NETWORK PERIPHERALS INC
10-K/A, 1998-08-31
COMPUTER COMMUNICATIONS EQUIPMENT
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K/A

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-23970

                            NETWORK PERIPHERALS INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                                    77-0216135
(State or other Jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or Organization)

                             1371 McCarthy Boulevard
                           Milpitas, California 95035
          (Address, including zip code of principal executive offices)

                                 (408) 321-7300
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(g) of the Act:

                                 Title of class
                                  Common Stock

Indicate by checkmark  whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of the registrant's  knowledge,  in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of March 18, 1998 was $94,251,917  based upon the closing price of
the Registrant's Common Stock on the Nasdaq National Market System on that date.

The number of shares of the  Registrant's  Common Stock  outstanding as of March
18, 1998 was 12,260,412.

The  undersigned   registrant  hereby  amends  the  following  items,  financial
statements,  exhibits or other portions of its Annual Report for the fiscal year
ended December 31, 1997 on Form 10-K as set forth in the pages attached hereto:

                                       1

<PAGE>


                                    Part III

Item 10.  Directors and Executive Officers of the Registrant

<TABLE>
         The following table sets forth the name and age of each director of the
Company,  the principal  occupation of each during the past five years,  and the
period during which each has served as a director of the Company:

<CAPTION>
                                               Principal Occupation                              Director
           Name                             During the Past Five Years                   Age       Since
           ----                             --------------------------                   ---       -----
<S>                         <C>                                                           <C>      <C>
Joseph Marengi              Mr.  Marengi  has  served on the Board of  Directors          44       1997
                            since July 1997.  Since August 1997, he has been the
                            Senior Vice  President  and  General  Manager of the
                            Relationship Group at Dell Computers. Previously, at
                            Novell, Inc. (Novell), Mr. Marengi held the position
                            of President and Chief Operating Officer from August
                            1996 to  June  1997.  While  at  Novell,  he was the
                            Executive  Vice  President of  Worldwide  Sales from
                            April 1994, a corporate  officer  since August 1993,
                            and Senior Vice President from October 1992.

William Rosenberger         Mr.  Rosenberger has served as the President,  Chief          48       1998
                            Executive  Officer  and a  director  of the  Company
                            since  June  1998.  From  June 1996 to June 1998 Mr.
                            Rosenberger   was  President  and  Chief   Executive
                            Officer of  NetAccess,  Inc.,  an  Internet  sevices
                            company.  From  October  1995 to  December  1995 Mr.
                            Rosenberger was Vice President of sales and business
                            development  for  NetVision,  a networking  company.
                            From March 1993 to June 1995,  Mr.  Rosenberger  was
                            General   Manager  of  ACSYS,   Inc.,   an  Internet
                            consulting and development  company.  Prior to March
                            1993  Mr.   Rosenberger   was  President  and  Chief
                            Executive  Officer of  Netronix,  Inc., a networking
                            hardware designer and manufacturer.

Michael S. Gardner          Mr.  Gardner has served as a director of the Company          53       1998
                            since May 1998.  From  February  1998 to the present
                            Mr.  Gardner has served as Senior Vice  President of
                            Worldwide  Field  Operations  for Sybase,  Inc.,  an
                            information   management   software  company.   From
                            November 1996 to February 1998 Mr. Gardner was Chief
                            Operating  Officer  for ACT  Networks,  a  wide-area
                            network access products manufacturer.  From May 1995
                            to  November  1996  Mr.  Gardner  was  President  of
                            Whittaker   Communications   (formerly   Hughes  LAN
                            Systems),  a networking company.  From April 1993 to
                            April 1995 Mr.  Gardner was Senior Vice President of
                            Worldwide  Sales  for  UB  Networks,   a  networking
                            company.

Steven Bell                 Mr.  Bell has  served as a director  of the  Company          44       1998
                            since July 1998.  From May 1998 to the  present  Mr.
                            Bell has  served as  President  and Chief  Executive
                            Officer of the Silicon Valley  Networking Lab, Inc.,
                            of networking  industry  products  testing  company.
                            From  September  1993 to  April  1998  Mr.  Bell was
                            founder and  President of Bell  Consulting,  Inc., a
                            networking  products marketing company.  From August
                            1992 to August 1993 Mr. Bell was Vice  President  of
                            Marketing  for  Make  Systems,  Inc.,  a  networking
                            software company.


<PAGE>


Glenn Penisten              Mr. Penisten has served as the Chairman of the Board          66       1996
                            of Directors since June 1996.  Since September 1985,
                            he has been a partner of Alpha  Partners,  a venture
                            capital  firm.  He has  served  as  Chief  Executive
                            Officer for  several  leading  technology  companies
                            including;  Superconductor Technologies,  Inc., from
                            May 1987 to June 1988; American Microsystems,  Inc.,
                            from  July   1976  to   December   1984,   and  Data
                            Transmission  Co., from February 1972 to April 1976.
                            Mr.  Penisten has also held director level positions
                            at Dataproducts Corporation,  Sanders Associates and
                            Gould,  Inc.  He served as a  corporate  officer  at
                            Texas   Instruments,   Inc.,  and  chairman  of  the
                            American  Electronics   Association.   Mr.  Penisten
                            currently serves as director for Ikos Systems,  Bell
                            Microproducts,  Pinnacle Systems, and Superconductor
                            Technologies, Inc.

Charles Hart                Mr. Hart has served on the Board of Directors  since          60       1996
                            November  1996.  From February 1998, he has been the
                            Chief Executive  Officer and a director of Micronics
                            Computers Inc., a supplier of advanced system boards
                            for high-performance  personal computers. From April
                            1997  through   February  1998,  he  served  as  the
                            Executive Vice President,  Business Development, for
                            the Company.  From August 1995 to May 1997, he was a
                            founding  board  member  of InsWeb  Corporation,  an
                            internet  technology  company providing a vertically
                            integrated marketplace for the insurance industry on
                            the World  Wide Web.  From  July 1992  through  July
                            1995, he was President and Chief  Executive  Officer
                            of Semaphore Communications Corporation. Previously,
                            he

<PAGE>

                            held  positions  of  President  and Chief  Executive
                            Officer with Phaser Systems and Etak, Inc.
</TABLE>


         There are no family  relationships  among any  directors or officers of
the Company.

Board Meetings and Committees

         The Board of  Directors  of the Company  held a total of 9 meetings and
took action by written  consent two times during the fiscal year ended  December
31, 1997.  No director  participated  in fewer than 75% of all such meetings and
actions of the Board of Directors  and the  committees,  if any, upon which such
director served.

         The  Board of  Directors  has an  Audit  Committee  and a  Compensation
Committee. It does not have a Nominating Committee or a committee performing the
functions of a Nominating Committee. The functions of a Nominating Committee are
performed by the Board of Directors as a whole.

         The Audit Committee of the Board of Directors,  consisting of directors
Mr. Levy and Mr.  Penisten,  met 4 times during fiscal 1997. The Audit Committee
recommends engagement of the Company's independent accountants, and is primarily
responsible  for  reviewing  and  approving  the  scope of the  audit  and other
services  performed by the Company's  independent  accountants and for reviewing
and evaluating the Company's  accounting  principles and its systems of internal
accounting controls.

<PAGE>

         The Compensation Committee of the Board of Directors, which consists of
directors  Joseph  Marengi and William Tai, held two meetings and took action by
written consent two times during fiscal 1997.  Director Ann Bowers, who resigned
from the  Board  of  Directors  in May  1997,  also  served  as a member  of the
Compensation Committee for a portion of 1997. The terms of office of Mr. Marengi
and Mr.  Tai will  expire at the 1998  Annual  Meeting.  The new  members of the
Compensation  Committee  are  anticipated  to be Mr. Hart and Mr.  Marengi.  The
Compensation Committee reviews and approves the Company's executive compensation
policy,  and  reviews  and  approves  grants of options to  employees  under the
Company's  1997 Stock Plan. The  Compensation  Committee also approved two stock
option  repricings  effective July 25, 1997 and October 31, 1997. See "Report of
Compensation Committee on Executive Compensation."

Compensation of Directors

         Directors who are not employees of the Company (an "Outside  Director")
are entitled to receive a director  fee of $4,000 per fiscal  quarter so long as
they remain directors of the Company. Directors do not receive any additional or
special  remuneration for their service on any of the committees  established by
the Board of Directors.

         Non-employee  directors  are eligible to  participate  in the Company's
1994 Outside  Directors  Stock  Option  Plan.  The Outside  Directors  Plan,  as
amended,  provides for the automatic  granting of nonstatutory  stock options to
Outside  Directors  of  the  Company.  Each  continuing  Outside  Director  will
automatically  be granted an option to purchase  5,000 shares of Common Stock on
the date of each annual meeting of stockholders.  Each new Outside Director will
automatically  be granted an option to purchase 15,000 shares of Common Stock on
their date of election.

         During 1997, the Company granted  nonstatutory  options to director Ms.
Alker for 66,667 shares (inclusive of the effects of the repricing - See "Report
of the  Compensation  Committee  on  Executive  Compensation  - Chief  Executive
Officer Compensation"), pursuant to the 1993 Stock Option Plan. In addition, Mr.
Hart,  Mr. Levy and Mr. Tai were each  granted  nonstatutory  stock  options for
5,000 shares and Mr.  Marengi was granted  15,000  shares under the 1994 Outside
Directors Stock Option Plan, as amended

<PAGE>

                                OTHER INFORMATION

Share Ownership by Principal Stockholders and Management
<TABLE>
         The following table sets forth the beneficial ownership of Common Stock
of the  Company  as of March 31,  1998 by:  (a) each  director;  (b) each of the
officers named in the Summary  Compensation  Table ("Named  Officers");  (c) all
directors  and executive  officers as a group;  and (d) each person known to the
Company who beneficially owns 5% or more of the outstanding shares of its Common
Stock.  The number and  percentage  of shares  beneficially  owned is determined
under  rules  of  the  Securities  and  Exchange  Commission  ("SEC"),  and  the
information is not necessarily  indicative of beneficial ownership for any other
purpose. Under such rules,  beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment  power and also any
shares which the individual has the right to acquire within 60 days of March 31,
1998 through the exercise of any stock option or other right.  To the  Company's
knowledge,  the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially  owned by them,
subject  to  community  property  laws  where  applicable  and  the  information
contained in the footnotes to this table.  A total of  12,260,412  shares of the
Company's Common Stock were issued and outstanding as of March 31, 1998.
<CAPTION>
                                                                         ------------------------------------
                                                                              Shares Beneficially Owned
- ------------------------------------------------------------------------ ------------------ -----------------
                                 Name                                         Number            Percent
- ------------------------------------------------------------------------ ------------------ -----------------
<S>                                                                            <C>              <C>
Seneca Ventures (1).............................................               1,030,000        8.2%
- ------------------------------------------------------------------------ ------------------ -----------------
Pauline Lo Alker (2)........................................                     755,498        6.0%
- ------------------------------------------------------------------------ ------------------ -----------------
Glenn Penisten (3)........................................                       135,813        1.1%
- ------------------------------------------------------------------------ ------------------ -----------------
Fred Kiremidjian (3)...........................................                   37,500         *
- ------------------------------------------------------------------------ ------------------ -----------------
Kenneth Levy (4)...............................................                   28,302         *
- ------------------------------------------------------------------------ ------------------ -----------------
Oliver Szu (3)...................................................                 20,919         *
- ------------------------------------------------------------------------ ------------------ -----------------
Robert Hersh (3)................................................                  13,541         *
- ------------------------------------------------------------------------ ------------------ -----------------
William Tai (3).............................................                      10,186         *
- ------------------------------------------------------------------------ ------------------ -----------------
Charles Hart (3).............................................                      7,604         *
- ------------------------------------------------------------------------ ------------------ -----------------
James Sullivan (3)....................................................             7,292         *
- ------------------------------------------------------------------------ ------------------ -----------------
Joseph Marengi ..................................................                      0         *
- ------------------------------------------------------------------------ ------------------ -----------------
Donald Morrison (5)..........................................                          0         *
- ------------------------------------------------------------------------ ------------------ -----------------
Derek Obata (5).............................................                           0         *
- ------------------------------------------------------------------------ ------------------ -----------------
All directors and current executive officers as a group (6)                    1,016,655        8.1%
- ------------------------------------------------------------------------ ------------------ -----------------
<FN>
* Less than 1%
(1)  Based on  information  contained  in the  Schedule  13D  filed by the above
     entity  and  other  members  of a group of  which  that  entity  is a part,
     including Woodland Venture Group, Woodland Partners, Barry Rubenstein,  and
     Marilyn Rubenstein.
(2)  Includes  36,000 shares held by a trust for the benefit of Ms. Alker's son,
     as to which shares Ms. Alker disclaims  beneficial  ownership;  and 114,498
     shares  issuable upon the exercise of outstanding  stock options which were
     exercisable at the Record Date or within 60 days thereafter.

<PAGE>

(3)  Includes  the  following  number of shares  issuable  upon the  exercise of
     outstanding  stock  options  which were  exercisable  at the Record Date or
     within 60 days  thereafter  held by the following  persons:  Mr.  Penisten,
     115,555 shares; Mr.  Kiremidjian,  37,500 shares; Mr. Hersh, 13,541 shares;
     Mr. Szu, 18,747 shares; Mr. Tai, 10,186 shares; Mr. Hart, 7,604 shares; and
     Mr. Sullivan, 7,292 shares.
(4)  Includes  24,366  shares held by Mr. Levy as the trustee of a family trust;
     and 3,936 shares  issuable upon the exercise of  outstanding  stock options
     which were exercisable at the Record Date or within 60 days thereafter.
(5)  Mr. Morrison and Mr. Obata are included in the Summary  Compensation  Table
     but are former  executive  officers  of the  Company.  They do not hold any
     outstanding stock options  exercisable at the Record Date or within 60 days
     thereafter.
(6)  Includes 328,859 shares issuable upon exercise of outstanding stock options
     which were exercisable at the Record Date or within 60 days thereafter.
</FN>
</TABLE>

<PAGE>

                       COMPENSATION OF EXECUTIVE OFFICERS

Summary of Cash and Certain Other Compensation
<TABLE>
         The  following  table sets forth  certain  information  concerning  the
compensation  of the Company's  Chief  Executive  Officer,  the three other most
highly compensated  executive  officers of the Company  (collectively the "Named
Officers")  whose salary and bonus for the year ended December 31, 1997 exceeded
$100,000,  and two former  executive  officers of the Company  whose  salary and
bonus  exceeded  $100,000,  but who were not executive  officers at December 31,
1997.

                           SUMMARY COMPENSATION TABLE
<CAPTION>
                                               ----------------------------------- ----- ---------------------------
                                                                                           LongTerm Compensation
                                                      Annual Compensation                          Awards
- ------------------------------------- ------- -------------- ----- -------------- ----- ----------------------------
              Name and                                                                     Securities Underlying
         Principal Position             Year      Salary              Bonus(1)               Options/SARs(#)(1)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
<S>                                     <C>         <C>                  <C>                  <C>        <C>
Pauline Lo Alker                        1997        $175,000             $149,048             286,667       (4)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  President and CEO                     1996        $175,000             $ 49,500             280,000       (5)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
                                        1995        $161,250             $ 42,601              80,000       (5)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
Fred Kiremidjian                        1997        $183,656             $ 45,150             300,000       (6)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  VP of NuWave Group                    1996        $ 80,881                    -             200,000       (6)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
Oliver Szu                              1997        $160,000             $199,235  (3)        150,000       (7)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  VP of NuCleus Group                   1996        $ 83,978                    -              50,000       (7)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
Robert Hersh                            1997        $111,781                    -             150,000       (8)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  VP of Operations and CFO
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
Derek Obata                             1997        $174,175   (2)       $ 15,000              10,000       (11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  (former VP of Sales)                  1996        $166,190   (2)              -             100,000    (9)(11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
                                        1995        $ 20,327             $    109              35,000    (9)(11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
Donald Morrison                         1997        $136,153   (2)       $ 68,760              37,500        (11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
  (former VP of Marketing)              1996        $152,501   (2)       $ 28,500             100,000    (10)(11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
                                        1995        $ 93,750             $  5,101              50,000    (10)(11)
- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------

- -------------------------------------- ------- -------------- ----- -------------- ----- ------------- -------------
<FN>
(1)  From time to time, the  Compensation  Committee  reviews the performance of
     the executive  officers and may award cash bonuses  and/or stock options to
     officers.  Bonuses  paid in 1997  were  earned  in 1996.  Fiscal  year 1996
     bonuses  include a portion of bonus  amounts  earned in 1995.  No bonus for
     1997 will be  awarded,  other than the bonus paid to Oliver Szu  pusuant to
     the acquisition of NuCom Systems, Inc. in 1996.

<PAGE>

(2)  Includes  commission  payments  to the  following  persons:  Mr.  Morrison,
     $50,436 and $17,501 for 1997 and 1996, respectively; Mr. Obata, $50,330 and
     $28,690 for 1997 and 1996 respectively.
(3)  Includes  bonus  payment  of  $140,000  in  accordance  with the  agreement
     relating to the acquisition of NuCom Systems Inc. in 1996.
(4)  Option to  purchase  an  aggregate  of 66,667  shares was issued  10/31/97,
     replacing  option to purchase  100,000  shares  granted  3/6/97.  Option to
     purchase an aggregate of 120,000 shares issued 10/31/97  replaces option to
     purchase  180,000  shares  granted  9/18/96 (see Note (5) below).  Refer to
     "Report of the  Compensation  Committee  on  Executive  Compensation--Chief
     Executive Officer Compensation."
(5)  Option to  purchase  an  aggregate  of 180,000  shares was issued  9/18/96,
     replacing  option to purchase  100,000  shares granted 4/9/96 and option to
     purchase   80,000  shares  granted  in  1995.   Refer  to  "Report  of  the
     Compensation Committee on Executive  Compensation--Chief  Executive Officer
     Compensation."
(6)  Option to purchase 250,000 shares was issued 10/31/97,  replacing option to
     purchase  50,000 shares granted  3/6/97 and 200,000 shares granted  6/3/96.
     Refer   to   "Report   of   the   Compensation   Committee   on   Executive
     Compensation--Repricing of Options."
(7)  Option to purchase 100,000 shares was issued 10/31/97,  replacing option to
     purchase 50,000 shares granted 3/21/96 and option to purchase 50,000 shares
     granted 3/6/97. Refer to "Report of the Compensation Committee on Executive
     Compensation--Repricing of Options."
(8)  Option to purchase 50,000 shares was issued  10/31/97,  replacing option to
     purchase   50,000  shares  granted   4/21/97.   Refer  to  "Report  of  the
     Compensation Committee on Executive Compensation--Repricing of Options."
(9)  Option to  purchase  an  aggregate  of 35,000  shares was  issued  1/19/96,
     replacing an option to purchase 35,000 shares granted in 1995.
(10) Option to  purchase  an  aggregate  of 50,000  shares was  issued  1/19/96,
     replacing an option to purchase 50,000 shares granted in 1995.
(11) These  options   expired   without  being   exercised  three  months  after
     termination  of the  officers'  employment by the Company prior to December
     31, 1997.
</FN>
</TABLE>

<PAGE>

Option Grants in Last Fiscal Year
<TABLE>
         The following table sets forth details  regarding stock options granted
to the Named Officers in 1997. The Company granted no stock appreciation  rights
in 1997.  In  addition,  in  accordance  with SEC  rules,  the  table  shows the
hypothetical  gains or  "option  spreads"  that would  exist for the  respective
options.  These gains are based on assumed rates of annual  compound stock price
appreciation  of 5% and 10% from the date the options were granted over the full
option term.  The actual value,  if any, an executive may realize will depend on
the spread  between  the  market  price and the  exercise  price on the date the
option is exercised.
<CAPTION>
                      -------------------------------------------------------
                                        Individual Grants
- --------------------- -------------- --------------- ----------- ------------ ------------------------------
                        Number of      Percent of                              Potential Realizable Value
                       Securities    Total Options   Exercise                  at Assumed Annual Rates of
                       Underlying      Granted to    or Base                  Stock Price Appreciation for
                         Options      Employees in     Price     Expiration          Option Term (5)
- --------------------- -------------- --------------- ----------- ------------ --------------- --------------
        Name            Granted *     Fiscal Year      ($/Sh)       Date          5% ($)        (10% ($)
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
<S>                         <C>                <C>      <C>         <C>           <C>            <C>
Pauline Lo Alker             66,667  (1)       1.4%     $  4.94      3/06/07      $  190,153     $  472,955
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                            120,000  (1)       2.5%     $  4.94      9/18/06      $  321,393     $  788,985
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                            100,000  (1)       2.1%     $ 14.00     10/31/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------

- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
Fred Kiremidjian            200,000  (2)       4.2%     $  4.94       6/3/06      $  514,026     $1,251,534
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000  (2)       1.0%     $  4.94       3/6/07      $  142,614     $  354,715
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000  (2)       1.0%     $ 14.00     10/31/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------

- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
Oliver Szu                   50,000  (3)       1.0%     $  4.94       3/6/07      $  146,742     $  367,267
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000  (3)       1.0%     $  4.94      3/21/06      $  124,812     $  302,171
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000  (3)       1.0%     $ 14.00     10/31/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------

- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
Robert Hersh                 50,000  (4)       1.0%     $  4.94      4/21/07      $  145,017     $  361,984
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000            1.0%     $  5.69     11/14/07      $  178,842     $  453,221
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
                             50,000  (4)       1.0%     $  9.13     10/31/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------

- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
Derek Obata                  10,000            0.2%     $ 14.00     12/25/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------

- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
Donald Morrison              37,500            0.8%     $ 14.00      9/13/97               -              -
- --------------------- -------------- ---- ---------- ----------- ------------ --------------- --------------
<FN>
* Executive  Officers who were employees of the Company at October 31, 1997 were
offered  the right to reprice  their  options to the market  price at that date.
Refer to "Report of the  Compensation  Committee  on  Executive  Compensation  -
Repricing of Options." 
(1)  Option to purchase  66,667 shares  granted on 10/31/97  replaced  option to
     purchase  100,000  shares  granted on 3/6/97.  Option to  purchase  120,000
     shares  granted on  10/31/97  replaced  option to purchase  180,000  shares
     granted on 9/18/96.
(2)  Option to purchase  200,000 shares granted on 10/31/97  replaced  option to
     purchase 200,000 shares granted on 6/3/96. Option to purchase 50,000 shares
     granted on 10/31/97  replaced  option to purchase  50,000 shares granted on
     3/6/97.

<PAGE>

(3)  Option to purchase  50,000 shares  granted on 10/31/97  replaced  option to
     purchase 50,000 shares granted on 3/6/97.  Option to purchase 50,000 shares
     granted on 10/31/97  replaced  option to purchase  50,000 shares granted on
     3/21/96.
(4)  Option to purchase  50,000 shares granted on 10/31/97  replaced  options to
     purchase 50,000 shares granted on 4/21/97.
(5)  The  potential  gain is  calculated  based on the fair market  value of the
     Company's Common Stock on the date of grant,  which is equal to the closing
     price reported on the Nasdaq National Market.  These amounts only represent
     certain  assumed rates of  appreciation  as established by the SEC.  Actual
     gains,  if any, on stock option  exercises  are  dependent  upon the future
     performance of the Company and overall stock market  conditions.  There can
     be no assurance that the amounts  reflected in this table or the associated
     rates of appreciation will be achieved.
</FN>
</TABLE>

<PAGE>

Aggregated Option Exercises and Fiscal Year End Option Values
<TABLE>

         The following table sets forth certain  information  concerning options
exercised by the Named Officers  during 1997,  including the aggregate  value of
gains on the date of exercise.  In addition,  this table  includes the number of
shares  covered  by both  exercisable  and  nonexercisable  stock  options as of
year-end.  Also  reported  are the  values  for  "in-the-money"  options,  which
represent the positive  spread  between the exercise  price of any such existing
stock options and the year-end price of the Company's Common Stock.
<CAPTION>

                      ----------- ----------- ----------------------------------- ------------------------------
                      Shares      Value        Number of Securities Underlying
                      Acquired    Realized      Unexercised Options at FY end         Value of In-the-Money
                          On          On                    (#)(1)                    Options at FY End (2)
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
        Name          Exercise    Exercise     Exercisable(1)    Unexercisable    Exercisable    Unexercisable
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
<S>                            <C>         <C>          <C>              <C>         <C>              <C>      
Pauline Lo Alker               -           -            80,054           178,613     $ 481,019        $ 447,449
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
Fred Kiremidjian               -           -            12,499           237,501     $  28,904        $ 549,221
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
Oliver Szu                     -           -             6,248            93,752     $  14,449        $ 216,802
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
Robert Hersh                   -           -             8,333            91,667     $  13,020        $ 180,730
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
Derek Obata                    -           -                 -                 -             -                -
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
Donald Morrison                -           -                 -                 -             -                -
- --------------------- ----------- ----------- ----------------- ----------------- ------------- ----------------
<FN>
(1)  A portion of these  options  were  immediately  exercisable  at the date of
     grant,  but shares  purchased upon exercise of unvested options are subject
     to repurchase at the option of the Company at their original issuance price
     based upon the scheduled vesting period.
(2)  Market value of  underlying  securities,  based on the closing price of the
     Company's  Common Stock,  as reported by the Nasdaq National Market System,
     on December 31, 1997 of $7.25, minus the exercise price.
</FN>
</TABLE>

Employment Agreements and Change in Control Arrangements

     Management Salary Continuation Agreements

         In November 1997 the Company  amended  Salary  Continuation  Agreements
with Pauline Lo Alker and Robert  Hersh and entered  into a Salary  Continuation
Agreement with Fred Kiremidjian.  These agreements provide that in the event the
individual is  terminated,  including  "constructive  termination"  by demotion,
relocation or reduction of the salary of the individual, beginning 30 days prior
to public  announcement and ending one year after the "change in control" of the
Company, the individual would be entitled to continued salary and bonus payments
for a period of six months for Mr. Kiremidjian,  one year for Mr. Hersh, and two
years for Ms. Alker.  Each executive would also be entitled to continued medical
coverage by the  Company  during the period of salary  continuation,  unless the
executive is covered by another  employer's group health plan. In addition,  the
Salary  Continuation  Agreements  provide for the acceleration of all options to
purchase shares of the Company's  Common Stock granted to that individual  prior
to the "change of control".

<PAGE>

         The 1997 Stock Plan  provides  that the Board of Directors  may, in its
sole discretion, accelerate the vesting and the ability to exercise options held
by executive officers in the event of a change of control of the Company.

Compensation  Committee  Interlocks and Insider  Participation  in  Compensation
Decisions

         During 1997, no members of the Compensation  Committee were officers or
employees of the Company or any of its subsidiaries.

<PAGE>

         REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

         The Compensation  Committee of the Board of Directors (the "Committee")
is comprised of non-employee directors. The Committee is responsible for setting
and administering  policies governing  compensation of executive  officers.  The
Committee  reviews  the  performance  and  compensation   levels  for  executive
officers,  sets  salary  and bonus  levels  and makes  option  grants  under the
Company's Option Plans other than the 1994 Outside Directors Stock Option Plan.

Compensation Policies

         The goals of the Company's executive officer compensation  policies are
to attract, retain and reward executive officers who contribute to the Company's
success, to align executive officer compensation with the Company's  performance
and to motivate executive officers to achieve the Company's business objectives.
The Company uses salary,  bonuses and stock options to achieve these goals.  The
Committee reviews various available data,  including  compensation  surveys,  to
enable the Committee to compare the Company's  compensation package with that of
other  high  technology  companies  of  similar  size  and  growth  rates in the
Company's geographic area.

Compensation Components

         Salaries are set for each  executive  officer with reference to a range
of salaries for comparable  positions among high technology companies of similar
size,  growth rate and  location.  Annual salary  adjustments  take into account
achievements  of individual  executive  officers during the prior fiscal year as
measured  against  key  Company-wide  objectives  set each  year by the Board of
Directors,  as well as the executive  officers'  performance of their individual
responsibilities.   Each  Committee   member  weighs  objective  and  subjective
performance  factors  and  a  consensus  is  obtained  through  discussion.  The
Compensation  Committee also considered relative levels of responsibility  among
the  executive  officers  in  attempting  to  reach  equitable  and  appropriate
projected compensation levels.

         Cash incentive  compensation is provided  through  participation in the
Company's  executive  bonus  plan.  The  Committee  determines  the amount of an
individual's  bonus  based on  subjective  judgment of the  Company's  financial
performance  (which,  for 1997,  were based  primarily  upon  revenue  and gross
margin) and the achievement of established goals.

         During  1997,  the  Compensation  Committee  completed  the  process of
awarding  bonuses  based  on  1996  performance.   Depending  on  the  perceived
achievement of individual goals, bonuses to executive officers for 1996 resulted
in payments  ranging from 11% to 85% of base  salaries for 1996.  These  bonuses
were  paid in 1997  and are  reflected  in the  Summary  Compensation  Table  as
compensation received in 1997.

<PAGE>

         The  Committee  strongly  believes  that equity  ownership by executive
officers provides incentives to build stockholder value and aligns the interests
of executive officers with the stockholders. The size of an initial option grant
to an  executive  officer  has  generally  been  determined  with  reference  to
comparable  equity  compensation  offered  by  similarly-sized  high  technology
companies  for similar  positions,  the  responsibilities  and  expected  future
contributions of the executive officer,  as well as recruitment  considerations.
In determining the size of subsequent  grants,  the Committee has considered the
individual executive officer's  performance during the previous fiscal year, the
expected  contributions  during the coming year,  the amount of options  already
held and the level of recent grants.  Option grants to executive officers during
1997 were  based upon  available  data  concerning  option  grants to  executive
officers of  companies  of similar  size,  growth and  location  and a review of
recent grants. The Committee believes that future subsequent option grants, with
vesting  schedules  of up to four years,  will  provide  strong  incentives  for
executive officers to remain with the Company.

Repricing of Options

         Employee stock options are an important element of compensation for the
Company and have been used to attract,  retain and motivate its  workforce.  The
Committee believes that the Company's success in the future will depend in large
part on its ability to attract,  retain and motivate a number of highly  skilled
personnel and that the competition for such personnel is intense.  The Committee
also believes it is important and cost-effective to provide equity incentives to
employees  and other  service  providers of the Company to improve the Company's
performance and the value of the Company to its stockholders.

         In July 1997, the Committee reviewed the impact of the decline in price
of the Company's Common Stock and determined that most of the employee  options,
which had been previously  granted at prices above the then current market price
of $7.00 per share,  were  significantly  less likely to serve their purposes of
retaining and motivating employees.  Furthermore,  the Committee determined that
many existing,  experienced employees would be likely to perceive an inequity in
comparison  to recently  hired  personnel  granted  stock  options with exercise
prices set at the current, lower fair market value of Common Stock.

         The  Committee  determined  that  it was in the  best  interest  of the
Company  and its  stockholders  to restore  incentive  for  employees  and other
service  providers to remain with the Company and to exert their maximum efforts
on behalf of the Company. The Committee did not believe it was necessary, at the
time,  to reprice the stock  options of  corporate  officers or directors of the
Company.  Therefore,  the Committee approved the repricing of stock options to a
fair market value represented by the closing price of the Company's Common Stock
on July 25, 1997,  with the condition that vesting of all such repriced  options
would recommence according to the terms of the original stock option agreement.

<PAGE>

         In October  1997,  the Committee  again  reviewed the impact of further
declines in the market price of the  Company's  Common Stock to $4.94 per share.
The Company's  voluntary employee turnover rate was approximately  twice that of
its industry peer group and the  Committee was concerned  that a further loss of
key  employees,   including   officers,   could  adversely  impact  new  product
development schedules and revenue growth.  Therefore, the Committee approved the
repricing  of stock  options to a fair market value  represented  by the closing
price of the Company's Common Stock on October 31, 1997, with the condition that
vesting of all such repriced options would recommence  according to the terms of
the original stock option agreement.

         Certain of the Company's  executive  officers were beneficiaries of the
repricing  actions in 1997 as  described in the  Ten-Year  Option/SAR  Repricing
table below.  Participants  in the October 1997  repricing  agreed to recommence
vesting  of their  outstanding  options  as a  condition  for the  shares  to be
repriced.  Additionally,  Ms. Alker agreed to cancel one-third, or 93,333 of her
repriced options.
<TABLE>
                       TEN-YEAR OPTION/SAR REPRICING TABLE
<CAPTION>
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                                    Number of                    Market                                  Length of
                                   Securities     Number of     Price of     Exercise                  Original Term
                                   Underlying     Securities    Stock at     Price at    New           Remaining at
                                     Options        After        Time of      Time of    Exercise    Date of Repricing
        Name             Date       Repriced      Repricing     Repricing    Repricing     Price
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

<S>                   <C>               <C>           <C>          <C>           <C>         <C>         <C>    
Pauline Lo Alker      10/31/97          100,000        66,667      $  4.94       $14.00      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                      10/31/97          180,000       120,000      $  4.94       $15.00      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                      9/18/96           100,000       100,000      $ 15.00       $13.25      $15.00      10 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                      9/18/96            80,000        80,000      $ 15.00       $20.00      $15.00       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
Fred Kiremidjian      10/31/97           50,000        50,000      $  4.94       $14.00      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                      10/31/97          200,000       200,000      $  4.94       $18.63      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
Robert Hersh          10/31/97           50,000        50,000      $  4.94       $ 9.13      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
James Sullivan        10/31/97           50,000        50,000      $  4.94       $ 7.13      $ 4.94      10 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
Oliver Szu            10/31/97           50,000        50,000      $  4.94       $14.00      $ 4.94       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
                      10/31/97           50,000        50,000      $  4.94       $14.00      $ 4.94       8 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
Donald Morrison (1)   1/19/96            50,000        50,000      $ 12.00       $21.88      $12.00       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
Derek Obata (1)       1/19/96            35,000        35,000      $ 12.00       $13.88      $12.00       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------

- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
John Chan (1)         1/19/96            60,000        60,000      $ 12.00       $23.00      $12.00       9 years
- --------------------- ----------- -------------- ------------- ------------ ------------ ----------- ------------------
<FN>
<PAGE>

(1)  Mr.  Morrison,  Mr. Obata and Mr. Chan terminated their employment with the
     Company  prior to December 31, 1997.  Accordingly,  these  options  expired
     without being exercised.
(2)
</FN>
</TABLE>

Chief Executive Officer Compensation

         The Compensation of the Chief Executive  Officer is based upon the same
criteria outlined above for the other executive  officers of the Company.  While
the Chief Executive Officer makes recommendations about the compensation levels,
goals and performance of the other executive officers,  she does not participate
in the discussions regarding her compensation or performance.

         In 1997,  Ms.  Alker  received a base salary of $175,000  and awarded a
cash bonus of $149,000 based on her individual  performance  and the performance
of the Company in 1996.  In March 1998,  the  Company  and Ms.  Alker  agreed to
terminate  her  employment  and  her  position  as a  director  of the  Company,
effective upon the hiring of a successor for those  positions.  In consideration
for Ms. Alker's agreeing to remain in her current positions until such time, and
in  recognition  for her  leadership of the Company and seven years of dedicated
service to Company, the Committee awarded Ms. Alker severance of one year's base
salary. In addition,  the Committee agreed to grant immediate vesting of all her
outstanding stock options at the time a successor is hired.

Qualifying Compensation

         The Committee has considered the potential  impact of Section 162(m) of
the Internal  Revenue Code ("Section  162(m)") adopted under the Federal Revenue
Reconciliation  Act of 1993.  Section  162(m)  disallows a tax deduction for any
publicly-held corporation for certain executive officers' compensation exceeding
$1 million  per person in any  taxable  year  unless it is  "performance  based"
within the meaning of Section 162(m).  Since to date the cash  compensation plus
restricted  stock vesting of each of the Company's  executive  officers has been
below the $1 million threshold and since the Committee believes that any options
granted  under the  Company's  option  plan will meet the  requirement  of being
performance-based under the provisions of Section 162(m), the Committee believes
that Section  162(m) will not reduce the tax deduction  available to the Company
for fiscal  year 1997 or prior  years.  The  Company's  policy is, to the extent
reasonable,  to qualify its executive  officers'  compensation for deductibility
under the applicable tax laws.


STOCK PERFORMANCE GRAPH

Five-Year Stockholder Return Comparison

         The graph below compares the cumulative total return on the Company's
Common  Stock for the end of each six month  periods  since the  initial  public
offering  in June 1994  compared to the CRSP Total  Return  Index for the Nasdaq
Stock Market (US companies),  an indicator of broad market performance,  and the
CRSP Total Return Index for the Nasdaq Computer  Manufacturer  Stocks (SIC 357),
an  indicator  of the  market  performance  of  this  sector.  The  stock  price
performance  shown on the graph below is not  necessarily  indicative  of future
price performance.

                      Cumulative Comparison of Total Return

[The following  descriptive  data is supplied in accordance  with Rule 304(d) of
Regulation S-T]

                            [GRAPHIC OMITTED]
<TABLE>
NPI
STOCK PERFORMANCE GRAPH FOR '98 PROXY
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
                                            6/28/94   12/30/94    6/30/95   12/31/95    6/30/96   12/31/96   6/30/97   12/31/97 
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>       <C>         <C>       <C>        <C>       <C>        <C> 
NPI                                             $100        $445      $356        $192      $280       $290      $115       $118
- --------------------------------------------------------------------------------------------------------------------------------
Nasdaq U.S. Market                              $100        $108      $134        $152      $172       $187      $209       $230
- --------------------------------------------------------------------------------------------------------------------------------
Nasdaq Computer Manufacturers                   $100        $141      $181        $222      $257       $298      $323       $360
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
*    Assumes $100 invested on June 28, 1994 in the Company's Common Stock and in
     each index listed above.
**   Data points are as of the last business day of the respective month.
***  The total  return  for the  Company's  Common  Stock and the  indices  used
     assumes the reinvestment of dividends for securities on which dividends are
     paid. Dividends have never been declared on the Company's Common Stock.
</FN>
</TABLE>


<PAGE>


                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


<TABLE>
The information  required by subsections (a)1 and (a)2 of this item are included
in the response to Item 8 of Part III of this Annual Report on Form 10-K.

<CAPTION>
(a)      Exhibits
<S>                     <C>
          3.1(1)        Amended and Restated Certificate of Incorporation.
          3.2(1)        By-Laws.
          4.1(1)        Fourth Amended and Restated Investor Rights Agreement dated July 15, 1993.
          10.1(1)       Form of Indemnity Agreement for directors and officers.
          10.2(1)       Amended and Restated 1993 Stock Option Plan and forms of agreement thereunder.
          10.3(1)       1994 Employee Stock Purchase Plan.
          10.4(1)       1994 Outside Directors Stock Option Plan and form of agreement thereunder.
          10.9(1)       Facilities Lease dated August 8, 1991 with John Arrillaga,  Trustee, or his Trustee, or
                        his Successor Trustee UTA dated 7/20/77, as amended, and Richard T. Peery,  Trustee, or his Successor
                        Trustee UTA dated 7/20/77, as amended.
          10.12(1)(2)   OEM Purchase Agreement with Network General Corporation dated March 4, 1991.
          10.14(3)      Amendment No. 1, dated June 1, 1994, to Facilities Lease with John Arrillaga,  Trustee,
                        or his Successor Trustee UTA dated 7/20/77,  as amended, and Richard T. Peery,  Trustee, or his Successor 
                        Trustee UTA dated 7/20/77, as amended.
          10.18(4)      Purchase  Agreement  among  Network   Peripherals  Inc.,  Network Peripherals,  Ltd., NuCom Systems, Inc., 
                        and the shareholders of NuCom, dated January 31, 1996.
          10.22 (5)     Line of Credit Agreement with Sumitomo Bank dated October 2, 1996.
          10.23 (5)     Agreement with Glenn Penisten dated May 15, 1996.
          10.26 (7)     Purchase  Agreement among Network  Peripherals  Inc.,  NetVision  Corporation,  and the
                        shareholders of NetVision , dated April 29, 1997.
          10.27 (6)     1997 Stock Option Plan.
          10.28 (6)     Amended 1994 Outside Directors Option Plan.
          10.29 (8)     Development  and Purchase  Agreement with Sun  Microsystems,  Inc.,  dated February 25,
                        1994.
          10.30 (8)     Corporate Supply Agreement with Sun Microsystems, Inc., dated March 31, 1997.
          10.31 (9)     Modification Agreement,  dated August 29, 1997, to amend  certain  terms  of the  Line of  Credit  Agreement
                        with Sumitomo Bank of California.
          10.32 (9)     Second Modification Agreement,  dated November 17, 1997,  to amend certain  terms of the Line of Credit  
                        Agreement with Sumitomo Bank of California.
          10.33 (9)     Amended and Restated Salary Continuation  Agreement with Pauline Lo Alker dated October
                        31, 1997.
          10.34 (9)     Amended and Restated Salary Continuation  Agreement with Robert Hersh dated October 31,
                        1997.
          10.35 (9)     Salary Continuation Agreement with Glenn Penisten dated October 31, 1997.
          10.36 (9)     Salary Continuation Agreement with Fred Kiremidjian dated October 31, 1997.
          10.37 (9)     Salary Continuation Agreement with James Sullivan dated October 31, 1997.
          10.38 (9)     Consent of Independent Accountants dated March 27, 1998.
          27    (9)     Financial Data Schedule.

                                       35

<PAGE>


(b)      Reports on Form 8-K
         None

         (1)    Incorporated   by   reference  to  the   corresponding   Exhibit  previously filed as an Exhibit to the Registrant's
                Registration Statement on Form S-1 (File No. 33-78350).
         (2)    Confidential treatment has been granted as to part of this Exhibit.
         (3)    Incorporated   by   reference  to  the   corresponding   Exhibit  previously  filed as an  Exhibit to the  
                Registrant's  Quarterly  Report on Form 10-Q for the period ended June 30, 1994 (File No.
                0-23970).
         (4)    Incorporated by reference to the Registrant's report on Form 8-K filed on March 31, 1996 (File No. 0-23970).
         (5)    Incorporated by reference to the  corresponding  exhibit in the  Registrant's  Annual Report on Form 10-K for
                the year ended December 31, 1996 (File No. 0-23970).
         (6)    Incorporated  by reference to the  corresponding  exhibit in the Registrant's  Quarterly Report on Form 10-Q for the
                period ended June 30, 1997 (File No. 0-23970).
         (7)    Incorporated by reference to the Registrant's report on Form 8-K filed on May 14, 1997 (File No. 0-23970).
         (8)    The Registrant has filed portions of these  agreements  separately  with the Commission and has requested that those
                portions be afforded confidential treatment.
         (9)    Filed with the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997.

                                                                 36

</TABLE>


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         NETWORK PERIPHERALS INC.

                                         By: \s\ROBERT HERSH
                                             ----------------------------------
                                             Robert Hersh
                                             Vice President of Operations and
                                             Chief Financial Officer
                                             (Authorized Officer)



                        SUN TECHNOLOGY ENTERPRISES, INC.
                       DEVELOPMENT AND PURCHASE AGREEMENT

This Agreement is made and entered into by and between Sun Microsystems, Inc., a
Delaware  corporation  having its  principal  place of  business  at 2550 Garcia
Avenue, Mountain View, California 94043 and acting by and through the SunConnect
unit of its subsidiary  Sun Technology  Enterprises,  Inc.  ("SunConnect"),  and
Network Peripherals Inc., a California corporation having its principal place of
business at 1371 McCarthy Boulevard, Milpitas, CA 95035 ("NP").

1.0           DEFINITIONS

              1.1 "Administrator(s)"  means the individuals listed in Section 28
below, or an individual designated by such Administrator.

              1.2 "BOM" means the Bill of Materials  describing the OEM Products
as they are to be delivered to SunConnect set forth in Exhibit A-4, which may be
modified with the mutual written agreement of each party's Administrator.

              1.3  "Development  Deliverable"  means each  deliverable  required
pursuant to the Development Schedule and Deliverables.

              1.4 "Development  Schedule and Deliverables" means the schedule of
tasks, deliverables and completion dates set forth in Exhibit B.

              1.5  "Documentation"  means  the user  manual  and  other  written
materials related to the OEM Products as described in the Product  Specification
and Development Deliverables.

              1.6 "NP  Products"  means the OEM  Products  minus the  Sun-Unique
Elements.

              1.7 "OEM  Products"  means the FDDI Adapter for the  SBbus/Solaris
systems  product line  described in the Product  Specification  (SunLink  FDDI/S
3.x), and any additional  products the parties add by mutual  consent.  The term
"OEM  Products"  shall  include  Documentation  except  with  respect  to  those
instances where this Agreement separately refers to Documentation.

              1.8  "Proprietary   Information"   means  that  information  which
SunConnect  and  NP  desire  to  protect  against  unrestricted   disclosure  or
competitive  use and which,  if disclosed in writing,  is  designated as such in
writing  by the  disclosing  party or, if  disclosed  orally,  is  announced  as
confidential  at the time of its disclosure by the  disclosing  party and within
thirty  (30) days  thereafter  is  summarized  in  writing  and such  summary is
provided to the receiving party.

              1.9  "Product  Specification"  means  the  description  of the OEM
Products set forth in Exhibits A, A-1 and A-2.

              1.10   "SunConnect    Modification"    means   any   modification,
enhancement,  extension  or  addition  of or to the OEM  Products,  in source or
object  code  form,  developed  by or on behalf  of  SunConnect  (but  excluding
modifications developed by NP pursuant to this Agreement).

              1.11  "Sun-Unique  Elements"  means  those  elements  of  the  OEM
Products listed in Exhibit C attached hereto.

              1.12  "Service  Provider"  means an entity  which  SunConnect  has
authorized  to  provide  product   support  to  customers,   which  may  include
distributors, resellers and support partners.

                                       1

<PAGE>


2.0           DEVELOPMENT OF OEM PRODUCTS

              2.1  Development of OEM Products.  NP and SunConnect  will develop
and test the OEM Products in accordance with the milestones,  delivery dates and
testing  requirements  set forth in the  Development  Schedule  and the  pre-FCS
"SunLink  FDDI/S 3.x Quality  Assurance  Plan  attached  hereto as Exhibit  A-3.
Changes to the Development Schedule and/or the Product Specification may be made
with the mutual written consent of the Administrators of both parties.

              2.2 * "Confidential  portion has been omitted and filed separately
with the Commission."

              2.3 Acceptance of Deliverables.  SunConnect  shall  acknowledge in
writing  or by  electronic  mail its  receipt of each  Development  Deliverable.
SunConnect  will  notify  NP  as  soon  as  possible   whether  the  Development
Deliverable is accepted or rejected,  provided that each Development Deliverable
will be deemed  automatically  accepted if SunConnect's  Administrator  fails to
notify NP in writing that SunConnect  accepts or rejects such deliverable within
thirty (30) days from the date of its delivery.

              2.4  Correction of Errors in  Deliverables.  If, within the thirty
(30)  day  acceptance  period,   SunConnect  notifies  NP  in  writing  that  an
Development  Deliverable  fails  to  satisfy  the  criteria  set  forth  in  the
Development  Schedule or Product  Specification  and  provides NP with a written
explanation  thereof,  NP will have five (5) days to provide  SunConnect  with a
revised schedule for correcting the defect(s) in the non-conforming  Development
Deliverable   and  shall  promptly   institute  and   diligently   execute  such
corrections.

              2.5 FCS Decision. Pursuant to the Development Schedule, SunConnect
is  responsible  for making a "Go/ No Go" decision  regarding the first customer
ship of the OEM Products.  SunConnect will notify NP in writing of the result of
the Go/ No Go  decision  within  two days  after the  decision  is made.  If the
decision is a "go," then this decision will authorize NP to begin the production
phase for the OEM Products and to ship the OEM Products to SunConnect  under the
terms set forth below.

3.0           DOCUMENTATION

              3.1 Documentation  Deliverables.  Development Deliverables related
to Documentation are set forth in Exhibit B.

              3.2 Post-FCS  Documentation.  The parties  will  negotiate in good
faith  to  determine  who  will be  responsible  for  writing  and  implementing
revisions to the  Documentation,  and how related costs shall be  allocated.  NP
will not  distribute  any  modified  Documentation  without  the  prior  written
approval of the SunConnect Administrator.

              3.3  Quality  of  Documentation  Shipped  by NP.  The  quality  of
Documentation  for the OEM  Products  shipped  by NP at and  after  FCS  must be
comparable  with the  quality  of the  current  SunLink  FDDI/S  2.0  documents.
(Notwithstanding  the foregoing  sentence,  the  documentation to be provided to
beta sites by NP may be xeroxed copies of the beta-stage documentation delivered
by  SunConnect  to NP.)  Promptly  after the  Effective  Date. NP will develop a
quality plan to ensure that the Documentation meets the Quality requirements for
post FCS  documentation,  and shall  submit such  quality  plan to  SunConnect's
Administrator for approval.  After such approval the documentation  quality plan
shall be attached as part of the Quality Assurance Plan described in Section 8.1
below.  SunConnect  shall  also have the right to  approve  the  quality  of the
completed Documentation prior to shipment.

                                       2

<PAGE>


4.0.           OWNERSHIP

              4.1 * "Confidential  portion has been omitted and filed separately
with the Commission."


              4.2 * "Confidential  portion has been omitted and filed separately
with the Commission."

5.0           MAINTENANCE, SUPPORT AND TRAINING.

              5.1  Support to  Customers.  Customer  support  for OEM  Products,
SunLink  FDDI/S 1.0 and  SunLink  FDDI/S 2.0  products  shall be provided as set
forth in Exhibit E.

              5.2 OEM  Product  Repair and  Replacements  Under  Warranty.  If a
SunConnect  Service  Provider  receives  an OEM Product  which is  eligible  for
warranty  service by NP under NP's warranty set forth in Section 23 below,  then
the  Service  Provider  will  return  such  OEM  Product  to NP  for  repair  or
replacement,  and NP shall repair or replace such OEM Product in accordance with
the warranty provided under Section 23.

              5.3 OEM Product Repair and  Replacements  Out of Warranty.  Repair
and Replacement Prices for OEM Products which are not eligible for service under
NP's warranty  ("Out of Warranty OEM  Products")  are set forth in Exhibit F. NP
will  replace Out of Warranty  OEM  Products  for  SunConnect  and  SunConnect's
Service Providers,  and will repair Out of Warranty OEM Products for SunConnect,
SunConnect's  Service  Providers,  customers,   distributors  and  resellers  in
accordance with the procedures and prices in Exhibit F.

              5.4 TOI. NP will provide SunConnect with the information described
in the "Transfer of Information" attached as Exhibit E, and will comply with the
procedures  set forth  therein.  NP hereby grants  SunConnect  an  unrestricted,
fully-paid  license to use,  duplicate,  and  distribute  any TOI  materials  in
whatever  fashion  SunConnect  or its Service  Providers  deem useful to provide
traning in the use of the OEM Products.

6.0           * "Confidential portion has been omitted and filed separately with
the Commission."

7.0           DISTRIBUTION OF NP PRODUCTS

              7.1 No  Distribution  of OEM  Products  by NP.  NP may not sell or
distribute   the  OEM   Products,   or  any  other   products   containing   any
SunConnect-Unique  Element without the express written consent of the SunConnect
Administrator.

                                       3

<PAGE>


8.0           PRODUCTION OF OEM PRODUCTS

              8.1  Quality  Assurance.  Attached  hereto  as  Exhibit  J is NP's
Quality  Systems  Manual for FCS and subsequent  shipments for ensuring  quality
standards of the OEM Products.

              8.2 NP  Responsibilities.  Except as set for in Section 8.3 below,
NP will be responsible for all aspects of  manufacturing,  assembling,  testing,
packaging  and  delivery  of  the  OEM  Products  to  the  SunConnect-designated
location(s). Each OEM Product delivered to SunConnect will meet the requirements
set forth in Exhibits A (Product  Specifications),  B (Development  Schedule and
Deliverables),  A-4 (BOM), J (Quality  Systems  Manual),  K-1  (Inbound)Outbound
Packaging Requirements),  K-2 (Engineering Specification for Part Identification
Label), K-3 (Corporate  Shipping Container  Graphics  Guideline),  K-4 (Shipping
Carton Color Standard),  K-5 (Specification  for A SunConnect Color:  SunConnect
Medium  Purple),  K-6  (Routing  Guide)  and  Section  15  (Trademark  License).
SunConnect  shall have the right, on reasonable  notice,  to audit NP's premises
and records to verify compliance with these  requirements.  At least thirty (30)
days prior to NP's distribution of the first copy of each commercial  release of
an OEM Product bearing the Sun Trademarks and Trade Dress (as defined in Section
15  below),   NP  shall   provide   SunConnect's   Administrator   with  written
certification  that NP has  adequately  reviewed and tested such OEM Product and
that it conforms to the  requirements of this Section 8.2. NP shall keep written
records of such testing and make them  available  to  SunConnect  promptly  upon
written request.

              8.3      Other Responsibilities.

                       a.   Compact   Disks.   SunConnect   will   initially  be
responsible  for the  mastering  of the  compact  disk to be included in the OEM
Products.  NP will  purchase  the  compact  disks  from  SunConnect's  vendor in
accordance  with  Section  8.11.  (Nothing  herein  shall  be  deemed  to  limit
SunConnect's  right to continue to order and purchase  products from the vendors
fisted in Exhibit  M.) After the FCS of the OEM  Products,  NP will use its best
efforts to identify and reach terms with a compact disk manufacturer within nine
(9) months of the  Effective  Date,  pursuant to which NP would  master  compact
disks without  SunConnect's  assistance.  NP will promptly provide  SunConnect's
Administrator  with the details of such agreement,  including without limitation
all pricing  terms.  SunConnect  may, at its option and in its sole  discretion,
authorize NP to master compact disks directly,  subject to SunConnect's approval
of content and quality.

                       b. Packaging Artwork. SunConnect shall design the artwork
for the OEM Product packaging. The completed artwork is a SunConnect Deliverable
to NP.

              8.4 Copyright  Notices.  The Documentation  shall bear a copyright
notice in the form (C)Sun  Microsystems 19__. NP shall put a copyright notice on
the software  components of the OEM Products and NP Products  incorporating  the
SunLink  Source  Code  stating  (C)Network  Peripherals  19__,  portions  (C)Sun
Microsystems  19__. NP may put an NP copyright  notice on the board component of
the OEM Products.

              8.5 NP Improvements.  NP agrees to keep SunConnect informed of any
improvements to of replacements for existing NP Products or OEM Products planned
to be made  available  during  the term of this  Agreement.  NP agrees to notify
SunConnect's Administrator of such improvements in writing not less than 90 days
prior to  shipment  of NP  Products  incorporating  such  improvements  to third
parties or customers and shall make available such improvements for OEM Products
at no charge to SunConnect, provided that such improvements do not significantly
affect the form,  fit and  function  of the OEM Product in ways that differ from
any  change  in the form,  fit or  function  of the  corresponding  NP  Product.
SunConnect may elect to incorporate such  improvements  into the OEM Products by
notifying NP in

                                       4

<PAGE>


writing within 30 days after notification of such improvements. If SunConnect so
notifies  NP  within  the 30  day  period,  then  NP  will  ensure  that  any NP
Improvements  are  incorporated  into OEM  Products at least as early as they am
incorporated into NP Products. The terms of Section 10.2 * "Confidential portion
has been omitted and filed  separately  with the  Commission."  will continue to
apply to any improved OEM Products.

              8.6 NP Modifications.  NP will not implement any changes in design
or  manufacture  that might  affect form,  fit or function of the OEM  Products,
including without limitation,  changes in performance,  maintenance  procedures,
interchangeability,  interconnectability,  reliability or  compatibility  of OEM
Products,  without the prior written consent of a SunConnect  Administrator  and
such consent shall not be unreasonably withheld.

              8.7       Mandatory Changes.

                       a.  "Mandatory  Changes," as used herein means any change
necessary to ensure that OEM Products  comply with the following  standards,  as
such  standards  are  constituted  on the  date of  shipment:  (1)  the  Product
Specification;  (2)  applicable  laws  or  regulations;  or (3)  recognized  and
accepted  commercial safety standards for similar products.  NP will. at its own
expense,  supply  SunConnect or SunConnect's  Service  Providers (as directed by
SunConnect)  parts kits and detailed  rework  instructions  for all OEM Products
purchased by SunConnect affected by any Mandatory Change,  regardless of whether
such OEM Products have been delivered to SunConnect, its customers, resellers or
distributors.

                       b. If a Mandatory Change requires replacement of products
already delivered to SunConnect's  customers,  resellers and distributors,  then
SunConnect or SunConnect's Service Provider(s) shall implement such replacements
in  accordance  with the  reasonable  instructions  provided  by NP. NP shall be
responsible for all necessary and reasonable costs incurred by SunConnect or its
Service  Provider(s) in any  replacement of products  delivered to  SunConnect's
customers, distributors and resellers which is required by Section 8.7(a).

              8.8       O/S and Platform Changes.

                       (a)  "Systems  Changes,"  as used herein means any change
necessary to ensure that NP Products remain  compatible with new versions of the
Sun Operating System and new versions of the Sun platform.  NP will use its best
commercial  efforts to develop Systems Changes.  NP agrees to notify  SunConnect
within a reasonable period of time after the release of a new version of the Sun
Operating  System or Sun Platform of Systems Changes planned for the NP Products
and shall make  available  such System  Changes for OEM Products at no charge to
SunConnect.  SunConnect  may elect to  incorporate  System  Changes into the OEM
Products by notifying NP in writing  within 30 days after  notification  of such
System Changes.  If SunConnect so notifies NP within the 30 day period,  than NP
will ensure that any System Changes are available incorporated into OEM Products
at  least  as early as they are  incorporated  into NP  Products.  The  terms of
Section 10.2 * "Confidential  portion has been omitted and filed separately with
the Commission." will continue to apply to any revised OEM Products.

                       (b)  When  Systems  Changes  am not  planned  for  the NP
Products,  then  SunConnect may request such changes in accordance  with Section
8.9 and the parties will mutually develop a development schedule.

                       (c) NP will  perform all required  compatibility  testing
for all new Sun  Operating  Systems  and  new  Sun  platforms  at NP's  expense.
SunConnect  will provide NP with the necessary  equipment  and operating  system
software to perform such testing.

                                       5

<PAGE>


               8.9     SunConnect Requested and Required Changes.

                       a.  SunConnect  may,  at any  time,  require  changes  in
writing  to any of the  following:  method  of  shipment  or  packing;  place of
delivery,  or the Exhibits marked with an * in Section 29.8 ("Required Change").
In  addition,  SunConnect  may,  at any  time,  request  changes  to  applicable
drawings,  designs or specifications,  or to ensure compatibility with other new
or modified SunConnect products ("Requested Change").

                       b. If a Required or Requested  Change  causes an increase
in the cost or the time  required by NP for  performance  of any purchase  order
issued under this  Agreement and NP so notifies  SunConnect in writing,  then if
SunConnect  wishes such  Requested or Required  Change to be made,  an equitable
adjustment  will be made in the  price  or  delivery  schedule  or both  and the
Agreement and/or any applicable  purchase order will be modified  accordingly in
writing.  Claims by NP for adjustment due to a SunConnect  Requested or Required
Change order must be made within fifteen (15) days from the date of NP's receipt
of the change order;  provided,  however,  that such period may be extended upon
the written approval of SunConnect.

                       c.  If  any  SunConnect   Requested  or  Required  Change
requires reworking of any OEM Product already delivered to SunConnect,  NP will,
at SunConnect's  expense,  supply  components for all OEM Products  purchased by
SunConnect affected thereby.

              8.10  NP  Purchase  from  SunConnect  Suppliers.  NP may  purchase
specific components for the OEM Products from specified  SunConnect suppliers as
SunConnect's  authorized  sub-contractor  as set  forth on  Exhibit  M. NP shall
comply with all  applicable  provisions  of the  SunConnect  contract  with such
suppliers.  SunConnect  agrees  to  provide  NP  with  the  text  of  applicable
provisions.  All items so purchased must be used in OEM Products, and may not be
used in NP Products or other  products  without the express  written  consent of
SunConnect.

              8.11 NP  Sub-Contractors.  NP may  subcontract  the  production of
components  of the OEM Products to  suppliers,  provided that each such supplier
agrees to and fulfills all quality and compliance requirements set forth in this
Agreement and its Exhibits.

              8.12 Future  Cooperation.  The parties  agree to work  together to
evaluate and develop new  technologies  and products for FDDI network  interface
cards as mutually  agreed to. If new  products are  developed,  the parties will
negotiate  an  agreement  with terms as similar as possible  to this  Agreement,
except that product  specifications,  pricing and leadtimes may be different for
such new products.

9.0           PURCHASE OF OEM PRODUCTS

              9.1 Orders.  SunConnect  shall order OEM  Products by  telecopier,
telephone,  electronic  data  interchange  ("EDI") as specified in Section 16.3,
and/or in writing on SunConnect's  standard  purchase order form. Each telephone
order shall be  confirmed  by a hard-copy  purchase  order  within five (5) days
after the placement of such telephone order. All orders for OEM Products will be
governed  by  this  Agreement  and  shall  not  be  governed  by  the  terms  of
SunConnect's  or NP's purchase order,  acceptance or other form documents.  This
Agreement does not constitute a purchase order  SunConnect shall be liable under
this  Agreement  only for those OEM Products  covered by a  SunConnect  purchase
order.

              9.2 Sale to SunConnect  Subcontractors.  NP shall sell and license
OEM  Products  under  the  pricing  and terms  set  forth in this  Agreement  to
SunConnect-designated  subcontractors  ("Subcontractors")  upon express  written
authorization  by  SunConnect.  SunConnect  shall be  liable to pay only for OEM
Products  ordered by and invoiced  directly to SunConect and shall not be liable
to pay for

                                       6

<PAGE>


any OEM Products ordered by Subcontractors. All purchases made by Subcontractors
shall be added to SunConnect's cumulative volume of OEM Products purchased.

              9.3  Forecasts.  SunConnect  shall  supply  a  six  month  rolling
forecast by the 10th day of each month,  with the first two months broken out by
week.  The  first  two  months  shall be backed  by a  purchase  order  which is
non-cancelable.  The third month of the forecast is a firm commitment, which may
be rescheduled as specified in Section 14.1.

              9.4 SoftwarelFirmware  License. With respect to OEM Products which
contain NP software and/or firmware (Software').  NP hereby grants to SunConnect
a perpetual,  nontransferable,  nonexclusive license to use, market,  distribute
and  sublicense  the use of the  Software  in  object  code  form  only,  and to
authorize  others  to do the  foregoing,  solely in  conjunction  with the sale,
license, loan of distribution of the OEM Products.

              9.5 * "Confidential  portion has been omitted and filed separately
with the Commission."

10.0          PRICE OF OEM PRODUCT(S).

              10.1  Pricing.  The prices and  applicable  discounts  for the OEM
Products  are  specified  in Exhibit N. The prices set forth in Exhibit N do not
include freight or taxes, and all applicable  federal,  state and local sales or
use taxes shall be separately stated on NP's invoice. SunConnect shall be liable
to NP for the payments of such sales or use taxes only if SunConnect  has failed
to comply with the statutory resale tax certificate requirements of states where
appropriate.

              10.2 * "Confidential portion has been omitted and filed separately
with the Commission."

                                       7

<PAGE>


              10.3 * "Confidential portion has been omitted and filed separately
with the Commission."

              10.4 Price  Notification.  During the tenth week of each  calendar
quarter, NP will provide to a SunConnect Administrator a written confirmation of
the price of each OEM  Product  and  component  thereof,  as such price has been
determined  in  accordance  with  Sections 10.1 10.3. NP will provide such price
confirmation whether or not any price has changed from the previous quarter. The
prices set forth in such  notification  will be deemed  accepted  if  SunConnect
fails to notify NP in writing of any  disagreement  within 10 days after receipt
of the notification by the SunConnect Administrator.

              10.5 Special Requests. If SunConnect requests NP to manufacture or
deliver OEM Products to SunConnect on special terms which will cause an increase
in  the  manufacturing   cost  to  NP,  then  NP  shall  notify  the  SunConnect
Administrator in writing, specifying the additional costs and available options.
SunConnect shall have 10 day to accept or reject such additional costs.  Failure
to respond shall be deemed a rejection of such additional costs and such special
terms.

11.0          SHIPMENT AND DELIVERY

              11.1 Leadtimes and Delivery Dates.  Leadtimes for OEM Products are
set forth in Exhibit N. NP agrees to accept and deliver the full quantity of OEM
Products  ordered on the delivery dates  requested by SunConnect,  to the extent
that such dates are in  conformance  with  leadtimes  set forth in Exhibit N, or
otherwise  mutually-agreed  to  delivery  dates  ("Agreed  Delivery  Date").  If
SunConnect  requests  delivery  dates  earlier than the  leadtimes  set forth in
Exhibit  N, NP  agrees  to use  commercially  reasonable  efforts  to meet  such
requested  delivery dates or to propose the earliest possible alternate delivery
dates.

              11.2  Delayed  Delivery  Dates.  If NP is  unable to  deliver  OEM
Product on the Agreed  Delivery Date, NP shall promptly  notify the  appropriate
SunConnect  materials  management  personnel (as  identified  by the  SunConnect
Administrator),  giving  SunConnect a new delivery date.  SunConnect may, at its
option, (1) accept the new delivery date, (2) reschedule the purchase order, (3)
require NP, at NP's expense,  to use any expedited  transportation  methods that
are available to deliver the OEM Products to SunConnect or a designated customer
via Drop Ship as quickly  as  possible,  or, if new date is greater  than 5 days
after Agreed Delivery Date, (4) cancel the purchase order without liability.  In
all cases,  NP agrees to respond to  SunConnect's  purchase orders within 3 days
after receipt. Time is of the essence with respect to this agreement.

              11.3  Overshipments.  SunConnect  will  pay  only  for  quantities
ordered.  At SunConnect's  option,  overshipments will be returned to NP at NP's
risk freight  collect.  NP shall credit  SunConnect  with the amount of outbound
freight attributable to such returned overshipments.

              11.4 Early  Shipments.  For OEM Products  delivered more than five
(5) days in advance of the Agreed  Delivery  Date(s),  SunConnect may (i) return
such OEM Products to NP freight

                                       8

<PAGE>


collect,  or (ii) accept such OEM Products  with  payment  based upon the Agreed
Delivery Date(s) and not the date of receipt by SunConnect.

              11.5  Partial  Deliveries.  NP shall  use  reasonable  efforts  to
deliver  the full number of OEM  Products  ordered by  SunConnect  on the Agreed
Delivery  Date(s).  If NP is unable to deliver the full  number of OEM  Products
ordered,  NP shall notify SunConnect  promptly,  and SunConnect shall consent to
such partial  delivery  provided  that the Agreed  Delivery  Date is met for the
deliverable  portion.  Partial deliveries shall be separately invoiced by NP and
paid for by SunConnect without regard to subsequent deliveries.  The undelivered
portion of the order shall be subject to the terms of Section 11.2.

              11.6 * "Confidential portion has been omitted and filed separately
with the Commission."

               11.7     Shipping Documents and Markings.

                       a. Shipping  labels and  containers  must comply with the
requirements set forth in Section 8.2 above.

                       b. Shipping  documentation must be complete and accurate.
This  documentation  must include the SunConnect part number, the manufacturer's
part number, the total quantity shipped,  the SunConnect  purchase order number,
the number of shipping  containers  in the  delivery,  the quantity per shipping
container,  indication  of  partial/complete  shipment and the  waybill/Bill  of
Lading number.

              11.8  Shipping  Reports.  NP will deliver to  SunConnect  shipping
reports specified in Exhibit O.

              11.9 * "Confidential portion has been omitted and filed separately
with the Commission."

              11.10  *   "Confidential   portion  has  been  omitted  and  filed
separately with the Commission."

                                       9

<PAGE>


              11.11 Import and Export Licenses. NP shall provide all information
under its control  which is  necessary  or useful for  SunConnect  to obtain any
export or  import  licenses  required  for  SunConnect  to ship or  receive  OEM
Products,  including, but not limited to, U.S. customs certificates of delivery,
affidavits of origin, and U.S. Federal Communications Commissions identifier, if
applicable.  The  parties  agree  not to  export  or  re-export,  or cause to be
exported  or  re-exported,  the OEM  Product,  any  technical  data of any  kind
received  hereunder,  or the direct  product  of such  technical  data,  without
complying with the laws of the United States, regulating the same.

              11.12 End of Term Orders.  Purchase  orders  placed by  SunConnect
prior to the end of the Term for which the Agreed Delivery Date(s) are after the
end of the Term shall  continue to be governed  by the terms and  conditions  of
this Agreement.

12.0          PAYMENT

              12.1 Invoice Contents.  Upon shipment of OEM Products ordered,  NP
will submit an invoice  showing invoice number and date,  remit to address,  the
purchase order number, SunConnect part number,  description of each OEM Product,
quantity of each OEM Product,  unit  prices,  each  applicable  tax and extended
totals.

              12.2  Payment  of  Invoice.  SunConnect  shall  be  invoiced  upon
shipment of OEM Product and shall pay each invoice when due. Payment terms are *
"Confidential   portion  has  been  omitted  and  filed   separately   with  the
Commission."  days after shipment to SunConnect's  "Ship to" location of the OEM
Product  covered by the  invoice,  unless  SunConnect  notifies  NP prior to the
payment due date that such OEM  Products am defective  or  nonconforming  in any
manner.

              12.3 Payment Not  Acceptance.  SunConnect's  payment of an invoice
does not  constitute  acceptance  of OEM  Products.  Invoices will be subject to
adjustment for errors, shortages, defects in OEM Products or other failure of NP
to meet the requirements of this Agreement.

13.0          ACCEPTANCE AND QUALITY

              13.1  Compliance  with  Standards.  Each OEM Product  delivered to
SunConnect  shall meet all  requirements  set forth in Section  8.2.  SunConnect
shall not be required  to accept any such OEM  Product  which does not meet such
standards.

              13.2 Audits. SunConnect or its agent may perform reasonable source
inspection and quality assurance audits at NP's facility. SunConnect retains the
right to  periodically  audit NP's  facilities and records to validate  incoming
quality data, test yield data and manufacturing yield data.

              13.3 Quality  Reports.  Within 7 days after the end of each month,
NP shall provide to a SunConnect  Administrator  a written  quality  report in a
form approved by a SunConnect Administrator for the immediately preceding month.

              13.4 Effect of Defects.  If any of the OEM Products are  defective
in  material  or  workmanship  or are  otherwise  not  in  conformity  with  the
requirements of this Agreement,  NP and SunConnect will work together to develop
a plan to correct such defects or nonconformities. If a plan has not been agreed
to within five (5) business days, then SunConnect may either:

                       a. Reject and return an entire lot(s) for  replacement in
which event NP shall,  at NP's expense,  replace  Product(s)  within twenty (20)
working days;

                       b. Perform  one-hundred  percent (100%) testing,  at NP's
expense, retain all conforming Product and reject all nonconforming Product. Any
Product that has been rejected or

                                       10

<PAGE>


required to be corrected  must be replaced or corrected by and at the expense of
NP promptly after notice; or

                       c. Accept it with a mutually  agreed-upon  adjustment  in
price.

              13.5  Returns.  NP  shall  issue a Return  Material  Authorization
("RMA")  within  two (2)  business  days  after  SunConnect's  request to return
defective OEM Products  pursuant to the product warranty  procedure as described
under Section 23. Any  additional  terms of the RMA procedure  shal1 be mutually
agreed to between the parties.  SunConnect shall include the RMA number with all
returns.

14.0          RESCHEDULING AND CANCELLATION.

<TABLE>
              14.1  Rescheduling.  SunConnect  may reschedule all or any part of
any purchase  order or forecast  under this Agreement for a new delivery date up
to ninety (90) days after the Agreed Delivery Date in accordance with the limits
as follows:

<CAPTION>
- ------------------------------------- ---------------------------------- -----------------------------------
Number  of  Days   Prior  to  Agreed  Maximum  Dollar Value of Purchase  Date  on  Which  Delivery  Must Be
Delivery Date  Reschedule  Notice is  Order Which May Be Rescheduled     Accepted
Received
- ------------------------------------- ---------------------------------- -----------------------------------
<S>                                   <C>
            61 - 90 Days              * "Confidential portion has been omitted and filed separately with
                                      the Commission."

- ------------------------------------- ----------------------------------------------------------------------
            0 - 60 Days               * "Confidential portion has been omitted and filed separately with
                                      the Commission."

- ------------------------------------- ----------------------------------------------------------------------
</TABLE>


Purchase orders may not be rescheduled more than twice.

                       14.2 *  "Confidential  portion has been omitted and filed
separately with the Commission."

                       14.3 *  "Confidential  portion has been omitted and filed
separately with the Commission."

                       14.4 *  "Confidential  portion has been omitted and filed
separately with the Commission."

15.0          TRADEMARK LICENSE

              15.1   Trademarks  And  Trade  Dress.   The  packaging,   artwork.
documentation  and other  materials  provided to NP by SunConnect  hereunder may
contain  Sun   Microsystems,   Inc.  ("Sun")   trademarks  and  or  trade  dress
requirements ("Sun Trademarks and Trade Dress").

              15.2 Grant Of License.  SunConnect  grants to NP a  non-exclusive,
royalty-free,  nontransferable  license  for  the  term  of  this  Agreement  to
reproduce  the  Sun  Trademarks  and  Trade  Dress  in the  United  States  (the
"territory")  solely for the purpose of producing  the OEM Products for delivery
to

                                       11

<PAGE>


SunConnect  hereunder.  NP is  granted  no other  right,  title or  license.  In
particular, NP shall not use the Sun Trademarks or Trade Dress on any item other
than the OEM Products; shall not deliver any item marked with the Sun Trademarks
or Trade Dress to any entity other than  SunConnect or its affiliated  companies
unless specifically directed in writing by SunConnect's Administrator; and shall
have no right to sublicense the Sun Trademarks or Trade Dress.

              15.3 Territory. NP shall not use the Sun Trademarks or Trade Dress
outside the United States (the "Territory") without the prior written consent of
Sun's  Administrator.  SunConnect may refuse to extend the Territory in its sole
discretion.

              15.4 Quality Standards.  NP shall use the Sun Trademarks and Trade
Dress only on  Software  Products  that  conform to the  standards  set forth in
Section 8.2, including the certification requirement therein.

              15.5  Trademark  Usage.  NP shall not modify the Sun Trademarks or
Trade Dress in any fashion  whatsoever  without written  instructions from Sun's
Administrator.  NP will not place any NP or third party  trademark,  trade name,
logo or other  identifying  material  on the OEM  Products  without  the written
consent of SunConnect's Administrator.

              15.6  Protection Of The Sun  Trademarks.  Sun is the sole owner of
the Sun Trademarks and Trade Dress and all goodwill associated  therewith.  NP's
use of the Sun  Trademarks  and Trade Dress inures solely to the benefit of Sun.
NP shall not do anything  that might harm the  reputation or goodwill of the Sun
Trademarks or Trade Dress.  NP shall not challenge Sun's rights in or attempt to
register the Sun  Trademarks or Trade Dress,  or any other name or mark owned by
Sun or substantially  similar thereto. NP shall take no action inconsistent with
Sun's  ownership of the Sun  Trademarks  and Trade  Dress.  if it at any time NP
acquires any rights in, or registration  or application  for, the Sun Trademarks
or Trade  Dress by  operation  of law or  otherwise,  it will  immediately  upon
request by Sun or SunConnect and at no expense to Sun or SunConnect, assign such
rights,  registrations,  or applications to Sun, along with any and all goodwill
associated  with the Sun  Trademarks  and Trade  Dress.  The  parties  agree and
acknowledge  that Sun remains  responsible for the protection and maintenance of
the Sun Trademarks and Trade Dress. NP will, if requested by SunConnect, provide
assistance  in matters  relating to this  Trademark  License,  including but not
limited to (a) giving prompt written notice to SunConnect's Administrator of any
known or potential  infringement  of the Sun Trademarks or Trade Dress,  and (b)
cooperating  with  SunConnect in the  preparation and execution of any documents
necessary  to record  this  Trademark  License  with the  appropriate  trademark
authorities.  SunConnect  shall reimburse NP for the reasonable costs associated
with providing such assistance,  except to the extent that any such costs result
from a  breach  of this  Agreement  by NP,  NP shall  not  commence  any  action
regarding the Sun Trademarks or Trade Dress without  SunConnect's  prior written
consent.

              15.7 Disclaimer Of Warranties By SunConnect.  SUNCONNECT  MAKES NO
WARRANTIES OF ANY KIND  RESPECTING THE SUN TRADEMARKS OR TRADE DRESS,  INCLUDING
THE  VALIDITY  OF SUN'S  RIGHTS  IN THE SUN  TRADEMARKS  OR  TRADE  DRESS IN ANY
COUNTRY, AND DISCLAIMS ANY AND ALL WARRANTIES RELATING TO THE SUN TRADEMARKS AND
TRADE DRESS THAT MIGHT OTHERWISE BE IMPLIED BY APPLICABLE LAW

              15.8 * "Confidential portion has been omitted and filed separately
with the Commission."

                                       12

<PAGE>


16.0          PROGRAMS AND SERVICES

              16.1 POU/DTS Program.  The parties will negotiate in good faith to
develop  with NP a POU/DTS  Program.  Such  program  shall be designed to supply
SunConnect  with OEM  Product(s)  that  meets  established  quality  levels  and
eliminate incoming inspection.

              16.2 Just In Time Delivery Program.  The parties will negotiate in
good faith to develop with NP a Just In Tune delivery program ("JIT").  Such JIT
shall be designed to supply  SunConnect  with the OEM  Product(s) at the time at
which  SunConnect  requires  such OEM  Product(s)  so as to reduce the inventory
which SunConnect is required to retain in order to meet its production needs.

              16.3 Electronic Data Interchange (EDI) Program.  Should SunConnect
and NP enter into an EDI Program which is designed to allow SunConnect and NP to
transmit  electronically all data and information  necessary to conduct business
between the two companies,  it shall be pursuant to the terms and conditions set
forth in Exhibit P.

              16.4 Score Card  Criteria.  The Score Card is a  measurement  tool
used to rate NP's overall performance,  including,  but not limited to, quality,
delivery,  technology,  price and service. NP acknowledges that, at SunConnect's
option, NP may be evaluated in accordance therewith and agrees to cooperate with
SunConnect in this  process.  A copy of  SunConnect's  Score Card criteria and a
sample of the ScoreCard has been provided to NP.

              16.5 Co-Marketing. The parties may enter into agreements regarding
co-marketing of the OEM Products.

17.0          SAFETY COMPLIANCE AND STANDARDS

              17.1 Specification. NP warrants that each OEM Product delivered to
SunConnect will meet the requirements of Section 1.4 (Compliance with standards)
of Exhibit A-1 throughout the Term.  Design changes on OEM Products which affect
compliance  status,  and design changes which may be required due to a change in
the compliance standards,  shall be submitted by NP for reapproval at NP's cost.
NP shall provide confirmation of such approvals to SunConnect's Administrator or
Administrator's  designee  within  thirty  (30)  days  after  execution  of this
Agreement  or  receipt  of  approval,   as   applicable.   Such  approvals  must
specifically identify the OEM products as SunConnect products.

              17.2  Applicable Law. NP warrants and represents that OEM Products
comply with all  applicable  federal,  state,  administrative  and foreign laws,
statutes and regulations for all countries to which NP distributes its products.
NP agrees to notify SunConnect of any post-sale  warnings,  retrofits or recalls
which NP implements with respect to any of the OEM Products.

              17.3 ISO Certification. NP will use its best efforts to become ISO
9001 certified  within 18 months from the Effective Date of this Agreement,  and
to remain ISO - certified throughout the term of this Agreement.

                                       13

<PAGE>


18.0         DISCONTINUED PRODUCTS

              18.1 Product  Discontinuance by NP. NP will not discontinue any of
the OEM  Products  during the Initial Term of this  Agreement  without the prior
written consent of SunConnect's  Administrator.  During any renewal term, NP may
discontinue  the  manufacture  and sale of an OEM  Product  upon six (6) month's
prior written notice to SunConnect, so long as NP does not sell such OEM Product
to any  other of its  customers  after  it stops  selling  such OEM  Product  to
SunConnect. Within sixty (60) days after receipt by SunConnect of written notice
of such discontinuance ("Notice Date"), SunConnect may place and NP shall accept
a binding.  non-cancelable  written commitment for such discontinued OEM Product
for delivery over a one (1) year period  following the Notice Date. OEM Products
to be delivered  during this one year period may be  rescheduled as specified in
Section 14.1, provided that no OEM Product may be rescheduled for delivery after
the first  anniversary  of the Notice  Date.  Discontinuance  of any OEM Product
shall also be subject to the provisions of Section 19 of this Agreement.

              18.2 Component  Discontinuance by NP's Vendors.  If NP learns that
any of the  components  in an OEM  Product is being  discontinued  and cannot be
replaced with a component with similar functionality at the same or lesser cost,
then NP shall notify the  SunConnect  Administrator.  NP will use all reasonable
commercial efforts to develop an appropriate  solution,  subject to SunConnect's
reasonable approval.

              18.3  Product   Discontinuance   by  SunConnect.   SunConnect  may
discontinue any OEM Product on six (6) months notice to NP.

19.0          * "Confidential portion has been omitted and filed separately with
the Commission."

                                       14

<PAGE>


20.0          PROPRIETARY INFORMATION

              20.1 Duty of Non-Disclosure. Each party shall, at all times during
the term of this Agreement and for five (5) years thereafter, keep in confidence
and trust all of the other's Proprietary  Information  disclosed to it and shall
not use such Proprietary  Information other than as permitted under the terms of
this Agreement,  nor shall either party disclose Proprietary  Information of the
other to any third party except as permitted hereunder without the prior written
consent of the  disclosing  party.  Both parties  acknowledge  that  information
disclosed  orally and announced at the time of such disclosure which is specific
to the design and properties of the SunLink Source Code and the Escrow Materials
(as defined in Section 19.4) shall be considered Proprietary Information without
the need for a subsequent writing summarizing the contents of the disclosure.

              20.2  Standard of Care.  Each party shall use the same standard of
care to prevent  disclosure of the  Proprietary  Information  of the other party
which it uses to safeguard  its own  valuable  confidential  information  and/or
trade  secrets,  and in no event km than a  reasonable  degree  of care for such
information;  provided,  however,  that  neither  party  shall be liable for any
inadvertent or unauthorized  disclosure of Proprietary  Information occurring if
it exercises at least the standard of care set forth above to prevent disclosure
and  takes   reasonable  steps  to  mitigate  any  damage  and  prevent  further
disclosure.  Each party shall promptly notify the other if it becomes aware that
the other party's Proprietary  Information has been or is likely to be disclosed
without authorization under this Agreement.

              20.3  Advising  Employees.  Each party dull  inform its  employees
having access to the Proprietary Information of such party's limitations, duties
and  obligations  regarding   non-disclosure  and  copying  of  the  Proprietary
Information  and shall obtain their  agreement,  whether by means of existing or
new agreements, to comply with those limitations, duties and obligations.

                                       15

<PAGE>


              20.4 Exceptions.  Notwithstanding any provisions herein concerning
non-disclosure and non-use of the Proprietary  Information,  neither party shall
have any  obligations  concerning the disclosure or use of any such  information
which: (a) is already known to receiving party other than by previous disclosure
under an obligation of confidentiality; (b) is or becomes publicly known through
publication,  inspection  of product or otherwise and through no wrongful act of
the  receiving  party,  (c) is  received  from a  third  party  without  similar
restriction and without breach of this  Agreement,  (d) is disclosed or released
for disclosure by the disclosing  party to others  without  restriction,  (e) is
disclosed in accordance  with the specific  written  approval of the  disclosing
party; or (f) has been independently developed by the receiving party.

              20.5  Disclosure  Required by Law.  Either  party may disclose any
Proprietary  Information  to the  extent  necessary  to  comply  with  any  law,
regulation or other governmental requirement provided that such party previously
notifies the other party so that it may take appropriate protective measures.

              20.6 Future Development.  Each party to this Agreement understands
that the party  receiving  Proprietary  Information  may now or in the future be
developing  proprietary   information   internally,   or  receiving  proprietary
information  from third parties in  confidence  that may be similar to disclosed
Proprietary  Information.  Accordingly,  nothing  in  this  Agreement  shall  be
construed as a  representation  or inference  that the receiving  party will not
develop  products,  for  itself  or  others,  that  compete  with the  products,
processes,  systems  or  methods  contemplated  by  the  disclosed  Confidential
Information.

              20.7     Inventions.

                       a. All discoveries. improvements and inventions conceived
or first reduced to practice, as those terms are used before the U.S. Patent and
Trademark  Office,  in the  performance  of  this  Agreement  ("Inventions")  by
SunConnect's  personnel  shall be the sole and exclusive  property of SunConnect
and SunConnect  shall retain any and all rights to file any patent  applications
thereon.  All  Inventions  of NP's  personnel  shall be the  sole and  exclusive
property  of NP and NP  shall  retain  any and all  rights  to file  any  patent
applications thereon.

                       b. *  "Confidential  portion  has been  omitted and filed
separately with the Commission."

                       c. The provisions of this Section 20.7  regarding  rights
of ownership * "Confidential  portion has been omitted and filed separately with
the  Commission.",  sharing of expenses and licenses shall also apply to work of
the parties and results obtained with respect to  copyrightable  subject matter,
mask work rights and trade secrets.

21.0          * "Confidential portion has been omitted and filed separately with
the Commission."

                                       16

<PAGE>


22.0          INSURANCE. During the term of this Agreement, NP, at its sole cost
and expense,  shall carry and maintain  Commercial  General Liability  Insurance
with an "A" rated  company or companies  insuring  NP, its agents,  employees or
associates  covering  all  operations  of NP  including,  but  not  limited  to,
Products/Completed  Operations and Blanket  Contractual  Liability  specifically
covering the  indemnification  provisions  in Section 21.0,  against  claims for
personal and bodily injury and property  damage with a combined  single limit of
$2,000,000.

23.0          WARRANTY.

              23.1 Non-Infringement.  NP hereby warrants that: (i) has the right
and power to enter into this  Agreement  and to grant the  rights  and  licenses
granted to SunConnect hereunder; and (ii) the OEM Products will not infringe any
patent,  copyright,  trade secret or other  intellectual  property  right of any
third party.

              23.2 Product Warranty. NP warrants that all OEM Products delivered
hereunder are new, unused and will perform in accordance with the Documentation,
and will achieve any function  described  therein,  will be free from defects in
design, material and workmanship and will substantially

                                       17

<PAGE>


comply with the  requirements  of this Agreement for a period of * "Confidential
portion has been omitted and filed  separately  with the  Commission."  from the
date of acceptance  by SunConnect of OEM Products.  When any OEM Products do not
meet the foregoing warranty, and SunConnect or its Service Providers so notifies
NP in writing  within the  warranty  period,  NP will  repair or replace the OEM
Product as quickly as  possible,  but in no event  later than  twenty  (20) days
after receipt of notification or as otherwise agreed to between the parties.  NP
shall  have no  obligation  hereunder  to make  repairs  or  cause  replacements
required through normal wear and tear.

              23.3 Disclaimer.  EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS
AGREEMENT, NP MAKES NO ADDITIONAL WARRANTIES,  EXPRESS, IMPLIED OR STATUTORY, AS
TO  ANY  MATTER   WHATSOEVER.   IN   PARTICULAR,   ANY  AND  ALL  WARRANTIES  OF
MERCHANTABILITY  AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY  DISCLAIMED.
NO PERSON IS AUTHORIZED  TO MAKE ANY OTHER  WARRANTY OR  REPRESENTATION  ON NP'S
BEHALF  CONCERNING THE PERFORMANCE OF THE OEM PRODUCTS OTHER THAN AS PROVIDED IN
THIS AGREEMENT.

24.           TERM AND TERMINATION

              24.1  Term.   Subject   to  the   provisions   of   Section   24.1
("Assignment"),  this  Agreement  shall commence on the Effective Date and shall
continue for * "Confidential  portion has been omitted and filed separately with
the  Commission."  ("Initial  Term"),  and thereafter  this  Agreement  shall be
automatically  renewed for  additional  one (1) year periods unless either party
gives  written  notice  of  termination  at least  sixty  (60) days  before  any
anniversary  of the  execution  date after the end of the Initial Term or unless
sooner terminated in accordance with the provisions hereof (the "Term").

              24.2  Termination  by Either  Party.  Either party may, by written
notice,  and/or  suspend its  performance  under this  Agreement,  or cancel any
purchase hereunder without penalty, if the other party:

                       a.  fails to comply  with any of the  material  terms and
conditions of this Agreement,  the other party may terminate this Agreement upon
thirty (30) days' written  notice to the  defaulting  party  specifying any such
breach,  unless within the period of such notice, all breaches specified therein
shall have been  remedied  or, for breaches  which by their nature  require more
than thirty (30) days to remedy,  the parties  shall have agreed upon a plan for
the defaulting party to remedy such breaches.

                       b.   becomes   bankrupt,   becomes  the  subject  of  any
proceedings  seeking  relief or  reorganization  which are not stayed  within 60
days, or makes an assignment for the benefit of creditors.

              24.3  Negotiation of Disputes.  Both parties agree to negotiate in
good faith the  settlement  of any dispute  that may wise under this  Agreement.
Pending  negotiations toward settlement of any dispute, NP agrees to continue to
develop,  fabricate,  and deliver OEM Products under the terms of this Agreement
and  SunConnect  agrees to make  payments on  invoices  due in  accordance  with
Section 12.

              24.4 Effect of  Termination.  If this  Agreement is terminated for
NP's default,  SunConnect  may, at its sole option  require NP to transfer title
and to deliver to  SunConnect,  in the  manner  and to the  extent  directed  by
SunConnect,  (i) all  completed  OEM  Products  not yet  delivered  and (ii) any
partially  completed OEM Products and materials that NP has produced or acquired
for the  performance  of the  terminated  portion.  Payment for OEM Products and
materials  delivered to and accepted by SunConnect under this Section will be at
a price (not to exceed the contract price) agreed upon by NP and SunConnect.

                                       18

<PAGE>


              24.5 No Damages  for  Termination.  Neither  party  shall have the
right to recover  damages or  indemnification  of any nature,  whether by way of
lost profits, expenditures for promotion, payment for goodwill or otherwise made
in  connection  with the business  contemplated  by this  Agreement,  due to the
expiration  or permitted or lawful  termination  of this  Agreement.  EACH PARTY
WAIVES AND RELEASES THE OTHER FROM ANY CLAIM TO  COMPENSATION  OR INDEMNITY  FOR
TERMINATION OF THE BUSINESS RELATIONSHIP UNLESS SUCH TERMINATION IS IN BREACH OF
THIS AGREEMENT.

25.0          LIMITATION OF LIABILITY.  EXCEPT FOR DAMAGES ARISING UNDER SECTION
21 *  "Confidential  portion  has been  omitted  and filed  separately  with the
Commission.",  IN NO EVENT WILL EITHER  SUNCONNECT  OR NP BE LIABLE TO THE OTHER
FOR THE OTHER'S SPECEAL,  INCIDENTAL,  OR CONSEQUENTIAL  DAMAGES HOWEVER CAUSED,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.

26.0          RELATIONSHIP  OF  PARTIES.  Neither  party  shall  have,  or shall
represent that it has, any power, right or authority to bind the other party, or
to assume or create any  obligation or  responsibility,  express or implied,  on
behalf of the other party or in the other party's name.  Nothing  stated in this
Agreement  shall be construed as  constituting  NP and  SunConnect  as partners,
joint  venturers,  or as creating the  relationships  of employer and  employee,
franchiser and franchisee, master and servant, or principal and agent.

27.0          PUBLICITY. Neither party shall publicize or disclose the existence
or terms  and  conditions  of this  Agreement,  or any  transactions  hereunder,
without the express,  prior written consent the other party,  except as required
by applicable law or regulation.

28.0          ADMINISTRATION. SunConnect and NP shall, each assign a primary and
secondary  individual to administer  this Agreement  throughout  its term.  Each
party  shall  inform  the  Administrator  of the other in writing of a change of
Administrator or such Administrator's address or telephone number.  SunConnect's
Administrators shall be:

                       PRIMARY ADMINISTRATOR
                                         Michael Hutchings
                                         SunConnect Technology Enterprises, Inc.
                                         2475 Garcia Avenue, M/S MTV 14-40
                                         Mountain View, CA 94043
                                         Ph: (415) 336-1005
                                         Fax: (415) 336-3156

                       SECONDARY ADMINISTRATOR
                                         Philippe Monot
                                         Sun MicroSystems, Inc.
                                         32, chemin du Vieux Chene
                                         38240 MEYLAN
                                         FRANCE
                                         Ph: (011) 33.76.41.42.43
                                         Fax: (011) 33.76.41.42.41

                       NP's Administrators shall be:
                       PRIMARY ADMINISTRATOR
                                         Mitch Strobin
                                         Network Peripherals, Inc.

                                       19

<PAGE>


                                         Milpitas, Ca. 95035
                                         Ph: (408) 321-7300
                                         Fax: (408) 321-9218

                        SECONDARY ADMENISTRATOR
                                         William F. Kelly
                                         Network Peripherals Inc.
                                         Milpitas, Ca. 9503
                                         Ph: (408) 321-7300
                                         Fax: (408) 321-9218

29.0          GENERAL.

              29.1 Entire  Agreement.  This  Agreement and all of its referenced
Exhibits,  constitutes the entire agreement  between the parties with respect to
the subject matter hereof and supersede all prior  proposals,  negotiations  and
communications, oral or written, between the parties with respect to the subject
matter  hereof.  No deviation from these  provisions  shall be binding unless in
writing and signed by an authorized representative of the party to be charged.

              29.2  Governing  Law.  This  Agreement  shall be  governed  by and
construed in accordance  with the laws of the State of California  applicable to
contracts  made and  wholly  to be  performed  in  California  by  residents  of
California.  The  parties  specifically  agree  that  the  1980  United  Nations
Convention on the International Sale of Goods shall not apply to this Agreement.
The  parties  agree  that the  exclusive  jurisdiction  and venue of any  action
between  the  parties  arising  out of  this  business  relationship,  including
disputes that may arise following  termination of this  Agreement,  shall be the
Superior  Court of California for the County of Santa Clara or the United States
District  Court for the Northern  District of California and each of the parties
hereby submits itself to the exclusive jurisdiction and venue of such courts for
purposes of such action.

              29.3 Assignment.  The rights,  duties and obligations either party
under this Agreement may not be assigned in whole or in part by operation of law
or otherwise without the prior express written consent of the other party, which
consent shall not be unreasonably  withheld, and any attempted assignment of any
rights,  duties or obligations  hereunder without such consent shall be null and
void, except that SunConnect may assign its rights and obligations  without NP's
consent,  to a corporation  or other entity which is controlled by, under common
control with, or controls SunConnect Microsystems,  Inc. This Agreement shall be
binding on the parties and their respective successors and permitted assigns.

              29.4 Notices.  Any notice  required or permitted to be given under
this  Agreement  shall be given  in  writing  and  shall be  deposited,  postage
prepaid,  certified  mail return receipt  requested,  in the United States mail,
addressed to SunConnect or NP as the case may be, at the address set forth above
or at such other address as may be given in writing.

              29.5  Waivers,  Severability.  All rights and  remedies  conferred
under this  Agreement or by any other  instrument or law shall be cumulative and
may be exercised singularly or concurrently.  Failure by either party to enforce
any provision shall not be deemed a waiver of future  enforcement of that or any
other  provision.  In the event that any portion of this Agreement shall be held
to be unenforceable,  the remaining portions of this Agreement shall remain full
force and effect.

              29.6 Force Majeure. Neither party shall be liable for any delay or
failure in performance hereunder caused by acts of God or other cause beyond the
parties  control and without fault or negligence of such party.  In the event NP
fails to deliver OEM Product due to such  causes,  SunConnect  may suspend  this
Agreement  in whole or in part for the duration of the  delaying  cause,  and at
SunConnect's  option,  buy the OEM  Product(s)  elsewhere  and  deduct  from any
milestone  or  commitment  to NP the  quantity  so  purchased.  NP shall  resume
performance  under this  Agreement  immediately  after the delaying

                                       20

<PAGE>


cause ceases and, at  SunConnect's  option,  extend the Initial Term and/or Term
for a period equivalent to the length of time the excised delay endured.

              29.7 Survival.  Notwithstanding  the  termination or expiration of
the term of this Agreement or any renewal period thereof, it is acknowledged and
agreed that those rights and  obligations  which by their nature are intended to
survive such expiration or earlier termination shall survive including,  without
limiting the foregoing, Sections 15.7, 15.8, 20, 21, 23, 25, and 29.

              29.8  Exhibits.  The  following is the list of Exhibits  which are
attached  hereto and  incorporated  herein by this  reference as if set forth in
full:

              Exhibits A, A-1 and A-2: Product Specification

                       A-3    Pre-FCS Quality Assurance Plan
                       A-4    BOM
                       B.     Development Schedule
                       C.     Sun-Unique Elements
                       D.     * "Confidential portion has been omitted and filed
                              separately with the Commission."
                       E.     Support *
                       F.     Procedures  for Board  Replacement  (In and out of
                              warranty)
                       G.     [This Exhibit does not exist]
                       H.     [This Exhibit does not exist]
                       I.     * "Confidential portion has been omitted and filed
                              separately with the Commission."
                       J.     Quality Systems Manual
                       K.-1   Inbound/Outbound Packaging Requirements *
                       K-2    Engineering  Specification for Part Identification
                              Label * -
                       K-3    Corporate Shipping Container Graphics Guideline *
                       K-4    Shipping Carton Color Standard *
                       K-5    Specification  for A SunConnect  Color  SunConnect
                              Medium Purple *
                       K-6    Routing Guide *
                       L.     [This Exhibit does not exist]
                       M.     List  of  SunConnect  Suppliers  from  whom NP can
                              purchase

                                       21

<PAGE>


                       N.     Pricing and Leadtimes
                       0.     Shipping Reports
                       R      EDI *
                       Q.     Information Required for Contingent Manufacturing


IN WITNESS  WHEREOF,  the parties  have caused this  Agreement to be executed by
their duly authorized representatives.

Accepted for SunConnect:                        Accepted for NP:

SUN TECHNOLOGY ENTERPRISES, INC.                NETWORK PERIPHERALS INC.


BY:     ____________________________            BY:     ________________________


NAME:   ____________________________            NAME:   ________________________


TITLE:  ____________________________            TITLE:  ________________________


DATE:   ____________________________            DATE:   ________________________

                                       22

<PAGE>



                          Exhibit A: SunLink FDDI/S3.x
                          Product Specifications

                          ______________________________________________________

                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."



<PAGE>



                          Exhibit A-1: SunLink FDDI/S3.0
                          Product Specifications

                          ______________________________________________________

                          This document  defines the SunLink  FDDI/S 3.0 product
                          line.

                          Please refer to the exhibit A for general  description
                          of the product line.

                          A more detailed specification is given below.


                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."



<PAGE>



                          Exhibit A-2: SunLink FDDI/S3.1
                          Product Specifications

                          ______________________________________________________

                          This document  defines the SunLink  FDDI/S 3.1 product
                          line.

                          Please refer to the exhibit A for general  description
                          of the product line and to the exhibit A-1 for general
                          description of the SunLink FDDI/S 3.0 products.

                          As a general  policy,  the SunLink FDDI/S 3.1 products
                          are a superset of the SunLink FDDI/S 3.0 products. All
                          the  hardware,  driver,  compatibility,   performance,
                          security, compliance, packaging,  documentation, etc.,
                          features   described   in  the   SunLink   FDDI/S  3.0
                          specifications  are  applicable to the SunLink  FDDI/S
                          3.1 products.

                          This document only describes new  additional  features
                          which may not be included  in the  SunLink  FDDI/S 3.1
                          products.

                          All   the    functionalities    described    in   this
                          specification   are  already   described  as  optional
                          features  in the  SunLink  FDDI/S  3.0  specification.
                          Therefore, they may already be included in the SunLink
                          FDDI/S 3.0  products.  Depending on the number and the
                          importance  of the features  which are not included in
                          the  SunLink  FDDI/S  3.0  products  and  remain to be
                          implemented,  SunConnect may decide not to require the
                          release of the SunLink FDDI/S 3.1 product line.


                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."


<PAGE>



                          Exhibit A-3: SunLink FDDI/S3.x
                          Pre-FCS Quality Assurance Plan

                          ______________________________________________________

                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."



<PAGE>


                                   EXHIBIT A-4
                          FDDI/S 3.0 PRODUCT DEFINITION
                 for OEM Products including Derivative Products


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>



                          Exhibit B: SunLink FDDI/S 3.x
                          Development Schedule and Deliverables

                          ______________________________________________________

                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."



<PAGE>



                          Exhibit C: SunLink FDDI/S3.x
                          Sun Unique Elements

                          ______________________________________________________

                          *  "Confidential  portion  has been  omitted and filed
                          separately with the Commission."



<PAGE>



                                    EXHIBIT D


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>



                                  SCHEDULE D-1


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                    EXHIBIT E
                              SUPPORT REQUIREMENTS

1.      DEFINITIONS

         1.1 "Supported  Products" means the SunLink FDDI/S v. 1.0 and 2.0 (both
software and hardware components) and the OEM Products.

         1.2  "Enhancement  Release" means a hardware or software  product which
typically  includes  incremental  improvements to a product's  functionality  or
performance. An Enhancement Release is generally characterized by a single digit
change to the right of the decimal  point  (tenths) of an existing  version of a
software product, i.e., X.(X).X.

         1.3 "Escalation" means a bug, error or other problem with the Supported
Products that is referred by SunConnect to NP.  Escalations  are rated according
to their severity (urgency for response) as follows:

                   o   Meltdown/Priority   1  Escalations   are  problems  which
                       require an  immediate  response,  such as the  customer's
                       system being down.

                   o   Hot/Priority 2 Escalations  are problems  which require a
                       very prompt but not an  immediate  response,  such as the
                       customer's  system being operational but with significant
                       degradation or loss of features.

                   o   Warm/Priority  3  Escalations  are  problem  which do not
                       require   as   immediate   or   prompt  a   response   as
                       Meltdown/Priority 1 or Hot/Priority 2 Escalations because
                       they have a less severe impact on the customer.

         1.4  "Maintenance  Release"  means a release of a  software  product or
component typically to correct errors to enable the product or component to meet
its  published  functionality.  A  Maintenance  Release is usually  developed to
incorporate error corrections and/or patches. A Maintenance Release is typically
characterized by a change in the digit to the extreme right of the decimal point
(hundredths) of an existing version of a software product, i.e., X.X.(X).

         1.5  "Services"  means  the  on-call  support,  escalation  management,
problem determination, maintenance and other software support services.

         1.6 "Workaround"  means a method a customer can use to avoid a problem.
Provides a customer with short term approach to dealing with known problems.

2.      NP SUPPORT OBLIGATIONS

<TABLE>
         2.1 On-Call  Support and  Escalation  Management.  Escalations  will be
referred to NP only by the SunConnect  designated  contact  person(s).  NP shall
provide  engineering  support for  Supported  Products and shall have  available
sufficient  trained and qualified  support  engineers to perform Services within
the response times set forth as follows:

<CAPTION>
- -------------------------- -------------------------- ------------------------- ---------------------------
                           SunConnect Callback;
                           NP Engineer Assigned;                                Fix, Workaround, or
                           Initial action Plan to                               Long-Term Action Plan
      Call Priority        SunConnect                      Status Reports       to SunConnect
- -------------------------- --------------------------------------------------------------------------------
<S>                        <C>
            1              * "Confidential portion has been omitted and filed separately with the
                           Commission."
- -------------------------- --------------------------------------------------------------------------------
            2              * "Confidential portion has been omitted and filed separately with the
                           Commission."
- -------------------------- --------------------------------------------------------------------------------
            3              * "Confidential portion has been omitted and filed separately with the
                           Commission."
- -------------------------- --------------------------------------------------------------------------------
</TABLE>


Days and hours shall be measured according to continuous business hours. Defined
as:  Monday  through  Friday;  8:00 am to 5:00 pm  Pacific  Time,  excluding  US
nationally  recognized holidays. NP shall meet response time requirements for at
least 90% of calls or reports from SunConnect.



<PAGE>


                                EXHIBIT E (con't)

         2.2 Support  Information  Access: The SunConnect Contact Person will be
responsible  for  assigning   Escalations  to  NP  and  for  providing  NP  with
appropriate background information related to such Escalations. Such information
may include prior analysis or traces performed on the problem,  and any relevant
bug track entries.  All requests by NP for additional  information relating to a
particular  Escalation  shall be addressed to and  responded to by  SunConnect's
Contact Person or such other person as may be designated by SunConnect.

         2.3 Problem  Determination.  NP is responsible  for (i) determining the
nature and cause of an Escalation; and (ii) creating a problem/solution synopsis
for each  Escalation.  The  initial  action plan shall  include the  responsible
engineer assigned, results of the initial investigation,  verifying that it is a
bug and a  fix/workaround  will be provided,  what will be the next steps taken,
when a fix/workaround and update will be provided.

         2.4  Workarounds.  NP shall  attempt  to provide  Workarounds  wherever
appropriate  in response to  Escalations  until a  Modification  can be created.
Appropriate  documentation/integration notes are required. Information regarding
Workarounds shall be submitted by NP to SunConnect.

         2.5 Error  Corrections/Patches.  NP shall  use  reasonable  efforts  to
create Patches to fix Supported  Product defects and test and integrate any such
fix in a format acceptable to SunConnect. NP shall provide Patches to SunConnect
in an object code master copy for duplication and distribution. NP will maintain
a copy of all  Patches  and problem  workarounds  produced  and will make backup
tapes containing all then current source and patch directories for the Supported
Products available for inclusion into the Escrow Account.

         2.6 Transfer of Responsibility.  If ongoing support will be provided by
someone other than NP, NP agrees to make reasonable efforts to notify SunConnect
to  preliminary  details  of the  transition  agreement  a minimum of 90-days in
advance of the  transaction of SunConnect to verify the new owner is prepared to
assume the  responsibility.  NP shall make best  efforts to address  issues that
impact SunConnect's support operations.

         2.7 * "Confidential  portion has been omitted and filed separately with
the Commission."

         2.8 * "Confidential  portion has been omitted and filed separately with
the Commission."

         2.9  Inability  to Support  FDDI 1.0 and 2.0.  If,  after the  diligent
exercise of all reasonable  commercial  efforts NP is unable to provide support,
workarounds;  or spares  for  SunLink  1.0 or 2.0  products,  then NP may notify
SunConnect's  Administrator  and shall provide  SunConnect  with all information
relating to the problem and NP's efforts to resolve such problem. Upon receiving
the  required  notice  and  information   from  NP,   SunConnect   shall  assume
responsibility for developing a solution, with NP's reasonable assistance.



<PAGE>


                                EXHIBIT E (con't)

3.     TRAINING AND CONSULTATION

         3.1 Transfer of Information  (TOI). This Section 3.1 shall not apply to
Maintenance  Releases.  For  each  new  Enhancement  Release,  NP  shall  ensure
SunConnect  receives  Transfer  of  Information  (TOI) ten (10)  weeks  prior to
product release.  The Initial TOI will be completed by FCS Code Freeze. NP shall
offer one train-the-trainer session at a central SunConnect designated facility,
and agrees to videotape the session for SunConnect duplication and distribution.
The Initial TOI will be ready within seven (7) days  following  FCS Code Freeze.
Content of the TOI must include the following to a sufficient level of detail:

                  Product Overview
                           Features
                           Limitations
                           File Descriptions
                           External Specification (Functional Spec)

                  Theory of Operation - detail of installation,  configuration
                           Walk through of product install, config, deinstall

                  Troubleshooting/Diagnostics
                           Known Bugs
                           Common User Errors
                           Troubleshooting tools and Diagnostic techniques
                           Support Center requirements

                  Recommended Support Strategy

         3.2 Customer Training. Upon SunConnect's specific request and with NP's
agreement,  NP shall be available  to  participate  in training of  SunConnect's
distributors  and  resellers in  providing  support  services for the  Supported
Products.  Such  training may include  both  creating  and  conducting  training
programs.

         3.3 Responses to Questions.  NP shall answer technical questions on the
Supported  Products from SunConnect's  "support" alias, or other such restricted
access aliases for support purposes. Until NP is provided access to such aliases
SunConnect  shall monitor such aliases and provide NP the questions that require
answers.  NP agrees to use reasonable  commercial  efforts to meet such response
time guidelines that might exist for such aliases.  Upon  SunConnect's  specific
request,  NP agrees to  assist,  as  appropriate,  in  responding  to  technical
questions from Sunconnect's other aliases for the Supported Products,  including
without  limitation  questions  received  via the "net amb" and  "fddi-interest"
email aliases.

4.      NEW OEM PRODUCT RELEASE SUPPORT DELIVERABLES

         4.1  Support  Deliverables.   This  Section  4.1  shall  not  apply  to
Maintenance  Releases nor to the initial  release of the OEM Products.  For each
new  Enhancement  Release of the OEM  Products,  NP shall  ensure  that  support
deliverables are provided to SunConnect within the time frame required to ensure
support readiness at product introduction:

              Deliverable:                                Weeks Prior to FCS:

              Product/Doc Evaluation Copy                 *  "Confidential
              Product/Structure Information                   portion has been
              Business Information & TOI Information          omitted and filed
              Electronic copy of SW/Docs                      separately with
                                                              the Commission."



<PAGE>


                                EXHIBIT E (con't)

5.          FDDI/S 1.0 and 2.0 Support

         5.1 Level of Support.  NP shall provide  hardware and software  support
for the FDDVS 1.0 and 2.0 products to the extent of  Maintenance  Releases only.
NP shall not be  required  to  manufacture  or make  substantial  changes to the
hardware.  If hardware changes are required and SunConnect requests NP to manage
the change  process  then  SunConnect  will be  responsible  for all  SunConnect
approved expenses incurred by NP.

         5.2  Platforms  Supported.  The  following  system  platforms  shall be
supported:

              * "Confidential portion has been omitted and filed separately with
              the Commission."

         5.3 Operating  Systems  Supported.  The following Sun Operating Systems
shall be supported:

              * "Confidential portion has been omitted and filed separately with
              the Commission."



<PAGE>


         Exhibit F

         _________________________________________________________________

         Network Peripherals
         Out of Warranty Repair Policy 1

                  Hardware Service Details


1        Network  Peripherals  reserves  the right to change any portion of this
         policy in the future.

2        Network  Peripherals  will update  records to reflect the shipment of a
         replacement product. In this case the * "Confidential  portion has been
         omitted and filed separately with the Commission."  warranty will be in
         effect for the replacement product.

3        International  deliveries  will be via the standard  service  available
         through the current carrier.



<PAGE>


                                    EXHIBIT I
                            NETWORK PERIPHERALS INC.
                          SOURCE CODE LICENSE AGREEMENT


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>



Exhibit N: Pricing and Lead Time    (all prices in US dollars)

________________________________________________________________________________


1.     Standard OEM Products

*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


2.     Derivative Products

*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


Exhibit N: Pricing and Lead Time    (all prices in US dollars)

________________________________________________________________________________


3.     Lead-time for Standard OEM Products will be *  "Confidential  portion has
       been omitted and filed separately with the Commission."


4. Flexibility of increases to Standard OEM Product orders.

                          Table 3  Lead-time vs. % Increase

                            --------------------- ---------------------
                            Lead-time             Max. % Increase
                            --------------------- ---------------------
                            12 weeks +                *  "Confidential
                            8 to 12 weeks         portion   has   been
                            6 to 8 weeks          omitted   and  filed
                            4 to 6 weeks          separately  with the
                            0 to 4 weeks          Commission."
                            --------------------- ---------------------


5.     Support of SunConnect's 1.0 and 2.0 FDDI Sbus product line.

*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


                                    EXHIBIT O
                                SHIPPING REPORTS


A. NP shall provide the appropriate  SunConnect  materials  management personnel
(as identified by the SunConnect Administrator) with the following reports.

1. Weekly Performance Against Schedule ("PAS") Reports on the first business day
of each week, even if there has not been any change in the information since the
last PAS Report. The PAS Report shall include the information specified below.

                  A. Product Information. Open purchase orders and line numbers,
SunConnect's  manufacturing part numbers, order date, open quantity, balance due
and order status.

                  B. Shipping  Information.  Agreed Delivery Dates,  actual ship
dates, date of arrival,  shipping method,  and airbill or bill of lading number,
if possible.

2. Outbound  Shipment  Report within  twenty-four  (24) hours of the date of any
shipment of OEM  Products to  SunConnect.  The  Outbound  Shipment  Report shall
include the information specified below.

                  A. Product Information.  Purchase order and line numbers, part
number, quantity

                  B.  Shipping  Information.  Airbill or bill of lading  number,
carrier, expected delivery date, and name of contact person at NP to contact

B. The parties will work together to develop a prototype form of monthly summary
report  prior to shipment of the beta version of the OEM  Products,  and a final
form of monthly summary report prior to FCS of the OEM Products.


<PAGE>


                                    EXHIBIT P
                           ELECTRONIC DATA INTERCHANGE
                                 TRADING PARTNER

1.0      Definitions.

         For the  purposes of this  Exhibit,  the  following  definitions  shall
apply:

         1.1      "EDI" means electronic data interchange.

         1.2      "Transaction  Set" is the collection of data that is exchanged
                  in order to convey meaning between the parties engaged in EDI

         1.3      "Third Party  Network  Service  Provider" or  "Provider"  is a
                  business  entity  that  provides  the  service  of moving  and
                  routing EDI transmissions between trading partners.

         1.4      "Enhanced  Security"  is a process  for  providing  additional
                  security,  beyond  what is offered by the  Provider,  that the
                  trading partners may agree to use.

         1.5      "Transaction Set Control Number" or "Header Control Number" is
                  an  identifying  number in the beginning of a Transaction  Set
                  that can be referenced in exchanging information.

         1.6      "Transaction  Set Control Number" or "Trailer  Control Number"
                  is an identifying  number at the end of a Transaction Set that
                  must have a corresponding Header Control Number.

         1.7      "Functional Group" is a group of similar Transaction Sets that
                  is bounded by a  Functional  Group  header  arid a  Functional
                  Group trailer.

         1.8      `Interchange  Control Number' is an identifying number that is
                  contained  in the  interchange  header and trailer and that is
                  used by the  receiving  party to  acknowledge  receipt of this
                  inter-change header and trailer.

         1.9      "Data  Interchange  Control  Number" is an identifying  number
                  that is contained in the  Functional  Group header segment and
                  Functional  Group trailer segment and is used by the receiving
                  party to  acknowledge  receipt  of a  Functional  Group to the
                  sending  party.  This Data  Element in the header and  trailer
                  segments  provides  the  control  information  needed  by  the
                  trading  partners  associated  with the exchange of Functional
                  Group information.

         1.10     "Data  Element" is the smallest  named unit of  information in
                  the Transaction Set.

         1.11     "Segment"  or  "Data  Segment"  is  an  intermediate  unit  of
                  information in a Transaction Set.  Segments are defined in the
                  segment directory.  The segment directory defines each Segment
                  by its name, purpose and identifier.

         1.12     "Line Item" is a Data Element in the  Transaction  Set that is
                  used to provide a specific type of Hash Total.

         1.13     "Hash Total" is the sum of values of a specific Data Element.

                                       1

<PAGE>


 2.0      Prerequisites.

          2.1     Documents, Standards.

                  Each party may electronically  transmit to or receive from the
                  other party any of the Transaction  Sets listed in Exhibit P-1
                  and Transaction Sets which the parties,  by written agreement,
                  add to said Exhibit. All Transaction Sets shall be transmitted
                  in accordance with the standards set forth in Exhibit P-1. Any
                  transmission of data which is not a Transaction Set shall have
                  no force or effect between the parties.

                  Precise procedures to be used in handling Transaction Sets are
                  incorporated   in  Exhibit  P-1.  These   procedures   include
                  assignment  of  confidential  and unique access codes for each
                  party which will then be used to authenticate each Transaction
                  Set,  along with such other  matters as the  parties  consider
                  appropriate.

         2.2      Third Party Network Service Providers.

                  Transaction  Sets will be transmitted  electronically  to each
                  party  through  any  Provider  with  which  either  party  may
                  contract. The Provider for each party is identified in Exhibit
                  P-1.  Either  party may change its  designated  Provider  upon
                  thirty (30) days prior written notice to the other party.

                  Each party shall be responsible  for the costs of any Provider
                  with which it contracts.

          2.3     System Operations.

                  Each party, at its own expense, shall provide and maintain the
                  equipment,   software,   services  and  testing  necessary  to
                  effectively and reliably transmit and receive documents.

                  If  Provider  is down  and this  prevents  either  party  from
                  meeting the pickup or delivery frequency agreed to, that party
                  must notify the other party the same day.

          2.4     Security Procedures.

                  Each party shall  properly use security  procedures  which are
                  reasonably  anticipated to: (a) ensure that all  transmissions
                  of  Transaction  Sets  are  authorized  and  (b)  protect  its
                  business records and data from improper  access.  Both parties
                  agree to preserve and  safeguard  the  confidentiality  of all
                  data  exchanged via EDI, and will not disclose any data to any
                  third  party,  individual  or  corporation  without the owning
                  party's prior written consent.

          2.5     Electronic Signatures.

                  The  parties  may  agree to apply  special  protection,  where
                  permissible,  by encryption or by other means,  to some or all
                  data  exchanged   between  them.  If  special   protection  is
                  required, it will be identified in Exhibit P-1.

3.0       Transmissions.

          3.1      Proper Receipt.

                  Transaction  Sets  shall not be  deemed to have been  property
                  received,  and no  Transaction  Set  shall  give  rise  to any
                  obligation,  until  accessible to the receiving  party at such
                  party's electronic mailbox.

                                        2

<PAGE>


          3.2      Verification.

                  Upon receipt of any Transaction Set, the receiving party shall
                  promptly and properly transmit a functional  acknowledgment in
                  return  within  one  (1)  business  day  after  receipt  of  a
                  Transaction Set.

          3.3      Acceptance.

                  An electronic  transmission  of data shall be deemed  complete
                  and a  Functional  Group  accepted,  when the  receiver of the
                  transmission verifies by functional acknowledgment that:

                            A.        The standards specified in Exhibit P-1 are
                                      met;

                            B.        The actual quantity of Functional  Groups,
                                      Transaction Sets, Segments, Line Items and
                                      Hash    Totals    received    within   the
                                      transmission equals the quantity the party
                                      has  identified as being  included,  using
                                      the appropriate  control fields  specified
                                      in Exhibit P-1.

          3.4     Garbled Transmissions.

                  If any  Transaction  Set is received in an  unintelligible  or
                  garbled form, the receiving  party shall  promptly  notify the
                  originating   party  (if   identifiable   from  the   received
                  Transaction  Set) in a  reasonable  manner.  In the absence of
                  such notice,  the originating  party's records of the contents
                  of such Transaction Set shall control.

          3.5      Erroneous Transmissions.

                  If either  party  receives  a  Transaction  Set from the other
                  party which differs from the applicable  terms and conditions,
                  (e.g., an Order with a price,  quantity or schedule  different
                  than that  mutually  agreed upon),  the receiving  party shall
                  promptly  contact the sending party to confirm the accuracy of
                  the Transaction Set.

          3.6     Faulty Transmissions.

                  In the event either  party  receives a  Transaction  Set which
                  contains any evidence of faulty  transmission,  the  receiving
                  party shall contact the sending party,  reject the Transaction
                  Set and request that the Transaction Set be re-sent.

4.0      Terms and Conditions.

         4.1      Validity, Enforceability.

                  This  Exhibit  evidences  the mutual  intent of the parties to
                  create a binding purchase and sale obligation  pursuant to the
                  electronic  transmission and receipt of documents,  specifying
                  certain  of the  applicable  terms.  During  the  term  of the
                  Agreement,  all  obligations  concerning  the delivery of such
                  Transaction  Sets  in  written  form  may  be  fulfilled  by a
                  transmission.  pursuant to the terms of this Exhibit. However,
                  either  party shall have the  option,  at its  discretion,  to
                  transmit Transaction Sets in written form to the other party.

                                        3

<PAGE>


                  Any  Transaction  Set  properly  transmitted  pursuant to this
                  Exhibit,  including  without  limitation  Exhibit P-1 ("Signed
                  Documents"),  shall  be  considered.  in  connection  with any
                  transaction,  or this  Exhibit,  to be a "writing" and to have
                  been "signed" and to consume an  "original"  when printed from
                  electronic files or records  established and maintained in the
                  normal course of business.

                  The  parties   agree  that  the   provisions  of  the  Uniform
                  Commercial Code, Section 2-201 ("Formal Requirements:  Statute
                  of Frauds"),  shall not apply to  Transaction  Sets covered by
                  this Exhibit since hard copies of Transaction Sets will not be
                  issued,  and the parties  further agree that said  Transaction
                  Sets  shall  be  deemed  to  satisfy  any  statutory  or legal
                  formalities   requiring   that   agreements   be  in  writing,
                  including, but not limited to the Statute of Frauds.

                  The conduct of the parties pursuant to this Exhibit, including
                  the use of Signed Documents properly  transmitted  pursuant to
                  this Exhibit, shall, for all legal purposes, evidence a course
                  of performance  accepted by the parties in furtherance of this
                  Exhibit.

                  The   parties   agree  not  to   contest   the   validity   or
                  enforceability of Signed Documents under the provisions of any
                  applicable  law relating to whether  certain  agreements be in
                  writing  and signed by the party to be bound  thereby.  Signed
                  Documents, if introduced as evidence on paper in any judicial,
                  arbitration,  mediation or administrative proceedings, will be
                  admissible as between the parties to the same extent and under
                  the same conditions as other business  records  originated and
                  maintained in  documentary  form.  Neither party shall contest
                  the  admissibility  of copies of Signed Documents under either
                  the business records exception to the hearsay rule or the best
                  evidence rule on the basis that the Signed  Documents were not
                  originated or maintained in documentary form.

                                        4

<PAGE>


                                   EXHIBIT P-1

1.0       Transaction Sets.

          All  Transaction   Sets   contemplated  by  this  Agreement  shall  be
          transmitted  and  formatted in accordance  with the American  National
          Standard Institute  Business Data Interchange (ANSI X12) Standard,  as
          reflected  in the  number,  version  and date  column set forth  below
          beside each  Transaction  Set. This also includes the data dictionary,
          segment  directory,   and  transmission   controls  published  as  X12
          standards.

          1.1      Transaction Sets to be transmitted by Seller to Sun.

                   Communication         Number      Version           Date
                   -------------         ------      -------           ----


          1.2     Transaction Sets to be transmitted from Sun to Seller.

                   Communication         Number      Version           Date
                   -------------         ------      -------           ----



2.0       Providers.

          All Transaction Sets  contemplated by this Agreement will be channeled
          through  Providers.  Sun and Seller  shall each  assign a Provider  as
          follows:

          2.1      Sun's Provider.

                   _________________________________
                   _________________________________
                   _________________________________
                   _________________________________

          2.2      Seller's Provider.

                   _________________________________
                   _________________________________
                   _________________________________
                   _________________________________

3.0       Transmission Requirements.

          For each  Transaction Set, the Header Control Number Data Element must
          have an identical  corresponding  value in the Trailer  Control Number
          Data Element for all control Segments as follows:

                                        1

<PAGE>


1        The value for the Interchange  Control Number contained in Data Element
         ISA13 for a  transmission  must equal the value for Data Element  IEA02
         that is contained in the transmission.

2.       The value for the Data  Interchange  Control  Number  contained in Data
         Element  GS06  must  equal  the  value  for Data  Element  GE02 that is
         contained in that Functional Group.

3.       The value for the  Transaction  Set Control  Number  contained  in Data
         Element  ST02 for a  Transaction  Set must  equal  the  value  for Data
         Element SE02 contained in that Transaction set.

In addition, the following requirements must be met:

A.       The  actual   quantity  of  Functional   Groups   received  within  the
         transmission must equal the quantity the trading partner has identified
         as being included, As contained in the IEA01 Data Element;

B.       The actual quantity of Transaction  Sets received with the transmission
         must equal the quantity  the trading  partner has  identified  as being
         included, as contained in the GE01 Data Element;

C.       The actual quantity of Segments  included  within each  Transaction Set
         must equal the quantity  the trading  partner has  identified  as being
         included, as contained in the SE01 field;

D.       The actual quantity of Line Items included within each  Transaction Set
         must equal the quantity  the trading  partner has  identified  as being
         included, as contained in the CTT01 field; and

E.       The Hash  Totals  contained  in the CTT02  field  must equal the sum of
         values as defined in each Transaction Set.

                                       2

<PAGE>


Exhibit Q


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."

<PAGE>


                     AMENDMENT #1 TO SUN MICROSYSTEMS, INC.
                       DEVELOPMENT AND PURCHASE AGREEMENT

Sun Microsystems,  Inc. ("Sun") and Network Peripherals Inc. ("NP") hereby agree
to amend the  Development  and Purchase  Agreement  between  them dated  2/25/94
("Agreement") as follows:

1.     SunSoft,  Inc., a subsidiary of Sun Microsystems,  Inc., hereby transfers
       administration  of the above  referenced  agreement  to Sun  Microsystems
       Computer Company, a division of Sun Microsystems, Inc.

2.     All references to "SunConnect" in the Agreement are replaced by "Sun".

3.     In all  sections,  where  applicable,  reference  to "Sunlink  FDDI/S" is
       changed to "Sun FDDI(TM)".

4.     In the event of a  conflict  between  the terms  and  conditions  of this
       Amendment  No. 1 and the  Agreement  as it  relates  to the OEM  Products
       listed in Exhibit N, this Amendment No. 1 shall take precedence.

5.     Reference   Section  1.4,  2.3  and  2.4.   There  are  no   "Development
       Deliverables" associated with the OEM Products set forth in Exhibit N.

6.     Reference Section 1.11. Sun-unique Elements. Delete reference to "Exhibit
       C" and substitute "Exhibit G".

7.     Reference  Section  1.12.  For the  purpose  of this  Agreement  "Service
       Providers" shall include "Sun-authorized third party maintainers (TPMs)".

8.     In the third  line of  Section  3.3 after  "documents"  add "and Sun FDDI
       documents".

9.     Add at the end of Paragraph 5. 1: "In the event of a conflict between the
       terms and  conditions  of Exhibits E and R,  Exhibit R (Customer  Support
       Provisions)  attached hereto and  incorporated  hereby by this reference.
       Exhibit R shall take precedence."

10.    Delete Paragraph 5.3 in its entirety.

11.    Add at the end of Section 8. 1: "NP agrees to comply with the  provisions
       of Exhibit C, Supplier's  Quality Program,  attached hereto. In the event
       of a conflict between Exhibit C and any other exhibits  regarding quality
       of the OEM Products, Exhibit C shall take precedence."

12.    In the ninth line of Section 8.2 after "(Trademark  License)" insert "and
       Exhibit C".

13.    Delete the 4th and 5th  sentence of Section  8.3.a in their  entirety and
       substitute  the  following:  "By the  release  of Sun FDDI  5.0,  NP will
       identify  and reach  terms  with a compact  disk  manufacturer.  Sun will
       provide the necessary copyright information and product disclaimers to be
       included.  Sun must approve the initial  procedures and file organization
       before CD masters are created.  Sun agrees to reimburse  Supplier for the
       costs of CD mastering which are estimated at $2500 to $3000."

14.    Delete Section 8.4 in its entirety and  substitute  the  following:  "8.4
       Copyright  Notices.  Documentation  shall  bear  copyright  notice(s)  as
       provided by Sun."

15.    In Section 8.6 after "interconnectability" insert "serviceability".

16.    Delete Section 9.3 in its entirety and substitute the following:

        "9.3    Forecast:  Sun shall  provide  Supplier  with a *  "Confidential
                portion  has  been  omitted  and  filed   separately   with  the
                Commission."  rolling forecast of its intended  purchases by the
                first  Monday  of each  month,  with the  first *  "Confidential
                portion  has  been  omitted  and  filed   separately   with  the
                Commission." broken out by week. Such forecast is for Supplier's
                convenience  only and shall in no way  create an  obligation  on
                Sun's part to meet such forecast.

                Sun  acknowledges  that in  order to  support  the  agreed  upon
                leadtime,  Supplier  may be required to acquire  certain  unique
                and/or long lead time materials ("Materials") well in advance of
                receipt of Sun's purchase  orders and to support Sun's forecast.
                The description of Materials and their respective  leadtimes are
                set forth in Exhibit  N-1.  Sun's  liability  for  Materials  is
                limited to those  conforming  materials  ordered in the  minimum
                quantities and leadtimes which were strictly  necessary to build
                Product in order to meet Sun's purchase orders and forecast.

17.    Delete the last sentence of Section 10.4 and  substitute  the  following:
       "Sun  agrees to respond to NP within ten (10) days after  receipt of such
       notification  by Sun's  Administrator  whether Sun accepts or rejects the
       price changes."

January 16, 1996    ff                 1               Network Peripherals, Inc.

<PAGE>


18.    Delete Section 14.1 in its entirety and substitute the following:

       "14.1  Rescheduling:  Sun may  reschedule  delivery of all or part of any
              purchase order, at no charge,  to a date after the agreed delivery
              date as follows:

              Notice        Maximum Reschedule Period        Maximum Reschedules

              0-30 days     *  "Confidential  portion has been omitted and filed
                                separately  with the Commission."

              30+ days      *  "Confidential  portion has been omitted and filed
                                separately with the Commission."

              * "Confidential portion has been omitted and filed separately with
              the Commission."

19.    Delete Section 14.2 in its entirety and substitute the following:

       "14.2  Cancellation:

       *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

20.    Delete  Section  18.3 in its  entirety  and replace  with " 18.3  Product
       Discontinuance by Sun. Sun agrees to give NP * "Confidential  portion has
       been omitted and filed separately with the  Commission."  notice prior to
       discontinuing  an OEM  Product.  NP shall use its best efforts to control
       inventory levels and costs during Product phase-out."

21.    *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

22.    *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

23.    *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

24.    *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

25.    In the sentence of Section 23.2 delete "twenty (20) days after receipt of
       notification  or  as  otherwise   agreed  to  between  the  parties"  and
       substitute "the number of days specified in Exhibit R".

26.    In the first line of  Section 24 delete  "Subject  to the  provisions  of
       Section 24.1 ("Assignment")".

27.    Section 24,  Administration.  Delete  Sun's and NP's  Administrators  and
       replace with.

       "Primary Administrator                     Secondary Administrator

       Yoshikazu (Roy) Hirotsuka                  Flora Ford
       Sun Microsystems Inc.                      Sun Microsystems Inc.
       2550 Garcia Avenue, UMIL01-120             2550 Garcia Avenue, UMIL01-103

January 16, 1996    ff                 2               Network Peripherals, Inc.

<PAGE>

       Mountain View, CA 94041                    Mountain View, CA 94041
       Ph:(408)276-2186                           Ph: (408) 276-3945
       Fax: (408) 263-0807                        Fax: (408) 263-3592

       Meena Bhatia                               Dane Iverson Gegal Department)
       Network Peripherals, Inc.                  Network Peripherals, Inc.
       1371 McCarthy Boulevard                    1371 McCarthy Boulevard
       Milpitas, CA 95035                         Milpitas, CA 95035
       Ph:(408)321-7206                           Ph: (408) 321-7300
       Fax: (408) 321-9218                        Fax: (408) 321-9218"

28.    In Section 29.7 add at the end "and Exhibits C and R".

29.    Add at the end of Section 29.8:

       "C - Supplier's Quality Program*

       G - Sun-Unique Elements

       N-1 - Pricing and Leadtimes for New OEM Products

       R - Customer Support Provisions *

30.    Add a new Section 29.9 as follows: "29.9 Environment. Consistent with the
       U.S. Clean Air Act of 1990, Supplier shall use reasonable efforts to give
       Sun as much notice as is  practicable  in the event  Supplier  uses ozone
       depleting chemicals in the manufacture of the Products.  Sun reserves the
       right to reject any Products  manufactured  utilizing or containing  such
       materials if Sun has not previously been notified of the same."

31.    Exhibit A titled "Sun FDDI SBus  Adapter 4.0 Product  Specifications"  is
       attached hereto and incorporated herein by this reference.

32.    Exhibit C dated  November  27, 1995 is attached  hereto and  incorporated
       herein by this reference. Exhibit C-1 dated November 29. 1995 is attached
       hereto and incorporated herein by this reference.

33.    Exhibit G-1 dated December 20, 1995 is attached  hereto and  incorporated
       herein by this reference.

34.    Exhibit F is deleted in its entirety.

35.    Exhibit N dated  2/24/94 is  deleted  in its  entirety  and  replaced  by
       Exhibit N dated November 27, 1995 attached hereto and incorporated herein
       by this reference.

Except as so amended, the Agreement is confirmed in its entirety.

SUN MICROSYSTEMS, INC.,                     NETWORK PERIPHERALS INC.
acting by and through its division,
Sun Microsystems Computer Company

BY:     __________________________          BY:     ____________________________

NAME:   __________________________          NAME:   ____________________________

TITLE:  __________________________          TITLE:  ____________________________

DATE:   __________________________          DATE:   ____________________________

SUNSOFT, INC.

BY:     __________________________

NAME:   __________________________

TITLE:  __________________________

DATE:   __________________________

January 16, 1996    ff                 3               Network Peripherals, Inc.

<PAGE>



                         Exbihit A: Sun FDDI Sbus Adapter 4.0
                         Product Requirements

                         _______________________________________________________

                         *  "Confidential  portion  has been  omitted  and filed
                         separately with the Commission."



<PAGE>


                                    EXHIBIT C
                           SUPPLIER'S QUALITY PROGRAM


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                   EXHIBIT C-1
                    ADDITIONAL CUSTOMER SUPPORT REQUIREMENTS


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                            Exhibit G-1: Sun FDDI 4.0
                               SUN UNIQUE ELEMENTS


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


                                    EXHIBIT N
                              Pricing and Leadtime


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


                                   EXHIBIT N-1
                             Materials and Leadtimes


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                    Exhibit R
                           Customer Support Provisions


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


                                   Exhibit R-1
                             NP's Repair Facilities


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                   Exhibit R-2
                          Sun's Repair Depots and TPMs


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                   Exhibit R-3
                             Out of Warranty Repair


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."




<PAGE>


                                   Exhibit R-4
                                   NTF Charges


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."

<PAGE>


                     AMENDMENT #2 TO SUN MICROSYSTEMS, INC.
                       DEVELOPMENT AND PURCHASE AGREEMENT

Sun Microsystems,  Inc. ("Sun") and Network Peripherals Inc. ("NP") hereby agree
to amend the  Development  and Purchase  Agreement  between  them dated  2/25/94
("Agreement") as follows:

1.     In the event of a  conflict  between  the terms  and  conditions  of this
       Amendment  No. 2 and the  Agreement  as it  relates  to the OEM  Products
       listed in Exhibit N-2, this Amendment No. 2 shall take precedence.

2.     Reference   Section  1.4,  2.3  and  2.4.   There  are  no   "Development
       Deliverables" associated with the OEM Products set forth in Exhibit N-2.

3.     Within thirty (30) days after  execution of this Amendment No. 2, NP will
       deliver all  materials  described in 19.2 related to SunFDDI 5.0 to Sun's
       designated Escrow Agent.

4.     In Section 24, Administration, change Sun's primary administrator to:

       "Mayita Sanchz
       Sun Microsystems, Inc.
       2550 Garcia Avenue, UMIL01-118
       Ph: (408) 276-2797
       Fax: (408) 945-6498"

5.     Exhibit A-1 titled "SunFDDI 5.0 Product Specification", Sun Part Number *
       "Confidential  portion  has been  omitted and filed  separately  with the
       Commission.",   is  attached  hereto  and  incorporated  herein  by  this
       reference.

6.     In Exhibit  C,  Section  2.0.  insert the  following  after the  headings
       indicated:

       *  "Confidential  portion has been omitted and filed  separately with the
       Commission."

7.     Exhibit F dated 4/1/93 is deleted in its entirety.

8.     Exhibit  G,  SunFDDI  5.0 Sun  Unique  Elements  is  attached  hereto and
       incorporated herein by this reference.

9.     Exhibit  N-1 dated  January  18,  1996 is  deleted  in its  entirety  and
       replaced by Exhibit N-1 dated September 18, 1996

10.    Exhibit N-2 dated November 11, 1996 is attached  hereto and  incorporated
       herein by this reference.

11.    Exhibit  R-3 dated  December  5, 1995,  is deleted  in its  entirety  and
       replaced by Exhibit R-3 dated October 3, 1996 attached hereto.

Except as so amended, the Agreement is confirmed in its entirety.

SUN MICROSYSTEMS, INC.,                     NETWORK PERIPHERALS INC.

BY:     __________________________          BY:     ____________________________

NAME:   __________________________          NAME:   ____________________________

TITLE:  __________________________          TITLE:  ____________________________

DATE:   __________________________          DATE:   ____________________________

November 11, 1996 ff                   1               Network Peripherals, Inc.

<PAGE>


                       Sun FDDI 5.0 Product Specification
                       Exhibit A-1
                       _________________________________________________________


                                             *  "Confidential  portion  has been
                                             omitted and filed  separately  with
                                             the Commission."


<PAGE>


                      Sun FDDI Sbus Adapter 5.0
                      Product Requirements
                      __________________________________________________________


                      *  "Confidential   portion  has  been  omitted  and  filed
                      separately with the Commission."



<PAGE>


                      Exhibit G: Sun FDDI 5.0
                      Sun Unique Elements
                      __________________________________________________________


                      *  "Confidential   portion  has  been  omitted  and  filed
                      separately with the Commission."



<PAGE>


                                   EXHIBIT N-1
                             Materials and Leadtimes


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                   EXHIBIT N-2
                              Pricing and Leadtime


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>



                                   Exhibit R-3
                             Out of Warranty Repair


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."





                           Corporate Supply Agreement

This  Agreement is made on and as of the 31st day of March,  1997 by and between
Sun Microsystems, Inc. a Delaware corporation, with offices at 2550 Garcia Ave.,
Mountain  View,  CA 94043  (herein  "Sun")  and  Network  Peripherals,  Inc.,  a
California  corporation,  with offices at 1371 McCarthy Boulevard,  Milpitas, CA
95035 (herein "Supplier").

WHEREAS Supplier is a seller of certain  component parts,  materials or finished
goods, and

WHEREAS  Sun  is  a  manufacturer  of  computing   devices  and  platforms  that
incorporate such component parts, materials and finished products, and

WHEREAS Sun and Supplier  desire to establish  and agree upon a set of terms and
conditions that will apply to the purchase of Supplier's products by Sun.

NOW THEREFORE in  consideration  of the mutual promises and  undertakings of the
parties hereto the parties agree as follows:

1.   Definitions:

     Award Letter shall mean that document delivered by Sun to, and accepted by,
     Supplier setting out the particular commitments of the parties with respect
     to specific Products,  prices, Product Leadtimes,  and other terms relative
     to the purchase of specific  Products,  but shall not constitute a contract
     for the purchase of any particular quantity of Product.

     Leadtime  shall  mean  the  number  of days,  or  fractions  thereof,  from
     placement  of a  Purchase  Release  to the date of  delivery  to the F.O.B.
     point. Leadtimes shall be set out in the Award Letter.

     Notice shall mean the giving of notice in the following manner:  notices or
     communications  made in writing and hand  delivered,  or sent by registered
     mail return receipt requested,  or sent by overnight courier service to the
     receiving party at the address specified in the Award Letter, or such other
     address as a party may specify.

     Product(s)  shall mean those component  parts,  materials or finished goods
     offered for sale by Supplier and as further described in the Award Letter.

     Purchase Release shall mean an offer from Sun received by Supplier, whether
     in written or other  form,  or in  electronic  form  pursuant to Exhibit 1,
     attached hereto and incorporated  herein,  to purchase or schedule delivery
     of a particular amount of Products.  The Purchase Release shall specify the
     relevant information such as quantity, price and proposed delivery dates of
     the Products.  When  acknowledgement  of receipt and acceptance  thereof is
     made by Supplier  the  Purchase  Release  shall be deemed a  commitment  to
     purchase and sell the Products  pursuant to the terms of this Agreement and
     the Purchase Release.

     Specifications  shall  mean  the  applicable  product   specifications  for
     Products,  which may be changed  from time to time by written  agreement of
     the parties, as set out in the Award Letter.

2.   Purchase Of  Product(s):  This  Agreement does not constitute a contract to
     purchase  any  quantity of Products  from  Supplier.  In the event that Sun
     elects to purchase  Products  from  Supplier Sun shall issue and deliver to
     Supplier an Award Letter and subsequent  Purchase Releases.  Supplier shall
     accept Sun's  Purchase  Releases to the extent that such Purchase  Releases
     are  consistent  with Sun's  forecast and Leadtimes as set out in the Award
     Letter. The parties agree that Purchase Releases therefor may be issued and
     shall be deemed received in the manner provided in Exhibit 1.

3.   *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."

4.   Payment Terms:  Sun shall make payment to Supplier in the manner and at the
     times set out in the Award Letter.

5.   Delivery:  Unless otherwise set out in the Award Letter delivery shall be *
     "Confidential  portion  has been  omitted  and  filed  separately  with the
     Commission.".

6.   Cancellation/Rescheduling:  *  "Confidential  portion has been  omitted and
     filed separately with the Commission."



<PAGE>


7.   Upside Support: When requested by Sun from time to time, Supplier shall use
     best  efforts to sell and  deliver to Sun  Product(s)  (i) in excess of the
     then  latest  forecast  or  (ii)  at  an  accelerated   delivery   schedule
     (collectively  "Upside Support").  The particulars of Supplier's obligation
     to provide Upside Support shall be set out in the Award Letter.

8.   *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."

9.   Product  Discontinuance:  Supplier  shall provide Sun with *  "Confidential
     portion has been omitted and filed separately with the Commission." written
     notice prior to discontinuing the manufacture or sale of a Product.

10.  *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."

11.  *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."

12.  *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."

13.  Confidential Information:

     13.1.  "Confidential  Information"  means  information  of a  party,  which
     information is conspicuously marked with  "Confidential".  or "Proprietary"
     or other similar legend. If Confidential Information is orally disclosed it
     shall be identified  as such at the time of disclosure  and a brief written
     description and confirmation of the confidential  nature of the information
     shall  be  sent  to  the  recipient  within  thirty  (30)  days  after  the
     disclosure.   Quantities,   schedules   and  pricing  shall  be  considered
     Confidential  Information hereunder whether disclosed orally or in writing,
     or whether or not marked "Confidential" or "Proprietary".

     13.2. The receiving party shall protect the  confidentiality and secrecy of
     such Confidential  Information and shall prevent any improper disclosure or
     use thereof by its employees,  agents,  contractors or consultants,  in the
     same  manner and with the same  degree of care (but in no event less than a
     reasonable  degree of care) as it uses in protecting its own information of
     a confidential nature for a period of three (3) years from the date of such
     disclosure.



<PAGE>


     13.3.  Confidential  Information does not include information that: (a) was
     in the  possession  of, or was known by, the  receiving  party prior to its
     receipt from the  disclosing  party,  without an obligation to maintain its
     confidentiality;  (b) is or becomes  generally  known to the public without
     violation of this Agreement;  (c) is obtained by the receiving party from a
     third party,  without an obligation to keep such information  confidential;
     or (d) is  independently  developed by the  receiving  party without use of
     Information.

     13.4.  Each  party  understands  that  the  party  receiving   Confidential
     Information may now or in the future be developing proprietary  information
     internally,  or receiving  proprietary  information  from third  parties in
     confidence  that may be  similar  to  disclosed  Confidential  Information.
     Nothing  in this  Agreement  shall  be  construed  as a  representation  or
     inference that the receiving party will not develop products, for itself or
     others,  that  compete  with the  products,  processes,  systems or methods
     contemplated by disclosed Confidential Information.

14.  Subsidiaries:  All current  and future  subsidiaries  of Sun  Microsystems,
     Inc.,  and  contractors  of Sun,  designated  by Sun, may purchase  Product
     pursuant to this Agreement.

15.  Compliance with Law:  Supplier shall comply with all laws applicable to the
     manufacture and sale of the Products,  including, by way of example and not
     limitation,  Executive  Order  11246 as amended by  Executive  Order  11375
     (non-discrimination  in  employment)  and the U.S.  Clean  Air Act of 1990.
     Supplier  shall use  reasonable  efforts  to give Sun as much  notice as is
     practicable  in the event  Supplier uses ozone  depleting  chemicals in the
     manufacture of the Products.  Sun reserves the right to reject any Products
     manufactured  utilizing  or  containing  such  materials  if  Sun  has  not
     previously been notified of the same.

16.  Attorney's  Fees:  In the  event  of any  litigation  arising  out of  this
     Agreement or its enforcement by either party, the prevailing party shall be
     entitled to recover as part of any judgement,  reasonable  attorneys'  fees
     and court costs.

17.  Integration: This Agreement and, when awarded, the Award Letter, constitute
     the entire  agreement  between  Supplier  and Sun  relating  to the subject
     matter  hereof and:  (i)  supersede  all prior or  contemporaneous  oral or
     written  communications,  proposals and representations with respect to its
     subject matter;  and (ii) prevail over any conflicting or additional  terms
     of  any  quote,   the   preprinted   terms  of  any  Purchase   Release  or
     acknowledgement,  or similar  communication  between the parties during the
     term of this  Agreement.  No modification to this Agreement will be binding
     unless in writing and signed by a duly  authorized  representative  of each
     party.

18.  Invalidity:  In the  event  any  one or  more  of the  provisions  of  this
     Agreement shall be held by a court of competent jurisdiction to be invalid,
     illegal or unenforceable,  the remaining provisions of this Agreement shall
     remain in effect and the  Agreement  shall be read as though the  offending
     provision had not been written or as the  provision  shall be determined by
     such court to be read.

19.  Survival  of  Terms:   The  parties  further  agree  that  the  rights  and
     obligations  set forth in Sections  8, 9, 10, 11, 12, and 13 shall  survive
     the  termination of this Agreement for any reason and  enforcement  thereof
     pursuant to this Section shall not be subject to any conditions precedent.

IN WITNESS WHEREOF the parties have set their hand on and as of the day and date
first set out above.

SUN MICROSYSTEMS, INC.                             NETWORK PERIPHERALS, INC.

_____________________________                      _____________________________
           By                                                 By

_____________________________                      _____________________________
          Name                                               Name

_____________________________                      _____________________________
          Title                                             Title

_____________________________                      _____________________________
          Date                                              Date


<PAGE>


                                    EXHIBIT 1
                           ELECTRONIC DATA INTERCHANGE
                                   (EDI) TERMS

1.       Definitions:

         1.1      "EDI" means electronic data interchange.

         1.2      "Adopted Format" is the accepted method for the interchange of
                  Documents under this Agreement based on the EDIFACT,  ANSI ASC
                  X12 OR CII standards for the  presentation  and structuring of
                  the electronic transmission of Documents, or other such format
                  as may be agreed to in writing by the parties.

         1.3      "Document" is data  structured in accordance  with the Adopted
                  Format and transmitted electronically between the parties.

2.       Prerequisites:

         2.1 Documents,  Standards. Each party may electronically transmit to or
         receive  from the other  party any  Document  which  the  parties  have
         mutually  agreed  to  Test.  The  content  of  Test  Documents  will be
         considered "dummy" data unless otherwise agreed to by the parties.  All
         documents  which  are  intended  to  evidence  a  transaction  shall be
         transmitted in accordance with the Adopted Format.

         2.2 Providers.  Documents will be  transmitted  electronically  to each
         party through any Provider with which either party may contract  and/or
         the Internet.  The Provider for each party shall be communicated to the
         other  party.  Either  party may change its  designated  Provider  upon
         thirty (30) days prior  written  notice to the other party.  Each party
         shall be  responsible  for the  costs  of any  Provider  with  which it
         contracts.

         2.3 System  Operations.  Each party, at its own expense,  shall provide
         and maintain the equipment, software, services and testing necessary to
         effectively and reliably transmit and receive Documents.

         If Provider is down and this  prevents  either  party from  meeting the
         pickup or  delivery  frequency  agreed to,  that party must  notify the
         other party the same day.

         2.4 Security Procedures. Each party shall use security procedures which
         are reasonably  anticipated  to: (a) ensure that all  transmissions  of
         Documents are authorized and (b) protect its business  records and data
         from improper access.

         2.5  Signatures.  Each party may adopt as its  signature an  electronic
         identification  consisting  of  symbol(s)  or  code(s)  which are to be
         affixed to or  contained  in each  Document  transmitted  by such party
         ("Signatures").  Each party  agrees  that any  Signature  of such party
         affixed to or contained in any transmitted Document shall be sufficient
         to verify such party  originated  such  Document.  Neither  party shall
         disclose to any unauthorized person the Signatures of the other party.

3.       Transmissions.

         3.1 Proper Receipt. Documents shall not be deemed to have been properly
         received,  and no  Document  shall give rise to any  obligation,  until
         accessible to the receiving party at such party's electronic mailbox.

         3.2  Verification.  Upon receipt of any Document,  the receiving  party
         shall promptly and properly  transmit a functional  acknowledgement  in
         return within one (1) business day after receipt of a Document.

         3.3 Acceptance.  If a transmitted  document requires  acceptance by the
         receiving  party,  any such Document  which has been properly  received
         shall  not give  rise to any  obligation  unless  and  until  the party
         initially transmitting such Document has properly received in return an
         acceptance Document.

         3.4  Garbled   Transmissions.   If  any  document  is  received  in  an
         unintelligible  or garbled  form,  or  otherwise  contains  evidence of
         faulty  transmission,  the receiving  party shall  promptly  notify the
         originating  party (if  identifiable  from the received  Document) in a
         reasonable  manner.  In the  absence of such  notice,  the  originating
         party's records of the contents of such Document shall control.

         3.5 Erroneous  Transmissions.  If either party receives a Document from
         the other party which differs from the applicable terms and conditions,
         (e.g. an order with a price,  quantity or schedule  different than that
         mutually agreed upon),  the receiving party shall promptly  contact the
         sending party to confirm the accuracy of the Document.

                                        1

<PAGE>


4.       Transaction Terms.

         4.1 Order Placement.  Each Purchase Release electronically  transmitted
         shall  reference  the  Sun  Purchase  Release  number,  and the Sun EDI
         number.

         4.2  Validity,  Enforceability.  The parties  acknowledge  their mutual
         intent to create  binding  purchase,  sale and payment  obligations  by
         means of electronic  transmission  and receipt of Documents  specifying
         certain of the applicable terms. During the term of the Agreement,  all
         obligations  concerning  the delivery of such Documents in written form
         may be  satisfied  by a  transmission  pursuant  to the  terms  of this
         Exhibit.   However,   either  party  shall  have  the  option,  at  its
         discretion, to transmit Documents in written form to other party.

         Any  Document  properly  transmitted  pursuant  to these terms shall be
         deemed ("Signed Documents") and shall be considered, in connection with
         any  transaction,  to be a "writing"  or "in  writing" and to have been
         "signed" and to constitute an "original"  when printed from  electronic
         files or records  established  and  maintained  in the normal course of
         business.

         The parties agree that the provisions of the Uniform  Commercial  Code,
         Section  2-201  ("Formal  Requirements:  Statue of Frauds"),  shall not
         apply to  Documents  covered  by this  Exhibit  since  hard  copies  of
         Documents  will not be issued and the parties  further  agree that said
         Documents shall be deemed to satisfy any statutory or legal formalities
         requiring that agreements be in writing,  including, but not limited to
         the Statute of Fraud.

         The conduct of the parties pursuant to this Exhibit,  including the use
         of  Signed  Documents  properly  transmitted,   shall,  for  all  legal
         purposes,  evidence  a course of  dealing  an a course  of  performance
         accepted by the parties in furtherance of this Agreement and Document.

         The parties agree not contest the validity or  enforceability of Signed
         Documents  under the  provisions  of any  applicable  law  relating  to
         whether  certain  agreements be in writing or signed by the party to be
         bound thereby.  Signed Documents, if introduced as evidence on paper in
         any judicial,  arbitration,  mediation or  administrative  proceedings,
         will be  admissible as between the parties to the same extent and under
         the same conditions as other business records originated and maintained
         in documentary  form.  Neither party shall contest the admissibility of
         copies of Signed Documents under either the business records  exception
         to the  hearsay  rule or the best  evidence  rule on the basis that the
         Signed Documents were not originated or maintained in documentary form.

                                        2

<PAGE>


                                  Award Letter


March 27, 1997


Mark Wolter
Network Peripherals, Inc.
1371 McCarthy Boulevard
Milpitas, CA 95035

Dear Mark,

Sun is pleased to notify you that Network  Peripherals,  Inc.  ("Supplier")  has
been  selected as a supplier of FDDI PCI  products  ("Product")  subject to your
agreement to the following terms ("Agreement"):

1.   Pricing:  Product  descriptions  and  pricing  are set  forth in  Exhibit A
     attached hereto.

     Prices are exclusive of freight and taxes.

     Currency: U.S. dollars.

2.   Forecast:  Sun shall use its reasonable  efforts to provide Supplier with a
     six (6) month rolling forecast of its intended purchases updated quarterly.
     Such forecast is for Supplier's convenience only and shall in no way create
     an obligation on Sun's part to meet such forecast.

3.   Leadtime:  *  "Confidential  portion has been omitted and filed  separately
     with the Commission."

4.   Payment  Terms:  *  "Confidential   portion  has  been  omitted  and  filed
     separately with the Commission."

5.   Shipping  Point:  *  "Confidential  portion  has  been  omitted  and  filed
     separately with the Commission."

6.   Rescheduling:

     Sun may  reschedule  delivery of all or part of any purchase  order,  at no
     charge, to a date after the agreed delivery date as follows:

     Notice                Maximum Reschedule Period         Maximum Reschedules

     0-30 days             *  "Confidential  portion has been  omitted and filed
                           separately   with   the   Commission."   
     30+  days             *  "Confidential  portion has been  omitted and filed
                           separately with the Commission."

     "Confidential  portion  has been  omitted  and  filed  separately  with the
     Commission."

7.   Cancellation:

     *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."



<PAGE>


8.   Upside Support:  "Upside" is defined as the maximum percentage increase set
     forth  below  beyond  Sun's  requirements  for the  current  quarter  which
     Supplier  commits to  manufacture  and deliver to Sun,  upon Sun's  written
     request, at no additional cost to Sun, within the timeframe indicated after
     such request.

     Notice         Maximum % Increase

     8+ weeks       *   "Confidential   portion  has  been   omitted  and  filed
                    separately with the  Commission."
     6-8 weeks      *   "Confidential   portion  has  been   omitted  and  filed
                    separately with the  Commission."
     4-6 weeks      *   "Confidential   portion  has  been   omitted  and  filed
                    separately with the  Commission."
     0-4 weeks      *   "Confidential   portion  has  been   omitted  and  filed
                    separately with the Commission."

9.   Extraordinary   Transportation  for  Late  Deliveries:   If  it  should  be
     reasonably expected that a shipment of Product will not be delivered on the
     agreed  delivery date,  upon Sun's request  Supplier shall, at its expense,
     use any  extraordinary  transportation  to deliver  Product at the earliest
     possible date.

10.  Quality:    Supplier   shall   deliver   Product(s)   which   conforms   to
     (Sun/Supplier)'s  specifications ("Product  Specification(s)")  attached as
     Exhibit D and shall comply with Supplier's  Quality Program attached hereto
     as Exhibit C. The  quantity  of  Product(s)  which  fails to conform to the
     Product  Specification at the time of delivery to Sun or during the term of
     the  warranty  shall not exceed the  following  Defects Per Million  ("DPW)
     levels set forth in Exhibit C.

     Sun shall not be required to accept any Product  which is not  qualified by
     Sun for use in Sun's products.

11.  Warranty:  The warranty period is * "Confidential  portion has been omitted
     and  filed  separately  with  the  Commission."  from  the  date  of  Sun's
     acceptance of Product.

12.  Customer Support: During the term of this Agreement, and thereafter for the
     period of time set out in Exhibit B,  Supplier  will  provide  warranty and
     non-warranty  customer  service  and  support  for  Product as set forth in
     Exhibit B, attached hereto.

13.  Manufacturing Rights:

     *  "Confidential  portion has been  omitted and filed  separately  with the
     Commission."


<PAGE>


14.  Notices:  Sun and Supplier  shall each assign an  individual  to administer
     this Agreement throughout its term.

     Sun's Administrator shall be:            Supplier's Administrator shall be:

     Debra Rossebo                            Mark Wolter
     Sun Microsystems, Inc.,                  Network Peripherals, Inc.
     2550 Garcia Avenue (mailing address),    1371 McCarthy Boulevard
     M/S UMPK14-309                           Milpitas, CA 95035
     Mountain View, CA 94043                  Ph: (408) 321-7399
     Ph: (415) 786-5634                       Fax: (408) 321-9218
     Fax: (415) 786-6981

     Each  party  shall  inform the  Administrator  of the other in writing of a
     change  of  Administrator  or such  Administrator's  address  or  telephone
     number.

15.  Survival  of  Terms:   The  parties  further  agree  that  the  rights  and
     obligations  set forth in Sections 11, 12 and 13 and Exhibits B and C shall
     survive the  termination of this  Agreement for any reason and  enforcement
     thereof  pursuant to this  Section  shall not be subject to any  conditions
     precedent.

16.  Exhibits:  The following is the list of Exhibits and Attachments  which are
     attached hereto and  incorporated  herein by this reference as if set forth
     in full:

     Exhibit A      -              Product Description & Pricing
     Exhibit A-1    -              Unique and Long Lead Time Materials
     Exhibit B      -              Customer Support Provisions
     Exhibit C      -              Supplier's Quality Program
     Exhibit D      -              Product Specification

Please  indicate  your  agreement  to these terms by signing  both copies in the
space  provided  below and  returning to my  attention.  Upon  execution of this
Agreement by Sun I will return an original to you. Thank you.

Sincerely,


Debra Rossebo
Commodity Manager

Sun Microsystems, Inc.                             Network Peripherals, Inc.

_____________________________                      _____________________________
           By                                                 By

_____________________________                      _____________________________
          Name                                               Name

_____________________________                      _____________________________
          Title                                             Title

_____________________________                      _____________________________
          Date                                              Date


<PAGE>


                                    EXHIBIT A
                          Product Description & Pricing


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                   EXHIBIT A-1
                       Unique and Long Lead Time Materials


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."


<PAGE>


                                    Exhibit B
                           Customer Support Provisions


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."




<PAGE>


                                   Exhibit B-1
                          Supplier's Repair Facilities


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."





<PAGE>


                                   Exhibit B-2
                          Sun's Repair Depots and TPMs


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."






<PAGE>


                                   Exhibit B-3
                             Out of Warranty Repair


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."







<PAGE>


                                   Exhibit B-4
                                   NTF Charges


*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."



<PAGE>


                                    EXHIBIT C
                           SUPPLIER'S QUALITY PROGRAM

1.0      Purpose

         This Exhibit defines Sun's requirements for NP's ("Supplier's") quality
         program  ("Quality  Program")  and  Supplier's   responsibilities   for
         manufacturing,  inspecting, testing and supplying production Product(s)
         to Sun.  Additional  Customer  Support  requirements  are set  forth in
         Exhibit C-1 attached hereto.

2.0      Scope

         This Exhibit  describes Sun's  requirements for the Quality Program for
         the  manufacture  of  Product(s)  for Sun.  The term  "quality" as used
         herein  means   conformance   to  the  following   applicable   Product
         Specifications:

         Product Specifications Title          Dated            Sun Part No.

         Exhibit A: SunFDDI SBus Adapter       N/A              N/A
         4.0 Product Specifications

         which are attached  hereto and  incorporated  herein by this reference.
         Supplier  shall  address any  concerns  regarding  requirements  of the
         Quality Program with the designated Sun supplier representatives.

         2.1      Objective

                  Sun's  objective is to achieve  "ship to stock" status for all
                  Products  shipped to Sun as a result of Supplier  consistently
                  meeting the Quality Program defined in this Exhibit.

         2.2      Applicable Documents

                  Sun's Product Specification
                  Supplier's Product Specification
                  MIL-STD-105E
                  MIL-HDBK-217E (or equivalent)
                  Supplier Scorecard Procedure
                  IS0 9000

3.0      Precedence of Documents

         In the event of a conflict  between  the terms and  conditions  of this
         Agreement,  Sun's Product Specification,  and this Exhibit C, the order
         of precedence shall be as follows:

         (1) this Agreement,  (2) Sun's Product Specification,  (3) this Exhibit
         C.

4.0      Supplier Process Requirements

         Supplier shall adhere to a quality/manufacturing plan (including a data
         collection/tracking/reporting system) ("the Process"), that will ensure
         compliance  with the  requirements  of the terms and conditions of this
         Agreement  and ISO  9000.  The  Process  and  procedures  developed  by
         Supplier shall be  documented.  Sun will review this Process during the
         Process Certification period (see Section 5.5 of this Exhibit).

         Supplier is solely  responsible  for the quality of  Product(s)  and/or
         components  procured or  manufactured  for Sun.  Approval of Supplier's
         Process by Sun does not relieve Supplier of this responsibility.

                                        1
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


         4.1      Process Flow Charts

                  Supplier  shall  provide a general  process  flowchart for the
                  Product(s)  and  major  subassemblies  as  agreed  to by  both
                  parties and shall identify all assembly,  test, and inspection
                  subprocesses.

         4.2      Data Collection Systems

                  The Data  Collection  System will show where  failure  data is
                  collected and detailed  process yield targets.  Supplier shall
                  provide  on-going  reports of current  yields at Sun's option.
                  This will be reviewed during the Process Certification.

         4.3      Control of Purchases

                  The  Supplier  will have a Quality  Program  that  provides  a
                  reliable  means of  determining  the quality  and  reliability
                  levels of all purchased  supplies,  material,  and  components
                  used in the manufacture of Product(s).

                  In the event Supplier desires to change the vendor or selected
                  source of a component used in the manufacturing of Product(s),
                  Supplier shall collect  quality/evaluation data to support and
                  justify  the change  (data must show that  quality  levels are
                  sustained  and/or  improved).  The  quality  data will be made
                  available to Sun upon request.  Section 4.6 below details what
                  source changes require prior notification.

                  In the event that a problem is identified in the  availability
                  or quality of purchased supplies, materials or components used
                  in the manufacture of Product(s), upon Sun's request, Supplier
                  agrees to permit Sun to  participate  in the  development of a
                  corrective  action  plan,  which  may  include  Sun  personnel
                  accompanying  Supplier's  person I to vendor  sites to perform
                  process and design audits and view corrective actions.

         4.4      Defect Free Program/Corrective Actions

                  Sun's goal is to  receive  Product(s)  that are  defect  free.
                  Supplier shall document and implement a defect free program as
                  part of the Process which  constantly  reduces the defect rate
                  of its Product(s) to a level which achieves zero defects.  Sun
                  shall not be  obligated  to accept  any  defective  Product(s)
                  shipped by Supplier.

                  Supplier will establish a program to ensure the performance of
                  effective corrective actions.  This program will be based upon
                  information  derived from failure  reporting  and analysis and
                  will ensure that parts, components or assemblies are corrected
                  so as to properly perform their intended function.

                  Supplier   shall  maintain   records  of  corrective   actions
                  indicating  the  frequency  of defect  during  fabrication  of
                  Product(s),   the  proposed   corrective  change  in  process,
                  evaluation  of its  effectiveness.  and an effective  date for
                  implementation. Such records are subject to review by Sun

         4.5      Changes in Manufacturing Process

                  In the event that Supplier  desires to change the  fundamental
                  manufacturing   process  in  such  a  way  as  to  affect  the
                  mechanical fit,  electrical  performance,  serviceability,  or
                  safety  requirements  of such Products.  Supplier shall notify
                  Sun in writing within a reasonable period (no less than thirty
                  (30) days) prior to the effective date of the proposed change.
                  Examples of changes which require  notification  include,  but
                  are not limited to, the following:

                                        2
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


                  o         Changes in major test equipment

                  o         Changes in burn-in time or environment

                  o         Change in manufacturing facility locations

                  Supplier   agrees  to  provide  verbal   notification  to  the
                  appropriate Sun Supplier Engineer of all other process changes
                  which do not affect form,  fit,  function,  serviceability  or
                  safety.

                  Supplier  shall  implement such changes in the process only if
                  collected  quality/evaluation  data  verifies that quality and
                  reliability  levels  would be sustained  and/or  improved as a
                  result of such  change.  The quality data will be submitted to
                  Sun for review before implementing the change.

         4.6      Changes to Product

                  Supplier shall notify Sun in writing thirty (30) days prior to
                  implementing  any of the  following  types of  changes  to the
                  Product(s):

                  o         Any changes that affect the form, fit or function of
                            the Product(s).
                  o         Any change of a programmed part on the Product(s).
                  o         Any change to the Product affecting clock speeds.
                  o         Any change to a custom or semi-custom I.C.
                  o         Any  change  made  to  correct  a  problem  in a Sun
                            application, made at the request of Sun.
                  o         Any change made to the board fab.
                  o         Supplier  shall  supply  Sun  copies  of  all  ECO's
                            affecting the Product.

         4.7      Re-Qualification

                  Major   changes   in   manufacturing    process   or   product
                  construction/design   will  require   re-qualification  and/or
                  process re-certification to the Product Specification. Sun may
                  require,  at  its  sole  discretion.   that  Supplier  perform
                  reliability   tests  to  confirm  an  equivalent  or  improved
                  reliability  of  the  Product(s).  Supplier  shall  coordinate
                  notification  of  planned  major  changes  with Sun.  At Sun's
                  request. Supplier shall run a pilot production.

5.0      Product Qualification Program

         This section describes a series of reviews and tests that Supplier must
         accomplish  during  the  product  development  and  pilot  build of its
         Product(s).

         5.1      Design Review

                  Supplier  will present to Sun  engineering,  upon  request,  a
                  comprehensive review consisting of:

                           Theory of Operation
                           Thermal Review
                           Mechanical Review
                           EMI/Safety Data
                           Environmental Test Results
                           Field Service Manual
                           Specification Performance Data

                                        3
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


                  The Sun review team will consist of the  Development  Engineer
                  and  Supplier  Engineer.  Supplier  shall  submit  appropriate
                  documentation  to Sun  one (1)  week  prior  to the  scheduled
                  review.

         5.2      Reliability Prediction

                  Supplier  shall  perform  an MTMF  reliability  prediction  in
                  accordance with Mil-Hdbk-217D (or E) or Bell Core based on the
                  preliminary  Bill  of  Material.  Results  of the  reliability
                  prediction shall be submitted to Sun for review.

         5.3      First Prototype Shipments

                  Supplier  shall submit  preliminary  design  documents to Sun,
                  upon request, with the first pass prototypes.

                           Electrical and mechanical drawings and Specifications
                           Schematics
                           Bill of Material

         5.4      Second Prototype Shipments

                  "Second  prototype"  shipments  will  be  used at Sun to run a
                  reliability  demonstration test. Supplier will demonstrate the
                  reliability  goal at an 80%  confidence  level.  Supplier will
                  start design validation testing, reliability testing, and life
                  testing  at  Supplier's  site  prior  to  "second   prototype"
                  shipment.

                  Supplier is  responsible  for  conducting  and  documenting  a
                  complete  Design  Validation  Test ("DVT").  The DVT must show
                  that  the   Product  is  capable  of  meeting   all  of  Sun's
                  specifications. (The Product Specification contains a complete
                  listing of those  specifications  and the Sun  reference  part
                  numbers.)

                  Supplier  shall submit for Sun approval the  reliability  test
                  plan to be used by Supplier to demonstrate that the MTBF meets
                  the Product Specification.

         5.5      Process Certification

                  Sun will  conduct a Process  Certification  Test  prior to the
                  start of Sun  Production.  The purpose of this test is to have
                  Supplier demonstrate that the Manufacturing  process is stable
                  and  capable  of  producing  high  quality  product in volume.
                  Required  documentation  will include,  but not be limited to,
                  the following:

                  o         Parts lists,  schematics.  and  mechanical  drawings
                            that  have  been  released  to   manufacturing   for
                            production build.

                  o         Procedures for all phases of the production assembly
                            and test of the Product.

                  o         Demonstration that test/burn-in times am adequate to
                            eliminate residual infant mortality.

                  o         Yield and  pareto  data for all test and  inspection
                            points  covering a sample  quantity  defined by Sun.
                            Pareto,  as  defined  herein,  shall  mean a list of
                            failures.  At Sun's option, a representative  of Sun
                            may be sent to  Supplier's  factory to  observe  the
                            build.

                                        4
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


         5.6      Pilot Run at Sun

                  As  part  of any  new  product  introduction,  or  changes  to
                  existing  Products,  Sun will  conduct a  manufacturing  pilot
                  build.  The  purpose of the  manufacturing  pilot is to ensure
                  manufacturability  of Sun's product.  During the manufacturing
                  pilot Sun will monitor the  acceptance  rates of all purchased
                  components  and  assemblies  through  the  assembly  and  test
                  process.  Sun will determine if the minimum  acceptable yields
                  for the  components  have been  achieved.  Failure to meet the
                  minimum  yield goals could result in Sun not  introducing  the
                  Product(s).  If the Product(s)  fail to meet the minimum pilot
                  yield goals, Sun may, at its option, cancel this Agreement and
                  any purchase  orders issued  hereunder for default Any failure
                  occurring in the pilot build will require  Supplier to perform
                  root cause failure analysis and corrective  actions.  The time
                  frames as  specified in section 7.3 below are  applicable  for
                  all failures.

         5.7      Acceptance Rates at Sun

                  * "Confidential  portion has been omitted and filed separately
                  with the Commission."

                                        5
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


6.0      Supplier Audit Program

         Supplier shall perform a series of monitoring  tests to ensure that its
         Product(s) conform to Sun's  requirements.  A brief description of each
         test requirement follows.

         6.1      On-Going Reliability Test (ORT)

                  Supplier   shall  conduct   on-going   reliability   tests  in
                  accordance  with mutually  agreed upon  criteria.  The testing
                  will be  conducted  at  Supplier's  site in a manner  mutually
                  agreed upon between the parties. The ORT test results shall be
                  delivered to Sun on a monthly basis and shall include  details
                  of any  corrective  actions  taken to address any ORT failure.
                  Supplier  shall report ORT failures to Sun within  twenty-four
                  (24) hours.

         6.2      Outgoing Quality Audit

                  Sun and Supplier shall agree to a  statistically  valid method
                  for estimating  the out-going  quality level of every shipment
                  prior to delivery to Sun. Any lots not meeting the agreed upon
                  quality  level will be 100%  screened  by  Supplier  to ensure
                  their conformance to the Product Specification.

                  At    Sun's    request,    Supplier    shall    conduct    Sun
                  application-specific process monitoring tests.

                  The  purpose  of  this  testing  is  to  monitor  the  ongoing
                  performance of manufacturing processes and product designs and
                  to  identify  Supplier's   manufacturing  process  and  design
                  problems  at   Supplier's   site,   rather  than  in  the  Sun
                  manufacturing processes.

                  Testing  will be  conducted  on equipment as specified by Sun.
                  Sun shall provide procedures, equipment lists, and analysis of
                  test  results.  Supplier  shall set up the test,  maintain the
                  equipment,  analyze  the root cause of all  failures  and take
                  appropriate corrective actions.

         6.3      Periodic Specification Testing (PST)

                  Supplier  shall  retest the  Product  to the full Sum  Product
                  Specification   on  a  periodic   basis  to  confirm   ongoing
                  performance to this specification. The specific timing of this
                  test  will be  determined  upon the start of  production,  and
                  jointly  agreed upon between the parties.  Supplier  shall put
                  forward a plan,  for Sun's  approval,  which shall not be less
                  than once per year.

7.0      Sun Audit Programs

         After the Product(s)  have been  introduced to  manufacturing,  Sun may
         choose to conduct  the  following  tests to ensure  conformance  to the
         Product Specification.

         7.1      Source Inspection

                  Sun may elect to source  inspect  lots prior to shipment  from
                  Supplier's  factory  during  initial  stages of  production or
                  until a  reasonable  confidence  level  has been  established.
                  Source  inspection  may be  initiated or  terminated  at Sun's
                  option. Supplier shall permit a Sun employee or representative
                  to  visit  the  factory  to  source  inspect   finished  lots.
                  Inspection  shall be  performed  and lot  acceptance  shall be
                  determined in accordance  with a pre-agreed  upon sample plan.
                  Supplier  shall assist the source  inspector  in  unpackaging,
                  staging, inspecting, testing, and re-packaging sample units.

                                        6
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


                  Supplier   shall   screen   rejected   lots   for   discrepant
                  parameter(s) and re-submit for source inspection.

                  Acceptance  at source  inspection  does not  limit  Supplier's
                  responsibilities for failures. Product quality and reliability
                  is at all times the responsibility of the Supplier.  If source
                  inspection  is  required  for  more  than  three  (3)  months,
                  Supplier will incur this expense.

         7.2      Supplier Process Audits

                  Sun may  conduct  quality  audits  at any  time of  Supplier's
                  facility during normal business hours to determine  Supplier's
                  compliance with Sun's quality requirements.  These audits will
                  include review of all aspects of the Process.

         7.3      Sun Out of Box Audit Program

                  Sun  performs  Out  of  Box  quality  audits  on  all  Product
                  shipments.  If any  failure  occurs  in  this  audit  testing,
                  Supplier shall analyze the root cause and take all appropriate
                  corrective  actions.  In  the  event  Supplier's  part(s)  are
                  determined to be cause of audit failure, Supplier shall:

                  1)        Provide  confirmation of failure within  twenty-four
                            (24) hours of receipt of failing part.

                  2)        Provide  root  cause   analysis  of  failure  within
                            seventy-two (72) hours of receipt of failing part.

                  3)        Implement  corrective  actions to prevent recurrence
                            of failure as necessary. Corrective actions shall be
                            implemented  as soon as  possible,  but in no  event
                            more than  thirty (30) days after the  discovery  of
                            the failure.

         7.3      Sun Process Yield/Pareto Reports

                  Sun shall send monthly  yield and pareto  reports to Supplier.
                  Supplier shall review the reports and  investigate any product
                  in-process  for the top three (3)  failures  listed and advise
                  Sun of the results. Supplier shall provide detailed root cause
                  failure analysis and Supplier pareto  information on a monthly
                  basis in response to the Sun report.

                  Semi-annual  meetings  will be conducted to review  Supplier's
                  progress  in   improving   its  yields.   Summaries   of  this
                  information   will  be   distributed  to  management  in  both
                  companies.  Sun  will  use  this  information  as a basis  for
                  awarding future business.

8.0      Supplier Test Systems Program

         As referenced in Sections 5 & 6 above, Supplier is responsible for both
         initial and  on-going  testing to ensure the  quality of its  products.
         Where this testing requires the use of Sun Systems, Sun has implemented
         the "Supplier Test Systems  Program." This program enables  Supplier to
         rent systems  through third party rental  companies at a Sun negotiated
         below market rental rate or to purchase systems at significant savings.

         To be entitled to the above  referenced  discounts,  Supplier  must use
         these systems exclusively for the testing of Product supplied to Sun.

         Sun and Supplier  agree to work  together to determine the need for Sun
         systems  to be used in the  testing  process  and Sun will at that time
         provide the program details to Supplier.

                                        7
February 15, 1995 - Exhibit C - Generic                November 27, 1995  ff
Document, Rev. D                                       Network Peripherals, Inc.

<PAGE>


                                   EXHIBIT C-1
                    ADDITIONAL CUSTOMER SUPPORT REQUIREMENTS

1.0      Acceptance Rates

         Refer to Section 6.0 below.

2.0      Applicable Documents

         Title                            Dated                     Sun Part No.

         * "Confidential  portion has been omitted and filed separately with the
         Commission."

3.0      Supplier Process Requirements

         3.1      General

                  All  requirements  in  Exhibit C  applicable  to  Manufactured
                  Product are also applicable to Repaired or replacement Product
                  shipped to  SunService.  Changes made to the  requirements  in
                  Exhibit C must also have SunService approval.

         3.2      Reports

                  Supplier  shall  provide  monthly  repair  quality  reports as
                  specified in Q16.1 "Vendor Data Reporting Specification".

         3.3      Marking

                  A Supplier  identification  marking may be required on Product
                  in  accordance  with "CMFG CS Labeling  Procedure for Repaired
                  FRUs" and  "Multiple  Return ID  Process".  If  required,  the
                  location will be specified by SunService in writing.

         3.4      ECOs

                  Supplier  must have the  capability  to manage  ECO  levels on
                  Product.  No  verbal  changes  will be  authorized;  i.e.  all
                  changes  must  be  according  to Sun  approved  documentation,
                  either by an  issued  ECO,  released  drawing  or an  approved
                  deviation.  All  deviations  must be  approved  by  SunService
                  Quality, Test Engineering, and Purchasing.

                  Supplier shall provide copies of its ECOs affecting Product to
                  SunService as they are released.

July 18, 1994     November 29, 1995 ff       1         Network Peripherals, Inc.

<PAGE>


         3.5      Packaging

                  Specific  packaging  requirements  beyond the standard process
                  will be supplied by Sun as required.  In all cases,  packaging
                  must be provided by Supplier to ensure all material arrives at
                  Sun undamaged.  Packaging in single-pack  Sun labeled boxes is
                  required for Product  shipped to SunService  unless  otherwise
                  agreed to in writing.

         3.6      Changes in Manufacturing/Repair Process

                  Further to Section 4.5 of this Exhibit C, other  changes which
                  require notification are:

                  o        Packaging
                  o        Cosmetic ("like new" conditions)

         3.7      Corrective Action

                  Supplier's  corrective  action response shall be in accordance
                  with the requirements of Q14.3 "Supplier  Corrective  Action".
                  This  is  applicable  to  defects   identified  during  Source
                  Inspection,  Receiving  Inspection,  Out-of-Box Audit, or when
                  Product is received Dead-on-Arrival (DOA) at customer's site.

                  Supplier shall notify SunService in writing of any discrepancy
                  discovered by Supplier  which could have a detrimental  effect
                  on previously  shipped  Products.  In  conjunction  therewith,
                  Supplier will make  recommendations  regarding the disposition
                  of such  previously  shipped  material  and  agrees,  at Sun's
                  request,  to  sort  all  such  affected  material  located  at
                  SunService Distribution Centers.

         3.8      Product Returning For Repair Multiple Times

                  Supplier  shall have the  capability to recognize any returned
                  Product which was  previously  repaired by Supplier.  Supplier
                  will notify  SunService if the Product is returned  within the
                  warranty  period and if the Product will not be repaired at no
                  charge, explain to SunService the reasons for the decision. In
                  any event,  Supplier must ensure that the Product  undergoes a
                  reliable repair process.

         3.9      No Trouble Found (NTF)

                  Returned  Product  which  includes  a  specific  complaint  or
                  failure  mode and which is initially  determined  to be NTF by
                  Supplier   must  be  processed   through  a  more   strenuous,
                  documented  test process  tailored to  duplicate  the reported
                  failure mode.

4.0      Supplier Audit Programs

         4.1      Process Monitoring Testing (PMT)

                  At    Sun's    request     Supplier    shall    conduct    Sun
                  application-specific process monitoring tests.

                  The  purpose  of  this  testing  is  to  monitor  the  ongoing
                  performance of repair processes to identify  Supplier's repair
                  process problems at Supplier's site.

                  Testing  will be  conducted  on equipment as specified by Sun.
                  Sun shall provide procedures, equipment lists, and analysis of
                  test  results.  Supplier  shall set up the test,  maintain the
                  equipment,  analyze  the root cause of all  failures  and take
                  appropriate corrective actions to prevent reoccurrence.

July 18, 1994     November 29, 1995 ff       2         Network Peripherals, Inc.

<PAGE>


                  Supplier  shall  maintain and  calibrate  test  equipment to a
                  documented  calibration  procedure and all calibration  checks
                  must be traceable to the National Bureau of Standards or to an
                  equivalent   multinational   agency.  All  test  equipment  or
                  measuring devices not subject to periodic calibration shall be
                  so   marked,   with   reference   to  the   equipment   vendor
                  specification exempting such calibration.

5.0      Sun Audit Programs

         5.1      Source Inspection

                  All source  inspection will be at .25 AQL in accordance with Q
                  10.2  "Repaired  Product  Inspection  Procedure".  Supplier is
                  required  to take  corrective  action  for the  non-conforming
                  items prior to shipment of succeeding  lots in accordance with
                  Q14.3 "Supplier Corrective Action".

         5.2      Discovery/Specification Conformance Testing

                  Sun may  conduct  random  audits of  repaired  or  replacement
                  Product(s) at any time.

6.0     Supplier DTS Repair Qualification Program-Outline

        6.1       Objective

                  Sun's objective is for Supplier to achieve Dock-to-Stock (DTS)
                  status  for all  Products  shipped to Sun in  accordance  with
                  Q10.4, "Supplier  Dock-to-Stock  Qualification Process". It is
                  the intent  under a DTS program  that  Products  received  are
                  defect  free  thereby   eliminating   the  need  for  incoming
                  inspection.

         6.2      Supplier  Qualification  Program  consists  of  the  following
                  sequential steps:

                  * "Confidential  portion has been omitted and filed separately
                  with the Commission."

         6.3      DTS Requirements

                  Sun's goal is to receive  Product(s)  that are defect  free to
                  support a DTS program  without  adverse affect to Sun's repair
                  stock and customer support operations. Supplier shall document
                  and  implement  a defect  free  program as part of the Process
                  which constantly  reduces the defect rate of its Product(s) to
                  a  level  which  achieves  zero  defects.  Sun  shall  not  be
                  obligated  to  accept  any  defective  Product(s)  shipped  by
                  Supplier.

July 18, 1994     November 29, 1995 ff       3         Network Peripherals, Inc.

<PAGE>


                  Failure to meet an average of 99.8% yield per month during the
                  last three months of Phase 3 shall  result in Supplier  paying
                  for the cost of the  third-party  source  inspection  activity
                  until measured  results meet agreement  specifications  over a
                  thirteen  (13) week period.  The third party source  inspector
                  must be pre-approved by Sun and perform  inspections under Sun
                  procedures and direction.

                  Third party inspection results shall be communicated to Sun on
                  a weekly  basis and be  included  in Sun's  Quality  Reporting
                  Database. In no event shall the cost of this source inspection
                  activity be passed on to Sun.

                  Phases I through 3 above may take as long as seven (7)  months
                  to  complete  for a new  supplier.  Sun  will  pay for  source
                  inspection  for Phase 1, followed by source  inspection  for a
                  maximum  of six (6)  months  (during  Phase 2 & 3) on  Product
                  repaired by Supplier to ensure that the repair  process  meets
                  Sun's quality requirements.

         6.4      DTS Process

                  Upon written notification from Sun of Supplier's DTS approval,
                  the following requirements shall apply.

                  All DTS Products  will be released by Supplier by stamping the
                  packing  list on the  front  side  with a  SimService  Quality
                  approved  DTS  stamp (or  other  Sun  approved  identification
                  means).  Each packing list will contain information which will
                  facilitate traceability to Supplier's quality control document
                  for dud Product shipped.

                  Supplier  shall  maintain a log of lots shipped to  SunService
                  Distribution  Centers  as  DTS  Product.  This  log  shall  be
                  available to Sun for inspection/review.

                  Supplier will continue to be responsible for the  requirements
                  outlined in previous sections of this Exhibit.

                  Following DTS approval status,  any Supplier  repaired Product
                  found to be defective will require timely failure analysis and
                  corrective  action as specified in Section 7.3 of this Exhibit
                  C and Q 14.3 "Supplier Corrective Action". Failure to maintain
                  a quality  level of 99.8% based on thirty (30)  calendar  days
                  worth of repaired  Product will  disqualify  Supplier from DTS
                  status and lead to reinstituting third-party source inspection
                  which  will be paid for by  Supplier.  Supplier  will  then be
                  required to repeat the DTS qualification process.

July 18, 1994     November 29, 1995 ff       4         Network Peripherals, Inc.

<PAGE>


                      Sun FDDI/PCI Adapter
                      Product Specifications
                      __________________________________________________________


                      This document defines the Sun FDDI/PCI product line.

                      The adapter is referred to Sun  FDDI/PCI in the  remainder
                      of this specification.

                      A more detailed specification is given below.

                      *  "Confidential   portion  has  been  omitted  and  filed
                      separately with the Commission."


<PAGE>



                       AMENDMENT TO SUN MICROSYSTEMS, INC.
                           CORPORATE SUPPLY AGREEMENT

Sun Microsystems, Inc. ("Sun") and Network Peripherals, Inc. ("Supplier") hereby
agree  to  amend  the  Corporate  Supply  Agreement  between  them of even  date
("Agreement") as follows:

1. Add the following at the end of the first paragraph of Section 8:

*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."

2. Section 12 is deleted in its entirety and replaced by the following:

*  "Confidential  portion  has  been  omitted  and  filed  separately  with  the
Commission."

Except as so amended, the Agreement is confirmed in its entirety.




SUN MICROSYSTEMS, INC.                          NETWORK PERIPHERALS, INC.

BY:    _________________________                BY:    _________________________

NAME:  _________________________                NAMES: _________________________

TITLE: _________________________                TITLE: _________________________

DATE:  _________________________                DATE:  _________________________


March 3, 1997 ff                             1




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