<PAGE>
                             LEASE

                  (SINGLE-TENANT MODIFIED NET)



                        by and between



            CALLAHAN-PENTZ PROPERTIES, McCARTHY FOUR

                          ("Landlord")


                              and


                   C-CUBE MICROSYSTEMS, INC.

                           ("Tenant")

















          For the approximately 48,384 SF Premises at
            575 Cottonwood Drive, Milpitas, CA 95035

<PAGE>
                         LEASE SUMMARY


Lease Date:              July 8, 1996

Landlord:                Callahan-Pentz Properties, McCarthy Four

Address of Landlord:     c/o CPS Realty Group
                         1740 Technology Drive, Suite 290
                         San Jose, CA 95110

Tenant:                  C-Cube Microsystems, Inc.

Address of Tenant:       580 Cottonwood Drive
                         Milpitas, CA 95035

Contact:                 Mark Katigbak

Telephone:               (408)944-6300

Building Address:        575 Cottonwood Drive,
                         Milpitas, CA 95035

Building Square Footage: approximately 48,384 square feet

Anticipated Commencement Date:  February 1, 1997

Term:                    Seven (7) years

Monthly Rent:

          Months of Term                   Monthly Rent

           1 through 24                   $47,416.00/month
          25 through 48                   $49,352.00/month
          49 through 72                   $50,320.00/month
          73 through 84                   $51,287.00/month
          

Estimated Operating Expenses: $3,870.00/month

Security Deposit:             $50,000.00

<PAGE>
                       TABLE OF CONTENTS


Article                                                      Page
  
  1.   Parties                                                
  
  2.   Premises                                               
  
  3.   Definitions                                            
  
  4.   Lease Term                                             
  
  5.   Rent                                                   
  
  6.   Late Payment Charges                                   
  
  7.   Security Deposit                                       
  
  8.   Holding Over                                           
  
  9.   Condition of Premises                                  
  
  10.  Use of the Premises                                    
  
  11.  Quiet Enjoyment                                        
  
  12.  Alterations                                            
  
  13.  Surrender of the Premises                              
  
  14.  Real Property Taxes                                    
  
  15.  Utilities and Services                                 
  
  16.  Repair and Maintenance                                 
  
  17.  Liens                                                  
  
  18.  Landlord's Right to Enter the Premises                 
  
  19.  Signs                                                  
  
  20.  Insurance                                              
  
  21.  Waiver of Subrogation                                  
  
  22.  Damage or Destruction                                  
  
  23.  Condemnation                                           
  
  24.  Assignment and Subletting                              
  
  25.  Default                                                
  
  26.  Subordination                                          
  
  27.  Notices                                                
  
  28.  Attorneys' Fees                                        
  
  29.  Estoppel Certificates                                  
  
  30.  Transfer of the Premises by Landlord                   
  
  31.  Landlord's Right to Perform Tenant's Covenants         
  
  32.  Tenant's Remedy                                        
  
  33.  Mortgagee Protection                                   
  
  34.  Brokers                                                
  
  35.  Acceptance                                             
  
  36.  Modifications for Lender                               
  
  37.  Parking                                                
  
  38.  Option to Extend.                                      
  
  40.  General                                                
  
<PAGE>
                      TABLE OF EXHIBITS


EXHIBIT A                The Premises

EXHIBIT B                CC&R's

EXHIBIT C                Work Letter Agreement

EXHIBIT D                Commencement Date Memorandum

EXHIBIT E                Subordination of Mortgage

<PAGE>
                             LEASE

                    (SINGLE-TENANT BUILDING)


     1.   Parties.

          THIS LEASE (the "Lease"), dated July 8, 1996, is entered into by
and between Callahan-Pentz Properties, McCarthy Four, a California general
partnership ("Landlord"), whose address is c/o CPS Realty Group, 1740
Technology Drive, Suite 280, San Jose, CA 95110 and C-Cube Microsystems,
Inc. a California corporation ("Tenant"), whose address is 580 Cottonwood
Drive, Milpitas, CA  95035.

     2.   Premises.

          Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the building located at 575 Cottonwood Drive, Milpitas,
California, consisting of approximately forty-eight thousand three hundred
eighty-four (48,384) square feet (the "Building"), located on that certain
real property consisting of approximately 3.258 acres as more particularly
described in EXHIBIT A, together with a right to use the Outside Area as
defined in Paragraph 3.E. (collectively, the "Premises").  Landlord shall
at all times have exclusive control of the Outside Area and may at any time
temporarily close any part thereof, exclude and restrain anyone from any
part thereof, except the bona fide customers, employees and invitees of
Tenant, and may change the configuration or location of the Outside Area.
In exercising any such rights, Landlord shall make a reasonable effort to
minimize any disruption of Tenant's business and shall not unreasonably
interfere with Tenant's parking rights.

     3.   Definitions.

          The following terms shall have the following meanings in this
Lease:

          A.   Alterations.  Any alterations, additions or improvements
made in, on or about the Building or the Premises after the Commencement
Date, including, but not limited to, lighting, heating, ventilating, air
conditioning, electrical, partitioning, drapery and carpentry
installations.
          
          B.   CC&R's.  Those certain covenants, conditions and
restrictions recorded at  Book E545, Page 189 of the Official Records of
the County, State of California, on June 5, 1979, as amended, attached
hereto as EXHIBIT B.

          C.   Commencement Date.  The Commencement Date of this Lease
shall be the first day of the Term determined in accordance with Paragraph
4.A.

          D.   Outside Area.  All areas and facilities within the Premises,
exclusive of the Building, such as parking areas, sidewalks, landscaped
areas, service areas, trash disposal facilities, and similar areas and
facilities.
          E.   HVAC.  Heating, ventilating and air conditioning.

          F.   Interest Rate.  Ten percent (10%) per annum, however, in no
event to exceed the maximum rate of interest permitted by law.

          G.   Landlord's Agents.  Landlord's authorized agents, partners,
subsidiaries, directors, officers, and employees.

          H.   Monthly Rent.  The rent payable pursuant to Paragraph 5.A.,
as adjusted from time to time pursuant to the terms of this Lease.

          I.   Real Property Taxes.  Any form of assessment, license, fee,
rent tax, levy, penalty (if a result of Tenant's delinquency), or tax
(other than net income, estate, succession, inheritance, transfer or
franchise taxes), imposed by any authority having the direct or indirect
power to tax, or by any city, county, state or federal government or any
improvement or other district or division thereof, whether such tax is:
(i) determined by the area of the Premises or any part thereof or the rent
and other sums payable hereunder by Tenant or by other tenants, including,
but not limited to, any gross income or excise tax levied by any of the
foregoing authorities with respect to receipt of such rent or other sums
due under this Lease; (ii) upon any legal or equitable interest of Landlord
in the Premises or any part thereof; (iii) upon this transaction or any
document to which Tenant is a party creating or transferring any interest
in the Premises; (iv) levied or assessed in lieu of, in substitution for,
or in addition to, existing or additional taxes against the Premises
whether or not now customary or within the contemplation of the parties; or
(v) surcharged against the parking area.

          J.   Rent.  Monthly Rent plus the Additional Rent defined in
Paragraph 5.B.

          K.   Security Deposit.  That amount paid by Tenant pursuant to
Paragraph 7.

          L.   Sublet.  Any transfer, sublet, assignment, license or
concession agreement, change of ownership, mortgage, or hypothecation of
this Lease or the Tenant's interest in the Lease or in and to all or a
portion of the Premises.

          M.   Subrent.  Any consideration of any kind received, or to be
received, by Tenant from a subtenant if such sums are related to Tenant's
interest in this Lease or in the Premises, including, but not limited to,
bonus money and payments (in excess of fair market value) for Tenant's
trade fixtures, equipment and other tangible personal property.

          N.   Subtenant.  The person or entity with whom a Sublet
agreement is proposed to be or is made.

          O.   Tenant Improvements.  Those certain improvements to the
Premises to be constructed by Tenant pursuant to EXHIBIT C.

          P.   Tenant Improvements Allowance.  The cost allowance provided
by Landlord for the construction of the Tenant Improvements as further
described in EXHIBIT C.

          Q.   Tenant's Personal Property.  Tenant's trade fixtures,
furniture, equipment and other personal property in the Premises.

          R.   Term.  The term of this Lease set forth in Paragraph 4.A.,
as it may be extended hereunder pursuant to any options to extend granted
herein.

     4.   Lease Term.

          A.   Term.  The Term shall be a period of seven (7) years,
commencing upon the date (the "Commencement Date") which is the earlier of
(i) thirty (30) days from the date that Landlord tenders possession of the
Premises to Tenant, and (ii) the date that Tenant commences occupancy of
the Premises for the purpose of conducting business.  Landlord and Tenant
anticipate that Landlord will tender possession of the Premises to Tenant
on or about January 1, 1997.  Tenant agrees, however, that if Landlord, for
any reason whatsoever, is unable to deliver possession of the Premises by
January 1, 1997, Landlord shall not be liable to Tenant for any loss or
damage therefrom, nor shall this Lease be void or voidable.  If Landlord
regains possession of the Premises prior to January 1, 1997, Landlord shall
notify Tenant in writing at least seven (7) days prior to the date that
Landlord tenders possession of the Premises to Tenant.  When the actual
Commencement Date is determined, the parties shall execute a Commencement
Date Memorandum setting forth such date in the form shown in EXHIBIT D.

          B.   Early Entry.  Tenant shall be permitted to enter the
Premises prior to the Commencement Date and upon tender of possession by
Landlord for the purpose of installing the Tenant Improvements and Tenant's
Personal Property.  Such early entry shall be subject to all the terms and
provisions hereof, except for the payment of Monthly Rent, Operating
Expenses and Real Property Taxes which shall commence on the Commencement
Date.  Landlord shall have the right to impose such additional conditions
on Tenant's early entry as Landlord shall deem appropriate.

     5.   Rent.

          A.   Monthly Rent.  Tenant shall pay to Landlord, in lawful money
of the United States, for each calendar month of the  Term, net Monthly
Rent in accordance with the following schedule, in advance, on the first
day of each calendar month, without abatement, deduction, claim, offset,
prior notice or demand.

          Months of Term           Monthly Rent

           1 through 24                   $47,416.00/month
          25 through 48                   $49,352.00/month
          49 through 72                   $50,320.00/month
          73 through 84                   $51,287.00/month

Additionally, Tenant shall pay, as and with the net Monthly Rent, the
estimated monthly Operating Expenses, as set forth in Paragraph 16.C.,
subject to adjustment as provided therein.  Tenant shall deposit with
Landlord upon execution of this Lease the following amounts to be applied
toward the Rent due for the first month of the Term:

          Monthly Rent (net)                 $47,416.00/month

          Estimated Operating Expenses       $ 3,870.00/month

          TOTAL                              $51,286.00/month

          B.   Additional Rent.  All monies required to be paid by Tenant
under this Lease other than Monthly Rent, including, without limitation,
Real Property Taxes pursuant to Paragraph 14, and Operating Expenses
pursuant to Paragraph 16.C., shall be deemed Additional Rent.

          C.   Prorations.  If the Commencement Date is not the first (1st)
day of a month, or if the termination date of this Lease is not the last
day of a month, a prorated installment of Monthly Rent based on a thirty
(30) day month shall be paid for the fractional month during which the
Lease commences or terminates.

     6.   Late Payment Charges.

          Tenant acknowledges that late payment by Tenant to Landlord of
Rent and other charges provided for under this Lease will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such costs
being extremely difficult or impracticable to fix.  Therefore, if any
installment of Rent or any other charge due from Tenant is not received by
Landlord when due, Tenant shall pay to Landlord an additional sum equal to
five percent (5%) of the amount overdue as a late charge for  the Rent or
other charges that remain unpaid.  The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of the late payment by Tenant.

Initials:

  /s/ George B. Pentz                /s/ Mark Allen         
------------------------           -------------------------
Landlord                           Tenant

     7.   Security Deposit.

          Tenant shall deposit with Landlord upon execution the sum of
Fifty Thousand and no/100ths Dollars ($50,000.00) as the Security Deposit
for the full and faithful performance of every provision of this Lease to
be performed by Tenant.  If Tenant defaults with respect to any provision
of this Lease, Landlord may apply all or any part of the Security Deposit
for the payment of any rent or other sum in default, the repair of such
damage to the Premises or the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant's default or to
compensate Landlord for any other loss or damage which Landlord may suffer
by reason of Tenant's default to the full extent permitted by law.  If any
portion of the Security Deposit is so applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the Security Deposit separate from
its general funds, and Tenant shall not be entitled to interest on the
Security Deposit.  If Tenant is not otherwise in default, the Security
Deposit or any balance thereof shall be returned to Tenant within thirty
(30) days of termination of the Lease.

     8.   Holding Over.

          If Tenant remains in possession of all or any part of the
Premises after the expiration of the Term, with the express or  implied
consent of Landlord, such tenancy shall be month-to-month only and shall
not constitute a renewal or extension for any further term.  If Tenant
remains in possession either with or without Landlord's consent, Monthly
Rent shall be increased to an amount equal to one hundred fifty percent
(150%) of the Monthly Rent payable during the last month of the Term, and
any other sums due under this Lease shall be payable in the amount and at
the times specified in this Lease.  Such month-to-month tenancy shall be
subject to every other term, condition, and covenant contained herein.  If
Tenant fails to surrender the Premises upon the expiration of the Term
despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation
any claim made by a succeeding tenant, resulting from Tenant's failure to
surrender.

     9.   Condition of Premises.

          Landlord represents to Tenant that the Building, including any
tenant improvements constructed by Landlord, were constructed in compliance
with all applicable laws and regulations and were constructed in a good and
workmanlike manner with good materials.  Landlord further represents that,
as of the date that Landlord tenders possession of the Premises to Tenant,
all equipment and Building systems serving the Premises will be in good
working order.  Subject to the foregoing representations, by taking
possession of the Premises, Tenant shall be deemed to have accepted the
Premises and all improvements therein in their current condition, "as is,"
subject to all applicable laws, codes and ordinances.  Tenant acknowledges
that neither Landlord nor Landlord's Agents have made any representations
or warranties as to the suitability or fitness of the Premises for the
conduct of Tenant's business or for any other purpose, nor has Landlord or
Landlord's Agents agreed to undertake any Alterations or construct any
tenant improvements to the Premises.  Tenant shall inform Landlord in
writing which of those improvements that were made to or installed in the
Premises by Heraeus LaserSonics that Tenant desires to be removed from the
Premises.  Landlord shall instruct Heraeus LaserSonics to remove those
improvements from the Premises and shall use diligent efforts to require
Heraeus LaserSonics to remove those improvements from the Premises prior to
the expiration or sooner termination of its lease with Landlord

     10.  Use of the Premises.

          A.   Tenant's Use.  Tenant shall use the Premises solely for
research & development, sales, marketing, administration,  shipping and
receiving and other legal uses that are incidental thereto, and shall not
use the Premises for any other purpose without the prior written consent of
Landlord.  Tenant acknowledges that the Premises is subject and this Lease
is subordinate to the CC&R's.  Tenant acknowledges that it has read the
CC&R's and knows the contents thereof.  Throughout the Term, Tenant shall
comply with the CC&R's and any modification or amendments thereof,  and
shall pay any periodic or special dues, assessments, and owners'
association fees against the Premises.  Tenant shall indemnify and hold
Landlord and Landlord's Agents harmless from and against any liability,
loss, expense, damage, attorneys' fees and costs arising out of or in
connection with Tenant's failure to  comply with the CC&R's.

          B.   Compliance.

               (i)  Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Premises which will in any way conflict
with any law, statute, zoning  restriction, ordinance or governmental law,
rule, regulation or requirement of public authorities now in force or which
may hereafter be in force, relating to  Tenant's use or occupancy of the
Premises.  Tenant shall not commit any public or private nuisance or any
other act or thing which  would disturb the quiet enjoyment of  any
occupant of nearby property.  Tenant shall place no loads upon the floors,
walls or ceilings in excess of the maximum designed load determined by
Landlord or which endanger the structure; nor place any harmful liquids in
the drainage systems; nor dump or store waste materials or refuse or allow
such to remain outside the Building proper, except in the enclosed trash
areas provided.  Tenant shall not store or permit to be stored or otherwise
placed any other material of any nature whatsoever outside the Building.

               (ii) In particular, Tenant, at its sole cost, shall comply
with all laws relating to  Tenant's storage, use and disposal of hazardous,
toxic or radioactive matter, including those materials identified in
Sections 66680 through 66685 of Title 22 of the California Code of
Regulations, Division 4, Chapter 30 as they may be amended from time to
time (collectively "Hazardous Materials").  If Tenant does store, use or
dispose of any Hazardous Materials, Tenant shall notify Landlord in writing
at least ten (10) days prior to their first appearance on the Premises.
Tenant shall be solely responsible for and shall defend, indemnify and hold
Landlord and Landlord's Agents harmless from and against all claims, costs
and liabilities, including attorneys' fees and costs, arising out of or in
connection with any storage, use or disposal of Hazardous Materials in, on,
under or about the Premises by Tenant, its agents, employees, contractors,
invitees or subtenants, including, without limitation, costs arising out of
or in connection with  any removal, clean-up and restoration work  required
by applicable Environmental Laws.  If any governmental agency or the
beneficiary of any deed of trust covering the Premises requires any testing
of the Premises, including the soil or groundwater of the Premises, to
ascertain whether there has been any release of Hazardous Materials in, on
or about the Premises, Landlord shall have the right to install monitoring
wells on or about the Outside Area and to perform such other tests and
investigations of the Premises for such purpose.  Tenant shall reimburse
Landlord as Additional Rent for the reasonable cost of such tests and
investigations and of the installation, maintenance, repair and replacement
of such monitoring wells or other measuring devices if the results of such
tests and investigations disclose the existence of facts which give rise to
the liability of Tenant pursuant to the indemnity provisions of this
Paragraph 10.B(ii).  Tenant's obligations hereunder shall survive the
termination of this Lease.

          (iii)     As of the date of this Lease, Landlord represents that,
to Landlord's actual, current knowledge: (a) no Hazardous Materials are
present on the Premises or in the soil, surface water or groundwater
thereof in excess of naturally-occurring background levels;  (b) no
asbestos-containing materials are present in the Building; and (c) Landlord
has received no notice of any action, proceeding or claim against Landlord
or the Premises pursuant to any Environmental Laws.

          (iv) Notwithstanding anything to the contrary in this Lease,
Landlord shall be responsible for performing, at Landlord's expense, any
investigation, removal, clean-up, remediation, and/or monitoring required
or mandated by any governmental agencies, authorities or regulatory bodies
in connection with any Hazardous Materials in, on or under the Premises,
except to the extent any such Hazardous Materials were used, stored,
released or disposed of by Tenant, its agents, employees, contractors,
invitees or subtenants.

          (v)  The obligations and liabilities of the parties under this
Lease concerning the presence of Hazardous Materials shall be governed by
the provisions of this Paragraph 10.B.

          (vi) The term "Environmental Laws" shall mean all local, state or
federal laws, statutes, ordinances, rules and/or regulations now or
hereafter enacted by any governmental authority which relate to Hazardous
Materials or the use, handling, transportation, production, disposal,
discharge, release, emission, sale, or storage of, or the exposure of any
person to, any Hazardous Materials.

     11.  Quiet Enjoyment.

          Landlord covenants that Tenant, upon performing the terms,
conditions and covenants of this Lease, shall have quiet and peaceful
possession of the Premises as against any person claiming the same by,
through or under Landlord.

     12.  Alterations.

          After the Commencement Date, Tenant shall not make or permit any
Alterations in, on or about the Premises, except for nonstructural
Alterations not exceeding  Ten Thousand Dollars ($10,000.00) in cost,
without the prior written consent of Landlord, and according to plans and
specifications approved in writing by Landlord, which consent shall not be
unreasonably withheld.  Notwithstanding the foregoing Tenant shall not,
without the prior written consent of Landlord, make any:

          (i)    Alterations to the exterior of the Building;

          (ii)   Alterations to and penetrations of the roof of the Building;
and

          (iii)  Alterations visible from outside the Building,
including any Alterations to the Outside Area, to which Landlord may
withhold Landlord's consent on wholly aesthetic grounds.

All Alterations shall be installed at Tenant's sole expense, in compliance
with all applicable laws and the CC&R's, by a licensed contractor, shall be
done in a good and workmanlike manner conforming in quality and design with
the Premises existing as of the Commencement Date, and shall not diminish
the value of  the Premises.  All Alterations made by Tenant shall  remain
the property of Tenant during the Term of this Lease and Tenant shall have
the right to remove any of such Alterations at any time during the Term
provided that Tenant repairs any damage to the Premises caused by such
removal.  Upon Tenant's request, Landlord shall advise Tenant in writing
whether Landlord reserves the right to require Tenant to remove any
Alterations from the Premises upon the expiration or sooner termination of
the Lease.  If Landlord elects to require such removal, then Tenant, at
Tenant's expense, shall remove any of such Alterations installed by Tenant
and, at Landlord's election, any Alterations installed by Tenant without
Landlord's consent where such consent was required, and shall return the
Premises to their condition as of the Commencement Date , normal wear and
tear excepted and subject to the provisions of Paragraph 22.  All
Alterations which are not removed by Tenant as provided herein shall become
the property of Landlord upon the expiration or sooner termination of this
Lease.  Notwithstanding any other provision of this Lease, Tenant shall be
solely responsible for the maintenance and repair of any and all
Alterations made by it to the Premises.  Tenant shall give Landlord written
notice of Tenant's intention to perform work on the Premises at least
twenty (20) days prior to the commencement of such work to enable Landlord
to post and record a Notice of Nonresponsibility or other notice deemed
proper before the commencement of any such work.

     13.  Surrender of the Premises.

          Upon the expiration or earlier termination of the Term, Tenant
shall surrender the Premises to Landlord in its condition existing as of
the Commencement Date, normal wear and tear and fire or other casualty
excepted, with all interior walls repaired and repainted if marked or
damaged, all carpets shampooed and cleaned, all broken, marred or
nonconforming acoustical ceiling tiles replaced, all windows washed if
necessary, the plumbing and electrical systems and lighting in good order
and repair, including replacement of any burned out or broken light bulb or
ballasts, the HVAC equipment serviced and repaired by a reputable and
licensed service firm, and all floors cleaned and waxed, all to the
reasonable satisfaction of Landlord.  Tenant shall remove from the Premises
all of Tenant's Alterations required to be removed pursuant to Paragraph
12, and all Tenant's Personal Property, and repair any damage and perform
any restoration work caused by such removal.  If Tenant fails to remove
such Alterations and Tenant's Personal Property, and such failure continues
after the termination of this Lease, Landlord may retain such property and
all rights of Tenant with respect to it shall cease, or Landlord may place
all or any portion of such property in public storage for Tenant's account.
Tenant shall be liable to Landlord for costs of removal of any such
Alterations and Tenant's Personal Property and storage and transportation
costs of same, and the cost of repairing and restoring the Premises,
together with interest at the Interest Rate from the date of expenditure by
Landlord.  If the Premises are not so surrendered at the termination of
this Lease, Tenant shall indemnify Landlord and Landlord's Agents against
all loss or liability, including attorneys' fees and costs, resulting from
delay by Tenant in so surrendering the Premises.

          Normal wear and tear, for the purposes of this Lease, shall be
construed to mean wear and tear caused to the Premises by a natural aging
process which occurs in spite of prudent application of  commercially
reasonable standards for maintenance, repair and janitorial practices.  It
is not intended, nor shall it be construed, to include items of neglected
or deferred maintenance which would have or should have been attended to
during the Term of the Lease if  commercially reasonable standards had been
applied to properly maintain and keep the Premises at all times in good
condition and repair.

     14.  Real Property Taxes.

          A.   Payment by Tenant.  On or before April 1 and December 1 of
each calendar year during the Term, Tenant shall pay  to Landlord, as
Additional Rent, the Real Property Taxes levied or assessed against the
Premises as set forth on the county assessor's tax statement for the
Premises.  Landlord shall give Tenant at least  thirty (30) days' prior
written notice of the amount so due.  Upon Landlord's receipt of the Real
Property Tax payment from Tenant, Landlord shall pay the taxes to the
county.  If Tenant fails to pay any installment of Real Property Taxes on
or before the later of (i) thirty (30) days after receipt of the tax
statement from Landlord, or (ii) April 1 and December 1, respectively,
Tenant shall pay to Landlord any penalty incurred by such late payment.
Tenant shall pay any Real Property Tax not included within the county tax
assessor's tax statement within ten (10) days after being billed for same
by Landlord.  The foregoing dates are based on the dates established by the
county as the dates on which Real Property Taxes become delinquent if not
paid.  If such delinquency dates change, the dates on which Tenant must pay
such taxes shall be at least ten (10) days prior to the delinquency dates.
Notwithstanding the foregoing, at any time, upon prior written notice to
Tenant, Landlord shall have the right to require that Tenant pay one-
twelfth (1/12th) of the Real Property Taxes payments to Landlord directly,
on the first (1st) day of each calendar month.  Assessments, taxes, fees,
levies and charges may be imposed by governmental agencies for such
purposes as fire protection, street, sidewalk, road, utility construction
and maintenance, refuse removal and for other governmental services which
may formerly have been provided without charge to property owners or
occupants.  It is the intention of the parties that all new and increased
assessments, taxes, fees, levies and charges are to be included within the
definition of Real Property Taxes for purposes of this Lease.

          B.   Taxes on Tenant Improvements and Personal Property.  Tenant
shall pay any increase in Real Property Taxes resulting from any and all
Alterations and Tenant Improvements of any kind whatsoever placed in, on or
about the Premises for the benefit of, at the request of, or by Tenant.
Tenant shall pay prior to delinquency all taxes assessed or levied against
Tenant's Personal Property in, on or about the Premises or elsewhere.  When
possible, Tenant shall cause its Personal Property to be assessed and
billed separately from the real or personal property of Landlord.

          C.   Proration.  Tenant's liability to pay Real Property Taxes
shall be prorated on the basis of a 365-day year to account for any
fractional portion of a fiscal tax year included at the commencement or
expiration of the Term.  With respect to any assessments which may be
levied against or upon the Premises, or which under the laws then in force
may be evidenced by improvements or other bonds or may be paid in annual
installments, only the amount of such annual installment (with appropriate
proration for any partial year) and interest due thereon shall be included
within the computation of the annual Real Property Taxes levied against the
Premises.  If assessments are levied against the Premises and Landlord has
the option to pay such assessments in  installments, then Tenant's
obligation to pay for such assessments during any year of the Term shall
not exceed that amount of principal and interest that would have become
payable during any such year if Landlord had elected to pay such
assessments in installments, even if Landlord elects to pay such
assessments in full.

     15.  Utilities and Services.

          Tenant shall be responsible for and shall pay promptly all
charges for water, gas, electricity, telephone, refuse pickup, janitorial
service and all other utilities, materials and services furnished directly
to or used by Tenant in, on or about the Premises, together with any taxes
thereon.  Landlord shall not be liable in damages or otherwise for any
failure or interruption, of any utility service or other service furnished
to the Premises, except that resulting from the willful misconduct of
Landlord.  In addition, Tenant shall not be entitled to any abatement or
reduction of Rent by reason of such failure or interruption, no eviction of
Tenant shall result from such failure or interruption and Tenant shall not
be relieved from the performance of any covenant or agreement in this Lease
because of such failure or interruption.

     16.  Repair and Maintenance.

          A.   Landlord's Obligations.  Landlord shall keep in good order,
condition and repair at Landlord's expense (without reimbursement from
Tenant) the structural parts of the Building, which structural parts
include only the foundation, subflooring, interior load-bearing walls and
roof structure of the Building, except that any damage thereto caused by
the negligence or willful acts or omissions of Tenant or of Tenant's
agents, employees or invitees, or by reason of the failure of Tenant to
perform or comply with any terms of this Lease, or caused by Alterations
made by Tenant or by Tenant's agents, employees or contractors shall be
repaired at Tenant's expense.  In addition, Landlord shall maintain the
Outside Area and the roof membrane of the Building (subject to Tenant's
obligation to pay for annual roof inspection and repair as set forth in
Paragraph 16.C.), and exterior walls (excluding the interior of all walls
and the exterior and interior of all windows, doors, ceiling and
plateglass).  The manner in which the Outside Area shall be maintained and
the expenditures therefor shall be at the  reasonable discretion of
Landlord.  It is an express condition precedent to all obligations of
Landlord to repair and maintain that Tenant shall have notified Landlord of
the need for such repairs or maintenance.  Tenant waives the provisions of
Sections 1941 and 1942 of the California Civil Code and any similar or
successor law regarding Tenant's right to make repairs and deduct the
expenses of such repairs from the Rent due under this Lease.

          B.   Tenant's Obligations.  Tenant shall at all times and at its
own expense clean, keep and maintain in good order, condition and repair
every part of the Building which is not  within Landlord's obligation
pursuant to Paragraph 16.A.  Tenant's repair and maintenance obligations
shall include, all plumbing and sewage facilities within the Building,
fixtures, interior walls and ceiling, floors, windows, doors, entrances,
plateglass, showcases, skylights, all electrical facilities and equipment,
including lighting fixtures, lamps, fans and any exhaust equipment and
systems, any automatic fire extinguisher equipment within the Building,
electrical motors and all other appliances and equipment of every kind and
nature located in, upon or about the Building.  Tenant shall also be
responsible for all pest control within the Building.  Tenant shall obtain
HVAC systems preventive maintenance contracts with bimonthly or monthly
service in accordance with manufacturer recommendations, which shall be
subject to the reasonable approval of Landlord and paid for by Tenant, and
which shall provide for and include replacement of filters, oiling and
lubricating of machinery, parts replacement, adjustment of drive belts, oil
changes and other preventive maintenance, including annual maintenance of
duct work, interior unit drains and caulking at sheet metal, and recaulking
of jacks and vents on an annual basis.  Tenant shall have the benefit of
all warranties available to Landlord regarding the equipment in such HVAC
systems.  Landlord may, at Landlord's election, have the HVAC systems
inspected by a licensed HVAC contractor at the expiration of the Term to
confirm whether Tenant has maintained the HVAC systems as required herein.
The cost of such inspection shall be paid by Tenant within ten (10) days
after Landlord's written request therefor.  Additionally, if any repairs
and/or replacements to the HVAC system are recommended by the contractor,
Tenant shall perform such repairs and/or replacements and shall provide
Landlord with evidence that such repairs and/or replacements have been
completed in accordance with the contractor's recommendations.  Tenant
shall have the benefit of any construction or equipment warranties existing
in favor of Landlord that would assist Tenant in correcting any defect in
the Premises or performing any of its repair and maintenance obligations
hereunder.  Upon request by Tenant, Landlord shall inform Tenant of all
written construction and equipment warranties, if any, existing in favor of
Landlord which affect the Premises.  Landlord shall cooperate with Tenant
in enforcing such warranties and in bringing any suit that may be necessary
to enforce liability with respect to any defect for which Landlord is not
responsible so long as Tenant pays all costs reasonably incurred by
Landlord in so acting.

          C.   Tenant to Pay Operating Expenses.

               (i)  Operating Expenses.  Tenant shall pay, as Additional
Rent, all reasonable costs and expenses paid or incurred by Landlord during
the Term in maintaining, repairing and replacing the Outside Area;
maintaining, repairing and replacing the roof membrane; including annual
roof inspections and preventive maintenance work on the roof membrane;
appropriate reserves for any such maintenance or repair; the cost of any
insurance maintained by Landlord for the Premises; and a  management fee
equal to three percent (3%) of the net Monthly Rent (the "Operating
Expenses").  The cost of any repair or replacement to be made by Landlord
as provided herein and which would properly be capitalized under generally
accepted accounting principles shall be fully amortized over the useful
life thereof and an amount equal to the cost so amortized, together with
interest at the then prevailing market rate Landlord would pay if Landlord
borrowed funds from an institutional lender to construct such improvements,
shall be included in Operating Expenses until the earlier of the end of the
Term or the end of such useful life.  In no event, however, shall Tenant
have any obligation to reimburse Landlord for any of the following: (a)
costs occasioned by fire, acts of God, or other casualties or by the
exercise of the power of eminent domain, other than insurance deductibles
which shall be paid by Tenant as provided in Paragraph 22; (b) costs for
which Landlord has a right of reimbursement from others including, without
limitation, under any warranties affecting the Premises or under any
insurance policies maintained with respect to the Premises; (c) costs to
correct any non-compliance with the CC&R's to the extent that such non-
compliance existed prior to the date that Landlord delivers possession of
the Premises to Tenant; (d) costs to correct any violation of laws
applicable to the Premises as of the date the Premises were originally
constructed; and (e) that portion of any premium for earthquake and/or
flood insurance that is in excess of four times the premium for the "all-
risk" or "causes of loss - special form" property insurance maintained by
Landlord for the Building.

               (ii) Monthly Payments.  From and after the Commencement
Date, Tenant shall pay to Landlord on the first day of each calendar month
of the Term an amount estimated by Landlord to be the monthly Operating
Expenses.  The foregoing estimated monthly charges may be adjusted by
Landlord at the end of any calendar quarter on the basis of Landlord's
experience and reasonably anticipated costs.  Any such adjustment shall be
effective as of the calendar month next succeeding receipt by Tenant of
written notice of such adjustment.  If the Operating Expenses billed to and
paid by Tenant include any reserves for maintenance and/or repair costs as
permitted under Paragraph 17.B.(i), the cost of the maintenance and/or
repairs for which the reserves were collected shall be paid first from the
reserves collected by Landlord as of the date of such expenditure and only
the balance of the actual cost of such maintenance and/or repairs, if any,
shall be included in Operating Expenses thereafter.  Within one hundred
twenty (120) days following the end of each calendar year Landlord shall
furnish Tenant a statement of the actual Operating Expenses ("Actual
Expenses") for the calendar year and the payments made by Tenant with
respect to such period. If Tenant's payments for the Operating Expenses do
not equal the amount of the Actual Expenses, Tenant shall pay Landlord the
deficiency within ten (10) days after receipt of such statement.  If
Tenant's payments exceed the Actual Expenses, Landlord shall either offset
the excess against the Operating Expenses next thereafter to become due to
Landlord, or shall refund the amount of the overpayments to Tenant, in
cash, as Landlord shall elect.  There shall be appropriate adjustments of
the Operating Expenses as of the Commencement Date and expiration of the
Term.

          D.   Compliance with Governmental Regulations.  Landlord shall,
at Landlord's sole cost and expense (which cost and expense shall not be
paid from the Tenant Improvements Allowance, as that term is defined in the
Work Letter Agreement), take any action that is required to correct the
violation of any law applicable to the Premises as of the date the Premises
were originally constructed.  In addition, if any laws are enacted after
the date of this Lease which require any improvements or alterations to the
Premises that would constitute a capital expenditure under generally
accepted accounting principles, Landlord shall make the required
improvement or alteration to the Premises so long as such improvement or
alteration is not required as a result of Tenant's particular use of the
Premises or as a result of any other alterations or improvements (including
the Tenant Improvements) to the Premises made by Tenant, in which case
Tenant shall be solely responsible for such improvements or alterations.
The cost of any such capital improvement or alteration to be made by
Landlord as provided herein shall be fully amortized over the useful life
thereof and an amount equal to the cost so amortized, together with
interest at the then prevailing market rate Landlord would pay if Landlord
borrowed funds from an institutional lender to construct such improvements,
shall be included in Operating Expenses until the earlier of the end of the
Term or the end of such useful life.  Subject to the foregoing, Tenant
shall, at its  sole cost and expense, comply with all present and future
regulations, rules, laws, ordinances, and requirements of all governmental
authorities (including, without limitation state, municipal,  county and
federal governments and their departments, bureaus, boards and officials)
applicable to the use or occupancy of the Premises, which shall include the
obligation to make any alterations or improvements to the Premises required
to comply with such regulations, rules, laws, ordinances and governmental
requirements whether such alterations or improvements are structural or non-
structural, capital improvements or otherwise.

     17.  Liens.

          Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished or obligations incurred by or on
behalf of Tenant and hereby indemnifies and holds Landlord and Landlord's
Agents harmless from all liability and cost, including attorneys' fees and
costs, in connection with or arising out of any such lien or claim of lien.
Tenant shall cause any such lien imposed to be released of record by
payment or posting of a proper bond acceptable to Landlord within ten (10)
days after written request by Landlord. Tenant shall give Landlord written
notice of Tenant's intention to perform work on the Premises which might
result in any claim of lien at least ten (10) days prior to the
commencement of such work to enable Landlord to post and record a Notice of
Nonresponsibility.  If Tenant fails to so remove any such lien within the
prescribed ten (10) day period, then Landlord may do so at Tenant's expense
and Tenant shall reimburse Landlord as Additional Rent for such amounts
upon demand.  Such reimbursement shall include all costs incurred by
Landlord including Landlord's reasonable attorneys' fees with interest
thereon at the Interest Rate.

     18.  Landlord's Right to Enter the Premises.

          Tenant shall permit Landlord and Landlord's Agents to enter the
Premises, including the Building, at all reasonable times with reasonable
notice, except for emergencies in which case no notice shall be required,
to inspect  the same, to post Notices of Nonresponsibility and similar
notices and "For Sale" signs, to show the Premises to interested parties
such as prospective lenders and purchasers, to make necessary repairs, to
discharge Tenant's obligations hereunder when Tenant has failed to do so
within a reasonable time after written notice from Landlord, and at any
reasonable time within one hundred and eighty (180) days prior to the
expiration of the Term, to place upon the Building or the Outside Area
ordinary "For Lease" signs and to show the Premises to prospective tenants.
The above rights are subject to reasonable security regulations of Tenant,
and to the requirement that Landlord shall at all times act in a manner to
cause the least possible interference with Tenant's business.

     19.  Signs.

          Tenant shall have the right to install Tenant's identification
sign on the exterior monument sign in the Outside Area.  Tenant shall have
no right to maintain any Tenant identification sign in any other location
in, on or about the Building or the Outside Area and shall not display or
erect any other Tenant identification sign, display or other advertising
material that is visible from the exterior of the Building.  The size,
design, color and other physical aspects of the Tenant identification sign
shall be subject to the Landlord's written approval prior to installation,
which shall not be unreasonably withheld, the CC&R's, and any appropriate
municipal or other governmental approvals.  The cost of the sign, its
installation, maintenance and removal expense shall be Tenant's sole
expense.  If Tenant fails to maintain its sign, or, if Tenant fails to
remove its sign upon termination of this Lease, Landlord  may do so at
Tenant's expense and Tenant's reimbursement to Landlord for such amounts
shall be deemed Additional Rent.

     20.  Insurance.

          A.   Indemnification.  Tenant hereby agrees to defend, indemnify
and hold harmless Landlord and Landlord's Agents from and against any and
all damage, loss, liability or expense including attorneys' fees and legal
costs suffered by reason of any claim, suit or judgment brought by or in
favor of any person or persons for damage, loss or expense due to, but not
limited to, bodily injury and property damage sustained by such person or
persons which arises out of, is occasioned by or in any way attributable to
the use or occupancy of the Premises or any part thereof and adjacent areas
by Tenant, the acts or omissions of the Tenant, its agents, employees or
any contractors brought onto the Premises by Tenant, except to the extent
caused by the negligence or willful misconduct of Landlord or Landlord's
Agents.  Tenant agrees that the obligations assumed herein shall survive
this Lease.

          B.   Tenant's Insurance.  Tenant agrees to maintain in full force
and effect at all times during the Term, at its own expense, for the
protection of Tenant and Landlord, as their interests may appear, policies
of insurance issued by a responsible carrier or carriers acceptable to
Landlord which afford the following coverages:

               (i)    Commercial general liability insurance in an amount not
less than Three Million and no/100ths Dollars ($3,000,000.00) combined
single limit for both bodily injury and  property damage which includes
blanket contractual liability broad form property damage, personal injury,
completed operations, and fire damage legal (in an amount not less than
Twenty-Five Thousand and no/100ths Dollars ($25,000.00)), naming Landlord,
Landlord's Agents and Landlord's lender as additional insureds.

               (ii)   "All-risk" or "causes of loss-special form" property
insurance (including, without limitation, vandalism, malicious mischief,
inflation endorsement, and sprinkler leakage endorsement) on Tenant's
Personal Property located on or in the Premises and any Alterations
constructed or installed on the Premises by Tenant.  Such insurance shall
be in the full amount of the replacement cost, as the same may from time to
time increase as a result of inflation or otherwise.  As long as this Lease
is in effect, the proceeds of such policy shall be used for the repair and
replacement of such items so insured.  Landlord shall have no interest in
the insurance proceeds  on Tenant's Personal Property.

               (iii)  Boiler and machinery insurance, including steam
pipes, pressure pipes, condensation return pipes and other pressure vessels
and HVAC equipment, including miscellaneous electrical apparatus, in an
amount satisfactory to Landlord.

          C.   Premises Insurance.  During the Term Landlord shall maintain
"all-risk" or "causes of loss - special form" property insurance (including
inflation endorsement, sprinkler leakage endorsement, and, at Landlord's
option, earthquake and flood coverage) on the Building, excluding coverage
of all Tenant's Personal Property located on or in the Building.  Such
insurance shall also include insurance against loss of rents, including, at
Landlord's option, coverage for earthquake and flood, in an amount equal to
the Monthly Rent and Additional Rent, and any other sums payable under the
Lease, for a period of at least twelve (12) months commencing on the date
of loss.  Such insurance shall name Landlord and Landlord's Agents as named
insureds and include a lender's loss payable endorsement in favor of
Landlord's lender (Form 438 BFU Endorsement).  The annual cost of such
insurance shall be included in Operating Expenses as provided in Paragraph
16.C.  If the property insurance premiums are increased after the
Commencement Date due to Tenant's use of the Premises, due to improvements
installed by Tenant, or due to any other cause solely attributable to
Tenant, Tenant shall pay such increase within ten (10) days of notice of
such increase.

          D.   Increased Coverage.  Upon demand, Tenant shall provide
Landlord, at  Tenant's expense, with such increased amount of existing
insurance, and such other insurance as Landlord or  Landlord's lender may
reasonably require to afford Landlord and  Landlord's lender adequate
protection; provided that such increased insurance or other insurance is
warranted due to a substantial change in the nature of Tenant's operations
at the Premises and the increased risks associated therewith or due to the
total amount of any claims paid on Tenant's insurance policies in the prior
twelve (12) month period, or such insurance is customarily required for
similar uses by owners of comparable buildings in Santa Clara County.

          E.   Co-Insurer.  If, on account of the failure of Tenant to
comply with the foregoing provisions, Landlord is adjudged a co-insurer by
its insurance carrier, then, any loss or damage Landlord shall sustain by
reason thereof, including attorneys' fees and costs, shall be borne by
Tenant and shall be immediately paid by Tenant upon receipt of a bill
therefor and evidence of such loss.

          F.   Insurance Requirements.  All insurance shall be in a form
reasonably satisfactory to Landlord and shall be carried with companies
that have a general policy holder's rating of not less than "A" and a
financial rating of not less than Class "X" in the most current edition of
Best's Insurance Reports; shall require that the insurer shall endeavor to
provide Landlord with at least thirty (30) days' prior written notice of
any material alteration or cancellation of the policy; and shall be primary
as to Landlord.  The policy or policies, or duly executed certificates for
them, together with satisfactory evidence of payment of the premium thereon
shall be deposited with Landlord prior to the Commencement Date, and upon
renewal of such policies, not less than thirty (30) days prior to the
expiration of the term of such coverage.  If Tenant fails to procure and
maintain the insurance required hereunder, Landlord may, but shall not be
required to, order such insurance at Tenant's expense and Tenant shall
reimburse Landlord upon demand.  Such reimbursement shall include all costs
incurred by Landlord including Landlord's reasonable attorneys' fees, with
interest thereon at the Interest Rate.

          G.   Landlord's Disclaimer.  Landlord and Landlord's Agents shall
not be liable for any loss or damage to persons or property resulting from
fire, explosion, falling plaster, glass, tile or sheetrock, steam, gas,
electricity, water or rain which may leak from any part of the Building or
from the pipes, appliances or plumbing works therein or from the roof,
street or subsurface, or from any other cause whatsoever, unless caused by
or due to the sole negligence or willful misconduct of Landlord.  Landlord
and Landlord's Agents shall not be liable for any latent defect in the
Premises.  Tenant shall give prompt written notice to Landlord in case of a
casualty, accident or repair needed in the Premises.

     21.  Waiver of Subrogation.

          Landlord and Tenant each hereby waive all rights of recovery
against the other on account of loss or damage occasioned to such waiving
party for its property or the property of others under its control to the
extent that such loss or damage is or would be insured against under any
insurance policies which may be in force or are required to be in force at
the time of such loss or damage.  Tenant and Landlord shall, upon obtaining
policies of insurance required hereunder, give notice to the insurance
carrier that the foregoing mutual waiver of subrogation is contained in
this Lease and Tenant and Landlord shall cause each insurance policy
obtained by such party to provide that the insurance company waives all
right of recovery by way of subrogation against either Landlord or Tenant
in connection with any damage covered by such policy.

     22.  Damage or Destruction.

          A.   Landlord's Obligation to Rebuild.  If the Building is
damaged or destroyed, Landlord shall promptly and diligently repair the
same unless it has the right to terminate this Lease as provided herein and
it elects to so terminate.

          B.   Right to Terminate.  Landlord shall have the right to
terminate this Lease in the event any of the following events occur:

               (i)    Insurance proceeds are not available to pay one hundred
percent (100%) of the cost of such repair, excluding the deductible for
which Tenant shall be responsible (as more specifically provided below),
unless Tenant elects to pay the cost of any repair that is not covered by
insurance proceeds;

               (ii)   The Building cannot, with reasonable diligence, be
fully repaired by Landlord within one hundred eighty (180) days after the
date of the damage or destruction; or

               (iii)  The Building cannot be safely repaired because of
the presence of hazardous factors, including, but not limited to,
earthquake faults, radiation, chemical waste and other similar dangers.

          If Landlord elects to terminate this Lease, Landlord may give
Tenant written notice of its election to terminate within thirty (30) days
after such damage or destruction, and this Lease shall terminate fifteen
(15) days after the date Tenant receives such notice.  If Landlord elects
not to terminate the Lease, subject to Tenant's termination right set forth
below, Landlord shall promptly commence the process of obtaining necessary
permits and approvals and repair of the Building as soon as practicable,
and this Lease will continue in full force and effect. All insurance
proceeds from insurance under Paragraph 20, excluding proceeds for Tenant's
Personal Property, shall be disbursed and paid to Landlord.  Tenant shall
be required to pay to Landlord the amount of any deductibles payable in
connection with any insured casualties, unless the casualty was caused by
the sole negligence or willful misconduct of Landlord.

          Tenant shall have the right to terminate this Lease, if the
Building cannot, with reasonable diligence, be fully repaired within one
hundred eighty (180) days from the date of damage or destruction.  The
determination of the estimated repair period shall be made by Landlord in
its good faith business judgment within thirty (30) days after such damage
or destruction.  Landlord shall deliver written notice of the repair period
to Tenant after such determination has been made and Tenant shall exercise
its right to terminate this Lease, if at all, within ten (10) days of
receipt of such notice from Landlord.

          C.   Limited Obligation to Repair.  Landlord's obligation, should
it elect or be obligated to repair or rebuild, shall be limited to the
basic Building as it existed as of the Commencement Date and Tenant shall,
at Tenant's expense, replace or fully repair all Tenant's Personal Property
and any Alterations installed by Tenant and existing at the time of such
damage or destruction.

          D.   Abatement of Rent.  Rent shall be temporarily abated
proportionately during any period when, by reason of such damage or
destruction,  there is   interference with Tenant's use of the Premises,
having regard to the extent to which Tenant may be required to discontinue
Tenant's use of the Premises.  Such abatement shall commence upon such
damage or destruction and end upon substantial completion by Landlord of
the repair or reconstruction which Landlord is obligated or undertakes to
do.  Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the Premises, damage to Tenant's Personal
Property or any inconvenience occasioned by such damage, repair or
restoration.  Tenant hereby waives the provisions of Section 1932,
Subdivision 2, and Section 1933, Subdivision 4, of the California Civil
Code, and the provisions of any similar law hereinafter enacted.

          E.   Damage Near End of Term.  Anything herein to the contrary
notwithstanding, if the Building is destroyed or damaged during the last
twelve (12) months of the Term, then either Landlord or Tenant may, at its
option, cancel and terminate this Lease as of the date of the occurrence of
such damage if the Building cannot be repaired within sixty (60) days after
such damage or destruction, unless Tenant exercises its option to extend
the Term of this Lease by delivery of written notice to Landlord within ten
(10) days after Landlord's notice to Tenant of its election to terminate,
in which event Landlord's election shall be void.  If neither Landlord nor
Tenant elects to so terminate this Lease, the repair of such damage shall
be governed by Paragraphs 22.A. and 22.B.

     23.  Condemnation.

          If title to all of the Premises or so much thereof is taken for
any public or quasipublic use under any statute or by right of eminent
domain so that reconstruction of the Premises will not, in Landlord's and
Tenant's mutual  opinion,  result  in the Premises being reasonably
suitable for Tenant's continued occupancy for the uses and purposes
permitted by this Lease, this Lease shall terminate as of the date that
possession of the Premises or part thereof be taken.  A sale by Landlord to
any authority having the power of eminent  domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed
a taking under the power of eminent domain for all purposes of this
paragraph.

          If any part of the Premises is taken and the remaining part is
reasonably suitable for Tenant's continued occupancy for the purposes and
uses permitted by this Lease, this Lease shall, as to the part so taken,
terminate as of the date that possession of such part of the Premises is
taken.  The Rent and other sums payable hereunder shall be reduced in the
same proportion that Tenant's use and occupancy of the Premises is reduced.
If any portion of the Outside Area is taken, Tenant's Rent shall be reduced
only if such taking materially interferes with Tenant's use of the Premises
and then only to the extent that the fair market rental value is diminished
by such partial taking.  Each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure allowing either party to
petition the Superior Court to terminate this Lease in the event of a
partial taking of the Premises.

           Except as expressly provided herein, no award for any partial or
entire taking shall be apportioned between Landlord and Tenant.  Tenant
assigns to Landlord its interest in any award which may be made in such
taking or condemnation, together with any and all rights of Tenant arising
in or to the same or any part thereof.  Nothing contained herein shall be
deemed to give Landlord any interest in or require Tenant to assign to
Landlord any separate award made to Tenant for the taking of Tenant's
Personal Property, or its moving costs or any award made for the loss of
any goodwill attributable to Tenant's business.

     24.  Assignment and Subletting.

          A.   Landlord's Consent.  Tenant shall not enter into a Sublet
without Landlord's prior written consent, which consent shall not be
unreasonably withheld.  Any attempted or purported Sublet without
Landlord's prior written consent shall be void and confer no rights upon
any third person and, at Landlord's election, shall terminate this Lease.
Each sublease shall be subject and subordinate to this Lease and each
assignee shall agree in writing, for the benefit of Landlord, to assume, to
be bound by, and to perform the terms, conditions and covenants of this
Lease to be performed by Tenant arising after the effective date of the
assignment.  Notwithstanding anything contained herein, Tenant shall not be
released from  liability for the performance of each term, condition and
covenant of this Lease by reason of Landlord's consent to a Sublet unless
Landlord specifically grants such release in writing.  Consent by Landlord
to any Sublet shall not be deemed a consent to any subsequent Sublet.

          B.   Information to be Furnished.  If Tenant desires at any time
to Sublet the Premises or any portion thereof, it shall first notify
Landlord of its desire to do so and shall submit in writing to Landlord:
(i) the name of the proposed Subtenant; (ii) the nature of the proposed
Subtenant's business to be carried on in the Premises; (iii) the terms and
provisions of the proposed Sublet and a copy of the proposed Sublet form
containing a description of the subject premises; and (iv) such financial
information, including financial statements, as Landlord may reasonably
request concerning the proposed Subtenant.

          C.   Landlord's Alternatives.  At any time within thirty (30)
days after Landlord's receipt of the information specified in Paragraph
24.D., Landlord may, by written notice to Tenant, elect:  (i) to consent to
the Sublet by Tenant; (ii) to refuse its consent to the Sublet, or (iii)
elect to terminate this Lease in the event of an assignment of this Lease
or a sublease of the entire Premises for the balance of the Term of this
Lease.  If Landlord consents to the Sublet, Tenant may thereafter enter
into a valid Sublet of the Premises or portion thereof, upon the terms and
conditions and with the proposed Subtenant set forth in the information
furnished by Tenant to Landlord pursuant to Paragraph 24.B., subject,
however, at Landlord's election, to the condition that seventy-five percent
(75%) of any excess of the Subrent over the Rent required to be paid by
Tenant under this Lease, less reasonable attorneys' fees and brokerage
commissions paid by Tenant in connection with the Sublet and reasonable
costs paid by Tenant for tenant improvements made to the Premises for the
Subtenant, shall be paid to Landlord.

          D.   Proration.   For purposes of determining the excess Subrent
to be paid to Landlord as provided in Paragraph 24.C. above, if a portion
of the Premises is Sublet, the pro rata share of the Rent attributable to
such partial area of the Premises shall be determined by Landlord by
dividing the Rent payable by Tenant hereunder by the total square footage
of the Premises and multiplying the resulting quotient (the per square foot
rent) by the number of square feet of the Premises which are Sublet.

          E.   Exempt Sublets.  Notwithstanding the above, Landlord's prior
written consent shall not be required for an assignment of this Lease to a
subsidiary, affiliate or parent corporation of Tenant; a corporation into
which Tenant merges or consolidates; or a purchaser of all or substantially
all of the assets for Tenant, if Tenant gives Landlord prior written notice
of the name of any such assignee, and if the assignee assumes, in writing,
for the benefit of Landlord all of Tenant's obligations under the Lease
arising after the effective date of the transfer, and with respect to any
assignment in connection with a sale of Tenant's assets,  the assignee has
a net worth, as of the effective date of the assignment, greater than or
equal to the greater of the net worth of Tenant as of the date of this
Lease or the net worth of Tenant immediately prior to the assignment,
determined in accordance with generally accepted accounting principles.

     25.  Default.

          A.   Tenant's Default.  A default under this Lease by Tenant
shall exist if any of the following occurs:

               (i)    If Tenant fails to pay Rent or any other sum required
to be paid hereunder  within five (5) days after written notice that such
Rent or other sum is past due;

               (ii)   If Tenant fails to perform any term, covenant or
condition of this Lease except those requiring the payment of money, and
Tenant fails to cure such breach within twenty (20) days after written
notice from Landlord where such breach could reasonably be cured within
such twenty (20) day period; provided, however, that where such failure
could not reasonably be cured within the twenty (20) day period, that
Tenant shall not be in default if it commences such performance within the
twenty (20) day period and diligently thereafter prosecutes the same to
completion;

               (iii)  If Tenant assigns its assets for the benefit of
its creditors;

               (iv)   If the sequestration or attachment of or execution on
any material part of Tenant's Personal Property essential to the conduct of
Tenant's business occurs, and Tenant fails to obtain a return or release of
such Personal Property within thirty (30) days thereafter, or prior to sale
pursuant to such sequestration, attachment or levy, whichever is earlier;

               (v)    If Tenant  abandons the Premises; or

               (vi)   If a court makes or enters any decree or order other
than under the bankruptcy laws of the United States adjudging Tenant to be
insolvent; or approving as properly filed a petition seeking reorganization
of Tenant; or directing the winding up or liquidation of Tenant and such
decree or order shall have continued for a period of  sixty (60) days.

Any notice provided by Landlord pursuant to Paragraph 25.A.(i) or Paragraph
25.A.(ii) above shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the California Code of Civil Procedure
regarding unlawful detainer actions provided that such notice satisfies the
requirements of that section.

          B.   Remedies.  Upon a default, Landlord shall have the following
remedies, in addition to all other rights and remedies provided by law or
otherwise provided in this Lease, to which Landlord may resort cumulatively
or in the alternative:

               (i)    Landlord may continue this Lease in full force and
effect, and this Lease shall continue in full force and effect as long as
Landlord does not terminate this Lease, and Landlord shall have the right
to collect Rent when due.

               (ii)   Landlord may terminate Tenant's right to possession of
the Premises at any time by giving written notice to that effect, and relet
the Premises or any part thereof. Reletting may be for a period shorter or
longer than the remaining term of this Lease.  Acts of maintenance, efforts
to relet the Premises or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this Lease shall not
constitute a termination of Tenant's right to possession.  On termination,
Landlord has the right to remove all Tenant's Personal Property and store
same at Tenant's cost and to recover from Tenant as damages:

                    (a)  The worth at the time of award of unpaid Rent and
other sums due and payable which had been earned at the time of
termination; plus

                    (b)  The worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of
such Rent loss that Tenant proves could have been reasonably avoided; plus
                    (c)  The worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable for the balance of the
Term after the time of award exceeds the amount of such Rent loss that
Tenant proves could be reasonably avoided; plus

                    (d)  Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease, or which, in the ordinary course of
things, would be likely to result therefrom, including, without limitation,
any costs or expenses incurred by Landlord: (i) in retaking possession of
the Premises; (ii) in maintaining, repairing, preserving, restoring,
replacing, cleaning, altering or rehabilitating the Premises or any portion
thereof, including such acts for reletting to a new tenant or tenants;
(iii) for leasing commissions and tenant improvement costs allocable to the
balance of the Term; or (iv) for any other costs necessary or appropriate
to relet the Premises; plus

                    (e)  At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to
time by the laws of the State of California.

          The "worth at the time of award" of the amounts referred to in
Paragraphs 25.B.(ii)(a) and 25.B.(ii)(b) is computed by allowing interest
at the Interest Rate on the unpaid rent and other sums due and payable from
the termination date through the date of award.  The "worth at the time of
award" of the amount referred to in Paragraph 25.B.(ii)(c) is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).

               (iii)  Landlord may upon termination of this Lease or
abandonment of the Premises by Tenant, re-enter the Premises and remove all
persons or property from the Premises; such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant.  No reentry  by Landlord pursuant to this paragraph
shall be construed as an election to terminate this Lease unless a written
notice of such intention is given to Tenant.

          C.   Landlord's Default.  Landlord shall not be deemed to be in
default in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation within
thirty (30) days after receipt of written notice by Tenant to Landlord
specifying the nature of such default; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be deemed to be in
default if it shall commence such performance within such thirty (30) day
period and thereafter diligently prosecute the same to completion.

     26.  Subordination.

          This Lease is subject and subordinate to any ground and
underlying leases and any first mortgages and first deeds of trust
(collectively "Encumbrances") which may now affect the Building or the
Premises, to the CC&R's and to all renewals, modifications, consolidations,
replacements and extensions thereof; provided, however, if the holder or
holders of any such Encumbrance ("Holder") shall require this Lease be
prior and superior to such Encumbrance, within seven (7) days of written
request of Landlord to Tenant, Tenant shall execute, have acknowledged and
deliver any and all documents or instruments, in the form presented to
Tenant, which Landlord or Holder deems necessary or desirable for such
purposes. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all Encumbrances which
are now or may hereafter be executed covering the Premises or any renewals,
modifications, consolidations, replacements or extensions thereof, for the
full amount of all advances made or to be made thereunder and without
regard to the time or character of such advances, together with interest
thereon and subject to all the terms and provisions thereof; provided that
Landlord shall obtain from any such Holder a non-disturbance agreement
which provides that in the event of termination of any such lease or upon
the foreclosure of any such mortgage or deed of trust, so long as Tenant is
not in default, Holder agrees to recognize Tenant's rights under this Lease
as long as Tenant shall pay the Rent and observe and perform all the
provisions of this Lease to be observed and performed by Tenant.  Within
ten (10) days after Landlord's written request, Tenant shall execute any
and all documents required by Landlord or the Holder to make this Lease
subordinate to any lien of the Encumbrance.  Landlord represents to Tenant
that, as of the date hereof, the Lease is not subject or subordinate to any
mortgage, deed of trust, security interest, ground lease or underlying
lease other than a deed of trust in favor of Teachers Insurance and Annuity
Association of America which deed of trust requires the execution by Tenant
of a Subordination of Mortgage in the form attached as EXHIBIT E.
Accordingly, Tenant shall execute and deliver to Landlord concurrently
herewith an original Subordination of Mortgage in the form attached as
EXHIBIT E.

          Notwithstanding anything to the contrary set forth in this
paragraph, Tenant hereby attorns and agrees to attorn to any entity
purchasing or otherwise acquiring the Building or the Premises at any sale
or other proceeding or pursuant to the exercise of any other rights, powers
or remedies under such Encumbrance.

     27.  Notices.

          Any notice or demand required or desired to be given under this
Lease shall be in writing and shall be personally served or in lieu of
personal service may be given by mail.  If given by mail, such notice shall
be deemed to have been given when seventy-two (72) hours have elapsed from
the time when such notice was deposited in the United States mail,
registered or certified, and postage prepaid, addressed to the party to be
served.  At the date of execution of this Lease, the addresses of Landlord
and Tenant are as set forth in Paragraph 1.  After the Commencement Date,
the address of Tenant shall be the address of the Premises.  Either party
may change its address by giving notice of same in accordance with this
paragraph.

     28.  Attorneys' Fees.

          If either party brings any action or legal proceeding for damages
for an alleged breach of any provision of this Lease, to recover rent, or
other sums due, to terminate the tenancy of the Premises or to enforce,
protect or establish any term, condition or covenant of this Lease or right
of either party, the prevailing party shall be entitled to recover as a
part of such action or proceedings, or in a separate action brought for
that purpose, reasonable attorneys' fees and costs.

     29.  Estoppel Certificates.

          Tenant shall within ten (10) business days following written
request by Landlord:

          (i)  Execute and deliver to Landlord any documents, including
estoppel certificates, in the form prepared by Landlord  (a) certifying
that this Lease is unmodified and in full force and effect or, if modified,
stating the nature of such modification and certifying that this Lease, as
so modified, is in full force and effect and the date to which the Rent and
other charges are paid in advance, if any, and (b) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of
Landlord, or, if there are uncured defaults on the part of the Landlord,
stating the nature of such uncured defaults, and (c) evidencing the status
of the Lease as may be required either by a lender making a loan to
Landlord to be secured by deed of trust or mortgage covering the Premises
or a purchaser of the Premises from Landlord.  Tenant's failure to deliver
an estoppel certificate within ten (10) business days after delivery of
Landlord's written request therefor shall be conclusive upon Tenant (a)
that this Lease is in full force and effect, without modification except as
may be represented by Landlord, (b) that there are now no uncured defaults
in Landlord's performance and (c) that no Rent has been paid in advance.

          If Tenant fails to so deliver a requested estoppel certificate
within the prescribed time it shall be conclusively presumed that this
Lease is unmodified and in full force and effect except as represented by
Landlord in good faith.

          (ii) If Tenant is not a "public company," deliver to Landlord the
current financial statements of Tenant, and financial statements of the two
(2) years prior to the current financial statements year, with an opinion
of a certified public accountant, including a balance sheet and profit and
loss statement for the most recent prior year, all prepared in accordance
with generally accepted accounting principles consistently applied.

     30.  Transfer of the Premises by Landlord.

          In the event of any conveyance of the Premises and assignment by
Landlord of this Lease, Landlord shall be and is hereby entirely released
from all liability under any and all of its covenants and obligations
contained in or derived from this Lease occurring after the date of such
conveyance and assignment and Tenant agrees to attorn to such transferee
provided  such transferee assumes Landlord's obligations under this Lease.

     31.  Landlord's Right to Perform Tenant's Covenants.

          If Tenant shall at any time fail to make any payment or perform
any other act on its part to be made or performed under this Lease,
Landlord may, but shall not be obligated to and without waiving or
releasing Tenant from any obligation of Tenant under this Lease, make such
payment or perform such other act to the extent Landlord may deem
desirable, and in connection therewith, pay expenses and employ counsel.
All sums so paid by Landlord and all penalties, interest and costs in
connection therewith shall be due and payable by Tenant on the next day
after any such payment by Landlord, together with interest thereon at the
Interest Rate from such date to the date of payment by Tenant to Landlord,
plus collection costs and attorneys' fees.  Landlord shall have the same
rights and remedies for the nonpayment thereof as in the case of default in
the payment of Rent.

     32.  Tenant's Remedy.

          If, as a consequence of a default by Landlord under this Lease,
Tenant recovers a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of
Landlord in the Premises and out of Rent, insurance proceeds, or other
income from such property received by Landlord or out of consideration
received by Landlord from the sale or other disposition of all or any part
of Landlord's right, title or interest in the Premises, and neither
Landlord nor Landlord's Agents shall be liable for any deficiency.

     33.  Mortgagee Protection.

          If Landlord defaults under this Lease, Tenant will notify any
beneficiary of a first deed of trust or mortgagee of a first mortgage
covering the Premises (of which Tenant has been given prior written notice
and the address thereof), and offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to obtain
possession of the Premises power of sale or a judicial foreclosure, if such
should prove necessary to effect a cure.

     34.  Brokers.

          Tenant warrants and represents that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this
Lease, except for CPS, The Commercial Property Services Company and CPS
Realty Group ("Brokers") and that it knows of no other real estate broker
or agent who is or might be entitled to a commission in connection with
this Lease.  Tenant agrees to indemnify, defend and hold Landlord and
Landlord's Agents harmless from and against any and all liabilities or
expenses, including attorneys' fees and costs, arising out of or in
connection with claims made by any other broker or individual for
commissions or fees resulting from Tenant's execution of this Lease.
Landlord shall pay to Brokers pursuant to a separate written agreement any
commission due to Brokers in connection with this Lease.

     35.  Acceptance.

          This Lease shall only become effective and binding upon full
execution hereof by Landlord and delivery of a signed copy to Tenant.
Neither party shall record this Lease nor a short form memorandum thereof.

     36.  Modifications for Lender.

          If, in connection with obtaining financing for the Premises or
any portion thereof, Landlord's lender shall request reasonable
modification to this Lease as a condition to such financing, Tenant shall
not unreasonably withhold, delay or defer its consent thereto, provided
such modifications do not  adversely affect Tenant's rights or obligations
hereunder.

     37.  Parking.

          Tenant shall have the exclusive right to use the Premises'
parking facilities upon terms and conditions as may from time to time be
established by Landlord.

     38.  Option to Extend.

          A.   Option Period.  Provided that Tenant is not in default of
any material obligation hereunder beyond any applicable cure or grace
period granted to Tenant by this Lease, either at the time of exercise or
at the time the extended Term commences, Tenant shall have the option to
extend the initial seven (7) year Term of this Lease for one (1) additional
period of three (3) years ("Option Period") on the same terms, covenants
and conditions provided herein, except that upon such renewal the Monthly
Rent due hereunder shall be determined pursuant to Paragraph 38.B.  Tenant
shall exercise its option by giving Landlord written notice ("Option
Notice") at least one hundred eighty (180) days but not more than two
hundred seventy (270) days prior to the expiration of the initial Term of
this Lease.

          B.   Option Period Monthly Rent.  The Monthly Rent for the Option
Period shall be determined as follows:

               (i)    The parties shall have fifteen (15) days after
Landlord receives the Option Notice within which to agree on the Monthly
Rent for the Option Period based upon the then fair market rental value of
the Premises as defined in Paragraph 38.B.(ii).  If the parties agree on
the Monthly Rent for the Option Period within fifteen (15) days, they shall
immediately execute an amendment to this Lease stating the Monthly Rent for
the Option Period.  If the parties are unable to agree on the Monthly Rent
for the Option Period within fifteen (15) days, then, the Monthly Rent for
the Option Period shall be the then current fair market rental value of the
Premises as determined in accordance with Paragraph 38.B.(iii), subject to
such periodic increases in Monthly Rent as are then customary, in both
amount or percentage amounts and frequency, for leases similar to this
Lease taking into consideration the same items considered in determining
the then fair market rental value of the Premises.

               (ii)   The "then fair market rental value of the
Premises" shall be defined to mean the fair market rental value of the
Premises as of the commencement of the Option Period, taking into
consideration Tenant's obligation to pay additional rent and expenses, the
uses permitted under this Lease, the quality, size, design, age and
location of the Premises, and the rent for comparable buildings located in
Milpitas.  In no event shall the fair market monthly rental value of the
Premises for the Option Period be less than the Monthly Rent last payable
under the Lease.

               (iii)  Within seven (7) days after the expiration of the
fifteen (15) day period set forth in Paragraph 38.B.(i), each party, at its
cost and by giving notice to the other party, shall appoint a real estate
appraiser with at least five (5) years' full-time commercial appraisal
experience in the area in which the Premises are located to appraise and
set the Monthly Rent.  If a party does not appoint an appraiser within ten
(10) days after the other party has given notice of the name of its
appraiser, the single appraiser appointed shall be the sole appraiser and
shall set the Monthly Rent.  If the two (2) appraisers are appointed by the
parties as stated in this paragraph, they shall meet promptly and attempt
to set the Monthly Rent.  If they are unable to agree within thirty (30)
days after the second appraiser has been appointed, they shall attempt to
elect a third appraiser meeting the qualifications stated in this paragraph
within ten (10) days after the last day the two (2) appraisers are given to
set the Monthly Rent.  If they are unable to agree on the third appraiser,
either of the parties to this Lease, by giving ten (10) days' notice to the
other party, can apply to the then Presiding Judge of the Santa Clara
County Superior Court, for the selection of a third appraiser who meets the
qualifications stated in this paragraph.  Each of the parties shall bear
one-half (1/2) of the cost of appointing the third appraiser and of paying
the third appraiser's fee.  The third appraiser, however selected, shall be
a person who has not previously acted in any capacity for either party.

                      Within thirty (30) days after the selection of the
third appraiser, a majority of the appraisers shall set the Monthly Rent.
If a majority of the appraisers are unable to set the Monthly Rent within
the stipulated period of time, the three (3) appraisals for either
unresolved item shall be added together and their total divided by three
(3); the resulting quotient shall be the Monthly Rent.  If, however, the
low appraisal and/or the high appraisal are/is more than ten percent (10%)
lower and/or higher than the middle appraisal, the low appraisal and/or the
high appraisal shall be disregarded.  If only one appraisal is disregarded,
the remaining two (2) appraisals shall be added together and their total
divided by two (2); the resulting quotient shall be the Monthly Rent.  If
both the low appraisal and the high appraisal are disregarded as stated in
this paragraph, then only the middle appraisal shall be used as the result
of the appraisal.  After the Monthly Rent has been set, the appraisers
shall immediately notify the parties and the parties shall amend this Lease
to set forth such amount.

     39.  Landlord's and Tenant's Conditions.

          A.   Landlord's Condition.  This Lease and Landlord's and
Tenant's obligations hereunder are subject to the condition that Heraeus
LaserSonics, Inc., the current tenant of the Premises, waives or fails to
exercise its option to extend the term of its lease beyond December 31,
1996, which option must be exercised on or before September 3, 1996.
Landlord shall notify Tenant on or before September 4, 1996 whether Heraeus
LaserSonics has exercised its option.  If Heraeus LaserSonics exercises its
option to extend the term,  this Lease shall terminate and Landlord shall
refund to Tenant the Security Deposit and prepaid Rent.

          B.   Tenant's Condition.  Pursuant to a letter agreement between
Landlord and Tenant executed by Tenant on June 27, 1996, Tenant has the
right to conduct certain tests and inspections of the Premises, including a
phase I environmental site assessment; an inspection of the structural
condition of the Building; a roof inspection; an inspection of the
electrical system; an inspection of the heating, ventilating and air
conditioning system in the Building; and an architectural review of the
Building.  If the phase I environmental site assessment discloses the
presence of any Hazardous Materials in, on or under the Premises, or the
inspections of the structural condition of the Building, the roof, the
electrical system, and/or the heating, ventilating and air conditioning
system disclose the need for any repairs, replacements and/or improvements,
and/or Tenant's architectural review discloses that the Premises are not,
as of the date of the letter agreement, in compliance with applicable laws
or that the Tenant Improvements will trigger compliance with law costs in
excess of $50,000.00, Tenant shall have the right to terminate this Lease
by delivery of written notice to Landlord no later than July 27, 1996,
unless Landlord notifies Tenant no later than August 6, 1996 that Landlord
will complete, to the extent applicable, and at Landlord's sole expense,
the necessary remediation of any Hazardous Materials discovered in, on or
under the Premises, and/or the necessary repairs, replacements and/or
improvements to the structural condition of the Building, the roof, the
electrical system, and/or the heating, ventilating or air conditioning
system, and/or the alterations or improvements required to comply with
applicable laws, to Tenant's reasonable satisfaction and in a manner and at
times reasonably acceptable to Tenant.

     40.  General.

          A.   Captions.  The captions and headings used in this Lease are
for the purpose of convenience only and shall not be construed to limit or
extend the meaning of any part of this Lease.

          B.   Executed Copy.  Any fully executed copy of this Lease shall
be deemed an original for all purposes.

          C.   Time.  Time is of the essence for the performance of each
term, condition and covenant of this Lease.

          D.   Separability.  If one or more of the provisions contained
herein, except for the payment of Rent, is for any reason held invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Lease, but
this Lease shall be construed as if such invalid, illegal or unenforceable
provision had not been contained herein.

          E.   Choice of Law.  This Lease shall be construed and enforced
in accordance with the laws of the State of California.  The language in
all parts of this Lease shall in all cases be construed as a whole
according to its fair meaning and not strictly for or against either
Landlord or Tenant.

          F.   Gender; Singular, Plural.  When the context of this Lease
requires, the neuter gender includes the masculine, the feminine, a
partnership or corporation or joint venture, and the singular includes the
plural.

          G.   Binding Effect.  The covenants and agreement contained in
this Lease shall be binding on the parties hereto and on their respective
successors and assigns to the extent this Lease is assignable.

          H.   Waiver.  The waiver by Landlord of any breach of
any term, condition or covenant, of this Lease shall not be
deemed to be a waiver of such provision or any subsequent breach
of the same or any other term, condition or covenant of this
Lease.  The subsequent acceptance of Rent hereunder by Landlord
shall not be deemed to be a waiver of any preceding breach at the
time of acceptance of such payment.  No covenant, term or
condition of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing signed by Landlord.

          I.   Entire Agreement.  This Lease is the entire
agreement between the parties, and there are no agreements or
representations between the parties except as expressed herein.
Except as otherwise provided herein, no subsequent change or
addition to this Lease shall be binding unless in writing and
signed by the parties hereto.

          J.   Authority.  If Tenant is a corporation or a
partnership, each individual executing this Lease on behalf of
said corporation or partnership, as the case may be, represents
and warrants that he is duly authorized to execute and deliver
this Lease on behalf of said entity in accordance with its
corporate bylaws, statement of partnership or certificate of
limited partnership, as the case may be, and that this Lease is
binding upon said entity in accordance with its terms.  Landlord,
at its option, may require a copy of such written authorization
to enter into this Lease.

          K.   Exhibits.  All exhibits, amendments, riders and
addendums attached hereto are hereby incorporated herein and made
a part hereof.

          L.   Lease Summary.  The Lease Summary attached to this
Lease is intended to provide general information only.  In the
event of any inconsistency between the Lease Summary and the
specific provisions of this Lease, the specific provisions of
this Lease shall prevail.

          THIS LEASE is effective as of the date the last
signatory necessary to execute the Lease shall have executed this
Lease.

                              TENANT:

Dated  7/9/96                     C-Cube Microsystems, Inc., a
     -------------------          California corporation

                              By   /s/ Mark Allen            
                                -----------------------------
                              Its  V.P.                      
                                 ----------------------------
                              By
                                -----------------------------
                              Its
                                 ----------------------------

                              LANDLORD:

Dated   July 9, 1996          Callahan-Pentz Properties,
     --------------------     McCarthy Four, a California general
                              partnership

                              By  /s/ George B. Pentz        
                                -----------------------------
                                   George B. Pentz,
                                   Managing General Partner
<PAGE>
THE PREMISES

The land referred to herein is described as follows:

All that certain real property in the City of Milpitas, County of Santa
Clara, State of California, described as follows:

All of Parcel 3 as shown upon that certain Map entitled, "Parcel Map being
a resubdivision of Parcel 3 as shown on Map entitled, 'Parcel Map' recorded
in Book 463 of Maps at pages 27 & 28, Santa Clara County Records", which
Map was filed for record in the office of the Recorder of the County of
Santa Clara, State of California, on April 17, 1981 in Book 483 of Maps, at
pages 5 and 6.



                                 EXHIBIT A
<PAGE>
                                 EXHIBIT B

Recorded at the request of and when recorded return to:

The Prudential Insurance Company of America
155 Moffett Park Drive
Building A - Suite 101
Sunnyvale, CA  94086

ATTN:  David Wright

                        Correction and Amendment of
                         DECLARATION OF COVENANTS,
                        CONDITIONS AND RESTRICTIONS
                      OF THE OAK CREEK BUSINESS PARK

     This Correction and Amendment to that certain instrument entitled
Declaration of Covenants, Condition and Restrictions of the Oak Creek
Business Park (the CC&Rs), which said instrument was recorded in the office
of the Recorder of the County of Santa Clara, State of California on June
5, 1979 in Book E 545 of Official Records at page 189, is made by the
"Declarant" under the CC&Rs, now and present owner of all that certain real
property hereinafter described.
     Whereas, the undersigned "Declarant" wishes to correct the legal
description of the "Subject Property" as shown on Exhibit "A" of the CC&Rs
as recorded and said Exhibit "A" is hereby corrected and amended to read as
follows:

                                EXHIBIT "A"

all that certain real property in the City of Milpitas, County of Santa
Clara, State of California, described as:

All of Parcel 1, Parcel 2, Parcel 3, Parcel 4, Parcel 5, Parcel 6 and
Parcel 8, as shown on that certain Parcel Map filed for record in the
office of the Recorder of the County of Santa Clara, State of California on
May 17, 1979 in Book 441 of Maps at pages 43 and 44.

In Witness Whereof, the undersigned "Declaration" has caused this
Correction and Amendment to be executed on this 13th day of June, 1979.

Declarant:

The Prudential Insurance Company
of America

by: /s/ A.K. Jacobson
        A.K. Jacobson - Vice President
<PAGE>
                   DECLARATION OF COVENANTS, CONDITIONS
                          AND RESTRICTIONS OF THE
                          OAK CREEK BUSINESS PARK

     THIS DECLARATION is made on May 15, 1979 by THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA  a New Jersey corporation (hereinafter called
"Declarant"), as owner of that certain real property (the "Subject
Property") situated in the city of Milpitas, County of Santa Clara, State
of California described in Exhibit "A" hereto which exhibit is by this
reference incorporated herein as if fully set forth herein.

                                 ARTICLE 1

                                DEFINITIONS

      1.1 Unless the context otherwise specifies or requires, the terms
defined in this Article shall, for all purposes of this Declaration, have
the meanings herein specified.

      1.2 Architect:  The term "Architect" shall mean a person holding a
certificate to practice architecture in the State of California under
authority of the Business and Professions Code of the State of California.

      1.3  Declaration:  The term "Declaration" shall mean this Declaration
of Covenants, Conditions and Restrictions.

      1.4  Deed of Trust:  The term "Deed of Trust" or "Trust Deed" shall
mean a mortgage as well as a deed of trust.
      
      1.5 Approving Agent:  The term "Approving Agent" shall mean, in the
following order or precedence:

          A.   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, whose present address is 155 Moffett Park Drive, Building A,
Suite 101, Sunnyvale, California 94086 (hereinafter referred to as
"Prudential"), shall be the Approving Agent until Prudential shall have
resigned as Approving Agent by executing a written resignation and causing
an original of same to be recorded, and by giving written notice of such
resignation to each Owner of record, as shown on the most recent county
assessor's roll, of real property then subject to this Declaration.

          B.   Any association (whether or not incorporated) organized by
the Owners of sixty-six and two-thirds percent (66-2/3%) of the land area
(exclusive of portions dedicated to a public agency or authority for a
public use) then subject to this Declaration for the purpose of acting as
and assuming the functions of an Approving Agent, in which membership is
available to all Owners and decisions are made on the basis of majority
vote with one vote assigned for each square foot of land owned by each
Owner, but only if the Owners organizing such association within not less
than six (6) months from the date that Prudential shall have ceased to be
the Approving Agent, shall have (i) organized such association and (ii)
executed and recorded a statement in the form of an amendment to this
Declaration as described in Paragraph 8.2 setting forth that such
organization has been formed for the purpose of acting as Approving Agent
pursuant to this Declaration and (iii) shall have, given written notice to
all Owners of record of real property then subject to this Declaration that
such association has been formed.

     1.6   Structures:  The term "structure(s)" shall include all
structures, buildings, outbuildings, sheds, fences and screening walls over
three (3) feet in height, barriers, or retaining walls.

      1.7  Mortgagee:  The term "Mortgagee" shall mean a beneficiary under
or a holder of a Deed of Trust as well as a mortgagee under a mortgage.

      1.8  The Oak Creek Business Park:  The term "The Oak Creek Business
Park" shall mean all of the real property described in Exhibit "A" hereto.

      1.9  Restrictions:  The term "Restrictions" shall mean the Covenants,
Conditions and Restrictions set forth in this Declaration, as it may from
time to time be amended or supplemented.

      1.10 Owner:  The term "Owner" shall mean and refer to any person
owning a fee estate in the land, or any portion thereof, contained within
the Oak Creek Business Park, but excluding either (a) any person who holds
such interest as security for the payment of an obligation or (b) any
person holding a leasehold estate.

      1.11 Record, Recorded:  The terms "record" or "recorded" shall mean,
with respect to any document, the recordation of said document in the
office of the County Recorder of the County of Santa Clara, State of
California.

      1.12 Sign:  The term "sign" shall mean any structure, device or
contrivance, electric or non-electric, and all parts thereof which are
erected or used for advertising purposes upon or within which any poster,
bill, bulletin, printing, lettering, painting, device or other advertising
of any kind whatsoever is used, placed, posted or otherwise fastened or
affixed to ground or structures.

      1.13 Streets:  The term "street(s)" shall mean any publicly dedicated
street, highway, or other publicly dedicated thoroughfare within or
adjacent to the Oak Creek Business Park and shown on any recorded
subdivision or parcel map, or record of survey, whether designated thereon
as a publicly dedicated street, boulevard, place, drive, road, terrace,
way, lane, circle or court.

      1.14 Visible From Neighboring Property:  The term "visible from
neighboring property" shall mean, with respect to any given object, that
such object is or would be visible to a person six (6) feet tall having
20/20 vision and standing on any part of such neighboring property at an
elevation no greater than the elevation of the base of the object being
viewed.

      1.15 Person:  The term "person" shall mean an individual, group of
individuals, corporation, partnership, trust, unincorporated business
association or such other legal entity as the context in which such term is
used may imply.

      1.16 Lot:  The term "lot" shall mean any parcel of land contained
within the Oak Creek Business Park as divided or subdivided on subdivision
or parcel map(s) recorded in the official records of the Recorder of Santa
Clara County, California, as they from time to time become current.

      1.17 Front:  The term "front" shall mean, with respect to any
structure, any wall facing a street.


                                 ARTICLE 2

                          PROPERTY SUBJECT TO THE

                             PARK RESTRICTIONS

      2.1  General Declaration Creating the Mutual

Restrictions:  Declarant hereby declares that all of the real property
located in the County of Santa Clara, State of California as described in
Exhibit "A", which exhibit is attached hereto and incorporated herein by
this reference, (sometimes hereinafter called the "Oak Creek Business
Park") is and shall be, conveyed, hypothecated, encumbered, leased,
occupied, built upon or otherwise used, improved or transferred, in whole
or in part, subject to the Restrictions and that all of said Restrictions,
and all the covenants, conditions and agreements herein contained, are
declared and agreed to be in furtherance of a general plan for the sub-
division, improvement and sale of said real property and are established
for the purpose of enhancing and perfecting the value, desirability, and
attractiveness of said real property and every part thereof.  Declarant
further declares that (a) that the Restrictions and each of the covenants,
conditions and agreements herein contained are made for the direct, mutual
and reciprocal benefit of each and every lot contained within the Oak Creek
Business Park and that such Restrictions are and shall be mutual equitable
servitudes burdening each lot for the benefit of all other lots within the
Oak Creek Business Park and (b) the Restrictions and each of the covenants,
conditions and agreements herein contained shall be "covenants running with
the land" burdening each lot within the Oak Creek Business Park for the
benefit of all other lots within the Oak Creek Business Park, the burdens
of which shall be binding upon each Owner, lessee, licensee, occupant or
user of each lot within the Oak Creek Business Park, his successors and
assigns, for the benefit of each Owner of all other lots within the Oak
Creek Business Park, his successors and assigns.

                                     
                                 ARTICLE 3

                  APPROVAL OF PLANS FOR STRUCTURES

     3.1  Approval Required:  So long as there is a then serving Approving
Agent, no structure shall be erected, placed, constructed, substantially
remodeled, rebuilt or reconstructed on any land subject to this Declaration
until the following procedures have been fully complied with and the
Approving Agent has approved in writing the Preliminary Plans (as defined
below) and the Final Plans (as defined below):

           A.   The owner, or lessee, licensee, or other occupant of the
lot to be improved or his authorized agent (the "Applicant") shall deliver
to the Approving Agent preliminary plans and specifications (the
"Preliminary Plans") in such form and containing such information as may be
required by the Approving Agent for the following:

                 (1) A site development plan showing the location of all
proposed driveways, parking areas, walkways, landscaped areas, storage and
refuse areas, and building area;

                 (2) A landscaping plan for the particular lot;

                 (3) A sign and lighting plan;

                 (4) A building elevation plan showing dimensions,
materials and exterior color schemes;
                 
                 (5) A grading plan.

Such Preliminary Plans shall be submitted in writing in duplicate over the
authorized signature of the Applicant.

           B.   At such time as the Approving Agent shall have approved in
writing the Preliminary Plans and prior to the submission of said Final
Plans to the City of Milpitas, the Applicant shall submit to the Approving
Agent complete and detailed final plans, specifications and working drawing
(the "Final Plans") with regard to the proposed improvements, which Final
Plans will be in such form as may then be required by the City of Milpitas
for review by said City and shall contain such additional information as
may be required by the Approving Agent; provided, such Final Plans need not
include detailing with regard to interior improvements such as interior
partitioning walls.

           C.   No such prior approval of any Preliminary Plans or Final
Plans shall be required if there is no then serving Approving Agent to so
approve such plans.  Changes in approved Preliminary Plans or approved
Final Plans which materially affect landscaping, signing, building size,
placement or external appearance must be similarly submitted to and
approved by the Approving Agent.

     3.2  Additional Approval Required:  So long as there is a then
serving Approving Agent, no exterior surface of any structure or
improvement existing on any lot subject to this Declaration shall be
painted, texturized or otherwise changed, no alterations, additions or
changes of any type whatsoever shall be made to any landscaping placed on
any lot subject to this Declaration, and no additions or alterations to any
paved area on any lot subject to this Declaration shall be made until plans
for such painting, alterations, additions or changes, including samples of
colors, materials, landscaping plans, and/or plans and specifications with
regard to paving, as the case may require, together with such other
information as shall be required by the Approving Agent, shall have been
submitted to the Approving Agent and the Approving Agent shall have
approved in writing such requested change.

     3.3 Basis for Approval:  The Approving Agent shall have the right to
disapprove any plans and specifications submitted hereunder for any reason
(provided that such approval shall not be unreasonably withheld), including
but not limited to any of the following:

            A.  Failure to comply with any of the Restrictions;

            B.  Failure to include information in such plans and
specifications as may have been reasonably requested by the Approving
Agent;

            C.  Objection to the exterior design of the proposed structures
or the appearance of materials to be used in the construction of any
proposed structure which are found by the Approving Agent to be
incompatible with existing structures in the Oak Creek Business Park;

            D.  Objections based upon the inadequacy of the number of
onsite parking spaces considering (1) the contemplated use or future
possible use of the structures proposed and (2) the availability of
additional parking offsite.

            E.  Objection to the location of any proposed structure upon
any lot as it relates to other lots within the Oak Creek Business Park;

            F.  Objection to the grading plan for any lot;

            G.  Objection to the color scheme, finish, proportions, style
or architecture, height, bulk or appropriateness of any structure as they
relate to other structures within the Oak Creek Business Park;

            H.  Objection to the landscaping materials as they relate to
other landscaping materials then used or contemplated for use within the
Oak Creek Business Park;

            I.  Any other matter which, in the judgment of the Approving
Agent, would render the proposed structure or structures or use
inharmonious with the general plan for improvement of the Oak Creek
Business Park or with structures or landscaping then located upon or
proposed to be located upon other lots or other properties within the Oak
Creek Business Park.
     
      3.4  Approval:  Upon approval by the Approving Agent of any plans and
specifications submitted hereunder, a copy of such plans and specifications
as approved shall be deposited for permanent record with the Approving
Agent, and a copy of such plans and specifications bearing such approval,
in writing, shall be returned to the applicant submitting the same.

      3.5  Result of Inaction:  If the Approving Agent fails either to
approve or disapprove either the Preliminary Plans or the Final Plans
within thirty (30) days after such Preliminary Plans or Final Plans, as the
case may be, have been submitted to it, it shall be conclusively presumed
that the Approving Agent has approved said Preliminary or Final Plans;
provided, however, that if within said thirty (30) day period, the
Approving Agent gives written notice of the fact that more time is required
for the review of such plans, there shall be no presumption that the same
are approved until the expiration of a reasonable period of time as set
forth in said notice not to exceed thirty (30) days. Such presumption shall
not apply if the review fee required by Paragraph 3.9 was not paid at the
time the plans were first submitted to the Approving Agent.

      3.6  Proceeding with Work:  Upon receipt of approval from the
Approving Agent pursuant to this Article, the Owner or lessee to whom the
same is given shall as soon as practicable satisfy all conditions thereof
and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations and excavations.  In all cases work
shall be commenced within one (1) year from the date of such approval.  If
Applicant fails to commence construction of the structures within one (1)
year from date of such approval, then the approval given pursuant to this
Article shall be deemed revoked unless the Approving Agent upon request
made prior to the expiration of said one (1) year period extends in writing
the time for commencing work. In all cases work shall be completed in
accordance with the Preliminary Plans and the Final Plans within two years
from date of issuance of the first (or only) building permit with regard to
such work.

      3.7  Limitation on Approving Agent:  In no event shall the Approving
Agent disapprove any plans and specifications solely by reason of the
Applicant's proposed use of the lot if such use is specifically permitted
pursuant to Section 5.1.

      3.8  Liability:  Neither the Declarant nor the Approving Agent shall
be liable for any damage, loss or prejudice suffered or claimed on account
of:

           A.   The approval or disapproval of any plans, drawings and
specifications, whether or not defective;
           
           B.   The construction or performance of any work, whether or not
done pursuant to approved plans, drawings and specifications; or

           C.   The development of any property within Oak Creek Business
Park.

      3.9  Review Fee:  An architectural review fee shall be paid to the
Approving Agent as follows:

           A.   At such time as Preliminary Plans pertaining to erection,
placement, construction, remodeling or reconstruction of structures within
the Oak Creek Business Park are submitted for approval based on the
following schedule:

                (1)  when the plans submitted are prepared by an architect,
the architectural review fee shall be Fifty Dollars ($50);

                (2)  In all other cases the architectural review fee shall
be One Hundred Dollars ($100).

           B.   At such time as documents required to be submitted pursuant
to paragraph 3.2 above are submitted for approval, the architectural review
fee shall be the sum of Fifty Dollars ($50).

      3.10 Certificate of Compliance:  So long as there is an Approving
Agent, such Approving Agent shall within twenty one (21) days following
written request therefor by an Owner, execute and deliver to such
requesting Owner a "Certificate of Compliance" stating that the lot
specified by such Owner in said request for Certificate of Compliance is in
compliance with Article 3 of these Restrictions, or, if such lot shall not
be in compliance with Article 3 of these Restrictions, stating the nature
of such non-compliance and the specific paragraph of this Article 3 with
which said lot does not comply.

                                 ARTICLE 4

                        LIMITATIONS ON IMPROVEMENTS

      4.1 Utility Lines:  All onsite utility transmission lines shall be
placed underground.

      4.2 Coverage:  No more than forty five percent (45%) of the square
foot area of any M-l zoned lots shall be occupied by structures.  No more
than thirty five percent (35%) of the square foot area of any MPD or HS
zoned lots shall be occupied by structures.

      4.3 Minimum Setback Lines:  No structures, and no part thereof, shall
be placed closer than fifty feet (50') from a property line fronting any
street ("frontage setback area"); provided, however, no structure shall be
placed closer than 20 feet (20') from any property line not fronting on any
street ("interior setback area").

      4.4 Parking Areas:  Each parcel shall have facilities for parking
sufficient to serve the business conducted thereon without using adjacent
streets therefor, and no use shall be made of the structures in any parcel
which would require parking in excess of the parking spaces on said parcel.
No parking spaces shall be located within, and no parking shall be
permitted within, a frontage setback area adjacent to any street, except
that parking shall be permitted within said setback area if such parking is
screened from view from the street by landscaping consisting of shrubbery
or berms extending at least forty eight inches (48") above the high point
of the finished adjacent pavement in said parking area.  In no case shall
such parking area be closer than twenty five feet (25') from a property
line fronting on any street or closer than five feet (5') from any property
line not fronting on any street.

      4.5 On Street Parking.  No parking shall be allowed in any public
street paved areas or rights of way located in the Oak Creek Business Park.
Said restriction shall be enforced by municipal ordinances of the City of
Milpitas.

      4.6 Storage and Loading Areas:  No loading dock, truck loading,
storage area or other such facility shall be located in the front of any
building or structure or within any frontage setback area or between a
front of any building or structure and the street which said front faces.
All exterior storage areas shall be screened by chain link fence with
redwood slats, a minimum of six feet (6') in height.

      4.7 Metal Buildings:  No buildings or structures constructed with
corragated metal exterior walls or so-called "Butler type" buildings shall
be constructed within the Oak Creek Business Park.

      4.8 Exterior Screening.  All electrical and mechanical apparatus,
fixtures (other than lighting fixtures but including main electrical
transformers), whether roof mounted, exterior wall mounted or pad mounted
at grade, including but not limited to, conduit, ducts, vents, flues and
pipes located on the exterior of any structure shall be concealed from view
and shall be treated in a manner acceptable to the Architectural Control
Committee.

                                 ARTICLE 5

               RESTRICTIONS ON OPERATION AND USE

      5.1 Permitted Uses:  Subject to compliance with these Restrictions,
the following uses shall be permitted in the Oak Creek Business Park.

           A.   Manufacture (including storage of raw materials and
finished products therefrom) of the following:

                (1)   Pharmaceutical and cosmetic products;

                (2)   Optical, electronic, timing and measuring instruments
                      for use in research, development, business and
                      professional facilities; and

                (3)   Industrial, communication, transportation and utility
                      equipment;

           B.   Wholesaling, warehousing and distribution establishments
and public utility facilities (excluding storing and warehousing of acids,
chemicals, cement, plaster, petroleum products or explosive materials);

           C.   Research, experimental and engineering laboratories;

           D.   Catalog sales and mail order establishments;

           E.   Establishments for the repair, cleaning and servicing of
commercial or industrial equipment or products;

           F.   Construction firms, but only construction firms whose
activities are carried on entirely within an enclosed building and which
have no construction yard on said lot;

           G.   So long as there is an Approving Agent, any commercial use
not specifically prohibited by Paragraph 5.3 which is first approved in
writing by the Approving Agent;

           H.   So long as there is an Approving Agent, any industrial or
manufacturing use not specifically prohibited by Paragraph 5.3 which is
first approved in writing by the Approving Agent;

           I.   If there is no Approving Agent, any industrial
manufacturing or commercial use permitted by the then existing zoning or
other applicable land use regulations as promulgated by requisite
governmental authorities, except those uses specifically prohibited by
Paragraph 5.3.

      5.2 Conduct of Permitted Uses:  All permitted uses shall be performed
or carried out entirely within a building that is so designed and
constructed.  Certain activities which cannot be carried on within a
building may be permitted, but only (a) so long as there is then serving an
Approving Agent, if the Approving Agent specifically consents to use and
the location for such activity, in writing, or (b) if there is no then
serving Approving Agent, if allowed under then existing zoning or other
applicable land use regulations except for uses which are specifically
prohibited pursuant to Paragraph 5.3; provided, however, that in either of
the foregoing situations such use shall be permitted only if (i) such
activity is screened so as not to be visible from neighboring property and
streets and (ii) all lighting required for such use is shielded from
adjacent streets.

      5.3 Prohibited Uses:  The following operations and uses shall not be
permitted on any property subject to these restrictions:

            A.  Residential of any type;

            B.  Trailer courts, mobile home parks or recreation vehicle
 camp grounds;

            C.  Junk yards or recycling facilities;

            D.  Drilling for and/or the removal of oil, gas or other
 hydrocarbon substances (except that this provision shall not be deemed to
 prohibit the entry of the property below a depth of five hundred (500)
 feet for such purposes);
            
            E.  Commercial excavation except in the course of approved
 construction;

            F.  Distillation of bones;

            G.  Dumping, disposal, incineration or reduction of garbage,
 sewage, offal, dead animals or refuse;

            H.  Fat rendering;

            I.  Stockyard or slaughter of animals;

            J.  Cemeteries;

            K.  Refining of petroleum or of its products;

            L.  Smelting of iron, tin, zinc, or other ores;

            M.  Jail or honor farms;

            N.  Labor or migrant worker camps;

            0.  Truck, bus terminals;

            P.  Petroleum storage yards.

            Q.  Auto wrecking, auto repair or auto painting establishment.

      5.4 Emissions:  No use shall be permitted to exist or operate any lot
which:

            A.  Emits dust, sweepings, dirt, cinders, fumes, odors,
  radiation, gases, vapors or discharges liquid or solid wastes or other
  harmful matter into the atmosphere or any stream, river or other body of
  water which may adversely affect (i) the health or safety of persons
  within the area or (ii) the use of property within the Oak Creek Business
  Park or (iii) vegetation within the Oak Creek Business Park, nor shall
  waste or any substance or materials of any kind be discharged into any
  public sewer serving the Oak Creek Business Park or any part thereof, in
  violation of any regulations of any public body having jurisdiction.

            B.  Produces intense glare or heat unless such use is performed
  only within an enclosed or screened area and then only in such manner
  that the glare or heat emitted will not be discernible from any exterior
  lot line.

            C.  Creates a sound pressure level in violation of any
  regulation of any public body having jurisdiction.

            D.  Allows the visible emissions of smoke (outside any
  building) other than the exhausts emitted by motor vehicles or other
  transportation facilities in violation of any regulation of any public
  body having jurisdiction.  This requirement shall also be applicable to
  the disposal of trash and waste materials.

            E.  Creates a ground vibration that is perceptible, without
  instruments, at any point along any of the exterior lot lines.

      5.5 Signs:  The Approving Agent may, from time to time, enact sign
criteria setting forth such requirements for signs to be erected within the
Oak Creek Business Park as the Approving Agent may deem desirable, which
sign criteria shall become effective upon recordation thereof in the
official records of Santa Clara County.  All signs erected by any owner on
a lot within the Oak Creek Business Park subsequent to the recoration of
said sign criteria shall be in conformance with the criteria set forth
therein.  Except as specifically otherwise allowed in any then existing
sign criteria, no sign shall be installed or erected or placed on any lot
other than those signs identifying the name, business and products of the
person or firm occupying the lot and those offering the lots for sale or
lease.  Until such time as sign criteria is enacted, all signs shall be
approved by the Approving Agent prior to the installation of said signs.

      5.6 Landscaping Criteria:  The Approving Agent may, from time to
time, enact landscaping criteria setting forth such requirements for
landscaping to be placed on or in lots located within the Oak Creek
Business Park as the Approving Agent may deem desirable including, without
limitation, amount of area to be plated in sod lawns or other plantings,
type of plantings, placement of irrigation systems, requirements for trees
and raised planter boxes, which landscape criteria shall become effective
upon recordation thereof in the official records of Santa Clara County.
All landscaping placed by any owner on a lot within the Oak Creek Business
Park subsequent to the recordation of said landscape criteria shall be in
conformance with the criteria set forth therein.
      
      5.7 Storage and Refuse Collection Areas:

          A.  No materials, supplies or equipment, including company owned
or operated trucks or motor vehicles, shall be stored in any area on a lot
except inside a closed building, or behind a visual barrier screening such
areas so that they are not visible from the neighboring properties or
streets.  No storage areas shall be maintained between a street and the
front of the structure nearest such street.

          B.  All outdoor refuse collection areas shall be visually
screened so as not to be visible from streets and neighboring property.  No
refuse collection areas shall be maintained between a street and the front
of the structure nearest such street.

      5.8 Condition of Property:  The Owner of each lot shall at all times
keep and properly maintain the premises, structures, improvements,
landscaping, paving and appurtenances situate thereon in a safe, clean,
sightly and wholesome condition and in a good state of repair and shall
comply in all respects with all governmental, health, fire and police
requirements and regulations, and shall cause to be regularly removed at
its own expense any rubbish of any character whatsoever which may
accumulate on such lot, and in particular and without limitation:

          A.    All areas of each lot not used for structures, walkways,
paved driveways, parking or storage areas shall be at all times maintained
by a professional landscape engineer or gardner in a fully and well kept
landscaped condition utilizing ground cover and/or shrub and tree
materials. Undeveloped areas proposed for future expansion shall be
maintained in a weed-free condition.  An automatic under-ground landscape
irrigation system shall be provided by the Owner of each lot which is
sufficient to properly irrigate all landscaped areas within such lot.

          B.    Parking areas shall be paved so as to provide all-weather
surfaces.  Each parking space shall be designated by lines painted on the
paved surfaces and shall be adequate in area, and all parking areas shall
provide, in addition to parking spaces, adequate driveways and space for
the movement of vehicles.

      5.9 Excavation:  No excavation shall be made on, and no sand, gravel,
soil, or other material shall be removed from, any lot, except in
connection with the construction of structures.  Upon completion of such
construction, exposed openings shall be backfilled to grade, and disturbed
ground shall be graded level and paved or landscaped in conformity with the
requirements of this Declaration.

                                 ARTICLE 6

                       APPROVALS OR VARIANCES IF NO

                          APPROVING AGENT EXISTS

      6.1 Variance by Approving Agent:  So long as there shall be Approving
Agent then serving, it shall have the exclusive right to grant variances
from requirements set forth in Article 4 or waive entirely the restrictions
set forth in said Article 4 with respect to any given lot, as the Approving
Agent, in its sole discretion, shall determine is for the successful
Development of the Oak Creek Business Park.

      6.2 Granting of Variance:  Any variance granted here-under shall be
effective upon, and only upon, the recordation of a Notice of Variance
executed by the Approving Agent.

                                 ARTICLE 7

                                ENFORCEMENT

      7.1 Remedy:  So long as there is an Approving Agent, it shall have
the exclusive right to enforce the provisions hereof, but without liability
for failure so to do.  In the event that the Approving Agent shall fail to
take action respecting the breach or violation of any of the provisions of
this Declaration within thirty (30) days from the written demand by any
Owner within the Oak Creek Business Park to take such action or if such
breach or violation of this Declaration shall occur at such time as there
is no Approving Agent, then any Owner of a lot within the Oak Creek
Business Park shall have the right to enforce the provisions contained in
this Declaration.
      
      7.2 Right to Enter:  So long as Prudential shall be serving as the
Approving Agent, Prudential, and only Prudential, in addition to any other
remedy available, may, with respect to a violation or breach of the
covenants to maintain as set forth in Paragraph 5.8, and only with respect
to a breach or violation of the covenants to maintain as contained in
paragraph 5.8, enter upon the lot on which such violation or breach shall
then be occurring and take whatever action it may deem necessary to effect
compliance with the provisions of said Paragraph 5.8, including without
limitation making of such repairs or the performance of such required
maintenance necessary to conform to the requirements imposed by these
Restrictions at the expense of the Owner of said lot, provided that
Prudential shall have first given to the Owner of such lot at least sixty
(60) days prior written notice of its intention to do so and then, only if,
said Owner of such lot shall have failed to correct said violation or
breach within said sixty (60) day period if such violation or breach was
curable within sixty (60) days, or if not curable within sixty (60) days
then only if such Owner shall have failed to commence and then be
diligently seeking to so cure such violation or breach.  In the event that
Prudential shall, after having complied with the above notice requirements,
enter such lot and remedy such breach or violation, the Owner of such lot
shall be responsible to reimburse Prudential forthwith upon demand for all
costs and expenses incurred in connection therewith ("Non-Compliance
Expenses") in accordance with the provisions of this Section.  Each Owner
of any lot within the Oak Creek Business Park by acceptance of a deed or
other conveyance whether or not it shall be so expressed in any such deed
or other conveyance, is and shall be deemed to covenant and agree to pay to
Prudential an assessment for any Non-Compliance Expenses incurred by
Prudential in connection with such Owner's lot.

            A.  Prudential shall maintain accurate books and records
  reflecting any Non-Compliance Expenses, and shall provide each Owner of
  an affected lot a statement with respect thereto.  Each affected Owner
  shall pay Non-Compliance Expenses incurred applicable to such Owner's lot
  within ten (10) days of receipt of a statement.  If such statement is
  deposited in the United States mail duly certified or registered with
  postage prepaid and addressed to the Owner affected thereby at his lot,
  the same shall be deemed received by such Owner on the fifth (5th)
  business day after such deposit.

            B.  Any Non-Compliance Expenses assessments, together with such
  interest thereon and costs of collection thereof as provided hereinbelow,
  shall be a charge on the lot and shall be a continuing lien upon the lot
  against which such assessments are made.  The lien shall become effective
  upon recordation of a notice of claim of lien as provided herein.  Such
  assessment, together with such interest and costs, shall also be the
  personal obligation of the person who is the Owner of such lot at the
  time when the assessment, or any portion thereof, fell due but in no
  event shall the person who is the Owner of such lot be personally
  obligated for a sum in excess of Ten Thousand Dollars ($10,000) for any
  given violation (but without limiting the amount that may become a lien
  upon such lot for any given violation or the aggregate of the personal
  obligation for successive violations).  Any personal obligation created
  hereunder shall not pass to such Owners successors in title unless it is
  expressly assumed by them but any lien created hereunder shall remain a
  charge against the lot except as to "bona fide purchasers or
  encumbrancers for value", without notice of same.  No Owner may waive or
  otherwise escape personal liability for the personal assessment provided
  herein by non-use or abandonment of his lot.

            C.  If any Non-Compliance Expenses assessment or any portion
  thereof is not paid within ten (10) days after the date due it shall bear
  interest from the date of delinquency at the then legal rate, and, in
  addition to all other legal and equitable rights or remedies, Prudential
  may, at its option, bring an action at law against the Owner who is
  personally obligated to pay the same, or upon compliance with the notice
  provisions set forth hereinbelow, to foreclose the lien against the
  affected lot, and there shall be added to the amount of such assessment
  or any portion thereof, the interest thereon, all costs and expenses,
  including reasonable attorneys fees, incurred by Prudential and in
  collecting the delinquent assessment.  In lieu of judicially foreclosing
  the lien, Prudential, at its option, may foreclose such lien by
  proceeding under a power of sale as provided hereinbelow, such a power of
  sale being given to Prudential, as to each and every lot for the purpose
  of collecting assessments.

            D.  No action shall be brought to foreclose the lien, or to
  proceed under the power of sale, less than thirty (30) days after the
  date that a notice of claim of lien, executed by Prudential, is recorded,
  stating the amount claimed (which may include interest and cost of
  collection, including reasonable attorneys' fees), a good and sufficient
  legal description of the lot being assessed, the name of the record Owner
  or reputed Owner thereof, and the name and address of Prudential as
  claimant.  A copy of said notice of claim shall be deposited in the
  United States mail, certified or registered, with postage prepaid, to the
  Owner of said lot.
            
            E.  Any such sale provided for above shall be conducted in
  accordance with Sections 2924, 2924(b), and 2924(c) of the Civil Code of
  the State of California, applicable to the exercise of powers of sale in
  mortgages and deeds of trust, or in any other manner permitted or
  provided by law.  Prudential shall have the power to bid on the lot at
  the foreclosure sale, and to acquire and hold, mortgage and convey the
  same.

            F.  Upon the timely curing of any default for which a notice of
  claim of lien was recorded by Prudential, Prudential is hereby authorized
  to file or record, as the case may be, an appropriate release of such
  notice, upon payment by the defaulting Owner of a fee to be determined by
  Prudential but not to exceed Five Hundred Dollars ($500), to cover the
  costs of preparing and filing or recording such release together with the
  payment of such other costs, interest or fees as shall have been
  incurred.

            G.  The assessment lien and the rights to foreclosure and sale
  thereunder shall be in addition to and not in substitution for all other
  rights and remedies which Prudential may have hereunder, at law or in
  equity.

      7.3 Result of Violation:  The result of every action or omission
whereby the provisions of this Declaration are violated in whole or in part
is hereby declared to be and to constitute a nuisance, and every remedy
allowed by law or equity shall be available to any Owner of any lot within
the Oak Creek Business Park.

      7.4 Attorney's Fees:  In any legal or equitable proceeding for the
enforcement of the provisions of this Declaration, whether it be an action
for damages, declaratory relief or injunctive relief, the losing party or
parties shall pay the attorneys' fees of the prevailing party or parties,
in such reasonable amount as may be fixed by the court in such proceedings,
or in a separate action brought for that purpose.  The prevailing party
shall be entitled to said attorneys' fees, even though said proceeding is
settled prior to judgment.

      7.5 Remedies Cumulative:  All remedies provided herein, or at law or
in equity shall be cumulative and not exclusive.

      7.6 Waiver:  Failure by the Approving Agent to enforce the provisions
of this Declaration shall in no event be deemed a waiver of the right to do
so thereafter, nor of the right to enforce any other covenants or
restrictions herein, nor of the rights of other Owners of the property
within the Oak Creek Business Park to enforce same.

      7.7 Prudential:  For purposes of this Article 7 the term "Prudential"
shall include Prudential's authorized employees.
                                     
                                     
                                 ARTICLE 8

                     DURATION, MODIFICATION AND REPEAL

      8.1 Duration of Restrictions:  These Restrictions shall continue and
remain in full force and effect at all times with respect to all property,
and each part thereof, now or hereafter made subject to these Restrictions
(subject, however, to the right to amend and repeal as provided for herein)
until 2039.

      8.2 Termination and Modifications:  This Declaration or any provision
thereof, or any covenant, condition or restriction contained herein, may be
terminated, extended, modified or amended, as to the whole of the Oak Creek
Business Park upon the written consent of the Owners of sixty-six and two-
thirds percent (66-2/3%) of the total square footage of the land area
contained within the Oak Creek Business Park (exclusive of dedicated public
streets); provided, however, that so long as Prudential is the Approving
Agent, no such termination, extension or modification or amendment shall be
effective without the written approval of Prudential.  No such termination,
extension, modification or amendment shall be effective until a proper
instrument in writing describing such termination, extension, modification
or amendment has been executed by the requisite number of Owners and by
Prudential and recorded.
      
      
                                 ARTICLE 9

                         MISCELLANEOUS PROVISIONS

      9.1 Constructive Notice and Acceptance:  Every person who now or
hereafter owns, occupies or acquires any right, title or interest in or to
any portion of the property made subject to these Restrictions is and shall
be conclusively deemed to have consented and agreed to every covenant,
condition and restriction contained herein, whether or not any reference to
this Declaration is contained in the instrument by which such person
acquired an interest in said property.

      9.2 Waiver of Liability:  Neither the Declarant nor the Approving
Agent shall be liable to any Owner, lessee, licensee, or occupant of land
subject to this Declaration by reason of any mistake in judgment,
negligence, nonfeasance, action or inaction or for the enforcement or
failure to enforce any provision of this Declaration.  Every Owner, lessee,
licensee or occupant of any of said property by acquiring his interest
therein agrees that he will not bring any action or suit against prudential
or any other Approving Agent to recover any such damages from or to seek
equitable relief against the Declarant by reason of same.

      9.3 Rights of Mortgagee:  No breach of the Restrictions and other
provisions contained herein, or any enforcement thereof, shall defeat or
render invalid the lien of any mortgage or deed of trust now or hereafter
executed upon land subject to these Restrictions; provided, however, that
if any portion of said property is sold under a fore-closure of any
mortgage or under the provisions of any deed of trust, any purchaser at
such sale and his successors and assigns shall hold any and all property so
purchased subject to all of the Restrictions and other provisions of this
Declaration.  Any notice of claim of lien recorded pursuant to paragraph
7.2 hereof shall take its priority vis-a-vis other encumbrances as of the
date of its recordation

      9.4 Paragraph Headings:  Paragraph headings, where used herein, are
inserted for convenience only and are not intended to be a part of this
Declaration or in any way to define, limit or describe the scope and intent
of the particular paragraphs to which they refer.

      9.5 Effect of Invalidation:  If any provision of this Declaration is
held to be invalid by any Court, the invalidity of such provision shall not
effect the validity of the remaining provisions hereof.

IN WITNESS WHEREOF, the undersigned have executed this Declaration the day
and year first above written.
       
       
                                  THE PRUDENTIAL INSURANCE COMPANY
                                  OF AMERICA
                                  
                                  By  /s/ A.K. Jacobson
                                          --------------
                                          A.K. Jacobson
Dated: 6/1/79                     Title   Regional Vice-President
<PAGE>
                            EXHIBIT "A"

All that certain real property in the City of Milpitas, County of Santa
Clara, State of California, described as:

All of Parcel 1, Parcel 2, Parcel 3, Parcel 4, Parcel 5, Parcel 6 and
Parcel 8, as shown on that certain Parcel Map filed for record on May 17,
1979 in Book 441 of Maps at pages 41 and 42 in the office of the Recorder
of the County of Santa Clara, State of California.

<PAGE>

               ALL THAT CERTAIN REAL PROPERTY IN THE CITY OF MILPITAS,
          COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:

                                   PARCEL ONE


         ALL OF PARCEL 1, AS SHOWN UPON THAT CERTAIN MAP ENTITLED, "PARCEL
    MAP BEING; A RESUBDIVISON OF PARCEL 3 AS SHOWN ON MAP ENTITLED 'PARCEL
    MAP' RECORDED IN BOOK 463 OF MAPS AT PAGES 27 & 28, SANTA CLARA COUNTY
    RECORDS", WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER
    OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, ON APRIL 17, 1981
    IN BOOK 483 OF MAPS AT PAGES 5 AND 6.


                                   PARCEL TWO

         AN EASEMENT FOR THE PURPOSE OF INGRESS AND EGRESS, BEING THE
    SOUTHEASTERLY 13.00 FEET OF THE MOST EASTERLY 58.34 FEET OF PARCEL 5,
    AS SHOWN UPON THAT CERTAIN MAP ENTITLED, "PARCEL MAP BEING A
    RESUBDIVISION OF PARCEL 3 AS SHOWN ON MAP ENTITLED 'PARCEL MAP'
    RECORDED IN BOOK 463 OF MAPS AT PAGES 27 & 28, SANTA CLARA COUNTY
    RECORDS", WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER
    OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, ON APRIL 17, 1981
    IN BOOK 483 OF MAPS AT PAGES 5 AND 6.

<PAGE>
                           EXHIBIT C


                     WORK LETTER AGREEMENT

          In connection with the Tenant Improvements to be
installed in the Premises the parties hereby agree as follows:

          1.   Plan and Specifications.  Tenant shall prepare and
submit to Landlord for Landlord's review and approval a space
plan for Tenant's proposed Tenant Improvements to the Premises.
Within five (5) business days after receipt of Tenant's space
plan, Landlord shall notify Tenant of Landlord's approval or
disapproval thereof, specifying in reasonable detail the basis
for Landlord's disapproval, if applicable.  Tenant shall retain a
licensed architect for the completion of final working
architectural and engineering plans and specifications for the
interior improvements based upon the approved space plan ("Final
Plans and Specifications").  Within ten (10) business days after
Landlord's receipt of the Final Plans and Specifications,
Landlord shall notify Tenant of Landlord's approval or
disapproval thereof, specifying in reasonable detail the basis
for Landlord's disapproval, if applicable.  No revisions to the
approved Final Plans and Specifications shall be made by Tenant
unless approved in writing by Landlord.

          2.   Permits and Approvals.  Tenant shall be
responsible for obtaining all necessary permits and approvals
(including the building and occupancy permits) and other
authorizations from the City of Milpitas or other governmental
agencies in connection with the construction of the Tenant
Improvements.  The cost of all such permits and approvals,
including inspection, outside plan check, and other building fees
required to obtain any such permits, shall be paid from the
Tenant Improvement Allowance.

          3.   Construction and Work Quality.  Once the Final
Plans and Specifications have been approved by Landlord, Tenant
will obtain subcontractor trade bids and furnish a cost breakdown
to Landlord.  The general contractor selected by Tenant for
construction of the Tenant Improvements shall be subject to
Landlord's approval, which shall not be unreasonably withheld or
delayed.  Tenant shall complete construction of the Tenant
Improvements in a good and workmanlike manner with new materials
of good quality, in accordance with the Final Plans and
Specifications approved by Landlord, and in compliance with all
applicable laws.  Tenant shall keep Landlord fully informed of
all progress and shall allow representatives of Landlord to
observe, inspect and monitor the construction of the Tenant
Improvements.  Tenant shall arrange for the Tenant Improvements
to be fully warranted (labor and materials) by the general
contractor, sub-contractor, or appropriate supplier, as the case
may be, for a period of one (1) year after the completion
thereof.  Prior to commencement of construction of the Tenant
Improvements Tenant shall deliver to Landlord (i) a current
financial statement of Tenant (if not delivered previously), and
(ii) a certification by the general contractor listing all
contractors, subcontractors and suppliers to be employed in
connection with the Tenant Improvements.  Tenant shall deliver to
Landlord a copy o the building permit obtained by Tenant for the
Tenant Improvements upon receipt of the permit from the City of
Milpitas.

          4.   Payment of Tenant Improvements Cost.

               (a)  Landlord shall provide Tenant with an
allowance for the planning and construction of the Tenant
Improvements in the amount of One Hundred Forty-Five Thousand One
Hundred Fifty-Two Dollars ($145,152.00) ("Tenant Improvements
Allowance").  The Tenant Improvements Allowance shall be the
maximum contribution by Landlord for the Tenant Improvements
Cost, as defined in Paragraph 4.   Any Tenant Improvements Costs
in excess of the Tenant Improvements Allowance shall be paid by
Tenant directly to the general contractor.

               (b)  Landlord shall pay the Tenant Improvements
Allowance to Tenant within thirty (30) days after a Notice of
Completion has been recorded for the Tenant Improvements,  and
Landlord has received all of the following: (i) an Unconditional
Waiver and Release upon Final Payment in the form attached as
Exhibit C-1 from Tenant's general contractor and each
subcontractor and supplier; (ii) an estoppel certificate executed
by Tenant in the form of Exhibit C-2; (iii) a letter executed by
Tenant's architect certifying that the Tenant Improvements have
been completed in accordance with the Final Plans and
Specifications; (iv) an unconditional certificate of occupancy or
other evidence that the Premises improved with the Tenant
Improvements are approved for occupancy by the City of Milpitas;
(v) an accounting that reconciles the disbursements made to the
general contractor and each subcontractor and supplier that has
received payment with the sums remitted to Tenant for the Tenant
Improvements; and (vi) an Application and Certification for
Payment (AIA Document G702) for the Tenant Improvements, executed
by the general contractor, and/or any subcontractor or vendor,
and the architect together with copies of all bills, vouchers and
invoices supporting all costs included in the application.  If
Landlord fails to pay the Tenant Improvements Allowance to Tenant
within such 30-day period, Tenant shall have the right to offset
any portion of the Tenant Improvements Allowance that is due and
unpaid against the Rent payable under the Lease.

          5.   Tenant Improvements Cost.  The Tenant Improvements
Allowance may be used to pay for all costs incurred by Tenant in
connection with the construction of the Tenant Improvements ,
which costs ("Tenant Improvements Costs") shall include, but not
be limited to:

               (a)  All costs of preliminary and final
architectural and engineering plans and specifications for the
Tenant Improvements, and engineering costs associated with
completion of the State of California energy utilization
calculations under Title 24 legislation;

               (b)  All costs of obtaining building permits and
other necessary authorizations from the City of Milpitas;

               (c)  All costs of interior design and finish
schedule plans and specifications including as-built drawings;
and

               (d)  All direct and indirect costs of procuring,
constructing and installing the Tenant Improvements in the
Premises.
               
In no event shall the Tenant Improvements Cost include any costs
of procuring, constructing or installing in the Premises any of
Tenant's Personal Property, but may include costs for telephone,
telecommunications and computer cabling and wiring.

          6.   Insurance.  During construction of the Tenant
Improvements, Tenant shall be required to carry (or cause its
contractor to carry) workers' compensation insurance in the
statutory limits, builder's all-risk insurance, and liability
insurance satisfying the requirements of Paragraph 21 of the
Lease.
<PAGE>
UNCONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT
         
         NOTICE:  THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES
    THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS.  THIS DOCUMENT IS
    ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN
    PAID.  IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM.
         
         The undersigned has been paid in full for all labor, services,
    equipment or material furnished to ______________ on the job of
    __________, a California limited partnership, located at
    ______________, California and does hereby waive and release any right
    to a mechanic's lien, stop notice, or any right against a labor and
    material bond on the job.
         
         
    Dated:___________________        ______________________
                                          (Company Name)
    
                                     By ___________________
                                     Its __________________
                                           (Title)
    
    
    
                                EXHIBIT C-1

<PAGE>
    Teachers Insurance and Annuity
      Association of America
    730 third Avenue
    New York, NY  10017
    
    Re:  Address
    Your Appl. #
    
    Gentlemen:
    
          It is our understanding that you have committed to place a
    mortgage upon the subject premises and as a condition precedent
    thereof have required this certification by the undersigned.
          
          The undersigned, as Lessee, under that certain lease dated
    , made with         , as Lessor, hereby ratifies the said lease and
    certifies that:
          
          1.   the undersigned has entered into occupancy of the premises
    described in said lease on ________________; and,
          
          2.   the undersigned is presently open and conducting business
    with the public in the premises; and,
          
          3.   the operation and use of the premises do not involve the
    generation, treatment, storage, disposal or release of a hazardous
    substance or a solid waste into the environment in violation of
    applicable laws and that the premises are being operated in accordance
    with all applicable environmental laws, zoning ordinances and building
    codes; and
          
          4.   the minimum rental in the annual amount of $______ was
    payable in accordance with paragraph 4.A. of the Lease and,
          
          5.   the said lease is in full force and effect and has not been
    assigned, modified, supplemented or amended in any way (except by
    agreement(s) dated             ), and neither party thereto is in
    default thereunder except as follows:___________________________

<PAGE>
                          EXHIBIT D


                  COMMENCEMENT DATE MEMORANDUM


LANDLORD:      Callahan-Pentz Properties, McCarthy Four

TENANT:        C-Cube Microsystems, Inc.

LEASE DATE:    July 8, 1996

PREMISES:      575 Cottonwood Drive
               Milpitas, CA 95035
               
          Pursuant to Paragraph 4.A. of the above referenced

Lease, the Commencement Date is hereby established as

_________________.



                              TENANT:

Dated____________________     C-Cube Microsystems, Inc., a
                              California corporation

                              By____________________________

                              Its___________________________

                              By____________________________

                              Its___________________________


                              LANDLORD:

Dated____________________     Callahan-Pentz Properties, McCarthy
                              Four, a California general
                              partnership

                              By____________________________
                                  George B. Pentz,
                                  Managing General Partner
<PAGE>

                               EXHIBIT E


RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:

  Teachers Insurance and Annuity
  Association of America
  730 Third Avenue
  New York, NY 10017
  Attn: ___________




                         SUBORDINATION OF MORTGAGE


     TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Mortgagee") as
owner and holder of a certain promissory note dated December 27, 1991 in
the original principal sum of Forty-Two Million and no/100ths Dollars
($42,000,000.00) and of a certain Deed of Trust and Assignment of Rents and
Fixture Filing of even date therewith and securing said note, recorded as
Instrument No.11183964 in the Official Records, Santa Clara County,
California, now a first lien upon the premises ("Premises") more
particularly demised and described in that certain Lease dated July 8, 1996
(the "Lease") by and between Callahan-Pentz Properties, McCarthy Four, a
California general partnership, as Landlord, and C-Cube Microsystems, Inc.
a California corporation, as Tenant, and upon other property, in
consideration of such leasing and of the sum of One ($1.00) Dollar and
other good and valuable consideration, receipt of which is hereby
acknowledged,

     DOES hereby covenant and agree that said Deed of Trust shall be and
the same is hereby made SUBORDINATE to the Lease with the same force and
effect as if the Lease, including all amendments thereto, had been
executed, delivered and recorded prior to the execution, delivery and
recording of said Deed of Trust;
          
     EXCEPT, HOWEVER, that this Subordination shall not affect nor be
applicable to and does hereby expressly exclude:

          (a)  The prior right, claim and lien of said Deed of Trust in, to
               and upon any award or other compensation heretofore or
               hereafter to be made for any taking by eminent domain of any
               part of the Premises, and to the right of disposition hereof
               in accordance with the provisions of said Deed of Trust;
          
          (B)  The prior right, claim and lien of said Deed of Trust in, to
               an upon any proceeds payable under all policies of fire and
               rent insurance upon the Premises and as to the right of
               disposition thereof in accordance with the terms of said
               Deed of Trust; and
          
          (c)  Any lien, right, power or interest, if any, which may have
               arisen or intervened in the period between the recording of
               said Deed of Trust and the execution of the Lease, or any
               lien or judgment which may arise at any time under the terms
               of the Lease.

     This Subordination shall inure to the benefit of and shall be binding
upon the undersigned, its successors and assigns.

     IN WITNESS WHEREOF, this Subordination has been duly signed and
delivered by the undersigned this _____ day of              , 1996.

                                  
                                  TEACHERS INSURANCE AND ANNUITY
                                  ASSOCIATION OF AMERICA

                                  By________________________

                                  Its______________________

                                  By________________________

                                  Its______________________

<PAGE>
                            TENANT'S AGREEMENT


          The undersigned, as Tenant under the Lease herein described, does
hereby accept and agree to the terms of the foregoing Subordination, which
shall inure to the benefit of and be binding upon the undersigned and the
heirs, executors, administrators, legal representatives, successors and
assigns of the undersigned.

          The undersigned further agrees not to subordinate such Lease, or
make such Lease subject, to any mortgage or deed of trust other than a
first mortgage or deed of trust.


                                       TENANT

                                   C-CUBE MICROSYSTEMS, INC.,
                                   a California corporation

                                   By______________________

                                   Its______________________
STATE OF CALIFORNIA      )
                         )ss.
COUNTY OF SANTA CLARA    )


On June _____, 1996, before me ,
_______________________________________________, personally appeared
__________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.

WITNESS my hand and official seal.