EXHIBIT 10.35

                         SECOND MODIFICATION AGREEMENT

         This Second Modification  Agreement ("Second  Modification") is made as
of  November  17,  1997,  by and  among  NETWORK  PERIPHERALS  INC.  a  Delaware
corporation  ("Borrower"),  having its chief  executive  office at 1371 McCarthy
Boulevard, Milpitas, California 95035, SUMITOMO BANK OF CALIFORNIA, a California
banking  corporation  ("Sumitomo"),  having  its head  office at 320  California
Street,  San  Francisco,  California,  and each other lender which may hereafter
execute and deliver an  instrument of  assignment  with respect to the Agreement
(defined below)  (individually,  the "Bank," and collectively,  the "Banks") and
Sumitomo, as Agent.

                                    RECITALS

         A. Pursuant to a Credit Agreement,  dated October 2, 1996,  executed by
Borrower  and  Sumitomo  ("Agreement"),  Sumitomo  extended a revolving  line of
credit to Borrower up to $10,000,000.00  ("Line of Credit") with a $5,000,000.00
letter of credit subline. Borrower's obligation to repay advances on the Line of
Credit was evidenced by a Promissory Note, dated the same date as the Agreement,
executed by Borrower,  in the principal amount of  $10,000,000.00  ("Note").  To
secure  the  indebtedness  of  Borrower  under the  Credit  Agreement  and Note,
Borrower executed a Security  Agreement,  dated as of October 2, 1996 ("Security
Agreement").

         B. Pursuant to a Modification  Agreement  ("Modification") dated August
29, 1997, by and among  Borrower and Sumitomo,  on behalf of itself and as Agent
for the Banks, the Agreement was modified on the terms contained therein.

         C. As used  herein,  the term  "Loan  Documents"  means  all  documents
described in these Recitals and those documents  executed pursuant thereto or in
conjunction therewith.

         D.  Borrower  seeks a further  modification  of the  Agreement and Loan
Documents and Sumitomo is agreeable on the terms set forth below.

                                     TERMS

         NOW, THEREFORE, Borrower and Sumitomo agree as follows:

         1.  Capitalized  Terms.  Unless otherwise  defined herein,  capitalized
terms shall have the meanings set forth in the Agreement.

         2. Adoption of Recitals.  Borrower hereby  represents and warrants that
each of the Recitals set forth above are true, accurate and complete.


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         3.  Acknowledgement  of Debt.  Borrower  acknowledges that there are no
claims,  demands,  offsets or defenses at law or in equity that would  defeat or
diminish Sumitomo's right to collect the indebtedness  evidenced by the Note and
Agreement  and to proceed  to enforce  the  rights  and  remedies  available  to
Sumitomo as provided in the Loan Documents or by law.

         4.  Modification  of Loan  Documents.  The Loan  Documents  are  hereby
supplemented,  amended and modified as follows,  which terms shall supersede and
prevail over any existing and conflicting provisions thereof:

                  (a)  The  following  new  Section   3.2(f)  is  added  to  the
Agreement:

                           (f)  in  the  event   Borrower  has  not  reported  a
profitable  fiscal quarter on a consolidated  basis to Sumitomo  commencing with
the fiscal  quarter  ending  September  30, 1997,  Borrower  shall  deposit with
Sumitomo cash collateral,  acceptable to Sumitomo in its sole discretion,  equal
to or  greater  than the  amount of the Loan or Letter  of Credit  requested  by
Borrower.  Such cash collateral shall remain on deposit with Sumitomo until such
time as Borrower reports a profitable fiscal quarter  on a consolidated basis to
Sumitomo.

                  (b) Section  5.7(b) of the  Agreement  is deleted and replaced
with the following:

                           (b)  Profitability.  Except  for  the  annual  period
ending  December 31, 1997,  Borrower  shall be profitable on an annual basis and
shall  not have a net loss on a  consolidated  basis in any  fiscal  quarter  as
measured  quarterly for that fiscal  quarter;  provided,  however,  that for the
fiscal quarter  ending  December  31, 1997,  Borrower  may  have a net loss on a
consolidated basis of not more than  $2,000,000.00;  that for the fiscal quarter
ending March 31, 1998,  Borrower may have a net loss on a consolidated  basis of
not more than  $1,250,000.00;  and that for the fiscal  quarter  ending June 30,
1998,  Borrower  may have a net loss on a  consolidated  basis of not more  than
$650,000.00.

                  (c) Section  5.7(d) of the  Agreement  is deleted and replaced
with the following:

                           (d) Consolidated  Tangible Net Worth.  Borrower shall
maintain Consolidated Tangible Net Worth of at learnt $35,000,000.O0.

                  (d)  The  Loan  Documents   which  recite  they  are  security
instruments  shall  secure,  in  addition  to  any  other   obligations  secured
thereby,  the payment and performance by Borrower of all  obligations  under the
Agreement,  the Note and the other Loan  Documents,  as  amended by this  Second
Modification, and any

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amendments,  modifications,  extensions  or  renewals  of  the  same  which  are
hereafter agreed to in writing by the parties.

         5.  Conditions  Precedent.  Sumitomo's  obligation  to extend credit to
Borrower  pursuant  to  this Second Modification  is  subject  to the  condition
precedent that Borrower  strictly  complies with the  requirement  that Borrower
deliver  to  Sumitomo,  in form and  substance  satisfactory  to  Sumitomo,  the
following  documents and other things, duly executed by Borrower or as specified
below:

                  (a) This Agreement.

                  (b) Such other evidence as Sumitomo may require,  to establish
the  consummation of the  transactions  contemplated  hereby,  the taking of all
proceedings  in connection  therewith and u compliance  with the  conditions set
forth in this Second Modification.

         6.  Representations and Warranties.  Except as previously  disclosed to
Sumitomo,  Borrower  hereby  represents  and warrants that no default,  Event of
Default,  breach or failure of condition has occurred or exists,  or would exist
with notice or lapse of time, or both, under any of the Loan Documents. Borrower
agrees that all  representations and warranties of Borrower in the Agreement and
the other Loan  Documents  are true and  correct  as of the date of this  Second
Modification, and shall survive the execution of this Second Modification.

         7. Governing Law. This Second Modification shall be construed, governed
and enforced in accordance with the laws of the State of California.

         8.  Interpretation.  No provision of this Second  Modification is to be
interpreted  for or against either  Borrower or Sumitomo  because that party, or
that party's representative, drafted such provision.

         9. Full Force and Effect.  Except as set forth herein,  all other terms
and  conditions  of the Loan  Documents  shall  remain in full force and effect,
including provisions on prepayment, late charges, default interest and attorneys
fees.

         10. Reaffirmation. Borrower hereby acknowledges, reaffirms and confirms
its obligations under the Loan Documents, as amended and modified by this Second
Modification.

         11.  Entire  Agreement.  This Second  Modification  (and all  documents
herein  mentioned)  and the Loan Documents  constitute the entire,  complete and
exclusive understanding between the parties regarding the Line of Credit and the
Collateral and may not be modified,  amended,  or terminated except by a written
agreement  signed  by  the  party  against  whom   enforcement  is  sought.   No
modification, change or supplement of the Loan Documents, this

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Second Modification or related agreements shall be binding on Sumitomo unless in
writing signed by a Corporate Officer and Manager of Sumitomo.  No waiver or any
event of default shall be construed to be a waiver, acquiescence,  or consent to
any preceding or subsequent event of default.

         12.  Documentation.  In  addition  to  the  instruments  and  documents
mentioned  or referred to herein,  Borrower  will,  at its own cost and expense,
supply Sumitomo with such other instruments,  documents, information and data as
are reasonably  necessary for the purposes hereof, all of which shall be in form
and content as reasonably required by Sumitomo.

         13. Counterparts.  This Second Modification may be executed in multiple
counterparts,  each of which shall be deemed an original  but all of which shall
constitute one and the same instrument.

         IN WITNESS WHEREOF,  the parties have executed this Second Modification
as of the day and year first above written.

SUMITOMO:

SUMITOMO BANK OF CALIFORNIA,
a California banking corporation

By: /s/ ARNE F. OLSON
----------------------------------
    ARNE F. OLSON,
    Vice President

AGENT:

SUMITOMO BANK OF CALIFORNIA,
a California banking corporation

By: /s/ ARNE F. OLSON
----------------------------------
    ARNE F. OLSON,
    Vice President

BORROWER:

NETWORK PERIPHERAL, INC.,
a Delaware corporation

By: /s/ ROBERT HERSH
----------------------------------
    ROBERT HERSH,
    Vice President and Chief Financial Officer

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