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                                                                    Exhibit 10.3

                         AGREEMENT OF PURCHASE AND SALE
                          AND JOINT ESCROW INSTRUCTIONS


TO: Chicago Title Company                         Escrow No.:  013038051
    925 B Street                                  Escrow Officer:  Lori Brandt
    San Diego, California 92101                   Title Order No.:  13038051-UI3
                                                  Title Officer:  Michael Brady


        THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this 11th day of April, 2001, by
and between TC KEARNY VILLA, L.P., a Delaware limited partnership ("Buyer"), and
COHU, INC., a Delaware corporation ("Seller"), with respect to the following:

                                R E C I T A L S :

        A. Seller desires to sell and convey to Buyer all of Seller's right,
title and interest in and to the following:

                1. That certain real property located in the City of San Diego,
        County of San Diego, State of California, located at 5755, 5775 and 5785
        Kearney Villa Road, consisting of approximately six (6) acres of land
        (the "Land"), as described on Exhibit "A" attached hereto, together with
        the office buildings located on the Land, containing in the aggregate
        approximately 156,000 square feet of leasable space, associated parking
        areas, and all other transferable improvements, if any, to the extent
        such rights are owned and assignable by Seller, located on the Land (the
        "Improvements");

                2. All transferable rights, privileges, easements and
        appurtenances benefiting the Land and/or the Improvements, including,
        without limitation, all mineral and water rights and all easements,
        rights-of-way and other appurtenances used or connected with the
        beneficial use or enjoyment of the Land and/or the Improvements, if any,
        to the extent such rights are owned and assignable by Seller (the Land,
        the Improvements and all such rights, privileges, easements and
        appurtenances are sometimes collectively hereinafter referred to as the
        "Real Property");

                3. All transferable rights in personal property, equipment,
        supplies and fixtures (collectively, the "Personal Property") owned by
        Seller and used or useful in the operation of the Real Property (to the
        extent such rights are owned and transferable by Seller) excluding those
        items of personal property which Buyer and Seller agree may be removed
        from the Property as provided in Paragraph 7(a)(vi) below; and

                4. All of Seller's interest in any intangible property used in
        connection with the Real Property and Personal Property, including,
        without limitation, all contract rights, warranties, guaranties,
        licenses, permits, entitlements, governmental approvals and certificates
        of occupancy which benefit the Real Property and/or the Personal
        Property (the "Intangible Personal Property"), to the extent such rights
        are assignable. Notwithstanding the foregoing, Buyer shall not be
        assigned or have the right to use the name "Cohu" or "Delta Design". The
        Real Property, the Personal Property and the Intangible Personal
        Property are sometimes collectively hereinafter referred to as the
        "Property."

        B. Seller desires to sell the Property to Buyer and Buyer desires to
purchase the Property from Seller upon the terms and conditions hereinafter set
forth.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree that the
terms and conditions of this Agreement and the instructions to Chicago Title
Company ("Escrow Holder") with regard to the escrow ("Escrow") created pursuant
hereto are as follows:

                1. Purchase and Sale. Seller hereby agrees to sell the Property
        to Buyer, and Buyer hereby

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        agrees to purchase the Property from Seller, upon the terms and
        conditions herein set forth.

                2. Purchase Price. The purchase price ("Purchase Price") for the
        Property shall be Twelve Million Five Hundred Thousand and No/100
        Dollars ($12,500,000.00).

                3. Payment of Purchase Price. The Purchase Price for the
        Property shall be payable by Buyer as follows:

                        (a) Initial Deposit. Within two (2) business days after
                the "Opening of Escrow" (as defined in Paragraph 4(a) hereof),
                Buyer shall deposit or cause to be deposited with Escrow Holder
                in cash, by a certified or bank cashier's check made payable to
                Escrow Holder or by a confirmed wire transfer of funds
                (hereinafter referred to as "Immediately Available Funds"), the
                sum of One Hundred Thousand and 00/100 Dollars ($100,000.00)
                (the "Initial Deposit"). Upon Escrow Holder's receipt of the
                Initial Deposit, Escrow Holder shall immediately invest it in an
                interest bearing account of a federally insured bank or savings
                and loan association acceptable to Buyer. The Initial Deposit
                and all interest thereon shall be fully refundable to Buyer if
                Buyer does not satisfy or waive the contingencies of Paragraph
                7(a)(i), (ii), (iii) and (iv) hereof on or before the expiration
                of the "Contingency Period" (as defined in Paragraph 7(a)(ii)
                hereof).

                        (b) Additional Deposit. Upon the expiration of the
                Contingency Period, provided Buyer has not earlier terminated
                this Agreement in accordance with any of its rights to do so
                contained herein, Buyer shall deposit or cause to be deposited
                with Escrow Holder in Immediately Available Funds, the
                additional sum of Fifty Thousand and 00/100 Dollars ($50,000.00)
                (the "Additional Deposit"). Upon Escrow Holder's receipt of the
                Additional Deposit, Escrow Holder shall immediately invest it in
                the interest bearing account described in Paragraph 3(a) above.
                The Initial Deposit and the Additional Deposit, or so much
                thereof as shall have then been deposited into Escrow, together
                with all interest accrued thereon, shall collectively
                hereinafter be referred to as the "Deposit." The Deposit shall
                be nonrefundable to Buyer in the event this Agreement and the
                Escrow is thereafter cancelled by reason of a default by Buyer
                or a breach by Buyer of any covenant, representation or warranty
                contained herein, as provided in and subject to the provisions
                of Paragraph 16(a) hereof. The Deposit and all interest which
                shall accrue thereon shall be applied to the payment of the
                Purchase Price upon the Close of Escrow, or refunded to Buyer in
                the event this Agreement and the Escrow is cancelled for any
                reason other than a default by Buyer or a breach by Buyer of any
                covenant, representation or warranty hereunder, in which case
                the Deposit, together with any interest accrued thereon, shall
                be delivered to Seller pursuant to Paragraph 16(a) below.

                        (c) Closing Funds. Prior to the Close of Escrow, as
                defined in Paragraph 4(b) below, Buyer shall deposit or cause to
                be deposited with Escrow Holder, in Immediately Available Funds,
                the balance of the Purchase Price (i.e., after deducting the
                above Deposit), and plus or minus Buyer's share of closing
                costs, prorations and charges payable pursuant to this
                Agreement.

                4. Escrow

                        (a) Opening of Escrow. For purposes of this Agreement,
                the Escrow shall be deemed opened on the date Escrow Holder
                shall have received a fully executed original or originally
                executed counterparts of this Agreement from both Buyer and
                Seller (such date being referred to hereinafter as the "Opening
                of Escrow"). Escrow Holder shall notify Buyer and Seller in
                writing of the date Escrow is opened. Buyer and Seller agree to
                execute, deliver and be bound by any reasonable or customary
                supplemental escrow instructions of Escrow Holder or other
                instruments as may reasonably be required by Escrow Holder in
                order to consummate the transaction contemplated by this
                Agreement. Any such supplemental instructions shall not conflict
                with, amend or supersede any portions of this Agreement. If
                there is any conflict or inconsistency between such supplemental
                instructions and this Agreement, this Agreement shall control.

                        (b) Close of Escrow. For purposes of this Agreement, the
                "Close of Escrow" shall be the date that the grant deed, the
                form of which is attached hereto as Exhibit "B" (the "Grant
                Deed"), conveying the Real Property to Buyer, is recorded in the
                Official Records of San Diego County, California (the "Official
                Records"). Unless extended in writing by Buyer and Seller, the
                Close of Escrow shall occur on or before the date which is
                twelve (12) days after expiration of the



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                Contingency Period (the "Closing Date"). Seller shall deliver
                possession of the Property to Buyer upon the Close of Escrow,
                subject only to the "Approved Condition of Title" (as defined in
                Paragraph 5 below) and the "Short Term Lease" (as defined in
                Paragraph 7(a)(vii) below).

                5. Condition of Title. It shall be a condition to the Close of
        Escrow for Buyer's benefit that title to the Real Property be conveyed
        to Buyer by Seller by the Grant Deed subject only to the following
        approved condition of title ("Approved Condition of Title"):

                        (a) a lien to secure payment of real estate taxes, not
                delinquent;

                        (b) the lien of supplemental taxes assessed pursuant to
                Chapter 3.5 commencing with Section 75 of the California Revenue
                and Taxation Code ("Code"), but only to the extent that such
                supplemental taxes are attributable to the transaction
                contemplated by this Agreement. Seller shall be responsible for,
                and shall indemnify, protect, defend (with counsel chosen by
                Buyer) and hold harmless Buyer and the Real Property from and
                against any and all supplemental taxes assessed pursuant to the
                Code, to the extent that such taxes are attributable to any
                period occurring prior to the Close of Escrow;

                        (c) matters affecting the Real Property created by or
                with the written consent of Buyer; and

                        (d) exceptions which are disclosed by the Report
                described in Paragraph 7(a)(i) hereof and which are approved or
                deemed approved by Buyer in accordance with such Paragraph
                7(a)(i).

                Seller covenants and agrees that during the term of the Escrow,
                it will not cause or permit title to the Real Property to differ
                from the Approved Condition of Title described in this Paragraph
                5. Any liens, encumbrances, encroachments, easements,
                restrictions, conditions, covenants, rights, rights-of-way or
                other matters affecting the Approved Condition of Title which
                may appear of record or be revealed after the date of the Report
                described in Paragraph 7(a)(i) below shall also be subject to
                Buyer's approval and must be eliminated or ameliorated by Seller
                to Buyer's sole, absolute and subjective satisfaction prior to
                the Close of Escrow as a condition to the Close of Escrow for
                Buyer's benefit.

                6. Title Policy. Title shall be evidenced by the willingness of
        the "Title Company" (as defined in Paragraph 7(a)(i) hereof) to issue
        its ALTA Extended Coverage (Form B-1970) Owner's Policy of Title
        Insurance ("Title Policy") in the amount of the Purchase Price, showing
        title to the Property vested in Buyer or its title nominee as provided
        in Paragraph 20 hereof and subject only to the Approved Condition of
        Title.

                7. Conditions to Close of Escrow

                        (a) Conditions to Buyer's Obligations. The Close of
                Escrow and Buyer's obligation to consummate the transaction
                contemplated by this Agreement are subject to the satisfaction
                of the following conditions (or Buyer's written waiver thereof,
                it being agreed that Buyer may waive in writing any or all of
                such conditions) for Buyer's benefit on or prior to the dates
                designated below for the satisfaction of such conditions. In the
                event Buyer terminates this Agreement and the Escrow due to the
                nonsatisfaction of any such conditions within the timeframe
                prescribed herein, then Buyer shall be entitled to the immediate
                return of the Deposit and all interest accrued thereon:

                                (i) Title. Buyer shall have approved the legal
                        description of the Land and any matters of title as
                        disclosed by the following documents (collectively, the
                        "Title Documents") prepared at Seller's sole cost and
                        expense and to be delivered to Buyer at Seller's sole
                        cost and expense: (A) a standard preliminary title
                        report dated on or after the date of this Agreement
                        issued by Chicago Title Company (the "Title Company")
                        with respect to the Land, as such report may be amended
                        or supplemented from time to time to reflect additional
                        title matters or survey exceptions (the "Report"); (B)
                        legible copies of all documents, whether recorded or
                        unrecorded, referred to in the Report; and (C) a
                        color-coded map plotting all easements disclosed by the
                        Report. Seller shall cause the Title



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                        Documents to be delivered to Buyer concurrently with the
                        Opening of Escrow. Buyer may also obtain, at Buyer's
                        sole cost and expense, an ALTA as-built survey of the
                        Land (the "Survey").

                        Buyer shall have until the expiration of the Contingency
                        Period to give Seller and Escrow Holder written notice
                        ("Buyer's Title Notice") of Buyer's disapproval or
                        conditional approval of the legal description or any
                        matters shown in or disclosed by the Title Documents and
                        the Survey.

                        The failure of Buyer to give Buyer's Title Notice on or
                        before the Contingency Period shall be deemed to
                        constitute Buyer's approval of the respective matters
                        relating thereto. If Buyer disapproves or conditionally
                        approves any of the foregoing matters, Seller may,
                        within five (5) days after its receipt of Buyer's Title
                        Notice, elect to eliminate or ameliorate to Buyer's
                        sole, absolute and subjective satisfaction such
                        disapproved or conditionally approved matters. Within
                        such five (5) day period, Seller shall give Buyer
                        written notice (which shall hereinafter be referred to
                        as "Seller's Title Notice") of those disapproved or
                        conditionally approved matters, if any, which Seller
                        covenants and agrees to either eliminate from the Title
                        Policy as exceptions to title to the Property or to
                        ameliorate to Buyer's sole, absolute and subjective
                        satisfaction by the Closing Date as a condition to the
                        Close of Escrow for Buyer's benefit. If Seller does not
                        elect in Seller's Title Notice to eliminate or
                        ameliorate any disapproved or conditionally approved
                        matters as provided above, or Buyer disapproves, in
                        Buyer's sole, absolute and subjective discretion,
                        Seller's Title Notice, then Buyer shall have the right,
                        by a writing delivered to Seller and Escrow Holder prior
                        to the Closing Date, to: (A) waive its prior
                        disapproval, in which event said disapproved matter(s)
                        shall be deemed approved, or (B) terminate this
                        Agreement and the Escrow created pursuant hereto, in
                        which event the Deposit and all interest accrued thereon
                        shall be immediately returned to Buyer, and this
                        Agreement, the Escrow and the rights and obligations of
                        the parties hereunder shall terminate. Notwithstanding
                        anything to the contrary contained in this Agreement,
                        Buyer hereby disapproves all liens evidencing monetary
                        encumbrances (other than liens for non-delinquent real
                        property taxes) and Seller agrees to cause all such
                        liens to be eliminated at Seller's sole cost and expense
                        (including all prepayment penalties and charges) prior
                        to or concurrently with the Close of Escrow.

                                (ii) Review and Approval of Documents and
                        Materials. Seller shall make available to Buyer
                        concurrently within the Opening of Escrow the documents
                        and materials respecting the Property set forth below
                        (the "Documents and Materials"). From the Opening of
                        Escrow until 5 p.m. Pacific Time on April 6, 2001 (the
                        "Contingency Period"), Buyer shall have the right to
                        review and approve or disapprove, in its sole, absolute
                        and subjective discretion, any or all of the Documents
                        and Materials. The failure of Buyer to approve of the
                        Documents and Materials on or before the expiration of
                        the Contingency Period shall be deemed to constitute
                        Buyer's disapproval thereof, in which event this
                        Agreement shall terminate and the Deposit shall be
                        returned to Buyer.

                                        (A) Permits. Any and all governmental
                                approvals (such as approved building permits,
                                building inspection approvals and certificates
                                of occupancy) and/or authorizations pertaining
                                to the Property to the extent in the possession
                                or control of Seller;

                                        (B) Improvement Plans. Complete
                                "as-built" plans, drawings and specifications
                                for the Improvements to the extent in the
                                possession or control of Seller;

                                        (C) Agreements. Legible copies of any
                                and all insurance policies, broker listing
                                agreements, construction contracts, management
                                contracts, maintenance contracts, service
                                contracts, reciprocal easement agreements, if
                                any,



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                                utility will-serve letters and any other
                                contracts or agreements affecting or relating to
                                the ownership, operation, maintenance,
                                construction or development of the Property,
                                including, without limitation, copies of all
                                warranties with respect thereto (collectively,
                                the "Contracts");

                                        (D) Personal Property List. A detailed
                                list ("Personal Property Schedule") of all
                                personal property, including, without
                                limitation, any and all fixtures, equipment and
                                tools owned by Seller and used on or in
                                connection with the Property, which are to be
                                conveyed to Buyer at Close of Escrow pursuant to
                                the Bill of Sale described in Paragraph 8(d)
                                below, together with a copy of all warranties
                                and guaranties applicable thereto. Said list
                                shall reflect any and all security interests in
                                said personal property, and Seller shall cause,
                                at Seller's sole cost and expense, said personal
                                property to be released from any such security
                                interests at the Close of Escrow;

                                        (E) Tax Statements. Legible copies of
                                the most recently issued bills for all real
                                property taxes and assessments and all personal
                                property taxes payable with respect to the
                                Property, or any portion thereof;

                                        (F) Schedule of Expenses. A schedule
                                reflecting any and all expenses for the
                                ownership, operation, maintenance and repair of
                                the Property for the calendar years of 1998 and
                                1999 and for the calendar year 2000 up to and
                                including the month of October, 2000, which
                                schedule shall include, without limitation, the
                                following:

                                               (1) annual insurance premiums for
                                        all forms of coverage;

                                               (2) real property taxes and
                                        assessments;

                                               (3) utility charges, management
                                        fees, maintenance and repair costs;

                                               (4) any and all other costs and
                                        expenses incurred in connection with the
                                        ownership, operation, maintenance and
                                        repair of the Property; and

                                               (5) any material extraordinary or
                                        periodic expenses, repairs or other
                                        improvements which Seller anticipates
                                        will be incurred or will become
                                        necessary within the twelve (12) months
                                        following the Closing Date in connection
                                        with the ownership, operation,
                                        maintenance and repair of the Property;

                                        (G) Soils and Engineering Reports. All
                                existing and available soils, environmental and
                                building reports and engineering data pertaining
                                to the Real Property or any portion thereof and
                                any and all architectural studies, grading
                                plans, topographical maps and similar data
                                respecting the Real Property which are in the
                                possession or control of Seller;

                                        (H) Miscellaneous. Such other documents
                                in Seller's possession or control which relate
                                to the Property which Buyer shall reasonably
                                request.

                                (iii) Inspections and Studies. On or before the
                        expiration of the Contingency Period, Buyer shall have
                        the right to approve or disapprove, in Buyer's sole,
                        absolute and subjective discretion, the results of any
                        and all inspections, investigations, tests and studies,
                        including, without limitation, investigations with
                        regard to zoning, building codes and other governmental
                        regulations, architectural inspections, engineering
                        tests, economic feasibility studies and soils, seismic
                        and geologic reports, as well as toxic and environmental
                        reports with respect to the Property, inspections of all
                        or any portion of the Improvements (including, without
                        limitation, structural, mechanical and electrical
                        systems, roofs, pavement, landscaping and public
                        utilities), and any other physical inspections and/or
                        investigations as Buyer may elect to make or obtain. The
                        failure of Buyer to approve said results on or prior to
                        the expiration of the Contingency Period shall be deemed
                        to constitute Buyer's disapproval thereof, in which
                        event this Agreement shall



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                        terminate and the Deposit shall be returned to Buyer.

                                        (A) Access. During the term of this
                                Escrow, Buyer shall be afforded access by Seller
                                to review Seller's books and records relating to
                                the Property, and Buyer, its agents,
                                consultants, contractors and subcontractors
                                shall have the right to enter upon the Property
                                to conduct or make any and all inspections and
                                tests (including, without limitation,
                                environmental assessments of the Real Property)
                                as may be necessary or desirable in Buyer's
                                sole, absolute and subjective judgment and
                                discretion. Notwithstanding the foregoing, Buyer
                                shall provide Seller with at least twenty-four
                                (24) hours prior written or verbal notice before
                                entering the Property for the purpose of making
                                examinations, tests, analyses, investigations,
                                surveys, inquiries and other inspections in
                                connection with Buyer's efforts to bring about
                                satisfaction of the conditions precedent set
                                forth in Paragraph 7. Such inspections shall
                                only be done during normal business hours. Buyer
                                shall not have the right to perform borings,
                                samplings, groundwater tests and other intrusive
                                physical environmental audit procedures
                                (collectively "Subsurface Testing") on the
                                Property without Buyer first obtaining the prior
                                written approval of Seller, which approval shall
                                not be unreasonably withheld provided that Buyer
                                complies with the terms and conditions of this
                                Paragraph. Any Subsurface Testing shall be
                                conducted by a licensed, insured environmental
                                consulting firm reasonably acceptable to Seller.
                                If Buyer elects to perform such Subsurface
                                Testing, Buyer shall present to Seller for its
                                approval a proposed scope of such work at least
                                five (5) days before such proposed Subsurface
                                Testing and Seller may elect to require Seller's
                                environmental consultant to be present during
                                the performance of any Subsurface Testing. All
                                of such examinations, tests, analyses,
                                investigations, surveys, inquiries and other
                                inspections (including Subsurface Testing) to be
                                performed by Buyer under this Paragraph shall be
                                performed by Buyer at Buyer's sole cost and
                                expense.

                                        (B) Confidentiality. Buyer, and its
                                agents, employees, contractors and
                                representatives, shall not disclose to any third
                                party, including any governmental or
                                quasi-governmental authority, the results of any
                                examinations, tests, analyses, investigations,
                                surveys, inquiries or other inspections
                                conducted by, or at the request of, Buyer on or
                                regarding the Property, except: (i) to the
                                extent that Buyer is required to do so pursuant
                                to applicable law, provided that, prior to such
                                disclosure, Buyer shall notify Seller of Buyer's
                                belief that Buyer is required to disclose such
                                information; and (ii) to those of Buyer's
                                consultants, partners, lenders, accountants, and
                                attorneys who require such information in order
                                to perform the services for which they were
                                retained; provided that, prior to such
                                disclosure, Buyer shall direct each such
                                consultant not to disclose any such information
                                to any other person or entity.

                                        (C) Indemnity. Buyer shall indemnify,
                                defend, protect and hold Seller harmless from
                                and against any and all loss, cost, damage,
                                injury, claim, liability or expenses (including
                                attorneys' fees) arising out of claims of injury
                                to or death of persons, damage to property, or
                                claims of lien for work or labor performed,
                                materials or supplies furnished as a result of
                                the exercise of Buyer's (or its agents',
                                contractors', employees' or authorized
                                representatives') right of entry pursuant to
                                this Paragraph or the performance of Buyer's due
                                diligence under this Agreement; provided that
                                Buyer shall not be liable for any losses or
                                liabilities resulting from Buyer's
                                investigations uncovering the existence of any
                                environmental contamination or any other defects
                                or conditions which adversely impact the
                                Property. In addition to the foregoing, Buyer
                                agrees to restore the Property to the condition
                                existing prior to Buyer's investigation of the
                                Property.

                                        (D) Buyer's Work Product. Upon
                                termination of this Agreement for any reason
                                whatsoever, Buyer shall promptly deliver to
                                Seller all reports,



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                                plans, specifications, studies, drawings,
                                photographs, models, surveys, test results and
                                other documents or work product of Buyer which
                                are not subject to any confidentiality agreement
                                (it being agreed that Buyer shall use good faith
                                efforts to have its reports prepared on a
                                non-confidential basis) or do not constitute
                                financial projections of Buyer ("Work Product"),
                                or its consultants, agents, employees and
                                independent contractors, either received by
                                Buyer from Seller or any third person, or
                                prepared by or for Buyer, relating to the
                                Property or in any way arising out of this
                                Agreement. Such Work Product shall be delivered
                                to Seller on an "as-is" basis, without any
                                representation or warranty.

                                        (E) Insurance. Before any entry onto the
                                Property under this Paragraph, Buyer shall
                                procure and furnish to Seller a certificate of
                                insurance showing that Buyer has obtained a
                                policy of commercial liability insurance with
                                combined single limit coverage of One Million
                                Dollars ($1,000,000.00), naming Seller as an
                                additional insured, which shall be issued by a
                                responsible insurer licensed to conduct
                                insurance business in California. Such insurance
                                policy shall expressly provide that such
                                insurance may not be canceled or reduced in
                                scope or coverage without at least thirty (30)
                                days' prior written notice to Seller.

                                (iv) Representations, Warranties and Covenants
                        of Seller. Seller shall have duly performed each and
                        every covenant and agreement to be performed by Seller
                        pursuant to this Agreement and Seller's representations,
                        warranties and covenants set forth in Paragraph 14
                        hereof shall be true and correct as of the Closing Date.

                                (v) No Material Changes. At the Closing Date,
                        there shall have been no material adverse changes in the
                        physical or environmental condition of the Property from
                        and after the Opening of Escrow.

                                (vi) Seller's Personal Property. As a condition,
                        for Buyer's and Seller's benefit, prior to the
                        expiration of the Contingency Period, Buyer and Seller
                        shall agree upon a list of personal property that Seller
                        shall remove from the Property and a list of all items
                        of repair to the Property that will be necessitated as a
                        result of the removal of Seller's personal property from
                        the Property. To effectuate the foregoing, Seller agrees
                        to provide Buyer with the foregoing lists within five
                        (5) business days following the Opening of Escrow.
                        Thereafter, the parties shall mutually meet and confer
                        to negotiate the final lists. If the lists are not
                        mutually approved by the expiration of the Contingency
                        Period, either Buyer or Seller shall have the right to
                        terminate this Agreement by delivering written notice to
                        the other party by 5:00 p.m. on the date the Contingency
                        Period expires.

                                (vii) Short Term Lease. Prior to the expiration
                        of the Contingency Period, Buyer and Seller shall agree
                        upon the terms and form of short term lease ("Short Term
                        Lease") for Seller to occupy the Property following the
                        Close of Escrow. The terms and conditions of the Short
                        Term Lease shall include a monthly base rental rate of
                        One Hundred Thirty Two Thousand Six Hundred and 00/100
                        Dollars, shall be "triple net", with Seller to pay for
                        all costs and expenses in connection with the Property
                        during the term of such lease (including, without
                        limitation, taxes, insurance and operating expenses),
                        shall be for a term of three (3) months (or as otherwise
                        agreed to by the parties), and shall otherwise be upon
                        the business and other terms agreed to by the parties
                        prior to the expiration of the Contingency Period.

                                (viii) Deposits. Seller shall have made all
                        deposits with Escrow Holder required of Seller pursuant
                        to the provisions of Paragraph 8 of this Agreement.

                                (ix) Financing. Buyer shall have obtained
                        non-recourse financing from a lender acceptable to Buyer
                        in the amount of seventy-five percent (75%) of the
                        Purchase Price, upon the following terms and conditions:
                        (A) a maturity date at least six (6) months after the
                        date of the closing of the loan, with an option to renew
                        for up to an additional one-hundred eighty (180) days;
                        (B) interest only payments commencing on the first day
                        of the month following the date of the closing of the
                        loan, and continuing on a monthly basis; (C) an interest
                        rate of eight percent (8%) per annum; and (d) other
                        terms



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                        satisfactory to Buyer in its reasonable discretion.

                        (b) Conditions to Seller's Obligations. For the benefit
                of Seller, the Close of Escrow shall be conditioned upon the
                timely performance by Buyer of all of the obligations required
                by the terms of this Agreement to be performed by Buyer (or
                Seller's waiver thereof, it being agreed that Seller may waive
                such condition), including without limitation, the following:

                        Accuracy of Representations. All of the representations
                and warranties of Buyer contained in this Agreement shall have
                been true and correct in all material respects when made, and
                shall be true and correct in all material respects as of the
                Close of Escrow with the same effect as if made at the Close of
                Escrow.

                        Performance. Buyer shall have performed, observed and
                complied with all material covenants, agreements and conditions
                required by this Agreement to be performed, observed and
                complied with on its part prior to or as of the Close of Escrow
                hereunder.

                        Documents and Deliveries. All instruments and documents
                required on Buyer's part to effectuate the Close of Escrow and
                the transactions contemplated hereby shall be delivered to
                Seller or the Escrow Holder, as required hereby, shall be in
                form and substance consistent with the requirements herein, and
                all funds to be deposited into the Escrow pursuant hereto shall
                have been timely deposited by the responsible party(ies).

                        Short Term Lease. Upon the Close of Escrow, Buyer shall
                have executed the Short Term Lease in the form agreed to by
                Buyer and Seller prior to the expiration date of the Contingency
                Period.

                        Personal Property List. Prior to the expiration of the
                Contingency Period, Buyer and Seller shall have agreed to the
                lists described in Paragraph 7(a)(vi) above.

                        Failure of Conditions. If any conditions precedent to
                Seller's obligations as set forth in this Paragraph 7(b) are not
                timely satisfied or waived in writing by Seller at or prior to
                the times prescribed therein, including, but not limited to,
                timely delivery of the Additional Deposit into the Escrow by
                Buyer, then Seller shall have the option, exercisable by written
                notice delivered to Buyer, of declining to proceed with the
                Close of Escrow. In such event, except as expressly set forth
                herein, all rights, obligations and liabilities of Buyer and
                Seller under this Agreement shall terminate (except for any
                obligations or liabilities under this Agreement which
                specifically set forth that such obligations or liabilities
                shall survive the termination of this Agreement or for any claim
                that either party may have against the other party for a default
                under this Agreement that caused the condition to be unfilled)
                and (a) all documentation delivered to Buyer pursuant hereto
                shall be returned to Seller, (b) all third party reports
                obtained by Buyer with respect to the Property shall be
                delivered to Seller without representation or warranty and at no
                cost to Seller, if requested by Seller, and (c) the Deposit
                shall be retained by Seller.

                8. Deposits by Seller. At least one (1) business day prior to
the Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder the following documents and instruments:

                        (a) Grant Deed. The Grant Deed conveying the Real
                Property to Buyer or its title nominee, as provided in Paragraph
                21 hereof, duly executed as appropriate by Seller, acknowledged
                and in recordable form in the form attached hereto as Exhibit
                "B";

                        (b) Contracts. Any and all original Contracts and all
                warranties related thereto, if any, approved by Buyer in
                accordance with Paragraph 7(a) hereof;

                        (c) Assignment of Contracts and Assumption Agreement.
                Assignment of Contracts and Assumption Agreement ("Assignment of
                Contracts"), duly executed by Seller, in the form attached
                hereto as Exhibit "C", pursuant to which Seller shall assign to
                Buyer all of Seller's right, title and interest in, under and to
                the Contracts which Buyer approved and elected to assume during
                the Contingency Period and any and all warranties relative
                thereto;

                        (d) Bill of Sale. Bill of Sale ("Bill of Sale"), duly
                executed by Seller, in the form attached hereto as Exhibit "D",
                conveying all of Seller's right, title and interest in and to
                the Personal Property;

                        (e) Transferor's Certification of Non-Foreign Status.
                Transferor's Certification of Non-Foreign Status, for both
                federal and state, in the form attached hereto as Exhibit "E",
                duly executed by Seller ("Seller's Certificate");



                                       8
<PAGE>   9

                        (f) General Assignment. General Assignment ("General
                Assignment"), duly executed by Seller, in the form attached
                herein as Exhibit "F", conveying all of Seller's right, title
                and interest in and to the Intangible Personal Property;

                        (g) Short Term Lease. Counterpart of the Short Term
                Lease, duly executed by Seller; and

                        (h) Other Instruments. Such other instruments and
                documents as are described in Paragraph 23(b) herein.

                9. Deposits by Buyer. Buyer shall deposit or cause to be
deposited with Escrow Holder in Immediately Available Funds, the funds which are
to be applied towards the payment of the Purchase Price in the amounts and at
the times designated in Paragraph 3 above (as reduced by the prorations and
credits hereinafter provided). In addition, Buyer shall deposit with Escrow
Holder prior to the Close of Escrow the following documents and instruments:

                        (a) Assignment of Contracts. Counterpart of the
                Assignment of Contracts, duly executed by Buyer;

                        (b) General Assignment. Counterpart of the General
                Assignment, duly executed by Buyer;

                        (c) Short Term Lease. Counterpart of the Short Term
                Lease, duly executed by Buyer; and

                        (d) Other Instruments. Such other instruments and
                documents as are described in Paragraph 23(b) herein.

                10. Costs and Expenses. The cost and expense of the standard
CLTA portion of the Title Policy, covering the Purchase Price for the Property,
shall be paid by Seller, and the cost and expense of any additional costs for
extended coverages or endorsements, if any, shall be paid by Buyer. The escrow
fee of Escrow Holder shall be shared equally by Seller and Buyer. Seller shall
pay all documentary transfer taxes payable in connection with the recordation of
the Grant Deed. Buyer and Seller shall pay, respectively, the Escrow Holder's
customary charges to buyers and sellers for document drafting, recording and
miscellaneous charges. If, as a result of no fault of Buyer or Seller, Escrow
fails to close, Buyer and Seller shall share equally all of Escrow Holder's fees
and charges.

                11. Prorations. The following prorations between Seller and
Buyer shall be made by Escrow Holder computed as of the Close of Escrow:

                        (a) Taxes. Real and personal property taxes and
                assessments on the Property shall be prorated on the basis that
                Seller is responsible for (i) all such taxes for the fiscal year
                of the applicable taxing authorities occurring prior to the
                "Current Tax Period" (as hereinafter defined) and (ii) that
                portion of such taxes for the Current Tax Period determined on
                the basis of the number of days which have elapsed from the
                first day of the Current Tax Period to the Close of Escrow,
                inclusive, whether or not the same shall be payable prior to the
                Close of Escrow. The phrase "Current Tax Period" refers to the
                fiscal year of the applicable taxing authority in which the
                Close of Escrow occurs. In the event that as of the Close of
                Escrow the actual tax bills for the year or years in question
                are not available and the amount of taxes to be prorated as
                aforesaid cannot be ascertained, then rates and assessed
                valuation of the previous year, with known changes, shall be
                used, and when the actual amount of taxes and assessments for
                the year or years in question shall be determinable, then such
                taxes and assessments will be reprorated between the parties to
                reflect the actual amount of such taxes and assessments.

                        (b) Utilities. Gas, water, electricity, heat, fuel,
                sewer and other utilities and the operating expenses relating to
                the Property shall be prorated as of the Close of Escrow. If the
                parties are unable to obtain final meter readings as of the
                Close of Escrow, such expenses shall be estimated as of the
                Close of Escrow on the basis of the prior operating history of
                the Property.

                At least one (1) business day prior to the Close of Escrow, the
                parties shall agree upon all of the prorations to be made and
                submit a statement to Escrow Holder setting forth the same. In
                the event that any prorations, apportionments or computations
                made under this Paragraph 11 shall require final adjustment,
                then the parties shall make the appropriate adjustments promptly
                when



                                       9
<PAGE>   10

                accurate information becomes available and either party hereto
                shall be entitled to an adjustment to correct the same. Any
                corrected adjustment or proration shall be paid in cash to the
                party entitled thereto.

                12. Disbursements and Other Actions by Escrow Holder. Upon the
Close of Escrow, Escrow Holder shall promptly undertake all of the following in
the following manner:

                        (a) Prorations. Prorate all matters referenced in
                Paragraph 11 based upon the statement delivered into Escrow
                signed by the parties;

                        (b) Recording. Cause the Grant Deed and any other
                documents which the parties hereto may mutually direct, to be
                recorded in the Official Records in the order directed by the
                parties;

                        (c) Funds. Disburse from funds deposited by Buyer with
                Escrow Holder towards payment of all items chargeable to the
                account of Buyer pursuant hereto in payment of such costs and
                disburse the balance of such funds, if any, to Buyer;

                        (d) Documents to Seller. Deliver to Seller the Purchase
                Price in Immediately Available Funds, counterparts of the
                Assignment of Contracts, the General Assignment and the Short
                Term Lease executed by Buyer;

                        (e) Documents to Buyer. Deliver to Buyer originals of
                the Contracts, the Bill of Sale, the Seller's Certificate,
                counterparts of the Assignment of Contracts, the General
                Assignment and the Short Term Lease executed by Seller, and any
                other documents which are to be delivered to Buyer hereunder,
                and, when issued, the Title Policy; and

                        (f) Title Policy. Direct the Title Company to issue the
                Title Policy to Buyer.

                13. Covenants of Seller. Seller hereby covenants with Buyer, as
follows:

                        (a) From and after the date of this Agreement, Seller
                shall not, without the prior written consent of Buyer, which
                consent Buyer may withhold in its sole, absolute and subjective
                discretion, enter into any maintenance contract, service
                contract, listing agreement or any other contract affecting or
                relating to the Property which will survive the Close of Escrow
                or will otherwise affect the use, operation or enjoyment of the
                Property after the Close of Escrow;

                        (b) All insurance policies carried by Seller with
                respect to the Property and in effect as of the date of this
                Agreement shall remain continuously in full force and effect
                from the date of this Agreement through the day upon which the
                Close of Escrow occurs;

                        (c) From and after the date of this Agreement, Seller
                shall not amend, modify, alter or supplement any Contract which
                is approved by Buyer pursuant to Paragraph 7(a) hereof. Further,
                Seller hereby covenants and agrees that it shall terminate on or
                before the Close of Escrow any Contract which Buyer disapproves
                in accordance with Paragraph 7(a) hereof;

                        (d) From the date of this Agreement until the Close of
                Escrow, Seller hereby covenants and agrees that it shall (i)
                operate and manage the Property in the same manner Seller
                currently maintains the Property, (ii) maintain all present
                services and amenities, (iii) maintain the Property in good
                condition, repair and working order, (iv) keep on hand
                sufficient materials, supplies, equipment and other personal
                property for the efficient operation and management of the
                Property in a manner customary for similarly situated
                properties, (v) perform when due, and otherwise comply with, all
                of Seller's obligations and duties under the Contracts approved
                by Buyer in accordance with Paragraph 7(a) hereof, and (vi)
                maintain the Property in accordance with all applicable laws,
                ordinances, rules and regulations affecting the Property. Except
                for the personal property to be retained by Seller as provided
                in Paragraph 7(a)(vi) above, none of the Personal Property shall
                be removed from the Real Property, unless replaced by
                unencumbered personal property of equal or greater utility and
                value. Except for the personal property to be retained by Seller
                as provided in Paragraph 7(a)(vi) above, all Personal Property
                and Intangible Personal Property shall be conveyed to Buyer by
                Seller at the Close of Escrow free from any liens, encumbrances
                or security interests of any kind or nature;

                        (e) After the date of this Agreement, Seller shall not
                alienate, lien, encumber or otherwise transfer all or any
                portion of the Property (other than to Buyer at the Close of
                Escrow);

                        (f) From and after the date of this Agreement, Seller
                shall not enter into any lease



                                       10
<PAGE>   11

                without the prior written consent of Buyer, which consent shall
                not be unreasonably withheld.

                        (g) Upon Buyer's request for a period of one (1) year
                after the Close of Escrow, Seller shall make all of Seller's
                records with respect to the Property available to Buyer for
                inspection, copying and audit by Buyer's designated employees,
                accountants or consultants; and

                        (h) Seller shall promptly notify Buyer of any change in
                any condition with respect to the Property or of any event or
                circumstance which makes any representation or warranty of
                Seller to Buyer under this Agreement materially untrue or
                misleading, and of any covenant of Seller under this Agreement
                which Seller will be incapable of performing or less likely to
                perform.

                14. Seller's Representations and Warranties. In consideration of
Buyer entering into this Agreement and as an inducement to Buyer to purchase the
Property, Seller makes the following covenants, representations and warranties,
each of which is material and is being relied upon by Buyer (and the continued
truth and accuracy of which shall constitute a condition precedent to Buyer's
obligations hereunder):

                        (a) Representations Regarding Seller's Authority

                                (i) Seller has the legal power, right and
                        authority to enter into this Agreement and the
                        instruments referenced herein, and to consummate the
                        transaction contemplated hereby;

                                (ii) All requisite action (corporate, trust,
                        partnership or otherwise) has been taken by Seller in
                        connection with the entering into this Agreement, the
                        instruments referenced herein, and the consummation of
                        the transaction contemplated hereby. No consent of any
                        partner, shareholder, trustee, trustor, beneficiary,
                        creditor, investor, judicial or administrative body,
                        governmental authority or other party is required;

                                (iii) The individuals executing this Agreement
                        and the instruments referenced herein on behalf of
                        Seller and the partners of Seller, if any, have the
                        legal power, right, and actual authority to bind Seller
                        to the terms and conditions hereof and thereof;

                                (iv) This Agreement and all documents required
                        hereby to be executed by Seller are and shall be valid,
                        legally binding obligations of and enforceable against
                        Seller in accordance with their terms; and

                                (v) Neither the execution and delivery of this
                        Agreement and the documents and instruments referenced
                        herein, nor the incurrence of the obligations set forth
                        herein, nor the consummation of the transaction
                        contemplated herein, nor compliance with the terms of
                        this Agreement and the documents and instruments
                        referenced herein conflict with or result in the
                        material breach of any terms, conditions or provisions
                        of, or constitute a default under, any bond, note, or
                        other evidence of indebtedness or any contract,
                        indenture, mortgage, deed of trust, loan, partnership
                        agreement, lease or other agreement or instrument to
                        which Seller is a party or affecting the Property;

                        (b) Threatened Actions. To Seller's actual knowledge,
                there are, and at the Close of Escrow there will be, no pending
                actions, suits, arbitrations, claims or proceedings, at law, in
                equity or otherwise, affecting, or which may affect, all or any
                portion of the Property or in which Seller is or will be a party
                by reason of Seller's ownership of the Property, including, but
                not limited to, judicial, municipal or administrative
                proceedings in eminent domain, collection actions, alleged
                building code violations, health and safety violations, federal,
                state or local agency actions regarding environmental matters,
                federal environmental protection agency or zoning violations,
                personal injuries or property damages alleged to have occurred
                at the Property or by reason of the condition or use of or
                construction on the Property. Seller is not aware of the
                existence of any threatened or contemplated actions, claims or
                proceedings or of the existence of any facts which might give
                rise to any such actions, claims or proceedings;

                        (c) Compliance with Law. To Seller's actual knowledge,
                all applicable laws, ordinances, rules, requirements,
                regulations, building codes and environmental rules of any
                governmental agency, body or subdivision thereof bearing on the
                Property and the construction of the Improvements have been
                complied with;

                        (d) Agreements. To Seller's actual knowledge, there are
                no agreements (whether oral or written), affecting or relating
                to the right of any party with respect to the possession of the



                                       11
<PAGE>   12

                Property, or any portion thereof, which are obligations which
                will affect the Property or any portion thereof subsequent to
                the recordation of the Grant Deed except as set forth in the
                Contracts provided to and approved by Buyer in accordance with
                Paragraph 7(a)(ii) hereof, or as may be reflected in the
                Approved Condition of Title;

                        (e) Documents True. To Seller's actual knowledge, all
                documents delivered by Seller to Buyer pursuant to this
                Agreement are true, accurate, correct and complete copies of
                originals and any and all information prepared by Seller or at
                Seller's direction and supplied to Buyer by Seller in accordance
                with Paragraph 7(a) hereof are true, accurate, correct and
                complete;

                        (f) Contracts. To Seller's actual knowledge, there are
                no maintenance contracts, service contracts or any other
                contracts (whether oral or written) affecting or relating to the
                Property which will survive the Close of Escrow except as
                approved by Buyer in accordance with Paragraph 7(a)(ii) hereof.
                At the Close of Escrow, there will be no outstanding contracts
                entered into by Seller for the construction or repair of any
                improvements to the Real Property which have not been fully paid
                for, and Seller shall cause to be discharged all mechanics' and
                materialmen's liens arising from any labor or materials
                furnished to the Real Property prior to the Close of Escrow;

                        (g) Hazardous Wastes. To Seller's actual knowledge,
                there is no asbestos or materials containing asbestos
                incorporated into any of the Improvements. To Seller's actual
                knowledge, the Property is not in violation of any federal,
                state or local law, ordinance or regulation relating to
                industrial hygiene or to the environmental conditions on, under
                or about the Property or the Improvements including, but not
                limited to, soil and groundwater condition. Seller further
                represents and warrants that, except as set forth in Exhibit "G"
                attached hereto, neither Seller nor, to Seller's actual
                knowledge, any third party has used, generated, manufactured,
                stored or disposed of on, under or about the Property or
                transported to or from the Property any flammable explosives,
                radioactive materials, hazardous wastes, toxic substances or
                related materials ("Hazardous Materials"). Seller has no
                knowledge of the presence, use, treatment, storage, release or
                disposal of any Hazardous Materials at, on, upon, beneath or
                about the Land or the Improvements. For purposes of this
                subparagraph, the term Hazardous Materials shall include, but
                not be limited to, asbestos, petroleum and any petroleum
                by-products, urea formaldehyde, foam insulation, polychlorinated
                biphenyls, and any other substance which is a "Hazardous
                Substance" under California Health and Safety Code Section 25316
                and in the regulations adopted and publications promulgated
                pursuant to said statute and any amendments thereto;

                        (h) Structural, Mechanical and Electrical Defects. To
                Seller's actual knowledge, there are no physical or mechanical
                defects or deficiencies in the condition of the Property,
                including, but not limited to, the roofs, exterior walls or
                structural components of the Improvements and the heating, air
                conditioning, plumbing, ventilating, utility, sprinkler and
                other mechanical and electrical systems, apparatus and
                appliances located on the Property or in the Improvements and
                all such items are in good operating condition and repair;

                        (i) No Prior Transfer. Seller has not previously sold,
                transferred or conveyed the Property and Seller has not entered
                into any executory contracts for the sale of the Property (other
                than this Agreement), nor do there exist any rights of first
                refusals or options to purchase the Property;

                        (j) Insurance Notices. Seller has not received any
                notice from any of Seller's insurance carriers of any defects or
                inadequacies in the Property, or any portion thereof, which
                would adversely affect the insurability of the Property or the
                cost of any such insurance. There are no pending insurance
                claims with respect to all or any portion of the Property;

                        (k) Representations and Warranties at Closing. The
                representations and warranties of Seller set forth in this
                Agreement shall be deemed to be remade and restated by Seller on
                and as of the Close of Escrow and shall survive the Close of
                Escrow for a period of one (1) year.

                        (l) Definition of Seller's Actual Knowledge. For all
                purposes under this Agreement, the phrase "actual knowledge" of
                Seller or the equivalent means the actual current (and not
                constructive or imputed) knowledge, without independent
                investigation or inquiry or any duty of independent
                investigation or inquiry, of John Allen, the VP of Finance and
                CFO of COHU, Inc. All representations and warranties made
                herein, and elsewhere in this Agreement or exhibits attached
                hereto, are subject to, and qualified by, information and
                disclosures contained in the doc-



                                       12
<PAGE>   13

                uments and reports delivered by Seller to Buyer, such
                information discovered by Buyer prior to the expiration of the
                Contingency Period, or as otherwise disclosed in writing by
                Seller to Buyer prior to the end of the Contingency Period.

                        (m) Seller's Disclaimer. Buyer acknowledges and agrees
                that Buyer is a sophisticated, knowledgeable investor in real
                property and is acquiring the Property solely upon its own
                judgment; and not upon any statement, representation or warranty
                by Seller, or any agent or representative of Seller, which is
                not expressly set forth in this Agreement. Except for the
                express representations and warranties of Seller set forth
                herein, Buyer acknowledges and agrees that the sale of the
                Property to Buyer is made without any warranty or representation
                of any kind by Seller, either express or implied, with respect
                to any aspect, portion or component of the Property, including:
                (i) the physical condition, nature or quality of the Property,
                including the quality of the soils on and under the Property and
                the quality of the labor and materials included in any buildings
                or other improvements, fixtures, equipment or personal property
                comprising a portion of the Property; (ii) the fitness of the
                Property for any particular purpose; (iii) the presence or
                suspected presence of hazardous materials on, in, under or about
                the Property (including the soils and groundwater on and under
                the Property); or (iv) existing or proposed governmental laws or
                regulations applicable to the Property, or the further
                development or change in use thereof, including environmental
                laws and laws or regulations dealing with zoning or land use.
                Buyer further agrees and acknowledges that, as of the Closing,
                Buyer shall have made such feasibility studies, investigations,
                environmental studies, engineering studies, inquiries of
                governmental officials, and all other inquiries and
                investigations, which Buyer shall deem necessary to satisfy
                itself as to the condition, nature and quality of the Property
                and as to the suitability of the Property for Buyer's purposes.
                Buyer further agrees and acknowledges that, in purchasing the
                Property, Buyer shall rely entirely on its own investigation,
                examination and inspection of the Property and its analysis and
                evaluation of the property documents made available by Seller to
                Buyer pursuant to Paragraph 7(a)(ii), and not upon any
                representation or warranty of Seller, or any agent or
                representative of Seller, which is not set forth in Paragraph
                14. THEREFORE, EXCEPT FOR SELLER'S REPRESENTATIONS AND
                WARRANTIES SET FORTH IN PARAGRAPH 14, BUYER AGREES THAT, IN
                CONSUMMATING THE PURCHASE OF THE PROPERTY PURSUANT TO THIS
                AGREEMENT, BUYER SHALL ACQUIRE THE PROPERTY IN ITS THEN
                CONDITION, "AS IS, WHERE IS" AND WITH ALL FAULTS, AND, SUBJECT
                TO SELLER'S REPRESENTATIONS AND WARRANTIES SET FORTH IN
                PARAGRAPH 14, SOLELY IN RELIANCE ON BUYER'S OWN INVESTIGATION,
                EXAMINATION, INSPECTION, ANALYSIS AND EVALUATION OF THE
                PROPERTY.

                        (n) Buyer's Release of Seller. Subject to all the terms
                and conditions of this Paragraph 14, Buyer hereby waives,
                releases and forever discharges Seller and its officers,
                directors, employees and agents from any and all claims,
                actions, causes of action, demands, liabilities, damages, costs,
                expenses or compensation whatsoever, whether direct or indirect,
                known or unknown, foreseeable or unforeseeable, which Buyer may
                have at the Closing or which may arise in the future on account
                of or in any way arising out of or connected with: (i) the
                physical condition, nature or quality of the Property (including
                the soils and groundwater on and under the Real Property); (ii)
                the condition of title to the Property; and (iii) the presence
                or release in, under, on or about the Property (including the
                soils and groundwater on and under the Real Property) of any
                hazardous materials. Buyer hereby waives the protection of
                California Civil Code Section 1542, which reads as follows:

                        "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                        CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
                        AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
                        HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
                        THE DEBTOR."

Buyer's Initials: __________

                However, the foregoing provisions of this Paragraph 14(n) shall
        not serve to release Seller from any breach of the express
        representations and warranties set forth in Paragraph 14.



                                       13
<PAGE>   14

                15. Buyer's Covenants, Representations and Warranties. In
addition to any express agreements of Buyer contained elsewhere in this
Agreement, Buyer hereby represents and warrants to, and covenants with, Seller
as follows:

                        (a) Organization. Buyer is a corporation duly organized,
                validly existing and in good standing under the laws of the
                State of California, and is qualified to do business and is in
                good standing under the laws of the State of California.

                        (b) Authorization. Buyer has or will have the legal
                power, right and authority to enter into this Agreement and the
                instruments referenced herein, and to consummate the
                transactions contemplated hereby. Each individual executing this
                Agreement and the instruments referenced herein on behalf of
                Buyer has or will have the legal power, right and actual
                authority to execute this Agreement and to bind Buyer to the
                terms and conditions hereof and thereof.

                        (c) Litigation. There are no assignments for the benefit
                of creditors, insolvency, bankruptcy, reorganization or other
                similar proceedings pending (or, to the Buyer's current actual
                knowledge, threatened or contemplated) against Buyer nor are any
                of such proceedings contemplated by Buyer.

                        (d) No Violations. The execution, delivery and
                performance by Buyer of this Agreement, or any other document,
                agreement or instrument referred to herein, does not and will
                not violate any existing order or decree of any court,
                arbitrator or governmental agency, or any existing indenture,
                agreement or any other instrument to which Buyer is a party or
                by which Buyer is bound, or be in conflict with, result in the
                breach of or constitute a default under any such indenture,
                agreement or other instrument.

                        (e) Survival. The representations and warranties of
                Buyer set forth in Paragraph 15 are true and correct on and as
                of the date of this Agreement, and shall be true and correct on
                and as of the date of the Close of Escrow. The representations
                and warranties of Buyer set forth herein shall survive for a
                period of one (1) year.

                        (f) New Information. To the extent that Buyer becomes
                aware of any information after the execution date that would
                affect the accuracy of the representations and warranties given
                by Buyer pursuant to this Paragraph 15, Buyer shall promptly
                notify Seller of such information.

                16. Remedies

                        (a) LIQUIDATED DAMAGES. PROVIDED BUYER HAS NOT ELECTED
                TO TERMINATE THIS AGREEMENT PURSUANT TO ANY OF BUYER'S RIGHTS TO
                DO SO CONTAINED HEREIN, IF AFTER THE EXPIRATION OF THE
                CONTINGENCY PERIOD BUYER COMMITS A DEFAULT UNDER THIS AGREEMENT
                AND THE CLOSE OF ESCROW FAILS TO OCCUR SOLELY BY REASON OF SUCH
                DEFAULT, THEN ESCROW HOLDER MAY BE INSTRUCTED BY SELLER TO
                CANCEL THE ESCROW AND SELLER SHALL THEREUPON BE RELEASED FROM
                ITS OBLIGATIONS HEREUNDER. BUYER AND SELLER AGREE THAT BASED
                UPON THE CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD
                BE IMPRACTICAL OR EXTREMELY DIFFICULT TO ESTABLISH SELLER'S
                DAMAGES BY REASON OF BUYER'S DEFAULT. ACCORDINGLY, BUYER AND
                SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO AWARD
                SELLER "LIQUIDATED DAMAGES" EQUAL TO THE AMOUNT OF THE DEPOSIT
                PREVIOUSLY PLACED INTO ESCROW BY BUYER PURSUANT TO PARAGRAPH 3
                HEREOF.

                SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT
                IS REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE
                AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR
                REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE
                ENTITLED BY REASON OF BUYER'S DEFAULT UNDER THIS AGREEMENT.
                ACCORDINGLY, IF BUYER COMMITS A DEFAULT UNDER THIS AGREEMENT AND
                THE CLOSE OF ESCROW FAILS TO OCCUR SOLELY BY REASON OF SUCH
                DEFAULT, SELLER MAY INSTRUCT THE ESCROW HOLDER TO CANCEL THE
                ESCROW, WHEREUPON SELLER SHALL BE RELIEVED FROM ALL LIABILITY
                HEREUNDER, AND, PROMPTLY FOLLOWING



                                       14
<PAGE>   15

                ESCROW HOLDER'S RECEIPT OF SUCH INSTRUCTION, ESCROW HOLDER SHALL
                (i) CANCEL THE ESCROW, AND (ii) DISBURSE TO SELLER THE DEPOSIT.
                WITHOUT LIMITING THE FOREGOING PROVISIONS OF THIS PARAGRAPH,
                SELLER WAIVES ANY AND ALL RIGHTS WHICH SELLER OTHERWISE WOULD
                HAVE HAD UNDER CALIFORNIA CIVIL CODE SECTION 3389 TO
                SPECIFICALLY ENFORCE THIS AGREEMENT. IF THE CLOSE OF ESCROW
                FAILS TO OCCUR FOR ANY REASON OTHER THAN BUYER'S DEFAULT UNDER
                THIS AGREEMENT, THEN ESCROW HOLDER SHALL IMMEDIATELY RETURN TO
                BUYER THE DEPOSIT, TOGETHER WITH ALL INTEREST ACCRUED THEREON.
                SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND
                THE PROVISIONS OF THIS PARAGRAPH 16 AND BY THEIR INITIALS
                IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
                NOTWITHSTANDING THE FOREGOING AND OTHER PROVISIONS IN THIS
                AGREEMENT TO THE CONTRARY, THIS PARAGRAPH 16 SHALL IN NO WAY
                LIMIT OR RESTRICT SELLER'S RIGHT TO RECOVERY OF ANY AMOUNT DUE
                SELLER UNDER PARAGRAPH 7(a)(iii) OR PARAGRAPH 20.

<TABLE>
<CAPTION>
                        Seller's Initials              Buyer's Initials
                        -----------------              ----------------
                        <S>                            <C>
</TABLE>

                        (b) Buyer's Remedies. Buyer and Seller hereby agree
                that, if the sale contemplated by this Agreement is not
                completed as herein provided by reason of any default of Seller
                hereunder, then in addition to the return of the Deposit and all
                interest accrued thereon, Buyer shall be entitled to pursue any
                remedy available under this Agreement or available at law or in
                equity, including, without limitation, the right to specifically
                enforce this Agreement.

                17. Damage or Condemnation Prior to Closing

                        (a) In the event that prior to the Close of Escrow, the
                Real Property, or any portion thereof, is destroyed or
                materially damaged, Buyer shall have the right, exercisable by
                giving written notice to Seller within fifteen (15) days after
                receipt of written notice of such damage or destruction, either
                (i) to terminate this Agreement, in which event the Deposit and
                all interest accrued thereon shall be immediately returned to
                Buyer, any other money or documents in Escrow shall be returned
                to the party depositing the same, and neither party hereto shall
                have any further rights or obligations hereunder, or (ii) to
                accept the Real Property in its then condition and to proceed
                with the consummation of the transaction contemplated by this
                Agreement, with an abatement or reduction in the Purchase Price
                equal to the amount of the deductible for the applicable
                insurance coverage, and to receive an assignment of all of
                Seller's rights to any insurance proceeds payable by reason of
                such damage or destruction, or if the casualty is not insured,
                an abatement or reduction in the Purchase Price equal to the
                cost to repair such damage, which credit shall in no event be
                more than One Hundred Thousand Dollars ($100,000.00). If Buyer
                elects to proceed under clause (ii) above, Seller shall not
                compromise, settle or adjust any claims to such proceeds without
                Buyer's prior written consent, which consent Buyer may withhold
                in its sole, absolute and subjective discretion.

                        (b) In the event that prior to the Close of Escrow there
                is any non-material damage to the Real Property, or any part
                thereof, Buyer shall accept the Real Property in its then
                condition with an abatement or reduction in the Purchase Price
                equal to the amount of the deductible for the applicable
                insurance coverage (or the cost to repair such damage if
                uninsured) and proceed with the transaction contemplated by this
                Agreement, in which event Buyer shall be entitled to an
                assignment of all of Seller's rights to any insurance proceeds
                payable by reason of such damage or destruction. In such event,
                Seller shall not compromise, settle or adjust any claims to such
                proceeds without Buyer's prior written consent, which consent
                Buyer may withhold in its sole, absolute and subjective
                discretion.

                        (c) In the event that prior to the Close of Escrow, all
                or any material portion of the Real Property is subject to a
                taking by a public or governmental authority, Buyer shall have
                the right, exercisable by giving written notice to Seller within
                fifteen (15) days after receiving written notice of such taking,
                either (i) to terminate this Agreement, in which event the
                Deposit and all



                                       15
<PAGE>   16

                interest accrued thereon shall be immediately returned to Buyer,
                any other money or documents in Escrow shall be returned to the
                party depositing the same, and neither party hereto shall have
                any further rights or obligations hereunder, or (ii) to accept
                the Real Property in its then condition, without a reduction in
                the Purchase Price, and to receive an assignment of all of
                Seller's rights to any condemnation award or proceeds payable by
                reason of such taking. If Buyer elects to proceed under clause
                (ii) above, Seller shall not compromise, settle or adjust any
                claims to such award without Buyer's prior written consent,
                which consent Buyer may withhold in its sole, absolute and
                subjective discretion.

                        (d) In the event that prior to the Close of Escrow, any
                non-material portion of the Real Property is subject to a taking
                by any public or governmental authority, Buyer shall accept the
                Real Property in its then condition and proceed with the
                consummation of the transaction contemplated by this Agreement,
                in which event Buyer shall be entitled to an assignment of all
                of Seller's rights to any award or proceeds payable in
                connection with such taking. In the event of any such
                non-material taking, Seller shall not compromise, settle or
                adjust any claims to such award without Buyer's prior written
                consent, which consent Buyer may withhold in its sole, absolute
                and subjective discretion.

                        (e) For purposes of this Paragraph 17, damage to the
                Real Property or a taking of a portion thereof shall be deemed
                to involve a material portion thereof if the estimated cost of
                restoration or repair, as reasonably estimated by Buyer, of such
                damage or the amount of the condemnation award with respect to
                such taking shall exceed One Hundred Thousand Dollars
                ($100,000.00).

                        (f) Seller agrees to give Buyer prompt written notice of
                any taking of, proposed taking of, damage to or destruction of
                the Real Property.

                18. Notices. All notices or other communications required or
permitted hereunder shall be in writing, and shall be personally delivered, sent
by overnight mail (Federal Express or the like) or sent by registered or
certified mail, postage prepaid, return receipt requested, telegraphed,
delivered or sent by telex, telecopy, facsimile, fax or cable and shall be
deemed received upon the earlier of (i) if personally delivered, the date of
delivery to the address of the person to receive such notice, (ii) if sent by
overnight mail, the business day following its deposit in such overnight mail
facility, (iii) if mailed, four (4) business days after the date of posting by
the United States post office, (iv) if given by telegraph or cable, when
delivered to the telegraph company with charges prepaid, or (v) if given by
telex, telecopy, facsimile or fax, when sent. Any notice, request, demand,
direction or other communication sent by cable, telex, telecopy, facsimile or
fax must be confirmed within forty-eight (48) hours by letter mailed or
delivered in accordance with the foregoing.

<TABLE>
                     <S>              <C>
                     To Buyer:        c/o Trammell Crow So. Cal. Properties, Inc.
                                      4250 Executive Square, Suite 200
                                      La Jolla, CA 92037
                                      Attention: Dorcey B. Abshier
                                      Phone No.  (858) 526-2649
                                      Fax No.    (858) 526-2601

                     With a copy to:  Jeffer, Mangles, Butler & Marmaro LLP
                                      2121 Avenue of the Stars, Tenth Floor
                                      Los Angeles, California 90067-5010
                                      Attention: Keith Elkins
                                      Phone No:  (310) 785-5353
                                      Fax No.    (310) 203-0567

                     To Seller:       COHU, INC.
                                      5755 Kearny Villa Road
                                      San Diego, California 92123
                                      Attention: John H. Allen
                                      Phone No.  (858) 541-5182
                                      Fax No.    (858) 277-9412
</TABLE>



                                       16
<PAGE>   17

<TABLE>
                     <S>              <C>
                     With a copy to:  Gray Cary Ware & Freidenrich LLP
                                      401 B Street, Suite 1700
                                      San Diego, California 92101-4297
                                      Attention: Karen M. ZoBell, Esq.
                                      Phone No.  (619) 699-3474
                                      Fax No.    (619) 236-1048

                     To Escrow Holder:Chicago Title Company
                                      925 B Street
                                      San Diego, California 92101
                                      Attention: Lori Brandt
                                      Phone No. (619) 239-6081
                                      Fax No. (619) 544-6229
</TABLE>

        Notice of change of address shall be given by written notice in the
manner detailed in this Paragraph. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.

                19. Brokers. Upon the Close of Escrow, Seller shall pay a real
estate brokerage commission to CB Richard Ellis, with respect to this
transaction in accordance with Seller's separate agreement with said broker, and
Seller hereby agrees to indemnify, protect, defend (with counsel chosen by
Buyer) and hold Buyer free and harmless from and against any and all commissions
or other claims such broker may assert in connection with the parties entering
into, or consummating the transactions contemplated by, this Agreement. If any
additional claims for broker's or finders' fees for the consummation of this
Agreement arise, then Buyer hereby agrees to indemnify, protect, save harmless
and defend Seller from and against such claims if they are based upon any
statement, representation or agreement made by Buyer, and Seller hereby agrees
to indemnify, protect, save harmless and defend Buyer from and against such
claims if they are based upon any statement, representation or agreement made by
Seller.

                20. Legal Fees. In the event of the bringing of any action or
suit by a party hereto against another party hereunder by reason of any breach
of any of the covenants or agreements or any inaccuracies in any of the
representations and warranties on the part of the other party arising out of
this Agreement, then in that event, the prevailing party in such action or
dispute, whether by final judgment or out of court settlement, shall be entitled
to have and recover of and from the other party all costs and expenses of suit,
including actual attorneys' fees. Any judgment or order entered in any final
judgment shall contain a specific provision providing for the recovery of all
costs and expenses of suit, including actual attorneys' fees (collectively
"Costs") incurred in enforcing, perfecting and executing such judgment. For the
purposes of this paragraph, Costs shall include, without limitation, attorneys'
fees, costs and expenses incurred in the following: (i) postjudgment motions;
(ii) contempt proceeding; (iii) garnishment, levy, and debtor and third party
examination; (iv) discovery; and (v) bankruptcy litigation.

                21. Assignment. Seller may not assign, transfer or convey its
rights or obligations under this Agreement without the prior written consent of
Buyer; provided, however, that Seller may assign, transfer or convey its rights
or obligations under this Agreement without Buyer's consent to an entity
affiliated with Seller or to a new entity which Seller is a member, partner or
manager provided that Seller delivers to Buyer written notice of any such
transfer. Any assignment shall be effective only if Seller's assignee assumes in
writing all of Seller's obligations hereunder; provided, however, Seller shall
in no event be released from its obligations hereunder by reason of such
assignment. Buyer, without being relieved of liability hereunder and without
obtaining Seller's consent, shall have the right to assign its rights and
obligations hereunder to an entity affiliated with Buyer or to a new entity in
which Buyer is a member, partner or manager or with who Buyer (or any affiliate
thereof) has entered into a development services agreement, a property
management agreement or other agreement of a similar nature with respect to the
Property or any portion thereof; provided that Buyer delivers written notice of
such transfer to Seller. Any other assignments requested by Buyer shall be
subject to the prior approval of Seller, which approval shall not be
unreasonably withheld, conditioned or delayed. Buyer hereby acknowledges it is
the intent of the Seller to effect an IRC Section 1031 tax deferred exchange
which will not delay the closing or cause additional expense to the Buyer. The
Seller's rights under this Agreement may be assigned to Investment Property
Exchange Services, Inc., a



                                       17
<PAGE>   18

Qualified Intermediary, for the purpose of completing such an exchange. Buyer
agrees to cooperate with the Seller and Investment Property Exchange Services,
Inc. in a manner necessary to complete the exchange.

                22. Intentionally Omitted

                23. Miscellaneous

                        (a) Survival of Covenants. The covenants,
        representations and warranties of both Buyer and Seller set forth in
        this Agreement shall survive the recordation of the Grant Deed and the
        Close of Escrow for a period of one (1) year.

                        (b) Required Actions of Buyer and Seller. Buyer and
        Seller agree to execute such instruments and documents and to diligently
        undertake such actions as may be required in order to consummate the
        purchase and sale herein contemplated and shall use their best efforts
        to accomplish the Close of Escrow in accordance with the provisions
        hereof.

                        (c) Computation of Time Periods. If the date upon which
        the Contingency Period expires, the Closing Date or any other date or
        time period provided for in this Agreement is or ends on a Saturday,
        Sunday or federal, state or legal holiday, then such date shall
        automatically be extended until 5 p.m. Pacific Time of the next day
        which is not a Saturday, Sunday or federal, state or legal holiday.

                        (d) Counterparts. This Agreement may be executed in
        multiple counterparts, each of which shall be deemed an original, but
        all of which, together, shall constitute but one and the same
        instrument.

                        (e) Captions. Any captions to, or headings of, the
        paragraphs or subparagraphs of this Agreement are solely for the
        convenience of the parties hereto, are not a part of this Agreement, and
        shall not be used for the interpretation or determination of the
        validity of this Agreement or any provision hereof.

                        (f) No Obligations to Third Parties. Except as otherwise
        expressly provided herein, the execution and delivery of this Agreement
        shall not be deemed to confer any rights upon, nor obligate any of the
        parties hereto, to any person or entity other than the parties hereto.

                        (g) Exhibits and Schedules. The Exhibits and Schedules
        attached hereto are hereby incorporated herein by this reference for all
        purposes.

                        (h) Amendment to this Agreement. The terms of this
        Agreement may not be modified or amended except by an instrument in
        writing executed by each of the parties hereto.

                        (i) Waiver. The waiver or failure to enforce any
        provision of this Agreement shall not operate as a waiver of any future
        breach of any such provision or any other provision hereof.

                        (j) Applicable Law. This Agreement shall be governed by
        and construed in accordance with the laws of the State of California.

                        (k) Fees and Other Expenses. Except as otherwise
        provided herein, each of the parties hereto shall pay its own fees and
        expenses in connection with this Agreement.

                        (l) Entire Agreement. This Agreement supersedes any
        prior agreements, negotiations and communications, oral or written, and
        contains the entire agreement between Buyer and Seller as to the subject
        matter hereof. No subsequent agreement, representation, or promise made
        by either party hereto, or by or to an employee, officer, agent or
        representative of either party hereto shall be of any effect unless it
        is in writing and executed by the party to be bound thereby.

                        (m) Successors and Assigns. Subject to the restrictions
        set forth in Paragraph 21 hereof, this Agreement shall be binding upon
        and shall inure to the benefit of the successors and assigns of the
        parties hereto.

                        (n) Construction. The parties hereto hereby acknowledge
        and agree that (i) each party hereto is of equal bargaining strength,
        (ii) each such party has actively participated in the drafting,
        preparation and negotiation of this Agreement, (iii) each such party has
        consulted with such party's own, independent counsel, and such other
        professional advisors as such party has deemed appropriate, relative to
        any and all matters contemplated under this Agreement, (iv) each such
        party and such party's counsel and advisors have reviewed this
        Agreement, (v) each such party has agreed to enter into this Agreement
        following such review and the rendering of such advice, and (vi) any
        rule of construction to the effect that ambiguities are to be resolved
        against the drafting parties shall not apply in the interpretation of
        this Agreement, or any portions hereof, or any amendments hereto.

                        (o) Consideration. In the event that this Agreement is
        cancelled by reason of



                                       18
<PAGE>   19

        Buyer's disapproval of any of the matters which are subject to Buyer's
        approval under Paragraph 7(a) hereof, Buyer shall deliver to Seller any
        and all reports, studies and the like prepared by or for Buyer with
        respect to the Property; provided, however, that Buyer shall only be
        obligated to deliver those reports, studies and the like which are
        freely transferable by Buyer, at no cost or expense to Buyer. Any and
        all such reports, studies and the like delivered by Buyer to Seller
        pursuant to this paragraph shall be accepted by Seller (i) "as-is"
        without any representation or warranty by Buyer, express, implied or
        statutory, with respect to any matter pertaining thereto, and (ii)
        subject to the rights of any other party (other than Buyer) with respect
        thereto. Seller hereby acknowledges and confirms that such obligation
        constitutes sufficient consideration for Seller's obligations hereunder.

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

               "Buyer"                 TC KEARNY VILLA LP,
                                       a Delaware limited partnership

                                       By:  Trammell Crow So. Cal., Inc.,
                                            a Delaware corporation

                                            By:   /s/  Dorsey  B. Abshier
                                               ---------------------------------
                                            Name:  Dorsey B. Abshier
                                                 -------------------------------
                                            Title: Vice-President
                                                   -----------------------------


               "Seller"                COHU, INC.,
                                       a Delaware corporation

                                            By:  /s/  John H. Allen

                                            Name:  John H. Allen
                                                 -------------------------------
                                            Title: Vice-President
                                                   -----------------------------



                                       19