<PAGE>
 
                                                                   EXHIBIT 10.01

                                                          [California Net Lease]



                                 LEASE AGREEMENT



     THIS LEASE AGREEMENT is made this 31st day of March, 1998, between SCI
Limited Partnership-I, a Delaware Limited Partnership ("Landlord"), and the
Tenant named below.




TENANT:                                   ONSALE, Inc.
                                          ------------

TENANT'S REPRESENTATIVE,                  ------------------------------------
ADDRESS, AND PHONE NO.:                   Dennis J. Shepard
                                          -----------------
                                          1380 Willow Road
                                          ----------------
                                          Menlo Park, CA  94025
                                          ---------------------
                                          650-470-2440
                                          ------------
 
<TABLE>
<CAPTION>
<S>                                       <C>
PREMISES:                                 That portion of the Building, containing approximately 22,000  rentable square feet,
                                          as determined by Landlord and commonly known as 8628 Thornton Avenue, Newark, CA
                                          as shown on Exhibit A.
</TABLE>
PROJECT:                                  Thornton Business Center
                                          ------------------------

BUILDING:                                 Building D (14104A)
                                          -------------------

TENANT'S PROPORTIONATE SHARE OF
PROJECT:                                  6.71%
                                          ----

TENANT'S PROPORTIONATE SHARE
OF BUILDING:                              22.22%
                                          -----

<TABLE>
<CAPTION>
<S>                                       <C>
LEASE TERM:                               Beginning on the Commencement Date and ending on the last day of the 60th  full
                                          calendar month thereafter.
</TABLE>
COMMENCEMENT DATE:                        March 1, 1998
                                          -------------

<TABLE>
<CAPTION>
INITIAL MONTHLY BASE RENT:
                                          Nine Thousand Two Hundred Forty dollars                                    $9,240
                                          ---------------------------------------------------------------------------------
<S>                                       <C>                                                                    <C>    
INITIAL ESTIMATED MONTHLY OPERATING       1.     Common Area Charges:  $63
 EXPENSE PAYMENTS: (estimates only                                     ---
 and subject to adjustment to actual      2.     Taxes:  $403
 costs and expenses according to the                     ----
 provisions of this Lease)                3.     Insurance:  $956
                                                             ----
                                          4.     Management Fee:  $321
                                                                  ----                                                
INITIAL ESTIMATED MONTHLY OPERATING
 EXPENSE PAYMENTS:                                                                                                   $1,798
                                                                                                                     ------

INITIAL MONTHLY BASE RENT AND
 OPERATING EXPENSE PAYMENTS:                                                                                         $11,038
                                                                                                                     -------
</TABLE>
SECURITY DEPOSIT:                         $13,000

BROKER:                                   Roger Field, Cornish & Carey
                                          ----------------------------

ADDENDA:
                                          Addendum I,  Exhibits A, B and C
                                          --------------------------------


     1.    GRANTING CLAUSE.  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.
Tenant shall not conduct or give 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, 
<PAGE>
 
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.



     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 date hereof, 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
REASONABLE 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 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 

                                      -2-
<PAGE>
 
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. 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.

     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, 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.

                                      -3-
<PAGE>
 
     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 reasonable
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.

     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.

                                      -4-
<PAGE>
 
     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 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 

                                      -5-
<PAGE>
 
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 all 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.  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 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 double 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:

                                      -6-
<PAGE>
 
            (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.

            (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.

            (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 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 

                                      -7-
<PAGE>
 
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 re-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
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 

                                      -8-
<PAGE>
 
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.  Tenant hereby irrevocably appoints Landlord as
its attorney in fact to execute on its behalf and in its name any such estoppel
certificate if Tenant fails to execute and deliver the estoppel certificate
within 10 days after Landlord's written request thereof.

     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 (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 

                                      -9-
<PAGE>
 
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.

     (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

                                      -10-
<PAGE>
 
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.

     38.    LANDLORD'S LIEN/SECURITY INTEREST.  Tenant hereby grants Landlord a
security interest, and this Lease constitutes a security agreement, within the
meaning of and pursuant to the Uniform Commercial Code of the state in which the
Premises are situated as to all of Tenant's property situate in, or upon, or
used in connection with the Premises (except merchandise sold in the ordinary
course of business) as security for all of Tenant's obligations hereunder,
including, without limitation, the obligation to pay rent.  Such personalty thus
encumbered includes specifically all trade and other fixtures for the purpose of
this Paragraph and inventory, equipment, contract rights, accounts receivable
and the proceeds thereof.  In order to perfect such security interest, Tenant
shall execute such financing statements and file the same at Tenant's expense at
the state and county Uniform Commercial Code filing offices as often as Landlord
in its discretion shall require; and Tenant hereby irrevocably appoints Landlord
its agent for the purpose of executing and filing such financing statements on
Tenant's behalf as Landlord shall deem necessary.

     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.



 
TENANT:                                       LANDLORD:

 
ONSALE, Inc.,                                 SCI Limited Partnership-I, a
                                              Delaware Limited Partnership
 
 
 
By:/s/ Dennis J. Shepard                      By:/s/ Ned K. Anderson      
   ----------------------------                  ---------------------------- 
Title: V. P. Operations                               Ned K. Anderson       
                                              Title:  Senior Vice President 
                                                             

Address:                                      Address:
 
1380 Willow Road                              47775 Fremont Boulevard
Menlo Park, CA 94025                          Fremont, CA 94538 
                                                                

                                      -11-
<PAGE>
 
                             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.

                                      -12-
<PAGE>
 
                 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.

                                      -13-
<PAGE>
 
                                  ADDENDUM I

                             BASE RENT ADJUSTMENTS
                             ---------------------

                 ATTACHED TO AND A PART OF THE LEASE AGREEMENT
                         DATED MARCH 31, 1998, BETWEEN
 
                           SCI Limited Partnership-I
                                      and
                                 ONSALE, Inc.


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

 
                Months               Monthly Base Rent
                ------               -----------------
 
          03/01/98 - 01/31/99              $ 9,240
          02/01/99 - 01/31/00              $10,120
          02/01/00 - 01/31/01              $10,340
          02/01/01 - 01/31/02              $10,560
          02/01/02 - 02/28/03              $10,780
 

                                      -14-
<PAGE>
 
                                   EXHIBIT A
                                   SITE PLAN

THORTON BUSINESS CENTER

BUILDING FEATURES:
 .Heavily landscaped campus-like setting
 .Dock-high and drive-in truck loading
 .Individual storefornt entrys with walkways leading to landscaped areas and 
 parking
 .Office improvements to suit, including architectural space planning
 .Hydraulically calculated sprinkler system - .6/3000

BUILDING A 
 .Rear loading building with storefront entrys and up to 3/1000 parking
 .25,000 square foot building size 
 .Divisible to 5,000 square feet
 .18' minimum clear height
 .20'x50' column spacing
 .1,200 amp, 480/277V 3-phase electrical service

BUILDING B 
 .Rear loading building with storefront entrys and up to 3/1000 parking
 .98,750 square foot building size 
 .Divisible to 20,000 square feet
 .24'-26' minimum clear height
 .40'x50' column spacing
 .2,000 amp, 480/277V 3-phase electrical service

BUILDING C 
 .105,000 square foot building size 
 .Divisible to 20,000 square feet
 .24'-26' minimum clear height
 .40'x50' column spacing
 .2,000 amp, 480/277V 3-phase electrical service

BUILDING D 
 .99,000 square foot building size 
 .Divisible to 20,000 square feet
 .24'-26' minimum clear height
 .40'x50' column spacing
 .2,000 amp, 480/277V 3-phase electrical service
<PAGE>
 
                                   EXHIBIT B
                                  FLOOR PLAN
<PAGE>
 
                                   EXHIBIT C
                                 SIGN CRITERIA
                                        
                                        


                                 SIGN CRITERIA
                                 -------------

                           THORNTON BUSINESS CENTER



IDENTIFICATION SIGNS:

Each Tenant is allowed a basic identification sign to display company name.
Letter style is to be Handel Gothic, the color of which will match the teal
accent stripe on the building.  Letter construction shall be 3/16" plexiglass,
primed pastel grey lacquer and top-coated with two coats minimum of automotive
acrylic lacquer satin finish (semi-gloss) in teal blue to match accent stripe.
Sides shall be 3" silver Channelume (see letter construction detail).

Logos or symbols of the same construction as letters are allowed a maximum of
18" vertical and 24" horizontal measurements. Face color may be determined by
tenant with approval of ownership.  Letters and logos are to be non-illuminated
and individually mounted with the building facade providing the background.
Corporate or company names will be listed in capital letters only, no lower case
letters are allowed.  Letter height will remain constant at 11" with the length
of the sign varying according to the length of the name displayed.

Signs shall be mounted on an imaginary line 18 1/2" above the teal accent stripe
over office doorway and windows.  There will be an 18 1/2" left or right
(depending upon office location) margin from the vertical teal stripe (see sign
placement detail).  Logos shall be centered up and down in the 4' sign area.

This tenant building sign will be restricted to company or corporate name and
logo only, no division names, descriptions of services or slogans are allowed in
this sign area.  There will be no deviations from this criteria without express
permission of the ownership prior to installation.

WINDOW SIGNS

Identity signs displaying trademarks or logos may be used on the glass panel to
the left or the right of the entrance door whichever provides the best
visibility.  The glass panel will provide the background for individually
mounted pressure sensitive or painted letters, no solid background panels are
                                               ------------------------------
allowed.  If a corporate logo is distinguished by a background shape, a 1/4"
--------                                                                    
outline may be used to define that shape.  Company names shall be listed in 3"
-------                                                                       
white capital letters in the company letter style.  Logos and symbols may be in
corporate colors as determined by tenant.  Copy shall start at 5' from grade,
working down to no more than 3 1/2" from grade.  Tenants are required to submit
        ----                                                                   
a layout with copy, sizes and color to the ownership for approval.  Management
reserves the right to deny any copy or color it considers unsuitable.



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 above
the rear  man doors.  The aluminum panel shall be painted white.

Copy shall consist of 3" metallic capital letters only in Helvetica Medium
style.  Company names and logos only are allowed.



MANAGEMENT RESERVES THE RIGHT TO DENY ANY COPY IT CONSIDERS UNSUITABLE, AND MUST
APPROVE ALL COPY PRIOR TO INSTALLATION.  THE COST OF ALL LETTERING AND LOGOS IS
THE RESPONSIBILITY OF THE TENANT.  NO OTHER SIGNS ARE ALLOWED IN THE WINDOWS OR
DOORS.