiaries that are qualified or
intended to be qualified under Section 423 or any successor provision of
the Code) that accrues at a rate in excess of $25,000 of fair market value
of such Shares for any calendar year (determined as of the Enrollment
Date).
Employee contributions may be commingled with other Company funds free of
any obligation of the Company to pay interest on such funds, but shall be
credited to each member as soon as practicable after each withholding.
PURCHASE RIGHTS.
GRANT OF PURCHASE RIGHTS. Enrollment or Re-enrollment of a member in the
Plan on an Enrollment Date will constitute the grant by the Company to
the member of limited rights to purchase Shares under the Plan. Upon
enrollment, unless otherwise determined by the Plan Committee, a
member will become eligible for the grant of purchase rights for up to
the maximum permitted by Section 423 or such smaller number as
authorized by the Plan Committee or by operation of this Plan, before
the Enrollment Date.
TERMS AND CONDITIONS OF PURCHASE RIGHTS. Each purchase right granted under
the Plan shall have the following terms:
whether or not Shares have been purchased thereunder, the purchase right
will expire on the earliest to occur of (A) the completion of the
purchase of Shares on the last Purchase Date occurring within 24
months after the Enrollment Date on which such purchase right was
granted, or such shorter period as may be established by the Board of
Directors from time to time before an Enrollment Date for all purchase
rights to be granted on such Enrollment Date, or (B) the date on which
participation of such member in the Plan terminates for any reason;
payment for Shares purchased under the purchase rights will be made only
through payroll deduction in accordance with Section 6;
purchase of Shares upon exercise of the purchase rights will be
accomplished only in installments in accordance with Section 8;
the purchase price per Share under the purchase rights will be determined
<PAGE>
as provided in Section 8; and
the purchase rights will in all respects be subject to the terms and
conditions of the Plan, as interpreted by the Plan Committee from time
to time.
ISSUANCE OF SHARES. On the last day of trading of each Purchase Period during an
Offering Period (each a "Purchase Date"), so long as the Plan shall remain
in effect, the Company shall apply the funds then credited to each member's
account to the purchase of whole Shares. The cost or charge to each
member's account shall be the lower of 85 percent of the fair market value
of one share of the Company's Common Stock on the applicable Enrollment
Date or on the Purchase Date, which date shall be the last day on which the
Company's stock is traded during a Purchase Period, as determined in good
faith by the Plan Committee, multiplied by the number of Shares purchased.
On each Purchase Date, if funds are still credited to a member after the
purchase of Shares, then (a) if such funds exceed the purchase price of a
whole share under the Plan, there shall be refunded to the member an amount
equal to the purchase price of the maximum number of whole shares such
funds would cover under the Plan, and (b) any remaining funds shall be held
for purchases on the next succeeding Purchase Date. Upon the effective date
of a member's written election to withdraw from participation in the Plan
for the then-current Offering Period, any funds then credited to the member
shall be refunded to the member. The Company shall, promptly after each
Purchase Date so long as the Plan is in effect, issue to the member
entitled thereto the Shares purchased by the member under the Plan.
TERMINATION OF MEMBERSHIP. A member's participation in the Plan shall terminate,
and no Shares may thereafter be purchased by such member under the Plan,
(a) when the member ceases to be employed by the Company and its
subsidiaries for any reason whatsoever, (b) when the member dies, or (c) 90
days after the member ceases to receive any compensation from the Company
and its subsidiaries unless, in the case of (c) above, (i) such cessation
is due to a leave of absence in accordance with policies of the Company or
approved by the person or persons appointed by the Plan Committee, and (ii)
the member's right to reemployment is guaranteed by statute or contract.
WITHDRAWAL OF FUNDS. Except as otherwise provided under this Plan, a member may
not withdraw all or part of the funds credited to him or her under the Plan
at any time before the funds are used to purchase Shares.
BENEFICIARY. Each member may designate in writing one or more beneficiaries and
may, in such member's sole discretion, change such designation from time to
time. Any such designation shall be effective only after receipt by the
Company
<PAGE>
and shall be controlling over any disposition by will or otherwise.
Upon the death of a member, amounts credited to the member shall be paid in
cash to the beneficiary or beneficiaries designated by the member or, in
the absence of such designation, to the executor, administrator, or other
legal representative of the member's estate. Such payment shall relieve the
Company of further liability under the Plan on account of the member. If
more than one beneficiary is designated, each beneficiary shall receive an
equal portion of the account unless the member gave contrary instructions
in such designation.
MODIFICATION, TERMINATION. The Company expects to continue this Plan until such
time as all of the Shares reserved for purchase under the Plan have been
purchased. However, the Company reserves the right to amend, alter, or
terminate the Plan at any time. No amendment shall require stockholder
approval, except:
for an increase in the number of shares reserved for purchase under the
Plan;
to the extent required for the Plan to comply with Section 423 of the Code;
to the extent required by other applicable laws, regulations or rules; or
to the extent the Board otherwise concludes that stockholder approval is
advisable.
The Board of Directors may elect to terminate any or all outstanding
enrollments at any time. If the Plan is terminated, the Board may also
elect to terminate enrollments before, or upon completion of, the purchase
of Shares on the next Purchase Date, or to permit enrollments to expire in
accordance with their terms (and participation to continue through such
expiration dates). If enrollments are terminated before expiration, any
funds contributed to the Plan that have not been used to purchase Shares
shall be returned to the members as soon as administratively feasible.
If at any time the Shares available under the Plan are over-enrolled,
enrollments shall be reduced proportionately to eliminate the
over-enrollment. Any funds that cannot be applied to the purchase of whole
Shares due to over-enrollment shall be refunded to members as soon as
administratively feasible. Further, if additional shares of Common Stock
are added to the Plan, the Company may, in its discretion, adjust the
purchase price of those shares or have such shares available, in whole or
in part, only for purchase rights granted subsequent to stockholder
approval of such additional shares.
ASSIGNABILITY OF RIGHTS; CREATION OF LIENS. No rights of any member under the
Plan shall be assignable by the member, by operation of law or otherwise,
and no person may create a lien on any funds, securities or any other
property,
<PAGE>
except to the extent that there has been a designation of a beneficiary or
beneficiaries in accordance with the Plan, and except to the extent
permitted by the laws of descent and distribution if such beneficiary is
not designated. Prior to the purchase of any Shares under the Plan, each
member shall be required to sign a statement to the foregoing effect. A
member's right to purchase Shares under the Plan shall be exercisable only
during the member's lifetime and only by the member.
PARTICIPATION IN OTHER PLANS. The Plan shall not affect an employee's right to
participate in and receive benefits under the then-current provisions of
any pension, insurance or other employee benefit plan or program of the
Company or a subsidiary.
REPORTS. The Company shall make available to members copies of all
communications with holders of Common Stock, including annual and interim
reports. In connection with the issuance of Shares under the Plan, the
Company shall provide each member with a summary of such member's total
contributions during the preceding Offering Period, and the number of
Shares purchased, purchase price and the balance of funds, if any, in the
member's account.
EQUAL RIGHTS AND PRIVILEGES. It is intended that, except as may be determined by
the Board of Directors, members shall have equal rights and privileges with
respect to the Plan.
APPLICABLE LAW. The interpretation, performance and enforcement of the Plan
shall be governed by the laws of the State of California.
APPROVAL. The Plan was approved by the Board of Directors on January 13, 1998
and by the stockholders of the Company on __________________, 1998.
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
PROXY PROXY
800 Saginaw Drive,
Redwood City, CA 94063
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF NETWORK EQUIPMENT TECHNOLOGIES, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the Notice
of Special Meeting of Stockholders and the Proxy Statement and appoints Joseph
J. Francesconi and Craig M. Gentner and each of them, the Proxy of the
undersigned, with full power of substitution, to vote all shares of Common Stock
of Network Equipment Technologies, Inc. (the "Company") held of record by the
undersigned on January 30, 1998, either on his or her own behalf or on behalf of
any entity or entities, at the Special Meeting of Stockholders of the Company to
be held March 10, 1998, and at any adjournment or postponement thereof, with the
same force and effect as the undersigned might or could do if personally
present. The shares represented by this Proxy shall be voted in the manner set
forth below.
1. To vote on a proposal to approve and adopt the Network Equipment
Technologies, Inc. 1998 Employee Stock Purchase Plan (the "1998 Purchase Plan")
and to authorize issuance of up to 600,000 shares of the Company's Common Stock
under the 1998 Purchase Plan.
___ FOR ___ AGAINST ___ ABSTAIN
(PLEASE DATE AND SIGN ON REVERSE SIDE)
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed herein.
THIS PROXY WILL BE VOTED FOR THE PROPOSAL IF NO SPECIFICATION IS MADE.
Abstentions have the same effect as a vote "Against" the proposal.
Please sign exactly as your name(s) is (are) shown on the share certificate to
which the Proxy applies. When shares are held by joint tenants, both should
sign. When signing as an attorney, executor, administrator, trustee or guardian,
please give full title, as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a partnership, please sign
in the partnership name by an authorized person.
Dated:___________________________, 1998
PLEASE MARK, SIGN, DATE AND
Signature RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
Signature if held jointly
