EXHIBIT 10.36

**BUSINESS LOAN AGREEMENT**

This Agreement dated as of November 29, 2004, is by and between Bank of America N.A. (the “Bank”), and Network Equipment Technologies, Inc., a Delaware corporation (the “Borrower”).

1.  LINE OF CREDIT AMOUNT AND TERMS

1.1

Line of Credit Amount.

(a)  During the availability period described below, the Bank will provide a line of credit to the Borrower.  The amount of the line of credit (the “Commitment”) is Seven Million Dollars ($7,000,000).

(b)  This is a revolving line of credit providing for cash advances and letters of credit.  During the availability period, the Borrower may repay principal amounts and reborrow them.

(c)   The Borrower agrees not to permit the outstanding principal balance of advances under the line of credit plus the outstanding amounts of any letters of credit, including amounts drawn on letters of credit and not yet reimbursed, to exceed the Commitment.

1.2  

Availability Period.  The line of credit is available between the date of this Agreement and October 30, 2005, or such earlier date as the availability may terminate as provided in this Agreement (the “Expiration Date”). 

1.3  

Interest Rate.

(a)  Prior to any event of default under this Agreement and subject to Section 4.9 of this Agreement, the interest rate is a rate per year equal to (i) the Bank's Prime Rate for all non-cash secured advances, and (ii) the Bank's Prime Rate minus one (1.0) percentage point for all cash secured advances.

(b)  The Prime Rate is the rate of interest publicly announced from time to time by the Bank as its Prime Rate.  The Prime Rate is set by the Bank based on various factors, including the Bank’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans.  The Bank may price loans to its customers at, above, or below the Prime Rate.  Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank’s Prime Rate.

1.4  

Repayment Terms.

(a)  The Borrower will pay interest on November 30, 2004, and then monthly thereafter until payment in full of any principal outstanding under this line of credit.

(b)  The Borrower will repay in full all principal and any unpaid interest or other charges outstanding under this line of credit no later than the Expiration Date.  

1.5  

Letters of Credit.

(a)  This line of credit may be used for financing:

(i)  standby letters of credit with a maximum maturity of 365 days but not to extend beyond the Expiration Date; provided, however, that the maturity date of any standby letters of credit shall be extended up to 365 days beyond the Expiration Date in the event such standby letters of credit are secured by cash.   

(ii)  The amount of letters of credit outstanding at any one time (including amounts drawn on letters of credit and not yet reimbursed) may not exceed Seven Million Dollars ($7,000,000).

(iii)  The following letters of credit are outstanding from the Bank for the account of the Borrower:

Letter of Credit Number

Amount

#3059594

$1,569,493.00

#3060936

$525,000.00

As of the date of this Agreement, these letters of credit shall be deemed to be outstanding under this Agreement, and shall be subject to all the terms and conditions stated in this Agreement.

(b)  The Borrower agrees:

(i)  any sum drawn under a letter of credit may, at the option of the Bank, be added to the principal amount outstanding under this Agreement.  The amount will bear interest and be due as described elsewhere in this Agreement.

(ii)  if there is an event of default under this Agreement upon demand, to immediately prepay and make the Bank whole for any outstanding letters of credit.

(iii)  the issuance of any letter of credit and any amendment to a letter of credit is subject to the Bank’s written approval and must be in form and content satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank.

(iv)  to sign the Bank’s standard form Application and Agreement for Standby Letter of Credit.

(v)  to pay any issuance and/or other standard fees that the Bank notifies the Borrower will be charged for issuing and processing letters of credit for the Borrower.

(vi)  to allow the Bank to automatically charge its checking account for applicable fees, discounts, and other charges.

(vii)  to, prior to any event of default under this Agreement and subject to Section 4.9 of this Agreement, pay the Bank a non-refundable fee equal to 2% per annum of the outstanding undrawn amount of each non-cash secured standby letter of credit, and a non-refundable fee equal to 1% per annum of the outstanding undrawn amount of each cash secured standby letter of credit, each calculated on the basis of the face amount outstanding on the day the fee is calculated.

2.  FEES AND EXPENSES

2.1 

Fees.

(a)  Loan Fee.  The Borrower agrees to pay a loan fee in an amount equal to one-fifth of one percent (0.20%) of the Commitment.  This fee is due on the date of execution of this Agreement.