Exhibit 10.22

                                U.S. $10,000,000

                                CREDIT AGREEMENT


                           DATED AS OF OCTOBER 2, 1996


                              --------------------


                                 BY AND BETWEEN

                            NETWORK PERIPHERALS INC.

                                       AND

                      SUMITOMO BANK OF CALIFORNIA, AS AGENT


<PAGE>


                                CREDIT AGREEMENT


         THIS CREDIT  AGREEMENT  ("Agreement")  is made as of October 2, 1996 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 banking association  ("Sumitomo"),  having
its head office at 320 California  Street, San Francisco,  California,  and each
other lender whose name is set forth on the signature  pages hereof or which may
hereafter  execute and deliver an instrument of assignment  with respect to this
Agreement  (individually,   the  "Bank,"  and  collectively,  the  "Banks")  and
Sumitomo, as Agent.



I
                                   DEFINITIONS

       .1 Definitions.  All  capitalized  terms used in this Agreement or in the
Note or in any certificate,  report or other document made or delivered pursuant
to this Agreement  (unless  otherwise  defined  therein) shall have the meanings
assigned to them below:

       Acquisition.  Any transaction, or any series of related transactions,  by
which  any  Borrower  or any of its  Subsidiaries  directly  or  indirectly  (a)
acquires any ongoing business or all or  substantially  all of the assets of any
firm,  partnership,  joint  venture,  corporation or division  thereof,  whether
through  purchase  of  assets,  merger or  otherwise,  or (b)  acquires  (in one
transaction  or as the most  recent  transaction  in a series  of  transactions)
control of at least a majority  of the stock of a  corporation  having  ordinary
voting power for the  election of  directors,  or (c) acquires  control of fifty
percent  (50%) or more of the  ownership  interest in any  partnership  or joint
venture.

       Adjusted LIBOR Rate. Applicable to any Interest Period, shall mean a rate
per annum determined pursuant to the following formula:

                           ALR       =      [   LIBOR   ]*
                                            [ 1.00 - RP ]

                           ALR       =      Adjusted LIBOR Rate
                           LIBOR     =      London Interbank Offered Rate
                           RP        =      Reserve Percentage

                  *        The amount in brackets shall be rounded  upwards,  if
                           necessary, to the next higher 1/100 of 1%.


<PAGE>

Where: "London  Interbank  Offered Rate"  applicable  to any  LIBOR Loan for any
                  Interest Period means the rate of interest determined by Agent
                  to be the prevailing  rate per annum at which deposits in U.S.
                  dollars are offered to  Sumitomo by  first-class  banks in the
                  interbank eurodollar market in which it regularly participates
                  on or about 10:00 a.m. (California time) two (2) Business Days
                  before  the  first  day of such  Interest  Period in an amount
                  approximately  equal to the principal amount of the LIBOR Loan
                  to which such Interest Period is to apply for a period of time
                  approximately equal to such Interest Period.

                  "Reserve  Percentage"  applicable to any Interest Period means
                  the  maximum  reserve  percentage  (expressed  as a  decimal),
                  whether  or not  applicable  to any  Bank,  under  regulations
                  issued  from  time to time by the  Board of  Governors  of the
                  Federal  Reserve System for  determining  the maximum  reserve
                  requirement   (including,   without  limitation,   any  basic,
                  supplemental,  emergency or marginal reserve requirement) with
                  respect to "Eurocurrency  liabilities" as that term is defined
                  under such regulations.

The Adjusted LIBOR Rate shall be adjusted automatically as of the effective date
of any change in the Reserve Percentage.

         Affected Loans. Has the meaning set forth in Section 2.9(a).

         Agent. Sumitomo Bank of California, solely in its capacity as Agent.

         Agreement.  This Agreement,  as the same may be supplemented or amended
from time to time.

         Assignment  and  Acceptance.  Has the  meaning  set  forth  in  Section
9.10(a).

         Authorized Officer. Has the meaning set forth in Section 2.2(a).

         Bank or Banks.  Sumitomo  and each  other  lender  which may  hereafter
execute and deliver an instrument of assignment with respect to this Agreement.

         Borrower.  Network Peripherals Inc., a Delaware corporation.

         Business Day. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday,  Sunday or legal holiday on which Banks in
California  are open for the conduct of a substantial  part of their  commercial
banking  business;  and (ii) with respect to all notices and  determinations  in
connection with, and payments of principal and interest on, LIBOR Loans, any day
that is a  Business  Day  described  in  clause  (i) and  that is also a day for
trading by and between  banks in U.S.  dollar  deposits in the London  interbank
eurodollar market.

                                       2.
<PAGE>

         Capital  Expenditures.  Means all payments for  acquisitions or for any
fixed assets or improvements  or for  replacements,  substitutions  or additions
thereto,  that  have a useful  life of more  than one (1)  year  and  which  are
required to be  capitalized  under  generally  accepted  accounting  principals,
including Capital Lease Obligations.

         Capital Lease.  Means,  as to any person,  any lease of any property by
such  person as  lessee  that is, or should  be, in  accordance  with  Financial
Accounting  Standards Board Statement No. 13,  classified and accounted for as a
"capital  lease" on the balance sheet of such person prepared in accordance with
generally accepted accounting principals.

         Capital Lease Obligation. Means, with respect to any Capital Lease, the
amount of the  obligation of the lessee  thereunder  that,  in  accordance  with
generally  accepted  accounting  principals,  would appear on a balance sheet of
such lessee in respect of such Capital Lease or otherwise be disclosed in a note
to such balance sheet.

         Closing Date. Means the date at which each of the conditions precedent,
set forth in Section III to the making of the initial Loan hereunder, shall have
been duly fulfilled or satisfied by Borrower.

         Code. The Internal  Revenue Code of 1986 and the rules and  regulations
thereunder,  collectively,  as the same may from time to time be supplemented or
amended and remain in effect.

         Commitment.  The  amount  set  forth  next to the name of each  Bank on
Schedule 1 now or hereafter attached hereto (and as adjusted from time to time).

         Commitment Amount.  $10,000,000 in the aggregate, or any lesser amount,
including  zero,  resulting  from a  termination  or reduction of such amount in
accordance with Section 2.5 or Section 7.2.

         Consolidated Current Assets. At any date as of which the amount thereof
shall be  determined,  all amounts that should,  in  accordance  with  generally
accepted   accounting   principles,   be  included  as  current  assets  on  the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.

         Consolidated  Current  Liabilities.  At any date as of which the amount
thereof  shall be  determined,  all amounts  that  should,  in  accordance  with
generally accepted accounting principles,  be included as current liabilities on
the consolidated balance sheet of Borrower and its Subsidiaries as at such date,
plus, to the extent not already included therein, all Loans and all Indebtedness
that  are  payable  upon  demand  or  within  one  (1)  year  from  the  date of
determination thereof.

                                       3.

<PAGE>

         Consolidated  Tangible  Net  Worth.  At any date as of which the amount
thereof shall be determined,  the Consolidated  Total Assets of Borrower and its
Subsidiaries minus (i) the sum of any amounts attributable to (a) goodwill,  (b)
intangible items such as unamortized debt discount and expense,  patents,  trade
and service marks and names,  copyrights and research and development  expenses,
(c) all reserves not already deducted from assets,  (d) any write-up in the book
value of assets resulting from any revaluation thereof subsequent to the date of
the  financial  statements  referred to in Section 4.6, and (e) the value of any
minority  interests in Subsidiaries,  and (ii) Consolidated  Total  Liabilities,
plus (iii) the sum of  non-cash  charges  to the book value of assets  resulting
from  accounting  adjustments  made in  relation  to the  acquisition  of  NuCom
Systems,  Inc. and such future Acquisitions,  if any, as may be made pursuant to
the terms of this Agreement.

         Consolidated  Total Assets.  At any date as of which the amount thereof
shall be  determined,  all assets that  should,  in  accordance  with  generally
accepted accounting principles,  be classified as assets on the balance sheet of
Borrower and its Subsidiaries.

         Consolidated  Total  Liabilities.  At any date as of which  the  amount
thereof shall be determined,  all  obligations  that should,  in accordance with
generally accepted  accounting  principles,  be classified as liabilities on the
consolidated  balance sheet of Borrower and its  Subsidiaries,  including in any
event all Indebtedness.

         Contingent  Liabilities.  As applied to Borrower and its  Subsidiaries,
(i) any  Guarantee  of  Borrower  or its  Subsidiaries;  and (ii) any  direct or
indirect  obligation or liability,  contingent or otherwise,  of Borrower or its
Subsidiaries,  (a) in  respect  of any  letter of credit or  similar  instrument
issued for the account of Borrower or its  Subsidiaries  as to which such entity
is  otherwise  liable  for  reimbursement  of  drawings,  (b)  to  purchase  any
materials,  supplies  or other  property  from,  or to obtain the  services  of,
another person or entity if the relevant  contract or other related  document or
obligation requires that payment for such materials, supplies or other property,
or for such  services,  shall be made  regardless  of whether  delivery  of such
materials, supplies or other property is ever made or tendered, or such services
are ever  performed or tendered,  (c) with  respect to the  Indebtedness  of any
partnership  or joint  venture  as to which  such  entity is a partner  or joint
venturer,  or (d) in respect of any Rate  Contract  that is not entered  into in
connection with a bona fide hedging operation that provides  offsetting benefits
to Borrower or any of its Subsidiaries.  The amount of any Contingent Obligation
shall  (subject,  in the  case  of  Guarantees,  to  the  last  sentence  of the
definition of "Guarantee") be deemed equal to the maximum reasonably anticipated
liability in respect  thereof,  and shall,  with respect to item (ii)(d) of this
definition, be marked to market on a current basis.

         Controlled   Group.   All  trades  or   businesses   (whether   or  not
incorporated) under common control that, together with Borrower,  are treated as
a single  employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.

                                       4.

<PAGE>

         Current  Maturity of Long Term Debt. At any date as of which the amount
thereof  shall be  determined,  all amounts  that  should,  in  accordance  with
generally accepted accounting principles,  be included as the current portion of
all Loans and Indebtedness  that are payable after one (1) year from the date of
determination thereof.

         Default.  An Event of Default or event or condition  that,  but for the
requirement  that time elapse or notice be given, or both,  would  constitute an
Event of Default.

         Designated  Deposit  Account.  A demand deposit  account  maintained by
Borrower with Sumitomo.

         Disclosure  Letter.  That  letter of even  date  herewith  of  Borrower
disclosing  certain exceptions to the  representations  and warranties set forth
herein.

         Encumbrances. Has the meaning set forth in Section 6.4.

         ERISA.  The  Employee  Retirement  Income  Security Act of 1974 and the
rules and  regulations  thereunder,  collectively,  as the same may from time to
time be supplemented or amended and remain in effect.

         Environmental Laws. Any and all applicable foreign,  federal, state and
local  environmental,  health  or safety  statutes,  laws,  regulations,  rules,
ordinances,  policies and rules or common law (whether now existing or hereafter
enacted or promulgated),  of all governmental  agencies,  bureaus or departments
which  may  now or  hereafter  have  jurisdiction  over  Borrower  or any of its
Subsidiaries  and all  applicable  judicial and  administrative  and  regulatory
decrees,  judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal  property or human
health or the  environment,  including,  without  limitation,  all  requirements
pertaining to reporting, licensing, permitting,  investigation,  remediation and
removal of emissions,  discharges,  releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants whether solid, liquid
or gaseous in nature,  into the  environment  or  relating  to the  manufacture,
processing,  distribution,  use,  treatment,  storage,  disposal,  transport  or
handling  of  such  Hazardous  Materials,  chemical  substances,  pollutants  or
contaminants.

         Event of Default. Has the meaning set forth in Section 7.1.

         Federal Funds Effective Rate. For any day, a fluctuating  interest rate
per annum equal to the weighted average of the rates on overnight  federal funds
transactions  with  members of the Federal  Reserve  System  arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for  the  next  preceding  Business  Day)  by the  Federal  Reserve  Bank of San
Francisco,  or, if such rate is not so published  for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
Agent from three (3) federal funds brokers of  recognized  standing  selected by
Agent.

                                       5.

<PAGE>

         Financial  Institution.  Any (i) bank,  savings bank,  savings and loan
association or insurance  company,  (ii) pension plan or portfolio or investment
fund  managed  or  administered  by any bank,  savings  bank,  savings  and loan
association or insurance  company,  (iii) investment  company owned by any bank,
savings  bank,  savings  and loan  association  or  insurance  company,  or (iv)
investment banking company.

         Financing  Statements.  Means  the  UCC-1  financing  statements  to be
executed and delivered by Borrower pursuant to Section 3.1(b).

         Guarantees.   As  applied  to  Borrower  and  its   Subsidiaries,   all
guarantees,  endorsements or other contingent or surety obligations with respect
to obligations of others  whether or not reflected on the  consolidated  balance
sheet of Borrower and its  Subsidiaries,  including  any  obligation  to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.  The amount of any Guarantee shall be
deemed equal to the stated or determinable  amount of the primary  obligation in
respect of which such Guarantee is made or, if not stated or if  indeterminable,
the maximum reasonably anticipated liability in respect thereof.

         Hazardous Material. Any substance (i) the presence of which requires or
may hereafter  require  notification,  investigation  or  remediation  under any
Environmental  Law;  (ii) which is or becomes  defined as a  "hazardous  waste,"
"hazardous material" or "hazardous  substance" or "controlled  industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments   thereto   including,    without   limitation,   the   Comprehensive
Environmental  Response,  Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) and any  applicable  local  statutes  and the  regulations  promulgated
thereunder; (iii) which is toxic, explosive, corrosive,  flammable,  infectious,
radioactive,  carcinogenic,  mutagenic or otherwise  hazardous and is or becomes
regulated by any governmental authority, agency, department,  commission, board,
agency or instrumentality  of any foreign country,  the United States, any state
of the United States, or any political  subdivision thereof to the extent any of
the foregoing has or had jurisdiction over Borrower and any of its Subsidiaries;
or (iv)  without  limitation,  which  contains  gasoline,  diesel  fuel or other
petroleum products, asbestos or polychlorinated biphenyls ("PCB's").

         Indebtedness.  As applied to  Borrower  and its  Subsidiaries,  (i) all
obligations  for borrowed  money or other  extensions  of credit  whether or not
secured or unsecured,  absolute or contingent,  including,  without  limitation,
unmatured  reimbursement  obligations  with respect to letters of credit and all
obligations  representing  the deferred  purchase price of property,  other than
accounts  payable  arising  in  the  ordinary  course  of  business,   (ii)  all
obligations evidenced by bonds, notes,  debentures or other similar instruments,
(iii) all  obligations  secured by any mortgage,  pledge,  security  interest or
other lien on property owned or acquired by Borrower or

                                       6.

<PAGE>

any of its  Subsidiaries  whether or not the  obligations  secured thereby shall
have been assumed,  (iv) that portion of all  obligations  arising under capital
leases that is required to be capitalized on the  consolidated  balance sheet of
Borrower and its Subsidiaries, (v) all Guarantees, (vi) all net obligations with
respect to Rate Contracts,  and (vii) all  obligations  that are immediately due
and payable out of the proceeds of or production  from property now or hereafter
owned or acquired by Borrower or any of its Subsidiaries.

         Indemnified Person. Has the meaning set forth in Section 9.3(a).

         Indemnified Liabilities. Has the meaning set forth in Section 9.3(a).

         Intellectual   Property  Security  Agreements.   Means  the  grants  of
intellectual  property  to be entered  into as of the date  hereof by  Borrower,
substantially in the form of Exhibit C hereto.

         Interest Period. With respect to each LIBOR Loan, the period commencing
on the date of the making or  continuation  of or  conversion to such LIBOR Loan
and ending thirty (30), sixty (60) or ninety (90) days  thereafter,  as Borrower
may elect in the applicable Notice of Borrowing or Conversion; provided that:

                        (i) any Interest  Period (other than an Interest  Period
         determined  pursuant to clause (iii) below) that would otherwise end on
         a day  that  is not a  Business  Day  shall  be  extended  to the  next
         succeeding  Business  Day  unless,  in the  case of LIBOR  Loans,  such
         Business  Day  falls in the next  calendar  month,  in which  case such
         Interest Period shall end on the immediately preceding Business Day;

                       (ii) any Interest Period  applicable to a LIBOR Loan that
         begins on the last  Business  Day of a calendar  month (or on a day for
         which there is no numerically  corresponding  day in the calendar month
         at the end of such  Interest  Period)  shall,  subject to clause  (iii)
         below, end on the last Business Day of a calendar month;

                       (iii) any Interest  Period  during the  Revolving  Credit
         Period that would  otherwise  end after the Maturity  Date shall end on
         the Maturity Date;

                       (iv)  notwithstanding  clause  (ii)  above,  no  Interest
         Period  applicable  to a LIBOR Loan shall have a duration  of less than
         one (1) month,  and if any  Interest  Period  applicable  to such Loans
         would be for a  shorter  period,  such  Interest  Period  shall  not be
         available hereunder.

         Investment.  As applied to Borrower and its Subsidiaries,  the purchase
or  acquisition,  valued at cost,  of any share of  capital  stock,  partnership
interest,  joint  venture  interest,  evidence of  indebtedness  or other equity
security of any other person or entity, any loan, advance or extension of credit
to, or  contribution  to the  capital of, any other  person or entity,  any real
estate held for sale or investment, any commodities futures contracts held other
than in connection with

                                       7.

<PAGE>

bona fide  hedging  transactions,  any other  investment  in any other person or
entity, and the making of any commitment or acquisition of any option to make an
Investment.

         Joint  Venture.  A  corporation,  partnership,  joint  venture or other
similar arrangement (whether created pursuant to contract or conducted through a
separate entity) now or hereafter formed or maintained by Borrower or any of its
subsidiaries  with another person or entity in order to conduct a common venture
or enterprise with such person or entity.

         Letter of Credit.  Any letter of credit issued  pursuant to Section 2.3
of this  Agreement,  and  "Letters of Credit"  means all such letters of credit,
collectively.

         Letter of Credit Maturity Date.  Means November 30, 1997.

         Letter of Credit Sublimit.  $5,000,000 in the aggregate,  or any lesser
amount, including zero, resulting from a termination or reduction of such amount
in accordance with Section 2.5 or Section 7.2.

         LIBOR  Loan.  Any  Loan  bearing  interest  at a rate  determined  with
reference to the Adjusted LIBOR rate.

         Loan. A loan made to Borrower by the Banks  pursuant to Section 2.1 and
may be a Prime Rate Loan or a LIBOR Loan  depending  upon the  context.  "Loans"
means all of such loans, collectively.

         Loan Documents.  Any and all of this  Agreement,  the Note, and any and
all other agreements,  documents and instruments executed and delivered by or on
behalf or in support of Borrower to Agent on behalf of the Banks, or any Bank or
their authorized  designee evidencing or otherwise relating to the Loans and the
Letters  of  Credit,  as the same may from  time to time be  amended,  modified,
supplemented or renewed.

         Majority  Banks.  Means at any time the Banks then holding in excess of
fifty percent (50%) of the then aggregate  unpaid principal amount of the Loans,
or, if no such principal  amount is then  outstanding,  the Banks then having in
excess of fifty percent (50%) of the Commitments.

         Material  Adverse  Effect.  (i) a  material  adverse  change  in,  or a
material adverse effect upon, the operations, business, properties, or condition
(financial or otherwise) of Borrower or Borrower and its Subsidiaries taken as a
whole;  (ii) a material  impairment  of the ability of Borrower to perform under
any Loan  Document and avoid any Event of Default;  or (iii) a material  adverse
effect upon the legality, validity, binding effect or enforceability of any Loan
Document.

         Maturity Date. Means July 31, 1997.

                                       8.

<PAGE>

         Maximum  Availability.  Shall  have the  meaning  set forth in  Section
2.1(a).

         NASDAQ.  Means the National Association of Securities Dealers Automated
Quotations.

         Note.  A  promissory  note of  Borrower,  substantially  in the form of
Exhibit A hereto,  evidencing  the  obligation of Borrower to Agent,  for and on
behalf of the Banks, to repay the Loans.

         Notice of Borrowing or Conversion. Has the meaning set forth in Section
2.2.

         Obligations.  Any and all  obligations  of Borrower to the Banks and/or
Agent arising in connection  with this  Agreement or the other Loan Documents of
every kind and description,  direct or indirect, absolute or contingent, primary
or  secondary,  due  or to  become  due,  now  existing  or  hereafter  arising,
regardless  of how they arise or by what  agreement or  instrument,  if any, and
including  obligations to perform acts and refrain from taking action as well as
obligations to pay money.

         Participant.  Has the meaning set forth in Section 9.10(d).

         PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

         Permitted Encumbrances.  Has the meaning set forth in Section 6.4.

         Plan.  At any time,  an employee  pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum  funding  standards under
Section 412 of the Code and is either (i)  maintained  by Borrower or any member
of  the  Controlled  Group  for  employees  of  Borrower  or any  member  of the
Controlled Group or (ii) if such Plan is established,  maintained  pursuant to a
collective  bargaining  agreement or any other arrangement under which more than
one (1) employer makes  contributions and to which Borrower or any member of the
Controlled Group is then making or accruing an obligation to make  contributions
or has within the preceding five (5) Plan years made contributions.

         Prime  Rate.  Equals  the rate of  interest  set  from  time to time by
Sumitomo at its head office in San Francisco,  California as its Prime Rate. The
Prime Rate is determined by Sumitomo as a means of pricing credit  extensions to
some customers and is neither tied to any external rate of interest or index nor
is it necessarily  the lowest rate of interest  charged by Sumitomo at any given
time for any particular class of customers or credit extensions.  Any changes in
the interest  rate  resulting  from a change in the Prime Rate shall take effect
without notice on the date specified at the time the Prime Rate is set.

                                       9.

<PAGE>

         Prime Rate Loan. Any Loan bearing interest determined with reference to
the Prime Rate.

         Qualified  Investments.  As applied to Borrower  and its  Subsidiaries,
investments  in (i) notes,  bonds or other  obligations  of the United States of
America or any agency  thereof  that as to  principal  and  interest  constitute
direct  obligations of or are  guaranteed by the United States of America;  (ii)
certificates  of deposit or other deposit  instruments or accounts or commercial
paper of Sumitomo; (iii) certificates of deposit or other deposit instruments or
accounts  of banks or trust  companies  organized  under the laws of the  United
States  or  any  state  thereof  that  have  capital  and  surplus  of at  least
$200,000,000, (iv) commercial paper that is rated not less than prime-one or A-1
or their  equivalents by Moody's  Investors  Service,  Inc. or Standard & Poor's
Corporation,  respectively,  or their successors,  (v) any repurchase  agreement
secured by any one or more of the foregoing,  and (vi) any Investments permitted
by  Borrower's  written and  then-current  investment  policy,  as amended  from
time-to-time,  provided  that such  investment  policy (and any such  amendments
thereto) has been approved in writing by the Requisite Banks,  such approval not
to be unreasonably withheld.

         Rate Contracts.  Interest rate and currency swap agreements, cap, floor
and collar  agreements,  interest  rate  insurance,  currency  spot and  forward
contracts and other  agreements or arrangements  designed to provide  protection
against fluctuations in interest or currency exchange rates.

         Related Documents.  Has the meaning set forth in Section 2.3(d)(i).

         Requirement  of Law. As to any person or entity,  any law (statutory or
common),  treaty,  rule or regulation or  determination of an arbitrator or of a
governmental authority, in each case applicable to or binding upon the person or
entity or any of its property is subject.

         Requisite  Banks.  At any time the Banks then holding at least  seventy
percent (70%) of the then aggregate unpaid principal amount of the Loans, or, if
no such  principal  amount is then  outstanding,  the Banks then having at least
seventy percent (70%) of the Commitments.

         Responsible  Officer.  The President and Chief Executive  Officer,  the
Chief Financial Officer or the Chairman of the Board of Borrower.

         Revolving  Credit  Period.  The  period  beginning  on the date of this
Agreement and extending  through and including the Maturity Date or such earlier
date on which the  Commitments  to make Loans are  terminated or the  Commitment
Amount is reduced to zero in accordance with the terms hereof.

         Security Agreement.  Means the Security Agreement to be entered into as
of the date hereof by and between  Borrower  and Agent,  on behalf of the Banks,
substantially in the form of Exhibit B hereto.

                                       10.

<PAGE>

         Subsidiary. Any corporation, association, joint stock company, business
trust or other similar  organization of which fifty percent (50%) or more of the
ordinary voting power for the election of a majority of the members of the board
of directors or other  governing  body of such entity is held or  controlled  by
Borrower  or a  Subsidiary  of  Borrower;  or any other  such  organization  the
management  of which is  directly  or  indirectly  controlled  by  Borrower or a
Subsidiary of Borrower through the exercise of voting power or otherwise; or any
joint  venture,  whether  incorporated  or not,  in which  Borrower  has a fifty
percent (50%) or more ownership interest.

         .2 Accounting  Terms.  All terms of an accounting  character shall have
the  meanings  assigned  thereto by  generally  accepted  accounting  principles
applied on a basis  consistent  with the  financial  statements  referred  to in
Section 4.6 of this Agreement,  modified to the extent,  but only to the extent,
that such meanings are specifically modified herein. In the event that generally
accepted  accounting  principles  change during the term of this  Agreement such
that the financial  covenants  contained in Section 5.7 would then be calculated
in a different manner or with different components, (i) Borrower and Banks agree
to  negotiate  to amend this  Agreement  in such  respects as are  necessary  to
conform  those  covenants  as  criteria  for  evaluating   Borrower's  financial
condition to  substantially  the same criteria as were  effective  prior to such
change in generally accepted accounting  principles,  and (ii) Borrower shall be
deemed  to be in  compliance  with the  financial  covenants  contained  in such
Section 5.7, pending reaching agreement on such amendment, for a period of sixty
(60) days following any such change in generally accepted accounting  principles
if and to the extent that the Borrower  would have been in compliance  therewith
under generally accepted accounting principles as in effect immediately prior to
such change.

II
                              DESCRIPTION OF CREDIT

         .1 Commitment to Lend

            (a) Revolving  Line of Credit.  Subject to the terms and  conditions
hereof, each Bank severally agrees to make Loans to Borrower up to the amount of
its  Commitment,  from time to time until the close of business on the  Maturity
Date,  in such  sums as  Borrower  may  request,  provided  that  the  aggregate
principal  amount of all Loans at any one time  outstanding  hereunder shall not
exceed the Commitment  Amount less the aggregate  principal amount undrawn under
Letters of Credit then outstanding (the "Maximum Availability").

            (b) General  Provisions  Relating to Loans. Each Loan made by a Bank
hereunder  shall,  at  Borrower's  option in  accordance  with the terms of this
Agreement, be either in the form of a Prime Rate Loan or a LIBOR Loan; provided,
however,  that the amount of any LIBOR Loan shall be not less than  $500,000  or
any integral multiple of $100,000 in excess

                                       11.

<PAGE>

thereof. Borrower may borrow, prepay pursuant to Section 2.11 and reborrow, from
the Closing  Date until the  Maturity  Date,  the full amount of the  Commitment
Amount or any lesser sum that is at least $100,000 provided,  however,  no LIBOR
Loan shall have an Interest Period ending after the Maturity Date.

            (c) Repayment of Principal Amount of Loans.  Subject to the terms of
this  Agreement  relating  to  optional  earlier  repayment  of  Loans  and  the
acceleration  of  maturities,  the Loans  shall be fully due and  payable on the
Maturity Date.

            (d) Conversion and Continuation Elections.  Provided that no Default
shall have occurred and be continuing Borrower may:

                        (i) elect to convert, on any Business Day any Prime Rate
Loan (or any portion  thereof in an amount  equal to  $500,000  or any  integral
multiple of $100,000 in excess thereof) into a LIBOR Loan; or

                        (ii) elect to convert, on any Interest Payment Date, any
LIBOR Loan maturing on such Interest  Payment Date (or any portion thereof) into
a Prime Rate Loan; or

                        (iii) elect to continue,  on any Interest  Payment Date,
any LIBOR Loan maturing on such Interest Payment Date (or any portion thereof in
an amount  equal to  $500,000  or any  integral  multiple  of $100,000 in excess
thereof);

provided, that if the aggregate amount of LIBOR Loans shall have been reduced by
payment, prepayment or conversion of a portion thereof to be less than $500,000,
such LIBOR Loans shall  automatically  convert into Prime Rate Loans;  provided,
further  that in no  event  shall  there  be more  than  five  (5)  LIBOR  Loans
outstanding at any one time. Borrower shall give Agent prior notice of each such
conversion  or  continuance  (which  notice shall be effective  upon receipt) in
accordance with Section 2.2.

            (e) Availability of Loans. The obligation of the Banks to make Loans
and issue or participate in Letters of Credit  hereunder shall be limited at any
time to the Maximum  Availability.  Nothing  contained in this  Agreement  shall
under  any  circumstance  be  deemed  to  require  any  Bank to make any Loan or
participate  in the  issuance of any Letter of Credit  hereunder  which,  in the
aggregate  principal  amount,  taking  into  account  the making of such Loan or
participation in such Letter of Credit, exceeds such Bank's Commitment.

         .2 Notice And Manner Of Borrowing Or Conversion Of Loans

            (a) Whenever Borrower desires to obtain or continue a Loan hereunder
or convert an outstanding  Loan into a Loan of another type provided for in this
Agreement,  an Authorized  Officer,  as defined below,  of Borrower shall notify
Agent (which  notice shall be  irrevocable)  by telefax,  telegraph or telephone
received  no  later  than  10:00  a.m.  San  Francisco

                                       12.

<PAGE>

time on the date two (2)  Business  Days  before the day on which the  requested
Loan is to be made or  continued  as or  converted  to a Prime  Rate  Loan,  and
received  no later  than  10:00 a.m.  San  Francisco  time on the date three (3)
Business  Days  before  the day on  which  the  requested  Loan is to be made or
continued  as or converted  to a LIBOR Loan.  Such notice shall  specify (i) the
effective  date and amount of each Loan or portion  thereof to be  continued  or
converted,  subject  to the  limitations  set  forth in  Section  2.1,  (ii) the
interest  rate option to be  applicable  thereto,  and (iii) the duration of the
applicable  Interest Period, if any (subject to the provisions of the definition
of  Interest  Period and  Section  2.7).  Each such  notification  (a "Notice of
Borrowing  or   Conversion")   shall  be  immediately   followed  by  a  written
confirmation  thereof by Borrower in substantially the form of Exhibit D hereto,
provided  that if such  written  confirmation  of a  notice  given  by  telefax,
telegraph or telephone  differs in any material respect from the action taken by
Agent, the records of Agent shall control absent manifest error. For purposes of
this  Agreement,  "Authorized  Officer" shall mean any officer of Borrower whose
name and  signature  are set forth in  Borrower's  resolution  authorizing  such
activity.

            (b) Agent shall promptly  notify each Bank as to the content of each
Notice of  Borrowing  or  Conversion  and  Agent's  determination  as to whether
conditions to the making of the Loan have been  satisfied.  Not later than 12:00
noon, San Francisco  time, on the date of such  borrowing,  each Bank shall make
available its pro rata share of such borrowing in immediately  available  funds,
by wiring the  proceeds  thereof  to Agent for the  account  of  Borrower.  Upon
satisfaction of the applicable  conditions precedent set forth in Section 3, the
amount of the Loan  shall be  credited  in  immediately  available  funds to the
Designated Deposit Account.

         .3 Letters Of Credit

            (a) Subject to the terms and  conditions  of this  Agreement  and in
reliance upon the  representations  and warranties of Borrower set forth herein,
at any time and from time to time  from the  Closing  Date  hereof  through  the
Business Day  immediately  prior to the Maturity Date,  Sumitomo shall issue for
the account of Borrower such letters of credit ("Letters of Credit") as Borrower
may  request  to a maximum  aggregate  principal  amount  equal to the Letter of
Credit  Sublimit,  which  request  shall be made by  delivering  to Agent a duly
executed letter of credit application on Sumitomo's standard form; provided that
each such Letter of Credit (i) is denominated in U.S. dollars,  (ii) supports an
obligation  maturing before the Letter of Credit Maturity Date, (iii) requires a
drawing  based on a sight  draft,  and (iv) is issuable  without  violating  any
Requirement of Law.  Notwithstanding  anything to the contrary contained in this
Agreement,  upon  issuing any such  Letter of Credit,  the  aggregate  principal
amount undrawn under all Letters of Credit then outstanding shall not exceed the
Commitment  Amount less the amount of all Loans then  outstanding.  No Letter of
Credit  shall  have an  expiration  date that is later than the Letter of Credit
Maturity Date.

            (b) Unless otherwise  expressly  provided therein,  each beneficiary
named by Borrower with respect to a Letter of Credit issued  hereunder  shall be
permitted to make only one draw under such Letter of Credit.  Upon the making of
such draw under a Letter of Credit by

                                       13.

<PAGE>

such  beneficiary,  the full  amount of such draw shall be  immediately  due and
payable by Borrower to Sumitomo. Sumitomo shall immediately notify Borrower, the
Banks and Agent of the amount of such draw.  Borrower shall reimburse  Sumitomo,
in immediately  available  funds, for the full amount of such draw prior to 1:00
p.m.  (San  Francisco  time)  on the date of such  draw.  If  Borrower  does not
reimburse Sumitomo by 1:00 p.m. as provided in this Section, and upon receipt of
notice  from   Sumitomo,   each  Bank  shall  be  deemed  to  have  purchased  a
participation  from Sumitomo in the original  principal amount of such Letter of
Credit  equal to an amount  proportionate  to such  Bank's pro rata share of the
Commitment Amount.

            (c) Upon  receipt of notice  from  Sumitomo  that  Borrower  has not
reimbursed  Sumitomo for any payment  made by Sumitomo  under a Letter of Credit
hereunder,  Agent shall, with notice to all Banks, cause a Prime Rate Loan to be
made by the Banks in an  aggregate  amount  equal to the amount  drawn under the
Letter of Credit (plus any unpaid  commission).  The proceeds of such Prime Rate
Loan shall be applied to  reimburse  each Bank for such Bank's pro rata share of
the payment  required to be made by Sumitomo under the Letter of Credit.  In the
event that a Prime Rate Loan shall be made to Borrower pursuant to this Section,
such  Prime  Rate  Loan  shall be deemed to have been made as of the date of the
draw under the respective  Letter of Credit and interest shall accrue thereon at
the same rate as provided for other Prime Rate Loans under this Agreement.

            (d)  Without  limiting  Borrower's  rights as set  forth in  Section
2.3(e) below, the obligation of Borrower to immediately  reimburse  Sumitomo for
drawings  made under  Letters of Credit  shall be  absolute,  unconditional  and
irrevocable,  and shall be performed  strictly in  accordance  with the terms of
this Agreement and such Letters of Credit,  under all circumstances  whatsoever,
including, without limitation, the following circumstances:

                        (i) Any lack of validity or  enforceability  of a Letter
of Credit, the obligation supported by a Letter of Credit or any other agreement
or instrument relating thereto (collectively, the "Related Documents");

                        (ii) Any  amendment  or waiver of or any  consent  to or
departure from all or any of the Related Documents;

                        (iii) The  existence of any claim,  set-off,  defense or
other rights which Borrower may have at any time against any  beneficiary or any
transferee  of a Letter of Credit (or any persons or entities  for whom any such
beneficiary or any such transferee may be acting), the Banks, Agent or any other
person, whether in connection with the Loan Documents,  the Related Documents or
any unrelated transaction;

                        (iv) Any breach of  contract  or other  dispute  between
Borrower and any  beneficiary  or any  transferee  of a Letter of Credit (or any
persons or entities  for whom such  beneficiary  or any such  transferee  may be
acting), the Banks, Agent or any other person;

                                      14.

<PAGE>

                        (v) Any draft, statement or any other document presented
under  a  Letter  of  Credit  proving  to  be  forged,  fraudulent,  invalid  or
insufficient in any respect or any statement  therein being untrue or inaccurate
in any respect whatsoever;

                        (vi) Any delay,  extension of time, renewal,  compromise
or other  indulgence or modification  granted or agreed to by Sumitomo,  with or
without  notice to or  approval  by  Borrower  in respect  of any of  Borrower's
indebtedness under this Agreement; or

                        (vii) Any other  circumstance  or happening  whatsoever,
whether or not similar to any of the foregoing.

            (e)  Borrower  assumes  all  risks of the acts or  omissions  of any
beneficiary and any transferee of each Letter of Credit; provided, however, this
assumption  with  respect to Agent and the  Banks,  including  Sumitomo,  is not
intended  to,  and shall  not,  preclude  Borrower's  pursuing  such  rights and
remedies as it may have against any such  beneficiary  or transferee of a Letter
of  Credit at law or under any other  agreement.  Neither  Agent,  nor any Bank,
including  Sumitomo,  nor any of their officers or directors  shall be liable or
responsible  for:  (i) the use which may be made of any  Letter of Credit or for
any acts or omissions of any  beneficiary  and any  transferee  of any Letter of
Credit in connection therewith; (ii) the validity, sufficiency or genuineness of
documents,  or of any endorsement(s)  thereon,  even if such documents should in
fact prove to be in any or all respects  invalid,  insufficient,  fraudulent  or
forged; or (iii) any other circumstances whatsoever in making or failing to make
payment under the Letter of Credit; provided, however,  notwithstanding anything
to the contrary contained in the preceding clauses (i), (ii) and (iii), Borrower
shall have a claim against  Sumitomo,  and Sumitomo  shall be liable to Borrower
for any direct  damages,  but not for any  consequential  or  punitive  damages,
suffered by Borrower  which  Borrower  proves were caused by Sumitomo's  willful
failure  to pay  under a Letter of Credit  after the  presentation  to it by any
beneficiary  (or person to whom such  Letter of Credit has been  transferred  in
accordance with its terms) of a sight draft and certificate  strictly  complying
with the terms and conditions of such Letter of Credit or by Sumitomo's  grossly
negligent  payment  under a Letter of Credit other than in  accordance  with the
terms thereof.  In furtherance and not in limitation of the foregoing,  Sumitomo
may  accept  documents  that  appear  on  their  face  to be in  order,  without
responsibility   for  further   investigation,   regardless  of  any  notice  or
information to the contrary.

         .4 Fees

            (a) Borrower shall pay to Agent, for its own account, a facility fee
equal to two-tenths of one percent  (0.20%) of the Commitment  Amount.  Although
the facility fee is fully earned by and unconditionally due Agent on the Closing
Date,  Agent has agreed that  Borrower  may pay such  facility fee in four equal
quarterly  installments  of Five Thousand  Dollars  ($5,000),  beginning  with a
payment on the Closing Date and  continuing  on the same day of each  subsequent
calendar quarter.

                                      15.

<PAGE>

            (b) Borrower  shall pay to Agent a  nonrefundable  issuance fee with
respect to each Letter of Credit issued  hereunder  equal to one and one-quarter
percent  (1.25%) per annum of the face amount of such Letter of Credit which fee
shall be due and payable upon issuance.

         .5 Reduction of  Commitment  Amount.  Borrower may from time to time by
written  notice  delivered to Agent at least five (5) Business Days prior to the
date of the requested reduction,  reduce by integral multiples of $1,000,000 any
unborrowed  portion of the Commitment  Amount or the Letter of Credit  Sublimit,
provided that the effect of such reduction shall not cause the principal  amount
of the Loans and the undrawn amount of the Letters of Credit then outstanding to
exceed the  Commitment  Amount as so reduced or cause the undrawn  amount of the
Letters of Credit then outstanding to exceed the Letter of Credit  Sublimit.  No
reduction  of the  Commitment  Amount shall be subject to  reinstatement  and no
reduction  of the  Commitment  Amount  shall result in a rebate or return of the
facility fee or any portion of the facility fee payable pursuant to Section 2.4.

         .6 The Note

            (a) The Loans shall be evidenced  by the Note,  payable to the order
of Agent for the  account of the Banks,  in the  Commitment  Amount and having a
final  maturity  of the  Maturity  Date.  The Note shall be dated as of the date
hereof and shall have the blanks therein appropriately completed.

            (b) Agent shall,  and is hereby  irrevocably  authorized by Borrower
to, enter on the schedule forming a part of the Note or otherwise in its records
appropriate  notations  evidencing  the date and the  amount of each  Loan,  the
interest  rate  applicable  thereto  and the date and amount of each  payment of
principal made by Borrower with respect thereto;  and in the absence of manifest
error, such notations shall constitute  conclusive  evidence  thereof.  Agent is
hereby  irrevocably  authorized  by Borrower to attach to and make a part of the
Note a continuation of any such schedule as and when required. No failure on the
part of Agent to make any notation as provided in this  subsection  (b) shall in
any way affect any Loan or the rights or  obligations  of the Banks or  Borrower
with respect thereto.

            (c) Upon the request of any Bank made through Agent,  the Loans made
by the Banks  may be  evidenced  by one or more  notes in favor of each Bank and
Agent shall,  upon redelivery of the Note to Borrower,  substitute such notes in
lieu of the Note.  After  such  substitution,  each Bank  shall  endorse  on the
schedules  annexed to the note(s) in its favor the date,  amount and maturity of
each  Loan  made by it and the  amount  of each  payment  of  principal  made by
Borrower with respect thereto.  Each Bank is irrevocably  authorized by Borrower
to endorse the note(s) in its favor and each Bank's  record shall be  conclusive
absent manifest error; provided, however, that the failure of a Bank to make, or
an error in making,  a notation thereon with respect to any Loan shall not limit
or otherwise affect the obligations of Borrower hereunder or under any such note
to  such  Bank.  After  the  substitution  of  notes  in  favor  of the

                                      16.

<PAGE>

Note as contemplated in this Agreement,  each reference herein to the Note shall
refer to all such notes issued in substitution therefor.

         .7 Duration Of Interest Periods

            (a) Subject to the provisions of the definition of Interest  Period,
the  duration of each  Interest  Period  applicable  to a LIBOR Loan shall be as
specified  in the  applicable  Notice of  Borrowing  or  Conversion.  Subject to
Section  III,  Borrower  shall  have the option to elect a  subsequent  Interest
Period to be  applicable  to such  LIBOR  Loan,  or to convert a LIBOR Loan to a
Prime Rate Loan, by giving  notice of such  election to Agent  received no later
than 10:00 a.m. San Francisco  time on the date two (2) Business Days before the
end of the  then  applicable  Interest  Period,  if  such  LIBOR  Loan  is to be
converted to a Prime Rate Loan,  and three (3)  Business  Days before the end of
the then  applicable  Interest Period if such Loan is to be continued as a LIBOR
Loan.

            (b) If Agent does not receive a notice of election of duration of an
Interest  Period for a LIBOR Loan  pursuant to  subsection  (a) above within the
applicable time limits specified therein, or if, when such notice must be given,
a Default exists, Borrower shall be deemed to have elected to convert such LIBOR
Loan in  whole  into a Prime  Rate  Loan on the  last  day of the  then  current
Interest Period with respect thereto.

            (c)  Notwithstanding  the  foregoing,  Borrower  may not  select  an
Interest  Period that would end, but for the  provisions  of the  definition  of
Interest Period, after the Maturity Date.

            (d) Subject to the  provisions  of Section II and the  provisions of
the  definition  of Interest  Period,  Borrower may elect from  time-to-time  to
convert  outstanding  Prime Rate Loans to LIBOR Loans by giving  Agent notice no
later than required  pursuant to Section  2.2(a).  The duration of each Interest
Period  applicable  to the Prime Rate Loan to be converted to a LIBOR Loan shall
be specified in the applicable Notice of Borrowing or Conversion.

         .8 Interest Rates And Payments Of Interest

            (a) Prime Rate  Loans.  Each Prime Rate Loan shall bear  interest on
the outstanding  principal amount thereof at a rate per annum equal to the Prime
Rate.  Such  interest  shall be payable on the first  Business Day of each month
commencing on the first such day after the Closing  Date,  and when such Loan is
due (whether at maturity, by reason of acceleration or otherwise).

            (b)  LIBOR  Loans.  Each  LIBOR  Loan  shall  bear  interest  on the
outstanding  principal  amount  thereof,  for each  Interest  Period  applicable
thereto,  at a rate per  annum  equal to the  Adjusted  LIBOR  Rate plus two and
one-half  percent  (2.50%).  Such  interest  shall be payable for such  Interest
Period on the last day  thereof  and when such  LIBOR  Loan is due  (whether  at

                                      17.

<PAGE>

maturity, by reason of acceleration or otherwise),  and on the last Business Day
of each month  during  such  Interest  Period  that has a duration  of more than
thirty (30) days.

         .9 Changed Circumstances

            (a) In the event that:

                        (i) on any date on which the  Adjusted  LIBOR Rate would
     otherwise  be set,  Agent or any Bank shall have  determined  in good faith
     (which  determination shall be final and conclusive) that adequate and fair
     means do not exist for ascertaining the London Interbank Offered Rate, or

                        (ii) at any time Agent or any Bank shall have determined
     in good faith (which determination shall be final and conclusive) that:

                                 (A) the making or continuation of or conversion
     of any Loan to a LIBOR Loan has been made  impracticable or unlawful by (1)
     the occurrence of a contingency  that materially and adversely  affects the
     London  interbank  eurodollar  market or the  market  for  certificates  of
     deposit  maintained by dealers in San  Francisco of recognized  standing or
     (2)  compliance  by any  Bank in good  faith  with  any  applicable  law or
     governmental  regulation,  guideline or order or  interpretation  or change
     thereof by any governmental  authority  charged with the  interpretation or
     administration  thereof  or with  any  request  or  directive  of any  such
     governmental authority (whether or not having the force of law); or

                                 (B) the  Adjusted  LIBOR  Rate  shall no longer
     represent the effective  cost to any Bank for U.S.  dollar  deposits in the
     interbank market for deposits in which it regularly participates;

then, and in any such event,  Agent shall forthwith so notify Borrower  thereof.
Until Agent notifies Borrower that the circumstances  giving rise to such notice
no longer apply,  the obligation of Agent to allow  selection by Borrower of the
type of Loan  affected by the  contingencies  described in this  Section  2.9(a)
(herein  called  "Affected  Loans") shall be suspended.  If at the time Agent so
notifies Borrower,  Borrower has previously given Agent a Notice of Borrowing or
Conversion  with respect to one or more  Affected  Loans but such Loans have not
yet gone into effect,  such notification shall be deemed to be void and Borrower
may  borrow  Loans of a  non-affected  type by  giving a  substitute  Notice  of
Borrowing or Conversion pursuant to Section 2.2 hereof.

     Upon such date as shall be  specified  in such notice  (which  shall not be
earlier than the date such notice is given) Borrower shall,  with respect to the
outstanding  Affected Loans, prepay the same, together with interest thereon and
any amounts  required to be paid pursuant to

                                      18.

<PAGE>

Section 2.14,  and may borrow a Loan of another type in accordance  with Section
2.1 hereof by giving a Notice of Borrowing or Conversion pursuant to Section 2.2
hereof.

            (b) In case any law, regulation, treaty or official directive or the
interpretation  or  application  thereof  by any  court  or by any  governmental
authority  charged with the  administration  thereof or the compliance  with any
guideline  or  request  of any  central  bank or  other  governmental  authority
(whether or not having the force of law):

                        (i)  subjects  Agent or any Bank to any tax with respect
     to payments of principal or interest or any other amounts payable hereunder
     by Borrower or  otherwise  with  respect to the  transactions  contemplated
     hereby  (except for taxes on the overall net income of any Bank  imposed by
     the United States of America or any political subdivision thereof), or

                        (ii) imposes,  modifies or deems  applicable any deposit
     insurance,  reserve,  special deposit or similar requirement against assets
     held by, or deposits in or for the account of, or loans by, any Bank (other
     than such  requirements as are already included in the determination of the
     Adjusted LIBOR Rate), or

                        (iii)  imposes  upon any Bank any other  condition  with
     respect to its performance under this Agreement,

and the result of any of the  foregoing  is to  increase  the cost to such Bank,
reduce the income  receivable  by such Bank or impose any expense upon such Bank
with respect to any Loans,  such Bank shall notify  Borrower  thereof.  Borrower
agrees to pay to such Bank the amount of such  increase  in cost,  reduction  in
income or  additional  expense  as and when such cost,  reduction  or expense is
incurred or  determined,  upon  presentation  by such Bank of a statement in the
amount and setting forth the Bank's calculation  thereof,  which statement shall
be deemed  true and correct  absent  manifest  error;  provided,  however,  that
Borrower  shall not be liable  for any such  amount  attributable  to any period
prior  to the date 180  days  prior  to the  date of such  statement;  provided,
further, that before making such demand, each Bank or Agent, as the case may be,
agrees to use its reasonable  efforts  (consistent  with its internal policy and
legal and regulatory  restrictions)  to designate a different  lending office if
the making of such a  designation  would  avoid,  or reduce the amount of,  such
additional  cost or a  reduced  amount,  and  would  not be,  in the  reasonable
judgment of such Bank or Agent, as the case may be, otherwise disadvantageous to
the Bank or Agent, as the case may be;  provided,  further,  that Borrower shall
not be obligated to pay any Bank or Agent for any  additional  amount  otherwise
payable  pursuant to this Section 2.9, to the extent such amount is reflected in
adjustments to the interest rates applicable to the Loans.

         Any and all  payments  by  Borrower  to each Bank or Agent  under  this
Agreement shall be made free and clear of, and without  deduction or withholding
for, any and all present or future taxes, levies, imposts,  deductions,  charges
or withholdings,  and all liabilities with respect  thereto,  excluding,  in the
case of each Bank and Agent,  such taxes  (including  income  taxes or

                                      19.

<PAGE>

franchise  taxes) as are imposed on or measured by each Bank's net income by the
jurisdiction  under the laws of which such Bank or Agent, as the case may be, is
organized or maintains an office or any political subdivision thereof.

         .10 Capital Requirements.  If after the date hereof any Bank determines
that (i) the  adoption of or change in any law,  rule,  regulation  or guideline
regarding  capital  requirements  for banks or bank  holding  companies,  or any
change  in  the  interpretation  or  application  thereof  by  any  governmental
authority charged with the  administration  thereof,  or (ii) compliance by such
Bank or its parent bank holding company with any guideline, request or directive
of any such entity regarding  capital adequacy  (whether or not having the force
of law),  has the effect of reducing  the return on such Bank's or such  holding
company's  capital as a  consequence  of such  Bank's  commitment  to make Loans
hereunder  to a level below that which such Bank or such holding  company  could
have  achieved  but  for  such  adoption,  change  or  compliance  (taking  into
consideration  such Bank's or such holding company's then existing policies with
respect to capital  adequacy and assuming the full  utilization of such entity's
capital) by any amount deemed by such Bank to be material,  then such Bank shall
notify Borrower thereof.  Borrower agrees to pay to such Bank the amount of such
reduction  in the return on capital as and when such  reduction  is  determined,
upon  presentation  by such Bank of a statement in the amount and setting  forth
such  Bank's  calculation  thereof,  which  statement  shall be deemed  true and
correct absent manifest  error;  provided,  however,  that Borrower shall not be
liable for any such amount attributable to any period prior to the date 180 days
prior to the date of such statement;  provided, further, that Borrower shall not
be  obligated  to pay any  Bank or Agent  for any  additional  amount  otherwise
payable  pursuant to this Section 2.10 to the extent such amount is reflected in
adjustments  to the  interest  rates  applicable  to the  Loans;  and  provided,
further,  that Borrower shall not be liable for any amount already accounted for
in accordance  with provisions of Section  2.9(b).  In determining  such amount,
such Bank may use any reasonable averaging and attribution methods.

         .11 Payments And  Prepayments of the Loans.  Loans that are LIBOR Loans
may be prepaid without premium or penalty on the last day of any Interest Period
applicable  thereto  and,  subject to payment of amounts  required  pursuant  to
Section  2.14,  may be  prepaid at any other  time,  in each case upon three (3)
Business  Days'  irrevocable  notice.  Loans  that are Prime  Rate  Loans may be
prepaid at any time,  without  premium or penalty,  upon one (1) Business  Day's
irrevocable  notice.  If such notice is given by Borrower,  Borrower  shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified  therein,  together with accrued  interest to each
such date on the amount  prepaid  and any amounts  required  pursuant to Section
2.14. No prepayment of the Loans during the Revolving Credit Period shall affect
the  Commitment  Amount  or  impair  Borrower's  right to borrow as set forth in
Section 2.1.

         .12 Method of Payment.  All payments and  prepayments  of principal and
all payments of interest, fees and other amounts payable hereunder shall be made
by Borrower to Agent for the account of each Bank at 84 West Santa Clara Street,
Suite 700, San Jose,

                                      20.

<PAGE>

California 95113, Attention: Commercial Banking Office - Network Peripherals, in
immediately available funds, on or before 10:00 a.m. (San Francisco time) on the
due date thereof,  free and clear of, and without any  deduction or  withholding
for, any taxes or other payments and without set-off, recoupment or counterclaim
on the last day of each month that such payment is due.  Interest payments shall
be made by automatic  direct debit to the Designated  Deposit  Account,  or such
other  accounts with Sumitomo as designated in writing by Borrower.  If an Event
of Default has occurred and is continuing,  with respect to any commitment  fee,
facility fee, or other fee, or any other cost or expense,  including  reasonable
attorney  costs,  due and payable to Agent or Sumitomo under the Loan Documents,
Borrower hereby irrevocably  authorizes Sumitomo to debit the Designated Deposit
Account,  or such other accounts with Sumitomo as maintained by Borrower,  in an
amount such that the  aggregate  amount  debited from all such deposit  accounts
does not exceed  such fee or other cost or  expense.  If there are  insufficient
funds in such  deposit  accounts to cover the amount of the fee or other cost or
expense  then  due,  such  debits  will be  reversed  (in  whole or in part,  in
Sumitomo's  sole  discretion)  and such amount not debited shall be deemed to be
unpaid.  No such debit of fees,  costs or expenses under this Section 2.12 shall
be deemed a setoff. Further, Agent may, and Borrower hereby authorizes Agent to,
debit the amount of any payment not made by such time to the Designated  Deposit
Account of Borrower with Agent. Agent will promptly  distribute to each Bank its
share of such payment  according to each Bank's  Commitment (or other applicable
share as expressly provided herein) of such principal,  interest,  fees or other
amounts, in like funds as received. Any payment which is received by Agent later
than 10:00 a.m.  (San  Francisco  time) shall be deemed to have been received on
the immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue.

         .13 Overdue  Principal.  Overdue  principal  (whether at  maturity,  by
reason of acceleration or otherwise) and, to the extent  permitted by applicable
law, overdue  interest and fees or any other amounts payable  hereunder or under
the Note shall bear interest from and including the due date thereof until paid,
compounded daily and payable on demand, at a rate per annum equal to (a) if such
due date occurs prior to the end of an Interest  Period,  two percent (2%) above
the interest rate  applicable  to such Loan for such  Interest  Period until the
expiration of such Interest Period,  and thereafter,  two percent (2%) above the
Prime Rate;  and (b) in all other  cases,  two percent  (2%) above the rate then
applicable to Prime Rate Loans.

         .14 Payments Not at End of Interest Period.  If Borrower for any reason
makes any payment of  principal  with respect to any LIBOR Loan on any day other
than the last day of an Interest Period  applicable to such LIBOR Loan, or fails
to borrow or  continue  or  convert  to a LIBOR  Loan  after  giving a Notice of
Borrowing or Conversion pursuant to Section 2.2, Borrower shall pay to Agent for
the account of each Bank an amount computed pursuant to the following formula:

                                    L = (R - T) x P x D
                                            360

                                      21.

<PAGE>

         L        =        amount payable to Agent for the account of the Banks
         R        =        interest rate on such Loan
         T        =        effective  interest  rate  per  annum  at  which  any
                           readily  marketable  bond or other  obligation of the
                           United   States,    selected   at   Sumitomo's   sole
                           discretion,  maturing  on or near the last day of the
                           then  applicable  Interest Period of such Loan and in
                           approximately  the same  amount  as such  Loan can be
                           purchased  by Sumitomo on the day of such  payment of
                           principal or failure to borrow or continue or convert
         P        =        the amount of principal prepaid or the amount of  the
                           requested Loan
         D        =        the number of days remaining in the  Interest  Period
                           as of the date of  such payment or the number of days
                           of the requested Interest Period

Borrower shall pay such amount upon presentation by Agent of a statement setting
forth  the  amount  and  Agent's  calculation  thereof  pursuant  hereto,  which
statement shall be deemed true and correct absent manifest error.

         .15  Computation  of Interest  and Fees.  Interest and all fees payable
hereunder  shall be  computed  daily on the basis of a year of 360 days and paid
for the actual  number of days for which due. If the due date for any payment of
principal is extended by operation  of law,  interest  shall be payable for such
extended time. If any payment  required by this  Agreement  becomes due on a day
that is not a  Business  Day such  payment  may be made on the  next  succeeding
Business Day (subject to clause (i) of the definition of Interest  Period),  and
such extension  shall be included in computing  interest in connection with such
payment.

         .16  Right to  Replace  Bank.  If  Borrower  shall,  as a result of the
requirements of Section  2.9(a),  2.9(b) or 2.10 be required to pay any Bank the
additional  costs  referred  to in such  Sections  or if any Bank  fails to make
available its ratable portion of any Borrowing, Borrower shall have the right to
substitute another Financial  Institution  satisfactory to Agent (whose approval
will not be unreasonably  withheld) for such Bank which has submitted an invoice
for such  additional cost or has failed to make available its ratable portion of
any Loan. Any such substitution shall be on terms and conditions satisfactory to
Agent. Until such time as such substitution shall be consummated, Borrower shall
continue to pay any additional  cost invoiced by such Bank and shall continue to
pay  all  other  amounts  payable  to  such  Bank   hereunder.   Upon  any  such
substitution,  Borrower  shall pay or cause to be paid to the Bank that is being
replaced,  all  principal,  interest (as of the date of such  substitution)  and
other amounts owing hereunder to such Bank.

III
                               CONDITIONS OF LOAN

                                      22.

<PAGE>


         .1 Conditions Precedent to Initial Loan. The obligation of the Banks to
make the  initial  Loan and to issue the first  Letter  of Credit  hereunder  is
subject to the condition  precedent that the Banks shall have received,  in form
and  substance  satisfactory  to the  Banks and their  respective  counsel,  the
following:

            (a) this Agreement and the Note, duly executed by Borrower;

            (b) the  Security  Agreement,  the  Intellectual  Property  Security
Agreements,  the Financing  Statements and such other security  documents as the
Banks require to create and perfect a first priority  security interest in favor
of Agent and the Banks in all assets of Borrower,  including  but not limited to
all of Borrower's accounts receivable,  inventory, general intangibles and fixed
assets,  and  excluding  only  such  assets  as are on lease to  Borrower,  duly
executed by Borrower;

            (c) a  certificate  of the  Secretary or an  Assistant  Secretary of
Borrower with respect to resolutions of its Board of Directors  authorizing  the
execution and delivery of this Agreement and the Loan Documents and  identifying
the  officer(s)  authorized  to  execute,  deliver  and take all  other  actions
required under this  Agreement and the Loan  Documents,  and providing  specimen
signatures of such officers;

            (d) the articles of incorporation of Borrower and all amendments and
supplements thereto,  filed in the office of the Secretary of State of the state
of its incorporation,  each certified by said Secretary of State as being a true
and correct copy thereof;

            (e) the  Bylaws  of  Borrower  and all  amendments  and  supplements
thereto,  certified by its  Secretary or an Assistant  Secretary as being a true
and correct copy thereof;

            (f) a certificate  of the Secretary of State of each of Delaware and
California as to legal existence and good standing in such state and listing all
documents on file in the office of said Secretary of State;

            (g) a certificate of each of the Delaware and  California  Franchise
Tax Boards as to the tax good standing of Borrower;

            (h) an opinion addressed to Agent from Borrower's counsel, Gray Cary
Ware & Freidenrich, substantially in the form of Exhibit F hereto;

            (i) certified  copies,  dated close to the date hereof,  of requests
for copies or information  (Form UCC-3 or equivalent),  or  certificates,  dated
close to the date hereof,  satisfactory to the Banks, of a UCC Reporter Service,
listing all effective  financing  statements  which name Borrower and/or each of
Borrower's Subsidiaries as debtor and which are filed in the appropriate offices
in the State of California,  together with copies of such financing  statements,
and  accompanied  by written  evidence  (including UCC  termination

                                      23.

<PAGE>

statements)  satisfactory  to the Banks that the  Encumbrances  indicated in any
such financing statements are either permitted hereunder or have been terminated
or released;

            (j) payment  from  Borrower of the facility fee set forth in Section
2.4 hereof;

            (k) payment  from  Borrower of an amount  equal to the  aggregate of
Agent's and the Banks' good faith  estimate  of all fees  (including  reasonable
attorneys'  fees incurred in the initial  drafting and  preparation  of the Loan
Documents),  costs,  expenses and other disbursements  incurred by Agent and the
Banks in  connection  with  this  Agreement  and the  transactions  contemplated
hereunder,  including,  without  limitation,  the negotiation and preparation of
this Agreement and the other Loan  Documents,  which payment shall be subject to
post-closing adjustment following receipt by Agent of all final invoices;

            (l) the Disclosure Letter, duly executed by Borrower;

            (m) an executed original of the Report of Chief Financial Officer in
the form of Exhibit E hereto  dated as of the date of such  initial loan showing
Borrower's  financial  condition as of the last day of the quarter most recently
ended;

            (n) a copy of Borrower's current written investment policy certified
by Borrower's Chief Financial  Officer as being a true and correct copy thereof;
and

            (o) such other documents,  and completion of such other matters,  as
counsel for the Banks may deem necessary or appropriate.

         .2 Conditions  Precedent to All Loans.  The  obligation of the Banks to
make each Loan,  including  the initial  Loan,  or continue or convert  Loans to
Loans of another type, or to issue, or extend or modify any Letter of Credit, is
further subject to the following conditions:

            (a) timely receipt by Agent of the Notice of Borrowing or Conversion
as provided in Section 2.2;

            (b)  receipt  by  Agent of a  certificate  signed  by a  Responsible
Officer stating that: the representations and warranties contained in Section IV
are true and  accurate  in all  material  respects  on and as of the date of the
Notice of  Borrowing  or  Conversion  and on the  effective  date of the making,
continuation  or conversion of each Loan or issuance of each Letter of Credit as
though  made at and as of  each  such  date  (except  to the  extent  that  such
representations  and warranties  expressly  relate to an earlier  date),  and no
Default has occurred or is  continuing,  or will result from such Loan or Letter
of Credit;

            (c) the  resolutions  referred to in Section  3.1(c) shall remain in
full force and effect;

                                      24.

<PAGE>

            (d) no  change  shall  have  occurred  in any law or  regulation  or
interpretation  thereof  that,  in the opinion of counsel for Agent or any Bank,
would  make it  illegal or  against  the  policy of any  governmental  agency or
authority for the Banks to make Loans or issue Letters of Credit hereunder; and

            (e) Borrower shall have opened and maintained the Designated Deposit
Account.

     The  making of each Loan and  issuance  of each  Letter of Credit  shall be
deemed  to be a  representation  and  warranty  by  Borrower  on the date of the
making,  continuation  or conversion of such Loan and issuance of such Letter of
Credit as to the  accuracy of the facts  referred to in  subsection  (b) of this
Section 3.2.

IV
                         REPRESENTATIONS AND WARRANTIES

     In order to induce the Banks to enter into this Agreement and to make Loans
and issue Letters of Credit hereunder,  Borrower  represents and warrants to the
Banks that:

         .1  Organization   and   Qualifications.   Each  of  Borrower  and  its
Subsidiaries (a) is a corporation  duly organized,  validly existing and in good
standing  under  the  laws of its  jurisdiction  of  incorporation,  (b) has all
requisite  corporate  power to own its  property and conduct its business as now
conducted and as presently  contemplated  and (c) is duly  qualified and in good
standing as a foreign  corporation and is duly authorized to do business in each
jurisdiction  where the  nature of its  properties  or  business  requires  such
qualification  except  where the  failure to so  qualify  cannot  reasonably  be
expected to have a Material Adverse Effect.

         .2 Corporate Authority. The execution, delivery and performance of this
Agreement and the Loan Documents and the  transactions  contemplated  hereby are
within the corporate power and authority of Borrower and have been authorized by
all  necessary  corporate  proceedings,  and do not and will not (a) require any
consent  or  approval  of the  shareholders  of  Borrower,  (b)  contravene  any
provision of the charter  documents  or by-laws of Borrower or any law,  rule or
regulation  applicable  to  Borrower,   (c)  contravene  any  provision  of,  or
constitute an event of default or event that, but for the requirement  that time
elapse or notice be given, or both,  would constitute an event of default under,
any other  material  agreement,  instrument,  order or  undertaking  binding  on
Borrower,  or (d) result in or require the imposition of any  Encumbrance on any
of  the  properties,   assets  or  rights  of  Borrower,  other  than  Permitted
Encumbrances.

         .3 Valid Obligations.  This Agreement and the Loan Documents and all of
their  respective  terms  and  provisions  are  the  legal,  valid  and  binding
obligations of Borrower,  enforceable in accordance with their  respective terms
except as limited by bankruptcy,

                                      25.

<PAGE>

insolvency,  reorganization,  moratorium or other laws affecting the enforcement
of creditors' rights generally, and except as the remedy of specific performance
or of injunctive  relief is subject to the  discretion of the court before which
any proceeding therefor may be brought.

         .4 Consents Or Approval.  The  execution,  delivery and  performance of
this Agreement and the Loan Documents and the transactions  contemplated  herein
do not require any approval or consent of, or filing or  registration  with, any
governmental  or other  agency  or  authority,  or any  other  party,  except as
contemplated by the Loan Documents.

         .5 Title to Properties;  Absence of Encumbrances.  Each of Borrower and
its  Subsidiaries  has  good  and  marketable  title  to  all  of  the  material
properties, assets and rights of every name and nature now purported to be owned
by it, including, without limitation, such properties,  assets and rights as are
reflected in the  financial  statements  referred to in Section 4.6 (except such
properties,  assets or rights as have been disposed of in the ordinary course of
business since the date thereof),  free from all  Encumbrances  except Permitted
Encumbrances.

         .6 Financial Statements.  Borrower has furnished Agent its consolidated
balance  sheet as of December  31,  1995,  and its  consolidated  statements  of
income,  changes in stockholders'  equity and cash flow for the fiscal year then
ended,  and  related  footnotes,  audited  and  certified  by Price  Waterhouse.
Borrower has also furnished Agent its consolidated balance sheet as of March 31,
1996,  and its  consolidated  statements of income for the three (3) months then
ended,  certified  by the chief  financial  officer  of  Borrower  but  subject,
however,  to  normal,  recurring  year-end  adjustments  that  shall  not in the
aggregate be material in amount. All such financial  statements were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis  throughout  the periods  specified  and present  fairly,  in all material
respects,  the consolidated  financial position of Borrower and its Subsidiaries
as of such dates and the results of the consolidated  operations of Borrower and
its  Subsidiaries  for such  periods.  There are no  liabilities,  contingent or
otherwise, as of the respective dates of such financial statements not disclosed
in such financial statements that involve a material amount.

         .7  Changes.  Since the date of the most  recent  financial  statements
referred to in Section  4.6,  there have been no changes,  other than changes in
the  ordinary  course  of  business,  in  the  assets,  liabilities,   financial
condition, or business of Borrower and its Subsidiaries the effect of which has,
in the aggregate, been materially adverse.

         .8 Defaults As of the date of this Agreement, no Default exists.

         .9 Taxes.  Borrower and each Subsidiary  have filed all federal,  state
and other  material tax returns  required to be filed,  and all material  taxes,
assessments and other governmental charges due from Borrower and each Subsidiary
have been fully paid or Borrower or such Subsidiary has established on its books
reserves  adequate for the payment of all federal,  state and other material tax
liabilities.

                                      26.

<PAGE>

         .10  Litigation.  Except as described in the  Disclosure  Letter - Item
4.10,  there are no claims,  actions,  suits,  proceedings  or other  litigation
pending or, to the best of Borrower's knowledge,  after due inquiry,  threatened
against  Borrower or any of its  Subsidiaries,  at law or in equity,  before any
governmental agency or, to the best of Borrower's knowledge,  after due inquiry,
any  investigation  by  any  governmental  agency  of  Borrower's  or any of its
Subsidiaries'  affairs,  properties or assets which could reasonably be expected
to have a Material  Adverse  Effect on Borrower  and its  Subsidiaries.  Neither
Borrower nor any of its Subsidiaries has any Contingent Liabilities which would,
if adversely determined, have a Material Adverse Effect.

         .11 Material Contracts.  Except as described in the Disclosure Letter -
Item 4.11,  there are no effective  contracts or agreements  (whether written or
oral) to which  Borrower  is a party and which (a) could  involve the payment or
receipt by Borrower  after the date of this  agreement of more than  $250,000 or
(b) otherwise materially affect the business,  operations or financial condition
of Borrower. Except as disclosed in the Disclosure Letter - Item 4.11, there are
no material defaults under any of the foregoing  contracts by Borrower,  and, to
the best of Borrower's knowledge, by any other party to such contracts.

         .12  Executive  Offices and  Inventory and  Equiptment  Locations.  The
current location of Borrower's  chief executive  offices and principal places of
business  as well as the  location  of any  material  amounts  of  inventory  or
equipment are set forth in the Schedule 4.12.

         .13 Use of Proceeds.  Borrower does not own any "margin  security",  as
that term is defined in Regulations G and U of the Federal  Reserve  Board,  and
the proceeds of the Loans and draws under Letters of Credit under this Agreement
will be used only for the purposes contemplated hereunder.  None of the Loans or
Letters of Credit  will be used,  directly  or  indirectly,  for the  purpose of
purchasing  or  carrying  any margin  security,  for the  purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin  security or for any other  purpose which might cause any of the Loans or
Letters of Credit  under this  Agreement  to be  considered  a "purpose  credit"
within the meaning of Regulations G, T, U or X.

         .14  Subsidiaries.   As  of  the  date  of  this  Agreement,   all  the
Subsidiaries  of Borrower  are listed on  Schedule  4.14  hereto.  Borrower or a
Subsidiary of Borrower is the owner, free and clear of all Encumbrances,  except
for  Encumbrances  permitted  under  this  Agreement,  of all of the  issued and
outstanding  stock of each such  Subsidiary,  other  than  shares of  Borrower's
foreign Subsidiaries issued to directors to meet foreign ownership requirements.
Except as listed on  Schedule  4.14  hereto,  all shares of such stock have been
validly issued and are fully paid and nonassessable,  and no rights to subscribe
to any additional shares have been granted, and no options,  warrants or similar
rights are outstanding.

         .15  Investment   Company  Act.   Neither   Borrower  nor  any  of  its
Subsidiaries is subject to regulation under the Investment  Company Act of 1940,
as amended.

                                      27.

<PAGE>

         .16 Compliance  With ERISA.  Borrower and each member of the Controlled
Group have fulfilled their  obligations  under the minimum funding  standards of
ERISA  and the Code  with  respect  to each  Plan and are in  compliance  in all
material respects with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA; and no
"prohibited  transaction"  or  "reportable  event" (as such terms are defined in
ERISA) has occurred with respect to any Plan.

         .17 Environmental Matters

            (a) Borrower and each of its Subsidiaries have obtained all permits,
licenses and other  authorizations  which are required  under all  Environmental
Laws,  except  to the  extent  failure  to have  any  such  permit,  license  or
authorization would not have a Material Adverse Effect. Borrower and each of its
Subsidiaries  are in  compliance  in all  material  respects  with the terms and
conditions of all such  permits,  licenses and  authorizations,  and are also in
compliance  with all other  limitations,  restrictions,  conditions,  standards,
prohibitions,  requirements,  obligations, schedules and timetables contained in
any  applicable  Environmental  Law or in any  regulation,  code,  plan,  order,
decree,  judgment,   injunction,   notice  or  demand  letter  issued,  entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a material  adverse  effect on the  business,  financial  condition  or
operations of Borrower and its Subsidiaries.

            (b) To the best of  Borrower's  knowledge,  after  due  inquiry,  no
notice,  notification,  demand,  request for information,  citation,  summons or
order has been issued, no complaint has been filed, no penalty has been assessed
and no  investigation  or review is pending or threatened by any governmental or
other  entity  with  respect to any  alleged  failure by  Borrower or any of its
Subsidiaries to have any permit, license or authorization required in connection
with  conduct  of its  business  or  with  respect  to any  Environmental  Laws,
including,  without  limitation,  Environmental Laws relating to the generation,
treatment,  storage,  recycling,  transportation,  disposal  or  release  of any
Hazardous Materials,  except to the extent that such notice, complaint,  penalty
or investigation  did not or could not result in the remediation of any property
owned or used by  Borrower  or any of its  Subsidiaries  costing  in  excess  of
$100,000 per occurrence or $100,000 in the aggregate.

            (c) To the best of  Borrower's  knowledge,  after  due  inquiry,  no
material oral or written  notification of a release of a Hazardous  Material has
been  filed  by or on  behalf  of  Borrower  or any of its  Subsidiaries  and no
property  now or  previously  owned,  leased or used by  Borrower  or any of its
Subsidiaries  is listed or proposed for listing on the National  Priorities List
under the Comprehensive  Environmental Response,  Compensation and Liability Act
of  1980,  as  amended,  or  on  any  similar  state  list  of  sites  requiring
investigation or clean-up.

            (d) To the best of Borrower's  knowledge,  after due inquiry,  there
are no liens or encumbrances arising under or pursuant to any Environmental Laws
on any of the real property or properties  owned,  leased or used by Borrower or
any of its  Subsidiaries  and no

                                      28.

<PAGE>

governmental  actions have been taken or are in process  which could subject any
of such  properties  to such  liens or  encumbrances  or,  as a result  of which
Borrower  would be required to place any notice or  restriction  relating to the
presence of Hazardous  Materials at any property owned by it in any deed to such
property.

            (e) Neither Borrower nor any of its  Subsidiaries,  nor, to the best
knowledge  of  Borrower,  any previous  owner,  tenant,  occupant or user of any
property owned,  leased or used by Borrower or any of its Subsidiaries,  has (i)
engaged  in or  permitted  any  operations  or  activities  upon  or any  use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling,  manufacture,  treatment,  storage, use, generation,
release,  discharge,  refining,  dumping or disposal  (whether legal or illegal,
accidental or  intentional)  of any Hazardous  Materials on, under,  in or about
such property,  except to the extent  commonly used in day-to-day  operations of
such property and in such case only, in compliance with all Environmental  Laws,
or (ii)  transported  any  Hazardous  Materials to, from or across such property
except to the extent  commonly  used in  day-to-day  operations of such property
and, in such case, in compliance with, all  Environmental  Laws; nor to the best
knowledge  of  Borrower  have  any  Hazardous   Materials  migrated  from  other
properties upon,  about or beneath such property,  nor, to the best knowledge of
Borrower, are any Hazardous Materials presently constructed,  deposited,  stored
or otherwise  located on, under,  in or about such property except to the extent
commonly  used in  day-to-day  operations of such property and, in such case, in
compliance with, all Environmental Laws.

V
                              AFFIRMATIVE COVENANTS

     So long as the Banks have any  commitment  to lend  hereunder  or any Loan,
Letter of Credit or other Obligation hereunder, except those Obligations arising
under Section 9.3, remains outstanding or unreimbursed, and unless the Requisite
Banks shall otherwise consent in writing, Borrower covenants as follows:

         .1 Financial  Statements  and Other  Reporting  Requirements.  Borrower
shall  furnish  to the Banks in form and  detail  satisfactory  to Agent and the
Requisite Banks:

            (a) as soon as  available,  but in any event within ninety (90) days
after the end of each of its fiscal years,  a  consolidated  balance sheet as of
the  end  of,  and  related  consolidated   statements  of  income,  changes  in
stockholders'  equity and cash flow for,  such year,  audited and  certified  by
Price Waterhouse (or other independent certified public accountant acceptable to
Agent);  and,  concurrently  with  such  financial  statements,  a copy  of said
certified public accountant's management report;

            (b) as soon as available,  but in any event within  forty-five  (45)
days after the end of each of its fiscal quarters,  a consolidated balance sheet
as of the end of, and a related

                                      29.

<PAGE>

consolidated  statements of income and cash flow for, the period then ended,  as
well as the results for the  year-to-date  period then ended,  certified  by the
chief financial officer of Borrower but subject,  however, to normal,  recurring
year-end adjustments that shall not in the aggregate be material in amount;

            (c)  after  the  occurrence  of an  Event  of  Default,  as  soon as
available, but in any event within twenty (20) days after the end of each month,
a detailed  accounts  receivable aging report (listing  current  receivables and
receivables  of 30,  60,  90 and over 90 days  duration)  for all  customers  of
Borrower, in form and substance satisfactory to Agent;

            (d) as soon as  available,  but in any event within ninety (90) days
after the end of each of its fiscal years,  a three (3) year  operating plan for
the new fiscal year, which operating plan shall detail, on a quarterly basis for
the  then-current  fiscal year and  annually for the two (2)  subsequent  years,
Borrower's  best  estimate of revenue,  expenses and balance  sheet  categories,
presented in the customary form of balance  sheets,  income  statements and cash
flow statements.

            (e)  concurrently  with the  delivery  of each  financial  statement
pursuant  to  subsections  (a)  and  (b)  of  this  Section  5.1,  a  report  in
substantially  the form of Exhibit E hereto  signed on behalf of Borrower by its
chief financial officer;

            (f) promptly  after the receipt  thereof by Borrower,  copies of any
final  reports  submitted  to  Borrower  by  independent  public  accountant  in
connection  with any interim  review of the  accounts  of Borrower  made by such
accountant;

            (g)  promptly  after  the same are  available,  copies  of all proxy
statements,  financial  statements  and  reports as  Borrower  shall send to its
stockholders  generally and copies of all final  registration  statements (other
than on form S-8 or other registration  statements relating to option plans) and
material  reports (in each case without  exhibits) as Borrower may file with the
Securities and Exchange Commission;

            (h) if and when Borrower  gives or is required to give notice to the
PBGC of any  "Reportable  Event"  (as  defined in  Section  4043 of ERISA)  with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan  administrator  of any Plan has given or is  required to give notice of any
such Reportable  Event, a copy of the notice of such  Reportable  Event given or
required to be given to the PBGC;

                                      30.

<PAGE>

            (i)  immediately  upon a Responsible  Officer  becoming aware of the
existence of any condition or event that constitutes or may result in a Default,
written notice thereof specifying the nature and duration thereof and the action
being or proposed to be taken with respect thereto.

            (j)  promptly  upon a  Responsible  Officer  becoming  aware  of any
litigation  or of any  investigative  proceedings  by a  governmental  agency or
authority commenced or threatened against Borrower or any of its Subsidiaries of
which it has notice, the outcome of which would or might have a Material Adverse
Effect, written notice thereof and the action being or proposed to be taken with
respect thereto;

            (k)  promptly  upon a  Responsible  Officer  becoming  aware  of any
investigative  proceedings  by a governmental  agency or authority  commenced or
threatened  against Borrower or any of its Subsidiaries  regarding any potential
violation of Environmental Laws or any spill, release,  discharge or disposal of
any Hazardous Material,  written notice thereof and the action being or proposed
to be taken with respect thereto;

            (l) from time to time,  such other  financial  data and  information
about Borrower or its  Subsidiaries as any of the Banks may reasonably  request;
and

            (m)  immediately  upon a  Responsible  Officer  becoming  aware that
Borrower  or any of its  Subsidiaries  shall enter into any  settlement,  or any
verdict, judgment or order for the payment of money shall be entered against any
of them by any court, or a warrant of attachment or execution or similar process
shall be issued or levied  against  property  of  Borrower  or such  Subsidiary,
whether or not such verdict, judgment, order, warrant or process shall have been
discharged or stayed,  which settlement,  verdict,  judgment,  order, warrant or
process has an aggregate  value exceeding  $250,000,  written notice thereof and
the action being or proposed to be taken with respect thereto.

         .2 Conduct of Business. Borrower shall and shall cause its Subsidiaries
to:

            (a) duly  observe  and  comply  with all  applicable  laws and valid
requirements  of  any  governmental   authorities   relative  to  its  corporate
existence,  rights and  franchises,  to the conduct of its  business  and to its
property and assets (including  without  limitation all  Environmental  Laws and
ERISA),  and shall  maintain  and keep in full force and effect all licenses and
permits necessary to the proper conduct of its business, except where failure to
do so cannot be expected to have a Material Adverse Effect;

            (b) maintain its corporate existence,  provided,  however,  that the
corporate  existence of any  Subsidiary  may be terminated if, in the good faith
judgment of the Board of Directors of Borrower,  such termination is in the best
interests of Borrower and its Subsidiaries taken as a whole; and

            (c) remain  engaged  substantially  in the  business  of  designing,
manufacturing,  marketing  and  supporting  client/server  workgroup  networking
solutions and activities reasonably related or incidental thereto.

                                      31.

<PAGE>

         .3  Maintance  and  Insurance.  Borrower  shall  maintain and cause its
Subsidiaries  to maintain  its  properties  in good  repair,  working  order and
condition as required for the normal conduct of its business.  Borrower shall at
all times maintain and cause its Subsidiaries to maintain liability and casualty
insurance  covering their  respective  properties and assets,  with  financially
sound and reputable  insurers in such amounts as the respective  officers in the
exercise of their  reasonable  judgment deem to be adequate and as are customary
in Borrower's industry.

         .4 Taxes. Borrower shall pay or cause to be paid all taxes, assessments
or  governmental  charges on or against it or any of its  Subsidiaries or its or
their  properties  on or prior to the time when they become due;  provided  that
this  covenant  shall not apply to any tax,  assessment  or charge that is being
contested  in good faith by  appropriate  proceedings  and with respect to which
adequate  reserves have been  established and are being maintained in accordance
with generally accepted  accounting  principles if no lien shall have been filed
to secure such tax, assessment or charge.

         .5  Inspection   By  Bank.   Borrower   shall  permit  any   authorized
representatives  designated by any Bank in writing, at Borrower's expense,  upon
reasonable  notice to Borrower  during normal business hours and as often as may
be reasonably  requested,  (or if an Event of Default shall have occurred and is
continuing,  at any time and without prior notice and at Borrower's  expense) to
(i) visit and inspect the  properties  of Borrower  and its  Subsidiaries,  (ii)
examine  and make  copies of and take  abstracts  from the books and  records of
Borrower  and its  Subsidiaries,  and (iii)  discuss the  affairs,  finances and
accounts of  Borrower  and its  Subsidiaries  with their  appropriate  officers,
employees, attorneys, accountants or other agents. In handling such information,
each of Agent  and the  Banks  shall  exercise  the same  degree of care that it
exercises with respect to its own  proprietary  information of the same types to
maintain the  confidentiality of any non-public  information thereby received or
received pursuant to subsections  5.1(a),  (b), or (c) except that disclosure of
such  information may be made (i) to the subsidiaries or affiliates of Agent and
the Banks in connection  with their present or  prospective  business  relations
with Borrower,  (ii) to prospective  transferees or purchasers of an interest in
the  Loans,  (iii) as  required  by law,  regulation,  rule or order,  subpoena,
judicial  order or similar order and (iv) as may be required in connection  with
the  examination,  audit  or  similar  investigation  of  Agent  or  the  Banks.
Notwithstanding  any  provision  of  this  Agreement  to the  contrary,  neither
Borrower nor any of its  Subsidiaries  will be required to disclose,  permit the
inspection,  examination,  copying or making  extracts of, or discussion of, any
document,  information or other matter that (i) constitutes  non-financial trade
secrets  or  other  non-financial  proprietary  information  unless  an Event of
Default  exists and is  continuing in which case such  inspection,  examination,
copying  or  making  of  extracts  of,  or  discussion  of  such  documents  and
information  may, at agent's  option,  be required;  or (ii) in respect of which
disclosure to such Bank (or a designated  representative)  is then prohibited by
law.

         .6 Maintenance  of Books and Records.  Borrower shall keep and Borrower
shall cause its  Subsidiaries to keep adequate books and records of account,  in
which  entries,  true  and  complete  in all  material  respects,  will  be made
reflecting all of its business and financial

                                      32.

<PAGE>

transactions,  and  such  entries  will  be made in  accordance  with  generally
accepted accounting principles consistently applied and applicable law.

         .7  Financial  Covenants.  Borrower  agrees  and  understands  that the
following  financial  covenants  shall be subject to  quarterly  compliance  (as
measured on the last day of each fiscal  quarter of Borrower  beginning with the
quarter  ending  June 30,  1996) for each  quarter  in which a Loan or Letter of
Credit is  outstanding  under this Agreement or in which an Event of Default has
occurred  and is  continuing  or in which  Borrower is in  violation of any such
financial  covenants or upon a request of Agent,  and in each case review by the
Banks of the  respective  fiscal  quarter's  consolidated  financial  statements
delivered to Agent by Borrower pursuant to Section 5.1:

            (a)  Quick  Ratio.  Borrower  shall  maintain  a  quick  ratio  (the
applicable  ratio  to be  calculated  as (i)  the  sum  of  cash  plus  accounts
receivable on a  consolidated  basis to (ii)  Consolidated  Current  Liabilities
plus, to the extent not already  included as Consolidated  Current  Liabilities,
the principal amount of the Loans and the principal amount undrawn under Letters
of Credit then outstanding) of not less than 2.00:1.

            (b)  Profitability.  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  September  30, 1996,  Borrower may have a net loss on a
consolidated basis of not more than $1,000,000.

            (c) Leverage Ratio.  Borrower shall maintain a ratio of Consolidated
Total  Liabilities  (including the undrawn amount of all outstanding  Letters of
Credit) to Consolidated  Tangible Net Worth (the "Leverage Ratio") not to exceed
1.00:1.00.

            (d)  Consolidated   Tangible  Net  Worth.  Borrower  shall  maintain
Consolidated Tangible Net Worth of at least $52,000,000.

            (e) Capital  Expenditures.  The consolidated Capital Expenditures of
Borrower  and its  Subsidiaries  shall not exceed  $3,000,000  during any fiscal
year.

         .8 Use of  Proceeds.  Borrower  will  use  the  proceeds  of the  Loans
substantially  for working  capital  purposes  and not in  contravention  of any
Requirement  of Law and Borrower  will use the proceeds of the Letters of Credit
to support offshore local currency borrowing needs or supplier contracts and not
in  contravention  of any  Requirement of Law.  Without  limiting the foregoing,
Borrower  will not take or  permit  any agent  acting on its  behalf to take any
action which might cause this Agreement or any document or instrument  delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.

         .9  Collateralization.  At the Maturity  Date,  unless the  Commitments
hereunder  are  renewed,  or  such  earlier  date  as the  commitment  hereunder
terminates,  Borrower shall deposit,

                                      33.

<PAGE>

as collateral,  with Sumitomo, in cash, an amount equal to the face value of any
and all issued and undrawn  Letters of Credit and shall  execute  all  documents
reasonably  requested  by  Sumitomo  to perfect  its  security  interest in such
collateral.

         .10  Futher  Assurances.  At any time and  from  time to time  Borrower
shall, and shall cause each of its  Subsidiaries or other necessary  parties to,
execute and deliver such further instruments and take such further action as may
reasonably be requested by Agent or the  Requisite  Banks to effect the purposes
of this Agreement and the Loan Documents.

VI
                               NEGATIVE COVENANTS

     So long as the Banks have any  commitment  to lend  hereunder  or any Loan,
Letter  of  Credit or other  Obligation  remains  outstanding,  and  unless  the
Requisite  Banks shall  otherwise  consent in  writing,  Borrower  covenants  as
follows:

         .1  Indebtness.  Neither  Borrower  nor any of its  Subsidiaries  shall
create,  incur,  assume,  guarantee  or be or remain  liable with respect to any
Indebtedness other than the following:

            (a) Indebtedness of Borrower or any of its Subsidiaries to the Banks
or any of their affiliates hereunder;

            (b)  Indebtedness  existing  as of the  date of this  Agreement  and
disclosed on Schedule 6.1 hereto and other normal trade Indebtedness;

            (c) Indebtedness secured by Permitted Encumbrances;

            (d) Guarantees permitted under Section 6.2;

            (e) unsecured  Indebtedness  of Network  Peripherals  International,
Ltd., in Taiwan, in an aggregate amount not to exceed U.S. $2,000,000;

            (f)  Indebtedness   constituting  the  execution  of  bonds  or  the
endorsement  of  negotiable  instruments  received  in the  ordinary  course  of
business; and

            (g)   extensions,   refinancings,   modifications,   amendments  and
restatements of any of items of indebtedness set forth in (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are  not  modified  to  impose  more  burdensome  terms  upon  Borrower,   on  a
consolidated basis.

                                      34.

<PAGE>

         .2 Contigent Liabilities.  Neither Borrower nor any of its Subsidiaries
shall  create,  incur,  assume or remain  liable with respect to any  Contingent
Liabilities other than the following:

            (a)  Guarantees  in  favor of the  Banks or any of their  affiliates
hereunder;

            (b) Guarantees  existing on the date of this Agreement and disclosed
on Schedule 6.2 hereto;

            (c)  Guarantees   resulting  from  the   endorsement  of  negotiable
instruments for collection in the ordinary course of business;

            (d) Guarantees with respect to surety, appeal performance and return
of money  and other  similar  obligations  incurred  in the  ordinary  course of
business  (exclusive  of  obligations  for the  payment of  borrowed  money) not
exceeding in the aggregate at any time $250,000; and

            (e)  Guarantees of normal trade debt relating to the  acquisition of
goods and supplies.

         .3 Sale and  Leaseback.  Neither  Borrower nor any of its  Subsidiaries
shall enter into any arrangement,  directly or indirectly, whereby it shall sell
or transfer  any property  owned by it in order to lease such  property or lease
other  property  that  Borrower  or any of its  Subsidiaries  intends to use for
substantially the same purpose as the property being sold or transferred, except
in the ordinary course of business.

         .4 Encumbrances.  Neither  Borrower nor any of its  Subsidiaries  shall
create,  incur,  assume  or  suffer  to exist  any  mortgage,  pledge,  security
interest,  lien or other charge or  encumbrance,  including the lien or retained
security  title  of a  conditional  vendor  upon or with  respect  to any of its
property or assets ("Encumbrances"),  or assign or otherwise convey any right to
receive  income,  including the sale or discount of accounts  receivable with or
without recourse, except the following ("Permitted Encumbrances"):

            (a)  Encumbrances  in favor of the Banks or any of their  affiliates
hereunder;

            (b)  Encumbrances  existing  as of the  date of this  Agreement  and
disclosed on Schedule 6.4 hereto;

            (c) liens  for  taxes,  fees,  assessments  and  other  governmental
charges  to the  extent  that  payment  of the same may be  postponed  or is not
required in accordance with the provisions of Section 5.4;

                                      35.

<PAGE>

            (d)  landlords' and lessors' liens in respect of rent not in default
or liens in  respect  of  pledges  or  deposits  under  workmen's  compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds  incidental to litigation;
mechanics',  laborers' and  materialmen's  and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids,  tenders,  contracts (other than for the payment of money);  and statutory
obligations  incidental  to the conduct of its  business  and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;

            (e)  judgment  liens  that  shall not have been in  existence  for a
period longer than thirty (30)  consecutive  days after the creation thereof or,
if a stay of execution shall have been obtained, for a period longer than thirty
(30) consecutive days after the expiration of such stay;

            (f) rights of lessors under capital leases to Borrower;

            (g)  Encumbrances  in respect of any purchase  money  obligations of
Borrower and its  Subsidiaries  for tangible  property used in its business that
have been  approved by the requisite  Banks;  provided,  however,  that any such
Encumbrances shall not extend to property and assets of Borrower not financed by
such a purchase money obligation;

            (h) easements, rights of way, restrictions and other similar charges
or Encumbrances  relating to real property and not interfering in a material way
with the ordinary conduct of its business;

            (i) Encumbrances in favor of customs and revenue authorities arising
in a matter of law to secure  payment of customs  duties in connection  with the
importation  of  goods  and  Encumbrances  on  insurance  proceeds  in  favor of
insurance companies with respect to the financing of insurance premiums;

            (j) Encumbrances  which constitute  rights of set-off of a customary
nature or bankers' liens with respect to amounts on deposit,  whether arising by
operation of law or by contract,  in connection with  arrangements  entered into
with banks or investment firms in the ordinary course of business;

            (k)  non-exclusive  licenses and  sublicenses  granted to others not
interfering in any material  respect with the business of Borrower or any of its
Subsidiaries and any interest or title of a licensor or under any license;

            (l)  Encumbrances  on its property or assets  created in  connection
with the refinancing of Indebtedness  secured by Permitted  Encumbrances on such
property,  provided  that  the  amount  of  Indebtedness  secured  by  any  such
Encumbrance  shall not be increased as a result

                                      36.

<PAGE>

of such refinancing and no such Encumbrance  shall extend to property and assets
of Borrower or any Subsidiary not encumbered prior to any such refinancing.

         .5 Merger; Consolidation; Sale or Lease of Assets. Neither Borrower nor
any of its Subsidiaries shall:e Of Assets

            (a)  sell,  lease  or  otherwise  dispose  of all or any part of its
business assets or properties, whether now owned or hereafter acquired except as
permitted  by Section  6.3,  other than (i) sales of  inventory  in the ordinary
cause of  business;  (ii)  sales of used,  worn-out  or  surplus  assets  in the
ordinary course of business;  (iii) sales of equipment,  for fair and reasonable
consideration, to the extent that such equipment is exchanged for credit against
the purchase price of similar replacement equipment or the proceeds of such sale
are applied to the purchase price of such  replacement  equipment  within ninety
(90) days of the date Borrower  shall have provided  Agent written notice of its
intent to sell  specifically  identified  equipment  and so apply  the  purchase
price; (iv) sales, transfers or liquidations of Investments permitted by Section
6.9 the proceeds of which are  maintained  in Borrower or its  Subsidiaries,  as
applicable;  (v) the licensing of Borrower's  technology on fair and  reasonable
market-based  terms;  and (vi) sales of assets by a Subsidiary to Borrower or to
another  wholly  owned  Subsidiary  at fair market  value as that value would be
determined between unrelated parties; or

            (b) in one  transaction  as a series of  transactions  liquidate  or
merge  or  recapitalize  or  consolidate   into  or  with,  or  acquire  all  or
substantially all of the assets of, any other person or entity.

         .6 Acquisitions  and Joint Ventures.  Except to the extent permitted by
Section 6.9,  Borrower  shall not, and shall not permit any of the  Subsidiaries
to, make any  Acquisitions  or Joint  Ventures or to enter into any agreement to
make any Acquisitions or Joint Ventures.

         .7  Subsidiary  Stock  Issuance.  Borrower  shall not permit any of its
Subsidiaries to issue any additional shares of its capital stock or other equity
securities,  any options  therefor or any securities  convertible  thereto other
than to  Borrower  or any  wholly  owned  Subsidiary  (or to  other  persons  in
connection  with the  issuance of  directors  shares or shares to satisfy  local
ownership  requirements).  Neither of Borrower nor any of its Subsidiaries shall
sell,  transfer or otherwise dispose of any of the capital stock or other equity
securities  of a Subsidiary,  except (i) to Borrower or any of its  wholly-owned
Subsidiaries, or (ii) in connection with a transaction permitted by Section 6.5.

         .8 Early  Distrubutions.  Borrower  shall not pay any  dividends on any
class of its capital stock or make any other  distribution or payment on account
of or in  redemption,  retirement or purchase of such capital  stock;  provided,
however,  that this  Section  shall not apply to (i) the  issuance,  delivery or
distribution  by Borrower of shares of its common stock pro rata to

                                      37.

<PAGE>

its existing shareholders, or (ii) the purchase or redemption by Borrower of its
capital stock with the proceeds of the issuance of additional  shares of capital
stock.

         .9 Investments.  Without prior written consent of the Requisite  Banks,
neither  Borrower  nor  any of its  Subsidiaries  shall  make  or  maintain  any
Investments other than

            (a)  Investments  by Borrower in  Subsidiaries  existing on the date
hereof  and  disclosed  on  Schedule  6.9 and  Investments  by  Subsidiaries  in
Borrower;

            (b) Qualified Investments;

            (c) Investments  existing on the date of this Agreement disclosed on
Schedule 6.9;

            (d)  Investments   consisting  of  the  endorsements  of  negotiable
instruments  for deposit or collection or similar  transactions  in the ordinary
course of business;

            (e) Investments by Borrower or a Subsidiary as part of a transaction
permitted by Sections 6.2 and 6.6;

            (f) Investments  consisting of receivables  owing to Borrower or its
Subsidiaries  and advances to customers or suppliers,  in each case, if created,
acquired or made in the ordinary course of business;

            (g) Investments  (including debt obligations) received in connection
with  the  bankruptcy  or  reorganization  of  customers  or  suppliers  and  in
settlement of delinquent  obligations of, and other disputes with,  customers or
suppliers arising in the ordinary course of business;

            (h)  Investments  consisting  of notes  receivable  of,  or  prepaid
royalties  and other  credit  extensions  to,  customers  and  suppliers  in the
ordinary course of business;

            (i) Deposit accounts;

            (j)  Investments   consisting  of  (i)  compensation  of  employees,
officers and directors of Borrower or its  Subsidiaries  so long as the Board of
Directors of Borrower  determines that such compensation is in the best interest
of Borrower, (ii) travel advances,  employee relocation loans and other employee
loans and advances in the ordinary course of business, (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower,
and other loans to officers and employees, which loans have been approved by the
Board of Directors  where such approval is required by law, all of the foregoing
of not more than $200,000 in the aggregate; and

                                      38.

<PAGE>

            (k) Investments  pursuant to or arising under currency agreements or
interest rate agreements entered into in support of commercial transactions done
in the ordinary course of business.

         .10 ERISA.  Neither of Borrower nor any member of the Controlled  Group
shall  permit  any  Plan  maintained  by it to (i)  engage  in  any  "prohibited
transaction"   (as  defined  in  Section  4975  of  the  Code,  (ii)  incur  any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived,  or (iii)  terminate  any Plan in a manner that could  result in the
imposition  of a lien or  encumbrance  on the assets of  Borrower  or any of its
Subsidiaries pursuant to Section 4068 of ERISA.

         .11  Transactions  with  Subsidiaries.  Borrower  shall not directly or
indirectly  enter into or permit to exist any  transaction  (including,  without
limitation,  the  purchase,  sale,  lease or  exchange  of any  property  or the
rendering  of any  service)  with any  Subsidiary  on terms  less  favorable  to
Borrower  than those that might be obtained from  unrelated  parties who are not
Subsidiaries.

VII
                                    DEFAULTS

         .1 Events of Default.  There shall be an Event of Default  hereunder if
any of the following events occurs:

            (a) Borrower  shall fail to pay when due (i) any amount of principal
of any Loans,  or (ii) any amount of  interest  thereon or any fees or  expenses
payable  hereunder or under the Note within three (3) days of the same  becoming
due and payable; or

            (b) Borrower  shall fail to perform any term,  covenant or agreement
contained in Sections  5.1(a),  (b),  (c), and (h), 5.5, 5.7 through 5.10 or 6.1
through 6.11; or

            (c)  Borrower  shall  fail to  perform  any  covenant  contained  in
Sections 5.1(g), 5.1(i), 5.1(j), 5.2 or 5.6, and such failure shall continue for
thirty (30) days; or

            (d) Borrower  shall fail to perform any term,  covenant or agreement
(other than in respect of subsections  7.l(a)  through (c) hereof)  contained in
this Agreement and such default shall continue for thirty (30) days after notice
thereof has been sent to Borrower by Agent; or

            (e)  any  representation  or  warranty  of  Borrower  made  in  this
Agreement or in the Loan Documents or any other documents or agreements executed
in connection  with the  transactions  contemplated  by this Agreement or in any
certificate  delivered  hereunder shall prove

                                      39.

<PAGE>

to have been false in any material  respect upon the date when made or deemed to
have been made; or

            (f) any event or  circumstance  or set of  events  or  circumstances
shall have  occurred  which has  resulted,  or could  reasonably  be expected to
result, in a Material Adverse Effect; or

            (g)  Borrower  or any  of  its  Subsidiaries  shall  fail  to pay at
maturity, or within any applicable period of grace, any obligations for borrowed
monies or advances or for the use of real or personal property  outstanding in a
principal  amount of at least $100,000,  or fail to observe or perform any term,
covenant or  agreement  evidencing  or securing  such  obligations  for borrowed
monies or advances or  relating  to such use of real or personal  property,  the
result of which failure is to permit the holder or holders of such  Indebtedness
to cause  such  Indebtedness  to become due prior to its  stated  maturity  upon
delivery of required notice, if any; or

            (h)  Borrower  or any of its  Subsidiaries  shall  (i)  apply for or
consent to the  appointment  of, or the  taking of  possession  by, a  receiver,
custodian,  trustee,  liquidator  or similar  official  of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts  become  due,  (iii)  make a general  assignment  for the  benefit  of its
creditors, (iv) take any action or commence any case or proceeding under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts,  or any other law providing for the relief of debtors,  (v)
fail to contest in a timely or appropriate  manner,  or acquiesce in writing to,
any petition  filed against it in an  involuntary  case under any  bankruptcy or
other  law,  (vii)  take  any  action  under  the  laws of its  jurisdiction  of
incorporation  or organization  similar to any of the foregoing,  or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or

            (i) a proceeding or case shall be commenced, without the application
or consent of  Borrower  or any of its  Subsidiaries  in any court of  competent
jurisdiction, seeking (i) the liquidation, reorganization,  dissolution, winding
up, or  composition  or  readjustment  of its debts,  (ii) the  appointment of a
trustee,  receiver,  custodian,  liquidator  or the  like of it or of all or any
substantial part of its assets,  or (iii) similar relief in respect of it, under
any law  relating  to  bankruptcy,  insolvency,  reorganization,  winding-up  or
composition  or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed and
in effect,  for a period of sixty (60) consecutive  days; or an order for relief
shall be  entered  in an  involuntary  case  under any  bankruptcy  law  against
Borrower or such  Subsidiary;  or action under the laws of the  jurisdiction  of
incorporation  or organization  of Borrower or any of its Subsidiary  similar to
any of the foregoing  shall be taken with respect to Borrower and shall continue
unstayed and in effect for any period of sixty (60) consecutive days; or

            (j) a judgment  or order for the  payment of money  shall be entered
against  Borrower  or any of its  Subsidiaries  by any  court,  or a warrant  of
attachment  or execution or

                                      40.

<PAGE>

similar  process shall be issued or levied against  property of Borrower or such
Subsidiary,  that in the aggregate  exceeds $250,000 in value and such judgment,
order,  warrant or process shall  continue  undischarged  or unstayed for thirty
(30) consecutive days;

            (k) Borrower or any member of the Controlled Group shall fail to pay
when due any amount that it shall have become  liable to pay to the PBGC or to a
Plan under Title IV of ERISA;  or notice of intent to  terminate a Plan or Plans
shall be filed under Title IV of ERISA by Borrower, any member of the Controlled
Group, any plan  administrator or any combination of the foregoing;  or the PBGC
shall institute  proceedings  under Title IV of ERISA to terminate or to cause a
trustee to be  appointed  to  administer  any such Plan or Plans or a proceeding
shall be instituted  by a fiduciary of any such Plan or Plans  against  Borrower
and such  proceedings  shall not have been  dismissed  within  thirty  (30) days
thereafter;  or a  condition  shall  exist by reason of which the PBGC  would be
entitled  to obtain a decree  adjudicating  that any such Plan or Plans  must be
terminated; or

            (l)  Borrower  fails to be  listed  on  NASDAQ  or other  nationally
recognized exchange.

         .2 Remedies.  Upon the  occurrence of an Event of Default  described in
subsections  7.1(h)  and  (i),  immediately  and  automatically,  and  upon  the
occurrence  of any other Event of  Default,  at any time  thereafter  while such
Event of Default  is  continuing,  at the  Majority  Banks'  option and upon the
Majority Banks' declaration:

            (a)  Agent  shall  file or  record  the  Financing  Statements,  the
Intellectual  Property Security  Agreements and all other documents  required to
perfect the first priority  security interest in favor of Agent and the Banks in
all assets of Borrower  created by the Security  Agreement and the  Intellectual
Property  Security  Agreements,  and  Borrower  shall,  and  shall  require  its
Subsidiaries  and any other  necessary  parties to, execute all other  documents
required to perfect a first priority security interest in favor of Agent and the
Banks in all assets of Borrower; such documents may include, without limitation,
security agreements and UCC financing statements;

            (b) the Banks'  Commitments  to make any further  Loans or issue any
further Letters of Credit hereunder shall terminate;

            (c) the unpaid  principal  amount of the Loans together with accrued
interest and all other  Obligations  hereunder shall become  immediately due and
payable without presentment,  demand, protest or further notice of any kind, all
of which are hereby expressly waived;

            (d) Agent or the Banks may demand that  Borrower  (i)  deposit  cash
with Agent in an amount  equal to the amount of any Letters of Credit  remaining
undrawn,  as collateral  security for the repayment of any future drawings under
such  Letters of Credit,  and  Borrower

                                      41.

<PAGE>

shall forthwith  deposit and pay such amounts,  and (ii) pay in advance all fees
and commissions scheduled to be paid or payable over the remaining terms of such
Letters of Credit; and

            (e) Agent and the Banks may  exercise  any and all rights  they have
under this  Agreement,  the Loan Documents or any other  documents or agreements
executed in connection herewith,  or at law or in equity, and proceed to protect
and  enforce  Agent's  and the Banks'  rights by any action at law, in equity or
other appropriate proceeding.

VIII
                                      AGENT

         .1 Appointment, Powers And Immunities

            (a) Each Bank hereby appoints  Sumitomo as Agent hereunder and under
the other Loan Documents and each Bank hereby  irrevocably  authorizes  Agent to
act hereunder and thereunder as Agent of such Bank.  Agent agrees to act as such
upon the express  conditions  contained  in this  Section 8. In  performing  its
functions and duties under this  Agreement  and under the other Loan  Documents,
Agent  shall act  solely as Agent of the Banks and does not assume and shall not
be deemed to have assumed any obligation  towards or  relationship  of agency or
trust with or for Borrower.

            (b) Each Bank  irrevocably  authorizes  Agent to take such action on
such Bank's  behalf and to exercise  such powers  hereunder as are  specifically
delegated  to Agent by the  terms  hereof,  together  with  such  powers  as are
reasonably  incidental  thereto.  Agent shall have only those  duties  which are
specified  in this  Agreement  and it may perform  such duties by or through its
agents,  representatives  or employees.  In performing  its duties  hereunder on
behalf of the Banks,  Agent shall exercise the same care which it would exercise
in dealing with loans made or letters of credit issued for its own account,  but
it  shall  not be  responsible  to any Bank  for the  execution,  effectiveness,
genuineness, validity,  enforceability,  collectibility or sufficiency of all or
any of the Loan Documents, or for any representations,  warranties,  recitals or
statements made herein or therein or made in any written or oral statement or in
any financial or other  statements,  instruments,  reports,  certificates or any
other  documents  furnished or delivered in connection  herewith or therewith by
Agent to any Bank or by or on behalf  of  Borrower  to Agent or any Bank,  or be
required to ascertain or inquire as to the  performance  or observance of any of
the terms, conditions,  provisions,  covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or amounts drawn under the
Letters of Credit.  Unless the  officers  of Agent  acting in their  capacity as
officers of Agent on Borrower's  account have actual  knowledge  thereof or have
been  notified in writing  thereof by the Banks,  Agent shall not be required to
ascertain or inquire as to the  existence or possible  existence of any Event of
Default.  Neither  Agent  nor  any  of  its  officers,   directors,   employees,
representatives  or agents  shall be liable to the Banks for any action taken or
omitted  hereunder  or under any of the other Loan  Documents  or in  connection
herewith or therewith  unless caused by its or their gross

                                      42.

<PAGE>

negligence or willful misconduct. No provision of this Agreement or of any other
Loan  Document  shall be  deemed to impose  any duty or  obligation  on Agent to
perform any act or to exercise any power in any  jurisdiction  in which it shall
be  illegal,  or shall be deemed to impose  any duty or  obligation  on Agent to
perform any act or exercise any right or power if such  performance  or exercise
(i) would subject Agent to a tax in a jurisdiction  where it is not then subject
to a tax  or  (ii)  would  require  Agent  to  qualify  to do  business  in  any
jurisdiction  where it presently is not so qualified.  Without  prejudice to the
generality of the foregoing,  no Bank shall have any right of action  whatsoever
against  Agent as a result of Agent acting or (where so  instructed)  refraining
from acting  under this  Agreement  or under any of the other Loan  Documents in
accordance with the instructions,  request or consent of the Requisite Banks and
any action taken or failure to act,  pursuant to such  instructions,  request or
consent  shall be binding on all Banks.  Agent shall be entitled to refrain from
exercising any power,  discretion or authority vested in it under this Agreement
unless and until it has  obtained  the  written  instructions  of the  Requisite
Banks.  The agency  hereby  created  shall in no way impair or affect any of the
rights and powers  of, or impose  any  duties or  obligations  upon Agent in its
individual capacity.

         .2  Representations  and Warranties;  No Responsibility For Inspection.
Each  Bank  represents  and  warrants  that  it has  made  its  own  independent
investigation  of the financial  condition and affairs of Borrower in connection
with the making of the Loans and issuance of the Letters of Credit hereunder and
has made and shall continue to make its own appraisal of the creditworthiness of
Borrower.  Agent shall have no duty or  responsibility  either initially or on a
continuing basis to make any such  investigation or any such appraisal on behalf
of the Banks or to provide any Bank with any credit or other information  (other
than  information  obtained under the  provisions of this Agreement  which Agent
shall make  available  to each Bank upon  request  by such  Bank)  with  respect
thereto whether coming into its possession before the date hereof or any time or
times  thereafter and shall further have no  responsibility  with respect to the
accuracy of or the completeness of the information  provided to the Banks.  With
respect to its  participation in the Loans and the Letters of Credit  hereunder,
Agent shall have the same rights and powers  hereunder as any other Bank and may
exercise the same rights and powers as though it were not  performing the duties
and  functions  delegated to it hereunder  and the term "Bank" or "Banks" or any
similar term shall unless the context clearly indicates  otherwise include Agent
in its individual capacity. Agent and each of its affiliates may accept deposits
from,  lend money to and generally  engage in any kind of business with Borrower
as if it were not Agent.

         .3 Reliance By Agent

            (a) Agent may consult with counsel,  and any opinion or legal advice
of such counsel who are not  employees of Agent or Borrower or any  affiliate of
Borrower shall be full and complete  authorization  and protection in respect of
any  action  taken or  suffered  by Agent  hereunder  or under  any  other  Loan
Documents in accordance therewith.

                                      43.

<PAGE>

            (b) Agent may rely, and shall be fully protected in acting, upon any
resolution,  statement,   certificate,   instrument,  opinion,  report,  notice,
request,  consent,  order, bond or other paper or document that it has no reason
to believe to be other than  genuine and to have been signed or presented by the
proper party or parties or, in the case of cables,  telecopies  and telexes,  to
have been sent by the  proper  party or  parties.  In the  absence  of its gross
negligence or willful  misconduct,  Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions  expressed  therein,  upon
any  certificates  or  opinions   furnished  to  Agent  and  conforming  to  the
requirements of this Agreement or any of the other Loan Documents.

            (c) Agent shall not be under any  obligation  to exercise any of the
rights or powers granted to Agent by this Agreement and the other Loan Documents
at the request or direction of the Requisite  Banks unless Agent shall have been
provided by the Requisite Banks with adequate security and indemnity against the
costs,  expenses and  liabilities  that may be incurred by it in compliance with
such request or direction.

         .4 Delegation of Duties. Agent may execute any of the powers hereof and
perform  any  duty  hereunder  either  directly  or  by  or  through  agents  or
attorneys-in-fact.  Agent shall be entitled to advice of counsel  concerning all
matters pertaining to such powers and duties. Agent shall not be responsible for
the negligence or misconduct of any agents or  attorneys-in-fact  selected by it
without gross negligence or willful misconduct on the part of Agent.

         .5 Right To Indemnity.  Each of the Banks  severally,  but not jointly,
agrees (a) to  indemnify  and hold  Agent  (and any  person  acting on behalf of
Agent)  harmless  from and against  and (b)  promptly on receipt by each Bank of
Agent's statement,  to reimburse Agent,  according to such Bank's pro rata share
of the  Commitment  Amount,  to the extent Agent shall not  otherwise  have been
reimbursed  by  Borrower  on  account  of and  for,  any  and  all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses (including,  without limitation,  the fees and disbursements of counsel
and other  advisors)  or  disbursements  of any kind of nature  whatsoever  with
respect to Agent's  performance of its duties under this Agreement and the other
Loan Documents.  Such  reimbursement  shall not in any respect release  Borrower
from any liability or  obligation.  If any indemnity  furnished to Agent for any
purpose shall,  in the opinion of Agent,  be  insufficient  or become  impaired,
Agent may call for additional  indemnity and cease,  or not commence,  to do the
acts indemnified against until such additional indemnity is furnished.

         .6 Resignation  and Appointment of Successor  Agent.  Agent may, and at
the request of the  Majority  Banks  shall,  resign by giving  thirty (30) days'
prior written notice thereof to the Banks and Borrower;  provided, however, that
the retiring  Agent shall  continue to serve until a successor  Agent shall have
been selected and approved pursuant to this Section 8.6. Upon any such notice or
request, the Majority Banks shall appoint a successor agent for the Banks. If no
successor  agent is appointed  prior to the effective date of the resignation of
Agent,  Agent may  appoint,  after  consulting  with the Banks and  Borrower,  a
successor Agent from

                                      44.
<PAGE>

among the Banks. Upon the acceptance of any appointment as an Agent hereunder by
a successor  Agent,  such successor Agent shall thereupon  succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring Agent's resignation  hereunder as Agent, the
provisions  of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.

         .7 Conflicts.  Sumitomo and its  affiliates  may accept  deposits from,
lend money to, act as trustee under indentures of, act as merchant banker in any
transaction for, and generally engage in any kind of business with, Borrower and
any person who may do business  with or own  securities  of Borrower,  all as if
Sumitomo were not Agent and without any duty to account therefor to the Banks or
to disclose to the Banks  confidential  information  which  Sumitomo may receive
from Borrower in connection with such other activity or business.

         .8 No  Obligations  of  Borrower.  Nothing  contained in this Section 8
shall be deemed to impose upon Borrower any obligation in respect of the due and
punctual  performance  by  Agent  of its  obligations  to the  Banks  under  any
provision of this  Agreement,  and Borrower  shall have no liability to Agent or
any Bank in respect of any  failure by Agent or any Bank to perform any of their
respective obligations to each other under this Agreement.  Without limiting the
generality of the  foregoing  sentence,  where any  provision of this  Agreement
relating to the  payment of any  amounts due and owing under the Loan  Documents
provides that such  payments  shall be made by Borrower to Agent for the account
of the Banks,  Borrower's  obligations  to the Banks in respect of such payments
shall be deemed to be satisfied upon the making of such payments to Agent in the
manner provided by this Agreement.

IX
                                  MISCELLANEOUS

         .1 Notices. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given when
delivered by hand, when properly  deposited in the mails postage  prepaid,  when
sent by telex,  answerback received,  or electronic facsimile  transmission with
electronic  confirmation  of receipt,  or when sent by  telegraph  or  overnight
courier, addressed to such party at its address indicated below:

IF TO BORROWER AT:    1371 Mccarthy Boulevard
                            Milpitas, California 95035
                            Telephone:        (408) 321-7300
                            Facsimile:        (408) 321-9218
                            Attention:        Truman Cole, Vice Pres. of Finance

IF TO AGENT AT:             SUMITOMO BANK OF CALIFORNIA

                                      45.

<PAGE>

                            84 West Santa Clara Street, Suite 700
                            San Jose, California 95113
                            Telephone:        (408) 288-6267
                            Facsimile:        (408) 288-6292
                            Attention:        Relationship Manager -
                                              Network Peripherals Inc.

     If to any Bank, at its address  specified on the signature pages hereto, or
at any other address specified by such party in writing.

         .2  Expenses.  Borrower  will pay  promptly  on demand,  and subject to
Section  3.1(j),  in any event within ten (10) days of invoice,  all expenses of
Agent in connection with the preparation, waiver or amendment of this Agreement,
the Loan Documents or other documents executed in connection therewith,  and all
expenses of Agent and each Bank in connection  with the default on or collection
of the Loans or other  Obligations  or default,  collection in  connection  with
Agent's  or any  Bank's  exercise,  preservation  or  enforcement  of any of its
rights,   remedies  or  options  thereunder,   including,   without  limitation,
reasonable  fees of outside  legal  counsel or the  allocated  costs of in-house
legal counsel, accounting,  consulting,  brokerage or other similar professional
fees or expenses,  and any fees or expenses  associated with any travel or other
costs relating to any appraisals or  examinations  conducted in connection  with
the  Obligations,and  the amount of all such expenses  shall,  until paid,  bear
interest at the rate  applicable to principal  hereunder  (including any default
rate).

         .3 Indemnification

            (a) General Indemnity.  Borrower shall pay, indemnify, and hold each
Bank,  Agent  and  each of  their  respective  officers,  directors,  employees,
counsel,  agents and attorneys-in-fact  (each, an "Indemnified Person") harmless
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions, judgments, suits, costs, charges, expenses or disbursements
(including  reasonable  attorneys'  fees  and  costs)  of  any  kind  or  nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration  of  this  Agreement  and  any  other  Loan  Documents,   or  the
transactions   contemplated  hereby  and  thereby,   and  with  respect  to  any
investigation,  litigation or proceeding (including any proceeding in bankruptcy
or appellate  proceeding)  related to this  Agreement or the Loans or the use of
the proceeds thereof,  whether or not any Indemnified  Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided, that
Borrower  shall have no  obligation  hereunder  to any  Indemnified  Person with
respect to Indemnified  Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person.

            (b)  Notice.   Borrower   shall  be  given  prompt   notice  of  the
commencement of any action or proceeding on any Indemnified Liability and of any
overt written threat of litigation on any Indemnified Liability, but the failure
to receive such notice shall not relieve  Borrower

                                      46.

<PAGE>

from any of its  obligations  under  this  Section  9.3,  except  to the  extent
Borrower has been actually damaged thereby.

            (c) Selection of Counsel.  Borrower  shall have the right,  with the
consent of the Indemnified Person (which shall not be withheld unreasonably), to
select a firm of attorneys as legal counsel to defend any Indemnified Liability,
and Borrower shall pay the fees,  expenses and disbursements of such counsel and
any  special  or local  counsel;  and if the  Indemnified  Person or such  legal
counsel determines in good faith that representing such Indemnified Person would
or could  result in a conflict of  interest,  or that a defense,  crossclaim  or
counterclaim  is available to such  Indemnified  Person that is not available to
any other Person represented by such legal counsel in the same proceeding,  then
to the extent  reasonably  necessary  to avoid such a conflict of interest or to
permit unqualified assertion of such a defense, crossclaim or counterclaim, such
Indemnified Person shall be entitled to separate  representation,  at Borrower's
expense,  by legal counsel  selected by such  Indemnified  Person and reasonably
acceptable to Borrower,  with all such legal counsel using reasonable efforts to
avoid unnecessary duplication of effort by counsel.

            (d) Seperate Counsel.  Each Indemnified  Person shall have the right
to be  represented  by counsel of its own  choosing  (i) at  Borrower's  expense
whenever  any Event of Default is  continuing,  except  that  Borrower  shall be
obligated under this Section 9.3 only to pay the reasonable fees and expenses of
one firm of attorneys  chosen by Agent to represent  its interests and the other
Indemnified  Person as a group, or (ii) when such Indemnified Person is entitled
to separate representation at Borrower's expense as set forth in Section 9.3(d),
and (iii) at any time and under any  circumstances at such Indemnified  Person's
expense;  and Borrower and the attorneys selected by Borrower shall cooperate in
all reasonable respects with such counsel.

            (e) Survival;  Defense.  The  obligations  in this Section 9.3 shall
survive  payment of all other  Obligations.  At the election of any  Indemnified
Person,  Borrower  shall  defend such  Indemnified  Person  using legal  counsel
satisfactory to such Indemnified  Person in such person's sole  discretion,  and
reasonably  satisfactory to Borrower,  at the sole cost and expense of Borrower.
All amounts  owing under this Section 9.3 shall be paid within  thirty (30) days
after demand.

         .4 Set-Off

            (a) Regardless of the adequacy of other means of obtaining repayment
of the Obligations, any deposits, balances or other sums credited by or due from
the head offices of Agent,  the Banks or any of their branch offices to Borrower
may,  at any time and from  time to time  after  the  occurrence  of an Event of
Default  hereunder,  without  notice to  Borrower or  compliance  with any other
condition  precedent  now or  hereafter  imposed  by  statute,  rule of law,  or
otherwise (all of which are hereby expressly  waived) be set off,  appropriated,
and applied by Agent and the Banks against any and all  obligations  of Borrower
to Agent and the  Banks or any

                                      47.
<PAGE>

of their  affiliates  in such manner as the head  offices of the Banks or any of
their branch offices in their sole discretion may determine.

            (b) Unless otherwise  expressly provided herein, all interest,  fees
and  principal  payments  on the Loans to Borrower  hereunder  are to be divided
among the Banks in the same  proportion  as each  Bank's  pro rata  share of the
Commitment Amount. Any sums obtained from Borrower or any Subsidiary by any Bank
by reason of the exercise of its rights of set-off or banker's lien or otherwise
shall be shared among all the Banks in the same  proportion and applied first to
Obligations  of Borrower  under this  Agreement.  Nothing in this Section 9.4(b)
shall be deemed to require the sharing by the Banks of  collections  (other than
by set-off or banker's  lien) with respect to any other  Obligations of Borrower
or any Subsidiary to any Bank.

         .5 Term of Agreement.  This Agreement  shall continue in full force and
effect so long as the Banks have any  Commitment  to make Loans or issue Letters
of Credit hereunder or any Loan or Letter of Credit or any Obligation hereunder,
except Obligations arising under Section 9.3, shall be outstanding.

         .6 No Waivers.  No failure or delay by Agent or the Banks in exercising
any right,  power or  privilege  hereunder  or under the Note or under any other
documents or  agreements  executed in  connection  herewith  shall  operate as a
waiver thereof;  nor shall any single or partial  exercise  thereof preclude any
other or further exercise  thereof or the exercise of any other right,  power or
privilege. The rights and remedies herein and in the Loan Documents provided are
cumulative  and not  exclusive of any rights or remedies  otherwise  provided by
agreement or law.

         .7 Governing Law. This Agreement and the Loan Documents shall be deemed
to be contracts  made under seal and shall be construed in  accordance  with and
governed by the laws of the State of  California  (without  giving effect to any
conflicts of laws provisions contained therein).

         .8 Amendments  and Waivers.  No amendment or waiver of any provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by Borrower therefrom,  shall be effective unless the same shall be in
writing and signed by the Requisite  Banks,  Borrower and acknowledged by Agent,
and then such waiver  shall be effective  only in the specific  instance and for
the specific purpose for which given;  provided,  however,  that no such waiver,
amendment, or consent shall, unless in writing and signed by all Banks, Borrower
and acknowledged by Agent, do any of the following:

            (a) increase or extend the  Commitment of any Bank (or reinstate any
Commitment  terminated pursuant to subsection 7.2(a)) or subject any Bank to any
additional obligations;

                                      48.

<PAGE>

            (b)  postpone or delay any date fixed for any payment of  principal,
interest, fees or other amounts due to Banks (or any of them) hereunder or under
any Loan Document;

            (c)  reduce  the  principal  of, or the rate of  interest  specified
herein on any Loan, or of any fees or other amounts  payable  hereunder or under
any Loan Document;

            (d) change the  percentage  of the  Commitments  or of the aggregate
unpaid  principal  amount of the Loans which shall be required  for the Banks or
any of them to take any action hereunder;

            (e) amend this Section 9.8 or Section 9.4(b); or

            (f) discharge any  guarantor of the  Obligations,  or release all or
substantially all of any collateral for the Obligations  except as otherwise may
be provided in the Loan  Documents or except where the consent of the  Requisite
Banks only is specifically provided for;

and, provided  further,  that no amendment,  waiver or consent shall,  unless in
writing and signed by Agent in addition to the Requisite  Banks or all Banks, as
the case may be,  affect the rights or duties of Agent under this  Agreement  or
any other Loan Document.

         .9 Binding Effect of Agreement.  This  Agreement  shall be binding upon
and inure to the benefit of Borrower and Banks and their  respective  successors
and  assigns;  provided  that  Borrower may not assign or transfer its rights or
obligations  hereunder.  Banks may sell, transfer or grant participations in the
Note,  without the prior written consent of Borrower,  and Borrower agrees that,
in addition to such rights as a Bank may grant  pursuant to Section  9.10 below,
any transferee or participant shall be entitled to the benefits of Sections 2.9,
2.10,  2.14,  5.5,  9.3 and 9.4 to the  same  extent  as if such  transferee  or
participant  were a Bank  hereunder;  provided  that  notwithstanding  any  such
transfer or  participation,  Borrower  may, for all purposes of this  Agreement,
treat such Banks as the persons  entitled to exercise all rights  hereunder  and
under the Note and to receive all payments with respect thereto. Nothing in this
Section shall negate the provisions of Section 9.10 below.

         .10 Assignments, Participations, Etc.

            (a) Any Bank may, with the written consent of Borrower (at all times
other than  during  the  existence  of an Event of  Default)  and  Agent,  which
consents shall not be unreasonably  withheld, at any time assign and delegate to
one or more financial institutions (provided that no written consent of Borrower
or Agent shall be required in connection with any assignment and delegation by a
Bank to an affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans,  the  Commitments  and the other rights and obligations of
such Bank hereunder,  in a minimum amount of $5,000,000  (provided that Sumitomo
may assign and delegate such rights and  obligations to any of its affiliates in
a minimum amount of $5,000,000);  provided, however, that (i) Borrower and Agent
may continue to deal solely and

                                      49.

<PAGE>

directly  with such Bank in  connection  with the  interest  so  assigned  to an
Assignee  until (A) written  notice of such  assignment,  together  with payment
instructions,  addresses and related  information  with respect to the Assignee,
shall have been given to Borrower and Agent by such Bank and the  Assignee;  (B)
such  Bank and its  Assignee  shall  have  delivered  to  Borrower  and Agent an
Assignment and Acceptance in form and substance acceptable to Agent ("Assignment
and Acceptance") and (C) the assignor Bank or Assignee has paid to Agent Agent's
customary fee as agreed to by the assignor Bank, provided that no processing fee
shall be charged for any assignment to a Bank or a Bank's affiliate.

            (b) From and after the date that Agent  notifies the  assignor  Bank
that it has received an executed  Assignment  and  Acceptance and payment of the
above-referenced  processing fee, (i) the Assignee  thereunder  shall be a party
hereto  and,  to the extent  that  rights and  obligations  hereunder  have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan  Documents,  and (ii) the assignor Bank
shall, to the extent that rights and  obligations  hereunder and under the other
Loan  Documents  have  been  assigned  by it  pursuant  to such  Assignment  and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.

            (c)  Immediately  upon each  Assignee's  making its  processing  fee
payment under the Assignment and  Acceptance,  this Agreement shall be deemed to
be amended to the  extent,  but only to the  extent,  necessary  to reflect  the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom.   The  Commitment  allocated  to  each  Assignee  shall  reduce  such
Commitment of the assigning Bank pro tanto.

            (d) Any Bank may at any time sell to one or more commercial banks or
other  persons  not  affiliates  of  Borrower  (a  "Participant")  participating
interests in any Loans,  the Commitment of that Bank and the other  interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided,  however,  that (i) the  originating  Bank's  obligations  under  this
Agreement shall remain unchanged,  (ii) the originating Bank shall remain solely
responsible  for the performance of such  obligations,  (iii) Borrower and Agent
shall  continue  to deal  solely  and  directly  with  the  originating  Bank in
connection  with the  originating  Bank's  rights  and  obligations  under  this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any  participating  interest  under which the  Participant  shall have rights to
approve  any  amendment  to, or any  consent or waiver  with  respect  to,  this
Agreement  or any other  Loan  Document,  except to the extent  such  amendment,
consent or waiver would otherwise require unanimous consent of Banks.

            (e) Notwithstanding any other provision in this Agreement,  any Bank
may at any time create a security interest in, or pledge,  all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal  Reserve Bank in accordance  with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss. 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

                                      50.

<PAGE>

         .11  Counterparts.  This  Agreement  may be  signed  in any  number  of
counterparts  with the same effect as if the signatures  hereto and thereto were
upon the same instrument.

         .12 Partial  Invalidity.  The invalidity or unenforceability of any one
or more  phrases,  clauses or  sections of this  Agreement  shall not affect the
validity or enforceability of the remaining portions of it.

         .13  Captions.  The captions  and headings of the various  sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.

         .14 Waiver of Jury Trial. AGENT, THE BANKS AND BORROWER AGREE THAT NONE
OF THEM  NOR ANY  ASSIGNEE  OR  SUCCESSOR  SHALL  (A)  SEEK A JURY  TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT
OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG ANY OF THEM,  OR (B) SEEK TO  CONSOLIDATE  ANY SUCH ACTION WITH
ANY OTHER  ACTION IN WHICH A JURY TRIAL  CANNOT BE OR HAS NOT BEEN  WAIVED.  THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY  DISCUSSED BY AGENT,  THE BANKS AND
BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.  NEITHER AGENT
NOR THE BANKS NOR BORROWER HAS AGREED WITH OR  REPRESENTED TO ANY OTHER THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

         .15 Entire  Agreement.  This Agreement,  the Note and the documents and
agreements executed in connection herewith constitute the final agreement of the
parties hereto and supersede any prior  agreement or  understanding,  written or
oral, with respect to the matters contained herein and therein.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed  by their duly  authorized  officers as of the day and year first above
written.

BORROWER                             NETWORK PERIPHERALS INC.


                                     By:
                                        ----------------------------------------
                                     Printed Name:
                                                  ------------------------------
                                     Title:
                                           -------------------------------------

AGENT                                SUMITOMO BANK OF CALIFORNIA

                                      51.

<PAGE>

                                     By:
                                        ----------------------------------------
                                     Printed Name:
                                                  ------------------------------
                                     Title:
                                           -------------------------------------

                                     By:
                                        ----------------------------------------
                                     Printed Name:
                                                  ------------------------------
                                     Title:
                                           -------------------------------------

BANKS                                SUMITOMO BANK OF CALIFORNIA


                                     By:
                                        ----------------------------------------
                                     Printed Name:
                                                  ------------------------------
                                     Title:
                                           -------------------------------------

                                     By:
                                        ----------------------------------------
                                     Printed Name:
                                                  ------------------------------
                                     Title:
                                           -------------------------------------

                                     Address for notices:
                                     SUMITOMO BANK OF CALIFORNIA
                                     84 West Santa Clara Street, Suite 700
                                     San Jose, California 95113
                                     Telephone:        (408) 288-6267
                                     Facsimile:        (408) 288-6292
                                     Attention:        Relationship Manager -
                                                       Network Peripherals Inc.

                                      52.

<PAGE>



                                   SCHEDULE 1

                           REVOLVING COMMITMENT AMOUNT


         BANK                                                         COMMITMENT

         Sumitomo Bank of California                          $10,000,000.00


<PAGE>



                                  SCHEDULE 4.12

             EXECUTIVE OFFICES AND INVENTORY AND EQUIPMENT LOCATIONS
                           OF NETWORK PERIPHERALS INC.

1371 McCarthy Boulevard
Milpitas, CA 95035
USA

9F-6 No. 4, Land 609 Sec. 5
Chung Hsin Road
San Chung City, Taipei
Taiwan

140 Cecil Street #10-03
PIL Building
Singapore

Transmolenlaan 12
3447 GZ Woerden
The Netherlands


<PAGE>


                                  SCHEDULE 4.14

                    SUBSIDIARIES OF NETWORK PERIPHERALS INC.

<TABLE>

                                                       JURISDICTION
NAME OF SUBSIDIARY                                     OF INCORPORATION                             % OWNERSHIP

<S>                                                    <C>                                             <C> 
Network Peripherals International, Ltd.                Delaware                                        100%

Network Peripherals FSC, Inc.                          Barbados                                        100%
</TABLE>


<PAGE>


                                  SCHEDULE 6.1

                    INDEBTEDNESS OF NETWORK PERIPHERALS INC.


None.


<PAGE>

                                  SCHEDULE 6.2

                     GUARANTEES OF NETWORK PERIPHERALS INC.


None.


<PAGE>



                                  SCHEDULE 6.4

                    ENCUMBRANCES OF NETWORK PERIPHERALS INC.


None.


<PAGE>



                                  SCHEDULE 6.9

                     INVESTMENTS OF NETWORK PERIPHERALS INC.


None.


<PAGE>

<TABLE>

                                                  TABLE OF CONTENTS
<CAPTION>
                                                                                                               Page

SECTION I
<S>      <C>                                         <C>                                                         <C>
                                                     DEFINITIONS................................................ 1.
         1.1      Definitions................................................................................... 1.
         1.2      Accounting Terms..............................................................................10.

SECTION II

                                                DESCRIPTION OF CREDIT...........................................11.
         2.1      Commitment to Lend............................................................................11.
         2.2      Notice And Manner Of Borrowing Or Conversion Of Loans.........................................12.
         2.3      Letters Of Credit.............................................................................12.
         2.4      Fees..........................................................................................15.
         2.5      Reduction Of Commitment Amount................................................................15.
         2.6      The Note......................................................................................15.
         2.7      Duration Of Interest Periods..................................................................16.
         2.8      Interest Rates And Payments Of Interest.......................................................16.
         2.9      Changed Circumstances.........................................................................17.
         2.10     Capital Requirements..........................................................................19.
         2.11     Payments And Prepayments Of The Loans.........................................................19.
         2.12     Method Of Payment.............................................................................20.
         2.13     Overdue Payments..............................................................................20.
         2.14     Payments Not At End Of Interest Period........................................................20.
         2.15     Computation Of Interest And Fees..............................................................21.
         2.16     Right To Replace Bank.........................................................................21.

SECTION III

                                                 CONDITIONS OF LOAN.............................................21.
         3.1      Conditions Precedent To Initial Loan..........................................................21.
         3.2      Conditions Precedent To All Loans.............................................................23.

SECTION IV

                                           REPRESENTATIONS AND WARRANTIES.......................................24.
         4.1      Organization And Qualification................................................................24.
         4.2      Corporate Authority...........................................................................24.
         4.3      Valid Obligations.............................................................................24.
         4.4      Consents Or Approvals.........................................................................24.
         4.5      Title To Properties; Absence Of Encumbrances..................................................25.
         
                                                                 i.

<PAGE>
                                                        TABLE OF CONTENTS
                                                            (continued)

         4.6      Financial Statements..........................................................................25.
         4.7      Changes.......................................................................................25.
         4.8      Defaults......................................................................................25.
         4.9      Taxes.........................................................................................25.
         4.10     Litigation....................................................................................25.
         4.11     Material Contracts............................................................................25.
         4.12     Executive Offices and Inventory and Equipment Locations.......................................26.
         4.13     Use Of Proceeds...............................................................................26.
         4.14     Subsidiaries..................................................................................26.
         4.15     Investment Company Act........................................................................26.
         4.16     Compliance With ERISA.........................................................................26.
         4.17     Environmental Matters.........................................................................26.

SECTION V

                                                AFFIRMATIVE COVENANTS...........................................28.
         5.1      Financial Statements And Other Reporting Requirements.........................................28.
         5.2      Conduct Of Business...........................................................................30.
         5.3      Maintenance And Insurance.....................................................................30.
         5.4      Taxes.........................................................................................30.
         5.5      Inspection By Bank............................................................................30.
         5.6      Maintenance Of Books And Records..............................................................31.
         5.7      Financial Covenants...........................................................................31.
                  (a)      Quick Ratio..........................................................................31.
                  (b)      Profitability........................................................................31.
                  (c)      Leverage Ratio.......................................................................32.
                  (d)      Consolidated Tangible Net Worth......................................................32.
                  (e)      Capital Expenditures.................................................................32.
         5.8      Use Of Proceeds...............................................................................32.
         5.9      Collateralization.............................................................................32.
         5.10     Further Assurances............................................................................32.

SECTION VI

                                                 NEGATIVE COVENANTS.............................................32.
         6.1      Indebtedness..................................................................................32.
         6.2      Contingent Liabilities........................................................................33.

                                                                 ii

<PAGE>
                                                        TABLE OF CONTENTS
                                                            (continued)

         6.3      Sale And Leaseback............................................................................33.
         6.4      Encumbrances..................................................................................33.
         6.5      Merger; Consolidation; Sale Or Lease Of Assets................................................35.
         6.6      Acquisitions And Joint Ventures...............................................................35.
         6.7      Subsidiary Stock Issuance.....................................................................35.
         6.8      Equity Distributions..........................................................................36.
         6.9      Investments...................................................................................36.
         6.10     ERISA.........................................................................................37.
         6.11     Transactions with Subsidiaries................................................................37.

SECTION VII

                                                      DEFAULTS..................................................37.
         7.1      Events Of Default.............................................................................37.
         7.2      Remedies......................................................................................39.

SECTION VIII

                                                        AGENT...................................................40.
         8.1      Appointment, Powers And Immunities............................................................40.
         8.2      Representations And Warranties; No Responsibility For Inspection..............................41.
         8.3      Reliance By Agent.............................................................................41.
         8.4      Delegation Of Duties..........................................................................42.
         8.5      Right To Indemnity............................................................................42.
         8.6      Resignation And Appointment Of Successor Agent................................................42.
         8.7      Conflicts.....................................................................................43.
         8.8      No Obligations Of Borrower....................................................................43.

SECTION IX

                                                    MISCELLANEOUS...............................................43.
         9.1      Notices.......................................................................................43.
         9.2      Expenses......................................................................................44.
         9.3      Indemnification...............................................................................44.
                  (a)      General Indemnity....................................................................44.
                  (b)      Notice...............................................................................44.
                  (c)      Selection Of Counsel.................................................................44.

                                                                iii.

<PAGE>
                                                        TABLE OF CONTENTS
                                                            (continued)

                  (d)      Separate Counsel.....................................................................45.
                  (e)      Survival; Defense....................................................................45.
         9.4      Set-Off.......................................................................................45.
         9.5      Term Of Agreement.............................................................................45.
         9.6      No Waivers....................................................................................46.
         9.7      Governing Law.................................................................................46.
         9.8      Amendments And Waivers........................................................................46.
         9.9      Binding Effect Of Agreement...................................................................47.
         9.10     Assignments, Participations, Etc..............................................................47.
         9.11     Counterparts..................................................................................48.
         9.12     Partial Invalidity............................................................................48.
         9.13     Captions......................................................................................48.
         9.14     Waiver Of Jury Trial..........................................................................48.
         9.15     Entire Agreement..............................................................................49.
</TABLE>

                                                                iv.

<PAGE>


                                    EXHIBITS


EXHIBIT A         Form of Promissory Note
EXHIBIT B         Form of Security Agreement
EXHIBIT C         Form of Intellectual Property Security Agreements
EXHIBIT D         Form of Notice of Borrowing or Conversion
EXHIBIT E         Form of Report of Chief Financial Officer
EXHIBIT F         Form of Opinion of Gray Cary Ware & Freidenrich

         SCHEDULES

SCHEDULE 1        Commitments
SCHEDULE 4.12     Executive Offices and Inventory and Equipment Locations
SCHEDULE 4.14     Subsidiaries
SCHEDULE 6.1      Indebtedness
SCHEDULE 6.2      Guarantees
SCHEDULE 6.4      Encumbrances
SCHEDULE 6.9      Investments

                                       v.