Document:

<PAGE>

                                                                    EXHIBIT 4.2A

                      NETWORK EQUIPMENT TECHNOLOGIES, INC.

                       AMENDMENT NO. 3 TO RIGHTS AGREEMENT
                       -----------------------------------

          THIS AMENDMENT NO. 3 TO RIGHTS AGREEMENT ("AMENDMENT") is made as of
October 2, 2002 by and between Network Equipment Technologies, Inc., a Delaware
corporation (the "COMPANY") and EquiServe Trust Company, N.A. as Rights Agent
(the "RIGHTS AGENT").

                                   BACKGROUND
                                   ----------

     A.   The Company and the Rights Agent have entered into a Rights Agreement,
dated as of August 15, 1989, as amended by Amendment No. 1 thereto dated as of
June 12, 1990 and Amendment No. 2 thereto dated as of August 17, 1999 (the
"RIGHTS AGREEMENT"). Capitalized terms used in this Amendment without definition
shall have the meanings given to them in the Rights Agreement.

     B.   The parties now wish to further amend the Rights Agreement as set
forth below.

     C.   This Amendment has been approved by the Board of Directors of the
Company and the individual members of the Board of Directors of the Company in
their capacities as Continuing Directors (as defined in the Rights Agreement).

     THE PARTIES AGREE AS FOLLOWS:

     1.   AMENDMENTS TO RIGHTS AGREEMENT. All references in the Rights Agreement
to "Continuing Directors" shall be deemed references to the Board of Directors
of the Company and all power and authority vested in the Continuing Directors is
hereby vested in the Board of Directors of the Company.

     2.   CONTINUITY OF TERMS. All the other terms and provisions of the Rights
Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3
to Rights Agreement as of the date and year first above written.

/s/ NETWORK EQUIPMENT TECHNOLOGIES, INC.

/s/ EQUISERVE TRUST COMPANY, N.A.<PAGE>

                                                                   EXHIBIT 10.31

                      NETWORK EQUIPMENT TECHNOLOGIES, INC.
                             1993 STOCK OPTION PLAN
                        AMENDED AND RESTATED JUNE 1, 1999
                              AMENDED JULY 12, 1999
                             AMENDED APRIL 16, 2002
                              AMENDED MAY 16, 2003

                                TABLE OF CONTENTS

ARTICLE ONE....................................................................2
   GENERAL PROVISIONS..........................................................2
      I.    PURPOSES OF PLAN...................................................2
      II.   ADMINISTRATION OF PLAN.............................................2
      III.  STOCK SUBJECT TO PLAN..............................................3
ARTICLE TWO....................................................................3
   DISCRETIONARY OPTION GRANTS.................................................3
      I.    ELIGIBILITY FOR OPTION GRANTS......................................3
      II.   TERMS AND CONDITIONS OF OPTIONS....................................4
      III.  INCENTIVE OPTIONS..................................................6
      IV.   CORPORATE TRANSACTION..............................................6
      V.    CANCELLATION AND REGRANT OF OPTIONS................................7
      VI.   STOCK APPRECIATION RIGHTS; HOSTILE TAKE-OVER; CHANGE IN CONTROL....7
ARTICLE THREE..................................................................8
   AUTOMATIC OPTION GRANT PROGRAM..............................................8
      I.    ELIGIBILITY........................................................8
      II.   TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS....................9
      III.  CORPORATE TRANSACTION; CHANGE IN CONTROL; HOSTILE TAKE-OVER.......11
ARTICLE FOUR..................................................................11
   RESTRICTED STOCK AWARDS....................................................11
      I.    DETERMINATION OF ELIGIBILITY AND AMOUNT OF AWARDS.................11
      II.   RESTRICTED STOCK..................................................11
      III.  VESTING SCHEDULE..................................................12
ARTICLE FIVE..................................................................14
   MISCELLANEOUS..............................................................14
      I.    AMENDMENT OF PLAN.................................................14
      II.   TAX WITHHOLDING...................................................14
      III.  TERM OF PLAN......................................................14
      IV.   USE OF PROCEEDS...................................................14
      V.    REGULATORY APPROVALS..............................................14
      VI.   NO EMPLOYMENT/SERVICE RIGHTS......................................15
      VII.  MISCELLANEOUS PROVISIONS..........................................15

N.E.T 1993 Stock Option Plan            1      As Amended through April 16, 2002
<PAGE>

                              AMENDED AND RESTATED

                      NETWORK EQUIPMENT TECHNOLOGIES, INC.

                             1993 STOCK OPTION PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS
                               ------------------

     I.   PURPOSES OF PLAN

          A.   This 1993 Stock Option Plan (the "Plan") was adopted as of August
11, 1993 (the "Effective Date") to promote the interests of Network Equipment
Technologies, Inc., a Delaware corporation (the "Corporation"), by allowing
eligible individuals to acquire or increase proprietary interests in the
Corporation as an incentive to remain in the service of the Corporation (or its
"parent" or "subsidiary" corporations, as defined in Section 424 of the Internal
Revenue Code).

          B.   This Plan is the successor to the Network Equipment Technologies,
Inc. 1983 Stock Option Plan (the "1983 Plan"). No options shall be granted under
the 1983 Plan from and after the Effective Date. The terms and conditions of
options granted under the 1983 Plan before the Effective Date are not affected
by the adoption of this Plan.

          C.   This Plan was amended and restated as of April 14, 1998 to
include the provisions of and provide a successor plan for the Corporation's
1988 Restricted Stock Award Plan (the "1988 Plan"). No restricted stock shall be
granted under the 1988 Plan from and after April 14, 1998. The terms and
conditions of restricted stock granted under the 1988 Plan before April 14, 1998
are not affected by the amendment of this Plan.

          D.   This Plan is amended as of April 16, 2002 to provide for the
automatic grant of stock options to all directors of the Corporation who are not
employed by the Corporation or any parent or subsidiary of the Corporation.

     II.  ADMINISTRATION OF PLAN

          A.   This Plan shall be administered by a committee (the "Plan
Administrator" or "Committee") of two or more non-employee Directors appointed
by the Corporation's Board of Directors (the "Board"). Committee members shall
serve for such periods as the Board may determine and may be removed by the
Board at any time.

          B.   The Plan Administrator shall have full authority (subject to the
provisions of this Plan) to establish such rules and regulations as it deems
appropriate for the proper administration of this Plan and to make such
determinations and interpretations concerning this Plan and options granted
under this Plan as it deems necessary or advisable. Decisions of the Plan
Administrator shall be final and binding upon all parties.

          C.   The Plan Administrator shall have full authority to grant options
and stock appreciation rights pursuant to Article Two and restricted stock
pursuant to Article Four of this Plan and to determine in its sole discretion
which eligible individuals are to receive such options, rights, or restricted
stock, the number of shares to be covered by each such option or grant, whether
each option is to be an incentive stock option intended to satisfy the
requirements of Section 422 of the Internal Revenue Code ("Incentive Option") or
a non-statutory option not intended to satisfy those requirements, the time(s)
at which each option or grant is to become vested or exercisable, and the
maximum term for which each option is to be outstanding.

N.E.T 1993 Stock Option Plan            2      As Amended through April 16, 2002
<PAGE>

     III. STOCK SUBJECT TO PLAN

          A.   An aggregate of 9,406,415 shares of the Corporation's common
stock, par value $0.01 per share ("Common Stock") is available for issuance
under this Plan, and the predecessor 1983 Plan, subject to adjustment from time
to time in accordance with this Section III. These shares may be authorized but
unissued shares of Common Stock or reacquired shares of Common Stock, including
shares repurchased by the Corporation on the open market. The number of shares
of Common Stock available for issuance under this Plan shall be reduced,
share-for-share, by the number of shares issued with respect to options granted
under the 1983 Plan that are outstanding at the Effective Date and are
subsequently exercised.

          B.   To the extent that an option granted under this Plan or the 1983
Plan or a restricted stock award under the 1988 Plan expires or terminates for
any reason before exercise or vesting in full (including any option canceled in
accordance with the cancellation-regrant provisions of Section V of Article Two
of this Plan), the shares then subject to the option or restricted stock award
shall again be available for grant under this Plan. Shares subject to any
option, restricted stock award or portion thereof surrendered or canceled in
accordance with Section VI of Article Two or Section III of Article Three, and
shares repurchased by the Corporation pursuant to any repurchase rights
available under this Plan, shall not again become available for option grants
under this Plan. If the exercise price of an option granted under this Plan (or
the 1983 Plan) is paid with shares of Common Stock, or if shares of Common Stock
otherwise issuable under this Plan are withheld by the Corporation in
satisfaction of withholding taxes incurred upon the exercise of an option, then
the number of shares available for issuance under this Plan shall be reduced by
the gross number of shares for which the option is exercised and not by the net
number of shares issued to the option holder.

          C.   If a change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, or other similar
change, then appropriate adjustments shall be made to (i) the number and/or
class of shares issuable under this Plan, (ii) the number and/or class of shares
and price per share in effect under each then-outstanding option or restricted
stock award granted under this Plan (or the 1983 Plan), and (iii) the number of
shares of Common Stock to be made the subject of each subsequent automatic
option grant under Article Three of this Plan. The purpose of adjustments to
outstanding and restricted stock awards options shall be to preclude the
enlargement or dilution of rights and benefits under such options or awards. The
adjustments determined by the Plan Administrator shall be final, binding, and
conclusive.

          D.   The Corporation may not issue stock options covering in the
aggregate more than 600,000 shares of Common Stock (subject to adjustments as
required under V(C) above to any one participant in any one-year period.
(amended 7/12/99)

                                   ARTICLE TWO

                           DISCRETIONARY OPTION GRANTS
                           ---------------------------

     I.   ELIGIBILITY FOR OPTION GRANTS

          The following persons are eligible to participate in the Discretionary
Option Grant Program of this Plan:

          A.   Officers and other key employees of the Corporation (or its
parent or subsidiary corporations) whose services contribute to the management,
growth, and financial success of the Corporation (or its parent or subsidiary
corporations), and

          B.   Those consultants and independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary corporations).

N.E.T 1993 Stock Option Plan            3      As Amended through April 16, 2002
<PAGE>

     II.  TERMS AND CONDITIONS OF OPTIONS

          Options granted pursuant to this Article Two may, at the Plan
Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not employees may be granted only non-statutory
options. Each option shall be evidenced by one or more written instruments in a
form approved by the Plan Administrator. Each such instrument shall comply with
the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall also be subject to Section III of this Article Two.
Failure to issue, or (if agreement is required) to agree to, an instrument
evidencing an option shall not invalidate the option grant; however, the option
shall not be exercisable until a written instrument has been issued and (if
required) agreed to.

          A.   OPTION PRICE.

               1.   The option price per share shall be fixed by the Plan
Administrator, but shall not be less than the "fair market value" (defined
below) per share of Common Stock on the date of the option grant.

               2.   The option price shall, subject to Section III below, be
immediately due upon exercise of the option and shall be payable in one or a
combination of the following forms:

                    (a)  cash or check payable to the Corporation;

                    (b)  shares of Common Stock held by the optionee for the
period necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at "fair market value" on the exercise date; or

                    (c)  a broker-dealer sale-and-remittance procedure pursuant
to which the optionee shall provide irrevocable written instructions (i) to a
designated brokerage firm to effect the immediate sale of the option shares and
remit to the Corporation, from the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate option price plus all income and
employment taxes required to be withheld by the Corporation in connection with
the exercise, and (ii) to the Corporation to deliver the certificates for the
purchased shares directly to the brokerage firm to complete the transaction.

               3.   The Plan Administrator may assist any optionee (excluding
"executive officers" of the Company, as defined under federal securities laws,
and members of the Board of Directors of the Company) in the exercise of any
option granted under this Article Two and the satisfaction of any federal and
state income and employment tax obligations arising therefrom, by (a)
authorizing a loan to the optionee by the Corporation, or (b) permitting the
optionee to pay the option price in installments over a period of months or
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) will be established by the Plan
Administrator in its sole discretion. Loans and installment payments may be
allowed with or without security or collateral (other than to optionees who are
consultants or independent contractors, who must adequately secure any loan by
collateral other than the purchased shares), but the maximum credit available to
the optionee shall not exceed the sum of (i) the aggregate option price (less
par value) of the purchased shares, plus (ii) any federal and state income and
employment tax liability incurred by the optionee in connection with the
exercise of the option. (amended 5/16/03)

               4.   The "fair market value" per share of Common Stock on any
relevant date shall be determined as follows:

                    (a)  If the Common Stock is listed or admitted to trading on
any national stock exchange, then the fair market value shall be the closing
selling price per share of Common Stock on the date in question on the stock
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as officially quoted on the composite tape of transactions on that
exchange. If there is no reported sale of Common Stock on that exchange on the
date in question, the fair market value shall be the closing selling price on
the exchange on the next preceding date for which a closing selling price is
quoted.

N.E.T 1993 Stock Option Plan            4      As Amended through April 16, 2002

<PAGE>

                    (b)  If the Common Stock is not listed or admitted to
trading on any national stock exchange, but is traded on the NASDAQ National
Market System, the fair market value shall be the closing selling price per
share of Common Stock on the date in question as reported on that system. If
there is no closing selling price for the Common Stock on the date in question,
then the fair market value shall be the closing selling price for the next
preceding date for which a closing selling price is quoted.

          B.   TERM AND EXERCISE OF OPTIONS.

               1.   Each option granted under this Article Two shall be
exercisable at such time(s), during such period, and for such number of shares
as shall be determined by the Plan Administrator and set forth in the written
instrument evidencing the option. No option granted under this Article Two shall
have a term in excess of ten (10) years after the grant date.

               2.   During the lifetime of the optionee, the option shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee otherwise than by will or by the laws of descent and distribution
following the optionee's death.

               3.   Exercise of an option shall be effected by delivery to the
Corporation of a written notice in a form approved by the Plan Administrator
specifying the number of shares as to which the option is being exercised,
accompanied by payment of the exercise price (or provision for payment
acceptable to the Plan Administrator), and containing such other provisions as
the Plan Administrator approves from time to time.

          C.   TERMINATION OF SERVICE.

               1.   Except as otherwise approved by the Plan Administrator, if
the optionee's service to the Corporation is terminated:

                    (a)  for cause, each then-outstanding option held by the
optionee shall terminate immediately;

                    (b)  for any reason other than cause, death, or permanent
disability, each then-outstanding option held by the optionee shall expire no
later than three (3) months after the termination date;

                    (c)  by reason of permanent disability (as defined in
Section 22(e)(3) of the Internal Revenue Code), each then-outstanding option
held by the optionee shall expire no later than twelve (12) months after the
termination date; or

                    (d)  by reason of the optionee's death, or if the optionee
dies during the three (3) months following termination of his or her employment
other than for cause or by reason of permanent disability, each then-outstanding
option held by the optionee shall expire no later than twelve (12) months
following the termination date. Following the optionee's death, the option may
be exercised by the personal representative of the optionee's estate or by the
person(s) to whom the option is transferred pursuant to the optionee's will or
in accordance with the laws of descent and distribution.

               2.   Under no circumstances shall any option be exercisable after
the specified expiration date of the option term.

               3.   Following termination of the optionee's service, an option
shall not be exercisable to any greater extent than on the termination date;
provided, however, that the Plan Administrator shall have complete discretion,
at any time while the option remains outstanding, to permit the option to be
exercised, not only with respect to the number of shares for which the option is
exercisable at the time of the termination, but also with respect to one or more
subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had termination not occurred.

N.E.T 1993 Stock Option Plan            5      As Amended through April 16, 2002

<PAGE>

               4.   For purposes of this Plan:

                    (a)  An optionee shall be deemed to remain in service to the
Corporation for so long as he or she renders (or in the case of consultants or
advisors, has agreed to render) services on a periodic basis to the Corporation
(or any parent or subsidiary) as an employee, a non-employee Director, or an
independent consultant or advisor.

                    (b)  An optionee shall be considered to be an employee for
so long as he or she remains in the employ of the Corporation (or any parent or
subsidiary), subject to the control and direction of the employer entity as to
the work to be performed and the manner and method of performance.

          D.   STOCKHOLDER RIGHTS.

          An optionee shall have no stockholder rights with respect to any
option shares until he or she has exercised the option and paid (or made
arrangements satisfactory to the Plan Administrator to pay) the option price for
the purchased shares.

     III. INCENTIVE OPTIONS

          In addition to other application terms and conditions of this Plan,
the following provisions shall apply:

          A.   Incentive Options may be granted only to employees. Options
specifically designated as "non-statutory" options when issued shall not be
subject to this Section III.

          B.   If any individual to whom an Incentive Option is granted is the
owner of stock (as determined under Section 424(d) of the Internal Revenue Code)
possessing 10% or more of the total combined voting power of all classes of
stock of the Corporation or any of its parent or subsidiary corporations ("10%
Stockholder"), then the option price per share shall not be less than 110% of
the fair market value per share of Common Stock on the grant date, and the
option term shall not exceed five (5) years from the grant date.

     IV.  CORPORATE TRANSACTION

          A.   In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction"):

               1.   a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction whose principal purpose is to
change the State of the Corporation's incorporation,

               2.   the sale, transfer, or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution, or

               3.   any "reverse" merger in which the Corporation is the
surviving entity, but in which securities possessing more than 50% of the total
combined voting power of the Corporation's outstanding securities are
transferred to holders other than those who owned such voting power immediately
before the merger, then immediately before the Effective Date of the Corporate
Transaction, each option granted under this Article Two shall become fully
exercisable ("accelerate") with respect to the total number of shares of Common
Stock then subject to the option. However, an option shall not accelerate if and
to the extent: (i) the option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or parent thereof or to be
replaced by an equivalent option to purchase shares of the capital stock of the
successor corporation or parent thereof, or (ii) acceleration of the option is
subject to other limitations imposed by the Plan Administrator at the time of
grant. The determination of equivalence under clause (i) above shall be made by
the Plan Administrator and shall be final, binding, and conclusive.

N.E.T 1993 Stock Option Plan            6      As Amended through April 16, 2002

<PAGE>

          B.   Upon the consummation of the Corporate Transaction, all options
granted under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor (or surviving) corporation or its
parent company.

          C.   Each option granted under this Article Two that is replaced by an
equivalent option in a Corporate Transaction, or that otherwise continues in
effect, shall be appropriately adjusted, immediately after the Corporate
Transaction, to apply to the number and class of securities that would have been
issued in the Corporate Transaction to an actual holder of the number of shares
of Common Stock that were subject to the option immediately before the Corporate
Transaction. Appropriate adjustment shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under this Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.

          D.   The grant of options under this Article Two shall not affect the
right of the Corporation to adjust, reclassify, reorganize, or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate,
or sell or transfer all or any part of its business or assets.

     V.   CANCELLATION AND REGRANT OF OPTIONS

          Upon stockholder approval, the Plan Administrator may, with the
consent of the affected optionees, cancel any or all outstanding options granted
under this Article Two and grant in substitution new options covering the same
or different numbers of shares of Common Stock but having an option price per
share not less than the fair market value of the Common Stock on the new grant
date (or 110% of fair market value in the case of an Incentive Option granted to
a 10% Stockholder). (amended 5/16/03)

     VI.  STOCK APPRECIATION RIGHTS; HOSTILE TAKE-OVER; CHANGE IN CONTROL

          A.   As determined by the Plan Administrator in its sole discretion,
one or more optionees may be granted the right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to surrender all or part of
an unexercised option granted under this Article Two in exchange for a payment
by the Corporation of an amount equal to the excess of (i) the fair market value
(on the option surrender date) of the number of shares in which the optionee is
at the time vested under the surrendered option (or part thereof), over (ii) the
aggregate option price payable for those shares.

          B.   No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is approved, then the
payment to the optionee under this Section VI may be made in shares of Common
Stock valued at fair market value on the option surrender date, in cash, or
partly in shares and partly in cash, as the Plan Administrator determines in its
sole discretion.

          C.   If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights he or she had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time before the later of (i)
five (5) business days after receipt of the rejection notice, or (ii) the last
day on which the option is otherwise exercisable in accordance with its terms,
but in no event more than ten (10) years after the date of the option grant.

          D.   Each Officer of the Corporation subject to the short-swing profit
restrictions of the federal securities laws shall have the following limited
stock appreciation rights in tandem with each option received under this Article
Two. Upon the occurrence of a Hostile Take-Over (defined below), each option
with a limited stock appreciation right in effect for at least six (6) months
shall automatically be canceled and the optionee shall be entitled to a cash
payment by the Corporation in the amount of the excess of (i) the Take-Over
Price (defined below) of the shares of Common Stock subject to the canceled
option (whether or not the option is otherwise exercisable for such shares),
over (ii) the aggregate exercise price payable for such shares. The payment
shall be made within five (5) days after consummation of the Hostile Take-Over.
Neither the approval of the Plan Administrator nor the consent of the Board
shall be required in connection with such option cancellation and cash payment.

N.E.T 1993 Stock Option Plan            7      As Amended through April 16, 2002

<PAGE>

          E.   A "Hostile Take-Over" shall be deemed to occur if (i) any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing
more than 50% of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer that the Board
does not recommend that the Corporation's stockholders accept, and (ii) more
than 50% of the securities so acquired are accepted from holders other than
Officers and Directors of the Corporation subject to Section 16 of the Exchange
Act. The "Take-Over Price" per share shall be the greater of (a) the fair market
value per share on the date of cancellation, as determined pursuant to the
valuation provisions of Section II.A.4 of this Article Two, or (b) the highest
reported price per share paid in effecting such Hostile Take-Over. However, if
the canceled option is an Incentive Option, the Take-Over Price shall not exceed
the clause (a) price per share.

          F.   The Plan Administrator shall have full discretionary authority,
exercisable either in advance of, or at the time of, a Change in Control
(defined below), to provide for the automatic acceleration of options granted
under this Article Two upon the occurrence of the Change in Control. The Plan
Administrator shall also have full discretionary authority to condition any such
acceleration upon the subsequent termination of the optionee's service to the
Corporation (or a parent or subsidiary) within a specified period after the
Change in Control. The Plan Administrator hereby exercises such discretion to
accelerate vesting of all outstanding options held by Officers of the
Corporation whose employment is terminated in conjunction with, or within a year
of, a Change in Control or Corporate Transaction. Any option accelerated in
connection with the Change in Control shall remain fully exercisable until the
expiration of the option term. For all purposes of this Plan, a "Change in
Control" shall mean a change in control of the Corporation of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not the Corporation is then subject to such
reporting requirement, other than a Corporate Transaction; provided that,
without limitation, a Change in Control shall be deemed to have occurred if:

               1.   any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any syndicate or group
deemed to be a "person" under Section 14(d)(2) of the Exchange Act, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), directly or indirectly, of securities
of the Corporation representing 40% or more of the combined voting power of the
Corporation's then-outstanding securities entitled to vote in the election of
Directors of the Corporation, pursuant to a tender or exchange offer that the
Board does not recommend that the Corporation's stockholders accept; or

               2.   during any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board and any new members
of the Board, whose election by the Board or nomination for election by the
Corporation's stockholders was approved by a vote of at least three-quarters
(3/4) of the Directors then in office who either were Directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof.

          G.   The shares of Common Stock subject to any option surrendered or
canceled for an appreciation distribution pursuant to this Section VI shall not
be available for subsequent option grant under the Plan.

                                  ARTICLE THREE

                         AUTOMATIC OPTION GRANT PROGRAM
                         ------------------------------

     I.   ELIGIBILITY

          A.   ELIGIBLE OPTIONEES. The individuals eligible to receive automatic
option grants pursuant to this Article Three shall be limited to (i) Directors
who are first elected or appointed as non-employee Directors on

N.E.T 1993 Stock Option Plan            8      As Amended through April 16, 2002

<PAGE>

or after the Effective Date, whether through appointment by the Board or
election by the Corporation's stockholders, and (ii) Directors who continue to
serve as non-employee Directors at one or more annual stockholders meetings held
while this Automatic Grant Program remains in effect, commencing with the 1994
annual meeting.

          B.   LIMITATION. Except for the option grants to be made pursuant to
this Article Three (and any automatic grants made under the corresponding
provisions of the 1983 Plan), non-employee Directors shall not be eligible to
receive option grants or stock issuances under this Plan or any other stock plan
of the Corporation (or its parent or subsidiaries).

     II.  TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

          A.   GRANT DATES. Option grants will be made under this Article Three
on the dates specified below:

               1.   Each individual who first becomes a non-employee Director at
any time after April 16, 2002, whether through election at an annual stockholder
meeting or through appointment by the Board, shall automatically be granted upon
the terms and conditions of this Article Three, at the time of such initial
election or appointment, a non-statutory stock option to purchase the lesser of
(a) 12,000 shares of Common Stock, or (b) a number of shares of Common Stock
equal to 12,000 multiplied by a fraction, the numerator of which is the number
of partial or whole calendar months remaining between such election or
appointment and the next scheduled annual stockholder meeting at which such
Director's term will expire and the denominator of which is 36. Each individual
who first became a Non-employee director at any time after the Company's 2001
annual meeting of stockholders and before April 16, 2002 and who did not receive
an automatic option grant at the time of his or her appointment under this
Section II.A.1 shall, on April 16, 2002, automatically be granted upon the terms
and conditions of this Article Three a non-statutory stock option to purchase
the lesser of (a) 12,000 shares of Common Stock, or (b) a number of shares of
Common Stock equal to 12,000 multiplied by a fraction, the numerator of which is
the number of partial or whole calendar months remaining between such
non-employee Director's election or appointment and the next scheduled annual
stockholder meeting at which such Director's term will expire and the
denominator of which is 36.

               2.   Each non-employee Director who first becomes a member of an
active standing committee of the Board at any time after the Effective Date
shall automatically be granted, upon the terms and conditions of this Article
Three, at the time of such initial appointment, a non-statutory stock option to
purchase the lesser of (a) 4,000 shares of Common Stock, or (b) a number of
shares of Common Stock equal to 4,000 multiplied by a fraction, the numerator of
which is the number of partial or whole calendar months remaining between such
appointment and the next scheduled annual stockholder meeting and the
denominator of which is 12.

               3.   Each non-employee Director who first becomes chairman of an
active standing committee of the Board at any time after the Effective Date
shall automatically be granted upon the terms and conditions of this Article
Three, at the time of such initial appointment, a non-statutory stock option to
purchase the lesser of (a) 4,000 shares of Common Stock, or (b) a number of
shares of Common Stock equal to 4,000 multiplied by a fraction, the numerator of
which is the number of partial or whole calendar months remaining between such
appointment and the next scheduled annual stockholder meeting and the
denominator of which is 12.

               4.   On the date of each annual stockholder meeting held after
the Effective Date, beginning with the 1994 annual stockholder meeting, each
non-employee Director who is at the time standing for reelection as a
non-employee Director shall automatically be granted a non-statutory stock
option under this Article Three to purchase 12,000 shares of Common Stock.

               5.   On the date of each annual stockholder meeting held after
the Effective Date, beginning with the 1994 annual stockholder meeting, each
non-employee Director shall automatically be granted, whether or not he or she
is standing for re-election as a Director at that time, a non-statutory stock
option under this Article Three to purchase 4,000 shares of Common Stock for
each active standing committee on which he or she serves as a member, plus an
additional 4,000 shares for each committee on which he or she serves as
chairman.

N.E.T 1993 Stock Option Plan            9      As Amended through April 16, 2002

<PAGE>

                    The 12,000-share limitation on the initial and periodic
automatic option grants and the 4,000-share limitation on committee grants to be
made to each non-employee Director shall be subject to adjustment pursuant to
Section III.C of Article One. For purposes of this Article Three, a committee
shall be deemed to be an active standing committee if so designated by the Board
and if it has met or transacted business within the twelve (12) months preceding
the date of grant of an automatic option.

          B.   EXERCISE PRICE. The exercise price per share shall be equal to
100% of the fair market value per share of Common Stock on the automatic grant
date.

          C.   PAYMENT. The option price shall become immediately due upon
exercise of the option and shall be payable as provided in Section II.A of
Article Two.

          D.   OPTION TERM. Each option granted under this Article Three shall
have a maximum term of ten (10) years measured from the grant date.

          E.   EXERCISABILITY.

               1.   Each option granted under this Article Three will vest fully
on the automatic grant date. After vesting, each option granted will become
exercisable in a series of 36 equal monthly installments beginning one month
after the automatic grant date, provided the optionee remains a Director through
each such date.

               2.   Each option granted under this Article Three shall also
become fully exercisable upon the date of the optionee's cessation of Board
service by reason of death or retirement, provided the optionee has served on
the Board for at least three (3) years at the time of cessation of Board
service. A Director shall be deemed to have ceased Board service by reason of
retirement if he or she has attained the age of 65 at the time of the cessation.

               3.   Each option shall remain exercisable until the expiration or
sooner termination of the option term.

          F.   NON-TRANSFERABILITY. During the optionee's lifetime, an option
granted under this Article Three (together with the limited stock appreciation
right pertaining to the option) shall be exercisable only by the optionee and
shall not be assignable or transferable by the optionee other than by will or by
the laws of descent and distribution following his or her death.

          G.   EFFECT OF TERMINATION OF BOARD MEMBERSHIP.

               1.   If a Director ceases to be a Board member for any reason
(other than death) while holding an option granted under this Article Three, he
or she shall have three (3) months following the date of cessation of Board
membership in which to exercise the option for any or all of the shares of
Common Stock for which the option is exercisable at the time of the cessation.

               2.   If a Director dies while serving as a Board member or during
the three (3) months following his or her cessation of Board service, an option
granted under this Article Three may be exercised, for any or all of the shares
of Common Stock for which the option is exercisable at the time of cessation of
Board membership, by the personal representative of his or her estate or by the
person(s) to whom the option is transferred pursuant to the Director's will or
in accordance with the laws of descent and distribution. Any such exercise must,
however, occur within twelve (12) months after the date of the Director's death.

               3.   In no event shall any option granted under this Article
Three remain exercisable after the specified expiration date of its ten
(10)-year term. Upon the expiration of the applicable exercise period in
accordance with subparagraphs 1 and 2 above or (if earlier) upon the expiration
of the ten (10)-year option term, the option shall terminate and cease to be
exercisable.

N.E.T 1993 Stock Option Plan           10      As Amended through April 16, 2002

<PAGE>

          H.   STOCKHOLDER RIGHTS. The holder of an option granted under this
Article Three shall have no stockholder rights with respect to any option shares
until he or she has exercised the option and paid (or made arrangement
satisfactory to the Plan Administrator to pay) the exercise price for the
purchased shares.

          I.   REMAINING TERMS. The remaining terms and conditions of each
option grant under this Article Three shall be as set forth in the form of
Director Automatic Grant Agreement attached as Exhibit A to this Plan.

     III. CORPORATE TRANSACTION; CHANGE IN CONTROL; HOSTILE TAKE-OVER

          A.   Each option granted under this Article Three that is outstanding
at the time of a Corporate Transaction or a Change in Control shall, immediately
before the specified Effective Date for the Corporation Transaction or Change in
Control, become fully exercisable with respect to the total number of shares of
Common Stock then subject to the option. Upon the consummation of the
Corporation transaction, all options granted under this Article Three shall
terminate.

          B.   Upon the occurrence of a Hostile Take-Over, each option that has
been outstanding under this Article Three for at least six (6) months shall
automatically be canceled and the optionee shall be entitled to a cash payment
by the Corporation calculated in accordance with Section VI.D. of Article Two
and payable at the time and manner set forth in Section VI.E of Article Two.
Neither the approval of the Plan Administrator nor the consent of the Board
shall be required in connection with such option cancellation and cash payment.

          C.   The automatic option grants under this Article Three shall in no
way affect the right of the Corporation to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

          D.   The shares of Common Stock subject to each option canceled in
connection with a Hostile Take-Over shall not be available for subsequent
issuance under this Plan.

                                  ARTICLE FOUR

                             RESTRICTED STOCK AWARDS
                             -----------------------

     I.   DETERMINATION OF ELIGIBILITY AND AMOUNT OF AWARDS

          The persons who shall be eligible to receive restricted stock awards
under this Article Four shall be such key employees of the Corporation or its
subsidiaries, including officers and directors, as the Plan Administrator shall
select from time to time. In no event, however, shall any employee owning stock
possessing more than ten percent (10%) of the total combined voting power or
value of all classes of stock of the Corporation or any subsidiary be eligible
to receive shares under this Article Four.

     II.  RESTRICTED STOCK

          A.   Restricted stock awards shall be made from time to time under the
Plan in recognition of the services rendered to the Corporation or its
subsidiaries by the selected participants. All such restricted stock awards
shall provide for the issuance, either as soon as practicable following the time
of the award or at a later date specified in the agreement evidencing the award,
of shares of the Corporation's Common Stock.

N.E.T 1993 Stock Option Plan           11      As Amended through April 16, 2002

<PAGE>

          B.   Each recipient of a restricted stock award under the Plan shall,
at the time the shares of Common Stock are issued in payment of such award, pay
to the Corporation, in cash or cash equivalent, an amount equal to the aggregate
par value of the issued shares.

     III. VESTING SCHEDULE

          A.   The interest of an employee in the shares of Common Stock issued
to such employee under this Article Four may, in the discretion of the Plan
Administrator, be fully and immediately vested upon issuance or may vest in one
or more installments in accordance with the vesting provisions of Section III.C.
Except as otherwise provided in Section III.F., the employee may not transfer
any of the Common Stock in which he or she does not have a vested interest.
Accordingly, all unvested shares issued to an employee under the Plan shall bear
the restrictive legend specified in Section III.D.1., until such legend is
removed in accordance with Section III.D.2. The employee, however, shall have
all the rights of a stockholder with respect to the shares of Common Stock
issued to him or her hereunder, whether or not his or her interest in such
shares is vested. Accordingly, the employee shall have the right to vote such
shares and to receive any cash dividend paid on such shares. Any new, additional
or different shares of stock or other property (including money paid other than
as a cash dividend) which the holder of unvested Common Stock may have the right
to receive by reason of a stock dividend, stock split or reclassification of
Common Stock or by reason of a merger, consolidation, liquidation or other
change in the capital structure of the Corporation shall be issued to the
employee, subject to (i) the same vesting schedule applicable to his or her
unvested Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.

          B.   In the event an employee should, while his or her interest in the
Common Stock remains unvested, (i) attempt to transfer (other than by way of a
permissible gift under Section III.F.) any of the unvested Common Stock or any
interest therein or (ii) cease employment with the Corporation for any reason
whatsoever, then the certificates evidencing the employee's unvested Common
Stock (other than shares which become vested by reason of, or upon, such
termination in accordance with the agreement evidencing the award) shall be
immediately surrendered to the Corporation for cancellation and the employee
shall no longer have any stockholder rights with respect to the canceled Common
Stock. In exchange for the surrendered certificates the employee shall receive a
cash payment from the Corporation equal to the aggregate par value of the
canceled shares. For purposes of this Article Four, the employee shall not be
deemed to have ceased employment with the Corporation for so long as the
employee remains in the active employ of the Corporation or one or more of its
subsidiaries.

          C.   VESTING; CORPORATE TRANSACTION; CHANGE IN CONTROL.

               1.   Any shares of Common Stock issued under this Article Four
that are not vested at the time of such issuance shall vest in one or more
installments thereafter. The elements of the vesting schedule applicable to the
issued shares, including the number of installments in which the shares are to
vest, the interval or intervals (if any) which are to lapse between installments
and the effect which death, disability or other event designated by the Plan
Administrator is to have upon the vesting schedule, shall be determined by the
Plan Administrator and shall be specified in the stock restriction agreement
executed by the employee at the time the shares are issued.

               2.   Should the Corporation's Common Stock be converted into cash
or other shares or securities of the Corporation or any other corporation as a
result of a Corporate Transaction (as defined in Article Two, Section IV.A.),
then the shares of Common Stock outstanding at such time under this Article Four
shall likewise be converted into cash or such other shares or securities, and
such assets may, in the discretion of the Plan Administrator, be held in escrow
by the Corporation or its successor and shall thereafter be distributed to the
employees from time to time as their interests therein vest in accordance with
the same vesting schedules which are in effect for their shares of Common Stock
immediately prior to such conversion. However, the interest each employee has in
the shares of Common Stock issued to him or her under this Article Four
(together with any cash or other shares or securities into which such Common
Stock is to be converted) shall become vested immediately prior to the specified
effective date for the Corporate Transaction if the Company's rights to
repurchase or cancel unvested shares under this Article Four (for a payment
equal to the par value of the shares) are not to be assigned to the successor
corporation or parent thereof in connection with the Corporate Transaction. If
the Corporation is to be

N.E.T 1993 Stock Option Plan           12      As Amended through April 16, 2002

<PAGE>

acquired by a reverse merger in which it is to remain the surviving entity, then
no accelerated vesting under the Plan shall occur, unless the Plan is to be
terminated in connection with such reverse merger.

               3.   In the event of a Change in Control (as defined in Article
Two, Section VI.F.), then the Plan Administrator shall have full power and
authority (exercisable before or after the Change in Control) to accelerate the
vesting of the interests of one or more of the employees in the shares of Common
Stock issued to him or her under this Article Four.

               4.   In the event of a Corporate Transaction, then any
outstanding obligations or commitments to issue Common Stock pursuant to this
Article Four shall be assumed by the successor corporation or parent thereof.

          D.   RESTRICTIVE LEGENDS.

               1.   Each certificate representing unvested shares of Common
Stock (or other securities) issued under this Article Four shall bear the
following restrictive legend:

     "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
     RESTRICTIONS ON TRANSFER AND TO CANCELLATION IN ACCORDANCE WITH THE TERMS
     AND CONDITIONS OF ARTICLE FOUR OF THE CORPORATION'S 1993 STOCK OPTION PLAN
     AND THE STOCK RESTRICTION AGREEMENT EXECUTED THEREUNDER BY THE CORPORATION
     AND THE REGISTERED HOLDER (OR HIS PREDECESSOR IN INTEREST). A COPY OF THE
     1993 STOCK OPTION PLAN AND STOCK RESTRICTION AGREEMENT MAY BE OBTAINED FROM
     THE SECRETARY OF THE CORPORATION."

               2.   As the interest of the employee vests in the shares of
Common Stock issued under this Article Four, the Corporation shall, upon the
employee's delivery of the certificate for such shares, issue a new certificate
for the vested shares without the restrictive legend of Section III.D.1. and a
second certificate for any remaining unvested shares with the Section III.D.1.
legend endorsed thereon. If any unvested shares of the employee are surrendered
and canceled under Section III.C.3., then the Corporation shall at the time the
cancellation is effected deliver a new certificate, without the restrictive
legend of Section III.D.1., representing the number of shares (if any) in which
the employee is at such time vested and which are accordingly no longer subject
to cancellation by the Corporation.

          E.   The Plan Administrator may in its discretion waive, in whole or
in part, any cancellation of unvested Common Stock (or other assets) to which an
employee would otherwise be subject under Section III.B. Such a waiver shall
result in the immediate vesting of the employee's interest in the shares of
Common Stock (or other assets) as to which the waiver applies.

          F.   As used in this Section III, the term "transfer" shall include
(without limitation) any sale, pledge, encumbrance, gift or other disposition of
the shares of Common Stock issued under Article Four. However, the employee
shall have the right to make a gift of any or all of his unvested shares under
Article Four to his spouse, parents or children or to a trust established for
such spouse, parents or children, provided the recipient of the gifted shares
delivers to the Corporation a written agreement to be bound by all the
provisions of the Plan and the stock restriction agreement executed by the
employee with respect to such shares.

N.E.T 1993 Stock Option Plan           13      As Amended through April 16, 2002

<PAGE>

                                  ARTICLE FIVE

                                  MISCELLANEOUS
                                  -------------

     I.   AMENDMENT OF PLAN

          The Board shall have complete and exclusive authority to amend or
modify this Plan in any or all respects whatsoever. However, no such amendment
or modification shall, without the consent of the option or restricted stock
holders, adversely affect rights and obligations with respect to options or
awards at the time outstanding under the Plan. No amendment shall require
stockholder approval except when (i) required by Section 422 of the Internal
Revenue Code for incentive stock options; (ii) required by other applicable
laws, regulations or rules (including rules of the New York Stock Exchange); or
(iii) otherwise deemed advisable by the Board.

     II.  TAX WITHHOLDING

          A.   The Corporation's obligation to deliver shares or cash upon
exercise of options, stock appreciation rights or restricted stock awards,
granted under this Plan shall be subject to the satisfaction of all federal,
state, and local income and employment tax withholding requirements.

          B.   The Plan Administrator may, in its discretion and upon such terms
and conditions as it deems appropriate, provide any or all optionees under
Article Two with the election to have the Corporation withhold, from the shares
of Common Stock otherwise issuable upon the exercise of options, one or more
shares with an aggregate fair market value equal to a designated percentage (any
whole multiple of 5% specified by the optionee) of the federal and state income
taxes ("Taxes") incurred in connection with the acquisition of such shares. In
lieu of direct withholding, optionees may be granted the right to deliver shares
of Common Stock to the Corporation in satisfaction of such Taxes. The withheld
or delivered shares shall be valued at the fair market value on the applicable
determination date for such Taxes.

     III. TERM OF PLAN

          A.   This Plan shall terminate upon the earlier of (i) August 10,
2008, or (ii) the date on which all shares available for issuance under this
Plan have been issued pursuant to restricted stock awards or the exercise of
options granted under this Plan and (to the extent outstanding on the Effective
Date) the 1983 Plan. If the date of termination is determined under clause (i)
above, then no options or awards outstanding on such date shall be affected by
the termination of this Plan. (amended 5/16/03)

          B.   Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
this Plan, provided each option granted is not to become exercisable, in whole
or in part, at any time before stockholder approval of an amendment authorizing
a sufficient increase in the number of shares issuable under the Plan.

     IV.  USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
pursuant to options or restricted stock awards granted under this Plan may be
used for general corporate purposes.

     V.   REGULATORY APPROVALS

          A.   The implementation of this Plan, the granting of any option
hereunder, and the issuance of stock for any restricted stock award or upon the
exercise or surrender of any such option shall be subject to the procurement by
the Corporation of all approvals and permits required by regulatory authorities
having jurisdiction over this Plan, the options granted under it, and the stock
issued pursuant to it.

N.E.T 1993 Stock Option Plan           14      As Amended through April 16, 2002

<PAGE>

          B.   No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of federal and state securities laws, including the
filing and effectiveness of a Form S-8 registration statement for the shares of
Common Stock issuable under this Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.

     VI.  NO EMPLOYMENT/SERVICE RIGHTS

                  Neither the action of the Corporation in establishing this
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan, shall be construed so as to grant any individual the
right to remain in the employ or service of the Corporation (or any parent or
subsidiary corporation) for any period, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.

     VII. MISCELLANEOUS PROVISIONS

          A.   Except as otherwise provided in this Plan, the right to acquire
Common Stock or other assets under this Plan may not be assigned, encumbered, or
otherwise transferred by any optionee.

          B.   The provisions of this Plan shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and
performed in that State.

          C.   The provisions of this Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, and the optionees,
the legal representatives of their respective estates, their respective heirs or
legatees, and their permitted assignees.

                                       o0o

N.E.T 1993 Stock Option Plan           15      As Amended through April 16, 2002

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]