Convertible Promissory Note Purchase Agreement - Network Computer Inc. and Middlefield Ventures Inc.


                    CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

          THIS CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (this 
'AGREEMENT') dated as of November 12, 1997, is entered into between Network 
Computer, Inc., a Delaware corporation (the 'COMPANY' or 'NCI'), and 
Middlefield Ventures, Inc., a Delaware corporation ('MALLARD').

          WHEREAS, Mallard desires to invest in NCI by purchasing convertible 
promissory notes with an aggregate principal amount of up to $12,000,000 upon 
the terms and subject to the conditions set forth in this Agreement, and NCI 
desires such an investment; and

          WHEREAS, Mallard and NCI have entered into a Technology Escrow 
Agreement of even date herewith; and

          WHEREAS, Intel Corporation, a Delaware corporation and the sole 
stockholder of Mallard ('Teal'), and NCI have entered into a Cooperation 
Agreement involving the contribution of $3,000,000 to NCI's non-recurring 
engineering efforts of even date herewith.

          Accordingly, the parties hereto agree as follows:

                                      ARTICLE I

                                     DEFINITIONS

          As used in this Agreement, the following terms shall have the 
following meanings:

          'BUSINESS DAY' means a day other than Saturday or Sunday, on which 
commercial banks are open for business in San Francisco, California.

          'DOLLARS' and the sign '$' each means lawful money of the United 
States.

          'GOVERNMENTAL AUTHORITY' means any United States federal, state, 
local or other governmental department, commission, board, bureau, agency, 
central bank, court, tribunal or other instrumentality or authority, domestic 
or foreign, exercising executive, legislative, judicial, regulatory or 
administrative functions of or pertaining to government.

          'INDEBTEDNESS' means:  (i) all indebtedness or other obligations 
for borrowed money or for the deferred purchase price of property or 
services; (ii) all obligations evidenced by notes, bonds, debentures or 
similar instruments, including obligations so evidenced incurred in 
connection with the acquisition of property, assets or businesses; (iii) all 
indebtedness created or arising under any conditional sale or other title 
retention agreement with respect to property acquired (even though the rights 
and remedies of the seller or lender under such agreement in the event of 
default are limited to repossession or sale of such property); (iv) all 
obligations under capital leases; (v) all reimbursement or other obligations 
under or in respect of letters of credit



and bankers acceptances; and (vi) all indebtedness secured by any Lien upon 
or in property owned whether or not a person assumed or became liable for the 
payment of such indebtedness.

          'LIEN' means any mortgage, deed of trust, pledge, security 
interest, assignment, deposit arrangement, charge or encumbrance, lien 
(statutory or other), or other preferential arrangement (including any 
conditional sale or other title retention agreement, any financing lease 
having substantially the same economic effect as any of the foregoing or any 
agreement to give any security interest).

          'MATERIAL ADVERSE EFFECT' means any event, matter, condition or 
circumstance which:  (i) has or would reasonably be expected to have a 
material adverse change on NCI's business, prospects, operating results or 
financial condition; (ii) would materially impair the ability of NCI to 
perform or observe its obligations under or in respect of the Transaction 
Documents; or (iii) materially affects the legality, validity, binding effect 
or enforceability of any of the Agreement or the Notes. 

          'MILESTONE' means the Second Note Milestone or the Third Note 
Milestone, as applicable.

          'NOTE' means the First Note (as defined in Section 2.01(b)), the 
Second Note (as defined in Section 2.03(a)) or the Third Note (as defined in 
Section 2.03(b)), each of which shall be in substantially the form attached 
hereto as EXHIBIT A and shall be issued by NCI to Mallard in accordance with 
the terms and conditions set forth herein.  Each Note will bear a principal 
amount of Four Million Dollars ($4,000,000.00).

          'SECOND NOTE MILESTONE' means the milestone detailed as such on 
Schedule A attached hereto. 

          'THIRD NOTE MILESTONE' means the milestone detailed as such on 
Schedule A attached hereto. 

          'TRANSACTION DOCUMENTS' means this Agreement, the Notes, the 
Admission Agreement attached hereto as EXHIBIT B and all other certificates, 
documents, agreements and instruments delivered to Mallard under or in 
connection with this Agreement.

                                      ARTICLE II

                              PURCHASE AND SALE OF NOTES

          SECTION 2.01   SALE AND ISSUANCE OF THE FIRST NOTE.

                  (a)    The Company shall adopt and file with the Secretary 
of State of Delaware on or before the Closing (as defined below) the Restated 
Certificate of Incorporation in the form attached hereto as EXHIBIT C (the 
'RESTATED CERTIFICATE').

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                  (b)    Subject to the terms and conditions of this 
Agreement, Mallard agrees to purchase at the Closing, and the Company agrees 
to sell and issue to Mallard at the Closing, one Note in the principal amount 
of Four Million Dollars ($4,000,000) (the 'FIRST NOTE') upon receipt of such 
amount. 

          SECTION 2.02   CLOSING.  The purchase and sale of the First Note 
shall take place at the offices of Gunderson Dettmer Stough Villeneuve 
Franklin & Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at 
10:00 a.m. California Time on November 12, 1997 (which time and place is 
designated as the 'CLOSING').  At the Closing, the Company shall deliver to 
Mallard the First Note against payment of the purchase price therefor by 
check, wire transfer, or a combination thereof.  The 'Closing' for the Second 
Note and the Third Note shall be the respective date of funding of each Note.

          SECTION 2.03   SALE AND ISSUANCE OF THE SECOND NOTE AND THE THIRD 
NOTE.  At NCI's election, NCI shall issue and sell to Mallard, and Mallard 
agrees to purchase from NCI, on the terms and conditions herein set forth:

                  (a)    A second Note with a principal amount of Four 
Million Dollars ($4,000,000) (the 'SECOND NOTE') upon receipt of such amount 
PROVIDED NCI has met the Second Note Milestone; and

                  (b)    A third Note with a principal amount of Four Million 
Dollars ($4,000,000) (the 'THIRD NOTE') upon receipt of such amount PROVIDED 
NCI has met the Third Note Milestone.  

                  (c)    If the Second Note Milestone or the Third Note 
Milestone is achieved and accepted pursuant to Section 2.03(d) but NCI 
chooses not to sell and issue the Second Note or Third Note, respectively, to 
Mallard, NCI shall so notify Mallard promptly in writing (the 'WAIVER 
NOTICE').  Mallard shall then have the right to purchase, and NCI shall issue 
and sell to Mallard, that number of shares of the Company's Series D 
Preferred Stock as equals Four Million Dollars ($4,000,000) divided by the 
Conversion Price of the applicable Note PROVIDED, HOWEVER, Mallard so 
notifies NCI within five (5) business days of receipt of the Waiver Notice 
and funds the purchase price therefore at a time and to a location specified 
by NCI.  Documentation of such purchase shall be in a form reasonably 
satisfactory to both NCI and Mallard and shall be included in the definition 
of 'Conversion Shares' as defined in Section 4.01(c) below. 

                  (d)    When NCI believes it has appropriately completed the 
Milestone, NCI will deliver evidence thereof to Mallard. Mallard will accept 
or reject the Milestone within fifteen (15) Business Days after delivery; 
failure to give notice of acceptance or rejection within that period will 
constitute acceptance. Mallard may reject the Milestone if the Milestone 
fails in some material respect to meet the requirements therefor.  Any 
rejection notice will include a detailed description of any such failures in 
a manner sufficient to allow NCI to reproduce and correct them. If Mallard 
rejects the Milestone, NCI will use reasonable commercial efforts to correct 
promptly the failures specified in the rejection notice and re-deliver the 
Milestone to Mallard.  The acceptance/rejection/correction provisions above 
shall be

                                       3



reapplied until the Milestone is accepted; provided, however, that upon the 
third or any subsequent rejection NCI shall have no continued obligation to 
make further correction. Mallard may not reject a resubmitted Milestone for a 
failure that was not cited in the immediately preceding rejection notice.

          SECTION 2.04   PROCEDURE FOR PURCHASE OF SECOND NOTE AND THIRD 
NOTE. The purchase of the Second Note or Third Note, as applicable, shall be 
made upon written notice from NCI to Mallard, which notice shall be received 
by Mallard not later than 3:00 P.M. California time five days prior to the 
proposed date of the sale of the Note.  Each such notice (a 'NOTICE OF 
BORROWING') shall refer to this Agreement and shall specify:  (i) that the 
Second Note Milestone or Third Note Milestone, as applicable, has been 
achieved, (ii) the proposed date of the sale of the Note, which shall be a 
Business Day; and (iii) payment instructions with respect to the funds to be 
made available to NCI as a result of such borrowing.  Upon fulfillment of the 
applicable conditions set forth in this Agreement, Mallard shall purchase the 
Note from NCI on the date set forth on the Notice of Borrowing.

                                     ARTICLE III

                                  TERMS OF THE NOTES

          SECTION 3.01   INTEREST.  Interest shall accrue on the unpaid 
principal amount of each Note from the date of such Note until the maturity 
thereof, at a rate equivalent to the lesser of (a) 5.0% or (b) the maximum 
interest rate permitted under applicable federal and state laws.  Interest 
shall be computed as simple annual interest on the basis of a year of 360 
days for the actual number of days occurring in the period for which such 
interest is payable.  Interest accrued on a particular Note will be forgiven 
upon conversion of such Note into shares of Series D Preferred Stock or the 
Series A Common Stock issuable upon conversion thereof.

          SECTION 3.02   REPAYMENT OF THE NOTES.  The principal amount and 
accrued interest outstanding under each Note hereunder shall be due and 
payable on or before the fifth anniversary of the date of issuance of such 
Note (the 'MATURITY DATE'), unless earlier prepaid under Section 3.03, 
converted under Section 3.05 (in which event interest will be forgiven) or 
accelerated in accordance with Section 3.08.

          SECTION 3.03   PREPAYMENTS.  NCI may, upon prior notice to Mallard 
not later than 10 Business Days prior to the date of prepayment, prepay the 
outstanding principal amount and interest under any Note in whole or in part, 
without premium or penalty.  The notice given of any prepayment shall specify 
the date and amount of the prepayment and the date of the Note to which such 
prepayment shall be applied.

          SECTION 3.04   PAYMENTS.  NCI shall make each payment under the 
Notes, unconditionally and in full without set-off, counterclaim or other 
defense, not later than 3:00 p.m. (California Time) on the Maturity Date in 
Dollars and in immediately available funds, at the offices of Mallard (as set 
forth in Section 8.02 below, which may be amended from time to time in 
accordance therewith), or to such other office and account of Mallard as it 
from time to time shall designate in a written notice to NCI.

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          SECTION 3.05   CONVERSION OF NOTES.

                  (a)    RIGHT TO CONVERT.  Subject to and upon compliance 
with the provisions of this Agreement, Mallard shall have the right at its 
option to convert the outstanding principal amount under the First Note, the 
Second Note or the Third Note or any portion thereof PROVIDED such portion of 
principal amount is at least $1,000,000, into that number of fully paid and 
non-assessable shares of NCI Series D Preferred Stock obtained by dividing 
the principal amount under such Note surrendered for conversion by the 
Conversion Price (as defined below) in effect at such time.

                  (b)    AUTOMATIC CONVERSION OF THE FIRST NOTE.  Unless 
earlier converted pursuant to Section 3.05(a) above, the outstanding 
principal amount under the First Note shall automatically be converted into 
that number of fully paid and non-assessable shares of NCI Series D Preferred 
Stock obtained by dividing the principal amount under the Note surrendered 
for conversion by the Conversion Price (as defined below) in effect at such 
time upon the sale by the Company of its Common Stock in a public offering 
pursuant to a registration statement filed by the Company under the 
Securities Act of 1933, as amended (the 'SECURITIES ACT'), with proceeds of 
greater than $20,000,000 (an 'IPO').

                  (c)    AUTOMATIC CONVERSION OF THE SECOND NOTE AND THE 
THIRD NOTE.  Unless earlier converted pursuant to Section 3.05(a) above, the 
outstanding principal amount under the Second Note and the Third Note shall 
automatically be converted into that number of fully paid and non-assessable 
shares of NCI Series D Preferred Stock obtained by dividing the principal 
amount under the Note surrendered for conversion by the Conversion Price (as 
defined below) in effect at such time upon the consummation of an IPO.

                  (d)    EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF 
PREFERRED STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.  In 
order to exercise the right to conversion with respect to a Note, Mallard 
shall surrender the Note and shall give written notice of conversion to NCI 
that Mallard elects to convert the Note or the specified portion thereof 
specified in said notice. Such notice shall also state the name or names 
(with address) in which the certificate or certificates for shares of NCI 
Series D Preferred Stock which shall be issuable on such conversion shall be 
issued.

          As promptly as practicable, but in no event more than 15 Business 
Days after satisfaction of the requirements for conversion set forth above, 
NCI shall issue and shall deliver to Mallard, a certificate or certificates 
for the number of full shares issuable upon the conversion of such Note or 
portion thereof in accordance with the provisions of this subsection (d) and 
a check or cash in respect of any fractional interest in respect of a share 
of NCI Series D Preferred Stock arising upon such conversion, as provided 
below.  In case any Note shall be surrendered for partial conversion, NCI 
shall execute and deliver to the holder of the Note so surrendered, without 
charge, a new Note or Notes in authorized denominations in an aggregate 
principal amount equal to the unconverted portion of the surrendered Note.

          Each conversion shall be deemed to have been effected as to any 
such Note (or the specified portion thereof) on the date on which the 
requirements set forth above in this

                                       5



Agreement required to be satisfied by the holder have been satisfied as to 
such Note (or portion thereof), and the person whose name any certificate or 
certificates for shares of NCI Series D Preferred Stock shall be issuable 
upon such conversion shall be deemed to have become on said date the holder 
of record of the shares represented thereby.

          No fractional shares or scrip representing fractional shares shall 
be issued upon conversion of Notes. If any fractional share of stock would be 
issuable upon the conversion of any Note or Notes, NCI shall make an 
adjustment therefor in cash at the current fair market value thereof.

                  (e)    CONVERSION PRICE.  The 'CONVERSION PRICE' shall be 
(i) in the case of the First Note, $1.58, unless the Company has, between the 
date hereof and April 30, 1998, sold its capital stock in a financing in 
which the Company has received gross proceeds of an excess of $5,000,000 (a 
'SUBSEQUENT FINANCING') at a differing price, in which case such Note will 
convert at the lower of $1.58 or such differing price, and (ii) in the case 
of the Second Note and Third Note, $1.58, unless the Company has, between the 
date hereof and the date on which such Notes are issued, sold its capital 
stock in a Subsequent Financing at a differing price, in which case such 
Notes shall convert at (A) such differing price if such financing is prior to 
an IPO or (B) the average closing sale price of the Company's Common Stock 
for the five (5) Business Days preceding the date on which NCI received 
notice pursuant to Section 2.05(c) or Section 3.05(d) above, as the case may 
be.  Notwithstanding the foregoing, a Subsequent Financing shall not include 
(i) the issuance or sale of Common Stock (or options therefor) to employees, 
consultants and directors, pursuant to plans or agreements approved by the 
Board of Directors for the primary purpose of soliciting or retaining their 
services, (ii) the issuance of securities pursuant to the conversion or 
exercise of convertible or exercisable securities that are outstanding on the 
date hereof or that are not outstanding on the date hereof but which NCI is 
contractually obligated to issue and sell hereafter, (iii) the issuance of 
securities in connection with a bona fide business acquisition by the 
Company, whether by merger, consolidation, sale of assets, sale or exchange 
of stock or otherwise, (iv) the issuance of securities to financial 
institutions or lessors in connection with commercial credit arrangements, 
equipment financings or similar transactions, (v) the purchase of shares of 
Series B, Series C or Series C-1 Preferred Stock by NCI or Oracle pursuant to 
the right afforded by NCI and Oracle to certain holders thereof in Sections 1 
and 2 of the Put/Call and Voting Agreement dated August 11, 1997, by and 
among NCI, Oracle and certain stockholders of the Company, or (vi) the 
issuance after the date hereof of up to 22,000,000 shares of Series A-1 
Preferred Stock, at a purchase price of $1.10 per share pursuant to the 
Convertible Note Purchase Agreement dated July 23, 1997, between Oracle and 
NCI. 

                  (f)    EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR 
SALE.  If any of the following events occur, namely (i) any reclassification 
or change of outstanding shares of NCI Series D Preferred Stock (other than a 
change in par value, or from par value to no par value, or from no par value 
to par value, or as a result of a subdivision or combination), (ii) any 
consolidation, merger or combination of NCI with another corporation as a 
result of which holders of NCI Series D Preferred Stock shall be entitled to 
receive stock, securities or other property or assets (including cash) with 
respect to or in exchange for such Preferred Stock (a

                                      6



'Merger'), or (iii) any sale or conveyance of the properties and assets of 
NCI as, or substantially as, an entirety to any other corporation as a result 
of which holders of Preferred Stock shall be entitled to receive stock, 
securities or other property or assets (including cash) with respect to or in 
exchange for such Preferred Stock (an 'Asset Sale'), then NCI or the 
successor or purchasing corporation, as the case may be, shall execute with 
Mallard an amendment to this Agreement providing that all issued and 
outstanding Notes shall be convertible into the kind and amount of shares of 
stock and other securities or property or assets (including cash) receivable 
upon such reclassification, change, consolidation, merger, combination, sale 
or conveyance by a holder of a number of shares of Preferred Stock issuable 
upon conversion of such Notes immediately prior to such reclassification, 
change, consolidation, merger, combination, sale or conveyance.

                  (g)    RESERVATION OF SHARES; SHARES TO BE FULLY PAID.  NCI 
shall provide, free from preemptive rights, out of its authorized but 
unissued shares or shares held in treasury, sufficient shares to provide for 
the conversion of the Notes from time to time as such Notes are presented for 
conversion.  From the execution of this Agreement, NCI will take all 
corporate action which may, in the opinion of its counsel, be necessary in 
order that NCI may validly and legally issue shares of such NCI Series D 
Preferred Stock at such adjusted Conversion Price.

          NCI covenants that all shares of NCI Series D Preferred Stock (and 
the shares of Series A Common Stock issuable upon conversion thereof) which 
may be issued upon conversion of Notes will upon issue be fully paid and 
non-assessable by NCI and free from all taxes, Liens and other charges with 
respect to the issue thereof.

          SECTION 3.06   TAXES ON PAYMENTS.  To the extent applicable, NCI 
shall withhold any present or future income, stamp or other taxes, levies, 
imposts, duties, charges, fees, deductions or withholdings, now or hereafter 
imposed, levied, collected, withheld or assessed by any Governmental 
Authority ('TAXES') from any amounts payable to Mallard hereunder and so 
notify Mallard as promptly as possible thereafter, NCI shall send to Mallard 
notice showing payment thereof. NCI will not be responsible for any income 
tax of Mallard for interest due on the Note, or stamp duty or other tax due 
on conversion of the Note into shares of Preferred Stock.

          SECTION 3.07   NO REBORROWING.  Once repaid or converted, the 
principal amount of the Notes may not be reborrowed.

          SECTION 3.08   ACCELERATION.  Notwithstanding the provisions of 
Section 3.05(b), (c) or (f), Mallard may alternatively elect to be repaid the 
outstanding principal amount and accrued interest on the Notes (the 
'OUTSTANDING BALANCE') in the event of an IPO, a Merger or an Asset Sale.  
Such election shall be made by written notice received by NCI within five (5) 
Business Days of Mallard's receipt of notice from NCI that it intends to 
consummate such IPO, Merger or Asset Sale within the succeeding ninety (90) 
days.  Such repayment shall be made within 45 Business Days after the 
completion of such IPO or upon completion of a Merger or Asset Sale.

                                       7



                                      ARTICLE IV

                            REPRESENTATIONS AND WARRANTIES

          SECTION 4.01   REPRESENTATIONS AND WARRANTIES OF NCI.  NCI hereby 
represents and warrants to Mallard that, except as set forth on the Schedule 
of Exceptions (the 'SCHEDULE OF EXCEPTIONS') furnished to Mallard which 
exceptions shall be deemed to be representations and warranties as if made 
hereunder:

                  (a)    ORGANIZATION, GOOD STANDING AND QUALIFICATION.  The 
Company is a corporation duly organized, validly existing and in good 
standing under the laws of the State of Delaware and has all requisite 
corporate power and authority to carry on its business as now conducted.  The 
Company is duly qualified to transact business and is in good standing in 
each jurisdiction in which the failure to so qualify would have a Material 
Adverse Effect on NCI. The Company does not presently own or control, 
directly or indirectly, any interest in any other corporation, association, 
or other business entity.  The Company is not a participant in any joint 
venture, partnership, or similar arrangement.

                  (b)    CAPITALIZATION AND VOTING RIGHTS.  The authorized 
capital of the Company consists, or will consist immediately prior to the 
Closing, of:

                       (i)    PREFERRED STOCK.  375,000,000 shares of 
Preferred Stock (the 'PREFERRED STOCK'), 84,999,900 shares of which have been 
designated Series A Preferred Stock and are outstanding, 70,000,000 shares of 
which have been designated Series A-1 Preferred Stock and 20,909,090 shares 
are outstanding, 14,500,000 shares of which have been designated Series B 
Preferred Stock and 13,924,553 shares are outstanding, 60,000,000 shares of 
which have been designated Series C Preferred Stock and 40,003,946 shares are 
outstanding, 60,000,000 shares of which are designated Series C-1 Preferred 
Stock and none are outstanding, 12,000,000 of which are designated Series D 
Preferred Stock and none are outstanding.  The rights, privileges and 
preferences of the Preferred Stock will be as stated in the Company's 
Restated Certificate.

                       (ii)   COMMON STOCK.  425,000,000 shares of common 
stock ('COMMON STOCK'), 302,000,000 shares of which have been designated 
Series A Common Stock of which 43,850 shares are outstanding, and 60,000,000 
shares of which have been designated Series B Common Stock none of which are 
issued and outstanding.  

                       (iii)  The outstanding shares of Preferred Stock and 
Common Stock have all been duly and validly authorized and issued, fully paid 
and nonassessable, and were issued in accordance with the registration or 
qualification provisions of the Securities Act and any relevant state 
securities laws or pursuant to valid exemptions therefrom.

                       (iv)   Except for (A) the conversion privileges of the 
Preferred Stock to be issued under this Agreement, (B) the rights provided in 
the Stockholders Agreement, dated August 11, 1997, among NCI and certain 
stockholders of NCI (the 'STOCKHOLDERS AGREEMENT'), (C) the rights provided 
in the Put/Call and Voting Agreement dated

                                      8



August 11, 1997, among NCI and certain stockholders of NCI (the 'P/C VOTING 
AGREEMENT') and (D) currently outstanding options to purchase 16,608,881 
shares of Series C Preferred Stock and 7,338,517 shares of Series A Common 
Stock granted to employees pursuant to the Company's equity incentive plans 
(the 'OPTION PLANS'), there are not outstanding any options, warrants, rights 
(including conversion or preemptive rights) or agreements for the purchase or 
acquisition from the Company of any shares of its capital stock.  The Company 
is not a party or subject to any agreement or understanding, and, to the best 
of the Company's knowledge, there is no agreement or understanding between 
any persons and/or entities, which affects or relates to the voting or giving 
of written consents with respect to any security or by a director of the 
Company other than the P/C Voting Agreement and the Stockholders Agreement.

                  (c) AUTHORIZATION.  The execution, delivery and performance 
of the Transaction Documents and any other agreement contemplated hereunder 
by NCI have been duly authorized by all necessary corporate action of NCI.  
The shares of Series D Preferred Stock to be issued upon conversion of the 
Notes and the shares of Series A Common Stock issuable upon conversion of 
such shares of Series D Preferred Stock (collectively, the 'CONVERSION 
SHARES') have been or will be duly authorized by all necessary corporate 
action of NCI (including, without limitation, approval of the filing of an 
appropriate amendment to the Company's Certificate of Incorporation 
authorizing the Conversion Shares) and, upon issuance and payment therefor, 
will be validly issued, fully paid and non-assessable, and issued, upon 
Mallard making appropriate written investment representations to NCI upon the 
conversion of each Note into shares of Series D Preferred Stock as provided 
in this Agreement, in compliance with the qualification and registration 
requirements or exemptions therefrom under all applicable state and federal 
securities laws.

                  (d)    VALID ISSUANCE OF PREFERRED AND COMMON STOCK.  The 
Series D Preferred Stock issuable upon conversion of the Notes and the Series 
A Common Stock issuable upon conversion of the shares of Series D Preferred 
Stock issuable upon conversion of the have been duly and validly reserved for 
issuance and, upon issuance in accordance with the terms of the Restated 
Certificate, will be duly and validly issued, fully paid, and nonassessable 
and will be free of restrictions on transfer other than restrictions on 
transfer under this Agreement and under applicable state and federal 
securities laws.

                  (e)    APPROVALS AND CONSENTS.  No approval, consent or 
authorization of any natural person, firm, corporation or Governmental 
Authority which has not heretofore been obtained is necessary for the 
execution or delivery of this Agreement, the Transaction Documents or any 
other agreement contemplated hereunder by NCI or for the performance by NCI 
of any of the terms or conditions thereof, except (i) at NCI's election, the 
filing of a Notice of Sale of Securities Pursuant to Regulation D promulgated 
under the Securities Act, and (ii) the filing of a Notice with the California 
Commissioner of Corporations pursuant to Section 25102(f) of the California 
Corporations Code.

                  (f)    OFFERING.  Subject in part to the truth and accuracy 
of Mallard's representations set forth in Section 4.02 of this Agreement, the 
offer, sale and issuance of the Notes as contemplated by this Agreement are 
exempt from the registration requirements of the

                                       9



Securities Act, and neither the Company nor any authorized agent acting on 
its behalf will take any action hereafter that would cause the loss of such 
exemption.

                  (g)    LITIGATION.  There is no action, suit, proceeding or 
investigation pending or currently threatened against the Company that 
questions the validity of this Agreement or the Transaction Documents, or the 
right of the Company to enter into such agreements, or to consummate the 
transactions contemplated hereby or thereby, or that might result, either 
individually or in the aggregate, in any Material Adverse Effect on NCI, or 
any change in the current equity ownership of the Company.  The foregoing 
includes, without limitation, actions, suits, proceedings or investigations 
pending or threatened involving the prior employment of any of the Company's 
officers, their use in connection with the Company's business of any 
information or techniques allegedly proprietary to any of their former 
employers, or their obligations under any agreements with prior employers.  
The Company is not a party or subject to the provisions of any order, writ, 
injunction, judgment or decree of any court or government agency or 
instrumentality.  There is no action, suit, proceeding or investigation by 
the Company currently pending or that the Company intends to initiate. 

                  (h)    PATENTS AND TRADEMARKS.  To its knowledge (but 
without having conducted any special investigation or patent search), the 
Company has sufficient title and ownership of all patents, trademarks, 
service marks, trade names, copyrights, trade secrets, information, 
proprietary rights and processes necessary for its business as now conducted 
without any conflict with or infringement of the rights of others.  The 
Company has not received any communications alleging that the Company has 
violated or, by conducting its business, would violate any of the patents, 
trademarks, service marks, trade names, copyrights or trade secrets or other 
proprietary rights of any other person or entity.  The Company is not aware 
that any of its employees is obligated under any contract (including 
licenses, covenants or commitments of any nature) or other agreement, or 
subject to any judgment, decree or order of any court or administrative 
agency, that would interfere with the use of his or her best efforts to 
promote the interests of the Company or that would conflict with the 
Company's business as conducted.  Neither the execution nor delivery of this 
Agreement nor the carrying on of the Company's business by the employees of 
the Company, nor the conduct of the Company's business will, to the Company's 
knowledge, conflict with or result in a breach of the terms, conditions or 
provisions of, or constitute a default under, any contract, covenant or 
instrument under which any of such employees is now obligated.

                  (i)    COMPLIANCE WITH LAW.  NCI, to its knowledge, is in 
material compliance with all applicable statutes, laws, regulations and 
executive orders of the United States of America and all states, foreign 
countries, and other governmental bodies and agencies having jurisdiction 
over its business or properties except to the extent non-compliance would not 
have a Material Adverse Effect on NCI, and NCI has received no notice of any 
violation of such statutes, laws, regulations or orders which has not been 
remedied prior to the date hereof.

                  (j)    AGREEMENTS; CONTRACTS.  NCI has not materially 
breached, nor does it have knowledge of any claim or threat that it has 
materially breached, any terms or conditions of any material agreement, 
contract, lease, license, instrument or commitment that,

                                     10



individually or in the aggregate, could have a Material Adverse Effect on 
NCI, nor is NCI in violation of any term of its Certificate of Incorporation 
or Bylaws, as now in effect. The execution, delivery and performance of and 
compliance with this Agreement and the other Agreements contemplated hereby, 
and the issuance of the Notes or the Conversion Shares, have not resulted and 
will not result in any violation of, or conflict with, or constitute a 
default under any of the foregoing, or result in the creation of any Lien or 
charge upon any of the properties or assets of NCI.  

                  (k)    DISCLOSURE.  The Company has provided Mallard with 
all the information that it has requested for deciding whether to purchase 
the Notes.  To its knowledge, neither this Agreement nor any other written 
statements or certificates made or delivered in connection herewith or 
therewith contains any untrue statement of a material fact or omits to state 
a material fact necessary to make the statements herein or therein not 
misleading. 

                  (l)    TITLE TO PROPERTY AND ASSETS.  The Company owns its 
property and assets free and clear of all Liens, except such Liens that are 
immaterial in size (individually or in the aggregate), arise in the ordinary 
course of business and do not materially impair the Company's ownership or 
use of such property or assets.  With respect to the property and assets it 
leases, the Company is in compliance with such leases and, to its knowledge, 
holds a valid leasehold interest free of any Liens.

                  (m)    FINANCIAL STATEMENTS.  NCI has furnished Mallard 
with the balance sheet of NCI as of May 31, 1997, and the related statements 
of operations and cash flows for the nine-month period ended May 31, 1997 and 
the balance sheet of NCI as of September 30, 1997, and the related statement 
of operations and cash flows for the four-month period ended September 30, 
1997 (together, the 'NCI FINANCIAL STATEMENTS').  All of such NCI Financial 
Statements, (i) are in accordance with the respective books of NCI; (ii) have 
been prepared in all material respects in accordance with GAAP except that 
such do not contain any footnotes required by GAAP; (iii) present fairly the 
financial position of NCI as of the date thereof and the results of 
operations and cash flows of NCI for the respective period indicated therein; 
and (iv) do not reflect any material items of nonrecurring income except as 
stated therein. NCI has no liabilities of any nature, whether accrued, 
absolute, contingent or otherwise, and whether due or to become due, that 
would be required to be reflected in a balance sheet, prepared in accordance 
with GAAP that were not disclosed or provided for in the NCI Financial 
Statements other than liabilities incurred since September 30, 1997, which 
were incurred in the ordinary course of business and are not individually or 
in the aggregate, material to NCI's business, operating results or financial 
condition ('NCI'S BUSINESS').  All reserves set forth on the NCI Financial 
Statements were adequate.  There are no loss contingencies (as such term is 
used in Statement of Financial Accounting Standards No. 5) that were not 
adequately provided for in the NCI Financial Statements.

                  (n)    ABSENCE OF CHANGES.  Since September 30, 1997: (a) 
there has been no material adverse change in NCI's Business or any 
development particular  to NCI's Business and not generally known to the 
public that reasonably could be expected to cause a material adverse change 
in NCI's Business; (b) there has been no damage, destruction or loss

                                       11



(whether or not covered by insurance) which has had a Material Adverse Effect 
on NCI; (c) there has been no change by NCI in accounting principles or 
methods except insofar as may be required by a change in generally accepted 
accounting principles; (d) there has been no revaluation by NCI of any of its 
assets, including, without limitation, writing down the value of inventory or 
writing off notes or accounts receivable; and (e) NCI has conducted its 
business only in the ordinary course consistent with past practice.

                  (o)    TAX RETURNS, PAYMENTS AND ELECTIONS.  The Company 
has filed all tax returns and reports as required by law.  These returns and 
reports are true and correct in all material respects.  The Company has paid 
all taxes and other assessments due, except those contested by it in good 
faith that are listed in the Schedule of Exceptions.  The provision for taxes 
of the Company as shown in the Financial Statements is adequate for taxes due 
or accrued as of the date thereof.  The Company has not elected pursuant to 
the Internal Revenue Code of 1986, as amended (the 'CODE'), to be treated as 
a Subchapter S corporation or a collapsible corporation pursuant to Section 
1362(a) or Section 341(f) of the Code, nor has it made any other elections 
pursuant to the Code (other than elections that relate solely to methods of 
accounting, depreciation or amortization) that would have a material effect 
on the Company, its financial condition, its business as presently conducted 
or any of its properties or material assets.  

          SECTION 4.02   REPRESENTATIONS AND WARRANTIES OF MALLARD.  Mallard 
hereby represents and warrants to NCI that:

                  (a)    AUTHORIZATION.  Mallard has full power and authority 
to enter into this Agreement and the Transaction Documents, and each such 
agreement constitutes its valid and legally binding obligation, enforceable 
in accordance with its terms.

                  (b)    ORGANIZATION, GOOD STANDING AND QUALIFICATION.  
Mallard is a corporation duly organized, validly existing and in good 
standing under the laws of the State of Delaware and has all requisite 
corporate power and authority to carry on its business as now conducted.  
Mallard is duly qualified to transact business and is in good standing in 
each jurisdiction in which the failure to so qualify would have a Material 
Adverse Effect on Mallard.  Other than as disclosed on SCHEDULE A attached 
hereto, Mallard does not presently own or control, directly or indirectly, 
any interest in any other corporation, association, or other business entity, 
and Mallard is not a participant in any joint venture, partnership, or 
similar arrangement.

                  (c)    PURCHASE ENTIRELY FOR OWN ACCOUNT.  This Agreement 
is made with Mallard in reliance upon its representation to NCI, which by its 
execution hereof Mallard hereby confirms, that the Notes to be received by 
it, the Series D Preferred Stock issuable upon conversion of the Notes and 
the Series A Common Stock issuable upon conversion of the shares of Series D 
Preferred Stock issuable upon conversion of the Notes (collectively, the 
'SECURITIES') will be acquired for investment for its own account, not as a 
nominee or agent, and not with a view to the resale or distribution of any 
part thereof, and that Mallard has no present intention of selling, granting 
any participation in, or otherwise distributing the same.  By executing this 
Agreement, Mallard further represents that it does not have any contract, 
undertaking, agreement

                                      12



or arrangement with any person to sell, transfer or grant participations to 
such person or to any third person, with respect to any of the Securities. 

                  (d)    DISCLOSURE OF INFORMATION.  Mallard believes it has 
received all the information it considers necessary or appropriate for 
deciding whether to purchase the Notes.  Mallard further represents that it 
has had an opportunity to ask questions and receive answers from the Company 
regarding the terms and conditions of the offering of the Notes, and the 
business, properties, prospects and financial condition of the Company.  The 
foregoing, however, does not limit or modify the representations and 
warranties of the Company in Section 4.01 of this Agreement or the right of 
Mallard to rely thereon.  

                  (e)    INVESTMENT EXPERIENCE.  Mallard is an investor in 
securities of companies in the development stage and acknowledges that it is 
able to fend for itself, can bear the economic risk of its investment, and 
has such knowledge and experience in financial or business matters that it is 
capable of evaluating the merits and risks of the investment in the Notes.  
If other than an individual, Investor also represents it has not been 
organized for the purpose of acquiring the Notes. 

                  (f)    ACCREDITED INVESTOR.  Mallard is an 'accredited 
investor' within the meaning of SEC Rule 501 of Regulation D, as presently in 
effect. 

                  (g)    RESTRICTED SECURITIES.  Mallard understands that the 
Securities it is purchasing are characterized as 'restricted securities' 
under the federal securities laws inasmuch as they are being acquired from 
the Company in a transaction not involving a public offering and that under 
such laws and applicable regulations such securities may be resold without 
registration under the Securities Act, only in certain limited circumstances. 
 In this connection, Mallard represents that it is familiar with SEC Rule 
144, as presently in effect, and understands the resale limitations imposed 
thereby and by the Securities Act.  

                  (h)    FURTHER LIMITATIONS ON DISPOSITION.  Without in any 
way limiting the representations set forth above, Mallard further agrees not 
to make any disposition of all or any portion of the Securities unless and 
until the transferee has agreed in writing for the benefit of the Company to 
be bound by this Section 4.02, and: 

                       (i)    There is then in effect a Registration 
Statement under the Securities Act covering such proposed disposition and 
such disposition is made in accordance with such Registration Statement; or

                       (ii)   (1) Mallard shall have notified the Company of 
the proposed disposition and shall have furnished the Company with a detailed 
statement of the circumstances surrounding the proposed disposition, and (2) 
if reasonably requested by the Company, Mallard shall have furnished the 
Company with an opinion of counsel, reasonably satisfactory to the Company 
that such disposition will not require registration of such shares under the 
Securities Act.  It is agreed that the Company will not require opinions of 
counsel for transactions made pursuant to Rule 144 except in unusual 
circumstances. 

                                      13



                  (i)    LEGENDS.  It is understood that the certificates 
evidencing the Securities may bear one or all of the following legends:

                       (i)    'These securities have not been registered 
under the Securities Act of 1933, as amended.  They may not be sold, offered 
for sale, pledged or hypothecated in the absence of a registration statement 
in effect with respect to the securities under such Securities Act or an 
opinion of counsel satisfactory to the Company that such registration is not 
required or unless sold pursuant to Rule 144 of such Securities Act.'

                       (ii)   Any legend required by the laws of the State of 
California, including any legend required by the California Department of 
Corporations.

          SECTION 4.03   CALIFORNIA COMMISSIONER OF CORPORATIONS AND 
CORPORATE SECURITIES LAW.  THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF 
THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS 
OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT 
OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH 
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS 
CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED 
UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

                                      ARTICLE V

                                      CONDITIONS

          SECTION 5.01   CONDITIONS OF MALLARD AT THE CLOSING.  The 
obligation of Mallard to purchase the Notes at the Closing shall be subject 
to the satisfaction of each of the following conditions:

                  (a)    The representations and warranties of NCI contained 
in Section 4.01 shall be true on and as of the Closing with the same effect 
as though such representations and warranties had been made on and as of the 
date of such Closing.

                  (b)    The Company shall have performed and complied with 
all agreements, obligations and conditions contained in this Agreement that 
are required to be performed or complied with by it on or before the Closing.

                  (c)    The President, Chief Executive Officer or Chief 
Financial Officer of the Company, on behalf of the Company, shall deliver to 
Mallard at the Closing a certificate stating that the conditions specified in 
Sections 5.01(a) and (b) have been fulfilled and stating that there shall 
have been no Material Adverse Effect on NCI since September 30, 1997.

                                      14



                  (d)    All authorizations, approvals, or permits, if any, 
of any Governmental Authority that are required in connection with the lawful 
issuance and sale of the Securities pursuant to this Agreement shall be duly 
obtained and effective as of the Closing.

                  (e)    The Admission Agreement, in substantially the form 
attached hereto as EXHIBIT B, shall have been executed by all applicable 
parties and the appropriate approvals for amending the P/C Voting Agreement 
and the Stockholders Agreement shall have been obtained.

                  (f)    There is no Event of Default (as defined in Section 
7.01).

          SECTION 5.02   OTHER CONDITIONS OF MALLARD.  The obligation of 
Mallard to purchase the Second Note or the Third Note, as the case may be, 
shall be subject to the satisfaction of each of the following conditions:

                  (a)    the conditions set forth in Section 5.01(a), 
5.01(b), 5.01(c) and 5.01(d) shall have been satisfied.  

                  (b)    NCI shall have given the Notice of Borrowing as 
provided in Section 2.04.

                  (c)    Mallard shall have received, in form and substance 
reasonably satisfactory, such additional approvals, opinions, documents and 
other information as Mallard may reasonably request.

          SECTION 5.03   CONDITIONS OF NCI.  The obligations of the Company 
to Mallard under this Agreement are subject to each of the following 
conditions:

                  (a)    The representations and warranties of Mallard 
contained in Section 4.02 shall be true on and as of the Closing and the date 
on which the Second Note and Third Note, if applicable, are issued, with the 
same effect as though such representations and warranties had been made on 
and as of such dates. 

                  (b)    Mallard shall have funded the principal amount of 
the Notes as specified in Sections 2.01(b) and 2.03(a) and (b).

                  (c)    All authorizations, approvals, or permits, if any, 
of any Governmental Authority that are required in connection with the lawful 
issuance and sale of the Securities pursuant to this Agreement shall be duly 
obtained and effective as of the Closing.

                                       15



                                      ARTICLE VI

                                      COVENANTS

          SECTION 6.01   AFFIRMATIVE COVENANTS.  So long as any of the Notes 
shall remain unpaid or Mallard shall have any obligation to purchase Notes 
hereunder, NCI agrees that:

                  (a)    PRESERVATION OF EXISTENCE.  NCI will maintain and 
preserve, through itself or any successor to its business, its corporate 
existence, its rights to transact business and all other rights, franchises 
and privileges necessary or desirable in the normal course of its business 
and operations and the ownership of its material properties.

                  (b)    PAYMENT OF TAXES.  NCI will pay and discharge all 
taxes, fees, assessments and governmental charges or levies imposed upon it 
or upon its properties or assets prior to the date on which penalties attach 
thereto, and all lawful claims for labor, materials and supplies which, if 
unpaid, might become a Lien upon any properties or assets of NCI, except to 
the extent such taxes, fees, assessments or governmental charges or levies, 
or such claims, are being contested in good faith by appropriate proceedings 
and are adequately reserved against in accordance with generally accepted 
accounting principles.

                  (c)    COMPLIANCE WITH LAWS.  NCI will comply in all 
material respects with the requirements of all applicable laws, rules, 
regulations and orders of any Governmental Authority and the terms of any 
material indenture, contract or other instrument to which it may be a party 
or under which it or its properties may be bound, except to the extent 
failure to so comply would not have a Material Adverse Effect.

                  (d)    MAINTENANCE OF PROPERTIES.  NCI will use 
commercially reasonable efforts to maintain and preserve all of its material 
properties necessary or useful in the proper conduct of its business in good 
working order and condition in accordance with the general practice of other 
corporations of similar character and size, ordinary wear and tear excepted.

                  (e)    LICENSES.  NCI will use commercially reasonable 
efforts to obtain and maintain all licenses, authorizations, consents, 
filings, exemptions, registrations and other governmental approvals necessary 
in connection with the execution, delivery and performance of the Transaction 
Documents, the consummation of the transactions therein contemplated or the 
operation and conduct of its business and ownership of its properties.

                  (f)    FURTHER ASSURANCES AND ADDITIONAL ACTS.  NCI will 
execute, acknowledge, deliver, file, notarize and register at its own expense 
all such further agreements, instruments, certificates, documents and 
assurances and perform such acts as Mallard shall deem reasonably necessary 
or appropriate to effectuate the purposes of the Transaction Documents, and 
promptly provide Mallard with evidence of the foregoing reasonably 
satisfactory in form and substance to Mallard.

                                     16



                  (g)    PLACE OF BUSINESS.  The Company shall provide 
Mallard prompt written notice of any change in the location of its principal 
place of business and its chief executive office from 1000 Bridge Parkway, 
Redwood Shores, California.  

                  (h)    INSPECTION RIGHTS.  The Company shall permit 
Mallard, at Mallard's expense, to visit and inspect the Company's properties, 
to examine its books of account and records and to copy the same and to make 
excerpts therefrom, and to discuss the Company's affairs, finances and 
accounts with its officers, all at such reasonable times during normal 
business hours as may be reasonably requested by Mallard, so long as such 
inspection, examination, copying and discussions do not unreasonably 
interfere with the business of the Company and Mallard agrees to keep any and 
all information obtained during inspection, examination, copying and 
discussions confidential, not disclose such information (except as may be 
required by law or court order, such information and not otherwise known to 
Mallard through other sources or publicly known).

                                     ARTICLE VII

                                  EVENTS OF DEFAULT

          SECTION 7.01   EVENTS OF DEFAULT.  Any of the following events that 
shall occur shall constitute an 'EVENT OF DEFAULT':

                  (a)    PAYMENTS.  NCI shall fail to pay when due any amount 
of principal of, or interest on, any Note, or any other amount payable under 
any Transaction Document, and such failure shall remain unremedied by NCI for 
a period of 30 days following the date of notice that such payment is due. 

                  (b)    REPRESENTATIONS AND WARRANTIES.  Any representation 
or warranty by NCI in the Transaction Documents shall prove to have been 
incorrect in a material respect when made or deemed made.

                  (c)    FAILURE BY NCI TO PERFORM CERTAIN COVENANTS.  NCI 
shall fail to perform or observe any material term, covenant or agreement 
contained in this Agreement and any such failure shall remain unremedied for 
a period of 30 days from the notice by Mallard of the occurrence thereof.

                  (d)    BANKRUPTCY.  NCI shall admit in writing its 
inability to, or shall fail generally or be generally unable to, pay its 
debts (including its payrolls) as such debts become due, or shall make a 
general assignment for the benefit of creditors; or NCI shall file a 
voluntary petition in bankruptcy or a petition or answer seeking 
reorganization, to effect a plan or other arrangement with creditors or any 
other relief under the Bankruptcy Reform Act of 1978 (the 'BANKRUPTCY CODE') 
or under any other state or federal law relating to bankruptcy or 
reorganization granting relief to debtors, whether now or hereafter in 
effect, or shall file an answer admitting the jurisdiction of the court and 
the material allegations of any involuntary petition filed against NCI 
pursuant to the Bankruptcy Code or any such other state or federal law;

                                      17



or NCI shall be adjudicated a bankrupt, or shall make an assignment for the 
benefit of creditors, or shall apply for or consent to the appointment of any 
custodian, receiver or trustee for all or any substantial part of NCI's 
property, or shall take any action to authorize any of the actions or events 
set forth above in this subsection; or an involuntary petition seeking any of 
the relief specified in this subsection shall be filed against NCI; or any 
order for relief shall be entered against NCI in any involuntary proceeding 
under the Bankruptcy Code or any such other state or federal law referred to 
in this subsection (d).

                  (e)    DEFAULT UNDER OTHER INDEBTEDNESS.  NCI shall:  (i) 
fail to make any payment of any principal of, or interest or premium on, any 
material Indebtedness (other than in respect of the Notes) when due (whether 
by scheduled maturity, required prepayment, acceleration, demand or 
otherwise) and such failure shall continue after the applicable grace period, 
if any, specified in the agreement or instrument relating to such 
Indebtedness as of the date of such failure or otherwise agreed to by the 
parties; or (ii) fail to perform or observe any material term, covenant or 
condition on its part to be performed or observed under any material 
agreement or instrument relating to any other Indebtedness, when required to 
be performed or observed, and such failure shall continue after the 
applicable grace period, if any, specified in such agreement or instrument, 
if the effect of such failure to perform or, observe accelerates the maturity 
of such Indebtedness.

          SECTION 7.02   CURE.  Upon each of such Event of Default, the 
Company shall have thirty (30) days to cure such default after receipt of 
written notice of default from Mallard specifying the nature of the Company's 
default.  If the Company is unable to cure its default within such thirty 
(30) day period, Mallard may, at its option, accelerate repayment of the 
Outstanding Balance in which case the Outstanding Balance shall be due and 
payable immediately.  Upon any default of the Company hereunder, Mallard may 
pursue any remedies that are available to it.  In addition, Mallard shall 
have a right to offset any amounts due upon such a default against any 
amounts (including royalties, if any) payable by Mallard or its parent to the 
Company.

                                     ARTICLE VIII

                                    MISCELLANEOUS

          SECTION 8.01   AMENDMENTS AND WAIVERS.  Any term of this Agreement 
may be amended and the observance of any term of this Agreement may be waived 
(either generally or in a particular instance and either retroactively or 
prospectively), only with the written consent of NCI and Mallard.  Any 
amendment or waiver effected in accordance with this paragraph shall be 
binding upon both parties hereto.

          SECTION 8.02   NOTICES.  Except as may be otherwise provided 
herein, all notices, requests, waivers and other communications made pursuant 
to this Agreement shall be in writing and shall be conclusively deemed to 
have been duly given (a) when hand delivered to the other party; (b) when 
received when sent by facsimile at the address and number set forth below 
(provided, however, that notices given by facsimile shall not be effective 
unless either (i) a

                                       18



duplicate copy of such facsimile notice is promptly given by one of the other 
methods described in this Section 8.02, or (ii) the receiving party delivers 
a written confirmation of receipt for such notice either by facsimile or any 
other method described in this Section 8.02; (c) three business days after 
deposit in the U.S. mail with first class or certified mail receipt requested 
postage prepaid and addressed to the other party as set forth below; or (d) 
the next business day after deposit with a national overnight delivery 
service, postage prepaid, addressed to the parties as set forth below with 
next-business-day delivery guaranteed, provided that the sending party 
receives a confirmation of delivery from the delivery service provider.

     To Mallard:                                To the Company:

     Middlefield Ventures, Inc.                 Network Computer, Inc.
     2200 Mission College Blvd.                 1000 Bridge Parkway
     Santa Clara, CA 95052                      Redwood Shores, CA 94065
     Attn:  Treasurer                           Attn:  Nancy Hilker
     Fax Number:  (408) 765-6038                Attn:  Roger Ross, Esq.
                                                Fax Number:  (650) 631-4683

     with copies to:                            with copies to:

     Intel Corporation                          Gunderson Dettmer et.al.
     220 Mission College Blvd.                  155 Constitution Drive 
     Mail Stop SC4-203                          Menlo Park, CA 94025 
     Santa Clara, CA 95052                      Attn:  Buddy Arnheim 
     Attn:  General Counsel                     Fax Number: (650) 321-2800
     Fax Number:  (408) 765-7630


          SECTION 8.03   SURVIVAL.  All covenants, agreements, 
representations and warranties made herein shall, except to the extent 
otherwise provided herein, survive the execution and delivery of this 
Agreement, the execution and delivery of the Notes, and shall continue in 
full force and effect so long as Mallard has any commitment, any Notes remain 
outstanding or unpaid or any obligation to perform any other act under this 
Agreement or the Transaction Documents otherwise remains unsatisfied.

          SECTION 8.04   BENEFITS OF AGREEMENT.  The Transaction Documents 
are entered into for the sole protection and benefit of the parties hereto 
and their successors and assigns, and no other person shall be a direct or 
indirect beneficiary of, or shall have any direct or indirect cause of action 
or claim in connection with, any Transaction Document.

          SECTION 8.05   BINDING EFFECT; ASSIGNMENT.  This Agreement shall 
become effective when it shall have been executed by NCI and Mallard and 
thereafter shall be binding upon, inure to the benefit of and be enforceable 
by NCI, Mallard and their respective successors and assigns; PROVIDED that 
NCI may not assign any of its rights, interests or obligations under this 
Agreement or the other Transaction Documents, and any attempt to do so shall 
be null and void without Mallard's prior written consent, which consent shall 
not be unreasonably withheld.  NCI

                                      19



hereby consents to the assignment or transfer of all or any part of the 
obligations and rights by Mallard to Mallard's parent or to one or more 
subsidiaries of Mallard or of Mallard's parent.

          SECTION 8.06   GOVERNING LAW.  This Agreement shall be governed by, 
and construed in accordance with the law of the State of Delaware without 
regard to application of principles of conflicts of laws.

          SECTION 8.07   ENTIRE AGREEMENT.  This Agreement and the documents 
referred to herein constitute the entire agreement between the parties and no 
party shall be liable or bound to any other party in any manner by any 
warranties, representations, or covenants except as specifically set forth 
herein or therein.

          SECTION 8.08   SEVERABILITY.  If one or more provisions of this 
Agreement are held to be unenforceable under applicable law, such provision 
shall be excluded from this Agreement and the balance of the Agreement shall 
be interpreted as if such provision were so excluded and shall be enforceable 
in accordance with its terms.

          SECTION 8.09   COUNTERPARTS.  This Agreement may be executed in any 
number of counterparts and by different parties hereto in separate 
counterparts, each of which when so executed shall be deemed to be an 
original and all of which taken together shall constitute but one and the 
same agreement.

          SECTION 8.10   PUBLIC ANNOUNCEMENTS.  Neither party shall use the 
other's name nor refer to the other directly or indirectly in connection with 
the investment contemplated herein in any advertisement, news release or 
professional or trade publication, or in any other manner, unless otherwise 
required by law, or with prior written consent.  The parties agree that there 
will be no press release or other public statement issued by either party 
relating to this Agreement unless required by law or mutually agreed to, and 
further agree to keep the terms and conditions of such in strictest 
confidence, it being understood that this restriction shall not prohibit 
disclosure to the parties counsel, accountants and professional advisors.  If 
either party determines that it is required by law to disclose the terms and 
conditions of this Agreement and the Notes, or to file this Agreement or the 
Notes with any governmental agency or authority, it shall, a reasonable time 
before making any such disclosure or filing, consult with the other regarding 
such filing and seek confidential treatment for such portions of those 
agreements as may be reasonably requested by the other.

          Notwithstanding the above, the Company may disclose the existence 
of this Agreement and the Notes to bona fide potential investors who are 
under obligations of nondisclosure, similar to those contained herein and 
which the Company believes in good faith are seriously considering investing 
in the Company.  In addition, the Company may disclose that a financial 
relationship exists between the parties hereto (but not the terms of such 
financial relationship) to customers, potential customers, strategic partners 
or potential strategic partners.

          SECTION 8.11   DISPUTE RESOLUTION.  The parties agree to negotiate 
in good faith to resolve any dispute between them regarding this Agreement.  
If the negotiations do not resolve the dispute to the reasonable satisfaction 
of both parties, then each party shall nominate

                                      20



one officer as its representative. These representatives shall, within thirty 
(30) days of a written request by either party to call such a meeting, meet 
in person and alone (except for one assistant for each party) and shall 
attempt in good faith to resolve the dispute.  If the disputes cannot be 
resolved in such meeting, the parties agree that they shall, if requested in 
writing by either party, meet within thirty (30) days after such written 
notification for one day with an impartial mediator and consider dispute 
resolution alternatives other than litigation.  If an alternative method of 
dispute resolution is not agreed upon within thirty (30) days after the one 
day mediation, either party may begin litigation proceedings. This procedure 
shall be a prerequisite before taking any additional action hereunder.



                               [SIGNATURE PAGE FOLLOWS]


                                        21




          IN WITNESS WHEREOF, the parties hereto have duly executed this 
Agreement, as of the date first above written.

                                   NETWORK COMPUTER, INC.




                                   By: 
                                       ------------------------------------

                                   Title: Chief Executive Officer
                                          ---------------------------------

                                   
                                   MIDDLEFIELD VENTURES, INC.
                                   


                                   By:
                                      ------------------------------------

                                   Title:
                                         ---------------------------------



          --Signature Page to the Convertible Note Purchase Agreement--




                                      EXHIBIT A

                         FORM OF CONVERTIBLE PROMISSORY NOTE

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. 
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED FOR HYPOTHECATED IN THE 
ABSENCE OF A REGISTRATION STATEMENT IS AN EFFECT WITH RESPECT TO THE 
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE 
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO 
RULE 144 OF SUCH ACT.

                             CONVERTIBLE PROMISSORY NOTE


$______                                                           ______, 199__
Redwood Shores, California

          FOR VALUE RECEIVED, Network Computer, Inc., a Delaware corporation 
('MAKER' or 'NCI'), promises to pay to the order of Middlefield Ventures, 
Inc., a Delaware corporation ('HOLDER' or 'MALLARD'), the principal sum of 
Four Million Dollars ($4,000,000), together with interest from the date of 
this Note on the unpaid principal balance at a rate equal to the lesser of 
(a) 5.0% or (b) the maximum interest rate permitted under applicable federal 
and state laws. Interest shall be computed as simple annual interest on the 
basis of a year of 360 days for the actual number of days occurring in the 
period for which such commitment fee or interest is payable.  Payment shall 
be made by Maker to Holder at the offices of Mallard, located at 2200 Mission 
College Blvd., Santa Clara, CA 95052, or to such other office and account of 
Holder as it from time to time shall designate in a written notice to Maker.

          This Note is issued pursuant to that certain Convertible Note 
Purchase Agreement dated as of November 12, 1997, between Maker and Holder 
(the 'AGREEMENT'). Terms used herein have the meanings assigned to those 
terms in the Agreement, unless otherwise defined herein.

          The terms of payment of principal and accrued interest shall be in 
accordance with the terms and conditions of the Agreement.  Payment shall be 
made in lawful tender of the United States and shall be credited first to 
accrued interest then due and payable with the remainder applied to 
principal. Prepayment of the principal, together with accrued interest, may 
be made at any time without penalty or premium, subject to Section 3.03 of 
the Agreement.

          The unpaid principal on this Note (or any portion thereof) shall be 
convertible at the election of Holder into shares of NCI Series D Preferred 
Stock pursuant to the terms and conditions set forth in the Agreement.

          If action is instituted to collect this Note, Maker will pay all 
costs and expenses, including reasonable attorneys' fees, incurred in 
connection with such action. Maker hereby waives notice of default, 
presentment or demand for payment, protest or notice of nonpayment or 
dishonor and all other notices or demands relative to this instrument.



          The holding of any provision of this Note to be invalid or 
unenforceable by a court of competent jurisdiction shall not affect any other 
provisions and the other provisions of this Note shall remain in full force 
and effect.

          This Note shall be construed in accordance with the laws of the 
state of Delaware, without regard to the conflicts of law provisions of the 
state of Delaware or of any other state.

          The Maker has caused this Convertible Promissory Note to be issued 
as of the date first above written.


                                   NETWORK COMPUTER, INC.


                                   By:
                                      ------------------------------------
                                   Title:
                                         ---------------------------------




                                      EXHIBIT B

                                 ADMISSION AGREEMENT




                                      EXHIBIT C

                                 RESTATED CERTIFICATE