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                                                                    EXHIBIT 10.1

                                                          [California Net Lease]

                                 LEASE AGREEMENT


        THIS LEASE AGREEMENT is made this ______________day of
_____________________, ______________, between SCI Limited Partnership-I, a
Delaware Limited Partnership ("Landlord"), and the Tenant named below.


<TABLE>
<S>                          <C>
TENANT:                      Sunrise Technologies International, Inc., a
                             Delaware Corporation

TENANT'S REPRESENTATIVE,     Tim Marcotte
ADDRESS, AND PHONE NO.:      47265 Fremont Boulevard
                             Fremont, CA  94538
                             (510) 623-9001


PREMISES:                    That portion of the Building, containing approximately 10,400 rentable square feet,
                             as determined by Landlord and commonly known as 47265 Fremont Boulevard, Fremont, CA
                             as shown on Exhibit A.

PROJECT:                     Bayside Commons


BUILDING:                    Shoreline Business Center  Building #7  (14507)

TENANT'S PROPORTIONATE 
SHARE OF PROJECT:            13.77%

TENANT'S PROPORTIONATE SHARE 30.23%
OF BUILDING:

LEASE TERM:                  Beginning on the Commencement Date and ending on the last day of the 36th  full
                             calendar month thereafter.

COMMENCEMENT DATE:           February 1, 1998

INITIAL MONTHLY BASE RENT:   
                             Ten Thousand Four Hundred                                      $10,400

INITIAL ESTIMATED MONTHLY    1.     Utilities:                      ($46)
Operating Expense Payments:
estimates only and subject   2.     Common Area Charges:            $429
to adjustment to actual
costs and expenses           3.     Taxes:                        $1,414
according to the provisions
of this Lease)               4.     Insurance:                       $35

INITIAL ESTIMATED MONTHLY 
OPERATING EXPENSE PAYMENTS:                                                                  $1,924

INITIAL MONTHLY BASE RENT 
AND OPERATING EXPENSE 
PAYMENTS:                                                                                   $12,324

SECURITY DEPOSIT:            $11,440  ($18,200 IS CURRENTLY ON ACCOUNT WITH LESSOR.  $6,760 SHALL BE REFUNDED 
                             UPON COMMENCEMENT OF THIS LEASE RENEWAL).

BROKER:                      N/A

ADDENDA:                     Addendum I and II,    Exhibit A, B and C
</TABLE>


        1. GRANTING CLAUS. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.

        2. ACCEPTANCE OF PREMISES. Tenant shall accept the Premises in its
condition as of the Commencement Date, subject to all applicable laws,
ordinances, regulations, covenants and restrictions. Landlord has made no
representation or warranty as to the suitability of the Premises for the conduct
of Tenant's business, and Tenant waives any implied warranty that the Premises
are suitable for Tenant's intended purposes. Except as provided in Paragraph 10,
in no event shall Landlord have any obligation for any defects in the Premises
or any limitation on its use. The taking of possession of the Premises shall be
conclusive evidence that Tenant accepts the Premises and that the Premises were
in good condition at the time possession was taken except for items that are
Landlord's responsibility under Paragraph 10 and any punchlist items agreed to
in writing by Landlord and Tenant.

        3. USE. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (but limited to wholesale sales) products,
materials and merchandise made and/or distributed by Tenant and for such other
lawful purposes as may be incidental thereto; provided, however, with Landlord's
prior written consent, Tenant may also use the Premises for light manufacturing
AND R&D. Tenant shall not conduct or give 


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notice of any auction, liquidation, or going out of business sale on the
Premises. Tenant will use the Premises in a careful, safe and proper manner and
will not commit waste, overload the floor or structure of the Premises or
subject the Premises to use that would damage the Premises. Tenant shall not
permit any objectionable or unpleasant odors, smoke, dust, gas, noise, or
vibrations to emanate from the Premises, or take any other action that would
constitute a nuisance or would disturb, unreasonably interfere with, or endanger
Landlord or any tenants of the Project. Outside storage, including without
limitation, storage of trucks and other vehicles, is prohibited without
Landlord's prior written consent. Tenant, at its sole expense, shall use and
occupy the Premises in compliance with all laws, including, without limitation,
the Americans With Disabilities Act, orders, judgments, ordinances, regulations,
codes, directives, permits, licenses, covenants and restrictions now or
hereafter applicable to the Premises (collectively, "Legal Requirements"). The
Premises shall not be used as a place of public accommodation under the
Americans With Disabilities Act or similar state statutes or local ordinances or
any regulations promulgated thereunder, all as may be amended from time to time.
Tenant shall, at its expense, make any alterations or modifications, within or
without the Premises, that are required by Legal Requirements related to
Tenant's use or occupation of the Premises. Tenant will not use or permit the
Premises to be used for any purpose or in any manner that would void Tenant's or
Landlord's insurance, increase the insurance risk, or cause the disallowance of
any sprinkler credits. If any increase in the cost of any insurance on the
Premises or the Project is caused by Tenant's use or occupation of the Premises,
or because Tenant vacates the Premises, then Tenant shall pay the amount of such
increase to Landlord. Any occupation of the Premises by Tenant prior to the
Commencement Date shall be subject to all obligations of Tenant under this Lease
SUBJECT TO EXISTING LEASE TAKING PRECEDENCE.

        4. BASE RENT. Tenant shall pay Base Rent in the amount set forth above.
The first month's Base Rent, the Security Deposit, and the first monthly
installment of estimated Operating Expenses (as hereafter defined) shall be due
and payable, ON THE LEASE COMMENCEMENT DATE and Tenant promises to pay to
Landlord in advance, without demand, deduction or set-off, monthly installments
of Base Rent on or before the first day of each calendar month succeeding the
Commencement Date. Payments of Base Rent for any fractional calendar month shall
be prorated. All payments required to be made by Tenant to Landlord hereunder
shall be payable at such address as Landlord may specify from time to time by
written notice delivered in accordance herewith. The obligation of Tenant to pay
Base Rent and other sums to Landlord and the obligations of Landlord under this
Lease are independent obligations. Tenant shall have no right at any time to
abate, reduce, or set-off any rent due hereunder except as may be expressly
provided in this Lease. Tenant waives and releases all statutory liens and
offset rights as to rent. If Tenant is delinquent in any monthly installment of
Base Rent or of estimated Operating Expenses for more than 5 days, Tenant shall
pay to Landlord on demand a late charge equal to 5 percent of such delinquent
sum. The provision for such late charge shall be in addition to all of
Landlord's other rights and remedies hereunder or at law and shall not be
construed as a penalty.

        5. SECURITY DEPOSIT. The Security Deposit shall be held by Landlord as
security for the performance of Tenant's obligations under this Lease. The
Security Deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default. Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law. Tenant shall pay
Landlord on demand the amount that will restore the Security Deposit to its
original amount. Landlord's obligation respecting the Security Deposit is that
of a debtor, not a trustee; no interest shall accrue thereon. The Security
Deposit shall be the property of Landlord, but shall be paid to Tenant when
Tenant's obligations under this Lease have been completely fulfilled. Landlord
shall be released from any obligation with respect to the Security Deposit upon
transfer of this Lease and the Premises to a person or entity assuming
Landlord's obligations under this Paragraph 5.

        6. OPERATING EXPENSE PAYMENTS. During each month of the Lease Term, on
the same date that Base Rent is due, Tenant shall pay Landlord an amount equal
to 1/12 of the annual cost, as estimated by Landlord from time to time, of
Tenant's Proportionate Share (hereinafter defined) of Operating Expenses for the
Project. Payments thereof for any fractional calendar month shall be prorated.
The term "Operating Expenses" means all costs and expenses incurred by Landlord
with respect to the ownership, maintenance, and operation of the Project
including, but not limited to costs of: Taxes (hereinafter defined) and fees
payable to tax consultants and attorneys for consultation and contesting taxes;
insurance; utilities; maintenance, repair and replacement of all portions of the
Project, including without limitation, paving and parking areas, roads, roofs,
alleys, and driveways, mowing, landscaping, exterior painting, utility lines,
heating, ventilation and air conditioning systems, lighting, electrical systems
and other mechanical and building systems; amounts paid to contractors and
subcontractors for work or services performed in connection with any of the
foregoing; charges or assessments of any association to which the Project is
subject; property management fees payable to a property manager, including any
affiliate of Landlord, or if there is no property manager, an administration fee
of 15 percent of Operating Expenses payable to Landlord; security services, if
any; trash collection, sweeping and removal; and additions or alterations made
by Landlord to the Project or the Building in order to comply with Legal
Requirements (other than those expressly required herein to be made by Tenant)
or that are appropriate to the continued operation of the Project or the
Building as a bulk warehouse facility in the market area, provided that the cost
of additions or alterations that are required to be capitalized for federal
income tax purposes shall be amortized on a straight line basis over a period
equal to the lesser of the useful life thereof for federal income tax purposes
or 10 years. Operating Expenses do not include costs, or expenses, depreciation
or amortization for capital repairs and capital replacements required to be made
by Landlord under Paragraph 10 of this Lease, debt service under mortgages or
ground rent under ground leases, costs of restoration to the extent of net
insurance proceeds received by Landlord with respect 


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thereto, leasing commissions, or the costs of renovating space for tenants.

               If Tenant's total payments of Operating Expenses for any year are
less than Tenant's Proportionate Share of actual Operating Expenses for such
year, then Tenant shall pay the difference to Landlord within 30 days after
demand, and if more, then Landlord shall retain such excess and credit it
against Tenant's next payments. For purposes of calculating Tenant's
Proportionate Share of Operating Expenses, a year shall mean a calendar year
except the first year, which shall begin on the Commencement Date, and the last
year, which shall end on the expiration of this Lease. With respect to Operating
Expenses which Landlord allocates to the entire Project, Tenant's "Proportionate
Share" shall be the percentage set forth on the first page of this Lease as
Tenant's Proportionate Share of the Project as reasonably adjusted by Landlord
in the future for changes in the physical size of the Premises or the Project;
and, with respect to Operating Expenses which Landlord allocates only to the
Building, Tenant's "Proportionate Share" shall be the percentage set forth on
the first page of this Lease as Tenant's Proportionate Share of the Building as
reasonably adjusted by Landlord in the future for changes in the physical size
of the Premises or the Building. Landlord may equitably increase Tenant's
Proportionate Share for any item of expense or cost reimbursable by Tenant that
relates to a repair, replacement, or service that benefits only the Premises or
only a portion of the Project or Building that includes the Premises or that
varies with occupancy or use OF THE TENANT. The estimated Operating Expenses for
the Premises set forth on the first page of this Lease are only estimates, and
Landlord makes no guaranty or warranty that such estimates will be accurate.

        7. UTILITIES. Tenant shall pay for all water, gas, electricity, heat,
light, power, telephone, sewer, sprinkler services, refuse and trash collection,
and other utilities and services used on the Premises, all maintenance charges
for utilities, and any storm sewer charges or other similar charges for
utilities imposed by any governmental entity or utility provider, together with
any taxes, penalties, surcharges or the like pertaining to Tenant's use of the
Premises. Landlord may cause at Tenant's expense any utilities to be separately
metered or charged directly to Tenant by the provider. Tenant shall pay its
share of all charges for jointly metered utilities based upon consumption, as
reasonably determined by Landlord. No interruption or failure of utilities shall
result in the termination of this Lease or the abatement of rent. Tenant agrees
to limit use of water and sewer for normal restroom use AND CAFETERIA.

        8. TAXES. Landlord shall pay all taxes, assessments and governmental
charges (collectively referred to as "Taxes") that accrue against the Project
during the Lease Term, which shall be included as part of the Operating Expenses
charged to Tenant. Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens thereof. All capital
levies or other taxes assessed or imposed on Landlord upon the rents payable to
Landlord under this Lease and any franchise tax, any excise, transaction, sales
or privilege tax, assessment, levy or charge measured by or based, in whole or
in part, upon such rents from the Premises and/or the Project or any portion
thereof shall be paid by Tenant to Landlord monthly in estimated installments or
upon demand, at the option of Landlord, as additional rent; provided, however,
in no event shall Tenant be liable for any net income taxes imposed on Landlord
unless such net income taxes are in substitution for any Taxes payable
hereunder. If any such tax or excise is levied or assessed directly against
Tenant, then Tenant shall be responsible for and shall pay the same at such
times and in such manner as the taxing authority shall require. Tenant shall be
liable for all taxes levied or assessed against any personal property or
fixtures placed in the Premises, whether levied or assessed against Landlord or
Tenant.

        9. INSURANCE. Landlord shall maintain all risk property insurance
covering the full replacement cost of the Building. Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, commercial liability insurance
and rent loss insurance. All such insurance shall be included as part of the
Operating Expenses charged to Tenant. The Project or Building may be included in
a blanket policy (in which case the cost of such insurance allocable to the
Project or Building will be determined by Landlord based upon the insurer's cost
calculations). Tenant shall also reimburse Landlord for any increased premiums
or additional insurance which Landlord reasonably deems necessary as a result of
Tenant's use of the Premises.

               Tenant, at its expense, shall maintain during the Lease Term: all
risk property insurance covering the full replacement cost of all property and
improvements installed or placed in the Premises by Tenant at Tenant's expense;
worker's compensation insurance with no less than the minimum limits required by
law; employer's liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per
occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for property
damage, personal injuries, or deaths of persons occurring in or about the
Premises. Landlord may from time to time require reasonable increases in any
such limits. The commercial liability policies shall name Landlord as an
additional insured, insure on an occurrence and not a claims-made basis, be
issued by insurance companies which are reasonably acceptable to Landlord, not
be cancelable unless 30 days' prior written notice shall have been given to
Landlord, contain a hostile fire endorsement and a contractual liability
endorsement and provide primary coverage to Landlord (any policy issued to
Landlord providing duplicate or similar coverage shall be deemed excess over
Tenant's policies). Such policies or certificates thereof shall be delivered to
Landlord by Tenant upon commencement of the Lease Term and upon each renewal of
said insurance.

               The all risk property insurance obtained by Landlord and Tenant
shall include a waiver of subrogation by the insurers and all rights based upon
an assignment from its insured, against Landlord or Tenant, 


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their officers, directors, employees, managers, agents, invitees and
contractors, in connection with any loss or damage thereby insured against.
Neither party nor its officers, directors, employees, managers, agents, invitees
or contractors shall be liable to the other for loss or damage caused by any
risk coverable by all risk property insurance, and each party waives any claims
against the other party, and its officers, directors, employees, managers,
agents, invitees and contractors for such loss or damage. The failure of a party
to insure its property shall not void this waiver. Landlord and its agents,
employees and contractors shall not be liable for, and Tenant hereby waives all
claims against such parties for, business interruption and losses occasioned
thereby sustained by Tenant or any person claiming through Tenant resulting from
any accident or occurrence in or upon the Premises or the Project from any cause
whatsoever, including without limitation, damage caused in whole or in part,
directly or indirectly, by the negligence of Landlord or its agents, employees
or contractors.

        10. LANDLORD'S REPAIRS. Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the Building
in good repair, reasonable wear and tear and uninsured losses and damages caused
by Tenant, its agents and contractors excluded. The term "walls" as used in this
Paragraph 10 shall not include windows, glass or plate glass, doors or overhead
doors, special store fronts, dock bumpers, dock plates or levelers, or office
entries. Tenant shall promptly give Landlord written notice of any repair
required by Landlord pursuant to this Paragraph 10, after which Landlord shall
have a reasonable opportunity to repair.

        11. TENANT'S REPAIRS. Landlord, at Tenant's expense as provided in
Paragraph 6, shall maintain in good repair and condition the parking areas and
other common areas of the Building, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises. Subject to Landlord's
obligation in Paragraph 10 and subject to Paragraphs 9 and 15, Tenant, at its
expense, shall repair, replace and maintain in good condition all portions of
the Premises and all areas, improvements and systems exclusively serving the
Premises including, without limitation, dock and loading areas, truck doors,
plumbing, water, and sewer lines up to points of common connection, fire
sprinklers and fire protection systems, entries, doors, ceilings and roof
membrane, windows, interior walls, and the interior side of demising walls, and
heating, ventilation and air conditioning systems. Such repair and replacements
include capital expenditures and repairs whose benefits may extend beyond the
Term. Heating, ventilation and air conditioning systems and other mechanical and
building systems serving the Premises shall be maintained at Tenant's expense
pursuant to maintenance service contracts entered into by Tenant or, at
Landlord's election, by Landlord. The scope of services and contractors under
such maintenance contracts shall be reasonably approved by Landlord. At
Landlord's request, Tenant shall enter into a joint maintenance agreement with
any railroad that services the Premises. If Tenant fails to perform any repair
or replacement for which it is responsible, Landlord may perform such work and
be reimbursed by Tenant within 10 days after demand therefor. Subject to
Paragraphs 9 and 15, Tenant shall bear the full cost of any repair or
replacement to any part of the Building or Project that results from damage
caused by Tenant, its agents, contractors, or invitees and any repair that
benefits only the Premises.

        12. TENANT-MADE ALTERATIONS AND TRADE FIXTURES. Any alterations,
additions, or improvements made by or on behalf of Tenant to the Premises
("Tenant-Made Alterations") shall be subject to Landlord's prior written
consent. Tenant shall cause, at its expense, all Tenant-Made Alterations to
comply with insurance requirements and with Legal Requirements and shall
construct at its expense any alteration or modification required by Legal
Requirements as a result of any Tenant-Made Alterations. All Tenant-Made
Alterations shall be constructed in a good and workmanlike manner by contractors
reasonably acceptable to Landlord and only good grades of materials shall be
used. All plans and specifications for any Tenant-Made Alterations shall be
submitted to Landlord for its approval. Landlord may monitor construction of the
Tenant-Made Alterations. Tenant shall reimburse Landlord for its costs in
reviewing plans and specifications and in monitoring construction. Landlord's
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules and regulations. Tenant shall provide Landlord with the identities and
mailing addresses of all persons performing work or supplying materials, prior
to beginning such construction, and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall furnish
security or make other arrangements satisfactory to Landlord to assure payment
for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker's compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant- Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant shall remain on the Premises as Landlord's property,
except to the extent Landlord requires removal at Tenant's expense of any such
items or Landlord and Tenant have otherwise agreed in writing in connection with
Landlord's consent to any Tenant-Made Alterations. Tenant shall repair any
damage caused by such removal.

               Tenant, at its own cost and expense and without Landlord's prior
approval, may erect such shelves, bins, machinery and trade fixtures
(collectively "Trade Fixtures") in the ordinary course of its business provided
that such items do not alter the basic character of the Premises, do not
overload or damage the Premises, and may be removed without injury to the
Premises, and the construction, erection, and installation thereof complies with
all Legal Requirements and with Landlord's requirements set forth above. Tenant
shall remove its Trade Fixtures and shall repair any damage caused by such
removal.


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        13. SIGNS. Tenant shall not make any changes to the exterior of the
Premises, install any exterior lights, decorations, balloons, flags, pennants,
banners, or painting, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed from
the exterior of the Premises, without Landlord's prior written consent. Upon
surrender or vacation of the Premises, Tenant shall have removed all signs and
repair, paint, and/or replace the building facia surface to which its signs are
attached. Tenant shall obtain all applicable governmental permits and approvals
for sign and exterior treatments. All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall be subject to Landlord's
approval and conform in all respects to Landlord's requirements.

        14. PARKING. Tenant shall be entitled to park in common with other
tenants of the Project in those areas designated for nonreserved parking.
Landlord may allocate parking spaces among Tenant and other tenants in the
Project if Landlord determines that such parking facilities are becoming
crowded. Landlord shall not be responsible for enforcing Tenant's parking rights
against any third parties.

        15. RESTORATION. If at any time during the Lease Term the Premises are
damaged by a fire or other casualty, Landlord shall notify Tenant within 60 days
after such damage as to the amount of time Landlord reasonably estimates it will
take to restore the Premises. If the restoration time is estimated to exceed 6
months, either Landlord or Tenant may elect to terminate this Lease upon notice
to the other party given no later than 30 days after Landlord's notice. If
neither party elects to terminate this Lease or if Landlord estimates that
restoration will take 6 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant's expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either party may terminate this Lease
if the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage. Tenant shall pay to Landlord with respect to any damage to the Premises
the amount of the commercially reasonable deductible under Landlord's insurance
policy (currently $10,000) within 10 days after presentment of Landlord's
invoice. If the damage involves the premises of other tenants, Tenant shall pay
the portion of the deductible that the cost of the restoration of the Premises
bears to the total cost of restoration, as determined by Landlord. Base Rent and
Operating Expenses shall be abated for the period of repair and restoration in
the proportion which the area of the Premises, if any, which is not usable by
Tenant bears to the total area of the Premises. Such abatement shall be the sole
remedy of Tenant, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.

        16. CONDEMNATION. If any part of the Premises or the Project should be
taken for any public or quasi-public use under governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a "Taking" or "Taken"), and the Taking would prevent or materially
interfere with Tenant's use of the Premises or in Landlord's judgment would
materially interfere with or impair its ownership or operation of the Project,
then upon written notice by Landlord this Lease shall terminate and Base Rent
shall be apportioned as of said date. If part of the Premises shall be Taken,
and this Lease is not terminated as provided above, the Base Rent payable
hereunder during the unexpired Lease Term shall be reduced to such extent as may
be fair and reasonable under the circumstances. In the event of any such Taking,
Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord
Tenant's interest, if any, in such award. Tenant shall have the right, to the
extent that same shall not diminish Landlord's award, to make a separate claim
against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant's Trade Fixtures, if a separate award for such items is made to Tenant.

        17. ASSIGNMENT AND SUBLETTING. Without Landlord's prior written consent,
which Landlord shall not unreasonably withhold, Tenant shall not assign this
Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within the
Premises and any attempt to do any of the foregoing shall be void and of no
effect. For purposes of this paragraph, a transfer of the ownership interests
controlling Tenant shall be deemed an assignment of this Lease unless such
ownership interests are publicly traded. Notwithstanding the above, Tenant may
assign or sublet the Premises, or any part thereof, to any entity controlling
Tenant, controlled by Tenant or under common control with Tenant (a "Tenant
Affiliate"), without the prior written consent of Landlord. Tenant shall
reimburse Landlord for all of Landlord's reasonable out-of-pocket expenses in
connection with any assignment or sublease. Upon Landlord's receipt of Tenant's
written notice of a desire to assign or sublet the Premises, or any part thereof
(other than to a Tenant Affiliate), Landlord may, by giving written notice to
Tenant within 30 days after receipt of Tenant's notice, terminate this Lease
with respect to the space described in Tenant's notice, as of the date specified
in Tenant's notice for the commencement of the proposed assignment or sublease.
If Landlord so terminates the Lease, Landlord may enter into a lease directly
with the proposed sublessee or assignee. Tenant may withdraw its notice to
sublease or assign by notifying Landlord within 10 days after Landlord has given
Tenant notice of such termination, in which case the Lease shall not terminate
but shall continue.

               It shall be reasonable for the Landlord to withhold its consent
to any assignment or sublease in any of the following instances: (i) an Event of
Default has occurred and is continuing that would not be cured 


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<PAGE>   6
upon the proposed sublease or assignment; (ii) the assignee or sublessee does
not have a net worth calculated according to generally accepted accounting
principles at least equal to the greater of the net worth of Tenant immediately
prior to such assignment or sublease or the net worth of the Tenant at the time
it executed the Lease; (iii) the intended use of the Premises by the assignee or
sublessee is not reasonably satisfactory to Landlord; (iv) the intended use of
the Premises by the assignee or sublessee would materially increase the
pedestrian or vehicular traffic to the Premises or the Project; (v) occupancy of
the Premises by the assignee or sublessee would, in Landlord's opinion, violate
an agreement binding upon Landlord or the Project with regard to the identity of
tenants, usage in the Project, or similar matters; (vi) the identity or business
reputation of the assignee or sublessee will, in the good faith judgment of
Landlord, tend to damage the goodwill or reputation of the Project; (vii) the
assignment or sublet is to another tenant in the Project and is at rates which
are below those charged by Landlord for comparable space in the Project; (viii)
in the case of a sublease, the subtenant has not acknowledged that the Lease
controls over any inconsistent provision in the sublease; (ix) the proposed
assignee or sublessee is a governmental agency; or (x) there is vacant space in
the Premises suitable for lease to the proposed sublessee or assignee. Tenant
and Landlord acknowledge that each of the foregoing criteria are reasonable as
of the date of execution of this Lease. The foregoing criteria shall not exclude
any other reasonable basis for Landlord to refuse its consent to such assignment
or sublease. Any approved assignment or sublease shall be expressly subject to
the terms and conditions of this Lease. Tenant shall provide to Landlord all
information concerning the assignee or sublessee as Landlord may request.

               Notwithstanding any assignment or subletting, Tenant and any
guarantor or surety of Tenant's obligations under this Lease shall at all times
remain fully responsible and liable for the payment of the rent and for
compliance with all of Tenant's other obligations under this Lease (regardless
of whether Landlord's approval has been obtained for any such assignments or
sublettings). In the event that the rent due and payable by a sublessee or
assignee (or a combination of the rental payable under such sublease or
assignment plus any bonus or other consideration therefor or incident thereto)
exceeds the rental payable under this Lease, then Tenant shall be bound and
obligated to pay Landlord as additional rent hereunder 50% such excess rental
and other excess consideration within 10 days following receipt thereof by
Tenant.

               If this Lease be assigned or if the Premises be subleased
(whether in whole or in part) or in the event of the mortgage, pledge, or
hypothecation of Tenant's leasehold interest or grant of any concession or
license within the Premises or if the Premises be occupied in whole or in part
by anyone other than Tenant, then upon a default by Tenant hereunder Landlord
may collect rent from the assignee, sublessee, mortgagee, pledgee, party to whom
the leasehold interest was hypothecated, concessionee or licensee or other
occupant and, except to the extent set forth in the preceding paragraph, apply
the amount collected to the next rent payable hereunder; and all such rentals
collected by Tenant shall be held in trust for Landlord and immediately
forwarded to Landlord. No such transaction or collection of rent or application
thereof by Landlord, however, shall be deemed a waiver of these provisions or a
release of Tenant from the further performance by Tenant of its covenants,
duties, or obligations hereunder.

        18. INDEMNIFICATION. Except for the negligence of Landlord, its agents,
employees or contractors, and to the extent permitted by law, Tenant agrees to
indemnify, defend and hold harmless Landlord, and Landlord's agents, employees
and contractors, from and against any and all losses, liabilities, damages,
costs and expenses (including attorneys' fees) resulting from claims by third
parties for injuries to any person and damage to or theft or misappropriation or
loss of property occurring in or about the Project and arising from the use and
occupancy of the Premises or from any activity, work, or thing done, permitted
or suffered by Tenant in or about the Premises or due to any other act or
omission of Tenant, its subtenants, assignees, invitees, employees, contractors
and agents. The furnishing of insurance required hereunder shall not be deemed
to limit Tenant's obligations under this Paragraph 18.

        19. INSPECTION AND ACCESS. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose WITH 24 HOUR PRIOR NOTICE EXCEPT
IN CASES OF EMERGENCY. Landlord and Landlord's representatives may enter the
Premises during business hours for the purpose of showing the Premises to
prospective purchasers and, during the last year of the Lease Term, to
prospective tenants. Landlord may erect a suitable sign on the Premises stating
the Premises are available to let or that the Project is available for sale.
Landlord may grant easements, make public dedications, designate common areas
and create restrictions on or about the Premises, provided that no such
easement, dedication, designation or restriction materially interferes with
Tenant's use or occupancy of the Premises. At Landlord's request, Tenant shall
execute such instruments as may be necessary for such easements, dedications or
restrictions.

        20. QUIET ENJOYMENT. If Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Lease Term, have peaceful and
quiet enjoyment of the Premises against any person claiming by, through or under
Landlord.

        21. SURRENDER. Upon termination of the Lease Term or earlier termination
of Tenant's right of possession, Tenant shall surrender the Premises to Landlord
in the same condition as received, broom clean, ordinary wear and tear and
casualty loss and condemnation covered by Paragraphs 15 and 16 excepted. Any
Trade Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant's 


                                      -6-


<PAGE>   7
expense, and Tenant waives all claims against Landlord for any damages resulting
from Landlord's retention and disposition of such property. All obligations of
Tenant hereunder not fully performed as of the termination of the Lease Term
shall survive the termination of the Lease Term, including without limitation,
indemnity obligations, payment obligations with respect to Operating Expenses
and obligations concerning the condition and repair of the Premises.

        22. HOLDING OVER. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to 150% the
Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over. All other payments shall
continue under the terms of this Lease. In addition, Tenant shall be liable for
all damages incurred by Landlord as a result of such holding over. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease except as otherwise expressly provided, and this Paragraph 22
shall not be construed as consent for Tenant to retain possession of the
Premises.

        23. EVENTS OF DEFAULT. Each of the following events shall be an event of
default ("Event of Default") by Tenant under this Lease:

                (i) Tenant shall fail to pay any installment of Base Rent or any
        other payment required herein when due, and such failure shall continue
        for a period of 5 days from the date such payment was due.

                (ii) Tenant or any guarantor or surety of Tenant's obligations
        hereunder shall (A) make a general assignment for the benefit of
        creditors; (B) commence any case, proceeding or other action seeking to
        have an order for relief entered on its behalf as a debtor or to
        adjudicate it a bankrupt or insolvent, or seeking reorganization,
        arrangement, adjustment, liquidation, dissolution or composition of it
        or its debts or seeking appointment of a receiver, trustee, custodian or
        other similar official for it or for all or of any substantial part of
        its property (collectively a "proceeding for relief"); (C) become the
        subject of any proceeding for relief which is not dismissed within 60
        days of its filing or entry; or (D) die or suffer a legal disability (if
        Tenant, guarantor, or surety is an individual) or be dissolved or
        otherwise fail to maintain its legal existence (if Tenant, guarantor or
        surety is a corporation, partnership or other entity).

                (iii) Any insurance required to be maintained by Tenant pursuant
        to this Lease shall be cancelled or terminated or shall expire or shall
        be reduced or materially changed, except, in each case, as permitted in
        this Lease.

                (iv) Tenant shall not occupy or shall vacate the Premises or
        shall fail to continuously operate its business at the Premises for the
        permitted use set forth herein, whether or not Tenant is in monetary or
        other default under this Lease. (SEE ADDENDUM II)

                (v) Tenant shall attempt or there shall occur any assignment,
        subleasing or other transfer of Tenant's interest in or with respect to
        this Lease except as otherwise permitted in this Lease.

                (vi) Tenant shall fail to discharge any lien placed upon the
        Premises in violation of this Lease within 30 days after any such lien
        or encumbrance is filed against the Premises THAT RESULTS FROM TENANTS
        ACTIVITIES.

                (vii) Tenant shall fail to comply with any provision of this
        Lease other than those specifically referred to in this Paragraph 23,
        and except as otherwise expressly provided herein, such default shall
        continue for more than 30 days after Landlord shall have given Tenant
        written notice of such default.

        24. LANDLORD'S REMEDIES. Upon each occurrence of an Event of Default and
so long as such Event of Default shall be continuing, Landlord may at any time
thereafter at its election: terminate this Lease or Tenant's right of possession
(but Tenant shall remain liable as hereinafter provided), and/or pursue any
other remedies at law or in equity. Upon the termination of this Lease or
termination of Tenant's right of possession, it shall be lawful for Landlord,
without formal demand or notice of any kind, to re-enter the Premises by summary
dispossession proceedings or any other action or proceeding authorized by law
and to remove Tenant and all persons and property therefrom. If Landlord
re-enters the Premises, Landlord shall have the right to keep in place and use,
or remove and store, all of the furniture, fixtures and equipment at the
Premises.


               Except as otherwise provided in the next paragraph, if Tenant
breaches this Lease and abandons the Premises prior to the end of the term
hereof, or if Tenant's right to possession is terminated by Landlord because of
an Event of Default by Tenant under this Lease, this Lease shall terminate. Upon
such termination, Landlord may recover from Tenant the following, as provided in
Section 1951.2 of the Civil Code of California: (i) the worth at the time of
award of the unpaid Base Rent and other charges under this Lease that had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the reasonable value of the 


                                      -7-


<PAGE>   8
unpaid Base Rent and other charges under this Lease 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; (iii) the worth at the
time of award by which the reasonable value of the unpaid Base Rent and other
charges under this Lease 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
have been reasonably avoided; and (iv) 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 that in the ordinary course of things would
be likely to result therefrom. As used herein, the following terms are defined:
(a) The "worth at the time of award" of the amounts referred to in Sections (i)
and (ii) is computed by allowing interest at the lesser of 18 percent per annum
or the maximum lawful rate. The "worth at the time of award" of the amount
referred to in Section (iii) 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; (b) The "time of award" as used in clauses (i), (ii), and
(iii) above is the date on which judgment is entered by a court of competent
jurisdiction; (c) The "reasonable value" of the amount referred to in clause
(ii) above is computed by determining the mathematical product of (1) the
"reasonable annual rental value" (as defined herein) and (2) the number of
years, including fractional parts thereof, between the date of termination and
the time of award. The "reasonable value" of the amount referred to in clause
(iii) is computed by determining the mathematical product of (1) the annual Base
Rent and other charges under this Lease and (2) the number of years including
fractional parts thereof remaining in the balance of the term of this Lease
after the time of award.

               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 rent as it becomes
due. This remedy is intended to be the remedy described in California Civil Code
Section 1951.4, and the following provision from such Civil Code Section is
hereby repeated: "The Lessor has the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee's breach and
abandonment and recover rent as it becomes due, if lessee has right to sublet or
assign, subject only to reasonable limitations)." Any such payments due Landlord
shall be made upon demand therefor from time to time and Tenant agrees that
Landlord may file suit to recover any sums falling due from time to time.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect in writing to terminate this Lease for such previous breach.

               Exercise by Landlord of any one or more remedies hereunder
granted or otherwise available shall not be deemed to be an acceptance of
surrender of the Premises and/or a termination of this Lease by Landlord,
whether by agreement or by operation of law, it being understood that such
surrender and/or termination can be effected only by the written agreement of
Landlord and Tenant. Any law, usage, or custom to the contrary notwithstanding,
Landlord shall have the right at all times to enforce the provisions of this
Lease in strict accordance with the terms hereof; and the failure of Landlord at
any time to enforce its rights under this Lease strictly in accordance with same
shall not be construed as having created a custom in any way or manner contrary
to the specific terms, provisions, and covenants of this Lease or as having
modified the same. Tenant and Landlord further agree that forbearance or waiver
by Landlord to enforce its rights pursuant to this Lease or at law or in equity,
shall not be a waiver of Landlord's right to enforce one or more of its rights
in connection with any subsequent default. A receipt by Landlord of rent or
other payment with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by Landlord of any provision of
this Lease shall be deemed to have been made unless expressed in writing and
signed by Landlord. To the greatest extent permitted by law, Tenant waives the
service of notice of Landlord's intention to r enter as provided for in any
statute, or to institute legal proceedings to that end, and also waives all
right of redemption in case Tenant shall be dispossessed by a judgment or by
warrant of any court or judge. The terms "enter," "re-enter," "entry" or
"re-entry," as used in this Lease, are not restricted to their technical legal
meanings. Any reletting of the Premises shall be on such terms and conditions as
Landlord in its sole discretion may determine (including without limitation a
term different than the remaining Lease Term, rental concessions, alterations
and repair of the Premises, lease of less than the entire Premises to any tenant
and leasing any or all other portions of the Project before reletting the
Premises). Landlord shall not be liable, nor shall Tenant's obligations
hereunder be diminished, because of Landlord's failure to relet the Premises or
collect rent due in respect of such reletting.

        25 TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord's obligations hereunder. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of its ownership of
the Premises and not thereafter. The term "Landlord" in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such owner's ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord.

        26 WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY
JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS


                                      -8-


<PAGE>   9
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

        27 SUBORDINATION. This Lease and Tenant's interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant. Tenant agrees,
at the election of the holder of any such mortgage, to attorn to any such
holder. Tenant agrees upon demand to execute, acknowledge and deliver such
instruments, confirming such subordination and such instruments of attornment as
shall be requested by any such holder. Tenant hereby appoints Landlord attorney
in fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "holder" of a mortgage shall be deemed to include the beneficiary under a
deed of trust.

        28 MECHANIC'S LIENS. Tenant has no express or implied authority to
create or place any lien or encumbrance of any kind upon, or in any manner to
bind the interest of Landlord or Tenant in, the Premises or to charge the
rentals payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Landlord harmless from all loss, cost or
expense based on or arising out of asserted claims or liens against the
leasehold estate or against the interest of Landlord in the Premises or under
this Lease. Tenant shall give Landlord immediate written notice of the placing
of any lien or encumbrance against the Premises and cause such lien or
encumbrance to be discharged within 30 days of the filing or recording thereof;
provided, however, Tenant may contest such liens or encumbrances as long as such
contest prevents foreclosure of the lien or encumbrance and Tenant causes such
lien or encumbrance to be bonded or insured over in a manner satisfactory to
Landlord within such 30 day period.

        29 ESTOPPEL CERTIFICATES. Tenant agrees, from time to time, within 10
days after request of Landlord, to execute and deliver to Landlord, or
Landlord's designee, any estoppel certificate requested by Landlord, stating
that this Lease is in full force and effect, the date to which rent has been
paid, that Landlord is not in default hereunder (or specifying in detail the
nature of Landlord's default), the termination date of this Lease and such other
matters pertaining to this Lease as may be requested by Landlord. Tenant's
obligation to furnish each estoppel certificate in a timely fashion is a
material inducement for Landlord's execution of this Lease. No cure or grace
period provided in this Lease shall apply to Tenant's obligations to timely
deliver an estoppel certificate.

        30 ENVIRONMENTAL REQUIREMENTS. Except for Hazardous Material contained
in products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party to bring any
Hazardous Material upon the Premises or transport, store, use, generate,
manufacture or release any Hazardous Material in or about the Premises without
Landlord's prior written consent. Tenant, at its sole cost and expense, shall
operate its business in the Premises in strict compliance with all Environmental
Requirements and shall remediate in manner satisfactory to Landlord any
Hazardous Materials released on or from the Project by Tenant, its agents,
employees, contractors, subtenants or invitees. Tenant shall complete and
certify to disclosure statements as requested by Landlord from time to time
relating to Tenant's transportation, storage, use, generation, manufacture, or
release of Hazardous Materials on the Premises. The term "Environmental
Requirements" means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act; the Resource Conservation and Recovery
Act; and all state and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. The term "Hazardous Materials" means
and includes any substance, material, waste, pollutant, or contaminant listed or
defined as hazardous or toxic, under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas, or
synthetic gas usable for fuel (or mixtures of natural gas and such synthetic
gas). As defined in Environmental Requirements, Tenant is and shall be deemed to
be the "operator" of Tenant's "facility" and the "owner" of all Hazardous
Materials brought on the Premises by Tenant, its agents, employees, contractors
or invitees, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.

               Tenant shall indemnify, defend, and hold Landlord harmless from
and against any and all losses (including, without limitation, diminution in
value of the Premises or the Project and loss of rental income from the
Project), claims, demands, actions, suits, damages (including, without
limitation, punitive damages), expenses 


                                      -9-


<PAGE>   10
(including, without limitation, remediation, removal, repair, corrective action,
or cleanup expenses), and costs (including, without limitation, actual
attorneys' fees, consultant fees or expert fees and including, without
limitation, removal or management of any asbestos brought into the Premises or
disturbed in breach of the requirements of this Paragraph 30, regardless of
whether such removal or management is required by law) which are brought or
recoverable against, or suffered or incurred by Landlord as a result of any
release of Hazardous Materials for which Tenant is obligated to remediate as
provided above or any other breach of the requirements under this Paragraph 30
by Tenant, its agents, employees, contractors, subtenants, assignees or
invitees, regardless of whether Tenant had knowledge of such noncompliance. The
obligations of Tenant under this Paragraph 30 shall survive any termination of
this Lease.

               Landlord shall have access to, and a right to perform inspections
and tests of, the Premises to determine Tenant's compliance with Environmental
Requirements, its obligations under this Paragraph 30, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord's
PRIOR notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant's operations. Such
inspections and tests shall be conducted at Landlord's expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord's receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.

        31 RULES AND REGULATIONS. Tenant shall, at all times during the Lease
Term and any extension thereof, comply with all reasonable rules and regulations
at any time or from time to time established by Landlord covering use of the
Premises and the Project. The current rules and regulations are attached hereto.
In the event of any conflict between said rules and regulations and other
provisions of this Lease, the other terms and provisions of this Lease shall
control. Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project.

        32 SECURITY SERVICE. Tenant acknowledges and agrees that, while Landlord
may patrol the Project, Landlord is not providing any security services with
respect to the Premises and that Landlord shall not be liable to Tenant for, and
Tenant waives any claim against Landlord with respect to, any loss by theft or
any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.

        33 FORCE MAJEURE. Landlord shall not be held responsible for delays in
the performance of its obligations hereunder when caused by strikes, lockouts,
labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, delay in issuance of permits, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of Landlord ("Force Majeure").

        34 ENTIRE AGREEMENT. This Lease constitutes the complete agreement of
Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.

        35 SEVERABILITY. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.

        36 BROKERS. Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than the
broker, if any, set forth on the first page of this Lease, and Tenant agrees to
indemnify and hold Landlord harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.

        37 MISCELLANEOUS. (a) Any payments or charges due from Tenant to
Landlord hereunder shall be considered rent for all purposes of this Lease.

        (b) If and when included within the term "Tenant," as used in this
instrument, there is more than one person, firm or corporation, each shall be
jointly and severally liable for the obligations of Tenant.

        (c) All notices required or permitted to be given under this Lease shall
be in writing and shall be sent by registered or certified mail, return receipt
requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their addresses below,
and with a copy sent to Landlord at 14100 East 35th Place, Aurora, Colorado
80011. Either party may by notice given aforesaid change its address for all
subsequent notices. Except where otherwise expressly provided to the contrary,
notice shall be deemed given upon delivery.


                                      -10-


<PAGE>   11
        (d) Except as otherwise expressly provided in this Lease or as otherwise
required by law, Landlord retains the absolute right to withhold any consent or
approval.

        (e) At Landlord's request from time to time Tenant shall furnish
Landlord with true and complete copies of its most recent annual and quarterly
financial statements prepared by Tenant or Tenant's accountants and any other
financial information or summaries that Tenant typically provides to its lenders
or shareholders.

        (f) Neither this Lease nor a memorandum of lease shall be filed by or on
behalf of Tenant in any public record. Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.

        (g) The normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto.

        (h) The submission by Landlord to Tenant of this Lease shall have no
binding force or effect, shall not constitute an option for the leasing of the
Premises, nor confer any right or impose any obligations upon either party until
execution of this Lease by both parties.

        (i) Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.

        (j) Any amount not paid by Tenant within 5 days after its due date in
accordance with the terms of this Lease shall bear interest from such due date
until paid in full at the lesser of the highest rate permitted by applicable law
or 15 percent per year. It is expressly the intent of Landlord and Tenant at all
times to comply with applicable law governing the maximum rate or amount of any
interest payable on or in connection with this Lease. If applicable law is ever
judicially interpreted so as to render usurious any interest called for under
this Lease, or contracted for, charged, taken , reserved, or received with
respect to this Lease, then it is Landlord's and Tenant's express intent that
all excess amounts theretofore collected by Landlord be credited on the
applicable obligation (or, if the obligation has been or would thereby be paid
in full, refunded to Tenant), and the provisions of this Lease immediately shall
be deemed reformed and the amounts thereafter collectible hereunder reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder.

        (k) Construction and interpretation of this Lease shall be governed by
the laws of the state in which the Project is located, excluding any principles
of conflicts of laws.

        (l) Time is of the essence as to the performance of Tenant's obligations
under this Lease.

        (m) All exhibits and addenda attached hereto are hereby incorporated
into this Lease and made a part hereof. In the event of any conflict between
such exhibits or addenda and the terms of this Lease, such exhibits or addenda
shall control.

        39 LIMITATION OF LIABILITY OF TRUSTEES, SHAREHOLDERS, AND OFFICERS OF
SECURITY CAPITAL INDUSTRIAL TRUST. Any obligation or liability whatsoever of
Security Capital Industrial Trust, a Maryland real estate investment trust,
which may arise at any time under this Lease or any obligation or liability
which may be incurred by it pursuant to any other instrument, transaction, or
undertaking contemplated hereby shall not be personally binding upon, nor shall
resort for the enforcement thereof be had to the property of, its trustees,
directors, shareholders, officers, employees or agents, regardless of whether
such obligation or liability is in the nature of contract, tort, or otherwise.

        IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.


                                      -11-


<PAGE>   12

<TABLE>
<S>                                                  <C>
TENANT:                                              LANDLORD:

Sunrise Technologies International, Inc., a          SCI Limited Partnership-I, a
Delaware Corporation                                 Delaware Limited Partnership

                                                     By:  Security Capital Industrial Trust, a
                                                          Maryland Real Estate Investment Trust,
                                                          General Partner



By:                                                  By:
   -------------------------------                      -------------------------------
Title:                                                        Ned K. Anderson
      ----------------------------
                                                     Title:  Senior Vice President


Address:                                             Address:

47265 Fremont Boulevard                              47775 Fremont Boulevard
Fremont, CA  94538                                   Fremont, CA 94538
</TABLE>


                                      -12-


<PAGE>   13
                              Rules and Regulations


1       The sidewalk, entries, and driveways of the Project shall not be
        obstructed by Tenant, or its agents, or used by them for any purpose
        other than ingress and egress to and from the Premises.

2.      Tenant shall not place any objects, including antennas, outdoor
        furniture, etc., in the parking areas, landscaped areas or other areas
        outside of its Premises, or on the roof of the Project.

3.      Except for seeing-eye dogs, no animals shall be allowed in the offices,
        halls, or corridors in the Project.

4.      Tenant shall not disturb the occupants of the Project or adjoining
        buildings by the use of any radio or musical instrument or by the making
        of loud or improper noises.

5.      If Tenant desires telegraphic, telephonic or other electric connections
        in the Premises, Landlord or its agent will direct the electrician as to
        where and how the wires may be introduced; and, without such direction,
        no boring or cutting of wires will be permitted. Any such installation
        or connection shall be made at Tenant's expense.

6.      Tenant shall not install or operate any steam or gas engine or boiler,
        or other mechanical apparatus in the Premises, except as specifically
        approved in the Lease. The use of oil, gas or inflammable liquids for
        heating, lighting or any other purpose is expressly prohibited.
        Explosives or other articles deemed extra hazardous shall not be brought
        into the Project.

7.      Parking any type of recreational vehicles is specifically prohibited on
        or about the Project. Except for the overnight parking of operative
        vehicles, no vehicle of any type shall be stored in the parking areas at
        any time. In the event that a vehicle is disabled, it shall be removed
        within 48 hours. There shall be no "For Sale" or other advertising signs
        on or about any parked vehicle. All vehicles shall be parked in the
        designated parking areas in conformity with all signs and other
        markings. All parking will be open parking, and no reserved parking,
        numbering or lettering of individual spaces will be permitted except as
        specified by Landlord.

8.      Tenant shall maintain the Premises free from rodents, insects and other
        pests.

9.      Landlord reserves the right to exclude or expel from the Project any
        person who, in the judgment of Landlord, is intoxicated or under the
        influence of liquor or drugs or who shall in any manner do any act in
        violation of the Rules and Regulations of the Project.

10      Tenant shall not cause any unnecessary labor by reason of Tenant's
        carelessness or indifference in the preservation of good order and
        cleanliness. Landlord shall not be responsible to Tenant for any loss of
        property on the Premises, however occurring, or for any damage done to
        the effects of Tenant by the janitors or any other employee or person.

11      Tenant shall give Landlord prompt notice of any defects in the water,
        lawn sprinkler, sewage, gas pipes, electrical lights and fixtures,
        heating apparatus, or any other service equipment affecting the
        Premises.

12      Tenant shall not permit storage outside the Premises, including without
        limitation, outside storage of trucks and other vehicles, or dumping of
        waste or refuse or permit any harmful materials to be placed in any
        drainage system or sanitary system in or about the Premises.

13      All moveable trash receptacles provided by the trash disposal firm for
        the Premises must be kept in the trash enclosure areas, if any, provided
        for that purpose.

14      No auction, public or private, will be permitted on the Premises or the
        Project.

15      No awnings shall be placed over the windows in the Premises except with
        the prior written consent of Landlord.

16      The Premises shall not be used for lodging, sleeping or cooking or for
        any immoral or illegal purposes or for any purpose other than that
        specified in the Lease. No gaming devices shall be operated in the
        Premises.

17      Tenant shall ascertain from Landlord the maximum amount of electrical
        current which can safely be used in the Premises, taking into account
        the capacity of the electrical wiring in the Project and the Premises
        and the needs of other tenants, and shall not use more than such safe
        capacity. Landlord's consent to the installation of electric equipment
        shall not relieve Tenant from the obligation not to use more electricity
        than such safe capacity.

18      Tenant assumes full responsibility for protecting the Premises from
        theft, robbery and pilferage.

19      Tenant shall not install or operate on the Premises any machinery or
        mechanical devices of a nature not directly related to Tenant's ordinary
        use of the Premises and shall keep all such machinery free of vibration,
        noise and air waves which may be transmitted beyond the Premises.


                                      -13-


<PAGE>   14
                 HVAC Maintenance/Service Contract Requirements



A service contract with a Landlord approved HVAC contractor must become
effective within thirty (30) days of occupancy and service visits should be
performed on a quarterly basis. The following are the approved HVAC contractors:

     Thermoscape                                510/445-0700
     Phoenix Heating and Air Conditioning       408/487-0390
     Cal-Air Conditioning                       408/947-0155

We suggest that you send the following list to one of the above HVAC contractors
to be assured that these items are included in the maintenance contract:

1.      Adjust belt tension;

2.      Lubricate all moving parts, as necessary;

3.      Inspect and adjust all temperature and safety controls;

4.      Check refrigeration system for leaks and operation;

5.      Check refrigeration system for moisture;

6.      Inspect compressor oil level and crank case heaters;

7.      Check head pressure, suction pressure and oil pressure;

8.      Inspect air filters and replace when necessary;

9.      Check space conditions;

10.     Check condensate drains and drain pans and clean, if necessary;

11.     Inspect and adjust all valves;

12.     Check and adjust dampers;

13.     Run machine through complete cycle.

Note:   A certificate must be provided for our files not later than thirty (30)
        days after mutual execution hereof. Failure to provide such certificate
        or perform said services, when required, shall constitute material
        default of this lease.


                                      -14-


<PAGE>   15
                                   ADDENDUM I

                              BASE RENT ADJUSTMENTS

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                     DATED _______________________, BETWEEN

                            SCI Limited Partnership-I
                                       and
                    Sunrise Technologies International, Inc.


        Base Rent shall equal the following amounts for the respective periods
set forth below:



<TABLE>
<CAPTION>
               Period                              Monthly Base Rent
               ------                              -----------------
<S>                                                <C>
        02/01/98 - 01/31/99                            $10,400
        02/01/99 - 01/31/00                            $10,920
        01/01/00 - 01/31/01                            $11,440
</TABLE>


                                      -15-


<PAGE>   16
                                   ADDENDUM II

                              VACATION OF PREMISES

                  ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                         DATED ________________, BETWEEN

                            SCI Limited Partnership-I
                                       and
                    Sunrise Technologies International, Inc.


        Tenant's vacating of the Premises shall not constitute an Event of
Default if, prior to vacating the Premises, Tenant has made arrangements
reasonably acceptable to Landlord to (a) insure that Tenant's insurance for the
Premises will not be voided or cancelled with respect to the Premises as a
result of such vacancy, (b) insure that the Premises are secured and not subject
to vandalism, and (c) insure that the Premises will be properly maintained after
such vacation. Tenant shall inspect the Premises at least once each month and
report monthly in writing to Landlord on the condition of the Premises.


                                      -16-


<PAGE>   17
                                    EXHIBIT C
                                  SIGN CRITERIA



                                 BAYSIDE COMMONS


WINDOW SIGNS IDENTIFICATION:

Each Tenant will be allowed one window sign placed either to the left or to the
right of the entrance door, whichever provides the best visibility.

Company names, logos or symbols will be allowed in this area - color and size to
be determined by the Tenant. all other copy in this area except for logos or
symbols will be white pressure sensitive letters.

Copy should start at 5' from grade working down to no more than 3 1/2' from
grade. sign layout including copy, sizes and color must be approved by the
building management.

One security decal only may be applied to the front door glass in the lower
corner if the Tenant so desires. All exterior alarm bells are to be mounted to
the rear of the building only.

DIRCTORY SIGN IDENTIFICATION:

A monument directory sign has been provided for each building. If only one
tenant occupies an entire building, that Tenant shall be allowed to utilize the
entire directory sign area for its sensitive vinyl letters in the Handel Gothic
style with a letter height suitable for the area allowed, and a logo may be
used. Layout is to be approved by building management.

If two Tenants occupy a building, signs shall consist of 4: Handel Gothic,
Spar-Cal Forest Green pressure sensitive vinyl letters condensed to 60.4%.
Directory signs shall list the street number and the company names only, no
slogans or symbols allowed.

If three Tenants occupy a building, signs shall consist of 4: Handel Gothic,
Spar-Cal dark Forest Green sensitive vinyl letters condensed to 60.4%. Directory
signs shall list the street number and the company names only, no slogans or
symbols allowed.

REAR LOADING SIGNS:

Each Tenant will be allowed to identify its rear door for shipping and receiving
purposes. the company name shall be placed on a 36" x 24" aluminum panel
adjacent to the rear doors.

Copy shall consist of 3" vinyl capital letters only in the Spar-Cal Forest Green
Handel Gothic style. Company names and logos only are allowed.



MANAGEMENT RESERVES THE RIGHT TO DENY ANY COPY IT CONSIDERS UNSUITABLE. LAYOUT
IS TO BE APPROVED BY BUILDING MANAGEMENT. THE COST OF ALL LETTERING AND LOGOS
WILL BE THE RESPONSIBILITY OF THE TENANT. NO OTHER SIGNS ARE ALLOWED IN THE
WINDOWS OR DOORS.




                                      -17-