<PAGE>
 
                                  EXHIBIT 10.23


                                   Page 175
<PAGE>
 
                THIS AGREEMENT made the 1st day of October, 1996


BETWEEN:

                         CROSSKEYS SYSTEMS CORPORATION,

                                          (Hereinafter called the "Sublandlord")

                                                               OF THE FIRST PART


AND:

                         NEWBRIDGE NETWORKS CORPORATION

                                            (Hereinafter called the "Subtenant")

                                                              OF THE SECOND PART

AND:

                        KANATA RESEARCH PARK CORPORATION

                                             (Hereinafter called the "Landlord")

                                                               OF THE THIRD PART



                                    SUBLEASE


         WHEREAS by written Lease dated the 1st day of May, 1996 (the
"Headlease"), Kanata Research Park Corporation leased to the Sublandlord, all
those premises comprising all of the building known municipally as 350 Terry Fox
Drive, (the "Building") in the City of Kanata as more particularly described in
the Headlease (the "Leased Premises").

         AND WHEREAS the Subtenant has agreed to sublet a portion of the Leased
Premises comprising twenty thousand and seven hundred and eighteen (20,718)
usable [twenty-two thousand one hundred and forty-nine (22,149) rentable] square
feet of space on the third (3rd) floor of the Building as shown on the floor
plan attached hereto as Schedule "A" (the Sub-leased Premises") and the
Sublandlord has agreed to grant a sublease (the "Sublease") of the Sub-leased
Premises upon the following terms and conditions.

         NOW THEREFORE in consideration of the rents, covenants and conditions
herein reserved and contained, the parties agree as follows:

                                   Page 176
<PAGE>
 
1.   (a)     The Sublandlord hereby subleases the Sub-leased Premises
             to the Subtenant for a term of one (1) year commencing on the
             1st day of October, 1996 and ending on the 30th day of
             September, 1997, unless earlier terminated in accordance with
             the terms hereof.

             (b)  The Subtenant shall pay to the Sublandlord as rent for the
             Sub-leased Premises, and for the non-exclusive use of the
             common areas on the floor of the Building on which the
             Sub-leased Premises is located (which common area allocation
             is six point nine-one (6.91%) percent ), shall be as follows:

<TABLE> 
<CAPTION> 
                        Rental Rate Per Sq.          For Sub-leased           Common           Total Per 
                        ------------------           --------------           ------           ---------
       Term               Ft. Per Annum                Premises                Area              Annum
       ----               -------------                --------                ----              -----
     <S>                   <C>                       <C>                    <C>            <C> 
         1                   $11.25                    $233,077.50          $16,098.75        $249,176.25
</TABLE> 

                  "Basic Rent" plus Goods and Services Tax, payable in advance
             on the first day of each calendar month during the term of the
             Sublease. The Subtenant shall pay the Basic Rent.

2.   In addition the Subtenant covenants and agrees to pay to the Sublandlord
     all Occupancy Costs and Other Costs as defined in the Headlease on a
     proportionate share basis.

3.   The Subtenant's proportionate share shall be that fraction the numerator of
     which is the usable area of the Sub-leased Premises and the denominator of
     which shall be the usable area of the Building expressed as a percentage
     ("Proportionate Share"). Calculated in accordance with the foregoing the
     Subtenants Proportionate Share is twenty-four point zero eight (24.08%)
     percent.

4.   Until otherwise notified by the Sublandlord the Subtenant shall make all of
     its rent payments directly to the Headlandlord in the same manner and
     pursuant to the same covenants and obligations as set out in the Headlease,
     however, such direct payment shall in no way derogate from the
     Sublandlord's covenants and obligations under the Lease.

5.   The Subtenant covenants with the Sublandlord as follows:

     (a)     To pay rent as aforesaid.

     (b)     To use the Sub-leased Premises only for offices only.

     (c)     The Subtenant agrees that this Sublease shall be deemed to contain
             all the provisions of the Lease except those which are inconsistent
             with the provisions of this Sublease as though they were set forth
             and contained in this Sublease and all references to "Landlord" and
             "Tenant" shall read, "Sublandlord" and "Subtenant".

                                   Page 177
<PAGE>
 
     (d)     The Subtenant covenants and agrees with the Sublandlord that it
             shall be bound by and shall fulfil all of the obligations of the
             Sublandlord under the Lease as if it had been named "Tenant"
             thereunder, save and except for the amounts of rent payable which
             shall be as set out herein.

     (e)     In its use of the Sub-leased Premises, wherever under the Headlease
             a consent of the Landlord would be required, to obtain the consent
             of the Sublandlord, and where appropriate, the Landlord.

     (f)     To indemnify and save harmless the Sublandlord from any and all
             claims made against the Sublandlord by the Landlord or others as a
             result of a contravention by the Subtenant of his covenants herein
             contained.

     (g)     Not to assign the Sublease or sublet any part of the Sub-leased
             Premises without the prior written consent of the Sublandlord and
             Landlord, such consent to be subject to the same terms and
             conditions as contained in the Headlease.

     (h)     The Subtenant agrees to accept the Sub-leased Premises in their
             current condition.

     (i)     The Subtenant covenants that it has received and reviewed the 
             Headlease.

6.   The Sublandlord covenants and agrees with the Subtenant:

     (a)     To pay the Annual Rent and the Occupancy Costs and Other Costs
             reserved by the Headlease and to perform and observe the covenants
             on the Sublandlord's part under the Headlease, so far as such
             covenants are not required to be performed and preserved by the
             Subtenant, and at all times to keep the Subtenant indemnified
             against all actions, expenses, claims and demands on account of the
             non-performance by the Sublandlord of its obligations.

     (b)     For quiet enjoyment.

     (c)     That it will not amend or surrender the Headlease during the 
             term of this Sublease.

7.   The Landlord hereby consents to this Sublease, it being understood that the
     Landlord in granting this consent does not thereby acknowledge or approve
     of or agree to be bound by any of the terms of the Sublease as between the
     Subtenant and the Sublandlord save for the direct payment of the rent by
     the Subtenant to it. It is understood and agreed by the parties that
     notwithstanding such direct payment the Sublandlord shall remain liable for
     all payments of rent as set out in the Headlease directly to the Landlord
     on the dates specified therein it being the responsibility of the
     Sublandlord to ensure that the Subtenant makes all payments. The Landlord
     shall be under no obligation to notify the Sublandlord that the Subtenant
     is in default of its payment(s) and any such default shall be 

                                   Page 178
<PAGE>
 
     deemed to be a default of the Sublandlord pursuant to the provisions of the
     Headlease.

8.   Time shall be of the essence of this Sublease.

9.   This Sublease shall be deemed to have been made and shall be construed in
     accordance with the laws of the Province of Ontario.

10.  The Sublandlord and the Subtenant agree that all of the provisions of the
     Sublease are to be construed as covenants and agreements as though the
     words importing such covenants and agreements were used in each separate
     paragraph hereof. Should any provision or provisions of this Sublease be
     illegal or not enforceable, it or they shall be considered separate and
     severable from the Sublease and its remaining provisions shall remain in
     force and be binding upon the parties hereto as though the said provision
     had never been included.

11.  The Sublandlord and Subtenant agree that there are no covenants,
     representation, agreements, warranties or conditions in any way relating to
     the subject matter of this Sublet whether express or implies, collateral or
     otherwise, except those set forth in this Sublease.

12.  The Sublandlord and the Subtenant agree that this Sublease constitutes
     the entire agreement between the Sublandlord and executed by the Subtenant
     and the Sublandlord.

                                   Page 179
<PAGE>
 
         THIS Sublease shall enure to the benefit of and be binding upon the
Sublandlord and the Subtenant, their respective heirs, executors,
administrators, successors and permitted assigns.

         IN WITNESS WHEREOF the parties hereto have hereunto affixed their
corporate seals duly attested to by the hands of their proper signing officers
authorised in that behalf.


SIGNED, SEALED AND DELIVERED  )
    in the presence of:       ) SUBLANDLORD:
                              ) CROSSKEYS SYSTEMS
                              ) CORPORATION
                              )
                              )
                              )
                              ) Per: /s/ John Selwyn
                                    -----------------------------
                              ) Name:     John Selwyn            c/s
                              ) Title:    Chief Executive Officer
                              )
                              )
                              ) SUBTENANT:
                              ) NEWBRIDGE NETWORKS
                              ) CORPORATION
                              )
                              ) Per: /s/ Kenneth B. Wigglesworth
                                    -----------------------------
                              ) Name:    Kenneth B. Wigglesworth  c/s
                              ) Title:    Vice President, Finance,
                                          Chief Financial Officer
                              )
                              )
                              )
                              ) LANDLORD:
                              ) KANATA RESEARCH PARK
                              )  CORPORATION
                              )
                              )
                              ) Per: /s/ Bronwen A. Heins
                                    -----------------------------
                              ) Name:    Bronwen A. Heins         c/s
                              ) Title:   Corporate Secretary
                              )

                                   Page 180
<PAGE>
 
                                  SCHEDULE "A"
                                   Floor Plan
                                   ----------

                       DATED the 1st day of October, 1996.

================================================================================



BETWEEN:

                           CROSSKEYS SYSTEMS CORPORATION

                                                               OF THE FIRST PART


AND:


                           NEWBRIDGE NETWORKS CORPORATION

                                                              OF THE SECOND PART




================================================================================

                                    SUBLEASE

================================================================================






Prepared by:               BRONWEN A. HEINS
Edit Date:
Disk Reference:   X-KEYS\SUBLEASE.AGT \NEWBRIDGE

                                   Page 181