8-K

                          UNITED STATES

               SECURITIES AND EXCHANGE COMMISSION

                     Washington, D.C. 20549

                            FORM 8-K

                          CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report  (Date of earliest event reported):  June 19, 1995


                          CIRRUS LOGIC, INC.
         (Exact name of registrant as specified in its charter)

      CALIFORNIA                      0-17795                   77-0024
(State or other jurisdiction of      (Commission            (I.R.S. Emp
incorporation or organization)       file Number)         Identificatio

          3100 West Warren Avenue, Fremont, CA             94538
        (Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code:   (510) 623-8300

                             Not Applicable
          (Former name or former address, if changed from last report)



Item 5.   Other Events

Under its MiCRUS joint venture agreement, MiCRUS has completed approxim
$176 million of equipment lease financings which have been guaranteed b
Company.

On June 19, 1995, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $66 million of semiconductor
manufacturing equipment between General Electric Capital Corporation as
Lessor and MICRUS, a New York general partnership, as Lessee.  Enclosed
Exhibit 99.1 to this Current Report on Form 8-K is the text of the MAST
LEASE AGREEMENT and the CIRRUS GUARANTY, both dated June 19, 1995.

On June 24, 1996, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $10 million of semiconductor
manufacturing equipment between General Electric Capital Corporation as
Lessor and MICRUS, a New York general partnership, as Lessee.  Enclosed
Exhibit 99.2 to this Current Report on Form 8-K is the text of the MAST
LEASE AGREEMENT and the CIRRUS GUARANTY, both dated June 24, 1996.

On June 28, 1996, Cirrus Logic, Inc. (the "Registrant") guaranteed
a MASTER LEASE AGREEMENT for approximately $100 million of semiconducto
manufacturing equipment between COMDISCO, INC., as Lessor and MICRUS, a
York general partnership, as Lessee.  Enclosed as Exhibit 99.3 to this 
Report on Form 8-K is the text of the MASTER LEASE AGREEMENT and the CI
GUARANTY, both dated June 28, 1996.


Item 7.   Financial Statements and Exhibits

     (c)  Exhibits

             99.1  MASTER LEASE AGREEMENT dated as of June 19, 1995 by
                   and between GENERAL ELECTRIC CAPITAL CORPORATION, as
                   and MICRUS, a New York general partnership, as Lesse
                   the CIRRUS GUARANTY.

             99.2  MASTER LEASE AGREEMENT dated as of June 24, 1996 by
                   and between GENERAL ELECTRIC CAPITAL CORPORATION, as
                   and MICRUS, a New York general partnership, as Lesse
                   the CIRRUS GUARANTY.

             99.3  MASTER LEASE AGREEMENT dated as of June 28, 1996 by
                   and between COMDISCO, INC., as Lessor and MICRUS, a
                   New York general partnership, as Lessee and the CIRR
                   GUARANTY.


                        CIRRUS LOGIC, INC.
                           SIGNATURES

          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.

                                   CIRRUS LOGIC, INC.
                                   (Registrant)


December 20, 1996             /s/ Thomas F. Kelly
Date                          Thomas F. Kelly
                              Executive Vice President, Finance and
                              Administration, Chief Financial Officer,
                              and Treasurer
                              (Principal Financial and Accounting Offic

EX-99.1

                              EXHIBIT 99.1

                     MASTER LEASE AGREEMENT 
                   dated as of June 19, 1995, 
                         by and between 

                   WILMINGTON TRUST COMPANY, 
             NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE 
                            as Lessor 
                               and 
                             MICRUS, 
                            as Lessee 
                     MASTER LEASE AGREEMENT 


          TABLE OF CONTENTS                                  Page 
I. LEASING . . . . . . . . . . . .  1 
II.     TERM, RENT AND PAYMENT . .  2 
III.    TAXES. . . . . . . . . . .  2 
IV.     LIENS. . . . . . . . . . .  3 
V. QUIET ENJOYMENT . . . . . . . .  3 
VI.     PERSONAL PROPERTY. . . . .  3 
VII.    DELIVERY, OPERATION, MAINTENANCE AND REPORTING 3 
VIII.   RELOCATION. . . . . . . .  4 
IX.     MODIFICATIONS. . . . . . .  4 
X. SUBSTITUTION OF ITEMS . . . . .  6 
XI.     LESSEE ASSIGNMENT AND SUBLEASE  6 
XII.    INSPECTION AND MARKING . .  8 
XIII.   STIPULATED LOSS VALUE. . .  8 
XIV.    LOSS OR DAMAGE . . . . . .  8 
XV.     INSURANCE. . . . . . . . .  9 
XVI.    RETURN OF EQUIPMENT. . . .  9 
XVII.   LEASE DEFAULT. . . . . . .  9 
XVIII.  LESSOR ASSIGNMENT. . . . . 11 
XIX.    NET LEASE; NO SET-OFF, ETC. 12 
XX.     INDEMNIFICATION. . . . . . 12 
XXI.    DISCLAIMER . . . . . . . . 13 
XXII.   REPRESENTATIONS AND WARRANTIES OF LESSEE . .  .  .  .  13 
XXIII.  OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST;   
        USURY SAVINGS. . . . . . . . . 14 
XXIV.   EARLY TERMINATION. . . . . 15 
XXV.    END OF BASIC TERM LEASE OPTIONS 16 
          (a)    Renewal. . . .  . . . . . . 17 
          (b)    Return . . . . . .  . .  .. 17 
          (c)    Purchase . . . . .  . .  .  18 
          (d)    Notice of Election .  . .   18 
XXVI.   END OF RENEWAL TERM LEASE OPTIONS 18 
          (a)    Extension. .  . . . . . . . 19 
          (b     Return .  . . . . .  . .  . 19 
          (c)    Purchase .  . . . .  . . .. 20 
          (d)    Notice of Election . . . .  20 
XXVII.  MISCELLANEOUS. . . . . . . 21 
XXVIII. CHOICE OF LAW; JURISDICTION 23 
XXIX.   CHATTEL PAPER. . . . . . . 23 
XXX.    SCOPE OF LIABILITY . . . . 23 
XXXI.   LIMITATION OF LIABILITY. . 23 


EXHIBITS 
   No. 1 - Additional Collateral 
   No. 2 - Purchase Order Assignment and Consent 
   No. 3 - Letter of Credit Agreement 
   No. 4 - Corporate Guaranty 
   No. 5 - IBM Guaranty 
   No. 6 - Real Property Waiver 
   No. 7 - Bill of Sale 

                     MASTER LEASE AGREEMENT 

 THIS MASTER LEASE AGREEMENT, dated as of the 19th day of June, 
1995 ("Agreement"), between WILMINGTON TRUST COMPANY, not 
individually but solely as Trustee (the "Trustee") pursuant to 
that certain Equipment Trust Agreement dated as of June, 1995 (the 
"Trust Agreement"), with General Electric Capital Corporation, 
with an office at Rodney Square North, 1100 North Market Street, 
Wilmington, Delaware 19890 (hereinafter called, together with its 
successors and assigns, if any, "Lessor"), and MICRUS, a New York 
general partnership with its mailing address and chief place of 
business at 1580 Route 52, Zip 92-C, Hopewell Junction, New York 
12533 (hereinafter called "Lessee"). 

                           WITNESSETH: 

I.    LEASING: 
 (a)  Subject to the terms and conditions set forth below, Lessor 
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, 
the equipment ("Equipment") described in Annex A to any schedule 
hereto ("Schedule").  Terms defined in a Schedule and not 
otherwise defined herein shall have the meanings ascribed to them 
in such Schedule. 
 (b)  The obligation of Lessor to purchase Equipment from the 
manufacturer or supplier thereof ("Supplier") and to lease the 
same to Lessee under any Schedule shall be subject to receipt by 
Lessor, prior to the Lease Commencement Date (with respect to such 
Equipment), of each of the following documents in form and 
substance satisfactory to Lessor:  (i) a Schedule relating to the 
Equipment then to be leased hereunder, (ii) a Purchase Order 
Assignment and Consent in substantially the form attached hereto 
as Exhibit No. 2, unless the item of the Equipment (an "Item") 
shall have been delivered, in which case Lessor shall receive a 
Bill of Sale in substantially the form attached hereto as Exhibit 
No. 7 with respect to such Item, (iii) evidence of insurance which 
complies with the requirements of Section XV, (iv) a Corporate 
Guaranty in substantially the form attached hereto as Exhibit No. 
3 (the "Guaranty"), duly executed by Cirrus Logic, Inc. 
("Guarantor"), (v) a Letter of Credit Agreement in substantially 
the form attached hereto as Exhibit No. 4 (the "Letter of Credit 
Agreement"), duly executed by Guarantor, (vi) the Letter of Credit 
pursuant to the Letter of Credit Agreement, (vii) a Real Property 
Waiver  in substantially the form attached hereto as Exhibit No. 
6, duly executed by each holder of an interest in the Location (as 
such term is hereinafter defined)  where the Equipment will be 
located, (viii) a Certificate of Delivery (in the form of Annex F 
to the applicable Schedule) with respect to such Item, and (ix) 
such other documents as Lessor may reasonably request.  As a 
further condition to such obligations of Lessor, Lessee shall 
execute and deliver to Lessor a Certificate of Acceptance (in the 
form of Annex B to the applicable Schedule) covering such 
Equipment (1) concurrently with delivery of such Equipment if the 
purchase order with the Supplier does not provide for a period of 
testing after delivery; or (2) within sixty (60) days after 
delivery of such Equipment (but not later than December 29, 1995) 
if the purchase order with the Supplier provides for a period of 
testing after delivery.  Lessor hereby appoints Lessee its agent 
for inspection and acceptance of the Equipment from the Supplier. 
 Upon execution by Lessee of any Certificate of Acceptance, the 
Equipment described thereon shall be deemed to have been delivered 
to, and irrevocably accepted by, Lessee for lease hereunder. 
 (c)  Each funding under this Agreement shall be in an amount not 
less than Ten Million Dollars ($10,000,000.00) except the last 
funding which shall cover any residual amount, and there shall be 
no more than six (6) fundings in the aggregate.  The aggregate 
amount of all fundings under this Agreement shall not exceed 
Seventy Million Dollars ($70,000,000.00).  The composition of the 
Equipment described in Annex A to each Schedule shall reasonably 
be satisfactory to Lessor. 

II.   TERM, RENT AND PAYMENT: 
 (a)  Lessee's right to use the Equipment shall commence on the 
date of execution by Lessee of the Certificate of Delivery for 
such Equipment ("Lease Commencement Date").  The Basic Term 
Commencement Date shall be, and the rent payable hereunder (the 
"Rent") shall commence on, the first day of the calendar month 
next following the date that Lessee executes and delivers a 
Certificate of Acceptance with respect to all of the Items of 
Equipment listed on a Schedule.  The term of this Agreement shall 
be the period specified in the applicable Schedule.  If any term 
is extended, the word "Term" shall be deemed to refer to all 
extended terms, and all provisions of this Agreement shall apply 
during any extended terms, except as may be otherwise specifically 
provided in writing. 
 (b)  Rent shall be paid to Lessor by wire transfer of immediately 
available funds to Lessor's Servicing Agent, General Electric 
Capital Corporation (the "Servicing Agent") at:  Bankers Trust New 
York, New York, New York 10006, Account No. 50-202-962, ABA No. 
021-001-033, or to such other account as Lessor may direct in 
writing; and shall be effective upon receipt.  Payments of Rent 
shall be in the amount set forth in, and due in accordance with, 
the provisions of the applicable Schedule.  In no event shall any 
Rent payments be refunded to Lessee. 

III.  TAXES: 
 Lessee shall report (to the extent that it is legally 
permissible) and pay promptly all taxes, fees and assessments due, 
imposed, assessed or levied against any Equipment (or the 
purchase, ownership, delivery, leasing, possession, use or 
operation thereof), this Agreement (or any rentals or receipts 
hereunder), any Schedule, Lessor or Lessee by any United States 
Federal, state or local government or taxing authority during or 
related to the term of this Agreement,  including, without 
limitation, all license and registration fees, and all sales, use, 
personal property, excise, stamp or other taxes, imposts, duties 
and charges, together with any penalties, fines or interest 
thereon, except that Lessee shall have no liability for taxes 
imposed (a) by the United States of America or any state or 
political subdivision thereof which are on or measured by the net 
or gross income or net or gross receipts of Lessor or which are 
characterized as franchise, net worth or shareholder's capital 
taxes or which are expressly in substitution for, or relieve 
Lessor from, any of the foregoing taxes (in each case other than 
sales, use, value-added, license, property or similar taxes), (b) 
by reason of the fact that Lessor shall not be an entity organized 
under the laws of the United States of America or any state 
thereof, (c) on or in connection with any voluntary transfer, 
assignment or disposition by Lessor of the Equipment or any part 
thereof or any interest arising hereunder or under any related 
document (other than a transfer pursuant to the exercise by Lessor 
of remedies under this Agreement) or any involuntary transfer, 
assignment or disposition by Lessor of any such item or interest 
resulting from any bankruptcy or other proceedings for the relief 
of debtors involving Lessor, or (d) while Lessee shall be 
contesting such taxes (all such taxes, fees and assessments for 
which Lessee shall have liability under this Section III being 
hereinafter called "Taxes").  Lessee shall (i) reimburse Lessor 
upon receipt of written request for reimbursement for any Taxes 
charged to or assessed against Lessor, (ii) on request of Lessor, 
submit to Lessor written evidence of Lessee's payment of Taxes, 
(iii) on all reports or returns show the ownership of the 
Equipment by Lessee, and (iv) on request of Lessor, send a copy 
thereof to Lessor.  Lessor shall give Lessee prompt notice if it 
shall receive any claim for Taxes or if it shall determine that 
any Taxes shall be payable and, at the request and expense of 
Lessee, Lessor shall contest such Taxes so long as such contest 
shall not involve any material risk of forfeiture of the Equipment 
(unless Lessee shall have provided security against such risk in a 
manner reasonably satisfactory to Lessor).  For purposes of this 
Section III, the term "Lessor" shall include any person who holds 
a beneficial interest in Lessor. 

IV.   LIENS: 
 (a)  Lessee shall not directly or indirectly create, incur, 
assume or suffer to exist any lien on or with respect to the 
Equipment except Permitted Liens.  As used herein, "Permitted 
Liens" shall mean liens which are (i) the Agreement, (ii) the 
rights of any sublessee or operator permitted by the terms of this 
Agreement, (iii) those asserted by persons claiming by or through 
Lessor, (iv) a security interest in favor of the New York State 
Urban Development Corporation, which security interest shall be 
subject and subordinate to the interest of Lessor in the Equipment 
(the "New York State Lien"), (v) liens for fees, taxes, levies, 
imposts, duties or other governmental charges of any kind which 
are not yet delinquent or are being contested in good faith by 
appropriate proceedings which suspend the collection thereof, (vi) 
liens of mechanics, materialmen, laborers, employees or suppliers 
and similar liens arising by operation of law, incurred by Lessee 
in the ordinary course of business for sums that are not yet 
delinquent or are being contested in good faith by negotiations or 
by appropriate proceedings which suspend the collection thereof, 
and (vii) liens arising out of any judgments or awards against 
Lessee which have been adequately bonded to protect Lessor's 
interests or with respect to which a stay of execution has been 
obtained pending an appeal or proceeding for review. 
 (b)  Lessee will promptly notify Lessor thereof and, at Lessee's 
own expense, take such action as may be necessary duly to 
discharge any such lien other than Permitted Liens. 

V.QUIET ENJOYMENT: 
 Notwithstanding any other provision of this Agreement, so long as 
no Material Lease Default shall have occurred and be continuing, 
as between Lessee and Lessor, Lessee shall have the exclusive 
rights to possession and control of all the Equipment and neither 
Lessor nor any person acting or claiming through Lessor will take 
any action that shall interfere with the peaceful and quiet 
enjoyment of the use or nonuse of any item of the Equipment (an 
"Item") by Lessee, and Lessee shall have the right to use or not 
use such Item in its sole discretion (but, in all events, shall be 
required to maintain the Equipment as specified herein).  The 
foregoing is not intended to limit the inspection rights and the 
rights in connection with a return of the Items granted by Lessee 
hereunder.  As used herein, "Material Lease Default" shall mean 
any Lease Default (as hereinafter defined) other than a Lease 
Default resulting pursuant to Section XVII(a)(3) of this 
Agreement. 

VI.  PERSONAL PROPERTY: 
 Lessee and Lessor agree for the purposes of this Agreement that 
the Items and every part thereof and title thereto are and shall 
be considered as and shall remain personal and not real property 
to all persons and for all purposes. 

VII.  DELIVERY, OPERATION, MAINTENANCE AND REPORTING: 
 (a)  The Equipment shall be shipped directly from the Supplier to 
Lessee. 
 (b)  Lessee shall not use any Item or authorize any third party 
to use any Item in either case, in breach of any applicable laws 
(other than applicable laws as to which noncompliance would not 
adversely affect the business, operations or properties of Lessee 
and so long as such noncompliance shall not involve any material 
danger of the sale, forfeiture or loss of such Item or the 
imposition of any criminal liability on Lessor). 
 (c)  Lessee at its own expense shall at all times during the Term 
applicable to each Item maintain such Item in accordance with good 
commercial maintenance standards and practices followed from time 
to time by Lessee and International Business Machines Corporation 
("IBM") in the operation and maintenance of similar kinds of 
properties owned or leased by it.  Lessee shall keep each such 
Item fit for its intended use, in good and efficient working order 
(ordinary wear and tear excepted), and in as good condition 
(ordinary wear and tear excepted) as on the Lease Commencement 
Date for such Item of Equipment. 
 (d)  Lessee will promptly report to Lessor in writing if any Item 
of the Equipment is lost or damaged where the estimated repair 
costs would exceed One Hundred Thousand Dollars ($100,000.00) or 
is otherwise involved in an accident causing serious personal 
injury or significant property damage. 

VIII.  RELOCATION: 
 For purposes of this Agreement, the term "Location" shall mean 
any building or buildings owned and/or operated by Lessee, 
Guarantor or IBM, or any of their solvent subsidiaries, 
collectively referred to by such party as a "site".  The initial 
Location for the Equipment leased under this Agreement is the IBM 
East Fishkill site which incorporates the Hudson Valley Research 
Park.  Lessee may not relocate any of the Items from the initial 
Location without Lessor's prior written consent (which shall not 
unreasonably be withheld) unless the following conditions are 
satisfied: 
 (a)  the Item is relocated to a Location located in the 
contiguous Continental United States of America and the owner of 
the Location has provided Lessor with the appropriate landlord 
waiver; 
 (b)  Lessee shall have provided Lessor with written notice of the 
intention to relocate such Items in accordance with the terms 
hereof at least ten (10) Business Days prior to the date such 
relocation is commenced; 
 (c)  no Material Lease Default shall have occurred and be 
continuing; 
 (d)  all reasonable out-of-pocket costs and expenses incurred by 
Lessor in connection with such relocation shall be paid by 
Lessee; 
 (e)  the Equipment is located at not more than three (3) 
Locations; and 
 (f)  Lessee executes and delivers to Lessor such documents and 
instruments as reasonably may be required by Lessor in connection 
with such relocation of the Equipment, including (without 
limitation) Uniform Commercial Code financing statements to be 
filed at Lessee's expense. 
 If Lessee moves any Item to a different building within a 
Location, promptly thereafter Lessee shall deliver to Lessor an 
itemization identifying the specific building to which such Item 
was moved.  

IX.  MODIFICATIONS: 
 (a)  Lessee, at its own expense from time to time, may make any 
modification to any Item that Lessee may deem desirable in the 
conduct of its business if Lessee complies with all applicable 
laws relating thereto; provided, however, that Lessee shall not 
have the right to make any such modification that could materially 
impair such Item from being operated as designed or diminish the 
value, utility or remaining useful life of such Item to an 
independent third-party user. 
 (b)  Title to each modification shall vest as follows: 
      (i)  in the case of each modification for which Lessor shall 
have provided financing of the cost of such modification effective 
on the date such modification shall have been incorporated into 
such Item, Lessor shall acquire title to such modification without 
further act; 
      (ii) in the case of each modification for which Lessor shall 
not have provided financing of the cost of such modification, 
Lessee shall retain title to such modification; and 
      (iii)     notwithstanding subparagraph (ii) above, in the 
case of modifications which remain upon return of the Item to 
Lessor at the end of the Term applicable to an Item so modified, 
title to such modifications shall vest in Lessor at the end of the 
Term applicable to such Item at no cost to Lessor and without 
further action by Lessee; provided, however, that Lessee shall 
take such actions as reasonably may be required by Lessor to 
evidence the transfer of title. 
Immediately upon title to a modification vesting in Lessor 
pursuant to Paragraph (b)(i) of this Section, such modification 
shall, without further act, become subject to this Agreement and 
be deemed part of the applicable Item for all purposes.  
Modifications title to which remains in Lessee pursuant to this 
Section shall not be deemed a part of the applicable Item and 
shall not be subject to this Agreement. 
 (c)  Lessee may request Lessor to finance the cost of any 
modification (a "Modification Financing"), on terms acceptable to 
Lessee and Lessor.  Lessor shall comply with any such request 
subject to the following conditions precedent to Lessor's 
obligation: 
      (i)  there shall have been no material adverse change in the 
business and financial condition of Guarantor; 
      (ii) no Material Lease Default shall have occurred and be 
continuing; 
      (iii)     all governmental actions related to Lessee and the 
Item subject to the modification required to effect the 
Modification Financing shall have been obtained; and 
      (iv) such request is approved in writing by General 
Electrical Capital Corporation and the other Participants (as such 
term is hereinafter defined), including satisfaction of each such 
person's underwriting criteria and approval of the proposed 
modification. 
 (d)  Subject to compliance with applicable law and so long as no 
Material Lease Default shall have occurred and be continuing, if 
Lessor and Lessee cannot agree on the terms of a proposed 
Modification Financing, Lessee may purchase (upon sixty (60) days' 
notice to Lessor, on the Rent Payment Date specified in such 
notice) the Item which was to have been modified at a purchase 
price equal to the Stipulated Loss Value of such Item computed as 
of such Rent Payment Date plus any accrued Rent and other charges 
hereunder due with respect to such Item as of such Rent Payment 
Date. 
 (e)  Subject to compliance with applicable law and so long as no 
Material Lease Default shall have occurred and be continuing, 
Lessee may remove, at its own expense, any modification to which 
Lessee shall have title as provided in Paragraph (b) above; 
provided, that, unless Lessee shall have given notice of its 
desire to purchase such Item, at its own expense and prior to the 
end of the Term applicable to the Item subject to such 
modification, Lessee shall repair any damage to such Item caused 
by such removal, and such Item remains in the condition required 
hereunder. 

X.    SUBSTITUTION OF ITEMS: 
 Provided that no Material Lease Default shall have occurred and 
be continuing, at Lessee's expense, Lessee may at any time 
substitute a comparable Item of the Equipment for any Item (a 
"Substituted Item") in accordance with the terms of this Section. 
 On a quarterly basis, Lessee shall notify Lessor of all 
substitutions made during the preceding quarter.  At such time as 
the aggregate original Capitalized Lessor's Cost of all 
Substituted Items (other than Items replaced pursuant to Section 
XIII(a) hereof) exceeds twenty percent (20%) of the aggregate 
original Capitalized Lessor's Cost of all Equipment leased 
hereunder, Lessee's option to substitute additional Items shall be 
subject to Lessor's prior written consent (which consent shall not 
unreasonably be withheld).  If Lessee shall elect to substitute an 
Item of the Equipment pursuant hereto, Lessee shall, at its sole 
cost and expense, convey to Lessor a comparable item of equipment 
(a "Replacement Item"), free and clear of all liens other than 
Permitted Liens, that has at least the value, utility and 
remaining useful life and is in as good operating condition as the 
Substituted Item, assuming that the Substituted Item had been 
maintained in accordance with this Agreement.  In addition, Lessee 
shall pay to the Servicing Agent an administrative fee of Three 
Thousand Dollars ($3,000.00) per notice of substitution (provided, 
however, that such administrative fee shall not exceed Twelve 
Thousand Dollars ($12,000.00) per calendar year), and Lessee shall 
execute and deliver to Lessor such documents and instruments as 
reasonably may be required by Lessor in connection with such 
replacement, including (without limitation) Uniform Commercial 
Code financing statements to be filed at Lessee's expense.  Upon 
compliance by Lessee with the terms of the two (2) preceding 
sentences, Lessor will transfer to Lessee, on an AS IS BASIS (as 
hereinafter defined) all of Lessor's interest in and to in such 
Substituted Item. Lessor shall not be required to make and may 
specifically disclaim any representation or warranty as to the 
condition of such Substituted Item and other matters (except that 
Lessor shall warrant that it has conveyed whatever interest it 
received in the Substituted Item free and clear of any liens or 
encumbrances created by, through or under Lessor).  Lessor shall 
execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order 
to terminate any interest of Lessor in and to the Substituted 
Item.  Lessee will be subrogated to all claims of Lessor, if any, 
against third parties to the extent the same relate to physical 
damage to or loss of such Substituted Item, and such Substituted 
Item shall no longer be subject to this Agreement.  For all 
purposes hereof, the Replacement Item so substituted shall after 
such transfer be part of the property leased hereunder and be an 
"Item".  No such substitution shall result in any change in Rent. 

XI.  LESSEE ASSIGNMENT AND SUBLEASE: 
 (a)  Lessee shall have and retain throughout the Term with 
respect to any Item control over the operation and use of such 
Item, and may, so long as no Lease Default shall have occurred and 
be continuing, without the consent of Lessor, assign its interest 
in this Agreement or sublease, license, transfer control of, or 
permit any other person to use, all or any part of any Item or 
Items during the Term, subject to the following terms and 
conditions: 
      (i)  Lessee shall remain primarily liable to Lessor for the 
performance of all the terms of this Agreement to the same extent 
as if such assignment, sublease or arrangement had not occurred 
and the Guaranty shall remain in full force and effect against 
Guarantor; 
      (ii) such assignment, sublease or arrangement shall be in 
compliance with all applicable laws; 
      (iii)     such assignment, sublease or arrangement as to any 
Item shall not extend beyond the stated Term with respect to such 
Item as then in effect for such Item, and any rights created 
thereby in an Item shall be fully subject and subordinate to this 
Agreement; 
      (iv) such assignment, sublease or arrangement shall not 
subject Lessor to any regulation by any governmental agency; 
      (v)  such assignment, sublease or arrangement shall be to 
Guarantor or to a solvent affiliate of Lessee, Guarantor or IBM, 
organized under the laws of any state of, and located in, the 
United States; 
      (vi) Lessee shall have given prior written notice to Lessor 
of any such assignment, sublease or arrangement; 
      (vii)     Lessee shall obtain and deliver to Lessor such 
Uniform Commercial Code financing statements executed by the 
assignee or sublessee and Lessee, as reasonably may be required by 
Lessor, to be filed at Lessee's expense; and 
      (viii)    all reasonable costs and expenses (including 
attorney's fees and expenses) incurred by Lessor in connection 
with such assignment, sublease or arrangement shall be paid by 
Lessee. 
 Lessee may make any such assignment, sublease or arrangement to a 
person other than those persons listed above provided such person 
is organized under the laws of any state of, and located in, the 
United States and is not a non-profit, tax-exempt entity; and 
provided further that such assignment, sublease or arrangement 
complies with subparagraphs (i) through (iv) and (vi) through 
(viii) above, with Lessor's prior written consent, which consent 
shall not unreasonably be withheld. 

 Notwithstanding the foregoing, if Guarantor, IBM or their 
subsidiaries who are partners in Lessee decide to dissolve Lessee, 
Lessee may assign its leasehold interest in this Agreement in its 
entirety to Guarantor, IBM or a solvent subsidiary of either 
thereof, or to a solvent general partnership of which IBM or a 
solvent subsidiary of IBM is the managing general partner; 
provided, that (1) the Guaranty will survive any such assignment 
and remains in full force and effect against Guarantor, and (2) 
subparagraphs (ii), (iii), (iv), (vi) and (vii) above shall be 
complied with. 

 (b)  Lessee shall not consolidate or merge into any person or 
sell, transfer, convey or lease all or substantially all its 
properties or assets as an entirety to any Person, unless: 
      (i)  the successor entity formed by such consolidation or 
into which it is merged or the successor entity that acquires by 
conveyance, transfer or lease all or substantially all its assets 
as an entirety, shall be organized under the laws of the United 
States of America, a state thereof or the District of Columbia, 
shall be authorized under all applicable laws to operate the 
Equipment and perform its obligations under this Agreement and all 
related documents (the "Operative Documents") to the same extent 
as Lessee and (at Lessee's expense) shall deliver to Lessor an 
opinion of counsel reasonably satisfactory in form and substance 
to the effect that the obligations of Lessee hereunder have been 
assumed by the successor entity by operation of law without any 
further act by such successor entity, or an agreement in form and 
substance reasonably satisfactory to Lessor containing an 
assumption by such successor entity of the due and punctual 
performance of each covenant and condition of the Operative 
Documents to be performed or observed by Lessee; 
      (ii) immediately after giving effect to such transaction, no 
Material Lease Default shall have occurred and be continuing; and 
      (iii)     the Guaranty shall remain in full force and effect 
against Guarantor and applicable to the successor. 
Upon any such consolidation or merger, or any sale, conveyance, 
transfer or lease of substantially all the assets of Lessee in 
accordance with this Section, the successor entity formed by such 
consolidation or into which the Lessee shall be merged or to which 
such sale, conveyance, transfer or lease shall be made, shall 
succeed to, and be substituted for, and may exercise every right 
and power and shall be subject to, each and every obligation of 
Lessee under the Operative Documents to which it is a party with 
the same effect as if such successor corporation had been named as 
Lessee therein. 
 (c)  The dissolution of Lessee shall not cause this Agreement to 
terminate, or otherwise constitute a Lease Default, so long as, 
prior to the effective date of such dissolution, Lessee shall have 
complied with Paragraph (b) of this Section (whereupon the 
assignee of Lessee's rights thereunder shall become Lessee for all 
purposes hereunder and under the other Operative Documents).  

XII.  INSPECTION AND MARKING: 
 Subject to Lessee's reasonable standard security procedures and 
operational requirements), during the normal business hours of 
Lessee, Lessor may (at its own expense), upon reasonable prior 
notice, inspect the Equipment.  Lessee shall affix to any Item, 
according to Lessor's instructions, any reasonable identifying 
labels, plates or tags supplied by Lessor which do not interfere 
with such Item's operation. 

XIII. STIPULATED LOSS VALUE: 
 Lessee shall promptly and fully notify Lessor in writing if any 
Item of Equipment shall be or become, lost, stolen, destroyed, 
irreparably damaged in the determination of Lessee, or permanently 
rendered unfit for use from any cause whatsoever (such occurrences 
being hereinafter called "Casualty Occurrences").  On the Rent 
Payment Date next succeeding a Casualty Occurrence (the "Payment 
Date"), Lessee shall either (as selected by Lessee): 
 (a)  replace the Item of Equipment having suffered the Casualty 
Occurrence as provided in Section X hereof; or 
 (b)  pay Lessor the sum of (x) the Stipulated Loss Value of such 
Item calculated in accordance with Annex C to the applicable 
Schedule as of the Rent Payment Date next following such Casualty 
Occurrence ("Calculation Date"); and (y) all rental and other 
amounts which are due hereunder as of the Payment Date.  Upon 
payment of all sums due hereunder, the term of this lease as to 
such Item shall terminate and (except in the case (i) of the loss, 
theft or complete destruction of such unit, or (ii) where the 
insurer requires possession of the damaged unit), Lessee shall be 
entitled to recover possession of such unit. 

XIV.  LOSS OR DAMAGE: 
 Lessee hereby assumes and shall bear the entire risk of any loss, 
theft, damage to, or destruction of, any Item of Equipment from 
any cause whatsoever from the Lease Commencement Date. 

XV.   INSURANCE: 
 Lessee agrees, at its own expense, to keep all Equipment insured 
for such amounts as specified in Paragraph D of the Equipment 
Schedule and against such hazards as Lessor may require, 
including, but not limited to, insurance for damage to or loss of 
such Equipment and liability coverage for personal injuries, death 
or property damage, with Lessor named as additional insured and 
with a loss payable clause in favor of Lessor, as its interest may 
appear, with respect to all losses in excess of One Hundred 
Thousand Dollars ($100,000.00), irrespective of any breach of 
warranty or other act or omission of Lessee.  Such policies may 
include such deductibles or self-insured retentions as are 
acceptable to Lessor.  All such policies shall be with companies, 
and on terms, reasonably satisfactory to Lessor.  Lessee agrees to 
deliver to Lessor evidence of insurance satisfactory to Lessor 
and, upon Lessor's determination that such insurance is 
satisfactory to it, Lessor shall certify to Lessee that such 
insurance is satisfactory to Lessor.  No insurance shall be 
subject to any co-insurance clause.  During the existence of a 
Lease Default hereunder, Lessee hereby appoints Lessor as Lessee's 
attorney-in-fact to make proof of loss and claim for insurance, 
and to make adjustments with insurers and to receive payment of 
and execute or endorse all documents, checks or drafts in 
connection with payments made as a result of such insurance 
policies.  Any expense of Lessor in adjusting or collecting 
insurance shall be borne by Lessee.  Lessee will not make 
adjustments with insurers except (i) with respect to claims for 
damage to any Item of Equipment where the repair costs do not 
exceed One Hundred Thousand Dollars ($100,000.00), or (ii) with 
Lessor's written consent.  Said policies shall provide that the 
insurance may not be altered or cancelled by the insurer until 
after thirty (30) days written notice to Lessor.  Lessee may, at 
its option, apply proceeds of insurance not in excess of One 
Hundred Thousand Dollars ($100,000.00), in whole or in part, to 
(i) repair or replace Equipment or any portion thereof, or (ii) 
satisfy any obligation of Lessee to Lessor hereunder.  Provided 
that no Material Lease Default shall then have occurred and be 
continuing, Lessor shall apply proceeds of insurance in excess of 
One Hundred Thousand Dollars ($100,000.00), in whole or in part, 
as elected by Lessee pursuant to Section XIII hereof, to (i) 
repair or replace Equipment or any portion thereof, or (ii) 
satisfy any obligation of Lessee to Lessor hereunder. 

XVI.  RETURN OF EQUIPMENT: 
 Upon any expiration or termination of this Agreement or any 
Schedule, unless Lessee shall have exercised its early termination 
option pursuant to Section XXIV hereof, or its extension option 
pursuant to Section XXVI(a) hereof, or its renewal option pursuant 
to Section XXV(a), hereof, or its purchase option pursuant to 
Section XXV(c) or Section XXVI(c) hereof, Lessee shall promptly, 
at its own cost and expense:  (i) perform any testing and repairs 
required to place the affected Items of Equipment in the same 
condition and appearance as when received by Lessee (ordinary wear 
and tear excepted) and in good working order for their originally 
intended purpose; (ii) if deinstallation, disassembly or crating 
is required, cause such Items to be deinstalled, disassembled and 
crated by qualified personnel of Lessee or IBM, or by an 
authorized manufacturer's representative or such other service 
person as is satisfactory to Lessor; and (iii) within ten (10) 
days after such expiration or termination, ship such Items, free 
and clear of all liens and encumbrances (other than the New York 
State Lien), to a location within the forty-eight (48) contiguous 
continental United States as Lessor shall direct; and Lessee shall 
provide, at its expense, transit insurance payable to Lessor for 
the Equipment in the amount of the then Stipulated Loss Value of 
the Equipment. 

XVII. LEASE DEFAULT: 
 (a)  Lessor may in writing declare this Agreement in default 
("Lease Default") if: (1) Lessee breaches its obligation to pay 
Rent when due hereunder and fails to cure the breach within ten 
(10) days; (2) Lessee breaches its obligation to pay any sum 
(other than Rent) when due and fails to cure that breach within 
five (5) days after written notice thereof; (3) Lessee breaches 
any of its insurance obligations under Section XV; (4) Lessee 
breaches any of its other obligations hereunder and fails to cure 
that breach within thirty (30) days after written notice thereof; 
provided, however, that if such breach (A) is curable, (B) cannot 
be remedied within the thirty (30) day period, (C) Lessee 
commences reasonable efforts to effect such remedy within the 
thirty (30) day period and diligently pursues such efforts, and 
(D) does not involve any substantial danger of the sale, 
forfeiture or loss of the Equipment or of Lessor's interest 
therein, then Lessee shall have an additional period of sixty (60) 
days to effect such remedy); (5) any representation or warranty 
made by Lessee in connection with this Agreement shall be false or 
misleading when made in any material respect; (6) Lessee becomes 
insolvent or ceases to do business as a going concern (unless the 
provisions of Section XI(c) hereof are satisfied); (7) any 
Equipment is illegally used; (8) a petition is filed by Lessee 
under any bankruptcy or insolvency laws; (9) a petition is filed 
against Lessee under any bankruptcy or insolvency laws and is not 
dismissed within sixty (60) days; (10) Lessee shall have 
terminated its existence as a general partnership, consolidated 
with, merged into, or conveyed or leased substantially all of its 
assets as an entirety to any person (such actions being referred 
to as an "Event"), unless the provisions of Section XI hereof are 
satisfied or not less than sixty (60) days prior to such Event:  
(x) such person is organized and existing under the laws of the 
United States or any state, and executes and delivers to Lessor an 
agreement containing an effective assumption by such person of the 
due and punctual performance of this Lease; and (y) Lessor is 
reasonably satisfied as to the creditworthiness of such person; or 
(11) subject to the provisions set forth in Paragraph (b) of this 
Section, there occurs a default under Section 6(b)(2) of the 
Guaranty.  Such declaration shall apply to all Schedules except as 
specifically excepted by Lessor. 
 (b)  Lessor shall provide written notice to IBM upon the 
occurrence of a default under Section 6(b)(2) of the Guaranty and, 
for a period of thirty (30) days after the giving of such notice 
(the "30-day Period"), if no other Material Lease Default has then 
occurred and is continuing Lessor shall not declare this Agreement 
to be in default as a result of such occurrence and shall not 
exercise any remedies hereunder as a result of such occurrence, 
provided that all Rent and other payments becoming due hereunder 
are paid as and when due during such 30-day Period.  Prior to the 
expiration of such 30-day Period, IBM may (at its sole 
discretion):  (1) cause to be delivered to Lessor an irrevocable 
letter of credit (in form and substance satisfactory to Lessor) 
issued by a national bank acceptable to Lessor in an amount equal 
to the Rent becoming due  during the next succeeding ninety (90) 
day period (the "Subsequent Rent"), or (2) deliver to Lessor a 
written guaranty of IBM, in substantially the form attached hereto 
as Exhibit No. 5, guaranteeing the payment as and when due of the 
Subsequent Rent.  If IBM timely provides the required letter of 
credit or guaranty, for an additional ninety (90) days after the 
original 30-day Period, if no other Material Lease Default has 
then occurred and is continuing, Lessor shall not declare this 
Agreement to be in default as a result of such occurrence and 
shall not exercise any remedies hereunder as a result of such 
occurrence.  Upon the expiration of such subsequent ninety (90) 
day period, unless IBM has (i) delivered to Lessor a written 
guaranty of IBM, in substantially the form attached hereto as 
Exhibit No. 5, (ii) purchased all the Equipment for its then 
Stipulated Loss Value, plus all unpaid Rent and other amounts due 
hereunder, (iii) received an assignment of all right, title, 
interest and obligations of Lessee in, under and pursuant to this 
Agreement, and IBM has accepted such assignment and assumed such 
obligations, or (iv) taken such other action acceptable to Lessor 
(in its sole discretion), then Lessor may exercise all rights and 
remedies hereunder. 
 (c)  After a Lease Default has occurred and is continuing, Lessee 
shall, upon demand, forthwith pay to Lessor (i) as liquidated 
damages for loss of a bargain and not as a penalty, the 
Termination Value of the Equipment (calculated as of the Rent 
Payment Date next preceding the declaration of Lease Default), and 
(ii) all Rent and other sums then having become due hereunder; and 
upon payment of such sums and all other costs, charges and 
expenses incurred by Lessor (including attorney's fees and 
expenses) as a result of the occurrence of Lease Default, Lessor 
will transfer to Lessee, on an AS IS BASIS (as hereinafter 
defined), all of Lessor's interest in and to the Equipment (and 
Lessor shall not be required to make and may specifically disclaim 
any representation or warranty as to the condition of the 
Equipment and other matters, except that Lessor shall warrant that 
it has conveyed whatever interest it received in the Equipment 
free and clear of any lien or encumbrance created by, through or 
under Lessor), and Lessor shall execute and deliver to Lessee such 
Uniform Commercial Code Statements of Termination as reasonably 
may be required in order to terminate any interest of Lessor in 
and to the Equipment.  If Lessee fails to pay the amounts 
specified in the preceding sentence, then, at the request of 
Lessor, Lessee shall comply with the provisions of Section XVI 
hereof.  Lessee hereby authorizes Lessor to enter, with or without 
legal process, any premises where any Equipment is located and 
take possession thereof.  Lessor may, but shall not be required 
to, sell Equipment at private or public sale, in bulk or in 
parcels, with or without notice, and without having the Equipment 
present at the place of sale; or Lessor may, but shall not be 
required to, lease, otherwise dispose of or keep idle all or part 
of the Equipment.  The proceeds of sale, lease or other 
disposition, if any, shall be applied in the following order of 
priorities:  (1) to pay all of Lessor's costs, charges and 
expenses incurred in taking, removing, holding, repairing and 
selling, leasing or otherwise disposing of Equipment; then, (2) to 
the extent not previously paid by Lessee, to pay Lessor all sums 
due from Lessee hereunder; then (3) to reimburse to Lessee any 
sums previously paid by Lessee as liquidated damages; and (4) any 
surplus shall be paid to Lessee.  Lessee shall pay any deficiency 
in clauses (1) and (2) forthwith. 

 (d)  The foregoing remedies are cumulative, and any or all 
thereof may be exercised in lieu of or in addition to each other 
or any remedies at law, in equity, or under statute.  Lessee 
waives notice of sale or other disposition (and the time and place 
thereof), and the manner and place of any advertising.  If 
permitted by law, Lessee shall pay reasonable attorney's fees 
actually incurred by Lessor in enforcing the provisions of this 
Lease and any ancillary documents.  Waiver of any default shall 
not be a waiver of any other or subsequent default. 


XVIII.     LESSOR ASSIGNMENT: 
 (a)  Lessor may not, without the consent of Lessee (which consent 
shall not unreasonably be withheld, delayed or conditioned), 
assign this Agreement or any Schedule, or the right to enter into 
any Schedule except to a successor trustee pursuant to the Trust 
Agreement.  The Servicing Agent shall act as the fiscal agent for 
any assignee unless the Servicing Agent is removed by Lessor as a 
result of its failure or inability to perform such duties.  Lessee 
agrees to confirm in writing receipt of a notice of an approved 
assignment as reasonably may be requested by assignee.  Lessee 
hereby waives and agrees not to assert against any such assignee 
any defense, set-off, recoupment claim or counterclaim which 
Lessee has or may at any time have against Lessor or any other 
person for any reason whatsoever. 
 (b)  Lessee acknowledges that it has been advised that the 
interest of Lessor in this Agreement, the Equipment Schedules, 
related instruments and documents and/or the Equipment may be 
conveyed to, in whole or in part,  certain third parties (each 
being herein referred to as a "Participant" and, collectively, as 
the "Participants") without the consent of Lessee (the 
"Syndication").  Lessee agrees reasonably to cooperate with Lessor 
in connection with the Syndication, including the execution and 
delivery of such other documents, instruments, notices, opinions, 
certificates and acknowledgements as reasonably may be required by 
Lessor or such Participant; provided, however, in no event shall 
Lessee be required to consent to any change that would adversely 
affect any of the terms of the transactions contemplated herein; 
and provided further, however, that Lessor shall be responsible 
for its own costs and expenses incurred in connection with the 
Syndication.  Each Participant shall be required to comply with 
the provisions of Section V hereof. 
 (c)  Lessor and each Participant agrees that it will not 
advertise or publish the fact that it has furnished financing to, 
or otherwise entered into the transactions contemplated hereby 
with Lessee, Guarantor or IBM without first obtaining the written 
consent of such person.  Notwithstanding any other provision of 
any Operative Document, Lessor and the Participants will not have 
any right to use any trademark or trade name of, or otherwise 
refer to Lessee, Guarantor or IBM in any promotion or publication 
without first obtaining the written consent of such person. 
 (d)  Lessor and each Participant agrees that it shall not amend 
the provisions of Section 9.01 of the Trust Agreement, pertaining 
to the transfer of the Participant's interests. 

 (e)  Subject always to the foregoing and to Section XI hereof, 
this Agreement inures to the benefit of, and is binding upon, the 
successors and assigns of the parties hereto. 

XIX.  NET LEASE; NO SET-OFF, ETC.: 
 This Agreement is a net lease.  Lessee's obligation to pay Rent 
and other amounts due hereunder shall be absolute and 
unconditional.  Lessee shall not be entitled to any abatement or 
reductions of, or set-offs against, said Rent or other amounts, 
including, without limitation, those arising or allegedly arising 
out of claims (present or future, alleged or actual, and including 
claims arising out of strict liability in tort or negligence of 
Lessor) of Lessee against Lessor under this Agreement or 
otherwise.  This Agreement shall not terminate and the obligations 
of Lessee shall not be affected by reason of any defect in or 
damage to, or loss of possession, use or destruction of, any 
Equipment from whatsoever cause.  It is the intention of the 
parties that Rents and other amounts due hereunder shall continue 
to be payable in all events in the manner and at the times set 
forth herein unless the obligation to do so shall have been 
terminated pursuant to the express terms hereof. 

XX.   INDEMNIFICATION: 
 (a)  Lessee hereby agrees to indemnify, save and keep harmless 
Lessor, the Participants, the Servicing Agent, their agents, 
employees, successors and assigns, from and against any and all 
damages, penalties, injuries, claims, actions and suits (including 
legal and other expenses), of whatsoever kind and nature, in 
contract or tort, except as to taxes which are covered in Section 
III hereof only (provided, however, that each such party is liable 
for its own gross negligence or willful misconduct and shall not 
be indemnified hereunder as a result thereof; and provided 
further, however, that the Servicing Agent shall be liable for any 
obligations it has under any other agreements and shall not be 
indemnified hereunder therefor) (and including, but not limited 
to, Lessor's strict liability in tort), arising out of (i) the 
selection, manufacture, purchase, acceptance or rejection of 
Equipment, the ownership of Equipment during the term of this 
Agreement, and the delivery, lease, possession, maintenance, uses, 
condition, return or operation of Equipment (including, without 
limitation, latent and other defects, whether or not discoverable 
by Lessor or Lessee and any claim for patent, trademark or 
copyright infringement or environmental damage), or (ii) any claim 
by a third party  attributable to the maintenance or use of such 
Item by Lessee, any sublessee or employees of Lessee.  Lessee 
shall, upon request, defend any actions based on, or arising out 
of, any of the foregoing. 
 (b)  Lessee hereby agrees to pay the fees and expenses of 
Wilmington Trust Company, as Trustee becoming due under the Trust 
Agreement, upon receipt of an invoice therefor. 
 (c)  All of Lessor's and the Servicing Agent's rights, privileges 
and indemnities contained in this Section XX shall survive the 
expiration or other termination of this Agreement and the rights, 
privileges and indemnities contained herein are expressly made for 
the benefit of, and shall be enforceable by Lessor, its successors 
and assigns. 

XXI.  DISCLAIMER: 
 LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT 
ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES.  LESSOR DOES 
NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, 
ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN 
OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY 
COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS 
TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR 
WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR 
OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR 
(EXCEPT AS EXPRESSLY PROVIDED HEREIN) TITLE.  All such risks, as 
between Lessor and Lessee, are to be borne by Lessee.  Without 
limiting the foregoing, Lessor shall have no responsibility or 
liability to Lessee or any other person with respect to any of the 
following (i) any liability, loss or damage caused or alleged to 
be caused directly or indirectly by any Equipment, any inadequacy 
thereof, any deficiency or defect (latent or otherwise) therein, 
or any other circumstance in connection therewith; (ii) the use, 
operation or performance of any Equipment or any risks relating 
thereto; (iii) any interruption of service, loss of business or 
anticipated profits or consequential damages; or (iv) the 
delivery, operation, servicing, maintenance, repair, improvement 
or replacement of any Equipment.  If, and so long as, no default 
exists under this Lease, Lessee shall be, and hereby is, 
authorized during the term of this Lease to assert and enforce, at 
Lessee's sole cost and expense, from time to time, in the name of 
and for the account of Lessor and/or Lessee, as their interests 
may appear, whatever claims and rights Lessor may have against any 
Supplier of the Equipment. 

XXII. REPRESENTATIONS AND WARRANTIES OF LESSEE: 
 Lessee hereby represents and warrants to Lessor that on the date 
hereof and on the date of execution of each Schedule: 
 (a)  Lessee has adequate power and capacity to enter into, and 
perform under, this Agreement and all related documents (together, 
the "Documents") and is duly qualified to do business wherever 
necessary to carry on its present business and operations, 
including the jurisdiction(s) where the Equipment is or is to be 
located, where the failure to be so qualified would have a 
material adverse effect. 
 (b)  The Documents have been duly authorized, executed and 
delivered by Lessee and constitute valid, legal and binding 
agreements, enforceable in accordance with their terms, except to 
the extent that the enforcement of remedies therein provided may 
be limited under applicable bankruptcy and insolvency laws and 
equitable principles. 

 (c)  No approval, consent or withholding of objections is 
required from any governmental authority or instrumentality with 
respect to the entry into or performance by Lessee of the 
Documents except such as have already been obtained. 

 (d)  The entry into and performance by Lessee of the Documents 
will not:  (i)  violate any judgment, order, law or regulation 
applicable to Lessee or any provision of that certain Partnership 
Agreement dated as of September 30, 1994, between Cirel Inc. and 
MiCrus Holdings Inc.; or (ii) result in any breach of, constitute 
a default under or result in the creation of any lien, charge, 
security interest or other encumbrance upon any Equipment pursuant 
to any indenture, mortgage, deed of trust, bank loan or credit 
agreement or other instrument (other than this Agreement) to which 
Lessee is a party. 
 (e)  There are no suits or proceedings pending or (to Lessee's 
knowledge) threatened in court or before any commission, board or 
other administrative agency against or affecting Lessee, which 
will have a material adverse effect on the ability of Lessee to 
fulfill its obligations under this Agreement. 
 (f)  Lessee is a general partnership duly organized and will be 
at all times validly existing under the laws of the State 
specified in the first sentence of this Agreement (except in 
accordance with the provisions of Section XI(c) hereof).  Cirel, 
Inc. and MiCrus Holdings Inc. are the sole general partners of 
Lessee. 
 (g)  The Equipment will at all times be used for commercial or 
business purposes. 

XXIII.     OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; 
USURY SAVINGS: 
 (a)  For Federal, state and local income tax purposes, Lessor 
will treat Lessee as the owner of the Equipment.  Accordingly, 
Lessor will not claim any tax benefits available to an owner of 
the Equipment. 
 (b)  In order to secure the prompt payment of the Rent and all of 
the other amounts from time to time outstanding under and with 
respect to the Schedules, and the performance and observance by 
Lessee of all the agreements, covenants and provisions thereof 
(including, without limitation, all of the agreements, covenants 
and provisions of this Agreement, which are incorporated therein 
by reference), Lessee hereby grants to Lessor a first priority 
security interest in (1) the Equipment leased under the Schedules, 
and (2) Lessee's interest in the personal property described on 
Exhibit No. 1 now or hereafter attached to this Agreement which is 
leased to Lessee by Cirel, Inc. , and any and all substitutions, 
replacements or exchanges therefor, and modifications, additions, 
attachments, accessions and accessories thereto, made pursuant to 
the terms hereof or of the lease from Cirel, Inc., in each such 
case in which Lessee shall from time to time acquire an interest 
(the "Additional Collateral"), and any and all insurance and/or 
other proceeds (but without power of sale) of the property in and 
against which a security interest is granted hereunder.  Lessee 
shall not directly or indirectly create, incur, assume or suffer 
to exist any lien on or with respect to the Additional Collateral 
except Permitted Liens and a security interest in favor of Cirel, 
Inc., which security interest shall be subject and subordinate to 
the interest of Lessor in the Additional Collateral.  Lessee shall 
use, maintain and insure the Additional Collateral as provided 
herein with respect to the Equipment.  Not more than three (3) 
times during the Term, Lessee shall initial and deliver to Lessor 
an Exhibit No. 1 to be attached hereto describing the Additional 
Collateral, together with such Uniform Commercial Code financing 
statements or statements of amendment as reasonably may be 
required by Lessor, to be filed at Lessee's expense.  
 (c)  It is the intention of the parties hereto to comply with any 
applicable usury laws to the extent that any Schedule is 
determined to be subject to such laws; accordingly, it is agreed 
that, notwithstanding any provision to the contrary in any 
Schedule or the Lease, in no event shall any Schedule require the 
payment or permit the collection of interest in excess of the 
maximum amount permitted by applicable law.  If any such excess 
interest is contracted for, charged or received under any Schedule 
or the Lease, or in the event that all of the principal balance 
shall be prepaid, so that under any of such circumstances the 
amount of interest contracted for, charged or received under any 
Schedule or the Lease shall exceed the maximum amount of interest 
permitted by applicable law, then in such event (1) the provisions 
of this paragraph shall govern and control,  (2) neither Lessee 
nor any other person or entity now or hereafter liable for the 
payment hereof shall be obligated to pay the amount of such 
interest to the extent that it is in excess of the maximum amount 
of interest permitted by applicable law, (3) any such excess which 
may have been collected shall be either applied as a credit 
against the then unpaid principal balance or refunded to Lessee, 
at the option of Lessee, and  (4) the effective rate of interest 
shall be automatically reduced to the maximum lawful contract rate 
allowed under applicable law as now or hereafter construed by the 
courts having jurisdiction thereof.  It is further agreed that 
without limitation of the foregoing, all calculations of the rate 
of interest contracted for, charged or received under any Schedule 
or the Lease (the "Interest") which are made for the purpose of 
determining whether such rate exceeds the maximum lawful contract 
rate, shall be made, to the extent permitted by applicable law, by 
amortizing, prorating, allocating and spreading the Interest in 
equal parts during the period of the full Term.  Notwithstanding 
the foregoing, if any applicable state law is amended or the law 
of the United States of America preempts any applicable state law, 
so that it becomes lawful for Lessor to receive a greater interest 
per annum rate than is presently allowed, Lessee agrees that, on 
the effective date of such amendment or preemption, as the case 
may be, the lawful maximum hereunder shall be increased to the 
maximum interest per annum rate allowed by the amended state law 
or the law of the United States of America (but not in excess of 
the interest rate contemplated hereunder). 

XXIV. EARLY TERMINATION: 
 On or after the First Termination Date (specified in the 
applicable Schedule), Lessee may, so long as no Material Lease 
Default then exists hereunder, from time to time (i) terminate 
this Agreement as to any Item of the Equipment (provided, however, 
that the aggregate original Capitalized Lessor's Cost of all Items 
of the Equipment terminated pursuant to this clause (i) shall not 
exceed twenty (20) percent of the aggregate original Capitalized 
Lessor's Cost of all Equipment described on all Schedules executed 
hereunder) which have not previously been terminated under this 
clause (i), or (ii) terminate this Agreement as to all Items of 
the Equipment then leased pursuant to an individual Schedule, as 
of a Rent Payment Date (the date of termination of this Agreement 
pursuant to this Section or otherwise being hereinafter referred 
to as the "Termination Date") upon at least ninety (90) days' 
prior written notice to Lessor.  In such notice, Lessee shall 
specify whether Lessee elects to purchase the Item of the 
Equipment pursuant to Paragraph (b) hereof, or to cause the Item 
of the Equipment to be sold to a third party pursuant to Paragraph 
(a) hereof. 
 (a)  If Lessee elects to cause the Item of the Equipment to be 
sold to a third party, Lessee shall, and Lessor may, solicit cash 
bids for the Item of the Equipment on an AS IS, WHERE IS BASIS, 
without recourse or warranty, express or implied, of any kind 
whatsoever ("AS IS BASIS").  On or prior to the Termination Date, 
Lessee shall (i) certify to Lessor any bids received by Lessee and 
the expiration date for such bids, (ii) pay to the Servicing Agent 
an administrative fee of Three Thousand Dollars ($3,000.00) per 
notice of termination, and (iii) pay to Lessor (A) the Termination 
Value (calculated as of the Termination Date) for the Equipment, 
and (B) all Rent and other sums due and unpaid as of the 
Termination Date with respect to the applicable Item of the 
Equipment.  Provided that all amounts due hereunder with respect 
to the applicable Item of the Equipment have been paid on the 
Termination Date, Lessor and Lessee shall sell the applicable Item 
of the Equipment on an AS IS BASIS for cash to the highest bidder 
and (within fifteen (15) Business Days after receipt of good 
collected funds) refund the proceeds of such sale (net of any 
related out-of-pocket expenses) to Lessee.  Upon satisfaction of 
the conditions specified in this Paragraph (a), Lessor will 
transfer, on an AS IS BASIS all of Lessor's interest in and to the 
Equipment.  Lessor shall not be required to make and may 
specifically disclaim any representation or warranty as to the 
condition of such Equipment and other matters (except that Lessor 
shall warrant that it has conveyed whatever interest it received 
in the applicable Item of the Equipment free and clear of any 
liens or encumbrances created by, through or under Lessor).  
Lessor shall execute and deliver to Lessee such Uniform Commercial 
Code Statements of Termination as reasonably may be required in 
order to terminate any interest of Lessor in and to the applicable 
Item of the Equipment.  If such sale is not consummated due to the 
fault of the potential buyer, no termination shall occur and 
Lessor shall refund the Termination Value (less any out-of-pocket 
expenses incurred by the Servicing Agent) to Lessee within fifteen 
(15) Business Days of the expiration date set forth in the 
Lessee's certification of the bid related to such sale.  Lessor 
shall cause the Servicing Agent to conduct any such sale promptly 
and with the same consideration that the Servicing Agent would 
afford to the sale of its own assets.  If any such sale is not 
consummated due to the fault of Lessor or the Servicing Agent, 
then (i) the termination shall be deemed to have occurred as of 
the expiration date set forth in Lessee's certification of the bid 
related to such sale, (ii) the Termination Value shall be repaid 
by Lessor to Lessee, and (iii) title to the applicable Equipment 
shall vest in  Lessor.  
 (b)  If Lessee elects to purchase the applicable Item of the 
Equipment, on the Termination Date, Lessee shall pay to Lessor in 
cash the purchase price for the applicable Item of the Equipment, 
determined as hereinafter provided.  The purchase price of the 
applicable Item of the Equipment shall be an amount equal to the 
Termination Value (calculated as of the Termination Date) for the 
applicable Item of the Equipment, plus all sales taxes upon sale. 
 Lessee shall also pay to Lessor all Rent and other sums due and 
unpaid as of the Termination Date applicable Item of the 
Equipment.  Upon satisfaction of the conditions specified in this 
Paragraph (b), Lessor will transfer, on an AS IS BASIS all of 
Lessor's interest in and to the with respect to the applicable 
Item of the Equipment.  Lessor shall not be required to make and 
may specifically disclaim any representation or warranty as to the 
condition of such Item of the Equipment and other matters (except 
that Lessor shall warrant that it has conveyed whatever interest 
it received in the applicable Item of the Equipment free and clear 
of any lien or encumbrance created by, through or under Lessor).  
Lessor shall execute and deliver to Lessee such Uniform Commercial 
Code Statements of Termination as reasonably may be required in 
order to terminate any interest of Lessor in and to the applicable 
Item of the Equipment. 
 As used herein, "Termination Value" shall mean the sum of the 
applicable Stipulated Loss Value plus the Make Whole Amount.  For 
purposes hereof, "Make Whole Amount" shall mean a premium equal to 
the excess, if any, of (i) the aggregate present value as of the 
Termination Date of the sum of (A) the remaining scheduled Rent 
payments with respect to the applicable Item of the Equipment, 
plus (B) the full amount of the applicable Fixed Purchase Price 
with respect to the applicable Item of the Equipment that but for 
termination of this Agreement would be payable on the last Rent 
Payment Date during the then applicable Basic Term or Renewal 
Term, discounted to the date of payment at the Reinvestment Rate, 
over (ii) the aggregate present value as of the Termination Date 
of the sum of (A) the remaining scheduled Rent payments with 
respect to the applicable Item of the Equipment, plus (B) the full 
amount of the applicable Fixed Purchase Price with respect to the 
applicable Item of the Equipment that but for termination of this 
Agreement would be payable on the last Rent Payment Date during 
the then applicable Basic Term or Renewal Term, discounted to the 
date of payment at the Assumed Interest Rate; provided, however, 
that if the Reinvestment Rate is equal to or higher than the 
Assumed Interest Rate, the Make Whole Amount shall be zero.  For 
purposes hereof, "Reinvestment Rate" shall mean the sum of (i) the 
Applicable Treasury Yield plus (ii) fifty (50) basis points.  The 
term "Applicable Treasury Yield" at any time shall mean the yield 
to maturity of United States Treasury Notes with a maturity equal 
to the remaining average life of the Term of the Lease as 
published in The Wall Street Journal two (2) Business Days prior 
to the Termination Date.  If no maturity exactly corresponds to 
such remaining Term, the Applicable Treasury Yield shall be 
interpolated on a straight-line basis, utilizing the yields for 
the two maturities which most closely correspond to the requisite 
maturity.  For purposes hereof, "Assumed Interest Rate" shall mean 
the sum of (i) the Base Index, plus (ii) one hundred twenty-five 
(125) basis points.  "Base Index" shall mean the five (5)-year 
Treasury Constant Maturities rate as published in The Wall Street 
Journal on the second Business Day immediately preceding the Lease 
Commencement Date. 

XXV.  END OF BASIC TERM LEASE OPTIONS: 
 Provided that no Material Lease Default shall have occurred and 
be continuing, Lessee shall have the option, upon the expiration 
of the Basic Term of the applicable Schedule, to return, or to 
purchase, or to renew the term of this Agreement with respect to, 
all (but not less than all) of the Equipment leased under an 
individual  Schedule executed hereunder upon the following terms 
and conditions. 
 (a)  Renewal.  So long as Lessee shall not have exercised its 
option to return the Equipment pursuant to Paragraph (b) of this 
Section, nor exercised its purchase option pursuant to Paragraph 
(c) of this Section, Lessee shall have the option, upon the 
expiration of the Basic Term of the applicable Schedule, to renew 
the Agreement with respect to all, but not less than all, of the 
Equipment leased under an individual Schedule for the renewal term 
specified in Paragraph B of the applicable Schedule (the "Renewal 
Term") at the Basic Term Lease Rate Factor. 
 (b)  Return.  So long as Lessee shall not have exercised its 
option to renew this Agreement pursuant to Paragraph (a) of this 
Section, nor exercised its purchase option pursuant to Paragraph 
(c) of this Section, Lessee shall have the option, upon the 
expiration of the Basic Term of an individual Schedule, to return 
all (but not less than all) of the Equipment described on an 
individual Schedule, to Lessor upon the following terms and 
conditions:  If Lessee desires to exercise this option, Lessee 
shall (i) pay to Lessor on the last day of the term of this 
Agreement with respect to the applicable individual Schedule, in 
addition to the scheduled Rent then due on such date and all other 
sums then due hereunder, a terminal rental adjustment amount equal 
to the Basic Term Fixed Purchase Price of such Equipment, and (ii) 
return the Equipment to Lessor in accordance with Section XVI 
hereof.  That portion of the terminal rental adjustment amount 
paid by Lessee to Lessor as is equal to the Basic Term Residual 
Risk Amount shall be held in escrow by Lessor and deposited in an 
interest-bearing account, invested in Permitted Investments (as 
such term is hereinafter defined).  Thereafter, upon return of all 
of the Equipment described on the applicable Schedule, Lessor 
shall arrange for the commercially reasonable sale, scrap or other 
disposition of such Item of the Equipment.  Lessee fully shall 
cooperate with Lessor in consummating such sale, scrap, or other 
disposition of the Equipment.  Such sale, scrap or disposition 
shall occur promptly and Lessor shall conduct such sale, scrap or 
disposition with the same consideration that the Servicing Agent 
would afford to the sale, scrap or disposition of such Item of its 
own assets.  Upon satisfaction of the conditions specified in this 
Paragraph (b), Lessor and Lessee will transfer to the 
purchaser(s), on an AS IS BASIS all of their interest in and to 
the applicable Equipment.  Lessor shall not be required to make 
and may specifically disclaim any representation or warranty as to 
the condition of such Equipment and other matters (except that 
Lessor shall warrant that it has conveyed whatever interest it 
received in such Equipment free and clear of any liens or 
encumbrances created by, through or under Lessor).  Lessor shall 
execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order 
to terminate any interest of Lessor in and to the applicable 
Equipment.  Promptly following the sale, scrap or other 
disposition of an Item of the Equipment and receipt by Lessor in 
good collected funds of the sales proceeds, if any, with respect 
to such Item of the Equipment, (1) Lessor shall pay to Lessee from 
the escrow account an amount equal to the Basic Term Residual Risk 
Amount (as specified in the Schedule) of such Item of the 
Equipment (less all reasonable actual out-of-pocket costs, 
expenses and fees incurred by the Servicing Agent, including 
storage, reasonable and necessary maintenance and other 
remarketing fees incurred in connection with the sale, scrap, or 
disposition of such Item of the Equipment); (2) Lessor shall pay 
from the escrow account all reasonable actual out-of-pocket costs, 
expenses and fees of the Servicing Agent, including storage, 
reasonable and necessary maintenance and other re-marketing fees 
incurred in connection with the sale, scrap, or disposition of 
such Item of the Equipment; and (3) any excess sales proceeds then 
remaining shall be held in escrow by Lessor and deposited in an 
interest-bearing account, invested in Permitted Investments.  
Promptly after the sale, scrap or other disposition of all of the 
Equipment described on the applicable Schedule and receipt by 
Lessor in good collected funds of the sales proceeds with respect 
thereto, Lessor shall pay to Lessee an amount equal to all net 
proceeds, if any, of such sale, scrap or other disposition in 
excess of the Basic Term Residual Risk Amount of the Equipment 
already paid to Lessee, and Lessor will also pay to Lessee all 
interest earned on the amount held in escrow.   As used herein, 
"Permitted Investments" shall mean the following securities which 
shall mature within thirty (30) days of the date of purchase: 
      (i)  direct obligations of the United States of America; or 
      (ii)  obligations fully guaranteed by the United States of 
America; or 
      (iii)  certificates of deposit issued by, or bankers' 
acceptances of, or time deposits or a deposit account with, any 
bank, trust company or national banking association incorporated 
or doing business under the laws of the United States of America 
or one of its States, having a combined capital and surplus not 
less than $100,000,000 and having a rating of "B" or better from 
the Keefe Bank Watch Service; or 
      (iv) commercial paper rated A-1/P-1 by Standard & Poor's 
Corporation and Moody's Investors Service, Inc., respectively (or 
if neither such organization shall rate such commercial paper at 
any time, by any nationally recognized rating organization in the 
United States of America) equal to the highest rating assigned by 
such rating organization. 
 (c)  Purchase.  So long as Lessee shall not have exercised its 
option to renew this Agreement pursuant to Paragraph (a) of this 
Section, nor exercised its option to return the Equipment pursuant 
to Paragraph (b) of this Section, Lessee shall have the option, 
upon the expiration of the Basic Term of each individual Schedule, 
to purchase all (but not less than all) of the Equipment described 
on such Schedule upon the following terms and conditions:  If 
Lessee desires to exercise this option with respect to the 
Equipment described on an individual Schedule, Lessee shall pay to 
Lessor on the last day of the term of this Agreement with respect 
to such individual Schedule, in addition to the scheduled Rent 
then due on such date and all other sums then due hereunder with 
respect to the Equipment described on the applicable Schedule, in 
cash the purchase price for the Equipment so purchased, determined 
as hereinafter provided.  The purchase price of the Equipment 
shall be an amount equal to the Basic Term Fixed Purchase Price of 
such Equipment (as specified on such Schedule), plus all sales 
taxes and all other reasonable and documented out-of-pocket 
expenses incurred by Lessor in connection with such sale, 
including, without limitation, any such expenses incurred based on 
a notice from Lessee to Lessor that Lessee intended to return any 
such Items of Equipment. Upon satisfaction of the conditions 
specified in this Paragraph, Lessor will transfer, on an AS IS 
BASIS, all of Lessor's interest in and to the applicable 
Equipment.  Lessor shall not be required to make and may 
specifically disclaim any representation or warranty as to the 
condition of such Equipment and other matters (except that Lessor 
shall warrant that it has conveyed whatever interest it received 
in the Equipment free and clear of any lien or encumbrance created 
by, through or under Lessor).  Lessor shall execute and deliver to 
Lessee such Uniform Commercial Code Statements of Termination as 
reasonably may be required in order to terminate any interest of 
Lessor in and to the applicable Equipment. 
 (d)  Notice of Election.  Lessee shall give Lessor written notice 
of its election of the options specified in this Section not less 
than one hundred fifty (150) days nor more than three hundred 
sixty-five (365) days before the expiration of the Basic Term of 
an individual Schedule.  Such election shall be effective with 
respect to all Equipment described on the applicable Schedule.  If 
Lessee fails timely to provide such notice, without further action 
Lessee automatically shall be deemed to have elected to renew the 
term of this Agreement pursuant to Paragraph (a) of this Section 
described on the applicable Schedule. XXVI. END OF RENEWAL TERM 
LEASE OPTIONS. 
 Provided that no Material Lease Default shall have occurred and 
be continuing, if Lessee exercised its option to renew this 
Agreement pursuant to Section XXV, then Lessee shall have the 
option, upon the expiration of the Renewal Term of each Schedule, 
to return, or to purchase, or to extend the term of this Agreement 
with respect to, all (but not less than all) of the Equipment 
leased under an individual Schedule upon the following terms and 
conditions. 

 (a)  Extension.  So long as Lessee shall not have exercised its 
option to return the Equipment described on an individual Schedule 
pursuant to Paragraph (b) of this Section, nor exercised its 
purchase option pursuant to Paragraph (c) of this Section, Lessee 
shall have the option, upon the expiration of the Renewal Term, to 
extend the Agreement with respect to all, but not less than all, 
of the Equipment described on an individual Schedule for an 
additional term of twelve (12) months (the "Extension Term") at a 
monthly rental to be paid in arrears on the same day of each month 
on which the prior Renewal Term Rent installment was paid (except 
that the last installment shall be paid on the last day of the 
Extension Term), and calculated so as to amortize the Renewal Term 
Fixed Purchase Price of such Equipment described on an individual 
Schedule over the Extension Term, together with interest thereon 
at a rate per annum equal to one hundred twenty-one (125) basis 
points over the then current yield to maturity of U.S. Treasury 
Notes having a one year maturity, in twelve (12) equal monthly 
installments.  At the end of the Extension Term, provided that 
Lessee is not then in default under this Agreement or any other 
agreement between Lessor and Lessee, Lessee shall purchase all, 
and not less than all, of such Equipment described on an 
individual Schedule for $1.00 cash, together with all rent and 
other sums then due on such date, plus all sales taxes and all 
other reasonable and documented out-of-pocket expenses incurred by 
Lessor in connection with such transfer.  Upon satisfaction of the 
conditions specified in this Paragraph (a), Lessor will transfer, 
on an AS IS BASIS, all of Lessor's interest in and to the 
applicable Equipment. Lessor shall not be required to make and may 
specifically disclaim any representation or warranty as to the 
condition of the Equipment and any other matters (except that 
Lessor shall warrant that it has conveyed whatever interest it 
received in the Equipment free and clear of any lien or 
encumbrance created by, through or under Lessor).  Lessor shall 
execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order 
to terminate any interest of Lessor in and to the applicable 
Equipment. 
 (b)  Return.  So long as Lessee shall not have exercised its 
extension option pursuant to Paragraph (a) of this Section, nor 
exercised its purchase option pursuant to Paragraph (c) of this 
Section, Lessee shall have the option, upon the expiration of the 
Renewal Term of an individual Schedule, to return all (but not 
less than all) of the Equipment described on an individual 
Schedule, to Lessor upon the following terms and conditions:  If 
Lessee desires to exercise this option, Lessee shall (i) pay to 
Lessor on the last day of the term of this Agreement with respect 
to the applicable individual Schedule, in addition to the 
scheduled Rent then due on such date and all other sums then due 
hereunder, a terminal rental adjustment amount equal to the 
Renewal Term Fixed Purchase Price of such Equipment, and (ii) 
return the Equipment to Lessor in accordance with Section XVI 
hereof.  That portion of the terminal rental adjustment amount 
paid by Lessee to Lessor as is equal to the Renewal Term Residual 
Risk Amount shall be held in escrow by Lessor and deposited in an 
interest-bearing account, invested in Permitted Investments. 
Thereafter, upon return of all of the Equipment described on the 
applicable Schedule, Lessor shall arrange for the commercially 
reasonable sale, scrap or other disposition of such Equipment.  
Lessee fully shall cooperate with Lessor in consummating such 
sale, scrap, or other disposition of the Equipment.  Such sale, 
scrap or disposition shall occur promptly and Lessor shall conduct 
such sale, scrap or disposition with the same consideration that 
the Servicing Agent would afford to the sale, scrap or disposition 
of its own assets.  Upon satisfaction of the conditions specified 
in this Paragraph (b), Lessor and Lessee will transfer to the 
purchaser(s) on an AS IS BASIS all of Lessor's interest in and to 
the applicable Equipment.  Lessor shall not be required to make 
and may specifically disclaim any representation or warranty as to 
the condition of such Equipment and other matters (except that 
Lessor shall warrant that it has conveyed whatever interest it 
received in such Equipment free and clear of any liens or 
encumbrances created by, through or under Lessor).  Lessor shall 
execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order 
to terminate any interest of Lessor in and to the applicable 
Equipment.   Promptly following the sale, scrap or other 
disposition of an Item of the Equipment and receipt by Lessor in 
good collected funds of the sales proceeds, if any, with respect 
to such Item of the Equipment, Lessor shall pay to Lessee from the 
escrow account an amount equal to the Renewal Term Residual Risk 
Amount (as specified in the Schedule) of such Item of the 
Equipment (less all reasonable actual out-of-pocket costs, 
expenses and fees, including storage, reasonable and necessary 
maintenance and other remarketing fees incurred in connection with 
the sale, scrap, or disposition of such Item of the Equipment); 
(2) Lessor shall pay from the escrow account all reasonable actual 
out-of-pocket costs, expenses and fees of the Servicing Agent, 
including storage, reasonable and necessary maintenance and other 
re-marketing fees incurred in connection with the sale, scrap, or 
disposition of such Item of the Equipment; and (3) any excess 
sales proceeds then remaining shall be held in escrow by Lessor 
and deposited in an interest-bearing account, invested in 
Permitted Investments.  Promptly after the sale, scrap or other 
disposition of all of the Equipment described on the applicable 
Schedule and receipt by Lessor in good collected funds of the 
sales proceeds with respect thereto, Lessor shall pay to Lessee an 
amount equal to all of that portion of the net proceeds, if any, 
of such sale, scrap or other disposition in excess of the Renewal 
Term Residual Risk Amount of the Equipment already paid to Lessee 
up to the Renewal Term Fixed Purchase Price of the applicable 
Equipment, plus fifty (50) percent of all net proceeds, if any, of 
such sale, scrap or other disposition in excess of the Renewal 
Term Fixed Purchase Price of all of the applicable Equipment, and 
Lessor will also pay to Lessee interest earned on the amount held 
in escrow attributable to that portion of the escrowed amount 
distributed to Lessee. 
 (c)  Purchase.  So long as Lessee shall not have exercised its 
extension option pursuant to Paragraph (a) of this Section, nor 
exercised its option to return the Equipment pursuant to Paragraph 
(b) of this Section, Lessee shall have the option, upon the 
expiration of the Renewal Term of each individual Schedule, to 
purchase all (but not less than all) of the Equipment described on 
such Schedule upon the following terms and conditions:  If Lessee 
desires to exercise this option with respect to the Equipment 
described on an individual Schedule, Lessee shall pay to Lessor on 
the last day of the term of this Agreement with respect to such 
individual Schedule, in addition to the scheduled Rent then due on 
such date and all other sums then due hereunder with respect to 
the Equipment described on the applicable Schedule, in cash the 
purchase price for the Equipment so purchased, determined as 
hereinafter provided.  The purchase price of the Equipment shall 
be an amount equal to the Renewal Term Fixed Purchase Price of 
such Equipment (as specified on such Schedule), plus all sales 
taxes and all other reasonable and documented expenses incurred by 
Lessor in connection with such sale, including, without 
limitation, any such expenses incurred based on a notice from 
Lessee to Lessor that Lessee intended to return any such Items of 
Equipment. Upon satisfaction of the conditions specified in this 
Paragraph (c), Lessor will transfer, on an AS IS BASIS, all of 
Lessor's interest in and to the applicable Equipment. Lessor shall 
not be required to make and may specifically disclaim any 
representation or warranty as to the condition of such Equipment 
and other matters (except that Lessor shall warrant that it has 
conveyed whatever interest it received in the Equipment free and 
clear of any lien or encumbrance created by, through or under 
Lessor).  Lessor shall execute and deliver to Lessee such Uniform 
Commercial Code Statements of Termination as reasonably may be 
required in order to terminate any interest of Lessor in and to 
the applicable Equipment. 
 (d)  Notice of Election.  Lessee shall give Lessor written notice 
of its election of the options specified in this Section not less 
than one hundred fifty (150) days nor more than three hundred 
sixty-five (365) days before the expiration of the Renewal Term of 
each individual Schedule.  Such election shall be effective with 
respect to all Equipment described on such Schedule.  If Lessee 
fails timely to provide such notice, without further action Lessee 
automatically shall be deemed to have elected to purchase the 
Equipment described on an individual Schedule pursuant to 
Paragraph (c) of this Section. 

XXVII.     MISCELLANEOUS: 
 (a)  LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY 
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT 
OF, DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE RELATED 
DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE 
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, 
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE 
AND LESSOR.  The scope of this waiver is intended to be all 
encompassing of any and all disputes that may be filed in any 
court (including, without limitation, contract claims, tort 
claims, breach of duty claims, and all other common law and 
statutory claims).  THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY 
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL 
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR 
MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY 
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY 
RELATED TRANSACTION.  In the event of litigation, this Agreement 
may be filed as a written consent to a trial by the court. 
 (b)  Any cancellation or termination by Lessor, pursuant to the 
provision of this Agreement, any Schedule, supplement or amendment 
hereto, or the lease of any Equipment hereunder, shall not release 
Lessee from any other then outstanding obligations to Lessor 
hereunder. 
 (c)  All Equipment shall at all times remain personal property 
regardless of the degree of its annexation to any real property 
and shall not by reason of any installation in, or affixation to, 
real or personal property become a part thereof. 
 (d)  Time is of the essence of this Agreement.  Lessor's failure 
at any time to require strict performance by Lessee of any of the 
provisions hereof shall not waive or diminish Lessor's right 
thereafter to demand strict compliance therewith. 
 (e)  Each of the parties agrees, upon request of the other party, 
to execute any instrument reasonably necessary or expedient for 
filing, recording or perfecting the interest of the parties 
hereunder. 
 (f)  All notices required to be given hereunder shall be in 
writing, personally delivered, delivered by overnight courier 
service, sent by facsimile transmission (with confirmation of 
receipt), or sent by certified mail, return receipt requested, 
addressed to the other party at its respective address stated 
above or at such other address as such party shall from time to 
time designate in writing to the other party; and shall be 
effective from the date of receipt. 
 (g)  This Agreement and any Schedule and Annexes thereto, and 
that certain commitment letter dated February 7, 1995, by General 
Electric Capital Corporation to Guarantor, constitute the entire 
agreement of the parties with respect to the subject matter 
hereof.  NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY 
WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID 
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF 
THE PARTIES HERETO.  Any provision of this Agreement which is 
prohibited or unenforceable in any jurisdiction shall, as to such 
jurisdiction, be ineffective to the extent of such prohibition or 
unenforceability without invalidating the remaining provisions 
hereof, and any such prohibition or unenforceability in any 
jurisdiction shall not invalidate or render unenforceable such 
provision in any other jurisdiction. 
 (h)  The representations, warranties and covenants of Lessee 
herein shall be deemed  to survive the closing hereunder. Lessor's 
obligations to acquire and lease specific Items of Equipment shall 
be conditioned upon Lessee providing to Lessor such information 
with respect to Lessee's financial condition as Lessor may 
require, and Lessor being satisfied that there shall have been no 
material adverse change in the business or financial condition of 
Lessee from the date of execution hereof.  The obligations of 
Lessee under Sections III, XVI and XX which accrue during the term 
of this Agreement and obligations which by their express terms 
survive the termination of this Agreement, shall survive the 
termination of this Agreement. 
 (i)  In case of a failure of Lessee to comply with any provision 
of this Agreement, Lessor shall have the right, but shall not be 
obligated to, effect such compliance, in whole or in part; and all 
moneys spent and expenses and obligations incurred or assumed by 
Lessor in effecting such compliance shall constitute additional 
rent due to Lessor within five (5) days after the date Lessor 
sends notice to Lessee requesting payment and providing reasonable 
details.  Lessor's effecting such compliance shall not be a waiver 
of Lessee's default. 
 (j)  Any Rent not paid when due hereunder and which remains 
unpaid for more than ten (10) days, or any other amount not paid 
to Lessor when due hereunder, shall bear interest, both before and 
after any judgment or termination hereof, at the lesser of twelve 
percent (12%) per annum or the maximum rate allowed by law (the 
"Late Charge Rate"). 
 (k)  Any provisions in this Agreement and any Schedule which are 
in conflict with any statute, law or applicable rule shall be 
deemed omitted, modified or altered to conform thereto. 
 (l)  Lessor represents and covenants to Lessee that Lessor has 
full authority to enter into this Agreement and that, conditioned 
upon Lessee performing all of the covenants and conditions hereof, 
as to claims of Lessor or persons claiming under Lessor, Lessee 
shall peaceably and quietly hold, possess and use the Equipment 
during the term of this Agreement, subject to the terms and 
provisions hereof. 
 (m)  The Operative Documents are confidential documents among the 
parties thereto and, for a period of seven (7) years from the date 
hereof, each party (the "Relevant Party") agrees to use its best 
efforts (i.e., in accordance with procedures adopted by such 
Relevant Party in good faith to protect confidential information 
of third parties delivered to such Relevant Party) to keep the 
same confidential and not disclose the Operative Documents to any 
third party without the prior written consent of Lessor, IBM and 
Guarantor; provided that nothing herein shall be deemed to prevent 
any such disclosure by the Relevant Party: 
      (i)  to its auditors or attorneys; 
      (ii) to any other persons requiring access to such 
information in connection with the normal business operations of 
such Relevant Party (including portfolio review and analysis), and 
such Relevant Party shall be responsible for such person acting in 
compliance herewith; 
      (iii)     to (or as required by) any regulatory authorities; 

      (iv) in connection with the enforcement or attempted 
enforcement of any of the Operative Documents; 

      (v)  to any person expressing an interest in acquiring, 
directly or indirectly, the Relevant Party's interest in the 
Operative Documents (and who agrees to be bound by the provisions 
of this Paragraph (m)); or 

      (vi) as required by any subpoena or civil investigative 
demand or any applicable law or governmental authority. 

XXVIII.    CHOICE OF LAW; JURISDICTION: 
 THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES 
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN 
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK 
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), 
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, 
REGARDLESS OF THE LOCATION OF THE EQUIPMENT.  The parties agree 
that any action or proceeding arising out of or relating to this 
Agreement may be commenced in the United States District Court for 
the Southern District of New York. 
XXIX. CHATTEL PAPER: 
 To the extent that any  Schedule would constitute chattel paper, 
as such term is defined in the Uniform Commercial Code as in 
effect in any applicable jurisdiction, no security interest 
therein may be created through the transfer or possession of this 
Lease in and of itself without the transfer or possession of the 
original of a Schedule executed pursuant to this Lease and 
incorporating this Agreement by reference; and no security 
interest in this Agreement and a Schedule may be created by the 
transfer or possession of any counterpart of the Equipment 
Schedule other than the original thereof, which shall be 
identified as the document marked "Original" and all other 
counterparts shall be marked "Duplicate". 

XXX.  SCOPE OF LIABILITY:   Notwithstanding any other provision of 
this Agreement or any other Operative Documents executed in 
connection herewith (expressly excepting the Guaranty and the 
Letter of Credit Agreement), there shall be no recourse against 
Lessee or any of its partners, officers or employees, for any 
liability to Lessor or any Participant arising in connection with 
any breach or default under this Agreement, except to the extent 
the same is enforced against the Equipment and the Additional 
Collateral and any proceeds thereof (including, without 
limitation, insurance proceeds thereof); and Lessor and the 
Participants shall look solely to the Equipment and the Additional 
Collateral and any proceeds thereof (including, without 
limitation, insurance proceeds thereof) in enforcing rights and 
obligations under and in connection with this Agreement and the 
other Operative Documents (expressly excepting the Guaranty and 
the Letter of Credit Agreement); provided that the foregoing 
provisions of this Section XXX shall not (i) constitute a waiver, 
release or discharge of any of Lessee's obligations hereunder, or 
of any of the terms, covenants, conditions or provisions of this 
Agreement or the other Operative Documents, or (ii) limit or 
restrict the right of Lessor to name Lessee as a defendant in any 
action or suit for a judicial foreclosure or for the exercise of 
any other remedy under or with respect to this Agreement, so long 
as no judgment in the nature of a deficiency judgment shall be 
enforced against Lessee or any of its partners, officers or 
employees out of any property, assets or funds other than the 
Equipment or the Additional Collateral and any proceeds thereof 
(including, without limitation, insurance proceeds thereof). 

XXXI. LIMITATION OF LIABILITY:   It is expressly understood and 
agreed by the parties hereto that (a) this Agreement is executed 
and delivered by Wilmington Trust Company, not individually or 
personally but solely as trustee of MiCrus Equipment Trust 1995-1 
under the Trust Agreement (the "Trust"), in the exercise of the 
powers and authority conferred and vested in it, (b) each of the 
representations, undertakings and agreements herein made on the 
part of the Trust is made and intended not as personal 
representations, undertakings and agreements by Wilmington Trust 
Company but is made and intended for the purpose of binding only 
the Trust, (c) nothing herein contained shall be construed as 
creating any liability on Wilmington Trust Company, individually 
or personally, to perform any covenant either expressed or implied 
contained herein, all such liability, if any, being expressly 
waived by MiCrus by any Person claiming by, through or under 
MiCrus, and (d) under no circumstances shall Wilmington Trust 
Company be personally liable for the payment of any indebtedness 
or expenses of the Trust or be liable for the breach or failure of 
any obligation, representation, warranty or covenant made or 
undertaken by the Trust under this Agreement or the other 
Operative Documents. 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 

IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement 
to be executed by their duly authorized representatives as of the 
date first above written. 

LESSOR:                     LESSEE: 

WILMINGTON TRUST COMPANY,   MICRUS, a New York general partnership 
NOT INDIVIDUALLY BUT 
SOLELY AS TRUSTEE           By:  CIREL INC.,                      
                                 General Partner 

By:/s/ Donald G. MacKelcan      By:/s/ Sam S. Srinivasan 
Name:  Donald G. MacKelcan      Name:  Sam S. Srinivasan 
Title: Senior Financial         Title:     
       Services Officer 

                            By:   MICRUS HOLDINGS, INC.,          
                                  General Partner 

                                By:/s/ Eric G. Johnson 
                                Name:  Eric G. Johnson 







                       CORPORATE GUARANTY 

                                             Date:  June 19, 1995 
Wilmington Trust Company, 
not individually but solely as Trustee 
Rodney Square North 
1100 North Market Street 
Wilmington, Delaware  19890 

     To induce you to enter into that certain Master Lease 
Agreement dated as of the date hereof, as now or hereafter amended 
(the "Agreement"), and/or any Schedules or other documents or 
instruments evidencing or relating to, any lease, loan, extension 
of credit or other financial accommodation made pursuant to the 
Agreement (collectively "Account Documents" and each an "Account 
Document") to MICRUS, a general partnership organized and existing 
under the laws of the State of New York ("Customer"), but without 
in any way binding you to do so, the undersigned, for Ygood and 
valuable consideration, the receipt and sufficiency of which is 
hereby acknowledged ("Guarantor"), does hereby: 

     (a)  agree to pay to you, for the period from and including 
each applicable Lease Commencement Date to each applicable Basic 
Term Commencement Date (the "Interim Period"), interim rent for 
each Item of the Equipment, calculated as the product of the 
Interest Rate times the Funding Amount with respect to such Item 
(as specified on the Equipment Schedule) divided by three hundred 
sixty (360), multiplied by the number of days in the Interim 
Period.  As used herein, "Interest Rate" shall mean that 
percentage per annum calculated as the sum of one hundred (100) 
basis points plus the LIBOR Rate redetermined monthly.  As used 
herein, "LIBOR Rate"  shall mean, with respect to the Interim 
Period, an interest rate per annum (rounded upward to the next 
higher whole multiple of 1/16th percent if such rate is not such a 
multiple), equal at all times during the Interim Period to the 
quotient of (1) the rate per annum (rounded upward to the next 
higher whole multiple of 1/16th percent if such rate is not such a 
multiple) as determined on the basis of the average of the rates 
offered by a majority of the banks in the London interbank market 
for deposits in U.S. Dollars for thirty (30) days, to the extent 
the rates offered by these banks appear in The Wall Street Journal 
on the third Business Day next preceding the Lease Commencement 
Date, redetermined monthly on the last Business Day of each 
calendar month), divided by (2) a number equal to 1.00 minus the 
aggregate (without duplication) of the rates (expressed as a 
decimal fraction) of the LIBOR Reserve Requirements current on the 
Business Day next preceding the Lease Commencement Date.  As used 
herein, "LIBOR Reserve Requirements" means, for the Interim 
Period, the maximum reserves (whether basic, supplemental, 
marginal, emergency or otherwise) prescribed by the Board of 
Governors of the Federal Reserve System (or any successor) with 
respect to liabilities or assets consisting of or including 
"Eurocurrency liabilities" (as defined in Regulation D of the 
Board of Governors of the Federal Reserve System) having a term 
equal to the Interim Period.  Interim rent shall be paid to you by 
wire transfer of immediately available funds to your Servicing 
Agent, General Electric Capital Corporation, at:  Bankers Trust 
New York, New York, New York 10006, Account No. 50-202-962, ABA 
No. 021-001-033, or to such other account as you may direct in 
writing; and shall be effective upon receipt.  Such interim rent 
shall be due on the earlier of:  (x) the applicable Basic Term 
Commencement Date, or (y) December 29, 1995; provided, however, 
that if such date is not a Business Day, the interim rent 
otherwise due on such date shall be payable on the immediately 
preceding Business Day.  Notwithstanding the foregoing, if Lessee 
does not execute and deliver to you a Certificate of Acceptance 
with respect to all of the Items of the Equipment listed on a 
Schedule within sixty (60) days after the applicable Lease 
Commencement Date (the "Expiration Date"), then the Interim Period 
shall expire on the Expiration Date and Guarantor shall pay to you 
on the Expiration Date the interim rent then due plus the 
Capitalized Lessor's Cost then having been paid by you with 
respect to all of the Items of the Equipment listed on the 
Schedule.  Upon receipt of such payment, so long as no Lease 
Default shall then have occurred and be continuing, you will 
transfer to Guarantor, on an AS IS BASIS, all your interest in and 
to the applicable Items of the Equipment.  You shall not be 
required to make and may specifically disclaim any representation 
or warranty as to the condition of the Items of the Equipment and 
any other matters (except that you shall warrant that you have 
conveyed whatever interest you received in the Items of the 
Equipment free and clear of any lien or encumbrance created by, 
through or under you).  You shall execute and deliver to Guarantor 
such Uniform Commercial Code Statements of Termination as 
reasonably may be required in order to terminate your interest in 
and to the applicable Items of the Equipment.  Capitalized terms 
used herein without definition shall have the meaning given them 
in the Account Documents; and 

     (b)  guarantee to you, your successors and assigns, the due 
regular and punctual payment of any sum or sums of money which the 
Customer may owe to you now or at any time hereafter pursuant to 
or evidenced by an Account Document, and whether it represents 
principal, interest, rent, late charges, indemnities, an original 
balance, an accelerated balance, liquidated damages, a balance 
reduced by partial payment, a deficiency after sale or other 
disposition of any leased equipment, collateral or security, or 
any other type of sum of any kind whatsoever that the Customer may 
owe to you now or at any time hereafter pursuant to or evidenced 
by an Account Document, and does hereby further guarantee to you, 
your successors and assigns, the due, regular and punctual 
performance of any other duty or obligation of any kind or 
character whatsoever that the Customer may owe to you now or at 
any time hereafter in connection with or pursuant to the Account 
Documents (all such payment and performance obligations being 
collectively referred to as "Obligations").  Undersigned does 
hereby further guarantee to pay upon demand all losses, costs, 
attorneys' fees and expenses which may be suffered by you by 
reason of Customer's default or default of the undersigned. 

     1.   This Guaranty is a guaranty of prompt payment and 
performance (and not merely a guaranty of collection).  Nothing 
herein shall require you to first seek or exhaust any remedy 
against the Customer, its successors and assigns, or any other 
person obligated with respect to the Obligations, or to first 
foreclose, exhaust or otherwise proceed against any leased 
equipment, collateral or security which may be given in connection 
with the Obligations.  It is agreed that you may, upon any breach 
or default of the Customer, or at any time thereafter, make demand 
upon the undersigned and receive payment and performance of the 
Obligations, with or without notice or demand for payment or 
performance by the Customer, its successors or assigns, or any 
other person.  Suit may be brought and maintained against the 
undersigned at your election, without joinder of the Customer or 
any other person as parties thereto.  The obligations of each 
signatory to this Guaranty shall be joint and several. 

     2.   The undersigned agrees that its obligations under this 
Guaranty shall be primary, absolute, continuing and unconditional, 
irrespective of and unaffected by any of the following actions or 
circumstances (regardless of any notice to or consent of the 
undersigned): (a) the genuineness, validity, regularity and 
enforceability of the Account Documents or any other document; (b) 
any extension, renewal, amendment, change, waiver or other 
modification of the Account Documents or any other document; (c) 
the absence of, or delay in, any action to enforce the Account 
Documents, this Guaranty or any other documents; (d) your failure 
or delay in obtaining any other guaranty of the Obligations 
(including without limitation, your failure to obtain the 
signature of any other guarantor hereunder); (e) the release of, 
extension of time for payment or performance by or any other 
indulgence granted to the Customer or any other person with 
respect to the Obligations by operation of law or otherwise; (f) 
the existence, value, condition, loss, subordination or release 
(with or without substitution) of or failure to have title to or 
perfect and maintain a security interest in, or the time, place 
and manner of any sale or other disposition of any leased 
equipment, collateral or security given in connection with the 
Obligations, or any other impairment (whether intentional or 
negligent, by operation of law or otherwise) of the rights of the 
undersigned; (g) the Customer's voluntary or involuntary 
bankruptcy, assignment for the benefit of creditors, 
reorganization, or similar proceedings affecting the Customer or 
any of its assets; or (h) any other action or circumstances which 
might otherwise constitute a legal or equitable discharge or 
defense of a surety or guarantor. 

     3.   This Guaranty may be terminated upon delivery to you (at 
your address shown above) of a written termination notice from the 
undersigned.  However, as to all Obligations (whether matured, 
unmatured, absolute, contingent or otherwise) incurred by the 
Customer prior to your receipt of such written termination notice 
(and regardless of any subsequent amendment, extension or other 
modification which may be made with respect to such Obligations), 
this Guaranty shall nevertheless continue and remain undischarged 
until all such Obligations are indefeasibly paid and performed in 
full. 

     4.   The undersigned agrees that this Guaranty shall remain 
in full force and effect or be reinstated (as the case may be) if 
at any time payment or performance of any of the Obligations (or 
any part thereof) is rescinded, reduced or must otherwise be 
restored or returned by you, all as though such payment or 
performance had not been made.  If, by reason of any bankruptcy, 
insolvency or similar laws affecting the rights of creditors, you 
shall be prohibited from exercising any of your rights or remedies 
against the Customer or any other person or against any property, 
then, as between you and the undersigned, such prohibition shall 
be of no force and effect, and you shall have the right to make 
demand upon, and receive payment from, the undersigned of all 
amounts and other sums that would be due to you upon a default 
with respect to the Obligations. 

     5.   The undersigned covenants and agrees that:  (a) it will 
provide to Lessor:  (1) within ninety (90) days after the end of 
each of its fiscal years, its balance sheet and related statement 
of income and statement of cash flows of Guarantor, prepared in 
accordance with generally accepted accounting principles 
consistently applied ("GAAP"), all in reasonable detail and 
certified by independent certified public accountants of 
recognized standing selected by the undersigned; (2) within sixty 
(60) days after the end of each quarter of its fiscal year, its 
balance sheet and related statement of income and statement of 
cash flows for such quarter, internally prepared in accordance 
with GAAP and certified by its chief financial officer; and (3) 
within thirty (30) days after the date on which they are filed, 
all regular periodic reports, forms and other filings required to 
be made by the undersigned to the Securities and Exchange 
Commission, including (without limitation) Forms 8K, 10K and 10Q; 
(b) it will promptly execute and deliver to you such further 
documents, instruments and assurances and take such further action 
as you from time to time reasonably may request in order to carry 
out the intent and purpose of this Guaranty and to establish and 
protect the rights and remedies created or intended to be created 
in your favor hereunder; and (c) upon the expiration or earlier 
termination of the Term under the Agreement with respect to any 
Item, Guarantor will cause the obligations secured by the New York 
State Lien to be prepaid in whole or in part, as and to the extent 
necessary to cause the New York State Lien to be released with 
respect to such Item. 

     6.   The undersigned shall be deemed to be in default 
hereunder ("Default") if:  (a) it shall fail to perform or observe 
any covenant, condition or agreement to be performed or observed 
by it hereunder and such failure shall continue unremedied for a 
period of thirty (30) days after the earlier of the actual 
knowledge of Guarantor or written notice thereof to the 
undersigned by you; or (b) it shall (1) be generally not paying 
its debts as they become due, (2) take action for the purpose of 
invoking the protection of any bankruptcy or insolvency law, or 
any such law is invoked against or with respect to it or its 
property, and such petition filed against it is not dismissed 
within sixty (60) days; or (c) there is an anticipatory 
repudiation of its obligations pursuant to this Guaranty; or (d) 
any certificate, statement, representation, warranty or audit 
contained herein or heretofore or hereafter furnished with respect 
to this Guaranty by or on behalf of the undersigned proving to 
have been false in any material respect at the time as of which 
the facts therein set forth were stated or certified, or having 
omitted any substantial contingent or unliquidated liability or 
claim against it; or (e) it shall be in default under any 
obligation for an amount in excess of $1,000,000.00 for borrowed 
money, for the deferred purchase price of property or any lease 
agreement, and the creditor thereunder shall have declared such 
obligation to be accelerated; or (f) the corporate existence of 
the undersigned is terminated and its obligations in connection 
with this Guaranty are not assumed by a successor in interest 
reasonably satisfactory to you; or (g) as a result of or in 
connection with a material change in the ownership of the capital 
stock of the undersigned and the debt to worth ratio of the 
undersigned equals or exceeds twice its debt to worth ratio as of 
the date of this Guaranty, without your prior written consent.  As 
used herein, "debt to worth ratio" shall mean the ratio of (1) 
total liabilities which, in accordance with GAAP, would be 
included in the liability side of a balance sheet, to (2) tangible 
net worth including the sum of the par or stated value of all 
outstanding capital stock, surplus and undivided profits, less any 
amounts attributable to good will, patents, copyrights, mailing 
lists, catalogs, trademarks, bond discount and underwriting 
expenses, organization expenses and other intangibles, all as 
determined in accordance with GAAP.  Notwithstanding the 
foregoing, the events specified in sub-parts (c), (f) and (g) of 
this Section 6 shall not constitute a Default hereunder if, prior 
to the occurrence of the events specified in any of such 
sub-parts, Guarantor delivers or causes to be delivered to you an 
irrevocable stand-by letter of credit ("Letter of Credit") which 
shall be (w) in an amount equal to the then Stipulated Loss Value 
of the Equipment, (x) issued by a bank which is acceptable to you 
in your sole discretion, (y) substantially in the form of Exhibit 
A attached to the Letter of Credit Agreement (or in such other 
form as may be acceptable to you in your sole discretion), and (z) 
for an initial term of one (1) year with automatic annual renewals 
thereafter (without amendment except for extension of the 
then-current expiration date by an additional year).  You shall 
have the right, with or without notice to or demand upon 
Guarantor, to draw upon the Letter of Credit by presenting to the 
issuer one or more sight drafts and any other necessary documents, 
and to receive (in a lump sum or in several sums from time to time 
at your sole discretion) and retain an amount not to exceed, in 
the aggregate, that available under the Letter of Credit, as and 
to the extent you otherwise would have been able to demand payment 
or performance by the undersigned pursuant to this Guaranty.  Once 
all obligations of Customer pursuant to the Account Documents have 
been indefeasibly paid and performed in full, you shall release 
the Letter of Credit and provide Guarantor with written notice to 
that effect or, if you have then drawn under the Letter of Credit, 
any remaining excess proceeds from the drawing under the Letter of 
Credit shall be remitted by you to Guarantor.  In any event, the 
undersigned shall remain liable under this Guaranty for any 
deficiency.  If Guarantor is required to provide the Letter of 
Credit hereunder and fails to do so, then upon your demand, 
Guarantor shall pay to you the then Stipulated Loss Value of the 
Equipment. 

     7.   Upon a Default hereunder, you may, at your option, 
declare this Guaranty to be in default by written notice to the 
undersigned (without election of remedies), and at any time 
thereafter, may do any one or more of the following, all of which 
are hereby authorized by the undersigned: 

     A.  sue for and recover all damages then or thereafter 
incurred by you as a result of such Default; and/or 

     B.  seek specific performance of the obligations of the 
undersigned hereunder. 

     In addition, the undersigned shall be liable for all 
reasonable attorneys' fees and other costs and expenses incurred 
by reason of any Default or the exercise of your remedies 
hereunder and/or under the Account Document.  No right or remedy 
referred to herein is intended to be exclusive, but each shall be 
cumulative, and shall be in addition to any other remedy referred 
to above or otherwise available at law or in equity, and may be 
exercised concurrently or separately from time to time. 

     8.   Notice of acceptance of this Guaranty and of any default 
by the Customer or any other person is hereby waived.  
Presentment, protest, demand, and notice of protest, demand and 
dishonor of any of the Obligations, and the exercise of 
possessory, collection or other remedies for the Obligations, are 
hereby waived.  The undersigned warrants that it has adequate 
means to obtain from the Customer on a continuing basis financial 
data and other information regarding the Customer and is not 
relying upon you to provide any such data or other information.  
Without limiting the foregoing, notice of adverse change in the 
Customer's financial condition or of any other fact which might 
materially increase the risk of the undersigned is also waived.  
All settlements, compromises, accounts stated and agreed balances 
made in good faith between the Customer, its successors or 
assigns, and you shall be binding upon and shall not affect the 
liability of the undersigned. 

     9.   Payment of all amounts now or hereafter owed to the 
undersigned by the Customer or any other obligor for any of the 
Obligations is hereby subordinated in right of payment to the 
indefeasible payment in full to you of all Obligations and is 
hereby assigned to you as security therefor.  The undersigned 
hereby irrevocably and unconditionally waives and relinquishes all 
statutory, contractual, common law, equitable and all other claims 
against the Customer and any other obligor for any of the 
Obligations, any collateral therefor, or any other assets of the 
Customer or any such other obligor, for subrogation, 
reimbursement, exoneration, contribution, indemnification, setoff 
or other recourse in respect of sums paid of payable to you by the 
undersigned hereunder, and the undersigned hereby further 
irrevocably and unconditionally waives and relinquishes any and 
all other benefits which it might otherwise directly or indirectly 
receive or be entitled to receive by reason of any amounts paid 
by, or collected or due from, it, the Customer or any other 
obligor for any of the Obligations, or realized from any of their 
respective assets. 

     10.  (a) THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS 
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON 
OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS GUARANTY, THE 
OBLIGATIONS GUARANTEED HEREBY, ANY OF THE RELATED DOCUMENTS, ANY 
DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER HEREOF OR 
THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN 
US.  The scope of this waiver is intended to be all encompassing 
of any and all disputes that may be filed in any court (including, 
without limitation, contract claims, tort claims, breach of duty 
claims, and all other common law and statutory claims).  THIS 
WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER 
ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT 
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS 
GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, OR ANY RELATED 
DOCUMENTS.  In the event of litigation this Guaranty may be filed 
as a written consent to a trial by the court. 

     (b)  As used in this Guaranty, the word "person" shall 
include any individual, corporation, partnership, joint venture, 
association, joint-stock company, trust, unincorporated 
organization, or any government or any political subdivision 
thereof. 

     (c)  This Guaranty is intended by the parties as a final 
expression of the guaranty of the undersigned and is also intended 
as a complete and exclusive statement of the terms thereof.  No 
course of dealing, course of performance or trade usage, nor any 
paid evidence of any kind, shall be used to supplement or modify 
any of the terms hereof.  There are no conditions to the full 
effectiveness of this Guaranty.  This Guaranty and each of its 
provisions may only be waived, modified, varied, released, 
terminated or surrendered, in whole or in part, by a duly 
authorized written instrument signed by you.  No failure by you to 
exercise your rights hereunder shall give rise to any estoppel 
against you, or excuse the undersigned from performing hereunder. 
 Your waiver of any right to demand performance hereunder shall 
not be a waiver of any subsequent or other right to demand 
performance hereunder. 

     (d)  This Guaranty shall bind the undersigned's successors 
and assigns and the benefits thereof shall extend to and include 
your successors and assigns.  In the event of default hereunder, 
you may at any time inspect undersigned's records, or at your 
option, undersigned shall furnish you with a current independent 
audit report. 

     (e)  THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE 
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND 
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF 
NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF 
SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND 
PERFORMANCE.  The parties agree that any action or proceeding 
arising out of or relating to this Agreement may be commenced in 
the United States District Court for the Southern District of New 
York.  If any provisions of this Guaranty are in conflict with any 
applicable statute, rule or law, then such provisions shall be 
deemed null and void to the extent that they may conflict 
therewith, but without invalidating any other provisions hereof. 

     (f)  All notices required to be given hereunder shall be 
deemed adequately given if sent by certified mail to the addressee 
at its address stated herein, or at such other place as such 
addressee may have designated in writing. 

     (g)  Any provision of this Agreement which is prohibited or 
unenforceable in any jurisdiction shall, as to such jurisdiction, 
be ineffective to the extent of such prohibition or 
unenforceability without invalidating the remaining provisions 
hereof, and any such prohibition or unenforceability in any 
jurisdiction shall not invalidate or render unenforceable such 
provision in any other jurisdiction. 

     (h)  Each signatory on behalf of a corporate guarantor 
warrants that he had authority to sign on behalf of such 
corporation and by so signing, to bind said guarantor corporation 
hereunder. 

        [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 

IN WITNESS WHEREOF, this Guaranty is executed the day and year 
above written. 
ATTEST:                          CIRRUS LOGIC, INC. 



/s/ Sam S. Srinivasan            By:  /s/ Michael L. Hackworth 
Secretary/Assistant Secretary    Name:    Michael L. Hackworth 
                                 Title:   President 

                                 3100 West Warren Avenue 
                                 Fremont, California  94538 

EX-99.2

                              EXHIBIT 99.2

                      MASTER LEASE AGREEMENT 
                   dated as of June 24, 1996, 
                          by and between 
              GENERAL ELECTRIC CAPITAL CORPORATION, 
        FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS, 
                                   as Lessor 
                               and 
                             MICRUS, 
                                   as Lessee 
                      MASTER LEASE AGREEMENT 

                        TABLE OF CONTENTS 
                                                             Page 

I.     LEASING . . . . . . . . . . . . . . . . . . . . . . . .  1 

II.    TERM, RENT AND PAYMENT. . . . . . . . . . . . . . . . .  2 

III.   TAXES . . . . . . . . . . . . . . . . . . . . . . . . .  2 

IV.    LIENS . . . . . . . . . . . . . . . . . . . . . . . . .  3 

V.     QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . .  3 

VI.    PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . .  3 

VII.   DELIVERY, OPERATION, MAINTENANCE AND REPORTING. .  . .   3 

VIII.  RELOCATION. . . . . . . . . . . . . . . . . . . . . . .  4 

IX.    MODIFICATIONS . . . . . . . . . . . . . . . . . . . . .  4 

X.     SUBSTITUTION OF ITEMS . . . . . . . . . . . . . . . . .  6 

XI.    LESSEE ASSIGNMENT AND SUBLEASE. . . . . . . . . . . . .  6 

XII.   INSPECTION AND MARKING. . . . . . . . . . . . . . . . .  8 

XIII.  STIPULATED LOSS VALUE . . . . . . . . . . . . . . . . .  8 

XIV.   LOSS OR DAMAGE. . . . . . . . . . . . . . . . . . . . .  8 

XV.    INSURANCE . . . . . . . . . . . . . . . . . . . . . . .  9 

XVI.   RETURN OF EQUIPMENT . . . . . . . . . . . . . . . . . .  9 

XVII.  LEASE DEFAULT . . . . . . . . . . . . . . . . . . . . .  9 

XVIII. LESSOR ASSIGNMENT . . . . . . . . . . . . . . . . . . . 11 

XIX.   NET LEASE; NO SET-OFF, ETC. . . . . . . . . . . . . . . 12 

XX.    INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 12 

XXI.   DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . 13 

XXII.  REPRESENTATIONS AND WARRANTIES OF LESSEE. . . . . . . . 13 

XXIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY 
INTEREST; USURY SAVINGS  . . . . . . . . . . . . . . . . . . . 14 


XXIV.  EARLY TERMINATION . . . . . . . . . . . . . . . . . . . 14 

XXV.   END OF BASIC TERM LEASE OPTIONS . . . . . . . . . . . . 16 
       (a)  Renewal. . . . . . . . . . . . . . . . . . . . . . 16 
       (b)  Return . . . . . . . . . . . . . . . . . . . . . . 16 
       (c)  Purchase . . . . . . . . . . . . . . . . . . . . . 17 
       (d)  Notice of Election . . . . . . . . . . . . . . . . 18 

XXVI.  END OF RENEWAL TERM LEASE OPTIONS . . . . . . . . . . . 18 
       (a)  Extension. . . . . . . . . . . . . . . . . . . . . 18 
       (b(b)     Return. . . . . . . . . . . . . . . . . . . . 19 
       (c)  Purchase . . . . . . . . . . . . . . . . . . . . . 19 
       (d)  Notice of Election . . . . . . . . . . . . . . . . 20 

XXVII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 20 

XXVIII.     CHOICE OF LAW; JURISDICTION. . . . . . . . . . . . 22 

XXIX.  CHATTEL PAPER . . . . . . . . . . . . . . . . . . . . . 22 

XXX.   SCOPE OF LIABILITY. . . . . . . . . . . . . . . . . . . 23 


EXHIBITS 

       No. 1 - [Intentionally Omitted] 
       No. 2 - Purchase Order and Consent 
       No. 3 - [Intentionally Omitted] 
       No. 4 - Corporate Guaranty 
       No. 5 - IBM Guaranty 
       No. 6 - Real Property Waiver 
       No. 7 - Bill of SaleMASTER LEASE AGREEMENT 


     THIS MASTER LEASE AGREEMENT, dated as of the  24th day of 
June, 1996 ("Agreement"), between GENERAL ELECTRIC CAPITAL 
CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN 
PARTICIPANTS, with an office at 303 International Circle, Suite 300, 
Hunt Valley, Maryland  21031 (or its successors and assigns with respec
a Schedule (as such term is hereinafter defined), if any, being hereina
called a "Lessor" and, collectively with respect to all Schedules, the 
"Lessors"), and MICRUS, a New York general partnership with its mailing
address and chief place of business at 1580 Route 52, P. O. Box 1279, 
Hopewell Junction, East Fishkill, New York 12533 (hereinafter called 
"Lessee"). 


                           WITNESSETH: 

I.   LEASING: 

     (a)  Subject to the terms and conditions set forth below, Lessor a
lease to Lessee, and Lessee agrees to lease from Lessor, the equipment 
("Equipment") described in Annex A to any schedule hereto ("Schedule").
Terms defined in a Schedule and not otherwise defined herein shall have
the meanings ascribed to them in such Schedule. 

     (b)  The obligation of Lessor to purchase Equipment from the 
manufacturer or supplier thereof ("Supplier") and to lease the same to 
Lessee under any Schedule shall be subject to receipt by Lessor, prior 
Lease Commencement Date (with respect to such Equipment), of each of 
the following documents in form and substance satisfactory to Lessor:  
Schedule relating to the Equipment then to be leased hereunder, (ii) a 
Purchase Order Assignment and Consent in substantially the form attache
hereto as Exhibit No. 2, unless the item of the Equipment (an "Item") s
have been delivered, in which case Lessor shall receive a Bill of Sale 
substantially the form attached hereto as Exhibit No. 7 with respect to
Item, (iii) evidence of insurance which complies with the requirements 
Section XV, (iv) a Corporate Guaranty in substantially the form attache
hereto as Exhibit No. 4 (the "Guaranty"), duly executed by Cirrus Logic
Inc. ("Guarantor"), (v) a Real Property Waiver  in substantially the fo
attached hereto as Exhibit No. 6, duly executed by each holder of an 
interest in the Location (as such term is hereinafter defined)  where t
Equipment will be located, (vi) a Certificate of Delivery (in the form 
Annex F to the applicable Schedule) with respect to such Item, and (vii
such other documents as Lessor may reasonably request.  As a further 
condition to such obligations of Lessor, Lessee shall execute and deliv
Lessor a Certificate of Acceptance (in the form of Annex B to the 
applicable Schedule) covering such Equipment (1) concurrently with 
delivery of such Equipment, which delivery shall occur not later than 
November 30, 1996 if the purchase order with the Supplier does not 
provide for a period of testing after delivery; or (2) within sixty (60
after delivery of such Equipment if the purchase order with the Supplie
provides for a period of testing after delivery.  Lessor hereby appoint
Lessee its agent for inspection and acceptance of the Equipment from th
Supplier.  Upon execution by Lessee of any Certificate of Acceptance, t
Equipment described thereon shall be deemed to have been delivered to, 
and irrevocably accepted by, Lessee for lease hereunder. 

     (c)  Each funding under this Agreement shall be in an amount not l
than Ten Million Dollars ($10,000,000.00) except the last funding which
shall cover any residual amount, and there shall be no more than six (6
fundings in the aggregate.  The aggregate amount of all fundings under 
Agreement shall not exceed Sixty Million Dollars ($60,000,000.00).  The
composition of the Equipment described in Annex A to each Schedule shal
reasonably be satisfactory to Lessor. 


II.  TERM, RENT AND PAYMENT: 

     (a)  Lessee's right to use the Equipment shall commence on the dat
execution by Lessee of the Certificate of Delivery for such Equipment 
("Lease Commencement Date").  The Basic Term Commencement Date 
shall be, and the rent payable hereunder (the "Rent") shall commence on
the first day of the calendar month next following the date that Lessee
executes and delivers a Certificate of Acceptance with respect to all o
Items of Equipment listed on a Schedule.  The term of this Agreement sh
be the period specified in the applicable Schedule.  If any term is ext
the word "Term" shall be deemed to refer to all extended terms, and all
provisions of this Agreement shall apply during any extended terms, exc
as may be otherwise specifically provided in writing. 

(b)  Rent shall be paid to Lessor by wire transfer of immediately avail
funds to Lessor at:  Bankers Trust New York, New York, New York 10006, 
Account No. 50-202-962, ABA No. 021-001-033, or to such other account 
as Lessor may direct in writing; and shall be effective upon receipt.  
Payments of Rent shall be in the amount set forth in, and due in accord
with, the provisions of the applicable Schedule.  In no event shall any
payments be refunded to Lessee. 

     (c)  Rent hereunder shall be calculated on the basis of an implici
determined as the sum of (i) the five (5)-year Treasury Constant Maturi
rate as published in The Wall Street Journal in effect on the second 
Business Day preceding the funding date, plus (ii) one hundred seventy-
(175) basis points. 


III. TAXES: 

     Lessee shall report (to the extent that it is legally permissible)
promptly all taxes, fees and assessments due, imposed, assessed or levi
against any Equipment (or the purchase, ownership, delivery, leasing, 
possession, use or operation thereof), this Agreement (or any rentals o
receipts hereunder), any Schedule, Lessor or Lessee by any United State
Federal, state or local government or taxing authority during or relate
the term of this Agreement,  including, without limitation, all license
registration fees, and all sales, use, personal property, excise, stamp
taxes, imposts, duties and charges, together with any penalties, fines 
interest thereon, except that Lessee shall have no liability for taxes 
(a) by the United States of America or any state or political subdivisi
thereof which are on or measured by the net or gross income or net or g
receipts of Lessor or which are characterized as franchise, net worth o
shareholder's capital taxes or which are expressly in substitution for,
relieve Lessor from, any of the foregoing taxes (in each case other tha
sales, use, value-added, license, property or similar taxes), (b) by re
the fact that Lessor or any Participant (as such term is hereinafter de
shall not be an entity organized under the laws of the United States of
America or any state thereof, (c) on or in connection with any voluntar
transfer, assignment or disposition by Lessor of the Equipment or any p
thereof or any interest arising hereunder or under any related document
(other than a transfer pursuant to the exercise by Lessor of remedies u
this Agreement) or any involuntary transfer, assignment or disposition 
Lessor of any such item or interest resulting from any bankruptcy or ot
proceedings for the relief of debtors involving Lessor, or (d) while Le
shall be contesting such taxes (all such taxes, fees and assessments fo
which Lessee shall have liability under this Section III being hereinaf
called "Taxes").  Lessee shall (i) reimburse Lessor upon receipt of wri
request for reimbursement for any Taxes charged to or assessed against 
Lessor, (ii) on request of Lessor, submit to Lessor written evidence of
Lessee's payment of Taxes, (iii) on all reports or returns show the 
ownership of the Equipment by Lessee, and (iv) on request of Lessor, se
a copy thereof to Lessor.  Lessor shall give Lessee prompt notice if it
receive any claim for Taxes or if it shall determine that any Taxes sha
payable and, at the request and expense of Lessee, Lessor shall contest
Taxes so long as such contest shall not involve any material risk of 
forfeiture of the Equipment (unless Lessee shall have provided security
against such risk in a manner reasonably satisfactory to Lessor).  For 
purposes of this Section III, the term "Lessor" shall include any perso
holds a beneficial interest in Lessor. 


IV.  LIENS: 

     (a)  Lessee shall not directly or indirectly create, incur, assume
to exist any lien on or with respect to the Equipment except Permitted 
Liens.  As used herein, "Permitted Liens" shall mean liens which are (i
created or permitted by the Agreement, (ii) the rights of any sublessee
operator permitted by the terms of this Agreement, (iii) those asserted
persons claiming by or through Lessor, (iv) liens for fees, taxes, levi
imposts, duties or other governmental charges of any kind which are not
delinquent or are being contested in good faith through appropriate 
proceedings which suspend the collection thereof, (v) liens of mechanic
materialmen, laborers, employees or suppliers and similar liens arising
operation of law, incurred by Lessee in the ordinary course of business
sums that are not yet delinquent or are being contested in good faith 
through negotiations or through appropriate proceedings which suspend t
collection thereof, and (vi) liens arising out of any judgments or awar
against Lessee which have been adequately bonded to protect Lessor's 
interests or with respect to which a stay of execution has been obtaine
pending an appeal or proceeding for review. 

     (b)  Lessee will promptly notify Lessor of any such lien other tha
Permitted Liens and, at Lessee's own expense, take such action as may b
necessary duly to discharge any such lien other than Permitted Liens. 


V.   QUIET ENJOYMENT: 

     Notwithstanding any other provision of this Agreement, so long as 
Material Lease Default shall have occurred and be continuing, as betwee
Lessee and Lessor, Lessee shall have the exclusive rights to possession
control of all the Equipment and neither Lessor nor any person acting o
claiming through Lessor will take any action that shall interfere with 
peaceful and quiet enjoyment of the use or nonuse of any item of the 
Equipment (an "Item") by Lessee, and Lessee shall have the right to use
not use such Item in its sole discretion (but, in all events, shall be 
to maintain the Equipment as specified herein).  The foregoing is not 
intended to limit the inspection rights and the rights in connection wi
return of the Items granted by Lessee hereunder.  As used herein, "Mate
Lease Default" shall mean any Lease Default (as hereinafter defined) ot
than a Lease Default resulting pursuant to Section XVII(a)(3) of this 
Agreement. 


VI.  PERSONAL PROPERTY: 

     Lessee and Lessor agree for the purposes of this Agreement that th
Items and every part thereof and title thereto are and shall be conside
and shall remain personal and not real property to all persons and for 
purposes.  All Equipment shall at all times remain personal property 
regardless of the degree of its annexation to any real property and sha
by reason of any installation in, or affixation to, real or personal pr
become a part thereof. 


VII.  DELIVERY, OPERATION, MAINTENANCE AND REPORTING: 

     (a)  The Equipment shall be shipped directly from the Supplier to 
Lessee. 

     (b)  Lessee shall not use any Item or authorize any third party to
Item in either case, in breach of any applicable laws (other than appli
laws as to which noncompliance would not adversely affect the business,
operations or properties of Lessee and so long as such noncompliance sh
not involve any material danger of the sale, forfeiture or loss of such
or the imposition of any criminal liability on Lessor). 

     (c)  Lessee at its own expense shall at all times during the Term 
applicable to each Item maintain such Item in accordance with good 
commercial maintenance standards and practices followed from time to 
time by Lessee and International Business Machines Corporation ("IBM") 
in the operation and maintenance of similar kinds of properties owned o
leased by it.  Lessee shall keep each such Item fit for its intended us
good and efficient working order (ordinary wear and tear excepted), and
as good condition (ordinary wear and tear excepted) as on the Lease 
Commencement Date for such Item of Equipment. 

     (d)  Lessee will promptly report to Lessor in writing if any Item 
Equipment is lost or damaged where the estimated repair costs would 
exceed One Hundred Thousand Dollars ($100,000.00) or is otherwise 
involved in an accident causing serious personal injury or significant 
property damage. 


VIII.  RELOCATION: 

     For purposes of this Agreement, the term "Location" shall mean any
building or buildings owned and/or operated by Lessee, Guarantor or IBM
or any of their solvent subsidiaries, collectively referred to by such 
a "site".  The initial Location for the Equipment leased under this 
Agreement is the IBM East Fishkill site which incorporates the Hudson 
Valley Research Park.  Lessee may not relocate any of the Items from th
initial Location without Lessor's prior written consent (which shall no
unreasonably be withheld) unless the following conditions are satisfied

     (a)  the Item is relocated to a Location located in the contiguous
Continental United States of America and the owner of the Location has 
provided Lessor with the appropriate landlord waiver; 

     (b)  Lessee shall have provided Lessor with written notice of the 
intention to relocate such Items in accordance with the terms hereof at
ten (10) Business Days prior to the date such relocation is commenced; 

     (c)  no Material Lease Default shall have occurred and be continui

     (d)  all reasonable out-of-pocket costs and expenses incurred by L
in connection with such relocation shall be paid by Lessee; 

     (e)  the Equipment is located at not more than three (3) Locations

     (f)  Lessee executes and delivers to Lessor such documents and 
instruments as reasonably may be required by Lessor in connection with 
such relocation of the Equipment, including (without limitation) Unifor
Commercial Code financing statements to be filed at Lessee's expense. 

     If Lessee moves any Item to a different building within a Location
promptly thereafter Lessee shall deliver to Lessor an itemization ident
the specific building to which such Item was moved.   


IX.  MODIFICATIONS: 

     (a)  Lessee, at its own expense from time to time, may make any 
modification to any Item that Lessee may deem desirable in the conduct 
its business if Lessee complies with all applicable laws relating there
provided, however, that Lessee shall not have the right to make any suc
modification that could materially impair such Item from being operated
designed or diminish the value, utility or remaining useful life of suc
to an independent third-party user. 

     (b)  Title to each modification shall vest as follows: 

          (i)  in the case of each modification for which Lessor shall 
provided financing of the cost of such modification effective on the da
such modification shall have been incorporated into such Item, Lessor s
acquire title to such modification without further act; 

          (ii) in the case of each modification for which Lessor shall 
provided financing of the cost of such modification, Lessee shall retai
to such modification; and 

          (iii)     notwithstanding subparagraph (ii) above, in the cas
modifications which remain upon return of the Item to Lessor at the end
the Term applicable to an Item so modified, title to such modifications
vest in Lessor at the end of the Term applicable to such Item at no cos
Lessor and without further action by Lessee; provided, however, that 
Lessee shall take such actions as reasonably may be required by Lessor 
evidence the transfer of title. 

Immediately upon title to a modification vesting in Lessor pursuant to 
Paragraph (b)(i) of this Section, such modification shall, without furt
become subject to this Agreement and be deemed part of the applicable 
Item for all purposes.  Modifications title to which remains in Lessee 
pursuant to this Section shall not be deemed a part of the applicable I
and shall not be subject to this Agreement. 

     (c)  Lessee may request Lessor to finance the cost of any modifica
"Modification Financing"), on terms acceptable to Lessee and Lessor.  
Lessor shall comply with any such request subject to the following 
conditions precedent to Lessor's obligation: 

          (i)  there shall have been no material adverse change in the 
and financial condition of Guarantor;  

          (ii) no Material Lease Default shall have occurred and be con

          (iii)  all governmental actions related to Lessee and the Ite
to the modification required to effect the Modification Financing shall
been obtained; and 

          (iv) such request is approved in writing by General Electrica
Corporation and the other Participants, or (if the Schedule with respec
the Equipment as to which such modification pertains has then been 
assigned) the assignee from Lessor, including satisfaction of each such
person's underwriting criteria and approval of the proposed modificatio

     (d)  Subject to compliance with applicable law and so long as no 
Material Lease Default shall have occurred and be continuing, if Lessor
Lessee cannot agree on the terms of a proposed Modification Financing, 
Lessee may purchase (upon not less than sixty (60) days' notice to Less
on the Rent Payment Date specified in such notice) the Item which was t
have been modified at a purchase price equal to the Stipulated Loss Val
of such Item computed as of such Rent Payment Date plus any accrued 
Rent and other charges hereunder due with respect to such Item as of su
Rent Payment Date. 

     (e)  Subject to compliance with applicable law and so long as no 
Material Lease Default shall have occurred and be continuing, Lessee ma
remove, at its own expense, any modification to which Lessee shall have
title as provided in Paragraph (b) above; provided, that, unless Lessee
have given notice of its desire to purchase such Item, at its own expen
prior to the end of the Term applicable to the Item subject to such 
modification, Lessee shall repair any damage to such Item caused by suc
removal, and such Item shall remain in the condition required hereunder


X.   SUBSTITUTION OF ITEMS: 

     Provided that no Material Lease Default shall have occurred and be
continuing, at Lessee's expense, Lessee may at any time substitute a 
comparable Item of the Equipment for any Item (a "Substituted Item") in
accordance with the terms of this Section.  On a quarterly basis, Lesse
shall notify each affected Lessor of all substitutions made during the 
preceding quarter with respect to such Lessors.  At such time as the 
aggregate original Capitalized Lessor's Cost of all Substituted Items (
than Items replaced pursuant to Section XIII(a) hereof) exceeds twenty 
percent (20%) of the aggregate original Capitalized Lessor's Cost of al
Equipment leased hereunder, Lessee's option to substitute additional It
shall be subject to the applicable Lessor's prior written consent (whic
consent shall not unreasonably be withheld).  If Lessee shall elect to 
substitute an Item of the Equipment pursuant hereto, Lessee shall, at i
cost and expense, convey to the applicable Lessor a comparable item of 
equipment (a "Replacement Item"), free and clear of all liens other tha
Permitted Liens, that has at least the value, utility and remaining use
and is in as good operating condition as the Substituted Item, assuming
the Substituted Item had been maintained in accordance with this 
Agreement.  In addition, Lessee shall pay to such affected Lessors an 
administrative fee of Three Thousand Dollars ($3,000.00) per notice of 
substitution (provided, however, that such administrative fee shall not
exceed in the aggregate with respect to all Lessors Twelve Thousand 
Dollars ($12,000.00) per calendar year; and provided, further, however 
such administrative fee shall be allocated pro rata among the affected 
Lessors at the sole expense of such Lessors), and Lessee shall execute 
deliver to Lessor such documents and instruments as reasonably may be 
required by Lessor in connection with such replacement, including (with
limitation) Uniform Commercial Code financing statements to be filed at
Lessee's expense.  Upon compliance by Lessee with the terms of the two 
preceding sentences, Lessor will transfer to Lessee, on an AS IS BASIS 
hereinafter defined) all of Lessor's interest in and to such Substitute
Lessor shall not be required to make and may specifically disclaim any 
representation or warranty as to the condition of such Substituted Item
other matters (except that Lessor shall warrant that it has conveyed 
whatever interest it received in the Substituted Item free and clear of
liens or encumbrances created by, through or under Lessor).  Lessor sha
execute and deliver to Lessee such Uniform Commercial Code Statements 
of Termination as reasonably may be required in order to terminate any 
interest of Lessor in and to the Substituted Item.  Lessee will be subr
to all claims of Lessor, if any, against third parties to the extent th
relate to physical damage to or loss of such Substituted Item, and such
Substituted Item shall no longer be subject to this Agreement.  For all
purposes hereof, the Replacement Item so substituted shall after such 
transfer be part of the property leased hereunder and be an "Item".  No
substitution shall result in any change in Rent. 


XI.  LESSEE ASSIGNMENT AND SUBLEASE: 

     (a)  Lessee shall have and retain throughout the Term with respect
Item control over the operation and use of such Item, and may, so long 
no Lease Default shall have occurred and be continuing, without the 
consent of Lessor, assign its interest in this Agreement or sublease, l
transfer control of, or permit any other person to use, all or any part
Item or Items during the Term, subject to the following terms and 
conditions: 

          (i)  Lessee shall remain primarily liable to Lessor for the p
of all the terms of this Agreement to the same extent as if such assign
sublease or arrangement had not occurred and the Guaranty shall remain 
full force and effect against Guarantor; 

          (ii) such assignment, sublease or arrangement shall be in com
with all applicable laws; 

          (iii)     such assignment, sublease or arrangement as to any 
not extend beyond the stated Term with respect to such Item as then in 
effect for such Item, and any rights created thereby in an Item shall b
subject and subordinate to this Agreement; 

          (iv) such assignment, sublease or arrangement shall not subje
Lessor to any regulation by any governmental agency; 

          (v)  such assignment, sublease or arrangement shall be to Gua
or to a solvent affiliate of Lessee, Guarantor or IBM, organized under 
laws of any state of, and located in, the United States; 

          (vi) Lessee shall have given prior written notice to Lessor o
assignment, sublease or arrangement;  

          (vii)     Lessee shall obtain and deliver to Lessor such Unif
Commercial Code financing statements executed by the assignee or 
sublessee and Lessee, as reasonably may be required by Lessor, to be fi
at Lessee's expense; and 

          (viii)    all reasonable costs and expenses (including attorn
and expenses) incurred by Lessor in connection with such assignment, 
sublease or arrangement shall be paid by Lessee. 

     Lessee may make any such assignment, sublease or arrangement to a 
person other than those persons listed above provided such person is 
organized under the laws of any state of, and located in, the United St
and is not a non-profit, tax-exempt entity; and provided further that s
assignment, sublease or arrangement complies with subparagraphs (i) 
through (iv) and (vi) through (viii) above, with Lessor's prior written
consent, which consent shall not unreasonably be withheld. 

     Notwithstanding the foregoing, if Guarantor, IBM or their subsidia
who are partners in Lessee decide to dissolve Lessee, Lessee may assign
leasehold interest in this Agreement in its entirety to Guarantor, IBM 
solvent subsidiary of either thereof, or to a solvent general partnersh
which IBM or a solvent subsidiary of IBM is the managing general partne
provided, that (1) the Guaranty will survive any such assignment and 
remains in full force and effect against Guarantor, and (2) subparagrap
(ii), (iii), (iv), (vi) and (vii) above shall be complied with. 


     (b)  Lessee shall not consolidate or merge into any person or sell
transfer, convey or lease all or substantially all its properties or as
entirety to any Person, unless: 

          (i)  the successor entity formed by such consolidation or int
is merged or the successor entity that acquires by conveyance, transfer
lease all or substantially all its assets as an entirety, shall be orga
the laws of the United States of America, a state thereof or the Distri
Columbia, shall be authorized under all applicable laws to operate the 
Equipment and perform its obligations under this Agreement and all rela
documents (the "Operative Documents") to the same extent as Lessee and 
(at Lessee's expense) shall deliver to Lessor an opinion of counsel 
reasonably satisfactory in form and substance to the effect that the 
obligations of Lessee hereunder have been assumed by the successor enti
by operation of law without any further act by such successor entity, o
agreement in form and substance reasonably satisfactory to Lessor 
containing an assumption by such successor entity of the due and punctu
performance of each covenant and condition of the Operative Documents t
be performed or observed by Lessee; 

          (ii) immediately after giving effect to such transaction, no 
Lease Default shall have occurred and be continuing; and 

          (iii)     the Guaranty shall remain in full force and effect 
Guarantor and applicable to the successor. 

Upon any such consolidation or merger, or any sale, conveyance, transfe
or lease of substantially all the assets of Lessee in accordance with t
Section, the successor entity formed by such consolidation or into whic
Lessee shall be merged or to which such sale, conveyance, transfer or l
shall be made, shall succeed to, and be substituted for, and may exerci
every right and power and shall be subject to, each and every obligatio
Lessee under the Operative Documents to which it is a party with the sa
effect as if such successor corporation had been named as Lessee therei

     (c)  The dissolution of Lessee shall not cause this Agreement to 
terminate, or otherwise constitute a Lease Default, so long as, prior t
effective date of such dissolution, Lessee shall have complied with 
Paragraph (b) of this Section (whereupon the assignee of Lessee's right
thereunder shall become Lessee for all purposes hereunder and under the
other Operative Documents).   


XII.  INSPECTION AND MARKING: 

     Subject to Lessee's reasonable standard security procedures and 
operational requirements), during the normal business hours of Lessee, 
Lessor may (at its own expense), upon reasonable prior notice, inspect 
Equipment.  Lessee shall affix to any Item, according to Lessor's 
instructions, any reasonable identifying labels, plates or tags supplie
Lessor which do not interfere with such Item's operation. 


XIII.     STIPULATED LOSS VALUE: 

     Lessee shall promptly and fully notify Lessor in writing if any It
Equipment shall be or become, lost, stolen, destroyed, irreparably dama
in the determination of Lessee, or permanently rendered unfit for use f
any cause whatsoever (such occurrences being hereinafter called "Casual
Occurrences").  On the Rent Payment Date next succeeding a Casualty 
Occurrence (the "Payment Date"), Lessee shall either (as selected by 
Lessee): 

     (a)  replace the Item of Equipment having suffered the Casualty 
Occurrence as provided in Section X hereof; or 

     (b)  pay Lessor the sum of (x) the Stipulated Loss Value of such I
calculated in accordance with Annex C to the applicable Schedule as of 
Rent Payment Date next following such Casualty Occurrence ("Calculation
Date"); and (y) all Rent and other amounts which are due hereunder as o
such Rent Payment Date.  Upon payment of all sums due hereunder, the 
term of this lease as to such Item shall terminate and (except in the c
of the loss, theft or complete destruction of such unit, or (ii) where 
insurer requires possession of the damaged unit), Lessee shall be entit
recover possession of such unit. 


XIV. LOSS OR DAMAGE: 

     Lessee hereby assumes and shall bear the entire risk of any loss, 
damage to, or destruction of, any Item of Equipment from any cause 
whatsoever from the Lease Commencement Date. 


XV.  INSURANCE: 

     Lessee agrees, at its own expense, to keep all Equipment insured f
such amounts as specified in Paragraph D of the Equipment Schedule and 
against such hazards as Lessor may require, including, but not limited 
insurance for damage to or loss of such Equipment and liability coverag
for personal injuries, death or property damage, with Lessor named as 
additional insured and with a loss payable clause in favor of Lessor, a
interest may appear, with respect to all losses in excess of One Hundre
Thousand Dollars ($100,000.00), irrespective of any breach of warranty 
other act or omission of Lessee.  Such policies may include such 
deductibles or self-insured retentions as are acceptable to Lessor.  Al
policies shall be with companies, and on terms, reasonably satisfactory
Lessor.  Lessee agrees to deliver to Lessor evidence of insurance 
satisfactory to Lessor and, upon Lessor's determination that such insur
is satisfactory to it, Lessor shall certify to Lessee that such insuran
satisfactory to Lessor.  No insurance shall be subject to any co-insura
clause.  During the existence of a Lease Default hereunder, Lessee here
appoints Lessor as Lessee's attorney-in-fact to make proof of loss and 
for insurance, and to make adjustments with insurers and to receive 
payment of and execute or endorse all documents, checks or drafts in 
connection with payments made as a result of such insurance policies.  
expense of Lessor in adjusting or collecting insurance shall be borne b
Lessee.  Lessee will not make adjustments with insurers except (i) with
respect to claims for damage to any Item of Equipment where the repair 
costs do not exceed One Hundred Thousand Dollars ($100,000.00), or (ii)
with Lessor's written consent.  Said policies shall provide that the in
may not be altered or cancelled by the insurer until after thirty (30) 
written notice to Lessor.  Lessee may, at its option, apply proceeds of
insurance not in excess of One Hundred Thousand Dollars ($100,000.00), 
in whole or in part, to (i) repair or replace Equipment or any portion 
thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder. 
Provided that no Material Lease Default shall then have occurred and be
continuing, Lessor shall apply proceeds of insurance in excess of One 
Hundred Thousand Dollars ($100,000.00), in whole or in part, as elected
Lessee pursuant to Section XIII hereof, to (i) repair or replace Equipm
any portion thereof, or (ii) satisfy any obligation of Lessee to Lessor
hereunder. 


XVI. RETURN OF EQUIPMENT: 

     Upon any expiration or termination of this Agreement or any Schedu
unless Lessee shall have exercised its early termination option pursuan
Section XXIV hereof, or its extension option pursuant to Section XXVI(a
hereof, or its renewal option pursuant to Section XXV(a), hereof, or it
purchase option pursuant to Section XXV(c) or Section XXVI(c) hereof, 
Lessee shall promptly, at its own cost and expense:  (i) perform any te
and repairs required to place the affected Items of Equipment in the sa
condition and appearance as when received by Lessee (ordinary wear and 
tear excepted) and in good working order for their originally intended 
purpose; (ii) if deinstallation, disassembly or crating is required, ca
Items to be deinstalled, disassembled and crated by qualified personnel
Lessee or IBM, or by an authorized manufacturer's representative or suc
other service person as is satisfactory to Lessor; and (iii) within ten
days after such expiration or termination, ship such Items, free and cl
all liens and encumbrances, to a location within the forty-eight (48) 
contiguous continental United States as Lessor shall direct; and Lessee
provide, at its expense, transit insurance payable to Lessor for the 
Equipment in the amount of the then Stipulated Loss Value of the 
Equipment. 


XVII.     LEASE DEFAULT: 

     (a)  Each Lessor may in writing declare this Agreement in default 
respect to the Equipment listed on a Schedule of such Lessor ("Lease 
Default") if: (1) Lessee breaches its obligation to pay Rent to the app
Lessor when due hereunder with respect to such Equipment and fails to 
cure the breach within ten (10) days; (2) Lessee breaches its obligatio
pay to the applicable Lessor any sum (other than Rent) when due hereund
and fails to cure that breach within five (5) days after written notice
(3) Lessee breaches any of its insurance obligations with respect to th
applicable Equipment under Section XV; (4) Lessee breaches any of its 
other obligations hereunder with respect to the applicable Equipment an
fails to cure that breach within thirty (30) days after written notice 
provided, however, that if (A) such breach is curable, (B) such breach 
cannot be remedied within the thirty (30) day period, (C) Lessee 
commences reasonable efforts to effect such remedy within the thirty (3
day period and diligently pursues such efforts, and (D) such breach doe
involve any substantial danger of the sale, forfeiture or loss of the 
applicable Equipment or of Lessor's interest therein, then Lessee shall
an additional period of sixty (60) days to effect such remedy); (5) any
representation or warranty made by Lessee in connection with this 
Agreement shall be false or misleading when made in any material respec
(6) Lessee becomes insolvent or ceases to do business as a going concer
(unless the provisions of Section XI(c) hereof are satisfied); (7) any 
applicable Equipment is illegally used; (8) a petition is filed by Less
under any bankruptcy or insolvency laws; (9) a petition is filed agains
Lessee under any bankruptcy or insolvency laws and is not dismissed 
within sixty (60) days; (10) Lessee shall have terminated its existence
general partnership, consolidated with, merged into, or conveyed or lea
substantially all of its assets as an entirety to any person (such acti
referred to as an "Event"), unless the provisions of Section XI hereof 
satisfied or not less than sixty (60) days prior to such Event:  (x) su
person is organized and existing under the laws of the United States or
state, and executes and delivers to Lessor an agreement containing an 
effective assumption by such person of the due and punctual performance
of this Lease with respect to the applicable Equipment; and (y) Lessor 
reasonably satisfied as to the creditworthiness of such person; or (11)
subject to the provisions set forth in Paragraph (b) of this Section, t
occurs a default under Section 6(b)(2) of the Guaranty.   

     (b)  Each Lessor shall provide written notice to IBM upon the 
occurrence of a default under Section 6(b)(2) of the Guaranty and, for 
period of thirty (30) days after the giving of such notice (the "30-day
Period"), if no other Material Lease Default has then occurred and is 
continuing such Lessor shall not declare this Agreement to be in defaul
result of such occurrence and shall not exercise any remedies hereunder
result of such occurrence, provided that all Rent and other payments 
becoming due hereunder are paid as and when due during such 30-day 
Period.  Prior to the expiration of such 30-day Period, IBM may (at its
discretion):  (1) cause to be delivered to such Lessor an irrevocable l
credit (in form and substance satisfactory to Lessor) issued by a natio
bank acceptable to Lessor in an amount equal to the Rent becoming due  
during the next succeeding ninety (90) day period (the "Subsequent Rent
or (2) deliver to such Lessor a written guaranty of IBM, in substantial
form attached hereto as Exhibit No. 5, guaranteeing the payment as and 
when due of the Subsequent Rent.  If IBM timely provides the required 
letter of credit or guaranty, for an additional ninety (90) days after 
original 30-day Period, if no other Material Lease Default has then occ
and is continuing, such Lessor shall not declare this Agreement to be i
default as a result of such occurrence and shall not exercise any remed
hereunder as a result of such occurrence.  Upon the expiration of such 
subsequent ninety (90) day period, unless IBM has (i) delivered to such
Lessor a written guaranty of IBM, in substantially the form attached he
as Exhibit No. 5, (ii) purchased all the Equipment with respect to such
Lessor for its then Stipulated Loss Value, plus all unpaid Rent and oth
amounts due hereunder, (iii) received an assignment of all right, title
interest and obligations of Lessee in, under and pursuant to this Agree
and IBM has accepted such assignment and assumed such obligations, or 
(iv) taken such other action acceptable to such Lessor (in its sole 
discretion), then such Lessor may exercise all rights and remedies 
hereunder. 

     (c)  After a Lease Default has occurred and is continuing, Lessee 
upon demand, forthwith pay to each affected Lessor (i) as liquidated 
damages for loss of a bargain and not as a penalty, the Termination Val
of the Equipment (calculated as of the Rent Payment Date next preceding
the declaration of Lease Default), and (ii) all Rent and other sums the
having become due hereunder; and upon payment of such sums and all 
other costs, charges and expenses incurred by such Lessor (including 
attorney's fees and expenses) as a result of the occurrence of Lease De
Lessor will transfer to Lessee, on an AS IS BASIS (as hereinafter defin
all of Lessor's interest in and to the Equipment (and Lessor shall not 
required to make and may specifically disclaim any representation or 
warranty as to the condition of the Equipment and other matters, except
Lessor shall warrant that it has conveyed whatever interest it received
Equipment free and clear of any lien or encumbrance created by, through
under Lessor), and Lessor shall execute and deliver to Lessee such Unif
Commercial Code Statements of Termination as reasonably may be 
required in order to terminate any interest of Lessor in and to the 
Equipment.  If Lessee fails to pay the amounts specified in the precedi
sentence, then, at the request of such Lessor, Lessee shall comply with
provisions of Section XVI hereof.  Lessee hereby authorizes Lessor to 
enter, with or without legal process, any premises where any Equipment 
located and take possession thereof.  Lessor may, but shall not be requ
to, sell Equipment at private or public sale, in bulk or in parcels, wi
without notice, and without having the Equipment present at the place o
sale; or Lessor may, but shall not be required to, lease, otherwise dis
or keep idle all or part of the Equipment.  The proceeds of sale, lease
other disposition, if any, shall be applied in the following order of p
(1) to pay all of such Lessor's costs, charges and expenses incurred in
taking, removing, holding, repairing and selling, leasing or otherwise 
disposing of Equipment; then, (2) to the extent not previously paid by 
Lessee, to pay such Lessor all sums due from Lessee hereunder; then (3)
reimburse to Lessee any sums previously paid by Lessee as liquidated 
damages; and (4) any surplus shall be paid to Lessee.  Subject to the 
limitations set forth in Article XXX hereof, Lessee shall pay any defic
in clauses (1) and (2) forthwith. 

     (d)  The foregoing remedies are cumulative, and any or all thereof
be exercised in lieu of or in addition to each other or any remedies at
equity, or under statute.  Lessee waives notice of sale or other dispos
(and the time and place thereof), and the manner and place of any 
advertising.  If permitted by law, Lessee shall pay reasonable attorney
actually incurred by such Lessor in enforcing the provisions of this Le
and any ancillary documents.  Waiver of any default shall not be a waiv
of any other or subsequent default. 



XVIII.    LESSOR ASSIGNMENT: 

     (a)  Lessor may not, without the consent of Lessee (which consent 
not unreasonably be withheld, delayed or conditioned; provided, however
any such assignee shall qualify as a Transferee (as such term is herein
defined)), assign this Agreement or any Schedule, or the right to enter
any Schedule.  Lessor shall act as the fiscal agent for any assignee un
Lease Default has then occurred hereunder, in which case such assignee 
may act directly hereunder.  Lessee agrees to confirm in writing receip
notice of an approved assignment with respect to a Schedule (in whole, 
not in part) as reasonably may be requested by assignee.  Lessee hereby
waives and agrees not to assert against any such assignee any defense, 
off, recoupment, claim or counterclaim which Lessee has or may at any 
time have against Lessor or any other person for any reason whatsoever.

     (b)  Lessee acknowledges that it has been advised that the interes
Lessor in this Agreement, the Equipment Schedules, related instruments 
and documents and/or the Equipment may be conveyed to, in whole or in 
part,  certain third parties (each being herein referred to as a "Parti
and, collectively, as the "Participants") without the consent of Lessee
"Syndication").  Lessee agrees reasonably to cooperate with Lessor in 
connection with the Syndication, including the execution and delivery o
such other documents, instruments, notices, opinions, certificates and 
acknowledgements as reasonably may be required by Lessor or such 
Participant; provided, however, in no event shall Lessee be required to
consent to any change that would adversely affect any of the terms of t
transactions contemplated herein; and provided further, however, that 
Lessor shall be responsible for its own costs and expenses incurred in 
connection with the Syndication.  Each Participant shall be required to
comply with the provisions of Section V hereof and qualify as a Transfe

     (c)  Each Lessor and each Participant agrees that it will not adve
publish the fact that it has furnished financing to, or otherwise enter
the transactions contemplated hereby with Lessee, Guarantor or IBM 
without first obtaining the written consent of such person.  Notwithsta
any other provision of any Operative Document, Lessors and the 
Participants will not have any right to use any trademark or trade name
or otherwise refer to Lessee, Guarantor or IBM in any promotion or 
publication without first obtaining the written consent of such person.

     (d)  A Participant may at any time assign any or all of its rights
obligations, title and interest as such Participant to any Transferee w
(5) Business Days' notice to Lessor, Lessee, Guarantor and IBM Credit 
Corporation.  As used herein, "Transferee" shall mean a corporation, ba
insurance company, trust company or national banking association, or an
affiliate of any thereof, incorporated or doing business under the laws
United States or one of the states thereof, having at the time of trans
consolidated net worth or combined capital and surplus of at least 
$20,000,000.00, which is not a direct competitor of or then in litigati
adverse to Lessee, Guarantor, IBM or IBM Credit Corporation.   

     (e)  Subject always to the foregoing and to Section XI hereof, thi
Agreement inures to the benefit of, and is binding upon, the successors
assigns of the parties hereto. 


XIX. NET LEASE; NO SET-OFF, ETC.: 

     This Agreement is a net lease.  Lessee's obligation to pay Rent an
amounts due hereunder shall be absolute and unconditional.  Lessee shal
not be entitled to any abatement or reductions of, or set-offs against,
Rent or other amounts, including, without limitation, those arising or 
allegedly arising out of claims (present or future, alleged or actual, 
including claims arising out of strict liability in tort or negligence 
of Lessee against Lessor under this Agreement or otherwise.  This 
Agreement shall not terminate and the obligations of Lessee shall not b
affected by reason of any defect in or damage to, or loss of possession
or destruction of, any Equipment from whatsoever cause.  It is the inte
of the parties that Rents and other amounts due hereunder shall continu
be payable in all events in the manner and at the times set forth herei
unless the obligation to do so shall have been terminated pursuant to t
express terms hereof. 


XX.  INDEMNIFICATION: 

     (a)  Lessee hereby agrees to indemnify, save and keep harmless Les
the Participants, their agents, employees, successors and assigns, from
against any and all damages, penalties, injuries, claims, actions and s
(including legal and other expenses), of whatsoever kind and nature, in
contract or tort, except as to taxes which are covered in Section III h
only (provided, however, that each such party is liable for its own gro
negligence or willful misconduct and shall not be indemnified hereunder
a result thereof) (and including, but not limited to, Lessor's strict l
tort), arising out of (i) the selection, manufacture, purchase, accepta
rejection of Equipment, the ownership of Equipment during the term of t
Agreement, and the delivery, lease, possession, maintenance, uses, 
condition, return or operation of Equipment (including, without limitat
latent and other defects, whether or not discoverable by Lessor or Less
and any claim for patent, trademark or copyright infringement or 
environmental damage), or (ii) any claim by a third party  attributable
maintenance or use of such Item by Lessee, any sublessee or employees o
Lessee.  Lessee shall, upon request, defend any actions based on, or ar
out of, any of the foregoing. 

     (b)  All of Lessor's and the Participants' rights, privileges and 
indemnities contained in this Section XX shall survive the expiration o
other termination of this Agreement, and the rights, privileges and 
indemnities contained herein are expressly made for the benefit of, and
shall be enforceable by Lessor, the Participants, and its and their suc
and assigns. 


XXI. DISCLAIMER: 

     LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE 
EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS 
AGENTS OR EMPLOYEES.  LESSOR DOES NOT MAKE, HAS NOT 
MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY 
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR 
IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE 
EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT 
THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY 
AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY 
OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, 
FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, 
PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR 
(EXCEPT AS EXPRESSLY PROVIDED HEREIN) TITLE.  All such risks, 
as between Lessor and Lessee, are to be borne by Lessee.  Without limit
the foregoing, Lessor shall have no responsibility or liability to Less
any other person with respect to any of the following:  (i) any liabili
or damage caused or alleged to be caused directly or indirectly by any 
Equipment, any inadequacy thereof, any deficiency or defect (latent or 
otherwise) therein, or any other circumstance in connection therewith; 
the use, operation or performance of any Equipment or any risks relatin
thereto; (iii) any interruption of service, loss of business or anticip
profits or consequential damages; or (iv) the delivery, operation, serv
maintenance, repair, improvement or replacement of any Equipment.  If, 
and so long as, no default exists under this Lease, Lessee shall be, an
hereby is, authorized during the term of this Lease to assert and enfor
Lessee's sole cost and expense, from time to time, in the name of and f
the account of Lessor and/or Lessee, as their interests may appear, wha
claims and rights Lessor may have against any Supplier of the Equipment


XXII.     REPRESENTATIONS AND WARRANTIES OF LESSEE: 

     Lessee hereby represents and warrants to Lessor that on the date h
and on the date of execution of each Schedule: 

     (a)  Lessee has adequate power and capacity to enter into, and per
under, this Agreement and all related documents (together, the 
"Documents") and is duly qualified to do business wherever necessary to
carry on its present business and operations, including the jurisdictio
where the Equipment is or is to be located, where the failure to be so 
qualified would have a material adverse effect. 

     (b)  The Documents have been duly authorized, executed and deliver
by Lessee and constitute valid, legal and binding agreements, enforceab
accordance with their terms, except to the extent that the enforcement 
remedies therein provided may be limited under applicable bankruptcy an
insolvency laws and equitable principles. 

     (c)  No approval, consent or withholding of objections is required
any governmental authority or instrumentality with respect to the entry
or performance by Lessee of the Documents except such as have already 
been obtained. 

     (d)  The entry into and performance by Lessee of the Documents wil
not:  (i)  violate any judgment, order, law or regulation applicable to
or any provision of that certain Partnership Agreement dated as of 
September 30, 1994, between Cirel Inc. and MiCrus Holdings, Inc.; or (i
result in any breach of, constitute a default under or result in the cr
any lien, charge, security interest or other encumbrance upon any 
Equipment pursuant to any indenture, mortgage, deed of trust, bank loan
credit agreement or other instrument (other than this Agreement) to whi
Lessee is a party. 

     (e)  There are no suits or proceedings pending or (to Lessee's 
knowledge) threatened in court or before any commission, board or other
administrative agency against or affecting Lessee, which will have a 
material adverse effect on the ability of Lessee to fulfill its obligat
under this Agreement. 

     (f)  Lessee is a general partnership duly organized and will be at
times validly existing under the laws of the State specified in the fir
sentence of this Agreement (except in accordance with the provisions of
Section XI(c) hereof).  Cirel Inc. and MiCrus Holdings, Inc. are the so
general partners of Lessee. 

     (g)  The Equipment will at all times be used for commercial or bus
purposes. 


XXIII.    OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY 
INTEREST; USURY SAVINGS: 

     (a)  For Federal, state and local income tax purposes, Lessor will
Lessee as the owner of the Equipment.  Accordingly, Lessor will not cla
any tax benefits available to an owner of the Equipment. 

     (b)  In order to secure the prompt payment of the Rent and all of 
other amounts from time to time outstanding under and with respect to t
Schedules, and the performance and observance by Lessee of all the 
agreements, covenants and provisions thereof (including, without 
limitation, all of the agreements, covenants and provisions of this 
Agreement, which are incorporated therein by reference), Lessee hereby 
grants to Lessor a first priority security interest in (i) the Equipmen
under the Schedules and any and all substitutions, replacements or 
exchanges therefor, and (ii) (other than modifications, additions, 
attachments, accessories and accessions thereto made pursuant to Sectio
XI (b)(ii) hereof) modifications, additions, attachments, accessions an
accessories thereto, made pursuant to the terms hereof, in which Lessee
shall from time to time acquire an interest, and any and all insurance 
other proceeds (but without power of sale) of the property in and again
which a security interest is granted hereunder.   

     (c)  It is the intention of the parties hereto to comply with any 
usury laws to the extent that any Schedule is determined to be subject 
such laws; accordingly, it is agreed that, notwithstanding any provisio
the contrary in any Schedule or the Lease, in no event shall any Schedu
require the payment or permit the collection of interest in excess of t
maximum amount permitted by applicable law.  If any such excess interes
is contracted for, charged or received under any Schedule or the Lease,
in the event that all of the principal balance shall be prepaid, so tha
any of such circumstances the amount of interest contracted for, charge
received under any Schedule or the Lease shall exceed the maximum 
amount of interest permitted by applicable law, then in such event (1) 
provisions of this paragraph shall govern and control,  (2) neither Les
nor any other person or entity now or hereafter liable for the payment 
hereof shall be obligated to pay the amount of such interest to the ext
that it is in excess of the maximum amount of interest permitted by 
applicable law, (3) any such excess which may have been collected shall
either applied as a credit against the then unpaid principal balance or
refunded to Lessee, at the option of Lessee, and  (4) the effective rat
interest shall be automatically reduced to the maximum lawful contract 
allowed under applicable law as now or hereafter construed by the court
having jurisdiction thereof.  It is further agreed that without limitat
the foregoing, all calculations of the rate of interest contracted for,
or received under any Schedule or the Lease (the "Interest") which are 
made for the purpose of determining whether such rate exceeds the 
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading the 
Interest in equal parts during the period of the full Term.  Notwithsta
the foregoing, if any applicable state law is amended or the law of the
United States of America preempts any applicable state law, so that it 
becomes lawful for Lessor to receive a greater interest per annum rate 
is presently allowed, Lessee agrees that, on the effective date of such
amendment or preemption, as the case may be, the lawful maximum 
hereunder shall be increased to the maximum interest per annum rate 
allowed by the amended state law or the law of the United States of 
America (but not in excess of the interest rate contemplated hereunder)


XXIV.     EARLY TERMINATION: 

     On or after the First Termination Date (specified in the applicabl
Schedule), Lessee may, so long as no Material Lease Default then exists
hereunder, from time to time (i) terminate this Agreement as to any Ite
the Equipment (provided, however, that the aggregate original Capitaliz
Lessor's Cost of all Items of the Equipment terminated pursuant to this
clause (i) shall not exceed twenty (20) percent of the aggregate origin
Capitalized Lessor's Cost of all Equipment described on all Schedules 
executed hereunder) which have not previously been terminated under thi
clause (i), or (ii) terminate this Agreement as to all Items of the Equ
then leased pursuant to an individual Schedule, as of a Rent Payment Da
(the date of termination of this Agreement pursuant to this Section or 
otherwise being hereinafter referred to as the "Termination Date") upon
least ninety (90) days' prior written notice to Lessor.  In such notice
shall specify whether Lessee elects to purchase the Item of the Equipme
pursuant to Paragraph (b) hereof, or to cause the Item of the Equipment
be sold to a third party pursuant to Paragraph (a) hereof. 

     (a)  If Lessee elects to cause the Item of the Equipment to be sol
third party, Lessee shall, and Lessor may, solicit cash bids for the It
the Equipment on an AS IS, WHERE IS BASIS, without recourse or 
warranty, express or implied, of any kind whatsoever ("AS IS BASIS").  
or prior to the Termination Date, Lessee shall (i) certify to such affe
Lessors any bids received by Lessee and the expiration date for such bi
(ii) pay to such affected Lessors an administrative fee of Three Thousa
Dollars ($3,000.00) per notice of termination to be allocated pro rata 
them, and (iii) pay to Lessor (A) the Termination Value (calculated as 
the Termination Date) for the Equipment, and (B) all Rent and other sum
due and unpaid as of the Termination Date with respect to the applicabl
Item of the Equipment.  Provided that all amounts due hereunder with 
respect to the applicable Item of the Equipment have been paid on the 
Termination Date, Lessor and Lessee shall sell the applicable Item of t
Equipment on an AS IS BASIS for cash to the highest bidder and (within 
fifteen (15) Business Days after receipt of good collected funds) refun
proceeds of such sale (net of any related out-of-pocket expenses) to Le
Upon satisfaction of the conditions specified in this Paragraph (a), Le
will transfer, on an AS IS BASIS all of Lessor's interest in and to the
Equipment.  Lessor shall not be required to make and may specifically 
disclaim any representation or warranty as to the condition of such 
Equipment and other matters (except that Lessor shall warrant that it h
conveyed whatever interest it received in the applicable Item of the 
Equipment free and clear of any liens or encumbrances created by, throu
or under Lessor).  Lessor shall execute and deliver to Lessee such Unif
Commercial Code Statements of Termination as reasonably may be 
required in order to terminate any interest of Lessor in and to the app
Item of the Equipment.  If such sale is not consummated due to the faul
the potential buyer, no termination shall occur and Lessor shall refund
Termination Value (less any out-of-pocket expenses incurred by Lessor) 
Lessee within fifteen (15) Business Days of the expiration date set for
the Lessee's certification of the bid related to such sale.  Lessor sha
conduct any such sale promptly and with the same consideration that Les
would afford to the sale of its own assets.  If any such sale is not 
consummated due to the fault of Lessor, then (i) the termination shall 
deemed to have occurred as of the expiration date set forth in Lessee's
certification of the bid related to such sale, (ii) the Termination Val
be repaid by Lessor to Lessee, and (iii) title to the applicable Equipm
shall vest in  Lessor.   

     (b)  If Lessee elects to purchase the applicable Item of the Equip
on the Termination Date, Lessee shall pay to Lessor in cash the purchas
price for the applicable Item of the Equipment, determined as hereinaft
provided.  The purchase price of the applicable Item of the Equipment s
be an amount equal to the Termination Value (calculated as of the 
Termination Date) for the applicable Item of the Equipment, plus all sa
taxes upon sale.  Lessee shall also pay to Lessor all Rent and other su
due and unpaid as of the Termination Date applicable to such Item of th
Equipment.  Upon satisfaction of the conditions specified in this Parag
(b), Lessor will transfer, on an AS IS BASIS all of Lessor's interest i
to the applicable Item of the Equipment.  Lessor shall not be required 
make and may specifically disclaim any representation or warranty as to
condition of such Item of the Equipment and other matters (except that 
Lessor shall warrant that it has conveyed whatever interest it received
applicable Item of the Equipment free and clear of any lien or encumbra
created by, through or under Lessor).  Lessor shall execute and deliver
Lessee such Uniform Commercial Code Statements of Termination as 
reasonably may be required in order to terminate any interest of Lessor
and to the applicable Item of the Equipment. 

     As used herein, "Termination Value" shall mean the sum of the 
applicable Stipulated Loss Value plus the Make Whole Amount.  For 
purposes hereof, "Make Whole Amount" shall mean a premium equal to the 
excess, if any, of (i) the aggregate present value as of the Terminatio
of the sum of (A) the remaining scheduled Rent payments with respect to
the applicable Item of the Equipment, plus (B) the full amount of the 
applicable Fixed Purchase Price with respect to the applicable Item of 
Equipment that but for termination of this Agreement would be payable o
the last Rent Payment Date during the then applicable Basic Term or 
Renewal Term, discounted to the date of payment at the Reinvestment Rat
over (ii) the aggregate present value as of the Termination Date of the
of (A) the remaining scheduled Rent payments with respect to the 
applicable Item of the Equipment, plus (B) the full amount of the appli
Fixed Purchase Price with respect to the applicable Item of the Equipme
that but for termination of this Agreement would be payable on the last
Rent Payment Date during the then applicable Basic Term or Renewal 
Term, discounted to the date of payment at the Assumed Interest Rate; 
provided, however, that if the Reinvestment Rate is equal to or higher 
the Assumed Interest Rate, the Make Whole Amount shall be zero.  For 
purposes hereof, "Reinvestment Rate" shall mean the sum of (i) the 
Applicable Treasury Yield plus (ii) fifty (50) basis points.  The term 
"Applicable Treasury Yield" at any time shall mean the yield to maturit
United States Treasury Notes with a maturity equal to the remaining 
average life of the Term of the Lease as published in The Wall Street 
Journal two (2) Business Days prior to the Termination Date.  If no 
maturity exactly corresponds to such remaining Term, the Applicable 
Treasury Yield shall be interpolated on a straight-line basis, utilizin
yields for the two maturities which most closely correspond to the requ
maturity.  For purposes hereof, "Assumed Interest Rate" shall mean the 
of (i) the Base Index, plus (ii) one hundred seventy-five (175) basis p
"Base Index" shall mean the five (5)-year Treasury Constant Maturities 
as published in The Wall Street Journal on the second Business Day 
immediately preceding the Lease Commencement Date. 


XXV. END OF BASIC TERM LEASE OPTIONS: 

     Provided that no Material Lease Default shall have occurred and be
continuing, Lessee shall have the option, upon the expiration of the Ba
Term of the applicable Schedule, to return, or to purchase, or to renew
term of this Agreement with respect to, all (but not less than all) of 
Equipment leased under an individual  Schedule executed hereunder upon 
the following terms and conditions. 

     (a)  Renewal.  So long as Lessee shall not have exercised its opti
return the Equipment pursuant to Paragraph (b) of this Section, nor 
exercised its purchase option pursuant to Paragraph (c) of this Section
Lessee shall have the option, upon the expiration of the Basic Term of 
applicable Schedule, to renew the Agreement with respect to all, but no
less than all, of the Equipment leased under an individual Schedule for
renewal term specified in Paragraph B of the applicable Schedule (the 
"Renewal Term") at a monthly rental, payable in arrears on the Rent 
Payment Date, calculated as the product of the Capitalized Lessor's Cos
the Equipment and the Basic Term Lease Rate Factor. 

     (b)  Return.  So long as Lessee shall not have exercised its optio
renew this Agreement pursuant to Paragraph (a) of this Section, nor 
exercised its purchase option pursuant to Paragraph (c) of this Section
Lessee shall have the option, upon the expiration of the Basic Term of 
individual Schedule, to return all (but not less than all) of the Equip
described on an individual Schedule, to Lessor upon the following terms
and conditions:  If Lessee desires to exercise this option, Lessee shal
pay to Lessor on the last day of the term of this Agreement with respec
the applicable individual Schedule, in addition to the scheduled Rent t
due on such date and all other sums then due hereunder, a terminal rent
adjustment amount equal to the Basic Term Fixed Purchase Price of such 
Equipment, and (ii) return the Equipment to Lessor in accordance with 
Section XVI hereof.  That portion of the terminal rental adjustment amo
paid by Lessee to Lessor as is equal to the Basic Term Residual Risk 
Amount shall be held in escrow by Lessor and deposited in an interest-
bearing account, invested in Permitted Investments (as such term is 
hereinafter defined).  Thereafter, upon return of all of the Equipment 
described on the applicable Schedule, Lessor shall arrange for the 
commercially reasonable sale, scrap or other disposition of such Item o
Equipment.  Lessee fully shall cooperate with Lessor in consummating su
sale, scrap, or other disposition of the Equipment.  Such sale, scrap o
disposition shall occur promptly and Lessor shall conduct such sale, sc
or disposition with the same consideration that Lessor would afford to 
sale, scrap or disposition of such Item of its own assets.  Upon satisf
of the conditions specified in this Paragraph (b), Lessor and Lessee wi
transfer to the purchaser(s), on an AS IS BASIS all of their interest i
to the applicable Equipment.  Lessor shall not be required to make and 
specifically disclaim any representation or warranty as to the conditio
such Equipment and other matters (except that Lessor shall warrant that
has conveyed whatever interest it received in such Equipment free and c
of any liens or encumbrances created by, through or under Lessor).  Les
shall execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order to 
terminate any interest of Lessor in and to the applicable Equipment.  
Promptly following the sale, scrap or other disposition of an Item of t
Equipment and receipt by Lessor in good collected funds of the sales 
proceeds, if any, with respect to such Item of the Equipment, (1) Lesso
shall pay to Lessee from the escrow account an amount equal to the Basi
Term Residual Risk Amount (as specified in the Schedule) of such Item o
the Equipment (less all reasonable actual out-of-pocket costs, expenses
fees incurred by Lessor, including storage, reasonable and necessary 
maintenance and other remarketing fees incurred in connection with the 
sale, scrap, or disposition of such Item of the Equipment); (2) Lessor 
pay from the escrow account all reasonable actual out-of-pocket costs, 
expenses and fees of Lessor, including storage, reasonable and necessar
maintenance and other re-marketing fees incurred in connection with the
sale, scrap, or disposition of such Item of the Equipment; and (3) any 
excess sales proceeds then remaining shall be held in escrow by Lessor 
deposited in an interest-bearing account, invested in Permitted Investm
Promptly after the sale, scrap or other disposition of all of the Equip
described on the applicable Schedule and receipt by Lessor in good 
collected funds of the sales proceeds with respect thereto, Lessor shal
to Lessee an amount equal to all net proceeds, if any, of such sale, sc
other disposition in excess of the Basic Term Residual Risk Amount of t
Equipment already paid to Lessee, and Lessor will also pay to Lessee al
interest earned on the amount held in escrow.   As used herein, "Permit
Investments" shall mean the following securities which shall mature wit
thirty (30) days of the date of purchase: 

          (i)  direct obligations of the United States of America; or 

          (ii)  obligations fully guaranteed by the United States of Am

          (iii)  certificates of deposit issued by, or bankers' accepta
time deposits or a deposit account with, any bank, trust company or nat
banking association incorporated or doing business under the laws of th
United States of America or one of its States, having a combined capita
and surplus not less than $100,000,000 and having a rating of "B" or be
from the Keefe Bank Watch Service; or 

          (iv) commercial paper rated A-1/P-1 by Standard & Poor's 
Corporation and Moody's Investors Service, Inc., respectively (or if ne
such organization shall rate such commercial paper at any time, by any 
nationally recognized rating organization in the United States of Ameri
equal to the highest rating assigned by such rating organization.  

     (c)  Purchase.  So long as Lessee shall not have exercised its opt
renew this Agreement pursuant to Paragraph (a) of this Section, nor 
exercised its option to return the Equipment pursuant to Paragraph (b) 
this Section, Lessee shall have the option, upon the expiration of the 
Term of each individual Schedule, to purchase all (but not less than al
the Equipment described on such Schedule upon the following terms and 
conditions:  If Lessee desires to exercise this option with respect to 
Equipment described on an individual Schedule, Lessee shall pay to Less
on the last  
day of the Basic Term of this Agreement with respect to such individual
Schedule, in addition to the scheduled Rent then due on such date and a
other sums then due hereunder with respect to the Equipment described o
the applicable Schedule, in cash the purchase price for the Equipment s
purchased, determined as hereinafter provided.  The purchase price of t
Equipment shall be an amount equal to the Basic Term Fixed Purchase 
Price of such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented out-of-pocket expenses 
incurred by Lessor in connection with such sale, including, without 
limitation, any such expenses incurred based on a notice from Lessee to
Lessor that Lessee intended to return any such Items of Equipment. Upon
satisfaction of the conditions specified in this Paragraph, Lessor will
transfer, on an AS IS BASIS, all of Lessor's interest in and to the app
Equipment.  Lessor shall not be required to make and may specifically 
disclaim any representation or warranty as to the condition of such 
Equipment and other matters (except that Lessor shall warrant that it h
conveyed whatever interest it received in the Equipment free and clear 
any lien or encumbrance created by, through or under Lessor).  Lessor s
execute and deliver to Lessee such Uniform Commercial Code Statements 
of Termination as reasonably may be required in order to terminate any 
interest of Lessor in and to the applicable Equipment. 

     (d)  Notice of Election.  Lessee shall give Lessor written notice 
election of the options specified in this Section not less than one hun
fifty (150) days nor more than three hundred sixty-five (365) days befo
the expiration of the Basic Term of an individual Schedule.  Such elect
shall be effective with respect to all Equipment described on the appli
Schedule.  If Lessee fails timely to provide such notice, without furth
action Lessee automatically shall be deemed to have elected to renew th
term of this Agreement pursuant to Paragraph (a) of this Section descri
on the applicable Schedule. 
XXVI.     END OF RENEWAL TERM LEASE OPTIONS. 

     Provided that no Material Lease Default shall have occurred and be
continuing, if Lessee exercised its option to renew this Agreement purs
to Section XXV, then Lessee shall have the option, upon the expiration 
the Renewal Term of each Schedule, to return, or to purchase, or to ext
the term of this Agreement with respect to, all (but not less than all)
Equipment leased under an individual Schedule upon the following terms 
and conditions. 

     (a)  Extension.  So long as Lessee shall not have exercised its op
return the Equipment described on an individual Schedule pursuant to 
Paragraph (b) of this Section, nor exercised its purchase option pursua
Paragraph (c) of this Section, Lessee shall have the option, upon the 
expiration of the Renewal Term, to extend the Agreement with respect to
all, but not less than all, of the Equipment described on an individual
Schedule for an additional term of twelve (12) months (the "Extension 
Term") at a monthly rental to be paid in arrears on the same day of eac
month on which the prior Renewal Term Rent installment was paid (except
that the last installment shall be paid on the last day of the Extensio
and calculated so as to amortize the Renewal Term Fixed Purchase Price 
such Equipment described on an individual Schedule over the Extension 
Term, together with interest thereon at a rate per annum equal to two 
hundred fifty (250) basis points over the then current yield to maturit
U.S. Treasury Notes having a one year maturity, in twelve (12) equal 
monthly installments.  At the end of the Extension Term, provided that 
Lessee is not then in default under this Agreement or any other agreeme
between Lessor and Lessee, Lessee shall purchase all, and not less than
of such Equipment described on an individual Schedule for $1.00 cash, 
together with all rent and other sums then due on such date, plus all s
taxes and all other reasonable and documented out-of-pocket expenses 
incurred by Lessor in connection with such transfer.  Upon satisfaction
the conditions specified in this Paragraph (a), Lessor will transfer, o
IS BASIS, all of Lessor's interest in and to the applicable Equipment. 
Lessor shall not be required to make and may specifically disclaim any 
representation or warranty as to the condition of the Equipment and any
other matters (except that Lessor shall warrant that it has conveyed 
whatever interest it received in the Equipment free and clear of any li
encumbrance created by, through or under Lessor).  Lessor shall execute
and deliver to Lessee such Uniform Commercial Code Statements of 
Termination as reasonably may be required in order to terminate any 
interest of Lessor in and to the applicable Equipment. 

     (b)  Return.  So long as Lessee shall not have exercised its exten
option pursuant to Paragraph (a) of this Section, nor exercised its pur
option pursuant to Paragraph (c) of this Section, Lessee shall have the
option, upon the expiration of the Renewal Term of an individual Schedu
to return all (but not less than all) of the Equipment described on an 
individual Schedule, to Lessor upon the following terms and conditions:
Lessee desires to exercise this option, Lessee shall (i) pay to Lessor 
last day of the Renewal Term of this Agreement with respect to the 
applicable individual Schedule, in addition to the scheduled Rent then 
on such date and all other sums then due hereunder, a terminal rental 
adjustment amount equal to the Renewal Term Fixed Purchase Price of 
such Equipment, and (ii) return the Equipment to Lessor in accordance w
Section XVI hereof.  That portion of the terminal rental adjustment amo
paid by Lessee to Lessor as is equal to the Renewal Term Residual Risk 
Amount shall be held in escrow by Lessor and deposited in an interest-
bearing account, invested in Permitted Investments. Thereafter, upon re
of all of the Equipment described on the applicable Schedule, Lessor sh
arrange for the commercially reasonable sale, scrap or other dispositio
such Equipment.  Lessee fully shall cooperate with Lessor in consummati
such sale, scrap, or other disposition of the Equipment.  Such sale, sc
disposition shall occur promptly and Lessor shall conduct such sale, sc
or disposition with the same consideration that the Lessor would afford
the sale, scrap or disposition of its own assets.  Upon satisfaction of
conditions specified in this Paragraph (b), Lessor and Lessee will tran
the purchaser(s) on an AS IS BASIS all of Lessor's interest in and to t
applicable Equipment.  Lessor shall not be required to make and may 
specifically disclaim any representation or warranty as to the conditio
such Equipment and other matters (except that Lessor shall warrant that
has conveyed whatever interest it received in such Equipment free and c
of any liens or encumbrances created by, through or under Lessor).  Les
shall execute and deliver to Lessee such Uniform Commercial Code 
Statements of Termination as reasonably may be required in order to 
terminate any interest of Lessor in and to the applicable Equipment.   
Promptly following the sale, scrap or other disposition of an Item of t
Equipment and receipt by Lessor in good collected funds of the sales 
proceeds, if any, with respect to such Item of the Equipment:  (1) Less
shall pay to Lessee from the escrow account an amount equal to the 
Renewal Term Residual Risk Amount (as specified in the Schedule) of suc
Item of the Equipment (less all reasonable actual out-of-pocket costs, 
expenses and fees, including storage, reasonable and necessary maintena
and other remarketing fees incurred in connection with the sale, scrap,
disposition of such Item of the Equipment); (2) Lessor shall pay from t
escrow account all reasonable actual out-of-pocket costs, expenses and 
of Lessor, including storage, reasonable and necessary maintenance and 
other re-marketing fees incurred in connection with the sale, scrap, or
disposition of such Item of the Equipment; and (3) any excess sales 
proceeds then remaining shall be held in escrow by Lessor and deposited
an interest-bearing account, invested in Permitted Investments.  Prompt
after the sale, scrap or other disposition of all of the Equipment desc
on the applicable Schedule and receipt by Lessor in good collected fund
the sales proceeds with respect thereto, Lessor shall pay to Lessee an 
amount equal to all of that portion of the net proceeds, if any, of suc
scrap or other disposition in excess of the Renewal Term Residual Risk 
Amount of the Equipment already paid to Lessee up to the Renewal Term 
Fixed Purchase Price of the applicable Equipment, plus fifty (50) perce
all net proceeds, if any, of such sale, scrap or other disposition in e
the Renewal Term Fixed Purchase Price of all of the applicable Equipmen
and Lessor will also pay to Lessee interest earned on the amount held i
escrow attributable to that portion of the escrowed amount distributed 
Lessee. 

     (c)  Purchase.  So long as Lessee shall not have exercised its ext
option pursuant to Paragraph (a) of this Section, nor exercised its opt
return the Equipment pursuant to Paragraph (b) of this Section, Lessee 
have the option, upon the expiration of the Renewal Term of each 
individual Schedule, to purchase all (but not less than all) of the Equ
described on such Schedule upon the following terms and conditions:  If
Lessee desires to exercise this option with respect to the Equipment 
described on an individual Schedule, Lessee shall pay to Lessor on the 
day of the Renewal Term of this Agreement with respect to such individu
Schedule, in addition to the scheduled Rent then due on such date and a
other sums then due hereunder with respect to the Equipment described o
the applicable Schedule, in cash the purchase price for the Equipment s
purchased, determined as hereinafter provided.  The purchase price of t
Equipment shall be an amount equal to the Renewal Term Fixed Purchase 
Price of such Equipment (as specified on such Schedule), plus all sales
taxes and all other reasonable and documented expenses incurred by Less
in connection with such sale, including, without limitation, any such 
expenses incurred based on a notice from Lessee to Lessor that Lessee 
intended to return any such Items of Equipment. Upon satisfaction of th
conditions specified in this Paragraph (c), Lessor will transfer, on an
BASIS, all of Lessor's interest in and to the applicable Equipment. Les
shall not be required to make and may specifically disclaim any 
representation or warranty as to the condition of such Equipment and ot
matters (except that Lessor shall warrant that it has conveyed whatever
interest it received in the Equipment free and clear of any lien or 
encumbrance created by, through or under Lessor).  Lessor shall execute
and deliver to Lessee such Uniform Commercial Code Statements of 
Termination as reasonably may be required in order to terminate any 
interest of Lessor in and to the applicable Equipment. 

     (d)  Notice of Election.  Lessee shall give Lessor written notice 
election of the options specified in this Section not less than one hun
fifty (150) days nor more than three hundred sixty-five (365) days befo
the expiration of the Renewal Term of each individual Schedule.  Such 
election shall be effective with respect to all Equipment described on 
Schedule.  If Lessee fails timely to provide such notice, without furth
action Lessee automatically shall be deemed to have elected to purchase
Equipment described on an individual Schedule pursuant to Paragraph (c)
of this Section. 


XXVII.    MISCELLANEOUS: 

     (a)  LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS 
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED 
UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS 
LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS 
BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT 
MATTER OF THIS TRANSACTION OR ANY RELATED 
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING 
ESTABLISHED BETWEEN LESSEE AND LESSOR.  The scope of this 
waiver is intended to be all encompassing of any and all disputes that 
be filed in any court (including, without limitation, contract claims, 
claims, breach of duty claims, and all other common law and statutory 
claims).  THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY 
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE 
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, 
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, 
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS 
OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY 
RELATED TRANSACTION.  In the event of litigation, this Agreement 
may be filed as a written consent to a trial by the court. 

     (b)  Any cancellation or termination by Lessor, pursuant to the pr
of this Agreement, any Schedule, supplement or amendment hereto, or the
lease of any Equipment hereunder, shall not release Lessee from any oth
then outstanding obligations to Lessor hereunder. 

     (c)  Time is of the essence of this Agreement.  Lessor's failure a
time to require strict performance by Lessee of any of the provisions h
shall not waive or diminish Lessor's right thereafter to demand strict 
compliance therewith. 

     (d)  Each of the parties agrees, upon request of the other party, 
execute any instrument reasonably necessary or expedient for filing, 
recording or perfecting the interest of the parties hereunder. 

     (e)  All notices required to be given hereunder shall be in writin
personally delivered, delivered by overnight courier service, sent by 
facsimile transmission (with confirmation of receipt), or sent by certi
mail, return receipt requested, addressed to the other party at its res
address stated above or at such other address as such party shall from 
to time designate in writing to the other party; and shall be effective
the date of receipt. 

     (f)  This Agreement and any Schedule and Annexes thereto, constitu
the entire agreement of the parties with respect to the subject matter 
NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR 
ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, 
SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN 
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.  Any 
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the exte
prohibition or unenforceability without invalidating the remaining 
provisions hereof, and any such prohibition or unenforceability in any 
jurisdiction shall not invalidate or render unenforceable such provisio
any other jurisdiction. 

     (g)  The representations, warranties and covenants of Lessee herei
be deemed  to survive the closing hereunder. Lessor's obligations to ac
and lease specific Items of Equipment shall be conditioned upon Lessee 
providing to Lessor such information with respect to Lessee's financial
condition as Lessor may require, and Lessor being satisfied that there 
have been no material adverse change in the business or financial condi
of Lessee from the date of execution hereof.  The obligations of Lessee
under Sections III, XVI and XX which accrue during the term of this 
Agreement and obligations which by their express terms survive the 
termination of this Agreement, shall survive the termination of this 
Agreement. 

     (h)  In case of a failure of Lessee to comply with any provision o
Agreement, Lessor shall have the right, but shall not be obligated to, 
such compliance, in whole or in part; and all moneys spent and expenses
and obligations incurred or assumed by Lessor in effecting such complia
shall constitute additional rent due to Lessor within five (5) days aft
date Lessor sends notice to Lessee requesting payment and providing 
reasonable details.  Lessor's effecting such compliance shall not be a 
of Lessee's default. 

     (i)  Any Rent not paid when due hereunder and which remains unpaid
for more than ten (10) days, or any other amount not paid to Lessor whe
due hereunder, shall bear interest, both before and after any judgment 
termination hereof, at the lesser of twelve percent (12%) per annum or 
maximum rate allowed by law (the "Late Charge Rate"). 

     (j)  Any provisions in this Agreement and any Schedule which are i
conflict with any statute, law or applicable rule shall be deemed omitt
modified or altered to conform thereto. 

     (k)  Lessor represents and covenants to Lessee that Lessor has ful
authority to enter into this Agreement and that, conditioned upon Lesse
performing all of the covenants and conditions hereof, as to claims of 
Lessor or persons claiming under Lessor, Lessee shall peaceably and 
quietly hold, possess and use the Equipment during the term of this 
Agreement, subject to the terms and provisions hereof. 

     (l)  The Operative Documents are confidential documents among the 
parties thereto and, for a period of seven (7) years from the date here
each party (the "Relevant Party") agrees to use its best efforts (i.e.,
accordance with procedures adopted by such Relevant Party in good faith
protect confidential information of third parties delivered to such Rel
Party) to keep the same confidential and not disclose the Operative 
Documents to any third party without the prior written consent of Lesso
IBM and Guarantor; provided that nothing herein shall be deemed to 
prevent any such disclosure by the Relevant Party: 

          (i)  to its auditors or attorneys; 

          (ii) to any other persons requiring access to such informatio
connection with the normal business operations of such Relevant Party 
(including portfolio review and analysis), and such Relevant Party shal
responsible for such person acting in compliance herewith;  

          (iii)     to (or as required by) any regulatory authorities; 

          (iv) in connection with the enforcement or attempted enforcem
any of the Operative Documents; 

          (v)  to any person expressing an interest in acquiring, direc
indirectly, the Relevant Party's interest in the Operative Documents (a
who agrees to be bound by the provisions of this Paragraph (l)); or  

          (vi) as required by any subpoena or civil investigative deman
applicable law or governmental authority. 


XXVIII.   CHOICE OF LAW; JURISDICTION: 

     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF 
THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE 
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE 
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT 
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH 
STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, 
VALIDITY AND PERFORMANCE, REGARDLESS OF THE 
LOCATION OF THE EQUIPMENT.  The parties agree that any action or 
proceeding arising out of or relating to this Agreement may be commence
in the United States District Court for the Southern District of New Yo

XXIX.     CHATTEL PAPER: 

     To the extent that any  Schedule would constitute chattel paper, a
term is defined in the Uniform Commercial Code as in effect in any 
applicable jurisdiction, no security interest therein may be created th
the transfer or possession of this Lease in and of itself without the t
or possession of the original of a Schedule executed pursuant to this L
and incorporating this Agreement by reference; and no security interest
this Agreement and a Schedule may be created by the transfer or possess
of any counterpart of the Equipment Schedule other than the original 
thereof, which shall be identified as the document marked "Original" an
all other counterparts shall be marked "Duplicate". 


XXX. SCOPE OF LIABILITY: 

     Notwithstanding any other provision of this Agreement or any other
Operative Documents executed in connection herewith (expressly exceptin
the Guaranty), there shall be no recourse against Lessee or any of its 
partners, officers or employees, for any liability to Lessor or any Par
arising in connection with any breach or default under this Agreement, 
except to the extent the same is enforced against the Equipment and any
proceeds thereof (including, without limitation, insurance proceeds 
thereof); and Lessor and the Participants shall look solely to the Equi
and any proceeds thereof (including, without limitation, insurance proc
thereof) in enforcing rights and obligations under and in connection wi
this Agreement and the other Operative Documents (expressly excepting 
the Guaranty); provided that the foregoing provisions of this Section X
shall not (i) constitute a waiver, release or discharge of any of Lesse
obligations hereunder, or of any of the terms, covenants, conditions or
provisions of this Agreement or the other Operative Documents, or (ii) 
or restrict the right of Lessor to name Lessee as a defendant in any ac
suit for a judicial foreclosure or for the exercise of any other remedy
or with respect to this Agreement, so long as no judgment in the nature
deficiency judgment shall be enforced against Lessee or any of its part
officers or employees out of any property, assets or funds other than t
Equipment and any proceeds thereof (including, without limitation, 
insurance proceeds thereof). 




        [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]   
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master 
Lease Agreement to be executed by their duly authorized representatives
of the date first above written. 

LESSOR:                                 LESSEE: 

GENERAL ELECTRIC CAPITAL CORPORATION,   MICRUS, a New York general part

FOR ITSELF AND AS AGENT FOR              
CERTAIN PARTICIPANTS                    By:  CIREL INC., 
                                        General Partner 


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


                                        By:  MICRUS HOLDINGS, INC., 
                                        General Partner 


                                        By:                       
                                        Name:                    


                        CORPORATE GUARANTY 


                                              Date: June 24, 1996 

General Electric Capital Corporation, 
For Itself and as Agent for  
Certain Participants 
303 International Circle 
Suite 300 
Hunt Valley, Maryland  21031 

     To induce you to enter into that certain Master Lease Agreement da
as of the date hereof, as now or hereafter amended (the "Agreement"), 
and/or any Schedules or other documents or instruments evidencing or 
relating to, any lease, loan, extension of credit or other financial 
accommodation made pursuant to the Agreement (collectively "Account 
Documents" and each an "Account Document") to MICRUS, a general 
partnership organized and existing under the laws of the State of New Y
("Customer"), but without in any way binding you to do so, the 
undersigned, for good and valuable consideration, the receipt and 
sufficiency of which is hereby acknowledged ("Guarantor"), does hereby:

     (a)  agree to pay to you, for the period from and including each 
applicable Lease Commencement Date to each applicable Basic Term 
Commencement Date (the "Interim Period"), interim rent for each Item of
the Equipment, calculated as the product of the Interest Rate times the
Funding Amount with respect to such Item (as specified on the Equipment
Schedule) divided by three hundred sixty (360), multiplied by the numbe
of days in the Interim Period.  As used herein, "Interest Rate" shall m
that percentage per annum calculated as the sum of one hundred (100) ba
points plus the LIBOR Rate redetermined monthly.  As used herein, 
"LIBOR Rate"  shall mean, with respect to the Interim Period, an intere
rate per annum (rounded upward to the next higher whole multiple of 
1/16th percent if such rate is not such a multiple), equal at all times
the Interim Period to the quotient of (1) the rate per annum (rounded 
upward to the next higher whole multiple of 1/16th percent if such rate
not such a multiple) as determined on the basis of the average of the r
offered by a majority of the banks in the London interbank market for 
deposits in U.S. Dollars for thirty (30) days, to the extent the rates 
by these banks appear in The Wall Street Journal on the third Business 
next preceding the Lease Commencement Date, redetermined monthly on 
the last Business Day of each calendar month thereafter), divided by (2
number equal to 1.00 minus the aggregate (without duplication) of the r
(expressed as a decimal fraction) of the LIBOR Reserve Requirements 
current on the Business Day next preceding the Lease Commencement 
Date.  As used herein, "LIBOR Reserve Requirements" means, for the 
Interim Period, the maximum reserves (whether basic, supplemental, 
marginal, emergency or otherwise) prescribed by the Board of Governors 
the Federal Reserve System (or any successor) with respect to liabiliti
assets consisting of or including "Eurocurrency liabilities" (as define
Regulation D of the Board of Governors of the Federal Reserve System) 
having a term equal to the Interim Period.  Interim rent shall be paid 
by wire transfer of immediately available funds to you at:  Bankers Tru
New York, New York, New York 10006, Account No. 50-202-962, ABA 
No. 021-001-033, or to such other account as you may direct in writing;
shall be effective upon receipt.  Such interim rent shall be due on the
of:  (x) the applicable Basic Term Commencement Date, or (y) November 
30, 1996; provided, however, that if such date is not a Business Day, t
interim rent otherwise due on such date shall be payable on the immedia
preceding Business Day.  Notwithstanding the foregoing, if Lessee does 
execute and deliver to you a Certificate of Acceptance with respect to 
the Items of the Equipment listed on a Schedule within sixty (60) days 
the applicable Lease Commencement Date (the "Expiration Date"), then th
Interim Period shall expire on the Expiration Date and Guarantor shall 
to you on the Expiration Date the interim rent then due plus the Capita
Lessor's Cost then having been paid by you with respect to all of the I
of the Equipment listed on the Schedule.  Upon receipt of such payment,
long as no Lease Default shall then have occurred and be continuing, yo
will transfer to Guarantor, on an AS IS BASIS, all your interest in and
the applicable Items of the Equipment.  You shall not be required to ma
and may specifically disclaim any representation or warranty as to the 
condition of the Items of the Equipment and any other matters (except t
you shall warrant that you have conveyed whatever interest you received
the Items of the Equipment free and clear of any lien or encumbrance 
created by, through or under you).  You shall execute and deliver to 
Guarantor such Uniform Commercial Code Statements of Termination as 
reasonably may be required in order to terminate your interest in and t
applicable Items of the Equipment.  Capitalized terms used herein witho
definition shall have the meaning given them in the Account Documents; 
and 

     (b)  guarantee to you, your successors and assigns, the due regula
punctual payment of any sum or sums of money which the Customer may 
owe to you now or at any time hereafter pursuant to or evidenced by an 
Account Document, and whether it represents principal, interest, rent, 
charges, indemnities, an original balance, an accelerated balance, liqu
damages, a balance reduced by partial payment, a deficiency after sale 
other disposition of any leased equipment, collateral or security, or a
other type of sum of any kind whatsoever that the Customer may owe to 
you now or at any time hereafter pursuant to or evidenced by an Account
Document, and does hereby further guarantee to you, your successors and
assigns, the due, regular and punctual performance of any other duty or
obligation of any kind or character whatsoever that the Customer may ow
to you now or at any time hereafter in connection with or pursuant to t
Account Documents (all such payment and performance obligations being 
collectively referred to as "Obligations").  Undersigned does hereby fu
guarantee to pay upon demand all losses, costs, attorneys' fees and exp
which may be suffered by you by reason of Customer's default or default
the undersigned. 

     1.   This Guaranty is a guaranty of prompt payment and performance
(and not merely a guaranty of collection).  Nothing herein shall requir
to first seek or exhaust any remedy against the Customer, its successor
assigns, or any other person obligated with respect to the Obligations,
first foreclose, exhaust or otherwise proceed against any leased equipm
collateral or security which may be given in connection with the 
Obligations.  It is agreed that you may, upon any breach or default of 
Customer, or at any time thereafter, make demand upon the undersigned 
and receive payment and performance of the Obligations, with or without
notice or demand for payment or performance by the Customer, its 
successors or assigns, or any other person.  Suit may be brought and 
maintained against the undersigned at your election, without joinder of
Customer or any other person as parties thereto.  The obligations of ea
signatory to this Guaranty shall be joint and several. 

     2.   The undersigned agrees that its obligations under this Guaran
be primary, absolute, continuing and unconditional, irrespective of and
unaffected by any of the following actions or circumstances (regardless
any notice to or consent of the undersigned): (a) the genuineness, vali
regularity and enforceability of the Account Documents or any other 
document; (b) any extension, renewal, amendment, change, waiver or othe
modification of the Account Documents or any other document; (c) the 
absence of, or delay in, any action to enforce the Account Documents, t
Guaranty or any other documents; (d) your failure or delay in obtaining
other guaranty of the Obligations (including without limitation, your f
to obtain the signature of any other guarantor hereunder); (e) the rele
extension of time for payment or performance by or any other indulgence
granted to the Customer or any other person with respect to the Obligat
by operation of law or otherwise; (f) the existence, value, condition, 
subordination or release (with or without substitution) of or failure t
title to or perfect and maintain a security interest in, or the time, p
manner of any sale or other disposition of any leased equipment, collat
or security given in connection with the Obligations, or any other 
impairment (whether intentional or negligent, by operation of law or 
otherwise) of the rights of the undersigned; (g) the Customer's volunta
involuntary bankruptcy, assignment for the benefit of creditors, 
reorganization, or similar proceedings affecting the Customer or any of
assets; or (h) any other action or circumstances which might otherwise 
constitute a legal or equitable discharge or defense of a surety or gua

     3.   This Guaranty may be terminated upon delivery to you (at your
address shown above) of a written termination notice from the undersign
However, as to all Obligations (whether matured, unmatured, absolute, 
contingent or otherwise) incurred by the Customer prior to your receipt
such written termination notice (and regardless of any subsequent 
amendment, extension or other modification which may be made with 
respect to such Obligations), this Guaranty shall nevertheless continue
remain undischarged until all such Obligations are indefeasibly paid an
performed in full. 

     4.   The undersigned agrees that this Guaranty shall remain in ful
and effect or be reinstated (as the case may be) if at any time payment
performance of any of the Obligations (or any part thereof) is rescinde
reduced or must otherwise be restored or returned by you, all as though
such payment or performance had not been made.  If, by reason of any 
bankruptcy, insolvency or similar laws affecting the rights of creditor
shall be prohibited from exercising any of your rights or remedies agai
the Customer or any other person or against any property, then, as betw
you and the undersigned, such prohibition shall be of no force and effe
and you shall have the right to make demand upon, and receive payment 
from, the undersigned of all amounts and other sums that would be due t
you upon a default with respect to the Obligations. 

     5.   The undersigned covenants and agrees that:  (a) it will provi
Lessor:  (1) within ninety (90) days after the end of each of its fisca
its balance sheet and related statement of income and statement of cash
flows of Guarantor, prepared in accordance with generally accepted 
accounting principles consistently applied ("GAAP"), all in reasonable 
detail and certified by independent certified public accountants of 
recognized standing selected by the undersigned; (2) within sixty (60) 
after the end of each quarter of its fiscal year, its balance sheet and
statement of income and statement of cash flows for such quarter, inter
prepared in accordance with GAAP and certified by its chief financial 
officer; and (3) within thirty (30) days after the date on which they a
all regular periodic reports, forms and other filings required to be ma
the undersigned to the Securities and Exchange Commission, including 
(without limitation) Forms 8K, 10K and 10Q; and (b) it will promptly 
execute and deliver to you such further documents, instruments and 
assurances and take such further action as you from time to time reason
may request in order to carry out the intent and purpose of this Guaran
and to establish and protect the rights and remedies created or intende
be created in your favor hereunder.   

     6.   The undersigned shall be deemed to be in default hereunder 
("Default") if:  (a) it shall fail to perform or observe any covenant, 
condition or agreement to be performed or observed by it hereunder and 
such failure shall continue unremedied for a period of thirty (30) days
the earlier of the actual knowledge of Guarantor or written notice ther
the undersigned by you; or (b) it shall (1) be generally not paying its
as they become due, (2) take action for the purpose of invoking the 
protection of any bankruptcy or insolvency law, or any such law is invo
against or with respect to it or its property, and such petition filed 
is not dismissed within sixty (60) days; or (c) there is an anticipator
repudiation of its obligations pursuant to this Guaranty; or (d) any 
certificate, statement, representation, warranty or audit contained her
heretofore or hereafter furnished with respect to this Guaranty by or o
behalf of the undersigned proving to have been false in any material re
at the time as of which the facts therein set forth were stated or cert
having omitted any substantial contingent or unliquidated liability or 
against it; or (e) it shall be in default under any obligation for an a
excess of $1,000,000.00 for borrowed money, for the deferred purchase 
price of property or any lease agreement, and the creditor thereunder s
have declared such obligation to be accelerated; or (f) the corporate 
existence of the undersigned is terminated and its obligations in conne
with this Guaranty are not assumed by a successor in interest reasonabl
satisfactory to you; or (g) as a result of or in connection with a mate
change in the ownership of the capital stock of the undersigned and the
to worth ratio of the undersigned equals or exceeds twice its debt to w
ratio as of the date of this Guaranty, without your prior written conse
used herein, "debt to worth ratio" shall mean the ratio of (1) total li
which, in accordance with GAAP, would be included in the liability side
a balance sheet, to (2) tangible net worth including the sum of the par
stated value of all outstanding capital stock, surplus and undivided pr
less any amounts attributable to good will, patents, copyrights, mailin
catalogs, trademarks, bond discount and underwriting expenses, 
organization expenses and other intangibles, all as determined in 
accordance with GAAP.  Notwithstanding the foregoing, the events 
specified in sub-parts (c), (f) and (g) of this Section 6 shall not con
Default hereunder if, prior to the occurrence of the events specified i
of such sub-parts, Guarantor delivers or causes to be delivered to you 
irrevocable stand-by letter of credit ("Letter of Credit") which shall 
in an amount equal to the then Stipulated Loss Value of the Equipment, 
issued by a bank which is acceptable to you in your sole discretion, (y
substantially in the form of Exhibit A attached hereto (or in such othe
as may be acceptable to you in your sole discretion), and (z) for an in
term of one (1) year with automatic annual renewals thereafter (without
amendment except for extension of the then-current expiration date by a
additional year).  You shall have the right, with or without notice to 
demand upon Guarantor, to draw upon the Letter of Credit by presenting 
the issuer one or more sight drafts and any other necessary documents, 
to receive (in a lump sum or in several sums from time to time at your 
discretion) and retain an amount not to exceed, in the aggregate, that 
available under the Letter of Credit, as and to the extent you otherwis
would have been able to demand payment or performance by the 
undersigned pursuant to this Guaranty.  Once all obligations of Custome
pursuant to the Account Documents have been indefeasibly paid and 
performed in full, you shall release the Letter of Credit and provide 
Guarantor with written notice to that effect or, if you have then drawn
the Letter of Credit, any remaining excess proceeds from the drawing un
the Letter of Credit shall be remitted by you to Guarantor.  In any eve
undersigned shall remain liable under this Guaranty for any deficiency.
Guarantor is required to provide the Letter of Credit hereunder and fai
do so, then upon your demand, Guarantor shall pay to you the then 
Stipulated Loss Value of the Equipment. 

     7.   Upon a Default hereunder, you may, at your option, declare th
Guaranty to be in default by written notice to the undersigned (without
election of remedies), and at any time thereafter, may do any one or mo
of the following, all of which are hereby authorized by the undersigned

     A.  sue for and recover all damages then or thereafter incurred by
a result of such Default; and/or 

     B.  seek specific performance of the obligations of the undersigne
hereunder. 

     In addition, the undersigned shall be liable for all reasonable at
fees and other costs and expenses incurred by reason of any Default or 
exercise of your remedies hereunder and/or under the Account Document. 
No right or remedy referred to herein is intended to be exclusive, but 
shall be cumulative, and shall be in addition to any other remedy refer
above or otherwise available at law or in equity, and may be exercised 
concurrently or separately from time to time. 

     8.   Notice of acceptance of this Guaranty and of any default by t
Customer or any other person is hereby waived.  Presentment, protest, 
demand, and notice of protest, demand and dishonor of any of the 
Obligations, and the exercise of possessory, collection or other remedi
the Obligations, are hereby waived.  The undersigned warrants that it h
adequate means to obtain from the Customer on a continuing basis financ
data and other information regarding the Customer and is not relying up
you to provide any such data or other information.  Without limiting th
foregoing, notice of adverse change in the Customer's financial conditi
of any other fact which might materially increase the risk of the 
undersigned is also waived.  All settlements, compromises, accounts sta
and agreed balances made in good faith between the Customer, its 
successors or assigns, and you shall be binding upon and shall not affe
liability of the undersigned. 

     9.   Payment of all amounts now or hereafter owed to the undersign
the Customer or any other obligor for any of the Obligations is hereby 
subordinated in right of payment to the indefeasible payment in full to
of all Obligations and is hereby assigned to you as security therefor. 
undersigned hereby irrevocably and unconditionally waives and 
relinquishes all statutory, contractual, common law, equitable and all 
claims against the Customer and any other obligor for any of the 
Obligations, any collateral therefor, or any other assets of the Custom
any such other obligor, for subrogation, reimbursement, exoneration, 
contribution, indemnification, setoff or other recourse in respect of s
paid or payable to you by the undersigned hereunder, and the undersigne
hereby further irrevocably and unconditionally waives and relinquishes 
and all other benefits which it might otherwise directly or indirectly 
or be entitled to receive by reason of any amounts paid by, or collecte
due from, it, the Customer or any other obligor for any of the Obligati
or realized from any of their respective assets for any of the Obligati

     10.  (a) THE UNDERSIGNED HEREBY UNCONDITIONALLY 
WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE 
OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR 
INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS 
GUARANTEED HEREBY, ANY OF THE RELATED DOCUMENTS, 
ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT 
MATTER HEREOF OR THEREOF, AND/OR THE RELATIONSHIP 
THAT IS BEING ESTABLISHED BETWEEN US.  The scope of this 
waiver is intended to be all encompassing of any and all disputes that 
be filed in any court (including, without limitation, contract claims, 
claims, breach of duty claims, and all other common law and statutory 
claims).  THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY 
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL 
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, 
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE 
OBLIGATIONS GUARANTEED HEREBY, OR ANY RELATED 
DOCUMENTS.  In the event of litigation this Guaranty may be filed as a 
written consent to a trial by the court. 

     (b)  As used in this Guaranty, the word "person" shall include any
individual, corporation, partnership, joint venture, association, joint
company, trust, unincorporated organization, or any government or any 
political subdivision thereof. 

     (c)  This Guaranty is intended by the parties as a final expressio
guaranty of the undersigned and is also intended as a complete and 
exclusive statement of the terms thereof.  No course of dealing, course
performance or trade usage, nor any paid evidence of any kind, shall be
used to supplement or modify any of the terms hereof.  There are no 
conditions to the full effectiveness of this Guaranty.  This Guaranty a
each of its provisions may only be waived, modified, varied, released, 
terminated or surrendered, in whole or in part, by a duly authorized wr
instrument signed by you.  No failure by you to exercise your rights 
hereunder shall give rise to any estoppel against you, or excuse the 
undersigned from performing hereunder.  Your waiver of any right to 
demand performance hereunder shall not be a waiver of any subsequent or
other right to demand performance hereunder. 

     (d)  This Guaranty shall bind the undersigned's successors and ass
and the benefits thereof shall extend to and include your successors an
assigns.  In the event of default hereunder, you may at any time inspec
undersigned's records, or at your option, undersigned shall furnish you
a current independent audit report. 

     (e)  THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF 
THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE 
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE 
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT 
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH 
STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, 
VALIDITY AND PERFORMANCE.  The parties agree that any action or 
proceeding arising out of or relating to this Agreement may be commence
in the United States District Court for the Southern District of New Yo
If any provisions of this Guaranty are in conflict with any applicable 
rule or law, then such provisions shall be deemed null and void to the 
that they may conflict therewith, but without invalidating any other 
provisions hereof. 

     (f)  All notices required to be given hereunder shall be deemed 
adequately given if sent by certified mail to the addressee at its addr
stated herein, or at such other place as such addressee may have design
in writing. 

     (g)  Any provision of this Agreement which is prohibited or 
unenforceable in any jurisdiction shall, as to such jurisdiction, be 
ineffective to the extent of such prohibition or unenforceability witho
invalidating the remaining provisions hereof, and any such prohibition 
unenforceability in any jurisdiction shall not invalidate or render 
unenforceable such provision in any other jurisdiction. 

     (h)  Each signatory on behalf of a corporate guarantor warrants th
had authority to sign on behalf of such corporation and by so signing, 
bind said guarantor corporation hereunder. 

        [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]   

IN WITNESS WHEREOF, this Guaranty is executed the day and year 
above written. 

ATTEST:                            CIRRUS LOGIC, INC.             



                                           By: 
Secretary/Assistant Secretary              Name:                
                                           Title:                      


                                             3100 West Warren Avenue 
                                             Fremont, California  94538

EX-99.3

                              EXHIBIT 99.3


                     MASTER LEASE AGREEMENT 

                    dated as of June 28, 1996 

                         by and between 

                    COMDISCO, INC., as Lessor 

                               and 

       MICRUS, a New York general partnership, as Lessee 


                        TABLE OF CONTENTS 

                                                             Page 

1. PROPERTY LEASED.                                            1 

2. TERM.                                                       1 

3. RENT AND PAYMENT.                                           1 

4.  SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES.       1 

     4.1. Selection..                                          1 
     4.2. Warranty and Disclaimer of Warranties                2 

5.  TITLE AND ASSIGNMENT.                                      2 

     5.1. Title..                                              2 
     5.2.  Relocation or Sublease                              2 
     5.3.  Assignment by Lessor to a Secured Party             3 
     5.4.  Assignment by Lessor to Assignee and Participants.  4 
     5.5.  Restrictions on Lessor, Assignee, Secured Party 
               and the Participants.                           5 

6. NET LEASE AND TAXES AND FEES.                               6 

     6.1. Net Lease.                                           6 
     6.2. Taxes and Fees                                       6 
     6.3.  Reservation of Right.                               6 

7.  CARE, USE AND MAINTENANCE, ATTACHMENTS AND 
     RECONFIGURATIONS AND INSPECTION BY LESSOR.                6 

     7.1. Care, Use and Maintenance.                           6 
     7.2.  Attachments and Reconfigurations.                   7 
     7.3. Inspection by Lessor                                 7 

8.  REPRESENTATIONS AND WARRANTIES OF LESSEE.                  7 

9. DELIVERY AND RETURN OF EQUIPMENT.                           7 

10. LABELING.                                                  8 

11.  INDEMNITY.                                                8 

12. RISK OF LOSS.                                              9 

13. DEFAULT, REMEDIES AND MITIGATION.                          9 

     13.1.  Default                                            9 
     13.2.Remedies:                                           11 
     13.3.Mitigation 

14. Intentionally Omitted.                                    11 

15.  ADDITIONAL PROVISIONS.                                   11 

     15.1.  Entire Agreement.                                 11 
     15.2.  No Waiver.                                        12 
     15.3.  Binding Nature.                                   12 
     15.4.  Survival of Obligations.                          12 
     15.5.  Notices                                           12 
     15.6.  Applicable Law                                    12 
     15.7.  Severability.                                     12 
     15.8.  Counterparts                                      13 
     15.9.  Additional Documents.                             13 
     15.10. Electronic Communications                         13 
     15.11. Scope of Liability                                13 
     15.12. Confidentiality:                                  13 
     15.13. Definitions.                                      14 


                     MASTER LEASE AGREEMENT 


     MASTER LEASE AGREEMENT (this "Master Lease") dated as of June 
28, 1996, by and between COMDISCO, INC.  ("Lessor") and MICRUS, a 
New York general partnership ("Lessee"). 

     IN CONSIDERATION of the mutual agreements described below, 
the parties agree as follows (all capitalized terms are defined in 
Section 15.13): 

1.PROPERTY LEASED. 

     Lessor hereby leases to Lessee and Lessee hereby leases from 
Lessor, subject to the terms and conditions of this Master Lease, 
the items of equipment (the "Equipment")  described in the lease 
schedules executed or to be executed hereunder (each a 
"Schedule").  Each Schedule shall constitute a separate and 
independent lease and contractual obligation of Lessee and shall 
incorporate the terms and conditions of this Master Lease and any 
additional provisions contained in such Schedule.  In the event of 
a conflict between the terms and conditions of this Master Lease 
and any additional provisions of such Schedule, the additional 
provisions of such Schedule shall prevail with respect to such 
Schedule only. 


2.TERM. 

     On the Commencement Date Lessee will be deemed to accept the 
Equipment (a) as evidenced by Lessee's delivery of a Lease 
Schedule in the form of Exhibit A to Lessor or (b) in the case of 
Lessee's delivery of a Lease Schedule in the form of Exhibit B as 
evidenced by Lessee's delivery of a Commencement Certificate in 
the form of Exhibit C to Lessor, and by such delivery of a Lease 
Schedule under (a) above or of a Lease Schedule and a Commencement 
Certificate under (b) above, as applicable, Lessee will be bound 
to its rental obligations for each item of Equipment ("Item"), and 
the term of a Schedule ("Term") will begin and continue through 
the Initial Term.  Except as set forth in a Schedule, no 
termination may be effective prior to the expiration of the 
Initial Term. 

3.RENT AND PAYMENT. 

     Rent is due and payable in advance, in immediately available 
funds, on the first day of each Rent Interval to the Paying Agent 
at the location specified in the Schedule or such other payee and 
location as specified by Lessor by written notice to Lessee not 
less than 30 days prior to the applicable payment date.  Interim 
Rent is due and payable within 30 days after invoice.  If any 
payment is not made when due, Lessee will pay interest at the 
Overdue Rate. 

4.SELECTION AND WARRANTY AND DISCLAIMER OF WARRANTIES. 

     4.1. Selection.  Lessee acknowledges that it has selected the 
Equipment and disclaims any reliance upon statements made by 
Lessor. 

     4.2. Warranty and Disclaimer of Warranties.  Lessor warrants 
to Lessee that, so long as no Event of Default exists, Lessor will 
not disturb Lessee's quiet and peaceful possession and 
unrestricted use of each Item.  To the extent permitted by the 
manufacturer, Lessor assigns to Lessee during the term of the 
Schedule any manufacturer's warranties for each Item.  LESSOR 
MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER 
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF 
EACH ITEM OR ITS FITNESS FOR A PARTICULAR PURPOSE.  Lessor is not 
responsible for any liability, claim, loss, damage or expense of 
any kind (including strict liability in tort) caused by each Item 
except for any loss or damage caused by the negligent acts of 
Lessor.  In no event is Lessor responsible for special, incidental 
or consequential damages. 

5.TITLE AND ASSIGNMENT. 

     5.1. Title.  Lessee holds the Equipment subject and 
subordinate to the rights of the, Lessor, any Assignee and any 
Secured Party.  If an Event of Default exists or Lessor has 
requested in writing of Lessee and Lessee has failed to respond 
within 10 days to such request, Lessee authorizes Lessor, as 
Lessee's agent, to prepare, execute and file in Lessee's name 
precautionary Uniform Commercial Code financing statements showing 
the interest of the, Lessor, and any Assignee or Secured Party in 
the Equipment and to insert serial numbers in Schedules as 
appropriate.  Except as provided in Sections 5.2 and 7.2 hereof 
and a Schedule, Lessee will, at its expense, keep the Equipment 
free and clear of any liens or encumbrances of any kind (other 
than Permitted Liens) and will indemnify and hold Lessor, any 
Assignee and any Secured Party harmless from and against any loss 
caused by Lessee's failure to do so. 

     5.2. Relocation or Sublease.  Upon prior written notice to 
Lessor, Lessee may relocate any Item to any location within the 
continental United States, provided (i)  such Item will not be 
used by an entity exempt from federal income tax, and (ii) all 
additional costs (including any administrative fees, additional 
taxes and insurance coverage) are reconciled and promptly paid by 
Lessee.  Lessee shall have and retain throughout the Term with 
respect to any Item control over the operation and use of such 
Item, and may, so long as no Event of Default exists, without the 
consent of Lessor, assign Lessee's interest in this Master Lease 
or sublease, license, transfer control of, or permit any other 
person to use, all or any part of any Item or Items during the 
Term, subject to the following terms and conditions: 

     (i) Lessee shall remain primarily liable to Lessor for the 
     performance of all the terms of this Master Lease to the same 
     extent as if such assignment, sublease or arrangement had not 
     occurred, and the Guaranty shall remain in full force and 
     effect against Guarantor; 

     (ii) such assignment, sublease or arrangement shall be in 
     compliance with all applicable laws; 

     (iii) such assignment, sublease or arrangement as to any Item 
     shall not extend beyond the stated Term with respect to such 
     Item as then in effect for such Item, and any rights created 
     thereby in an Item shall be fully subject and subordinate to 
     this Master Lease; 

     (iv) such assignment, sublease or arrangement shall be to 
     Guarantor or to a solvent affiliate of Lessee, Guarantor or 
     International Business Machines Corporation ("IBM"), 
     organized under the laws of any state of, and located in, the 
     United States; 

     (v)  such assignment, sublease or arrangement shall not 
     subject Lessor to any regulation by any governmental agency; 

     (vi) Lessee shall give prior written notice to Lessor of any 
     such assignment, sublease or arrangement; 

     (vii) Lessee shall obtain and deliver to Lessor such Uniform 
     Commercial Code financing statements executed by the assignee 
     or sublessee and Lessee, as reasonably may be required by 
     Lessor, to be filed at Lessee's expense; and 

     (viii) all reasonable costs and expenses (including 
     attorney's fees and expenses) incurred by Lessor in 
     connection with such assignment, sublease or arrangement 
     shall be paid by Lessee. 

No relocation or sublease will relieve Lessee of any of its 
obligations under this Master Lease and the relevant Schedule.  

Upon the dissolution of Lessee, Lessee may assign its leasehold 
interest in this Master Lease in its entirety to Guarantor, IBM or 
a solvent subsidiary of either thereof, or to a solvent general 
partnership of which IBM or a solvent subsidiary of IBM is the 
managing general partner; provided that  (1) the Guaranty survives 
any such assignment to Guarantor or its solvent subsidiary and 
remains in full force and effect against Guarantor or, if such 
assignment is to a solvent subsidiary of IBM, IBM will provide a 
guaranty substantially in the form of Exhibit E attached hereto 
(provided, however, such guaranty shall not include paragraph 3 of 
Exhibit E therein), and  (2) subparagraphs (ii), (iii), (iv) and 
(vi) above shall be complied with. 

     5.3. Assignment by Lessor to a Secured Party.  Lessor may not 
grant a security interest in all or any part of a Schedule to a 
Secured Party unless (a) Lessor delivers five (5) Business Days 
prior written notice to Lessee setting forth the identity of any 
proposed Secured Party and the Items on which such proposed 
Secured Party is intended to have a Lien ("Notice") (b) any 
proposed Secured Party qualifies as a Transferee (as such term is 
hereinafter defined), and (c) Lessee confirms in writing the 
qualification of such proposed Secured Party within a reasonable 
time after such Notice.  If such an event should occur, and upon 
delivery by Lessor of written notice to Lessee confirming the 
status of such party as a Secured Party and the Items on which it 
has a Lien, the term Lessor will include the security interest of 
such Secured Party with respect to such Schedule; provided, 
however, any assignment, sale, or other transfer by Lessor will 
not relieve Lessor of its obligations to Lessee and will not 
change Lessee's duties or increase the burdens or risks imposed on 
Lessee.  Lessee consents to such assignments to a Transferee, and 
will acknowledge them in a written notice given to Lessee.  Any 
successor to a Secured Party must also be a Transferee.  Lessee 
also agrees that at any time an Event of Default exists: 

     (a) The Secured Party will be entitled to exercise all of 
     Lessor's rights with respect to such Schedule subject to a 
     lien in favor of the Secured Party, but will not be obligated 
     to perform any of the obligations of Lessor with regard to 
     such Equipment; provided, however, the Secured Party will not 
     disturb Lessee's quiet and peaceful possession and 
     unrestricted use of the Equipment so long as no Event of 
     Default exists. 

     (b) To the extent applicable, Lessee will pay all Rent and 
     all other amounts payable to the Paying Agent for the benefit 
     of the Secured Party, despite any defense or claim which 
     Lessee has against Lessor.  Notwithstanding anything to the 
     contrary contained herein, Lessee reserves its right to have 
     recourse directly against Lessor for any defense or claim. 

     (c) Subject to and without impairment of Lessee's leasehold 
     rights in the Equipment, Lessee will hold the Equipment for 
     the Secured Party to the extent of the Secured Party's rights 
     in such Equipment and to the extent such rights do not exceed 
     the rights of the Lessor (or conflict with Lessee's rights of 
     quiet enjoyment hereunder)  and have been notified in writing 
     to Lessee. 

     5.4.  Assignment by Lessor to Assignee and Participants. 

     (a) Lessor may not, without the consent of Lessee (which 
     consent shall not unreasonably be withheld, delayed or 
     conditioned; provided, however, any Assignee must qualify as 
     a Transferee), assign this Master Lease or any Schedule, in 
     whole but not in part, or the right to enter into any 
     Schedule to an Assignee.  Lessor or the Paying Agent shall 
     act as the Paying Agent for any Assignee unless an Event of 
     Default exists hereunder, in which case such Assignee may act 
     directly in lieu of Lessor or Paying Agent, as the case may 
     be, hereunder.  Lessee agrees to confirm in writing receipt 
     of a notice of an approved assignment with respect to a 
     Schedule (in whole, but not in part) as reasonably may be 
     requested by Assignee.  Lessee hereby waives, and agrees not 
     to assert against any such Assignee, any defense, set-off, 
     recoupment, claim or counterclaim that Lessee has or may at 
     any time have against Lessor or any other person for any 
     reason whatsoever.  Notwithstanding anything to the contrary 
     contained herein, Lessee reserves its right to have recourse 
     directly against Lessor for any defense or claim.  Each 
     Assignee shall be required to assume, in a writing delivered 
     to Lessee, all obligations of Lessor, including the first 
     sentence of Section 4.2 and Section 5.6. 

     (b)  Subject to the terms set forth in the last sentence of 
     this Section 5.4(b), Lessee acknowledges that it has been 
     advised that the interest of Lessor in this Master Lease, the 
     Schedules, related instruments and documents and/or the 
     Equipment may be conveyed to, in whole or in part, certain 
     third parties (each being herein referred to as a 
     "Participant" and, collectively, as the "Participants") 
     without the consent of Lessee (the "Syndication").  Lessee 
     agrees to cooperate reasonably with Lessor in connection with 
     the Syndication, including the execution and delivery of such 
     other documents, instruments, notices, opinions, certificates 
     and acknowledgments as reasonably may be required by Lessor 
     or such Participant; provided, however, in no event shall 
     Lessee be required to consent to any change that would 
     adversely affect any of the terms of the transactions 
     contemplated herein; and provided further, however, that 
     Lessor shall be responsible for its own costs and expenses 
     incurred in connection with the Syndication.  Each 
     Participant shall be required to comply with the provisions 
     of the first sentence of Section 4.2 hereof and to qualify as 
     a Transferee. 

     5.5. Restrictions on Lessor, Assignee, Secured Party and the 
Participants. 

     (a) Each of Lessor, any Assignee, Security Party and the 
     Participants agrees that it will not advertise or publish the 
     fact that it has furnished financing to, or otherwise entered 
     into the transactions contemplated hereby with, Lessee, 
     Guarantor or IBM without first obtaining the written consent 
     of such Person.  Notwithstanding any other provision of this 
     Master Lease, a Schedule, the Guaranty or any documents 
     executed in connection with the Master Lease (collectively, 
     "Operative Documents"), Lessor, any Assignee, Security Party 
     and the Participants will not have any right to use any 
     trademark or trade name of, or otherwise refer to, Lessee, 
     Guarantor or IBM in any promotion or publication without 
     first obtaining the written consent of such Person. 

     (b) A Participant may at any time assign any or all of its 
     rights, obligations, title and interest as such Participant 
     to any Transferee with five (5) Business Days' notice to 
     Lessor, Lessee, Guarantor, IBM and IBM Credit Corporation.  
     As used herein, "Transferee" shall mean a corporation, bank, 
     insurance company, trust company or national banking 
     association, or any affiliate of any thereof, incorporated or 
     doing business under the laws of the United States or one of 
     the states thereof, having at the time of transfer a 
     consolidated net worth or combined capital and surplus of at 
     least $20,000,000.00, which is not a direct competitor of or 
     then in litigation adverse to Lessee, Guarantor or IBM or 
     which is then in litigation adverse to IBM Credit 
     Corporation. 

     (c) Subject always to the foregoing and to Sections 5.2, 5.3 
     and 5.4 hereof, this Master Lease inures to the benefit of, 
     and is binding upon, the successors and assigns of the 
     parties hereto. 

     5.6 No Lessor Liens.  Lessor and Lessor's successors and 
assigns (including, without limitation, any Assignee, Secured 
Party or Participant)  shall not directly or indirectly create, 
incur or suffer to exist any lien on or disposition of title of 
any Item or any portion thereof that either (i) results from 
claims against Lessor not related to the transactions contemplated 
by the Operative Documents or (ii)  results from an affirmative 
act of Lessor to create such a lien or disposition and that is 
neither consented to by the Lessee nor taken in connection with 
any Event of Default (all such liens referred to in clauses (i) 
and (ii)  being herein called "Lessor Liens").  Lessor agrees that 
it will, at its own cost and expense, promptly take such action as 
may be necessary duly to discharge any Lessor Lien attributable to 
it and will make restitution and hold harmless Lessee from and 
against any costs or expenses (including legal fees and expenses) 
and any reduction in the amount payable under this Master Lease, 
as a result of the imposition or enforcement of any such Lessor 
Lien attributable to it. 

6.NET LEASE AND TAXES AND FEES. 

     6.1. Net Lease.  Each Schedule constitutes a net lease.  
Lessee's obligation to pay Rent and all other amounts is absolute 
and unconditional and is not subject to any abatement, reduction, 
set-off, defense, counterclaim, interruption, deferment or 
recoupment for any reason whatsoever. 

     6.2. Taxes and Fees.  Lessee will pay when due or reimburse 
Lessor for all taxes, fees or any other charges by any 
governmental authority (except only federal, state and local taxes 
on or measured by the capital or the net income of Lessor), 
together with any related interest or penalties not arising from 
the negligence of Lessor, accrued for or arising from the 
Equipment and/or this Master Lease during the term of each 
Schedule.  Lessor will file all personal property tax returns for 
the Equipment and pay all property taxes due.  Lessee will 
reimburse Lessor for such property taxes within thirty (30) days 
of receipt of an invoice therefor. 

     6.3. Reservation of Right.  Notwithstanding anything to the 
contrary contained herein, Lessee reserves the right to recover 
damages resulting from any breach by Lessor, any Assignee, any 
Secured Party or any Participant of Lessor's obligation under this 
Master Lease to protect quiet and peaceful possession and 
unrestricted use and enjoyment of each Item by Lessee. 

7.CARE, USE AND MAINTENANCE, ATTACHMENTS AND RECONFIGURATIONS AND 
INSPECTION BY LESSOR. 

     7.1. Care, Use and Maintenance. (a)Lessee shall not use any 
Item, or authorize any third party to use any Item, in breach of 
any applicable laws (other than applicable laws as to which 
noncompliance would not adversely affect the business, operations 
or properties of Lessee and so long as such noncompliance shall 
not involve any material danger of the sale, forfeiture or loss of 
such Item or the imposition of any criminal liability on Lessor). 
(b)Lessee at its own expense shall at all times during the Term 
applicable to each Item maintain such Item in accordance with good 
commercial maintenance standards and practices followed from time 
to time by Lessee in the operation and maintenance of similar 
kinds of properties owned or leased by them.  Lessee shall keep 
each such Item fit for its intended use, in good and efficient 
working order (ordinary wear and tear excepted), and in as good 
condition (ordinary wear and tear excepted) as it was in on the 
Commencement Date for such Item of Equipment. (c)Lessee will 
promptly report to Lessor in writing if any Item is lost or 
damaged and the estimated replacement or repair costs would exceed 
One Hundred Thousand Dollars ($100,000), or is otherwise involved 
in an accident causing serious personal injury or significant 
property damage. 

     7.2. Attachments and Reconfigurations.  Notwithstanding 
anything to the contrary contained herein or in a Schedule, no 
consent of Lessor shall be required for any alterations, 
modification, repairs, upgrades or enhancements (collectively, 
"Alterations") to the Equipment during the Initial Term or any 
extension thereof, provided, however, that if such Alterations 
should impair or degrade the remarketability, fair market value or 
use of the Equipment, then prior to return of Equipment, Lessee at 
its expense will restore the Equipment as required in Section 9.  
In the event Lessee elects either to purchase or renew at the end 
of the Initial Term or extension thereof and Alterations have 
impaired or degraded the Fair Market Value of the Equipment, then 
both parties agree the determination of the Fair Market Value 
shall be based on the Equipment in the same operating order, 
repair and appearance as when installed (normal wear and tear 
excluded).  Alternatively, without limiting the foregoing, Lessee 
may return the Equipment with the Alteration.  If the Alteration 
has been purchased by Lessee, upon return, Lessor will remarket 
the altered equipment and remit 100% of the Fair Market Value of 
Alteration to Lessee.  The Lessor, at its sole discretion, may 
lease Alterations to Lessee under mutually agreeable terms. 7.3.  
Inspection by Lessor.  Upon request, Lessee, during reasonable 
business hours and subject to Lessee's security and operational 
requirements, will make the Equipment and its related log and 
maintenance records available to Lessor for inspection. 


8.  REPRESENTATIONS AND WARRANTIES OF LESSEE. 

     Lessee represents and warrants that for this Master Lease and 
each Schedule:  (a)The execution, delivery and performance of the 
Lessee have been duly authorized by all necessary corporate or 
partnership action; (b)  The individual executing was duly 
authorized to do so; (c)This Master Lease and each Schedule 
constitute legal, valid and binding agreements of the Lessee 
enforceable in accordance with their terms; and 

9.   DELIVERY AND RETURN OF EQUIPMENT. 

     Lessee assumes the full expense of transportation of the 
Equipment to its initial location, installation, deinstallation, 
and return to a location within the continental United States 
(including without limitation the expense of in-transit insurance) 
all pursuant to Lessee's operating requirements and manufacturer's 
specifications (as applicable).  Upon any expiration or 
termination of this Master Lease or any Schedule, unless Lessee 
has exercised its early termination option, extension option, 
renewal option, or purchase option pursuant hereto, Lessee shall 
promptly, at its own cost and expense:  (i) perform any testing 
and repairs required to place the affected Item in the same 
condition and appearance as when received by Lessee (ordinary wear 
and tear excepted) meeting all original equipment manufacturer's 
specifications for continued manufacturer's maintenance, but only 
to the extent such manufacturer's specifications and maintenance 
are then commercially available, and, to the extent reasonably 
available, accompanied by all associated documents, manuals, 
maintenance records, spare parts and accessories for the duration 
of the Initial Term, and in good working order for its originally 
intended purpose; (ii) if deinstallation, disassembly or crating 
is required, cause such Item to be deinstalled, disassembled and 
crated by qualified personnel of Lessee or IBM, or by an 
authorized manufacturer's representative or such other service 
person as is satisfactory to Lessor; and (iii) within ten (10) 
days after such expiration or termination, ship such Item, free 
and clear of all liens and encumbrances (other than Lessor Liens), 
to a location within the forty-eight (48) contiguous continental 
United States as Lessor shall direct; and Lessee shall provide, at 
its expense, transit insurance payable to Lessor for the Equipment 
in the amount of the then Casualty Value of the Equipment.  The 
Lessee agrees that during the last six months of the Term with 
respect to such Item, it will cooperate in all reasonable respects 
with efforts of the Lessor to lease lessees or purchasers by 
providing access to the Item as then being used and to the records 
relating to maintenance and performance for inspection during 
normal working hours upon prior written notice to Lessee, 
including providing access to Lessor and a representative of the 
manufacturer to audit such Item prior to any decommissioning of 
such Item during such six month period; provided, however, that 
such cooperation shall be subject to the Lessee's reasonable 
operational and security requirements. 

10. LABELING. 

     Upon request, Lessee will provide unique equipment numbering 
for each Item that is tracked to the list of Items on a Schedule. 
Lessee will keep all Equipment free from any other marking or 
labeling which might be interpreted as a claim of ownership. 

11. INDEMNITY. 

     Lessee will indemnify and hold Lessor, any Assignee and any 
Secured Party harmless from and against any and all claims, costs, 
expenses, damages and liabilities, including reasonable attorney's 
fees, arising out of the ownership (for strict liability in tort 
only), selection, possession, leasing, operation, control, use, 
maintenance, delivery, return or other disposition of the 
Equipment (including, without limitation, latent and other 
defects, whether or not discoverable by Lessor or Lessee, and any 
claim for patent, trademark or copyright infringement or 
environmental damage).  However, Lessee is not responsible to a 
party indemnified hereunder, for any claims, costs, expenses, 
damages and liabilities occasioned by the negligent acts or 
willful misconduct of such indemnified party.  Lessee agrees to 
carry bodily injury and property damage liability insurance during 
the term of the Master Lease in amounts and against risks 
customarily insured against by Lessee on equipment owned by it.  
Any amounts received by Lessor under that insurance will be 
credited against Lessee's obligations under this Section. 

12.RISK OF LOSS. 

     Effective upon delivery and until the Equipment is returned, 
Lessee relieves Lessor of responsibility for all risks of physical 
damage to or loss or destruction of the Equipment.  With respect 
to all losses in excess of One Hundred Thousand Dollars 
($100,000), Lessee will carry casualty insurance for each Item in 
an amount not less than the Casualty Value.  All policies for such 
insurance will name Lessor and any Secured Party as additional 
insureds, and as loss payees, and will provide for at least thirty 
(30) days' prior written notice to Lessor of cancellation or 
expiration.  Lessee will furnish appropriate evidence of such 
insurance.  Provided that no Event of Default exists, Lessor shall 
apply proceeds of insurance with respect to losses in excess of 
One Hundred Thousand Dollars ($100,000), in whole or in part, as 
elected by Lessee pursuant to this Section 12, to (i) repair or 
replace Equipment or any part thereof, or (ii) satisfy any 
obligation of Lessee to Lessor hereunder.  Lessee shall promptly 
repair any damaged Item if such Item is damaged and the estimated 
repair costs would exceed One Hundred Thousand Dollars ($100,000) 
and unless such Item has suffered a Casualty Loss.  Within fifteen 
(15) days of a Casualty Loss, Lessee will provide written notice 
of that loss to Lessor, and Lessee will, at Lessee's option, 
either (a) replace the Item with Like Equipment, and marketable 
title to the Like Equipment will automatically vest in Lessor, or 
(b) pay the Casualty Value, and after that payment and the payment 
of all other amounts due and owing hereunder, Lessee's obligation 
to pay further Rent for the Item will cease, and (except in case 
(i) of the loss, theft or complete destruction of such Item, or 
(ii) where the insurer requires possession of the damaged Item) 
Lessee shall be entitled to recover possession of and title to 
such Item and Lessor shall transfer (without any representation, 
recourse or warranty whatsoever except as to the absence of Lessor 
Liens) such Item, including title to such Item to the Lessee and 
the Lessor shall execute and deliver such documents evidencing 
such transfer and take such further action as the Lessee shall 
reasonably request. 

13.DEFAULT, REMEDIES AND MITIGATION. 

     13.1.Default.  Lessor of a defaulted Schedule may in writing 
declare this Master Lease in default with respect to the Equipment 
listed on such defaulted Schedule upon the occurrence of any one 
or more of the following Events of Default: (a)Lessee's failure to 
pay Rent with respect to such Schedule or other amounts payable by 
Lessee with respect to such Equipment listed on such Schedule when 
due if that failure continues for ten (10) days after written 
notice; or (b)Lessee's failure to perform any other term or 
condition of such Schedule or the material inaccuracy of any 
representation or warranty made by Lessee in such Schedule or in 
any document or certificate furnished to Lessor hereunder with 
respect to the Equipment listed on such Schedule if that failure 
or inaccuracy continues for thirty (30) days after written notice; 
provided, however, that if (A) such breach is curable, (B) such 
breach cannot be remedied within the thirty (30) day period, (C) 
Lessee commences reasonable efforts to effect such remedy within 
the thirty (30) day period and diligently pursues such efforts, 
and (D) such breach does not involve any substantial danger of the 
sale, forfeiture or loss of the applicable Equipment or of 
Lessor's interest therein, then Lessee shall have an additional 
period of sixty (60) days to effect such remedy; or (c)An 
assignment by Lessee for the benefit of its creditors, the failure 
by Lessee to pay its debts when due, the insolvency of Lessee, the 
filing by Lessee of any petition under any bankruptcy or 
insolvency law or for the appointment of a trustee or other 
officer with similar powers, the filing of a petition against 
Lessee under any bankruptcy or insolvency laws which is not 
dismissed within sixty (60) days, the adjudication of Lessee as 
insolvent, the liquidation of Lessee (unless Lessee has assigned 
its rights and obligations under this Master Lease and each 
Schedule pursuant to Section 5.2), or the taking of any action for 
the purpose of the foregoing; or (d)Subject to the notice and cure 
provisions set forth below, an assignment by Guarantor for the 
benefit of its creditors, the failure by Guarantor to pay its 
debts when due, the insolvency of Guarantor, the filing by 
Guarantor of any petition under any bankruptcy or insolvency law 
or for the appointment of a trustee or other officer with similar 
powers, the filing of a petition against Guarantor under any 
bankruptcy or insolvency laws which is not dismissed within sixty 
(60) days, the adjudication of Guarantor as insolvent, the 
liquidation of Guarantor, or the taking of any action for the 
purpose of the foregoing. Lessor shall provide written notice to 
IBM upon the occurrence of an event under clause (d) above and, 
until thirty (30) days after the giving of such notice (the 
"30-day Period"), so long as no other Event of Default exists, 
Lessor shall not declare this Master Lease to be in default as a 
result of such occurrence and shall not exercise any remedies 
hereunder as a result of such occurrence, provided that all Rent 
and other payments becoming due hereunder are paid as and when due 
during such 30-day Period.  Prior to the expiration of such 30-day 
Period, IBM may (at its sole discretion): (1) cause to be 
delivered to Lessor an irrevocable letter of credit (in form and 
substance satisfactory to Lessor) issued by a national bank 
acceptable to Lessor in an amount equal to the Rent becoming due 
during the next succeeding ninety (90) day period (the "Subsequent 
Rent"), or (2) deliver to Lessor a written guaranty of IBM, in 
substantially the form of guaranty executed by Guarantor, 
guaranteeing the payment as and when due of the Subsequent Rent.  
If IBM timely provides the required letter of credit or guaranty, 
for an additional ninety (90) days after the original 30-day 
Period, and if no other Event of Default exists, Lessor shall not 
declare this Master Lease to be in default as a result of such 
occurrence and shall not exercise any remedies hereunder as a 
result of such occurrence.  Upon the expiration of such subsequent 
ninety (90) day period, unless IBM has (i) delivered to Lessor a 
written guaranty of IBM, in substantially the form of Exhibit E 
hereto, (ii) purchased all the Equipment with respect to Lessor 
for (A) with respect to up to, but not to exceed seventy percent 
(70%) of the original Aggregate Funding Amount, an amount 
calculated in accordance with the procedure used to calculate the 
Prepayment Purchase Price, and (B) with respect to the remaining 
Items, an amount equal to the Fair Market Value of such Items 
(provided, however, that all Items that are designated by an 
asterisk (*) on such Schedule A shall be included as part of the 
aggregate purchase limit of seventy percent (70%)), and paid all 
unpaid Rent and other amounts due hereunder, in which case Lessor 
shall transfer (without any representation, recourse or warranty 
whatsoever except as to the absence of Lessor Liens) such 
Equipment, including title to such Equipment, to the Lessee and 
the Lessor shall execute and deliver such documents evidencing 
such transfer and take such further action as the Lessee shall 
reasonably request, (iii) received an assignment of all rights, 
title, interest and obligations of Lessee in, under and pursuant 
to this Master Lease, and has accepted such assignment and assumed 
such obligations, or (iv) taken such other action acceptable to 
Lessor (in its sole discretion), then Lessor may exercise all 
rights and remedies hereunder. 13.2.Remedies.  Upon the occurrence 
and continuation of any of the above Events of Default, Lessor, at 
its option, may: (a)enforce Lessee's performance of the provisions 
of the applicable Schedule by appropriate court action in law or 
in equity; (b) recover from Lessee any related damages and/or 
expenses, including Default Costs; (c)with notice and demand, 
recover all sums due and accelerate and recover the present value 
of the remaining payment stream of all Rent due under the 
defaulted Schedule (discounted at the same rate of interest at 
which such defaulted Schedule was discounted with a Secured Party 
plus any prepayment fees charged to Lessor by the Secured Party, 
or if there is no Secured Party, then discounted at 6%) together 
with all Rent and other amounts currently due as liquidated 
damages and not as a penalty; (d)with notice and process of law 
and in compliance with Lessee's operational and security 
requirements, enter on Lessee's premises to remove and repossess 
the Equipment without being liable to Lessee for damages due to 
the repossession, except those resulting from Lessor's, its 
assignees' or agents' or representatives' negligence or willful 
misconduct; and (e)pursue any other remedy permitted by law or 
equity. The above remedies, in Lessor's discretion and to the 
extent permitted by law, are cumulative and may be exercised 
successively or concurrently. 

14.Intentionally Omitted. 

15.  ADDITIONAL PROVISIONS. 

     15.1. Entire Agreement. (a)This Master Lease, each Schedule 
and the other Operative Documents shall constitute the complete 
and exclusive statement of the terms of the agreement of Lessor 
and Lessee with respect to the Equipment leased thereby, and shall 
automatically cancel and supersede any and all prior oral or 
written agreements or understandings between the parties 
concerning the Equipment.  The headings of this Master Lease and 
each Schedule shall be for convenience of reference only and shall 
form no part of this Master Lease or such Schedule. (b)  ANY 
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE MAY ONLY BE 
ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE 
AMENDMENT IS SOUGHT TO BE ENFORCED. 

     15.2. No Waiver.  No action taken by Lessor or Lessee shall 
be deemed to constitute a waiver of compliance with any 
representation, warranty or covenant contained in this Master 
Lease or a Schedule.  The waiver by Lessor or Lessee of a breach 
of any provision of this Master Lease or a Schedule will not 
operate or be construed as a waiver of any subsequent breach.  

     15.3. Binding Nature.  Each Schedule is binding upon, and 
inures to the benefit of, Lessor and its permitted assigns. 

     15.4. Survival of Obligations.  All Lessee agreements, 
obligations, including but not limited to those arising under 
Section 6.2, representations and warranties contained in this 
Master Lease, any Schedule or any document delivered in connection 
with those agreements are for the benefit of Lessor and any 
Assignee or Secured Party and shall survive the execution, 
delivery, expiration or termination of this Master Lease. 

     15.5.  Notices.  Any notice, request or other communication 
to either party by the other will be given in writing and deemed 
received upon the earlier of actual receipt or three days after 
mailing if mailed postage prepaid by first-class to Lessor (to the 
attention of "Lease Administrator") or Lessee, at the address set 
out in the applicable Schedule, or one day after it is sent by 
courier or facsimile transmission if receipt is verified by the 
receiving party. 

     15.6. Applicable Law.  THIS MASTER LEASE AND EACH SCHEDULE 
WILL BE GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH 
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO 
CONFLICT -OF- LAW PROVISIONS.  THE PARTIES HERETO AGREE THAT THIS 
MASTER LEASE ALONG WITH ANY SCHEDULE HERETO CONSTITUTES A "FINANCE 
LEASE"  AS DEFINED IN SECTION 103 OF ARTICLE 2A OF THE UNIFORM 
COMMERCIAL CODE; PROVIDED, HOWEVER, NO RIGHTS OR REMEDIES REFERRED 
TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE CONFERRED 
ON LESSEE IF THEY CONTRADICT AN EXPRESS PROVISION OF THIS MASTER 
LEASE. 

     15.7. Severability.  If any one or more of the provisions of 
this Master Lease or any Schedule are for any reason held invalid, 
illegal or unenforceable, the remaining provisions of this Master 
Lease and any such Schedule will be unimpaired, and any invalid, 
illegal or unenforceable provision replaced by a mutually 
acceptable valid, legal and enforceable provision that is closest 
to the original intention of the parties. 

     15.8.  Counterparts.  This Master Lease and any Schedule may 
be executed in any number of counterparts, each of which will be 
deemed an original, but all such counterparts together will 
constitute one and the same instrument.  If Lessor grants a 
security interest in all or any part of a Schedule, the Equipment 
or sums payable thereunder or thereon, only that counterpart 
Schedule marked "Secured Party's Original" can transfer Lessor's 
rights, and all other counterparts will be marked "Duplicate." 

     15.9. Additional Documents.  Lessee will, upon execution of 
this Master Lease and as may be requested thereafter, provide 
Lessor with a secretary's certificate of incumbency and authority 
and any other documents reasonably requested by Lessor.  Upon the 
execution of each Schedule with an aggregate Rent in excess of 
$2,000,000, Lessee will provide Lessor with an opinion from 
Lessee's counsel regarding the representations and warranties in 
Section 8.  Lessee will furnish, upon request, audited financial 
statements for the most recent period. 

     15.10. Electronic Communications.  Each of the parties may 
communicate with the other by electronic means under mutually 
agreeable terms. 

     15.11. Scope of Liability.  Notwithstanding any other 
provision of this Master Lease or any other Operative Documents 
executed in connection herewith (expressly excepting the 
Guaranty), there shall be no recourse against Lessee or any of its 
partners, officers or employees, for any liability to Lessor, 
Assignee, Secured Party or any Participant arising in connection 
with any breach or default under this Master Lease, except to the 
extent the same is enforced against the Equipment and any proceeds 
thereof (including, without limitation, insurance proceeds 
thereof); and Lessor, Assignee, Secured Party and the Participants 
shall look solely to the Equipment and any proceeds thereof 
(including, without limitation, insurance proceeds thereof) in 
enforcing rights and obligations under and in connection with this 
Master Lease and the other Operative Documents (expressly 
excepting the Guaranty); provided that the foregoing provisions of 
this Section 15.11 shall not (i)  constitute a waiver, release or 
discharge of any of Lessee's obligations hereunder or of any of 
the terms, covenants, conditions or provisions of this Master 
Lease or the other Operative Documents, or (ii) limit or restrict 
the right of Lessor to name Lessee as a defendant in any action or 
suit for a judicial foreclosure or for the exercise of any other 
remedy under or with respect to this Master Lease, so long as no 
judgment in the nature of a deficiency judgment shall be enforced 
against Lessee or any of its partners, officers or employees out 
of any property, assets or funds other than the Equipment and any 
proceeds thereof (including, without limitation, insurance 
proceeds thereof). 

     15.12. Confidentiality.  The Operative Documents are 
confidential documents among the parties thereto and, for a period 
of seven (7)  years from the date hereof, each party thereto (the 
"Relevant Party") agrees to use its best efforts (i.e., in 
accordance with procedures adopted by such Relevant Party in good 
faith to protect confidential information of third parties 
delivered to such Relevant Party) to keep the same confidential 
and not disclose the Operative Documents to any third party 
without the prior written consent of Lessor, IBM and Guarantor; 
provided that nothing herein shall be deemed to prevent any such 
disclosure by the Relevant Party: (i)to its auditors or attorneys; 
(ii)to any other persons requiring access to such information in 
connection with the normal business operations of such Relevant 
Party (including portfolio review and analysis), and such Relevant 
Party shall be responsible for such persons acting in compliance 
herewith; (iii)in connection with the enforcement or attempted 
enforcement of any of the Operative Documents; (iv)to any person 
expressing an interest in acquiring, directly or indirectly, the 
Relevant Party's interest in the Operative Documents (and who 
agrees to be bound by the provisions of this Section 15.13); or 
(v)to (or as required by)  any subpoena or civil investigative 
demand or any applicable law or governmental or regulatory 
authority. 

     15.13. Waiver of Jury Trial.  THE LESSEE AND LESSOR EACH 
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR 
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS 
MASTER LEASE, THE OTHER OPERATIVE DOCUMENTS, OR THE TRANSACTIONS 
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER 
LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY, 
OR ANY SECURED PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH 
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  THE LESSEE 
AND THE LESSOR EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION 
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. 

     15.14. Appraisals.  (a) If Lessee and Lessor are unable to 
agree upon the Fair Market Value or Fair Market Rental Value (each 
a "Value") of Equipment at any time, and the parties are unable to 
resolve such dispute pursuant to reasonable negotiations among 
themselves and if either Lessor or Lessee shall have given written 
notice to the other requesting determination of such Value by 
appraisal (provided, however, no such notice shall be given 
earlier than 12 months prior to the end of the Initial Term for 
such Item), Lessor and Lessee shall consult for the purpose of 
appointing a mutually acceptable independent appraiser.  If they 
are unable to agree on an appraiser within 30 days of the giving 
of such notice, then Lessor or Lessee may apply to the American 
Arbitration Association (or its successor, the "Association") for 
a list of independent appraisers qualified to determine such 
Value.  If either Lessor or Lessee does not find an acceptable 
appraiser on such list, it may request a second list from the 
Association.  The Lessor and Lessee shall each select one 
appraiser from the list.  The Association will be asked to 
commission the two appraisers so chosen to determine such Value, 
with identical instructions being given to each and without 
revealing (and Lessor and Lessee shall not reveal) which party 
chose which appraiser.  The appraiser or appraisers appointed 
pursuant to the foregoing procedure shall be instructed to 
determine such Value within 20 days after such appointment and 
such determination shall be final and binding upon the parties.  
If two appraisers shall be appointed, their determinations shall 
be reported only to the Association, which shall be asked to 
average them and report only the average (and not the individual 
determinations) to the Lessee and Lessor and such average shall 
constitute the determination of the appraisers.   The fees and 
expenses of the appraiser or appraisers shall be shared equally by 
Lessor and Lessee unless either (i) the Value so determined shall 
be greater than 110% of the Value proposed by Lessor, in which 
event the Lessee shall pay such costs, or (ii)  the Value so 
determined shall be less than 90% of the Value proposed by Lessor, 
in which event Lessor shall pay such costs. 

     15.15. Definitions. 

     30- Day Period - shall have the meaning set forth in Section 
     13.1.  Affiliate - means any entity that directly or 
     indirectly, through one or more intermediaries, controls or 
     is controlled by, or is under common control with, Lessor. 

     Aggregate Funding Amount - is defined in the Schedule. 

     Assignee - means Transferee to whom Lessor has sold or 
     assigned its rights as owner and Lessor of Equipment. 

     Attachment - means any accessory, equipment or device and the 
     installation thereof that does not impair the original 
     function or use of the Equipment and is capable of being 
     removed without causing material damage to the Equipment and 
     is not an accession to the Equipment. 

     Business Day -means any day other than a Saturday, Sunday or 
     other day on which commercial banks in New York City or San 
     Francisco are authorized or required by law to close. 

     Casualty Loss - means an event whereby any Item shall be or 
     becomes lost, stolen, destroyed, irreparably damaged in the 
     determination of Lessee, or permanently rendered unfit for 
     use from any cause whatsoever. 

     Casualty Value -is defined in the Schedule. 

     Commencement Certificate - means the certificate provided by 
     Lessor which must be signed by Lessee within ten days after 
     the Commencement Date as requested by Lessor. 

     Commencement Date - is defined in the Schedule. 

     Default Costs - means reasonable attorney's fees resulting 
     from an Event of Default or Lessor's enforcement of its 
     remedies as a result of an Event of Default. 

     Equipment - shall have the meaning as set forth in Section 1. 

     Equipment Cost - is defined in the Schedule. 

     Equipment Vendor - is defined in the Purchase Agreement. 

     Event of Default - means the events described in Section 
     13.l. 

     Fair Market Value - means, with regards to any Item, at any 
     time, the aggregate amount that would be obtainable in an 
     arm's-length transaction between an informed and willing 
     buyer/user purchasing the Equipment in place for its 
     originally intended use and an informed and willing seller 
     under no compulsion to sell; provided, however, the Fair 
     Market Value shall not include the value of any Alterations 
     other than Alterations financed or purchased by Lessor. 

     Guarantor - means Cirrus Logic, Inc. 

     Guaranty - means the guaranty executed by Guarantor as of the 
     date hereof in the form of Exhibit D hereto. 

     IBM - means International Business Machines Corporation. 

     Initial Term - means the period of time beginning on the 
     first day of the first full Rent Interval following the 
     Commencement Date for all Items on a Schedule and continuing 
     for the number of Rent Intervals indicated on such Schedule. 

     Installation Date - means the day on which Equipment is 
     installed and qualified for a commercially available 
     manufacturer's standard maintenance contract or warranty 
     coverage, if available. 

     Interim Rent - means the pro rata portion of Rent due for the 
     period from the Commencement Date to but not including the 
     first day of the first full Rent Interval included in the 
     Initial Term. 

     Item - shall have the meaning set forth in Section 2. 

     Lease Rate Factor -is defined in the Schedule. 

     Lessor Liens - shall have the meaning set forth in Section  
     5.6. 

     Like Equipment - means a comparable item of Equipment, free 
     and clear of all liens other than Permitted Liens, that has 
     at least the value, utility and remaining useful life of and 
     is in as good operating condition as the substituted or 
     replaced Item, assuming that the substituted or replaced Item 
     was maintained in accordance with this Master Lease. 

     Like Part - means a substituted part that is lien free and of 
     the same manufacturer and part number as the removed part, 
     and that when installed on the Equipment will be eligible for 
     maintenance coverage with the manufacturer of the Equipment. 

     Master Lease - shall have the meaning set forth in the 
     recitals.  

     Notice Period - means the time period described in a Schedule 
     during which Lessee may give Lessor notice of the termination 
     of the term of that Schedule. 

     Operative Documents - shall have meaning set forth in Section 
     5.5(a). 

     Overdue Rate - means the lesser of 12% per year or the 
     maximum rate permitted by the law of the state where the 
     Equipment is located. 

     Participant or Participants - shall have the meaning set 
     forth in Section 5.4(b). 

     Paying Agent - is defined in the Schedule. 

     Permitted Liens - means 

          (i) liens that are created or permitted by this Master 
          Lease, 

          (ii)  the rights of any sublessee or operator permitted 
          by the terms of this Master Lease, 

          (iii)  those rights asserted by persons claiming by or 
          through Lessor, 

          (iv)  liens for fees, taxes, levies, imposts, duties or 
          other governmental charges of any kind which are not yet 
          delinquent or are being contested in good faith by 
          appropriate proceedings that suspend the collection 
          thereof, 

          (v)  liens of mechanics, materialmen, laborers, 
          employees or suppliers and similar liens arising by 
          operation of law, incurred by Lessee in the ordinary 
          course of business for sums that are not yet delinquent 
          or are being contested in good faith by negotiations or 
          by appropriate proceedings that suspend the collection 
          thereof, and 

          (vi) liens arising out of any judgments or awards 
          against Lessee which have been adequately bonded to 
          protect Lessor's interests or with respect to which a 
          stay of execution has been obtained pending an appeal or 
          proceeding for review. 

     Person - means any individual, partnership, corporation, 
     trust, unincorporated organization, government or department 
     or agency thereof and any other entity. 

     Prepayment Purchase Price - is defined in the Schedule. 

     Purchase Agreement - a purchase agreement in the form of 
     Exhibit B hereto. 

     Reconfiguration - means any change to Equipment that would 
     upgrade or downgrade the performance capabilities of the 
     Equipment in any way. 

     Relevant Party - shall have the meaning set forth in Section 
     15.13. 

     Rent - means the rent, including Interim Rent, that Lessee 
     will pay for each Item, expressed in a Schedule either as a 
     specific amount or as an amount equal to the Equipment cost 
     multiplied by the Lease Rate Factor, plus all other amounts 
     due to Lessor under this Master Lease or a Schedule. 

     Rent Interval - means a full calendar month or quarter as 
     indicated on a Schedule. 

     Replacement Equipment - is defined in the Schedule. 

     Schedule - shall have the meaning as set forth in Section 1. 

     Secured Party - means a Transferee to whom Lessor has granted 
     a security interest in a Schedule and related Equipment for 
     the purpose of securing a loan. 

     Subsequent Rent - shall have the meaning set forth in Section 
     13.1. 

     Syndication - shall have the meaning set forth in Section 
     5.4(b). 

     Term - shall have the meaning set forth in Section 2. 

     Total Equipment Cost - is defined in the Schedule. 

     Transferee - shall have the meaning set forth in Section 
     5.4(a). 

IN WITNESS WHEREOF, the parties hereto have executed this Master 
Lease on or as of the day and year first above written. 


COMDISCO, INC.,                      MICRUS, 
as Lessee                            as Lessor 

                                     By:  MICRUS HOLDINGS INC., 
                                          as general partner 

By: /s/ Michael F. Herman
        Michael F. Herman
Title:  President Comdisco
         Electronics Group
                                     By: /s/ Eric G. Johnson
                                             Eric G. Johnson
                                     Title:  Director, Business Office


                                     CIREL INC. 
                                     as general partner 


                                     By: /s/ George N. Alexy
                                             George N. Alexy

                                   Title:  Senior Vice President, Marke




                         CIRRUS GUARANTY 


     In consideration for Comdisco, Inc. ("Comdisco")  entering 
into the Master Lease Agreement dated as of June 28,1996, and all 
of its related Equipment Schedules issued pursuant thereto (the 
"Lease") with MiCRUS (as "Lessee"), a general partnership 
organized and existing under the laws of the State of New York, 
the undersigned hereby guarantees the prompt and complete 
performance by the Lessee of all the terms and conditions of said 
Lease to be performed by it, including but not limited to, the 
prompt payment of all rentals and other sums payable thereunder.  
The undersigned further agrees to indemnify and hold Comdisco, its 
successors and assigns, harmless from and against any and all 
liability, loss, damage or expense, including attorneys fees and 
court costs, which Comdisco, its successors and assigns, may incur 
or sustain by reason of the failure of the Lessee to fully perform 
and comply with the terms and conditions of said Lease. 

     This is a continuing, absolute and unconditional guaranty of 
performance and payment and not of collection.  The undersigned 
specifically waives any right to subrogation, setoff or 
counterclaim, and any defense for changes in applicable law or any 
other circumstances which might constitute a legal or equitable 
defense or discharge of a guarantor or surety.  The undersigned 
waives any right to require a proceeding first against the Lessee 
or to exhaust any security for the performance of the obligations 
of the Lessee, and waives notice of acceptance hereof and of 
defaults hereunder.  The undersigned agrees that the liability of 
the undersigned shall not be affected or decreased by any 
amendment, termination, extension, renewal, waiver or modification 
of said Lease or the rejection or disaffirmance thereof in 
bankruptcy or like proceedings and that certain obligations under 
the Lease may be accelerated upon any nonpayment thereof by the 
Lessee.  This Guaranty shall be specifically assignable to and 
inure to the benefit of Lessor's Assignee and Secured Party to the 
extent such assignment, transfer or grant of security interest is 
permitted under the Lease and is irrevocable so long as there are 
any obligations of Lessee remaining under the Lease.  The 
undersigned acknowledges that its obligations under this Guaranty 
are in no way or manner limited by the provisions contained in 
Section 15.11 of the Lease.  This Guaranty shall be governed by 
and construed in accordance with the laws of the State of New 
York. 

Dated: June 28, 1996. 
                             CIRRUS LOGIC, INC. 
                             (Guarantor) 

                             By: /s/ George N. Alexy
                                 George N. Alexy

                             Title:  Senior Vice President, Marketing