1
TOTAL NUMBER OF PAGES        30
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INDEX TO EXHIBITS AT PAGE    30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]       Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended June 30, 2000

OR

[ ]       Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from __________ to ___________

Commission File No.  0-25826

HARMONIC INC.
(Exact name of Registrant as specified in its charter)

DELAWARE                                   77-0201147
(State of incorporation)             (I.R.S. Employer Identification No.)

549 Baltic Way
Sunnyvale, CA 94089
(408) 542-2500

(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

--------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. 

Yes [X] No [ ]

As of June 30, 2000 there were 57,310,809 shares of the Registrant's Common
Stock outstanding.

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HARMONIC INC.

Index

Page
----

PART I - FINANCIAL INFORMATION                                                                                    

Item 1.  Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets at June 30, 2000 and December 31, 1999 ......................................3

Condensed Consolidated Statements of Operations for the Three Months and Six Months
Ended June 30, 2000 and July 2, 1999...............................................................................4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2000 and July 2, 1999.....................................................................................5

Notes to Condensed Consolidated Financial Statements...............................................................6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................14

PART  II - OTHER INFORMATION

Item 2. Legal Proceeding..............................................................................................27

Item 5.  Other Information............................................................................................27

Item 6.Exhibits and Reports on Form 8-K...............................................................................28

2

3
PART I - FINANCIAL  INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HARMONIC INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

JUNE 30,                 DECEMBER 31,
2000                       1999
-----------                ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents                                                    $   350,430                $    24,822
Short-term investments                                                            90,925                     64,877
Accounts receivable, net                                                         114,764                     35,421
Inventories                                                                       68,355                     35,310
Deferred income taxes                                                             11,525                      5,478
Prepaid expenses and other assets                                                 12,060                      3,792
-----------                -----------

Total current assets                                                         648,059                    169,700

Property and equipment, net                                                           35,270                     14,931

Intangibles and other assets                                                       1,688,662                      1,062
-----------                -----------
$ 2,371,991                $   185,693
===========                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                             $    32,676                $    18,946
Income taxes payable                                                             332,378                      2,265
Deferred income taxes                                                             19,327                         --
Accrued liabilities                                                               48,104                     19,073
-----------                -----------

Total current liabilities                                                    432,485                     40,284
-----------                -----------
Deferred income taxes                                                                 74,088                         --
Other non-current liabilities                                                          3,120                        521

Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized;
no shares issued or outstanding                                                  --                         --

Common Stock, $.001 par value, 150,000,000 shares authorized;
57,310,809 and 30,501,766 shares issued and outstanding                          57                         31

Capital in excess of par value                                                 1,943,124                    148,551

Accumulated deficit                                                              (81,527)                    (3,792)

Accumulated other comprehensive income                                               644                         98
-----------                -----------

Total stockholders' equity                                                 1,862,298                    144,888
-----------                -----------

$ 2,371,991                $   185,693
===========                ===========

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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HARMONIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

THREE MONTHS ENDED                    SIX MONTHS ENDED
----------------------------         ----------------------------
JUNE 30,            JULY 2,           JUNE 30,            JULY 2,
2000               1999              2000                1999
---------          ---------         ---------          ---------

Net sales                                                  $  79,963          $  37,902         $ 142,826          $  68,165

Cost of sales                                                 49,118             21,946            82,185             39,798
---------          ---------         ---------          ---------

Gross profit                                                  30,845             15,956            60,641             28,367
---------          ---------         ---------          ---------

Operating expenses:
Research and development                                  11,951              3,479            17,969              7,173
Selling, general and administrative                       16,016              7,972            25,795             14,846
Amortization of goodwill and other intangibles            55,256                 76            55,332                152
In-process research and development                       38,700                 --            38,700                 --
---------          ---------         ---------          ---------

Total operating expenses                                     121,923             11,527           137,796             22,171
---------          ---------         ---------          ---------

Income (loss) from operations                                (91,078)             4,429           (77,155)             6,196

Interest and other income, net                                 4,814                711             5,935                743
---------          ---------         ---------          ---------

Income (loss) before income taxes                            (86,264)             5,140           (71,220)             6,939

Provision for income taxes                                       799              1,285             6,515              1,735
---------          ---------         ---------          ---------

Net income (loss)                                          $ (87,063)         $   3,855         $ (77,735)         $   5,204
=========          =========         =========          =========

Net income (loss) per share
Basic                                                  $   (1.81)         $    0.13         $   (1.98)         $    0.20
=========          =========         =========          =========
Diluted                                                $   (1.81)         $    0.12         $   (1.98)         $    0.18
=========          =========         =========          =========

Weighted average shares
Basic                                                     47,980             29,654            39,348             26,324
=========          =========         =========          =========
Diluted                                                   47,980             32,125            39,348             29,238
=========          =========         =========          =========

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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5
HARMONIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

SIX MONTHS ENDED
----------------------------------
JUNE 30, 2000         JULY 2, 1999
-------------         ------------

Cash flows from operating activities:
Net income (loss)                                                           $   (77,735)         $     5,204
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Amortization of goodwill and other intangibles                               58,417                  304
In-process research and development                                          38,700                   --
Depreciation                                                                  4,790                2,213
Changes in assets and liabilities:
Accounts receivable                                                      (21,548)              (9,239)
Inventories                                                              (15,086)              (1,748)
Prepaid expenses and other assets                                         (5,266)              (1,068)
Accounts payable                                                             223                4,775
Income taxes payable                                                       1,212                   --      
Accrued and other liabilities                                            (18,742)               1,888
-----------          -----------

Net cash provided by (used in) operating activities                  (35,035)               2,329

Cash flows from investing activities:
Acquisition of property and equipment                                            (9,776)              (3,668)
Net cash received from DiviCom acquisition                                      393,739                   --
Proceeds from maturities of short-term investments                               24,307                   --
Purchases of short-term investments                                             (50,534)             (41,645)
-----------          -----------

Net cash provided by (used in) investing activities                  357,736              (45,313)
-----------          -----------

Cash flows from financing activities:                                                 2,597               66,335
Proceeds from issuance of Common Stock, net                                     
Borrowings under bank line                                                           --                  840
Repayments under bank line and term loan                                             --               (1,270)
-----------          -----------

Net cash provided by financing activities                              2,597               65,905

Effect of exchange rate changes on cash
and cash equivalents                                                                310                   89
-----------          -----------

Net increase in cash and cash equivalents                                           325,608               23,010

Cash and cash equivalents at beginning of period                                     24,822                9,178
-----------          -----------

Cash and cash equivalents at end of period                                      $   350,430          $    32,188
===========          ===========

Supplemental disclosure of cash flow information: 
Interest paid during the period                                             $        21          $        37
Income taxes paid during the period                                         $     9,266          $        70

Non-cash financing activities: 
Issuance of Common Stock and assumption of options
in DiviCom acquisition                                                 $ 1,792,000          $        --

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
include all adjustments (consisting only of normal recurring adjustments) which
Harmonic Inc. (the "Company") considers necessary for a fair presentation of the
results of operations for the unaudited interim periods covered and the
consolidated financial condition of the Company at the date of the balance
sheets. The quarterly financial information is unaudited. This Quarterly Report
on Form 10-Q should be read in conjunction with the Company's audited
consolidated financial statements contained in the Company's Annual Report on
Form 10-K and Form 10-K/A which were filed with the Securities and Exchange
Commission on March 31, 2000 and May 15, 2000, respectively. The interim results
presented herein are not necessarily indicative of the results of operations
that may be expected for the full fiscal year ending December 31, 2000, or any
other future period.

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

In June 2000 the Financial Accounting Standards Board ("FASB") issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities," which amends SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 was previously amended by SFAS No. 137,
"Deferral of the Effective Date of SFAS No. 133," which deferred the effective
date of SFAS No. 133 to fiscal years commencing after June 15, 2000. The Company
will adopt SFAS Nos. 133 and 138 as of the beginning of fiscal 2001. The Company
is continuing to evaluate the impact of SFAS Nos. 133 and 138 but is unable to
determine the impact from adoption of these standards on its financial position
or results of operations at this time.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles ("GAAP") to revenue recognition. The Company is
required to adopt SAB 101 in the fourth quarter of fiscal 2000. The Company is
continuing to evaluate the impact of SAB 101, but currently does not expect any
material effects on its financial position or results of operations from the
implementation of this SAB.

NOTE 3 - INVENTORIES

JUNE 30,             DECEMBER 31,
2000                   1999
------------           ------------
IN THOUSANDS                (UNAUDITED)

Raw materials                 $18,436               $10,649
Work-in-process                15,783                 4,740
Finished goods                 34,136                19,921
-------               -------
$68,355               $35,310
=======               =======

NOTE 4 - CASH EQUIVALENTS AND INVESTMENTS

Cash equivalents are comprised of highly liquid investments with
original maturities of three months or less at time of acquisition. Investments
are comprised of U.S. government, state, municipal and county obligations and
corporate debt securities with lives ranging from three months to two years. The
Company classifies its investments as available for sale in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," and states its investments at
estimated fair value, with material unrealized gains and losses reported in
other comprehensive income. The specific identification method is used to
determine the cost of securities disposed of, with realized gains and losses
reflected in other income and expense. Investments are anticipated to be used
for current operations and are, therefore, classified as current assets, even
though maturities may extend beyond one year.

At June 30, 2000, short-term investments of $53.1 million mature in less
than one year and $37.9 million mature between one and two years. The Company's
cash equivalents as of June 30, 2000 included approximately $320 million of cash
received in connection with the C-Cube merger for payment by August 15, 2000 of
taxes incurred on the spin-off of C-Cube's semiconductor business.

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income
available to common stockholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period. Basic net income
(loss) per share excludes the dilutive effect of stock options and warrants.
Diluted net income (loss) per share gives effect to all dilutive potential
common shares outstanding during a period. In computing diluted net income
(loss) per share, the average price for the period is used in determining the
number of shares assumed to be purchased from exercise of stock options and
warrants.

The following table presents a reconciliation of the numerators and
denominators of the Basic and Diluted net income (loss) per share computations
for the periods presented below:

THREE MONTHS ENDED                     SIX MONTHS ENDED
----------------------------         ----------------------------
JUNE 30,             JULY 2,           JUNE 30,          JULY 2,
2000                1999              2000               1999
-----------          -------         -----------          -------

IN THOUSANDS  (UNAUDITED)

Net income (loss) - (numerator)               $   (87,063)         $ 3,855         $   (77,735)         $ 5,204
===========          =======         ===========          =======

Shares calculation - (denominator):

Average shares outstanding - basic                 47,980           29,654              39,348           26,324

Effect of Dilutive Securities:

Potential Common Stock relating
to stock options and warrants                      --            2,471                  --            2,914
-----------          -------         -----------          -------

Average shares outstanding - diluted               47,980           32,125              39,348           29,238
===========          =======         ===========          =======

Net income (loss)  per share - basic          $     (1.81)         $  0.13         $     (1.98)         $  0.20
===========          =======         ===========          =======

Net income (loss) per share - diluted         $     (1.81)         $  0.12         $     (1.98)         $  0.18
===========          =======         ===========          =======

Options and warrants to purchase 6.4 million shares of common stock were
outstanding during the three and six month periods ended June 30, 2000, and 0.5
million shares of common stock were outstanding during the three and six month
periods ended July 2, 1999, but were not included in the computation of diluted
net income (loss) per share because either the option's exercise price was
greater than the average market price of the common stock or inclusion of such
options would have been antidilutive. The exercise price ranges of these options
and warrants were from $0.15 to $121.68 per share for the three and six month
periods ended June 30, 2000. The exercise price ranges of these options and
warrants were from $22.82 to $28.72 per share for the three and six month
periods ended July 2, 1999.

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"), requires that all items recognized under
accounting standards as components of comprehensive income be reported in an
annual financial statement that is displayed with the same prominence as other
annual financial statements. In accordance with SFAS 130, the Company's total
comprehensive income (loss) was as follows:

THREE MONTHS ENDED                 SIX MONTHS ENDED
--------------------------         --------------------------
JUNE 30,           JULY 2,         JUNE 30,          JULY 2,
2000              1999             2000              1999
--------          --------         --------          --------

IN THOUSANDS (UNAUDITED)

Net income (loss)                                         $(87,063)         $  3,855         $(77,735)         $  5,204
Change in unrealized income (loss) on investments               61                --              (14)               --
Currency translation                                           445                65              560               137
--------          --------         --------          --------

Total comprehensive income (loss)                    $(86,557)         $  3,920         $(77,189)         $  5,341
========          ========         ========          ========

NOTE 7 - ACQUISITION OF DIVICOM BUSINESS

On May 3, 2000, Harmonic completed its merger with C-Cube Microsystems
Inc. ("C-Cube") pursuant to the terms of an Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") dated October 27, 1999. Under the terms
of the Merger Agreement, C-Cube spun off its semiconductor business as a
separate publicly traded company prior to the closing. C-Cube then merged into
Harmonic and Harmonic therefore acquired C-Cube's DiviCom business. The merger
was structured as a tax-free exchange of stock and was accounted for under the
purchase method of accounting.

The purchase price of $1.8 billion includes $1.6 billion of issued
stock, $155 million in Harmonic stock option costs, and expenses of the
transaction of $9.6 million. The issued stock reflects the conversion of C-Cube
common stock into 0.5427 shares of Harmonic stock, totaling 26.4 million shares
of Harmonic common stock, at an average market price per share of Harmonic
common stock of $62.00. The average market price per share was based on the
average closing price for a period three days before and after the October 27,
1999 announcement of the merger.

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Following is a table of the total purchase price, purchase price allocation and
annual amortization of the intangible assets acquired (in thousands):

ANNUAL
AMORTIZATION
------------

Purchase price allocation:
Net assets of DiviCom business                                           $   138,400                   --
Fair value adjustments:
Accounts receivable                                                 (10,800)                  --
Inventory                                                             4,500                   --
Accrued liabilities                                                 (14,600)                  --
-----------          -----------
Total fair value of tangible net assets  acquired             117,500                   --

Intangible assets acquired:
Customer base                                                          113,000          $    22,600
Developed technology                                                    78,300               15,660
Trademark and tradename                                                 14,000                2,800
Assembled workforce                                                     23,000                4,600
Supply agreement                                                         8,000                1,600
-----------          -----------
Total intangibles (excluding goodwill)                        236,300               47,260

In-process research and development                                     38,700                   --
Goodwill                                                             1,506,400              301,280
Deferred tax liabilities                                               (97,000)                  --
-----------          -----------

Total purchase price allocation                           $ 1,801,600          $   348,480
===========          ===========

The tangible net assets acquired represent the historical net assets of
the DiviCom business as of May 2, 2000 adjusted to eliminate intangibles of $3.8
million arising from C-Cube's acquisition of the DiviCom business in 1996, plus
additional cash of $60 million received as a result of the merger. In addition,
under the terms of the Merger Agreement, the Company is liable for all of C-Cube
Microsystems' liabilities consisting principally of tax liabilities related to
the spin-off of C-Cube's semiconductor business. The net assets acquired
included $333.7 million of cash and other consideration sufficient to pay these
liabilities. As required under purchase accounting, the assets and liabilities
have been adjusted to fair value.

A customer base represents established relationships with businesses
that repeatedly order from a company. The income approach was used to estimate
the value of the DiviCom business' customer base by determining the present
value of future cash flows generated by existing customers. Key assumptions used
in the calculation included an attrition rate of 20%, discount rate of 20% and
estimates of revenue growth, cost of sales, operating expenses and tax rate
provided by management of the DiviCom business.

In estimating the value of the trademark and tradename, the relief from
royalty method was employed. The relief from royalty method is based on the
assumption that in lieu of ownership, a firm would be willing to pay a royalty
in order to exploit the related benefits of the assets. Therefore, a portion of
the company's earnings, equal to the after-tax royalty that would have been paid
for the use of the trademark and tradename, can be

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

attributed to the company's possession of the trademark and tradename. The
trademark and tradename are each being amortized on a straight-line basis over
its estimated useful life of five years.

The value of the assembled workforce was derived by estimating the costs
to replace the existing employees, including recruiting, hiring and training
costs for each category of employee. The value of the assembled workforce is
being amortized on a straight-line basis over its estimated useful life of five
years.

Harmonic and C-Cube Semiconductor entered into a Supply, License and
Development Agreement (Supply Agreement) concurrent with the merger agreement.
This separate agreement covers the supply, licensing and development of two
encoder chips for Harmonic by the spun-off semiconductor business. The value of
the Supply Agreement was derived by using the income approach and is being
amortized on a straight line basis over its estimated useful life of five years.

A portion of the purchase price has been allocated to developed
technology and in-process research and development ("IPR&D"). Developed
technology and IPR&D were identified and valued through extensive interviews,
analysis of data provided by the DiviCom business concerning development
projects, their stage of development, the time and resources needed to complete
them, if applicable, their expected income generating ability and associated
risks. The income approach, which includes an analysis of the cash flows, and
risks associated with achieving such cash flows, was the primary technique
utilized in valuing the developed technology and IPR&D.

Where development projects had reached technological feasibility, they
were classified as developed technology and the value assigned to developed
technology was capitalized. The developed technology is being amortized on a
straight-line basis over its estimated useful life of five years.

Where the development projects had not reached technological feasibility
and had no future alternative uses, they were classified as IPR&D, which was
expensed upon the consummation of the merger. The value was determined by
estimating the expected cash flows from the projects once commercially viable,
discounting the net cash flows back to their present value and then applying a
percentage of completion to the calculated value as defined below.

-       Net cash flows. The net cash flows from the identified projects
were based on estimates of revenue, cost of sales, research and
development costs, selling, general and administrative costs and
income taxes from those projects. These estimates were based on
the assumptions mentioned below. The research and development
costs included in the model reflected costs to sustain projects,
but excluded costs to bring in-process projects to technological
feasibility.

The estimated revenue was based on projections of the DiviCom
business for each in-process project. These projections were
based on its estimates of market size and growth, expected
trends in technology and the nature and expected timing of new
product introductions by the DiviCom business and its
competitors.

Projected gross margins and operating expenses approximated the
DiviCom business' recent historical levels.

-       Discount rate. Discounting the net cash flows back to their
present value was based on the industry weighted average cost of
capital ("WACC"). The industry WACC was approximately 17%. The

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

discount rate used in discounting the net cash flows from IPR&D
was 25%, an 800 basis point increase from the industry WACC.
This discount rate was higher than the industry WACC due to
inherent uncertainties surrounding the successful development of
the IPR&D, market acceptance of the technology, the useful life
of such technology and the uncertainty of technological advances
which could potentially impact the estimates described above.

-       Percentage of completion. The percentage of completion for each
project was determined using costs incurred to date on each
project as compared to the remaining research and development to
be completed to bring each project to technological feasibility.
The percentage of completion varied by individual project
ranging from 10% to 80%.

If the projects discussed above are not successfully developed, the
sales and profitability of the combined company may be adversely affected in
future periods.

The following unaudited pro forma summary presents the combined
statement of operations as if the merger had been completed on January 1, 1999
and does not purport to be indicative of what would have occurred had the merger
actually been completed on such date or of results which may occur in the
future.

SIX MONTHS ENDED
-----------------------------
JUNE 30,            JULY 2,
2000                 1999
---------           ---------

Net sales                               $ 182,228           $ 152,925

Net loss                                 (186,638)           (189,342)

Net loss per share

Basic and diluted                $   (4.74)          $   (3.59)

Weighted average shares

Basic and diluted                   39,348              52,724

Adjustments made in arriving at the pro forma unaudited results of
operations include amortization of goodwill and other intangibles and related
tax adjustments. No effect has been given to cost savings or operating synergies
that may be realized as a result of the merger.

Based on the finalization of the valuation, purchase price allocation,
integration plans and other factors, the effects of the merger may change from
those included in the above pro forma summary. A change in the value assigned to
long-term tangible and intangible assets and liabilities could result in a
reallocation of the purchase price and a change in the adjustments. The
statement of operations effect of these changes will depend on the nature and
amount of the assets or liabilities adjusted.

NOTE 8 - SEGMENT REPORTING

Operating segments are defined as components of an enterprise that
engage in business activities for which separate financial information is
available and evaluated by the chief operating decision maker. Prior to 

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the acquisition of the DiviCom business, Harmonic was organized as one operating
segment. On May 3, 2000, Harmonic completed the acquisition of the DiviCom
business, thus changing its organizational structure. The merged company has
been organized into two operating segments: Broadband Access Networks ("BAN")
for fiber optic systems, and Convergent Systems ("CS") for digital headend
systems. These segments do not correspond to the pre-merger companies in
significant ways. For example, Harmonic's TRANsend and CyberStream product lines
are part of the CS segment. Each of these operating segments require their own
development and marketing strategies and therefore have separate management
teams, however, a worldwide sales, sales support and systems integration group
supports both operating segments.

The results of the reportable segments are derived directly from the
Company's management reporting system. These results reported below are based on
Harmonic's method of internal reporting and are not necessarily in conformity
with generally accepted accounting principles. Subsequent to the acquisition of
DiviCom, management commenced measuring the performance of each segment based on
several metrics, including revenue, and income or loss from operations. These
results are used, in part, to evaluate the performance of, and allocate
resources to each of the segments. Revenue for the prior periods has been
reclassified to reflect the new organizational structure. The reclassified
revenue for the prior periods reflect only Harmonic's revenue, and not the
historical revenue of the DiviCom business. However, income or loss from
operations is not available and is impractical to prepare for the periods prior
to the quarter ended June 30, 2000, and accordingly, has not been presented. Net
income or loss, and assets and liabilities are not internally reported by
business segment.

THREE MONTHS ENDED             SIX MONTHS ENDED
------------------------       -----------------------
JUNE 30,        JULY 2,       JUNE 30,         JULY 2,
2000            1999           2000           1999
--------        --------       --------       --------

Net Sales:

Broadband Access Networks                            $ 53,159        $ 36,390       $109,002       $ 63,725
Convergent Systems                                     26,804           1,512         33,824          4,440
--------        --------       --------       --------
Total net sales                                   $ 79,963        $ 37,902       $142,826       $ 68,165
========        ========       ========       ========

Income (loss) from operations:
Broadband Access Networks                            $ 12,451
Convergent Systems                                     (3,785)
--------
Total segment income (loss) from operations          8,666
--------
Amortization of goodwill and other intangibles                       (58,220)
In-process research and development                                  (38,700)
Interest  and other income, net                                        4,814
Corporate and unallocated costs, and eliminations                     (2,824)
--------
Income (loss) before income taxes                                   $(86,264)
========

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HARMONIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - LEGAL PROCEEDINGS

Securities Litigation

On June 28, 2000, a securities class action captioned Smith v. Harmonic
Inc., Et. Al., Civil Action No. C-00-2287-PJH was filed against Harmonic and
several of its officers and directors in the United States District Court for
the Northern District of California. Additional actions containing similar
allegations have since been filed. These complaints allege violations of the
federal securities laws, specifically Section 10 (b) of the Securities Exchange
Act of 1934, and seek unspecified damages on behalf of a purported class of
purchasers of Harmonic common stock during the period from March 27, 2000
through June 26, 2000. The various actions have not yet been consolidated and no
trial date has been scheduled.

On June 29, 2000, a securities class action captioned Krim v. Harmonic
Inc., Et. Al., Civil Action No. CV 790816 was filed against Harmonic and several
of its officers and directors in the California Superior Court for the County of
Santa Clara. The complaint alleges violations of the federal securities laws,
specifically Section 11 of the Securities Act of 1933, and seeks unspecified
damages on behalf of a purported class of persons who acquired Harmonic common
stock pursuant to a Form S-4 Registration Statement filed March 23, 2000,
concerning a transaction completed on May 3, 2000. On July 26, 2000, the action
was removed to the United States District Court for the Northern District of
California. No trial date has been scheduled.

While the Company believes these class actions to be without merit and
is vigorously defending against them, there can be no assurance that the Company
will prevail. An unfavorable outcome of this litigation could have a material
adverse effect on the Company's consolidated financial position, liquidity or
results of operations.

NOTE 10 - SUBSEQUENT EVENT

On July 1, 2000, Harmonic completed the acquisition of privately-held
Cogent Technology, Inc. ("Cogent") of Santa Cruz, California, a developer of
advanced MPEG-2 technology for the migration from analog to digital television
on PCI based platforms. Harmonic issued approximately 284,000 shares of common
stock to shareholders of Cogent in the stock-for-stock transaction, which will
be accounted for as a purchase. The purchase price of approximately $12 million
will be allocated to the acquired assets, in-process technology, goodwill and
other intangibles during the third quarter of 2000. The acquisition is not
expected to have a material impact on earnings for the remainder of 2000,
excluding a one-time charge for in-process research and development which will
be recorded in the third quarter of 2000 and amortization of goodwill and other
intangibles. Cogent's products and eight employees have been integrated into
Harmonic's Convergent Systems division.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, including statements regarding future
revenue, gross margins, and expense levels, future capital expenditures, future
cash flows, future borrowing capability and the merger with C-Cube Microsystems,
Inc. ("C-Cube") and the reorganization of our business organization. Actual
results could differ materially from those projected in the forward-looking
statements as a result of a number of factors, including those set forth under
"Factors That May Affect Future Results of Operations" below and elsewhere in
this Form 10-Q.

OVERVIEW

Harmonic Inc. ("Harmonic" or the "Company") designs, manufactures and
markets digital and fiber optic systems for delivering video, voice and data
services over cable, satellite and wireless networks. Historically, almost all
of our sales were derived directly or indirectly from sales of fiber optic
transmission systems to cable television operators. With the introduction of our
TRANsend digital headend products in 1997 and the subsequent purchase of New
Media Communication Ltd., which changed its name to Harmonic Data Systems Ltd.,
we broadened our product offering to enable delivery of digital video, voice and
data over satellite and wireless networks and cable systems.

In order to further expand our digital systems capability, the Company
entered into an Agreement and Plan of Merger and Reorganization with C-Cube on
October 27, 1999, pursuant to which C-Cube merged into Harmonic (the "Merger
Agreement"). Under the terms of the Merger Agreement, C-Cube spun off its
semiconductor business as a separate publicly traded company. C-Cube then merged
into Harmonic and Harmonic therefore acquired C-Cube's DiviCom business, which
provides MPEG-2 encoding products and systems for digital television. The merger
was structured as a tax-free exchange of stock and has been accounted for under
the purchase method of accounting. In the merger, each share of common stock of
C-Cube was converted into 0.5427 shares of Harmonic common stock. The purchase
price, including merger-related costs, was approximately $1.8 billion.

The merger closed on May 3, 2000, and Harmonic has consolidated the
results of the DiviCom business in its financial statements from that date
forward. The merged company has been organized into two operating segments,
Broadband Access Networks ("BAN") for fiber optic systems and Convergent Systems
("CS") for digital headend systems. While the two segments have been organized
generally around the pre-merger Harmonic fiber optics systems and the DiviCom
digital headend systems, respectively, these segments do not correspond to the
pre-merger companies in significant ways. For example, Harmonic's TRANsend and
CyberStream product lines are now part of the CS segment. Each of these segments
has its own separate management team, with a worldwide sales, sales support and
systems integration group supporting both segments.

RESULTS OF OPERATIONS

Net Sales

The Company's net sales increased 111% from $37.9 million in the second
quarter of 1999 to $80.0 million in the second quarter of 2000. For the six
month periods, net sales increased 110% from $68.2 million in the first six
months of 1999 to $142.8 million in the first six months of 2000. The increases
in net sales reflected significant growth in the BAN segment and inclusion of
approximately two months of sales for the DiviCom business. BAN sales for the
second quarter and first six months of 2000 increased by 46% and 71% compared to
the comparable periods of 1999 due to higher cable industry spending and
increasing customer acceptance of the Company's products, particularly METROLink
DWDM systems, and PWRBlazer Scaleable Nodes. International sales represented 35%
of net sales in the second quarter of 2000 compared to 31% in the second quarter
of 1999 due to DiviCom's higher percentage of international sales.

While the Company's sales increased significantly in the second quarter
of 2000 compared to the second quarter of 1999, sales were below the Company's
expectations within each segment. BAN sales were lower than expected and below
the level achieved in the first quarter of 2000 due to reduced sales to AT&T,
which have continued to decline from record levels in the third quarter of 1999.
While sales to AT&T decreased, AT&T remains an important customer, and sales to
BAN's other cable customers increased in the second quarter. The lower CS sales
reflect slower spending by satellite operators and the impact of organizational
changes resulting from the merger.

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Gross Profit

Gross profit increased from $16.0 million (42% of net sales) in the
second quarter of 1999 to $30.8 million (39% of net sales) in the second quarter
of 2000. For the six month periods, gross profit increased from $28.4 million
(42% of net sales) in the first six months of 1999 to $60.6 million (42% of net
sales) in the first six months of 2000. Gross profit for the second quarter and
first six months of 2000 is net of amortization of intangibles of $3.0 million
related to the C-Cube merger, which had the effect of reducing the gross margin
percentage by 3% for both periods of 2000. Excluding amortization of intangibles
gross margins were unchanged for the second quarter of 2000 compared to 1999 but
increased for the first six months of 2000 by 3% compared to 1999, as higher
unit volumes of BAN products allowed for improved fixed cost absorption and
realization of economies of scale through increased production and purchasing
volumes.

Research and Development

Research and development expenses increased from $3.5 million (9% of net
sales) in the second quarter of 1999 to $12.0 million (15% of net sales) in the
second quarter of 2000. For the six month periods, research and development
expenses increased from $7.2 million (11% of net sales) in 1999 to $18.0 million
(13% of net sales) in 2000. The increases were principally attributable to the
inclusion of DiviCom, which historically has spent a higher percentage of sales
on research and development than has Harmonic, and higher payroll and prototype
expenses. Harmonic anticipates that research and development expenses will
continue to increase in absolute dollars, although they may vary as a percentage
of net sales.

Selling, General and Administrative

Selling, general and administrative expenses increased from $8.0 million
(21% of net sales) in the second quarter of 1999 to $16.0 million (20% of net
sales) in the second quarter of 2000. For the six month periods, selling,
general and administrative expenses increased from $14.8 million (22% of net
sales) in 1999 to $25.8 million (18% of net sales) in 2000. The increases in
absolute expenses were primarily due to inclusion of DiviCom, as well as higher
payroll and recruiting expenses, principally for the expansion of the sales and
marketing organizations to provide greater customer focus and support for sales
of new products. In addition, higher promotional expenses also contributed to
the increase. The decreases in selling, general and administrative expenses as a
percentage of net sales were principally attributable to increased net sales.
Harmonic anticipates that selling, general and administrative expenses will
continue to increase in absolute dollars, although such expenses may vary as a
percentage of net sales.

Amortization of Goodwill and Other Intangibles

Goodwill and other intangible assets of approximately $1.7 billion were
recorded in connection with the C-Cube merger resulting in amortization of $55.3
million for the second quarter of 2000. See Note 7 to the unaudited Condensed
Consolidated Financial Statements for the three and six month periods ended June
30, 2000. Goodwill and intangibles are being amortized over 5 years, and such
amortization is expected to result in substantial net losses over the
amortization period.

In-Process Research and Development

The Company recorded a $38.7 million one-time charge to operations in
the second quarter of 2000 for acquired in-process technology in connection with
the C-Cube merger. See Note 7 to the unaudited Condensed Consolidated Financial
Statements for the three and six month periods ended June 30, 2000. This amount
was expensed on the acquisition date in accordance with generally accepted
accounting principles because the acquired technology had not yet reached
technology feasibility and had no future alternative uses.

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Interest and Other Income, Net

Interest and other income, net, increased from $0.7 million in the
second quarter of 1999 to $4.8 million in the second quarter of 2000 and from
$0.7 million for the six month period of 1999 to $5.9 million for the six month
period of 2000. The increases were due primarily to interest earned on cash
received in the merger, and to a lesser extent, interest earned on cash proceeds
resulting from the Company's public offering of common stock in April 1999. The
majority of the cash received is required to pay taxes incurred on the spin-off
of C-Cube's semiconductor business, payment of which is due by August 15, 2000.
The Company expects interest income to decrease in future periods.

Income Taxes

The provisions for income taxes for both periods of 1999 and 2000 were
based on estimated tax rates of 25% and 38%, respectively. The increase in the
effective rate reflects the full utilization of remaining net operating loss
carryovers and research and development credit carryovers in 1999. The Company
expects to have an effective annual rate that approximates statutory rates in
year 2000 and beyond on income before amortization of goodwill, other
intangibles and related tax effects thereon, and acquired in-process research
and development.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2000, cash and cash equivalents and short-term
investments totaled $441.4 million of which $60.0 million of cash was received
under the terms of the Merger Agreement plus additional cash of approximately
$320 million for payment by August 15, 2000 of the estimated tax liability
related to the spin-off of C-Cube's semiconductor business. In addition, the
Company completed a public offering of its common stock in April 1999, raising
approximately $58.3 million, net of underwriting discounts and offering
expenses. The Company also received $4.0 million from exercise of a warrant in
connection with the public offering.

Cash used in operations was $35.0 million in the first six months of
2000 compared to cash provided by operations of $2.3 million in the first six
months of 1999. The increase in cash used in operations in the first six months
of 2000 was primarily due to an increase in accounts receivable and inventory
and a decrease in accrued and other liabilities.

The Company has a bank line of credit facility which provides for
borrowings up to $10.0 million with a $3.0 million equipment term loan sub-limit
and expires December 31, 2000. Borrowings pursuant to the line bear interest at
the bank's prime rate (prime rate plus 0.5% under the term loan) and are payable
monthly. There were no outstanding borrowings at June 30, 2000 under the line.
The Company has letters of credit issued under the line of $0.7 million.

Additions to property, plant and equipment were approximately $3.7
million and $9.8 million in the first six months of 1999 and 2000,
respectively. The increase in 2000 was due principally to higher expenditures
for manufacturing and test equipment associated with expansion of production
capacity, and leasehold improvements, which allowed the Company to expand into
space during the first quarter of 2000 that had been previously subleased. In
connection with the merger, Harmonic has entered into lease agreements to
relocate employees from certain existing facilities and expects to incur
significant costs associated with leasehold improvements commencing in the
fourth quarter of 2000.

The Company believes that its existing liquidity sources, including $60
million of cash received pursuant to the merger, its bank line of credit
facility, and anticipated funds from operations will satisfy its cash
requirements for at least the next twelve months.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of Harmonic due to adverse changes
in market prices and rates. Harmonic is exposed to market risk because of
changes in interest rates and foreign currency exchange rates as measured
against the U.S. Dollar and currencies of Harmonic's subsidiaries. 

Harmonic has subsidiaries in Israel and the United Kingdom whose sales
are generally denominated in U.S. dollars. While Harmonic does not anticipate
that near-term changes in exchange rates will have a material impact on future
operating results, fair values or cash flows, Harmonic cannot assure you that a
sudden and significant change in the value of the Israeli Shekel or British
Pound would not harm Harmonic's financial condition and results of operations.

Harmonic's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio of marketable debt securities of various
issuers, types and maturities. Harmonic does not use derivative instruments in
its investment portfolio, and its investment portfolio only includes highly
liquid instruments with an original maturity of less than two years. These
investments are classified as available for sale and states its investments at
estimated fair value, with material unrealized gains and losses reported in
other comprehensive income. While Harmonic generally holds its investment
securities to maturity there is risk that losses could be incurred if it were to
sell any of its securities prior to maturity.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

Our Operating Results Are Likely To Fluctuate Significantly And May Fail To Meet
Or Exceed The Expectations Of Securities Analysts Or Investors, Causing Our
Stock Price To Decline

Our operating results have fluctuated in the past and are likely to
continue to fluctuate in the future, on an annual and a quarterly basis, as a
result of several factors, many of which are outside of our control. Some of the
factors that may cause these fluctuations include:

-       the level of capital spending of our customers, both in the U.S.
and in foreign markets;

-       changes in market demand;

-       the timing and amount of customer orders;

-       the timing of revenue from systems contracts which may span
several quarters;

-       competitive market conditions;

-       our unpredictable sales cycles;

-       our ability to integrate the acquired DiviCom business into
Harmonic's operations;

-       new product introductions by our competitors or by us;

-       changes in domestic and international regulatory environments;

-       market acceptance of new or existing products;

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-       the cost and availability of components, subassemblies and
modules;

-       the mix of our customer base and sales channels;

-       the mix of our products sold;

-       our development of custom products and software;

-       the level of international sales; and

-       economic conditions specific to the cable and satellite
industries, and general economic conditions.

In addition, we often recognize a substantial portion of our revenues in
the last month of the quarter. We establish our expenditure levels for product
development and other operating expenses based on projected sales levels, and
expenses are relatively fixed in the short term. Accordingly, variations in
timing of sales can cause significant fluctuations in operating results. In
addition, because a significant portion of our business is derived from orders
placed by a limited number of large customers, the timing of such orders can
also cause significant fluctuations in our operating results. Our expenses for
any given quarter are typically based on expected sales and if sales are below
expectations in any given quarter, the adverse impact of the shortfall on our
operating results may be magnified by our inability to adjust spending to
compensate for the shortfall. As a result of all these factors, our operating
results in one or more future periods may fail to meet or exceed the
expectations of securities analysts or investors. In that event, the trading
price of our common stock would likely decline. In this regard, due to lower
than expected sales to AT&T, and lower than expected sales in the CS segment,
we failed to meet our internal expectations, as well as the expectations of 
securities analysts and investors during the second quarter of 2000, and the
price of our common stock declined significantly.

We Depend On Cable and Satellite Industry Capital Spending For A Substantial
Portion Of Our Revenue And Any Decrease Or Delay In Capital Spending In These
Industries Would Negatively Impact Our Resources, Operating Results And
Financial Condition.

Prior to the merger with C-Cube, almost all of Harmonic's historic sales
had been derived from sales to cable television operators and broadcasters, and
it expects these sales to constitute a substantial majority for the foreseeable
future. Almost all of the DiviCom business' historic sales have been derived
from sales to satellite operators, telephone companies and cable operators.
Demand for the combined company's products in the future will depend on the
magnitude and timing of capital spending by cable television operators,
broadcasters, satellite operators and telephone companies for constructing and
upgrading of their systems.

These capital spending patterns are dependent on a variety of factors,
including:

-       access to financing;

-       annual budget cycles;

-       the status of federal, local and foreign government regulation
of telecommunications and television broadcasting;

-       overall demand for communication services and the acceptance of
new video, voice and data services;

-       evolving industry standards and network architectures;

-       competitive pressures;

-       discretionary customer spending patterns;

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-       general economic conditions.

In the past, specific factors contributing to reduced capital spending have
included:

-       uncertainty related to development of digital video and cable
modem industry standards;

-       delays associated with the evaluation of new services and system
architectures by many cable television operators;

-       emphasis on marketing and customer service strategies by cable
television operators instead of construction of networks; and

-       general economic conditions in international markets.

While our net sales increased during the last eight quarters from the
level achieved in the first quarter of 1998 due primarily to increased spending
in the North American cable television industry, spending by cable television
operators outside of North America generally remained weak. While net sales
outside of North America increased during the last three quarters compared to
the first quarter of 1998 we cannot predict if cable television spending outside
of North America will continue to grow. Although the Company's sales increased
significantly in the second quarter of 2000 compared to the first quarter of
2000, sales were below our expectations within each operating segment. BAN sales
were lower than expected and below the level achieved in the first quarter of
2000 due to reduced sales to AT&T, which have continued to decline from levels
achieved in the third quarter of 1999. For a more detailed discussion regarding
risks related to AT&T and other major customers, see "Our Customer Base Is
Concentrated And The Loss Of One Or More Of Our Key Customers Would Harm Our
Business. The Loss Of AT&T Or Any Other Key Customer Would Have A Negative
Effect On Our Business" below. The lower CS sales are due in part to slower
spending by satellite operators and to the impact of organizational changes
resulting from the C-Cube merger. The Company is unable to predict when cable
and satellite industry spending will increase In addition, cable television
capital spending can be subject to the effects of seasonality, with fewer
construction and upgrade projects typically occurring in winter months and
otherwise being affected by inclement weather.

Our Customer Base Is Concentrated And The Loss Of One Or More Of Our Key
Customers Would Harm Our Business. The Loss Of AT&T Or Any Other Key Customer
Would Have A Negative Effect On Our Business.

Historically, a significant majority of our sales and sales of DiviCom
have been to relatively few customers. Sales to Harmonic's ten largest customers
in 1998, 1999 and the first half of 2000 accounted for approximately 66%, 75%
and 61% of net sales, respectively. Due in part to the consolidation of
ownership of domestic cable television systems, we expect that sales to AT&T,
RCN and relatively few other customers will continue to account for a
significant percentage of net sales of the combined company for the foreseeable
future. In the second quarter of 2000, sales to AT&T accounted for 10% of our
net sales compared to 28% in the prior quarter and 40% in the second quarter of
1999. Sales to AT&T have continued to decline from a record 52% of net sales in
the third quarter of 1999. We cannot assure you that sales to other customers
will compensate for any further reduction in sales to AT&T. Sales to RCN
accounted for 12% of our net sales in the second quarter of 2000 compared to 15%
in the prior quarter and less than 10% in the second quarter of 1999. Almost all
of our sales are made on a purchase order or system contract basis, and none of
our customers has entered into a long-term agreement requiring it to purchase
our products. The loss of, or any reduction in orders from, a significant
customer would harm our business.

We Have Experienced Difficulties Integrating The DiviCom Business Of C-Cube.

In addition to the risks generally associated with acquisitions, there
are a number of significant risks directly associated with our merger with
C-Cube. In particular, the successful combination of Harmonic and C-

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Cube requires substantial attention from management. The anticipated benefits
of the merger will not be achieved unless the operations of the DiviCom business
of C-Cube are successfully combined with those of Harmonic in a timely manner.
To date, we have had difficulty in assimilating and integrating disparate
information systems and personnel into a combined corporation. These
difficulties are increased due to our limited personnel, management and other
resources. The successful combination of the two companies requires integration
of the companies' product offerings and the coordination of their research and
development and sales and marketing efforts. The process of combining the two
organizations has caused interruption of, and a loss of momentum in, the
activities of both of the organizations' businesses, and we believe that this
diversion may have caused certain customers to defer purchasing decisions. The
diversion of the attention of management from the day-to-day operations of the
combined company, or difficulties encountered in the transition and integration
process, could materially and adversely affect our business, financial condition
and operating results. In addition, our success depends, in part, on the
retention and integration of key management, technical, marketing, sales and
customer support personnel of the DiviCom business, and, in particular, the
retention of these key employees during the transitional period following the
merger. We have experienced the loss of certain key employees since the merger,
principally due to intense competition for qualified technical and other
personnel in the San Francisco Bay Area. The loss of key employees and managers
has adversely affected the acquired DiviCom business and could continue to
adversely affect our business and operating results.

We Depend On Our International Sales And Are Subject To The Risks Associated
With International Operations, Which May Negatively Affect Our Profitability.

Sales to customers outside of the United States in 1998, 1999 and first
half of 2000 represented 43%, 30% and 35% of net sales, respectively, and we
expect that international sales will continue to represent a substantial portion
of our net sales for the foreseeable future. Our international operations are
subject to a number of risks, including:

-       changes in foreign government regulations and telecommunications
standards;

-       import and export license requirements, tariffs, taxes and other
trade barriers;

-       fluctuations in currency exchange rates;

-       difficulty in collecting accounts receivable;

-       the burden of complying with a wide variety of foreign laws,
treaties and technical standards;

-       difficulty in staffing and managing foreign operations; and

-       political and economic instability.

While our international sales are typically denominated in U.S. dollars,
fluctuations in currency exchange rates could cause our products to become
relatively more expensive to customers in a particular country, leading to a
reduction in sales or profitability in that country. Gains and losses on the
conversion to U.S. dollars of accounts receivable, accounts payable and other
monetary assets and liabilities arising from international operations may
contribute to fluctuations in operating results. Furthermore, payment cycles for
international customers are typically longer than those for customers in the
United States. Unpredictable sales cycles could cause us to fail to meet or
exceed the expectations of security analysts and investors for any given period.
Further, foreign markets may not continue to develop.

We Must Be Able To Manage Expenses And Inventory Risks Associated With Meeting
The Demand Of Our Customers.

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From time to time, we receive indications from our customers as to their
future plans and requirements to ensure that we will be prepared to meet their
demand for our products. In the past, however, we have received such indications
but, on occasion, we did not ultimately receive purchase orders for our
products. We must be able to effectively manage expenses and inventory risks
associated with meeting potential demand for our products. In addition, if we
fail to meet customers' supply expectations, we may lose business from such
customers. If we expend resources and purchase materials to manufacture products
and such products are not purchased, our business and operating results could
suffer.

The Markets In Which We Operate Are Intensely Competitive And Many Of Our
Competitors Are Larger And More Established.

The markets for cable television fiber optics systems and digital video
broadcasting systems are extremely competitive and have been characterized by
rapid technological change and declining average selling prices. Harmonic's
competitors in the cable television fiber optics systems business include
significantly larger corporations such as ADC Telecommunications, ANTEC, a
company owned in part by AT&T, General Instrument, which has been acquired by
Motorola, Philips and Scientific-Atlanta. Additional competition could come from
new entrants in these markets, such as Lucent Technologies and Cisco Systems.

In the digital and video broadcasting systems business, we compete with
vertically integrated system suppliers including Motorola, Scientific-Atlanta,
Tandberg, Thomson Broadcast Systems and Philips, as well as more specialized
suppliers including SkyStream and Terayon.

Most of our competitors are substantially larger and have greater
financial, technical, marketing and other resources than Harmonic. Many of these
large organizations are in a better position to withstand any significant
reduction in capital spending by customers in these markets. They often have
broader product lines and market focus and will therefore not be as susceptible
to downturns in a particular market. In addition, many of our competitors have
been in operation longer than we have and therefore have more long standing and
established relationships with domestic and foreign customers. We may not be
able to compete successfully in the future and competition may harm our
business.

If any of our competitors' products or technologies were to become the
industry standard, our business could be seriously harmed. For example, U.S.
cable operators have to date mostly purchased proprietary digital systems from
Motorola and Scientific-Atlanta. While certain operators have made limited
purchases of the "open" systems provided by Harmonic, we cannot assure you that
our digital products will find broad market acceptance with U.S. cable
operators. In addition, companies that have historically not had a large
presence in the broadband communications equipment market have begun recently to
expand their market share through mergers and acquisitions. The continued
consolidation of our competitors could have a significant negative impact on us.
Further, our competitors, particularly competitors of our digital and video
broadcasting systems' business may bundle their products or incorporate
functionality into existing products in a manner that discourages users from
purchasing our products or which may require us to lower our selling prices
resulting in lower gross margins.

Broadband Communications Markets Are Relatively Immature And Characterized By
Rapid Technological Change.

Broadband communications markets are relatively immature, making it
difficult to accurately predict the markets' future growth rates, sizes or
technological directions. In view of the evolving nature of these markets, it is
possible that cable television operators, telephone companies or other suppliers
of broadband wireless and satellite services will decide to adopt alternative
architectures or technologies that are incompatible with our current or future
products. If we are unable to design, develop, manufacture and sell products
that incorporate or are compatible with these new architectures or technologies,
our business will suffer.

We Need To Develop And Introduce New And Enhanced Products In A Timely Manner To
Remain Competitive.

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Broadband communications markets are characterized by continuing
technological advancement, changes in customer requirements and evolving
industry standards. To compete successfully, we must design, develop,
manufacture and sell new or enhanced products that provide increasingly higher
levels of performance and reliability. However, we may not be able to
successfully develop or introduce these products, if our products:

-       are not cost effective,

-       are not brought to market in a timely manner,

-       are not in accordance with evolving industry standards and
architectures, or

-       fail to achieve market acceptance.

In addition, to successfully develop and market our planned products for
digital applications, we will be required to retain and attract new personnel
with experience and expertise in the digital arena. Competition for qualified
personnel is intense. We may not be successful in retaining and attracting
qualified personnel.

Also, to successfully develop and market certain of our planned products
for digital applications, we may be required to enter into technology
development or licensing agreements with third parties. We cannot assure you
that we will be able to enter into any necessary technology development or
licensing agreement on terms acceptable to us, or at all. The failure to enter
into technology development or licensing agreements when necessary could limit
our ability to develop and market new products and, accordingly, could
materially and adversely affect our business and operating results.

We Need To Effectively Manage Our Growth.

The growth in our business has placed, and is expected to continue to
place, a significant strain on our personnel, management and other resources.
Our ability to manage any future growth effectively will require us to attract,
train, motivate and manage new employees successfully, to integrate new
employees into our overall operations, to retain key employees and to continue
to improve our operational, financial and management systems. If we fail to
manage our future growth effectively, our business could suffer.

Competition For Qualified Personnel Is Intense, And We May Not Be Successful In
Attracting And Retaining Personnel.

Our future success will depend, to a significant extent, on the ability
of our management to operate effectively, both individually and as a group. We
are dependent on our ability to retain and motivate high caliber personnel, in
addition to attracting new personnel. Competition for qualified technical and
other personnel is intense, particularly in the San Francisco Bay Area and
Israel, and we may not be successful in attracting and retaining such personnel.

Competitors and others have in the past and may in the future attempt to
recruit our employees. While our employees are required to sign standard
agreements concerning confidentiality and ownership of inventions, we generally
do not have employment contracts or noncompetition agreements with any of our
personnel. The loss of the services of any of our key personnel, the inability
to attract or retain qualified personnel in the future or delays in hiring
required personnel, particularly engineers and other technical personnel, could
negatively affect our business.

The C-Cube Merger Has Resulted In The Recording Of Substantial Goodwill And
Other Intangible Assets And Reporting Of Substantial Net Losses Without Any
Corresponding Tax Deduction.

22

23

Goodwill and other intangible assets of approximately $1.7 billion were
recorded in connection with the merger as disclosed in Note 7 to the unaudited
Condensed Consolidated Financial Statements for the three months ended June 30,
2000. Goodwill and intangibles are being amortized over 5 years, and this
amortization is expected to result in substantial net losses over the
amortization period. The amortization of goodwill and intangibles are not
deductible for tax purposes which will result in a provision for income taxes
despite a substantial reported net loss.

We Are Liable For C-Cube's Pre-Merger Tax Liabilities, Including Tax Liabilities
Resulting From The Spin-Off Of Its Semiconductor Business.

The spin-off of C-Cube's semiconductor business gave rise to a
significant tax liability of approximately $320 million based on a valuation of
the semiconductor business of $1.1 billion. This liability is payable on or
before August 15, 2000. C-Cube determined the valuation by using the volume
weighted average price on May 3, 2000, the first trading day following the
spin-off, which resulted in a share price of $21.74. Under state law, Harmonic
generally is liable for all of C-Cube's debts, including C-Cube's liability for
taxes resulting from the spin-off. C-Cube retained and transferred to Harmonic
in the merger an amount of cash and other consideration sufficient to pay this
liability as well as all other tax liabilities of C-Cube and its subsidiaries
for periods prior to the merger. Harmonic will also be indemnified by the
spun-off semiconductor business if the cash reserves are not sufficient to
satisfy all of C-Cube's tax liabilities for periods prior to the merger. If for
any reason, the spun-off semiconductor business does not have sufficient cash to
pay such taxes, or if there are additional taxes due with respect to the
non-semiconductor business, Harmonic generally will remain liable, and such
liability could have a material adverse effect on Harmonic.

Due To The Structure Of The Merger Transaction, Harmonic Is Liable For C-Cube's
General Pre-Merger Liabilities And Any Liabilities Relating To C-Cube's
Semiconductor Business For Which The Spun-off Semiconductor Business Is Unable
To Indemnify Harmonic.

The merger of C-Cube into Harmonic, with Harmonic as the surviving
entity, resulted in our assuming all of the liabilities of C-Cube at the time of
the merger. Pursuant to the merger agreement, Harmonic is indemnified by the
spun-off semiconductor business for liabilities associated with C-Cube's
historic semiconductor business. However, if the spun-off semiconductor business
is unable to fulfill its indemnification obligations to Harmonic or if general
liability claims not specifically associated with C-Cube's historic
semiconductor business are asserted, we would have to assume such obligations.
Those obligations could have a material adverse effect on us.

We May Be Subject To Risks Associated With Other Acquisitions.

We have made and may make investments in complementary companies,
products or technologies. If we make acquisitions, we could have difficulty
assimilating or retaining the acquired companies' personnel and operations or
integrating the acquired technology or products into ours. These difficulties
could disrupt our ongoing business, distract our management and employees and
increase our expenses. Moreover, our profitability may suffer because of
acquisition-related costs or amortization costs for acquired goodwill and other
intangible assets. Furthermore, we may have to incur debt or issue equity
securities to pay for any future acquisitions, the issuance of which could be
dilutive to our existing shareholders. If we are unable to successfully address
any of these risks, our business, financial condition and operating results
could be harmed.

Difficulties In The Development And Production Of Video Encoding Chips By
C-Cube's Spun-off Semiconductor Business May Adversely Impact Us.

The DiviCom business and C-Cube semiconductor business collaborated on
the production and development of two video encoding microelectronic chips prior
to the merger. In connection with the merger, Harmonic and the spun-off
semiconductor business entered into a contractual relationship under which
Harmonic will have access to certain of the spun-off semiconductor business
technologies and products which the DiviCom business

23

24

previously depended on for its product and service offerings. However, under the
contractual relationships between Harmonic and the spun-off semiconductor
business, the semiconductor business does not have a firm commitment to continue
the development of video encoding microelectronic chips. As a result, the
semiconductor business may choose not to continue future development of the
chips for any reason. The semiconductor business may also encounter in the
future technological difficulties in the production and development of the
chips. If the spun-off semiconductor business is not able to or does not sustain
its development and production efforts in this area, we may not be able to fully
recognize the benefits of the acquisition. See "Supply, License and Development
Agreement" at page 60 of the joint proxy statement filed with the Securities and
Exchange Commission on March 23, 2000, for further details of Harmonic's
business relationship with the spun-off semiconductor business after the merger.

If Sales Forecasted For A Particular Period Are Not Realized In That Period Due
To The Unpredictable Sales Cycles Of Our Products, Our Operating Results For
That Period Will Be Harmed.

The sales cycles of many of our products, particularly our newer
products and products sold internationally, are typically unpredictable and
usually involve:

-       a significant technical evaluation;

-       a commitment of capital and other resources by cable, satellite,
and other network operators;

-       delays associated with cable, satellite, and other network
operators' internal procedures to approve large capital
expenditures;

-       time required to engineer the deployment of new technologies or
services within broadband networks; and

-       testing and acceptance of new technologies that affect key
operations.

For these and other reasons, our sales cycles generally last three to
six months, but can last up to 12 months. If orders forecasted for a specific
customer for a particular quarter do not occur in that quarter, our operating
results for that quarter could be substantially lower than anticipated.

As a result of the merger, a significant portion of our revenue will be
derived from systems contracts. Substantially all of DiviCom's revenues are from
systems contracts which include a combination of product sales as well as
installation and integration services. Revenue forecasts are based on estimated
timing of the systems installation and integration. Because the systems
contracts on the average span three quarters, the timing of revenue is difficult
to predict and could result in lower than expected revenue in any particular
quarter.

Our Failure To Adequately Protect Our Proprietary Rights May Adversely Affect
Us.

We currently hold 29 issued United States patents and 9 issued foreign
patents, and have a number of patent applications pending. Although we attempt
to protect our intellectual property rights through patents, trademarks,
copyrights, licensing arrangements, maintaining certain technology as trade
secrets and other measures, we cannot assure you that any patent, trademark,
copyright or other intellectual property rights owned by us will not be
invalidated, circumvented or challenged, that such intellectual property rights
will provide competitive advantages to us or that any of our pending or future
patent applications will be issued with the scope of the claims sought by us, if
at all. We cannot assure you that others will not develop technologies that are
similar or superior to our technology, duplicate our technology or design around
the patents that we own. In addition, effective patent, copyright and trade
secret protection may be unavailable or limited in certain foreign countries in
which we do business or may do business in the future.

24

25

We believe that the future success of our business will depend on our
ability to translate the technological expertise and innovation of our personnel
into new and enhanced products. We generally enter into confidentiality or
license agreements with our employees, consultants, vendors and customers as
needed, and generally limit access to and distribution of our proprietary
information. Nevertheless, we cannot assure you that the steps taken by us will
prevent misappropriation of our technology. In addition, we have taken in the
past, and may take in the future, legal action to enforce our patents and other
intellectual property rights, to protect our trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Such litigation could result in
substantial costs and diversion of resources and could harm our business and
operating results.

In order to successfully develop and market certain of our planned
products for digital applications, we may be required to enter into technology
development or licensing agreements with third parties. Although many companies
are often willing to enter into such technology development or licensing
agreements, we cannot assure you that such agreements will be negotiated on
terms acceptable to us, or at all. The failure to enter into technology
development or licensing agreements, when necessary, could limit our ability to
develop and market new products and could cause our business to suffer.

As is common in our industry, we have from time to time received
notification from other companies of intellectual property rights held by those
companies upon which our products may infringe. Any claim or litigation, with or
without merit, could be costly, time consuming and could result in a diversion
of management's attention, which could harm our business. If we were found to be
infringing on the intellectual property rights of any third party, we could be
subject to liabilities for such infringement, which could be material, and could
be required to seek licenses from other companies or to refrain from using,
manufacturing or selling certain products or using certain processes. Although
holders of patents and other intellectual property rights often offer licenses
to their patent or other intellectual property rights, we cannot assure you that
licenses would be offered, that the terms of any offered license would be
acceptable to us or that failure to obtain a license would not cause our
operating results to suffer.

We Purchase Several Key Components, Subassemblies And Modules Used In The
Manufacture Or Integration Of Our Products From Sole Or Limited Sources, And We
Are Increasingly Dependent On Contract Manufacturers.

Many components, subassemblies and modules necessary for the manufacture
or integration of our products are obtained from a sole supplier or a limited
group of suppliers. Our reliance on sole or limited suppliers, particularly
foreign suppliers, and our increasing reliance on subcontractors involves
several risks, including a potential inability to obtain an adequate supply of
required components, subassemblies or modules and reduced control over pricing,
quality and timely delivery of components, subassemblies or modules. In
particular, certain optical components have been recently in short supply and
are available only from a small number of suppliers, including sole source
suppliers. While we expend considerable efforts to qualify additional optical
component sources, consolidation of suppliers in the industry (including the
acquisition of Etek Dynamics and the proposed acquisition of SDL Inc. by JDS
Uniphase) and the small number of viable alternatives have limited the results
of these efforts. Certain key elements of our digital headend products are
provided by a sole foreign supplier. We do not generally maintain long-term
agreements with any of our suppliers or subcontractors. An inability to obtain
adequate deliveries or any other circumstance that would require us to seek
alternative sources of supply could affect our ability to ship our products on a
timely basis, which could damage relationships with current and prospective
customers and harm our business. We attempt to limit this risk by maintaining
safety stocks of these components, subassemblies and modules. As a result of
this investment in inventories, we may be subject to an increasing risk of
inventory obsolescence in the future, which could harm our business.

We May Need Additional Capital In The Future And May Not Be Able To Secure
Adequate Funds On Terms Acceptable To Us.

25

26

We currently anticipate that our existing cash balances including cash
received pursuant to the merger, and available line of credit and cash flow
expected to be generated from future operations will be sufficient to meet our
liquidity needs for at least the next twelve months. However, we may need to
raise additional funds if our estimates change or prove inaccurate or in order
for us to respond to unforeseen technological or marketing hurdles or to take
advantage of unanticipated opportunities.

In addition, we expect to review other potential acquisitions that would
complement our existing product offerings or enhance our technical capabilities.
While we have no other current agreements or negotiations underway with respect
to any potential acquisition, any future transaction of this nature could
require potentially significant amounts of capital. Funds may not be available
at the time or times needed, or available on terms acceptable to us. If adequate
funds are not available, or are not available on acceptable terms, we may not be
able to take advantage of market opportunities, to develop new products or to
otherwise respond to competitive pressures.

We Face Risks Associated With Having Important Facilities And Resources Located
In Israel.

Harmonic maintains two facilities in the State of Israel with a total of
approximately 90 employees. The personnel at these facilities represent a
significant portion of our research and development operations. Accordingly, we
are directly influenced by the political, economic and military conditions
affecting Israel, and any major hostilities involving Israel or the interruption
or curtailment of trade between Israel and its present trading partners could
significantly harm our business.

In addition, most of our employees in Israel are currently obligated to
perform annual reserve duty in the Israel Defense Forces and are subject to
being called for active military duty at any time. We cannot predict the effect
of these obligations on Harmonic in the future.

Securities Class Action Claims

On June 28, 2000, a securities class action captioned Smith v. Harmonic
Inc., Et. Al., Civil Action No. C-00-2287-PJH was filed against Harmonic and
several of its officers and directors in the United States District Court for
the Northern District of California. Additional actions containing similar
allegation have since been filed. These complaints allege violations of the
federal securities laws, specifically Section 10 (b) of the Securities Exchange
Act of 1934, and seek unspecified damages on behalf of a purported class of
purchasers of Harmonic common stock during the period from March 27, 2000
through June 26, 2000. The various actions have not yet been consolidated and no
trial date has been scheduled.

On June 29, 2000, a securities class action captioned Krim v. Harmonic
Inc., Et. Al., Civil Action No. CV 790816 was filed against Harmonic and several
of its officers and directors in the California Superior Court form the County
of Santa Clara. The complaint alleges violations of the federal securities laws,
specifically Section 11 of the Securities Act of 1933, and seeks unspecified
damages on behalf of a purported class of persons who acquired Harmonic common
stock pursuant to a Form S-4 Registration Statement filed March 23, 2000,
concerning a transaction completed on May 3, 2000. On July 26, 2000, the action
was removed to the United States District Court for the Northern District of
California. No trial date has been scheduled.

While the Company believes these class actions to be without merit and
is vigorously defending against them, there can be no assurance that the Company
will prevail. An unfavorable outcome of this litigation could have a material
adverse effect on the Company's consolidated financial position, liquidity or
results of operations.

Our Stock Price May Be Volatile.

The market price of our common stock has fluctuated in the past and is
likely to fluctuate in the future. In addition, the securities markets have
experienced significant price and volume fluctuations and the market prices of
the securities of technology companies have been especially volatile. Investors
may be unable to resell their shares of our common stock at or above their
purchase price. In the past, companies that have experienced volatility in the
market price of their stock have been the object of securities class action
litigation. If we were

26

27
We are currently the object of securities class action litigation, and this
could result in substantial costs and a diversion of management's attention and
resources.

While the Company believes these class actions to be without merit and is
vigorously defending against them, there can be no assurance that the Company
will prevail. An unfavorable outcome of this litigation could have a material
adverse effect on the Company's consolidated financial position, liquidity or
results of operations.

Our Certificate Of Incorporation And Bylaws And Delaware Law Contain Provisions
That Could Discourage A Takeover.

Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders.

PART II

ITEM 1. LEGAL PROCEEDINGS

On June 28, 2000, a securities class action captioned Smith v. Harmonic
Inc., Et. Al., Civil Action No. C-00-2287-PJH was filed against Harmonic
and several of its officers and directors in the United States District
Court for the Northern District of California. Additional actions
containing similar allegations have since been filed. These complaints
allege violations of the federal securities laws, specifically Section
10 (b) of the Securities Exchange Act of 1934, and seek unspecified
damages on behalf of a purported class of purchasers of Harmonic common
stock during the period from March 27, 2000 through June 26, 2000. The
various actions have not yet been consolidated and no trial date has
been scheduled.

On June 29, 2000, a securities class action captioned Krim v. Harmonic
Inc., Et. Al., Civil Action No. CV 790816 was filed against Harmonic and
several of its officers and directors in the California Superior Court
for the County of Santa Clara. The complaint alleges violations of the
federal securities laws, specifically Section 11 of the Securities Act
of 1933, and seeks unspecified damages on behalf of a purported class of
persons who acquired Harmonic common stock pursuant to a Form S-4
Registration Statement filed March 23, 2000, concerning a transaction
completed on May 3, 2000. On July 26, 2000, the action was removed to
the United States District Court for the Northern District of
California. No trial date has been scheduled.

While the Company believes these class actions to be without merit and
is vigorously defending against them, there can be no assurance that the
Company will prevail. An unfavorable outcome of this litigation could
have a material adverse effect on the Company's consolidated financial
position, liquidity or results of operations.

ITEM 5. OTHER INFORMATION

Pursuant to Rule 14a-4 (c) (1) under the Securities Exchange Act of
1934, the proxies provided to management shall confer on management
discretionary authority to vote with respect to any non Rule 14a-8
stockholder proposals raised at the Company's annual meeting of
stockholders, without any discussion of the matter in the proxy
statement, unless a stockholder has notified the Company of such a
proposal at least 45 days prior to the month and day on which the
Company mailed its prior year's proxy statement. Since the Company
mailed its proxy statement for the 2000 annual meeting of stockholders
on June 13, 2000, the deadline for receipt of any such stockholder
proposal for the 2001 annual meeting of stockholders is April 28, 2001.

In connection with the C-Cube Merger, Harmonic has entered into various
lease agreements, which have been attached as Exhibit 99.1.

10.26 Lease Agreement for 603-611 Baltic Way, Sunnyvale, 
California

10.27 Lease Agreement for 1322 Crossman Avenue, Sunnyvale, 
California

10.28 Lease Agreement for 646 Caribbean Drive, Sunnyvale, 
California

10.29 Lease Agreement for 632 Caribbean Drive, Sunnyvale, 
California

10.30 First Amendment to the Lease Agreement for 549 Baltic Way,
Sunnyvale, California

27

28

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A.      Exhibits

Exhibit #        Description of Document
---------        -----------------------

27.1          Financial Data Schedule

10.26         Lease Agreement for 603-611 Baltic Way, Sunnyvale,
California

10.27         Lease Agreement for 1322 Crossman Avenue, Sunnyvale,
California

10.28         Lease Agreement for 646 Caribbean Drive, Sunnyvale,
California

10.29         Lease Agreement for 632 Caribbean Drive, Sunnyvale,
California

10.30         First Amendment to the Lease Agreement for 549 Baltic
Way, Sunnyvale, California 

B.      Reports on Form 8-K

Amended Current Report on Forms 8-K and 8-K/A filed on May 2, 2000 and
July 17, 2000, respectively, relating to the merger of C-Cube Microsystems Inc.
with and into Harmonic.

28

29
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:  August 14, 2000

HARMONIC INC.
(Registrant)

By: /s/    Robin N. Dickson  
--------------------------------------------
Robin N. Dickson
Chief Financial Officer
(Principal Financial and Accounting Officer)

29

30

HARMONIC INC.

Index to Exhibits

EXHIBIT #        DESCRIPTION OF DOCUMENT
---------        -----------------------

27.1          Financial Data Schedule

10.26         Lease Agreement for 603-611 Baltic Way, Sunnyvale,
California

10.27         Lease Agreement for 1322 Crossman Avenue, Sunnyvale,
California

10.28         Lease Agreement for 646 Caribbean Drive, Sunnyvale,
California

10.29         Lease Agreement for 632 Caribbean Drive, Sunnyvale,
California

10.30         First Amendment to the Lease Agreement for 549 Baltic
Way, Sunnyvale, California 

30

1
EXHIBIT 10.26

LEASE

DATED APRIL 18, 2000

BY AND BETWEEN

AMB PROPERTY, L.P.
as Landlord

and

HARMONIC, INC.
as Tenant

AFFECTING PREMISES COMMONLY KNOWN AS

603-611 BALTIC WAY
SUNNYVALE, CALIFORNIA

2
TABLE OF CONTENTS

Page

1.     Basic Provisions                                               1
1.1    Parties                                                 1
1.2    Premises                                                1
1.3    Term                                                    1
1.4    Base Rent                                               1
1.5    Tenant's Share of Operating Expenses                    1
1.6    Tenant's Estimated Monthly Rent Payment                 1
1.7    Security Deposit                                        1
1.8    Permitted Use                                           1
1.9    Guarantor                                               I
1.10   Addenda and Exhibits                                    I
1.11   Address for Rent Payments                               1
2.     Premises, Parking and Common Areas                             2
2.1    Letting                                                 2
2.2    Common Areas - Definition                               2
2.3    Common Areas - Tenant's Rights                          2
2.4    Common Areas - Rules and Regulations                    2
2.5    Common Area Changes                                     2
3.     Term                                                           2
3.1    Term                                                    2
3.2    Delay in Possession                                     2
3.3    Commencement Date Certificate                           2
4.     Rent                                                           2
4.1    Base Rent                                               2
4.2    Operating Expenses                                      3
5.     Security Deposit                                               3
6.     Use                                                            4
6.1    Permitted Use                                           4
6.2    Hazardous Substances                                    4
6.3    Tenant's Compliance with Requirements                   5
6.4    Inspection: Compliance with Law                         5
7.     Maintenance, Repairs, Trade Fixtures and Alterations           5
7.1    Tenant's Obligations                                    5
7.2    Landlord's Obligations                                  6
7.3    Alterations                                             6
7.4    Surrender/Restoration                                   6
8.     Insurance; Indemnity                                           6
8.1    Payment of Premiums                                     7
8.2    Tenant's Insurance                                      7
8.3    Landlord's Insurance                                    7
8.4    Waiver

of Subrogation                                   7
8.5    Indemnity                                               7
8.6    Exemption of Landlord from Liability                    8
9.     Damage or Destruction                                          8
9.1    Termination Right                                       8
9.2    Damage Caused by Tenant                                 8
10.    Real Property Taxes                                            8
10.1   Payment of Real Property Taxes                          8
10.2   Real Property Tax Definition                            9
10.3   Additional Improvements                                 9
10.4   Joint Assessment                                        9
10.5   Tenant's Property Taxes                                 9
11.    Utilities                                                      9
12.    Assignment and Subletting                                      9
12.1   Landlord's Consent Required                             9
12.2   Rent Adjustment                                         9
13.    Default; Remedies                                              9
13.1   Default                                                 10
13.2   Remedies                                                10
13.3   Late Charges                                            10

i

3
TABLE OF CONTENTS

Page

14.    Condemnation                                                   10
15.    Estoppel Certificate and Financial Statements                  11
15.1   Estoppel Certificate                                    11
15.2   Financial Statement                                     11
16.    Additional Covenants and Provisions                            11
16.1   Severability                                            11
16.2   Interest on Past-Due Obligations                        11
16.3   Time of Essence                                         11
16.4   Landlord Liability                                      11
16.5   No Prior or Other Agreements                            11
16.6   Notice Requirements                                     11
16.7   Date of Notice                                          11
16.8   Waivers                                                 12
16.9   Holdover                                                12
16.10  Cumulative Remedies                                     12
16.11  Binding Effect; Choice of Law                           12
16.12  Landlord                                                12
16.13  Attorneys' Fees and Other Costs                         12
16.14  Landlord's Access: Showing Premises; Repairs            12
16.15  Signs                                                   12
16.16  Termination: Merger                                     12
16.17  Quiet Possession                                        12
16.18  Subordination: Attornment; Non-Disturbance              13
16.19  Rules and Regulations                                   13
16.20  Security Measures                                       13
16.21  Reservations                                            13
16.22  Conflict                                                13
16.23  Offer                                                   13
16.24  Amendments                                              13
16.25  Multiple Parties                                        14
16.26  Authority                                               14

Signatures                                                            14

EXHIBIT A
EXHIBIT B
Not Applicable
Not Applicable
Not Applicable
Not Applicable
EXHIBIT G
Not Applicable
EXHIBIT I

ii

4
AMB PROPERTY CORPORATION
INDUSTRIAL MULTI-TENANT LEASE

1.      BASIC PROVISIONS ("Basic Provisions").

1.1 Parties: This Lease ("Lease") dated April 18, 2000, is made by and
between AMB PROPERTY, L.P., a Delaware limited partnership, ("Landlord") and
HARMONIC, INC., a Delaware corporation ("Tenant") (collectively the "Parties,"
or individually a "Party").

1.2 Premises: The area consisting of 43,500 square feet of leasable area
as outlined on Exhibit A attached hereto ("Premises"), of the building
("Building") located at 603611 Baltic Way in the City of Sunnyvale, State of
California. The Building is located in the industrial center commonly known as
MBC/Moffett Business Center (the "Industrial Center"). Tenant shall have
non-exclusive rights to the Common Areas (as defined in Paragraph 2.3 below),
but shall not have any rights to the roof, exterior walls or utility raceways of
the Building or to any other buildings in the Industrial Center. The Premises,
the Building, the Common Areas, the land upon which they are located and all
other buildings and improvements thereon are herein collectively referred to as
the "Industrial Center."

1.3 Term: Eight (8) years and Nine (9) months ("Term") commencing
January 1, 2002 ("Commencement Date") and ending September 30, 2010 ("Expiration
Date").

1.4 Base Rent: $95,700.00 per month ("Base Rent"). $95,700.00 payable on
execution of this Lease for period January 1, 2002 through and including January
31, 2002.

1.5 Tenant's Share of Operating Expenses ("Tenant's Share"):

(a)     Industrial Center         15.24%

(b)     Building                    100%

1.6 Tenant's Estimated Monthly Rent Payment: Following is the estimated
monthly Rent payment to Landlord pursuant to the provisions of this Lease. This
estimate is made at the inception of the Lease and is subject to adjustment
pursuant to the provisions of this Lease:

(a)     Base Rent (Paragraph 4.1)                    $ 95,700.00

(b)     Operating Expenses (Paragraph 4.2;
excluding Real Property Taxes, Landlord
Insurance)                                   $  2,838.00

(c)     Landlord Insurance (Paragraph 8.3)           $    254.00

(d)     Real Property Taxes (Paragraph 10)           $  3,565.00

Estimated Monthly Payment                    $102,357.00

1.7 Security Deposit: $130,500.00 ("Security Deposit").

1.8 Permitted Use ("Permitted Use") Research and development,
manufacturing, storage and distribution, offices and marketing and other legal
related uses.

1.9 Guarantor: N/A

1.10 Addenda and Exhibits: Attached hereto are the following Addenda and
Exhibits, all of which constitute a part of this Lease:

(a)     Addenda:   First Addendum to Lease

(b)     Exhibits:  Exhibit A: Diagram of Premises.
Exhibit B: Commencement Date Certificate.
Exhibit C:
Exhibit D:
Exhibit E:
Exhibit F: 
Exhibit G: Hazardous Materials Questionnaire.
Exhibit H: 
Exhibit I: Rules and Regulations.

1.11 Address for Rent Payments: All amounts payable by Tenant to
Landlord shall until further notice from Landlord be paid to AMB PROPERTY L.
P./MBC MOFFETT BUSINESS CENTER, C/O ORCHARD PROPERTIES at the following address:

File No.: 3750789034
P.O. Box 840349
Dallas, TX 75284-0349

1

5
2.      PREMISES, PARKING AND COMMON AREAS.

2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises upon all of the terms, covenants and conditions set
forth in this Lease. Any statement of square footage set forth in this Lease or
that may have been used in calculating Base Rent and/or Operating Expenses is an
approximation which Landlord and Tenant agree is reasonable and the Base Rent
and Tenant's Share based thereon is not subject to revision whether or not the
actual square footage is more or less.

2.2 Common Areas - Definition. "Common Areas" are all areas and
facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are
provided and designated by the Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and other tenants of the Industrial Center
and their respective employees, suppliers, shippers, tenants, contractors and
invitees.

2.3 Common Areas - Tenant's Rights. Landlord hereby grants to Tenant,
for the benefit of Tenant and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terms of any rules and
regulations or covenants, conditions and restrictions governing the use of the
Industrial Center.

2.4 Common Areas - Rules and Regulations. Landlord shall have the
exclusive control and management of the Common Areas and shall have the right,
from time to time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 16.19.

2.5 Common Area Changes. Landlord shall have the right, in Landlord's
sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without
limitation, changes in the locations, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

(d) To add additional buildings and improvements to the Common
Areas;

(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as Landlord
may, in the exercise of sound business judgment, deem to be appropriate.

3.      TERM.

3.1 Term. The Commencement Date, Expiration Date and Term of this Lease
are as specified in Paragraph 1.3.

3.2 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall COMMENCE 30 days following notice to Tenant that Landlord is prepared to
tender possession of the Premises to Tenant. If possession of the Premises is
not delivered to Tenant within 120 days after the Commencement Date and such
delay is not due to Tenant's acts, failure to act or omissions Tenant may by
notice in writing to Landlord within 10 days after the end of said 120 day
period cancel this Lease and the parties shall be discharged from all
obligations hereunder. If such written notice of Tenant is not received by
Landlord within said 10 day period, Tenant's right to cancel this Lease shall
terminate.

3.3 Commencement Date Certificate. At the request of Landlord, Tenant
shall execute and deliver to Landlord a completed certificate ("Commencement
Date Certificate") in the form attached hereto as Exhibit B.

4.      RENT.

4.1 Base Rent. Tenant shall pay to Landlord Base Rent and other monetary
obligations of Tenant to Landlord under the terms of this Lease (such other
monetary obligations are herein referred to as "Additional Rent") in lawful
money of the United States, without offset or deduction, in advance on or before
the first day of each month. Base Rent and Additional Rent for any period during
the term hereof which is for less than one full month shall be prorated based
upon the actual number of days of the month involved. Payment of

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Base Rent and Additional Rent shall be made to Landlord at its address stated
herein or to such other persons or at such other addresses as Landlord may from
time to time designate in writing to Tenant. Base Rent and Additional Rent are
collectively referred to as "Rent". All monetary obligations of Tenant to
Landlord under the terms of this Lease are deemed to be rent.

4.2 Operating Expenses. Tenant shall pay to Landlord on the first day of
each month during the term hereof, in addition to the Base Rent, Tenant's Share
of all Operating Expenses in accordance with the following provisions:

(a) "Operating Expenses" are all costs incurred by Landlord
relating to the ownership, management and operation of the Industrial Center,
Building and Premises including, but not limited to, the following:

(i)    The management, operation, repair, maintenance and
replacement in neat, clean, good order and condition of the Common Areas,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, drainage systems, lighting facilities, fences and gates,
exterior signs and tenant directories.

(ii)   Water, gas, electricity, telephone and other
utilities servicing the Common Areas.

(iii)  Trash disposal, janitorial services, snow removal,
property management and security services.

(iv)   Reserves set aside for maintenance, repair and
replacement of the Common Areas and Building.

(v)    Real Property Taxes.

(vi)   Premiums for the insurance policies maintained by
Landlord under Paragraph 8 hereof.

(vii)  Environmental monitoring and insurance programs.

(viii) Monthly amortization of capital improvements to the
Common Areas and the Building. The monthly amortization of any given capital
improvement shall be the sum of the (i) quotient obtained by dividing the cost
of the capital improvement by Landlord's estimate of the number of months of
useful life of such improvement plus (ii) an amount equal to the cost of the
capital improvement times 1/12 of the lesser of 12% or the maximum annual
interest rate permitted by law.

(ix)   Maintenance of the Building including, but not
limited to, painting, caulking and repair and replacement of Building
components, including, but not limited to, roof, elevators and fire detection
and sprinkler systems.

(x)    If Tenant fails to maintain the Premises, any
expense incurred by Landlord for such maintenance.

(b) Tenant's Share of Operating Expenses that are not
specifically attributed to the Premises or Building ("Common Area Operating
Expenses") shall be that percentage shown in Paragraph 1.5(a). Tenant's Share of
Operating Expenses that are attributable to the Building ("Building Operating
Expenses") shall be that percentage shown in Paragraph 1.5(b). Landlord in its
sole discretion shall determine which Operating Expenses are Common Area
Operating Expenses, Building Operating Expenses or expenses to be entirely borne
by Tenant.

(c) The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose any obligation
upon Landlord to either have said improvements or facilities or to provide those
services.

(d) Tenant shall pay monthly in advance on the same day as the
Base Rent is due Tenant's Share of estimated Operating Expenses in the amount
set forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days
after the expiration of each calendar year a reasonably detailed statement
showing Tenant's Share of the actual Operating Expenses incurred during the
preceding year. If Tenant's estimated payments under this Paragraph 4(d) during
the preceding year exceed Tenant's Share as indicated on said statement, Tenant
shall be credited the amount of such overpayment against Tenant's Share of
Operating Expenses next becoming due. If Tenant's estimated payments under this
Paragraph 4.2(d) during said preceding year were less than Tenant's Share as
indicated on said statement, Tenant shall pay to Landlord the amount of the
deficiency within 30 days after delivery by Landlord to Tenant of said
statement. At any time Landlord may adjust the amount of the estimated Tenant's
Share of Operating Expenses to reflect Landlord's estimate of such expenses for
the year.

5.      SECURITY DEPOSIT. Tenant shall deposit with Landlord prior to
Commencement Date or Early Occupancy the Security Deposit set forth in Paragraph
1.7 as security for Tenant's faithful performance of Tenant's obligations under
this Lease. If Tenant fails to pay Base Rent or Additional Rent or otherwise
defaults under this Lease (as defined in Paragraph 13.1), Landlord may use the
Security Deposit for the payment of any amount due Landlord or to reimburse or
compensate Landlord for any liability, cost, expense, loss or damage (including
attorney's fees) which Landlord may suffer or incur by reason thereof. Tenant
shall on demand

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pay Landlord the amount so used or applied so as to restore the Security Deposit
to the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Landlord shall, at the expiration or earlier termination of the term hereof and
after Tenant has vacated the Premises, return to Tenant that portion of the
Security Deposit not used or applied by Landlord. No part of the Security
Deposit shall be considered to be held in trust, to bear interest, or to be
prepayment for any monies to be paid by Tenant under this Lease.

6.      USE.

6.1 Permitted Use. Tenant shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any nuisance,
permit the emission of any objectionable noise or odor, suffer any waste, make
any use of the Premises which is contrary to any law or ordinance or which will
invalidate or increase the premiums for any of Landlord's insurance. Tenant
shall not service, maintain or repair vehicles on the Premises, Building or
Common Areas. Tenant shall not store foods, pallets, drums or any other
materials outside the Premises.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Landlord to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Tenant shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Landlord and compliance in a timely
manner (at Tenant's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and
(iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Requirements require that a notice be given to
persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Tenant may, without Landlord's prior consent, but
upon notice to Landlord and in compliance with all Applicable Requirements, use
any ordinary and customary materials reasonably required to be used by Tenant in
the normal course of the Permitted Use, so long as such use is not a Reportable
Use and does not expose the Premises, or neighboring properties to any
meaningful risk of contamination or damage or expose Landlord to any liability
therefor. In addition, Landlord may (but without any obligation to do so)
condition its consent to any Reportable Use of any Hazardous Substance by Tenant
upon Tenant's giving Landlord such additional assurances as Landlord, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but not limited to the installation (and, at
Landlord's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit.

(b) Duty to Inform Landlord. If Tenant knows, or has reasonable
cause to believe, that a Hazardous Substance is located in, under or about the
Premises or the Building, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance. Tenant shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including, without
limitation, through the plumbing or sanitary sewer system).

(c) Indemnification by Tenant. Tenant shall indemnify, protect,
defend and hold Landlord, Landlord's affiliates, Lenders, and the officers,
directors, shareholders, partners, employees, managers, independent contractors,
attorneys and agents of the foregoing ("Landlord Entities") and the Premises,
harmless from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Tenant or by any of Tenant's employees, agents,
contractors or invitees. Tenant's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects

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of any contamination or injury to person, property or the environment created or
suffered by Tenant, and the cost of investigation (including consultants' and
attorneys' fees and testing), removal, remediation, restoration and/or abatement
thereof, or of any contamination therein involved. Tenant's obligations under
this Paragraph 6.2(c) shall survive the expiration or earlier termination of
this Lease.

(D). LANDLORD'S REPRESENTATION REGARDING HAZARDOUS MATERIALS.
LANDLORD HEREBY MAKES THE FOLLOWING REPRESENTATIONS TO TENANT AS OF THE
EFFECTIVE DATE WITHOUT HAVING MADE ANY INVESTIGATION THEREOF (AND WITHOUT BEING
REQUIRED TO MAKE OR BEING DEEMED TO HAVE MADE ANY SUCH INVESTIGATION) TO VERIFY
THE ACCURACY THEREOF AND IS SUBJECT TO AND QUALIFIED BY ALL INFORMATION AND
DISCLOSURES MADE TO TENANT BY LANDLORD. TO THE BEST OF THE LANDLORD'S KNOWLEDGE:

1. THE SOIL AND GROUNDWATER ON OR UNDER THE PROJECT DOES
NOT CONTAIN HAZARDOUS MATERIALS IN AMOUNTS WHICH VIOLATE ANY HAZARDOUS MATERIALS
LAWS TO THE EXTENT THAT ANY GOVERNMENTAL ENTITY COULD REQUIRE EITHER LANDLORD OR
TENANT TO TAKE ANY REMEDIAL ACTION WITH RESPECT TO SUCH HAZARDOUS MATERIALS.

2. DURING THE TIME THAT LANDLORD HAS OWNED THE PROJECT,
LANDLORD HAS RECEIVED NO WRITTEN NOTICE OF: (I) ANY VIOLATION, OR ALLEGED
VIOLATION, OF ANY HAZARDOUS MATERIALS LAW WITH RESPECT TO THE PROJECT THAT HAS
NOT BEEN REMEDIATED TO THE EXTENT THAT NO OTHER REMEDIATION IS THEN LEGALLY
REQUIRED BY APPLICABLE LAW; (II) ANY PENDING CLAIMS RELATING TO THE PRESENCE OF
HAZARDOUS MATERIALS ON THE PROJECT; OR, (III) ANY PENDING INVESTIGATION BY ANY
GOVERNMENTAL AGENCY CONCERNING THE PROJECT RELATING TO HAZARDOUS MATERIALS.

6.3 Tenant's Compliance with Requirements. Tenant shall, at Tenant's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the REASONABLE recommendations of
Landlord's engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release of
any Hazardous Substance), now in effect or which may hereafter come into effect.
Tenant shall, within 5 days after receipt of Landlord's written request, provide
Landlord with copies of all documents and information evidencing Tenant's
compliance with any Applicable Requirements and shall immediately upon receipt,
notify Landlord in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Tenant or the Premises to comply with any
Applicable Requirements.

6.4 Inspection; Compliance with Law. In addition to Landlord's
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times PROVIDED LANDLORD HAS PROVIDED TWENTY-FOUR (24) HOUR NOTICE TO TENANT, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Tenant with this Lease and all Applicable Requirements. Landlord
shall be entitled to employ experts and/or consultants in connection therewith
to advise Landlord with respect to Tenant's installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance on or from the
Premises. The cost and expenses of any such inspections shall be paid by the
party requesting same unless a violation of Applicable Requirements exists or is
imminent or the inspection is requested or ordered by a governmental authority.
In such case, Tenant shall upon request reimburse Landlord or Landlord's Lender,
as the case may be, for the costs and expenses of such inspections.

7.      MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS.

7.1 Tenant's Obligations. Subject to the provisions of Paragraph 7.2
(Landlord's Obligations), Paragraph 9 (Damage or Destruction) and Paragraph 14
(Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonable or readily accessible to Tenant and
whether or not the need for such repairs occurs as a result of Tenant's use, any
prior use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or unfired pressure
vessels, fire hose connectors if within the Premises, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights, but excluding any items which are the responsibility of
Landlord pursuant to Paragraph 7.2

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below. Tenant's obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair.

7.2 Landlord's Obligations. Subject to the provisions of Paragraph 6
(Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or Destruction)
and Paragraph 14 (Condemnation), Landlord at its expense and not subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and
repair the foundations and exterior walls of the Building and utility systems
outside the Building. Landlord, subject to reimbursement pursuant to Paragraph
4.2, shall keep in good order, condition and repair the Building roof and Common
Areas.

7.3 Alterations. Construction by Tenant of Alterations shall be governed
by the following:

A. Except as set forth below, Tenant shall not construct any
Tenant Alterations or otherwise alter, improve, modify, or perform any work of
improvement to the Premises without Landlord's prior written approval. However,
Tenant shall be entitled, without Landlord's prior approval, to make Tenant
Alterations (i) which do not affect the structural or exterior parts or water
tight character of the Building, and (ii) the reasonably estimated cost of
which, plus the original cost of any part of the Premises removed or materially
altered in connection with such Tenant Alterations, together do not exceed the
Permitted Tenant Alterations Limit per work of improvement. In the event
Landlord's approval for any Tenant Alterations is required, Tenant shall not
construct the Tenant Alterations until Landlord has approved in writing the
plans and specifications therefor. Such Tenant Alterations shall be constructed
substantially in compliance with such approved plans and specifications by a
licensed contractor first approved by Landlord. All Tenant Alterations (whether
Landlord's consent is required or not) shall be constructed by a licensed
contractor in accordance with all Laws (including the ADA) using new materials
of good quality.

B. Tenant shall not commence construction of any Tenant
Alterations until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five days' prior
written notice of its intention to commence such construction, and (iv) if
requested by Landlord, Tenant has obtained contingent liability and broad form
builders' risk insurance in an amount reasonably satisfactory to Landlord if
there are any perils relating to the proposed construction not covered by
insurance carried pursuant to the Lease.

C. All Tenant Alterations shall remain the property of Tenant
during the Lease Term but shall not be altered or removed from the Premises
except with Landlord's advance written permission. At the expiration or sooner
termination of the Lease Term, all Tenant Alterations shall be surrendered to
Landlord as part of the realty and shall then become Landlord's property, and
Landlord shall have no obligation to reimburse Tenant for all or any portion of
the value or cost thereof; provided, however, that if Landlord requires Tenant
to remove any Tenant Alterations, Tenant shall so remove such Tenant Alterations
prior to the expiration or sooner termination of the Lease Term. Notwithstanding
the foregoing, Tenant shall not be obligated to remove any Tenant Alterations
with respect to which the following is true: (i) Tenant was required, or
elected, to obtain the approval of Landlord to the installation of the Leasehold
Improvement in question; (ii) at the time Tenant requested Landlord's approval,
Tenant requested of Landlord in writing that Landlord inform Tenant of whether
or not Landlord would require Tenant to remove such Leasehold Improvement at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant that it would require Tenant to remove such
Leasehold Improvement at the expiration of the Lease Term.

D. Landlord's consent to the construction of Tenant Alterations
may be withheld in Landlord's sole discretion. Landlord's consent to
construction of Tenant Alterations and Landlord's approval of plans and
specifications for Tenant Alterations shall not create any responsibility or
liability on Landlord's part in regard to the completeness, competency, design
sufficiency, or compliance with Law of such Tenant Alterations or the plans and
specifications therefor.

7.4 Surrender/Restoration. Tenant shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures and floor bolts, patch
all floors and cause all lights to be in good operating condition.

8.      INSURANCE; INDEMNITY.

8.1 Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Landlord under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or

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extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date of Expiration Date.

8.2 Tenant's Insurance.

(i) At its sole cost and expense, Tenant shall maintain in full
force and effect during the Term of the lease the following insurance coverages
insuring against claims which may arise from or in connection with the Tenant's
operation and use of the leased premises.

(a) Commercial General Liability with minimum limits of
$1,000,000 per occurrence; $3,000,000 general aggregate for bodily injury,
personal injury and property damage. If required by Landlord, liquor liability
coverage will be included.

(b) Workers' Compensation insurance with statutory limits
and Employers Liability with a $1,000,000 per accident limit for bodily injury
or disease.

(c) Automobile Liability covering all owned, non-owned and
hired vehicles with a $1,000,000 per accident limit for bodily injury and
property damage.

(d) Property insurance against all risks of loss to any
tenant improvements or betterments and business personal property on a full
replacement cost basis with no coinsurance penalty provision; and Business
Interruption Insurance with a limit of liability representing loss of at least
approximately THREE months of income.

(ii) Tenant shall deliver to AMB certificates of all insurance
reflecting evidence of required coverages prior to initial occupancy; and
annually thereafter.

(iii) If, in the opinion of Landlord's insurance advisor, the
amount of scope of such coverage is deemed inadequate at any time during the
Term, Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate.

(iv) All insurance required under Paragraph 8.2 (i) shall be
primary and non-contributory (ii) shall provide for severability of interests,
(iii) shall be issued by insurers, licensed to do business in the state in which
the Premises are located and which are rated A:VII or better by Best's Key
Rating Guide, (iv) shall be endorsed to include Landlord and such other persons
or entities as Landlord may from time to time designate, as additional insureds
(Commercial General Liability only), and (v) shall be endorsed to provide at
least 30-days prior notification of cancellation or material change in coverage
to said additional insureds.

8.3 Landlord's Insurance. Landlord may, but shall not be obligated to,
maintain all risk, including earthquake and flood, insurance covering the
buildings within the Industrial Center, Commercial General Liability and such
other insurance in such amounts and covering such other liability or hazards as
deemed appropriate by Landlord. The amount and scope of coverage of Landlord's
insurance shall be determined by Landlord from time to time in its sole
discretion and shall be subject to such deductible amounts as Landlord may
elect. Landlord shall have the right to reduce or terminate any insurance or
coverage. Premiums for any such insurance shall be a Common Area Operating
Expense.

8.4 Waiver of Subrogation. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to property insurance actually carried, or required to be carried
hereunder, to the extent of the proceeds realized from such insurance coverage.

8.5 Indemnity. TO THE FULLEST EXTENT PERMITTED BY LAW, TENANT HEREBY
AGREES TO DEFEND (WITH ATTORNEYS ACCEPTABLE TO LANDLORD), INDEMNIFY, PROTECT AND
HOLD HARMLESS LANDLORD AND LANDLORD'S AGENTS AND ANY SUCCESSORS TO ALL OR ANY
PORTION OF LANDLORD'S INTEREST IN THE PREMISES AND THEIR DIRECTORS, OFFICERS,
PARTNERS, EMPLOYEES, AUTHORIZED AGENTS, REPRESENTATIVES, AFFILIATES AND
MORTGAGES, FROM AND AGAINST ANY AND ALL DAMAGE, LOSS, CLAIM, LIABILITY AND
EXPENSE INCLUDING, BUT NOT LIMITED TO, ACTUAL ATTORNEY'S FEES AND LEGAL COSTS,
INCURRED DIRECTLY OR INDIRECTLY BY REASON OF ANY CLAIM, SUIT OR JUDGMENT BROUGHT
BY OR ON BEHALF OF (I) ANY PERSON OR PERSONS FOR DAMAGE, LOSS OR EXPENSE DUE TO,
BUT NOT LIMITED TO, BODILY INJURY OR PROPERTY DAMAGE SUSTAINED BY SUCH PERSON OR
PERSONS WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY ATTRIBUTABLE TO
THE CONDITION, USE OR OCCUPANCY OF THE PREMISES OR THE ACTS OR OMISSIONS OF THE
TENANT OR TENANT'S AGENTS IN OR ABOUT THE PREMISES OR THE PROJECT (INCLUDING BUT
NOT LIMITED TO ANY EVENT OF DEFAULT HEREUNDER), OR (II) TENANT OR TENANT'S
AGENTS FOR DAMAGE, LOSS OR EXPENSE DUE TO, BUT NOT LIMITED TO, BODILY INJURY OR
PROPERTY DAMAGE WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY
ATTRIBUTABLE TO THE USE IF ANY OF THE COMMON AREA, EXCEPT TO THE EXTENT CAUSED
SOLELY BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD SHALL NOT BE RELEASED OR
INDEMNIFIED FROM, AND SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS TENANT
FROM, ALL DAMAGES, LIABILITIES, JUDGMENTS, ACTIONS, CLAIMS, ATTORNEY'S FEES,
CONSULTANTS' FEES, PAYMENTS, COSTS AND EXPENSES ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL

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MISCONDUCT OF LANDLORD OR ITS AGENTS, CONTRACTORS OR LICENSEES, OR LANDLORD'S
VIOLATION OR APPLICABLE LAW.

8.6 Exemption of Landlord from Liability. Except to the extent caused by
the gross negligence or willful misconduct of Landlord, Landlord Entities shall
not be liable for and Tenant waives any claims against Landlord Entities for
injury or damage to the person or the property of Tenant, Tenant's employees,
contractors, invitees, customers or any other person in or about the Premises,
Building or Industrial Center from any cause whatsoever, including, but not
limited to, damage or injury which is caused by or results from (i) fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or (ii) from the condition of the Premises,
other portions of the Building or Industrial Center. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant of
Landlord nor from the failure by Landlord to enforce the provisions of any other
lease in the Industrial Center. Notwithstanding Landlord's negligence or breach
of this Lease, Landlord shall under no circumstances be liable for injury to
Tenant's business, for any loss of income or profit therefrom or any indirect,
consequential or punitive damages.

9.      DAMAGE OR DESTRUCTION.

9.1 Termination Right. Tenant shall give Landlord immediate written
notice of any damage to the Premises. Subject to the provisions of Paragraph
9.2, if the Premises or the Building shall be damaged to such an extent that
there is substantial interference for a period exceeding 90 consecutive days
with the conduct by Tenant of its business at the Premises, Tenant, at any time
prior to commencement of repair of the Premises and following 10 days written
notice to Landlord, may terminate this Lease effective 30 days after delivery of
such notice to Landlord. Such termination shall not excuse the performance by
Tenant of those covenants which under the terms hereof survive termination. Rent
shall be abated in proportion to the degree of interference during the period
that there is such substantial interference with the conduct of Tenant's
business at the Premises. Abatement of rent and Tenant's right of termination
pursuant to this provision shall be Tenant's sole remedy for failure of Landlord
to keep in good order, condition and repair the foundations and exterior walls
of the Building, Building roof, utility systems outside the Building and the
Common Areas.

9.2 Damage Caused by Tenant. Tenant's termination rights under Paragraph
9.1 shall not apply if the damage to the Premises or Building is the result of
any act or omission of Tenant or of any of Tenant's agents, employees,
customers, invitees or contractors ("Tenant Acts"). Any damage resulting from a
Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at
Tenant's expense repair any damage caused by Tenant Acts. Tenant shall continue
to pay all rent and other sums due hereunder and shall be liable to Landlord for
all damages that Landlord may sustain resulting from a Tenant Act.

10.     REAL PROPERTY TAXES.

10.1 Payment of Real Property Taxes. Landlord shall pay the Real
Property Taxes due and payable during the term of this Lease and, except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Operating Expenses in accordance with the provisions of Paragraph
4.2.

10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" is any form of tax or assessment, general, special, ordinary or
extraordinary, imposed or levied upon (a) the Industrial Center, (b) any
interest of Landlord in the Industrial Center, (c) Landlord's right to rent or
other income from the Industrial Center, and/or (d) Landlord's business of
leasing the Premises. Real Property Taxes include (i) any license fee,
commercial rental tax, excise tax, improvement bond or bonds, levy or tax; (ii)
any tax or charge which replaces or is in addition to any of such
above-described "Real Property Taxes" and (iii) any fees, expenses or costs
(including attorney's fees, expert fees and the like) incurred by Landlord in
protesting or contesting any assessments levied or any tax rate. The term "Real
Property Taxes" shall also include any increase resulting from a change in the
ownership of the Industrial Center or Building, the execution of this Lease or
any modification, amendment or transfer thereof. Real Property Taxes for tax
years commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date and Expiration
Date.

10.3 Additional Improvements. Operating Expenses shall not include Real
Property Taxes attributable to improvements placed upon the Industrial Center by
other tenants or by Landlord for the exclusive enjoyment of such other tenants.
Notwithstanding Paragraph 10.1 hereof, Tenant shall, however, pay to Landlord at
the time Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed by reason of improvements placed
upon the Premises by Tenant or at Tenant's request.

10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the
tax parcel assessed.

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10.5 Tenant's Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.

11.     UTILITIES. Tenant shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.

12.     ASSIGNMENT AND SUBLETTING.

12.1 Landlord's Consent Required.

(a) Tenant shall not assign, transfer, mortgage or otherwise
transfer or encumber (collectively, "assign") or sublet all or any part of
Tenant's interest in this Lease or in the Premises without Landlord's prior
written consent which consent shall not be unreasonably withheld. Relevant
criteria in determining reasonability of consent include, but are not limited
to, credit history of a proposed assignee or sublessee, references from prior
landlords, any change or intensification of use of the Premises or the Common
Areas and any limitations imposed by the Internal Revenue Code and the
Regulations promulgated thereunder relating to Real Estate Investment Trusts.
Assignment or sublet shall not release Tenant from its obligations hereunder.
Tenant shall not (i) sublet or assign or enter into other arrangements such that
the amounts to be paid by the sublessee or assignee thereunder would be based,
in whole or in part, on the income or profits derived by the business activities
of the sublessee or assignee; (ii) sublet the Premises or assign this Lease to
any person in which Landlord owns an interest, directly or indirectly (by
applying constructive ownership rules set forth in Section 856(d)(5) of the
Internal Revenue Code (the "Code"); or (iii) sublet the Premises or assign this
Lease in any other manner which could cause any portion of the amounts received
by Landlord pursuant to this Lease or any sublease to fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code, or which
could cause any other income received by Landlord to fail to qualify as income
described in Section 856(c)(2) of the Code. The requirements of this Section
12.1 shall apply to any further subleasing by any subtenant.

(b) A change in the control of Tenant shall constitute an
assignment requiring Landlord's consent. The transfer, on a cumulative basis, of
50% or more of the voting or management control of Tenant shall constitute a
change in control for this purpose.

12.2 Rent Adjustment. If, as of the effective date of any permitted
assignment or subletting the then remaining term of this Lease is less than ONE
(1) YEAR, Landlord may, as a condition to its consent: (i) require that the
amount and adjustment schedule of the rent payable under this Lease be adjusted
to what is then the market value and/or adjustment schedule for property similar
to the Premises as then constituted, as determined by Landlord; or (ii)
terminate the Lease as of the date of assignment or subletting subject to the
performance by Tenant of those covenants which under the terms hereof survive
termination.

13.     DEFAULT; REMEDIES.

13.1 Default. The occurrence of any one of the following events shall
constitute an event of default on the part of Tenant ("Default"):

(a) The abandonment of the Premises by Tenant;

(b) Failure to pay any installment of Base Rent, Additional Rent
or any other monies due and payable hereunder, said failure continuing for a
period of 3 business days after the same is due;

(c) A general assignment by Tenant or any guarantor for the
benefit of creditors;

(d) The filing of a voluntary petition in bankruptcy by Tenant or
any guarantor, the filing of a voluntary petition for an arrangement, the filing
of a petition, voluntary or involuntary, for reorganization, or the filing of an
involuntary petition by Tenant's creditors or guarantors;

(e) Receivership, attachment, of other judicial seizure of the
Premises or all or substantially all of Tenant's assets on the Premises;

(f) Failure of Tenant to maintain insurance as required by
Paragraph 8.2;

(g) Any breach by Tenant of its covenants under Paragraph 6.2;

(h) Failure in the performance of any of Tenant's covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs of this Paragraph 13.1 which shall be governed by
such other Paragraphs), which failure continues for 10 days after written notice
thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such 10 day period despite reasonable diligence, Tenant shall not be in
default under this subparagraph unless Tenant fails thereafter diligently and
continuously to prosecute the cure to completion;

(i) Any transfer of a substantial portion of the assets of
Tenant, or any incurrence of a material obligation by Tenant, unless such
transfer or obligation is undertaken

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or incurred in the ordinary course of Tenants business or in good faith for
equivalent consideration, or with Landlord's consent; and

(j) The default of any guarantors of Tenant's obligations
hereunder under any guaranty of this Lease, or the attempted repudiation or
revocation of any such guaranty.

13.2 Remedies. In the event of any Default by Tenant, Landlord shall
have the remedies set forth in the Addendum attached hereto entitled "Landlord's
Remedies in Event of Tenant Default".

13.3 Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment of rent or
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within 10 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to 5% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's Default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS LEASE, IF TENANT IS DELINQUENT IN THE PAYMENT OF RENT AND IS SUBJECT TO
A LATE CHARGE OR INTEREST FEE, LANDLORD AGREES TO WAIVE THE LATE CHARGE OR
INTEREST FEE IF (i) TENANT HAS NOT BEEN LATE IN ITS PAYMENT OF RENT DURING THE
TWELVE (12) MONTH PERIOD PRECEDING THE RENT DELINQUENCY IN QUESTION AND (ii) THE
RENT DUE IS PAID WITHIN FIVE (5) DAYS OF LANDLORD'S WRITTEN NOTICE TO THE TENANT
OF THE DELINQUENCY AMOUNT OWED.

14.     CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of exercise of said power (all
of which are herein called "condemnation"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Premises, or
more than 25% of the portion of the Common Areas designated for Tenant's
parking, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Tenant does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as the
rentable floor area of the Premises taken bears to the total rentable floor area
of the Premises. No reduction of Base Rent shall occur if the condemnation does
not apply to any portion of the Premises. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Landlord,
provided, however, that Tenant shall be entitled to any compensation, separately
awarded to Tenant for Tenant's relocation expenses and/or loss of Tenants trade
fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall to the extent of its net severance damages in the
condemnation matter, repair any damage to the Premises caused by such
condemnation authority. Tenant shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.

15.     ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS.

15.1 Estoppel Certificate. Each party (herein referred to as "Responding
Party") shall within 10 days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party, to
the extent it can truthfully do so, an estoppel certificate, plus such
additional information, confirmation and/or statements as be reasonably
requested by the Requesting Party.

15.2 Financial Statement. If Landlord desires to finance, refinance, or
sell the Building, Industrial Center or any part thereof, Tenant and all
Guarantors shall deliver to any potential lender or purchaser designated by
Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

16.     ADDITIONAL COVENANTS AND PROVISIONS.

16.1 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall not affect the validity
of any other provision hereof.

16.2 Interest on Past-Due Obligations. Any monetary payment due Landlord
hereunder not received by Landlord within 10 days following the date on which it
was due shall

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bear interest from the date due at 12% per annum, but not exceeding the maximum
rate allowed by law in addition to the late charge provided for in Paragraph
13.3.

16.3 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.

16.4 Landlord Liability. Tenant, its successors and assigns, shall not
assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under this Lease. In no event whatsoever
shall Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.

16.5 No Prior or Other Agreements. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and supersedes
all oral, written prior or contemporaneous agreements or understandings.

16.6 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or registered
mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission during normal business hours, and shall be deemed sufficiently
given if served in a manner specified in the Paragraph 16.6. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Tenant's taking possessing of the Premises, the Premises shall constitute
Tenant's address for the purpose of mailing or delivering notices to Tenant. A
copy of all notices required or permitted to be given to Landlord hereunder
shall be concurrently transmitted to such party or parties at such addresses as
Landlord may from time to time hereafter designate by written notice to Tenant.

16.7 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by facsimile
transmission or similar means, the same shall be deemed served or delivered upon
telephone or facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via hand or overnight delivery or certified
mail. If notice is received on a Saturday or a Sunday or a legal holiday, it
shall be deemed received on the next business day.

16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default by Tenant of the same or any other term, covenant or
condition hereof.

16.9 Holdover. Tenant has no right to retain possession of the Premises
or any part thereof beyond the expiration or earlier termination of this Lease.
If Tenant holds over with the consent of Landlord: (i) the Base Rent payable
shall be increased to 150% of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination; (ii) Tenant's
right to possession shall terminate on 30 days notice from Landlord and (iii)
all other terms and conditions of this Lease shall continue to apply. Nothing
contained herein shall be construed as a consent by Landlord to any holding over
by Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration or earlier termination of this Lease in accordance with the
provisions of this Lease.

16.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or in equity.

16.11 Binding Effect; Choice of Law. This Lease shall be binding upon
the Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.

16.12 Landlord. The covenants and obligations contained in this Lease on
the part of Landlord are binding on Landlord, its successors and assigns, only
during and in respect of their respective period of ownership of such interest
in the Industrial Center. In the event of any transfer or transfers of such
title to the Industrial Center, Landlord (and in case of any subsequent
transfers or conveyances, the then grantor) shall be concurrently freed and
relieved from and after the date of such transfer or conveyance, without any
further instrument or

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agreement, of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed.

16.13 Attorneys' Fees and Other Costs. If any Party brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting breach. Tenant shall reimburse
Landlord on demand for all reasonable legal, engineering and other professional
services expenses incurred by Landlord in connection with all requests by Tenant
for consent or approval hereunder.

16.14 Landlord's Access; Showing Premises; Repairs. Landlord and
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.

16.15 Signs. Tenant shall not place any signs at or upon the exterior of
the Premises or the Building, except that Tenant may, with Landlord's prior
written consent, install (but not on the roof) such signs as are reasonably
required to advertise Tenant's own business so long as such signs are in a
location designated by Landlord and comply with sign ordinances and the signage
criteria established for the Industrial Center by Landlord.

16.16 Termination; Merger. Unless specifically stated otherwise in
writing by Landlord, the voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof, or a termination hereof by
Landlord for Default by Tenant, shall terminate any sublease or lesser estate in
the Premises; provided, however, Landlord shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies.

16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and
Additional Rent for the Premises and the performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof subject to all of the provisions of this Lease.

16.18 Subordination; Attornment; Non-Disturbance.

(a) Subordination. This Lease shall be subject and subordinate to
any ground lease, mortgage, deed of trust, or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord upon the real
property of which the Premises are a part, to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Tenant agrees that any person holding any
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously in writing been furnished Tenant, notice of a default by
Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 60 DAYS) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The
provisions of a Mortgage relating to the disposition of condemnation and
insurance proceeds shall prevail over any contrary provisions contained in this
Lease.

(b) Attornment. Subject to the non-disturbance provisions of
subparagraph C of this Paragraph 16.18, Tenant agrees to attorn to a Lender or
any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.

(c) Non-Disturbance. With respect to Mortgage entered into by
Landlord after the execution of this Lease, Tenant's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Mortgage holder that Tenant's

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possession and this Lease will not be disturbed so long as Tenant is not in
default and attorns to the record owner of the Premises.

(d) Self-Executing. The agreements contained in this Paragraph
16.18 shall be effective without the execution of any further documents;
provided, however, that upon written request from Landlord or a Lender in
connection with a sale, financing or refinancing of Premises, Tenant and
Landlord shall execute such further writings as may be reasonably required to
separately document any such subordination or non-subordination, attornment
and/or non-disturbance agreement as is provided for herein. Landlord is hereby
irrevocably vested with full power to subordinate this Lease to a Mortgage.

16.19 Rules and Regulations. Tenant agrees that it will abide by, and to
cause its employees, suppliers, shippers, customers, tenants, contractors and
invitees to abide by all reasonable rules and regulations ("Rules and
Regulations") which Landlord may make from time to time for the management,
safety, care, and cleanliness of the Common Areas, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees. Landlord shall not be responsible to Tenant for the non-compliance
with said Rules and Regulations by other tenants of the Industrial Center.

16.20 Security Measures. Tenant acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security
measures. Landlord has no obligations to provide same. Tenant assumes all
responsibility for the protection of the Premises, Tenant, its agents and
invitees and their property from the acts of third parties.

16.21 Reservations. Landlord reserves the right to grant such easements
that Landlord deems necessary and to cause the recordation of parcel maps, so
long as such easements and maps do not reasonably interfere with the use of the
Premises by Tenant. Tenant agrees to sign any documents reasonable requested by
Landlord to effectuate any such easements or maps.

16.22 Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

16.23 Offer. Preparation of this Lease by either Landlord or Tenant or
Landlord's agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.

16.24 Amendments. This Lease may be modified only in writing, signed by
the parties in interest at the time of the modification.

16.25 Multiple Parties. Except as otherwise expressly provided herein,
if more than one person or entity is named herein as Tenant, the obligations of
such persons shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.

16.26 Authority. Each person signing on behalf of Landlord or Tenant
warrants and represents that he or she is authorized to execute and deliver this
Lease and to make it a binding obligation of Landlord or Tenant.

The parties hereto have executed this Lease at the place and on
the dates specified above their respective signatures.

LANDLORD:                               TENANT:                           
AMB PROPERTY, L.P.                      HARMONIC, Inc.                    
a Delaware limited partnership          a Delaware corporation            
By: AMB Property Corporation,                                             
a Maryland corporation              By:  /s/ ROBIN N. DICKSON        
-------------------------------
By: /s/ JOHN L. ROSSI                        Robin N. Dickson            
-------------------------------                                        
John L. Rossi                      Its: Chief Financial Officer      
Its: Regional Manager                       ------------------------------
By:                               
------------------------------

Its:                              
------------------------------

Telephone: (415) 394-9000               Telephone: (408) 542-2661
------------------------                ------------------------

Facsimile: (415) 394-0903               Facsimile: (408) 542-2516
------------------------                ------------------------

Executed at: 505 Montgomery Street      Executed at: 632 Caribbean Avenue
6th Floor                               Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5-12-00                           Date:
----------------------------            ----------------------------

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FIRST ADDENDUM TO LEASE

THIS FIRST ADDENDUM is dated for reference purposes as April 18, 2000,
and is made a part of that Lease Agreement (the "Lease") dated April 18, 2000,
by and between AMB PROPERTY L.P., a Delaware limited partnership ("LANDLORD")
and HARMONIC, INC., a Delaware corporation ("Tenant") affecting certain real
property commonly known as 603-611 Baltic Way, Sunnyvale, California, with
reference to the following facts:

1.      Base Monthly Rent:

January 1, 2002 - December 31, 2002:  $2.20 NNN per square foot per month 
January 1, 2003 - December 31, 2003:  $2.30 NNN per square foot per month 
January 1, 2004 - December 31, 2004:  $2.40 NNN per square foot per month 
January 1, 2005 - December 31, 2005:  $2.50 NNN per square foot per month 
January 1, 2006 - December 31, 2006:  $2.60 NNN per square foot per month 
August 2, 2006                        Adjustment to Fair market Value (FMV) 
January 1, 2007 - December 31, 2007:  $2.70 NNN per square foot per month or FMV 
January 1, 2008 - December 31, 2008:  $2.80 NNN per square foot per month of FMV 
January 1, 2009 - December 31, 2009:  $2.90 NNN per square foot per month or FMV 
January 1, 2010 - September 30, 2010: $3.00 NNN per square foot per month or FMV

A. The Base Monthly Rent for the Period after August 2, 2006
shall be the greater of (i) one hundred percent (100%) of the Base Monthly Rent
Schedule, or (ii) one hundred percent (100%) of the then fair market
monthly rent determined as of the commencement of the Period in question based
upon like buildings with like improvements in the area within the boundaries of
Highways 101, 880 and the San Francisco Bay. However, the Fair Market Value Rent
as determined by appraisal shall not exceed $4.00 per square foot per month in
August 2006 with 5% annual increases through the balance of the term. The Period
shall contain no free rent and the Premises shall be taken "as-is". If the
parties are unable to agree upon the fair market monthly rent for the Premises
for the option period in question at least seventy-five (75) days prior to the
commencement of the option period in question, then the fair market monthly rent
shall be determined by appraisal conducted pursuant to subparagraph B.

B. In the event it becomes necessary to determine by appraisal
the fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Period, then such fair market monthly rent shall be
determined by three (3) real estate appraisers, all of whom shall be members of
the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:

(1) The party demanding an appraisal (the "Notifying
Party") shall notify the other party (the "Non-Notifying Party") thereof by
delivering a written demand for appraisal, which demand, to be effective, must
give the name, address, and qualifications of an appraiser selected by the
Notifying Party. Within ten (10) days of receipt of said demand, the
Non-Notifying Party shall select its appraiser and notify the Notifying Party,
in writing, of the name, address, and qualifications of an appraiser selected by
it. Failure by the Non-Notifying Party to select a qualified appraiser within
said ten (10) day period shall be deemed a waiver of its right to select a
second appraiser on its own behalf and the Notifying Party shall select a second
appraiser on behalf of the Non-Notifying Party within five (5) days after the
expiration of said ten (10) day period. Within ten (10) days from the date the
second appraiser shall have been appointed, the two (2) appraisers so selected
shall appoint a third appraiser. If the two appraisers fail to select a third
qualified appraiser, the third appraiser shall be selected by the American
Arbitrations Association or if it shall refuse to perform this function, then at
the request of either Landlord or Tenant, such third appraiser shall be promptly
appointed by the then Presiding Judge of the Superior Court of the State of
California for the County of Santa Clara.

(2) The three (3) appraisers so selected shall meet in San
Jose, California, not later than twenty (20) days following the selection of the
third appraiser. At said meeting the appraisers so selected shall attempt to
determine the fair market monthly rent of the Premises for the period in
question (including the timing and amount, periodic increases).

1

18
(3) If the appraisers so selected are unable to complete
their determinations in one meeting, they may continue to consult at such times
as they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers so selected agree on the fair market rent of the Leased
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall, in simple letter form executed by the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set
by such agreement.

(4) If two (2) or more appraisers do not so agree within
said fifteen (15) day period, then each appraiser shall, within five (5) days
after the expiration of said fifteen (15) day period, submit his independent
appraisal in simple letter form to Landlord and Tenant stating his determination
of the fair market rent of the Premises for the period in question. The parties
shall then determine the fair market rent for the Premises by determining the
average of the fair market rent set by each of the appraisers. However, if the
lowest appraisal is less than eighty-five percent (85%) of the middle appraisal
then such lowest appraisal shall be disregarded and/or if the highest appraisal
is greater than one hundred fifteen percent (115%) of the middle appraisal then
such highest appraisal shall be disregarded. If the fair market rent set by any
appraisal is so disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded.

(5) Nothing contained herein shall prevent Landlord and
Tenant from jointly selecting a single appraiser to determine the fair market
rent of the Premises, in which event the determination of such appraisal shall
be conclusively deemed the fair market rent of the Premises.

(6) Each party shall bear the fees and expenses of the
appraiser selected by or for it, and the fees and expenses of the third
appraiser (or the joint appraiser if one joint appraiser is used) shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.

2.      Early Occupancy:

A. As consideration for Tenant's performance of all obligations
to be performed by Tenant under the Lease, and upon receipt of (i) the first
month's Base Monthly Rent and Security Deposit totaling $221,850.00, and (ii) a
certificate of insurance as provided by Article 9.1C of the Lease, Landlord
shall permit Tenant to enter and use the Premises commencing thirty (30) days
prior to Commencement until the Commencement Date (the "Early Occupancy
Period"). Such occupancy during the Early Occupancy Period shall be subject to
all of the terms, covenants and conditions of the Lease provided, however, that
the rent payable during the Early Occupancy Period shall be waived.

B. In the event either party shall bring any action or legal
proceeding for damages for alleged breach of any provision of this agreement, to
recover rent, to terminate tenancy of the Premises, or to enforce, protect or
establish any term or covenant of this agreement or the Lease or right of remedy
of either party, the prevailing party shall be entitled to recover as a part of
such action or proceeding, reasonable attorney's fees and court costs as may be
fixed by the court or jury.

C. In consideration of executing this Early Occupancy Agreement,
Tenant agrees to indemnify and save Landlord harmless of and from any and all
liability, damage, expense, cause of action, suits or claims or judgments
resulting from injury to person or property arising from the use of the Premises
by Tenant during the Early Occupancy Period, including loss or damage to Tenant,
its equipment, materials or supplies.

D. Tenant agrees to cooperate with construction personnel
completing the Interior Improvements in the Premises and not cause any delay in
the completion of these improvements. It is the intent of Landlord and Tenant
that Tenant's obligation to pay the Base Monthly Rent and all Additional Rent
not be delayed by any cause or other act of Tenant and, if it is so delayed, and
provided that Landlord promptly notifies Tenant in writing of each separate
delay and the estimated period of delay, then Tenant's obligation to pay the
Base Monthly Rent and all Additional Rent shall commence as of the date it would
have commenced absent said delay caused by Tenant.

2

19
E. During the Early Occupancy Period, Tenant shall arrange to
have all utility services, including but not limited to gas, electric, water and
trash, billed directly to Tenant for payment.

3.      Tenant Maintenance: Tenant shall (i) maintain, repair and
replace when necessary all HVAC equipment which services only the Premises, and
shall keep the same in good condition through regular inspection and servicing,
and (ii) maintain continuously throughout the Lease Term a service contract for
the maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every
sixty (60) days during the Lease Term. Tenant shall furnish Landlord with a copy
of such service contract, which shall provide that it may not be cancelled or
changed without at least thirty (30) day's prior written notice to Landlord.
Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves only the Premises. Tenant shall maintain continuously
through the Lease Term a service contract for the washing of all windows (both
interior and exterior surfaces) in the Premises.

4.      Landlord's Remedies in Event of Tenant Default: (AMB)

A. Termination. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:

(1) the worth at the time of award of any unpaid Rent and
any other sums due and payable which have been earned at the time of such
termination; plus

(2) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus

(3) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable for the balance of the term
of this Lease after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus

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

(5) such reasonable attorneys' fees incurred by Landlord
as a result of a Default, and costs in the event suit is filed by Landlord to
enforce such remedy; and plus

(6) at Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). Tenant waives redemption
or relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other present or future law, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default of
Tenant hereunder.

B. Continuation of Lease. In the event of any Default by Tenant,
then in addition to any other remedies available to Landlord at law or in equity
and under this Lease,

3

20
Landlord shall have the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant's Default and
abandonment and recover Rent as it becomes due, provided tenant has the right to
sublet or assign, subject only to reasonable limitations).

C. Re-entry. In the event of any Default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, in compliance
with applicable law, to reenter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.

D. Reletting. In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph a, Landlord may from time to time, without terminating
this Lease, relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied in the
following order: (1) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies; (2) to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; (3) to the payment of any costs of such
reletting; (4) to the payment of the costs of any alterations and repairs to the
Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the
residue, if any, shall be held by Landlord and applied in payment of future Rent
and other sums payable by Tenant hereunder as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of Rent hereunder,
be less than the Rent payable during the month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

E. Termination. No re-entry or taking of possession of the
Premises by Landlord pursuant to this Addendum shall be construed as an election
to terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

F. Cumulative Remedies. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.

G. No Surrender. No act or conduct of Landlord, whether
consisting of the acceptance of the keys to the Premises, or otherwise, shall be
deemed to be or constitute an acceptance of the surrender of the Premises by
Tenant prior to the expiration of the Term, and such acceptance by Landlord of
surrender by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender of
this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
Landlord elects in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, or Landlord may, at
its option, elect in writing to treat such surrender as a merger terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.

H. Notice Provisions. Tenant agrees that any notice given by
Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements
for notice under California Code of Civil Procedure Section 1161, and Landlord
shall not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

5.      Year 2000 Disclaimer: Landlord hereby disclaims any liability
for any and all damages, injuries or other losses, whether ordinary, special,
consequential, punitive or otherwise, arising out of, relating to, or in
connection with, (a) the failure of any automated, computerized and/or software
system or other technology used in, on, or about the Property or relating to the
management or operation of the Property to accurately receive, provide or

4

21
process date/time data (including, but not limited to, calculating, comparing
and sequencing) both before and after September 9, 1999, and before, after,
during and between the years 1999 A. D. and 2000 A. D., and leap year
calculations and, or (b) the malfunction, ceasing to function or providing of
invalid or incorrect results by any such technology as a result of date/time
data. The foregoing disclaimer shall apply to any such technology used in, on,
or about the Property or that affects the Property, whether or not such
technology is within the control of Owner or any of Owner's agents or
representatives. THE FOREGOING DISCLAIMER INCLUDES A DISCLAIMER OF ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATTERS
DESCRIBED HEREIN, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

LANDLORD:                               TENANT:                           

AMB PROPERTY, L.P.                      HARMONIC, INC.                    
a Delaware limited partnership          a Delaware corporation            
By: AMB Property Corporation,                                             
a Maryland corporation              By:  /s/ ROBIN N. DICKSON       
-------------------------------
By: /s/ JOHN L. ROSSI                        Robin N. Dickson          
-------------------------------                                        
John L. Rossi                      Its: Chief Financial Officer      
Its: Regional Manager                       ------------------------------
By:                               
------------------------------

Its:                              
------------------------------

Telephone: (415) 394-9000               Telephone: (408) 542-2661
------------------------                ------------------------

Facsimile: (415) 394-0903               Facsimile: (408) 542-2516
------------------------                ------------------------

Executed at: 505 Montgomery Street      Executed at: 632 Caribbean Avenue
6th Floor                               Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5-12-00                           Date:
----------------------------            ----------------------------

5

22
Exhibit "A"

Site Plan

AMB PROPERTY, L.P.
PROJECT 8J01                                          MBC/MOFFET BUSINESS CENTER
R&D                                        TOTAL PROJECT SQUARE FOOTAGE: 285,480
--------------------------------------------------------------------------------

[DIAGRAM]

23
EXHIBIT B

COMMENCEMENT DATE CERTIFICATE

THIS COMMENCEMENT DATE CERTIFICATE is made as of April 18, 2000, by and
between the parties hereto with regard to that Lease dated April 18, 2000, by
and between AMB PROPERTY, L.P., a Delaware limited partnership, as Landlord
("Landlord"), and HARMONIC, INC., a California corporation as Tenant ("Tenant"),
affecting those Premises commonly known as 603-611 Baltic Way, Sunnyvale,
California. The parties hereto agree as follows:

1.      Possession of the Premises has been delivered to Tenant and
Tenant has accepted and taken possession of the Premises.

2.      The Commencement Date of the Lease Term is January 1, 2002 and
the Lease Term shall expire on September 30, 2010 unless sooner terminated
according to the terms of the Lease or by mutual agreement.

3.      The Base Monthly Rent initially due pursuant to the Lease is
Ninety-Five Thousand Seven Hundred and 00/100 Dollars ($95,700.00) per month,
subject to any subsequent adjustments required by the Lease.

4.      Landlord has received a Security Deposit in the amount of One
Hundred Thirty Thousand Five Hundred and 00/Dollars ($130,500.00). In addition,
Tenant has prepaid rent in the amount of Ninety-Five Thousand Seven Hundred and
00/Dollars ($95,700.00), which shall be applied to the first installment of Base
Monthly Rent.

5.      The Lease is in full force and effect, neither party is in
default of its obligations under the Lease, and Tenant has no setoffs, claims,
or defenses to the enforcement of the Lease.

LANDLORD:                               TENANT:                           

AMB PROPERTY, L.P.                      HARMONIC, INC.                    
a Delaware limited partnership          a Delaware corporation            
By: AMB Property Corporation,                                             
a Maryland corporation              By:  /s/ ROBIN N. DICKSON      
-------------------------------
By: /s/ JOHN L. ROSSI                        Robin N. Dickson           
-------------------------------                                        
John L. Rossi                      Its: Chief Financial Officer      
Its: Regional Manager                       ------------------------------
By:                               
------------------------------

Its:                              
------------------------------

Telephone: (415) 394-9000               Telephone: (408) 542-2661
------------------------                ------------------------

Facsimile: (415) 394-0903               Facsimile: (408) 542-2516
------------------------                ------------------------

Executed at: 505 Montgomery Street      Executed at: 632 Caribbean Avenue
6th Floor                               Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5-12-00                           Date:
----------------------------            ----------------------------

1

24
EXHIBIT "C"

IMPROVEMENT AGREEMENT

NOT APPLICABLE

25
EXHIBIT "D"

APPROVED SPECIFICATIONS

NOT APPLICABLE

26
EXHIBIT "E"

DESCRIPTION OF PRIVATE RESTRICTIONS

(NOT APPLICABLE)

27
EXHIBIT "F"

SIGN CRITERIA

(NOT APPLICABLE)

28
EXHIBIT "H"

LEGAL DESCRIPTION

NOT APPLICABLE

1
EXHIBIT 10.27

LEASE AGREEMENT

by and between

CARIBBEAN/GENEVA INVESTORS
AND CROSSMAN PARTNERS, L.P.

("LANDLORD")

and

HARMONIC, INC.

("TENANT")

DATED AS OF MAY 24, 2000

2

EXHIBITS

Exhibit "A"    Premises

Exhibit "B"    Land

Exhibit "C"    Declaration of Covenants, Conditions and Restrictions

Exhibit "D"    Rules and Regulations

Exhibit "E"    Form of Tenant Estoppel Certificate

Exhibit "F"    Subordination, Nondisturbance and Attornment Agreement

- i -

3

BASIC LEASE INFORMATION

Lease Date:                      May 24, 2000

Landlord:                        Caribbean/Geneva Investors, a California
limited partnership, and Crossman Partners,
L.P., a California limited partnership, Tenants
In Common

Managing Agent:                  The Mozart Development Company 

Landlord's and Managing
Agent's Address:                 c/o The Mozart Development Company
1068 East Meadow Circle
Palo Alto, CA 94303
Attn: James Freitas & John Mozart

Tenant:                          Harmonic, Inc., a Delaware corporation

TENANT'S ADDRESS:                FOR NOTICE                FOR BILLING
549 Baltic Way            549 Baltic Way
Sunnyvale, CA 94089       Sunnyvale, CA 94089
Attn: Robin Dickson,      Attn: Robin Dickson,
Chief Financial           Chief Financial
Officer                   Officer

Building:                        The building located at 1322 Crossman Avenue,
Sunnyvale, California

Premises:                        The entire Building as depicted on Exhibit "A"

Land:                            The Real Property described on Exhibit "B"

Rentable Area of the Premises:   52,325 rentable square feet ("Rentable Area")

Parking Spaces:                  All parking spaces located on the Land

Tenant's Use of the Premises:    General office, research, development,
manufacturing, storage and distribution,
production, marketing and distribution

Lease Term:                      Ten (10) years (the "Initial Term"), with the
right to extend for two (2) additional five (5)
year terms (each an "Extension Term") in
accordance with Paragraph 42. The Initial Term,
and any Extension Term(s) shall collectively be
defined as the "Term"

Estimated Availability Date:     September 1, 2000

Monthly Base Rent:               $3.25 per rentable square foot of the Rentable
Area of the Premises.

Monthly Base Rent
Adjustment:                      On each anniversary of the Commencement Date,
the Monthly Base Rent shall increase by four
percent (4%) of the Monthly Base Rent for the
immediately prior year

Tenant's Share of
Expenses and Taxes:              100%

Security Deposit:                $193,600

- ii -

4

Guarantor of Lease:              None

Landlord's Broker:               None

Tenant's Broker:                 Cornish & Carey 

Broker's Fee or Commission,
if any, paid by:                 Landlord, pursuant to separate agreement

The foregoing Basic Lease Information is hereby incorporated into and made a
part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the respective information hereinabove set forth and
shall be construed to incorporate all of the terms provided under the particular
paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and the Lease, the latter shall control.

LANDLORD:

CARIBBEAN/GENEVA INVESTORS
a California Limited Partnership

By: /s/ JOHN MOZART
------------------------------------------
John Mozart, Trustee of the Mozart
Family Trust dated September 8, 1977
Its:  General Partner

By: /s/ JOHN LOVEWELL
------------------------------------------
John Lovewell
Its: General Partner

CROSSMAN PARTNERS, L.P.,
a California Limited Partnership

By: /s/ JOHN MOZART
------------------------------------------
John Mozart, Trustee of the Mozart
Family Trust dated September 8, 1977
Its: General Partner

TENANT:

HARMONIC, INC.,
a Delaware corporation

By: /s/ ANTHONY J. LEY
------------------------------------------
ANTHONY J. LEY
------------------------------------------
Its: PRESIDENT
--------------------------------------

By: /s/ ROBIN N. DICKSON
------------------------------------------
ROBIN N. DICKSON
------------------------------------------
Its: CHIEF FINANCIAL OFFICER
--------------------------------------

- iii -

5

LEASE AGREEMENT

THIS LEASE AGREEMENT (the "Lease") is made and entered into as of May
24, 2000, by and between CARIBBEAN/GENEVA INVESTORS, a California Limited
Partnership and CROSSMAN PARTNERS, L.P., a California Limited Partnership, as
Tenants in Common (herein collectively called "Landlord"), and HARMONIC, INC., a
Delaware corporation (herein called "Tenant").

Upon and subject to the terms, covenants and conditions hereinafter set
forth, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
those premises (the "Premises") outlined on EXHIBIT A, comprising the entire
rentable area in the Building located at 1322 Crossman Avenue in Sunnyvale,
California (hereinafter referred to as the "Building") specified in the Basic
Lease Information attached hereto. Prior to the execution of this Lease, Tenant
has reviewed and approved the Rentable Area specified in the Basic Lease
Information, which shall be conclusive and binding on the parties for purposes
of calculating Rent and the Tenant Allowance hereunder notwithstanding any
measurement or remeasurement by Landlord, Tenant or any other party that may now
or hereafter indicate a different Rentable Area. The Building, together with the
associated land specified in the Basic Lease Information and improvements is
referred to as the "Project." The term "Common Area" shall mean all areas and
facilities within the Project that are not designated by Landlord for the
exclusive use of Tenant or any other tenant or other occupant of the Project
that are located outside the perimeter (including footings) of the Building,
including the parking areas, access and perimeter roads, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and the like.

1. OCCUPANCY AND USE. Tenant may use and occupy the Premises for the
purposes specified in the Basic Lease Information ("Permitted Use"), subject to
the terms and conditions of this Lease, and for no other use or purpose without
the prior written consent of Landlord. Landlord shall have the right to grant or
withhold consent to a use other than as specified in the Basic Lease Information
in its sole discretion. Tenant shall be entitled to the nonexclusive use of the
Common Area with Landlord and other occupants (if any) of the Project in
accordance with the Rules and Regulations established by Landlord from time to
time. Notwithstanding anything to the contrary in the Basic Lease Information or
in this Lease, Tenant understands and agrees that the Declaration of Covenants,
Conditions and Restrictions ("CC&Rs") described in EXHIBIT C encumbers the
Project and that Tenant's Occupancy and Use of the Premises are restricted by,
and Tenant shall fully comply with any and all restrictions on the use of the
Premises specified in, such CC&Rs.

2. TERM AND POSSESSION.

(a) The term of this Lease (the "Term") shall be for the period
specified in the Basic Lease Information (or until sooner terminated as herein
provided), commencing on the Commencement Date and expiring on the Expiration
Date. The "Commencement Date" shall be the earlier to occur of (i) thirty (30)
days after the date on which Landlord gives Tenant written notice that the
Premises is available for Tenant's occupancy, or (ii) any earlier date upon
which Tenant actually occupies and conducts business in any portion of the
Premises. Within five (5) business days after the Commencement Date, the parties
shall execute a letter confirming the Commencement Date and certifying that
Tenant has accepted delivery of the Premises (the "Commencement Date
Memorandum"). Either party's failure to request execution of, or to execute, the
Commencement Date Memorandum shall not in any way alter the Commencement Date.
By occupying the Premises, Tenant shall be deemed to have accepted the same as
suitable for the purpose herein intended. The "Expiration Date" shall be the
date that is one day prior to the tenth anniversary of the Commencement Date
(subject to extension in accordance with Paragraph 42 to the date that is one
day prior to the fifth anniversary of any exercised Extension Term).

(b) Tenant is aware that the Premises is currently occupied by
another tenant ("Existing Tenant"). Pursuant to a written agreement between
Landlord and the Existing Tenant, the Existing Tenant has agreed to vacate the
Premises on or before the Estimated Availability Date set forth in the Basic
lease Information. If Landlord, for any reason whatsoever (including without
limitation the failure of the Existing Tenant to surrender possession of the
Premises on or before the Estimated Availability Date), cannot deliver
possession of the Premises to Tenant by the Estimated Commencement Date, this
Lease shall not be void or voidable, nor shall Landlord be

- 1 -

6

liable to Tenant for any loss or damage resulting therefrom. In that event,
however, the Term of the Lease shall not commence until such commencement date
as is determined pursuant to Paragraph 2(a). In such event, the Commencement
Date and the Expiration Date shall be adjusted accordingly.

(c) The Premises shall be delivered by Landlord to Tenant in its
"as-is, where-is condition, with all faults", but in "broom clean" condition.
Tenant acknowledges that Landlord has not made any representation or warranty,
express or implied, with respect to the condition of the Premises, the
suitability or fitness of the Premises for the conduct of Tenant's Permitted
Uses or for any other purposes, or the actual dimensions of the Premises. Tenant
represents and warrants that Tenant has conducted a thorough and diligent
inspection and investigation, either independently or through agents of Tenant's
own choosing, of the Premises and the suitability of the Premises for Tenant's
intended use, that Tenant is fully aware of the needs of its operations and has
determined, based solely on its own investigation, that the Premises are
suitable for its operations and intended use. In no event shall Landlord be
liable for any defect in the Premises or for any limitations on the use of the
Premises, except as expressly and specifically set forth in this Lease.

3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

(a) MONTHLY BASE RENT AND ADDITIONAL CHARGES. Commencing on the
Commencement Date and throughout the Term of this Lease, Tenant shall the
monthly base rent specified in the Basic Lease Information, as adjusted pursuant
to Paragraph 3(b) (as so adjusted from time to time, "Monthly Base Rent"), on
the first day of each month, in advance, with the first month's Monthly Base
Rent and Additional Charges for Expenses and Taxes (as defined below) due upon
execution of this Lease, in lawful money of the United States (without any prior
demand therefor and without deduction or offset whatsoever, except as expressly
provided in Paragraphs 20 and 21) to Landlord or its Managing Agent at the
address specified in the Basic Lease Information or to such other firm or to
such other place as Landlord or its Managing Agent may from time to time
designate in writing. In addition, Tenant shall pay to Landlord all charges and
other amounts whatsoever as provided in this Lease ("Additional Charges") at the
place where the Monthly Base Rent is payable, and Landlord shall have the same
remedies for a Default in the payment of Additional Charges as for a Default in
the payment of Monthly Base Rent. As used herein, the term "Rent" shall include
all Monthly Base Rent and Additional Charges (including, without limitation,
Additional Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c)
below, and Additional Charges pursuant to Paragraphs 6, 7(e), 8, 10(d) and 23).
If the Commencement Date occurs on a day other than the first day of a calendar
month, or the Expiration Date occurs on a day other than the last day of a
calendar month, then the Monthly Base Rent and Additional Charges for such
fractional month shall be prorated on a daily basis.

(b) ANNUAL ADJUSTMENTS IN MONTHLY BASE RENT. The Monthly Base
Rent under Paragraph 3(a) shall be adjusted throughout the Term (including any
Extension Term(s)) as provided in the Basic Lease Information under the heading
"Monthly Base Rent Adjustment".

(c) ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

(i) DEFINITIONS OF ADDITIONAL CHARGES. For purposes of
this Paragraph 3(c), the following terms shall have the meanings
hereinafter set forth:

(A) "TAX YEAR" shall mean each twelve (12)
consecutive month period commencing January 1st of the calendar
year during which the Commencement Date of this Lease occurs,
provided that Landlord, upon notice to Tenant, may change the Tax
Year from time to time to any other twelve (12) consecutive month
period and, in the event of any such change, Tenant's Share of
Real Estate Taxes (as hereinafter defined) shall be equitably
adjusted for the Tax Years involved in any such change.

(B) "TENANT'S SHARE" shall mean the percentage
figure so specified in the Basic Lease Information.

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(C) "REAL ESTATE TAXES" shall mean all taxes,
assessments and charges levied upon or with respect to the
Project or any personal property of Landlord used in the
operation thereof, or Landlord's interest in the Project or such
personal property. Real Estate Taxes shall include, without
limitation, all general real property taxes and general and
special assessments, charges, fees or assessments for transit,
housing, police, fire or other governmental services or purported
benefits to the Project (provided, however, that any refunds of
Real Estate Taxes paid by Tenant shall be credited against
Tenant's further obligation to pay Real Estate Taxes during the
Term or refunded to Tenant if received by Landlord within one
year after the Expiration Date), service payments in lieu of
taxes, and any tax, fee or excise on the act of entering into
this Lease, or any other lease of space in the Building, or on
the use or occupancy of the Building or any part thereof, or on
the rent payable under any lease or in connection with the
business of renting space in the Building, that are now or
hereafter levied or assessed against Landlord by the United
States of America, the State of California, or any political
subdivision, public corporation, district or any other political
or public entity, and shall also include any other tax, fee or
other excise, however described, that may be levied or assessed
as a substitute for, or as an addition to, in whole or in part,
any other Real Estate Taxes, whether or not now customary or in
the contemplation of the parties on the date of this Lease. Real
Estate Taxes shall not include franchise, transfer, inheritance
or capital stock taxes or income taxes measured by the net income
of Landlord from all sources unless, due to a change in the
method of taxation, any of such taxes is levied or assessed
against Landlord as a substitute for, in whole or in part, any
other tax that would otherwise constitute a Real Estate Tax.
Additionally, Real Estate Taxes shall not include any assessments
or like charges to pay for any remediation of contamination from
any Hazardous Substance (defined in Paragraph 40 hereof) existing
at the Project as of the Commencement Date unless introduced in,
on, under or about the Premises by Tenant or Tenant's employees,
agents, contractors or invitees. Real Estate Taxes shall also
include reasonable legal fees, costs and disbursements incurred
in connection with proceedings to contest, determine or reduce
Real Estate Taxes; provided that such fees, costs and
disbursements do not exceed the actual savings in Real Estate
Taxes obtained by Tenant over the Term of the Lease. If any
assessments are levied on the Project, Tenant shall have no
obligation to pay more than that amount of annual installments of
principal and interest that would become due during the Term had
Landlord elected to pay the assessment in installment payments,
even if Landlord pays the assessment in full.

(D) "EXPENSES" shall mean the total costs and
expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Project,
including, without limitation (i) the cost of air conditioning,
electricity, steam, heating, mechanical, ventilating, elevator
systems and all other utilities, to the extent provided by
Landlord, and the cost of supplies and equipment and maintenance
and service contracts in connection therewith; (ii) the cost of
repairs and general maintenance and cleaning; (iii) the cost of
fire, extended coverage, boiler, sprinkler, public liability,
property damage, rent, earthquake (if Landlord elects to obtain
it) and other insurance for the Project obtained by Landlord, or
otherwise obtained by Landlord in connection with the Project,
all including, without limitation, insurance premiums and any
deductible amounts paid by Landlord, including, without
limitation, the insurance required by Paragraph 10(f); (iv) fees,
charges and other costs directly related to the operation of the
Project (as distinct from the operation of the partnership which
owns the Project), including management fees, consulting fees,
legal fees and accounting fees, fees of all independent
contractors engaged by Landlord directly related to the operation
of the Project or reasonably charged by Landlord if Landlord
performs management services in connection with the Project,
(though the management fee shall not exceed the cap noted in the
following paragraph); (v) the cost of any capital improvements
made to the Project after the Commencement Date (excluding,
however, any capital improvements required by Laws that are
Tenant's responsibility under Paragraph 5, which shall be paid
directly by Tenant pursuant to Paragraph 5), the cost of such
capital improvements incurred by Landlord shall be amortized over
the useful life of the capital item in question as determined in
accordance with generally accepted accounting principles
("GAAP"), together with interest on the unamortized balance at
the greater of (x) the rate paid

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by Landlord on funds borrowed from an institutional lender for
the purpose of constructing such capital improvements; or (y) 10%
per annum; provided, however, the amount of the cost of capital
improvements which may be included within Expenses pursuant to
this clause (v) shall be the greater of (I) the amount that would
be payable pursuant to the foregoing amortization or (11) $.02
per square foot of the Rentable Area of the Premises per month
(and to the extent the amount under this clause (II) exceeds the
amount that would be payable under clause (I), such excess shall
be credited against the unamortized balance of the cost of
capital improvements in the inverse order in which they would be
payable by Tenant under clause (i)); and (vi) any other
reasonable expenses of any other kind whatsoever reasonably
incurred in managing, operating, maintaining and repairing the
Project. Any "deductible" amounts relating to capital
improvements required to be paid by Tenant hereunder in
connection with any property or earthquake insurance policy
carried by Landlord shall be amortized over the useful life of
the restoration work to which such deductible amount relates in
accordance with GAAP, in the same manner as other capital
improvements that are included in Expenses as provided above.

Notwithstanding anything to the contrary herein contained,
Expenses shall not include, and in no event shall Tenant have any
obligation to pay for pursuant to this Paragraph 3 or Paragraph
7(a)7(b), (aa) any rent payable pursuant to a ground lease, and
debt service (including, but without limitation, interest,
principal and any impound payments) required to be made on any
mortgage or deed of trust recorded with respect to all or any
portion of the Project other than debt service and financing
charges imposed pursuant to Paragraph 3(c)(i)(D)(v) above; (bb)
depreciation; (cc) the portion of a management fee paid to
Landlord or affiliate in excess of three percent (3%) of Monthly
Base Rent and Additional Charges for Expenses and Taxes
(excluding the management fee); (dd) costs occasioned by the
fraud or willful misconduct under applicable laws of Landlord or
its agents, servants, contractors, employees; (ee) costs for
which Landlord has a right of and has received reimbursement from
others; (ff) environmental pollution remediation related costs
for which Landlord has indemnified Tenant pursuant to Paragraph
40(c); (gg) advertising or promotional expenditures; and (hh)
leasing commissions. All costs and expenses shall be determined
in accordance with GAAP which shall be consistently applied (with
accruals appropriate to Landlord's business).

(E) "EXPENSE YEAR" shall mean each twelve (12)
consecutive month period commencing January I of the calendar
year during which the Commencement Date of the Lease occurs,
provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12)
consecutive month period, and, in the event of any such change,
Tenant's Share of Expenses shall be equitably adjusted for the
Expense Years involved in any such change.

(ii) PAYMENT OF REAL ESTATE TAXES. With reasonable
promptness after Landlord has received the tax bills for any Tax Year,
Landlord shall furnish Tenant with a statement (herein called
"Landlord's Tax Statement") setting forth the amount of Real Estate
Taxes for such Tax Year. Unless otherwise required pursuant to Paragraph
3(c)(v) below, Tenant shall pay to Landlord the full amount of said
actual Real Estate Taxes no later than twenty (20) days prior to the due
date of each installment of Real Estate Taxes. Notwithstanding the
foregoing, Landlord shall have the right, upon the giving of written
notice to Tenant, to require Tenant to pay the estimated amount of Real
Estate Taxes; and if Landlord gives such notice, Tenant shall,
commencing with the next succeeding calendar month, pay to Landlord as
Additional Charges one-twelfth (1/12th) of the Real Estate Taxes for
each Tax Year on or before the first day of each month during such Tax
Year, in advance, in an amount reasonably estimated by Landlord and
billed by Landlord to Tenant. Landlord shall have the right initially to
determine monthly estimates and to revise such estimates from time to
time. If the actual Real Estate Taxes for such Tax Year (as shown on
Landlord's Tax Statement) exceed the estimated Real Estate Taxes paid by
Tenant for such Tax Year, Tenant shall pay to Landlord the difference
between the amount paid by Tenant and the actual Real Estate Taxes
within fifteen (15) days after the receipt of Landlord's Tax Statement,
and if the total amount paid by Tenant for any such Tax Year shall
exceed the actual Real Estate Taxes for such Tax Year, such excess

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shall be credited against the next installment of Real Estate Taxes due
from Tenant to Landlord hereunder or if the Term has ended it shall be
returned to Tenant within thirty (30) days. If it has been determined
that Tenant has overpaid Real Estate Taxes during the last year of the
Lease Term, then Landlord shall reimburse Tenant for such overage on or
before the thirtieth (30th) day following the Expiration Date. No delay
by Landlord in providing Landlord's Tax Statement shall be deemed a
default by Landlord or a waiver of Landlord's right to require payment
of the actual or estimated sums of Real Estate Taxes.

(iii) PAYMENT OF INSURANCE COSTS. With reasonable
promptness after Landlord has received an invoice for any fire, extended
coverage, boiler, sprinkler, public liability, property damage, rent,
earthquake (if Landlord elects to obtain it) and other insurance for the
Project obtained by Landlord, or otherwise obtained by Landlord in
connection with the Project, including, without limitation, the
insurance required by Paragraph 10(f), Landlord shall furnish Tenant
with a statement (herein called "Landlord's Insurance Statement")
setting forth the amount of the premium for such insurance. Unless
otherwise required pursuant to Paragraph 3(c)(v) below, Tenant shall pay
to Landlord the full amount of said insurance premium no later than
twenty (20) days prior to the due date of such insurance premium.
Notwithstanding the foregoing, Landlord shall have the right, upon the
giving of written notice to Tenant, to require Tenant to pay the
estimated amount of Landlord's cost of insurance in monthly installments
in accordance with the provisions of Paragraph 3(c)(iv) below.

(iv) PAYMENT OF EXPENSES. Commencing on the Commencement
Date, Tenant shall pay to Landlord as Additional Charges one-twelfth
(1/12th) of the Expenses (including insurance premiums if Landlord has
made the election described in the last sentence of Paragraph 3(c)(iii)
above) for each Expense Year on or before the first day of each month of
such Expense Year, in advance, in an amount reasonably estimated by
Landlord and billed by Landlord to Tenant, and Landlord shall have the
right initially to determine monthly estimates and to revise such
estimates from time to time. With reasonable promptness after the
expiration of each Expense Year, Landlord shall furnish Tenant with a
statement (herein called "Landlord's Expense Statement"), setting forth
in reasonable detail the Expenses for such Expense Year. If the actual
Expenses for such Expense Year exceed the estimated Expenses paid by
Tenant for such Expense Year, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual Expenses
within fifteen (15) days after the receipt of Landlord's Expense
Statement, and if the total amount paid by Tenant for any such Expense
Year shall exceed the actual Expenses for such Expense Year, such excess
shall be credited against the next installment of the estimated Expenses
due from Tenant to Landlord hereunder or if the Term has ended it shall
be returned to Tenant within thirty (30) days. Any utility rebates for
the Project which Landlord receives for payments made by Tenant shall be
forwarded to Tenant so long as such rebate is received within one year
following the Expiration Date or sooner termination of the Lease. If it
has been determined that Tenant has overpaid Expenses during the last
year of the Lease Term (including rebates of utilities applicable to
Tenant), then Landlord shall reimburse Tenant for such overage on or
before the thirtieth (30th) day following the Expiration Date.

(v) OTHER. To the extent any item of Real Estate Taxes or
Expenses is payable by Landlord in advance of the period to which it is
applicable (e.g. insurance and tax escrows required by Landlord's
Lender), or to the extent that prepayment is customary for the service
or matter, Landlord may (i) include such items in Landlord's estimate
for periods prior to the date such item is to be paid by Landlord and
(ii) to the extent Landlord has not collected the full amount of such
item prior to the date such item is to be paid by Landlord, Landlord may
include the balance of such full amount in a revised monthly estimate
for Additional Charges. If the Commencement Date or Expiration Date
shall occur on a date other than the first day of a Tax Year and/or
Expense Year, Tenant's Share of Real Estate Taxes and Expenses, for the
Tax Year and/or Expense Year in which the Commencement Date occurs shall
be prorated.

(vi) AUDIT. Within one hundred eighty (180) days after
receipt of any Expense Statement or Tax Statement from Landlord, Tenant
shall have the right to examine and copy Landlord's books and records
relating to such Expense Statements and Tax Statements, or cause an
independent audit thereof to be conducted by an accounting firm to be
selected by Tenant and subject to the reasonable approval of Landlord.
If the audit conclusively proves that Tenant has overpaid either
Expenses or Real

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Estate Taxes, then Landlord shall reimburse Tenant within thirty (30)
days for such overage together with interest on such overpayment at the
Default Rate (as defined in 3(d) below), and if such overage exceeds
five percent (5%) of the actual amount of Expenses or Real Estate Taxes
paid by Landlord for the Tax or Expense Year covered by such audit, then
Landlord shall bear the reasonable cost of such audit, up to a maximum
cost of $5,000. If Tenant fails to object to any such Expense Statement
or Tax Statement or conduct an independent audit thereof within one
hundred eighty (180) days after receipt thereof, such Expense Statement
and/or Tax Statement shall be final and shall not be subject to any
audit, challenge or adjustment. All information obtained through any
audit by Tenant and any compromise, settlement or adjustment reached
between Landlord and Tenant relative to the results of such audit shall
be held in strict confidence by the Tenant.

(d) LATE CHARGES. Tenant recognizes that late payment of any
Monthly Base Rent or Additional Charges will result in administrative expenses
to Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefore agrees that if any
Monthly Base Rent or Additional Charges remain unpaid five (5) days after such
amount is due, the amount of such unpaid Monthly Base Rent or Additional Charges
shall be increased by a late charge to be paid to Landlord by Tenant in an
amount equal to four percent (4%) of the amount of the delinquent Monthly Base
Rent or Additional Charges. In addition, any outstanding Monthly Base Rent,
Additional Charges, late charges and other outstanding Rent amounts shall accrue
interest at an annualized rate of the lesser of (i) the greater of 10% or The
Federal Reserve Discount Rate plus 5%, until paid to Landlord, or (ii) the
maximum rate permitted by law ("the Default Rate"). Tenant agrees that such
amount is a reasonable estimate of the loss and expense to be suffered by
Landlord as a result of such late payment by Tenant and may be charged by
Landlord to defray such loss and expense. The provisions of this Paragraph 3(d)
in no way relieve Tenant of the obligation to pay Monthly Base Rent or
Additional Charges on or before the date on which they are due, nor do the terms
of this Paragraph 3(d) in any way affect Landlord's remedies pursuant to
Paragraph 19 in the event any Monthly Base Rent or Additional Charges are unpaid
after the date due.

4. RESTRICTIONS ON USE. Tenant shall not use or allow the Premises to be
used for any unlawful purpose, nor shall Tenant cause or maintain or permit any
nuisance in, on or about the Premises. Tenant shall not commit or suffer the
commission of any waste in, on or about the Premises.

5. COMPLIANCE WITH LAWS.

(a) TENANT'S COMPLIANCE OBLIGATIONS. Tenant shall not use the
Project or permit anything to be done in or about the Project which will in any
way conflict with any present and future laws, statutes, ordinances,
resolutions, regulations, proclamations, orders or decrees of any municipal,
county, state or federal government or other governmental or regulatory
authority with jurisdiction over the Project, or any portion thereof, whether
currently in effect or adopted in the future and whether or not in the
contemplation of the parties hereto (collectively, "Laws"), and Tenant shall
promptly, at its sole expense, maintain the Premises, any Alterations (as
defined in Paragraph 6 below) permitted hereunder and Tenant's use and
operations thereon in strict compliance at all times with all Laws. "Laws" shall
include, without limitation, all Laws relating to health and safety (including,
without limitation, the California Occupational Safety and Health Act of 1973
and the California Safe Drinking Water and Toxic Enforcement Act of 1986,
including posting and delivery of notices required by such Laws with respect to
the Premises), disabled accessibility (including, without limitation, the
Americans with Disabilities Act, 42 U.S.C. section 12101 et seq.), Hazardous
Substances, and all present and future life safety, fire, sprinkler, seismic
retrofit, building code and municipal code requirements; provided however, that
Tenant's obligation to comply with Laws relating to Hazardous Substances is
subject to the terms and conditions of Paragraph 40, and Tenant shall not be
responsible for compliance with clean-up provisions of any Laws with respect to
Hazardous Substances except to the extent of any release caused by the Tenant or
any of its servants, employees, contractors, agents, licensees or invitees
(collectively, including Tenant, the "Tenant Parties") or otherwise included in
Tenant's indemnity contained in Paragraph 40. Notwithstanding the foregoing,
Landlord, and not Tenant, shall be responsible for correcting any condition with
respect to the exterior or structural portions of the Building (but not with
respect to the interior of the Premises), which is in violation of applicable
Laws (subject to Tenant's obligation to pay such costs to the extent they are
included as Expenses under Paragraph 3(c)(i)(D) above), except to the extent
such condition is caused by the negligent or intentional acts or omissions of
the Tenant Parties, or such violation results from Tenant's particular

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use of the Premises, or such condition will be altered in connection with the
installation of any Alterations. Any Alterations that are Tenant's
responsibility pursuant to this Paragraph 5 shall be made in accordance with
Paragraph 6 below, at Tenant's sole cost. The parties acknowledge and agree that
Tenant's obligation to comply with all Laws as provided in this paragraph
(subject to the limitations contained herein) is a material part of the
bargained-for consideration under this Lease. Tenant's obligations under this
Paragraph and under Paragraph 7(c) below shall include, without limitation, the
responsibility of Tenant to make substantial or structural repairs and
alterations to the Premises to the extent provided above, regardless of, among
other factors, the relationship of the cost of curative action to the Rent under
this Lease, the length of the then remaining Term hereof, the relative benefit
of the repairs to Tenant or Landlord, the degree to which the curative action
may interfere with Tenant's use or enjoyment of the Premises, and the likelihood
that the parties contemplated the particular Law involved.

(b) INSURANCE REQUIREMENTS. Tenant shall not do or permit
anything to be done in or about the Premises or bring or keep anything therein
which will in any way increase the rate of any insurance upon the Project or any
of its contents (unless Tenant agrees to pay for such increase) or cause a
cancellation of any insurance on the Project or otherwise violate any
requirements, guidelines, conditions, rules or orders with respect to such
insurance. Tenant shall at its sole cost and expense promptly comply with the
requirements of the Insurance Services Office (ISO), board of fire underwriters,
or other similar body now or hereafter constituted relating to or affecting
Tenant's use or occupancy of the Project (other than in situations where
compliance involves repair, maintenance or replacement of items that Landlord is
expressly required to repair, maintain or replace under this Lease).

(c) NO LIMITATION ON OBLIGATIONS. The provisions of this
Paragraph 5 shall in no way limit Tenant's maintenance, repair and replacement
obligations under Paragraph 7 or Tenant's obligation to pay Expenses under
Paragraph 3(c). The judgment of any court of competent jurisdiction or the
admission of Tenant in an action against Tenant, whether Landlord is a party
thereto or not, that Tenant has so violated any such Law shall be conclusive of
such violation as between Landlord and Tenant.

6. ALTERATIONS.

(a) Tenant shall not make or suffer to be made any additional
alterations, additions or improvements ("Alterations") in, on or to the Premises
or any part thereof without the prior written consent of Landlord. Failure of
Landlord to give its approval within fifteen (15) calendar days after receipt of
Tenant's written request for approval shall constitute disapproval by Landlord.
Any Alterations in, on or to the Premises, except for Tenant's trade fixtures
and movable furniture and equipment, shall be the property of Tenant during the
Term and shall become Landlord's property at the end of the Term without
compensation to Tenant. Landlord shall not unreasonably withhold or delay its
consent to Alterations that (i) do not materially affect the structure of the
Building or its electrical, plumbing, HVAC, security or other systems, (ii) are
not visible from the exterior of the Premises and do not otherwise affect the
exterior appearance of the Building, (iii) are consistent with Tenant's
Permitted Use hereunder; (iv) do not require any application to a political
jurisdiction for rezoning, general plan amendment, variance, conditional use
permit or architectural review approval, (v) will not interfere with the use and
occupancy of any other portion of the Project by Landlord or by any other
tenants or occupants or their invitees, or by any other party with the right to
use any portion of the Project, (vi) comply with any ground lease, CC&Rs
(including without limitation the CC&Rs described in EXHIBIT C) and Mortgages,
and (vii) do not adversely affect the value or marketability of Landlord's
reversionary interest upon termination or expiration of this Lease.

(b) If Landlord consents to the making of any Alterations by
Tenant, the same shall be made by Tenant, at Tenant's sole cost and expense, in
accordance with plans and specifications submitted by Tenant to Landlord
concurrently with its request pursuant to Paragraph 6(a) and reasonably approved
by Landlord, and any contractor or person selected by Tenant to make the same
must first be reasonably approved in writing by Landlord. With respect to any
Alterations that affect the structure of the Building, the Building Systems, or
any portion of the Project outside the Premises, at Landlord's option the
Alterations shall be made by Landlord, or by a contractor specified by Landlord,
for Tenant's account and Tenant shall reimburse Landlord for the cost thereof
(including a reasonable charge for Landlord's overhead) as an Additional Charge,
within twenty (20) days after receipt of a statement from Landlord therefor.

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(c) Tenant shall reimburse Landlord upon demand for any
reasonable out-of-pocket expenses incurred by Landlord in the review of any
Alterations made by Tenant, including fees charged by Landlord's contractors or
consultants to review plans and specifications, and such obligation shall be an
Additional Charge. Landlord's consent to any Alterations shall not obligate
Landlord to repair, maintain, insure or otherwise assume any responsibility or
liability with respect to any such Alteration. In addition, notwithstanding
Landlord's review, Tenant and not Landlord shall be responsible for compliance
of the Alterations, and plans and specifications therefor, with all applicable
Laws, and Landlord shall not be responsible for any omissions or errors therein.

(d) Upon the expiration or sooner termination of the Term, Tenant
shall upon demand by Landlord, at Landlord's election either (i) at Tenant's
sole cost and expense, forthwith and with all due diligence remove any
Alterations made by or for the account of Tenant, designated by Landlord to be
removed (provided, however, that upon the written request of Tenant prior to
installation of such Alterations, Landlord shall advise Tenant at that time
whether or not such Alterations must be removed upon the expiration or sooner
termination of this Lease), and restore the Premises to substantially its
original condition as of the Commencement Date, subject to normal wear and tear
and the rights and obligations of Tenant concerning casualty damage pursuant to
Paragraph 20 or (ii) pay Landlord the reasonable estimated cost thereof.

7. REPAIR AND MAINTENANCE.

(a) LANDLORD'S OBLIGATIONS.

(i) Landlord shall maintain, repair and replace, except as
provided in Paragraph 7(c), the exterior (excluding windows and window
frames), roof structure (but not the roof membrane) and structural
portions of the Building (including load bearing walls and foundations).

(ii) Landlord shall maintain, repair and replace the
parking areas courtyards, sidewalks, entryways, lawns, fountains,
landscaping and other similar facilities located in the Common Area.

All costs incurred by Landlord in connection with the foregoing obligations
shall be payable by Tenant as Additional Charges in accordance with Paragraph
3(c) to the extent they are properly included in Expenses thereunder. Landlord's
obligations under this Paragraph 7(a) with respect to any particular repair,
replacement or maintenance requirement, shall not commence until Tenant
notifies Landlord in writing of any circumstances which Tenant believes may
trigger Landlord's obligations.

(b) TENANT'S OBLIGATIONS. Tenant shall maintain, repair and
replace, at its sole cost and expense, all portions of the Premises which are
not Landlord's obligations under Paragraph 7(a), including, without limitation,
(i) the roof membrane, windows, and window frames; (ii) the building systems
serving the Premises for electrical, mechanical, HVAC and plumbing and all
controls appurtenant thereto, and any elevators in the Building (collectively,
including elevators, "Building Systems"); and (iii) the interior portion of the
Building, the Alterations, and any additional tenant improvements, alterations
or additions installed by or on behalf of Tenant within the Premises. Tenant
shall be responsible for the expense of installation, operation, and maintenance
of its telephone and other communications cabling from the point of entry into
the Building to the Premises and throughout the Premises, though Landlord shall
have the right to perform such work on behalf of Tenant in Common Areas,
provided Landlord performs such work in coordination with Tenant and its
contractors in such a manner as will accommodate Tenant's reasonable objectives
with respect thereto. The Premises shall at all times be maintained by Tenant in
the condition of a first-class office building. Tenant's obligations under this
Paragraph 7 include, without limitation, the replacement, at Tenant's sole cost
and expense, of any portions of the Premises or Building Systems which are not
Landlord's express responsibility under Paragraph 7(a), if it would be
commercially prudent to replace, rather than repair, such portions of the
Premises, regardless of whether such replacement would be considered a capital
expenditure. Tenant hereby waives and releases its right to make repairs at
Landlord's expense under Sections 1941 and 1942 of the California Civil Code or
under any similar law, statute or ordinance now or hereafter in effect. In
addition, Tenant hereby waives and releases its right to terminate this Lease
under Section 1932(1) of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect.

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(c) ADDITIONAL OBLIGATIONS OF TENANT. The purpose of Paragraph
7(a) and 7(b) is to define the obligations of Landlord and Tenant to perform
various repair and maintenance functions; the allocation of the costs therefor
are covered under this Paragraph 7(c) and Paragraph 3. Tenant shall bear the
full cost of repairs or maintenance interior or exterior, structural or
otherwise, to preserve the Premises and the Building in good working order and
first-class condition, arising out of (i) the existence, installation, use or
operation of any Alterations or any of Tenant's trade fixtures or personal
property, (ii) the moving of Tenant's property or fixtures in or out of the
Building or Project or in and about the Premises (iii) the particular use or
particular occupancy or manner of use or occupancy of the Premises by any Tenant
Party; or (iv) except to the extent any claims arising from any of the foregoing
are reimbursed by insurance carried by Landlord, are covered by the waiver of
subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, the
acts, omissions or negligence of any Tenant Parties.

(d) MAINTENANCE SERVICE CONTRACTS. In connection with Tenant's
maintenance and repair obligations contained in this Paragraph 7, Tenant shall,
at its own cost and expense, enter into regularly scheduled preventive
maintenance service contracts with maintenance contractors approved by Landlord,
in its reasonable discretion, for servicing all Building Systems, elevators and
equipment within the Premises, and shall provide copies of such contracts and
periodic maintenance reports to Landlord. At Landlord's option at any time in
which Tenant is in Default hereunder, maintenance service contracts shall be
prepaid on an annual basis. Each maintenance service contract shall specifically
name Landlord as a third party beneficiary, with the right to receive copies of
all notices delivered under such contract and the ability to exercise Tenant's
rights thereunder, at Landlord's election, in connection with any cure of
Tenant's default by Landlord, or any assumption by Landlord of Tenant's
maintenance obligations with respect to Building Systems, pursuant to Paragraph
7(e) below.

(e) CURE RIGHTS. Tenant shall have a period of thirty (30) days
from the date of written notice from Landlord within which to cure any failure
to fulfill any of its obligations under this Paragraph 7; provided however, that
if such failure is curable but cannot be cured within such thirty (30) day
period, Tenant shall have such additional time as may be reasonably required to
cure (not to exceed sixty (60) additional days) so long as Tenant commences such
cure within such (30) day period and diligently prosecutes such cure to
completion. Landlord shall have the rights set forth in Paragraph 23 with
respect to any failure of Tenant to perform its obligations under this Paragraph
7. In addition, Landlord may elect, by delivery of written notice to Tenant, to
assume Tenant's maintenance obligations with respect to the Building Systems
under item (ii) of Paragraph 7(b) if Tenant does not cure any breach of such
obligations, or if Tenant has failed to perform such obligations more than once
in any twelve month period (without benefit of cure periods) upon the second
such failure. If Landlord assumes such obligations, all costs incurred by
Landlord in connection therewith shall be included in Expenses payable by Tenant
as Additional Charges in accordance with Paragraph 3(c). The remedies described
in this paragraph are cumulative and in addition to any other remedies Landlord
may have at law or under this Lease.

(f) NO ABATEMENT. Except to the extent any claims arising from
any of the foregoing are reimbursed by rental abatement insurance proceeds
actually received by Landlord, are covered by the waiver of subrogation in
Paragraph 11 or are otherwise provided for in Paragraph 20, there shall be no
abatement of Rent with respect to, and except for Landlord's gross negligence or
willful misconduct, Landlord shall not be liable for any injury to or
interference with Tenant's business arising from, any repairs, maintenance,
alteration or improvement in or to any portion of the Project, including the
Premises, or in or to the fixtures, appurtenances and equipment therein.

8. LIENS. Tenant shall keep the Premises free from any liens arising out
of any work performed, material furnished or obligations incurred by Tenant. In
the event that Tenant shall not, within ten (10) days following the imposition
of any such lien, cause the same to be released of record by payment or posting
of a proper bond, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same
to be released by such means as it shall deem proper, including without
limitation by the payment of the claim giving rise to such lien or by the
posting of a bond. All such sums paid by Landlord and all expenses incurred by
Landlord in connection therewith shall be considered Additional Charges and
shall be payable to Landlord by Tenant on demand with interest from the date
incurred by Landlord at the Default Rate. Landlord shall have the right at all
times to post and keep posted on the Premises any notices permitted or required
by law, or which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Project and any other

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party having an interest therein, from mechanics' and materialmen's liens, and
Tenant shall give written notice to Landlord at least fifteen (15) business
days' prior to commencement of any construction on the Premises.

9. ASSIGNMENT AND SUBLETTING.

(a) Except as otherwise provided in this Paragraph 9, Tenant
shall not directly or indirectly, voluntarily or by operation of law, sell,
assign, encumber, pledge or otherwise transfer or hypothecate all or any part of
the Premises or Tenant's leasehold estate hereunder (collectively,
"Assignment"), or permit the Premises to be occupied by anyone other than Tenant
or sublet the Premises or any portion thereof (collectively, "Sublease"),
without Landlord's prior written consent in each instance, which consent shall
not be unreasonably withheld; provided, however, that Tenant shall have the
right to enter into an Assignment of Sublease to any affiliate of Tenant
pursuant to Paragraph 9(f) below or a Permitted Transfer pursuant to Paragraph
9(d) below. Without otherwise limiting the criteria upon which Landlord may
withhold its consent to any proposed Sublease or Assignment, if Landlord
withholds its consent where either (i) the creditworthiness of the proposed
Sublessee or Assignee is not reasonably acceptable to Landlord, or (ii) the
proposed Sublessee's or Assignee's use of the Premises is not in compliance with
the Permitted Use as described in the Basic Lease Information, such withholding
of consent shall be presumptively reasonable. If Landlord consents to the
Sublease or Assignment, Tenant may thereafter enter into a valid Sublease or
Assignment upon the terms and conditions set forth in this Paragraph 9.

(b) If Tenant desires at any time to enter into an Assignment of
this Lease or a Sublease of the Premises or any portion thereof for which
Landlord's consent is required, it shall first give written notice to Landlord
of its desire to do so, which notice shall contain (i) the name of the proposed
assignee, subtenant or occupant; (ii) the name of the proposed assignee's,
subtenant, or occupant's business to be carried on in the Premises; (iii) the
terms and provisions of the proposed Assignment or Sublease; and (iv) such
financial information as Landlord may reasonably request concerning the proposed
assignee, subtenant or occupant.

At any time within fifteen (15) days after Landlord's receipt of
the notice specified in Paragraph 9(b), Landlord may by written notice to Tenant
elect to (i) consent to the Sublease or Assignment; or (ii) disapprove the
Sublease or Assignment. In addition, Landlord may elect to terminate this Lease
as to the portion of the Premises that is specified in such notice, with a
proportionate abatement in Monthly Base Rent and Additional Charges for Expenses
and Taxes, if such notice is with respect to (x) any proposed Assignment, or (y)
any proposed Sublease and either (I) such Sublease has a term (including any
renewal or extension options) that either is coterminous with the Term or
expires within the last two years of the Term, or (II) after giving effect to
such Sublease, the original Tenant will occupy less than fifty percent (50%) of
the Rentable Area of the Premises. If Landlord elects to terminate the Lease as
to a portion of the Premises pursuant to the immediately preceding sentence,
Tenant shall at all times provide reasonable and appropriate access to such
portion of the Premises and use of any common facilities within the Building.
Promptly after request from Landlord, Tenant shall enter into any amendment to
this Lease or other documentation reasonably requested by Landlord in connection
with any such termination of this Lease as to a portion of the Premises. Failure
by Landlord to either consent to or disapprove a proposed Assignment or Sublease
within the fifteen (15) day time period specified above shall be deemed to be
Landlord's disapproval thereof. At Tenant's option, Tenant may notify Landlord
in writing if Tenant wishes to Assign or Sublease any portion of the Premises,
prior to commencing negotiations for an Assignment or Sublease with another
party, if such Assignment or Sublease would be subject to Landlord's termination
right provided above (such notice being the "Availability Notice"), and Landlord
shall have the option, by written notice to Tenant within fifteen (15) days
after receiving any Availability Notice, to terminate this Lease with respect to
the portion of the Premises as provided above. If Landlord declines or fails
timely to elect to terminate this Lease with respect to such portion of the
Premises, Tenant shall have the right, within one hundred twenty (120) days
after the expiration of such fifteen (15) day period, to enter into an
Assignment or Sublease with respect to the portion of the Premises designated in
the Availability Notice, subject to Landlord's consent and the other provisions
of this Paragraph 9, except that Landlord shall not have the further right to
terminate with respect to such Assignment or Sublease. If Tenant fails to enter
into an Assignment or Sublease within such one hundred twenty (120) day period,
or upon expiration of any Sublease entered into within such one hundred twenty
(120) day period, Landlord's rights under this Paragraph 9 to terminate the
Lease with respect to the portion of the Premises upon any future proposed
Sublease or Assignment shall revive. If Landlord consents to the Sublease or
Assignment within fifteen (15) days

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after receipt of Tenant's notice as provided above, Tenant may thereafter within
one hundred twenty (120) days after Landlord's consent, but not later than the
expiration of said one hundred twenty (120) days, enter into such Assignment or
Sublease of the Premises or portion thereof upon the terms and conditions set
forth in the notice furnished by Tenant to Landlord pursuant to Paragraph 9(b).
However, Tenant shall pay to Landlord seventy-five percent (75%) of any rent or
other consideration realized by Tenant under any and all Subleases in excess of
the Monthly Base Rent and Additional Charges payable hereunder (or the amount
thereof proportionate to the portion of the Premises subject to such
Sublease(s)), including, without limitation, any sums paid for the sale or
rental of any Alterations, after first deducting from such excess costs
reasonably incurred for tenant improvements installed by Tenant (commensurate
with a standard office build-out) to obtain the Sublease or Assignment in
question, each of which are installed in that portion of the Premises which is
the subject of the Sublease or Assignment and which unamortized costs shall be
amortized on a straight line basis (without interest) over the term of the
Sublease or Assignment in equal installments, and after deducting therefrom any
customary brokers' commissions that Tenant has incurred in connection with such
Sublease amortized on a straight line basis (without interest) over the term of
the Sublease.

(c) No consent by Landlord to any Assignment or Sublease by
Tenant shall relieve Tenant of any obligation to be performed by Tenant under
this Lease, whether arising before or after the Assignment or Sublease. The
consent by Landlord to any Assignment or Sublease shall not relieve Tenant from
the obligation to obtain Landlord's express written consent to any other
Assignment or Sublease. Any Assignment or Sublease that is not in compliance
with this Paragraph 9 shall be void and, at the option of Landlord, shall
constitute a material Default by Tenant under this Lease. The acceptance of
Monthly Base Rent or Additional Charges by Landlord from a proposed assignee or
sublessee shall not constitute the consent to such Assignment or Sublease by
Landlord.

(d) The following shall be deemed a voluntary assignment of
Tenant's interest in this Lease: (i) any dissolution, merger, consolidation, or
other reorganization of Tenant; and (ii) if the capital stock of Tenant is not
publicly traded, the sale or transfer to one person or entity stock possessing
more than fifty percent (50%) of the total combined voting power of all classes
of Tenant's stock issued, outstanding and entitled to vote for the election of
directors. Notwithstanding anything to the contrary contained in this Paragraph
9, Tenant may enter into any of the following transfers (a "Permitted Transfer")
without Landlord's prior written consent: (1) Tenant may assign its interest in
the Lease to a corporation, partnership, limited liability company, or limited
liability partnership ("Transfer Entity") which results from a merger,
consolidation or other reorganization, so long as the surviving Transfer Entity
has a net worth immediately following such transaction that is equal to or
greater than the net worth of Tenant as of the date immediately prior to such
transaction; and (2) Tenant may assign this Lease to a Transfer Entity which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring Transfer Entity has a net worth immediately
following such transaction that is equal to or greater than the net worth of
Tenant as of the date immediately prior to such transaction.

(e) Each assignee pursuant to an Assignment as provided in this
Paragraph 9 shall assume all obligations of Tenant under this Lease, and shall
be and remain liable jointly and severally with Tenant for the payment of
Monthly Base Rent and Additional Charges, and for the performance of all the
terms, covenants, conditions and agreements herein contained on Tenant's part to
be performed for the Term. No Assignment shall be binding on Landlord unless the
assignee or Tenant shall deliver to Landlord a counterpart of the Assignment and
an instrument in recordable form that contains a covenant of assumption by the
assignee satisfactory in substance and form to Landlord, consistent with the
requirements of this Paragraph 9(e), but the failure or refusal of the assignee
to execute such instrument of assumption shall not release or discharge the
assignee from its liability as set forth above. Notwithstanding anything to the
contrary in this Lease, no Sublease shall be binding on Landlord unless and
until Landlord shall agree in writing following termination of this Lease to
recognize such sublessee and such sublessee agrees in writing to attorn to
Landlord on the terms and conditions of the sublease (including the obligations
under this Lease to the extent that they relate to the portion of the Premises
subleased), and any Sublease entered into by Tenant hereunder shall include an
obligation by the sublessee to so attorn to Landlord if Landlord, in Landlord's
sole discretion, elects to recognize such Sublease upon any termination of this
Lease.

(f) Tenant shall have the right, without Landlord's consent and
without triggering Landlord's rights under Paragraph 9(b), but with written
notice to Landlord at least ten (10) days prior thereto, to enter into an

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Assignment of Tenant's interest in the Lease or a Sublease of all or any portion
of the Premises to an Affiliate (as defined below) of Tenant, provided that (i)
in connection with an Assignment that is not a Sublease, the Affiliate delivers
to Landlord concurrent with such Assignment a written notice of the Assignment
and an assumption agreement whereby the Affiliate assumes and agrees to perform,
observe and abide by the terms, conditions, obligations, and provisions of this
Lease arising from and after the effective date of the assignment; and (ii) the
assignee or sublessee remains an Affiliate throughout the term of this Lease
(and, in connection with an Assignment that is not a Sublease, the assumption
agreement shall contain provisions consistent with the provisions of this
subparagraph allowing Landlord to terminate this Lease at such time as the
entity is no longer an Affiliate of the original Tenant). If this Lease is
assigned or sublet to an Affiliate and thereafter any circumstance occurs which
causes such assignee or sublessee to no longer be an Affiliate of the assigning
or subleasing Tenant, Tenant shall give written notice thereof to Landlord,
which notice, to become effective, shall refer to Landlord's right to terminate
this Lease pursuant to this subparagraph, in the event of an Assignment, or to
cause Tenant to terminate the Sublease, in the event of a Sublease ("Affiliation
Termination Notice"). Following occurrence of the circumstance giving rise to
the discontinuation of such assignee or sublessee being an Affiliate ("Affiliate
Termination") of the assigning or subleasing Tenant, Landlord shall be entitled
to terminate this Lease in the event of an Assignment, or to cause Tenant to
terminate the Sublease in the event of a Sublease, unless Landlord has given its
prior written consent to such circumstance which consent shall not be
unreasonably withheld by Landlord so long as, in the event of an Assignment,
such assignee (after giving effect to such circumstance) has financial strength
(as demonstrated by audited financial statements) equal to or greater than the
assigning or subleasing Tenant (including its net worth) as of the date of
execution of this Lease, or the assigning or subleasing Tenant executes a
guaranty in usual form reasonably acceptable to Landlord (however, this does not
imply that Tenant would be released without such guaranty). No Sublease or
Assignment by Tenant made pursuant to this paragraph shall relieve Tenant of
Tenant's obligations under this Lease. As used in this paragraph, the term
"Affiliate" shall mean and collectively refer to a corporation or other entity
which controls, is controlled by or is under common control with Tenant, by
means of an ownership of either (aa) more than fifty percent (50%) of the
outstanding voting shares of stock or partnership or other ownership interests,
or (bb) stock, or partnership or other ownership interests, which provide the
right to control the operations, transactions and activities of the applicable
entity.

10. INSURANCE AND INDEMNIFICATION.

(a) Except to the extent caused by the negligence or willful
misconduct of Tenant Parties or Tenant's breach of this Lease, Landlord shall
indemnify and hold Tenant harmless from and defend Tenant against any and all
claims or liability for any injury or damage to any person or property including
any reasonable attorney's fees (but excluding any consequential damages or loss
of business) occurring in, on, or about the Project to the extent such injury or
damage is caused by the gross negligence or willful misconduct of: (i) Landlord;
or (ii) Landlord's agents, servants, contractors or employees (collectively,
together with Landlord, "Landlord Parties"), provided, however, that in no event
shall Landlord be liable to Tenant for any losses arising from any interruption
of Tenant's business, or for lost profits, or for charges or expenses which
continue but would have been earned if the business had gone on without
interruption, or for any other loss, claim, cost, expense or damage which would
be covered by a standard policy of business interruption insurance, even if such
lost profits, charges, expenses, losses, claims, costs or damages caused by the
gross negligence or willful misconduct of Landlord's agents, servants,
contractors or employees.

(b) Landlord shall not be liable to Tenant, and Tenant hereby
waives all claims against Landlord Parties for any injury or damage to any
person or property in or about the Premises by or from any cause whatsoever
(other than the gross negligence or willful misconduct of Landlord Parties), and
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement, or other portion of the
Premises or the Building, or caused by gas, fire, oil, electricity, or any cause
whatsoever, in, on, or about the Premises, the Project or any part thereof
(other than that caused by the gross negligence or willful misconduct of
Landlord Parties); provided, however, that in no event shall Landlord be liable
to Tenant for any losses arising from any interruption of Tenant's business, or
for lost profits, or for charges or expenses which continue but would have been
earned if the business had gone on without interruption, or for any other loss,
claim, cost, expense or damage which would be covered by a standard policy of
business interruption insurance, even if caused by the gross negligence or
willful misconduct of Landlord's agents, servants, contractors or employees.

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Tenant acknowledges that any casualty insurance carried by Landlord will not
cover loss of income to Tenant or damage to the Alterations in the Premises
installed by Tenant or Tenant's personal property located within the Premises
(except as provided in Paragraph 10(f) below). Tenant shall be required to
maintain the insurance described in Paragraph 10(d) below during the Term.

(c) Except to the extent caused by the gross negligence or
willful misconduct of Landlord Parties, Tenant shall indemnify and hold Landlord
harmless from and defend Landlord against any and all claims or liability for
any injury or damage to any person or property whatsoever: (i) occurring in or
on the Premises; or (ii) occurring in, on, or about any other portion of the
Project to the extent such injury or damage shall be caused by the negligence or
willful misconduct by the Tenant Parties. Tenant further agrees to indemnify and
hold Landlord harmless from, and defend Landlord against, any and all claims,
losses, or liabilities (including damage to Landlord's property) arising from
(x) any breach of this Lease by Tenant, (y) any matter referred to in Paragraph
10(g), and/or (z) the conduct of any work or business of Tenant Parties in or
about the Project, including, but not limited to any release, discharge, storage
or use of any Hazardous Substance. In the event of a discrepancy between the
terms of this paragraph and the terms of Paragraph 40 of the Lease concerning
Hazardous Substance liability, the latter shall control. Notwithstanding the
foregoing, however, Tenant shall so indemnify, hold harmless and defend Landlord
with respect to losses arising from any interruption of Tenant's business, or
for lost profits, or for charges or expenses which continue but would have been
earned if the business had gone on without interruption, or for any other loss,
claim, cost, expense or damage which would be covered by a standard policy of
business interruption insurance, even if such losses resulted from the gross
negligence or willful misconduct of Landlord's agents, servants, contractors or
employees.

(d) Tenant shall procure at its cost and expense and keep in
effect during the Term the following insurance:

(i) Commercial general liability insurance on an occurrence
form, including contractual liability, with a minimum combined single
limit of liability of Three Million Dollars ($3,000,000). Such insurance
shall name Landlord, any Mortgagee, any ground lessor, and such other
parties as Landlord may request as additional insureds, shall
specifically include the liability assumed hereunder by Tenant, and
shall provide that it is primary insurance, and not excess over or
contributory with any other valid, existing and applicable insurance in
force for or on behalf of Landlord, and shall provide that Landlord
shall receive thirty (30) days' written notice from the insurer prior to
any cancellation or change of coverage. The limits of such insurance
shall not limit the liability of Tenant hereunder, and Tenant is
responsible for ensuring that the amount of liability insurance carried
by Tenant is sufficient for Tenant's purposes.

(ii) Intentionally Omitted;

(iii) "Special" (also known as "all risk") property
insurance (including, without limitation, boiler and machinery (if
applicable); sprinkler damage, vandalism and malicious mischief) on all
of Tenant's personal property. Such insurance shall be in an amount
equal to full replacement cost of the aggregate of the foregoing and
shall provide coverage comparable to the coverage in the standard ISO
All Risk form, when such form is supplemented with the coverages
required above;

(iv) Worker's compensation insurance with limits as may be
required by law.

(v) Such other insurance as may be required by Laws, or by
Landlord to the extent it is commercially reasonable for tenants to be
required to carry such other insurance under similar leases with respect
to similar property in similar locations.

Insurance required under this Paragraph 10(d) shall be in companies rated "A"X
or better in "Best's Insurance Guide." Tenant shall deliver copies of policies
of such insurance and certificates naming the additional insureds thereof to
Landlord on or before the Commencement Date, and thereafter at least thirty (30)
days before the expiration dates of expiring policies; and, in the event Tenant
shall fail to procure such insurance, or to deliver such

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policies or certificates, Landlord may, at its option after written notice to
Tenant, procure same for the account of Tenant, and the cost thereof shall be
paid to Landlord as Additional Charges within five (5) days after delivery to
Tenant of bills therefor.

(e) The provisions of this Paragraph 10 shall survive the
expiration or termination of this Lease with respect to any claims or liability
occurring prior to such expiration or termination.

(f) Landlord shall maintain insurance on the Project, including
the Building, and any Alterations installed in the Premises by Tenant at its
expense to the extent Tenant provides Landlord with all information reasonably
required by Landlord or its insurer in connection therewith (with the entire
cost of any such insurance on Alterations to be payable directly by Tenant to
Landlord as an Additional Charge, including the incremental cost to add such
insurance to Landlord's policies and any deductibles payable with respect to
such Alterations), against fire and risks covered by "special" coverage (also
known as "all risk") (excluding earthquake and flood, though Landlord, at its
sole option, may include this coverage) on a 100% of "replacement cost" basis
(though reasonable deductibles may be included under such coverage). Landlord's
insurance shall also have a building ordinance provision and shall provide for
rental interruption insurance covering a period of twelve (12) full months. In
no event shall Landlord be deemed a co-insurer under such policy. Landlord shall
also maintain commercial general liability insurance on an occurrence basis in
amounts not less than Three Million Dollars ($3,000,000) per occurrence with
respect to bodily injury or death and property damage in the Project.
Notwithstanding the foregoing obligations of Landlord to carry insurance,
Landlord may modify the foregoing coverages if and to the extent it is
commercially reasonable to do so. Landlord agrees to provide Tenant, upon
written request, with certificates of insurance evidencing the foregoing
coverages. Tenant acknowledges that, notwithstanding any provision of this
Paragraph 10(f) or any other provision of this Lease, Landlord currently intends
to carry earthquake insurance on the Project during the Term of this Lease.

(g) Tenant acknowledges that even if Landlord installs and
operates security cameras or other security equipment and/or provides any other
services that could be construed as being intended to enhance security, Landlord
shall have no obligation to Tenant or to any of Tenant's Parties for any damage,
claim, loss or liability related to any claim that Landlord had a duty to
provide security or that the equipment or services provided by Landlord were
inadequate, inoperative or otherwise failed to provide adequate security. Any
such claim made against Landlord by any employee, customer or invitee of Tenant
shall be included within Tenant's obligation of indemnity and defense set forth
in Paragraph 10(c) above.

11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in
this Lease, the parties hereto release each other (including Landlord Parties
and Tenant Parties) and their respective agents, employees, successors,
assignees and subtenants from all liability for injury to any person or damage
to any property that is caused by or results from a risk (i) which is actually
insured against, to the extent of receipt of payment under such policy (unless
the failure to receive payment under any such policy results from a failure of
the insured party to comply with or observe the terms and conditions of the
insurance policy covering such liability, in which event, such release shall not
be so limited), (ii) which is required to be insured against under this Lease,
without regard to the negligence or willful misconduct of the entity so
released, or (iii) which would normally be covered by the standard form of
"special" or "all risk" coverage property insurance. Landlord and Tenant shall
each obtain from their respective insurers under all policies of fire, theft,
and other property insurance maintained by either of them at any time during the
Term insuring or covering the Building, the Premises, or the Project or any
portion thereof of its contents therein, a waiver of all rights of subrogation
which the insurer of one party might otherwise, if at all, have against the
other party and Landlord and Tenant shall each indemnify the other against any
loss or expense, including reasonable attorneys' fees, resulting from the
failure to obtain such waiver.

12. SERVICES AND UTILITIES.

(a) Landlord shall provide the maintenance and repairs described
in Paragraph 7(a), except for damage occasioned by the act or omission of Tenant
or for which Tenant is responsible pursuant to Paragraph 10(c), which damage
shall be repaired by Landlord at Tenant's expense.

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(b) Subject to the provisions elsewhere herein contained and to
the Rules and Regulations, Tenant shall be responsible for arranging for, and
direct payment of any and all cost of, garbage pickup, recycling, janitorial,
security, transportation management programs, water, electricity, gas,
telephone, cable and digital services, and Tenant shall provide the maintenance,
repair and replacement of Building Systems in connection with such utilities and
services, and Tenant shall provide the maintenance, repair and services as
described in Paragraph 7(b). Landlord shall cooperate with Tenant's efforts to
arrange all such services. If Landlord assumes Tenant's maintenance obligations
with respect to the Building Systems pursuant to Paragraph 7(e), Tenant shall
cooperate fully with Landlord and abide by all the reasonable regulations and
requirements that Landlord may prescribe for the proper functioning and
protection of the Building Systems.

(c) Tenant will not without the written consent of Landlord,
which consent shall not be unreasonably withheld or delayed, use any apparatus
or device in the Premises which, when used, puts an excessive load on the
Building or its structure or systems, including, without limitation, electronic
data processing machines, punch card machines and machines using excess lighting
or voltage in excess of the amount for which the Building is designed.

(d) Landlord shall not be in default hereunder, nor be deemed to
have evicted Tenant, nor be liable for any damages directly or indirectly
resulting from, nor shall the rental herein reserved be abated, except as
expressly provided for in the last sentence of this paragraph, by reason of (i)
the installation, use or interruption of use of any equipment in connection with
the foregoing utilities and services; (ii) failure to furnish or delay in
furnishing any services to be provided by Landlord when such failure or delay is
caused by Acts of God or the elements, labor disturbances of any character, any
other accidents or other conditions beyond the reasonable control of Landlord,
or by the making of repairs or improvements to the Premises or to the Building
(except in the case of Landlord's gross negligence or willful misconduct); or
(iii) the limitation, curtailment, rationing or restriction on use of water or
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Premises or the Project. Furthermore, Landlord shall be
entitled to cooperate with the mandatory requirements of national, state or
local governmental agencies or utilities suppliers in connection with reducing
energy or other resources consumption. If the Premises become unsuitable for
Tenant's use as a consequence of cessation of gas and electric utilities or
other services provided to the Premises resulting from a casualty covered by
Landlord's insurance, then Tenant's Monthly Base Rent and Additional Charges
shall abate during the period of time in which Tenant cannot occupy the Premises
for the Permitted Uses, but only to the extent of rental abatement insurance
proceeds received by Landlord.

13. TENANT'S CERTIFICATES. Tenant, at any time and from time to time,
within ten (10) days from receipt of written notice from Landlord, will execute,
acknowledge and deliver to Landlord and, at Landlord's request, to any
prospective tenant, purchaser, ground or underlying lessor or mortgagee of any
part of the Project any other party acquiring an interest in Landlord, a
certificate of Tenant substantially in the form attached as EXHIBIT E and also
containing any other information that may reasonably be required by any of such
persons. It is intended that any such certificate of Tenant delivered pursuant
to this Paragraph 13 may be relied upon by Landlord and any prospective tenant,
purchaser, ground or underlying lessor or mortgagee of any part of the Project,
or such other party.

14. HOLDING OVER. If Tenant (directly or through any
successor-in-interest of Tenant) remains in possession of all or any portion of
the Premises after the expiration of the Term or the termination of this Lease
with the written consent of Landlord, such continued possession shall be
construed to be a tenancy from month to month at one hundred twenty-five percent
(125%) of the Monthly Base Rent payable in the last full month prior to such
termination or expiration (and shall be increased in accordance with Paragraph
3(b)), together with an amount estimated by Landlord for the monthly Additional
Charges for Expenses and Taxes payable under this Lease, and shall otherwise be
on the terms and conditions herein specified so far as applicable. If Tenant
(directly or through any successor-in-interest of Tenant) remains in possession
of all or any portion of the Premises after the expiration of the Term or the
termination of this Lease without the written consent of Landlord, Tenant's
continued possession shall be on the basis of a tenancy at the sufferance of
Landlord. In such event, Tenant shall continue to comply with or perform all the
terms and obligations of Tenant under this Lease, except that the Monthly Base
Rent during Tenant's holding over shall be the greater of the then fair market
rent for the Premises (as reasonably determined by

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Landlord) or one hundred fifty percent (150%) of the Monthly Base Rent and
Additional Charges for Expenses and Taxes payable in the last full month prior
to the termination or expiration of this Lease (and shall be increased in
accordance with Paragraph 3(b). In addition to Rent, Tenant shall pay Landlord
for all damages proximately caused by reason of the Tenant's retention of
possession. Landlord's acceptance of Rent after the expiration of the Term or
termination of the Term of this Lease shall not constitute a renewal of this
Lease, and nothing contained in this provision shall be deemed to waive
Landlord's right of re-entry or any other right hereunder or at law. Tenant
acknowledges that, in Landlord's marketing and re-leasing efforts for the
Premises, Landlord is relying on Tenant's vacation of the Premises on the
Expiration Date. Accordingly, Tenant shall indemnify, defend and hold Landlord
harmless from and against all claims, liabilities, losses, costs, expenses and
damages arising or resulting directly or indirectly from Tenant's failure to
timely surrender the Premises, including (i) any loss, cost or damages suffered
by any prospective tenant of all or any part of the Premises, and (ii)
Landlord's damages as a result of such prospective tenant rescinding or refusing
to enter into the prospective lease of all or any portion of the Premises by
reason of such failure of Tenant to timely surrender the Premises.

15. SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, this
Lease shall be subject and subordinate at all times to: (i) all ground leases or
underlying leases which may now exist or hereafter be executed affecting all or
any portion of the Project, (ii) any CC&Rs (including without limitation the
CC&Rs described in EXHIBIT C), and (iii) the lien of any mortgage or deed of
trust which may now exist or hereafter be executed in any amount for which all
or any portion of the Project, ground leases or underlying leases, or Landlord's
interest or estate in any of said items, is specified as security (any of the
foregoing, a "Mortgage", and the beneficiary or mortgagee under any of the
foregoing, a "Mortgagee"). Notwithstanding the foregoing, Landlord shall have
the right to subordinate or cause to be subordinated any such ground leases or
underlying leases or any such Mortgages to this Lease. In the event that any
ground lease or underlying lease terminates for any reason or any Mortgage is
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord at the option of such successor in interest.
Notwithstanding anything to the contrary contained herein, this Lease shall not
be subject or subordinate to any ground or underlying lease or to any Mortgage,
unless the ground lessor or Mortgagee executes a reasonable recognition and
non-disturbance agreement which provides that Tenant shall be entitled to
continue in possession of the Premises on the terms and conditions of this Lease
if and for so long as Tenant fully performs all of its obligations hereunder.
Landlord and Tenant covenant and agree to cooperate in efforts to obtain a
mutually acceptable form of subordination, non-disturbance and attornment
agreement from Landlord's current Mortgagee, and Tenant covenants and agrees to
execute and deliver upon demand by Landlord and in the form requested by
Landlord and reasonably acceptable to Tenant (Tenant has approved the form of
the subordination, non-disturbance and attornment agreement attached as EXHIBIT
F, without limiting Tenant's future approval of any additional or substitute
form), any customary additional documents evidencing the priority or
subordination of this Lease with respect to any such ground leases or underlying
leases or the lien of any such Mortgage. Tenant shall execute, deliver and
record any such documents within ten (10) days after Landlord's written request.

16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the rules and regulations attached to this Lease as EXHIBIT D and all
reasonable modifications thereof and additions thereto from time to time put
into effect by Landlord. Landlord shall not be responsible for the
nonperformance by any other Tenant or occupant of the Building or the Project of
any said rules and regulations. In the event of an express and direct conflict
between the terms, covenants, agreements and conditions of this Lease and those
set forth in the rules and regulations, as modified and amended from time to
time by Landlord, this Lease shall control.

17. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable
times, upon reasonable prior notice (except in the case of an emergency), and
subject to Tenant's reasonable security precautions and the right of Tenant to
accompany Landlord at all times, have the right to re-enter the Premises to
inspect the same, to supply janitor service and any other service to be provided
by Landlord to Tenant hereunder (unless Tenant is supplying such service), to
show the Premises to prospective purchasers, Mortgagees or tenants (as to
prospective tenants, only during the last eighteen (18) months of the Term), to
post notices of nonresponsibility or as otherwise required or allowed by this
Lease or by law, and to alter, improve or repair the Premises and any portion of
the Building and may for that purpose erect, use, and maintain scaffolding,
pipes, conduits, and other necessary

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structures in and through the Premises where reasonably required by the
character of the work to be performed. Landlord shall not be liable in any
manner for any inconvenience, disturbance, loss of business, nuisance or other
damage arising from Landlord's entry and acts pursuant to this paragraph and
Tenant shall not be entitled to an abatement or reduction of Monthly Base Rent
or Additional Charges if Landlord exercises any rights reserved in this
paragraph. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby,
except to the extent caused by Landlord's gross negligence or willful
misconduct. For each of the aforesaid purposes, Landlord shall at all times have
and retain a key with which to unlock all of the doors in, upon and about the
Premises, excluding Tenant's vaults and safes, or special security areas
(designated in advance), and Landlord shall have the right to use any end all
means which Landlord may deem necessary or proper to open said doors in an
emergency, in order to obtain entry to any portion of the Premises, and any
entry to the Premises, or portion thereof obtained by Landlord by any of said
means, or otherwise, shall not under any emergency circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction, actual or constructive, of Tenant from the Premises or any
portions thereof. Landlord shall use commercially reasonable efforts during
re-entry to not unreasonably interfere with Tenant's use of the Premises or its
business conducted therein.

18. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, or an assignment
of Tenant for the benefit of creditors, or any action taken or suffered by
Tenant under any insolvency, bankruptcy, reorganization or other debtor relief
proceedings, whether now existing or hereafter amended or enacted, shall at
Landlord's option constitute a breach of this Lease by Tenant (provided that,
with respect to a petition in bankruptcy, or receiver attachment, or other
remedy pursued by a third party, such event shall not constitute a breach of
this Lease so long as it is discharged within sixty (60) days). Upon the
happening of any such event or at any time thereafter, this Lease shall
terminate five (5) days after written notice of termination from Landlord to
Tenant. In no event shall this Lease be assigned or assignable by operation of
law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no
event shall this Lease or any rights or privileges hereunder be an asset of
Tenant under any bankruptcy, insolvency, reorganization or other debtor relief
proceedings.

19. DEFAULT.

(a) The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a "Default" hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord (which notice shall be in lieu of and not in addition to the notice
required by Section 1161 of the California Code of Civil Procedure) within which
to cure any failure to pay Monthly Base Rent or Additional Charges; provided,
however, that Landlord shall not be required to provide such notice more than
two (2) times during any two (2) year period during the Term with respect to
non-payment of Monthly Base Rent or Additional Charges, the third such
non-payment constituting Default without requirement of notice. Tenant shall
have a period of thirty (30) days from the date of receipt of written notice
from Landlord within which to cure any other Default under this Lease; provided,
however, that with respect to any curable Default other than the payment of
Monthly Base Rent or Additional Charges that cannot reasonably be cured within
thirty (30) days, the cure period shall be extended for an additional period of
time reasonably required to cause such cure if Tenant commences to cure within
thirty (30) days from Landlord's notice and continues to prosecute diligently
the curing thereof, provided that such cure period shall in no event extend
beyond ninety (90) days after Landlord's notice. Notwithstanding the foregoing,
(i) if a different cure period is specified elsewhere in this Lease with respect
to any specific obligation of Tenant, such specific cure period shall apply with
respect to a failure of such obligation in lieu of, and not in addition to, the
cure period provided in this Paragraph 19(a); and (ii) the cure periods
specified in Paragraphs 7(e) and 23 shall apply with respect to Landlord's
rights to cure Tenant's failure to perform pursuant to Paragraphs 7(e) and 23,
respectively. Upon a Default of this Lease by Tenant, Landlord shall have the
following rights and remedies in addition to any other rights or remedies
available to Landlord at law or in equity:

(i) The rights and remedies provided by California Civil
Code, Section 1951.2, including but not limited to, recovery of the
worth at the time of award of the amount by which the unpaid

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Monthly Base Rent and Additional Charges for the balance of the Term
after the time of award exceeds the amount of rental loss for the same
period that the Tenant proves could be reasonably avoided, as computed
pursuant to subsection (b) of said Section 1951.2;

(ii) The rights and remedies provided by California Civil
Code, Section 1951.4, that allows Landlord to continue this Lease in
effect and to enforce all of its rights and remedies under this Lease,
including the right to recover Monthly Base Rent and Additional Charges
as they become due, for so long as Landlord does not terminate Tenant's
right to possession; provided, however, if Landlord elects to exercise
its remedies described in this Paragraph 19(a)(ii) and Landlord does not
terminate this Lease, and if Tenant requests Landlord's consent to an
assignment of this Lease or a sublease of the Premises at such time as
Tenant is in Default, Landlord shall not unreasonably withhold its
consent to such assignment or sublease. Acts of maintenance or
preservation, efforts to relet the Premises or the appointment of a
receiver upon Landlord's initiative to protect its interest under this
Lease shall not constitute a termination of Tenant's rights to
possession;

(iii) The right to terminate this Lease by giving notice
to Tenant in accordance with applicable law;

(iv) If Landlord elects to terminate this Lease, the right
and power to enter the Premises and remove therefrom all persons and
property and, to store such property in a public warehouse or elsewhere
at the cost of and for the account of Tenant, and to sell such property
and apply such proceeds therefrom pursuant to applicable California law.

(b) Landlord shall have a period of thirty (30) days from the
date of written notice from Tenant within which to cure any default of Landlord
under this Lease; provided, however, that with respect to any default that
cannot reasonably be cured within thirty (30) days, the default shall not be
deemed to be uncured if Landlord commences to cure within thirty (30) days from
Tenant's notice and continues to prosecute diligently the curing thereof. Tenant
agrees to deliver to any Mortgagee a copy of any Notice of Default served upon
the Landlord in the manner prescribed by Paragraph 26 hereof, provided that
prior to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Mortgagee shall have an
additional thirty (30) days (provided that Tenant notifies Mortgagee
concurrently with Tenant's notice to Landlord at the beginning of Landlord's
thirty (30) day period; otherwise Mortgagee shall have sixty (60) days from the
date on which it is noticed) within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be
reasonably necessary to cure such default shall be granted if within such
applicable period Mortgagee has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event the Lease shall not be terminated while such remedies are being so
diligently pursued.

20. DAMAGE BY FIRE, ETC.

(a) RESTORATION OR TERMINATION. If the Premises or the Building
are damaged by fire or other casualty, Landlord shall forthwith repair the same,
provided that such repairs can be made within one hundred eighty (180) days
after the date of such damage under the laws and regulations of the federal,
state and local governmental authorities having jurisdiction thereof. In such
event, this Lease shall remain in full force and effect except that Tenant shall
be entitled to a proportionate reduction of Monthly Base Rent and Additional
Charges while such repairs to be made hereunder by Landlord are being made. Such
reduction of Monthly Base Rent and Additional Charges, if any, shall be based
upon the greater of (i) the proportion that the area of the Premises rendered
untenantable by such damage bears to the total area of the Premises; or (ii) the
extent to which such damage and the making of such repairs by Landlord shall
interfere with the business carried on by Tenant in the Premises, and shall be
limited to the extent of rental abatement insurance proceeds actually received
by Landlord under Landlord's casualty insurance policy. Within thirty (30) days
after the date of such damage, Landlord shall notify Tenant whether or not in
Landlord's reasonable opinion such repairs can be made within one hundred eighty

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(180) days after the date of such damage and Landlord's reasonable estimate of
the time needed for such repairs. If such repairs cannot be made within one
hundred eighty (180) days from the date of such damage, Landlord shall within
thirty (30) days after the date of such damage elect either to: (i) notify
Tenant of Landlord's intention to repair such damage and diligently prosecute
such repairs, in which event this Lease shall continue in full force and effect
and the Monthly Base Rent and Additional Charges shall be reduced as provided
herein; or (ii) notify Tenant of Landlord's election to terminate this Lease as
of a date specified in such notice, which date shall not be less than thirty
(30) days nor more than sixty (60) days after such notice is given and this
Lease shall terminate on the date specified in such notice. If Landlord notifies
Tenant that restoration or repair of the Premises will take more than one
hundred eighty (180) days, Tenant shall have a right to terminate the Lease
within fifteen (15) days following receipt of Landlord's notice, by providing
Landlord with written notice of its election to do so. in such event (and also
in the event Landlord terminates the Lease pursuant to the immediately preceding
sentence), Tenant shall have no liability for payment of the deductible under
Landlord's insurance relating to such damage. In case of termination by either
event, the Monthly Base Rent and Additional Charges shall be reduced by a
proportionate amount based upon the extent to which such damage interfered with
the business carried on by Tenant in the Premises, and Tenant shall pay such
reduced Monthly Base Rent and Additional Charges up to the date of termination.
Landlord agrees to refund to Tenant any Monthly Base Rent and Additional Charges
previously paid for any period of time subsequent to such date of termination.
The repairs to be made hereunder by Landlord shall not include, and Landlord
shall not be required to repair, any damage by fire or other cause to the
property of Tenant or any repairs or replacements of any paneling, decorations,
railings, floor coverings or any alterations, additions, fixtures or
improvements installed on the Premises by or at the expense of Tenant; provided,
however, that to the extent Landlord's insurance policies cover any Alterations
pursuant to Paragraph 10(f), Landlord shall make available to Tenant any
available insurance proceeds with respect to any damage or destruction that
affects such Alterations, after deducting therefrom the cost, if any, to
Landlord for the recovery of such proceeds and/or of any repair to the Building
or Premises or Project for which Landlord is responsible hereunder, in order for
Tenant to repair and restore such Alterations, pursuant to disbursement
procedures established by Landlord and/or any Mortgagee. Tenant hereby waives
the provisions of Section 1932.2, and Section 1933.4, of the Civil Code of
California. Notwithstanding anything contained herein to the contrary, if a
Major Casualty (as defined below) occurs with respect to any portion of the
Building, and the net insurance proceeds obtained as a result of such casualty
are ninety percent (90%) or a lesser percentage of the cost of restoration,
rebuilding or replacement, then Landlord shall not be obligated to undertake
such restoration, rebuilding or replacement unless Landlord elects to do so in
writing, provided that Landlord's election not to restore shall be deemed
Landlord's election to terminate. For the purpose of this Lease, a "Major
Casualty" shall mean a casualty that renders unusable twenty percent (20%) or
more of the Net Rentable Area of the Building or which materially adversely
affects the use of such Building.

(b) CASUALTY AT END OF TERM. Notwithstanding anything to the
contrary contained in this Lease, if during the twelve (12) months prior to the
expiration of the Term, either of the Building or a substantial portion thereof
are damaged or destroyed by fire or other casualty, either Tenant or Landlord
shall have the option to terminate this Lease as of the date of such damage or
destruction by written notice to the other party given within thirty (30) days
after such damage or destruction, in which event Landlord shall make a
proportionate refund to Tenant of such Rent as may have been paid in advance.
For purposes of this paragraph, a "substantial portion" shall mean fifty percent
(50%) of the Building.

(c) UNINSURED CASUALTY. Notwithstanding Paragraph 20(a), and
subject to the termination right in Paragraph 20(b), in the event of a total or
partial destruction of the Premises (i) by a casualty of a type not required to
be insured against by Landlord under the terms of this Lease, or (ii) under
circumstances where Landlord has been required by any Mortgagee to utilize
substantially all of the insurance proceeds to pay down the Mortgage, which
destruction exceeds five percent (5%) of the replacement cost of the Building,
this Lease shall automatically terminate, unless (x) Landlord elects to
reconstruct the Building, and (y) the damage can be reconstructed within one
hundred eighty (180) days after the date of such damage. If Landlord elects to
reconstruct, the cost incurred by Landlord for such reconstruction shall be
amortized over the useful life of the Building and such amortization shall be
reimbursed by Tenant to Landlord as an Additional Charge together with interest
at the Default Rate; provided, however, that Tenant shall not be obligated to
pay for any portion of the useful life of the Building which extends beyond the
Expiration Date.

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21. EMINENT DOMAIN. If any part over fifteen percent (15%) of the
Premises shall be taken or appropriated under the power of eminent domain or
conveyed in lieu thereof, Tenant shall have the right to terminate this Lease at
its option. In such event, Landlord shall receive (and Tenant shall assign to
Landlord upon demand from Landlord) any income, rent, award or any interest
therein which may be paid in connection with the exercise of such power of
eminent domain, and Tenant shall have no claim against Landlord for any part of
sum paid by virtue of such proceedings, whether or not attributable to the value
of the unexpired term of this Lease except that Tenant shall be entitled to
petition the condemning authority for the following: (i) the then unamortized
cost of any Alterations paid for by Tenant from its own funds (as opposed to any
allowance, including the Tenant Allowance, provided by Landlord); (ii) the value
of Tenant's trade fixtures; (iii) Tenant's relocation costs; and (iv) Tenant's
goodwill, loss of business and business interruption. 1f a part of the Premises
shall be so taken or appropriated or conveyed and neither party hereto shall
elect to terminate this Lease and the Premises have been damaged as a
consequence of such partial taking or appropriation or conveyance, Landlord
shall restore the Premises continuing under this Lease at Landlord's cost and
expense; provided, however, that Landlord shall not be required to repair or
restore any injury or damage to the property of Tenant or to make any repairs or
restoration of any Alterations installed on the Premises by or at the expense of
Tenant. Thereafter, the Monthly Base Rent and Additional Charges to be paid
under this Lease for the remainder of the Term shall be proportionately reduced,
such that thereafter the amounts to be paid by Tenant shall be in the ratio that
they are of the portion of the Premises not so taken bears to the total area of
the Premises prior to such taking. Notwithstanding anything to the contrary
contained in this Paragraph 21, if the temporary use or occupancy of any part of
the Premises shall be taken or appropriated under power of eminent domain during
the Term, this Lease shall be and remain unaffected by such taking or
appropriation and Tenant shall continue to pay in full all Monthly Base Rent and
Additional Charges payable hereunder by Tenant during the Term. In the event of
any such temporary appropriation or taking, Tenant shall be entitled to receive
that portion of any award which represents compensation for the use of or
occupancy of the Premises during the Term, and Landlord shall be entitled to
receive that portion of any award which represents the cost of restoration of
the Premises and the use and occupancy of the Premises after the end of the
Term. If such temporary taking is for a period longer than two hundred and
seventy (270) days and unreasonably interferes with Tenant's use of the Premises
or the Common Area, then Tenant shall have the right to terminate the Lease.
Landlord and Tenant understand and agree that the provisions of this Paragraph
21 are intended to govern fully the rights and obligations of the parties in the
event of a Taking of all or any portion of the Premises. Accordingly, the
parties each hereby waives any right to terminate this Lease in whole or in part
under Sections 1265.120 and 1265.130 of the California Code of Civil Procedure
or under any similar Law now or hereafter in effect.

22. SALE BY LANDLORD. If Landlord sells or otherwise conveys its
interest in the Premises, Landlord shall be relieved of its obligations under
the Lease from and after the date of sale or conveyance (including the
obligations of Landlord under Paragraph 40), only when the successor assumes in
writing the obligations to be performed by Landlord on and after the effective
date of the transfer, whereupon Tenant shall attorn to such successor.

23. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of Monthly
Base Rent or Additional Charges. If Tenant shall default in the payment of any
sum of money, other than Monthly Base Rent or Additional Charges, required to be
paid by it hereunder or shall fail to perform any other act on its part to be
performed hereunder (including, without limitation, Tenant's obligation to
maintain and repair the Premises and Building Systems pursuant to Paragraph
7(b)), and either (i) such failure continues, and Tenant does not commence cure
of such failure, for ten (10) days after notice thereof by Landlord as provided
in Paragraph 19(a) (except in the event of emergency, when no cure period shall
be required but Landlord shall make reasonable good faith efforts to notify
Tenant prior to commencing such emergency cure), or (ii) having commenced such
cure Tenant does not diligently prosecute the curing thereof, or (iii) if
Landlord is, in Landlord's reasonable business judgment, in a better position to
accomplish such cure or can accomplish such cure in a more efficient or
cost-effective manner than Tenant, or (iv) if a default under any Mortgage is,
in Landlord's reasonable judgment, likely to occur due to Tenant's failure to
cure such failure in a timely manner, then in any such situation Landlord may,
but shall not be obligated so to do, and without waiving or releasing Tenant
from any obligations of Tenant, make any such payment or perform any such act on
Tenant's part to be made or performed as provided in this Lease. All sums so
paid and costs so incurred by Landlord, together with interest thereon at the
Default Rate

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from the date Landlord makes such payment or incurs such cost, shall be payable
as Additional Charges to Landlord within thirty (30) days after receipt by
Tenant of a bill or statement therefor.

24. SURRENDER OF PREMISES.

(a) At the end of the Term or any renewal thereof or other sooner
termination of this Lease, Tenant will peaceably deliver to Landlord possession
of the Premises, together with all improvements or additions upon or belonging
to Landlord, by whomsoever made, in substantially the same condition as
received, or first installed, subject to the terms of Paragraphs 6, 21 and 40,
subject to normal wear and tear and the rights and obligations of Tenant
concerning casualty damage pursuant to Paragraph 20. Tenant may, upon the
termination of this Lease, remove all movable furniture and equipment belonging
to Tenant, at Tenant's sole cost, provided that Tenant repairs any damage caused
by such removal. Property not so removed by the Expiration Date (or in the event
of an earlier termination, within five (5) days of such earlier termination
date) shall be deemed abandoned by Tenant, and title to the same shall thereupon
pass to Landlord. Upon such expiration or sooner termination of the Term, Tenant
shall upon demand by Landlord, at Landlord's election either (i) at Tenant's
sole cost and expense, forthwith and with all due diligence remove any
Alterations made by or for the account of Tenant, designated by Landlord to be
removed (provided, however, that upon the written request of Tenant prior to
installation of such Alterations, Landlord shall advise Tenant at that time
whether or not such Alterations must be removed upon the expiration or sooner
termination of this Lease), and restore the Premises to its original condition
as of the Delivery Date, subject to the foregoing; or (ii) pay Landlord the
reasonable estimated cost thereof.

(b) The voluntary or other surrender of this Lease by Tenant, or
a mutual cancellation thereof, shall not work a merger, and shall, at the option
of Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to it of any or all such
subleases or subtenancies.

25. WAIVER. If either Landlord or Tenant waives the performance of any
term, covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. Furthermore, the acceptance of Rent or
Additional Charges by Landlord shall not constitute a waiver of any preceding
breach by Tenant of any tenor, covenant or condition of this Lease, regardless
of Landlord's knowledge of such preceding breach at the time Landlord accepted
such Monthly Base Rent or Additional Charges. Failure by Landlord to enforce any
of the terms, covenants or conditions of this Lease for any length of time shall
not be deemed to waive or to decrease the right of Landlord to insist thereafter
upon strict performance by Tenant. Waiver by Landlord of any term, covenant or
condition contained in this Lease may only be made by a written document signed
by Landlord.

26. NOTICES. Except as otherwise expressly provided in this Lease, any
bills, statements, notices, demands, requests or other communications given or
required to be given under this Lease shall be effective only if rendered or
given in writing, sent by certified mail, return receipt requested, reputable
overnight carrier, or delivered personally, (i) to Tenant (A) at Tenant's
address set forth in the Basic Lease Information, if sent prior to Tenant's
taking possession of the Premises, or (B) at the Premises if sent subsequent to
Tenant's taking possession of the Premises, or (C) at any place where Tenant may
be found if sent subsequent to Tenant's vacating, deserting, abandoning or
surrendering the Premises; or (ii) to Landlord at Landlord's address set forth
in the Basic Lease Information; or (iii) to such other address as either
Landlord or Tenant may designate as its new address for such purpose by notice
given to the other in accordance with the provisions of this Paragraph 26. Any
such bill, statement, notice, demand, request or other communication shall be
deemed to have been rendered or given on the date the return receipt indicates
delivery of or refusal of delivery if sent by certified mail, the day upon which
recipient accepts and signs for delivery from a reputable overnight carrier, or
on the date a reputable overnight carrier indicates refusal of delivery, or upon
the date personal delivery is made. If Tenant is notified in writing of the
identity and address of any Mortgagee or ground or underlying lessor, Tenant
shall give to such Mortgagee or ground or underlying lessor notice of any
Default by Landlord under the terms of this Lease in writing sent by registered
or certified mail, and such Mortgagee or ground or underlying lessor shall be
given the opportunity to cure such Default (as defined in Paragraph 19(a)) prior
to Tenant exercising any remedy available to it.

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27. TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay all
taxes levied or assessed upon Tenant's equipment, furniture, fixtures and other
personal property located in or about the Premises. If the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
Tenant's equipment, furniture, fixtures or other personal property, Tenant shall
pay to Landlord, upon written demand, the taxes so levied against Landlord, or
the proportion thereof resulting from said increase in assessment

28. ABANDONMENT. Tenant shall not abandon the Premises and cease
performing its financial and maintenance obligations under this Lease at any
time during the Term, and if Tenant shall abandon and cease performing its
financial and maintenance obligations under this Lease, or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall, at the option of
Landlord, be deemed to be abandoned and title thereto shall thereupon pass to
Landlord. Notwithstanding anything to the contrary contained herein, Tenant
shall not be allowed to vacate the Premises for any period of time unless either
(a) such vacation would not result in a termination of, limitation on, or other
adverse effect on, Landlord's insurance policies, or (b) Tenant pays the
incremental premium costs, and assumes responsibility for any increased
deductible amounts, to the extent required to cause Landlord's insurance
policies to not be terminated, limited or adversely affected as a result of such
vacation. For purposes of this Paragraph 28, the Tenant shall not be deemed to
have abandoned the Premises solely because the Tenant is not occupying the
Premises.

29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 9,
the terms, covenants and conditions contained herein shall be binding upon and
inure to the benefit of the parties hereto and their respective legal and
personal representatives, successors and assigns.

30. ATTORNEY'S FEES. If Tenant or Landlord brings any action for any
relief against the other, declaratory or otherwise, arising out of this Lease,
including any suit by Landlord for the recovery of Rent or possession of the
Premises, the losing party shall pay to the prevailing party a reasonable sum
for attorney's fees and costs, which shall be deemed to have accrued on the
commencement of such action and shall be paid whether or not the action is
prosecuted to judgment.

31. LIGHT AND AIR Tenant covenants and agrees that no diminution of
light, air or view by any structure which may hereafter be lawfully erected
(whether or not by Landlord) shall entitle Tenant to any reduction of rent under
this Lease, result in any liability of Landlord to Tenant, or in any other way
affect this Lease or Tenant's obligations hereunder. Landlord has informed
Tenant that it has no intention of constructing additional facilities at the
Project except those facilities needed to service the Project.

32. SECURITY DEPOSIT. Concurrently with execution hereof, Tenant has
paid to Landlord the Security Deposit specified in the Basic Lease Information
as security for the fill and faithful performance of Tenant's obligations under
this Lease. If a default occurs under this Lease, or if Tenant is the subject of
an Insolvency Proceeding, Landlord may use the Security Deposit to remedy any
such default and to compensate Landlord for damages incurred. If Landlord uses
any portion of the Security Deposit to cure any default by Tenant hereunder,
Tenant shall deposit additional cash with Landlord in an amount equal to restore
the Security Deposit to its original amount within ten (10) days of notice from
Landlord; and Tenant's failure to do so shall become be a material breach of
this Lease. Landlord shall hold the Security Deposit for the foregoing purposes;
provided, however, that Landlord shall have no obligation to segregate the
Security Deposit from its general finds or to pay interest thereon. Within sixty
(60) days after the expiration of the Term or earlier termination, the Security
Deposit shall be returned to Tenant, reduced by those amounts that may be
required by Landlord to remedy defaults on the part of Tenant in the payment of
Rent, to repair damages to the Premises caused by Tenant and to clean the
Premises. If Landlord conveys or transfers its interest in the Leased Premises,
and as a part of such conveyance or transfer, assigns its interest in this Lease
and Security Deposit, or any portion thereof not previously applied, the
Security Deposit shall be transferred to Landlord's successor end Landlord shall
be released and discharged from any further liability to Tenant with respect to
such Security Deposit. In no event shall any mortgagee or beneficiary under a
mortgage or deed of trust encumbering all or any portion of the Project, or any
purchaser of all or any portion of the Project at a public or private
foreclosure sale under such mortgage or deed of trust, have any liability or
obligation whatsoever to Tenant or Tenant's successors or assigns for the return
of all or any part of the Security Deposit in the event any such mortgagee,
beneficiary or purchaser becomes a mortgagee in possession or succeeds

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27

to the interest of Landlord under this Lease unless, and then only to the extent
that, such mortgagee, beneficiary or purchaser has received all or any part of
the Security Deposit.

33. CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a
corporation each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
corporation, that Tenant has and is qualified to do business in California, that
the corporation has full right and authority to enter into this Lease, and that
each and both of the persons signing on behalf of the corporation were
authorized to do so. If Tenant signs as a partnership or limited liability
company, each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
partnership or limited liability company, as applicable, that Tenant has and is
qualified to do business in California, that Tenant has full right and authority
to enter into this Lease, and that each and both of the persons signing on
behalf of the Tenant were authorized to do so and by their signatures bind the
Tenant. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Tenant hereby further covenants and warrants to Landlord that all
financial information and other descriptive information regarding Tenant's
business, which has been or shall be furnished to Landlord, is and shall be
accurate and complete at the time of delivery to Landlord. If Landlord signs as
a corporation each of the persons executing this Lease on behalf of Landlord
does hereby covenant and warrant that Landlord is a duly authorized and existing
corporation, that Landlord has and is qualified to do business in California,
that the corporation has full right and authority to enter into this Lease, and
that each and both of the persons signing on behalf of the corporation were
authorized to do so. Upon Tenant's request, Landlord shall provide Tenant with
evidence reasonably satisfactory to Tenant confirming the foregoing covenants
and warranties.

34. PARKING. Tenant shall have the right to use, and Landlord shall
maintain for use by Tenant pursuant to the provisions of Paragraph 7, all of the
parking spaces located on the Project. Landlord agrees that so long as not
required by an applicable governmental entity, there shall be no additional
Monthly Base Rent charged for parking (not to be confused with the Expenses
charged pursuant to Paragraph 3).

35. MISCELLANEOUS.

(a) The term "Premises" wherever it appears herein includes and
shall be deemed or taken to include (except where such meaning would be clearly
repugnant to the context) the office space demised and improvements now or at
any time hereafter comprising or built in the space hereby demised. The
paragraph headings herein are for convenience of reference and shall in no way
define, increase, limit or describe the scope or intent of any provision of this
Lease. The term "Landlord" shall include Landlord and its successors and
assigns. In any case where this Lease is signed by more than one person, the
obligations hereunder shall be joint and several. The term "Tenant" or any
pronoun used in place thereof shall indicate and include the masculine or
feminine, the singular or plural number, individuals, firms or corporations, and
their and each of their respective successors, executors, administrators, and
permitted assigns, according to the context hereof.

(b) Time is of the essence of this Lease and all of its
provisions. This Lease shall in all respects be governed by the laws of the
State of California. This Lease, together with its exhibits, contains all the
agreements of the parties hereto and supersedes any previous negotiations. There
have been no representations made by the Landlord or Tenant or understandings
made between the parties other than those set forth in this Lease and its
exhibits. This Lease may not be modified except by a written instrument by the
parties hereto.

(c) If for any reason whatsoever any of the provisions hereof
shall be unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.

(d) Upon Tenant paying the Monthly Base Rent and Additional
Charges and performing all of Tenant's obligations under this Lease, Tenant
shall have quiet and peaceful enjoyment of the Premises during the Term as
against all persons or entities lawfully claiming by, through or under Landlord;
subject, however, to the provisions of this Lease.

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28

36. TENANT'S REMEDIES. If any default hereunder by Landlord is not cured
within the applicable cure period provided in Paragraph 19(b) (including any
Mortgagee's additional cure period), Tenant's exclusive remedies shall be (i) an
action for specific performance, or (ii) an action for actual damages. Tenant
shall look solely to Landlord's interest in the Project for the recovery of any
judgment from Landlord. Landlord, or if Landlord is a partnership its partners
whether general or limited, or if Landlord is a corporation its directors,
officers or shareholders, or if Landlord is a limited liability company its
members or managers, shall never be personally liable for any such judgment. Any
lien obtained to enforce such judgment and any levy of execution thereon shall
be subject and subordinate to any Mortgage (excluding any Mortgage which was
created as part of an effort to defraud creditors, i.e., a fraudulent
conveyance); provided, however that any such judgement and any such levy of
execution thereon shall not be subject or subordinated to any Mortgage that is
created or recorded in the official records of the county in which the Project
is located after the date of the judgement giving rise to such lien. Landlord's
interest in the Project shall include any insurance proceeds received by
Landlord which are not controlled by any Mortgagee or other lender. Tenant
hereby waives the benefit of any Laws granting it (A) the right to perform
Landlord's obligations, or (B) the right to terminate this Lease or withhold
Rent on account of any Landlord default, including, without limitation, Sections
1932(1), 1941 and 1942 of the California Civil Code.

37. REAL ESTATE BROKERS. Each party represents that it has not had
dealings with any real estate broker, finder or other person with respect to
this Lease in any manner, except for any broker named in the Basic Lease
Information, whose fees or commission, if earned, shall be paid as provided in
the Basic Lease Information. Each party shall hold harmless the other party from
all damages resulting from any claims that may be asserted against the other
party by any other broker, finder or other person with whom the other party has
or purportedly has dealt.

38. LEASE EFFECTIVE DATE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.

39. SIGNAGE. Tenant shall be allowed to use a monument sign near the
Project's entrance, and to install exterior signage and signage in the lobby of
the Building, subject to this Paragraph 39. Tenant shall be responsible for the
costs related to such signage. Such signage shall be subject to approval from
Landlord of the exact number, size, location and materials therefor (which
consent shall not be unreasonably withheld), approval from the City of Sunnyvale
and compliance with applicable governmental restrictions, including but not
limited to, ordinances of the City of Sunnyvale.

40. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a
copy of the Phase I Environmental Assessment of Two Office Buildings located at
1322 Crossman Avenue and 1341 Orleans Drive, Sunnyvale, California, dated August
7, 1997, prepared by McLaren Hart (the "Environmental Report").

(a) DEFINITION OF HAZARDOUS SUBSTANCES. For the purpose of this
Lease, "Hazardous Substances" shall be defined, collectively, as oil, flammable
explosives, asbestos, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under applicable environmental laws, ordinance
or regulation.

(b) TENANT INDEMNITY. Tenant releases Landlord from any liability
for, waives all claims against Landlord and shall indemnify, defend and hold
harmless Landlord, its employees, partners, agents, subsidiaries and affiliate
organizations against any and all claims, suits, loss, costs (including costs of
investigation, clean up, monitoring, restoration and reasonably attorney fees),
damage or liability, whether foreseeable or unforeseeable, by reason of property
damage (including diminution in the value of the property of Landlord), personal
injury or death directly arising from or related to Hazardous Substances
released, manufactured, discharged, disposed, used or stored on, in, or under
the Project or Premises during the Term by any Tenant Parties. The provisions of
this Tenant Indemnity regarding Hazardous Substances shall survive the
termination of the Lease.

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29

(c) LANDLORD INDEMNITY. Landlord releases Tenant from any
liability for, waives all claims against Tenant and shall indemnify, defend and
hold harmless Tenant, its officers, employees, and agents to the extent of
Landlord's interest in the Project, against any and all actions by any
governmental agency for clean up of Hazardous Substances on or under the
Project, including costs of legal proceedings, investigation, clean up,
monitoring, and restoration, including reasonable attorney fees, if, and to the
extent, arising from the presence of Hazardous Substances on, in or under the
Project or Premises as of the date of this Lease. The provisions of this
Landlord Indemnity regarding Hazardous Substances shall survive the termination
of the Lease.

Tenant's use of Hazardous Substances beyond very immaterial amounts of toxic
materials incidental to its office use (e.g., copier toner) shall be subject to
Landlord's prior written approval and shall comply with any applicable laws.

41. SATELLITE ANTENNAE. During the Term of this Lease, Tenant shall have
the right, subject to relevant regulatory approvals and Landlord's consent (with
Landlord's consent not to be unreasonably withheld, conditioned or delayed), to
install satellite antennae ("Antennae") on the roof of the Building in a
location satisfactory to both Landlord and Tenant. Without otherwise limiting
the criteria upon which Landlord may withhold its consent to any proposed
Antennae, if Landlord withholds its consent due to concerns regarding the
appearance of the Antennae or the impact on structural aspects of the Building,
such withholding of consent shall be presumptively reasonable. Tenant shall not
be charged additional rent for roof space. Prior to submitting any plans to the
City of Sunnyvale or proceeding with any installation of the Antennae, Tenant
shall submit to Landlord elevations and specifications for the Antennae. Tenant
shall install the Antennae at its sole expense and shall be responsible for any
damage caused by the installation of the Antennae or related to the Antennae. At
the end of the Term, Tenant shall remove the Antennae from their locations and
repair any damage caused by such removal.

42. OPTION TO RENEW. Upon condition that (i) no Default is continuing
under this Lease at the time of exercise or at the commencement of the option
term and (ii) Tenant continues to physically occupy the entire Premises, then
Tenant shall have the right to extend the Term for two (2) periods of five (5)
years each (each, an "Extension Term") following the initial Expiration Date or
the Expiration Date as extended by the first Extension Term, as applicable, by
giving written notice ("Exercise Notice") to Landlord at least eighteen (18)
months prior to the Expiration of the immediately preceding Tern.

43. RENT DURING EXTENSION TERM. The initial Monthly Base Rent (subject
to Paragraph 3(b)) during each five (5) year Extension Term shall be the greater
of the Base Rent paid during the last month of the immediately preceding Tern or
the Fair Market Rental Value for the Premises as of the commencement of the
option term, as determined below:

(a) Within thirty (30) days after receipt of Tenant's Exercise
Notice Landlord shall notify Tenant of Landlord's estimate of the Fair Market
Rental Value for the Premises, as determined below, for determining Monthly Base
Rent during the ensuing Extension Term; provided, however, if Tenant's Exercise
Notice is given more than eighteen (18) months before the Expiration Date,
Landlord's estimate of Fair Market Rental value may, but need not be given more
than eighteen (18) months before the Expiration Date. Within fifteen (15) days
after receipt of such notice from Landlord, Tenant shall notify Landlord in
writing that it (i) agrees with such rental rate or (ii) disagrees with such
rental rate. No response shall constitute agreement. In the event that Tenant
disagrees with Landlord's estimate of Fair Market Rental Value for the Premises,
then the parties shall meet and endeavor to agree within fifteen (15) days after
Landlord receives Tenant's notice described in the immediately preceding
sentence. If the parties cannot agree upon the Fair Market Rental Value within
said fifteen (15) day period, then the parties shall submit the matter to
binding appraisal in accordance with the following procedure except that in any
event neither party shall be obligated to start such procedure sooner than
eighteen (18) months before the expiration of the Lease Term. Within fifteen
(15) days of the conclusion of the period during which the two parties fail to
agree (but not sooner than eighteen (18) months before the expiration of the
Lease Term), the parties shall either (i) jointly appoint an appraiser for this
purpose or (ii) failing this joint action, each separately designate a
disinterested appraiser. No person shall be appointed or designated an appraiser
unless such person has at least five (5) years experience in appraising major
commercial property in Santa Clara County and is a member of a recognized
society of real estate appraisers. If within thirty (30) days after the
appointment, the two appraisers reach agreement on the Fair Market Rental Value
for the Premises, that value shall be binding and conclusive upon

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the parties. If the two appraisers thus appointed cannot reach agreement on the
Fair Market Rental Value for the Premises within thirty (30) days after their
appointment, then the appraisers thus appointed shall appoint a third
disinterested appraiser having like qualifications within five (5) days. If
within thirty (30) days after the appointment of the third appraiser a majority
of the appraisers agree on the Fair Market Rental Value of the Premises, that
value shall be binding and conclusive upon the parties. If within thirty (30)
days after the appointment of the third appraiser a majority of the appraisers
cannot reach agreement on the Fair Market Rental Value for the Premises, then
the three appraisers shall each simultaneously submit their independent
appraisal to the parties, the appraisal farthest from the median of the three
appraisals shall be disregarded, and the mean average of the remaining two
appraisals shall be deemed to be the Fair Market Rental Value for the Premises
and shall be binding and conclusive upon the parties. Each party shall pay the
fees and expenses of the appraiser appointed by it and shall share equally the
fees and expenses of the third appraiser. If the two appraisers appointed by the
parties cannot agree on the appointment of the third appraiser, they or either
of them shall give notice of such failure to agree to the parties and if the
parties fail to agree upon the selection of such third appraiser within ten (10)
days after the appraisers appointed by the parties give such notice, then either
of the parties, upon notice to the other party, may request such appointment by
the American Arbitration Association or, on it failure, refusal or inability to
act, may apply for such appointment to the presiding judge of the Superior Court
of Santa Clara County, California.

(b) Wherever used throughout this paragraph (Rent during
Extension Term) the term "Fair Market Rental Value" shall mean the fair market
rental value of the Premises, using as a guide the rate of monthly base rent
which would be charged during the Extension Term in the City of Sunnyvale and
adjacent cities for comparable high image, Class A office space in comparable
condition, of comparable quality, as of the time that the Extension Term
commences, with appropriate adjustments regarding taxes, insurance and operating
expenses as necessary to insure comparability to this Lease, as the case may be,
and also taking into consideration amount and type of parking, location, the
existence of any leasehold improvements (regardless of who paid for them and
with the assumption, for purposes of determining the Fair Market Rental Value,
that they are fully usable by Tenant), proposed term of lease, amount of space
leased, extent of service provided or to be provided, and any other relevant
terms or conditions (including consideration of whether or not the monthly base
rent is fixed).

(c) In the event of a failure, refusal or inability of any
appraiser to act, his successor shall be appointed by the party who originally
appointed him, but in the case of the third appraiser, his successor shall be
appointed in the same manner as provided for appointment of the third appraiser.

(d) The appraisers shall render their appraisals in writing with
counterpart copies to Landlord and Tenant. The appraisers shall have no power to
modify the provisions of this Lease.

(e) To the extent that a binding appraisal has not been completed
prior to the expiration of any preceding period for which Monthly Base Rent has
been determined, Tenant shall pay Monthly Base Rent at the rate estimated by
Landlord, with an adjustment to be made once Fair Market Rental Value is
ultimately determined by binding appraisal. In no event shall any such
adjustment result in a decrease of the Monthly Base Rent for the Premises below
the amount payable by Tenant as of the period immediately preceding the ensuing
Extension Term.

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(f) From and after the commencement of the Extension Term, all of
the other terms, covenants and conditions of the Lease shall also apply;
provided, however, that during the second Extension Term Tenant shall have no
further rights to extend the Term.

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

LANDLORD:

CARIBBEAN/GENEVA INVESTORS,
a California Limited Partnership

By: /s/ JOHN MOZART
------------------------------------------
John Mozart, Trustee of the Mozart
Family Trust dated September 8, 1977
Its: General Partner

By: /s/ JOHN LOVEWELL
------------------------------------------
John Lovewell
Its: General Partner

CROSSMAN PARTNERS, L.P.,
a California Limited Partnership

By: /s/ JOHN MOZART
------------------------------------------
John Mozart, Trustee of the Mozart
Family Trust dated September 8, 1977
Its: General Partner

TENANT:

HARMONIC, INC.,
a Delaware corporation

By: /s/ ANTHONY J. LEY
------------------------------------------
ANTHONY J. LEY
------------------------------------------
Its: PRESIDENT
--------------------------------------

By: /s/ ROBIN N. DICKSON
------------------------------------------
ROBIN N. DICKSON
------------------------------------------
Its: CHIEF FINANCIAL OFFICER
--------------------------------------

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EXHIBIT "A"

PREMISES

[See attached Site Plan]

- 1 -

33

BUILDING C

52,325 +/- Sq.Ft.

[SITE PLAN]

34

EXHIBIT "B"

LEGAL DESCRIPTION OF THE LAND

REAL PROPERTY in the City of Sunnyvale, County of Santa Clara, State of
California, described as follows:

Parcel 6, as shown on that certain Map entitled which was filed for record in
the Office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, page(s) 13.

APN: 110-36-003
ARB: 10-04-23.02.02 (23.02, 23)

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35

EXHIBIT "C"

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS

- 1 -

36

2. So long as Tenant is not in default (beyond any period given Tenant
to cure such default) in the payment of rent or additional rent or in the
performance of any material term, covenant or condition of the Lease on Tenant's
part to the performed, (a) Tenant's possession of the Demised Premises and
Tenant's rights and privileges under the Lease, or any extensions or renewals
thereof or acquisition of additional space which may be effected in accordance
with any option therefor in the Lease, shall not be diminished or interfered
with by Mortgagee in the exercise of any of its rights under the Mortgage, and
(b) Mortgagee will not join Tenant as a party defendant in any action or
proceeding for the purposes of terminating Tenant's interest and estate under
the Lease because of any default under the Mortgage, however Mortgagee may join
Tenant as a party defendant in any action or proceeding to enforce the Mortgage
or any other instrument given as security for the loan to Landlord, if such is
done only for purposes of procedure and required completeness and not for the
purposes of canceling the Lease or Tenant's rights under such Lease.

3. In the event any proceedings are brought for the foreclosure of the
Mortgage, or if the Mortgaged Property be sold pursuant to a trustee's sale
under the Mortgage or if the Mortgagee becomes owner of the Mortgaged Property
by acceptance of a deed or assignment in lieu of foreclosure or otherwise,
Tenant shall attorn to the purchaser or Mortgagee, as the case may be, upon any
such foreclosure sale or trustee's sale or acceptance by Mortgagee of a deed or
assignment in lieu of foreclosure and Tenant shall recognize such purchaser or
Mortgagee, as the case may be, as the landlord under the Lease. Such attornment
shall be effective and self-operative without the execution of any further
instrument on the part of any of the parties hereto. Tenant agrees, however, to
execute and deliver at any time and from time to time, upon the request of
Landlord or of any holder(s) of any of the indebtedness or other obligations
secured by the Mortgage or any such purchaser, any instrument or certificate
which, in the reasonable judgment of Landlord or of such holder(s) or such
purchaser, may be necessary or appropriate in any such foreclosure proceeding or
otherwise to evidence such attornment.

4. If Mortgagee shall succeed to the interest of Landlord under the
Lease in any manner, or if any purchaser acquires the Demised Premises upon any
foreclosure of the Mortgage or any trustee's sale under the Mortgage, Mortgagee
or such purchaser, as the case may be, in the event of attornment shall have the
same remedies by entry, action or otherwise in the event of any default by
Tenant (beyond any period given Tenant to cure such default) in the payment of
rent or additional rent or in the performance of any of the terms, covenants and
conditions of the Lease on Tenant's part to be performed that Landlord had or
would have had if Mortgagee or such purchaser had not succeeded to the interest
of Landlord. From and after any such attornment, Mortgagee or such purchaser
shall be bound to Tenant under all the terms, covenants, and conditions of the
Lease, and Tenant shall, from and after the succession to the interest of
Landlord under the Lease by Mortgagee or such purchaser, have the same remedies
against Mortgagee or such purchaser for the breach of an agreement contained in
the Lease that Tenant might have had under the Lease against Landlord if
Mortgagee or such purchaser had not succeeded to the interest of Landlord;
provided, however, the Mortgagee or such purchaser shall not be:

(a) liable for any act or omission of any prior landlord
(including Landlord); or

(b) subject to any offsets or defenses which Tenant might have
against any prior landlord (including Landlord); or

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37

(c) bound by any rent or additional rent which Tenant might have
paid for more than the current month to any prior landlord (including Landlord).

5. Nothing herein contained is intended, nor shall it be construed, to
abridge or adversely affect any right or remedy of Landlord under the Lease in
the event of any default by Tenant (beyond any period given Tenant to cure such
default) in the payment of rent or additional rent or in the performance of any
of the terms, covenants or conditions of the Lease on Tenant's part to be
performed.

6. This Agreement and the Lease may not be amended or modified orally or
in any manner other than by an agreement in writing signed by the parties hereto
or their respective successors in interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors and assigns,
and any purchaser or purchasers at foreclosure of the Mortgaged Property, and
their respective heirs, personal representatives, successors and assigns.

7. To the extent that the Lease shall entitle the Tenant to notice of
any mortgage, and/or the address of the Mortgagee, this Agreement shall
constitute such notice to the Tenant with respect to the Mortgage and to the
address of the Mortgagee.

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

TENANT:

NAME

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

MORTGAGEE:

GENERAL AMERICAN LIFE INSURANCE COMPANY

By:
-------------------------------------------------
Title:   Vice President/Authorized Representative
Address: 700 Market Street
St. Louis, Missouri 63101

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38
D 511 PAGE 396

5947371
RECORDED AT THE REQUEST OF
Title Insurance and Trust Company
MAR 8 1978 801AM
George A. Mann, Recorder
SANTA CLARA COUNTY, OFFICIAL RECORDS

When recorded mail to:                      

Prudential Insurance Co.              
155 Moffett Park Drive                
Bldg. A
Suite 101
Sunnyvale, CA
Attn: Lee Cashion

DECLARATION OF PROTECTIVE COVENANTS
MOFFETT INDUSTRIAL PARK NO. 5

6227353

THIS DECLARATION, made this March 1, 1978 9:00 by THE PRUDENTIAL INSURANCE 
COMPANY OF AMERICA (hereinafter called Prudential), a New Jersey Corporation,

W I T N E S S E T H
- - - - - - - - - -

WHEREAS Prudential is the owner of that certain real property located in 
the City of Sunnyvale, County of Santa Clara, State of California, described in 
Exhibit "A" (hereinafter called Moffett Industrial Park No. 5), and           .

WHEREAS Prudential proposes to subdivide Moffett Industrial Park No. 5 and 
to subject it to the following restrictions:

NOW, THEREFORE, Prudential hereby declares that Moffett Industrial Park 
No. 5 is and shall be held, conveyed, encumbered, leased and used subject to 
the following uniform restrictions, covenants and equitable servitudes in 
furtherance of a plan for the subdivision, improvement and sale thereof and to 
enhance the value, desirability and attractiveness of Moffett Industrial Park 
No. 5, the restrictions set forth herein shall run with the real property 
included within Moffett Industrial Park No. 5 shall be binding upon all persons 
having or acquiring any interest in such real property or any part thereof, 
shall inure to the benefit of every portion of Moffett Industrial Park No. 5 
and any interest therein and shall inure to the benefit of and be binding upon 
each successor in interest of Prudential and may be enforced by Prudential or 
its successors in interest or by any Owner (as defined in Article 1 below) or 
his successors in interest.

I.   GENERAL PROVISIONS.

A.   Definitions.

1.   "Architectural Control Committee" means Prudential, or any 
committee which Prudential may appoint by an appropriate 
instrument recorded with the Santa Clara County Recorder.

2.   "Lot" means each lot shown on the parcel or subdivision cap,
or cape for Moffett Industrial Park No. 5.

3.   "Site" means a parcel consisting either of a Lot, a portion of
a Lot, contiguous Lots, or portions of contiguous Lots.

4.   "Improvements" means all improvements to a Site including, but 
without limitation, buildings loading areas, trackage, parking
areas, pavement, poles, fences landscaping, signs and structures 
of any type.

5.   "Building" means the main portion of any building or similar
structure and all projections or extensions thereof, including 
garages, outside platforms and docks.

6.   "Owner" means the person or persons, partnership or corporation
in when title to a Site is vested, as shown by the official 
records of the Office of the County Recorder of Santa Clara
County, "Owner" does not mean mortgages, trustees and
beneficiaries of deeds of trust or holders of any indebtedness
secured by a mortgage or deed of trust.

B.   Purposes of Restrictions.

The purpose of these covenants, conditions and restrictions is to
insure proper development and use of Moffett Industrial Park No. 5, to
protect the Owner of each Site against such improper development and
use of other Sites as will depreciate the value of his Site, to
prevent the erection of structure of unsuitable

THIS DOCUMENT IS BEING RE-RECORDED TO CORRECT THE LEGAL DESCRIPTION

39
or inharmonious design or construction, to secure and maintain sufficient
setbacks from streets and between structures, to maintain Comcon Landscaping (as
defined in Article V) and in general to provide for a high quality of
improvement of Moffett Industrial Park No. 5 in accordance with a general plan.

II.  REGULATION OF IMPROVEMENTS.

A.   Minimum Setback Lines. 

No Improvement shall be constructed upon any Site within fifty (50)
feet of the right-of-way line of any public street. No Improvement
other than landscaping, paving and fences shall be constructed upon
any Site within twenty (20) feet of any other Site. The Architectural
Control Committee may approve lesser setback lines if in its opinion a
variation would be compatible with the general development of Moffett
Industrial Park No. 5.

B.   Ground Coverage.

No more than forty-five percent (45%) of the surface of any Site 
shall be covered with a Building or Buildings.

C.   Construction Operations.

Construction of all Improvements shall be expedited so that none shall
remain in a partially finished condition any longer than reasonably
necessary for the completion thereof.

D.   Excavation.

No excavation shall be made on, and no sand, gravel or soil shall be
removed from, any Site, except in connection with the construction of
Improvements, and upon completion thereof, exposed openings shall be
backfilled, and disturbed ground shall be graded, leveled and paved or
landscaped.

E.   Landscaping.

Within ninety (90) days of the occupancy or completion of any Building
on a Site, whichever occurs first, such Site shall be landscaped in
accordance with plans approved by the Architectural Control Committee.
The Owner of the Site shall maintain such landscaping in good order
and condition.

F.   Signs.

No billboard or advertising signs shall be permitted on any Site other
than those approved by the Architectural Control Committee which
identify the name, business and products of the person or firm
occupying the Site or offer the Site for sale or lease.

G.   Parking Areas.

Each Site shall have facilities for parking sufficient to serve the
business conducted thereon without using adjacent streets thereof, and
no use shall be made of any Site which would require parking in excess
of the parking spaces on the Site. In any event, the number and size
of the parking spaces on each Site shall conform with all ordinances
of the City of Sunnyvale applicable with respect thereto. Parking
areas shall be laid out and constructed according to plans approved by
the Architectural Control Committee and shall be maintained thereafter
in good condition. Except with the approval of the Architectural
Control Committee no parking shall be permitted within fifty (50) feet
of the right-of-way line of any street or between any Building and any
street.

H.   Loading Areas.

All vehicle loading and unloading in connection with an Owner's
business shall be conducted upon his Site, and sufficient space shall
be provided therefor. Loading Areas shall be screened from view from
streets and adjoining properties by a visual barrier not less than six
(6) feet in height. Except with the prior written approval of the
Architectural Control Committee, loading areas shall not be located
between any Building and any street or any closer than seventy-five
(75) feet to the right-of-way line of any street.

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40
I.   Storage Areas.

No materials, supplies, equipment or trash containers shall be stored
on a Site except inside a Building, or behind a visual barrier not
less than six (6) feet in height or rising two (2) feet above the
stored materials, supplies or equipment, whichever is higher,
screening such storage areas from view from streets and adjoining
Sites. Except with the prior written approval of the Architectural
Control Committee, storage areas shall not be located between any
Building and any street.

J.   Building Regulations.

All Buildings shall be constructed and maintained in accordance with
the following standards unless an exception is approved in writing by
the Architectural Control Committee:

1.   Exterior walls shall be of masonry, concrete or approved equal 
material.

2.   Exterior walls shall be painted or otherwise finished in a manner
acceptable to the Architectural Control Committee. Exterior walls
shall not be repainted or refinished unless and until the
Architectural Control Committee shall have approved the color or
refinishing materials to be used.

3.   All Buildings shall be maintained in good order and repair and
condition. All exterior painted surfaces shall be maintained in
first-class condition and shall be repainted at least once every
five (5) years.

4.   All electrical, telephone and other utility lines shall be 
underground and shall not be exposed on the exterior of any 
Building.

5.   All electrical and mechanical apparatus, equipment, fixtures
(other than lighting fixtures) conduit, ducts, vents, flues and
pipes located on the exterior of any Building shall be concealed
from view and shall be architecturally treated in a manner
acceptable to the Architectural Control Committee.

III. APPROVAL OF PLANS.

No Improvement shall be erected, placed, altered, maintained or permitted
to remain on any Site until plans and specifications showing plot layout
and all exterior elevations, with materials and colors therefor and
structural design, signs and landscaping shall have been submitted to and
approved in writing by the Architectural Control Committee.  Such plans and
specifications shall be submitted in writing over the signature of the
Owner of the Site or his authorized agent. Approval shall be based, among
other things, on adequacy of Site dimensions; adequacy of structural
design; effect of location and use of improvements on neighboring Sites;
improvement operations, and uses; relation of topography, grade, and
finished ground elevation of the Site being improved to that of neighboring
Sites; proper facing of main elevation with respect to nearby streets; and
conformity of the plans and specifications to the purpose and general plan
and intent of this Declaration. The Architectural Control Committee shall
not arbitrarily or unreasonably withhold its approval of such plans and
specifications. If the Architectural Control Committee fails either to
approve or disapprove such plans and specifications with thirty (30) days
after the same have been submitted to it, it shall be conclusively presumed
that the Architectural Control Committee has approved said plans and
specifications, subject, however, to the restrictions contained in Article
II and IV hereof.

Neither the Architectural Control Committee nor its successors or assigns
shall be liable in damages to anyone submitting plans to them for approval,
or to any Owner by reason of mistake in judgment, negligence, or
nonfeasance arising out of or in connection with the approval or
disapproval or failure to approve any such plans. Every person who submits
plans to the Architectural Control Committee for approval agrees, by
submission of such plans, and every Owner agrees, by acquiring title to a
Site, that he will not bring any action or suit against the Architectural
Control Committee to recover any such damages.

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41
Notwithstanding anything to the contrary contained herein, after the
expiration of one (1) year from the date of issuance of a building permit 
by municipal or other governmental authority for any improvement, said
improvement shall, in favor of purchasers and encumbrances in good faith
and for value, be deemed to be in compliance with all provisions of this
Article III, unless actual notice of such noncompliance or noncompletion,
executed by the Architectural Control Committee, shall appear of record in
the Office of the Recorder of Santa Clara County, California, or unless
legal proceedings shall have been instituted to enforce compliance or
completion.

IV.  REGULATION OF OPERATIONS AND USES.

A.   Permitted Operations and Uses.

Except as provided in paragraphs B and C below, any industrial use
will be permitted on a Site including, but without limitation,
manufacturing, processing, storage, wholesale, office, laboratory,
professional and research and development. Such retail uses as may be
required for the convenience of Owners and their employees shall be
permitted and such retail uses may include, but without limitation,
restaurants, drug stores, barber and beauty shops, shoe repair shops,
cleaners, hotels, post offices, banks and automobile service stations.
Such municipal, governmental and public utility uses as may be
necessary or appropriate shall be permitted.

B.   Prohibited Operations and Uses.

No Site shall be used as a junk yard, stock yard, or slaughter yard or
for commercial excavation of building or construction materials, fat
rendering or distillation of bones, dumping, disposal, incineration or
reduction of garbage, sewage, offal, dead animals or refuse, or the
smelting of iron, tin, zinc or other ores or the prospecting, or 
drilling for natural gas, oil or like substances, except with the 
prior written permission of the Architectural Control Committee, and
then only in such manner as will not materially inconvenience other
Owners or materially depreciate the value of adjacent property.

C.   Nuisance.

No noxious or offensive activity shall be carried on nor shall
anything be done on any Site which may be or become an annoyance or
nuisance to the Owners or occupants of other Sites or which will be
offensive by reason of odor, fumes, dust, dirt, fly-ash, smoke, noise,
glare or which will be hazardous by reason of danger of fire or
explosion.

V.   COMMON LANDSCAPING.

The Owner of each Site shall maintain landscaping existing thereon at the
time of purchase ("Common Landscaping") in a condition that meets the
approval of the Architectural Control Committee. In the event that the
Owner of any Site does not maintain Common Landscaping in such condition or
the landscaping described in Article II E as therein provided, Prudential
or its agents shall have the right to maintain such landscaping in such
condition. Prudential or its Agents shall have the right at any reasonable
time to enter into any Site for the purpose of such maintenance and for
such other purposes as are reasonably related thereto. Prudential shall use
due diligence and reasonable care in repairing, maintaining and installing
Common Landscaping to see that such repair, maintenance and installation
does not interfere with the Owner's use of its Site. In the event that
Prudential or its Agents should undertake any such maintenance on any such
Site, the Owner thereof shall reimburse Prudential for all of Prudential's
costs incurred in such maintenance. In any legal proceeding brought by
Prudential to recover such costs, the Owner shall be obligated to pay for
the costs and expenses of such proceeding, including reasonable attorneys'
fees.

VI.  ENFORCEMENT.

A.  Interpretation.

In case of uncertainty as to the meaning of any article, section,
subsection, paragraph, sentence, clause, phrase or word of this
Declaration the interpretation of Prudential shall be final, conclusive
and binding upon all interested parties.

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42
B. Abatement and Suit.

Violation or breach of any restriction herein contained shall give to 
Prudential and every Owner the right to enter the property upon or as
to which said violation or breach exists and to summarily abate and
remove at the expense of the Owner thereof, any structure, thing or
condition that may be or exist thereon contrary to the intent and
meaning of the provision hereof, or to prosecute a proceeding at law
or in equity against the person or persons who have violated or are
attempting to violate any of these restrictions to enjoin or prevent
them from doing so, to cause said violation to be remedied or to
recover damages for said violation.

In any legal or equitable proceeding for the enforcement of this
Declaration the losing party or parties shall pay the attorneys' fees
of the prevailing party or parties, in such amount as may be fixed by
the court in such proceedings. All remedies provided herein or at law
or in equity shall be cumulative and not exclusive.

C. Inspection.

Prudential may from time to time at any reasonable hour or hours,
enter and inspect any property subject to these restrictions to
ascertain compliance therewith.

D. Failure to Enforce Not a Waiver of Rights.

Except as provided in the last paragraph of Article III hereof, the
failure of Prudential or any Owner to enforce any restriction 
contained herein shall in no event be deemed to be a waiver of the 
right to do so thereafter nor of the right to enforce any other 
restriction contained herein.

VII.   EXTINGUISHMENT, CONTINUATION AND MODIFICATION.

This Declaration, every provision hereof and every covenant, condition
and restriction contained herein shall continue in full force and effect
for a period of forty (40) years from the date hereof; provided, however,
that this Declaration, or any provision hereof, or any covenant,
condition or restriction contained herein, may be terminated, extended,
modified, or amended with the written consent of the Owners of sixty-five
percent (65%) of the land in Moffett Industrial Park No. 5 (exclusive of
portions thereof now or hereafter dedicated to public use); provided,
further, that so long as Prudential owns at least twenty percent (20%) of
Moffett Industrial Park No. 5, no such termination, extension,
modification or amendment shall be effective without the written consent
of Prudential. No such termination, extension, modification or amendment
shall be effective until a proper instrument in writing has been executed
and acknowledged and recorded in the Office of the Recorder of Santa
Clara County, California.

VIII.  MOFFETT INDUSTRIAL PARK NO. 5 OWNERS ASSOCIATION.

A. Membership.

Each Owner shall be a member of the Moffett Industrial Park No. 5
Owners Association, an unincorporated association (hereinafter called
the "Association").

B. Transfer of Rights and Duties.

The rights and duties of Prudential under this Declaration shall be
transferred to and automatically assured by the Association upon the
earliest of the following to occur:

1. The sale of ninety percent (90%) of Moffett Industrial Park No. 5 
by Prudential to Owners as evidenced by the official records of the
Santa Clara County Recorder; or

2. The recordation by Prudential of an appropriate instrument with the
Santa Clara County Recorder transferring the rights and duties of
Prudential under this Declaration to the Association.

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43
c.   Organization.

The members of the Association may at any time meet and adopt by-laws
or rules of procedure to govern the operation of the Association.
Until such by-laws or rules of procedures are adopted, meetings of the
Association may be called by any member thereof upon seven (7) days'
written notice to each member setting forth the time and place
thereof, provided that notice may be waived in writing at any time by
any member or members not so notified; twenty-five percent (25%) of
the members of the Association shall constitute a quorum; and the
Association may set by a vote of a majority of its members present at
a meeting, duly called, at which a quorum is present or without a
meeting by unanimous written consent of its members.

IX.  ASSIGNABILITY OF PRUDENTIAL'S RIGHTS AND DUTIES.

Any and all of the rights, powers and reservations of Prudential herein
contained may be assigned to any person, corporation or entity which
assumes in writing the duties of Prudential pertaining to the particular
rights, powers and reservations assigned, and thereafter to the extent of
such assignment, such person, corporation or entity shall have the same
rights and powers and be subject to the same obligations and duties as are
herein given to and assumed by Prudential.

X.   CONSTRUCTIVE NOTICE AND ACCEPTANCE.

Every Owner is and shall be conclusively deemed to have consented and
agreed to every covenant, condition and restriction contained herein,
whether or not any reference to this Declaration is contained in the
instrument by which such Owner acquired an interest in any portion of
Moffett Industrial Park No. 5.

IN WITNESS WHEREOF, Prudential, the declarent herein, has caused its name 
to be hereunto subscribed as of the day and year first above written.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:     /s/ L.R. CASHION
-----------------------------------------
RECORDER'S MEMO                  L.R. Cashion, General Manager
[ILLEGIBLE]

STATE OF CALIFORNIA    )            On this 1st day of December in the year one 
COUNTY OF SANTA CLARA  )            thousand nine hundred and 78, before me, 
Matthew Nicoll, a Notary Public, State of 
California, duly commissioned and sworn, 
personally appeared  L.R. Cashion known to 
me to be the General Manager of the 
corporation described in and that executed
the within instrument and also known to me
to be the person who executed the within
instrument on behalf of the corporation
therein named and acknowledged to me that
such corporation executed the same 

IN WITNESS WHEREOF I have hereunto set my
hand and affixed my official seal in the
said County of Santa Clara the day and year
in this certificate ???? above written.

OFFICIAL SEAL
[SEAL WORDING ILLEGIBLE]                             MATTHEW NICOLL
---------------------------------
Notary Public State of California

44
EXHIBIT "A"

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

All of Parcels 1, A and B, as shown upon that certain map entitled, "Parcel Map 
being a resubdivision of Parcel 7 as shown on map recorded in Book 214 of Maps 
at Page 23 Santa Clara County Records", which map was filed for record in the 
office of the recorder of the County of Santa Clara, State of California on 
March 1, 1978 in Book 413 of Maps at page 54.

All of Parcel 5, as shown upon that certain map entitled, "Parcel Map being a 
resubdivision of Parcel 6 as shown on map recorded in Book 214 of maps at page 
23 Santa Clara County records", which map was filed for record in the office of 
the recorder of the County of Santa Clara, State of California, on March 1, 
1978 in Book 413 of Maps, at page 53.

45
RECORDED AT THE REQUEST OF
TITLE INSURANCE AND TRUST CO.

DEC 12 1978 2:01AM

GEORGE A. MANN, Recorder
Santa Clara County, Official Records

46
[FLOOR PLAN]

1322 CROSSMAN AVE.
52,325 (plus or minus) SQUARE FEET

47

EXHIBIT "D"

RULES AND REGULATIONS

1. Sidewalks, halls, passages, exits, entrances, elevators, escalators
and stairways shall not be obstructed by Tenant or used by Tenant for any
purpose other than for ingress to and egress from the Premises. Tenant, and
Tenant's employees or invitees, shall not go upon the roof of the Building,
except as authorized by Landlord or as expressly set forth in the Lease.

2. Except as expressly permitted in the Lease, no sign, placard,
picture, name, advertisement or notice visible from the exterior of the Premises
shall be inscribed, painted, affixed, installed or otherwise displayed by Tenant
on any part of the Building without the prior written consent of Landlord, and
Landlord shall have the right to remove any such sign, placard, picture, name,
advertisement or notice without notice to and at the expense of Tenant.

If Landlord shall have given consent relating to a sign to
Tenant at any time, whether before or after the execution of the Lease, such
consent shall not in any way operate as a waiver or release of any of the
provisions hereof or of the Lease, and shall be deemed to relate only to the
particular sign, placard, picture, name, advertisement or notice so consented to
by Landlord and shall not be construed as dispensing with the necessity of
obtaining the specific written consent of Landlord with respect to any other
such sign, placard, picture, name, advertisement or notice. All approved signs
or lettering on doors and walls shall be printed, painted, affixed or inscribed
at the expense of Tenant.

3. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, awnings, hangings or decorations shall be attached to, hung or placed
in, or used in connection with, any window, door or patio on the Premises
without the prior written consent of Landlord. In any event with the prior
written consent of Landlord, all such items shall be installed inboard of
Landlord's window coverings and shall not in any way be visible from the
exterior of the Building. No articles shall be placed or kept on the window
sills so as to be visible from the exterior of the Building. No articles shall
be placed against glass partitions or doors which might appear unsightly from
outside the Building.

4. Tenant shall see that the doors of the Premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before Tenant or its employees leave
such Premises, and that all utilities shall likewise be carefully shut off, so
as to prevent waste or damage, and for any default or carelessness the Tenant
shall make good all injuries sustained by other tenants or occupants of the
Building or Landlord.

5. [Intentionally deleted]

6. Tenant shall have the right to install its own security system for
the Premises so long as Tenant shall furnish Landlord with a key or other access
device for any such lock.

7. If Tenant shall alter any lock or access device or install a new or
additional lock or access device, Tenant shall in each case furnish Landlord
with a key for any such lock. Tenant, upon the termination of the tenancy, shall
deliver to Landlord all the keys or access devices for the Building, offices,
rooms and toilet rooms which shall have been furnished to Tenant or which Tenant
shall have had made. In the event of the loss of any keys or access devices so
furnished by Landlord, Tenant shall pay Landlord therefor.

8. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule by Tenant or Tenant's employees or invitees shall be
borne by Tenant.

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48

9. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material other than
limited quantities necessary for the operation or maintenance of office or
office equipment. Tenant shall not use any method of heating or air conditioning
other than supplied pursuant to the Lease.

10. Tenant shall not use, keep or permit to be used or kept in the
Premises any foul or noxious gas or substance or permit or suffer the Premises
to be occupied or used in a manner offensive or objectionable to Landlord by
reason of noise, odors and/or vibrations or interfere in any way with anyone
having business in the Project, nor shall any animals or birds be brought or
kept in or about the Premises or the Building.

11. Except with the prior written consent of Landlord, Tenant shall not
sell, or permit the sale, at retail, of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise in or on the Premises, nor
shall Tenant carry on, or permit or allow any employee or other person to carry
on, the business of stenography, typewriting or any similar business in or from
the Premises for the service or accommodation of occupants of any other portion
of the Building other than as set forth in Tenant's permitted use herein, nor
shall the Premises be used for the storage of merchandise or for manufacturing
of any kind, or the business of a public barber shop or beauty parlor, nor shall
the Premises be used for any improper, immoral or objectionable purpose, or any
business or activity other than that specifically provided for in the Lease.

12. Except for Tenant's right to install Antennae pursuant to the Lease,
Tenant shall not install any radio or television antenna, loudspeaker or any
other device on the exterior walls or the roof of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.

13. Tenant shall not lay linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule by Tenant or Tenant's
contractors, employees or invitees or the removal of any floor covering shall be
borne by Tenant. Tenant shall use chair pads if needed to avoid excess wear and
tear to the floor coverings.

14. Landlord shall have the right to prescribe the weight, size, and
position of all safes, furniture or other heavy equipment brought into the
Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on wood strips of such thickness as determined by Landlord to be
necessary to properly distribute the weight thereof. Landlord will not be
responsible for loss of or damage to any such safe, equipment or property from
any cause, and all damage done to the Building by moving or maintaining any such
safe, equipment or other property shall be repaired at the expense of Tenant.

Business machines and mechanical equipment belonging to Tenant
which cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed to move such
equipment in or out of the Building must be reasonably acceptable to Landlord.

15. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Tenant shall not mark, use double-sided adhesive tape
on, or drive nails, screw or drill into, the partitions, woodwork or plaster or
in any way deface the Premises or any part thereof. Tenant may hang pictures on
walls in the Premises. Any damage to the walls caused by molley bolts, or like
hanging materials, will be repaired by Tenant.

16. Tenant shall not install, maintain or operate upon the Premises any
vending machine other than those for the exclusive use of Tenant's or it
subtenant's employees without the written consent of Landlord.

17. There shall not be used in any space, or in the public areas of the
Building, either by Tenant or others, any hand trucks except those equipped with
rubber tires and side guards or such other material-handling

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49

equipment as Landlord may approve. No other vehicles of any kind shall be
brought by Tenant into or kept in or about the Premises.

18. Tenant shall store all trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in the
jurisdiction in which the Premises is located, without violation of any law or
ordinance governing such disposal.

19. Canvassing, soliciting, distribution of handbills or any other
written material and peddling in the Building are prohibited, and Tenant shall
cooperate to prevent the same.

20. Landlord shall have the right to change the name and address of the
Building, subject to providing reasonable notice to Tenant.

21. Landlord reserves the right to exclude or expel from the Building
any person who, in Landlord's judgment, is intoxicated or under the influence of
liquor or drugs or who is in excessive violation of any of the rules or
regulations of the Building. Excessive violation shall mean that Tenant has been
provided with repeated notice of such violation and such violation is continued.

22. Without the prior written consent of Landlord, Tenant shall not use
the name of the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address. Tenant may use Project's name on
its stationery and business cards.

23. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

24. Tenant assumes any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed.

25. Landlord reserves the right to make such other and reasonable,
uniformly applied and nondiscriminatory enforced rules and regulations as in its
judgment may from time to time be needed for safety and security, for care and
cleanliness of the Building and for the preservation of good order therein.
Tenant agrees to abide by all such Rules and Regulations hereinafter stated and
any additional rules and regulations which are adopted. No new Rule or
Regulation shall be designed to discriminate solely against Tenant.

26. Tenant shall be responsible for the observance of all of the
foregoing Rules and Regulations by Tenant's employees, agents, clients,
customers, invitees and guests.

27. Unless otherwise defined, terms used in these Rules and Regulations
shall have the same meaning as in the Lease.

28. In the event of a conflict between the Lease and the Rules and
Regulations, then the Lease shall control.

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50

EXHIBIT "E"

FORM OF TENANT ESTOPPEL CERTIFICATE

Date: ______  _________________, 2000

Conning Asset Management Company,
As authorized lender representative
700 Market Street
St. Louis, Missouri 63101
Re: Loan No. ______ - Application No. ___
C/O CONNING ASSET MANAGEMENT,              Lease dated _________________ between
ITS AUTHORIZED REPRESENTATIVE              _____________________________________
2682 BISHOP DRIVE, SUITE 209               ____________________ Lessor/Landlord,
SAN RAMON, CA 94583                        and _________________________________
______________________ Lessee/Tenant,
on premises located and addressed as
_____________________________________

Gentlemen:

The undersigned, as Lessee/Tenant, hereby confirms and represents to you the
following:

1. That it has accepted possession of the premises demised pursuant to
the terms of the aforesaid lease.

2. That the building(s), improvements and space required to be furnished
according to the aforesaid lease have been satisfactorily completed
in all respects.

3. That the Lessor/Landlord has fulfilled all of its duties of an
inducement nature, and is not in default in any manner in the
performance of any of the terms, covenants or provisions of said
lease.

4. That the aforesaid lease has not been modified, altered or amended
except by agreement dated __________.

5. That there are no offsets or credits against rentals, nor have
rentals been prepaid, except as provided by the lease terms.

6. That said rentals commence to accrue on the ___ day of ________, 20_.
The primary lease term expires on ________, 20__. The fixed monthly 
rental is $_____.

7. That we have no notice of an assignment, hypothecation or pledge of
rents or the lease, except to your Company.

8. WE CERTIFY THAT THE ATTACHED LEASE IS A TRUE AND COMPLETE CONY OF THE
LEASE AND HAS NOT BEEN MODIFIED, ALTERED AND/OR AMENDED EXCEPT AS
DESCRIBED ABOVE.

-1-

51

The above statements are made upon the understanding that your Company will rely
on them in connection with the making of a loan collaterally secured by an
assignment of our lease, and that these statements are true to the best of our
knowledge and belief.

Sincerely,
By:
---------------------------------
(authorized rep.)

-2-

52

EXHIBIT "F"

FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT

THIS AGREEMENT made this ____ day of _________________ , ______ between
GENERAL AMERICAN LIFE INSURANCE COMPANY (hereinafter called "Mortgagee") and
______________________________________________________________________________
(hereinafter called "Tenant").

WITNESSETH:

RECITALS

A. Mortgagee is now the owner and holder of a Deed of Trust (hereinafter
called the "Mortgage") dated ____________________________ , covering the real
property described in Exhibit "A" attached hereto and made a part hereof and the
buildings and improvements thereon (hereinafter collectively called the
"Mortgaged Property") securing the payment of a promissory note in the stated
principal amount of $ ____________ payable to the order of Mortgagee.

B. Tenant is the holder of a leasehold estate pursuant to a lease
(hereinafter called the "Lease") dated _______________________________ , with 
____________________ as landlord (said landlord and its successors and assigns
occupying the position of landlord under the Lease hereinafter called
"Landlord"), covering the Mortgaged Property (hereinafter called the "Demised
Premises").

C. Tenant and Mortgagee desire to confirm their understanding with
respect to the Lease and the Mortgage.

AGREEMENTS

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, Mortgagee and Tenant hereby agree and covenant as follows:

1. The Lease now is, and shall at all times continue to be, subject and
subordinate in each and every respect, to the Mortgage and to any and all liens,
interests and rights created thereby and to any and all increases, renewals,
modifications, extensions, substitutions, replacements and/or consolidations of
the Mortgage, provided that any and all such increases, renewals, modifications,
extensions, substitutions, replacements and/or consolidations shall nevertheless
be subject to the terms of this Agreement.

-1-

1
EXHIBIT 10.28

LEASE

DATED APRIL 18, 2000

BY AND BETWEEN

AMB PROPERTY, L.P.
as Landlord

and

HARMONIC, INC.
as Tenant

AFFECTING PREMISES COMMONLY KNOWN AS

646 CARIBBEAN DRIVE
SUNNYVALE, CALIFORNIA

2

TABLE OF CONTENTS

Page
----

1.     Basic Provisions                                                  1
1.1   Parties                                                     1
1.2   Premises                                                    1
1.3   Term                                                        1
1.4   Base Rent                                                   1
1.5   Tenant's Share of Operating Expenses                        1
1.6   Tenant's Estimated Monthly Rent Payment                     1
1.7   Security Deposit                                            1
1.8   Permitted Use                                               1
1.9   Guarantor                                                   1
1.10  Addenda and Exhibits                                        1
1.11  Address for Rent Payments                                   1
2.     Premises, Parking and Common Areas                                2
2.1   Letting                                                     2
2.2   Common Areas - Definition                                   2
2.3   Common Areas - Tenant's Rights                              2
2.4   Common Areas - Rules and Regulations                        2
2.5   Common Area Changes                                         2
3.     Term                                                              2
3.1   Term                                                        2
3.2   Delay in Possession                                         2
3.3   Commencement Date Certificate                               2
4.     Rent                                                              2
4.1   Base Rent                                                   2
4.2   Operating Expenses                                          3
5.     Security Deposit                                                  3
6.     Use                                                               4
6.1   Permitted Use                                               4
6.2   Hazardous Substances                                        4
6.3   Tenant's Compliance with Requirements                       5
6.4   Inspection: Compliance with Law                             5
7.     Maintenance, Repairs, Trade Fixtures and Alterations              5
7.1   Tenant's Obligations                                        5
7.2   Landlord's Obligations                                      6
7.3   Alterations                                                 6
7.4   Surrender/Restoration                                       6
8.     Insurance; Indemnity                                              6
8.1   Payment of Premiums                                         7
8.2   Tenant's Insurance                                          7
8.3   Landlord's Insurance                                        7
8.4

Waiver of Subrogation                                       7
8.5   Indemnity                                                   7
8.6   Exemption of Landlord from Liability                        8
9.     Damage or Destruction                                             8
9.1   Termination Right                                           8
9.2   Damage Caused by Tenant                                     8
10.    Real Property Taxes                                               8
10.1  Payment of Real Property Taxes                              8
10.2  Real Property Tax Definition                                9
10.3  Additional Improvements                                     9
10.4  Joint Assessment                                            9
10.5  Tenant's Property Taxes                                     9
11.    Utilities                                                         9
12.    Assignment and Subletting                                         9
12.1  Landlord's Consent Required                                 9
12.2  Rent Adjustment                                             9
13.    Default; Remedies                                                 9
13.1  Default                                                    10
13.2  Remedies                                                   10
13.3  Late Charges                                               10

i

3

TABLE OF CONTENTS

Page
----

14.    Condemnation                                                     10
15.    Estoppel Certificate and Financial Statements                    11
15.1  Estoppel Certificate                                       11
15.2  Financial Statement                                        11
16.    Additional Covenants and Provisions                              11
16.1  Severability                                               11
16.2  Interest on Past-Due Obligations                           11
16.3  Time of Essence                                            11
16.4  Landlord Liability                                         11
16.5  No Prior or Other Agreements                               11
16.6  Notice Requirements                                        11
16.7  Date of Notice                                             11
16.8  Waivers                                                    12
16.9  Holdover                                                   12
16.10 Cumulative Remedies                                        12
16.11 Binding Effect; Choice of Law                              12
16.12 Landlord                                                   12
16.13 Attorneys' Fees and Other Costs                            12
16.14 Landlord's Access: Showing Premises; Repairs               12
16.15 Signs                                                      12
16.16 Termination: Merger                                        12
16.17 Quiet Possession                                           12
16.18 Subordination: Attornment; Non-Disturbance                 13
16.19 Rules and Regulations                                      13
16.20 Security Measures                                          13
16.21 Reservations                                               13
16.22 Conflict                                                   13
16.23 Offer                                                      13
16.24 Amendments                                                 13
16.25 Multiple Parties                                           14
16.26 Authority                                                  14
Signatures                                                              14

EXHIBIT A
EXHIBIT B
Not Applicable
Not Applicable
Not Applicable
Not Applicable
EXHIBIT G
Not Applicable
EXHIBIT I

ii

4

AMB PROPERTY CORPORATION
INDUSTRIAL MULTI-TENANT LEASE

1. BASIC PROVISIONS ("Basic Provisions").

1.1 Parties: This Lease ("Lease") dated April 18, 2000, is made by and
between AMB PROPERTY, L.P., a Delaware limited partnership, ("Landlord") and
HARMONIC, INC., a Delaware corporation ("Tenant") (collectively the "Parties,"
or individually a "Party").

1.2 Premises: The area consisting of 88,320 square feet of leasable area
as outlined on Exhibit A attached hereto ("Premises"), of the building
("Building") located at 646 Caribbean Drive in the City of Sunnyvale, State of
California. The Building is located in the industrial center commonly known as
MBC/Moffett Business Center (the "Industrial Center"). Tenant shall have
non-exclusive rights to the Common Areas (as defined in Paragraph 2.3 below),
but shall not have any rights to the roof, exterior walls or utility raceways of
the Building or to any other buildings in the Industrial Center. The Premises,
the Building, the Common Areas, the land upon which they are located and all
other buildings and improvements thereon are herein collectively referred to as
the "Industrial Center."

1.3 Term: Ten (10) years and Zero (0) months ("Term") commencing
September 8, 2000 ("Commencement Date") and ending September 30, 2010
("Expiration Date").

1.4 Base Rent: $176,640.00 per month ("Base Rent"). $176,640.00 payable
on execution of this Lease for THE FIRST FULL MONTH OF RENT.

1.5 Tenant's Share of Operating Expenses ("Tenant's Share"):

(a) Industrial Center                     30.94%
(b) Building                                100%

1.6 Tenant's Estimated Monthly Rent Payment: Following is the estimated
monthly Rent payment to Landlord pursuant to the provisions of this Lease. This
estimate is made at the inception of the Lease and is subject to adjustment
pursuant to the provisions of this Lease:

(a) Base Rent (Paragraph 4.1)              $176,640.00
(b) Operating Expenses (Paragraph 4.2;
excluding Real Property Taxes,
Landlord Insurance)                    $  5,833.00
(c) Landlord Insurance (Paragraph 8.3)     $    567.00
(d) Real Property Taxes (Paragraph 10)     $  7,238.00

Estimated Monthly Payment                    $190,278.00

1.7 Security Deposit: $264,960.00 ("Security Deposit").

1.8 Permitted Use ("Permitted Use") Research and development,
manufacturing, storage and distribution, offices and marketing and other legal
related uses.

1.9 Guarantor: N/A

1.10 Addenda and Exhibits: Attached hereto are the following Addenda and
Exhibits, all of which constitute a part of this Lease:

(a) Addenda:  First Addendum to Lease

(b) Exhibits: Exhibit A: Diagram of Premises.
Exhibit B: Commencement Date Certificate.
Exhibit C:
Exhibit D:
Exhibit E:
Exhibit F:
Exhibit G: Hazardous Materials Questionnaire.
Exhibit H:
Exhibit I: Rules and Regulations.

1.11 Address for Rent Payments: All amounts payable by Tenant to
Landlord shall until further notice from Landlord be paid to AMB PROPERTY L.
P./MBC MOFFETT BUSINESS CENTER, C/O ORCHARD PROPERTIES at the following address:

File No.: 3750789034
P.O. Box 840349
Dallas, TX 75284-0349

5

2. PREMISES, PARKING AND COMMON AREAS.

2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises upon all of the terms, covenants and conditions set
forth in this Lease. Any statement of square footage set forth in this Lease or
that may have been used in calculating Base Rent and/or Operating Expenses is an
approximation which Landlord and Tenant agree is reasonable and the Base Rent
and Tenant's Share based thereon is not subject to revision whether or not the
actual square footage is more or less.

2.2 Common Areas - Definition. "Common Areas" are all areas and
facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are
provided and designated by the Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and other tenants of the Industrial Center
and their respective employees, suppliers, shippers, tenants, contractors and
invitees.

2.3 Common Areas - Tenant's Rights. Landlord hereby grants to Tenant,
for the benefit of Tenant and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terms of any rules and
regulations or covenants, conditions and restrictions governing the use of the
Industrial Center.

2.4 Common Areas - Rules and Regulations. Landlord shall have the
exclusive control and management of the Common Areas and shall have the right,
from time to time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 16.19.

2.5 Common Area Chances. Landlord shall have the right, in Landlord's
sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without
limitation, changes in the locations, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

(d) To add additional buildings and improvements to the Common
Areas;

(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof and

(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Industrial Center as
Landlord may, in the exercise of sound business judgment, deem to be
appropriate.

3. TERM.

3.1 Term. The Commencement Date, Expiration Date and Term of this Lease
are as specified in Paragraph 1.3.

3.2 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall commence 30 days following notice to Tenant that Landlord is prepared to
tender possession of the Premises to Tenant. If possession of the Premises is
not delivered to Tenant within 120 days after the Commencement Date and such
delay is not due to Tenant's acts, failure to act or omissions Tenant may by
notice in writing to Landlord within 10 days after the end of said 120 day
period cancel this Lease and the parties shall be discharged from all
obligations hereunder. If such written notice of Tenant is not received by
Landlord within said 10 day period, Tenant's right to cancel this Lease shall
terminate.

3.3 Commencement Date Certificate. At the request of Landlord, Tenant
shall execute and deliver to Landlord a completed certificate ("Commencement
Date Certificate") in the form attached hereto as Exhibit B.

4. RENT.

4.1 Base Rent. Tenant shall pay to Landlord Base Rent and other monetary
obligations of Tenant to Landlord under the terms of this Lease (such other
monetary obligations are herein referred to as "Additional Rent") in lawful
money of the United States, without offset or deduction, in advance on or before
the first day of each month. Base Rent and Additional Rent for any period during
the term hereof which is for less than one full month shall be prorated based
upon the actual number of days of the month involved. Payment of

2

6

Base Rent and Additional Rent shall be made to Landlord at its address stated
herein or to such other persons or at such other addresses as Landlord may from
time to time designate in writing to Tenant. Base Rent and Additional Rent are
collectively referred to as "Rent". All monetary obligations of Tenant to
Landlord under the terms of this Lease are deemed to be rent.

4.2 Operating Expenses. Tenant shall pay to Landlord on the first day of
each month during the term hereof, in addition to the Base Rent, Tenant's Share
of all Operating Expenses in accordance with the following provisions:

(a) "Operating Expenses" are all costs incurred by Landlord
relating to the ownership, management and operation of the Industrial Center,
Building and Premises including, but not limited to, the following:

(i) The management, operation, repair, maintenance and
replacement in neat, clean, good order and condition of the Common Areas,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, drainage systems, lighting facilities, fences and gates,
exterior signs and tenant directories.

(ii) Water, gas, electricity, telephone and other
utilities servicing the Common Areas.

(iii) Trash disposal, janitorial services, snow removal,
property management and security services.

(iv) Reserves set aside for maintenance, repair and
replacement of the Common Areas and Building.

(v) Real Property Taxes.

(vi) Premiums for the insurance policies maintained by
Landlord under Paragraph 8 hereof.

(vii) Environmental monitoring and insurance programs.

(viii) Monthly amortization of capital improvements to
the Common Areas and the Building. The monthly amortization of any given capital
improvement shall be the sum of the (i) quotient obtained by dividing the cost
of the capital improvement by Landlord's estimate of the number of months of
useful life of such improvement plus (ii) an amount equal to the cost of the
capital improvement times 1/12 of the lesser of 12% or the maximum annual
interest rate permitted by law.

(ix) Maintenance of the Building including, but not
limited to, painting, caulking and repair and replacement of Building
components, including, but not limited to, roof, elevators and fire detection
and sprinkler systems.

(x) If Tenant fails to maintain the Premises, any
expense incurred by Landlord for such maintenance.

(b) Tenant's Share of Operating Expenses that are not
specifically attributed to the Premises or Building ("Common Area Operating
Expenses") shall be that percentage shown in Paragraph 1.5(a). Tenant's Share of
Operating Expenses that are attributable to the Building ("Building Operating
Expenses") shall be that percentage shown in Paragraph 1.5(b). Landlord in its
sole discretion shall determine which Operating Expenses are Common Area
Operating Expenses, Building Operating Expenses or expenses to be entirely borne
by Tenant.

(c) The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose any obligation
upon Landlord to either have said improvements or facilities or to provide those
services.

(d) Tenant shall pay monthly in advance on the same day as the
Base Rent is due Tenant's Share of estimated Operating Expenses in the amount
set forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days
after the expiration of each calendar year a reasonably detailed statement
showing Tenant's Share of the actual Operating Expenses incurred during the
preceding year. If Tenant's estimated payments under this Paragraph 4(d) during
the preceding year exceed Tenant's Share as indicated on said statement, Tenant
shall be credited the amount of such overpayment against Tenant's Share of
Operating Expenses next becoming due. If Tenant's estimated payments under this
Paragraph 4.2(d) during said preceding year were less than Tenant's Share as
indicated on said statement, Tenant shall pay to Landlord the amount of the
deficiency within 30 days after delivery by Landlord to Tenant of said
statement. At any time Landlord may adjust the amount of the estimated Tenant's
Share of Operating Expenses to reflect Landlord's estimate of such expenses for
the year.

5. SECURITY DEPOSIT. Tenant shall deposit with Landlord prior to Commencement
Date or Early Occupancy the Security Deposit set forth in Paragraph 1.7 as
security for Tenant's faithful performance of Tenant's obligations under this
Lease. If Tenant fails to pay Base Rent or Additional Rent or otherwise defaults
under this Lease (as defined in Paragraph 13.1), Landlord may use the Security
Deposit for the payment of any amount due Landlord or to reimburse or compensate
Landlord for any liability, cost, expense, loss or damage (including attorney's
fees) which Landlord may suffer or incur by reason thereof. Tenant shall on
demand

3

7

pay Landlord the amount so used or applied so as to restore the Security Deposit
to the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Landlord shall, at the expiration or earlier termination of the term hereof and
after Tenant has vacated the Premises, return to Tenant that portion of the
Security Deposit not used or applied by Landlord. No part of the Security
Deposit shall be considered to be held in trust, to bear interest, or to be
prepayment for any monies to be paid by Tenant under this Lease.

6. USE.

6.1 Permitted Use. Tenant shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any nuisance,
permit the emission of any objectionable noise or odor, suffer any waste, make
any use of the Premises which is contrary to any law or ordinance or which will
invalidate or increase the premiums for any of Landlord's insurance. Tenant
shall not service, maintain or repair vehicles on the Premises, Building or
Common Areas. Tenant shall not store foods, pallets, drums or any other
materials outside the Premises.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Landlord to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or byproducts
thereof. Tenant shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Landlord and compliance in a timely
manner (at Tenant's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and
(iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Requirements require that a notice be given to
persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Tenant may, without Landlord's prior consent, but
upon notice to Landlord and in compliance with all Applicable Requirements, use
any ordinary and customary materials reasonably required to be used by Tenant in
the normal course of the Permitted Use, so long as such use is not a Reportable
Use and does not expose the Premises, or neighboring properties to any
meaningful risk of contamination or damage or expose Landlord to any liability
therefor. In addition, Landlord may (but without any obligation to do so)
condition its consent to any Reportable Use of any Hazardous Substance by Tenant
upon Tenant's giving Landlord such additional assurances as Landlord, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but not limited to the installation (and, at
Landlord's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit.

(b) Duty to Inform Landlord. If Tenant knows, or has reasonable
cause to believe, that a Hazardous Substance is located in, under or about the
Premises or the Building, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance. Tenant shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including, without
limitation, through the plumbing or sanitary sewer system).

(c) Indemnification by Tenant. Tenant shall indemnify, protect,
defend and hold Landlord, Landlord's affiliates, Lenders, and the officers,
directors, shareholders, partners, employees, managers, independent contractors,
attorneys and agents of the foregoing ("Landlord Entities") and the Premises,
harmless from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Tenant or by any of Tenant's employees, agents,
contractors or invitees. Tenant's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects

4

8

of any contamination or injury to person, property or the environment created or
suffered by Tenant, and the cost of investigation (including consultants' and
attorneys' fees and testing), removal, remediation, restoration and/or abatement
thereof, or of any contamination therein involved. Tenant's obligations under
this Paragraph 6.2(c) shall survive the expiration or earlier termination of
this Lease.

(D). LANDLORD'S REPRESENTATION REGARDING HAZARDOUS MATERIALS.
LANDLORD HEREBY MAKES THE FOLLOWING REPRESENTATIONS TO TENANT AS OF THE
EFFECTIVE DATE WITHOUT HAVING MADE ANY INVESTIGATION THEREOF (AND WITHOUT BEING
REQUIRED TO MAKE OR BEING DEEMED TO HAVE MADE ANY SUCH INVESTIGATION) TO VERIFY
THE ACCURACY THEREOF AND IS SUBJECT TO AND QUALIFIED BY ALL INFORMATION AND
DISCLOSURES MADE TO TENANT BY LANDLORD. TO THE BEST OF THE LANDLORD'S KNOWLEDGE:

1. THE SOIL AND GROUNDWATER ON OR UNDER THE PROJECT DOES
NOT CONTAIN HAZARDOUS MATERIALS IN AMOUNTS WHICH VIOLATE ANY HAZARDOUS MATERIALS
LAWS TO THE EXTENT THAT ANY GOVERNMENTAL ENTITY COULD REQUIRE EITHER LANDLORD OR
TENANT TO TAKE ANY REMEDIAL ACTION WITH RESPECT TO SUCH HAZARDOUS MATERIALS.

2. DURING THE TIME THAT LANDLORD HAS OWNED THE PROJECT,
LANDLORD HAS RECEIVED NO WRITTEN NOTICE OF: (I) ANY VIOLATION, OR ALLEGED
VIOLATION, OF ANY HAZARDOUS MATERIALS LAW WITH RESPECT TO THE PROJECT THAT HAS
NOT BEEN REMEDIATED TO THE EXTENT THAT NO OTHER REMEDIATION IS THEN LEGALLY
REQUIRED BY APPLICABLE LAW; (II) ANY PENDING CLAIMS RELATING TO THE PRESENCE OF
HAZARDOUS MATERIALS ON THE PROJECT; OR, (III) ANY PENDING INVESTIGATION BY ANY
GOVERNMENTAL AGENCY CONCERNING THE PROJECT RELATING TO HAZARDOUS MATERIALS.

6.3 Tenant's Compliance with Requirements. Tenant shall, at Tenant's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the reasonable recommendations of
Landlord's engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release of
any Hazardous Substance), now in effect or which may hereafter come into effect.
Tenant shall, within 5 days after receipt of Landlord's written request, provide
Landlord with copies of all documents and information evidencing Tenant's
compliance with any Applicable Requirements and shall immediately upon receipt,
notify Landlord in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Tenant or the Premises to comply with any
Applicable Requirements.

6.4 Inspection: Compliance with Law. In addition to Landlord's
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times PROVIDED LANDLORD HAS PROVIDED TWENTY-FOUR (24) HOUR NOTICE TO TENANT, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Tenant with this Lease and all Applicable Requirements. Landlord
shall be entitled to employ experts and/or consultants in connection therewith
to advise Landlord with respect to Tenant's installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance on or from the
Premises. The cost and expenses of any such inspections shall be paid by the
party requesting same unless a violation of Applicable Requirements exists or is
imminent or the inspection is requested or ordered by a governmental authority.
In such case, Tenant shall upon request reimburse Landlord or Landlord's Lender,
as the case may be, for the costs and expenses of such inspections.

7. MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS.

7.1 Tenant's Obligations. Subject to the provisions of Paragraph 7.2
(Landlord's Obligations), Paragraph 9 (Damage or Destruction) and Paragraph 14
(Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonable or readily accessible to Tenant and
whether or not the need for such repairs occurs as a result of Tenant's use, any
prior use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or unfired pressure
vessels, fire hose connectors if within the Premises, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights, but excluding any items which are the responsibility of
Landlord pursuant to Paragraph 7.2 I

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below. Tenant's obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair.

7.2 Landlord's Obligations. Subject to the provisions of Paragraph 6
(Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or Destruction)
and Paragraph 14 (Condemnation), Landlord at its expense and not subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and
repair the foundations and exterior walls of the Building and utility systems
outside the Building. Landlord, subject to reimbursement pursuant to Paragraph
4.2, shall keep in good order, condition and repair the Building roof and Common
Areas.

7.3 Alterations. Construction by Tenant of Alterations shall be governed
by the following:

A. Except as set forth below, Tenant shall not construct any
Tenant Alterations or otherwise alter, improve, modify, or perform any work of
improvement to the Premises without Landlord's prior written approval. However,
Tenant shall be entitled, without Landlord's prior approval, to make Tenant
Alterations (i) which do not affect the structural or exterior parts or water
tight character of the Building, and (ii) the reasonably estimated cost of
which, plus the original cost of any part of the Premises removed or materially
altered in connection with such Tenant Alterations, together do not exceed the
Permitted Tenant Alterations Limit per work of improvement. In the event
Landlord's approval for any Tenant Alterations is required, Tenant shall not
construct the Tenant Alterations until Landlord has approved in writing the
plans and specifications therefor. Such Tenant Alterations shall be constructed
substantially in compliance with such approved plans and specifications by a
licensed contractor first approved by Landlord. All Tenant Alterations (whether
Landlord's consent is required or not) shall be constructed by a licensed
contractor in accordance with all Laws (including the ADA) using new materials
of good quality.

B. Tenant shall not commence construction of any Tenant
Alterations until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five days' prior
written notice of its intention to commence such construction, and (iv) if
requested by Landlord, Tenant has obtained contingent liability and broad form
builders' risk insurance in an amount reasonably satisfactory to Landlord if
there are any perils relating to the proposed construction not covered by
insurance carried pursuant to the Lease.

C. All Tenant Alterations shall remain the property of Tenant
during the Lease Term but shall not be altered or removed from the Premises
except with Landlord's advance written permission. At the expiration or sooner
termination of the Lease Term, all Tenant Alterations shall be surrendered to
Landlord as part of the realty and shall then become Landlord's property, and
Landlord shall have no obligation to reimburse Tenant for all or any portion of
the value or cost thereof, provided, however, that if Landlord requires Tenant
to remove any Tenant Alterations, Tenant shall so remove such Tenant Alterations
prior to the expiration or sooner termination of the Lease Term. Notwithstanding
the foregoing, Tenant shall not be obligated to remove any Tenant Alterations
with respect to which the following is true: (i) Tenant was required, or
elected, to obtain the approval of Landlord to the installation of the Leasehold
Improvement in question; (ii) at the time Tenant requested Landlord's approval,
Tenant requested of Landlord in writing that Landlord inform Tenant of whether
or not Landlord would require Tenant to remove such Leasehold Improvement at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant that it would require Tenant to remove such
Leasehold Improvement at the expiration of the Lease Term.

D. Landlord's consent to the construction of Tenant Alterations
may be withheld in Landlord's sole discretion. Landlord's consent to
construction of Tenant Alterations and Landlord's approval of plans and
specifications for Tenant Alterations shall not create any responsibility or
liability on Landlord's part in regard to the completeness, competency, design
sufficiency, or compliance with Law of such Tenant Alterations or the plans and
specifications therefor.

7.4 Surrender/Restoration. Tenant shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures and floor bolts, patch
all floors and cause all lights to be in good operating condition.

8. INSURANCE; INDEMNITY.

8.1 Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Landlord under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or

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extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date of Expiration Date.

8.2 Tenant's Insurance.

(i) At its sole cost and expense, Tenant shall maintain in full
force and effect during the Term of the lease the following insurance coverages
insuring against claims which may arise from or in connection with the Tenant's
operation and use of the leased premises.

(a) Commercial General Liability with minimum limits of
$1,000,000 per occurrence; $3,000,000 general aggregate for bodily injury,
personal injury and property damage. If required by Landlord, liquor liability
coverage will be included.

(b) Workers' Compensation insurance with statutory
limits and Employers Liability with a $1,000,000 per accident limit for bodily
injury or disease.

(c) Automobile Liability covering all owned, non-owned
and hired vehicles with a $1,000,000 per accident limit for bodily injury and
property damage.

(d) Property insurance against all risks of loss to any
tenant improvements or betterments and business personal property on a full
replacement cost basis with no coinsurance penalty provision; and Business
Interruption Insurance with a limit of liability representing loss of at least
approximately THREE months of income.

(ii) Tenant shall deliver to AMB certificates of all insurance
reflecting evidence of required coverages prior to initial occupancy; and
annually thereafter.

(iii) If, in the opinion of Landlord's insurance advisor, the
amount of scope of such coverage is deemed inadequate at any time during the
Term, Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate.

(iv) All insurance required under Paragraph 8.2 (i) shall be
primary and non-contributory (ii) shall provide for severability of interests,
(iii) shall be issued by insurers, licensed to do business in the state in which
the Premises are located and which are rated A:VII or better by Best's Key
Rating Guide, (iv) shall be endorsed to include Landlord and such other persons
or entities as Landlord may from time to time designate, as additional insureds
(Commercial General Liability only), and (v) shall be endorsed to provide at
least 30-days prior notification of cancellation or material change in coverage
to said additional insureds.

8.3 Landlord's Insurance. Landlord may, but shall not be obligated to,
maintain all risk, including earthquake and flood, insurance covering the
buildings within the Industrial Center, Commercial General Liability and such
other insurance in such amounts and covering such other liability or hazards as
deemed appropriate by Landlord. The amount and scope of coverage of Landlord's
insurance shall be determined by Landlord from time to time in its sole
discretion and shall be subject to such deductible amounts as Landlord may
elect. Landlord shall have the right to reduce or terminate any insurance or
coverage. Premiums for any such insurance shall be a Common Area Operating
Expense.

8.4 Waiver of Subrogation. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to property insurance actually carried, or required to be carried
hereunder, to the extent of the proceeds realized from such insurance coverage.

8.5 Indemnity. TO THE FULLEST EXTEND PERMITTED BY LAW, TENANT HEREBY
AGREES TO DEFEND (WITH ATTORNEYS ACCEPTABLE TO LANDLORD), INDEMNIFY, PROTECT AND
HOLD HARMLESS LANDLORD AND LANDLORD'S AGENTS AND ANY SUCCESSORS TO ALL OR ANY
PORTION OF LANDLORD'S INTEREST IN THE PREMISES AND THEIR DIRECTORS, OFFICERS,
PARTNERS, EMPLOYEES, AUTHORIZED AGENTS, REPRESENTATIVES, AFFILIATES AND
MORTGAGES, FROM AND AGAINST ANY AND ALL DAMAGE, LOSS, CLAIM, LIABILITY AND
EXPENSE INCLUDING, BUT NOT LIMITED TO, ACTUAL ATTORNEY'S FEES AND LEGAL COSTS,
INCURRED DIRECTLY OR INDIRECTLY BY REASON OF ANY CLAIM, SUIT OR JUDGMENT BROUGHT
BY OR ON BEHALF OF (I) ANY PERSON OR PERSONS FOR DAMAGE, LOSS OR EXPENSE DUE TO,
BUT NOT LIMITED TO, BODILY INJURY OR PROPERTY DAMAGE SUSTAINED BY SUCH PERSON OR
PERSONS WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY ATTRIBUTABLE TO
THE CONDITION, USE OR OCCUPANCY OF THE PREMISES OR THE ACTS OR OMISSIONS OF THE
TENANT OR TENANT'S AGENTS IN OR ABOUT THE PREMISES OR THE PROJECT (INCLUDING BUT
NOT LIMITED TO ANY EVENT OF DEFAULT HEREUNDER), OR (II) TENANT OR TENANT'S
AGENTS FOR DAMAGE, LOSS OR EXPENSE DUE TO, BUT NOT LIMITED TO, BODILY INJURY OR
PROPERTY DAMAGE WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY
ATTRIBUTABLE TO THE USE IF ANY OF THE COMMON AREA, EXCEPT TO THE EXTENT CAUSED
SOLELY BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD SHALL NOT BE RELEASED OR
INDEMNIFIED FROM, AND SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS TENANT
FROM, ALL DAMAGES, LIABILITIES, JUDGMENTS, ACTIONS, CLAIMS, ATTORNEY'S FEES,
CONSULTANTS' FEES, PAYMENTS, COSTS AND EXPENSES ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL

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MISCONDUCT OF LANDLORD OR ITS AGENTS, CONTRACTORS OR LICENSEES, OR LANDLORD'S
VIOLATION OR APPLICABLE LAW.

8.6 Exemption of Landlord from Liability. Except to the extent caused by
the gross negligence or willful misconduct of Landlord, Landlord Entities shall
not be liable for and Tenant waives any claims against Landlord Entities for
injury or damage to the person or the property of Tenant, Tenant's employees,
contractors, invitees, customers or any other person in or about the Premises,
Building or Industrial Center from any cause whatsoever, including, but not
limited to, damage or injury which is caused by or results from (i) fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or (ii) from the condition of the Premises,
other portions of the Building or Industrial Center. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant of
Landlord nor from the failure by Landlord to enforce the provisions of any other
lease in the Industrial Center. Notwithstanding Landlord's negligence or breach
of this Lease, Landlord shall under no circumstances be liable for injury to
Tenant's business, for any loss of income or profit therefrom or any indirect,
consequential or punitive damages.

9. DAMAGE OR DESTRUCTION.

9.1 Termination Right. Tenant shall give Landlord immediate written
notice of any damage to the Premises. Subject to the provisions of Paragraph
9.2, if the Premises or the Building shall be damaged to such an extent that
there is substantial interference for a period exceeding 90 consecutive days
with the conduct by Tenant of its business at the Premises, Tenant, at any time
prior to commencement of repair of the Premises and following 10 days written
notice to Landlord, may terminate this Lease effective 30 days after delivery of
such notice to Landlord. Such termination shall not excuse the performance by
Tenant of those covenants which under the terms hereof survive termination. Rent
shall be abated in proportion to the degree of interference during the period
that there is such substantial interference with the conduct of Tenant's
business at the Premises. Abatement of rent and Tenant's right of termination
pursuant to this provision shall be Tenant's sole remedy for failure of Landlord
to keep in good order, condition and repair the foundations and exterior walls
of the Building, Building roof, utility systems outside the Building and the
Common Areas.

9.2 Damage Caused by Tenant. Tenant's termination rights under Paragraph
9.1 shall not apply if the damage to the Premises or Building is the result of
any act or omission of Tenant or of any of Tenant's agents, employees,
customers, invitees or contractors ("Tenant Acts"). Any damage resulting from a
Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at
Tenant's expense repair any damage caused by Tenant Acts. Tenant shall continue
to pay all rent and other sums due hereunder and shall be liable to Landlord for
all damages that Landlord may sustain resulting from a Tenant Act.

10. REAL PROPERTY TAXES.

10.1 Payment of Real Property Taxes. Landlord shall pay the Real
Property Taxes due and payable during the term of this Lease and, except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Operating Expenses in accordance with the provisions of Paragraph
4.2.

10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" is any form of tax or assessment, general, special, ordinary or
extraordinary, imposed or levied upon (a) the Industrial Center, (b) any
interest of Landlord in the Industrial Center, (c) Landlord's right to rent or
other income from the Industrial Center, and/or (d) Landlord's business of
leasing the Premises. Real Property Taxes include (i) any license fee,
commercial rental tax, excise tax, improvement bond or bonds, levy or tax; (ii)
any tax or charge which replaces or is in addition to any of such
above-described "Real Property Taxes" and (iii) any fees, expenses or costs
(including attorney's fees, expert fees and the like) incurred by Landlord in
protesting or contesting any assessments levied or any tax rate. The term "Real
Property Taxes" shall also include any increase resulting from a change in the
ownership of the Industrial Center or Building, the execution of this Lease or
any modification, amendment or transfer thereof. Real Property Taxes for tax
years commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date and Expiration
Date.

10.3 Additional Improvements. Operating Expenses shall not include Real
Property Taxes attributable to improvements placed upon the Industrial Center by
other tenants or by Landlord for the exclusive enjoyment of such other tenants.
Notwithstanding Paragraph 10.1 hereof, Tenant shall, however, pay to Landlord at
the time Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed by reason of improvements placed
upon the Premises by Tenant or at Tenant's request.

10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed.

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10.5 Tenant's Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.

11. UTILITIES.

Tenant shall pay directly for all utilities and services supplied to the
Premises, including but not limited to electricity, telephone, security, gas and
cleaning of the Premises, together with any taxes thereon.

12. ASSIGNMENT AND SUBLETTING.

12.1 Landlord's Consent Required.

(a) Tenant shall not assign, transfer, mortgage or otherwise
transfer or encumber (collectively, "assign") or sublet all or any part of
Tenant's interest in this Lease or in the Premises without Landlord's prior
written consent which consent shall not be unreasonably withheld. Relevant
criteria in determining reasonability of consent include, but are not limited
to, credit history of a proposed assignee or sublessee, references from prior
landlords, any change or intensification of use of the Premises or the Common
Areas and any limitations imposed by the Internal Revenue Code and the
Regulations promulgated thereunder relating to Real Estate Investment Trusts.
Assignment or sublet shall not release Tenant from its obligations hereunder.
Tenant shall not (i) sublet or assign or enter into other arrangements such that
the amounts to be paid by the sublessee or assignee thereunder would be based,
in whole or in part, on the income or profits derived by the business activities
of the sublessee or assignee; (ii) sublet the Premises or assign this Lease to
any person in which Landlord owns an interest, directly or indirectly (by
applying constructive ownership rules set forth in Section 856(d)(5) of the
Internal Revenue Code (the "Code"); or (iii) sublet the Premises or assign this
Lease in any other manner which could cause any portion of the amounts received
by Landlord pursuant to this Lease or any sublease to fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code, or which
could cause any other income received by Landlord to fail to qualify as income
described in Section 856(c)(2) of the Code. The requirements of this Section
12.1 shall apply to any further subleasing by any subtenant.

(b) A change in the control of Tenant shall constitute an
assignment requiring Landlord's consent. The transfer, on a cumulative basis, of
50% or more of the voting or management control of Tenant shall constitute a
change in control for this purpose.

12.2 Rent Adjustment. If, as of the effective date of any permitted
assignment or subletting the then remaining term of this Lease is less than ONE
(1) YEAR, Landlord may, as a condition to its consent: (i) require that the
amount and adjustment schedule of the rent payable under this Lease be adjusted
to what is then the market value and/or adjustment schedule for property similar
to the Premises as then constituted, as determined by Landlord; or (ii)
terminate the Lease as of the date of assignment or subletting subject to the
performance by Tenant of those covenants which under the terms hereof survive
termination.

13. DEFAULT; REMEDIES.

13.1 Default. The occurrence of any one of the following events shall
constitute an event of default on the part of Tenant ("Default"):

(a) The abandonment of the Premises by Tenant;

(b) Failure to pay any installment of Base Rent, Additional Rent
or any other monies due and payable hereunder, said failure continuing for a
period of 3 BUSINESS days after the same is due;

(c) A general assignment by Tenant or any guarantor for the
benefit of creditors;

(d) The filing of a voluntary petition in bankruptcy by Tenant
or any guarantor, the filing of a voluntary petition for an arrangement, the
filing of a petition, voluntary or involuntary, for reorganization, or the
filing of an involuntary petition by Tenant's creditors or guarantors;

(e) Receivership, attachment, of other judicial seizure of the
Premises or all or substantially all of Tenant's assets on the Premises;

(f) Failure of Tenant to maintain insurance as required by
Paragraph 8.2;

(g) Any breach by Tenant of its covenants under Paragraph 6.2;

(h) Failure in the performance of any of Tenant's covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs of this Paragraph 13.1 which shall be governed by
such other Paragraphs), which failure continues for 10 days after written notice
thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such 10 day period despite reasonable diligence, Tenant shall not be in
default under this subparagraph unless Tenant fails thereafter diligently and
continuously to prosecute the cure to completion;

(i) Any transfer of a substantial portion of the assets of
Tenant, or any incurrence of a material obligation by Tenant, unless such
transfer or obligation is undertaken

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or incurred in the ordinary course of Tenants business or in good faith for
equivalent consideration, or with Landlord's consent; and

(j) The default of any guarantors of Tenant's obligations
hereunder under any guaranty of this Lease, or the attempted repudiation or
revocation of any such guaranty.

13.2 Remedies. In the event of any Default by Tenant, Landlord shall
have the remedies set forth in the Addendum attached hereto entitled "Landlord's
Remedies in Event of Tenant Default".

13.3 Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment of rent or
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within 10 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to 5% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's Default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS LEASE, IF TENANT IS DELINQUENT IN THE PAYMENT OF RENT AND IS SUBJECT TO
A LATE CHARGE OR INTEREST FEE, LANDLORD AGREES TO WAIVE THE LATE CHARGE OR
INTEREST FEE IF (i) TENANT HAS NOT BEEN LATE IN ITS PAYMENT OF RENT DURING THE
TWELVE (12) MONTH PERIOD PRECEDING THE RENT DELINQUENCY IN QUESTION AND (ii) THE
RENT DUE IS PAID WITHIN FIVE (5) DAYS OF LANDLORD'S WRITTEN NOTICE TO THE TENANT
OF THE DELINQUENCY AMOUNT OWED.

14. CONDEMNATION.

If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of exercise of said power (all of which are
herein called "condemnation"), this Lease shall terminate as to the part so
taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Premises, or
more than 25% of the portion of the Common Areas designated for Tenant's
parking, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Tenant does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as the
rentable floor area of the Premises taken bears to the total rentable floor area
of the Premises. No reduction of Base Rent shall occur if the condemnation does
not apply to any portion of the Premises. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Landlord,
provided, however, that Tenant shall be entitled to any compensation, separately
awarded to Tenant for Tenant's relocation expenses and/or loss of Tenants trade
fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall to the extent of its net severance damages in the
condemnation matter, repair any damage to the Premises caused by such
condemnation authority. Tenant shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.

15. ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS.

15.1 Estoppel Certificate. Each party (herein referred to as "Responding
Party") shall within 10 days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party, to
the extent it can truthfully do so, an estoppel certificate, plus such
additional information, confirmation and/or statements as be reasonably
requested by the Requesting Party.

15.2 Financial Statement. If Landlord desires to finance, refinance, or
sell the Building, Industrial Center or any part thereof, Tenant and all
Guarantors shall deliver to any potential lender or purchaser designated by
Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

16. ADDITIONAL COVENANTS AND PROVISIONS.

16.1 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall not affect the validity
of any other provision hereof.

16.2 Interest on Past-Due Obligations. Any monetary payment due Landlord
hereunder not received by Landlord within 10 days following the date on which it
was due shall,

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bear interest from the date due at 12% per annum, but not exceeding the maximum
rate allowed by law in addition to the late charge provided for in Paragraph
13.3.

16.3 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.

16.4 Landlord Liability. Tenant, its successors and assigns, shall not
assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under this Lease. In no event whatsoever
shall Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.

16.5 No Prior or Other Agreements. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and supersedes
all oral, written prior or contemporaneous agreements or understandings.

16.6 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or registered
mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission during normal business hours, and shall be deemed sufficiently
given if served in a manner specified in the Paragraph 16.6. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Tenant's taking possessing of the Premises, the Premises shall constitute
Tenant's address for the purpose of mailing or delivering notices to Tenant. A
copy of all notices required or permitted to be given to Landlord hereunder
shall be concurrently transmitted to such party or parties at such addresses as
Landlord may from time to time hereafter designate by written notice to Tenant.

16.7 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by facsimile
transmission or similar means, the same shall be deemed served or delivered upon
telephone or facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via hand or overnight delivery or certified
mail. If notice is received on a Saturday or a Sunday or a legal holiday, it
shall be deemed received on the next business day.

16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default by Tenant of the same or any other term, covenant or
condition hereof.

16.9 Holdover. Tenant has no right to retain possession of the Premises
or any part thereof beyond the expiration or earlier termination of this Lease.
If Tenant holds over with the consent of Landlord: (i) the Base Rent payable
shall be increased to 150% of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination; (ii) Tenant's
right to possession shall terminate on 30 days notice from Landlord and (iii)
all other terms and conditions of this Lease shall continue to apply. Nothing
contained herein shall be construed as a consent by Landlord to any holding over
by Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration or earlier termination of this Lease in accordance with the
provisions of this Lease.

16.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or in equity.

16.11 Binding Effect: Choice of Law. This Lease shall be binding upon
the Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.

16.12 Landlord. The covenants and obligations contained in this Lease on
the part of Landlord are binding on Landlord, its successors and assigns, only
during and in respect of their respective period of ownership of such interest
in the Industrial Center. In the event of any transfer or transfers of such
title to the Industrial Center, Landlord (and in case of any subsequent
transfers or conveyances, the then grantor) shall be concurrently freed and
relieved from and after the date of such transfer of conveyance, without any
further instrument or

11

15

agreement, of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed.

16.13 Attorneys' Fees and Other Costs. If any Party brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting breach. Tenant shall reimburse
Landlord on demand for all reasonable legal, engineering and other professional
services expenses incurred by Landlord in connection with all requests by Tenant
for consent or approval hereunder.

16.14 Landlord's Access: Showing Premises: Repairs. Landlord and
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.

16.15 Signs. Tenant shall not place any signs at or upon the exterior of
the Premises or the Building, except that Tenant may, with Landlord's prior
written consent, install (but not on the roof) such signs as are reasonably
required to advertise Tenant's own business so long as such signs are in a
location designated by Landlord and comply with sign ordinances and the signal
criteria established for the Industrial Center by Landlord.

16.16 Termination: Merger. Unless specifically stated otherwise in
writing by Landlord, the voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof, or a termination hereof by
Landlord for Default by Tenant, shall terminate any sublease or lesser estate in
the Premises; provided, however, Landlord shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies.

16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and
Additional Rent for the Premises and the performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof subject to all of the provisions of this Lease.

16.18 Subordination: Attainment; Non-Disturbance.

(a) Subordination. This Lease shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord upon the real
property of which the Premises are a part, to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Tenant agrees that any person holding any
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously in writing been furnished Tenant, notice of a default by
Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 60 DAYS) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The
provisions of a Mortgage relating to the disposition of condemnation and
insurance proceeds shall prevail over any contrary provisions contained in this
Lease.

(b) Attornment. Subject to the non-disturbance provisions of
subparagraph C of this Paragraph 16.18, Tenant agrees to attorn to a Lender or
any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.

(c) Non-Disturbance. With respect to Mortgage entered into by
Landlord after the execution of this Lease, Tenant's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Mortgage holder that Tenant's

12

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possession and this Lease will not be disturbed so long as Tenant is not in
default and attorns to the record owner of the Premises.

(d) Self-Executing. The agreements contained in this Paragraph
16.18 shall be effective without the execution of any further documents;
provided, however, that upon written request from Landlord or a Lender in
connection with a sale, financing or refinancing of Premises, Tenant and
Landlord shall execute such further writings as may be reasonably required to
separately document any such subordination or non-subordination, attornment
and/or non-disturbance agreement as is provided for herein. Landlord is hereby
irrevocably vested with full power to subordinate this Lease to a Mortgage.

16.19 Rules and Regulations. Tenant agrees that it will abide by, and to
cause its employees, suppliers, shippers, customers, tenants, contractors and
invitees to abide by all reasonable rules and regulations ("Rules and
Regulations") which Landlord may make from time to time for the management,
safety, care, and cleanliness of the Common Areas, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees. Landlord shall not be responsible to Tenant for the non-compliance
with said Rules and Regulations by other tenants of the Industrial Center.

16.20 Security Measures. Tenant acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security
measures. Landlord has no obligations to provide same. Tenant assumes all
responsibility for the protection of the Premises, Tenant, its agents and
invitees and their property from the acts of third parties.

16.21 Reservations. Landlord reserves the right to grant such easements
that Landlord deems necessary and to cause the recordation of parcel maps, so
long as such easements and maps do not reasonably interfere with the use of the
Premises by Tenant. Tenant agrees to sign any documents reasonable requested by
Landlord to effectuate any such easements or maps.

16.22 Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

16.23 Offer. Preparation of this Lease by either Landlord or Tenant or
Landlord's agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.

16.24 Amendments. This Lease may be modified only in writing, signed by
the parties in interest at the time of the modification.

16.25 Multiple Parties. Except as otherwise expressly provided herein,
if more than one person or entity is named herein as Tenant, the obligations of
such persons shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.

16.26 Authority . Each person signing on behalf of Landlord or Tenant
warrants and represents that he or she is authorized to execute and deliver this
Lease and to make it a binding obligation of Landlord or Tenant.

The parties hereto have executed this Lease at the place and on
the dates specified above their respective signatures.

LANDLORD:                                   TENANT:
AMB PROPERTY, L.P.                          HARMONIC, INC.
a Delaware limited partnership              a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation                  By: /s/ ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By: /s/ JOHN L. ROSSI                       Its: Chief Financial Officer
--------------------------------             --------------------------------
John L. Rossi

Its: Regional Manager                       By:
---------------------------------

Its:
--------------------------------

Telephone: (415)394-9000                    Telephone: (408)542-2661
Facsimile: (415)394-0903                    Facsimile: (408)542-2516

Executed at: 505 Montgomery Street          Executed at: 632 Caribbean Avenue
6th Floor                      Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5/12/00                               Date:

13

17

FIRST ADDENDUM TO LEASE

THIS FIRST ADDENDUM is dated for reference purposes as April 18, 2000, and is
made a part of that Lease Agreement (the "Lease") dated April 18, 2000, by and
between AMB PROPERTY L.P., a Delaware limited partnership ("Landlord") and
HARMONIC, INC., a Delaware corporation ("Tenant") affecting certain real
property commonly known as 646 Caribbean Drive, Sunnyvale, California, with
reference to the following facts:

1. Base Monthly Rent:

October 1, 2000 - December 31, 2000:  $2.00 NNN per square foot
per month

January 1, 2001 - December 31, 2001:  $2.10 NNN per square foot
per month
January 1, 2002 - December 31, 2002:  $2.20 NNN per square foot
per month
January 1, 2003 - December 31, 2003:  $2.30 NNN per square foot
per month
January 1, 2004 - December 31, 2004:  $2.40 NNN per square foot
per month
January 1, 2005 - December 31, 2005:  $2.50 NNN per square foot
per month
January 1, 2006 - December 31, 2006:  $2.60 NNN per square foot
per month
August 2, 2006                        Adjustment to Fair market
Value (FMV)
January 1, 2007 - December 31, 2007:  $2.70 NNN per square foot
per month or FMV
January 1, 2008 - December 31, 2008:  $2.80 NNN per square foot
per month of FMV
January 1, 2009 - December 31, 2009:  $2.90 NNN per square foot
per month or FMV
January 1, 2010 - September 30, 2010: $3.00 NNN per square foot
per month or FMV

A. The Base Monthly Rent for the Period after August 2, 2006
shall be the greater of (i) one hundred percent (100%) of the Base Monthly Rent
Schedule, or (ii) one hundred percent (100%) of the then fair market monthly
rent determined as of the commencement of the Period in question based upon like
buildings with like improvements in the area within the boundaries of Highways
101, 880 and the San Francisco Bay. However, the Fair Market Value Rent as
determined by appraisal shall not exceed $4.00 per square foot per month in
August 2006 with 5% annual increases through the balance of the term. The Period
shall contain no free rent and the Premises shall be taken "as-is". If the
parties are unable to agree upon the fair market monthly rent for the Premises
for the option period in question at least seventy-five (75) days prior to the
commencement of the option period in question, then the fair market monthly rent
shall be determined by appraisal conducted pursuant to subparagraph B.

B. In the event it becomes necessary to determine by appraisal
the fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Period, then such fair market monthly rent shall be
determined by three (3) real estate appraisers, all of whom shall be members of
the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:

(1) The party demanding an appraisal (the "Notifying
Party") shall notify the other party (the "Non-Notifying Party") thereof by
delivering a written demand for appraisal, which demand, to be effective, must
give the name, address, and qualifications of an appraiser selected by the
Notifying Party. Within ten (10) days of receipt of said demand, the
Non-Notifying Party shall select its appraiser and notify the Notifying Party,
in writing, of the name, address, and qualifications of an appraiser selected by
it. Failure by the Non-Notifying Party to select a qualified appraiser within
said ten (10) day period shall be deemed a waiver of its right to select a
second appraiser on its own behalf and the Notifying Party shall select a
second appraiser on behalf of the Non-Notifying Party within five (5) days after
the expiration of said ten (10) day period. Within ten (10) days from the date
the second appraiser shall have been appointed, the two (2) appraisers so
selected shall appoint a third appraiser. If the two appraisers fail to select a
third qualified appraiser, the third appraiser shall be selected by the American
Arbitrations Association or if it shall refuse to perform this function, then at
the request of either Landlord or Tenant, such third appraiser shall be promptly
appointed by the then Presiding Judge of the Superior Court of the State of
California for the County of Santa Clara.

(2) The three (3) appraisers so selected shall meet in
San Jose, California, not later than twenty (20) days following the selection of
the third appraiser. At said

18
meeting the appraisers so selected shall attempt to determine the fair market
monthly rent of the Premises for the period in question (including the timing
and amount of periodic increases).

(3) If the appraisers so selected are unable to complete
their determinations in one meeting, they may continue to consult at such times
as they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers so selected agree on the fair market rent of the Leased
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall, in simple letter form executed by the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set
by such agreement.

(4) If two (2) or more appraisers do not so agree within
said fifteen (15) day period, then each appraiser shall, within five (5) days
after the expiration of said fifteen (15) day period, submit his independent
appraisal in simple letter form to Landlord and Tenant stating his determination
of the fair market rent of the Premises for the period in question. The parties
shall then determine the fair market rent for the Premises by determining the
average of the fair market rent set by each of the appraisers. However, if the
lowest appraisal is less than eighty-five percent (85%) of the middle appraisal
then such lowest appraisal shall be disregarded and/or if the highest appraisal
is greater than one hundred fifteen percent (115%) of the middle appraisal then
such highest appraisal shall be disregarded. If the fair market rent set by any
appraisal is so disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded.

(5) Nothing contained herein shall prevent Landlord and
Tenant from jointly selecting a single appraiser to determine the fair market
rent of the Premises, in which event the determination of such appraisal shall
be conclusively deemed the fair market rent of the Premises.

(6) Each party shall bear the fees and expenses of the
appraiser selected by or for it, and the fees and expenses of the third
appraiser (or the joint appraiser if one joint appraiser is used) shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.

2. Early Occupancy:

A. As consideration for Tenant's performance of all obligations
to be performed by Tenant under the Lease, and upon receipt of (i) the first
month's Base Monthly Rent and Security Deposit totaling $221,850.00, and (ii) a
certificate of insurance as provided by Article 9.1 C of the Lease, Landlord
shall permit Tenant to enter and use the Premises commencing thirty (30) days
prior to Commencement until the Commencement Date (the "Early Occupancy
Period"). Such occupancy during the Early Occupancy Period shall be subject to
all of the terms, covenants and conditions of the Lease provided, however, that
the rent payable during the Early Occupancy Period shall be waived.

B. In the event either party shall bring any action or legal
proceeding for damages for alleged breach of any provision of this agreement, to
recover rent, to terminate tenancy of the Premises, or to enforce, protect or
establish any term or covenant of this agreement or the Lease or right of remedy
of either party, the prevailing party shall be entitled to recover as a part of
such action or proceeding, reasonable attorney's fees and court costs as may be
fixed by the court or jury.

C. In consideration of executing this Early Occupancy Agreement,
Tenant agrees to indemnify and save landlord harmless of and from any and all
liability, damage, expense, cause of action, suits or claims or judgments
resulting from injury to person or property arising from the use of the Premises
by Tenant during the Early Occupancy Period, including loss or damage to Tenant,
its equipment, materials or supplies.

D. Tenant agrees to cooperate with construction personnel
completing the Interior Improvements in the Premises and not cause any delay in
the completion of these improvements. It is the intent of Landlord and Tenant
that Tenant's obligation to pay the Base Monthly Rent and all Additional Rent
not be delayed by any cause or other act of Tenant and, if it is so delayed, and
provided that Landlord promptly notifies Tenant in writing of each separate
delay and the estimated period of delay, then Tenant's obligation to pay the
Base

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Monthly Rent AND all Additional Rent shall commence as of the date it would have
commenced absent said delay caused by Tenant.

E. During the Early Occupancy Period, Tenant shall arrange to
have all utility services, including but not limited to gas, electric, water and
trash, billed directly to Tenant for payment.

3. Tenant Maintenance: Tenant shall (i) maintain, repair and replace
when necessary all HVAC equipment which services only the Premises, and shall
keep the same in good condition through regular inspection and servicing, and
(ii) maintain continuously throughout the Lease Term a service contract for the
maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every
sixty (60) days during the Lease Term. Tenant shall furnish Landlord with a copy
of such service contract, which shall provide that it may not be cancelled or
changed without at least thirty (30) days' prior written notice to Landlord.
Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves only the Premises. Tenant shall maintain continuously
through the Lease Term a service contract for the washing of all windows (both
interior and exterior surfaces) in the Premises.

4. Landlord's Remedies in Event of Tenant Default: (AMB)

A. Termination. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:

(1) the worth at the time of award of any unpaid Rent
and any other sums due and payable which have been earned at the time of such
termination; plus

(2) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable which would have been
earned after termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonably avoided; plus

(3) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable for the balance of the
term of this Lease after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided; plus

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

(5) such reasonable attorneys' fees incurred by Landlord
as a result of a Default, and costs in the event suit is filed by Landlord to
enforce such remedy; and plus

(6) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). Tenant waives redemption
or relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other present or future law, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default of
Tenant hereunder.

3

20

B. Continuation of Lease. In the event of any Default by Tenant,
then in addition to any other remedies available to Landlord at law or in equity
and under this Lease, Landlord shall have the remedy described in California
Civil Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant's Default and abandonment and recover Rent as it becomes due, provided
tenant has the right to sublet or assign, subject only to reasonable
limitations).

C. Re-entry. In the event of any Default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, in compliance
with applicable law, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant.

D. Reletting. In the event of the abandonment of the Premises
by Tenant or in the event that Landlord shall elect to re-enter or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph a, Landlord may from time to time, without terminating
this Lease, relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied in the
following order: (1) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies; (2) to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; (3) to the payment of any costs of such
reletting; (4) to the payment of the costs of any alterations and repairs to the
Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the
residue, if any, shall be held by Landlord and applied in payment of future Rent
and other sums payable by Tenant hereunder as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of Rent hereunder,
be less than the Rent payable during the month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

E. Termination. No re-entry or taking of possession of the
Premises by Landlord pursuant to this Addendum shall be construed as an election
to terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

F. Cumulative Remedies. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.

G. No Surrender. No act or conduct of Landlord, whether
consisting of the acceptance of the keys to the Premises, or otherwise, shall be
deemed to be or constitute an acceptance of the surrender of the Premises by
Tenant prior to the expiration of the Term, and such acceptance by Landlord of
surrender by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender of
this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
Landlord elects in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, or Landlord may, at
its option, elect in writing to treat such surrender as a merger terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.

H. Notice Provisions. Tenant agrees that any notice given by
Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements
for notice under California Code of Civil Procedure Section 1161, and Landlord
shall not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

5. Year 2000 Disclaimer: Landlord hereby disclaims any liability for any
and all damages, injuries or other losses, whether ordinary, special,
consequential, punitive or

4

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otherwise, arising out of, relating to, or in connection with, (a) the failure
of any automated, computerized and/or software system or other technology used
in, on, or about the Property or relating to the management or operation of the
Property to accurately receive, provide or process date/time data (including,
but not limited to, calculating, comparing and sequencing) both before and after
September 9, 1999, and before, after, during and between the years 1999 A. D.
and 2000 A. D., and leap year calculations and, or (b) the malfunction, ceasing
to function or providing of invalid or incorrect results by any such technology
as a result of date/time data. The foregoing disclaimer shall apply to any such
technology used in, on, or about the Property or that affects the Property,
whether or not such technology is within the control of Owner or any of Owner's
agents or representatives. THE FOREGOING DISCLAMIER INCLUDES A DISCLAIMER OF ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATTERS
DESCRIBED HEREIN, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

LANDLORD:                                   TENANT:

AMB PROPERTY, L.P.                          HARMONIC, INC.
a Delaware limited partnership              a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation                  By:   /s/ ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By: /s/ JOHN L. ROSSI                       Its: Chief Financial Officer
--------------------------------             --------------------------------
John L. Rossi

Its: Regional Manager                       By:
---------------------------------

Its:
--------------------------------

Telephone: (415)394-9000                    Telephone: (408)542-2661
Facsimile: 415 394-0903                     Facsimile: (408)542-2516

Executed at: 505 Montgomery Street          Executed at: 632 Caribbean Avenue
6th Floor                      Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5/12/00                               Date:
------------------------------              -------------------------------

5

22

EXHIBIT "A"

SITE PLAN

AMB PROPERTY, L.P.
PROJECT 8J01                                         MBC/MOFFETT BUSINESS CENTER
R & D                                      TOTAL PROJECT SQUARE FOOTAGE: 285,480
--------------------------------------------------------------------------------

[DIAGRAM]

23

EXHIBIT B

COMMENCEMENT DATE CERTIFICATE

THIS COMMENCEMENT DATE CERTIFICATE is made as of April 18, 2000, by and
between the parties hereto with regard to that Lease dated April 18, 2000, by
and between AMB PROPERTY, L.P., a Delaware limited partnership, as Landlord
("Landlord"), and HARMONIC, INC., a California corporation as Tenant ("Tenant"),
affecting those Premises commonly known as 646 Caribbean Drive, Sunnyvale,
California. The parties hereto agree as follows:

1. Possession of the Premises has been delivered to Tenant and Tenant
has accepted and taken possession of the Premises.

2. The Commencement Date of the Lease Term is September 8, 2000 and the
Lease Term shall expire on September 30, 2010 unless sooner terminated according
to the terms of the Lease or by mutual agreement.

3. The Base Monthly Rent initially due pursuant to the Lease is One
Hundred Seventy-Six Thousand Six Hundred Forty and 00/100 Dollars ($176,640.00)
per month, subject to any subsequent adjustments required by the Lease.

4. Landlord has received a Security Deposit in the amount of Two Hundred
Sixty-Four Thousand Nine Hundred Sixty and 00/Dollars ($264,960.00). In
addition, Tenant has prepaid rent in the amount of One Hundred Seventy-Six
Thousand Six Hundred Forty and 00/Dollars ($176,640.00), which shall be applied
to the first installment of Base Monthly Rent.

5. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.

LANDLORD:                                   TENANT:

AMB PROPERTY, L.P.                          HARMONIC, INC.
a Delaware limited partnership              a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation                  By: /s/ ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By: /s/ JOHN L. ROSSI                       Its: Chief Financial Officer
--------------------------------             --------------------------------
John L. Rossi

Its: Regional Manager                       By:
---------------------------------

Its:
--------------------------------

Telephone: (415)394-9000                       Telephone: (408)542-2661
Facsimile: (415)394-0903                       Facsimile: (408)542-2516
Executed at: 505 Montgomery Street             Executed at: 632 Caribbean Avenue
6th Floor                        Sunnyvale, CA 94089
San Francisco, CA 94111

Date: 5/12/00                                  Date:
------------------------------                 ----------------------------

1

24

EXHIBIT "C"
IMPROVEMENT AGREEMENT

NOT APPLICABLE

25

EXHIBIT "D"
APPROVED SPECIFICATIONS

NOT APPLICABLE

26

EXHIBIT "E"
DESCRIPTION OF PRIVATE RESTRICTIONS

(NOT APPLICABLE)

27

EXHIBIT "F"
SIGN CRITERIA

(NOT APPLICABLE)

28

EXHIBIT "H"
LEGAL DESCRIPTION

NOT APPLICABLE

29
EXHIBIT I
RULES AND REGULATIONS

This Exhibit sets forth the rules and regulations governing Tenant's use of
the Common Areas and the Premises leased to Tenant pursuant to the terms,
covenants and conditions of the Lease to which this Exhibit is attached. Unless
otherwise defined, capitalized terms used herein shall have the same meanings as
set forth in the Lease. In the event of any conflict or inconsistency between
this Exhibit and the Lease, the Lease shall control.

1.   Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly from
outside the Premises.

2.   The walls, walkways, sidewalks, entrance passages, courts and
vestibules shall not be obstructed or used for any purpose other than ingress
and egress of pedestrian travel to and from the Premises, and shall not be used
for loitering or gathering, or to display, store or place any merchandise,
equipment or devices, or for any other purpose. The walkways, entrance passages,
courts, vestibules and roof are not for the use of the general public and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence in the judgment of the Landlord shall be
prejudicial to the safety, character, reputation and interests of the Building
and its tenants, provided that nothing herein contain shall be construed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of Tenant's business unless such persons are engaged in illegal
activities. No tenant or employee or invitee of any tenant shall be permitted
upon the roof of the Building.

3.   No awnings or other projection shall be attached to the outside walls
of the Building. No security bars or gates, curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.

4.   Tenant shall not in any way deface any part of the Premises or the
Building. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord in writing. The expense of repairing any
damage resulting from a violation of this rule or removal of any floor covering
shall be borne by Tenant.

5.   The toilet rooms, urinals, wash bowls and other plumbing apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant.

6.   Landlord shall direct electricians as to the manner and location of
any future telephone wiring. No boring or cutting for wires will be allowed
without the prior consent of Landlord. The locations of the telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
prior written approval of Landlord.

1

30
7.   No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.

8.   Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, phonograph, machinery, or otherwise. Tenant shall
not use, keep or permit to be used, or kept, any foul or obnoxious gas or
substance in the Premises or permit or suffer the Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other occupants
of this or neighboring buildings or premises by reason of any odors, fumes or
gases.

9.   Neither Tenant nor any of Tenant's Agents shall at any time bring or 
keep upon the Premises any toxic, hazardous, inflammable, combustible or 
explosive fluid, chemical or substance without the prior written consent of 
Landlord.

10.  No animals shall be permitted at any time within the Premises.

11.  Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant's address, without the prior written consent of Landlord. Landlord shall
have the right to prohibit any advertising by Tenant which uses the name of, or
uses pictures or depictions of, the Building or the Project if such advertising
in Landlord's reasonable opinion, tends to impair the reputation of the Project
or its desirability for its intended uses, and upon written notice from Landlord
Tenant shall refrain from or discontinue such advertising.

12.  Canvassing, soliciting, peddling, parading, picketing, demonstrating
or otherwise engaging in any conduct that unreasonably impairs the value or use
of the Premises or the Project are prohibited and Tenant shall cooperate to
prevent the same.

13.  All equipment of any electrical or mechanical nature shall be placed
by Tenant on the Premises in such a way as to best minimize, absorb and prevent
any vibration, noise or annoyance. No equipment of any type shall be placed on
the Premises which in Landlord's opinion exceeds the load limits of the floor or
otherwise threatens the soundness of the structure or improvements of the
Building.

14.  All furniture, equipment and freight shall be moved in and out of the
Building only at hours and in accordance with rules established by Landlord, and
shall not impair vehicular and pedestrian circulation in the Common Area.
Landlord will not be responsible for loss or damage to any furniture, equipment,
or other personal property of Tenant from any cause.

15.  No air conditioning unit or other similar apparatus shall be 
installed or used by Tenant without the prior written consent of Landlord.

16.  No aerial antenna shall be erected on tile roof or exterior walls of 
the Premises, or on the grounds, without in each instance the prior written 
consent of Landlord. Any aerial or antenna so installed by or on behalf of 
Tenant without such written consent shall be subject to removal by Landlord at 
any time without prior notice at the expense of Tenant, and Tenant shall upon 
Landlord's demand pay a reasonable removal fee to Landlord.

2

31
17.  The entire Premises, including vestibules, entrances, doors, fixtures,
windows and plate glass, shall at all times be maintained in a safe, neat and
clean condition by Tenant. All trash, refuse and waste materials shall be
regularly removed from the Premises by Tenant and placed in the containers at
the locations designated by Landlord for refuse collection. All cardboard boxes
must be "broken down" prior to being placed in the trash containers. All
styrofoam chips must be bagged or otherwise contained prior to placement in the
trash containers, so as not to constitute a nuisance. Pallets may not be
disposed of in the trash containers or enclosures. The burning of trash, refuse
or waste materials is prohibited.

18.  All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises without the prior written consent of Landlord, except
for Secure Areas within the Premises. In the event of loss of any keys furnished
by Landlord for Tenant, Tenant shall pay to Landlord the costs thereof.

19.  No person shall enter or remain within the Project while intoxicated
or under the influence of liquor or drugs. Landlord shall have the right to
exclude or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.

Tenant agrees to comply with all of the foregoing Rules and Regulations.
Should Tenant not abide by these Rules and Regulations, Landlord or any
"Operator," "Association" or "Declarant" under any Restrictions may serve a
notice to correct the deficiencies. If Tenant has not corrected the deficiencies
by the end of the notice period set forth in Section 15.1(g) of the Lease,
Tenant will be in default of the Lease, and Landlord and/or its designee shall
have the right, without further notice, to cure the violation at Tenant's
expense.

Landlord reserves the right to amend or supplement the foregoing Rules and
Regulations and to adopt and promulgate additional reasonable rules and
regulations applicable to the Premises. Notice of such rules and regulations and
amendments and supplements thereto, if any, shall be given to the Tenant.
Notwithstanding anything to the contrary herein or in the Lease, Tenant shall
not be required to comply with any new rules, regulations or restrictions,
unless the same apply generally and non-discriminatorily to the occupants of the
Project, do not unreasonably interfere with Tenant's use of the Premises or
Tenant's parking rights and do not materially increase Tenant's obligations or
decrease Tenant's rights under this Lease.

Neither Landlord nor Landlord's Agents or any other person or entity shall
be responsible to Tenant or to any other person for the ignorance or violation
of these Rules and Regulations by any other tenant or other person. Tenant shall
be deemed to have read these Rules and Regulations and to have agreed to abide
by them as a condition precedent, waivable only by Landlord, to Tenant's
occupancy of the Premises.

3

1
EXHIBIT 10.29

LEASE

DATED APRIL 18, 2000

BY AND BETWEEN

AMB PROPERTY, L. P.
as Landlord

and

HARMONIC, INC.
as Tenant

AFFECTING PREMISES COMMONLY KNOWN AS

632 CARIBBEAN DRIVE
SUNNYVALE, CALIFORNIA

2

TABLE OF CONTENTS

Page
----

1.      Basic Provisions                                                                                1
1.1    Parties                                                                                  1
1.2    Premises                                                                                 1
1.3    Term                                                                                     1
1.4    Base Rent                                                                                I
1.5    Tenant's Share of Operating Expenses                                                     1
1.6    Tenant's Estimated Monthly Rent Payment                                                  1
1.7    Security Deposit                                                                         1
1.8    Permitted Use                                                                            1
1.9    Guarantor                                                                                1
1.10   Addenda and Exhibits                                                                     1
1.11   Address for Rent Payments                                                                1
2.      Premises, Parking and Common Areas                                                              2
2.1    Letting                                                                                  2
2.2    Common Areas - Definition                                                                2
2.3    Common Areas - Tenant's Rights                                                           2
2.4    Common Areas - Rules and Regulations                                                     2
2.5    Common Area Changes                                                                      2
3.      Term                                                                                            2
3.1    Term                                                                                     2
3.2    Delay in Possession                                                                      2
3.3    Commencement Date Certificate                                                            2
4.      Rent                                                                                            2
4.1    Base Rent                                                                                2
4.2    Operating Expenses                                                                       3
5.      Security Deposit                                                                                3
6.      Use                                                                                             4
6.1    Permitted Use                                                                            4
6.2    Hazardous Substances                                                                     4
6.3    Tenant's Compliance with Requirements                                                    5
6.4    Inspection: Compliance with Law                                                          5
7.      Maintenance, Repairs, Trade Fixtures and Alterations                                            5
7.1    Tenant's Obligations                                                                     5
7.2    Landlord's Obligations                                                                   6
7.3    Alterations                                                                              6
7.4    Surrender/Restoration                                                                    6
8.      Insurance; Indemnity                                                                            6
8.1    Payment of Premiums                                                                      7
8.2    Tenant's Insurance                                                                       7
8.3    Landlord's Insurance                                                                     7
8.4

Waiver of Subrogation                                                                    7
8.5    Indemnity                                                                                7
8.6    Exemption of Landlord from Liability                                                     8
9.      Damage or Destruction                                                                           8
9.1    Termination Right                                                                        8
9.2    Damage Caused by Tenant                                                                  8
10.     Real Property Taxes                                                                             8
10.1   Payment of Real Property Taxes                                                           8
10.2   Real Property Tax Definition                                                             9
10.3   Additional Improvements                                                                  9
10.4   Joint Assessment                                                                         9
10.5   Tenant's Property Taxes                                                                  9
11.     Utilities                                                                                       9
12.     Assignment and Subletting                                                                       9
12.1   Landlord's Consent Required                                                              9
12.2   Rent Adjustment                                                                          9
13.     Default; Remedies                                                                               9
13.1   Default                                                                                  10
13.2   Remedies                                                                                 10
13.3   Late Charges                                                                             10

i

3

TABLE OF CONTENTS

Page
----

14.     Condemnation                                                       10
15.     Estoppel Certificate and Financial Statements                      11
15.1   Estoppel Certificate                                        11
15.2   Financial Statement                                         11
16.     Additional Covenants and Provisions                                11
16.1   Severability                                                11
16.2   Interest on Past-Due Obligations                            11
16.3   Time of Essence                                             11
16.4   Landlord Liability                                          11
16.5   No Prior or Other Agreements                                11
16.6   Notice Requirements                                         11
16.7   Date of Notice                                              11
16.8   Waivers                                                     12
16.9   Holdover                                                    12
16.10  Cumulative Remedies                                         12
16.11  Binding Effect; Choice of Law                               12
16.12  Landlord                                                    12
16.13  Attorneys' Fees and Other Costs                             12
16.14  Landlord's Access: Showing Premises; Repairs                12
16.15  Signs                                                       12
16.16  Termination: Merger                                         12
16.17  Quiet Possession                                            12
16.18  Subordination: Attornment; Non-Disturbance                  13
16.19  Rules and Regulations                                       13
16.20  Security Measures                                           13
16.21  Reservations                                                13
16.22  Conflict                                                    13
16.23  Offer                                                       13
16.24  Amendments                                                  13
16.25  Multiple Parties                                            14
16.26  Authority                                                   14

Signatures                                                                 14

EXHIBIT A
EXHIBIT B
Not Applicable
Not Applicable
Not Applicable
Not Applicable
EXHIBIT G
Not Applicable
EXHIBIT I

ii

4

AMB PROPERTY CORPORATION
INDUSTRIAL MULTI-TENANT LEASE

1.      BASIC PROVISIONS ("Basic Provisions").

1.1 Parties: This Lease ("Lease") dated April 18, 2000, is made by and
between AMB PROPERTY, L.P., a Delaware limited partnership, ("Landlord") and
HARMONIC, INC., a Delaware corporation ("Tenant") (collectively the "Parties,"
or individually a "Party").

1.2 Premises: The area consisting of 43,500 square feet of leasable area
as outlined on Exhibit A attached hereto ("Premises"), of the building
("Building") located at 632 Caribbean Drive in the City of Sunnyvale, State of
California. The Building is located in the industrial center commonly known as
MBC/Moffett Business Center (the "Industrial Center"). Tenant shall have
non-exclusive rights to the Common Areas (as defined in Paragraph 2.3 below),
but shall not have any rights to the roof, exterior walls or utility raceways of
the Building or to any other buildings in the Industrial Center. The Premises,
the Building, the Common Areas, the land upon which they are located and all
other buildings and improvements thereon are herein collectively referred to as
the "Industrial Center."

1.3 Term: Seven (7) years and Six (6) months ("Term") commencing April
1, 2003 ("Commencement Date") and ending September 30, 2010 ("Expiration Date").

1.4 Base Rent: $91,350.00 per month ("Base Rent"). $91,350.00 payable on
execution of this Lease for period April 1, 2003 through and including April 30,
2003.

1.5 Tenant's Share of Operating Expenses ("Tenant's Share"):

(a) Industrial Center                    15.24%

(b) Building                               100%

1.6 Tenant's Estimated Monthly Rent Payment: Following is the estimated
monthly Rent payment to Landlord pursuant to the provisions of this Lease. This
estimate is made at the inception of the Lease and is subject to adjustment
pursuant to the provisions of this Lease:

(a) Base Rent (Paragraph 4.1)            $91,350.00

(b) Operating Expenses (Paragraph 4.2;
excluding Real Property 
Taxes, Landlord Insurance)           $ 2,972.00

(c) Landlord Insurance (Paragraph 8.3)   $   254.00

(d) Real Property Taxes (Paragraph 10)   $ 3,565.00 

Estimated Monthly Payment            $98,141.00

1.7 Security Deposit: $130,500.00 ("Security Deposit").

1.8 Permitted Use ("Permitted Use") Research and development,
manufacturing, storage and distribution, offices and marketing and other legal
related uses.

1.9 Guarantor: N/A

1.10 Addenda and Exhibits: Attached hereto are the following Addenda and
Exhibits, all of which constitute a part of this Lease:

(a) Addenda:  First Addendum to Lease

(b) Exhibits: Exhibit A: Diagram of Premises.
Exhibit B: Commencement Date Certificate.
Exhibit C:
Exhibit D:
Exhibit E:
Exhibit F:
Exhibit G: Hazardous Materials Questionnaire.
Exhibit H:
Exhibit I: Rules and Regulations.

1.11 Address for Rent Payments: All amounts payable by Tenant to
Landlord shall until further notice from Landlord be paid to AMB PROPERTY L.
P./MBC MOFFETT BUSINESS CENTER, C/O ORCHARD PROPERTIES at the following address:

File No.: 3750789034
P.O. Box 840349
Dallas, TX 75284-0349

5

2.      PREMISES, PARKING AND COMMON AREAS.

2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises upon all of the terms, covenants and conditions set
forth in this Lease. Any statement of square footage set forth in this Lease or
that may have been used in calculating Base Rent and/or Operating Expenses is an
approximation which Landlord and Tenant agree is reasonable and the Base Rent
and Tenant's Share based thereon is not subject to revision whether or not the
actual square footage is more or less.

2.2 Common Areas - Definition. "Common Areas" are all areas and
facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are
provided and designated by the Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and other tenants of the Industrial Center
and their respective employees, suppliers, shippers, tenants, contractors and
invitees.

2.3 Common Areas - Tenant's Rights. Landlord hereby grants to Tenant,
for the benefit of Tenant and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terms of any rules and
regulations or covenants, conditions and restrictions governing the use of the
Industrial Center.

2.4 Common Areas - Rules and Regulations. Landlord shall have the
exclusive control and management of the Common Areas and shall have the right,
from time to time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 16.19.

2.5 Common Area Changes. Landlord shall have the right, in Landlord's
sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without
limitation, changes in the locations, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

(d) To add additional buildings and improvements to the Common
Areas;

(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

(f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as Landlord
may, in the exercise of sound business judgment, deem to be appropriate.

3.      TERM.

3.1 Term. The Commencement Date, Expiration Date and Term of this Lease
are as specified in Paragraph 1.3.

3.2 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall COMMENCE 30 days following notice to Tenant that Landlord is prepared to
tender possession of the Premises to Tenant. If possession of the Premises is
not delivered to Tenant within 120 days after the Commencement Date and such
delay is not due to Tenant's acts, failure to act or omissions Tenant may by
notice in writing to Landlord within 10 days after the end of said 120 day
period cancel this Lease and the parties shall be discharged from all
obligations hereunder. If such written notice of Tenant is not received by
Landlord within said 10 day period, Tenant's right to cancel this Lease shall
terminate.

3.3 Commencement Date Certificate. At the request of Landlord, Tenant
shall execute and deliver to Landlord a completed certificate ("Commencement
Date Certificate") in the form attached hereto as Exhibit B.

4.      RENT.

4.1 Base Rent. Tenant shall pay to Landlord Base Rent and other monetary
obligations of Tenant to Landlord under the terms of this Lease (such other
monetary obligations are herein referred to as "Additional Rent") in lawful
money of the United States, without offset or deduction, in advance on or before
the first day of each month. Base Rent and Additional Rent for any period during
the term hereof which is for less than one full month shall be prorated based
upon the actual number of days of the month involved. Payment of

2

6

Base Rent and Additional Rent shall be made to Landlord at its address stated
herein or to such other persons or at such other addresses as Landlord may from
time to time designate in writing to Tenant. Base Rent and Additional Rent are
collectively referred to as "Rent". All monetary obligations of Tenant to
Landlord under the terms of this Lease are deemed to be rent.

4.2 Operating Expenses. Tenant shall pay to Landlord on the first day of
each month during the term hereof, in addition to the Base Rent, Tenant's Share
of all Operating Expenses in accordance with the following provisions:

(a) "Operating Expenses" are all costs incurred by Landlord
relating to the ownership, management and operation of the Industrial Center,
Building and Premises including, but not limited to, the following:

(i)    The management, operation, repair, maintenance and
replacement in neat, clean, good order and condition of the Common Areas,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, drainage systems, lighting facilities, fences and gates,
exterior signs and tenant directories.

(ii)   Water, gas, electricity, telephone and other
utilities servicing the Common Areas.

(iii)  Trash disposal, janitorial services, snow removal,
properly management and security services.

(iv)   Reserves set aside for maintenance, repair and
replacement of the Common Areas and Building.

(v)    Real Property Taxes. 

(vi)   Premiums for the insurance policies maintained by
Landlord under Paragraph 8 hereof.

(vii)  Environmental monitoring and insurance programs.

(viii) Monthly amortization of capital improvements to the
Common Areas and the Building. The monthly amortization of any given capital
improvement shall be the sum of the (i) quotient obtained by dividing the cost
of the capital improvement by Landlord's estimate of the number of months of
useful life of such improvement plus (ii) an amount equal to the cost of the
capital improvement times 1/12 of the lesser of 12% or the maximum annual
interest rate permitted by law.

(ix)   Maintenance of the Building including, but not
limited to, painting, caulking and repair and replacement of Building
components, including, but not limited to, roof, elevators and fire detection
and sprinkler systems.

(x)    If Tenant fails to maintain the Premises, any expense
incurred by Landlord for such maintenance.

(b) Tenant's Share of Operating Expenses that are not specifically
attributed to the Premises or Building ("Common Area Operating Expenses") shall
be that percentage shown in Paragraph 1.5(a). Tenant's Share of Operating
Expenses that are attributable to the Building ("Building Operating Expenses")
shall be that percentage shown in Paragraph 1.5(b). Landlord in its sole
discretion shall determine which Operating Expenses are Common Area Operating
Expenses, Building Operating Expenses or expenses to be entirely borne by
Tenant.

(c) The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose any obligation upon
Landlord to either have said improvements or facilities or to provide those
services.

(d) Tenant shall pay monthly in advance on the same day as the Base
Rent is due Tenant's Share of estimated Operating Expenses in the amount set
forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days after
the expiration of each calendar year a reasonably detailed statement showing
Tenant's Share of the actual Operating Expenses incurred during the preceding
year. If Tenant's estimated payments under this Paragraph 4(d) during the
preceding year exceed Tenant's Share as indicated on said statement, Tenant
shall be credited the amount of such overpayment against Tenant's Share of
Operating Expenses next becoming due. If Tenant's estimated payments under this
Paragraph 4.2(d) during said preceding year were less than Tenant's Share as
indicated on said statement, Tenant shall pay to Landlord the amount of the
deficiency within 30 days after delivery by Landlord to Tenant of said
statement. At any time Landlord may adjust the amount of the estimated Tenant's
Share of Operating Expenses to reflect Landlord's estimate of such expenses for
the year.

5.      SECURITY DEPOSIT. Tenant shall deposit with Landlord prior to
Commencement Date or Early Occupancy the Security Deposit set forth in Paragraph
1.7 as security for Tenant's faithful performance of Tenant's obligations under
this Lease. If Tenant fails to pay Base Rent or Additional Rent or otherwise
defaults under this Lease (as defined in Paragraph 13.1), Landlord may use the
Security Deposit for the payment of any amount due Landlord or to reimburse or
compensate Landlord for any liability, cost, expense, loss or damage (including
attorney's fees) which Landlord may suffer or incur by reason thereof. Tenant
shall on demand

3

7

pay Landlord the amount so used or applied so as to restore the Security Deposit
to the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Landlord shall, at the expiration or earlier termination of the term hereof and
after Tenant has vacated the Premises, return to Tenant that portion of the
Security Deposit not used or applied by Landlord. No part of the Security
Deposit shall be considered to be held in trust, to bear interest, or to be
prepayment for any monies to be paid by Tenant under this Lease.

6.      USE.

6.1 Permitted Use. Tenant shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any nuisance,
permit the emission of any objectionable noise or odor, suffer any waste, make
any use of the Premises which is contrary to any law or ordinance or which will
invalidate or increase the premiums for any of Landlord's insurance. Tenant
shall not service, maintain or repair vehicles on the Premises, Building or
Common Areas. Tenant shall not store foods, pallets, drums or any other
materials outside the Premises.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Landlord to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Tenant
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Landlord and compliance in a timely manner (at
Tenant's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Requirements require that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Tenant may, without Landlord's prior consent, but upon notice to Landlord and in
compliance with all Applicable Requirements, use any ordinary and customary
materials reasonably required to be used by Tenant in the normal course of the
Permitted Use, so long as such use is not a Reportable Use and does not expose
the Premises, or neighboring properties to any meaningful risk of contamination
or damage or expose Landlord to any liability therefor. In addition, Landlord
may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Tenant upon Tenant's giving
Landlord such additional assurances as Landlord, in its reasonable discretion,
deems necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Landlord's option, removal on or before
Lease expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit.

(b) Duty to Inform Landlord. If Tenant knows, or has reasonable
cause to believe, that a Hazardous Substance is located in, under or about the
Premises or the Building, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance. Tenant shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including, without
limitation, through the plumbing or sanitary sewer system).

(c) Indemnification by Tenant. Tenant shall indemnify, protect,
defend and hold Landlord, Landlord's affiliates, Lenders, and the officers,
directors, shareholders, partners, employees, managers, independent contractors,
attorneys and agents of the foregoing ("Landlord Entities") and the Premises,
harmless from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Tenant or by any of Tenant's employees, agents,
contractors or invitees. Tenant's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects

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of any contamination or injury to person, property or the environment created or
suffered by Tenant, and the cost of investigation (including consultants' and
attorneys' fees and testing), removal, remediation, restoration and/or abatement
thereof, or of any contamination therein involved. Tenant's obligations under
this Paragraph 6.2(c) shall survive the expiration or earlier termination of
this Lease.

(D). LANDLORD'S REPRESENTATION REGARDING HAZARDOUS MATERIALS.
LANDLORD HEREBY MAKES THE FOLLOWING REPRESENTATIONS TO TENANT AS OF THE
EFFECTIVE DATE WITHOUT HAVING MADE ANY INVESTIGATION THEREOF (AND WITHOUT BEING
REQUIRED TO MAKE OR BEING DEEMED TO HAVE MADE ANY SUCH INVESTIGATION) TO VERIFY
THE ACCURACY THEREOF AND IS SUBJECT TO AND QUALIFIED BY ALL INFORMATION AND
DISCLOSURES MADE TO TENANT BY LANDLORD. TO THE BEST OF THE LANDLORD'S KNOWLEDGE:

1. THE SOIL AND GROUNDWATER ON OR UNDER THE PROJECT DOES NOT
CONTAIN HAZARDOUS MATERIALS IN AMOUNTS WHICH VIOLATE ANY HAZARDOUS MATERIALS
LAWS TO THE EXTENT THAT ANY GOVERNMENTAL ENTITY COULD REQUIRE EITHER LANDLORD OR
TENANT TO TAKE ANY REMEDIAL ACTION WITH RESPECT TO SUCH HAZARDOUS MATERIALS.

2. DURING THE TIME THAT LANDLORD HAS OWNED THE PROJECT,
LANDLORD HAS RECEIVED NO WRITTEN NOTICE OF: (i) ANY VIOLATION, OR ALLEGED
VIOLATION, OF ANY HAZARDOUS MATERIALS LAW WITH RESPECT TO THE PROJECT THAT HAS
NOT BEEN REMEDIATED TO THE EXTENT THAT NO OTHER REMEDIATION IS THEN LEGALLY
REQUIRED BY APPLICABLE LAW; (ii) ANY PENDING CLAIMS RELATING TO THE PRESENCE OF
HAZARDOUS MATERIALS ON THE PROJECT; OR, (iii) ANY PENDING INVESTIGATION BY ANY
GOVERNMENTAL AGENCY CONCERNING THE PROJECT RELATING TO HAZARDOUS MATERIALS.

6.3 Tenant's Compliance with Requirements. Tenant shall, at Tenant's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the REASONABLE recommendations of
Landlord's engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill or release of
any Hazardous Substance), now in effect or which may hereafter come into effect.
Tenant shall, within 5 days after receipt of Landlord's written request, provide
Landlord with copies of all documents and information evidencing Tenant's
compliance with any Applicable Requirements and shall immediately upon receipt,
notify Landlord in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Tenant or the Premises to comply with any
Applicable Requirements.

6.4 Inspection; Compliance with Law. In addition to Landlord's
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times PROVIDED LANDLORD HAS PROVIDED TWENTY-FOUR (24) HOUR NOTICE TO TENANT, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Tenant with this Lease and all Applicable Requirements. Landlord
shall be entitled to employ experts and/or consultants in connection therewith
to advise Landlord with respect to Tenant's installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance on or from the
Premises. The cost and expenses of any such inspections shall be paid by the
party requesting same unless a violation of Applicable Requirements exists or is
imminent or the inspection is requested or ordered by a governmental authority.
In such case, Tenant shall upon request reimburse Landlord or Landlord's Lender,
as the case may be, for the costs and expenses of such inspections.

7.      MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS.

7.1 Tenant's Obligations. Subject to the provisions of Paragraph 7.2
(Landlord's Obligations), Paragraph 9 (Damage or Destruction) and Paragraph 14
(Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonable or readily accessible to Tenant and
whether or not the need for such repairs occurs as a result of Tenant's use, any
prior use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or unfired pressure
vessels, fire hose connectors if within the Premises, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights, but excluding any items which are the responsibility of
Landlord pursuant to Paragraph 7.2

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below. Tenant's obligations shall include restorations, replacements or renewals
when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair.

7.2 Landlord's Obligations. Subject to the provisions of Paragraph 6
(Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or Destruction)
and Paragraph 14 (Condemnation), Landlord at its expense and not subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and
repair the foundations and exterior walls of the Building and utility systems
outside the Building. Landlord, subject to reimbursement pursuant to Paragraph
4.2, shall keep in good order, condition and repair the Building roof and Common
Areas.

7.3 Alterations. Construction by Tenant of Alterations shall be governed
by the following:

A. Except as set forth below, Tenant shall not construct any Tenant
Alterations or otherwise alter, improve, modify, or perform any work of
improvement to the Premises without Landlord's prior written approval. However,
Tenant shall be entitled, without Landlord's prior approval, to make Tenant
Alterations (i) which do not affect the structural or exterior parts or water
tight character of the Building, and (ii) the reasonably estimated cost of
which, plus the original cost of any part of the Premises removed or materially
altered in connection with such Tenant Alterations, together do not exceed the
Permitted Tenant Alterations Limit per work of improvement. In the event
Landlord's approval for any Tenant Alterations is required, Tenant shall not
construct the Tenant Alterations until Landlord has approved in writing the
plans and specifications therefor. Such Tenant Alterations shall be constructed
substantially in compliance with such approved plans and specifications by a
licensed contractor first approved by Landlord. All Tenant Alterations (whether
Landlord's consent is required or not) shall be constructed by a licensed
contractor in accordance with all Laws (including the ADA) using new materials
of good quality.

B. Tenant shall not commence construction of any Tenant Alterations
until (i) all required governmental approvals and permits have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant has given Landlord at least five days' prior written
notice of its intention to commence such construction, and (iv) if requested by
Landlord, Tenant has obtained contingent liability and broad form builders' risk
insurance in an amount reasonably satisfactory to Landlord if there are any
perils relating to the proposed construction not covered by insurance carried
pursuant to the Lease.

C. All Tenant Alterations shall remain the property of Tenant
during the Lease Term but shall not be altered or removed from the Premises
except with Landlord's advance written permission. At the expiration or sooner
termination of the Lease Term, all Tenant Alterations shall be surrendered to
Landlord as part of the realty and shall then become Landlord's property, and
Landlord shall have no obligation to reimburse Tenant for all or any portion of
the value or cost thereof; provided, however, that if Landlord requires Tenant
to remove any Tenant Alterations, Tenant shall so remove such Tenant Alterations
prior to the expiration or sooner termination of the Lease Term. Notwithstanding
the foregoing, Tenant shall not be obligated to remove any Tenant Alterations
with respect to which the following is true: (i) Tenant was required, or
elected, to obtain the approval of Landlord to the installation of the Leasehold
Improvement in question; (ii) at the time Tenant requested Landlord's approval,
Tenant requested of Landlord in writing that Landlord inform Tenant of whether
or not Landlord would require Tenant to remove such Leasehold Improvement at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant that it would require Tenant to remove such
Leasehold Improvement at the expiration of the Lease Term.

D. Landlord's consent to the construction of Tenant Alterations may
be withheld in Landlord's sole discretion. Landlord's consent to construction of
Tenant Alterations and Landlord's approval of plans and specifications for
Tenant Alterations shall not create any responsibility or liability on
Landlord's part in regard to the completeness, competency, design sufficiency,
or compliance with Law of such Tenant Alterations or the plans and
specifications therefor.

7.4 Surrender/Restoration. Tenant shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures and floor bolts, patch
all floors and cause all lights to be in good operating condition.

8.      INSURANCE; INDEMNITY.

8.1 Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Landlord under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or

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extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date of Expiration Date.

8.2 Tenant's Insurance.

(i) At its sole cost and expense, Tenant shall maintain in full
force and effect during the Term of the lease the following insurance coverages
insuring against claims which may arise from or in connection with the Tenant's
operation and use of the leased premises.

(a) Commercial General Liability with minimum limits of
$1,000,000 per occurrence; $3,000,000 general aggregate for bodily injury,
personal injury and property damage. If required by Landlord, liquor liability
coverage will be included.

(b) Workers' Compensation insurance with statutory limits
and Employers Liability with a $1,000,000 per accident limit for bodily injury
or disease.

(c) Automobile Liability covering all owned, non-owned and
hired vehicles with a $1,000,000 per accident limit for bodily injury and
property damage.

(d) Property insurance against all risks of loss to any
tenant improvements or betterments and business personal property on a full
replacement cost basis with no coinsurance penalty provision; and Business
Interruption Insurance with a limit of liability representing loss of at least
approximately THREE months of income.

(ii) Tenant shall deliver to AMB certificates of all insurance
reflecting evidence of required coverages prior to initial occupancy; and
annually thereafter.

(iii) If, in the opinion of Landlord's insurance advisor, the
amount of scope of such coverage is deemed inadequate at any time during the
Term, Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate.

(iv) All insurance required under Paragraph 8.2 (i) shall be
primary and non-contributory (ii) shall provide for severability of interests,
(iii) shall be issued by insurers, licensed to do business in the state in which
the Premises are located and which are rated A:VII or better by Best's Key
Rating Guide, (iv) shall be endorsed to include Landlord and such other persons
or entities as Landlord may from time to time designate, as additional insureds
(Commercial General Liability only), and (v) shall be endorsed to provide at
least 30-days prior notification of cancellation or material change in coverage
to said additional insureds.

8.3 Landlord's Insurance. Landlord may, but shall not be obligated to,
maintain all risk, including earthquake and flood, insurance covering the
buildings within the Industrial Center, Commercial General Liability and such
other insurance in such amounts and covering such other liability or hazards as
deemed appropriate by Landlord. The amount and scope of coverage of Landlord's
insurance shall be determined by Landlord from time to time in its sole
discretion and shall be subject to such deductible amounts as Landlord may
elect. Landlord shall have the right to reduce or terminate any insurance or
coverage. Premiums for any such insurance shall be a Common Area Operating
Expense.

8.4 Waiver of Subrogation. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to property insurance actually carried, or required to be carried
hereunder, to the extent of the proceeds realized from such insurance coverage.

8.5 Indemnity. TO THE FULLEST EXTENT PERMITTED BY LAW, TENANT HEREBY
AGREES TO DEFEND (WITH ATTORNEYS ACCEPTABLE TO LANDLORD), INDEMNIFY, PROTECT AND
HOLD HARMLESS LANDLORD AND LANDLORD'S AGENTS AND ANY SUCCESSORS TO ALL OR ANY
PORTION OF LANDLORD'S INTEREST IN THE PREMISES AND THEIR DIRECTORS, OFFICERS,
PARTNERS, EMPLOYEES, AUTHORIZED AGENTS, REPRESENTATIVES, AFFILIATES AND
MORTGAGES, FROM AND AGAINST ANY AND ALL DAMAGE, LOSS, CLAIM, LIABILITY AND
EXPENSE INCLUDING, BUT NOT LIMITED TO, ACTUAL ATTORNEY'S FEES AND LEGAL COSTS,
INCURRED DIRECTLY OR INDIRECTLY BY REASON OF ANY CLAIM, SUIT OR JUDGMENT BROUGHT
BY OR ON BEHALF OF (I) ANY PERSON OR PERSONS FOR DAMAGE, LOSS OR EXPENSE DUE TO,
BUT NOT LIMITED TO, BODILY INJURY OR PROPERTY DAMAGE SUSTAINED BY SUCH PERSON OR
PERSONS WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY ATTRIBUTABLE TO
THE CONDITION, USE OR OCCUPANCY OF THE PREMISES OR THE ACTS OR OMISSIONS OF THE
TENANT OR TENANT'S AGENTS IN OR ABOUT THE PREMISES OR THE PROJECT (INCLUDING BUT
NOT LIMITED TO ANY EVENT OF DEFAULT HEREUNDER), OR (II) TENANT OR TENANT'S
AGENTS FOR DAMAGE, LOSS OR EXPENSE DUE TO, BUT NOT LIMITED TO, BODILY INJURY OR
PROPERTY DAMAGE WHICH ARISE OUT OF, ARE OCCASIONED BY, OR ARE IN ANY WAY
ATTRIBUTABLE TO THE USE IF ANY OF THE COMMON AREA, EXCEPT TO THE EXTENT CAUSED
SOLELY BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD SHALL NOT BE RELEASED OR
INDEMNIFIED FROM, AND SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS TENANT
FROM, ALL DAMAGES, LIABILITIES, JUDGMENTS, ACTIONS, CLAIMS, ATTORNEY'S FEES,
CONSULTANTS' FEES, PAYMENTS, COSTS AND EXPENSES ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL

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MISCONDUCT OF LANDLORD OR ITS AGENTS, CONTRACTORS OR LICENSEES, OR LANDLORD'S
VIOLATION OR APPLICABLE LAW.

8.6 Exemption of Landlord from Liability. Except to the extent caused by
the gross negligence or willful misconduct of Landlord, Landlord Entities shall
not be liable for and Tenant waives any claims against Landlord Entities for
injury or damage to the person or the property of Tenant, Tenant's employees,
contractors, invitees, customers or any other person in or about the Premises,
Building or Industrial Center from any cause whatsoever, including, but not
limited to, damage or injury which is caused by or results from (i) fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or (ii) from the condition of the Premises,
other portions of the Building or Industrial Center. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant of
Landlord nor from the failure by Landlord to enforce the provisions of any other
lease in the Industrial Center. Notwithstanding Landlord's negligence or breach
of this Lease, Landlord shall under no circumstances be liable for injury to
Tenant's business, for any loss of income or profit therefrom or any indirect,
consequential or punitive damages.

9.      DAMAGE OR DESTRUCTION.

9.1 Termination Right. Tenant shall give Landlord immediate written
notice of any damage to the Premises. Subject to the provisions of Paragraph
9.2, if the Premises or the Building shall be damaged to such an extent that
there is substantial interference for a period exceeding 90 consecutive days
with the conduct by Tenant of its business at the Premises, Tenant, at any time
prior to commencement of repair of the Premises and following 10 days written
notice to Landlord, may terminate this Lease effective 30 days after delivery of
such notice to Landlord. Such termination shall not excuse the performance by
Tenant of those covenants which under the terms hereof survive termination. Rent
shall be abated in proportion to the degree of interference during the period
that there is such substantial interference with the conduct of Tenant's
business at the Premises. Abatement of rent and Tenant's right of termination
pursuant to this provision shall be Tenant's sole remedy for failure of Landlord
to keep in good order, condition and repair the foundations and exterior walls
of the Building, Building roof, utility systems outside the Building and the
Common Areas.

9.2 Damage Caused by Tenant. Tenant's termination rights under Paragraph
9.1 shall not apply if the damage to the Premises or Building is the result of
any act or omission of Tenant or of any of Tenant's agents, employees,
customers, invitees or contractors ("Tenant Acts"). Any damage resulting from a
Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at
Tenant's expense repair any damage caused by Tenant Acts. Tenant shall continue
to pay all rent and other sums due hereunder and shall be liable to Landlord for
all damages that Landlord may sustain resulting from a Tenant Act.

10.     REAL PROPERTY TAXES.

10.1 Payment of Real Property Taxes. Landlord shall pay the Real
Property Taxes due and payable during the term of this Lease and, except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Operating Expenses in accordance with the provisions of Paragraph
4.2.

10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" is any form of tax or assessment, general, special, ordinary or
extraordinary, imposed or levied upon (a) the Industrial Center, (b) any
interest of Landlord in the Industrial Center, (c) Landlord's right to rent or
other income from the Industrial Center, and/or (d) Landlord's business of
leasing the Premises. Real Property Taxes include (i) any license fee,
commercial rental tax, excise tax, improvement bond or bonds, levy or tax; (ii)
any tax or charge which replaces or is in addition to any of such
above-described "Real Property Taxes" and (iii) any fees, expenses or costs
(including attorney's fees, expert fees and the like) incurred by Landlord in
protesting or contesting any assessments levied or any tax rate. The term "Real
Property Taxes" shall also include any increase resulting from a change in the
ownership of the Industrial Center or Building, the execution of this Lease or
any modification, amendment or transfer thereof. Real Property Taxes for tax
years commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date and Expiration
Date.

10.3 Additional Improvements. Operating Expenses shall not include Real
Property Taxes attributable to improvements placed upon the Industrial Center by
other tenants or by Landlord for the exclusive enjoyment of such other tenants.
Notwithstanding Paragraph 10.1 hereof, Tenant shall, however, pay to Landlord at
the time Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed by reason of improvements placed
upon the Premises by Tenant or at Tenant's request.

10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed.

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10.5 Tenant's Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.

11.     UTILITIES. Tenant shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.

12.     ASSIGNMENT AND SUBLETTING.

12.1 Landlord's Consent Required.

(a) Tenant shall not assign, transfer, mortgage or otherwise
transfer or encumber (collectively, "assign") or sublet all or any part of
Tenant's interest in this Lease or in the Premises without Landlord's prior
written consent which consent shall not be unreasonably withheld. Relevant
criteria in determining reasonability of consent include, but are not limited
to, credit history of a proposed assignee or sublessee, references from prior
landlords, any change or intensification of use of the Premises or the Common
Areas and any limitations imposed by the Internal Revenue Code and the
Regulations promulgated thereunder relating to Real Estate Investment Trusts.
Assignment or sublet shall not release Tenant from its obligations hereunder.
Tenant shall not (i) sublet or assign or enter into other arrangements such that
the amounts to be paid by the sublessee or assignee thereunder would be based,
in whole or in part, on the income or profits derived by the business activities
of the sublessee or assignee; (ii) sublet the Premises or assign this Lease to
any person in which Landlord owns an interest, directly or indirectly (by
applying constructive ownership rules set forth in Section 856(d)(5) of the
Internal Revenue Code (the "Code"); or (iii) sublet the Premises or assign this
Lease in any other manner which could cause any portion of the amounts received
by Landlord pursuant to this Lease or any sublease to fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code, or which
could cause any other income received by Landlord to fail to qualify as income
described in Section 856(c)(2) of the Code. The requirements of this Section
12.1 shall apply to any further subleasing by any subtenant.

(b) A change in the control of Tenant shall constitute an
assignment requiring Landlord's consent. The transfer, on a cumulative basis, of
50% or more of the voting or management control of Tenant shall constitute a
change in control for this purpose.

12.2 Rent Adjustment. If, as of the effective date of any permitted
assignment or subletting the then remaining term of this Lease is less than ONE
(1) YEAR, Landlord may, as a condition to its consent: (i) require that the
amount and adjustment schedule of the rent payable under this Lease be adjusted
to what is then the market value and/or adjustment schedule for property similar
to the Premises as then constituted, as determined by Landlord; or (ii)
terminate the Lease as of the date of assignment or subletting subject to the
performance by Tenant of those covenants which under the terms hereof survive
termination.

13.     DEFAULT; REMEDIES.

13.1 Default. The occurrence of any one of the following events shall
constitute an event of default on the part of Tenant ("Default"):

(a) The abandonment of the Premises by Tenant;

(b) Failure to pay any installment of Base Rent, Additional Rent or
any other monies due and payable hereunder, said failure continuing for a period
of 3 BUSINESS days after the same is due;

(c) A general assignment by Tenant or any guarantor for the benefit
of creditors;

(d) The filing of a voluntary petition in bankruptcy by Tenant or
any guarantor, the filing of a voluntary petition for an arrangement, the filing
of a petition, voluntary or involuntary, for reorganization, or the filing of an
involuntary petition by Tenant's creditors or guarantors;

(e) Receivership, attachment, of other judicial seizure of the
Premises or all or substantially all of Tenant's assets on the Premises;

(f) Failure of Tenant to maintain insurance as required by
Paragraph 8.2;

(g) Any breach by Tenant of its covenants under Paragraph 6.2;

(h) Failure in the performance of any of Tenant's covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs of this Paragraph 13.1 which shall be governed by
such other Paragraphs), which failure continues for 10 days after written notice
thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such 10 day period despite reasonable diligence, Tenant shall not be in
default under this subparagraph unless Tenant fails thereafter diligently and
continuously to prosecute the cure to completion;

(i) Any transfer of a substantial portion of the assets of Tenant,
or any incurrence of a material obligation by Tenant, unless such transfer or
obligation is undertaken

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or incurred in the ordinary course of Tenants business or in good faith for
equivalent consideration, or with Landlord's consent; and

(j) The default of any guarantors of Tenant's obligations hereunder
under any guaranty of this Lease, or the attempted repudiation or revocation of
any such guaranty.

13.2 Remedies. In the event of any Default by Tenant, Landlord shall
have the remedies set forth in the Addendum attached hereto entitled "Landlord's
Remedies in Event of Tenant Default".

13.3 Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment of rent or
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within 10 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to 5% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's Default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS LEASE, IF TENANT IS DELINQUENT IN THE PAYMENT OF RENT AND IS SUBJECT TO
A LATE CHARGE OR INTEREST FEE, LANDLORD AGREES TO WAIVE THE LATE CHARGE OR
INTEREST FEE IF (I) TENANT HAS NOT BEEN LATE IN ITS PAYMENT OF RENT DURING THE
TWELVE (12) MONTH PERIOD PRECEDING THE RENT DELINQUENCY IN QUESTION AND (II) THE
RENT DUE IS PAID WITHIN FIVE (5) DAYS OF LANDLORD'S WRITTEN NOTICE TO THE TENANT
OF THE DELINQUENCY AMOUNT OWED.

14.     CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of exercise of said power (all
of which are herein called "condemnation"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Premises, or
more than 25% of the portion of the Common Areas designated for Tenant's
parking, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Tenant does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as the
rentable floor area of the Premises taken bears to the total rentable floor area
of the Premises. No reduction of Base Rent shall occur if the condemnation does
not apply to any portion of the Premises. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Landlord,
provided, however, that Tenant shall be entitled to any compensation, separately
awarded to Tenant for Tenant's relocation expenses and/or loss of Tenants trade
fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall to the extent of its net severance damages in the
condemnation matter, repair any damage to the Premises caused by such
condemnation authority. Tenant shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.

15.     ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS.

15.1 Estoppel Certificate. Each party (herein referred to as "Responding
Party") shall within 10 days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party, to
the extent it can truthfully do so, an estoppel certificate, plus such
additional information, confirmation and/or statements as be reasonably
requested by the Requesting Party.

15.2 Financial Statement. If Landlord desires to finance, refinance, or
sell the Building, Industrial Center or any part thereof, Tenant and all
Guarantors shall deliver to any potential lender or purchaser designated by
Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

16.     ADDITIONAL COVENANTS AND PROVISIONS.

16.1 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall not affect the validity
of any other provision hereof.

16.2 Interest on Past-Due Obligations. Any monetary payment due Landlord
hereunder not received by Landlord within 10 days following the date on which it
was due shall

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bear interest from the date due at 12% per annum, but not exceeding the maximum
rate allowed by law in addition to the late charge provided for in Paragraph
13.3.

16.3 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.

16.4 Landlord Liability. Tenant, its successors and assigns, shall not
assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under this Lease. In no event whatsoever
shall Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.

16.5 No Prior or Other Agreements. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and supersedes
all oral, written prior or contemporaneous agreements or understandings.

16.6 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or registered
mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission during normal business hours, and shall be deemed sufficiently 
given if served in a manner specified in the Paragraph 16.6. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Tenant's taking possessing of the Premises, the Premises shall constitute
Tenant's address for the purpose of mailing or delivering notices to Tenant. A
copy of all notices required or permitted to be given to Landlord hereunder
shall be concurrently transmitted to such party or parties at such addresses as
Landlord may from time to time hereafter designate by written notice to Tenant.

16.7 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by facsimile
transmission or similar means, the same shall be deemed served or delivered upon
telephone or facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via hand or overnight delivery or certified
mail. If notice is received on a Saturday or a Sunday or a legal holiday, it
shall be deemed received on the next business day.

16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default by Tenant of the same or any other term, covenant or
condition hereof.

16.9 Holdover. Tenant has no right to retain possession of the Premises
or any part thereof beyond the expiration or earlier termination of this Lease.
If Tenant holds over with the consent of Landlord: (i) the Base Rent payable
shall be increased to 150% of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination; (ii) Tenant's
right to possession shall terminate on 30 days notice from Landlord and (iii)
all other terms and conditions of this Lease shall continue to apply. Nothing
contained herein shall be construed as a consent by Landlord to any holding over
by Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration or earlier termination of this Lease in accordance with the
provisions of this Lease.

16.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or in equity.

16.11 Binding-Effect: Choice of Law. This Lease shall be binding upon
the Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.

16.12 Landlord. The covenants and obligations contained in this Lease on
the part of Landlord are binding on Landlord, its successors and assigns, only
during and in respect of their respective period of ownership of such interest
in the Industrial Center. In the event of any transfer or transfers of such
title to the Industrial Center, Landlord (and in case of any subsequent
transfers or conveyances, the then grantor) shall be concurrently freed and
relieved from and after the date of such transfer or conveyance, without any
further instrument or

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agreement, of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed.

16.13 Attorneys' Fees and Other Costs. If any Party brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting breach. Tenant shall reimburse
Landlord on demand for all reasonable legal, engineering and other professional
services expenses incurred by Landlord in connection with all requests by Tenant
for consent or approval hereunder.

16.14 Landlord's Access; Showing Premises; Repairs. Landlord and
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.

16.15 Signs. Tenant shall not place any signs at or upon the exterior of
the Premises or the Building, except that Tenant may, with Landlord's prior
written consent, install (but not on the roof) such signs as are reasonably
required to advertise Tenant's own business so long as such signs are in a
location designated by Landlord and comply with sign ordinances and the signage
criteria established for the Industrial Center by Landlord.

16.16 Termination; Mercer. Unless specifically stated otherwise in
writing by Landlord, the voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof, or a termination hereof by
Landlord for Default by Tenant, shall terminate any sublease or lesser estate in
the Premises; provided, however, Landlord shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies.

16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and
Additional Rent for the Premises and the performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof subject to all of the provisions of this Lease.

16.18 Subordination; Attornment; Non-Disturbance.

(a) Subordination. This Lease shall be subject and subordinate to
any ground lease, mortgage, deed of trust, or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord upon the real
property of which the Premises are a part, to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Tenant agrees that any person holding any
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously in writing been furnished Tenant, notice of a default by
Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 60 days) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The
provisions of a Mortgage relating to the disposition of condemnation and
insurance proceeds shall prevail over any contrary provisions contained in this
Lease.

(b) Attornment. Subject to the non-disturbance provisions of
subparagraph C of this Paragraph 16.18, Tenant agrees to attorn to a Lender or
any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.

(c) Non-Disturbance. With respect to Mortgage entered into by
Landlord after the execution of this Lease, Tenant's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Mortgage holder that Tenant's

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possession and this Lease will not be disturbed so long as Tenant is not in
default and attorns to the record owner of the Premises.

(d) Self-Executing. The agreements contained in this Paragraph
16.18 shall be effective without the execution of any further documents;
provided, however, that upon written request from Landlord or a Lender in
connection with a sale, financing or refinancing of Premises, Tenant and
Landlord shall execute such further writings as may be reasonably required to
separately document any such subordination or non-subordination, attornment
and/or non-disturbance agreement as is provided for herein. Landlord is hereby
irrevocably vested with full power to subordinate this Lease to a Mortgage.

16.19 Rules and Regulations. Tenant agrees that it will abide by, and to
cause its employees, suppliers, shippers, customers, tenants, contractors and
invitees to abide by all reasonable rules and regulations ("Rules and
Regulations") which Landlord may make from time to time for the management,
safety, care, and cleanliness of the Common Areas, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees. Landlord shall not be responsible to Tenant for the non-compliance
with said Rules and Regulations by other tenants of the Industrial Center.

16.20 Security Measures. Tenant acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security
measures. Landlord has no obligations to provide same. Tenant assumes all
responsibility for the protection of the Premises, Tenant, its agents and
invitees and their property from the acts of third parties.

16.21 Reservations. Landlord reserves the right to grant such easements
that Landlord deems necessary and to cause the recordation of parcel maps, so
long as such easements and maps do not reasonably interfere with the use of the
Premises by Tenant. Tenant agrees to sign any documents reasonable requested by
Landlord to effectuate any such easements of maps.

16.22 Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

16.23 Offer. Preparation of this Lease by either Landlord or Tenant or
Landlord's agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.

16.24 Amendments. This Lease may be modified only in writing, signed by
the parties in interest at the time of the modification.

16.25 Multiple Parties. Except as otherwise expressly provided herein,
if more than one person or entity is named herein as Tenant, the obligations of
such persons shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.

16.26 Authority. Each person signing on behalf of Landlord or Tenant
warrants and represents that he or she is authorized to execute and deliver this
Lease and to make it a binding obligation of Landlord or Tenant.

The parties hereto have executed this Lease at the place and on the
dates specified above their respective signatures.

LANDLORD:                              TENANT:

AMB PROPERTY, L.P.                     HARMONIC, INC.
a Delaware limited partnership         a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation             By: /s/  ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By:  /s/ JOHN L. ROSSI                 Its: Chief Financial Officer
-------------------------------        ----------------------------------
John L. Rossi

Its: Regional Manager                  By:
----------------------------------

Its:
----------------------------------

Telephone: (415)394-9000               Telephone: (408)542-2661
------------------------               ---------------------------

Facsimile: (415)394-0903               Facsimile: (408)542-2516
------------------------               ---------------------------

Executed at: 505 Montgomery Street     Executed at: 632 Caribbean Avenue
6th Floor                              Sunnyvale, CA 94089
San Francisco, CA 94111

Date:  5/12/00                         Date:
-----------------------------          --------------------------------

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FIRST ADDENDUM TO LEASE

THIS FIRST ADDENDUM is dated for reference purposes as April 18, 2000,
and is made a part of that Lease Agreement (the "Lease") dated April 18, 2000,
by and between AMB PROPERTY L.P., a Delaware limited partnership ("Landlord")
and HARMONIC, INC., a Delaware corporation ("Tenant") affecting certain real
property commonly known as 632 Caribbean Drive, Sunnyvale, California, with
reference to the following facts:

1.      Base Monthly Rent:

April 1, 2003 - December 31, 2003: $2.30 NNN per square foot per month
January 1, 2004 - December 31, 2004: $2.40 NNN per square foot per month
January 1, 2005 - December 31, 2005: $2.50 NNN per square foot per month
January 1, 2006 - December 31, 2006: $2.60 NNN per square foot per month
August 2, 2006                       Adjustment to Fair market Value (FMV)
January 1, 2007 - December 31, 2007: $2.70 NNN per square foot per month or FMV
January 1, 2008 - December 31, 2008: $2.80 NNN per square foot per month of FMV
January 1, 2009 - December 31, 2009: $2.90 NNN per square foot per month or FMV
January 1, 2010 - September 30, 2010: $3.00 NNN per square foot per month or FMV

A. The Base Monthly Rent for the Period after August 2, 2006 shall
be the greater of (i) one hundred percent (100%) of the Base Monthly Rent
Schedule, or (ii) one hundred percent (100%) of the then fair market monthly
rent determined as of the commencement of the Period in question based upon like
buildings with like improvements in the area within the boundaries of Highways
101, 880 and the San Francisco Bay. However, the Fair Market Value Rent as
determined by appraisal shall not exceed $4.00 per square foot per month in
August 2006 with 5% annual increases through the balance of the term. The Period
shall contain no free rent and the Premises shall be taken "as-is". If the
parties are unable to agree upon the fair market monthly rent for the Premises
for the option period in question at least seventy-five (75) days prior to the
commencement of the option period in question, then the fair market monthly rent
shall be determined by appraisal conducted pursuant to subparagraph B.

B. In the event it becomes necessary to determine by appraisal the
fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Period, then such fair market monthly rent shall be
determined by three (3) real estate appraisers, all of whom shall be members of
the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:

(1) The party demanding an appraisal (the "Notifying Party")
shall notify the other party (the "Non-Notifying Party") thereof by delivering a
written demand for appraisal, which demand, to be effective, must give the name,
address, and qualifications of an appraiser selected by the Notifying Party.
Within ten (10) days of receipt of said demand, the Non-Notifying Party shall
select its appraiser and notify the Notifying Party, in writing, of the name,
address, and qualifications of an appraiser selected by it. Failure by the
Non-Notifying Party to select a qualified appraiser within said ten (10) day
period shall be deemed a waiver of its right to select a second appraiser on its
own behalf and the Notifying Party shall select a second appraiser on behalf of
the Non-Notifying Party within five (5) days after the expiration of said ten
(10) day period. Within ten (10) days from the date the second appraiser shall
have been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be selected by the American Arbitrations Association or if
it shall refuse to perform this function, then at the request of either Landlord
or Tenant, such third appraiser shall be promptly appointed by the then
Presiding Judge of the Superior Court of the State of California for the County
of Santa Clara.

(2) The three (3) appraisers so selected shall meet in San
Jose, California, not later than twenty (20) days following the selection of the
third appraiser. At said meeting the appraisers so selected shall attempt to
determine the fair market monthly rent of the Premises for the period in
question (including the timing and amount of periodic increases).

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(3) If the appraisers so selected are unable to complete
their determinations in one meeting, they may continue to consult at such times
as they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers so selected agree on the fair market rent of the Leased
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall, in simple letter form executed by the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set
by such agreement.

(4) If two (2) or more appraisers do not so agree within
said fifteen (15) day period, then each appraiser shall, within five (5) days
after the expiration of said fifteen (15) day period, submit his independent
appraisal in simple letter form to Landlord and Tenant stating his determination
of the fair market rent of the Premises for the period in question. The parties
shall then determine the fair market rent for the Premises by determining the
average of the fair market rent set by each of the appraisers. However, if the
lowest appraisal is less than eighty-five percent (85%) of the middle appraisal
then such lowest appraisal shall be disregarded and/or if the highest appraisal
is greater than one hundred fifteen percent (115%) of the middle appraisal then
such highest appraisal shall be disregarded. If the fair market rent set by any
appraisal is so disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded.

(5) Nothing contained herein shall prevent Landlord and
Tenant from jointly selecting a single appraiser to determine the fair market
rent of the Premises, in which event the determination of such appraisal shall
be conclusively deemed the fair market rent of the Premises.

(6) Each party shall bear the fees and expenses of the
appraiser selected by or for it, and the fees and expenses of the third
appraiser (or the joint appraiser if one joint appraiser is used) shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.

2. Early Occupancy:

A. As consideration for Tenant's performance of all obligations to
be performed by Tenant under the Lease, and upon receipt of (i) the first
month's Base Monthly Rent and Security Deposit totaling $221,850.00, and (ii) a
certificate of insurance as provided by Article 9.1 C of the Lease, Landlord
shall permit Tenant to enter and use the Premises commencing thirty (30) days
prior to Commencement until the Commencement Date (the "Early Occupancy
Period"). Such occupancy during the Early Occupancy Period shall be subject to
all of the terms, covenants and conditions of the Lease provided, however, that
the rent payable during the Early Occupancy Period shall be waived.

B. In the event either party shall bring any action or legal
proceeding for damages for alleged breach of any provision of this agreement, to
recover rent, to terminate tenancy of the Premises, or to enforce, protect or
establish any term or covenant of this agreement or the Lease or right of remedy
of either party, the prevailing party shall be entitled to recover as a part of
such action or proceeding, reasonable attorney's fees and court costs as may be
fixed by the court or jury.

C. In consideration of executing this Early Occupancy Agreement,
Tenant agrees to indemnify and save Landlord harmless of and from any and all
liability, damage, expense, cause of action, suits or claims or judgments
resulting from injury to person or property arising from the use of the Premises
by Tenant during the Early Occupancy Period, including loss or damage to Tenant,
its equipment, materials or supplies.

D. Tenant agrees to cooperate with construction personnel
completing the Interior Improvements in the Premises and not cause any delay in
the completion of these improvements. It is the intent of Landlord and Tenant
that Tenant's obligation to pay the Base Monthly Rent and all Additional Rent
not be delayed by any cause or other act of Tenant and, if it is so delayed, and
provided that Landlord promptly notifies Tenant in writing of each separate
delay and the estimated period of delay, then Tenant's obligation to pay the
Base Monthly Rent and all Additional Rent shall commence as of the date it
would have commenced absent said delay caused by Tenant.

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E. During the Early Occupancy Period, Tenant shall arrange to have
all utility services, including but not limited to gas, electric, water and
trash, billed directly to Tenant for payment.

3. Tenant Maintenance: Tenant shall (i) maintain, repair and replace
when necessary all HVAC equipment which services only the Premises, and shall
keep the same in good condition through regular inspection and servicing, and
(ii) maintain continuously throughout the Lease Term a service contract for the
maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every
sixty (60) days during the Lease Term. Tenant shall furnish Landlord with a copy
of such service contract, which shall provide that it may not be cancelled or
changed without at least thirty (30) day's prior written notice to Landlord.
Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves only the Premises. Tenant shall maintain continuously
through the Lease Term a service contract for the washing of all windows (both
interior and exterior surfaces) in the Premises.

4. Landlord's Remedies in Event of Tenant Default: (AMB)

A. Termination. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:

(1) the worth at the time of award of any unpaid Rent and
any other sums due and payable which have been earned at the time of such
termination; plus

(2) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus

(3) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable for the balance of the term
of this Lease after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus

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

(5) such reasonable attorneys' fees incurred by Landlord as
a result of a Default, and costs in the event suit is filed by Landlord to
enforce such remedy; and plus

(6) at Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). Tenant waives redemption
or relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other present or future law, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default of
Tenant hereunder.

B. Continuation of Lease. In the event of any Default by Tenant,
then in addition to any other remedies available to Landlord at law or in equity
and under this Lease,

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Landlord shall have the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant's Default and
abandonment and recover Rent as it becomes due, provided tenant has the right to
sublet or assign, subject only to reasonable limitations).

C. Re-entry. In the event of any Default by Tenant, Landlord shall
also have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.

D. Reletting. In the event of the abandonment of the Premises by
Tenant or in the event that Landlord shall elect to re-enter or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph a, Landlord may from time to time, without terminating
this Lease, relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied in the
following order: (1) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies; (2) to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; (3) to the payment of any costs of such
reletting; (4) to the payment of the costs of any alterations and repairs to the
Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the
residue, if any, shall be held by Landlord and applied in payment of future Rent
and other sums payable by Tenant hereunder as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of Rent hereunder,
be less than the Rent payable during the month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

E. Termination. No re-entry or taking of possession of the Premises
by Landlord pursuant to this Addendum shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

F. Cumulative Remedies. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.

G. No Surrender. No act or conduct of Landlord, whether consisting
of the acceptance of the keys to the Premises, or otherwise, shall be deemed to
be or constitute an acceptance of the surrender of the Premises by Tenant prior
to the expiration of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.

H. Notice Provisions. Tenant agrees that any notice given by
Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements
for notice under California Code of Civil Procedure Section 1161, and Landlord
shall not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

5. Year 2000 Disclaimer: Landlord hereby disclaims any liability for any
and all damages, injuries or other losses, whether ordinary, special,
consequential, punitive or otherwise, arising out of, relating to, or in
connection with, (a) the failure of any automated, computerized and/or software
system or other technology used in, on, or about the Property or relating to the
management or operation of the Property to accurately receive, provide or

4

21

process date/time data (including, but not limited to, calculating, comparing
and sequencing) both before and after September 9, 1999, and before, after,
during and between the years 1999 A. D. and 2000 A. D., and leap year
calculations and, or (b) the malfunction, ceasing to function or providing of
invalid or incorrect results by any such technology as a result of date/time
data. The foregoing disclaimer shall apply to any such technology used in, on,
or about the Property or that affects the Property, whether or not such
technology is within the control of Owner or any of Owner's agents or
representatives. THE FOREGOING DISCLAIMER INCLUDES A DISCLAIMER OF ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATTERS
DESCRIBED HEREIN, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

LANDLORD:                              TENANT:

AMB PROPERTY, L.P.                     HARMONIC, INC.
a Delaware limited partnership         a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation             By: /s/  ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By:  /s/ JOHN L. ROSSI                 Its: Chief Financial Officer
-------------------------------        ----------------------------------
John L. Rossi

Its: Regional Manager                  By:
----------------------------------

Its:
---------------------------------

Telephone: (415)394-9000               Telephone: (408)542-2661
------------------------               ---------------------------

Facsimile: (415)394-0903               Facsimile: (408)542-2516
------------------------               ---------------------------

Executed at: 505 Montgomery Street     Executed at: 632 Caribbean Avenue
6th Floor                              Sunnyvale, CA 94089
San Francisco, CA 94111

Date:  5/12/00                         Date:
-----------------------------          --------------------------------

6

22

EXHIBIT "A"

SITE PLAN

AMB PROPERTY, L.P.
PROJECT 8J01                                         MBC/MOFFETT BUSINESS CENTER
R&D                                        TOTAL PROJECT SQUARE FOOTAGE: 285,480
--------------------------------------------------------------------------------

[FLOOR PLAN]

23

EXHIBIT B

COMMENCEMENT DATE CERTIFICATE

THIS COMMENCEMENT DATE CERTIFICATE is made as of April 18, 2000, by and
between the parties hereto with regard to that Lease dated April 18, 2000, by
and between AMB PROPERTY, L.P., a Delaware limited partnership, as Landlord
("Landlord"), and HARMONIC, INC., a California corporation as Tenant ("Tenant"),
affecting those Premises commonly known as 632 Caribbean Drive, Sunnyvale,
California. The parties hereto agree as follows:

1. Possession of the Premises has been delivered to Tenant and Tenant
has accepted and taken possession of the Premises.

2. The Commencement Date of the Lease Term is April 1, 2003 and the
Lease Term shall expire on September 30, 2010 unless sooner terminated according
to the terms of the Lease or by mutual agreement.

3. The Base Monthly Rent initially due pursuant to the Lease is
Ninety-One Thousand Three Hundred Fifty and 00/100 Dollars ($91,350.00) per
month, subject to any subsequent adjustments required by the Lease.

4. Landlord has received a Security Deposit in the amount of One Hundred
Thirty Thousand Five Hundred and 00/Dollars ($130,500.00). In addition, Tenant
has prepaid rent in the amount of Ninety-One Thousand Three Hundred Fifty and
00/Dollars ($91,350.00), which shall be applied to the first installment of Base
Monthly Rent.

5. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.

LANDLORD:                              TENANT:

AMB PROPERTY, L.P.                     HARMONIC, INC.
a Delaware limited partnership         a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation             By: /s/  ROBIN N. DICKSON
---------------------------------
Robin N. Dickson

By:  /s/ JOHN L. ROSSI                 Its: Chief Financial Officer
-------------------------------        ----------------------------------
John L. Rossi

Its: Regional Manager                  By:
----------------------------------

Its:
---------------------------------

Telephone: (415)394-9000               Telephone: (408)542-2661
------------------------               ---------------------------

Facsimile: (415)394-0903               Facsimile: (408)542-2516
------------------------               ---------------------------

Executed at: 505 Montgomery Street     Executed at: 632 Caribbean Avenue
6th Floor                              Sunnyvale, CA 94089
San Francisco, CA 94111

Date:  5/12/00                         Date:
-----------------------------          --------------------------------

1

24

EXHIBIT "C"

IMPROVEMENT AGREEMENT

NOT APPLICABLE

25

EXHIBIT "D"

APPROVED SPECIFICATIONS

NOT APPLICABLE

26

EXHIBIT "E"

DESCRIPTION OF PRIVATE RESTRICTIONS

(NOT APPLICABLE)

27

EXHIBIT "F"

SIGN CRITERIA

(NOT APPLICABLE)

28

EXHIBIT "H"

LEGAL DESCRIPTION

NOT APPLICABLE

29
EXHIBIT 1

RULES AND REGULATIONS

This Exhibit sets forth the rules and regulations governing Tenant's use
of the Common Area and the Premises leased to Tenant pursuant to the terms,
covenants and conditions of the Lease to which this Exhibit is attached. Unless
otherwise defined, capitalized terms used herein shall have the same meanings as
set forth in the Lease. In the event of any conflict or inconsistency between
this Exhibit and the Lease, the Lease shall control.

1.    Tenant shall not place anything or allow anything to be placed near 
the glass of any window, door, partition or wall which may appear unsightly 
from outside the Premises.

2.    The walls, walkways, sidewalks, entrance passages, courts and 
vestibules shall not be obstructed or used for any purpose other than ingress 
and egress of pedestrian travel to and from the Premises, and shall not be used 
for loitering or gathering, or to display, store or place any merchandise, 
equipment or devices, or for any other purpose. The walkways, entrance 
passageways, courts, vestibules and roof are not for the use of the general 
public and Landlord shall in all cases retain the right to control and prevent 
access thereto by all persons whose presence in the judgment of the Landlord 
shall be prejudicial to the safety, character, reputation and interests of the 
Building and its tenants, provided that nothing herein contained shall be 
construed to prevent such access to persons with whom Tenant normally deals in 
the ordinary course of Tenant's business unless such persons are engaged in 
illegal activities. No tenant or employee or invitee of any tenant shall be 
permitted upon the roof of the Building.

3.    No awnings or other projection shall be attached to the outside 
walls of the Building. No security bars or gates, curtains, blinds, shades or 
screens shall be attached to or hung in, or used in connection with, any window 
or door of the Premises without prior written consent of the Landlord. Neither 
the interior or exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.

4.    Tenant shall not in any way deface any part of the Premises or the 
Building. Tenant shall not lay linoleum, tile, carpet or other similar floor 
covering so that the same shall be affixed to the floor of the Premises in any 
manner except as approved by Landlord in writing. The expense of repairing any 
damage resulting from a violation of this rule or removal of any floor covering 
shall be borne by Tenant.

5.    The toilet rooms, urinals, wash bowls and other plumbing apparatus 
shall not be used for any purpose other than that for which they were 
constructed and no foreign substance of any kind whatsoever shall be thrown 
therein. The expense of any breakage, stoppage or damage resulting from the 
violation of this rule shall be borne by the Tenant.

6.    Landlord shall direct electricians as to the manner and location of 
any future telephone wiring. No boring or cutting for wires will be allowed 
without the prior consent of Landlord. The locations of the telephones, call 
boxes and other office equipment affixed to the Premises shall be subject to 
the prior written approval of Landlord.

1

30
7.   No exterior storage shall be allowed at any time without the prior 
written approval of Landlord. The Premises shall not be used for cooking or 
washing clothes without the prior written consent of Landlord, or for lodging 
or sleeping or for any immoral or illegal purposes.

8.   Tenant shall not make, or permit to be made, any unseemly or 
disturbing noises or disturb or interfere with occupants of this or neighboring 
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, phonograph, machinery, or otherwise. Tenant 
shall not use, keep or permit to be used, or kept, any foul or obnoxious gas or 
substance in the Premises or permit or suffer the Premises to be used or 
occupied in any manner offensive or objectionable to Landlord or other 
occupants of this or neighboring buildings or premises by reason of any odors, 
fumes or gases.

9.   Neither Tenant nor any of Tenant's Agents shall at any time bring or 
keep upon the Premises any toxic, hazardous, inflammable, combustible or 
explosive fluid, chemical or substance without the prior written consent of 
Landlord.

10.   No animals shall be permitted at any time within the Premises.

11.   Tenant shall not use the name of the Building or the Project in 
connection with or in promoting or advertising the business of Tenant, except 
as Tenant's address, without the prior written consent of Landlord. Landlord 
shall have the right to prohibit any advertising by Tenant which uses the name 
of, or uses pictures or depictions of, the Building or the Project if such 
advertising in Landlord's reasonable opinion, tends to impair the reputation of 
the Project or its desirability for its intended uses, and upon written notice 
from Landlord Tenant shall refrain from or discontinue such advertising.

12.   Canvassing, soliciting, peddling, parading, picketing, demonstrating 
or otherwise engaging in any conduct that unreasonably impairs the value or use 
of the Premises or the Project are prohibited and Tenant shall cooperate to 
prevent the same.

13.   All equipment of any electrical or mechanical nature shall be placed 
by Tenant on the Premises in such a way as to best minimize, absorb and prevent 
any vibration, noise or annoyance. No equipment of any type shall be placed on 
the Premises which in Landlord's opinion exceeds the load limits of the floor 
or otherwise threatens the soundness of the structure or improvements of the 
Building.

14.   All furniture, equipment and freight shall be moved in and out of the 
Building only at hours and in accordance with rules established by Landlord, 
and shall not impair vehicular and pedestrian circulation in the Common Area.  
Landlord will not be responsible for loss or damage to any furniture, 
equipment, or other personal property of Tenant from any cause.

15.   No air conditioning unit or other similar apparatus shall be 
installed or used by Tenant without the prior written consent of Landlord.

16.   No aerial antenna shall be erected on tile roof or exterior walls of 
the Premises, or on the grounds, without in each instance the prior written 
consent of Landlord. Any aerial or antenna so installed by or on behalf of 
Tenant without such written consent shall be subject to removal by Landlord at 
any time without prior notice at the expense of Tenant, and Tenant shall upon 
Landlord's demand pay a reasonable removal fee to Landlord.

2

31
17.  The entire Premises, including vestibules, entrances, doors, fixtures,
windows and plate glass, shall at all times be maintained in a safe, neat and
clean condition by Tenant. All trash, refuse and waste materials shall be
regularly removed from the Premises by Tenant and placed in the containers at
the locations designated by Landlord for refuse collection. All cardboard boxes
must be "broken down" prior to being placed in the trash containers. All
styrofoam chips must be bagged or otherwise contained prior to placement in the
trash containers, so as not to constitute a nuisance. Pallets may not be
disposed of in the trash containers or enclosures. The burning of trash, refuse
or waste materials is prohibited.

18.  All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises without the prior written consent of Landlord, except
for Secure Areas within the Premises. In the event of loss of any keys furnished
by Landlord for Tenant, Tenant shall pay to Landlord the costs thereof.

19.  No person shall enter or remain within the Project while intoxicated
or under the influence of liquor or drugs. Landlord shall have the right to
exclude or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.

Tenant agrees to comply with all of the foregoing Rules and Regulations.
Should Tenant not abide by these Rules and Regulations, Landlord or any
"Operator," "Association" or "Declarant" under any Restrictions may serve a
notice to correct the deficiencies. If Tenant has not corrected the deficiencies
by the end of the notice period set forth in Section 15.1(g) of the Lease,
Tenant will be in default of the Lease, and Landlord and/or its designee shall
have the right, without further notice, to cure the violation at Tenant's
expense.

Landlord reserves the right to amend or supplement the foregoing Rules and
Regulations and to adopt and promulgate additional reasonable rules and
regulations applicable to the Premises. Notice of such rules and regulations and
amendments and supplements thereto, if any, shall be given to the Tenant.
Notwithstanding anything to the contrary herein or in the Lease, Tenant shall
not be required to comply with any new rules, regulations or restrictions,
unless the same apply generally and non-discriminatorily to the occupants of the
Project, do not unreasonably interfere with Tenant's use of the Premises or
Tenant's parking rights and do not materially increase Tenant's obligations or
decrease Tenant's rights under this Lease.

Neither Landlord nor Landlord's Agents or any other person or entity shall
be responsible to Tenant or to any other person for the ignorance or violation
of these Rules and Regulations by any other tenant or other person. Tenant shall
be deemed to have read these Rules and Regulations and to have agreed to abide
by them as a condition precedent, waivable only by Landlord, to Tenant's
occupancy of the Premises.

3

1
EXHIBIT 10.30

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE is dated for reference purposes only as
April 18, 2000, and is part of that Lease dated January 12, 1996 together with
the Lease and Exhibits (collectively, the "Lease") by and between AMB PROPERTY,
L.P., a Delaware limited partnership ("Landlord") Successor-in-Interest to
EASTRICH NO. 137 CORPORATION, c/o Insignia-O'Donnell Commercial Group, Inc. and
HARMONIC, INC., a Delaware corporation ("Tenant"), and is made with reference to
the following facts:

A. The Premises currently leased by Tenant pursuant to the Lease
consists of 110,160 rentable square feet commonly known as 549 Baltic Way, City
of Sunnyvale, California.

B. The Lease Term for said Premises currently expires on August 1, 2006.

C. Tenant and Landlord wish to amend the Lease on the Terms and
Conditions set forth in this First Amendment to Lease.

NOW, THEREFORE, Landlord and Tenant hereby agree that the Lease Terms
are amended as follows:

1. Lease Term: Article 8 is hereby amended to provide that the
Lease Term shall be extended through and including September 30, 2010.

2. Base Monthly Rent: Commencing August 2, 2006, Article 9 is
hereby amended to provide for the Base Monthly Rent as follows:

August 2, 2006                        Adjustment to Fair market Value (FMV)
--------------                        -------------------------------------

August 2, 2006 - December 31, 2006:   $2.60 NNN per square foot per month or FMV
January 1, 2007 - December 31, 2007:  $2.70 NNN per square foot per month or FMV
January 1, 2008 - December 31, 2008:  $2.80 NNN per square foot per month of FMV
January 1, 2009 - December 31, 2009:  $2.90 NNN per square foot per month or FMV
January 1, 2010 - September 30, 2010: $3.00 NNN per square foot per month or FMV

A. The Base Monthly Rent for the Period after August 2,
2006 shall be the greater of (i) one hundred percent (100%) of the Base Monthly
Rent Schedule, or (ii) one hundred percent (100%) of the then fair market
monthly rent determined as of the commencement of the Period in question based
upon like buildings with like improvements in the area within the boundaries of
Highways 101, 880 and the San Francisco Bay. However, the Fair Market Value Rent
as determined by appraisal shall not exceed $4.00 per square foot per month in
August 2006 with 5% annual increases through the balance of the term. The Period
shall contain no free rent and the Premises shall be taken "as-is". If the
parties are unable to agree upon the fair market monthly rent for the Premises
for the option period in question at least seventy-five (75) days prior to the
commencement of the option period in question, then the fair market monthly rent
shall be determined by appraisal conducted pursuant to subparagraph B.

B. In the event it becomes necessary to determine by
appraisal the fair market rent of the Premises for the purpose of establishing
the Base Monthly Rent during the Period, then such fair market monthly rent
shall be determined by three (3) real estate appraisers, all of whom shall be
members of the American Institute of Real Estate Appraisers with not less than
five (5) years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:

(1) The party demanding an appraisal (the "Notifying
Party") shall notify the other party (the "Non-Notifying Party") thereof by
delivering a written demand for appraisal, which demand, to be effective, must
give the name, address, and qualifications of an appraiser selected by the
Notifying Party. Within ten (10) days of receipt of said demand, the
Non-Notifying Party shall select its appraiser and notify the Notifying Party,
in writing, of the name, address, and qualifications of an appraiser selected by
it. Failure by the Non-Notifying Party to select a qualified appraiser within
said ten (10) day period shall be deemed a waiver of its right to select a
second appraiser on its own behalf and the Notifying Party shall select a second
appraiser on behalf of the Non-Notifying Party within five (5) days after the
expiration of said ten

2
(10) day period. Within ten (10) days from the date the second appraiser shall
have been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be selected by the American Arbitrations Association or if
it shall refuse to perform this function, then at the request of either Landlord
or Tenant, such third appraiser shall be promptly appointed by the then
Presiding Judge of the Superior Court of the State of California for the County
of Santa Clara.

(2) The three (3) appraisers so selected shall meet
in San Jose, California, not later than twenty (20) days following the selection
of the third appraiser. At said meeting the appraisers so selected shall attempt
to determine the fair market monthly rent of the Premises for the period in
question (including the timing and amount of periodic increases).

(3) If the appraisers so selected are unable to
complete their determinations in one meeting, they may continue to consult at
such times as they deem necessary for a fifteen (15) day period from the date of
the first meeting, in an attempt to have at least two (2) of them agree. If, at
the initial meeting or at any time during said fifteen (15) day period, two (2)
or more of the appraisers so selected agree on the fair market rent of the
Leased Premises, such agreement shall be determinative and binding on the
parties hereto, and the agreeing appraisers shall, in simple letter form
executed by the agreeing appraisers, forthwith notify both Landlord and Tenant
of the amount set by such agreement.

(4) If two (2) or more appraisers do not so agree
within said fifteen (15) day period, then each appraiser shall, within five (5)
days after the expiration of said fifteen (15) day period, submit his
independent appraisal in simple letter form to Landlord and Tenant stating his
determination of the fair market rent of the Premises for the period in
question. The parties shall then determine the fair market rent for the Premises
by determining the average of the fair market rent set by each of the
appraisers. However, if the lowest appraisal is less than eighty-five percent
(85%) of the middle appraisal then such lowest appraisal shall be disregarded
and/or if the highest appraisal is greater than one hundred fifteen percent
(115%) of the middle appraisal then such highest appraisal shall be disregarded.
If the fair market rent set by any appraisal is so disregarded, then the average
shall be determined by computing the average set by the other appraisals that
have not been disregarded.

(5) Nothing contained herein shall prevent Landlord
and Tenant from jointly selecting a single appraiser to determine the fair
market rent of the Premises, in which event the determination of such appraisal
shall be conclusively deemed the fair market rent of the Premises.

(6) Each party shall bear the fees and expenses of
the appraiser selected by or for it, and the fees and expenses of the third
appraiser (or the joint appraiser if one joint appraiser is used) shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant.

3. Security Deposit: Article 10 is hereby amended to provide for
an increase in the Security Deposit of $227,480.00 which Tenant has provided
Landlord upon signature hereon, for a total of $330,480.00.

4. Retained Real Estate Brokers: Article 12 is amended to provide
that Tenant is represented exclusively by Cornish & Carey and Landlord is
represented exclusively by Orchard Properties.

5. Condition of Premises: Tenant is fully familiar with the
Premises by way of its occupancy and accepts the Premises for the extended term
created hereby in their as-is condition, with all latent and patent faults,
without warranty or obligation on the part of Landlord to provide or pay for any
interior improvements or tenant improvement allowances. Upon timely exercise of
the option to extend, Tenant shall take the Premises for the Extended Term on
the same basis.

6. Year 2000 Disclaimer: Landlord hereby disclaims any liability
for any and all damages, injuries or other losses, whether ordinary, special,
consequential, punitive or otherwise, arising out of, relating to, or in
connection with, (a) the failure of any automated,

3
computerized and/or software system or other technology used in, on, or about
the Property or relating to the management or operation of the Property to
accurately receive, provide or process date/time data (including, but not
limited to, calculating, comparing and sequencing) both before and after
September 9, 1999, and before, after, during and between the years 1999 A. D.
and 2000 A. D., and leap year calculations and, or (b) the malfunction, ceasing
to function or providing of invalid or incorrect results by any such technology
as a result of date/time data. The foregoing disclaimer shall apply to any such
technology used in, on, or about the Property or that affects the Property,
whether or not such technology is within the control of Owner or any of Owner's
agents or representatives. THE FOREGOING DISCLAIMER INCLUDES A DISCLAIMER OF ALL
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATTERS
DESCRIBED HEREIN, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

7. Continuing Obligation: Except as expressly set forth in this
Amendment, all terms and conditions of the Lease remain in full force and
effect, and all terms and conditions of the Lease are incorporated herein as
though set forth at length.

8. Effect of Amendment: This Amendment modifies the Lease. In the
event of any conflict or discrepancy between the Lease and/or any other previous
documents between the parties and the provisions of this Amendment, then the
provisions of this Amendment shall control. Except as modified herein, the Lease
shall remain in full force and effect.

9. Authority: Each individual executing this Amendment on behalf
of Tenant represents and warrants that he or she is duly authorized to and does
execute and deliver this Amendment pursuant to express authority from Tenant
pursuant to and in accordance with the By-Laws and the other organic documents
of the Tenant corporation.

10. Entire Agreement: The Lease, as modified by this Amendment,
constitutes and contains the entire agreement between the parties, and there are
no binding agreements or representations between the parties except as expressed
herein. Tenant acknowledges that neither Landlord nor Landlord's Agents have
made any legally binding representations or warranties as to any matter except
for such matters binding representations or warranties as to any matter except
for such matters which are expressly set forth herein, including any
representations or warranties relating to the condition of the Premises or the
improvements thereto or the suitability of the Premises or the Project for
Tenant's business.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment to be effective as of the date first set forth above.

LANDLORD:                               TENANT:

AMB PROPERTY, L.P.                      HARMONIC, INC.
a Delaware limited partnership          a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation              By: /s/ ROBIN N. DICKSON
-------------------------------
By: /s/ JOHN L. ROSSI                         Robin N. Dickson
-------------------------------      Its:  Chief Financial Officer
John L. Rossi                          -------------------------------
Its: Regional Manager
By:
Telephone: (415)394-9000                   --------------------------------
------------------------      Its:
-------------------------------
Facsimile: (415)394-0903
------------------------      Telephone: (408)542-2661
------------------------
Executed at: 505 Montgomery Street
6th Floor                  Facsimile: (408)542-2516
San Francisco, CA 94111              ------------------------

Date: 5/12/00                           Executed at: 549 Baltic Way
-----------------------------      Sunnyvale, CA 94089

Date:
-----------------------------

4
EXHIBIT I
RULES AND REGULATIONS

This Exhibit sets forth the rules and regulations governing Tenant's use 
of the Common Area and the Premises leased to Tenant pursuant to the terms, 
covenants and conditions of the Lease to which this Exhibit is attached. Unless 
otherwise defined, capitalized terms used herein shall have the same meanings 
as set forth in the Lease. In the event of any conflict or inconsistency 
between this Exhibit and the Lease, the Lease shall control.

1.   Tenant shall not place anything or allow anything to be placed near 
the glass of any window, door, partition or wall which may appear unsightly 
from outside the Premises.

2.   The walls, walkways, sidewalks, entrance passages, courts and 
vestibules shall not be obstructed or used for any purpose other than ingress 
and egress of pedestrian travel to and from the Premises, and shall not be used 
for loitering or gathering, or to display, store or place any merchandise, 
equipment or devices, or for any other purpose. The walkways, entrance 
passageways, courts, vestibules and roof are not for the use of the general 
public and Landlord shall in all cases retain the right to control and prevent 
access thereto by all persons whose presence in the judgment of the Landlord 
shall be prejudicial to the safety, character, reputation and interests of the 
Building and its tenants, provided that nothing herein contained shall be 
construed to prevent such access to persons with whom Tenant normally deals in 
the ordinary course of Tenant's business unless such persons are engaged in 
illegal activities. No tenant or employee or invitee of any tenant shall be 
permitted upon the roof of the Building.

3.   No awnings or other projection shall be attached to the outside walls 
of the Building. No security bars or gates, curtains, blinds, shades or screens 
shall be attached to or hung in, or used in connection with, any window or door 
of the Premises without the prior written consent of Landlord. Neither the 
interior nor exterior of any windows shall be coated or otherwise sunscreened 
without the express written consent of Landlord.

4.   Tenant shall not in any way deface any part of the Premises or the 
Building. Tenant shall not lay linoleum, tile, carpet or other similar floor 
covering so that the same shall be affixed to the floor of the Premises in any 
manner except as approved by Landlord in writing. The expense of repairing any 
damage resulting from a violation of this rule or removal of any floor covering 
shall be borne by Tenant.

5.   The toilet rooms, urinals, wash bowls and other plumbing apparatus 
shall not be used for any purpose other than that for which they were 
constructed and no foreign substance of any kind whatsoever shall be thrown 
therein. The expense of any breakage, stoppage or damage resulting from the 
violation of this rule shall be borne by the Tenant.

6.   Landlord shall direct electricians as to the manner and location of 
any future telephone wiring. No boring or cutting for wires will be allowed 
without the prior consent of Landlord. The locations of the telephones, call 
boxes and other office equipment affixed to the Premises shall be subject to 
the prior written approval of Landlord.

1

5
7.   No exterior storage shall be allowed at any time without the prior 
written approval of Landlord. The Premises shall not be used for cooking or 
washing clothes without the prior written consent of Landlord, or for lodging 
or sleeping or for any immoral or illegal purposes.

8.   Tenant shall not make, or permit to be made, any unseemly or 
disturbing noises or disturb or interfere with occupants of this or neighboring 
buildings or premises or those having business with them, whether by the use of 
any musical instrument, radio, phonograph, machinery, or otherwise. Tenant 
shall not use, keep or permit to be used, or kept, any foul or obnoxious gas or 
substance in the Premises or permit or suffer the Premises to be used or 
occupied in any manner offensive or objectionable to Landlord or other 
occupants of this or neighboring buildings or premised by reason of any odors, 
fumes or gases.

9.   Neither Tenant nor any of Tenant's Agents shall at any time bring or 
keep upon the Premises any toxic, hazardous, inflammable, combustible or 
explosive fluid, chemical or substance without the prior written consent of 
Landlord.

10.  No animals shall be permitted at any time within the Premises.

11.  Tenant shall not use the name of the Building or the Project in 
connection with or in promoting or advertising the business of Tenant, except 
as Tenant's address, without the prior written consent of Landlord. Landlord 
shall have the right to prohibit any advertising by Tenant which uses the name 
of, or uses pictures or depictions or, the Building or the Project if such 
advertising in Landlord's reasonable opinion, tends to impair the reputation of 
the Project or its desirability for its intended uses, and upon written notice 
from Landlord Tenant shall refrain from or discontinue such advertising.

12.  Canvassing, soliciting, peddling, parading, picketing, demonstrating 
or otherwise engaging in any conduct that unreasonably impairs the value or use 
of the Premises or the Project are prohibited and Tenant shall cooperate to 
prevent the same.

13.  All equipment of any electrical or mechanical nature shall be placed 
by Tenant on the Premises in such a way as to best minimize, absorb and prevent 
any vibration, noise or annoyance. No equipment of any type shall be placed on 
the Premises which in Landlord's opinion exceeds the load limits of the floor 
or otherwise threatens the soundness of the structure or improvements of the 
Building.

14.  All furniture, equipment and freight shall be moved in and out of the 
Building only at hours and in accordance with rules established by Landlord, 
and shall not impair vehicular and pedestrian circulation in the Common Area. 
Landlord will not be responsible for loss or damage to any furniture, 
equipment, or other personal property of Tenant from any cause.

15.  No air conditioning unit or other similar apparatus shall be 
installed or used by Tenant without the prior written consent of Landlord.

16.  No aerial antenna shall be erected on tile roof or exterior walls of 
the Premises, or on the grounds, without in each instance the prior written 
consent of Landlord. Any aerial or antenna so installed by or on behalf of 
Tenant without such written consent shall be subject to removal by Landlord at 
any time without prior notice at the expense of Tenant, and Tenant shall upon 
Landlord's demand pay a reasonable removal fee to Landlord.

2

6
17.  The entire Premises, including vestibules, entrances, doors, 
fixtures, windows and plate glass, shall at all times be maintained in a safe, 
neat and clean condition by Tenant. All trash, refuse and waste materials shall 
be regularly removed from the Premises by Tenant and placed in the containers 
at the locations designated by Landlord for refuse collection. All cardboard 
boxes must be "broken down" prior to being placed in the trash containers. All 
styrofoam chips must be bagged or otherwise contained prior to placement in the 
trash containers, so as not to constitute a nuisance. Pallets may not be 
disposed of in the trash containers or enclosures. The burning of trash, refuse 
or waste materials is prohibited.

18.  All keys for the Premises shall be provided to Tenant by Landlord and 
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises without the prior written consent of Landlord, except
for Secure Areas within the Premises. In the event of loss of any keys furnished
by Landlord for Tenant, Tenant shall pay to Landlord the costs thereof.

19.  No person shall enter or remain within the Project while intoxicated 
or under the influence of liquor or drugs. Landlord shall have the right to 
exclude or expel from the Project any person who, in the absolute discretion of 
Landlord, is under the influence of liquor or drugs.

Tenant agrees to comply with all of the foregoing Rules and Regulations. 
Should Tenant not abide by these Rules and Regulations, Landlord or any 
"Operator," "Association" or "Declarant" under any Restrictions may serve a 
notice to correct the deficiencies. If Tenant has not corrected the 
deficiencies by the end of the notice period set forth in Section 15.1(g) of 
the Lease, Tenant will be in default of the Lease, and Landlord and/or its 
designee shall have the right, without further notice, to cure the violation at 
Tenant's expense.

Landlord reserves the right to amend or supplement the foregoing Rules and 
Regulations and to adopt and promulgate additional reasonable rules and 
regulations applicable to the Premises. Notice of such rules and regulations 
and amendments and supplements thereto, if any, shall be given to the Tenant. 
Notwithstanding anything to the contrary herein or in the Lease, Tenant shall 
not be required to comply with any new rules, regulations or restrictions, 
unless the same apply generally and non-discriminatorily to the occupants of 
the Project, do not unreasonably interfere with Tenant's use of the Premises or 
Tenant's parking rights and do not materially increase Tenant's obligations or 
decrease Tenant's rights under this Lease.

Neither Landlord nor Landlord's Agents or any other person or entity shall 
be responsible to Tenant or to any other person for the ignorance or violation 
of these Rules and Regulations by any other tenant or other person. Tenant 
shall be deemed to have read these Rules and Regulations and to have agreed to 
abide by them as a condition precedent, waivable only by Landlord, to Tenant's 
occupancy of the Premises.

3

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