CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (the "Agreement") is entered into as of June 2,
2000, by and between Network Equipment Technologies, Inc. (the "Company"), and
Xxxx Xxxxx (the "Executive").
1. Definitions.
(a) Change in Control and Corporate Transaction. For all purposes under
this Agreement, "Change in Control" and "Corporate Transaction" will
have the same meaning as the defined term in the Company's 1993
Stock Option Plan.
(b) Good Reason. For all purposes under this Agreement, "Good Reason"
means that the Executive: (i) has incurred a material reduction or
alteration in his or her authority, status or responsibility; (ii)
has incurred a material reduction in his or her "base compensation";
or (iii) has been notified that his or her principal place of work
will be relocated by a distance of 50 miles or more.
(c) Base Compensation. For purposes of this Agreement, "base
compensation" means annualized base salary as reflected in the
Company's payroll records as of the effective date of this Agreement
and as may be subsequently adjusted upward for increases.
(d) Cause. For all purposes under this Agreement, "Cause" means: (i) a
willful act by the Executive which constitutes misconduct or fraud
and which has a material adverse effect on the Company; or (ii)
Conviction of a felony crime. No act, or failure to act, by the
Executive will be considered "willful" unless committed without good
faith and without a reasonable belief that the act or omission was
in the Company's best interest.
(e) Disability. For all purposes under this Agreement, "disability" will
have the same meaning as under the Company's Long-Term Disability
Plan.
2. Incentive Programs. If a Change in Control or Corporate Transaction occurs
with respect to the Company, and within the first twelve (12) month period
after such occurance, the Executive either voluntarily resigns his or her
employment for Good Reason, or his or her employment is terminated by the
Company for any reason other than Cause or Disability, then the Executive
shall become fully vested in all awards heretofore or hereafter granted to
him or her under all stock option, stock appreciation rights, restricted
stock, phantom stock or similar plans or agreements of the Company
regardless of any provisions in such plans or agreements that do not
provide for full vesting. (To the extent that such plans or agreements
provide for full vesting on the same or an earlier date than this
Agreement, such plans or agreements shall prevail.) In addition, all
vested awards will be exercisable for the full duration of their terms.
3. Successors.
(a) Company's Successors. The Company will require any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all
of the Company's business and/or assets, by an agreement in
substance and form satisfactory to the Executive, to assume this
Agreement and to agree expressly to perform this Agreement in the
same manner and to the same extent as the Company would be required
to perform it in the absence of a succession. The Company's failure
to obtain such agreement prior to the effectiveness of a succession
will constitute Good Reason under Section 1(b) for the Executive to
terminate his or her employment. For all purposes under this
Agreement, the term "Company" will include any successor to the
Company's business and/or assets which executes and delivers the
assumption agreement described in this Subsection (a) or which
becomes bound by this Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of the
Executive under this Agreement will inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.
Page 51
4. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by this
Agreement will be in writing and will be deemed to have been duly
given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the
case of the Executive, mailed notices will be addressed to him or
her at the home address which he or she most recently communicated
to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of its Secretary.
(b) Waiver. No provision of this Agreement will be modified, waived or
discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Executive and by an authorized officer
of the Company (other than the Executive). No waiver by either party
of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party will be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are
not expressly set forth in this Agreement have been made or entered
into by either party with respect to the subject matter hereof.
(d) No Setoff; Withholding Taxes. There will be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against
payments to the Executive under this Agreement. All payments made
under this Agreement will be subject to reduction to reflect taxes
required to be withheld by law.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement will be governed by the laws of the
State of California.
(f) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement will not affect the validity or
enforceability of any other provision hereof, which will remain in
full force and effect.
(g) Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, will be settled by
arbitration in San Francisco in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Discovery
will be permitted to the same extent as in a proceeding under the
Federal Rules of Civil Procedure, including (without limitation)
such discovery as is specifically authorized by section 1283.05 of
the California Code of Civil Procedure, without need of prior leave
of the arbitrator under section 1283.05(e) of such Code. Judgment on
the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. All fees and expenses of the arbitrator
and such Association and attorney fees will be paid as determined by
the arbitrator.
(h) No Assignment. The rights of any person to payments or benefits
under this Agreement will not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action
in violation of this Subsection (h) will be void.
5. Effective Date and Term of Agreement. This Agreement is effective on the
date written above and will continue in effect until the Company gives one
(1) years' written notice of cancellation; provided, that, notwithstanding
the delivery of any such notice, this Agreement will continue in effect
for a period of one (1) year after a Change in Control or Corporate
Transaction, if such transaction(s) occurrs during the term of this
Agreement. Except as provided in the next paragraph, this Agreement will
terminate if Executive or the Company terminates Executive's employment
prior to a Change in Control or Corporate Transaction.
This Agreement will also become effective in the event that the Company
terminates the Executive's employment for any reason other than Cause or
Disability or the Executive voluntarily resigns for Good Reason in connection
with an impending Change in Control or Corporate Transaction. The Company's
Board shall determine in good faith whether such a termination or resignation is
occurring in connection with an impending Change in Control or Corporate
Transaction. However, such a termination or resignation will in any event be
deemed to be in connection with an impending Change in Control or Corporate
Transaction if the termination or resignation (i) is required by the merger
agreement or other instrument relating to such Change in Control or Corporate
Transaction or (ii) is made at the express request of the other party to the
transaction constituting such Change in Control or
Page 52
Corporate Transaction. If this paragraph applies, then this Agreement will
become effective immediately prior to the effective time of the Executive's
termination or resignation.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
EXECUTIVE:
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
NETWORK EQUIPMENT TECHNOLOGIES, INC.
By: /s/ Xxxxxx X.X. Xxxxx
--------------------------------------------
Print Name: Xxxxxx X.X. Xxxxx
--------------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
Page 53
