Document:

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                                                                    EXHIBIT 10.2

                             MODIFICATION AGREEMENT

      This Modification Agreement ("Agreement") is made effective as of June 18,
2004 (the "Effective Date") between Varian Medical Systems, Inc. ("Varian"), a
Delaware corporation, and Communications & Power Industries, Inc. ("CPI"), a
Delaware corporation.

                                    RECITALS

      Varian (formerly named "Varian Associates, Inc.") and CPI (as successor to
Communications & Power Industries Holding Corporation, Inc.) are parties to the
following existing agreements: Stock Sale Agreement dated June 9, 1995 (the
"Stock Sale Agreement"); Second Amendment to Stock Sale Agreement dated August
11, 1995 (the "2nd Amendment") (the Stock Sale Agreement and 2nd Amendment are
collectively referred to herein as the "1995 Stock Sale Agreement"); and Site
Access Agreement dated August 11, 1995 (the "1995 Site Access Agreement")
(collectively these three agreements are referred to herein as the "CPI/Varian
Agreements"). Any capitalized term used herein and not otherwise defined herein,
shall have the meaning ascribed to such term in the 1995 Stock Sale Agreement.

      CPI is the current owner of real property located at 301 Industrial Road,
San Carlos, California (the "San Carlos Property"). Varian was a prior owner of
the San Carlos Property. CPI acquired the San Carlos Property from Varian
effective August 11, 1995. The 1995 Stock Sale Agreement and the 1995 Site
Access Agreement restrict the right to develop, and to conduct environmental
response actions on, the San Carlos Property and establishes CPI's and Varian's
indemnity obligations related to certain environmental conditions on the
Property. CPI has entered into an agreement (as amended, the "Purchase
Agreement") to sell the San Carlos Property to Palo Alto Medical Foundation
("PAMF"), a non-profit public benefit corporation organized and existing under
the laws of the State of California, for development as a medical facility and
hospital.

      Simultaneously with entering into this Agreement, Varian and CPI are
entering into an Agreement Re Environmental Matters (the "Five Party Agreement")
with, PAMF, 301 Industrial LLC ("301"), a limited liability company organized
and existing under the laws of the State of California, and 301 Holding LLC
("301 Holding"), a limited liability company organized and existing under the
laws of the State of California, to enable CPI to sell the San Carlos Property
for redevelopment. The Five Party Agreement will also provide financial relief
for CPI and Varian for certain obligations and liabilities related to certain
environmental conditions on the San Carlos Property.

      Pursuant to the Purchase Agreement, the purchase price adjustment agreed
to by CPI for the sale of the San Carlos Property by CPI to PAMF is to reimburse
the buyer for remediation costs that will be incurred pursuant to the Five Party
Agreement for remediation of the San Carlos Property in accordance with the
terms and conditions of the Five Party Agreement. Varian and CPI are interested
in further restructuring their obligations and liabilities related to certain
environmental conditions on the San Carlos Property, and restrictions concerning
a

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property currently owned by CPI and formerly owned by Varian in Beverly,
Massachusetts (the "Beverly Property").

      Pursuant to Section III C(1) of the Five Party Agreement, PAMF and/or 301
or their contractors or agents must contact the California Regional Water
Quality Control Board, San Francisco Bay Region ("RWQCB") within five (5)
business days after the Effective Date of the Five Party Agreement, and pursuant
to Section XIX of the Five Party Agreement any party to the Five Party Agreement
has the right to terminate the Five Party Agreement if the Remedial Action Plan
("RAP") described in that Agreement is not timely approved by the RWQCB as set
out in Sections XIX and III C(1) of that Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in exchange for the consideration referred to in this
Agreement, and other good and valuable consideration, the adequacy of which is
hereby acknowledged, each party hereto agrees as follows:

      1. 301/PAMF DO NOT CONTACT RWQCB. If 301 and/or PAMF, or their contractors
or agents, do not contact the RWQCB about remediation of the San Carlos Property
within thirty (30) business days after the Effective Date of the Five Party
Agreement (provided that if Varian grants an extension pursuant to the Five
Party Agreement for this contact with the RWQCB that extends beyond this 30
business day period, Varian will grant an equivalent extension under this
Agreement), then the 1995 Site Access Agreement terms and conditions remain in
full force and effect and the 1995 Stock Sale Agreement terms and conditions
remain in full force and effect (including without limitation Section 7.11 and
CPI's and Varian's Article X obligations ) without modification by this
Agreement and the Beverly Property restriction of Section 3(d)(2) of this
Agreement shall terminate, and only the terms of this Section 1 and Sections 4
through 23 of this Agreement shall apply pursuant to this Agreement.

      2.    301/PAMF CONTACT RWQCB/RAP NOT APPROVED BY RWQCB.

      (a) If 301 and/or PAMF, or their contractors or agents, contact the RWQCB
about remediation of the San Carlos Property within thirty (30) business days
after the Effective Date of the Five Party Agreement (provided that if Varian
grants an extension pursuant to the Five Party Agreement for this contact with
the RWQCB that extends beyond this 30 business day period, Varian will grant an
equivalent extension under this Agreement), then within thirty (30) days after
the date the RWQCB is contacted, Varian shall pay CPI $250,000, and if this
Section 2 does not apply, because Section 3 does apply, to the Parties under the
terms and conditions of this Agreement, then this Varian $250,000 payment to CPI
shall become a partial payment to CPI of the Varian $500,000 payment obligation
set out in Section 3(b)(1) of this Agreement, and

      (b) if, within 245 days after the Effective Date of the Five Party
Agreement (provided that if Varian grants an extension pursuant to the Five
Party Agreement for this RAP approval by the RWQCB that extends beyond this 245
day period, Varian will grant an equivalent extension under this Agreement), the
RAP is not approved by the RWQCB as set out in Sections XIX and

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III C(1) of the Five Party Agreement and the Five Party Agreement is terminated
pursuant to Section XIX of the Five Party Agreement, then:

            (1) as modified and supplemented by this Agreement, the 1995 Site
      Access Agreement terms and conditions remain in full force and effect;

            (2) the 1995 Stock Sale Agreement terms and conditions remain in
      full force and effect (including without limitation Section 7.11 and CPI's
      and Varian's Article X obligations), except that:

                  (a) CPI shall be obligated to implement and complete any San
            Carlos Seller Indemnified Environmental Claim, as defined in Section
            2(b)(2)(g) below, (this CPI obligation is defined as "CPI Work")
            and, except to the extent set forth in Section 2(b)(2)(b)(iii), CPI
            shall release Varian from any San Carlos Seller Indemnified
            Environmental Claim arising from or related to such CPI Work and
            defend and hold Varian harmless from and against any Claims arising
            from such CPI Work. Notwithstanding the foregoing, CPI and Varian
            shall not be relieved of their respective obligations under the 1995
            Stock Sale Agreement relating to or arising out of Hazardous
            Materials located off-site from the San Carlos Property or for
            alleged bodily injury from exposure to Hazardous Materials prior to
            August 11, 1995.

                  (b) CPI shall seek, and be entitled to receive, reimbursement
            for its reasonable out-of-pocket payments (excluding any CPI
            internal costs) for CPI Work performed in compliance with this
            Section 2(b)(2) as follows. Any contractors retained by CPI, for
            whose costs CPI seeks reimbursement pursuant to this Section
            2(b)(2)(b), shall be non-affiliated third party contractors whom CPI
            retains pursuant to arms length, bona fide negotiations to perform
            CPI Work.

                       (i) first, CPI shall seek reimbursement for such CPI Work
                  from the Insurance Policy described in the Five Party
                  Agreement;

                       (ii) second, if funds from the Insurance Policy are not
                  available for such CPI Work, CPI shall reimburse itself by
                  applying the $250,000 paid by Varian to CPI in accordance with
                  Section 2(a); and

                       (iii) third, if funds from the Insurance Policy are not
                  available for such CPI Work and the $250,000 paid by Varian in
                  accordance with Section 2(a) has been applied in full pursuant
                  to Section 2(b)(2)(b)(ii), Varian shall reimburse CPI for up
                  to an additional $250,000 pursuant to Section 2(b)(2)(e) of
                  this Agreement.

            CPI shall bear the cost for all CPI Work the cost of which is not
            reimbursed pursuant to clauses (i) through (iii) above.

                  (c) with respect to any reimbursement pursuant to Section
            2(b)(2)(b)(ii) or (iii), CPI shall diligently take such actions as
            are commercially reasonable to obtain insurance proceeds under the
            Insurance Policy described in the Five Party

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            Agreement for such CPI Work (collectively "CPI Due Diligence
            Actions"), and if, after taking such Due Diligence Actions CPI does
            not receive sufficient insurance proceeds to pay for the CPI Work,
            CPI shall inform Varian in writing of the results of the CPI Due
            Diligence Actions and of CPI's entitlement to reimbursement pursuant
            to Section 2(b)(2)(b)(ii) or (iii). In such event, Varian shall be
            subrogated, with respect to any amounts reimbursed by it pursuant to
            such provisions, to all of CPI's rights under such Insurance Policy
            to the extent of reimbursement of CPI by Varian.

                  (d) CPI shall comply with the following requirements in
            proposing to undertake and in undertaking any CPI Work, whether or
            not reimbursement will be sought from Varian:

                        (i) the CPI and Varian Site Coordinators for CPI Work
                  shall be the same individuals that are appointed Site
                  Coordinators pursuant to the 1995 Site Access Agreement;

                        (ii) prior to proposing to implement any CPI Work and
                  preparing work plans, CPI shall provide Varian with any
                  documents upon which CPI is relying to support its need to
                  perform such CPI Work, including notices, correspondence,
                  orders or other documents from government agencies and
                  correspondence or other documents from third parties, and
                  shall meet with Varian to discuss the facts relied on by CPI
                  to determine that such work is CPI Work;

                        (iii) CPI shall perform CPI Work pursuant to written
                  work plans; prior to performing any CPI Work, CPI shall
                  provide the applicable work plan(s) to Varian for review and
                  comment, which review and comment process Varian shall
                  complete within two weeks of receipt of the work plan(s) from
                  CPI, unless CPI provides a longer period;

                        (iv) CPI shall give good faith consideration to Varian
                  comments and shall use commercially reasonable efforts to
                  reach agreement with Varian on the final work plan and its
                  recommendations;

                        (v) after completing the consultation process described
                  in subsections (ii), (iii) and (iv) above and revising the
                  work plan(s), as appropriate, CPI shall submit the final work
                  plan(s) to the governmental agency with jurisdiction (the
                  "Government Agency") for the CPI Work and simultaneously
                  provide a copy of the final work plan(s) to Varian, provided,
                  however, that if an emergency exists, such as the CPI Work to
                  be performed is to address a situation that poses an imminent
                  and substantial endangerment to human health, CPI shall not be
                  obligated to comply with subsections (ii), (iii) and (iv)
                  above and CPI shall perform such emergency CPI Work ,
                  informing and consulting with Varian insofar as is reasonably
                  consistent with meeting CPI's obligations to address the
                  emergency situation, and, upon completion of such emergency
                  CPI Work, CPI will

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                  meet with Varian and provide Varian with copies of the
                  documents created for or related to such emergency CPI Work;

                        (vi) CPI shall allow Varian or its agents to participate
                  in any discussions and/or meetings that CPI has with the
                  Government Agency including, to the extent possible, in any
                  emergency situation, and to present Varian's views and
                  recommendations to the Government Agency concerning the work
                  plan(s) and the CPI Work;

                        (vii) CPI shall provide Varian with at least two weeks
                  advance notice prior to the implementation by CPI of any CPI
                  Work, unless CPI is undertaking emergency CPI Work, as
                  described in subsection (v) above, and for any CPI Work,
                  including emergency CPI Work, CPI shall provide Varian or its
                  agents the opportunity to monitor the implementation of CPI
                  Work, including taking split and/or duplicate samples;

                        (viii) during the term of this Agreement, CPI shall
                  provide to Varian: (x) data and other results from any
                  sampling or site investigative activity on the San Carlos
                  Property promptly and, in any event, within 2 business days
                  after receipt by CPI of such data or other results; (y) all
                  correspondence, notices, orders, permits and other documents
                  received by CPI from government agencies that relate to the
                  San Carlos Property and any environmental condition or
                  Hazardous Material; and (z) all correspondence and other
                  documents received by CPI from third parties that relate to
                  the San Carlos Property and any environmental condition or
                  Hazardous Material;

                        (ix) CPI shall preserve, retain and maintain, and
                  instruct all of its contractors, subcontractors, agents and
                  anyone else acting on its behalf to preserve, retain and
                  maintain, all records, correspondence, and other written
                  materials and all electronic files (collectively "Records")
                  generated in the performance of CPI Work and, at Varian's
                  request and expense, shall provide to Varian copies of such
                  Records, and CPI shall not destroy any such Records (unless a
                  copy of such Records has been provided to Varian) without
                  providing notice to Varian of CPI's intent to destroy such
                  Records and giving Varian the opportunity and reasonable time
                  to have a copy of such Records made for Varian at Varian's
                  expense; and

                        (x) if, during the term of this Agreement, Varian elects
                  to perform Varian response work, which is not a San Carlos
                  Varian Response Cost Seller Indemnified Environmental Claim,
                  Varian shall perform such work at its cost in accordance with
                  the terms and conditions of the Site Access Agreement, and if
                  Varian proposes to do such work in conjunction with CPI
                  implementation of any CPI Work, Varian shall cooperate and
                  coordinate with CPI and CPI shall provide Varian reasonable
                  time to implement such Work and shall cooperate and coordinate
                  with Varian in the performance of such Varian work, and,
                  should any such Varian work

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                  increase the costs of any CPI Work, Varian shall pay CPI the
                  amount of such increased costs.

                  (e) Varian reimbursement payments pursuant to Sections
            2(b)(2)(b)(iii) & 2(b)(2)(d)(x) shall be paid within forty-five (45)
            days of receipt of CPI's invoices therefor accompanied by reasonably
            detailed documentation of the CPI payments for which reimbursement
            is sought, unless Varian elects to dispute such invoices.

                  (f) Varian shall have the right to audit CPI Work records from
            time to time, including invoices from CPI contractors, bids, and
            other financial information related to CPI implementation of CPI
            Work. Such audit shall be at Varian's expense. Varian may initiate
            an audit at any time within 12 months of receipt of an invoice, but
            no more often than annually, and the audit may relate to amounts
            paid by Varian as well as amounts not paid, and to all CPI Work for
            which reimbursement may be sought, whether such reimbursement is
            pursuant to Sections 2(b)(2)(b)(i), (ii) or (iii) or 2(b)(2)(d)(x).

                  (g) "San Carlos Seller Indemnified Environmental Claim" shall
            mean a "Seller Indemnified Environmental Claim" as that term is
            defined by the 1995 Stock Sale Agreement for Response Costs arising
            from or related to the San Carlos Property, but does not include any
            Seller Indemnified Environmental Claim that relates to or arises
            from Hazardous Materials located off-site from the San Carlos
            Property or for alleged bodily injury from exposure to Hazardous
            Materials prior to August 11, 1995, for which the parties remain
            responsible, as provided under the 1995 Stock Sale Agreement.

            (3) the Beverly Property restriction of Section 3(d)(2) of this
      Agreement will be effective for 30 years from the date the $250,000
      payment is made by Varian to CPI in accordance with Section 2(a) of this
      Agreement; and

            (4) only the requirements of this Section 2 and of Section 3(d)(2)
      of this Agreement, as modified by this Section 2, and Sections 4 through
      23 of this Agreement shall apply pursuant this Agreement.

      3. RAP APPROVED BY RWQCB. If, within 245 days after the Effective Date of
the Five Party Agreement (provided that if Varian grants an extension pursuant
to the Five Party Agreement for this RAP approval by the RWQCB that extends
beyond this 245 day period, Varian will grant an equivalent extension under this
Agreement), the RWQCB approves the RAP as set out in Sections III C(1) and XIX
of the Five Party Agreement, then, on the date that the RWQCB approves the RAP,
Sections 1 and 2 of this Agreement shall not apply and the terms and conditions
of this Section 3 and Sections 4 through 23 of this Agreement shall apply.

      (a)   SURVIVAL.

             (1) As modified and supplemented by this Agreement, the 1995 Stock
      Sale Agreement remains in full force and effect.

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             (2) The 1995 Site Access Agreement remains in full force and
      effect, other than with respect to the San Carlos Property as to which the
      1995 Site Access Agreement remains in full force and effect only until the
      date title to the San Carlos Property is transferred from CPI to 301 or
      PAMF or any permitted transferee in accordance with the Five Party
      Agreement. With respect to the San Carlos Property, CPI and Varian agree
      that CPI shall not assign to 301 or PAMF, or to any affiliate of PAMF or
      other permitted assignee of PAMF or 301 under the Five Party Agreement,
      any rights or obligations that CPI has under the 1995 Site Access
      Agreement.

      (b)   VARIAN FINANCIAL CONTRIBUTION.  Varian shall pay CPI:

            (1) $500,000: (y) $250,000 of which amount shall be the payment that
      Varian made to CPI pursuant to Section 2(a) of this Agreement; and (z) the
      remaining $250,000 shall be paid to CPI by Varian within thirty (30) days
      after the date that the RWQCB approves the RAP as set out in Section III
      C(1) of the Five Party Agreement; and

            (2) $500,000 within thirty (30) days after the date that title to
      the San Carlos Property is transferred from CPI to 301 or PAMF or any
      permitted transferee in accordance with the Five Party Agreement.

      (c)   CPI/VARIAN COST SHARING

             (1) CPI agrees to reimburse Varian for 50% of any and all
      reasonable out-of-pocket payments by Varian (excluding any Varian internal
      costs) as a result of losses, damages, claims, costs and expenses,
      interest, awards, judgments and penalties (including reasonable legal fees
      and costs) arising out of claims by a third party ("Claims") relating to
      Hazardous Materials at, on, or under the San Carlos Property, arising out
      of or directly or indirectly resulting from exposures that occur, or
      personal, property or other damage (including environmental response
      action costs) that is suffered, after the date the RWQCB approves the RAP
      as set out in Section III C(1) of the Five Party Agreement and that are
      not reimbursed to Varian by the Insurance Policy to be obtained by PAMF
      and/or 301 pursuant to the Five Party Agreement, other than Claims arising
      out of or relating to the presence offsite of Hazardous Materials that
      migrated offsite from the San Carlos Property and provided, however, that
      Varian shall bear no liability, responsibility, or obligation for any
      Claims relating to or arising from CPI actions to implement Section V: C,
      D, E & J of the Five Party Agreement. With respect to CPI's obligation to
      reimburse Varian pursuant to this section, CPI and Varian agree diligently
      to take such actions as are commercially reasonable to enforce the
      environmental response action obligations of 301 and/or PAMF, or their
      contractors or agents, established by the Five Party Agreement and to
      obtain insurance proceeds under the Insurance Policy described in the Five
      Party Agreement for such Claims and to inform each other in writing of the
      results of their actions and of Varian's entitlement to reimbursement
      pursuant to this Section 3(c)(1). In such event, CPI shall be subrogated,
      with respect to any amounts reimbursed by it pursuant to this Section
      3(c)(1), to all of Varian's rights under such Insurance Policy to the
      extent of reimbursement of Varian by CPI.

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             (2) Any contractors retained by Varian, for whose costs Varian
      seeks reimbursement pursuant to this Section 3(c), shall be non-affiliated
      third party contractors whom Varian retains pursuant to arms length, bona
      fide negotiations to perform work required to be performed pursuant to
      Section 3(c)(1).

             (3) With respect to any Claim that involves cleanup, removal,
      treatment, response, remedial, investigation, monitoring or similar
      actions (including, without limitation, enforcement concerning such
      actions) ("environmental response actions"):

                    (a) Varian shall give good faith consideration to CPI
             comments on any written work plans prepared by Varian for
             environmental response actions and shall use commercially
             reasonable efforts to reach agreement with CPI on the final work
             plans and their recommendations.

                    (b) Varian shall allow CPI or its agents to participate in
             any discussions and/or meetings that Varian has with the
             governmental agency with jurisdiction for the environmental
             response actions, including, to the extent possible, in any
             emergency situation, and to present CPI's views and recommendations
             to that government agency concerning the work plans and the
             environmental response actions.

             (4) CPI reimbursement payments pursuant to this Section 3(c) shall
      be paid within forty-five (45) days of receipt of Varian's invoices
      therefor accompanied by reasonably detailed documentation of the Varian
      payments for which reimbursement is sought, unless CPI elects to dispute
      such invoices.

             (5) CPI shall have the right to audit Varian's records relating to
      work for which reimbursement is sought pursuant to this Section 3(c) from
      time to time, including invoices from Varian contractors, bids, and other
      financial information related to Varian implementation of such work. Such
      audit shall be at CPI's expense. CPI may initiate an audit at any time
      within 12 months of receipt of an invoice, but no more often than
      annually, and the audit may relate to amounts paid by CPI as well as
      amounts not paid.

             (6) There is hereby excepted from the indemnities by Varian under
      Article X of the 1995 Stock Sale Agreement, and such indemnities shall not
      apply to, any Claim, relating to Hazardous Materials at, on, or under the
      San Carlos Property, that results from exposure occurring, or personal,
      property or other damage (including environmental response action costs)
      suffered, after the approval by the RWQCB of the RAP as set out in Section
      III C(1) of the Five Party Agreement, other than Claims arising out of or
      relating to the presence offsite of Hazardous Materials that migrated
      offsite from the San Carlos Property which Claims shall be governed by the
      1995 Stock Sale Agreement.

             (7) Upon the transfer of title to the San Carlos Property from CPI
      to 301 or PAMF or any permitted transferee in accordance with the Five
      Party Agreement, there is

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      hereby excepted from the indemnities by CPI under Article X of the 1995
      Stock Sale Agreement, and such indemnities shall not apply to any Claim,
      relating to Hazardous Materials at, on, or under the San Carlos Property,
      that results from exposure occurring, or personal, property or other
      damage (including environmental response action costs) suffered, after the
      date of transfer of the San Carlos Property by CPI to 301 or PAMF or any
      permitted transferee in accordance with the Five Party Agreement, other
      than Claims arising out of or relating to the presence offsite of
      Hazardous Materials that migrated offsite from the San Carlos Property
      which Claims shall be governed by the 1995 Stock Sale Agreement.

      (d)   USE OF PROPERTIES.

             (1) San Carlos Property: Subject to the condition that the Five
      Party Agreement becomes effective, then, effective on the date that title
      to the San Carlos Property is transferred from CPI to 301 or PAMF or any
      permitted transferee in accordance with the Five Party Agreement, Sections
      7.11 and 10.5(d) of the 1995 Stock Sale Agreement as they apply to the San
      Carlos Property and the 1995 Site Access Agreement as it applies to the
      San Carlos Property will be terminated automatically without any further
      action. Varian waives any claims relating to the investigative actions
      taken and submissions to governmental agencies by PAMF, 301, CPI, or their
      agents that were undertaken during the period from June 1, 2002 to the
      present and that were previously disclosed in writing to Varian, excluding
      any Claims relating to physical damage to the San Carlos Property that may
      have been caused by such actions.

              (2) Beverly Property:

                    (a) Neither CPI nor any subsequent owner of the Beverly
              Property shall, during the period of its ownership, develop (or
              permit the development of) the Beverly Property for Unrestricted
              Uses. For purposes of this Agreement, the term "Unrestricted Uses"
              means residential housing, children facilities (e.g., daycare,
              K-12 schools, preschools, playgrounds), elderly facilities (e.g.,
              nursing homes, hospices, convalescent homes, senior centers,
              assisted living facilities), places of worship, hotels, motels,
              hospitals, skilled nursing facilities, facilities for medical
              procedures, and similar sensitive receptors. CPI and subsequent
              owners of the Beverly Property may develop (or permit the
              development of) the Beverly Property for uses other than
              Unrestricted Uses.

                    (b) If CPI develops the Beverly Property for a use other
              than Unrestricted Uses, the rights and obligations of the parties
              with respect to the Response Costs required for such development
              shall be as stated in the 1995 Stock Sale Agreement (including
              without limitation those relating to or arising out of Hazardous
              Materials located off-site from the Beverly Property or for
              alleged bodily injury from exposure to Hazardous Materials prior
              to August 11, 1995), except that CPI shall be responsible for 50%
              of the Incremental Varian Response Costs. "Incremental Varian
              Response Costs" means the excess, if any, of (x) the Response
              Costs required for such development which are allocable to Varian
              under the 1995 Stock Sale Agreement over (y) the

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              Response Costs (adjusted for inflation) that would have been
              required to develop such use as of the Effective Date of this
              Agreement, as established by the governmental agency with
              jurisdiction for Response Cost actions at the Beverly Property,
              which are allocable to Varian under the 1995 Stock Sale Agreement.
              The procedures applicable to reimbursement for such 50/50 cost
              sharing shall be those set out in Sections 3(c)(4)&(5).

                    (c) CPI shall not extract or use in any way the groundwater
              at the Beverly Property at any time, except as required by any
              Governmental Authority or as allowed by Varian.

                    (d) CPI shall record against the Beverly Property with
              appropriate Governmental Authorities such acknowledgements, deed
              restrictions, and/or deed notices as are reasonably requested by
              Varian in furtherance of this Section 3(d)(2).

                    (e) CPI shall require any direct successor(s) or assign(s)
              to CPI's interest in the Beverly Property to assume the covenants
              and obligations of CPI set forth in this Section 3(d)(2),
              including this Section 3(d)(2)(e) as to any of its direct
              successors and assigns (and this Section 3(d)(2)(e) shall
              similarly apply to all successive transfers without limit of time)
              and if such party assumes the covenants and obligations of this
              Section 3(d)(2) and CPI provides Varian with written documentation
              of such assumption, CPI is then released from such covenants and
              obligations. Such assumption shall not, however, entitle such
              party to enforce CPI's rights under this Section 3(d)(2).

        (e) RELATIONSHIP TO FIVE PARTY AGREEMENT. Prior to transfer of the San
  Carlos Property by CPI to 301 or PAMF or any permitted transferee, if the
  performance by CPI and/or Varian of an obligation established by the Five
  Party Agreement would be inconsistent with an obligation or obligations
  established by the 1995 Site Access Agreement, then the performance of such
  obligation pursuant to the Five Party Agreement shall not be deemed a breach
  of the 1995 Site Access Agreement.

      4. REPRESENTATIONS. CPI and Varian each represents and warrants to the
other that except as expressly permitted by the CPI/Varian Agreements (or with
the other's prior consent), each has never, by operation of law or otherwise,
transferred or purported to transfer to any other third party, or conveyed or
purported to convey to any third party any right or interest in or to, any of
its rights under the CPI/Varian Agreements as applicable to the San Carlos
Property.

      5. NO ADMISSION OF LIABILITY. It is understood and agreed by each Party
that nothing in this Agreement shall constitute or be considered an admission or
concession of liability by either party.

      6. TAXES. Each Party agrees that any tax that may be payable on the
consideration received pursuant to this Agreement by a Party is the sole
responsibility of such Party receiving such consideration. The Parties agree
that any liability or claim for any tax or other governmental contribution or
any penalty or interest thereon that may be incurred or demanded

                                      -10-
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as a result of the receipt of the consideration provided for in this Agreement
shall be the responsibility of such Party receiving such consideration.

      7. UNDERSTANDING. The Parties confirm that they have read this Agreement,
fully understand its terms and their effect, and sign this Agreement voluntarily
and with the intention of being legally bound thereby. The Parties understand
that they are waiving legal rights by signing this Agreement and have consulted
with counsel before signing this Agreement.

      8. ENTIRE AGREEMENT. This Agreement amends and modifies the 1995 Stock
Sale Agreement and the 1995 Site Access Agreement and to the extent that this
Agreement is inconsistent with either the 1995 Stock Sale Agreement or the 1995
Site Access Agreement, the terms of this Agreement shall control. Except as
modified by this Agreement, the 1995 Stock Sale Agreement and the 1995 Site
Access Agreement remain in full force and effect. This Agreement and the Five
Party Agreement contain all of the terms, promises, representations, and
understanding between the Parties relating to the subject matter of this
Agreement, and supersede any other oral or written agreement or understanding
between the Parties regarding the subject matter of this Agreement. Each Party
agrees that no promises, representations or inducements have been made to it
which caused it to sign this Agreement other than the promises which are
expressly set forth herein or in the Five Party Agreement.

      9. NOTICE. Any notice, request, delivery, approval, consent or report
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been sufficiently given when delivered in person,
transmitted by commercial overnight courier, or transmitted by telecopy to the
Party to whom it is directed at the address shown below or such other address as
such Party shall have last given notice to the other Party.

      CPI                   Communications & Power Industries, Inc.
                            811 Hansen Way
                            Palo Alto, California 94303
                            Attn:  Chief Financial Officer
                            Facsimile:  650-846-3276
                            Telephone:  650-846-2801

      With a copy to:       Irell & Manella, LLP
                            1900 Avenue of the Stars, Suite 900
                            Los Angeles, California 90067
                            Attn:  Rick Wirthlin
                            Facsimile:  310 203-7199
                            Telephone:  310 277-1010

                                      -11-
<PAGE>
      Varian                Varian Medical Systems, Inc.
                            3100 Hansen Way
                            Palo Alto, California 94304
                            Attn:  Legal Department
                            Facsimile:  650-424-5998
                            Telephone:  650-493-4000

      And                   Varian Medical Systems, Inc.
                            3100 Hansen Way
                            Palo Alto, California 94304
                            Attn:  Environmental, Health & Safety Department
                            Facsimile:  650-842-5199
                            Telephone:  650-424-6060

      10. SEVERABILITY. If one or more provisions of this Agreement is (or are)
determined by a panel of arbitrators to be invalid, void or unenforceable under
applicable law as applied in a particular circumstance, the Parties agree to
renegotiate such provision (or provisions) in good faith. In the event that the
Parties cannot reach a mutually agreeable and enforceable replacement for each
such provision, then (i) such provision shall be excluded from this Agreement
with respect to such circumstance, (ii) the balance of this Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of this
Agreement shall be enforceable in accordance with its terms.

      11. AMENDMENTS; WAIVERS. No modification of or amendment to this
Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing signed by the Parties to by bound by such modification,
amendment or waiver. The failure by a Party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such Party.

      12. RULES OF CONSTRUCTION. This Agreement is the result of negotiations
between the Parties and has been reviewed by each Party and their respective
counsel; accordingly, this Agreement shall be deemed to be the product of all of
the Parties, and no ambiguity shall be construed in favor of or against a Party.

      13. ASSIGNMENT. Subject to Section 3(d)(2) of this Agreement, the rights,
benefits and obligations of this Agreement shall inure to the benefit of, be
enforceable by, and be binding on each Party's successors and permitted assigns,
to the same extent as set forth in Section 14.6 of the 1995 Stock Sale
Agreement.

      14.   COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, which may be delivered by electronic facsimile or other
means of electronic transmission, each of which shall constitute an
original, and all of which shall constitute one and the same document.

                                      -12-
<PAGE>
      15.   EXECUTION.  This Agreement shall not be binding in whole or
in part upon a Party unless and until executed and delivered by or on
behalf of the Parties, in which event this Agreement shall be effective
as of the Effective Date.

      16.   HEADINGS.  The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret,
define, or limit the scope, extent or intent of this Agreement or any
provision hereof.

      17.   GOVERNING LAW.  This Agreement and its interpretation shall
be governed exclusively by its terms and by the laws of the State of
California, without regard to principles of conflicts of laws.

      18. COMPLIANCE WITH LAW. In their performance of their obligations under
this Agreement, each of the parties hereto agrees to comply with Environmental
Laws and with all other laws, regulations, and orders of Relevant Agencies which
may be applicable to the performance of this Agreement.

      19.   DISPUTE RESOLUTION.  The dispute resolution provision of the
1995 Stock Sale Agreement, Section 14.13, shall apply to this Agreement.

      20. AUTHORITY. The Parties to this Agreement, and the individuals signing
this Agreement on behalf of the Parties, represent and warrant that they have
full and complete authority and authorization to execute and effect this
Agreement and to take or cause to be taken all acts contemplated by this
Agreement.

      21. INDEPENDENT PARTIES. Nothing in this Agreement shall be construed to
create a relationship of employer and employee, partnership, principal and
agent, joint venture or similar arrangement between CPI and Varian, nor shall
either party have responsibility for compliance by the other with applicable
laws, regulations, or orders of governmental agencies, or for any other acts,
errors or omissions of the other.

      22. EXCLUSIVE REMEDIES. The rights and remedies provided for in this
Agreement are exclusive of all other rights and remedies, at law or in equity or
pursuant to any statute or regulation, including without limitation CERCLA,
other than those rights and remedies expressly set forth in the CPI/Varian
Agreements, to the extent not modified or terminated pursuant to this Agreement.

      23. THIRD PARTIES. This Agreement is solely for the benefit of Varian and
CPI and no third party shall have any rights hereunder, including without
limitation any subrogation rights with respect thereto, other than as expressly
provided in this Agreement or the 1995 Stock Sale Agreement. Where multiple
sources of reimbursement are or may be available for specified costs,
reimbursement shall be made in the following priorities:

      (i) reimbursement shall be sought under the Insurance Policy
described in the Five Party Agreement to the extent set forth herein;

      (ii) any remaining unreimbursed costs shall be reimbursed by the
other party to the extent set forth herein;

                                      -13-
<PAGE>
      (iii) any remaining unreimbursed costs shall be reimbursed by affiliated
parties, former affiliated parties or insurers (other than the insurers under
the Insurance Policy described in the Five Party Agreement) to the extent the
party initially bearing such costs is entitled to such reimbursement.

                            [signature page follows]

                                      -14-
<PAGE>
      IN WITNESS WHEREOF, the undersigned have executed this Modification
Agreement freely and voluntarily intending to be legally bound by it.

                              VARIAN MEDICAL SYSTEMS, INC.

                              By: ________________________________________

                              Name:____________________________________
                              Title:  ____________________________________

                              COMMUNICATIONS & POWER INDUSTRIES, INC.

                              By: ________________________________________

                              Name:____________________________________
                              Title:  ____________________________________

                                      -15-<PAGE>
                                                                    EXHIBIT 10.3

                       AGREEMENT RE ENVIRONMENTAL MATTERS

                                      AMONG

                               301 INDUSTRIAL LLC
                                 301 HOLDING LLC
                     COMMUNICATIONS & POWER INDUSTRIES, INC.
                          VARIAN MEDICAL SYSTEMS, INC.
                          PALO ALTO MEDICAL FOUNDATION

                                 JUNE ___, 2004
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
I.      SUBJECT MATTER......................................................      2

        A.    The Property..................................................      2

        B.    Insurance Policy..............................................      2

II.     TERM OF AGREEMENT...................................................      2

        A.    Term..........................................................      2

        B.    Termination...................................................      2

III.    301'S RESPONSIBILITIES..............................................      2

        A.    Purchase Agreement............................................      2

        B.    Insurance Policy..............................................      2

        C.    RWQCB Approvals...............................................      3

            1.    No Further Action Letter..................................      3

            2.    Institutional and Engineering Controls....................      3

        D.    Closure of CPI Facility.......................................      4

        E.    CPI's Evacuation from the Property............................      4

        F.    Demolition Contractor.........................................      4

        G.    RAP Contractor................................................      4

        H.    Other Professionals...........................................      4

        I.    General Performance Requirements..............................      5

        J.    Performance of Demolition and Remediation.....................      5

        K.    Costs of Enforcement of Insurance Policy......................      5

        L.    Loan from PAMF................................................      5

        M.    Monitoring by the Parties.....................................      5

        N.    Groundwater...................................................      6

        O.    No Transfer, Development or Use until Completion of RAP.......      6

        P.    30 Year Development Restriction...............................      6

        Q.    Environmental Response Actions................................      6

        R.    New Development...............................................      6

        S.    Transfer of the Property......................................      6

        T.    Provide Information...........................................      7

        U.    Payment of Commission on Insurance Policy.....................      8
</TABLE>
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
        V.    Retention of Records..........................................      8

        W.    Commutation Account...........................................      8

        X.    Membership Interests..........................................      8

        Y.    Existence.....................................................      8

IV.     301 HOLDING'S RESPONSIBILITIES......................................      8

V.      CPI'S RESPONSIBILITIES..............................................      9

        A.    Purchase Agreement............................................      9

        B.    Assignment of Purchase Agreement..............................      9

        C.    Cease Operations..............................................      9

        D.    Remove Personal Property......................................      9

        E.    Closure of Facilities.........................................      9

        F.    Access to 301.................................................      9

        G.    Memorandum re Acknowledgement.................................     10

        H.    Termination of Pre-existing Restrictions......................     10

        I.    Intercreditor Agreement.......................................     10

        J.    New Contamination.............................................     10

VI.     VARIAN'S RESPONSIBILITIES...........................................     10

        A.    Termination of Pre-existing Restrictions......................     10

        B.    Closure of Monitoring Wells...................................     10

        C.    Intercreditor Agreement.......................................     11

VII.    PAMF'S RESPONSIBILITIES.............................................     11

        A.    Purchase Agreement............................................     11

        B.    Assignment of Purchase Agreement..............................     11

        C.    Loan to 301...................................................     11

        D.    Acquisition of the Property...................................     11

        E.    Development Proposals.........................................     12

        F.    Intercreditor Agreement.......................................     12

VIII.   RELATIONSHIP OF THE PARTIES.........................................     12

        A.    No Agency.....................................................     12

        B.    Limited Contact with RWQCB....................................     12
</TABLE>
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
        C.    No Transfer of Rights Under Varian Agreements.................     12

IX.     NON-DISCLOSURE/NEWS RELEASE.........................................     13

        A.    Information...................................................     13

        B.    Terms of Agreement............................................     13

        C.    Disclosure....................................................     13

        D.    News Release..................................................     13

X.      TIME................................................................     13

XI.     INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE..........................     14

XII.    FURTHER ACTIONS.....................................................     14

XIII.   ASSIGNMENT..........................................................     14

XIV.    MUTUAL REPRESENTATIONS & WARRANTIES.................................     14

        A.    Solvency......................................................     14

        B.    Authority.....................................................     14

        C.    No Conflict...................................................     14

        D.    No Migration..................................................     14

        E.    Insurance Policy Application..................................     15

        F.    No Reliance...................................................     15

XV.     RELEASES............................................................     15

        A.    By 301 and PAMF...............................................     15

        B.    By CPI and Varian.............................................     16

        C.    By PAMF, Varian and CPI.......................................     16

        D.    Waiver of Section 1542........................................     16

        E.    Limitation of Releases........................................     17

XVI.    GOVERNING LAW.......................................................     17

XVII.   ARBITRATION.........................................................     17

        A.    Dispute.......................................................     17

        B.    Notice and Offer..............................................     17

        C.    Provisional Relief............................................     17

        D.    Proceeding....................................................     17

XVIII.  FORCE MAJEURE.......................................................     20
</TABLE>
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
XIX.    TERMINATION.........................................................     20

XX.     NOTICES.............................................................     20

XXI.    WAIVER..............................................................     22

XXII.   SEVERABILITY........................................................     22

XXIII.  BENEFIT OF COUNSEL/ INTERPRETATION..................................     22

XXIV.   HEADINGS............................................................     22

XXV.    VARIAN STOCK SALE AGREEMENT/VARIAN SITE ACCESS AGREEMENT............     22

XXVI.   ENTIRE AGREEMENT....................................................     22
XXVII.  COUNTERPARTS; FACSIMILE SIGNATURES..................................     23

XXVIII. NO OBLIGATIONS TO THIRD PARTIES.....................................     23
</TABLE>
<PAGE>
                       AGREEMENT RE ENVIRONMENTAL MATTERS

      THIS AGREEMENT RE ENVIRONMENTAL MATTERS ("AGREEMENT") is dated June 18,
2004 for reference purposes and entered into by and between 301 INDUSTRIAL LLC
("301"), a limited liability company organized and existing under the laws of
the State of California, with its principal office at 3629 Grand Avenue,
Oakland, California 94610; between 301 HOLDING LLC ("301 HOLDING"), a limited
liability company organized and existing under the laws of the State of
California, with its principal office at 3629 Grand Avenue, Oakland, California
94610, COMMUNICATIONS & POWER INDUSTRIES, INC. ("CPI"), a corporation organized
and existing under the laws of the State of Delaware, with its principal office
at 811 Hansen Way, Palo Alto, California 94303, as successor in interest by
merger to Communications & Power Industries Holding Corporation; VARIAN MEDICAL
SYSTEMS, INC. ("VARIAN"), a corporation organized and existing under the laws of
the State of Delaware, with its principal office at 3100 Hansen Way, Palo Alto,
California 94304; and PALO ALTO MEDICAL FOUNDATION ("PAMF"), a non-profit public
benefit corporation organized and existing under the laws of the State of
California, with its principal office at 795 El Camino Road, Palo Alto,
California 94301. 301, 301 Holding, PAMF, CPI, and Varian may be referred to
herein collectively as the "PARTIES" and individually as a "PARTY".

      WHEREAS, PAMF and CPI previously entered into an Agreement of Purchase and
Sale dated February 7, 2003, as amended ("PURCHASE AGREEMENT"), whereby PAMF
would acquire the real property located at 301 Industrial Road, San Carlos,
California (the "PROPERTY") on the terms and conditions therein with the
intention to develop a new hospital and medical facilities on the Property. The
Property is currently owned by CPI and was formerly owned by Varian. The
Property has been operated for at least 40 years as a manufacturing facility.
Over time, soil and groundwater at the Property have become contaminated by
various chemical compounds. CPI and Varian have previously entered into
agreements addressing their respective ongoing obligations to each other
relating to the Property. After discussion among the Parties, the Parties have
decided that in order to facilitate PAMF's redevelopment plans and address CPI's
and Varian's concerns related thereto, the Parties will enter into this
Agreement to establish their respective rights and responsibilities with regard
to environmental matters relating to the Property.

      WHEREAS, to facilitate PAMF's proposed construction and operation of a
hospital and medical facilities on the Property, 301 Holding has formed and will
maintain 301 as a single asset special purpose limited liability company wholly
owned by 301 Holding, to take title to and conduct the necessary investigation
and remediation of the Property under regulatory oversight of the Regional Water
Quality Control Board for the San Francisco Bay Region (the "RWQCB") to agreed
upon standards for unrestricted use and to obtain an insurance policy negotiated
jointly by the Parties to insure against the risks associated with the
environmental condition of the Property and 301 Holding will guarantee the
performance of 301 under this Agreement.

      NOW, THEREFORE, in consideration of the foregoing and the mutual
obligations herein contained, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the Parties agree as follows:

                                       1
<PAGE>
I.      SUBJECT MATTER

       A.   The Property.  The "PROPERTY" is that certain real estate located
at 301 Industrial Road, San Carlos, California, and further described in
Appendix I A.

      B. Insurance Policy. The "INSURANCE POLICY" is that certain "Environmental
Protection Program" Blended Finite Risk Pollution Policy issued simultaneously
with the Parties' entry into this Agreement by American Insured Surplus Lines
Insurance Company ("INSURER"), a wholly owned subsidiary of American
International Group, Inc. ("AIG"), policy number ______________ with a thirty
(30) year pollution legal liability term and a $30 million aggregate limit and
providing the coverages specified therein, including without limitation coverage
for defense costs, cleanup costs, property damage and bodily injury claims, and
changes in regulatory requirements, and provision for a commutation account, a
copy of which is attached hereto as Appendix I B and hereby approved in form and
content by the Parties. AIG has given a support agreement evidencing AIG's
guarantee of the insurer's obligations under the Insurance Policy, which is
attached as part of Appendix I B.

II.     TERM OF AGREEMENT

      A.    Term.  This Agreement shall be effective as of the last date of
signature by all Parties ("EFFECTIVE DATE").

      B.    Termination.  Section XIX of this Agreement provides for the
termination of certain obligations hereunder and the termination of those
obligations shall be without prejudice to any rights which shall have accrued
to the benefit of any Party prior to such termination.

III.    301'S RESPONSIBILITIES

      301 agrees to, at its cost:

      A. Purchase Agreement. Accept assignment from PAMF of the Purchase
Agreement upon execution of the Ninth Amendment to Agreement of Purchase and
Sale, which has or will incorporate the applicable terms of this Agreement. The
Purchase Agreement, as amended by the Ninth Amendment to Agreement of Purchase
and Sale, shall be referred to hereafter as the Purchase Agreement. The form of
such Assignment is attached hereto as Appendix III A.

      B. Insurance Policy. Purchase (simultaneously with the execution of this
Agreement), be the first named insured, and service and enforce the Insurance
Policy for the benefit of the Parties, including without limitation timely
tendering and, if necessary and appropriate, litigating, on behalf of the
Parties (or any applicable Party, as the case may be) any and all claims arising
under or covered by the Insurance Policy. The costs of enforcement of the
Insurance Policy shall be borne by 301, except that the cost of any deductibles
shall be borne by the Parties, as described in Section III K below.
Notwithstanding this provision, any named insured under the Insurance Policy may
seek enforcement of the Insurance Policy directly, at its cost. The Insurance
Policy shall not be commuted without the written consent of all Parties, except
as provided in Section III W below.

                                       2
<PAGE>
      C.    RWQCB Approvals.

            1. No Further Action Letter. Within five (5) business days after the
Effective Date of this Agreement, commence, and thereafter pursue diligently,
negotiations with the RWQCB and use commercially reasonable best efforts to (1)
obtain the RWQCB's timely approval of the Remedial Action Plan dated June 16,
2004 prepared by Northgate and previously approved by the Parties ("RAP") and
attached as Appendix III C-1, which includes the closure of existing monitoring
wells located on the Property; (2) enter into and perform a prospective
purchaser agreement with the RWQCB on the terms set forth in the form of
prospective purchaser agreement attached as Appendix III C-2, as may be modified
with the agreement (not to be unreasonably withheld) of all Parties ("FINALLY
APPROVED PPA"); and (3) following completion of the "FINALLY APPROVED RAP" (as
defined in Section III.O) pursuant to the finally approved PPA, obtain a written
acknowledgement from the RWQCB that no further environmental response actions,
including institutional controls (including deed restrictions) and/or
engineering controls, is necessary on the Property to allow for "Unrestricted
Uses" of the Property ("NO FURTHER ACTION Letter"). "UNRESTRICTED USES" in this
Agreement shall mean and include residential housing, children facilities (e.g.,
daycare, K-12 schools, preschools, playgrounds), elderly facilities (e.g.,
nursing homes; hospices; convalescent homes; senior centers; assisted living
facilities), places of worship, hotels, motels, hospitals, skilled nursing
facilities, medical facilities, and similar sensitive receptors. For all
purposes under this Agreement, "Unrestricted Uses" shall exclude commercial,
manufacturing, industrial, retail and office uses. The RAP is predicated upon
the requirement and agreement among the Parties that the environmental response
actions defined or provided therein, when performed, will result in remediation
of the Property to a condition that allows the Property to be used for
Unrestricted Uses without the need for institutional controls (including deed
restrictions) and/or engineering controls.

            2. Institutional and Engineering Controls. After 301 completes
performance of the finally approved RAP (including if necessary, as determined
by 301, access to the cost cap coverage portion of the Insurance Policy) and
requests the RWQCB to issue a No Further Action Letter, if the RWQCB indicates
that it will not issue a No Further Action Letter unless 301 implements and
maintains institutional controls (including deed restrictions) and/or
engineering controls at the Property, and if, at that time, 301 has not expended
all funds in the commutation account, 301, in consultation with the RWQCB, shall
undertake such additional environmental response actions at the Property as are
reasonable under the circumstances and as can be implemented without incurring
costs greater than the remaining balance in the commutation account to eliminate
without use of institutional controls (including deed restrictions) and/or
engineering controls, in so far as possible, the environmental conditions that
formed the basis for the RWQCB's refusal to issue a No Further Action Letter.
Upon completion of such additional work, if any, 301 shall request the RWQCB to
issue a No Further Action Letter for its benefit at its cost. If, in response,
the RWQCB indicates that it will not issue a No Further Action Letter unless 301
implements and maintains institutional controls (including deed restrictions)
and/or engineering controls, the Parties will be so informed and have the right
to approve such institutional controls (including deed restrictions) and/or
engineering controls, which approval or disapproval shall not be unreasonably
delayed. If the Parties cannot agree as to such institutional controls
(including deed restrictions) and/or engineering controls, this dispute shall be
submitted to arbitration, in accordance with this Agreement (and the Arbitrator
shall have a technical

                                       3
<PAGE>
advisor approved by the Parties). If a decision is made by the Parties or by the
Arbitrator to implement institutional controls (including deed restrictions)
and/or engineering controls, 301: (i) shall implement and maintain such
institutional controls (including deed restrictions) and/or engineering controls
as are agreed to by the Parties or determined by the Arbitrator, and (ii) shall
record against the Property a permanent deed restriction for the benefit of the
Parties: (x) against the use or development of the Property for Unrestricted
Uses, excluding hospitals, skilled nursing facilities, medical facilities,
motels, and hotels, and/or (y) against the use or development of the Property
for any other uses as established by the RWQCB. If a decision is made by the
Parties or by the Arbitrator to implement additional environmental response
actions at the Property, 301 shall undertake such additional environmental
response actions at the Property and request a No Further Action Letter from the
RWQCB upon completion of such additional environmental response actions. If the
RWQCB indicates that it will not issue a No Further Action Letter unless 301
implements and maintains institutional controls (including deed restrictions)
and/or engineering controls at the Property, then the foregoing provisions of
this Section III C(2) shall again apply and shall be complied with by 301.

      D. Closure of CPI Facility. Monitor CPI's efforts in obtaining regulatory
closure of CPI's facility, including without limitation any regulated waste
management units currently on the Property, as required by the Purchase
Agreement or this Agreement and perform (and cause its RAP contractor and/or its
demolition contractor to perform) the closure responsibilities allocated to 301,
as set forth in Appendix III D.

      E. CPI's Evacuation from the Property. Monitor CPI's evacuation from the
Property, as required by the Purchase Agreement or this Agreement.

      F. Demolition Contractor. Select, hire and pay Pacific States
Environmental Contractors, Inc. (or other qualified contractor(s) and
consultant(s) reasonably acceptable to the Parties and approved by AIG) as the
abatement, demolition and removal contractor(s) and consultant(s) and cause the
abatement, demolition and removal of existing improvements on the Property,
including without limitation abatement of asbestos-containing building materials
and lead paint, in accordance with all applicable federal, California and local
laws and requirements, pursuant to a written contract, a copy of which shall be
submitted to the Parties prior to execution for an opportunity to comment. The
abatement, demolition and removal also shall include equipment which CPI is
permitted to leave on the Property as listed in Appendix V D attached hereto.

      G. RAP Contractor. Select, hire and pay Northgate Environmental
Management, Inc. (or, at 301's option, other qualified contractor and/or
consultant reasonably acceptable to the Parties and approved by AIG) as the
environmental contractor and/or consultant, and cause the remediation of the
Property to be performed in accordance with the finally approved RAP (including
without limitation all environmental response actions required by the finally
approved RAP) and in accordance with all applicable federal, California and
local laws and requirements, pursuant to a written contract, a copy of which
shall be submitted to the Parties prior to execution for an opportunity to
comment.

      H. Other Professionals. Select, hire and pay other professionals
reasonably acceptable to the Parties as necessary to meet its obligations under
this Agreement pursuant to a

                                       4
<PAGE>
written contract, a copy of which shall be submitted to the Parties prior to
execution for an opportunity to comment, with the exception of written contracts
for legal services, which contract need not be provided to the Parties. If 301
selects a professional and submits such proposed hiring and contract to the
Parties as provided herein, each Party shall have five (5) business days to
reasonably disapprove such selection and/or provide comments on the contract. If
no disapproval or comments are given by a Party within such time period, such
Party shall be deemed to have accepted such professional.

      I. General Performance Requirements. Cause its agents and contractors to
complete all work in a professional and good and workmanlike manner and to
comply with all applicable federal, California and local laws and requirements
in connection with its performance of its obligations and rights pursuant to
this Agreement.

      J. Performance of Demolition and Remediation. Except as otherwise
expressly provided in this Agreement, cause and pay all costs for the
remediation of the Property (including all necessary environmental response
actions) and the abatement, demolition and removal of improvements, including
without limitation, costs of preparing and obtaining government approvals of and
in accordance with the finally approved RAP and subject to such modifications as
may from time to time be required by such agencies; costs of performing work
required under the finally approved RAP; costs of performing the closure
responsibilities allocated to 301 as set forth in Appendix III D; assume
ownership of and responsibility for monitoring wells that the RWQCB does not
approve for closure pursuant to Section VI B; costs of design, construction, or
installation of any facilities (including any monitoring wells) required under
the finally approved RAP; and prepayments or deposits required to order
materials.

      K. Costs of Enforcement of Insurance Policy. Pay all costs reasonably
incurred in connection with enforcing the Insurance Policy (on behalf of any
Party), including legal costs, and deductibles payable under the Insurance
Policy, other than deductibles to the extent attributable to (i) existence off
or migration from the Property, of Hazardous Materials from the Property which
existence or migration occurs before the transfer of the Property to 301 or (ii)
migration after transfer of the Property to 301 of Hazardous Materials which
were on the Property prior to the transfer of the Property to 301 and (1) which
migration was not caused by 301 or its agents or (2) which Hazardous Materials
were known to (or should have been known, using reasonably applicable
professional practices at the time in the San Francisco Bay Area) and the
offsite migration of which could not have reasonably been prevented, by use of
customary professional standards, by 301 or its agents.

      L. Loan from PAMF. Accept a loan from PAMF or PAMF's affiliate on terms,
in an amount of money, for a term and under other conditions consistent with
this Agreement, sufficient to purchase the Property (including without
limitation all deposits) pursuant to the Purchase Agreement; to purchase the
Insurance Policy; to perform or cause to be performed the Purchase Agreement; to
enforce the Insurance Policy; to perform the RAP and the abatement, demolition
and removal of improvements at the Property and all of 301's other obligations
under this Agreement; and to pay all of 301's costs of owning and operating the
Property and 301's organizational and operating costs.

                                       5
<PAGE>
      M. Monitoring by the Parties. Following its acquisition of the Property
and continuing until sale or conveyance of the Property to PAMF, an affiliate of
301 or PAMF, or another party pursuant to this Agreement, provide cooperation
and reasonable access to PAMF, CPI and Varian and their agents and contractors
to inspect and monitor the demolition work, the RAP work, 301's performance of
its closure responsibilities as set forth in Appendix III D and 301's compliance
with this Agreement.

      N. Groundwater. Not extract or use in any way the groundwater at the
Property at any time, except as required by any governmental authority, as
allowed by the applicable governmental authority if required for sampling or
dewatering during construction of improvements on the Property, or as allowed by
CPI and Varian. After 301 acquires the Property, 301 shall be deemed the
generator of and will arrange for disposal of all Hazardous Materials on the
Property (other than as expressly required of CPI pursuant to Section V E) and
will list itself as the generator of waste on both the hazardous waste manifest
and any waste profile for use by any transporter and the disposal facility.

      O. No Transfer, Development or Use until Completion of RAP. Not convey
(including without limitation any lease), develop or use the Property until (i)
the remediation of the Property is complete in accordance with the finally
approved RAP (for purposes of this Agreement, "finally approved RAP" shall mean
the RAP as approved by all Parties and by the RWQCB immediately prior to
commencement of remediation as meeting the then-applicable cleanup standards for
Unrestricted Uses) and all necessary environmental response actions have been
completed in compliance with the requirements of Sections III G and J and (ii)
the No Further Action Letter is obtained from the RWQCB with a copy provided to
the Parties. In the event the No Further Action Letter cannot be obtained
without institutional controls (including deed restrictions) and/or engineering
controls, the provisions of Section III C(2) shall apply and be fully performed
before 301 will convey, develop or use the Property.

      P.    30 Year Development Restriction.  Not develop, use or permit the
use of the Property for Unrestricted Uses, excluding hospitals, skilled
nursing facilities, medical facilities, hotels and motels, for a period of
thirty (30) years after issuance of the No Further Action Letter.

      Q. Environmental Response Actions. Cause and pay for the performance of
all environmental response actions required, now or in the future, by federal,
California and/or local agencies and environmental response actions required in
connection with any change in use, new development and/or new construction on
the Property, including such environmental response actions as are necessary to
meet the then applicable standards for Unrestricted Uses.

      R. New Development. Not undertake any new development and/or new
construction on the Property until all necessary agency approvals have been
obtained.

      S. Transfer of the Property. Following receipt of the No Further Action
Letter (including compliance with Section III C(2) if applicable), as a
condition to any sale or conveyance of the Property, including without
limitation, a ground lease or lease of substantially all of the premises
comprising the Property, other than to PAMF,

                                       6
<PAGE>
            (1) obtain for the express benefit of 301, CPI and Varian a signed
Acknowledgement from the acquiring party (other than PAMF) in the form of
Appendix III S which contains

                  (i)   an "as-is" disclosure;

                  (ii) a restriction on development or use of the Property for
Unrestricted Uses, excluding hospitals, skilled nursing facilities, medical
facilities, hotels and motels for a period of thirty (30) years after issuance
of the No Further Action Letter;

                  (iii) a release of CPI and Varian;

                  (iv) an agreement to perform all required environmental
response actions on the Property, including without limitation in connection
with any change in use, new development and/or new construction, and to obtain
all necessary agency approvals in connection therewith; and

                  (v) an agreement not to extract or use in any way groundwater
at the Property at any time, except as (x) required by any governmental
authority, or (y) to the extent allowed by the applicable governmental authority
if required for sampling or dewatering required for construction of improvements
on the Property, or (z) as allowed by 301, CPI and Varian; and an agreement that
the owner or lessor of the Property shall be deemed the generator of and will
arrange for disposal of all Hazardous Materials on the Property and will list
itself as the generator of waste on both the hazardous waste manifest and any
waste profile for use by any transporter and the disposal facility.

      and

            (2) (i) take investigative and any necessary environmental response
actions required for the Property to meet the then-applicable standards for
Unrestricted Uses; or

                  (ii) record against the Property a deed restriction
prohibiting the use or development, of the Property for Unrestricted Uses
(excluding hospitals, skilled nursing facilities, medical facilities, hotels and
motels, for the benefit of the Parties), unless all necessary environmental
response actions required to meet the then-applicable standards for Unrestricted
Uses are completed.

The restrictions in this Section III S shall not be applicable to any lender
that acquires the Property pursuant to a foreclosure (private or judicial) or
deed in lieu of foreclosure of a bona fide arms length loan secured by the
Property, although the restrictions of this Section III S shall be binding upon
any other purchaser or acquiring party, including a party which purchases the
property at a foreclosure sale or from the foreclosing lender. Notwithstanding
the foregoing, if PAMF acquires the Property pursuant to a foreclosure (private
or judicial) or deed in lieu of foreclosure, PAMF shall nonetheless be bound by
all of its and 301's obligations under this Agreement, including without
limitation the provisions of this Section III S.

      T. Provide Information. Provide to the Parties all correspondence,
documents, permits, orders and similar items between 301 or its agents and any
governmental agency and/or

                                       7
<PAGE>
the insurer under the Insurance Policy that relate to any contamination and any
environmental response actions affecting or relating to the Property; make
available to the Parties, upon reasonable advance notice, for inspection and
copying all of its files and documents relating to its obligations under this
Agreement including without limitation files and documents relating to the RAP
work, demolition work and the closure work; notify PAMF, CPI and Varian in
advance of and permit them to attend any meeting with the RWQCB or any
regulatory agency relating to the environmental condition of the Property; and
provide a monthly written summary and updated schedule to the Parties of the
actions taken or to be taken in pursuit of the completion of the finally
approved RAP, the demolition of improvements, the No Further Action Letter and
all related obligations under this Agreement.

      U. Payment of Commission on Insurance Policy. Within thirty (30) days
after payment of the commission by AIG to Breitstone & Company, 301's insurance
broker, pay for or cause Breitstone & Company to pay The Spofford Group,
Varian's insurance broker, $45,000, provided The Spofford Group agrees to refund
such amount in the event the Insurance Policy is cancelled by the Parties and
the commission paid by AIG to Breitstone & Company is refunded.

      V. Retention of Records. Preserve, retain and maintain, and instruct all
of its contractors, subcontractors, agents, and anyone else acting on its behalf
to preserve, retain and maintain, all records, correspondence, and other written
materials and all electronic files (collectively "RECORDS") generated in the
performance of this Agreement until the Property is transferred by 301 to PAMF,
an affiliate of PAMF, or any other party in accordance with this Agreement, and,
at that time, either: (i) provide notice to each of PAMF, CPI and Varian of its
intent to retain such Records, and to make copies for any Party that requests a
copy within 30 days of such notice, at the expense of the requesting Party; or
(ii) provide notice to each of PAMF, CPI and Varian of its intent to transfer
such Records within 30 days of such notice to PAMF, CPI and Varian, and to
provide sufficient (in addition to the original Records) copies to meet any
requests for copies made by the requesting Parties. The costs of creating such
copies shall be shared by the Parties making such requests. 301 shall not be
obligated to transfer Records or copies of Records that are attorney client
privileged documents.

      W. Commutation Account. Upon receipt of the No Further Action Letter and
commutation of the cost cap coverage under the Insurance Policy, refund to CPI
one-third and refund to PAMF two-thirds of any amounts in the Insurance Policy
commutation account that have not been expended for the demolition or
remediation of the Property and pay no amount of any such refund to 301 or its
contractors.

      X. Membership Interests. Provide CPI and Varian with a copy of its
Operating Agreement for prior approval (which approval will not be withheld if
the Operating Agreement is consistent and conforms with this Agreement) and
enter into a Covenant Agreement in the form of Appendix III X-1.

      Y. Existence. Enter into the Covenant Agreement in the form of Appendix
III X-1 which provides among other things for 301 to maintain its existence in
good standing, as a single asset, special purpose entity until the earliest to
occur of (1) the date on which PAMF (or its affiliate) becomes liable for the
performance of 301's obligations pursuant to Section VII D or

                                       8
<PAGE>
(2) the transfer of the Property to another party, other than PAMF, in
accordance with this Agreement, including without limitation full compliance
with Sections III C(2) and III S.

      The provisions of this Section III are expressly for the benefit of CPI,
Varian and PAMF and each of them shall be entitled to enforce the foregoing
obligations of 301.

IV.     301 HOLDING'S RESPONSIBILITIES

      301 Holding agrees to enter into a Covenant Agreement, Guaranty Agreement,
Pledge Agreement and Intercreditor Agreement in the form of Appendices III X-1,
III X-2, III X-3, and X-4 respectively, whereby 301 Holding (x) covenants to
maintain the existence of 301 until the earliest to occur of (1) the date on
which PAMF (or its affiliate) becomes liable for the performance of 301's
obligations pursuant to Section VII D or (2) the transfer of the Property to
another party, other than PAMF, in accordance with this Agreement, including
without limitation full compliance with Sections III C(2) and III S, (y)
guarantees the obligations of 301 hereunder and (z) pledges, as security for
those obligations, 100% of the membership interests of 301 to PAMF, Varian and
CPI.

The provisions of this Section IV are expressly for the benefit of CPI, Varian
and PAMF and each of them shall be entitled to enforce the foregoing obligations
of 301 Holding.

V.      CPI'S RESPONSIBILITIES

      CPI agrees to, at its cost:

      A. Purchase Agreement. Enter into the Ninth Amendment to Agreement of
Purchase and Sale on terms acceptable to PAMF and CPI and consistent with this
Agreement.

      B. Assignment of Purchase Agreement. Approve an assignment of the Purchase
Agreement to 301, and provide a release of PAMF from any obligations under the
Purchase Agreement (but not from its obligations under this Agreement) to
perform the cleanup and bear any liability for matters involving the existing
contamination of the Property, as provided in the form of Assignment referenced
in Section III A above.

      C. Cease Operations. Cease and decommission its operations at the Property
in accordance with all federal, California and local requirements and permits
within the time period provided for in the Purchase Agreement (i.e., 24 to 30
months after the date the "Additional Deposit" is made by PAMF pursuant to the
Purchase Agreement).

      D. Remove Personal Property. During the time period described in Section V
C above, remove all personal property, equipment, furnishings, machinery, raw
materials, supplies, products, containers, fixtures, trash, and garbage from the
Property, other than those items of equipment which may remain, as identified in
Appendix V D which is attached hereto and incorporated herein.

      E. Closure of Facilities. Complete the investigation, cleanup and obtain
regulatory closure from all local, California and federal agencies with
jurisdiction, of its facility, including

                                       9
<PAGE>
without limitation any regulated waste management units currently on the
Property, in accordance with Appendix III D.

      F. Access to 301. Provide cooperation and access to 301 to enable 301 to
monitor CPI's completion of its obligations described in Sections V C, V D and V
E above (including without limitation to allow 301 to take photos, collect
samples and otherwise oversee the progress of the decommissioning in compliance
with applicable law) and to perform 301's obligations under this Agreement,
provided that 301 shall not interfere with CPI's operation of its business,
shall provide one business day prior notice of its need for access, and shall
comply with all reasonable security requirements of CPI.

      G. Memorandum re Acknowledgement. Record, in connection with the transfer
of the Property to 301, a Memorandum in the form of Appendix V G which advises
any party acquiring the Property that an Acknowledgment for the benefit of
Varian and CPI is required from such party (other than PAMF). The Acknowledgment
is described in Section III S and attached as Appendix III S, but will not be
recorded with the Memorandum.

      H. Termination of Pre-existing Restrictions. Prior to, conditioned on and
effective as of the transfer of the Property to 301, obtain from Varian a waiver
or termination of (i) Sections 7.11 and 10.5(d) of the Stock Sale Agreement
between Varian Associates, Inc. and CPI dated June 9, 1995, as amended to date
("VARIAN STOCK SALE AGREEMENT") as such sections apply to the Property and (ii)
the Site Access Agreement between CPI and Varian Associates, Inc. dated August
11, 1995, as amended to date (the "VARIAN SITE ACCESS AGREEMENT") as it applies
to the Property. A copy of the document evidencing such waiver or termination
shall be provided to 301 and PAMF.

      I.    Intercreditor Agreement.  Enter into the Intercreditor Agreement
in the form of Appendix III X-4.

      J. New Contamination. Undertake any required environmental response
actions for any Hazardous Materials which are introduced by any party other than
301 or PAMF (or the affiliates of either) or any of their agents onto the
Property after the Effective Date of this Agreement and before the transfer of
the Property to 301, provided that CPI receives actual notice thereof prior to
the transfer of the Property to 301 or 301 notifies CPI of any such alleged
contamination within five (5) years after transfer of the Property to 301. Any
such contamination of which CPI receives actual notice prior to the transfer of
the Property to 301 or which is identified prior to the end of the five (5) year
period shall be referred to as "NEW CONTAMINATION" for purposes of this
Agreement.

The provisions of this Section V are expressly for the benefit of Varian, 301,
301 Holding and PAMF and each of them shall be entitled to enforce the foregoing
obligations of CPI.

VI.     VARIAN'S RESPONSIBILITIES

      Varian agrees to, at its cost:

      A. Termination of Pre-existing Restrictions. Prior to, conditioned on and
effective as of the transfer of the Property to 301, waive or terminate (i)
Sections 7.11 and 10.5(d) of the

                                       10
<PAGE>
Varian Stock Sale Agreement as such sections apply to the Property and (ii) the
Varian Site Access Agreement as it applies to the Property. A copy of the
document evidencing such termination shall be provided to 301 and PAMF.

      B. Closure of Monitoring Wells. Prior to the transfer of the Property to
301, close all monitoring wells located on the Property as are approved for
closure by the RWQCB, and Varian shall have no obligation, liability, or
responsibility to replace or install any monitoring wells or to close or
maintain any monitoring wells that the RWQCB does not approve for closure, and
the ownership of and responsibility for such wells shall be assumed by 301 in
accordance with Section III J.

      C. Intercreditor Agreement. Enter into the Intercreditor Agreement in the
form of Appendix III X-4.

The provisions of this Section VI are expressly for the benefit of CPI, 301, 301
Holding and PAMF and each of them shall be entitled to enforce the foregoing
obligations of Varian.

VII.    PAMF'S RESPONSIBILITIES

      PAMF agrees to, at its cost:

      A. Purchase Agreement. Enter into the Ninth Amendment to Agreement of
Purchase and Sale on terms acceptable to PAMF and CPI and consistent with this
Agreement.

      B. Assignment of Purchase Agreement. Assign the Purchase Agreement to 301,
pursuant to the form of Assignment referenced in Section III A; provided,
however, if PAMF does not so assign the Purchase Agreement, PAMF shall be deemed
to have assumed all of 301's obligations under this Agreement.

      C. Loan to 301. For the benefit of all Parties, loan or cause an affiliate
to loan to 301 funds sufficient for 301 to purchase the Property (including
without limitation all deposits) pursuant to the Purchase Agreement; to purchase
the Insurance Policy; to perform or cause to be performed the Purchase Agreement
and the Insurance Policy; to perform the RAP and the abatement, demolition and
removal of improvements at the Property and all of 301's other obligations under
this Agreement; and to pay all of 301's costs of owning and operating the
Property and 301's organizational and operating costs. A copy of the loan
documents shall be provided to CPI and Varian.

      D. Acquisition of the Property. Upon its or its affiliate's acquisition,
lease or commencement of use of the Property, PAMF shall assume or cause such
affiliate to assume the obligations of 301 pursuant to the following subsections
of Section III: B, K, N, O, P, Q, R, S, T, V, and W. It is anticipated that PAMF
or an affiliate will acquire the Property from 301 after the issuance of the No
Further Action letter by the RWQCB pursuant to the terms of a separate contract
between 301 and PAMF consistent with this Agreement, including without
limitation containing the obligations to be imposed hereunder on any subsequent
acquiring party, a copy of which contract shall be provided to all Parties.
Notwithstanding anything herein, if a party (including PAMF) other than 301
acquires the Property prior to the issuance of the No Further Action Letter
(including compliance with Section III C(2), if applicable), whether such

                                       11
<PAGE>
acquisition is voluntary or involuntary, and including without limitation any
change of 301's status to a debtor in a bankruptcy proceeding, PAMF shall be
bound by all of its and 301's obligations under this Agreement, including
without limitation all the provisions of Section III. In that regard, PAMF
waives (i) any right to require that any Party proceed first against 301 or any
other person, proceed against or exhaust any security, or pursue any remedy in
such Party's power; (ii) any defense arising by reason of any disability or
defense of 301 or from any cause other than the full performance of such
obligations; (iii) any defense arising out of an election of remedies by any
Party; and (iv) all rights and benefits accorded a surety under applicable law.
In the event PAMF acquires the Property from CPI, all references herein to the
transfer of the Property to 301 shall be deemed to mean the transfer of the
Property to PAMF.

      E.    Development Proposals.  Provide to CPI and Varian copies of all
submissions to the City of San Carlos and related agencies regarding the
proposed development of the Property.

      F.    Intercreditor Agreement.  Enter into the Intercreditor Agreement
in the form of Appendix III X-4.

The provisions of this Section VII are expressly for the benefit of CPI, Varian,
301 Holding and 301 and each of them shall be entitled to enforce the foregoing
obligations of PAMF.

VIII.   RELATIONSHIP OF THE PARTIES

      A. No Agency. No Party shall act as agent for, or partner of, another, nor
be authorized to incur any liability or to represent or make commitments on
behalf of the other (except as provided herein), and the employee and/or
representative of one shall not be deemed the employee or representative of any
other. Nothing in this Agreement shall be deemed to constitute, create, give
effect to or otherwise recognize a joint venture, partnership or formal business
entity of any kind, and the rights and obligations of the Parties shall be
limited to those expressly set forth herein. Nothing in this Agreement shall be
construed to give any Party the right to manage the day-to-day activities or
control another Party's business. No Party shall have any liability or
obligation to another except as expressly provided herein or in any other
agreement signed by the Party to be bound.

      B. Limited Contact with RWQCB. To facilitate 301's ability to perform its
obligations hereunder, PAMF, CPI and Varian agree that they will not,
individually or in concert, contact or attempt to influence the actions of the
RWQCB or any other relevant regulatory agency with regard to 301's obligations
hereunder with respect to the Property without the express advance written
approval of 301. Notwithstanding the foregoing, without any liability under the
preceding sentence any Party may contact the RWQCB or any relevant regulatory
agency if reasonably necessary to cause or ensure that the provisions of this
Agreement and the finally approved RAP are fully complied with, but only if, (i)
such Party has given prior written notice to 301 and PAMF of the alleged failure
of 301 to comply with this Agreement, (ii) 301 does not promptly commence the
cure of such failure and diligently prosecute it to completion, (iii) in the
case of such failure to cure, all Parties shall attend a meeting (which
attendance may be by their representatives and/or contractors) within ten (10)
days of notice thereof by such Party, at which meeting PAMF, CPI and Varian
agree that 301 has failed to comply with this Agreement, and (iv) 301
nonetheless does not immediately commence the cure of such failure

                                       12
<PAGE>
and diligently prosecute it to completion. CPI's actions pursuant to Section V
E, Appendix III D and Section V J and Varian's actions pursuant to Section VI B
shall not be deemed breaches of this provision.

      C. No Transfer of Rights Under Varian Agreements. PAMF, 301 and 301
Holding each represents and warrants to Varian that, except as provided herein,
neither CPI nor any other person has ever, by operation of law or otherwise,
transferred or purported to transfer to it, or conveyed or purported to convey
to it, any right or interest in or to, any of CPI's or any other person's rights
under any of the Varian Stock Sale Agreement and Varian Site Access Agreement
and two Special Release and Settlement Agreements dated September 30, 1996 and
August 16, 2000 as applicable to the Property. PAMF, 301 and 301 Holding each
covenants with Varian that, except as provided herein, it will never accept any
such transfer, purported transfer, conveyance or purported conveyance.

IX.     NON-DISCLOSURE/NEWS RELEASE

      A. Information. Each Party will use commercially reasonable efforts to
avoid disclosure of all confidential information ("INFORMATION") disclosed by
another Party in connection with this Agreement, except for disclosure to the
receiving Party's directors, employees, agents, attorneys, insurers, lenders and
any contractors directly involved with the receiving Party's use of such
Information and as otherwise required, or reasonably deemed advisable, under
applicable law or regulation or as may be required to enforce this Agreement or
carry out the terms of this Agreement. Such Information shall be used only in
connection with or for the purposes contemplated by this Agreement.
Notwithstanding the foregoing, if Information is released into the public domain
the Parties shall no longer be obligated to maintain the confidentiality of such
Information.

      B. Terms of Agreement. The terms and form of this Agreement are
CONFIDENTIAL. Except as may otherwise be required, including, without limitation
required to enforce this Agreement or to carry out its terms or reasonably
deemed advisable, under applicable law or regulation, no Party shall, without
the prior written consent of the other Parties, disclose the specific terms and
conditions of this Agreement, except to its directors, employees, agents,
attorneys, insurers, and lenders. Notwithstanding the foregoing, if this
Agreement or its terms is released into the public domain the Parties shall no
longer be obligated to maintain the confidentiality of such Information.

      C.    Disclosure.  Notwithstanding Sections IX A and B, Varian and CPI
may (i) inform any party seeking any environmental response action or
asserting any claim regarding the subject matter of this Agreement, of the
existence of this Agreement and the Party responsible for such  environmental
response action or claim and (ii) contact any oversight regulatory agency (a)
if 301 (or any successor or assign) is not performing its obligations in this
Agreement or is failing to implement the finally approved RAP, as modified or
amended, if such failure of performance is not corrected immediately
following notice to such non-performing Party or (b) if Varian or CPI is
required to perform any environmental response action.

                                       13
<PAGE>
      D.    News Release.  The Parties agree that they will not issue any
news release regarding the subject matter of this Agreement without the
express prior written consent of the other Parties.

X.      TIME

      Time is of the essence in the performance of the Parties' respective
obligations under this Agreement.

XI.     INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE

      The Parties agree that money damages alone may be an inadequate remedy for
a breach or threatened breach of this Agreement and that such breach may cause
irreparable injury. Accordingly, the Parties agree that in addition to the
remedies otherwise available, each Party will be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach
or threatened breach.

XII.    FURTHER ACTIONS

      All Parties agree to execute, acknowledge and deliver such further
instruments and do all such other acts, as may be necessary or appropriate in
order to carry out the purposes and intent of this Agreement.

XIII.   ASSIGNMENT

      No Party shall assign its rights or obligations under this Agreement
without the prior written consent of the other Parties hereto, other than, with
prior notice to the other Parties, to an entity which succeeds to the Property,
or which acquires more than 50% of the business and assets of a Party. Any
assignment shall not relieve the assignor Party of its obligations under this
Agreement. Notwithstanding the foregoing, PAMF may succeed to the rights of 301
hereunder provided that PAMF assumes the obligations of 301 hereunder, whereupon
301 shall be released from its obligations to be performed from and after the
date of such assumption by PAMF. This Agreement shall be binding upon and inure
to the benefit of the successors and permitted assigns of the Parties.

XIV.    MUTUAL REPRESENTATIONS & WARRANTIES

      Each Party represents and warrants to the others that:

      A.    Solvency.  It is solvent, duly organized and validly existing in
the state of organization indicated in this Agreement and is or will become
duly qualified and in good standing under the laws of all states in which it
is required to be qualified in order to conduct the business covered by this
Agreement.

      B.    Authority.  It has full corporate power and authority to enter
into this Agreement and to do all things necessary for the performance of the
contract contemplated herein.

                                       14
<PAGE>
      C. No Conflict. This Agreement does not, and will not conflict with any
other right or obligation provided under any other agreement or obligation that
it has with or to any third Party.

      D. No Migration. Other than any off-site contamination that may be
associated with the incidents described in Appendix XIV attached hereto, it is
not aware of existence off of the Property of any Hazardous Materials that
migrated from the Property. For purposes of this Agreement, "HAZARDOUS
MATERIALS" shall mean: (i) any substance which is listed, regulated or defined
as a hazardous substance, extremely hazardous substance, hazardous material,
toxic substances, hazardous waste, hazardous chemical, carcinogen, mutagen,
reproductive toxicant, explosive substance, corrosive substance, flammable or
ignitable substance, or pollutant or contaminant or words of similar import
under any Environmental Laws; (ii) radioactive substances; (iii) asbestos; (iv)
radon gas; (v) polychlorinated biphenyls (PCBs); (vi) petroleum (including crude
oil and any fractions thereof) and petroleum products, and any additives thereto
(including without limitation MTBE); (vii) natural or synthetic gas or any
mixture thereof; (viii) medical or infectious waste; (ix) lead-based paint; and
(x) urea foam insulation. "ENVIRONMENTAL LAWS" shall mean: all laws,
regulations, ordinances, codes, policies, governmental orders and consent
decrees, and any judicial and administrative determinations thereof, of
governmental authorities in effect as of the date 301 acquires the Property and
as may be amended, supplemented or revised in the future relating to pollution
or protection of the environment, natural resources and public (including
employee) health and safety, emissions, discharges, releases or threatened
releases of pollutants, contaminants, wastes, chemicals or other deleterious
materials into the environment (including ambient air, surface water,
groundwater or land), or the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
wastes, chemicals or other deleterious materials or Hazardous Materials. The
Parties shall, upon request give this representation in writing immediately
prior to the transfer of the Property to 301; or if this representation is no
longer accurate, such Party shall specify the then current information known to
such Party regarding the information contained in this representation.

      E. Insurance Policy Application. It has provided an exact copy of its
Insurance Policy Application to the other Parties.

      F. No Reliance. It is not relying on any representation, action, or
omission by any Party, except as expressly set forth in this Agreement or any
other agreement to which such Party and the relying Party are signatories.

XV.     RELEASES

      The following releases shall be effective upon the transfer of the
Property to 301 pursuant to the Purchase Agreement and shall not be deemed to
include a release of any Party's obligations under this Agreement.

      A. By 301 and PAMF. 301, 301 Holding and PAMF hereby release CPI and
Varian and their respective successors and assigns and all of their parents,
subsidiaries, affiliates, members, directors, officers, employees, shareholders,
representatives and agents from any and all claims of any kind, known or
unknown, including without limitation for death, bodily injury,

                                       15
<PAGE>
property damage, cleanup costs, and business interruption arising out of: (i)
Hazardous Materials located on or beneath the Property on or after the transfer
of the Property to 301; (ii) any abatement, demolition or removal of
improvements at the Property performed after transfer of the Property to 301;
(iii) Hazardous Materials migrating from the Property (1)which Hazardous
Materials were first introduced on the Property on or after the transfer of the
Property to 301 or (2) which migration was caused by 301 or PAMF (or any
affiliate of either) or any of their agents or (3) such Hazardous Materials were
known to such party (or should have been known to such party using reasonably
applicable professional practices at the time in the San Francisco Bay Area) and
such migration could reasonably have been prevented by such party applying
customary professional standards; and/or (iv) alleged exposure to, or damages
(including personal injury, death and property damage) arising from, Hazardous
Materials located on or beneath the Property if such alleged exposure occurred,
or such alleged damage was suffered on or after the transfer of the Property to
301; provided however, that the foregoing release does not apply to claims (a)
arising out of or relating to claims by third parties relating to Hazardous
Materials, if any, which migrated off of the Property prior to the transfer of
the Property to 301; or (b) arising out of or relating to claims by third
parties relating to the migration from the Property of any Hazardous Materials
in soil or groundwater which existed on the Property when the Property was
transferred to 301, unless (x) such migration was caused by 301 or any successor
owner or user of the Property, or any of their agents or (y) the Hazardous
Materials were known to such party (or should have been known to such party
using reasonably applicable professional practices at the time in the San
Francisco Bay Area) and such migration could reasonably have been prevented by
such party applying customary professional standards or (c) as to CPI only,
arising out of New Contamination.

      B. By CPI and Varian. CPI and Varian hereby release 301, 301 Holding and
PAMF and their respective members, employees, contractors, representatives,
successors and assigns and their respective parents, subsidiaries, members,
directors, officers, employees, shareholders, representatives and agents, from
any and all claims, known or unknown, including without limitation claims for
death, bodily injury, property damage, cleanup costs and business interruption,
arising from: (i) claims by employees or contractors of Varian or CPI or others,
of alleged exposure to or damages (including personal injury, death and property
damage) on account of, Hazardous Materials if such alleged exposure occurred, or
such alleged damage was suffered, prior to the transfer of the Property to 301,
(ii) Hazardous Materials from the Property which existed off of the Property or
migrated off of the Property prior to transfer of the Property to 301, (iii)
Hazardous Materials which existed on the Property at the time of transfer of the
Property to 301 and migrated off the Property after the transfer of the Property
to 301 other than (1) from such migration which was caused by 301 or PAMF (or an
affiliate of either) or any of their agents or (2) Hazardous Materials which
were known to such party (or should have been known to such party using
reasonably applicable professional practices at the time in the San Francisco
Bay Area) and such migration could reasonably have been prevented by such party
applying customary professional standards; and/or (iv) as to CPI only, Hazardous
Materials which were first introduced on the Property after the Effective Date
of this Agreement and prior to the transfer of the Property to 301; provided
however, the foregoing release does not apply to any claim arising out of any
action or omission by PAMF, 301 or their agents which is a breach of the
covenants set forth in Section 4.01.A(3) of the Purchase Agreement.

                                       16
<PAGE>
      C. By PAMF, Varian and CPI. PAMF, Varian and CPI hereby release 301 and
301 Holding and their respective members, employees, contractors,
representatives, successors and assigns and their respective parents,
subsidiaries, members, directors, officers, employees, shareholders,
representatives and agents, from any and all claims, known or unknown, including
without limitation claims for death, bodily injury, property damage, cleanup
costs and business interruption, arising out of the failure of the RWQCB to
approve or grant the RAP, PPA or No Further Action Letter as desired by the
Parties or AIG's action or inaction, provided that 301 has exercised its
commercially reasonable best efforts to obtain such results as set forth in ,
and has otherwise complied with its obligations under, this Agreement.

      D. Waiver of Section 1542. Each Party acknowledges that it has read and is
familiar with the provisions of California Civil Code Section 1542, which
provides:

      "A general release does not extend to claims which the creditor does not
      know or expect to exist in his favor at the time of executing the release,
      which if known by him must have materially affected his settlement with
      the debtor."

Each Party hereby WAIVES the benefit of the provisions of Section 1542, and of
any statute, principle of common law or case law which would limit the scope of
the releases and waivers contained in this Section XV.

      E. Limitation of Releases. Nothing herein shall be deemed to be a release
by any Party of any other Party of any claim for a breach of this Agreement,
fraud or intentional misrepresentation.

XVI.    GOVERNING LAW

      This Agreement will be interpreted and the rights of the Parties construed
in accordance with California law, and any litigation concerning this Agreement
shall be limited and confined exclusively to the appropriate State or Federal
court located within California.

XVII.   ARBITRATION

      A.    Dispute.  Any dispute, controversy or claim arising out of or
relating to this Agreement, including any dispute relating to interpretation
of or performance under this Agreement ("DISPUTE"), shall be resolved in the
manner set forth in this Section XVII, which shall be in lieu of litigation
in any court (except as provided in Section XVII C regarding provisional
remedies), and the Parties specifically waive any right to a jury trial of
any dispute between them.

      B. Notice and Offer. A Party contending that there is a Dispute shall
notify in writing the other Party or Parties who are directly involved
explaining the nature of the Dispute ("DISPUTE NOTICE"). The affected Parties
will attempt in good faith to resolve the Dispute promptly (but no later than 30
days after receipt of the notice of such Dispute) by negotiations between senior
representatives of the Parties who have authority to settle the Dispute (each, a
"REPRESENTATIVE"). Prior to expiration of the 30-day negotiation period, the
Party who has first notified the other Party(ies) of the Dispute shall submit a
written offer to settle the Dispute.

                                       17
<PAGE>
      C. Provisional Relief. At any time after expiration of the 30-day
negotiation period and prior to selection of the Arbitrator, a Party requiring
provisional relief to maintain the status quo, may seek provisional relief in
court. The granting of such provisional relief shall not constitute a waiver of
the parties' obligations to resolve the Dispute by arbitration as described in
Section XVII D and the Arbitrator shall not be deemed deprived of jurisdiction
to award or modify any provisional relief. Once the Arbitrator has been
selected, the Arbitrator shall promptly determine if any existing provisional
relief should remain in effect and may continue, terminate or modify such
provisional relief.

      D. Proceeding. In the event the Representatives have not resolved the
Dispute within the 30-day negotiation period, the Dispute shall be resolved by
binding arbitration before the arbitrator (the "ARBITRATOR") identified below,
in accordance with the following provisions:

            1. The Parties stipulate and agree that any and all necessary
parties may be joined in the arbitration, but the Parties agree to proceed with
arbitration of all Disputes between themselves even if other parties refuse to
participate. The Parties specifically waive any objection to arbitration based
on the failure or refusal of any other party to be joined.

            2. Within 60 days after the expiration of the 30-day negotiation
period, the arbitration shall be initiated by written notice (the "ARBITRATION
NOTICE") of a demand to arbitrate by registered or certified mail sent by one
Party to the other Party or Parties. If an Arbitration Notice is not given
within the 60-day period, then the right to make a claim based on the Dispute
described in the Dispute Notice shall be forever waived. The Arbitration Notice
shall include a plain statement of the Dispute and the relief requested and
shall select to be governed by either AAA (as described below) or JAMS (as
described below). Within 30 days of receipt of the Arbitration Notice, each
responding Party or Parties shall provide its own plain statement of the Dispute
and the bases of any defenses it intends to assert in response to the demand.
The Parties shall equally share the Arbitrator's fee, as fixed and required by
the Arbitrator in order to initiate the arbitration, although the Parties shall
ultimately bear responsibility for such fee as determined by the Arbitrator.

            3. The Parties shall attempt to agree on a retired judge to be the
Arbitrator. If they are unable to agree, the Parties shall simultaneously
exchange the names of three available retired judges and a judge appearing on
both lists shall be selected. If there is no common available Arbitrator and the
Parties still cannot agree on an Arbitrator, the Parties shall submit further
lists until one is selected. If the Parties have not selected the Arbitrator
within 15 days following the responding Party's statement of its position, the
arbitrator shall be selected in accordance with the applicable rules of
arbitration (AAA or JAMS, as the case may be). The Arbitrator so selected shall
be notified immediately and a date for the arbitration shall be set within nine
months after selection of the Arbitrator. The Dispute shall be resolved by
binding arbitration under the American Arbitration Association's ("AAA")
Commercial Arbitration Rules or the arbitration rules of JAMS (whichever is
elected by the party giving the Arbitration Notice) then in effect, as
supplemented by this Section XVII. To the extent this Section XVII is
inconsistent with the applicable arbitration rules, the provisions of this
Section XVII shall control.

                                       18
<PAGE>
            4. The Arbitrator shall schedule a pre-hearing conference to resolve
procedural matters and arrange for the exchange of information.

            5. Prior to the arbitration, the Parties shall be allowed the
following limited discovery: each Party shall be entitled to receive relevant
non-attorney-client privileged documents and to take up to three fact and/or
expert witness depositions in the discretion of the Arbitrator. Any further
discovery shall only be allowed by order of the Arbitrator upon a showing that
it is critical to the presentation of a Party's claims or defenses. All
discovery shall be completed 30 days prior to the arbitration.

            6. The arbitration shall be completed in no more than ten full
consecutive days, if possible. The following is the timetable preferred by the
parties and which the parties agree cannot be varied except by the Arbitrator
upon a showing that it is critical to the presentation of a Party's claims or
defenses. Each Party shall have two days to present its position using
documentary and testimonial evidence. The Party giving the Arbitration Notice
shall present its case first. One day shall be reserved for argument or the
taking of such further evidence as the Arbitrator may require.

            7. The Arbitrator shall have the power to grant all legal and
equitable remedies, including, but not limited to, injunction, specific
performance, reformation, cancellation, accounting and compensatory damages,
except only that lost profits, consequential damages and punitive damages shall
not be awarded. The Arbitrator shall issue a binding decision within 30 days of
the conclusion of the arbitration. The Arbitrator's interpretations of
California law or applicable federal law shall form the basis of the decision.
The Arbitrator's decision shall be conclusive and binding, and it may thereafter
be confirmed as a judgment by the Superior Court of the State of California,
subject only to challenge on the grounds set forth in California Code of Civil
Procedure Section 1286.2. The validity and enforceability of the Arbitrator's
decision is to be determined exclusively by the California courts pursuant to
the provisions of this Section XVII.

            8. The Arbitrator shall award reasonable attorneys' fees and costs,
including the Arbitrator's fees and expert fees, to the "PREVAILING PARTY". For
purposes of this section, the "Prevailing Party" shall be the Party or Parties
which is or are determined by the Arbitrator to be the prevailing Party or
Parties, provided that a Party may not be the Prevailing Party if the net
recovery by such Party is equal to or less than the written offer from the
opposing party made after the negotiations described in Section XVII B, as
determined by the Arbitrator. The Arbitrator shall have exclusive and binding
authority to determine entitlement to attorneys' fees and costs, including
Arbitrator's and experts' fees, under this section.

            9.    The arbitration shall be conducted in Santa Clara County,
California.  Any party may be represented by counsel or other authorized
representative.

            10. The Arbitrator shall be a retired judge of the Federal District
Court or Court of Appeal or the Superior Court, Appellate Court or Supreme Court
of the State of California.

                                       19
<PAGE>
      "NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
      DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF
      DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
      CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE
      THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE
      BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL,
      UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE `ARBITRATION OF
      DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING
      TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY
      OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
      ARBITRATION PROVISION IS VOLUNTARY. YOU ACKNOWLEDGE THAT YOU HAVE REVIEWED
      THE "ARBITRATION OF DISPUTES" PROVISION WITH COUNSEL OR HAVE HAD AN
      OPPORTUNITY TO REVIEW IT WITH COUNSEL AND HAVE CHOSEN NOT TO DO SO.

      "WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
      ARISING OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF DISPUTES'
      PROVISION TO NEUTRAL ARBITRATION."

----------------         --------------     -------------       --------------
301 Holding Initials     301 Initials       CPI Initials        Varian Initials

----------------
PAMF Initials

XVIII.  FORCE MAJEURE

      Force Majeure shall mean an act of nature, flood, fire, earthquake,
strike, lockout, war, civil commotion, act of public enemies, blockage or
embargo, or any injunction, law, order, proclamation, regulation, ordinance,
demand or requirement of any government or any subdivision, authority or
representative thereof, or the inability (other than due to lack of financial
resources) to procure or use materials, labor, equipment, transportation or
energy sufficient to execute the services, or any other cause whatsoever,
whether similar or dissimilar to those enumerated above, which are beyond the
reasonable control of such Party (other than due to lack of financial
resources), which the Party affected has used its reasonable best efforts to
avoid, and which prevent, restrict or interfere with the performance by a Party
of its obligations hereunder. The Party effected by Force Majeure shall give
notice to the other Party(ies) promptly in writing and whereupon the affected
Party shall be entitled to extend the time to perform those obligations
hereunder, to the extent of such prevention, restriction or interference,
provided that the affected Party shall use its commercially reasonably efforts
to avoid or remove such cause(s) of non-performance and shall continue
performance whenever such cause(s) is removed. Nothing herein shall relieve any
Party of its obligation of performance.

                                       20
<PAGE>
XIX.    TERMINATION

      If within 120 days of the Effective Date of this Agreement the RWQCB does
not approve the RAP pursuant to Section III C(1)above, any Party may terminate
this Agreement. In the event of such termination, each Party shall thereafter
cease to have any obligation hereunder (other than for its own breach thereof
and other than Section VIII A and the Insurance Policy which will continue in
effect following any termination of this Agreement). Nothing herein shall be
deemed to release PAMF or 301 from its obligations under the Purchase Agreement
(other than pursuant to the release described in Section V B above). Other than
as provided in this Section XIX, this Agreement may not be terminated.

XX.     NOTICES

      Any notice, request, delivery, approval, consent, or report required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been sufficiently given when delivered in person, transmitted by
commercial overnight courier, or transmitted by telecopy to the Party to whom it
is directed at its address shown below or such other address as such Party shall
have last given notice to the other Party.

      301:                301 Industrial LLC
                          3629 Grand Avenue
                          Oakland, California 94610
                          Attn.: Manager
                          Facsimile: 510-839-0688
                          Telephone: 510-839-0415

      301 Holding:        301 Holding LLC
                          3629 Grand Avenue
                          Oakland, California 94610
                          Attn.: Manager
                          Facsimile: 510-839-0688
                          Telephone: 510-839-0415

      CPI:                Communications & Power Industries, Inc.
                          811 Hansen Way
                          Palo Alto, California 94303
                          Attn.: Chief Financial Officer
                          Facsimile: 650-846-3276
                          Telephone: 650-846-2801

      Varian:             Varian Medical Systems, Inc.
                          3100 Hansen Way
                          Palo Alto, California 94304
                          Attn.: Legal Department
                          Facsimile: 650-424-5998
                          Telephone: 650-493-4000

                                       21
<PAGE>

      And                 Varian Medical Systems, Inc.
                          3100 Hansen Way
                          Palo Alto, California 94304
                          Attn.: Environmental, Health & Safety Department
                          Facsimile: 650-842-5199
                          Telephone: 650-424-6060

      PAMF:               Palo Alto Medical Foundation
                          795 El Camino Road
                          Palo Alto, California 94301
                          Attn.: President
                          Facsimile: 650-853-6050
                          Telephone: 650-321-4121

All notices to be given by any Party under this Agreement shall be effective as
of the business date received, using the methods described above, by the noticed
Party at the above address.

XXI.    WAIVER

      The waiver by any Party of a breach or default under any provision of this
Agreement by another Party shall not be construed as a waiver of any succeeding
breach or default under the same or any other provision, nor shall any delay or
omission on the part of any Party to exercise or avail itself of any right,
power or privilege that it has or may have under this Agreement operate as a
waiver of any right, power or privilege by such Party.

XXII.   SEVERABILITY

      In the event that any one or more of the provisions of this Agreement
should for any reason be held by any court or authority having jurisdiction over
this Agreement or any of the Parties to be invalid, illegal or unenforceable,
such provision or provisions shall be validly reformed to as nearly as possible
to approximate the intent of the Parties and, if such provision or provisions
can not be validly reformed, such provision or provisions shall be divisible and
deleted in such jurisdiction; otherwise, this Agreement shall not be affected so
long as the Parties are still able to realize the principal benefits bargained
for in this Agreement.

XXIII.  BENEFIT OF COUNSEL/ INTERPRETATION

      The Parties each declare that they have had the benefit of advice and
counsel from separate and independent attorneys at law with respect to all
matters contemplated herein. This Agreement shall not be construed against the
drafting Party, rather this Agreement shall be given a reasonable interpretation
in accordance with the plain meaning of its terms and the Parties' intent
herewith. Similarly, the presence or absence of language in prior drafts of this
document shall not be used to interpret any provision hereof.

XXIV.   HEADINGS

      Section headings contained in this Agreement are included for convenience
only and form no part of the Agreement between the Parties. The use of the term
"herein" or a term of

                                       22
<PAGE>
similar import in any provision shall not refer exclusively to such provision or
section, but rather to the entire Agreement.

XXV.    VARIAN STOCK SALE AGREEMENT/VARIAN SITE ACCESS AGREEMENT

      Nothing in this Agreement shall be deemed to modify any of the rights of
CPI or Varian, as between those two Parties, pursuant to the Varian Stock Sale
Agreement or the Varian Site Access Agreement.

XXVI.   ENTIRE AGREEMENT

      This Agreement, and all Appendices which are hereby incorporated in this
Agreement, constitutes the entire understanding and agreement of the Parties and
except as provided above in Section XXV and for other agreements which are
described herein and intended to survive this Agreement, this Agreement cancels
and supersedes any and all prior negotiations, correspondence, understandings
and agreements, whether verbal or written, between the Parties respecting the
subject matter hereof. There are no representations, agreements, arrangements or
understandings, oral or written, relating to the subject matter of this
Agreement, which are not expressed herein or in an agreement or written
instrument which is referenced herein or referenced in any instrument referenced
herein. No waiver, modification or amendment of any provision of this Agreement
shall be valid or effective unless made in writing and signed by a duly
authorized representative of the Party to be bound.

XXVII.  COUNTERPARTS; FACSIMILE SIGNATURES

      This Agreement may be executed in counterparts, each of which shall be
deemed an original, but which together shall constitute a single document.
Signatures and initials transmitted by facsimile shall be binding; provided
however, that any Party transmitting its signature or initials by facsimile
shall promptly send an original signature to the other Parties in accordance
with Section XX.

XXVIII. NO OBLIGATIONS TO THIRD PARTIES

      Except as otherwise expressly provided in this Agreement, the execution
and delivery of this Agreement shall not be deemed to confer any rights upon, or
obligate any of the Parties hereto, to any person or entity other than the
Parties hereto.

                         (Signatures on following page.)

                                    23
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized representatives as of the Effective Date.

                              301 INDUSTRIAL LLC,
                              a California limited liability company

                              By:_______________________________________________
                              Print Name:_______________________________________
                              Title:____________________________________________
                              Date:_____________________________________________

                              301 HOLDING LLC,
                              a California limited liability company

                              By:_______________________________________________
                              Print Name:_______________________________________
                              Title:____________________________________________
                              Date:_____________________________________________

                              COMMUNICATIONS & POWER INDUSTRIES, INC.,
                             a Delaware corporation

                              By:_______________________________________________
                              Print Name:_______________________________________
                              Title:____________________________________________
                              Date:_____________________________________________

                              VARIAN MEDICAL SYSTEMS, INC.
                             a Delaware corporation

                              By:_______________________________________________
                              Print Name:_______________________________________
                              Title:____________________________________________
                              Date:_____________________________________________

                              PALO ALTO MEDICAL FOUNDATION,
                              a California non-profit public benefit
                              corporation

                              By:_______________________________________________
                              Print Name:_______________________________________
                              Title:____________________________________________
                              Date:_____________________________________________

                                       24
<PAGE>
                                   APPENDICES

Appendix I A - Legal Description of the Property

Appendix I B - Insurance Policy and AIG Support Letter

Appendix III A - Form of Assignment of Purchase Agreement

Appendix III C-1 - Remedial Action Plan

Appendix III C-2 - Form of Prospective Purchaser Agreement

Appendix III D - Closure Responsibilities of CPI and 301

Appendix III S - Acknowledgment of Acquiring Party

Appendix III X-1 - Form of Covenant Agreement

Appendix III X-2 - Form of Guaranty Agreement

Appendix III X-3 - Form of Pledge Agreement

Appendix III X-4 - Form of Intercreditor Agreement

Appendix V D - Personal Property to Remain

Appendix V G - Form of Memorandum

Appendix XIV - List of Incidents

                                       25
<PAGE>
                                DEFINED TERMS

                                                                     Section

301................................................................Paragraph 1

301 Holding........................................................Paragraph 1

AAA...................................................................XVII.D.3

Agreement..........................................................Paragraph 1

AIG........................................................................I.B

Arbitration Notice....................................................XVII.D.2

Arbitrator..............................................................XVII.D

CPI................................................................Paragraph 1

Dispute.................................................................XVII.A

Dispute Notice..........................................................XVII.B

Effective Date............................................................II.A

Environmental Laws.......................................................XIV.D

finally approved PPA...................................................III.C.1

finally approved RAP...................................................III.C.1

Hazardous Materials......................................................XIV.D

Information...............................................................IX.A

Insurance Policy...........................................................I.B

insurer....................................................................I.B

New Contamination..........................................................V.J

No Further Action Letter...............................................III.C.1

PAMF...............................................................Paragraph 1

Parties...........................................................Paragrapah 1

Party..............................................................Paragraph 1

Prevailing Party......................................................XVII.D.8

Property......................................................Paragraph 2, I.A

Purchase Agreement.................................................Paragraph 2

RAP....................................................................III.C.1

Records..................................................................III.V

Representative..........................................................XVII.B

RWQCB..............................................................Paragraph 3
<PAGE>
                                DEFINED TERMS

                                                                     Section

Unrestricted Uses......................................................III.C.1

Varian.............................................................Paragraph 1

Varian Site Access Agreement...............................................V.H

Varian Stock Sale Agreement................................................V.H

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