Document:

<PAGE>
                                                                   EXHIBIT 10.19

                                  redENVELOPE

February 18, 2003

John Roberts
1617 Belburn Drive
Belmont, CA 94002

RE: EMPLOYMENT TERMS

Dear John:

On behalf of RedEnvelope ("Company"), I am very pleased to offer you the
position of Vice President of Information Systems on the following terms.

You will report directly to the Chief Executive Officer, and will work in our
San Francisco office. The position of Vice President of Information Systems is
exempt from any overtime pay. Your primary duties in this position will be to:
(1) provide leadership in analyzing business requirements in conjunction with
technical considerations and in proposing system solutions, (2) manage all
computer operations, application development and business application areas and
all associated personnel, and (3) direct budgeting, strategic and tactical
planning for the Information Systems area. You will also be responsible for any
other projects or assignments as directed by the CEO. At all times during
employment with the Company, you will devote your full energies, abilities and
productive business time to the performance of your job for the Company and will
not engage in any activity that would in any way interfere or conflict with the
full performance of any of your duties for the Company.

You will receive a salary of $6,808.00 on a bi-weekly basis ($177,000.00
annualized), less applicable payroll deductions and all required withholdings,
in accordance with the Company's regular payroll practices. You will also
receive a one-time sign-on bonus of $10,000.00 to be paid in a lump sum, less
applicable payroll deductions and required withholdings, within 30 days of your
start date so long as you are still employed at that time. If your employment
with the Company ends within 12 months of your start date due to termination
with cause by the Company or voluntary resignation by you, on your last day of
employment, you will repay the full amount of this sign-on bonus to the Company.
For purposes of any such repayment to the Company, you authorize and consent to
the deduction of the full amount of the sign-on bonus from the net amount of
your final paycheck and any other amounts otherwise owed to you by the Company.

Commencing the month following your start date and while employed as a full-time
employee on the regular payroll of the Company, you will be eligible to
participate in the Company's standard benefits package. You will also be
eligible for the Company's standard PTO and holiday benefits. General
information regarding the Company's current benefit plans is attached. The
Company may modify or cancel benefits from time to time as it deems appropriate
in its sole discretion.

In addition, after hiring, we will recommend that the Board of Directors of the
Company ("Board") grant you an option to purchase 165,000 shares of the
Company's common stock. The specific characteristics, terms and conditions of
the options mentioned above, including

  201 Spear Street Suite 300 San Francisco California 94105 www.RedEnvelope.com

<PAGE>

John Roberts
February 18, 2003
Page 2

the strike price and applicable vesting schedule, will be set forth in the
option plan and grant documentation to follow after approval by the Board.

Your employment with the Company is for no specified duration and may be
terminated either by you or the Company at any time and for any reason
whatsoever, with or without cause or advance notice. The Company also retains
the right to make all other decisions concerning your employment (e.g., changes
to your position, title, level, responsibilities, compensation, job duties,
reporting structure, work location, work schedule, goals or any other managerial
decisions) at any time, with or without cause or advance notice, as it deems
appropriate in its sole discretion. This at-will employment relationship cannot
be changed except in writing signed by you and the Company's Chief Executive
Officer. If the Company terminates your employment without cause, in exchange
for you signing a general release of any all claims, the Company will pay you
severance in the total amount of $44,250.00, less applicable payroll deductions
and all required withholdings. This severance amount will be paid in biweekly
installments, less applicable payroll deductions and all required withholdings,
in accordance with the Company's regular payroll schedule, during the three
calendar months following the termination of your employment. In addition to
this payment, your existing coverage under the Company's group health plan (and,
if applicable, the existing group health coverage for your eligible dependents)
will continue for the three calendar months following the termination of your
employment.

Your employment with the Company pursuant to this offer is contingent on you
signing the Company's standard employee confidentiality and invention assignment
agreement (attached) prior to your start date, providing satisfactory proof of
your right to work in the United States as required by law, and on the Company's
verification of your qualifications, background, experience and references. If
employed, you will comply at all times with all Company policies, rules and
procedures as they may be established, stated and/or modified from time to time
at the Company's sole discretion.

Prior to your first day of work with the Company, you will have previously
returned any confidential, proprietary or trade secret information belonging to
any prior employer and will not use such information in your employment with the
Company. You will also strictly adhere to the terms of any lawful restrictive
covenants entered into between you and any prior employers.

Except as specified below, to the fullest extent allowed by law, any and all
disputes, claims or controversies of any kind arising out of or related in any
way to hiring, employment or the termination of employment with the Company
(including without limitation any statutory or common law claims against the
Company or any of its agents or employees) shall be fully and finally resolved
through binding arbitration, before a neutral arbitrator, pursuant to the
California Arbitration Act, California Code of Civil Procedure section 1280, et
seq. You and the Company therefore waive any right to a jury trial on any such
claims or matters. Any arbitration between the parties will be conducted before
the American Arbitration Association ("AAA") in San Francisco, California, under
the AAA's then existing national rules for the resolution of employment
disputes, as modified in any respect necessary to comply with the requirements
of California law for enforcement of arbitration agreements regarding
employment-related disputes. This arbitration provision shall not apply to any
claims for

John Roberts Offer

<PAGE>

John Roberts
February 18, 2003
Page 3

injunctive or other similar equitable relief. Before commencing any arbitration
proceedings, any dispute between you and the Company or any of its agents or
employees shall first be submitted, in writing, to the Company's Human Resource
Officer (or if none, to the head of Finance & Accounting) for a good faith
attempt at resolution.

This letter sets forth the entire agreement between you and the Company on the
terms of your employment with the Company and supersedes any prior
representations, understandings, promises or agreements, whether oral or
written, by anyone regarding employment with the Company. The employment terms
in this letter may only be modified in a writing signed by both you and the
Company's Chief Executive Officer.

If you wish to accept employment with the Company under the terms described
above, please sign and date this letter and return it to me by 5:00 p.m. PST on
February 28, 2003. If you accept our offer, we would like you to start with us
on March 10, 2003 or as soon thereafter as possible.

John, we are excited for you to join our team and look forward to working with
you.

Sincerely,

RedEnvelope, Inc.

By: /s/ Alison L. May
    ---------------------------------

Title: Pres & CEO
       ------------------------------

ACCEPTED AND AGREED:

JOHN ROBERTS

/s/ John Roberts                                        2/26/03
-------------------------------------                 -----------
Signature                                                Date

John Roberts Offer<PAGE>

                                                                   EXHIBIT 10.23

                                REDENVELOPE, INC.

                        TRANSITION AGREEMENT AND RELEASE

         This Transition Agreement and Release (the "AGREEMENT") is made by and
between RedEnvelope, Inc., a Delaware corporation (the "COMPANY"), and Martin
McClanan ("EXECUTIVE"). Executive has been employed by the Company pursuant to
the terms of an offer letter dated January 23, 2000, as amended on November 30,
2000 (the "OFFER LETTER"). The Company and Executive have mutually agreed to the
continuation of the employment relationship and the effects of a termination of
such relationship and Executive has agreed to release the Company from any
claims arising from or related to the employment relationship as described
below. In consideration of the promises made herein, the Company and Executive
(collectively referred to as the "PARTIES") hereby agree as follows:

         1.       TRANSITION OF EMPLOYMENT.

                  (a)      CONTINUED EMPLOYMENT; SEPARATION DATE. Executive and
the Company acknowledge and agree that Executive's employment as Chief Executive
Officer of the Company shall continue on an at-will basis under the terms of
this Agreement. Without limiting the effect of the foregoing, Executive
acknowledges that the Company may terminate his employment at any time for any
reason or no reason. The date of the termination of Executive's employment with
the Company shall be referred to in this Agreement as the "SEPARATION DATE."
Executive acknowledges and agrees that prior to the Separation Date, Executive
shall continue to be paid a gross monthly base salary of $16,666.67 pursuant to
the Company's regular payroll policy (or in the same manner as other officers of
the Company). Executive and the Company further agree that Executive shall
continue in his capacity as a member of the Company's Board of Directors until
such time that either he resigns or the Company requests his resignation from
such position (at which time Executive agrees to resign as a director), which
request shall occur no earlier than the Separation Date, and that Executive
shall have no rights to any benefits or payments described herein solely as a
result of the termination of Executive's service as a member of the Company's
Board of Directors.

                  (b)      FINAL WAGES. Upon the termination of Executive's
employment with the Company for any reason, the Company shall pay Executive the
sum of (i) all earned salary through the Separation Date, the $70,000 cash bonus
promised to Executive pursuant to Section 3(b) of the Offer Letter to the extent
it has not been paid as of the Separation Date, and any other earned wages owed
to the Executive through the Separation Date, except as otherwise set forth in
this Agreement, (ii) payment for all accrued but unused vacation days of
Executive, and (iii) payment of all unreimbursed business expenses properly
incurred and submitted by Executive prior to the Separation Date. In addition,
Company will reimburse Executive promptly for any additional unreimbursed
business expenses (not submitted prior to the Separation Date) properly incurred
by Executive prior to the Separation Date and submitted by Executive to the
Company within one (1) week following the Separation Date.

                  (c)      REVISED OFFER LETTER BENEFITS. In the event of the
termination of Executive's employment by the Company without "Cause" (as defined
in Section 10(e) of the Offer Letter), or as a result of a "Constructive
Termination" (as defined in Section 10(e) of the Offer Letter), or by Executive
as a result of Executive commencing full-time employment with a

<PAGE>

third party, the Company shall pay Executive a sum of $100,000, which amount is
equal to six (6) months of Executive's gross base salary. Executive acknowledges
that this amount exceeds, and will be paid in lieu of, the cash severance
amounts set forth in the Offer Letter, and is being offered in consideration for
the release of claims and other obligations of Executive under this Agreement.
The Company shall make such payment in two installments as follows: 50% of the
amount shall be paid on or before the 30th day following the Separation Date and
the remaining 50% shall be paid on or before the earlier of (i) the date upon
which the Company has sufficient cash available to make such payment without
undue burden on the Company or its operations in the sole discretion of the
Company's Board of Directors, or (ii) the four (4) month anniversary of the
Separation Date.

         2.       SEVERANCE BENEFITS. In consideration for the release of claims
set forth below and other obligations under this Agreement, and provided that
Executive's employment is terminated either by the Company without Cause, or as
a result of a Constructive Termination, or by Executive as a result of Executive
commencing full-time employment with a third party, and provided further that,
as of the Separation Date, Executive has complied with his continuing
obligations under this Agreement (including without limitation the execution of
the Continuing Representations Certificate as described in Section 21 herein),
the Company agrees to provide the following severance benefits to Executive as
to which he is not otherwise entitled:

                  (a)      REIMBURSEMENT OF COBRA PREMIUMS. Provided Executive
makes an accurate and timely election for continuation of health care coverage
under the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), the Company agrees to reimburse Executive for the
applicable premiums for continuation coverage for himself and his currently
enrolled dependents (as applicable) for the first six (6) months of continuation
coverage, up to a total of $5,000, as described in Section 3(a) below.

                  (b)      EXTENSION OF EXERCISE PERIOD. The Company shall
extend the Option Exercise Period (as defined in Section 4(d) below) applicable
to each of Executive's Options (as defined in Section 4(d) below) such that
Executive may exercise the Options for a period of three (3) years following the
Separation Date; provided, however, in no event may Executive exercise the
Options later than the applicable expiration date of such Options.

                  (c)      2002 BONUS. In the event that the Company
establishes, and the Company's Board of Directors approves, a cash bonus plan
for the Company's executive officers for Fiscal Year 2002 (i.e., the fiscal year
concluding March 31, 2002) based on achievement of certain performance
objectives (the "2002 CASH BONUSES"), the Company's Board of Directors shall
determine the amount of such cash bonuses for each Company executive officer and
the sales, profit and other performance targets (collectively, the "2002
TARGETS") that the Company must achieve as a condition to payment of such cash
bonuses. In the event that 2002 Cash Bonuses are established as set forth
herein, Executive shall be eligible to earn a 2002 Cash Bonus, subject to
achievement of the 2002 Targets and the requirements of this Agreement, in an
amount to be determined by the Company's Board of Directors, which amount shall
be equal, on an aggregate annual basis, to the greater of $70,000 or the highest
2002 Cash Bonus established for any other executive officer of the Company
(other than Hilary Billings). In the event that the 2002 Cash Bonuses are
established as set forth herein and Executive's employment with the Company is
terminated prior to the close of Fiscal Year 2002, then, upon achievement of the

                                      -2-

<PAGE>

2002 Targets and subject to the requirements of this Agreement, Executive shall
be entitled to a pro-rated payment of his 2002 Cash Bonus based on the number of
whole calendar months in which Executive was employed by the Company in Fiscal
Year 2002 and the percentage of the Company's Fiscal Year 2002 revenues that
were recognized during those months of Executive's employment in Fiscal Year
2002. Any amounts owed to Executive pursuant to this Section 2(c) will be paid
to Executive during the month of April 2002.

                  (d)      COMPUTER. Executive will retain possession of the
notebook computer previously issued to him by the Company following the
Separation Date; provided, however, that the Company shall first review the
contents of such computer and remove all confidential and/or proprietary
information therefrom prior to surrendering such computer to Executive following
the Separation Date.

                  (e)      FRIENDS & FAMILY DISCOUNT. Executive will continue to
be eligible to use the Company's twenty percent (20%) discount on Company
products available to "Friends & Family" of the Company following the Separation
Date, pursuant to the terms and conditions of such "Friends & Family" program,
as it may be modified by the Company from time to time.

         3.       EMPLOYEE BENEFITS.

                  (a)      Executive shall continue to receive the Company's
health insurance benefits at the Company's expense, to the same extent it pays
such premiums for other similarly situated employees, until the Separation Date.
Following such date, Executive shall have the right to continue coverage under
the Company's health insurance programs as provided by COBRA at his own expense;
provided, however, that if Executive makes an accurate and timely election for
continuation coverage, in further consideration of Executive's release of claims
herein and other obligations under this Agreement (including but not limited to
Executive's execution of the Continuing Representations Certificate), the
Company agrees to reimburse Executive for the applicable premiums for
continuation coverage for himself and his then-currently enrolled dependents (as
applicable) for the first six (6) months of continuation coverage, with such
reimbursed amount not to exceed $5,000.

                  (b)      Executive shall continue to be eligible to
participate in the Company's standard benefit programs available to similarly
situated employees until the Separation Date, including but not limited to
vacation and medical and dental insurance. Except as otherwise provided above,
Executive shall not be entitled to participate in any of the Company's benefit
plans or programs offered to employees or officers of the Company after the
Separation Date.

         4.       EQUITY INTERESTS.

                  (a)      ORIGINAL OPTION. Pursuant to the terms of the
Company's 1999 Stock Plan and the two stock option agreements dated February 16,
2000 (collectively, the "ORIGINAL OPTION AGREEMENT"), Executive was granted
options (collectively, the "ORIGINAL OPTION") to purchase an aggregate of
840,000 shares of the Company's Common Stock (the "ORIGINAL SHARES").

                  (b)      SUBSEQUENT GRANT OPTION. Pursuant to the terms of the
Company's 1999 Stock Plan and the stock option agreement dated August 23, 2000
(the "SUBSEQUENT GRANT

                                      -3-

<PAGE>

OPTION AGREEMENT"), Executive was granted an option (the "SUBSEQUENT GRANT
OPTION") to purchase 360,000 shares of the Company's Common Stock (the
"SUBSEQUENT GRANT Shares").

                  (c)      BONUS OPTION. Pursuant to the terms of the Company's
1999 Stock Plan and the stock option agreement dated June 1, 2001 (the "BONUS
OPTION AGREEMENT"), Executive was granted an option (the "BONUS OPTION") to
purchase 100,000 shares of the Company's Common Stock (the "BONUS SHARES")
pursuant to Section 4(d) of the Offer Letter.

                  (d)      EXTENSION OF EXERCISE PERIOD. Pursuant to the terms
of the Original Option Agreement, Subsequent Grant Option Agreement, and the
Bonus Option Agreement (collectively, the "OPTION AGREEMENTS"), to the extent
Executive does not exercise the Original Option, the Subsequent Grant Option,
and the Bonus Option (collectively, the "OPTIONS") on or before the three (3)
month anniversary of the Separation Date (with respect to each of the Options,
the "OPTION EXERCISE PERIOD"), the Options shall lapse in their entirety. As set
forth in Section 2(b) above, in further consideration for the release of claims
set forth below and upon the fulfillment of Executive's other obligations under
this Agreement (including but not limited to Executive's execution of the
Continuing Representations Certificate), and notwithstanding the terms of the
Option Agreements, the Company agrees to modify the Options and extend the
Option Exercise Period such that Executive shall be permitted to exercise the
Options as to the vested shares subject to each Option on or before the three
(3) year anniversary of the Separation Date. In no event may the Executive
exercise the Options later than the applicable expiration dates set forth in the
Option Agreements.

                  (e)      RIGHTS OFFERING. In the event that, during the
eighteen (18) month period following the Effective Date, (1) the Company sells
shares of its capital stock or other securities in connection with a financing
and, in consultation with legal counsel, determines that it is necessary or
advisable in connection with such financing to offer, and does offer, such stock
or securities to each of the Company's stockholders (other than those
stockholders which the Company determines should be excluded from the offering
to ensure compliance with applicable federal or state securities laws) based on
their pro rata ownership of the Company's capital stock (a "RIGHTS OFFERING")
and (2) Executive has not exercised the Options in full, the Company shall
include Executive in the Rights Offering to the same extent he would have been
included had he exercised in full the vested Options held by Executive as of the
date notification regarding the Rights Offering is delivered to the Company's
stockholders; provided, however, that the Company shall not be required to
include Executive in the Rights Offering if such inclusion would cause the
Rights Offering to violate the exemption from federal and state securities
registration and qualification requirements upon which the Company is relying.

                  (f)      NO OTHER RIGHTS. Executive acknowledges and agrees
that he remains bound by the terms of the Option Agreements, as modified herein.
Executive acknowledges and agrees that Executive shall not be entitled to
acceleration of vesting or exercisability of any of the Options as a result of
the termination of his employment. Executive acknowledges and agrees that his
Options shall lapse in their entirety as to any unvested shares as of the
Separation Date. As of the Effective Date, except as set forth in this Section
4, Executive shall have no right, title or interest in or to any shares of the
Company's capital stock or other securities under the Offer Letter, the Option
Agreements or under any other document, instrument or arrangement, whether oral
or written, with the Company.

                                      -4-

<PAGE>

                  (g)      PAYMENT OF PURCHASE PRICE. Pursuant to the terms of
the Option Agreements, Executive may pay the Exercise Price (as such term is
defined in the Option Agreements) by surrender of other shares of common stock
of the Company which (i) in the case of shares acquired pursuant to the exercise
of an Option, have been owned by Executive for more than six (6) months on the
date of surrender, and (ii) have a Fair Market Value (as such term is defined in
the 1999 Stock Plan) on the date of surrender equal to the Exercise Price of the
shares as to which the Option is being exercised. However, notwithstanding the
definition of Fair Market Value set forth in the 1999 Stock Plan, in the event
that there is no established market for the Company's common stock and
Executive, in good faith, disagrees with the fair market value determined by the
Company's Board of Directors (or committee thereof) in connection with
Executive's use of Company common stock to pay the Exercise Price for his
Options, Executive may, at his expense, obtain an independent third party
appraisal of the stock's value from a reputable, nationally-recognized bank or
similar financial institution, provided that such appraisal is obtained and
provided to the Company within ten (10) business days of the Company's
notification to Executive of the Board of Director's determination of fair
market value. The Company acknowledges that it will notify Executive of the
Board of Director's determination of the then-fair market value of the Company's
common stock within ten (10) business days following written notification from
Executive that he intends to pay the Exercise Price for his Options by surrender
of Company common stock (as permitted by the Option Agreements) as soon as is
reasonably practicable. In the event that such appraisal obtained by Executive
exceeds the fair market value determined by the Company's Board of Directors,
the parties shall resolve this discrepancy in accordance with Section 14 of this
Agreement.

         5.       NO OTHER PAYMENTS DUE. Executive acknowledges and agrees that
upon receipt of the payments to be made on and after the Effective Date pursuant
to this Agreement, Executive will have received all salary, accrued vacation,
commissions, bonuses, wages, compensation or other such sums due to Executive as
of the Separation Date, other than amounts, if any, to be paid after the
Separation Date pursuant to this Agreement. The Parties further acknowledge and
agree that, upon the payment by the Company of all wages due, or to become due,
to Executive, the California Labor Code Section 206.5 will not be applicable to
the Parties hereto. That section provides in pertinent part as follows:

                  NO EMPLOYER SHALL REQUIRE THE EXECUTION OF ANY RELEASE OF ANY
                  CLAIM OR RIGHT ON ACCOUNT OF WAGES DUE, OR TO BECOME DUE, OR
                  MADE AS AN ADVANCE ON WAGES TO BE EARNED, UNLESS PAYMENT OF
                  SUCH WAGES HAS BEEN MADE.

         6.       RELEASE OF CLAIMS. In consideration for the Company's
obligations set forth in this Agreement, Executive, on behalf of himself and his
heirs, executors, and assigns, hereby fully and forever releases the Company and
its officers, directors, employees, investors, attorneys, stockholders,
administrators, predecessor and successor corporations and assigns, of and from
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that he may
possess arising from any omissions, acts or facts that have occurred up until
and including the date of this Agreement including, without limitation:

                                      -5-

<PAGE>

                  (a)      any and all claims relating to or arising from
Executive's employment relationship with the Company and the termination of that
relationship;

                  (b)      any and all claims relating to Executive's right to
receive, or receipt of, wages or other compensation;

                  (c)      any and all claims relating to, or arising from,
Executive's right to purchase, or actual purchase of shares of the capital stock
or other securities of the Company;

                  (d)      any and all claims for wrongful discharge of
employment; breach of contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and implied, negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; negligence; and defamation;

                  (e)      any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act of 1990, the California Fair Employment and Housing Act, the
Fair Labor Standards Act, and any family and medical leave acts;

                  (f)      any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and

                  (g)      any and all claims for attorneys' fees and costs.

         Executive agrees that the release set forth in this Section 6 shall be
and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred or
specified under this Agreement.

         7.       APPLICABLE TAX WITHHOLDING. All payments made under this
Agreement shall be subject to reduction to reflect taxes or other charges
required to be withheld by law or otherwise authorized to be withheld by
Executive.

         8.       CIVIL CODE SECTION 1542. The Parties represent that they are
not aware of any claim by either of them other than the claims that are released
by this Agreement. Executive and the Company acknowledge that they have been
advised by legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         Executive and the Company, being aware of said Code section, agree to
expressly waive any rights they may have thereunder, as well as under any other
statute or common law principles of similar effect.

         9.       COVENANTS.

                                      -6-

<PAGE>

                  (a)      GENERAL. Executive agrees that for all periods
described in this Agreement, he shall continue to conduct himself in a
professional manner that is supportive of the business of the Company.

                  (b)      NON-DISPARAGEMENT. Each Party agrees to refrain from
any disparagement, criticism, defamation, or slander of the other Party, or
tortious interference with the contracts and relationships of the other Party.

                  (c)      CONFIDENTIALITY. The Parties agree to maintain in
strict confidence the existence of this Agreement, the contents and terms of
this Agreement, and the consideration for this Agreement (hereinafter
collectively referred to as "SETTLEMENT INFORMATION"). Each Party hereto agrees
to take every reasonable precaution to prevent disclosure of any Settlement
Information to third parties, and each agrees that there will be no publicity,
directly or indirectly, concerning any Settlement Information. The Parties
hereto agree to take every precaution to disclose Settlement Information only to
those employees, officers and directors of the Company, and attorneys,
accountants and governmental entities who have a reasonable need to know of such
Settlement Information.

                  (d)      NONDISCLOSURE. Executive acknowledges and agrees that
this Agreement in no way modifies Executive's obligations to the Company under
the terms of the Confidential Information and Invention Assignment Agreement
between Executive and the Company (the "CONFIDENTIALITY AGREEMENT"), a copy of
which is attached hereto as Exhibit A. Executive shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
prior to and after the Separation Date as provided under the Confidentiality
Agreement. Executive represents and warrants that at all times up until the
Effective Date he has been in compliance with his obligations to the Company
under the Confidentiality Agreement. Executive agrees to execute the Separation
Certification, attached hereto as Exhibit B, and return it to the Company within
seven (7) days following the Separation Date, which certifies that Executive
will have returned all the Company's property and confidential and proprietary
information in his possession to the Company.

         10.      BREACH OF THE AGREEMENT. Executive acknowledges that upon his
breach of this Agreement or the Confidentiality Agreement, the Company would
sustain irreparable harm from such breach, and, therefore, Executive agrees that
in addition to any other remedies which the Company may have under this
Agreement, the Confidentiality Agreement, or otherwise, the Company shall be
entitled to obtain equitable relief, including specific performance and
injunctions, restraining him from committing or continuing any such violation of
the Agreement or the Confidentiality Agreement. Executive acknowledges and
agrees that upon his material or intentional breach of any of the provisions of
the Agreement or the Confidentiality Agreement, in addition to any other
remedies the Company may have under this Agreement or otherwise, the Company's
obligations to provide benefits to Executive as described in this Agreement,
including without limitation those benefits provided in Sections 2, 3 and 4
herein, shall immediately terminate.

         11.      AUTHORITY. The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Agreement. Executive represents and warrants that

                                      -7-

<PAGE>

he has the capacity to act on his own behalf and on behalf of all who might
claim through him to bind them to the terms and conditions of this Agreement.
Executive represents and warrants that there are no liens or claims of lien or
assignments in law or equity or otherwise of or against any of the claims or
causes of action released herein.

         12.      NO REPRESENTATIONS. Executive has not relied upon any
representations or statements made by the Company which are not specifically set
forth in this Agreement.

         13.      SEVERABILITY. In the event that any provision hereof becomes
or is declared by a court or other tribunal of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.

         14.      ARBITRATION. The Parties shall attempt to settle all disputes
arising in connection with this Agreement through good faith consultation. In
the event no agreement can be reached on such dispute within fifteen (15) days
after notification in writing by either Party to the other concerning such
dispute, the dispute shall be settled by binding arbitration to be conducted in
San Francisco before the American Arbitration Association under its California
Employment Dispute Resolution Rules, or by a judge to be mutually agreed upon.
The arbitration decision shall be final, conclusive and binding on both Parties
and any arbitration award or decision may be entered in any court having proper
jurisdiction. The Parties agree that the prevailing party in any arbitration
shall be entitled to injunctive relief in any court of competent jurisdiction to
enforce the arbitration award. The Parties further agree that the prevailing
Party in any such proceeding shall be awarded reasonable attorneys' fees and
costs. This Section 14 shall not apply to the Confidentiality Agreement. THE
PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO
ARBITRABLE CLAIMS.

         15.      ENTIRE AGREEMENT. This Agreement, and the exhibits hereto
(including the Confidentiality Agreement, represents the entire agreement and
understanding between the Company and Executive concerning Executive's
separation from the Company, and supersedes and replaces any and all prior
agreements and understandings on the matters addressed herein, including but not
limited to the Offer Letter (with the exception of Sections 1 and 5 thereof,
which shall survive until the Separation Date, and the definitions set forth in
Section 10(e) thereof, which are incorporated herein by reference). The Parties
expressly agree that nothing in this Agreement in any way alters the at-will
nature of Executive's employment relationship with the Company and, to the
extent such employment continues during any period, either party may terminate
that employment relationship at any time for any or no reason.

         16.      NO ORAL MODIFICATION. This Agreement may only be amended in
writing signed by Executive and the Company.

         17.      GOVERNING LAW. This Agreement shall be governed by the laws of
the State of California, without regard to its conflicts of law provisions.

         18.      EFFECTIVE DATE. This Agreement shall be effective on the first
date on which it has been signed by both parties and such date shall be referred
to in this Agreement as the "EFFECTIVE DATE."

                                      -8-

<PAGE>

         19.      COUNTERPARTS. This Agreement may be executed in counterparts,
and each counterpart shall have the same force and effect as an original and
shall constitute an effective, binding agreement on the part of each of the
undersigned.

         20.      ASSIGNMENT. This Agreement may not be assigned by Executive or
the Company without the prior written consent of the other party.
Notwithstanding the foregoing, this Agreement may be assigned by the Company to
a corporation controlling, controlled by or under common control with the
Company or to an acquiror of all or substantially all of the Company's business,
stock or assets, without the consent of Executive.

         21.      CONTINUING REPRESENTATIONS. Executive expressly acknowledges
and agrees that Executive shall sign a Continuing Representations Certificate,
in substantially the same form as attached hereto as Exhibit C, on the
Separation Date, reaffirming each of the waivers, releases, warranties and
representations contained in this Agreement as of such date and that Employee's
rights continue to be as defined by the terms of this Agreement as of such date.

         22.      VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

                  (a)      they have read this Agreement;

                  (b)      they have been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of their own
choice or that they have voluntarily declined to seek such counsel;

                  (c)      they understand the terms and consequences of this
Agreement and of the releases it contains; and

                  (d)      they are fully aware of the legal and binding effect
of this Agreement.

                            [signature page follows]

                                      -9-

<PAGE>

               IN WITNESS WHEREOF, the Parties have executed this Transition
Agreement and Release on the respective dates set forth below.

                                             REDENVELOPE, INC.

Dated as of September 26, 2001               By: /s/ Hilary Billings
                                                 ------------------------------

                                             Print Name: Hilary Billings

                                             Title: CHAIRMAN

                                             MARTIN MCCLANAN, an individual

Dated as of September 25, 2001               /s/ MARTIN MCCLANAN
                                             -----------------------------------
                                             Signature

                                      -10-

<PAGE>

                                    EXHIBIT A

                            CONFIDENTIALITY AGREEMENT

                                      -11-
<PAGE>

                               REDENVELOPE, INC.

                          CONFIDENTIAL INFORMATION AND
                         INVENTION ASSIGNMENT AGREEMENT

         As a condition of my becoming employed by or retained as a consultant
by RedEnvelope, Inc., a Delaware corporation or any of its current or future
subsidiaries, affiliates, successors or assigns (collectively, the "Company"),
and in consideration of my employment or consulting relationship with the
Company and my receipt of the compensation now and hereafter paid to me by the
Company, I agree to the following:

         1.       EMPLOYMENT OR CONSULTING RELATIONSHIP. I understand and
acknowledge that this Agreement does not alter, amend or expand upon any rights
I may have to continue in the employ of, or in a consulting relationship with,
or the duration of my employment or consulting relationship with, the Company
under any existing agreements between the Company and me or under applicable
law. Any employment or consulting relationship between the Company and me,
whether commenced prior to or upon the date of this Agreement, shall be referred
to herein as the "Relationship."

         2.       AT-WILL RELATIONSHIP. I understand and acknowledge that my
Relationship with the Company is and shall continue to be at-will, as defined
under applicable law, meaning that either I or the Company may terminate the
Relationship at any time for any reason or no reason, without further obligation
or liability.

         3.       CONFIDENTIAL INFORMATION.

                  (a)      COMPANY INFORMATION. I agree at all times during the
term of my Relationship with the Company and thereafter, to hold in strictest
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm, corporation or other entity without written
authorization of the Board of Directors of the Company, any Confidential
Information of the Company which I obtain or create. I further agree not to make
copies of such Confidential Information except as authorized by the Company. I
understand that "Confidential Information" means any Company proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research, product plans, products, services, suppliers, customer
lists and customers (including, but not limited to, customers of the Company on
whom I called or with whom I became acquainted during the Relationship), prices
and costs, markets, software, developments, inventions, laboratory notebooks,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, marketing, licenses, finances, budgets or other
business information disclosed to me by the Company either directly or
indirectly in writing, orally or by drawings or observation of parts or
equipment or created by me during the period of the Relationship, whether or not
during working hours. I understand that "Confidential Information" includes,
but is not limited to, information pertaining to any aspects of the Company's
business which is either information not known by actual or potential
competitors of the Company or is proprietary information of the Company or its
customers or suppliers, whether of a technical nature or otherwise. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly and widely known and made generally available
through no wrongful act of mine or of others who were under confidentiality
obligations as to the item or items involved.

                  (b)      FORMER EMPLOYER INFORMATION. I represent that my
performance of all terms of this Agreement as an employee or consultant of the
Company has not breached and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by me in confidence or trust
prior or subsequent to the commencement of my Relationship with the Company, and
I will not disclose to the Company, or induce the Company to use, any
inventions, confidential or proprietary information or material belonging to any
previous employer or any other party.

                  (c)      THIRD PARTY INFORMATION. I recognize that the Company
has received and in the future will receive confidential or proprietary
information from third parties subject to a duty on the Company's part to
maintain the confidentiality of such information and to use it only for certain
limited purposes. I agree to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out my work for
the Company consistent with the Company's agreement with such third party.

<PAGE>

         4.       INVENTIONS.

                  (a)      INVENTIONS RETAINED AND LICENSED. I have attached
hereto, as Exhibit A, a list describing with particularity all inventions,
original works of authorship, developments, improvements, and trade secrets
which were made by me prior to the commencement of the Relationship
(collectively referred to as "Prior Inventions"), which belong solely to me or
belong to me jointly with another, which relate in any way to any of the
Company's proposed businesses, products or research and development, and which
are not assigned to the Company hereunder; or, if no such list is attached, I
represent that there are no such Prior Inventions. If, in the course of my
Relationship with the Company, I incorporate into a Company product, process or
machine a Prior Invention owned by me or in which I have an interest, the
Company is hereby granted and shall have a non-exclusive, royalty-free,
irrevocable, perpetual, worldwide license (with the right to sublicense) to
make, have made, copy, modify, make derivative works of, use, sell and otherwise
distribute such Prior Invention as part of or in connection with such product,
process or machine.

                  (b)      ASSIGNMENT OF INVENTIONS. I agree that I will
promptly make full written disclosure to the Company, will hold in trust for the
sole right and benefit of the Company, and hereby assign to the Company, or its
designee, all my right, title and interest throughout the world in and to any
and all inventions, original works of authorship, developments, concepts,
know-how, improvements or trade secrets, whether or not patentable or
registrable under copyright or similar laws, which I may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed
or reduced to practice, during the period of time in which I am employed by or a
consultant of the Company (collectively referred to as "Inventions"), except
as provided in Section 4(e) below. I further acknowledge that all inventions,
original works of authorship, developments, concepts, know-how, improvements or
trade secrets which are made by me (solely or jointly with others) within the
scope of and during the period of my Relationship with the Company are "works
made for hire" (to the greatest extent permitted by applicable law) and are
compensated by my salary (if I am an employee) or by such amounts paid to me
under any applicable consulting agreement or consulting arrangements (if I am a
consultant), unless regulated otherwise by the mandatory law of the state of
California. Personal, non-business oriented, works authored are exempt from
this document.

                  (c)      MAINTENANCE OF RECORDS. I agree to keep and maintain
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my Relationship with the Company. The
records may be in the form of notes, sketches, drawings, flow charts, electronic
data or recordings, laboratory notebooks, and any other format. The records will
be available to and remain the sole property of the Company at all times. I
agree not to remove such records from the Company's place of business except as
expressly permitted by Company policy which may, from time to time, be revised
at the sole election of the Company for the purpose of furthering the Company's
business.

                  (d)      PATENT AND COPYRIGHT RIGHTS. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents,
trademarks, mask work rights, moral rights, or other intellectual property
rights relating thereto in any and all countries, including the disclosure to
the Company of all pertinent information and data with respect thereto, the
execution of all applications, specifications, oaths, assignments, recordations,
and all other instruments which the Company shall deem necessary in order to
apply for, obtain, maintain and transfer such rights and in order to assign and
convey to the Company, its successors, assigns and nominees the sole and
exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement until the expiration of the
last such intellectual property right to expire in any country of the world. If
the Company is unable because of my mental or physical incapacity or
unavailability or for any other reason to secure my signature to apply for or to
pursue any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to
the Company as above, then I hereby irrevocably designate and appoint the
Company and its duly authorized officers and agents as my agent and attorney in
fact, to act for and in my behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
application for, prosecution, issuance, maintenance or transfer of letters
patent or copyright registrations thereon with the same legal force and effect
as if originally executed by me. I hereby waive and irrevocably quitclaim to the
Company any and all claims, of any nature whatsoever, which I now or hereafter
have for infringement of any and all proprietary rights assigned to the Company.

                                      -2-

<PAGE>

                  (e)      EXCEPTION TO ASSIGNMENTS. I understand that the
provisions of this Agreement requiring assignment of Inventions to the Company
do not apply to any invention which qualifies fully under the provisions of
California Labor Code Section 2870 (attached hereto as Exhibit B ). I will
advise the Company promptly in writing of any inventions that I believe meet
such provisions and are not otherwise disclosed on Exhibit A.

         5.       RETURNING COMPANY DOCUMENTS. I agree that, at the time of
termination of my Relationship with the Company, I will deliver to the Company
(and will not keep in my possession, recreate or deliver to anyone else) any and
all devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, laboratory notebooks, materials,
flow charts, equipment, other documents or property, or reproductions of any
aforementioned items developed by me pursuant to the Relationship or otherwise
belonging to the Company, its successors or assigns. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. In the
event of the termination of the Relationship, I agree to sign and deliver the
"Termination Certification" attached hereto as Exhibit C .

         6.       NOTIFICATION TO OTHER PARTIES.

                  (a)      EMPLOYEES. In the event that I leave the employ of
the Company, I hereby consent to notification by the Company to my new employer
about my rights and obligations under this Agreement.

                  (b)      CONSULTANTS. I hereby grant consent to notification
by the Company to any other parties besides the Company with whom I maintain a
consulting relationship, including parties with whom such relationship commences
after the effective date of this Agreement, about my rights and obligations
under this Agreement.

         7.       SOLICITATION OF EMPLOYEES, CONSULTANTS AND OTHER PARTIES. I
agree that during the term of my Relationship with the Company, and for a period
of twenty-four (24) months immediately following the termination of my
Relationship with the Company for any reason, whether with or without cause, I
shall not either directly or indirectly solicit, induce, recruit or encourage
any of the Company's employees or consultants to terminate their relationship
with the Company, or take away such employees or consultants, or attempt to
solicit, induce, recruit, encourage or take away employees or consultants of the
Company, either for myself or for any other person or entity. Further, for a
period of twenty-four (24) months following termination of my Relationship with
the Company for any reason, with or without cause, I shall not solicit any
licensor to or customer of the Company or licensee of the Company's products, in
each case, that are known to me, with respect to any business, products or
services that are competitive to the products or services offered by the Company
or under development as of the date of termination of my Relationship with the
Company.

         8.       REPRESENTATIONS AND COVENANTS.

                  (a)      FACILITATION OF AGREEMENT. I agree to execute
promptly any proper oath or verify any proper document required to carry out the
terms of this Agreement upon the Company's written request to do so.

                  (b)      CONFLICTS. I represent that my performance of all
the terms of this Agreement will not breach any agreement to keep in confidence
proprietary information acquired by me in confidence or in trust prior to
commencement of my Relationship with the Company. I have not entered into, and I
agree I will not enter into, any oral or written agreement in conflict with any
of the provisions of this Agreement.

                  (c)      VOLUNTARY EXECUTION. I certify and acknowledge that
I have carefully read all of the provisions of this Agreement and that I
understand and will fully and faithfully comply with such provisions.

         9.       GENERAL PROVISIONS.

                  (a)      GOVERNING LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California, without giving effect to the principles of conflict of
laws.

                                      -3-

<PAGE>

                  (b)      ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement and understanding between the Company and me relating to the
subject matter herein and merges all prior discussions between us. No
modification or amendment to this Agreement, nor any waiver of any rights under
this Agreement, will be effective unless in writing signed by the party to be
charged. Any subsequent change or changes in my duties, obligations, rights or
compensation will not affect the validity or scope of this Agreement.

                  (c)      SEVERABILITY. If one or more of the provisions in
this Agreement are deemed void by law, then the remaining provisions will
continue in full force and effect.

                  (d)      SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its successors, and its assigns.

                  (e)      SURVIVAL. The provisions of this Agreement shall
survive the termination of the Relationship and the assignment of this Agreement
by the Company to any successor in interest or other assignee.

                  (f)      ADVICE OF COUNSEL. I ACKNOWLEDGE THAT, IN EXECUTING
THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST. ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION HEREOF.

                            [Signature Page Follows]

                                      -4-

<PAGE>

         The parties have executed this Agreement on the respective dates set
forth below:

COMPANY:                                    EMPLOYEE:

REDENVELOPE, INC.                           ___________________an Individual:

/s/ Hilary Billings                         /s/ Martin McClanan
-----------------------------               ------------------------------------
Signature                                   Signature

By:      HILARY BILLINGS                    Martin McClanan
                                            ------------------------------------
                                            Printed Name
Title:   President & CEO

Date:    _____________________              Date:    2/16/00

Address:201 Spear Street, 3rd Floor        Address:201 Spear Street, 3rd Floor

        San Francisco, CA 94105                    SF, CA 94105

                               SIGNATURE PAGE TO
                          CONFIDENTIAL INFORMATION AND
                         INVENTION ASSIGNMENT AGREEMENT

<PAGE>

                                    EXHIBIT A

                            LIST OF PRIOR INVENTIONS
                        AND ORIGINAL WORKS OF AUTHORSHIP
                            EXCLUDED FROM SECTION 4

  Title                               Date                  Identifying Number
                                                            or Brief Description

___No inventions or improvements

___Additional Sheets Attached

Signature of Employee/Consultant: _______________

Print Name of Employee/Consultant: ______________

Date: ___________________________________________

<PAGE>

                                    EXHIBIT B

Section 2870 of the California Labor Code is as follows:

         (a)      Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:

                  (1)      Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer; or

                  (2)      Result from any work performed by the employee for
the employer.

         (b)      To the extent a provision in an employment agreement purports
to require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
<PAGE>

                                    EXHIBIT B

                            SEPARATION CERTIFICATION

         This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, notebooks, flow
charts, materials, equipment, other documents or property, or copies or
reproductions of any aforementioned items belonging to RedEnvelope, Inc., its
subsidiaries, affiliates, successors or assigns (together the "COMPANY").

         I further certify that I have complied with all the terms of the
Confidential Information and Invention Assignment Agreement dated _________,
200__ (see Exhibit A, the "CONFIDENTIALITY AGREEMENT") signed by me, including
the reporting of any inventions and original works of authorship (as defined
therein), conceived or made by me (solely or jointly with others) covered by
that agreement.

         I further agree that, in compliance with the Confidentiality Agreement,
I will preserve as confidential all trade secrets, confidential knowledge, data
or other proprietary information relating to products, processes, know-how,
designs, formulas, developmental or experimental work, computer programs, data
bases, other original works of authorship, customer lists, business plans,
financial information or other subject matter pertaining to any business of the
Company or any of its employees, clients, consultants or licensees.

Date: _____________

                                            ____________________________________
                                            (Executive's Signature)

                                            ____________________________________
                                            (Type/Print Executive's Name)

                                      -12-

<PAGE>

                                    EXHIBIT C

                     CONTINUING REPRESENTATIONS CERTIFICATE

         This is to certify that the waivers, covenants, warranties and
representations made by me and set forth in the Transition Agreement and Release
(the "Agreement") dated September __, 2001, between RedEnvelope, Inc. (the
"Company") and me, continue to be true and correct as of the date hereof and
that I remain bound by, and my rights continue to be defined by, the terms of
the Agreement.

         The Agreement is hereby incorporated in its entirety into this
Certificate and capitalized terms not defined in this Certificate have the same
meanings as in the Agreement.

         In addition, I expressly agree and acknowledge as of the date hereof
that:

         1.       Except as set forth in Section 4 of the Agreement, I have no
right, title or interest in or to any shares of the Company's capital stock or
other securities under the Option Agreements, the Offer Letter, or any other
document, instrument or agreement (whether oral or written) with the Company;

                  2.       I have received all salary, accrued vacation,
commissions, bonuses, wages, compensation or other such sums due to me, other
than amounts, if any, to be paid after the date hereof pursuant to the
Agreement. I further acknowledge and agree that, upon the payment by the Company
of all wages due, or to become due, to me, the California Labor Code Section
206.5 will not be applicable. That section provides in pertinent part as
follows:

                  NO EMPLOYER SHALL REQUIRE THE EXECUTION OF ANY RELEASE OF ANY
                  CLAIM OR RIGHT ON ACCOUNT OF WAGES DUE, OR TO BECOME DUE, OR
                  MADE AS AN ADVANCE ON WAGES TO BE EARNED, UNLESS PAYMENT OF
                  SUCH WAGES HAS BEEN MADE;

         3.       I, on behalf of myself and my heirs, executors, and assigns,
hereby fully and forever release the Company and its officers, directors,
employees, investors, attorneys, stockholders, administrators, predecessor and
successor corporations and assigns, of and from any claim, duty, obligation or
cause of action relating to any matters of any kind, whether presently known or
unknown, suspected or unsuspected, that I may possess arising from any
omissions, acts or facts that have occurred up until and including the date of
this Certificate including, without limitation:

                  (a)      any and all claims relating to or arising from my
employment relationship with the Company and the termination of that
relationship;

                  (b)      any and all claims relating to my right to receive,
or receipt of, wages or other compensation;

                                      -13-

<PAGE>

                  (c)      any and all claims relating to, or arising from, my
right to purchase, or actual purchase of shares of the capital stock or other
securities of the Company;

                  (d)      any and all claims for wrongful discharge of
employment; breach of contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and implied, negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; negligence; and defamation;

                  (e)      any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act of 1990, the California Fair Employment and Housing Act, the
Fair Labor Standards Act, and any family and medical leave acts;

                  (f)      any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and

                  (g)      any and all claims for attorneys' fees and costs.

         I agree that the release set forth herein shall be and remain in effect
in all respects as a complete general release as to the matters released. This
release does not extend to any obligations incurred or specified under this
Certificate.

         I further acknowledge that I am not aware of any claim other than the
claims that are released hereunder. I acknowledge that I have been advised by
legal counsel and am familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         Being aware of said Code section, I agree to expressly waive any rights
I may have thereunder, as well as under any other statute or common law
principles of similar effect; and

         4.       I certify that I have complied with all of my obligations
under the Agreement and the Confidentiality Agreement.

                  I have executed this Certificate on the date set forth below.

                                                 MARTIN MCCLANAN, an individual

Dated as of MAY 17, 2002                         /s/ Martin McClanan
                                                 -----------------------------
                                                 Signature

                                      -14-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]