<PAGE>

                                                                    EXHIBIT 10.7


                          RESULTS WAY CORPORATE PARK


                              LEASE - BUILDING 1

                                   RWC, LLC,
               a California limited liability company, Landlord

                                      and

                        MAGMA DESIGN AUTOMATION, INC.,
                        a Delaware corporation, Tenant
<PAGE>

                                     LEASE

                                BUILDING NO. 1

          THIS LEASE ("Lease") is dated November 30, 1998, for reference
purposes only, and is made by and between RWC, LLC, a California limited
liability company ("Landlord"), and Magma Design Automation, Inc., a Delaware
corporation ("Tenant").

                                   Recitals
                                   --------

          A. Landlord is the owner of those parcels of real property (the "Real
Property") located at Results Way Corporate Park, in the City of Cupertino,
County of Santa Clara, State of California. Tenant desires to lease all of
Building No. 1 (herein referred to as the "Building" and/or the "Premises"),
which contains a total of approximately forty-two thousand ninety-six (42,096)
square feet of rentable area. The Building is shown and designated on the site
plan attached hereto as Exhibit A. The Real Property, the Building, the other
buildings located on the Real Property, and all other improvements now or
hereafter located on the Real Property are sometimes hereinafter referred to
collectively as the "Property."

          B. Landlord and Tenant hereby agree as follows:

                             Article 1 -- Premises
                             ---------------------

          Section 1.01. Landlord hereby leases the Premises to Tenant, and
Tenant hereby leases the Premises from Landlord, for the term and subject to the
agreements, conditions and provisions hereinafter set forth, together with a
nonexclusive right to the use of the "Common Facilities" (as defined in Article
                                                                        -------
5 below); provided, however, that Landlord hereby reserves for itself from the
-
leasehold interest granted to Tenant herein: (a) the "Main Utility Lines" (as
defined in Section 5.01), any easements for public utilities and the right of
           ------------
ingress and egress to the public utilities and the distribution system for all
utilities serving the Property for the purpose of installing, maintaining and
repairing such utility systems, and (b) a nonexclusive right to use the Common
Facilities, including a nonexclusive right of ingress and egress over the
parking lots, entrances, exits and drive aisles. Landlord is currently
remeasuring the Premises. Upon completion of remeasurement, using a measurement
standard selected by Landlord, the area of the Premise shall be restated in a
notice from Landlord and such restated area shall constitute the area of the
Premises. The area, as stated in the notice, shall be in rentable square feet
("Rentable Square Feet").

          Section 1.02. Tenant shall have the right to use the parking spaces
located in the basement of the Building. Landlord shall have no obligation to
supervise or monitor the use of the parking by tenants or third parties.

          Section 1.03. Provided Tenant is not then in default, Tenant shall
receive an improvement allowance of Five Dollars ($5.00) per square foot (the
"Allowance"). The Allowance shall be paid by Landlord to Tenant promptly upon
receipt by Landlord of paid invoices reflecting permanent improvements to the
Premises. The sufficiency of such evidence of costs incurred shall be to
Landlord's satisfaction. All requests for payment must be received by Landlord
on or before December 31, 1999. If any portion of the Allowance remains on
January 1, 2000, it shall be deemed forfeited and Tenant shall have no further
rights thereto.

                               Article 2 -- Term
                               -----------------

          Section 2.01. The term of this Lease (the "Term") shall commence on
December 12, 1998 (the "Term Commencement Date"). Unless sooner terminated as
hereinafter provided, the Term shall end on December 11, 2003 (the "Term
Expiration Date"). If Landlord does not tender possession of the Premises to
Tenant on or before the Term Commencement Date, for any reason whatsoever,
Landlord shall not be rendered liable for any damage thereby and this Lease
shall not be rendered void or voidable thereby, but Tenant shall not be liable
for any rent until such time as Landlord does tender possession of the Premises
to Tenant. No failure to tender possession of the Premises on or before the Term
Commencement Date shall: (a) in any way affect any other obligations of Tenant
hereunder or (b) extend the Term Expiration Date. If tender of possession does
not occur on the Term Commencement Date, then, once the actual Term Commencement
Date has been determined, Landlord and Tenant shall execute an amendment to this
Lease stating the actual Term Commencement Date. If Landlord has failed to
tender the Premises to Tenant on or before ninety (90) days following the Term
Commencement Date, Tenant shall have the right to terminate this Lease at any
time prior to Landlord's tender of the Premises.
<PAGE>

                               Article 3 -- Rent
                               -----------------

          Section 3.01. Tenant shall pay to Landlord for the use of the
Premises, in lawful money of the United States, a Monthly Base Rent in the sum
set forth in Section 3.02 below (subject to adjustment as herein provided),
             ------------
payable without notice or demand, in advance, on the first day of each calendar
month.

          All payments of Monthly Base Rent required to be made under this
Article 3, or payments to be made under any other Article of this Lease, shall
---------
be made without any setoff or counterclaim whatsoever, and shall be made payable
to and sent to Landlord at the office of Landlord or at such other place as
Landlord may designate from time to time.

          Every installment of rent and every other payment due hereunder from
Tenant to Landlord which shall not be paid within three (3) business days after
the same shall have become due and payable shall bear interest at the greater of
ten percent (10%) or five percent (5%) in excess of the discount rate than
charged by the San Francisco Federal Reserve on the twenty-fifth (25th) day of
the month immediately preceding the delinquency date, from the date that the
same became due and payable until paid, whether or not demand be made therefor.
Tenant acknowledges that late payment by Tenant to Landlord of rent will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges, and late charges that may
be imposed on Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Premises, Therefore, if any installment of rent due
from Tenant is not received by Landlord within three (3) business days after the
same shall have become due and payable, Tenant shall pay to Landlord an
additional sum of five percent (5%) of the overdue rent as a late charge The
parties agree that this late charge represents a fair and reasonable estimate of
the costs that Landlord will incur by reason of late payment by Tenant.
Acceptance of any late charge shall not constitute a waiver of Tenant's default
with respect to the overdue amount or prevent Landlord from exercising any of
the other rights and remedies available to Landlord.

          Section 3.02. Commencing on the Term Commencement Date and continuing
through January 15, 1999, Tenant shall pay Monthly Base Rent for the Premises in
the amount of Twenty Four Thousand Dollars ($24,000.00) per month; thereafter,
Monthly Base Rent shall be adjusted pursuant to Section 4.01. If the Term
                                                ------------
Commencement Date is a day other than the first day of a calendar month, then
the Monthly Base Rent for the Premises for the first and last fractional months
shall be proportionately reduced.

          Section 3.03. Upon execution of this Lease, Tenant shall pay to
Landlord the sum of One Hundred One Thousand Thirty and 40/100 Dollars
($101,030.40) ("Advance Rent"). The Advance Rent shall be applied to Tenant's
obligation to pay Monthly Base Rent for the first month or months in which
Monthly Base Rent is due.

          Section 3.04. Tenant shall deposit an initial security deposit of Six
Hundred Thousand Dollars ($600,000.00) (the "Security Deposit") with Landlord
upon the execution of this Lease in cash as security for the faithful
performance and observance by Tenant of the terms, covenants and conditions of
this Lease, including the surrender of possession of the Premises to Landlord as
herein provided. Provided Tenant is not then in default, the Security Deposit
shall be reduced to Four Hundred Thousand Dollars ($400,000.00) on June 1, 2000.

          Section 3.05. In lieu of a cash deposit, Tenant may deliver the
Security Deposit to Landlord in the form of one or more clean, irrevocable, non-
documentary and unconditional letters of credit (collectively, the "Letter of
Credit") issued by and drawable upon any commercial bank, trust company,
national banking association or savings and loan association with offices for
banking purposes in the City of San Francisco (the "Issuing Bank"), which has
outstanding unsecured, uninsured and unguaranteed indebtedness, or shall have
issued a letter of credit or other credit facility that constitutes the primary
security for any outstanding indebtedness (which is otherwise uninsured and
unguaranteed), that is then rated, without regard to qualification of such
rating by symbols such as "+" or "-" or numerical notation, "Aa" or better by
Moody's Investors Service and "AA" or better by Standard & Poor's Rating
Service, and has combined capital, surplus and undivided profits of not less
than $500,000,000. Up to Two Hundred Thousand Dollars ($200,000.00) of the
Security Deposit may be in the form of a Letter of Credit from Tenant's
subtenant. Such Letter of Credit shall satisfy all of the requirements contained
in this Article. Such Letter of Credit shall (a) name Landlord as beneficiary,
(b) be in the amount of the Security Deposit, (c) have a term of not less than
one year, (d) permit multiple drawings, (e) be fully transferable by Landlord
without the payment of any fees or charges by Landlord, and (f) otherwise be in
form and content satisfactory to Landlord. If upon any transfer of the Letter of
Credit, any fees or charges shall be so imposed, then such fees or charges shall
be payable

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<PAGE>

solely by Tenant and the Letter of Credit shall so specify. The Letter of Credit
shall provide that it shall be deemed automatically renewed, without amendment,
for consecutive periods of one year each thereafter during the Term unless the
Issuing Bank sends a notice (the "Non-Renewal Notice") to Landlord by certified
mail, return receipt requested, not less than 45 days next preceding the then
expiration date of the Letter of Credit stating that the Issuing Bank has
elected not to renew the Letter of Credit. Landlord shall have the right, upon
receipt of the Non-Renewal Notice, to draw the full amount of the Letter of
Credit, by sight draft on the Issuing Bank, and shall thereafter hold or apply
the cash proceeds of the Letter of Credit pursuant to the terms of this Article.
The Issuing Bank shall agree with all drawers, endorsers and bona fide holders
that drafts drawn under and in compliance with the terms of the Letter of Credit
will be duly honored upon presentation to the Issuing Bank at an office location
in San Francisco. The Letter of Credit shall be subject in all respects to the
Uniform Customs and Practice for Documentary Credits (1993 revision),
International Chamber of Commerce Publication No. 500.

          Section 3.06. If Tenant defaults in the payment or performance of any
of the terms, covenants or conditions of this Lease, including the payment of
Rent, Landlord may apply or retain the whole or any part of the cash Security
Deposit or may notify the Issuing Bank and thereupon receive all or a portion of
the Security Deposit represented by the Letter of Credit and use, apply, or
retain the whole or any part of such proceeds, as the case may be, to the extent
required for the payment of any Rent or any other sum as to which Tenant is in
default including (a) any sum which Landlord may expend or may be required to
expend by reason of Tenant's default, and/or (b) any damages or deficiency to
which Landlord is entitled pursuant to this Lease or applicable requirements,
whether such damages or deficiency accrues before or after summary proceedings
or other reentry by Landlord. If Landlord applies or retains any part of the
Security Deposit, Tenant, upon demand, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full Security Deposit on
hand at all times during the Term. If Tenant shall fully and faithfully comply
with all of the terms, covenants and conditions of this Lease, the Security
Deposit shall be returned to Tenant after the Expiration Date and within thirty
(30) days after delivery of possession of the Premises to Landlord in the manner
required by this Lease. Tenant expressly agrees that Tenant shall have no right
to apply any portion of the Security Deposit against any of Tenant's obligations
to pay Rent hereunder.

          Section 3.07. Upon a sale of the Real Property or the Building or a
leasing of the Building, or any financing of Landlord's interest therein,
Landlord shall have the right to transfer the cash Security Deposit or the
Letter of Credit, as applicable, to the vendee, lessee or lender. With respect
to the Letter of Credit, within five days after notice of such sale, leasing or
financing, Tenant, at its sole cost, shall arrange for the transfer of the
Letter of Credit to the new landlord or the lender, as designated by Landlord in
the foregoing notice or have the Letter of Credit reissued in the name of the
new landlord or the lender. If so transferred, Tenant shall look solely to the
new landlord or lender for the return of such cash Security Deposit or Letter of
Credit and the provisions hereof shall apply to every transfer or assignment
made of the Security Deposit to a new landlord. Tenant shall not assign or
encumber or attempt to assign or encumber the cash Security Deposit or Letter of
Credit and neither Landlord nor its successors or assigns shall be bound by any
such action or attempted assignment, or encumbrance.

                        Article 4 -- Adjustment of Rent
                        -------------------------------

          Section 4.01. Commencing on January 16, 1999 and continuing through
November 30, 1999, Monthly Base Rent shall be $2.40 per Rentable Square Foot.
Thereafter, Monthly Base Rent shall be:

<TABLE>
<S>                                                <C>
          December 1, 1999 - November 30, 2000:    $2.50 per Rentable Square Foot

          December 1, 2000 - November 30, 2001:    $2.5875 per Rentable Square Foot

          December 1, 2001 - November 30, 2002:    $2.678 per Rentable Square Foot

          December 1, 2002 - December 11, 2003:    $2.772 per Rentable Square Foot
</TABLE>

          Section 4.02. This shall be a "net lease" and the Monthly Base Rent
shall be paid to Landlord absolutely net of all costs and expenses. The
provisions for payment of operating expenses, taxes, assessments and utilities
and maintenance are intended to pass on to Tenant and reimburse Landlord for all
costs and expenses incurred in connection with the ownership and operation of
the Property and the Common Facilities.

                                       3
<PAGE>

             Article 5 -- Common Facilities and Operating Expenses
             -----------------------------------------------------

          Section 5.01. The term "Main Utility Lines" shall mean the electric
light and power, telephone and telegraph, water, storm drain, gas and sewer
pipes, conduits, lines, trails or systems serving the Property and located under
those portions of the Property. The term "Common Facilities" shall mean the Main
Utility Lines, entrances, exits, drive aisles and access roads, parking areas,
walkways, landscaped areas and all other areas located on or adjacent to the
Real Property which are provided from time to time for use of all tenants of the
Real Property and/or the Building. The Common Facilities exclude all areas
located on or adjacent to the Real Property which Landlord has provided for the
exclusive use of particular tenants of the Real Property and/or the Building.
From time to time, Landlord shall have the right to designate areas for the
exclusive use of particular tenants of the Real Property and/or the Building.
Tenant acknowledges that Honeywell has an employee cafeteria and outdoor eating
area which are for the exclusive use of Honeywell's employees. Tenant shall not
allow its employees to use Honeywell's employee cafeteria or outdoor eating
area. The Common Facilities will be administered by Landlord.

          Section 5.02. Landlord gives to Tenant and its authorized
representatives and invitees a nonexclusive right to use the Common Facilities
for ingress and egress, with others who are entitled to use the Common
Facilities, subject to Landlord's reserved rights hereinafter set forth.
Landlord reserves the right to change the Common Facilities or the layout
thereof, and to add other buildings and improvements to the Real Property and
remove buildings and improvements from the Real Property, from time to time so
long as such change does not materially adversely affect Tenant's use of the
Premises. Landlord reserves for itself and its assigns a non-exclusive easement
on, over and across the Common Facilities for the purpose of vehicular
(including trucks of all sizes) and pedestrian ingress and egress.

          Section 5.03. Landlord shall have the right to:

               (a)  Establish and enforce rules and regulations applicable to
all tenants concerning the maintenance, management, use and operation of the
Common Facilities.

               (b)  Close any of the Common Facilities to whatever extent
required in the opinion of Landlord's counsel to prevent a dedication of any of
the Common Facilities or the accrual of any rights of any person or of the
public to the Common Facilities, but Landlord shall use reasonable efforts not
to interfere with Tenant's use of the Premises.

               (c)  Close temporarily any of the Common Facilities for
maintenance purposes.

               (d)  Select a person or company to maintain and operate any of
the Common Facilities if at any time Landlord determines that the best interests
of the Property will be served by having any of the Common Facilities maintained
and operated by that person or company. Landlord shall have the right to
negotiate and enter into a contract with that person or company on such terms
and conditions and for such period of time as Landlord deems reasonable and
proper as to both service and cost.

          Section 5.04. Commencing on the Term Commencement Date, and on the
first day of each calendar month thereafter, Tenant shall pay to Landlord, in
addition to Monthly Base Rent, an amount estimated by Landlord to be equal to
Tenant's "Proportionate Share" of "Operating Expenses" (each as defined below);
provided, however, Landlord may, at Tenant's sole cost, repair any damage to the
Common Facilities caused by the negligence or act or omission of Tenant, its
agents, employees, servants or invitees, or Landlord may require Tenant to make
such repairs. Unless otherwise specified in this Lease, whenever Tenant is
required to pay its "Proportionate Share," such Proportionate Share shall be the
ratio (expressed as a percentage) which the number of Rentable Square Feet then
contained in the Premises bears to the total number of Rentable Square Feet then
constructed on the Real Property, as each may change from time to time; however,
if portions of the Real Property are taxed, maintained or in some other way
managed or treated separately with respect to costs of which Tenant is to pay a
portion, then, at Landlord's option, the denominator used for calculating
Tenant's Proportionate Share shall be the total number of Rentable Square Feet
constructed on that portion of the Real Properly in which the Premises are
included for purposes of such taxes, maintenance or other matters. For example,
if certain portions of the Real Property were separately assessed for tax
purposes, then, at Landlord's option, the denominator used for Tenant's
Proportionate Share would be the total number of Rentable Square Feet
constructed on that portion of the Real Property which is included in the same
tax bill as the Premises. In addition, Landlord shall have the option of billing
certain Operating Expenses on a building-by-building basis, in which case
Tenant's

                                       4
<PAGE>

Proportionate Share shall be the ratio (expressed as a percentage) which the
number of Rentable Square Feet then contained in the Premises bears to the total
number of Rentable Square Feet contained in the Building. As of the date of this
Lease, and except as otherwise provided in Section 6.01 and Section 12.03,
                                           ------------     -------------
Tenant's Proportionate Share of Operating Expenses is one hundred percent (100%)
as applied to the Building. When Landlord completes its measurement of the
Building and other builds it will notify Tenant of its Proportionate Share of
the Real Property. Landlord also shall have the option of submetering or
equitably prorating charges for electricity, water, gas, steam and sewer, in
which case Tenant shall be responsible for the portion of such costs which
Landlord so allocates to Tenant. If Landlord submeters or prorates any of such
charges, then Landlord's allocation, made reasonably and in good faith, shall be
determinative and binding on Tenant.

          Operating Expenses which vary with occupancy and which are
attributable to any part of the Term during which less than one hundred percent
(100%) of the Rentable Area of the Building is occupied by tenants, shall be
adjusted by Landlord to the amount which Landlord reasonably believes they would
have been if one hundred percent (100%) of the Rentable Area within the Building
had been so occupied. It during all or any part of any calendar year, Landlord
does not furnish any particular item of work or service to portions of the
Building due to the fact that such portions are not occupied or leased, or
because such item of work or service is not required or desired by the tenant of
such space, or such tenant is itself obtaining and providing such item of work
or service, or for any other reason, then for the purpose of computing Operating
Expenses for such calendar year, the Operating Expenses shall be increased by an
amount equal to the additional operating and maintenance expenses which would
reasonably have been incurred by Landlord during such period if it had furnished
such item of work or service to such portions of the Building. Landlord may, at
or after the start of any calendar year, notify Tenant of the amount which
Landlord estimates will be Tenant's monthly share of Operating Expenses for such
calendar year, and the amount thereof shall be added to the Monthly Base Rent
payments required to be made by Tenant in such year. A reasonably detailed
Statement (the "Statement") of the Operating Expenses payable by tenant for each
year shall be given to Tenant within a reasonable period of time after the end
of each calendar year. If Tenant's share of any Operating Expenses as shown on
such Statement is greater or less than the total amounts actually paid by Tenant
during the year covered by such Statement, then within fifteen (15) days after
receipt of the Statement, Tenant shall pay in cash, any sums owed Landlord or,
if applicable, Tenant shall receive a credit against any rent next accruing for
any sum owed Tenant. If this Lease expires or is terminated on a day other than
the last day of a calendar year. the amount of Operating Expenses payable by
Tenant during the year in which this Lease expires or is terminated shall be
prorated on the basis which the number of days from the commencement of the
calendar year to and including the date on which this Lease expires or is
terminated bears to three hundred sixty-five (365), and shall be due and payable
monthly in advance notwithstanding the expiration or earlier termination of the
Term. Following the expiration or termination of this Lease, Landlord may
deliver to Tenant an estimate of the final Statement for such partial calendar
year. If Tenant's Percentage Share of Operating Expenses for such partial
calendar year as shown on such estimated Statement is greater than the total
amount of Operating Expenses actually paid by Tenant during such partial
calendar year, Tenant shall, within fifteen (15) days after receipt of such
estimated final Statement, pay to Landlord the amount of the deficiency. Whether
or not Landlord has delivered to Tenant an estimated Statement at the end of the
Term, following expiration of the calendar year in which this Lease expired or
was terminated, Landlord shall give a final Statement to Tenant for such
calendar year. If Tenant's share of any Operating Expenses as shown on the final
Statement is greater or less than the total amount of Operating Expenses
actually paid by Tenant during the year covered by the final Statement, then
within fifteen (15) days after receipt of the Statement, the appropriate party
shall pay to the other party any sums owed. Tenant shall have the right to audit
Operating Expenses for any year by notice to Landlord not more than thirty (30)
days after receipt of the annual Statement for such year. Failure to timely
notice an audit for any year shall constitute a waiver of the right to audit or
object to such Statement. Tenant shall conduct the audit at such time and in
such manner as prescribed by Landlord. The auditor engaged by Tenant may not be
contingency fee compensated.

          The term "Operating Expenses," as used herein, shall mean any and all
sums expended by Landlord for the management, ownership, maintenance, repair and
operation of the Common Facilities, the Building and the Real Property,
including, without limitation:

               (a)  Wages, salaries and other compensation and benefits, as well
as any adjustment thereto, for Landlord's employees and agents and any
independent contractors hired by Landlord.

               (b)  Costs of service, maintenance and inspection contracts for
landscaping, rubbish removal, exterminating, elevator, escalator, fire and life
safety equipment,

                                       5
<PAGE>

HVAC units, telephone cable distribution, plumbing, electrical and mechanical
equipment and the costs of purchasing or renting mechanical equipment, supplies,
tools, materials and uniforms.

               (c)  Premiums and other charges (including costs of claims
adjustments) for insurance and deductible amounts under the terms of such
insurance, including, without limitation, all risk, earthquake, public
liability, environmental, property damage and workers' compensation insurance,
and such other insurance coverage in such amounts as Landlord, in its sole
discretion, shall elect to maintain.

               (d)  Costs of providing electricity, water, gas, steam, sewer,
telephone, communication and other utility services.

               (e)  Costs of restriping, resurfacing and sweeping parking areas,
planting and landscaping (including replacement planting and landscaping),
maintenance, repair and replacement of directional signs and other markers, as
well as lighting.

               (f)  Sales, use and excise taxes on goods and services purchased
by Landlord,

               (g)  License, permit and inspection fees.

               (h)  Reasonable attorneys', accountants' and consultants' fees.

               (i)  Reasonable fees for management and accounting services and
costs incidental thereto, whether provided by an independent management company,
Landlord, or an affiliate of Landlord.

               (j)  The costs of any capital improvements, equipment or devices
installed or paid for by Landlord (i) required or desired for health and safety
of tenants and occupants, (ii) to conform with any change in laws, rules,
regulations or requirements of any governmental or quasi-governmental authority
having jurisdiction not applicable to the Building as of the date of original
construction or of the board of fire underwriters or similar insurance body,
(iii) to effect a labor saving, energy saving or other economy, or (iv) to
replace any existing improvements, equipment or devices, including, without
limitation, the roof and parking area, amortized over the lesser of (A) ten (10)
years; (B) the "pay back period;" or (C) the useful life of such capital
improvement, equipment or device (as determined by Landlord), as well as
interest on the unamortized balance at the prime rate as defined below (the
"Prime Rate") on the date the costs are incurred or such higher rate as may have
been paid by Landlord on borrowed funds. The "pay back period" shall be the
period within which the anticipated savings from the use of such capital
improvement, equipment or device, as determined by Landlord, will equal the cost
of the subject capital improvement, equipment or device. "Prime Rate" shall mean
the prime rate (or base rate) reported in the Money Rates column or section of
The Wall Street Journal as being the base rate on corporate loans at large U.S.
money center commercial banks (whether or not such rate has actually been
charged by any such bank) on the first day on which The Wall Street Journal is
published in the month preceding the month in which the subject costs are
incurred.

               (k)  Depreciation or amortization of the costs of materials,
tools, supplies and equipment purchased by Landlord to enable Landlord to supply
services which Landlord might otherwise contract for with a third party where
such depreciation and amortization would otherwise have been included in the
charge for such third party's services.

               (l)  Compliance with air, water and noise quality and/or control
statutes, laws, codes, rules and regulations including, without limitation,
statutes, laws, codes, rules and regulations relating to toxic substances or
hazardous wastes.

               (m)  Real property taxes other than those payable pursuant to
Section 6.01;

               (n)  Local civic association dues and fees related to the
Property; and

               (o)  Any capital improvement the cost of which is less than Ten
Thousand Dollars ($10,000).

          Section 5.05. Landlord, its agents and others receiving Landlord's
written permission while engaged in the work of constructing improvements in the
Property or making repairs therein, including but not limited to construction of
new buildings or building addition(s) and construction or reconstruction work,
shall have the right to make a reasonable use of

                                       6
<PAGE>

portions of the accommodation areas, roads and the truckways; provided, however,
Landlord shall provide reasonable prior notice to Tenant and shall use its
reasonable efforts not to interfere with Tenant's use of the Premises. In
determining the reasonableness of any such use, all pertinent factors shall be
taken into consideration including, but not limited to. the interference, if
any, with the business and operations of the various business enterprises in the
Property, the availability of other space for such purpose and the cost of using
other space for such purpose, provided that the entrance to Tenant's or other
tenants premises for customers and service shall not be blocked.

          Section 5.06. If any general or special assessment is levied and
assessed against the Property, Landlord may elect to either pay the assessment
in full or allow the assessment to "go to bond." If Landlord pays the assessment
in full, Landlord shall include in Operating Expenses only that portion which
would have been payable (as both principal and interest) had Landlord allowed
the assessment to "go to bond."

          Section 5.07. Tenant's liability to pay real property taxes shall be
prorated on the basis of a 365-day year to account for any fractional portion of
a fiscal tax year included in the term at the Term Commencement Date and at the
expiration of the term.

          Section 5.08. If Landlord receives a tax credit for any taxes
attributable to any prior taxes paid by Tenant or for which Tenant has
reimbursed Landlord pursuant to this Lease, then Tenant shall receive a credit
against the next payment of Operating Expenses for its proportionate share of
such tax credit.

                        Article 6 -- Taxes; Assessments
                        -------------------------------

          Section 6.01. Tenant shall pay before delinquency all "real property
taxes" (as defined below) that become payable during the term and are levied or
assessed against Tenant's personal property and/or improvements made by Tenant
or Landlord installed or located in or on the Premises. On demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments.
"Real property taxes" shall include all taxes, assessments and charges
(including costs and expenses of contesting the amount or validity thereof or
seeking a reduction by appropriate administrative or legal proceedings) levied
upon or with respect to the subject property or any personal property of
Landlord, or Landlord's interest in the subject property and/or or such personal
property, including, without limitation, all real property taxes and general and
special assessments; charges, fees, levies or assessments for transit, housing,
police, fire or other governmental services or purported benefits to the
Property; service payments in lieu of taxes; and any tax, fee or excise on the
act of entering into this Lease or any other lease of space in the Property, on
the use or occupancy of the Property or any part thereof, relating to transit
impact and mitigation, or on the rent payable under any lease or in connection
with the business of renting space in the Property, which may now or hereafter
be levied or assessed against Landlord by the United States of America, the
State of California, or any political subdivision, public corporation, district
or other political or public entity, and any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute for, or as an
addition to (in whole or in part) any other property taxes, whether or not now
customary or in the contemplation of the parties on the date of this Lease.

                               Article 7 -- Use
                               ----------------

          Section 7.01. The Premises shall be used only for software research
and development, sales, marketing and general office use. No other use shall be
permitted without Landlord's written consent, which consent may be withheld in
Landlord's sole discretion. In no event shall the Premises be used for
manufacturing or assembly. Tenant shall be permitted to use the Premises for
assembly of prototypes in connection with product development.

          Section 7.02. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Property or injure or annoy them or use or
allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose, nor shall Tenant cause or maintain or permit any nuisance
in, on, or about the Premises. Tenant shall not commit or suffer the commission
of any waste in, on, or about the Premises.

          Section 7.03. Tenant shall not use the Premises or permit anything to
be done in or about the Premises which will in any way conflict with any law,
statute, ordinance, or governmental rule or regulation now in force or which may
hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances, and governmental rules,
regulations, or requirements now in force or which may hereafter be in force and
with the requirements of any board of fire underwriters or other similar body
now or

                                       7
<PAGE>

hereafter constituted relating to or affecting the condition, use, or occupancy
of the Premises. The judgment of any court of competent jurisdiction or the
admission of Tenant in an action against Tenant, whether Landlord be a party
thereto or not, that Tenant has so violated any law, statute, ordinance, or
governmental rule, regulation, or requirement, shall be conclusive of such
violation as between Landlord and Tenant.

          Section 7.04. All graphics of Tenant on the exterior of the Premises
shall be subject to Landlord's prior written approval, which approval may be
withheld in its sole discretion.

          Section 7.05. Tenant shall not cause or permit the escape, disposal or
release of any biologically or chemically active or other hazardous substances
or materials (a "Release"). Tenant shall not allow the storage or use of such
substances or materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials, nor allow to be brought into the Building any such materials or
substances except to use in the ordinary course of Tenant's business, and then
only after written notice is given to Landlord of the identity of such
substances or materials. Without limitation, hazardous substances and materials
shall include those described in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
sec., the Resource Conservation and Recovery Act, as amended 42 U.S.C. Section
6901 et seq., any applicable state or local laws and the regulations adopted
under these acts. If any lender or governmental agency requires testing to
ascertain whether there has been any Release by Tenant, then the reasonable
costs thereof shall be reimbursed by Tenant to Landlord upon demand as
additional charges if such requirement applies to the Premises. In addition
Tenant shall execute affidavits, representations and the like from time to time
at Landlord's request concerning Tenant's best knowledge and belief regarding
the presence of hazardous substances or materials on the Premises. In all
events, Tenant shall indemnify, defend, protect and hold Landlord, and
Landlord's agents, employees and constituent members, harmless from and against
any and all losses, damages, claims, causes of action, penalties, liabilities,
costs and expenses (including, without limitation, clean-up costs, monitoring
costs, and attorneys' and consultants' fees) resulting from, arising out of or
related to: (i) any Release, regardless of where located, if caused by Tenant or
persons acting under Tenant, and/or (ii) any Release on the Premises occurring
while Tenant is in possession of the Premises unless caused by Landlord or
persons acting under Landlord. The covenants contained herein shall survive the
expiration or earlier termination of the Lease. California Health and Safety
Code Section 25359.7(b) requires any tenant of real property who knows, or has
reasonable cause to believe, that any release of a hazardous substance has come
to be located on or beneath such real property to give written notice of such
condition to the owner. Tenant shall comply with the requirements of Section
25359.7(b) and any successor statute thereto and with all other statutes, laws,
ordinances, rules, regulations and orders of governmental authorities with
respect to hazardous substances. Landlord shall have the right to pursue all
legal and equitable remedies available to it in the event of failure of Tenant
to comply with the requirements of this Section.

          Section 7.06. Landlord shall have the right to make changes or
alterations to any portion of the Building other than the Premises (which may
include, but need not be limited to, repair or replacement of the Building's
roof, exterior facade, exterior window glass, elevators, electrical systems,
heating, ventilating and air-conditioning system, plumbing system or restrooms).
Landlord shall not be subject to any liability nor shall Tenant be entitled to
any compensation or any diminution or abatement of rent as a result of any
noise, dust, vibration or other disturbance to Tenant's business at the Premises
(provided Tenant is not denied access to the Premises) arising out of the making
of such changes or alterations and such changes or alterations shall not be
deemed to be a constructive or actual eviction or a breach of Landlord's
covenant of quiet enjoyment. Landlord shall use reasonable efforts (which shall
not include any obligation to employ labor at overtime rates) to minimize
disruption of Tenant's business during the making of any such changes or
alterations.

                      Article 8 -- Services and Utilities
                      -----------------------------------

          Section 8.01. Landlord shall provide a main electrical room in the
Building, and Tenant shall make all arrangements for, and shall pay all costs
of, installation and supply of utility facilities, telephone service, janitorial
services and all utilities furnished to or used by it; provided, however, that
utilities for the Common Facilities or which are provided jointly to tenants of
the Building shall be provided by Landlord as part of Operating Expenses.

          Section 8.02. Landlord shall not be liable for any failure to provide
access to the Premises, to assure the beneficial use of the Premises or to
furnish any services or utilities when such failure is caused by natural
occurrences, riots, civil disturbances, insurrection, war,

                                       8
<PAGE>

court order, public enemy, accidents, breakage, strikes, lockouts, other labor
disputes, the making of repairs, alterations or improvements to the Premises or
the Building, the inability to obtain an adequate supply of fuel, gas, steam,
water, electricity, communication services, labor or other supplies or by any
other condition beyond Landlord's reasonable control, and Tenant shall not be
entitled to any damages resulting from such failure, nor shall such failure
relieve Tenant of the obligation to pay all sums due hereunder or constitute or
be construed as a constructive or other eviction of Tenant. If any governmental
entity promulgates or revises any statute, ordinance or building, fire or other
code, or imposes mandatory or voluntary controls or guidelines on Landlord or
the Building or any part thereof, relating to the use or conservation of energy,
water, gas, steam, light, communication services or electricity or the provision
of any other utility or service provided with respect to this Lease, or if
Landlord is required or elects to make alterations to the Building in order to
comply with such mandatory or voluntary controls or guidelines, Landlord may, in
its sole discretion, comply with such mandatory or voluntary controls or
guidelines, or make such alterations to the Building. Neither such compliance
nor the making of such alterations shall in any event entitle Tenant to any
damages, relieve Tenant of the obligation to pay any of the sums due hereunder,
or constitute or be construed as a constructive or other eviction of Tenant.

                           Article 9 -- Alterations
                           ------------------------

          Section 9.01. Tenant shall neither make nor cause to be made any
alterations, additions or improvements (collectively "Alterations") in, on or to
any portion of the Building or the Common Facilities outside of the interior of
the Premises. Tenant shall not make or suffer to be made any Alterations in, on
or to the Premises or any part thereof without the prior written consent of
Landlord, which consent will not be unreasonably withheld; provided, however,
Landlord may withhold its consent in its sole discretion if any proposed
Alterations will adversely affect the structure or safety of the Building or its
communications, electrical, plumbing, HVAC, mechanical or life safety systems.
When applying for any such consent, Tenant shall furnish complete plans and
specifications for the desired Alterations, unless the cost thereof is less than
Ten Thousand Dollars ($10,000.00). Subsequent to obtaining Landlord's consent
and prior to commencement of construction of the Alterations, Tenant shall
deliver to Landlord the building permit and a copy of the executed construction
contract covering the Alterations. Tenant shall pay to Landlord upon demand a
review fee in the amount of five percent (5%) of the construction cost of the
Alterations to compensate Landlord for the cost of review and approval of the
plans and specifications and for additional administrative costs incurred in
monitoring the construction of the Alterations. The review fee shall not be
payable with respect to construction of the initial Alterations in the Premises,
provided, however, Tenant shall reimburse Landlord for all third party costs
incurred by Landlord in connection with the initial Alterations. Landlord shall
deduct such third party costs from the allowance provided in Section 1.03. If
Landlord consents to the making of any Alterations, the same shall be made by
Tenant at Tenant's sole cost and expense (subject to reimbursement by Landlord
pursuant to Section 1.03 of this Lease), and any contractor or person selected
by Tenant to make the same must first be approved in writing by Landlord. For
Alterations affecting the Building's structural, electrical, mechanical,
plumbing or life safely systems, Tenant must use those approved contractors
designated by Landlord. Tenant shall provide, at its expense, such completion,
performance and/or payments bonds as Landlord considers reasonably necessary
with respect to such construction work. Tenant shall also require its contractor
to maintain insurance in amounts and in such form as Landlord may require. Any
construction, alteration, maintenance, repair, replacement, installation,
removal or decoration undertaken by Tenant in connection with the Premises shall
be completed in accordance with the plans and specifications approved by
Landlord, shall be carried out in a good, workmanlike and prompt manner, shall
comply with all applicable statutes, laws, ordinances, regulations, rules,
orders and requirements of the authorities having jurisdiction thereof, and
shall be subject to supervision by Landlord or its employees, agents or
contractors. Without Landlord's prior written consent Tenant shall not use any
portion of the Common Facilities in connection with the making of any
Alterations. If the Alterations which Tenant causes to be constructed result in
Landlord being required to make any alterations and/or improvements to other
portions of the Building in order to comply with any applicable statutes, laws,
ordinances, regulations, rules, orders or requirements (e.g. ordinances intended
to provide full access to handicapped persons), then Tenant shall reimburse
Landlord upon demand for all costs and expenses incurred by Landlord in making
such alterations and/or improvements (subject to Section 1.03 of this Lease).
Any Alterations made by Tenant shall remain on and be surrendered with the
Premises upon the expiration or sooner termination of the Term, except Tenant
shall upon demand by Landlord, at Tenant's sole cost and expense, forthwith and
with all due diligence remove all or any portion of any Alterations made by
Tenant which are designated by Landlord to be removed, and Tenant shall
forthwith and with all due diligence, and at its sole cost and expense, repair
and restore the Premises to their original condition, reasonable wear and tear
excepted.

                                       9
<PAGE>

          Section 9.02.  Tenant shall give Landlord at least fifteen (15) days
prior written notice of commencement of any work of construction, alteration,
maintenance, repair or replacement in order to enable Landlord to post and
record notices of nonresponsibility. Tenant shall keep the Premises, Common
Facilities, Building and the real property upon which the Building is situated
free from any liens arising out of any work performed, materials furnished or
obligations incurred by Tenant. Within ten (10) days after completion of any
Alterations, Tenant shall deliver to Landlord fully executed California Civil
Code Section 3262 lien, releases from each contractor and subcontractor
performing work in the Building.

          Section 9.03.  Tenant shall indemnify, defend, and hold Landlord
harmless against any and all loss, cost, damage, injury and expense arising out
of or in any way related to claims for work or labor performed, or materials or
supplies furnished, to or at the request of Tenant or in connection with
performance of any work done for the account of Tenant in the Premises, the
Common Facilities or the Building, whether or not Tenant obtained Landlord's
permission to have such work done, labor performed, or materials or supplies
furnished.

                             Article 10 -- Repairs
                             ---------------------

          Section 10.01. Landlord shall maintain the Common Facilities. as well
as the exterior and structural parts of the Building (including, as necessary,
structural parts of the Premises), and the costs of doing so shall constitute
part of the Operating Expenses. Except as expressly provided herein, Landlord
shall have no further responsibility to maintain the Premises or the Building.

          Section 10.02. No representations, except as contained herein or
endorsed hereon, have been made to Tenant respecting the condition of the
Premises, and the acceptance of possession of the Premises by Tenant shall be
conclusive evidence as against Tenant that the Premises are now in a tenantable
and good condition. Tenant shall take good care of the Premises and shall make
all repairs to all improvements within the Premises, whether constructed by or
at the direction of Landlord or Tenant, in order to preserve the Premises in
good working order and condition. Landlord shall not be liable for, and there
shall be no abatement of rent with respect to, any injury to or interference
with Tenant's business arising from any repairs, maintenance, alteration or
improvement in or to any portion of the Premises, the Common Areas or the
Building or in or to the fixtures, appurtenances or equipment therein. Tenant
hereby waives all right to make repairs at Landlord's expense under the
provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code, and
instead, all improvements, repairs and/or maintenance expenses incurred in
connection with the Premises shall be at the expense of Tenant or as an
Operating Expense, if applicable, and shall be considered as part of the
consideration for leasing the Premises. All damage or injury done to the
Premises or the Building by Tenant or by any person who may be in or upon the
Premises with Tenant's consent or at Tenant's invitation, shall be paid for by
Tenant, and Tenant shall, at the termination of this Lease, surrender the
Premises to Landlord in as good condition and repair as when accepted by Tenant,
reasonable wear and tear excepted.

                        Article 11 -- Tenant Insurance
                        ------------------------------

          Section 11.01. Tenant, at its cost, shall maintain commercial general
liability insurance, including contractual liability coverage, with a minimum
combined single limit of bodily injury, personal injury and property damage
coverage of Five Million Dollars ($5,000,000.00), insuring against all liability
arising out of or in connection with Tenant's use or occupancy of the Premises.
Such insurance shall name Landlord, its partners, lenders and property managers
as additional insureds, shall specifically include the liability assumed under
this Lease by Tenant (provided, however, that the amount of such insurance shall
not be construed to limit the liability of Tenant hereunder), and shall provide
that it is primary insurance and not "excess over" or contributory with any
other valid, existing and applicable insurance in force for or on behalf of
Landlord. The policy shall not eliminate cross-liability and shall contain a
severability of interest clause. Not more frequently than once each year, if, in
the opinion of Landlord's lender or of the insurance consultant retained by
Landlord, the amount of public liability and property damage insurance coverage
at that time is not adequate, Tenant shall increase the insurance coverage as
required by either Landlord's lender or Landlord's insurance consultant.

          Section 11.02. Tenant, at its cost, shall maintain on all of its
personal property, tenant improvements (whether constructed by Landlord or
Tenant), and Alterations, in, on, or about the Premises, a policy of "Broad
Form" insurance, to the extent of at least full replacement value without any
deduction for depreciation. The proceeds from any such policy shall be used by
Tenant for the replacement of such personal property or the restoration of such
tenant improvements or Alterations. Tenant shall not be obligated to replace
obsolete

                                       10
<PAGE>

equipment or fixtures provided Tenant uses such insurance proceeds to restore
and replace equipment and fixtures so that Tenant may productively conduct its
business in the Premises. The "full replacement value" of the improvements to be
insured under this Article 11 shall be determined by the company issuing the
                   ----------
insurance policy at the time the policy is initially obtained. Not more
frequently than once every three (3) years, Landlord shall have the right to
notify Tenant that it elects to have the replacement value redetermined at
Landlord's expense by an insurance company or insurance consultant. The
redetermination shall be made promptly and in accordance with the rules and
practices of the Board of Fire Underwriters, or a like board recognized and
generally accepted by the insurance company, and each party shall be promptly
notified of the results by the company. The insurance policy shall be adjusted
according to the redetermination. Tenant, at its cost, shall maintain such other
insurance as Landlord may reasonably require from time to time.

          Section 11.03. All the insurance required under this Lease shall:

               (a)  Be issued by insurance companies authorized to do business
in the State of California, with a financial rating of at least an AXIII status
as rated in the most recent edition of Best's Insurance Reports.

               (b)  Be issued as a primary policy.

               (c)  Contain an endorsement requiring thirty (30) days' written
notice from the insurance company to both parties and to Landlord's lender
before cancellation or change in the coverage, scope, or amount of any policy.

          Section 11.04. Each policy, and a certificate of the policy, together
with evidence of payment of premiums, shall be deposited with Landlord at the
commencement of the term, and on renewal of the policy not less than twenty (20)
days before expiration of the term of the policy.

                       Article 12 -- Landlord Insurance
                       --------------------------------

          Section 12.01. A policy of standard fire and extended coverage or all
risk insurance (including earthquake insurance) with vandalism and malicious
mischief endorsements and such other insurance and endorsements as Landlord
deems reasonable and appropriate, to the extent of at least full replacement
value, may be maintained by Landlord (as part of Operating Expenses) on the
Building and other improvements that are a part of the Property. Such policy
shall not cover the personal property or trade fixtures of tenants, but shall
cover alterations, improvements and nontrade fixtures within the Building.

          Section 12.02. The parties release each other, and their respective
authorized representatives, to the extent of insurance proceeds actually
received, from any claims for damage to any person or to the Premises and to the
fixtures, personal property, tenant improvements, and alterations of either
Landlord or Tenant in or on the Premises that are caused by or result from risks
insured against under any insurance policies carried by the parties (or which
the parties are required to maintain) and in force at the time of any such
damage.

          Each party shall cause each insurance policy obtained by it to provide
that the insurance company waives all right of recovery by way of subrogation
against either party in connection with any damage covered by any policy.
Neither party shall be liable to the other, to the extent of insurance proceeds
actually received, for any damage caused by fire or any of the risks insured
against under any insurance policy required by this Lease. If any insurance
policy cannot be obtained with a waiver of subrogation, or is obtainable only by
the payment of an additional premium charge above that charged by insurance
companies issuing policies without waiver of subrogation, the party undertaking
to obtain the insurance shall notify the other party of this fact. The other
party shall have a period of ten (10) days after receiving the notice either to
place the insurance with a company that is reasonably satisfactory to the other
party and that will carry the insurance with a waiver of subrogation, or to
agree to pay the additional minimum if such a policy is only obtainable at
additional cost. If the insurance cannot be obtained or the party in whose favor
a waiver of subrogation is desired refuses to pay the additional premium
charged, the other party is relieved of the obligation to obtain a waiver of
subrogation rights with respect to the particular insurance involved.

                    Article 13 -- Assignment and Subletting
                    ---------------------------------------

          Section 13.01. Tenant shall not, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld: (a) assign,
mortgage, pledge, encumber or

                                       11
<PAGE>

otherwise transfer this Lease, the term or estate hereby granted, or any
interest hereunder: (b) permit the Premises or any part thereof to be utilized
by anyone other than Tenant (whether as licensee, permittee or otherwise); or
(c) except as hereinafter provided, sublet or offer or advertise for subletting
the Premises or any part thereof. Any assignment. mortgage, pledge, encumbrance,
transfer or sublease without Landlord's consent shall be voidable and, at
Landlord's election, shall constitute a default. It Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer of a controlling percentage of the capital stock of
Tenant or the sale of fifty percent (50%) or more of the value of the assets of
Tenant, shall be deemed a voluntary assignment of this Lease by Tenant. The
phrase "controlling percentage" shall mean the ownership of, and the right to
vote, stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of Tenant's capital stock issued, outstanding, and entitled
to vote for the election of directors. The preceding two sentences shall not
apply to corporations, the stock of which is traded through an exchange or over
the counter. If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary, or by operation of law of any partner or partners owning a total of
fifty percent (50%) or more of the partnership, or the dissolution of the
partnership, shall be deemed a voluntary assignment of this Lease by Tenant. If
Tenant consists of more than one person, a purported assignment, voluntary,
involuntary, or by operation of law, by any one of the persons executing this
Lease shall be deemed a voluntary assignment of this Lease by Tenant.

          Section 13.02. If at any time or from time to time during the Term,
Tenant desires to assign or sublet all or any part of the Premises, then at
least thirty (30) days, but not more than one hundred twenty (120) days, prior
to the date when Tenant desires the assignment or subletting to be effective
(the "Transfer Date"), Tenant shall give Landlord a notice (the "Notice") which
shall set forth the name, address and business of the proposed assignee or
sublessee, information (including financial statements and references)
concerning the character of the proposed assignee or sublessee, a detailed
description of the space proposed to be assigned or sublet (the "Space"), any
rights of the proposed assignee or sublessee to use Tenant's improvements and
the like, the Transfer Date, and the fixed rent and/or other consideration and
all other material terms and conditions of the proposed assignment or
subletting, all in such detail as Landlord may reasonably require. If Landlord
requests additional detail, the Notice shall not be deemed to have been received
until Landlord receives such additional detail. If an Event of Default then
exists, Landlord shall have the option, exercisable by giving notice to Tenant
at any time within twenty (20) days after Landlord's receipt of the Notice: (a)
in the case of an assignment or sublease, to terminate this Lease as to the
Space as of the Transfer Date, in which event Tenant shall be relieved of all
further obligations hereunder as to the Space; or (b) in the case of a sublease,
to sublease the Space from Tenant upon the terms and conditions set forth in the
Notice, except that the rent shall be the lower of the per square foot Monthly
Base Rent and additional rent payable under this Lease for the Space, or that
part of the rent and other consideration set forth in the Notice which is
applicable to the Space. If Landlord exercises its option to sublet the Space,
Tenant shall sublet the Space to Landlord upon the terms and conditions
contained in the Notice; provided, however, that: (i) Landlord shall at all
times under such sublease have the right and option further to sublet the Space
without obtaining Tenant's consent or sharing any of the economic consideration
received by Landlord; (ii) the use provisions shall not be applicable thereto;
(iii) Landlord and its subtenants shall have the right to use in common with
Tenant all lavatories, corridors and lobbies which are within the Premises and
the use of which is reasonably required for the use of the Space; (iv) Tenant
shall have no right of setoff or abatement or any other right to assert a
default hereunder by reason of any default by Landlord under such sublease; and
(v) Landlord's liability under such sublease shall not be deemed assumed or
taken subject to by any successor to Landlord's interest under this Lease. No
failure of Landlord to exercise either option with respect to the Space shall be
deemed to be Landlord's consent to the assignment or subletting of all or any
portion of the Space. Provided Landlord has consented to such assignment or
subletting, Tenant shall be free to assign or sublet the Space to any third
party subject to the following conditions:

               (a)  The assignment or sublease shall be on the same terms set
forth in the Notice given to Landlord;

               (b)  No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Space until an executed counterpart of
the assignment or sublease has been delivered to Landlord;

               (c)  No assignee or sublessee shall have a right further to
assign or sublet; and

               (d)  Any proposed subletting would not result in more than two
(2) subleases of portions of the Premises being in effect at any one time during
the Term.

                                       12
<PAGE>

          Section 13.03. Landlord shall be permitted to consider any reasonable
factor in determining whether to withhold its consent to a proposed assignment
or sublease. Without limiting the other instances in which it may be reasonable
for Landlord to withhold its consent to an assignment or sublease, it shall be
reasonable for Landlord to withhold its consent if any of the following
conditions are not satisfied:

               (a)  The proposed transferee shall satisfy Landlord's then-
current credit standards and shall have the financial strength and stability to
perform all obligations under this Lease to be performed by Tenant;

               (b)  The proposed use of the Space by the transferee shall (i)
comply with the use provisions hereof, (ii) be consistent with the general
character of businesses carried on by other tenants of space located on the Real
Property, (iii) not increase the likelihood of damage or destruction, (iv) not
increase the density of occupancy of the Premises, (v) not be likely to cause an
increase in insurance premiums for insurance policies applicable to the
Building, (vi) not require new tenant improvements incompatible with then-
existing Building systems and components and (vii) not otherwise have or cause a
material adverse impact on the Premises, the Building or any other buildings on
the Real Property, or Landlord's interest therein;

               (c)  Any ground lessor or mortgagee whose consent to such
transfer is required fails to consent thereto;

               (d)  Any proposed subletting would not result in more than two
(2) subleases of portions of the Premises being in effect at any one time during
the Term; and

               (e)  At the time of the request, no Event of Default under this
Lease, or under any other lease between Tenant and Landlord or any affiliate of
Landlord, shall have occurred and be continuing.

Tenant shall have the burden of demonstrating that each of the foregoing
conditions has been satisfied.

          Section 13.04. Regardless of Landlord's consent, no subletting or
assignment shall release Tenant's obligation or alter the primary liability of
Tenant to pay the rent and to perform all other obligations to be performed by
Tenant hereunder. The acceptance of rent by Landlord from any other person shall
not be deemed to be a waiver by Landlord of any provision hereof. Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. If any assignee of Tenant or any successor of Tenant
defaults in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such assignee or successor. Landlord may consent to subsequent assignments or
subletting of this Lease or amendments or modifications to this Lease with
assignees of Tenant, without notifying Tenant, or any successor of Tenant, and
without obtaining its or their consent thereto, and such action shall not
relieve Tenant of its liability under this Lease. If Tenant assigns this Lease,
or sublets all or a portion of the Premises, or requests the consent of Landlord
to any assignment or subletting, or if Tenant requests the consent of Landlord
for any act that Tenant proposes to do, then Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection therewith.

          Section 13.05. If a petition is filed by or against Tenant for relief
under Title 11 of the United States Code, as amended (the "Bankruptcy Code"),
and Tenant (including for purposes of this Section Tenant's successor in
bankruptcy, whether a trustee or Tenant as debtor in possession) assumes and
proposes to assign, or proposes to assume and assign, this Lease pursuant to the
provisions of the Bankruptcy Code to any person or entity who has made or
accepted a bona fide offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of the proposed assignment setting forth (a)
the name and address of the proposed assignee, (b) all of the terms and
conditions of the offer and proposed assignment, and (c) the adequate assurance
to be furnished by the proposed assignee of its future performance under the
Lease, shall be given to Landlord by Tenant no later than twenty (20) days after
Tenant has made or received such offer, but in no event later than ten (10) days
prior to the date on which Tenant applies to a court of competent jurisdiction
for authority and approval to enter into the proposed assignment. Landlord shall
have the prior right and option, to be exercised by notice to Tenant given at
any time prior to the date on which the court order authorizing such assignment
becomes final and non-appealable, to receive an assignment of this Lease upon
the same terms and conditions, and for the same consideration, if any, as the
proposed assignee, less any brokerage commissions which may otherwise be payable
out of the consideration to be paid by the proposed assignee for the assignment
of this Lease. If this Lease is assigned pursuant to the provisions of the
Bankruptcy Code, Landlord may require

                                       13
<PAGE>

from the assignee a deposit or other security for the performance of its
obligations under the Lease in an amount substantially the same as would have
been required by Landlord upon the initial leasing to a tenant similar to the
assignee. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed, without further act or
documentation, to have assumed all of the Tenant's obligations arising under
this Lease on and after the date of such assignment. Any such assignee shall,
upon demand, execute and deliver to Landlord an instrument confirming such
assumption. No provision of this Lease shall be deemed a waiver of Landlord's
rights or remedies under the Bankruptcy Code to oppose any assumption and/or
assignment of this Lease, to require a timely performance of Tenant's
obligations under this Lease, or to regain possession of the Premises if this
Lease has neither been assumed nor rejected within sixty (60) days after the
date of the order for relief or within such additional time as a court of
competent jurisdiction may have fixed. Notwithstanding anything in this Lease to
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated as rent, shall constitute rent
for the purposes of Section 502(b)(6) of the Bankruptcy Code.

          Section 13.06. Tenant shall not be entitled to, and Tenant hereby
waives any right it may have to make any claim for, money damages (nor shall
Tenant claim any money damages by way of set-off, counterclaim or defense) based
upon any claim or assertion by Tenant that Landlord has unreasonably withheld or
unreasonably delayed its consent or approval to a proposed assignment or
subletting as provided for in this Article 13. Tenant's sole remedy shall be an
                                   ----------
action or proceeding to enforce any provision hereof, or for specific
performance, injunction or declaratory judgment. Tenant acknowledges that
Tenant's rights under this Article 13 satisfy the conditions set forth in
                           ----------
Section 1951.4 of the California Civil Code with respect to the availability to
Landlord of certain remedies for a default by Tenant under this Lease.

                         Article 14 -- Indemnification
                         -----------------------------

          Section 14.01. Landlord shall not be liable or responsible in any way
for, and Tenant hereby waives all claims against Landlord, its partners,
officers, employees and agents with respect to or arising out of: any death or
any injury of any nature whatsoever that may be suffered or sustained by Tenant
or any employee, licensee, invitee, guest, agent or customer of Tenant or any
other person, from any causes whatsoever, or for any loss or damage or injury to
any property outside or within the Premises belonging to Tenant or its
employees, agents, customers, licensees, invitees, guests or any other person,
unless such death. injury, loss or damage is caused by the gross negligence or
willful misconduct of Landlord, its partners, officers, employees or agents.
Without limiting the generality of the foregoing, Landlord shall not be liable
for any such damage or damages of any nature whatsoever, including, without
limitation, consequential damages or loss of profit or business opportunity,
caused by explosion, fire, theft or breakage, by sprinkler, drainage or plumbing
systems, by failure for any cause to supply adequate drainage, by the
interruption of the telephone cable distribution system, any public utility or
service, by steam, gas, water, rain or other substances leaking, issuing or
flowing into any part of the Premises, by natural occurrence, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority, or for any damage or inconvenience which may
arise through repair, maintenance or alteration of any part of the Building, or
by anything done or omitted to be done by any tenant, occupant or person in the
Building. In addition, Landlord shall not be liable for any loss or damage for
which the Tenant is required to insure, nor for any loss or damage resulting
from any construction, alterations or repair.

          Section 14.02. To the fullest extent permitted by law, Tenant shall
indemnify, defend and hold Landlord, its partners, officers, employees, and
agents harmless from and against any and all losses, damages, claims, or
liability for any damage to any property or injury, illness or death of any
person: (a) occurring in, on, or about the Premises, or any part thereof,
arising at any time and from any cause whatsoever other than by reason of the
gross negligence or willful misconduct of Landlord, its employees or agents; and
(b) occurring in, on, or about any part of the Building other than the Premises,
when such damage, injury, illness or death shall be caused in whole or in part
by the negligence or willful misconduct of Tenant, its agents, servants,
partners, officers, employees, invitees or licensees (including, without
limitation, when such damage, injury, illness or death shall have been caused in
part by the negligence of Landlord, its partners, officers, employees or
agents). Tenant shall also indemnify, defend and hold Landlord, its partners,
officers, employees and agents harmless from and against any and all losses,
damages, claims and liability resulting from Tenant's breach of any of its
obligations under the Lease and any damage to the telephone cable distribution
system caused by Tenant, its contractors, agents or employees. The provisions of
this Section shall survive the expiration or termination of this Lease with
respect to any accident, event, damage, injury, illness or death occurring prior
to such termination.

                                       14
<PAGE>

          Section 14.03. Neither the partners comprising Landlord, nor the
partners, directors or officers of any of the foregoing (collectively, the
"Parties") shall be liable for the performance of Landlord's obligations under
this Lease. Tenant shall look solely to Landlord to enforce Landlord's
obligations hereunder and shall not seek any damages against any of the Parties.
The liability of Landlord for Landlord's obligations under this Lease shall not
exceed and shall be limited to Landlord's interest in the Building and Tenant
shall not look to the property or assets of any of the Parties in seeking either
to enforce Landlord's obligations under this Lease or to satisfy a judgement for
Landlord's failure to perform such obligations.

                      Article 15 -- Destruction or Damage
                      -----------------------------------

          Section 15.01. Tenant shall notify Landlord in writing immediately
upon the occurrence of any damage to the Premises or the Building. As used
herein with respect to the Premises or the Building, the term "partial damage"
shall mean damage or destruction which does not result in the loss of either (a)
fifty percent (50%) or more of the total number of Rentable Square Feet in the
Premises or the Building (as applicable); or (b) fifty percent (50%) or more of
the value of the Premises or the Building (as applicable); and the term
"substantial damage" shall mean any damage or destruction exceeding partial
damage (including total destruction).

          Section 15.02. If the Premises are partially or substantially damaged,
or the Building is partially damaged, then this Lease shall remain in effect,
and Landlord shall repair the damage as soon as reasonably possible; provided,
however, that if the insurance proceeds received by Landlord with respect to
such damage are not sufficient to pay the entire cost of repair, or if the cause
of the damage is not covered by insurance policies, then Landlord may elect
either to; (a) repair the damage as soon as reasonably possible, in which case
this Lease shall remain in effect; or (b) terminate this Lease, as of the date
the damage occurred, by notifying Tenant, within ninety (90) days after receipt
by Landlord of notice of the occurrence of such damage, of election by Landlord
to terminate this Lease. The foregoing provisions of this Section 15.02
                                                          -------------
notwithstanding, if substantial damage to the Premises occurs during the last
twelve (12) months of the Lease Term, then either Landlord or Tenant may elect
to terminate this Lease, as of the date the damage occurred, regardless of the
sufficiency of any insurance proceeds. In such event, Landlord shall not be
obligated to repair the damage, and Tenant shall have no right to continue this
Lease. Notification of such election shall be given by the electing party to the
other party within thirty (30) days after the occurrence of the damage.

          Section 15.03. If the Building is substantially damaged (whether or
not the Premises are substantially damaged), then Landlord (as well as Tenant,
but only if the Premises have also been damaged substantially) may terminate
this Lease, as of the date the damage occurred, whether or not Landlord receives
any insurance proceeds with respect to such damage, by notifying the other party
of such termination within thirty (30) days after the occurrence of such damage.
Landlord shall otherwise repair all such damage, and this Lease shall remain in
full force and effect.

          Section 15.04. The provisions of Section 15.02 and Section 15.03 of
                                           -------------     -------------
this Lease notwithstanding, if the Premises or the Building are damaged (whether
partially or substantially), and the damage cannot be repaired within seven (7)
months after it occurs (for whatever reason), either Landlord or Tenant may
terminate this Lease by notifying the other party if within thirty (30) days
after the date of the damage Landlord reasonably determines that repair and
reconstruction cannot be completed within seven (7) months of the date of the
damage. If reconstruction is delayed by reason of "force majeure," the period of
completion of reconstruction shall be extended for the period of the force
majeure delay. Any such termination shall be effective as of the date of the
damage.

          Section 15.05. If the Premises or the Building are damaged, and
Landlord repairs the damage pursuant to the provisions of this Article 15,
                                                               ----------
Monthly Base Rent payable during the period of such damage, repair and/or
restoration shall be reduced according to the degree, if any, to which Tenant's
use of the Premises is impaired. Except for such possible reduction in Monthly
Base Rent, Tenant shall not be entitled to any compensation, reduction or
reimbursement from Landlord as a result of any damage, destruction, repair or
restoration of or to the Premises or the Building.

          Section 15.06. Tenant waives any applicability to the Premises of the
provisions of California Civil Code Sections 1932(2) and 1933(4), and any
successor statutes thereto, with respect to any damage to or destruction of the
Premises or the Building.

                                       15
<PAGE>

                        Article 16 -- Entry by Landlord
                        -------------------------------

          Section 16.01. Landlord may, upon twenty-four (24) hours prior notice
to Tenant (or at any time in the case of an emergency), enter the Premises at
reasonable hours to (a) inspect the same, (b) exhibit the same to prospective
purchasers, lenders or tenants, (c) determine whether Tenant is complying with
all its obligations hereunder, (d) post notices of nonresponsibility, and (e)
make repairs required of Landlord under the terms hereof or repairs to any
adjoining space or utility services or make repairs, alterations or improvements
to any other portion of the Property; provided, however, that all such work or
entry shall be done as promptly as reasonably possible and so as to cause as
little interference to Tenant as reasonably possible. Except as otherwise
provided in this Lease, Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises or any other loss occasioned by
such entry. In an emergency, Landlord shall have the right to use any and all
reasonable means as warranted by the nature of the emergency to open any of the
doors in, on or about the Premises (excluding Tenant's vaults, safes and similar
areas designated in writing by Tenant in advance) in order to obtain entry to
the Premises, and any entry to the Premises obtained by Landlord by any of such
means, or otherwise, shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into or a detainer of the Premises or an
eviction, actual or constructive, of Tenant from the Premises, or any portion
thereof.

          Section 16.02. Landlord shall have the right from time to time to
alter the Building and, without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor, to change the
arrangement or location of entrances or passageways, doors and doorways, and
corridors, elevators, stairs, toilets, or other public parts of the Building and
to change the name, number or designation by which the Building is commonly
known, provided any such change does not (a) unreasonably reduce, interfere with
or deprive Tenant of access to the Building or Premises or (b) reduce the area
(except by a de minimus amount) of the Premises. All parts (except surfaces
facing the interior of the Premises) of all walls, windows and doors bounding
the Premises (including exterior Building walls, exterior core corridor walls,
exterior doors and entrances), all space in or adjacent to the Premises used for
shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating,
air cooling, plumbing and other mechanical facilities, service closets and other
Building facilities are not part of the Premises, and Landlord shall have the
use thereof, as well as access thereto through the Premises for the purposes of
operation, maintenance, alteration and repair.

                             Article 17 -- Default
                             ---------------------

          Section 17.01. The occurrence of any one or more of the following
events ("Events of Default") shall constitute a breach of this Lease by Tenant
(a) if Tenant shall fail to pay any rental when and as the same becomes due and
payable and such failure continues for more than five (5) days after notice
thereof from Landlord, provided Landlord shall not be required to give such
notice more than twice during any twelve (12) consecutive month period; or (b)
if Tenant shall fail to pay any other sum when and as the same becomes due and
payable and such failure shall continue for more than ten (10) days after notice
thereof from Landlord; or (c) if Tenant shall fail to perform or observe any
other term hereof to be performed or observed by Tenant, such failure shall
continue for more than thirty (30) days after notice thereof from Landlord, or
Tenant shall not within such period commence with due diligence and dispatch the
curing of such default, or, having so commenced, shall thereafter fail or
neglect to prosecute or complete with due diligence and dispatch the curing of
such default; or (d) if Tenant shall make a general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts as they
become due or shall file a petition in bankruptcy, or shall be adjudicated a
bankrupt or insolvent, or shall file a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statue, law or regulation, or shall file an
answer admitting or shall fail reasonably to contest the material allegations of
a petition filed against it in any such proceeding, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant
or any material part of its properties; or (e) if within ninety (90) days after
the commencement of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed, or if, within ninety (90) days after the
appointment without the consent or acquiescence of Tenant, of any trustee,
receiver or liquidator of Tenant or of any material part of its properties, such
appointment shall not have been vacated; or (f) if this Lease or any estate of
Tenant hereunder shall be levied upon under any attachment or execution and such
attachment or execution is not vacated within sixty (60) days.

                                       16
<PAGE>

          Section 17.02. If an Event of Default shall occur, Landlord at any
time thereafter may give a written termination notice specifying the nature of
the default to Tenant, and on the date specified in such notice (which shall be
not less than three (3) days after the giving of such notice) Tenant's right to
possession shall terminate and this Lease shall terminate, unless on or before
such date all arrears of rental and all other sums payable by Tenant under this
Lease (together with interest and late charges thereon as provided in Section
                                                                      -------
3.01) and all costs and expenses incurred by or on behalf of Landlord hereunder
----
shall have been paid by Tenant and all other breaches of this Lease by Tenant at
the time existing shall have been fully remedied to the satisfaction of
Landlord. Upon such termination, Landlord may recover from Tenant: (a) the worth
at the time of award of the unpaid rental which had been earned at the time of
termination: (b) the worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; (c) the worth at the time of award of the amount by which
the unpaid rental for the balance of the term of this Lease after the time of
award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided: and (d) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The phrase "time of award" shall have the same
meaning as used in California Civil Code Section 1951.2. The "worth at the time
of award" of the amounts referred to in clauses (a) and (b) above is computed by
allowing interest at the rate set forth in Section 3.01. The worth at the time
                                           ------------
of award of the amount referred to in clause (c) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

          Section 17.03. Even though Tenant has breached this Lease and
abandoned the Premises, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant's right to possession, and Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover the rental as it becomes due under this Lease. Acts of maintenance or
preservation or efforts to relet the Premises or the appointment of a receiver
upon the initiative of Landlord to protect Landlord's interest under this Lease
shall not constitute a termination of Tenant's right to possession.

          Section 17.04. The remedies provided for in this Lease are in addition
to any other remedies available to Landlord at law or in equity by statute or
otherwise.

         Article 18 -- Landlord's and Tenant's Rights to Cure Defaults
         -------------------------------------------------------------

          Section 18.01. All agreements and provisions to be performed by Tenant
under any of the terms of this Lease shall be at its sole cost and expense and
without any abatement of rental or any other sums payable by Tenant under this
Lease. If Tenant shall fail to pay any sum of money, other than rental, required
to be paid by it hereunder or shall fail to perform any other act on its part to
be performed hereunder and such failure shall continue for thirty (30) days
after notice thereof by Landlord, Landlord may, but shall not be obligated so to
do, and without waiving or releasing Tenant from any obligations of Tenant, make
any such payment or perform any such other act on Tenant's part to be made or
performed as in this Lease provided all sums so paid by Landlord and all
necessary incidental costs shall be deemed additional rent hereunder and shall
be payable to Landlord on demand, and Landlord shall have (in addition to any
other right or remedy of Landlord) the same rights and remedies upon the
nonpayment thereof by Tenant as in the case of default by Tenant in the payment
of rental.

                         Article 19 -- Attorneys' Fees
                         -----------------------------

          Section 19.01. In any action or proceeding brought by either party
against the other under this Lease, the prevailing party shall be entitled to
recover court and litigation costs and the fees of its attorneys, consultants
and experts, in such action or proceeding (whether at the administrative, trial
or appellate levels) in such amount as the court or administrative body may
adjudge reasonable.

                          Article 20 -- Holding Over
                          --------------------------

          Section 20.01. If Tenant shall remain in possession after the
expiration or sooner termination of this Lease, all the terms, covenants and
agreements hereof shall continue to apply and bind Tenant so long as Tenant
shall remain in possession insofar as the same are applicable, except that if
Tenant remains in possession without Landlord's written consent, the Monthly
Base Rent shall be one hundred fifty percent (150%) of the Monthly Base Rent
payable for the last month of the term hereof, and Tenant shall continue to pay
its share of all expenses then payable by Tenant, including, but not limited to,
Operating Expenses, insurance premiums and real property taxes, prorated on a
daily basis for each day that Tenant remains in

                                       17
<PAGE>

possession, Tenant shall indemnify, defend, protect and hold Landlord harmless
from any losses, costs, damages, liability or expense (including reasonable
attorneys' fees and costs of suit) which Landlord may suffer or incur as a
result thereby. If Tenant remains in possession with Landlord's written consent,
such tenancy shall be from month to month, terminable by either party by not
less than thirty (30) days' written notice.

                             Article 21 -- Waiver
                             --------------------

          Section 21.01. The failure of either party to exercise its rights in
connection with any breach or violation of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent.

                         Article 22 -- Eminent Domain
                         ----------------------------

          Section 22.01. As used in this Article 22, the following words and
                                       ----------
phrases shall have the following meaning:

               (a)  "Condemnation" means (i) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a condemnor and (ii) a
voluntary sale or transfer by Landlord to any condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.

               (b)  "Date of taking" means the date the condemnor has the right
to possession of the property being condemned.

               (c)  "Award" means all compensation, sums, or anything of value
awarded, paid, or received on a total or partial condemnation.

               (d)  "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.

          Section 22.02. If, during the term or during the period of time
between the execution of this Lease and the Term Commencement Date, there is any
taking of all or any part of the Property, the Building or the Premises or any
interest in this Lease, the rights and obligations of the parties shall be
determined pursuant to this Article 22.
                            ----------

          Section 22.03. If the Premises are totally taken by condemnation, this
Lease shall terminate on the date of taking.

          Section 22.04. Tenant may elect to terminate this Lease due to a
condemnation which takes part of the Premises only in the event of a taking of
twenty-five percent (25%) of the total number of Rentable Square Feet in the
Premises. This Lease shall otherwise remain in effect. Tenant must exercise its
right to terminate this Lease pursuant to this Section 22.04 (if at all) by
                                               -------------
giving notice of such exercise to Landlord within thirty (30) days after the
nature and the extent of the taking have been finally determined and Tenant has
been notified of such determination by Landlord. If Tenant elects to terminate
this Lease as provided in this Section 22.04, then Tenant shall also notify
                               -------------
Landlord of the date of termination, which date shall not be earlier than thirty
(30) days prior to the date of taking. If Tenant does not terminate this Lease
by notice provided within such thirty (30) day period, then this Lease shall
continue in full force and effect, except that all sums payable by Tenant, if
not reduced pursuant to other provisions of this Lease, shall be reduced as
hereinafter provided.

          Section 22.05. If any portion of the Premises is taken by
condemnation, and this Lease remains thereafter in full force and effect, then,
on the date of taking, the Monthly Base Rent and any other sum payable by Tenant
hereunder shall, if not reduced pursuant to other provisions of this Lease, be
reduced by that amount which is determined by multiplying the Monthly Base Rent
or such other sum (as applicable) by a fraction, the numerator of which shall be
the total number of Rentable Square Feet in the Premises so taken, and the
denominator of which shall be the total number of Rentable Square Feet in the
Premises immediately before the date of taking.

          Section 22.06. If there is a partial taking of the Premises, and this
Lease remains thereafter in full force and effect, then Landlord, at its sole
cost, shall accomplish all

                                       18
<PAGE>

necessary restoration. Monthly Base Rent and any other sum payable by Tenant
hereunder shall, if not reduced pursuant to other provisions of this Lease, be
abated or reduced during the period from the date of taking, until the
completion of restoration, but all other obligations of Tenant under this Lease
shall remain in full force and effect. The abatement or reduction of Monthly
Base Rent or such other sum shall be based on the extent to which the
restoration interferes with Tenant's use of the Premises,

          Section 22.07. If a taking of more than twenty-five percent (25%) of
the total number of Rentable Square Feet of the Building occurs during the last
one (1) full year of the Lease Term, then Landlord shall have the right, at its
option, to terminate this Lease, whether or not the Premises are affected by
such taking, by giving notice of such termination to Tenant not more than thirty
(30) days after the nature and extent of the taking have been finally
determined.

          Section 22.08. The award shall belong to and be paid to Landlord,
except that Tenant shall receive from the award the sum attributable to: the
unamortized value (depreciated on a straight-line basis, computed monthly) of
tenant improvements or alterations made to the Premises by Tenant in accordance
with this Lease, which improvements or alterations Tenant has the right to
remove from the Premises pursuant to the provisions of this Lease, but elects
not to remove; and any sum awarded to Tenant for Tenant's moving and relocation
costs which is separately stated and does not reduce, diminish or otherwise
affect the amount of the award to Landlord.

          Section 22.09. If there is a total or partial taking of the Premises,
for a period which is less than the remaining term of this Lease, then all of
the provisions of this Lease shall remain in full force and effect, except that
Monthly Base Rent and any other sum payable by Tenant hereunder shall, if not
reduced pursuant to other provisions of this Lease, be abated during such period
of taking, based upon the extent to which the taking interferes with Tenant's
use of the Premises, and Landlord shall be entitled to whatever award may be
paid for the taking of the Premises for the period involved; provided, however,
that, if there is a total taking of the Premises for a period of more than one
(1) year, either party may elect to terminate this Lease by giving notice to the
other party within thirty (30) days after the nature and the extent of the
taking have been finally determined. If this Lease terminates as provided in
this Section 22.09, the award shall be paid to Landlord and Tenant as set forth
     -------------
in Section 22.08.
   -------------

                        Article 23 -- Sale by Landlord
                        ------------------------------

          Section 23.01. If Landlord sells or conveys the Premises, the Building
or the Real Property, the same shall operate to release Landlord from any future
liability upon any of the covenants or conditions, express or implied, herein
contained in favor of Tenant, and in such event Tenant agrees to look solely to
the responsibility of the successor in interest of Landlord in and to this
Lease. With respect to the Security Deposit, Landlord shall not be released from
its obligations until and unless the successor assumes the obligations of
Landlord hereunder. Notwithstanding the foregoing, if Landlord sells or conveys
the Premises or the Property, this Lease shall not be barred, terminated or cut
off nor shall the rights and possession of Tenant hereunder be disturbed if
Tenant shall not then be in default in the payment of rental or other sums or be
otherwise in default under the terms of this Lease. Upon a sale of the Premises
or the Property by Landlord, Tenant agrees to attorn to the purchaser or
assignee, such attornment to be effective and self-operative without the
execution of any further instruments on the part of any of the parties to this
Lease.

                          Article 24 -- Subordination
                          ---------------------------

          Section 24.01. This Lease shall be subject and subordinated at all
times to: (a) all ground or underlying leases which may hereafter be executed
affecting the Building, and (b) the lien of all mortgages and deeds of trust in
any amount or amounts whatsoever now or hereafter placed on or against the
Building, on or against Landlord's interest or estate therein, and on or against
all such ground or underlying leases, all without the necessity of having
further instruments executed on the part of Tenant to effectuate such
subordination. Notwithstanding the foregoing: (i) in the event of termination
for any reason whatsoever of any such ground or underlying lease, and if such
ground or underlying lease so provides, then this Lease shall not be barred,
terminated, cut off or foreclosed, nor shall the rights and possession of Tenant
hereunder be disturbed if Tenant shall not then be in default in the payment of
rent or other sums or be otherwise in default under the terms of this Lease, and
Tenant shall attorn to the landlord of any such ground or underlying lease, or,
if requested, enter into a new lease for the balance of the original or extended
Term then remaining, upon the same terms and provisions as are contained in this
Lease; (ii) in the event of a foreclosure of any such mortgage or deed of trust
or of any other action or proceeding for the enforcement thereof, or of any sale
thereunder, and if any such mortgage or deed of trust so provides, this Lease
will not be barred,

                                       19
<PAGE>

terminated, cut off or foreclosed, nor will the rights and possession of Tenant
thereunder be disturbed if Tenant shall not then be in default in the payment of
rent or other sums or be otherwise in default under the terms of this Lease, and
Tenant shall attorn to the purchaser at such foreclosure sale or other action or
proceeding, or, if requested, enter into a new lease with such purchaser for the
balance of the original or extended Term then remaining upon the same terms and
provisions as are in this Lease contained; and (iii) Tenant agrees to execute
and deliver upon demand such further instruments evidencing such subordination
of this Lease to such deed, to such ground or underlying leases, and to the lien
of any such mortgages or deeds of trust as may reasonably be required by
Landlord. Tenant shall from time to time on request from Landlord execute and
deliver any documents or instruments that may be required by any lender to
effectuate any subordination. If Tenant fails to execute and deliver any such
documents or instruments, Tenant irrevocably constitutes and appoints Landlord
as Tenant's special attorney in fact to execute and deliver such documents or
instruments. Upon request by Tenant, Landlord shall use reasonable and diligent
efforts to obtain a Subordination and Non-Disturbance Agreement ("SNDA") from
any lender or ground lessor. The SNDA shall be in a form reasonably satisfactory
to Tenant. Obtaining an SNDA shall not be a condition to the effectiveness of
the Lease and failure to obtain an SNDA shall not constitute a default
hereunder.

          Section 24.02. Notwithstanding anything to the contrary set forth
above, any beneficiary under any deed of trust may at any time subordinate its
deed of trust to this Lease in whole or in part, without any need to obtain
Tenant's consent, by execution of a written document subordinating such deed of
trust to the Lease to the extent set forth in such document and thereupon the
Lease shall be deemed prior to such deed of trust to the extent set forth in
such document without regard to their respective dates of execution, delivery
and/or recording. In that event, to the extent set forth in such document, such
deed of trust shall have the same rights with respect to this Lease as would
have existed if this Lease had been executed, and a memorandum thereof, recorded
prior to the execution, delivery and recording of the deed of trust.

                            Article 25 -- No Merger
                            -----------------------

          Section 25.01. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Landlord, terminate all or any existing subleases or subtenancies,
or may, at the option of Landlord, operate as an assignment to it of any or all
such subleases or subtenancies.

                      Article 26 -- Surrender of Premises
                      -----------------------------------

          Section 26.01. At the end of the term or any renewal thereof or other
sooner termination of this Lease, the Tenant shall peaceably deliver up to the
Landlord possession of the Premises, together with all improvements or additions
upon or belonging to the same, by whomsoever made, in the same condition as
received by Tenant on the Term Commencement Date, or first installed by Tenant
on or after the Term Commencement Date, ordinary wear and tear and damage by
fire, earthquake, act of God or the elements alone excepted. Providing Tenant is
not in default under the terms of this Lease, Tenant may, upon the termination
of this Lease, remove from the Premises, immediately before the termination of
the term, its trade fixtures and movable personal property installed by Tenant,
at Tenant's sole cost, title to which shall be in Tenant until such termination,
repairing any and all damage to the Premises and the Building caused by such
removal. Property not so removed shall be deemed abandoned by the Tenant and
Landlord shall proceed in accordance with the provisions of the California Civil
Code with respect to such abandoned property. Upon request by Landlord, Tenant
shall remove any or all improvements, alterations or additions to the Premises
installed by Tenant from and after the Term Commencement Date at Tenant's sole
cost, the removal of which Landlord required as a condition of its consent
thereto, and all movable partitions, counters, and other trade fixtures which
may be left by Tenant and repair any and all damage to the structure of the
Building resulting from such removal.

                           Article 27 -- Abandonment
                           -------------------------

          Section 27.01. Tenant shall not vacate or abandon the Premises at any
time during the term, and if Tenant shall abandon, vacate, or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord. Landlord shall proceed in accordance with
the provisions of the California Civil Code with respect to such abandoned
property.

                                       20
<PAGE>

                      Article 28 -- Estoppel Certificate
                      ----------------------------------

          Section 28.01. At any time and from time to time, but in no event on
less than ten (10) days prior written request by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord, promptly upon request, a certificate
certifying: (a) that Tenant has accepted the Premises (or, if Tenant has not
done so, that Tenant has not accepted the Premises, and specifying the reasons
therefor); (b) the commencement and expiration dates of this Lease; (c) whether
there are then existing any defaults by Landlord in the performance of its
obligations under this Lease (and, if so, specifying the same); (d) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, as modified, and
stating the date and nature of each modification); (e) the capacity of the
person executing such certificate, and that such person is duly authorized to
execute the same on behalf of Tenant; (f) the date, if any, to which rent and
other sums payable hereunder have been paid; (g) that no notice has been
received by Tenant of any default which has not been cured, except as to
defaults specified in the certificate; (h) the amount of any security deposit
and prepaid rent; and (i) such other matters as may be reasonably requested by
Landlord. Any such certificate may be relied upon by any prospective purchaser,
mortgagee or beneficiary under any deed of trust affecting the Building or any
part thereof. If Tenant fails to deliver the executed certificate within ten
(10) days after receipt thereof by Tenant, Tenant irrevocably constitutes and
appoints Landlord as its special attorney in fact to execute and deliver the
certificate to any third party.

                    Article 29 -- No Light and Air Easement
                    ---------------------------------------

          Section 29.01. Any diminution or shutting off of light or air by any
structure which may be erected on lands adjacent to the Premises shall in no way
affect this Lease or impose any liability on Landlord.

                             Article 30 -- Notices
                             ---------------------

          Section 30.01. All notices and demands of any kind which either party
may be required or may desire to serve on the other in connection with this
Lease shall be in writing and shall be sent only by: personal delivery; United
States Mail (first-class, certified, return-receipt requested, postage prepaid);
or a national, overnight courier delivery service which keeps records of
deliveries (such as, by way of example but not limitation, Federal Express,
United Parcel Service and DHL). For purposes of giving notice hereunder, the
addresses of the parties are, until changed as hereinafter provided, the
following:

          If to Tenant:      MAGMA Design Automation, Inc.
                             953 Commercial Street
                             Palo Alto, CA 94303
                             Attn: Teresa Botha

          with copy to:      Allison Leopold Tilley, Esq.
                             Pillsbury Madison & Sutro LLP
                             2550 Hanover Street
                             Palo Alto, CA 94304

          If to Landlord:    RWC, LLC
                             100 Pine Street, Suite 3200
                             San Francisco, CA 94111
                             Attn: President

Service of any notice or demand shall be deemed complete on the day of actual
delivery as shown by the addressee's registry or certification receipt or the
courier's delivery record. Either party hereto may from time to time, by notice
in writing served upon the other as aforesaid, designate a different mailing
address or a different person to which all such notices or demands are
thereafter to be addressed.

                           Article 31 -- Successors
                           ------------------------

          Section 31.01. All the terms, covenants, and conditions hereof shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the parties hereto, provided that
nothing in this Section shall be deemed to permit any assignment, subletting,
occupancy or use by Tenant contrary to the provision of Article 13.
                                                        ----------

                                       21
<PAGE>

                          Article 32 -- Miscellaneous
                          ---------------------------

          Section 32.01. The captions in this Lease are for convenience only and
shall not in any way limit or be deemed to construe or interpret the terms and
provisions hereof.

          Section 32.02. Time is of the essence of this Lease and of all
provisions hereof, except in respect to the delivery of possession of the
Premises at the commencement of the term hereof.

          Section 32.03. The words "Landlord" and "Tenant," as used herein,
shall include the plural as well as the singular. Words used in the masculine
gender include the feminine and neuter. If there be more than one Landlord or
Tenant the obligations hereunder imposed upon Landlord and Tenant shall be joint
and several.

          Section 32.04. This Lease shall be construed and enforced in
accordance with the laws of the State of California.

          Section 32.05. It is understood and agreed that the remedies herein
given to either party shall be cumulative, and the exercise of any one remedy by
either party shall not be to the exclusion of any other remedy.

          Section 32.06. Each party represents to the other that no broker has
been involved in this transaction other than Wayne Mascia Associates ("WMA") and
Cushman & Wakefield ("C&W"). It is agreed that if any claims for brokerage
commissions or finders fees or like payment arise out of or in connection with
this Lease, and in the event any claim is made, all such claims shall be handled
and paid by the party whose actions or alleged commitment form the basis of such
claim. It is further agreed that each party whose actions or alleged commitment
form the basis of a claim agrees to indemnify and hold harmless the other party
from and against any and all claims or demands with respect to any brokerage
fees or agent's commissions or other compensation asserted by any person, firm,
or corporation in connection with this Lease. Landlord shall pay C&W a
commission pursuant to a separate agreement. Landlord shall pay WMA a commission
of Four and 50/100ths Dollars ($4.50) per square foot (the "WMA" Commission").
One-fifth (1/5) of the WMA Commission shall be payable upon execution hereof by
both parties. The balance of the WMA Commission shall be payable one-fifth on
December 31, 1999, one-fifth on December 31, 2000 and the balance on December
31, 2001. The WMA Commission shall be accelerated and due and payable on the
date on which Tenants net worth, as computed in accordance with generally
accepted accounting principles, exceeds its current level by more than Twelve
Million Dollars ($12,000,000) or on the date that Tenant receives a permanent
equity contribution of not less than Twelve Million Dollars. Notwithstanding the
foregoing, no payments shall be due WMA if Tenant is in default hereunder. If
the Lease is terminated prior to payment of any installments of the WMA
Commission, WMA shall have no right to receive any further installments of the
WMA Commission and Landlord shall be relieved of all further obligations to WMA.

          Section 32.07. The unenforceability, invalidity, or illegality of any
provision of this Lease shall not render the other provisions unenforceable,
invalid or illegal.

          Section 32.08. The terms of this Lease are intended by the parties as
a final expression of their agreement with respect to such terms as are included
in this Lease and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Lease
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial proceedings, if
any, involving this Lease.

          Section 32.09. For purposes of this Lease, the term "Landlord's
Lender" shall mean the beneficiary, mortgagee or secured party of any deed of
trust, mortgage or other written security device or agreement affecting the
Premises.

          Section 32.10. If Tenant signs as a corporation or a partnership, each
of the persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing entity, that Tenant has
and is qualified to do business in California, that Tenant has full right and
authority to enter into this Lease, and that each and both of the persons
signing on behalf of Tenant are authorized to do so. Upon Landlord's request,
Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord
confirming the foregoing covenants and warranties.

          Section 32.11. No contractual or other rights shall exist between
Landlord and Tenant with respect to the Premises until both have executed and
delivered this Lease,

                                       22
<PAGE>

notwithstanding that rental deposits have been received by Landlord and
notwithstanding that Landlord has delivered to Tenant an unexecuted copy of this
Lease. The submission of this Lease to Tenant shall be for examination purposes
only, and does not and shall not constitute a reservation of or an option for
the Tenant to lease, or otherwise create any interest by Tenant in the Premises
or any other Premises situated in the Building. Execution of this Lease by
Tenant and return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered this Lease to Tenant.

          Section 32.12. Neither Landlord nor Landlord's agents or attorneys
have made any representations or warranties with respect to the Premises, the
Building or this Lease, except as expressly set forth herein, and no rights,
easements or licenses are or shall be acquired by Tenant by implication or
otherwise.

          Section 32.13. This Lease shall not be recorded.

          Section 32.14. Tenant shall be entitled to the Building 1 portion of
the monument sign to be constructed at the entrance to the Property. Tenant
shall also be entitled to place its name on the building sign to be erected near
the Building. Selection of location and design shall be in Landlord's
discretion. All costs of Tenant's signage shall be borne by Tenant.

          Section 32.15. The Parties recognize that certain computer controlled
systems and equipment may be affected when the year changes from 1999 to 2000,
which could in turn affect Building operations. Landlord will take reasonable
steps to provide that Building computer controlled facility components, for
which Landlord is responsible, are Year 2000 compliant. Tenant will take
reasonable steps to provide that computer controlled facility components, which
Tenant has installed or for which Tenant is responsible, are Year 2000
compliant. As used herein, "Year 2000 compliant" means computer controlled
facility components which accurately process date/time date from, into, and
between the 20th and 21st centuries, and the years 1999 and 2000. As used
herein, "computer controlled facility components" means software driven
technology and/or embedded microchip technology, such as (by way of example and
not necessarily applicable to or in use at the Building) programmable
thermostats, HVAC controllers, elevator controllers, utility monitoring and
control systems, fire detection and suppression systems, alarms, security
systems, and any other facilities control systems utilizing microcomputer,
minicomputer or programmable logic controllers. Notwithstanding the foregoing,
Landlord shall not be liable for failure to ensure that computer controlled
facility components are Year 2000 compliant, and Tenant shall not be entitled to
any damages arising from such failure, nor shall such failure constitute a
constructive or other eviction of Tenant.

                                       23
<PAGE>

          IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
quadruplicate on the dates set forth below and this Lease is effective as of the
latter of such dates.

<TABLE>
<CAPTION>
LANDLORD:                                             TENANT:
---------                                             ------
<S>                                                   <C>
RWC, LLC, a California limited liability              MAGMA DESIGN AUTOMATION, INC., a
company                                               Delaware corporation

By:  Grosvenor International California, Ltd.,
     a California corporation                        By:  /s/ Rajeev Madhavan
                                                           --------------------------------
Its: Managing Member                                 Name: ________________________________

                                                     Its:  President

By:   /s/ WILLIAM J. ABLEMANN
     -------------------------------
Name:    William J. Abelmann
     -------------------------------                 By:  __________________________________
Its:   President
     -------------------------------                 Name:__________________________________

                                                     Its:___________________________________
By:   /s/ GERRY ZACKOVSKY
     -------------------------------                 Date:__________________________________
Name:   Gerry Zackovsky
     -------------------------------
Its:   Senior Vice President
     -------------------------------
Date:   7 Dec 1998
     -------------------------------


WAYNE MASCIA ASSOCIATES ACCEPTS
THE TERMS AND CONDITIONS OF
SECTION 32.06


By: /s/ MIKE WEBBER
    --------------------------------
    Mike Webber, its authorized
    representative
</TABLE>

                                       24
<PAGE>

                                  EXHIBIT  A
                                         -----

                                    [PLAN]


                                                                       SITE PLAN
                                                                       ---------

The site plan consists of rectangles labeled Buildings One through Eight with
parking spaces surrounding the perimeter of the buildings.