FIRST AMENDMENT
                                    TO
                    AMENDED AND RESTATED LOAN AGREEMENT
          
          
          This First Amendment to Amended and Restated Loan Agreement (this
     "Amendment") is entered into as of October 10, 1997, by and between
     Comerica Bank-California ("Bank") and C-Cube Microsystems, Inc.
     ("Borrower").
          
                                 RECITALS
          
          Borrower and Bank are parties to that certain Amended and
     Restated Loan Agreement dated as of September 27, 1996 (the
     "Agreement").  Borrower and Bank desire to amend the terms of the
     Agreement in accordance with the terms of this Amendment.
          
          NOW, THEREFORE, the parties agree as follows:
          
          1.   Amendments to Agreement.  The Agreement is amended as
     follows:
          
               a.   The following defined terms in Section 1.1 are amended
          in their entirety to read as follows:
               
                    "Committed Line" means Thirty Million Dollars
          ($30,000,000).

                    "Maturity Date" means May 1, 1999.
               
               b.   Subsection (a) of Section 2.1.1 is amended in its
          entirety to read as follows:
               
                    "(a)   Subject to the terms and conditions of this
          Agreement, Bank agrees to issue or cause to be issued Letters of
          Credit for the account of Borrower in an aggregate outstanding
          face amount not to exceed (i) the Committed Line minus (ii) the
          then outstanding principal balance of the Advances, provided that
          the face amount of outstanding Letters of Credit (including drawn
          but unreimbursed Letters of Credit and any Letter of Credit
          Reserve) shall not in any case exceed Fifteen Million Dollars
          ($15,000,000). Each Letter of Credit shall have an expiry date no
          later than one hundred eighty (180) days after the Maturity Date,
          provided that Borrower's Letter of Credit reimbursement
          obligation shall be secured by cash on terms acceptable to Bank
          at any time after the Maturity Date.  All Letters of Credit shall
          be, in form and substance, acceptable to Bank in its sole
          discretion and shall be subject to the terms and conditions of
          Bank's form of standard Application and Letter of Credit
          Agreement.  All amounts actually paid by Bank in respect of a
          Letter of Credit shall, when paid, constitute an Advance under
          this Agreement."
               
               c.   Clause (a) of Section 5.3 is amended to read as
          follows:
               
                    "(a) as soon as available, but in any event within
          forty-five (45) days after the end of each fiscal quarter, a
          company prepared consolidated balance sheet and income statement
          covering Borrower's consolidated operations during such period,
          certified by a Responsible Officer;"
               
               d.   Section 6.3 is amended in its entirety to read as
          follows:
               
                    "6.3 Mergers or Acquisitions.  Merge or consolidate, or
          permit any of its Subsidiaries to merge or consolidate, with or
          into any other business organization, or acquire, or permit any
          of its Subsidiaries to acquire, all or substantially all of the
          capital stock or property of another Person, provided Borrower
          may enter into mergers, consolidations or acquisitions if no
          Event of Default has occurred and is continuing or would exist
          immediately after the consummation of such transaction (i)
          between any Subsidiaries or between Borrower and any Subsidiary
          or (ii) in which the consideration is stock (in any amount) or in
          cash in an amount less than Sixty Million Dollars ($60,000,000)
          provided that, in any such transaction Borrower is the surviving
          entity following the consummation of such transaction."
               
               e.   Exhibit A to the Agreement is replaced with Exhibit A
          attached hereto.
               
               f.   The Agreement shall be and hereby is supplemented by
          the Libor Supplement to Agreement (the "Supplement") attached
          hereto as Appendix 1, which shall form a part of and is
          incorporated into the Agreement.
          
          2.   Fees and Expenses.  Borrower agrees to pay to Bank a fee
     equal to Seventy-Five Thousand Dollars ($75,000), which fee shall be
     deemed to be fully earned and nonrefundable as of the date hereof,
     provided that Bank, in its sole discretion, may waive such fee or any
     portion thereof if Borrower maintains sufficient reserves in its
     depository accounts with Bank.  Any portion of such fee not waived by
     Bank shall be payable on demand, or if no demand is made, then
     quarterly in arrears. In addition, as a condition to the effectiveness
     of this Amendment, Borrower shall pay to Bank all Bank Expenses
     incurred in connection with the preparation and negotiation of this
     Amendment.
          
          3.   Other Defined Terms.  Unless otherwise defined, all
     capitalized terms in this Amendment shall be as defined in the
     Agreement. Except as amended, the Agreement remains in full force and
     effect and is hereby ratified and confirmed.
          
          4.   Representations and Warranties.  Borrower represents and
     warrants that the Representations and Warranties contained in the
     Agreement are true and correct as of the date of this Amendment
     (except such representations and warranties to be expressly true as of
     a specific date), and that no Event of Default has occurred.
          
          5.   Promissory Note.  As a condition to the effectiveness of
     this Amendment, Borrower shall execute and deliver to Bank a Revolving
     Promissory Note in the form of Exhibit A hereto. Upon receipt by Bank
     of such Revolving Promissory Note, duly executed and delivered by
     Borrower, Bank shall cancel and return to Borrower the previously
     existing Revolving Promissory Note.
          
          6.   Counterparts.  This Amendment may be executed in two or more
     counterparts, each of which shall be deemed an original, but all of
     which together shall constitute one instrument.
          
          
          IN WITNESS WHEREOF, the undersigned have executed this Amendment
     as of the first date above written.
          
          
          
     C-CUBE MICROSYSTEMS, INC.
     
     By:     /s/ John J. Hagedorn
          ---------------------------------
     Title:  VP / CFO
          ---------------------------------
     
     COMERICA BANK-CALIFORNIA
     
     By:     /s/ Alan Jepsen
          ---------------------------------
     Title:  VP and Assistant Manager
          ---------------------------------
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
          
                                 EXHIBIT A
                         REVOLVING PROMISSORY NOTE
     $30,000,000                                    San Jose, California
                                                    Date: October 10, 1997
          
          C-CUBE MICROSYSTEMS, INC., ("Borrower"), for value received,
     hereby promises to pay to the order of COMERICA BANK-CALIFORNlA
     ("Bank"), in lawful money of the United States of America, pursuant to
     that certain Loan Agreement dated as of September 27, 1996, by and
     between Borrower and Bank, as amended (the "Loan Agreement"), (i) the
     principal amount of $30,000,000 or, if lesser, (ii) the principal
     amount of all Advances outstanding as of the maturity date hereof.
          
          This Note is the promissory note referred to in the Loan
     Agreement. All terms defined in the Loan Agreement shall have the same
     definitions when used herein, unless otherwise defined herein.
          
          Borrower further promises to pay interest on each Advance
     hereunder in like funds on the principal amount hereof from time to
     time outstanding from the date hereof until paid in full, at a rate or
     rates per annum and payable on the dates determined pursuant to the
     Loan Agreement.
          
          Payment on this Note shall be applied in the manner set forth in
     the Loan Agreement. The Loan Agreement contains provisions for
     acceleration of the maturity of Advances hereunder upon the occurrence
     of certain stated events and also provides for optional and mandatory
     prepayments of principal hereof prior to any stated maturity upon the
     terms and conditions therein specified.
          
          All Advances made by Bank to Borrower pursuant to the Loan
     Agreement shall be recorded by Bank on the books and records of Bank.
     The failure of Bank to record any Advance or any prepayment or payment
     made on account of the principal balance hereof shall not limit or
     otherwise affect the obligation of Borrower under this Note and under
     the Loan Agreement to pay the principal, interest and other amounts
     due and payable under the Advances.
          
          Any principal or interest payments on this Note not paid when
     due, whether at stated maturity, by acceleration or otherwise, shall
     bear interest at the Default Rate.
          
          Upon the occurrence of a default hereunder or an Event of Default
     under the Loan Agreement, all unpaid principal, accrued interest and
     other amounts owing hereunder shall, at the option of Bank, be
     immediately collectible by or on behalf of Bank pursuant to the Loan
     Agreement and applicable law.
          
          Borrower waives presentment and demand for payment, notice of
     dishonor, protest and notice of protest of this Note, and shall pay
     all costs of collection when incurred, including reasonable attorneys'
     fees, costs and expenses. The right to plead any and all statutes of
     limitations as a defense to any demand hereunder is hereby waived to
     the full extent permitted by law.
          
          This Note shall be governed by, and construed and enforced in
     accordance with, the laws of the State of California, excluding
     conflict of laws principles that would cause the application of the
     laws of any other jurisdiction.
          
          The provisions of this Note shall inure to the benefit of and be
     binding upon any successor to Borrower and shall extend to any holder
     hereof.
          
     C-CUBE MICROSYSTEMS, INC.
     
     By:            /s/ John J. Hagedorn
               --------------------------------------
     Printed Name:  John J. Hagedorn
               --------------------------------------
     Title:         VP / CFO
               --------------------------------------
          
          
                                APPENDIX 1
                       LIBOR SUPPLEMENT TO AGREEMENT
          
          
          This LIBOR Supplement to Agreement (the "Supplement") is a
     supplement to the Amended and Restated Loan Agreement dated as of
     September 27, 1996, between Comerica Bank-California ("Bank") and 
     C-Cube Microsystems, Inc. ("Borrower"), as amended (the "Agreement")
     and forms a part of and is incorporated into the Agreement.  Except as
     otherwise defined in this Supplement, capitalized terms shall have the
     meanings assigned in the Agreement.
          
          1.    Definitions.
          
          "Base Rate Advances" means any Advances made or a portion thereof
     on which interest is payable based on the Base Rate in accordance with
     the terms hereof.
          
          "Business Day" means a day of the year (a) that is not a
     Saturday, Sunday or other day on which banks in the State of
     California or the City of London are authorized or required to close
     and (b) on which dealings are carried on in the interbank market in
     which Bank customarily participates.
          
          "Interest Period" means for each LIBOR Rate Advance, a period of
     approximately one, two or three months as the Borrower may elect,
     provided that the last day of an Interest Period for a LIBOR Rate
     Advance shall be determined in accordance with the practices of the
     LIBOR interbank market as from time to time in effect, provided
     further in all cases such period shall expire not later than the
     applicable Maturity Date.
          
          "Interest Rate" shall mean as to: (a) Base Rate Advances, a rate
     equal to the Base Rate; and (b) LIBOR Rate Advances, a rate of 1.25%
     per annum in excess of the LIBOR Rate (based on the LIBOR Rate
     applicable for the Interest Period selected by the Borrower).
          
          "LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate
     Advance, the rate of interest per annum determined by Bank to be the
     per annum rate of interest at which deposits in United States Dollars
     are offered to Bank in the London interbank market in which Bank
     customarily participates at 11:00 A.M. (local time in such interbank
     market) two (2) Business Days before the first day of such Interest
     Period for a period approximately equal to such Interest Period and in
     an amount approximately equal to the amount of such Advance.
          
          "LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate
     Advance, a rate per annum (rounded upwards, if necessary, to the
     nearest 1/16 of 1%) equal to (i) the LIBOR Base Rate for such Interest
     Period divided by (ii) 1 minus the Reserve Requirement for such
     Interest Period.
          
          "LIBOR Rate Advances" means any Advances made or a portion
     thereof on which interest is payable based on the LIBOR Rate in
     accordance with the terms hereof.
          
          "Regulatory Change" means, with respect to Bank, any change on or
     after the date of this Agreement in United States federal, state or
     foreign laws or regulations, including Regulation D, or the adoption
     or making on or after such date of any interpretations, directives or
     requests applying to a class of lenders including Bank of or under any
     United States federal or state, or any foreign, laws or regulations
     (whether or not having the force of law) by any court or governmental
     or monetary authority charged with the interpretation or
     administration thereof.
          
          "Reserve Requirement" means, for any Interest Period, the average
     maximum rate at which reserves (including any marginal, supplemental
     or emergency reserves) are required to be maintained during such
     Interest Period under Regulation D against "Eurocurrency liabilities"
     (as such term is used in Regulation D) by member banks of the Federal
     Reserve System. Without limiting the effect of the foregoing, the
     Reserve Requirement shall reflect any other reserves required to be
     maintained by Bank by reason of any Regulatory Change against (i) any
     category of liabilities which includes deposits by reference to which
     the LIBOR Rate is to be determined as provided in the definition of
     "LIBOR Base Rate" or (ii) any category of extensions of credit or
     other assets which include Advances.          
       
   
          2.    Requests for Advances; Confirmation of Initial Advances.
     Each LIBOR Rate Advance shall be made upon the irrevocable written
     request of Borrower received by Bank not later than 11:00 a.m. (San
     Jose, California time) on the Business Day three (3) Business Days
     prior to the date such Advance is to be made. Each such notice shall
     specify the date such Advance is to be made, which day shall be a
     Business Day; the amount of such Advance, the Interest Period for such
     Advance, and comply with such other requirements as Bank determines
     are reasonable or desirable in connection therewith.
          
          Each written request for a LIBOR Rate Advance shall be in the
     form of a LIBOR Rate Advance Form as set forth on Exhibit 1, which
     shall be duly executed by a Responsible Officer.
          
          
          3.   Conversion/Continuation of Advances.
          
               (a)  Borrower may from time to time submit in writing a
     request that Base Rate Advances be converted to LIBOR Rate Advances or
     that any existing LIBOR Rate Advances continue for an additional
     Interest Period. Such request shall specify the amount of the Base
     Rate Advances which will constitute LIBOR Rate Advances (subject to
     the limits set forth below) and the Interest Period to be applicable
     to such LIBOR Rate Advances. Each written request for a conversion to
     a LIBOR Rate Advance or a continuation of a LIBOR Rate Advance shall
     be substantially in the form of a LIBOR Rate Conversion/Continuation
     Certificate as set forth on Exhibit 2, which shall be duly executed by
     a Responsible Officer. Subject to the terms and conditions contained
     herein, three (3) Business Days after Bank's receipt of such a request
     from Borrower, such Base Rate Advances shall be converted to LIBOR
     Rate Advances or such LIBOR Rate Advances shall continue, as the case
     may be provided that:
          
                    (i)  no Event of Default or event which with notice or
     passage of time or both would constitute an Event of Default exists;
          
                    (ii) no party hereto shall have sent any notice of
     termination of this Supplement or of the Agreement.
          
                    (iii)   Borrower shall have complied with such
     customary procedures as Bank has established from time to time for
     Borrower's requests for LIBOR Rate Advances;
          
                    (iv)   the amount of a LIBOR Rate Advance shall be
     $1,000,000 or such greater amount which is an integral multiple of
     $100,000; and
          
                    (v)  Bank shall have determined that the Interest
     Period or LIBOR Rate is available to Bank which can be readily
     determined as of the date of the request for such LIBOR Rate Advance.
          
          Any request by Borrower to convert Base Rate Advances to LIBOR
     Rate Advances or continue any existing LIBOR Rate Advances shall be
     irrevocable.  Notwithstanding anything to the contrary contained
     herein, Bank shall not be required to purchase United States Dollar
     deposits in the London interbank market or other applicable LIBOR Rate
     market to fund any LIBOR Rate Advances, but the provisions hereof
     shall be deemed to apply as if Bank had purchased such deposits to
     fund the LIBOR Rate Advances.
          
               (b)  Any LIBOR Rate Advances shall automatically convert to
     Base Rate Advances upon the last day of the applicable Interest
     Period, unless Bank has received and approved a complete and proper
     request to continue such LIBOR Rate Advance at least three (3)
     Business Days prior to such last day in accordance with the terms
     hereof.  Any LIBOR Rate Advances shall, at Bank's option, convert to
     Base Rate Advances in the event that (i) an Event of Default, or event
     which with the notice or passage of time or both would constitute an
     Event of Default, shall exist, (ii) this Supplement or the Agreement
     shall terminate, or (iii) the aggregate principal amount of the Base
     Rate Advances which have previously been converted to LIBOR Rate
     Advances, or the aggregate principal amount of existing LIBOR Rate
     Advances continued, as the case may be, at the beginning of an
     Interest Period shall at any time during such Interest Period exceeds
     the Committed Line. Borrower agrees to pay to Bank, upon demand by
     Bank (or Bank may, at its option, charge Borrower's deposit account)
     any amounts required to compensate Bank for any loss (including loss
     of anticipated profits), cost or expense incurred by such person, as a
     result of the conversion of LIBOR Rate Advances to Base Rate Advances
     pursuant to any of the foregoing.
          
               (c)  On all Advances, Interest shall be payable by Borrower
     to Bank monthly in arrears not later than the last day of each
     calendar month at the applicable Interest Rate.
          
          4.   Additional Requirements/Provisions Regarding LIBOR Rate
     Advances; Etc.
          
               (a)  If for any reason (including voluntary or mandatory
     prepayment or acceleration), Bank receives all or part of the
     principal amount of a LIBOR Rate Advance prior to the last day of the
     Interest Period for such Advance, Borrower shall immediately notify
     Borrower's account officer at Bank and, on demand by Bank, pay Bank
     the amount (if any) by which (i) the additional interest which would
     have been payable on the amount so received had it not been received
     until the last day of such Interest Period exceeds (ii) the interest
     which would have been recoverable by Bank by placing the amount so
     received on deposit in the certificate of deposit markets or the
     offshore currency interbank markets or United States Treasury
     investment products, as the case may be, for a period starting on the
     date on which it was so received and ending on the last day of such
     Interest Period at the interest rate determined by Bank in its
     reasonable discretion.  Bank's determination as to such amount shall
     be conclusive absent manifest error.
          
               (b)  Borrower shall pay to Bank, upon demand by Bank, from
     time to time such amounts as Bank may determine to be necessary to
     compensate it for any costs incurred by Bank that Bank determines are
     attributable to its making or maintaining of any amount receivable by
     Bank hereunder in respect of any Advances relating thereto (such
     increases in costs and reductions in amounts receivable being herein
     called "Additional Costs"), in each case resulting from any Regulatory
     Change which:
          
                    (i)   changes the basis of taxation of any amounts
     payable to Bank under this Supplement in respect of any Advances
     (other than changes which affect taxes measured by or imposed on the
     overall net income of Bank by the jurisdiction in which such Bank has
     its principal office); or
          
                    (ii)  imposes or modifies any reserve, special deposit
     or similar requirements relating to any extensions of credit or other
     assets of, or any deposits with or other liabilities of Bank
     (including any Advances or any deposits referred to in the definition
     of "LIBOR Base Rate"); or
          
                    (iii) imposes any other condition affecting this
     Supplement (or any of such extensions of credit or liabilities).
          
     Bank will notify Borrower of any event occurring after the date of the
     Agreement which will entitle Bank to compensation pursuant to this
     section as promptly as practicable after it obtains knowledge thereof
     and determines to request such compensation.  Bank will furnish
     Borrower with a statement setting forth the basis and amount of each
     request by Bank for compensation under this Section 4.  Determinations
     and allocations by Bank for purposes of this Section 4 of the effect
     of any Regulatory Change on its costs of maintaining its obligations
     to make Advances or of making or maintaining Advances or on amounts
     receivable by it in respect of Advances, and of the additional amounts
     required to compensate Bank in respect of any Additional Costs, shall
     be conclusive absent manifest error.
          
               (c)  Borrower shall pay to Bank, upon the request of Bank,
     such amount or amounts as shall be sufficient (in the sole good faith
     opinion of such Bank) to compensate it for any loss, costs or expense
     incurred by it as a result of any failure by Borrower to borrow a
     LIBOR Rate Advance on the date for such borrowing specified in the
     relevant notice of borrowing hereunder.
          
               (d)  If Bank shall determine that the adoption or
     implementation of any applicable law, rule, regulation or treaty
     regarding capital adequacy, or any change therein, or any change in
     the interpretation or administration thereof by any governmental
     authority, central bank or comparable agency charged with the
     interpretation or administration thereof, or compliance by Bank (or
     its applicable lending office) with any respect or directive regarding
     capital adequacy (whether or not having the force of law) of any such
     authority, central bank or comparable agency, has or would have the
     effect of reducing the rate of return on capital of Bank or any person
     or entity controlling Bank (a "Parent") as a consequence of its
     obligations hereunder to a level below that which Bank (or its Parent)
     could have achieved but for such adoption, change or compliance
     (taking into consideration its policies with respect to capital
     adequacy) by an amount deemed by Bank to be material, then from time
     to time, within 15 days after demand by Bank, Borrower shall pay to
     Bank such additional amount or amounts as will compensate Bank for
     such reduction. A statement of Bank claiming compensation under this
     Section and setting forth the additional amount or amounts to be paid
     to it hereunder shall be conclusive absent manifest error.
          
               (e)  If at any time Bank, in its sole and absolute
     discretion, determines that: (i) the amount of the LIBOR Rate Advances
     for periods equal to the corresponding Interest Periods are not
     available to Bank in the offshore currency interbank markets, or (ii)
     the LIBOR Rate does not accurately reflect the cost to Bank of lending
     the LIBOR Rate Advance, then Bank shall promptly give notice thereof
     to Borrower, and upon the giving of such notice Bank's obligation to
     make the LIBOR Rate Advances shall terminate, unless Bank and the
     Borrower agree in writing to a different interest rate Advances shall
     terminate, unless Bank and the Borrower agree in writing to a
     different interest rate applicable to LIBOR Rate Advances.  If it
     shall become unlawful for Bank to continue to fund or maintain any
     Advances, or to perform its obligations hereunder, upon demand by
     Bank, Borrower shall prepay the Advances in full with accrued interest
     thereon and all other amounts payable by Borrower hereunder
     (including, without limitation, any amount payable in connection with
     such prepayment pursuant to Section 4(a)).
          
          IN WITNESS WHEREOF, the undersigned have executed this LIBOR
     Supplement to Agreement as of the first date above written.
          
          
     C-CUBE MICROSYSTEMS, INC.
     
     
     By:       /s/ John J. Hagedorn
          ------------------------------------
     Title:    VP / CFO
          ------------------------------------
     
     
     COMERICA BANK-CALIFORNIA
     
     By:       /s/ Alan Jepsen
          ------------------------------------
     Title:    VP and Assistant Manager
          ------------------------------------
          
          
          
          
                                 EXHIBIT 1
          
                          LIBOR RATE ADVANCE FORM
          
          
          The undersigned hereby certifies as follows:
          
          I, _______________________, am the duly elected and acting
        _______________________ of C-Cube Microsystems, Inc. ("Borrower").
          
          This certificate is delivered pursuant to Section 2 of that
        certain LIBOR Supplement to Agreement together with the Loan
        Agreement by and between Borrower and Comerica Bank-California
        ("Bank") (the "Agreement").  The terms used in this Borrowing
        Certificate which are defined in the Agreement have the same
        meaning herein as ascribed to them therein.
          
          Borrower hereby requests on ______________, 19__  a LIBOR Rate
        Advance (the "Advance") as follows:
          
          (a)   The date on which the Advance is to be made is
        ______________, 19___.
          
          (b)   The amount of the Advance is to be _____________
        ($___________), for an Interest Period of month(s).
          
          All representations and warranties of Borrower stated in the
        Agreement are true, correct and complete in all material respects
        as of the date of this request for a loan; provided, however, that
        those representations and warranties expressly referring to
        another date shall be true, correct and complete in all material
        respects as of such date.
          
          IN WITNESS WHEREOF, this LIBOR Rate Advance Form is executed by
        the undersigned as of this ______ day of ______________, 19__.
          
        
        C-CUBE MICROSYSTEMS, INC.
        
        By:
             ---------------------------------
        Title:
             ---------------------------------
        
        For Internal Bank Use Only
        
        LIBOR Pricing Date  LIBOR Rate  LIBOR Rate Variance  Maturity Date


                                 EXHIBIT 2
          
              LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE
          
          The undersigned hereby certifies as follows:
          
          I, _____________, am the duly elected and acting ________________
     of  C-Cube Microsystems, Inc. ("Borrower").
          
          This certificate is delivered pursuant to Section 2 of that
     certain LIBOR Supplement to Agreement together with the Loan Agreement
     by and between Borrower and Comerica Bank-California ("Bank") (the
     "Agreement").  The terms used in this LIBOR RateConversion/Continuation 
     Certificate which are defined in the Agreement have the same meaning 
     herein as ascribed to them therein.
          
          Borrower hereby requests on _________________, 19___ a LIBOR Rate
     Advance (the "Advance") as follows:
          
          (a)  ---  (i)  A rate conversion of an existing Base Rate Advance
                         from a Base Rate Advance to a LIBOR Rate Advance; or
          
               ---  (ii) A continuation of an existing LIBOR Rate Advance
                         as a LIBOR Rate Advance;

                         [Check (i) or (ii) above]       

          (b)  The date on which the Advance is to be made is ______, 19___.

(c)  The amount of the Advance is to be _________($_______), for an 
               Interest Period of _________ month(s).
          
          All representations and warranties of Borrower stated in the
     Agreement are true, correct and complete in all material respects as
     of the date of this request for a loan; provided, however, that those
     representations and warranties expressly referring to another date
     shall be true, correct and complete in all material respects as of
     such date.
          
          IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation
     Certificate is executed by the undersigned as of this _________ day of
     _________________ 19___.
          
          
     C-CUBE MICROSYSTEMS, INC.
     
     By:   
          ---------------------------------
     
     Title: 
          ---------------------------------
     
     
     For Internal Bank Use Only
     
     LIBOR Pricing Date  LIBOR Rate  LIBOR Rate Variance  Maturity Date
     
     
          
                             SECOND AMENDMENT
                                    TO
                    AMENDED AND RESTATED LOAN AGREEMENT
          
          
          This Second Amendment to Amended and Restated Loan Agreement
     (this "Amendment") is entered into as of October 10, 1997, by and
     between Comerica Bank-California ("Bank") and C-Cube Microsystems,
     Inc. ("Borrower").
          
                                 RECITALS
          
          Borrower and Bank are parties to that certain Amended and
     Restated Loan Agreement dated as of September 27, 1996, as amended
     (the "Agreement").  Borrower and Bank desire to amend the terms of the
     Agreement in accordance with the terms of this Amendment.
          
          NOW, THEREFORE, the parties agree as follows:
          
          1.   Amendments to Agreement. The Agreement is amended as
          follows:
          
               a.   Section 5.8 is amended in its entirety to read as
          follows:
          
                    "5.8 Quick Ratio. Borrower shall maintain, as of the
          last day of each calendar quarter, a ratio of Quick Assets to
          Current Liabilities of at least 1.75 to 1.0."
          
               b.   Section 5.9 is amended in its entirety to read as
          follows:
          
                    "5.9 Debt-Net Worth Ratio. Borrower shall maintain, as
          of the last day of each calendar quarter, a ratio of Total
          Liabilities less Subordinated Debt to Tangible Net Worth plus
          Subordinated Debt of not more than 0.75 to 1.0."
          
               c.   Section 5.10 is amended in its entirety to read as
          follows:
          
                    "5.10 Tangible Net Worth. Borrower shall maintain, as
          of the last day of each calendar quarter, a Tangible Net Worth of
          not less than the sum of (i) One Hundred Eighty Million Dollars
          ($180,000,000), plus (ii) 75% of Borrower's quarterly profits
          commencing with the quarter ending September 30, 1997, plus (iii)
          100% of the proceeds of the sale or issuance of Borrower's equity
          securities or Subordinated Debt from and after September 30,
          1997, minus (iv) any in-process research and development expense
          write-offs in connection with acquisitions permitted by the terms
          of this Agreement, up to a maximum of $50,000,000 during the term
          of this Agreement."
          
               d.   Section 5.11 is amended in its entirety to read as
          follows:
          
                    "5.11 Profitability. Borrower shall be profitable on an
          operating and after tax basis for each fiscal quarter, except
          that Borrower may incur a loss for one fiscal quarter in any
          fiscal year of not more than $3,000,000."
          
               e.   Exhibit C to the Agreement is replaced with Exhibit C
          attached hereto.
          
          2.   Fees and Expenses.  As a condition to the effectiveness of
          this Amendment, Borrower shall pay to Bank all Bank Expenses
          incurred in connection with the preparation and negotiation of
          this Amendment.
          
          3.   Other Defined Terms.  Unless otherwise defined, all
          capitalized terms in this Amendment shall be as defined in the
          Agreement. Except as amended, the Agreement remains in full force
          and effect and is hereby ratified and confirmed.
          
          4.   Representations and Warranties.  Borrower represents
          and warrants that the Representations and Warranties contained in
          the Agreement are true and correct as of the date of this
          Amendment (except such representations and warranties to be
          expressly true as of a specific date), and that no Event of
          Default has occurred.
          
          5.   Counterparts. This Amendment may be executed in two or
          more counterparts, each of which shall be deemed an original, but
          all of which together shall constitute one instrument.
          
          IN WITNESS WHEREOF, the undersigned have executed this Amendment
          as of the first date above written.
          
          
          C-CUBE MICROSYSTEMS, INC.
          
          By:     /s/ John J. Hagedorn
               ----------------------------------------------
          Title:  VP / CFO
               ----------------------------------------------
          
          
          COMERICA BANK-CALIFORNIA
          
          By:     /s/ Alan Jepsen
               ----------------------------------------------
          
          Title:  VP & Assistant Manager
               ----------------------------------------------
          
          
          
          
          
          
          
          
                                 EXHIBIT C
                          COMPLIANCE CERTIFICATE
                                     
     TO:     COMERICA BANK-CALIFORNIA
     
     FROM:   C-CUBE MICROSYSTEMS, INC.
          
          The undersigned authorized officer of C-Cube Microsystems, Inc.
     ("Borrower") hereby certifies that in accordance with the terms and
     conditions of the Loan Agreement between Borrower and Bank (the
     "Agreement"), (i) Borrower is in complete compliance for the period
     ending ______________ with all required covenants except as noted
     below and (ii) all representations and warranties of Borrower stated
     in the Agreement are true and correct in all material respects as of
     the date hereof.  Attached herewith are the required documents
     supporting the above certification. The Officer further certifies that
     these are prepared in accordance with Generally Accepted Accounting
     Principles (GAAP) and are consistently applied from one period to the
     next except as explained in an accompanying letter or footnotes.  The
     Officer expressly acknowledges that no borrowings may be requested by
     Borrower at any time or date of determination that Borrower is not in
     compliance with any of the terms of the Agreement, and that such
     compliance is determined not just at the date this certificate is
     delivered.
                                     
     Please indicate compliance status by circling Yes/No under "Complies"
     column.
                                     
          
     Reporting Covenant                 Required                  Complies
          
     Quarterly financial statements     Quarterly within 45 days  Yes   No
     Annual (CPA Audited)               FYE within 90 days        Yes   No
          
          
     Financial Covenant                 Required       Actual     Complies
          
     Maintain on a Quarterly Basis:
          
       Minimum Quick Ratio              1.75:1.0       ____:1.0   Yes   No
       Maximum Debt/Tangible Net Worth  0.75:1.0       ____:1.0   Yes   No
       Minimum Tangible Net Worth       $180,000,000*  $______    Yes   No
          
     Profitability:  Quarterly          $1.00**        $______    Yes   No
          
       *  plus 75% of quarterly profits, plus 100% of proceeds of new equity
          or Subordinated Debt.
       ** Borrower may incur a loss in one quarter in any fiscal year of no 
          more than $3,000,000.
          
          
          
          Comments Regarding Exceptions:   See Attached.

          
          Sincerely,  ------------------------------
                       SIGNATURE
          
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                       TITLE
          
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                       DATE