Document:

<PAGE>

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of
the 5th day of January, 2000 (the "Effective Date"), between HCC INSURANCE
HOLDINGS, INC. ("HCC" or "Company"), and EDWARD H. ELLIS, JR. ("Executive"),
sometimes collectively referred to herein as the "Parties."

                                R E C I T A L S:

      WHEREAS, Executive is to be employed as Senior Vice President and Chief
Financial Officer ("CFO") and, as an integral part of its management who
participates in the decision-making process relative to short and long-term
planning and policy for the Company, will serve on the Company's Executive
Management Committee;

      WHEREAS, it is the desire of the Board of Directors of HCC (the "Board")
to (i) directly engage Executive as an officer of HCC and its subsidiaries;

      WHEREAS, Executive is desirous of committing himself to serve HCC on the
terms herein provided; and

      WHEREAS, Executive and HCC have previously entered into an Employment
Agreement effective as of January 1, 1998 (the "1998 Contract") which is to be
cancelled and of no further force and effect.

      NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:

      1. Termination of 1998 Contract and Term. Effective as of the Effective
Date, the 1998 Contract shall be cancelled, terminated and of no further force
or effect. The Company hereby agrees to employ Executive as a Senior Vice
President and CFO, and Executive hereby agrees to accept such employment, on the
terms and conditions set forth herein, for the period commencing on the
Effective Date and expiring as of 11:59 p.m. on December 31, 2002 (the "Basic
Term") (unless sooner terminated as hereinafter set forth).

      At Executive's option, Executive shall have the right to retire on or
after December 31, 2001. In such event, Executive shall be retained as a
consultant to the Company for the period beginning on the date of such
retirement and ending one year thereafter (the "Consulting Period"). Executive
shall receive a fee during such Consulting Period of $100,000 (the "Consulting
Fee"). During the Consulting Period, any options or grants pursuant to this
Agreement shall continue to vest and be exercisable. In addition to the
Consulting Fee, the Company shall on behalf of the Executive provide for medical
insurance in accordance with the Company's policy and COBRA and, subject to the
terms of any plan, all other benefits Executive would have received if he were
an employee.

      2. Duties.
<PAGE>

            (a) Duties as Employee of the Company. Executive shall, subject to
the supervision of the Board of Directors, act as Chief Financial Officer of HCC
in the ordinary course of its business with all such powers with respect to such
management and control as may be reasonably incident to such responsibilities.
During normal business hours, Executive shall devote his full time and attention
to diligently attending to the business of the Company during the Basic Term.
During the Basic Term, Executive shall not directly or indirectly render any
services of a business, commercial, or professional nature to any other person,
firm, corporation, or organization, whether for compensation or otherwise,
without the prior written consent of the Board of Directors of HCC. However,
Executive shall have the right to engage in such activities as may be
appropriate in order to manage his personal investments so long as such
activities do not materially interfere or conflict with the performance of his
duties to the Company hereunder. The conduct of such activity shall not be
deemed to materially interfere or conflict with Executive's performance of his
duties until Executive has been notified in writing thereof and given a
reasonable period in which to cure the same.

            (b) Other Duties. If elected, Executive agrees to serve as a member
of the Senior Management Committee of HCC and of any of its subsidiaries and in
one or more executive offices of any of HCC's subsidiaries, provided Executive
is indemnified for serving in any and all such capacities in a manner acceptable
to the Company and Executive. If elected, Executive agrees that he shall not be
entitled to receive any compensation for serving as a director of HCC, or in any
capacities of HCC's subsidiaries other than the compensation to be paid to
Executive by the Company pursuant to this Agreement.

      3. Compensation and Related Matters.

            (a) Base Salary. Executive shall receive a base salary paid by the
Company as follows: $250,000 for the year ending December 31, 2000; $275,000 for
the year ending December 31, 2001; and $300,000 for the year ending December 31,
2002, payable in each calendar year in substantially equal monthly installments.
For purposes of this Agreement, "Base Salary" shall mean the Executive's initial
base salary or, if increased, then the increased base salary.

            (b) Bonus Payments. Executive shall be eligible to receive, in
addition to the Base Salary, an annual cash and/or stock bonus payment in
amount, which may be zero, to be determined at the sole discretion of the
Compensation Committee.

            (c) Expenses. During the Basic Term, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established by the Board for the
Company's senior executive officers) in performing services hereunder, provided
that Executive properly accounts therefor in accordance with Company policy.

            (d) Other Benefits. Executive shall be entitled to participate in or
receive benefits under any compensation employee benefit plan or other
arrangement made available by the

                                       2
<PAGE>

Company now or in the future to its senior executive officers, subject to and on
a basis consistent with the terms, conditions, and overall administration of
such plan or arrangement. Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the Base Salary payable to Executive pursuant to Paragraph (a)
of this Section. The Company shall not make any changes in any employee benefit
plans or other arrangements in effect on the date hereof or subsequently in
effect in which Executive currently or in the future participates (including,
without limitation, each pension and retirement plan, supplemental pension and
retirement plan, savings and profit sharing plan, stock or unit ownership plan,
stock or unit purchase plan, stock or unit option plan, life insurance plan,
medical insurance plan, disability plan, dental plan, health and accident plan,
or any other similar plan or arrangement) that would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to substantially all executives of the Company and does not
result in a proportionately greater reduction in the rights of or benefits to
Executive as compared with any other executive of the Company.

            (e) Vacations. Executive shall be entitled to twenty (20) paid
vacation days per year during the Basic Term. There shall be no carryover of
unused vacation from year to year. For purposes of this Paragraph, weekends
shall not count as vacation days, and Executive shall also be entitled to all
paid holidays given by the Company to its senior executive officers.

            (f) Perquisites. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to an executive officer of HCC in
accordance with any practice established by the Board.

            (g) Proration. Any payments or benefits payable to Executive
hereunder in respect of any calendar year during which Executive is employed by
the Company for less than the entire year, unless otherwise provided in the
applicable plan or arrangement, shall be prorated in accordance with the number
of days in such calendar year during which he is so employed. Notwithstanding
the foregoing, any payments pursuant to Paragraph 4(c) or 4(d) this Agreement
shall not be subject to proration.

      4.    Termination.

            (a)   Definitions.

                  (1)   "Cause" shall mean:

                        (i) Material dishonesty which is not the result of an
      inadvertent or innocent mistake of Executive with respect to the Company
      or any of its subsidiaries;

                        (ii) Willful misfeasance or nonfeasance of duty by
      Executive intended to injure or having the effect of injuring in some
      material fashion the reputation, business, or business relationships of
      the Company or any of its subsidiaries or any of their respective
      officers, directors, or employees;

                                       3
<PAGE>

                        (iii) Material violation by Executive of any material
      term of this Agreement;

                        (iv) Conviction of Executive of any felony, any crime
      involving moral turpitude or any crime other than a vehicular offense
      which could reflect in some material fashion unfavorably upon the Company
      or any of its subsidiaries.

      Executive may not be terminated for Cause unless and until there has been
      delivered to Executive written notice from the Board supplying the
      particulars of his acts or omissions that the Board believes constitute
      Cause, a reasonable period of time (not less than 30 days) has been given
      to Executive after such notice to either cure the same or to meet with the
      Board with his attorney if so desired by Executive, and following which
      the Board by action of not less than two-thirds of its members furnishes
      to Executive a written resolution specifying in detail its findings that
      Executive has been terminated for Cause as of the date set forth in the
      notice to Executive.

                  (2) A "Change of Control" shall be deemed to have occurred if:

                        (i) Any "person" or "group" (within the meaning of
      Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) other
      than a trustee or other fiduciary holding securities under an employee
      benefit plan of the Company becomes the "beneficial owner" (as defined in
      Rule 13d-3 under the Securities Exchange Act of 1934), directly or
      indirectly, of 50% or more of the Company's then outstanding voting common
      stock; or

                        (ii) At any time during the period of three (3)
      consecutive years (not including any period prior to the date hereof),
      individuals who at the beginning of such period constituted the Board (and
      any new director whose election by the Board or whose nomination for
      election by the Company's shareholders were approved by a vote of at least
      two-thirds of the directors then still in office who either were directors
      at the beginning of such period or whose election or nomination for
      election was previously so approved) cease for any reason to constitute a
      majority thereof; or

                        (iii) The shareholders of the Company approve a merger
      or consolidation of the Company with any other corporation, other than a
      merger or consolidation (a) in which a majority of the directors of the
      surviving entity were directors of the Company prior to such consolidation
      or merger, and (b) which would result in the voting securities of the
      Company outstanding immediately prior thereto continuing to represent
      (either by remaining outstanding or by being changed into voting
      securities of the surviving entity) more than 50% of the combined voting
      power of the voting securities of the surviving entity outstanding
      immediately after such merger or consolidation; or

                                       4
<PAGE>

                        (iv) The shareholders approve a plan of complete
      liquidation of the Company or an agreement for the sale or disposition by
      the Company of all or substantially all of the Company's assets.

      Executive may not be terminated for Cause unless and until there has been
      delivered to Executive written notice from the Board supplying the
      particulars of his acts or omissions that the Board believes constitute
      Cause, a reasonable period of time (not less than 30 days) has been given
      to Executive after such notice to either cure the same or to meet with the
      Board with his attorney if so desired by Executive, and following which
      the Board by action of not less than two-thirds of its members furnishes
      to Executive a written resolution specifying in detail its findings that
      Executive has been terminated for Cause as of the date set forth in the
      notice to Executive.

                  (3) A "Disability" shall mean the absence of Executive from
Executive's duties with the Company on a full-time basis for 180 consecutive
days, or 180 days in a 365-day period, as a result of incapacity due to mental
or physical illness which results in the Executive being unable to perform the
essential functions of his position, with or without reasonable accommodation.

                  (4) A "Good Reason" shall mean any of the following (without
Executive's express written consent):

                        (i) Following a change of control, a material alteration
      in the nature or status of Executive's title, duties or responsibilities,
      or the assignment of duties or responsibilities inconsistent with,
      Executive's status title, duties and responsibilities;

                        (ii) A failure by the Company to continue in effect any
      employee benefit plan in which Executive was participating, or the taking
      of any action by the Company that would adversely affect Executive's
      participation in, or materially reduce Executive's benefits under, any
      such employee benefit plan, unless such failure or such taking of any
      action adversely affects the senior members of corporate management of the
      Company generally;

                        (iii) A relocation of the Company's executive offices,
      or Executive's relocation to any place other than the executive offices,
      exceeding a distance of fifty (50) miles from the Company's current
      executive office located in Houston, Texas, except for reasonably required
      travel by Executive on the Company's business;

                        (iv) Any material breach by the Company of any provision
      of this Agreement; or

                        (v) Any failure by the Company to obtain the assumption
      and performance of this Agreement by any successor (by merger,
      consolidation, or otherwise) or assign of the Company.

                                       5
<PAGE>

However, Good Reason shall exist with respect to an above specified matter only
if such matter is not corrected by the Company within thirty (30) days of its
receipt of written notice of such matter from Executive and in no event shall a
termination by Executive occurring more than ninety (90) days following the date
of the event described above be a termination for Good Reason due to such event.

                  (5) "Termination Date" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.

                  (6) "Termination Following a Change of Control" shall mean
failure of any successor/surviving company to adopt this Agreement.

            (b) Termination Without Cause or For Good Reason: Benefits. In the
event there is a termination by the Company without Cause, or if Executive
terminates for Good Reason within ninety (90) days after a Change of Control (a
"Termination Event"), this Agreement shall terminate and Executive shall be
entitled to the following severance benefits:

                  (1) For the remainder of the Basic Term after the Termination
      Date, Base Salary (as defined in Paragraph 3(a)), at the rate in effect
      immediately prior to the Termination Event, payable in a lump sum;

                  (2) If there is a Change of Control or if there is a
      Termination Event, any stock options ("Stock Awards") which Executive has
      received under this Agreement shall vest immediately and, if there is a
      Termination Event, all such Stock Awards shall be exercisable for ten (10)
      days from the date of such Termination Event or the remainder of their
      term, whichever is less;

                  (3) To the extent not theretofore paid or provided, the
      Company shall timely pay or provide to Executive any other amounts or
      benefits required to be paid or provided or which Executive is eligible to
      receive under any plan, program, policy or practice, or contract or
      agreement of the Company and its affiliated companies for the period of
      time equal to the remainder of the Basic Term and through December 31,
      2002 the Company, at its sole expense, shall continue to provide (through
      its own plan and/or individual policies) Executive (and Executive's
      dependents) with health benefits no less favorable than the group health
      plan benefits provided during such period to any senior executive officer
      of the Company or any affiliated company (to the extent any such coverage
      or benefits are taxable to Executive by reason of being provided under a
      self-insured health plan of the Company or an affiliate, the Company shall
      make Executive "whole" for the same on an after-tax basis), provided,
      however, such coverage shall be secondary to any group health plan
      coverage Executive (or his dependents) receive from another employer,
      (such other amounts and benefits shall be hereinafter referred to as the
      "Other Benefits");

                  (4) If Executive receives any payments whether or not pursuant
      to this Agreement which are subject to an excise tax imposed under Section
      4999 of the Internal

                                       6
<PAGE>

      Revenue Code of 1986, as amended, or any similar tax imposed under
      federal, state, or local law (collectively, "Excise Taxes"), the Company
      shall pay to Executive (on or before the date on which the Company is
      required to withhold such Excise Taxes), 1) an additional amount equal to
      all Excise Taxes then due and payable, and 2) the amount necessary to
      defray Executive's increased (federal, state, and local) tax liability
      arising due to payment of the amounts specified in this Subsections (4) of
      this Paragraph 4, which shall include any costs and expenses, including
      penalties and interest incurred by Executive in connection with any audit,
      proceedings, etc. related to the payment of such Excise Taxes or this
      payment. For purposes of calculating the amount payable to Executive under
      this Paragraph, the federal and state income tax rates used shall be the
      highest marginal federal and state rates applicable to ordinary income in
      Executive's state of residence, taking into account any federal income tax
      deductions or credits available to Executive for state income taxes. The
      Company shall cause its independent auditors to calculate such amount and
      provide Executive a copy of such calculation at least ten (10) days prior
      to the date specified above for payment of such amount. It is the intent
      of the Parties that this Subsection (4) shall place Executive in the same
      net after-tax position Executive would have been in had no payment been
      subject to an Excise Tax and, notwithstanding anything herein to the
      contrary, it shall be construed to effectuate said result;

                  (5) All accrued compensation and unreimbursed expenses through
      the Termination Date. Such amounts shall be paid to Executive in a lump
      sum in cash within thirty (30) days after the Termination Date; and

                  (6) Executive shall be free to accept other employment during
      such period, and there shall be no offset of any employment compensation
      earned by Executive in such other employment during such period against
      payments due Executive under this Paragraph (4), and there shall be no
      offset in any compensation received from such other employment against the
      Base Salary set forth above.

            (c) Termination In Event of Death: Benefits. If Executive's
employment is terminated by reason of Executive's death during the Basic Term,
this Agreement shall terminate without further obligation to Executive's legal
representatives under this Agreement, other than for payment of all accrued
compensation, unreimbursed expenses, the timely payment or provision of Other
Benefits through the date of death. Such amounts shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within ninety (90)
days after the date of death. With respect to the provision of Other Benefits,
the term Other Benefits as used in this Paragraph 4(c) shall include, without
limitation, and Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company to the estates and beneficiaries of other executive level employees of
the Company under such plans, programs, practices, and policies relating to
death benefits, if any, as in effect with respect to other executives and their
beneficiaries at any time during the 120-day period immediately preceding the
date of death. Additionally, all Stock Awards shall be vested immediately and
shall be exercisable for the greater of one year after the date of such vesting
or the remaining term of such option.

                                       7
<PAGE>

            (d) Termination In Event of Disability: Benefits. If Executive's
employment is terminated by reason of Executive's Disability during the Basic
Term, this Agreement shall continue in full force for a period of one (1) year
following such Disability. Following such one (1) year period, this Agreement
shall continue in full force except that (a) the Base Salary shall be reduced by
50% and (b) Executive shall, not be entitled to any subsequent cash or stock
bonuses. In addition, all outstanding Stock Awards shall vest immediately upon
such termination due to Disability and shall be exercisable for the greater of
one year after the date of such vesting or the remaining term of the option.

            (e) Voluntary Termination by Employee and Termination for Cause:
Benefits. Executive may terminate his employment with the Company without Good
Reason by giving written notice of his intent and stating an effective
Termination Date at least ninety (90) days after the date of such notice;
provided, however, that the Company may accelerate such effective date by paying
Executive through the proposed Termination Date and also vesting awards that
would have vested but for this acceleration of the proposed Termination Date.
Upon such a termination by Executive or upon termination for Cause by the
Company, this Agreement shall terminate and the Company shall pay to Executive
all accrued compensation, unreimbursed expenses and the Other Benefits through
the Termination Date. Such amounts shall be paid to Executive in a lump sum in
cash within thirty (30) days after the date of termination. In addition, all
unvested stock options shall terminate and all vested options will terminate ten
(10) days after the Termination Date.

            (f) Director Positions. Executive agrees that upon termination of
employment, for any reason, at the request of the Chairman of the Board,
Executive will immediately tender his resignation from any and all Board
positions held with the Company and/or any of its subsidiaries and affiliates.

      5. Non-Competition, Non-Solicitation, and Confidentiality. Executive
recognizes and agrees that the benefit of not being employed at-will, is
provided in consideration for, among other things, the agreements contained in
this Section, as well as the Stock Awards granted to Executive pursuant to this
Agreement. The Company agrees that while employed pursuant to this Agreement,
Executive will be provided with confidential information of Company; specialized
training on how to perform his duties; and contact with the Company's customers
and potential customers.

            (a) Non-Competition During Employment. Executive agrees that during
the Basic Term and the Consulting Period, he will not compete with the Company
by engaging in the conception, design, development, production, marketing, or
servicing of any product or service that is substantially similar to the
products or services which the Company provides, and that he will not work for,
in any capacity, assist, or become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual or business which offers or
performs services, or offers or provides products substantially similar to the
services and products provided by Company, provided, Executive shall not be
prevented from owning no more than 2% of any Company whose stock is publicly
traded.

                                       8
<PAGE>

            (b) Conflicts of Interest. Executive agrees that during the Basic
Term and the Consulting Period, he will not engage, either directly or
indirectly, in any activity (a "Conflict of Interest") which might adversely
affect the Company or its affiliates, including ownership of a material interest
in any supplier, contractor, distributor, subcontractor, customer or other
entity with which the Company does business or accepting any material payment,
service, loan, gift, trip, entertainment, or other favor from a supplier,
contractor, distributor, subcontractor, customer or other entity with which the
Company does business, and that Executive will promptly inform the President of
the Company as to each offer received by Executive to engage in any such
activity. Executive further agrees to disclose to the Company any other facts of
which Executive becomes aware which in Executive's good faith judgment could
reasonably be expected to involve or give rise to a Conflict of Interest or
potential Conflict of Interest.

            (c) Non-Competition After Termination. Executive agrees that
Executive shall not, at any time during the period of two (2) years after the
later of termination of the Basic Term or the Consulting Period for any reason,
within any of the markets in which the Company has sold products or services or
formulated a plan to sell products or services into a market during the last
twelve (12) months of Executive's employ or which the Company enters into within
three (3) months thereafter, engage in or contribute Executive's knowledge to
any work which is competitive with or similar to a product, process, apparatus,
service, or development on which Executive worked or with respect to which
Executive had access to Confidential Information while employed by the Company.
Following the expiration of said two (2) year period, Executive shall continue
to be obligated under the Confidential Information Paragraph of this Agreement
not to use or to disclose Confidential Information of the Company so long as it
shall not be publicly available. It is understood that the geographical area set
forth in this covenant is divisible so that if this clause is invalid or
unenforceable in an included geographic area, that area is severable and the
clause remains in effect for the remaining included geographic areas in which
the clause is valid.

            (d) Confidential Information. Executive further agrees that he will
not, except as the Company may otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or otherwise disclose to any third
party any Confidential Information or proprietary information of the Company, or
authorize anyone else to do these things at any time either during or subsequent
to his employment with the Company. This Section shall continue in full force
and effect after termination of Executive's employment and after the termination
of this Agreement. Executive's obligations under this Paragraph with respect to
any specific Confidential Information and proprietary information shall cease
when that specific portion of the Confidential Information and proprietary
information becomes publicly known, in its entirety and without combining
portions of such information obtained separately. It is understood that such
Confidential Information and proprietary information of the Company include
matters that Executive conceives or develops, as well as matters Executive
learns from other employees of Company. Confidential Information is defined to
include information: (1) disclosed to or known by the Executive as a consequence
of or through his employment with the Company; (2) not generally known outside
the Company; and (3) which relates to any aspect of the Company or its business,
finances, operation plans, budgets, research, or strategic development.
"Confidential Information" includes, but is not limited to the Company's trade
secrets, proprietary information, financial documents, long range plans,
customer

                                       9
<PAGE>

lists, employer compensation, marketing strategy, data bases, costing data,
computer software developed by the Company, investments made by the Company, and
any information provided to the Company by a third party under restrictions
against disclosure or use by the Company or others.

            (e) Return of Documents, Equipment, Etc. All writings, records, and
other documents and things comprising, containing, describing, discussing,
explaining, or evidencing any Confidential Information, and all equipment,
components, parts, tools, and the like in Executive's custody or possession that
have been obtained or prepared in the course of Executive's employment with the
Company shall be the exclusive property of the Company, shall not be copied
and/or removed from the premises of the Company, except in pursuit of the
business of the Company, and shall be delivered to the Company, without
Executive retaining any copies, upon notification of the termination of
Executive's employment or at any other time requested by the Company. The
Company shall have the right to retain, access, and inspect all property of
Executive of any kind in the office, work area, and on the premises of the
Company upon termination of Executive's employment and at any time during
employment by the Company to ensure compliance with the terms of this Agreement.

            (f) Reaffirm Obligations. Upon termination of his employment with
the Company, Executive, if requested by Company, shall reaffirm in writing
Executive's recognition of the importance of maintaining the confidentiality of
the Company's Confidential Information and proprietary information, and reaffirm
any other obligations set forth in this Agreement.

            (g) Prior Disclosure. Executive represents and warrants that he has
not used or disclosed any Confidential Information he may have obtained from
Company prior to signing this Agreement, in any way inconsistent with the
provisions of this Agreement.

            (h) Confidential Information of Prior Companies. Executive will not
disclose or use during the period of his employment with the Company any
proprietary or Confidential Information or Copyright Works which Executive may
have acquired because of employment with an employer other than the Company or
acquired from any other third party, whether such information is in Executive's
memory or embodied in a writing or other physical form.

            (i) Breach. Executive agrees that any breach of Paragraphs .A.5(a)
or (c) above cannot be remedied solely by money damages, and that in addition to
any other remedies Company may have, Company is entitled to obtain injunctive
relief against Executive. Nothing herein, however, shall be construed as
limiting Company's right to pursue any other available remedy at law or in
equity, including recovery of damages and termination of this Agreement and/or
any payments that may be due pursuant to this Agreement.

            (j) Right to Enter Agreement. Executive represents and covenants to
Company that he has full power and authority to enter into this Agreement and
that the execution of this Agreement will not breach or constitute a default of
any other agreement or contract to which he is a party or by which he is bound.

                                       10
<PAGE>

            (k) Enforceability. The agreements contained in Section .A.5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any of its obligations outside of this Paragraph do
not excuse Executive from complying with the agreements contained herein.

            (l) Survivability. The agreements contained in Paragraphs
 .A.5(c)-(d) shall survive the termination of this Agreement for any reason.

      6. Assignment. This Agreement cannot be assigned by Executive. The Company
may assign this Agreement only to a successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and assets of the Company provided such successor expressly agrees in
writing reasonably satisfactory to Executive to assume and perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession and assignment had taken place.
Failure of the Company to obtain such written agreement prior to the
effectiveness of any such succession shall be a material breach of this
Agreement.

      7. Binding Agreement. Executive understands that his obligations under
this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.

      8. Notices. All notices pursuant to this Agreement shall be in writing and
sent certified mail, return receipt requested, addressed as set forth below, or
by delivering the same in person to such party, or by transmission by facsimile
to the number set forth below (which shall not constitute notice). Notice
deposited in the United States Mail, mailed in the manner described hereinabove,
shall be effective upon deposit. Notice given in any other manner shall be
effective only if and when received:

            If to Executive:              Edward H. Ellis, Jr.
                                          1826 Castlerock
                                          Houston, Texas 77090
                                          Fax: (281) 397-6440

            If to Company:                HCC Insurance Holdings, Inc.
                                          13403 Northwest Freeway
                                          Houston, Texas 77040
                                          Fax: (713) 462-2401

            with a copy (which shall      Arthur S. Berner, Esq.
            not constitute notice) to:    Haynes and Boone, LLP
                                          1000 Louisiana Street,
                                          Suite 4300
                                          Houston, Texas 77002-5012
                                          Fax: (713) 236-5652

                                       11
<PAGE>

      9. Waiver. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.

      10. Severability. If any provision of this Agreement is determined to be
void, invalid, unenforceable, or against public policy, such provisions shall be
deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect.

      11. Arbitration. In the event any dispute arises out of Executive's
employment with or by the Company, or separation/termination therefrom, which
cannot be resolved by the Parties to this Agreement, such dispute shall be
submitted to final and binding arbitration. The arbitration shall be conducted
in accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association ("AAA"). If the Parties cannot agree on
an arbitrator, a list of seven (7) arbitrators will be requested from AAA, and
the arbitrator will be selected using alternate strikes with Executive striking
first. The cost of the arbitration will be shared equally by Executive and
Company ; provided, however, the Company shall promptly reimburse Executive for
all costs and expenses incurred in connection with any dispute in an amount up
to, but not exceeding 20 percent of Executive's base salary unless such
termination was for Cause in which event Executive shall not be entitled to
reimbursement unless and until it is determined he was terminated other than for
Cause. Arbitration of such disputes is mandatory and in lieu of any and all
civil causes of action and lawsuits either party may have against the other
arising out of Executive's employment with Company, or separation therefrom.
Such arbitration shall be held in Houston, Texas.

      12. Entire Agreement. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Executive's
employment with Company during the time period covered by this Agreement. This
Agreement replaces and supersedes any and all existing Agreements entered into
between Executive and the Company relating generally to the same subject matter,
if any, and shall be binding upon Executive's heirs, executors, administrators,
or other legal representatives or assigns.

      13. Modification of Agreement. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Executive and
an officer or other authorized executive of Company.

      14. Understand Agreement. Executive represents and warrants that he has
read and understood each and every provision of this Agreement, and Executive
understands that he has the right to obtain advice from legal counsel of choice,
if necessary and desired, in order to interpret any and all provisions of this
Agreement, and that Executive has freely and voluntarily entered into this
Agreement.

                                       12
<PAGE>

      15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

      16. Jurisdiction and Venue. With respect to any litigation regarding this
Agreement, Executive agrees to venue in the state or federal courts in Harris
County, Texas, and agrees to waive and does hereby waive any defenses and/or
arguments based upon improper venue and/or lack of personal jurisdiction. By
entering into this Agreement, Executive agrees to personal jurisdiction in the
state and federal courts in Harris County, Texas.

                [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

                                       13
<PAGE>

      IN WITNESS WHEREOF, the Parties have executed this Agreement in multiple
copies, effective as of the date first written above.

EXECUTIVE                               COMPANY

                                        HCC INSURANCE HOLDINGS, INC.

/s/ Edward H. Ellis, Jr.                    /s/ Stephen L. Way
------------------------------------    By: ------------------------------------
EDWARD H. ELLIS, JR.                        STEPHEN L. WAY,
                                             Chief Executive Officer and
                                             Chairman of the Board

Dated:   4/24/00                        Dated:   5/1/00
      ------------------------------          ----------------------------------

                 [SIGNATURE PAGE TO ELLIS EMPLOYMENT AGREEMENT]

                                        14<PAGE>

                                                                  EXHIBIT 10.12

TENANT:  IPRINT.COM

                                      LEASE

                                TABLE OF CONTENTS

ARTICLE                             TITLE                                  PAGE

 1 - Premises and Term.......................................................1

 2 - Rent....................................................................1

 3 - Landlord's Work - Tenant's Work.........................................2

 4 - Streets.................................................................2

 5 - Utility Services........................................................2

 6 - Assignment - Change of Ownership........................................3

 7 - Tenant's Additional Agreements..........................................4

 8 - Use of Premises.........................................................6

 9 - Indemnity and Public Liability Insurance................................6

10 - Fire Insurance and Casualty.............................................7

11 - Repair..................................................................9

12 - Fixtures & Alterations..................................................10

13 - Remedies................................................................11

14 - Bankruptcy..............................................................12

15 - Surrender of Premises...................................................13

16 - Eminent Domain..........................................................13

17 - Real Property Taxes.....................................................14

18 - Common Area, Parking Facilities.........................................15

19 - Miscellaneous...........................................................17

<PAGE>

                               BUSINESS PARK LEASE

         THIS LEASE is made this 7th day of March, 2000, between BOHANNON
DEVELOPMENT COMPANY, a California corporation, herein referred to as "Landlord,"
and IPRINT.COM, INC., a Delaware corporation, herein referred to as "Tenant".

                                   WITNESSETH:

                          ARTICLE 1 - PREMISES AND TERM

         SECTION 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the demised premises, including the building and other
improvements thereon (as described in EXHIBIT "A" and located substantially as
shown on EXHIBIT "B" attached hereto) upon and subject to the terms and
provisions of this Lease for a demised term of five (5) years (plus any partial
period prior to the commencement of the first full calendar month), commencing
on the earlier of (i) May 1, 2000, or (ii) three (3) days after Landlord
substantially completes its work pursuant to SECTION 3.1. herein (provided such
date shall not be earlier than April 15, 2000), and subject to the provisions of
Exhibit "C" hereto, and ending on the last day of the fifth (5th) year
(exclusive of such partial period, if any) after such commencement.

         SECTION 1.2. Upon execution and delivery of this Lease Agreement,
Tenant shall have the right to occupy the demised premises for the purposes of
performing Tenant's Improvements therein prior to the commencement of the
demised term hereof. From and after the date Tenant first occupies any portion
of the demised premises, all of the provisions of this Lease shall be applicable
to said portion notwithstanding that the demised term has not yet commenced.
Specifically, but without limitation, Tenant's and Landlord's obligations with
respect to insurance and indemnities shall be operable as of the date Tenant
occupies any portion of the demised premises.

                                ARTICLE 2 - RENT

         SECTION 2.1. A. Tenant covenants and agrees to pay to Landlord without
set-off, recoupment, deduction or demand of any nature whatsoever, base rent for
as follows: for the first (1st ) year during the demised term, the amount of
Seven Hundred Seventy Two Thousand Two Hundred Dollars ($772,200.00) per annum,
payable in twelve (12) equal monthly installments of Sixty Four Thousand Three
Hundred Fifty Dollars ($64,350.00); for the second (2nd) year during the demised
term, the amount of Seven Hundred Ninety Nine Thousand Two Hundred Twenty Seven
Dollars ($799,227.00) per annum, payable in twelve (12) equal monthly
installments of Sixty Six Thousand Six Hundred Two and 25/100 Dollars
($66,602.25); for the third (3rd) year during the demised term, the amount of
Eight Hundred Twenty Seven Thousand One Hundred Ninety Nine and 95/100 Dollars
($827,199.95) per annum, payable in twelve (12) equal monthly installments of
Sixty Eight Thousand Nine Hundred Thirty Three and 33/100 Dollars ($68,933.33);
for the fourth (4th) year during the demised term, the amount of Eight Hundred
Fifty Six Thousand One Hundred Fifty One and 95/100 Dollars ($856,151.95) per
annum, payable in twelve (12) equal monthly installments of Seventy

                                       1

<PAGE>

One Thousand Three Hundred Forty Six Dollars ($71,346.00); and for the fifth
(5th) year during the demised term, the amount of Eight Hundred Eighty Six
Thousand One Hundred Seventeen and 27/100 Dollars ($886,117.27) per annum,
payable in twelve (12) equal monthly installments of Seventy Three Thousand
Eight Hundred Forty Three and 11/100 Dollars ($73,843.11). Base rent shall be
paid monthly in advance on the first (1st) day of each calendar month.

         B. The demised premises contains a mezzanine consisting of
approximately 7,128 square feet of space. If at any time during the demised term
Tenant occupies and/or uses the mezzanine for any purpose, then the Base Rent
set forth under Subparagraph A above shall be increased by an amount equal to
Three Thousand Five Hundred Sixty Four Dollars ($3,564.00) per month for the
first year of the demised term and increasing by three and one-half percent
(3.5%) each year thereafter at the same time as Base Rent under Subparagraph A
increases. Such Base Rent for the mezzanine space shall commence on the first
day Tenant occupies and/or uses the same for any purpose.

         SECTION 2.2. For the purpose of this Lease, a year shall be twelve (12)
calendar months, commencing with the first day of the first full calendar month
of the demised term and the succeeding anniversaries thereof. For any period
prior to the commencement of the first year or subsequent to the end of the last
year of the demised term, rent shall be prorated on the basis of the rental rate
then payable.

         SECTION 2.3. All sums payable and all statements deliverable to
Landlord by Tenant under this Lease shall be paid and delivered at 60 Hillsdale
Mall, San Mateo, California 94403-3497, or at such other place as Landlord may
from time to time direct by notice to Tenant and all such sums shall be paid in
lawful money of the United States.

         SECTION 2.4. Upon execution of this Lease, Tenant shall provide the
Landlord with the following:

         (A) the sum of Sixty Four Thousand Three Hundred Fifty Dollars
($64,350.00) which shall be applied by Landlord to the first base rent to become
due and payable under this Lease, and

         (B) a letter of credit in the amount of Two Hundred Fifty Thousand
Dollars ($250,000.00) which shall be held as a Security Deposit pursuant to the
terms of SECTION 19.9.

         Tenant shall deliver said letter of credit to Landlord concurrently
with Tenant's execution of this Lease. Such letter of credit shall be issued by
and drawn on an institution reasonably acceptable to Landlord and otherwise upon
conditions acceptable to Landlord and shall be renewed at least thirty (30) days
prior to any scheduled expiration during the entire demised term hereof and
shall remain in effect without expiration for a term ending sixty (60) days
after the scheduled expiration or sooner termination the demised term of this
Lease (including any extended term(s)).

                                       2
<PAGE>

         Upon the occurrence and continuance of an event of default that is not
cured within the applicable notice or grace period, if any, as provided herein,
Landlord shall be permitted to draw upon the letter of credit in the amount
necessary to cure such default. The letter of credit shall be substantially in
the form attached hereto as Exhibit "D".

         SECTION 2.5. In addition to base rent under SECTION 2.1., all other
payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.

         SECTION 2.6. Any amount due from Tenant to Landlord that is not paid
when due and that remains unpaid for five (5) days after written notice to
Tenant shall bear interest at the rate announced from time to time by Wells
Fargo Bank, N.A. as its prime rate plus five percent but not to exceed the
highest rate then permitted to be charged on late payments under leases under
California law; provided, however, the payment of any such interest shall not
excuse or cure the default upon which such interest accrued. Tenant acknowledges
and agrees that payment of such interest on late payments is reasonable
compensation to Landlord for the additional costs incurred by Landlord caused by
such late payment, including, but not limited to, collection and administration
expenses and the loss of the use of the money that was late in payment.

                   ARTICLE 3 - LANDLORD'S WORK - TENANT'S WORK

         SECTION 3.1. Landlord shall, on or before commencement of the demised
term (except as provided in Exhibit "C"), provide, or cause to be provided,
certain interior improvements as described on EXHIBIT "C" attached hereto in
compliance with applicable laws. Except for the work described in EXHIBIT "C",
Landlord shall not be required to perform any other work in the demised
premises; and except for the work described in EXHIBIT "C", Tenant accepts the
demised premises in an "as is" condition.

         Notwithstanding the foregoing to the contrary, Landlord agrees that it
will deliver possession of the demised premises to Tenant with the parking area
and walkways in good condition and the following existing building systems in
good working condition and repair: the roof; exterior walls; HVAC system;
electrical system; mechanical; plumbing; lighting; and the existing men's and
women's restrooms in the interior of the building.

         SECTION 3.2. Any additional work to be performed other than that
provided for in SECTION 3.1. and designated as Landlord's Work shall be
performed at the sole cost of Tenant in accordance with detailed plans and
specifications therefor which must be approved, in writing, by Landlord or
Landlord's architect before work is commenced. Tenant shall furnish Landlord
with a set of "as built" plans therefor in Windows-based AutoCAD format or such
other format which is compatible to Landlord's computer aided design software
after any such work is completed.

                                       3
<PAGE>

         Tenant, at Tenant's sole cost and expense, shall comply with all laws
(including the Americans With Disabilities Act ("ADA")) applicable to its use
and occupancy of the demised premises, including changes required to the
building or demised premises on account of, or arising from, Tenant's work and
improvements, except as expressly provided in EXHIBIT "C" with respect to
Landlord's work.

                               ARTICLE 4 - STREETS

         SECTION 4.1. Tenant agrees to require employees, and to direct
customers and other persons visiting Tenant, to park in the parking area
provided in the Parking and Accommodation Areas, as defined in Article 18 below,
and to allow Landlord to post the streets for no parking.

                          ARTICLE 5 - UTILITY SERVICES

         SECTION 5.1. Landlord has at its own cost and expense secured the
installation of water, gas, sanitary sewers and electrical services to the
demised premises and made all necessary connections thereof to the building.
Tenant shall pay all meter or service charges made by public utilities companies
and shall pay for the water, gas and/or electricity used on the demised premises
and sewer use fees and charges whether ad valorum or not and any so called
"sewer connection charges" based on increased wastewater discharge from the
demised premises exclusively. Tenant shall maintain such connections of
utilities to the building.

         SECTION 5.2. Landlord shall not be liable to Tenant for the failure of
any utility services.

                  ARTICLE 6 - ASSIGNMENT - CHANGE OF OWNERSHIP

         SECTION 6.1.

         A. Except as otherwise provided herein, Tenant shall not, by operation
of law or otherwise, transfer, assign, sublet, enter into license or concession
agreements, change ownership, mortgage or hypothecate this Lease or the Tenant's
interest in and to the demised premises without first procuring the written
consent of Landlord. Any attempted transfer, assignment, subletting, license or
concession agreement, change of ownership, mortgage or hypothecation without
Landlord's written consent shall be void and confer no rights upon any third
person. Landlord's consent to a proposed assignment or sublease shall not be
unreasonably withheld provided that the proposed assignee or sublessee shall
have: (i) a net worth, at the time of the assignment or sublease, determined in
accordance with good accounting principles, equal to or in excess of the net
worth of Tenant at the date of the Lease; (ii) been active in its current
business for a minimum of three (3) years immediately prior to the assignment or
sublease; and (iii) a good reputation in the business community; provided
further that Tenant shall give Landlord not less than thirty (30)
days notice prior to the effective date of any such assignment or sublease, and
if the transfer is an assignment or a sublease of more than fifty percent (50%)
of the demised premises, Landlord shall

                                       4
<PAGE>

have the option to terminate this Lease with respect to the space to be assigned
or subleased by notice to Tenant given within fifteen (15) days of Landlord's
receipt of Tenant's notice in which event Tenant shall be released from further
liability with respect to the recaptured space as of the date the assignment or
sublease was to commence. Nothing herein contained shall relieve Tenant and any
Guarantor from its covenants and obligations for the demised term except as
expressly provided herein. Tenant agrees to reimburse Landlord for Landlord's
reasonable outside attorneys' fees incurred in conjunction with the processing
and documentation of any such requested transfer, assignment, subletting,
licensing or concession agreement, change of ownership, mortgage or
hypothecation of this Lease or Tenant's interest in and to the demised premises,
not to exceed One Thousand Dollars ($1,000.00) per transaction. If Landlord
consents to any assignment or sublease pursuant to this Article, Tenant shall
pay Landlord, as additional rent:

                (a) in the case of each and every assignment (including those
         which do not require Landlord's consent), an amount equal to  fifty
         percent (50%) of all monies, property, and other consideration of every
         kind whatsoever paid or payable to Tenant by the assignee with respect
         to the demised premises for such assignment and for all property of
         Tenant transferred to the assignee as part of the transaction
         (including, but not limited to, fixtures, other leasehold improvements,
         furniture, equipment, and furnishings, but only to the extent that the
         consideration paid exceeds the fair market value thereof ); and

                (b) in the case of each and every sublease (including those
         which do not require Landlord's consent), fifty percent (50%) of
         the amount by which all rent, and/or other monies, property, and
         consideration of every kind whatsoever paid or payable to Tenant by the
         subtenant under the sublease with respect to the demised premises,
         exceeds the sum of (y) all base rent and additional rent under
         this Lease accruing during the term of the sublease in respect of the
         subleased space (as reasonably determined by Landlord, taking into
         account the useable area of the premises demised under the sublease)
         plus (x) the following:

                           (i) commissions actually paid by Tenant to procure
         the sublease to an independent third party licensed real estate broker
         amortized on a straight line basis over the term of the sublease,
         commencing with the date on which the sublease term commences; and

                           (ii) the actual cost of leasehold improvements
         undertaken by Tenant (subject to Landlord's prior written consent)
         solely to prepare the subleased space for the subtenant amortized on a
         straight line basis over the term of the sublease, commencing with the
         date on which the sublease term commences.

         B. Each transfer, assignment, subletting, license, concession
agreement, mortgage and hypothecation to which there has been consent shall be
by an instrument in writing in form reasonably satisfactory to Landlord, and
shall be executed by the transferor, assignor, sublessor, licensor,
concessionaire, hypothecator or mortgagor and the transferee, assignee,
sublessee,

                                       5
<PAGE>

licensee, concessionaire or mortgagee in each instance, as the case may be; and
each transferee, assignee, sublessee, licensee, concessionaire or mortgagee
shall agree in writing for the benefit of Landlord herein to assume, to be bound
by, and to perform the terms, covenants and conditions of this Lease to be done,
kept and performed by Tenant from and after the effective date of the transfer
including the payment of all amounts due or to become due under this Lease
directly to Landlord. One (1) executed copy of such written instrument shall be
delivered to Landlord. Failure to first obtain in writing Landlord's consent or
failure to comply with the provisions of this Article shall operate to prevent
any such transfer, assignment, subletting, license, concession agreement,
mortgage, or hypothecation from becoming effective.

         C. If Tenant hereunder is a corporation which, under the then current
laws of the State of California, is not deemed a public corporation, or is an
unincorporated association or partnership, the transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership in the aggregate in excess of fifty percent (50%) shall be deemed an
assignment within the meaning and provisions of this SECTION 6.1.

         D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease, Landlord shall thereupon be entirely
released of all obligations of Landlord hereunder from and after the effective
date of the transfer and shall not be subject to any liability resulting from
any act or omission or event occurring after such sale.

         E. The consent of Landlord to any transfer, assignment, sublease,
license or concession agreement, change in ownership, mortgage or hypothecation
of this Lease is not and shall not operate as a consent to any future or further
transfer, assignment, sublease, license or concession agreement, change in
ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
SECTION 6.1.

         Notwithstanding any provision hereof to the contrary, Landlord's
consent shall not be required (and Landlord shall not be entitled to terminate
this Lease as otherwise provided in Section 6.1.A.) in connection with the
merger or consolidation of Tenant with another entity, the sale of all or
substantially all of the assets of Tenant, the transfer or issuance of Tenant's
capital stock (whether or not constituting a change of control of Tenant), or
any assignment or sublease to any entity controlled by, controlling, or under
common control with Tenant (collectively, a "Tenant Affiliate"), so long as the
net worth of the surviving entity or Tenant Affiliate is at least equal to the
net worth of Tenant immediately prior to the transfer or as of the date of this
Lease, whichever is greater; provided that any such surviving entity or Tenant
Affiliate comply with the provisions of this Lease; and further provided that
any such surviving entity or Tenant Affiliate shall agree in writing, in form
reasonably satisfactory to Landlord, to assume, to be bound by, and to perform
the terms, covenants and conditions of this Lease to be done, kept and performed
by Tenant, including the payment of all amounts due or to become due under this
Lease directly to Landlord, without any modification of this Lease. Tenant shall
provide Landlord with the following no later than ten (10) days prior to the
effective date of the proposed merger or other consolidation transaction: (i)
the name and address of the surviving entity or Tenant Affiliate, and (ii) a
copy of the proposed assignment agreement, and (iii) such reasonable information
as may be requested by Landlord. Nothing herein contained shall be construed as
releasing

                                       6
<PAGE>

Tenant from any of its liabilities or other obligations hereunder, including the
payment of rent.

                   ARTICLE 7 - TENANT'S ADDITIONAL AGREEMENTS

         SECTION 7.1. Tenant agrees at all times during the demised term to: (A)
Keep the demised premises in a neat and clean condition. (B) Promptly remove all
waste, garbage or refuse from the demised premises. (C) Promptly comply with all
laws and ordinances and all rules and regulations of duly constituted
governmental authorities affecting Tenant's use of the demised premises, and the
cleanliness, safety, use and occupation thereof, but this clause (C) shall not
be construed to require Tenant to comply with any such laws, ordinances, rules
or regulations which require structural changes in the demised premises unless
the same are made necessary by act or work performed by Tenant or the nature of
Tenant's business. (D) Prevent the escape from the demised premises of all
fumes, odors and other substances which are offensive or may constitute a
nuisance or interfere with other tenants.

         SECTION 7.2. Tenant agrees that it will not at any time during the
demised term without first obtaining the Landlord's written consent: (A) Conduct
or permit any fire, bankruptcy or auction sale in the demised premises. (B)
Place on the exterior walls (including both interior and exterior surfaces of
windows and doors), the roof of any buildings or any other part of the demised
premises, any sign, symbol, advertisement, neon light, other light or other
object or thing visible to public view outside of the demised premises. (C)
Change the exterior color of the building on the demised premises, or any part
thereof, or the color, size, location or composition of any sign, symbol or
advertisement that may have been approved by Landlord. (D) Park, operate, load
or unload, any truck or other delivery vehicle on any place other than the
loading area designated for Tenant's use. (E) Use the plumbing facilities for
any purpose other than that for which they were constructed or dispose of any
foreign substance therein. (F) Install any exterior lighting or plumbing
facilities, shades or awnings, amplifiers or similar devices, or use any
advertising medium which may be heard or experienced outside the demised
premises, such as loudspeakers, phonographs, or radio broadcasts. (G) Deface any
portion of the building or improvements on the demised premises, normal usage
excepted. In the event any portion of the building is defaced or damaged, Tenant
agrees to repair such damage. (H) Permit any rubbish or garbage to accumulate on
the demised premises, or any part thereof, unless confined in metal containers
so located as not to be visible to members of the public. (I) Install, maintain
or operate any sign except as approved in writing by Landlord. (J) Store
materials, supplies, equipment, finished products, raw materials or articles of
any nature outside of the demised premises. (K) Use the demised premises for
walk-in retail, commercial or residential purposes.

         SECTION 7.3. Tenant agrees that it will not at any time during the
demised term: (A) Perform any act or carry on any practice which may injure the
demised premises. (B) Burn anything in or about the demised premises. (C) Keep
or display any merchandise or other object on or otherwise obstruct any
sidewalks, walkways or areaways. (D) Use or permit the use of any portion of the
demised premises as living quarters, sleeping apartments, lodging rooms, or for
any unlawful purpose. (E) Use or

                                       7
<PAGE>

permit the demised premises to be used for any purpose which is or shall not
then be allowed under the Zoning Ordinance of the City of Menlo Park,
California, in that area.

         SECTION 7.4. Tenant shall, at its expense, comply with all applicable
laws, regulations, rules and orders, regardless of when they become or became
effective, including, without limitation, those relating to health, safety,
noise, environmental protection, waste disposal, and water and air quality to
the extent applicable to Tenant's use and occupancy of the demised premises, and
furnish satisfactory evidence of such compliance upon request of Landlord.

         Should any discharge, leakage, spillage, emission or pollution of any
type occur upon or from the demised premises due to Tenant's use and occupancy
thereof, Tenant, at its expense, shall be obligated to remedy the same to the
satisfaction of Landlord and any governmental body having jurisdiction
thereover. Tenant agrees to indemnify, hold harmless, and defend Landlord
against all liability, cost, and expense (including without limitation any
fines, penalties, judgments, litigation costs, and attorneys' fees) incurred by
Landlord as a result of Tenant's breach of this section, or as a result of any
such discharge, leakage, spillage, emission, or pollution to the extent caused
by or arising out of Tenant's activities at the demised premises, regardless of
whether such liability, cost, or expense arises during or after the demised
term, unless such liability, cost or expense is proximately caused solely by the
active negligence of Landlord.

         Tenant shall pay all amounts due Landlord under this section, as
additional rent, within ten (10) days after any such amounts become due.

         If required by applicable law as a result of Tenant's activities or
occupancy, Tenant shall, at least thirty (30) days prior to the termination of
the demised term, or any earlier termination of this Lease, submit a plan to the
Menlo Park Fire Protection District in accordance with applicable provisions of
the Uniform Fire Code, with a copy to Landlord, demonstrating how any hazardous
materials which were stored, dispensed, handled or used in, at or upon the
demised premises will be transported, disposed of or reused at the expiration or
sooner termination of the demised term of this Lease; and Tenant shall, at the
expiration or sooner termination of the demised term, comply with all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
thereover (including without limitation the Menlo Park Fire Protection District)
regarding the disposal of any such hazardous materials.

         Tenant's obligations under this SECTION 7.4. shall survive the
expiration or earlier termination of this Lease, including without limitation
any termination resulting from any default by Tenant under the Lease.

         Notwithstanding any provision hereof to the contrary, Tenant shall not
be responsible for performing or for paying for the cost of performing any
clean-up or remediation of hazardous materials at the demised premises, except
to the extent resulting or arising from a release of hazardous materials at the
demised premises by Tenant or by Tenant's agents, employees, invitees, or
contractors.

                                       8
<PAGE>

                           ARTICLE 8 - USE OF PREMISES

         SECTION 8.1. Tenant shall use the demised premises solely for
administrative offices and the shipping and receiving of goods and products in
the ordinary course of business and for no other purposes without Landlord's
written consent.

              ARTICLE 9 - INDEMNITY AND PUBLIC LIABILITY INSURANCE

         SECTION 9.1. Tenant agrees to indemnify and save harmless Landlord
from and against all claims for death, bodily injury or property damage arising
from any act, omission or negligence of Tenant, or its contractors, licensees,
agents, servants, invitees or employees, or arising from any accident, injury or
damage whatsoever caused to any person, or to the property of any person
occurring during the demised term at the demised premises, the sidewalks (if
any) adjoining the same and from and against all costs, expenses and liabilities
incurred in or in connection with any such claim or proceeding brought thereon,
including, but not limited to, reasonable attorneys' fees and court costs.

        SECTION 9.2. Tenant agrees to maintain in full force during the
demised term a policy of public liability and property damage insurance under
which Landlord (and Landlord's lenders and property manager as are designated by
Landlord and are properly includible as additional insureds under the terms of
any such policies of insurance) and Tenant are named as insureds, and the
insurer agrees to indemnify and hold Landlord and Landlord's said designees
harmless from and against all cost, expense and/or liability arising out of or
based upon any and all claims, accidents, injuries and damage mentioned in
SECTION 9.1. All public liability and property damage policies shall contain a
provision that Landlord, although named as an insured, shall nevertheless be
entitled to recovery under said policies for any loss occasioned to it, its
servants, agents and employees, by reason of the negligence of Tenant. Each such
policy shall be approved as to form and insurance company by Landlord, such
approval not to be unreasonably withheld, be noncancelable with respect to the
Landlord and Landlord's said designees without twenty (20) days' written notice
to the Landlord and Landlord's said designees, and a duplicate original or
certificate thereof shall be delivered to Landlord prior to commencement of the
demised term and thereafter thirty (30) days prior to expiration of the term of
each policy. The limits of liability of such comprehensive general liability
insurance shall be Two Million Dollars ($2,000,000.00) for injury or death to
one or more persons and damage to property, combined single limit. All public
liability, property damage and other casualty policies shall be written as
primary policies, not contributing with and not in excess of coverage which
Landlord may carry.

         If Tenant shall not comply with its covenants to maintain insurance
made above, or if Tenant fails to provide duplicate originals or certificates
thereof to Landlord as is provided above, Landlord may, but shall not be
required to, obtain any such insurance; and if Landlord does obtain any such
insurance, Tenant shall, on demand, reimburse Landlord for the premium for any
such insurance.

                                       9
<PAGE>

         SECTION 9.3. Tenant agrees to use and occupy the demised premises, the
Parking and Accommodation Areas and to use all other portions of the Business
Park (which it is herein given the right to use) at its own risk and hereby
releases to the full extent permitted by law the Landlord, and its agents,
servants, contractors, and employees, from all claims and demands of every kind
resulting from any accident, damage or injury occurring therein. Landlord shall
have no responsibility or liability for any loss of or damage to fixtures or
other personal property of Tenant. The provisions of this Section shall apply
during the whole of the demised term.

                    ARTICLE 10 - FIRE INSURANCE AND CASUALTY

         SECTION 10.1. If the building on the demised premises should be damaged
or destroyed during the demised term by any casualty insurable under Landlord's
standard fire and extended coverage insurance policies, Landlord shall (except
as hereinafter provided) repair and/or rebuild the same to substantially the
condition in which the same existed immediately prior to such damage or
destruction. Landlord's obligation under this Section shall in no event exceed
either (A) the scope of the work done by Landlord in the original construction
of such building, or (B) the proceeds of any such insurance policy if Landlord
keeps the building and the demised premises insured against loss or damage by
such fire and extended coverage insurance to the extent of at least eighty
percent (80%) of the insurable value of the building if reasonably obtainable
from responsible insurance companies licensed to do business in California,
unless Landlord nevertheless elects to repair and/or rebuild the building and
the demised premises. Tenant shall in the event of any such damage or
destruction, unless this Lease shall be terminated as hereinafter provided, be
responsible for replacing or repairing all exterior signs, trade fixtures,
equipment, display cases, and other installations originally installed by the
Tenant. Tenant shall have no interest in the proceeds of any insurance carried
by Landlord.

         SECTION 10.2. Tenant's base rent shall be abated proportionately during
any period in which, by reason of any such damage or destruction, the building
is rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.

         SECTION 10.3. If the building on the demised premises should be damaged
or destroyed to the extent of 33-1/3% or more of the then monetary value thereof
by an event described in SECTION 10.1., then Landlord may terminate this Lease
by written notice to Tenant within thirty (30) days after the casualty.

         If Landlord does not elect to terminate this Lease then Landlord shall
repair and/or rebuild the same as provided in SECTION 10.1. If such damage or
destruction occurs and this Lease is not so terminated, this Lease shall remain
in full force and effect and the parties waive the provisions of any law to the
contrary. The Landlord's obligation under this Section shall in no event exceed
the scope of the work to be done by the Landlord in the original construction of
said building and the demised premises.

                                       10
<PAGE>

         Within thirty (30) days after any casualty, Landlord shall provide
Tenant with an estimate prepared by a contractor, architect or other reliable
source stating the estimated time required to repair the damage and to restore
the demised premises to their condition prior to the casualty. If such repair
and restoration will require more than two hundred seventy (270) days from the
date of such notice, then Tenant, upon written notice to Landlord given within
fifteen (15) days after receipt of such estimate, may terminate this Lease.

         SECTION 10.4. Tenant agrees to comply with all of the regulations and
rules of the Insurance Service Office or any similar body and will not do,
suffer, or permit an act to be done in or about the demised premises which will
increase any insurance rate with respect thereto.

         SECTION 10.5. Tenant agrees, in addition to any rent provided for
herein, to pay to the Landlord the cost of the fire and extended coverage
insurance policy carried by Landlord on the demised premises during the entire
demised term or any renewal or extension thereof. This Section expressly permits
the Landlord to carry standard fire and extended coverage policies to the extent
of one hundred percent (100%) of the insurable value.

         SECTION 10.6. During the demised term, Tenant shall carry, at its
expense, insurance against loss and damage by fire with an "All Risk"
endorsement for the full insurable value of Tenant's merchandise, trade
fixtures, furnishings, operating equipment and personal property, including wall
coverings, carpeting and drapes, if installed by Tenant. Landlord and Landlord's
mortgagee shall be named as additional insureds under said policy, which shall
be noncancellable with respect to Landlord and Landlord's mortgagee without
twenty (20) days' prior written notice. A certificate evidencing such coverage
shall be delivered to Landlord prior to commencement of the demised term and
thereafter thirty (30) days prior to the expiration of the term of such policy.
Such insurance shall be written as a primary policy, not contributing with and
not in excess of coverage Landlord may carry. If Tenant shall not comply with
its covenants to maintain said insurance, or if Tenant fails to provide a
certificate thereof to Landlord, Landlord may, but shall not be required to,
obtain any such insurance, and if Landlord does obtain any such insurance,
Tenant shall, on demand, reimburse Landlord for the premium for any such
insurance.

         SECTION 10.7. In the event the building on the demised premises shall
be damaged as a result of any flood, earthquake, act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and extended coverage insurance, and if the cost of
repair reasonably is expected to exceed One Hundred Thousand Dollars
($100,000.00) Landlord may within ninety (90) days following the date of such
damage, commence repair, reconstruction or restoration of the building and
prosecute the same diligently to completion, in which event this Lease shall
continue in full force and effect, or within said ninety (90) day period elect
not to so repair, reconstruct or restore the building, in which event this Lease
shall cease and terminate. In either such event Landlord shall give Tenant
written notice of its intention within said ninety-day period.

                                       11
<PAGE>

         SECTION 10.8. Upon any termination of this Lease under the provisions
of this ARTICLE 10, the rent shall be adjusted as of the date of such
termination and the parties shall be released without further obligation to the
other party upon the surrender of possession of the demised premises to
Landlord, except for items that have been theretofore accrued and are then
unpaid, and except for obligations that are designated as surviving such
termination.

         SECTION 10.9. Notwithstanding anything in this ARTICLE 10 or elsewhere
in this Lease to the contrary, Landlord may maintain any insurance on the
demised premises that Landlord deems necessary or advisable, including, but not
limited to, any rental insurance (for up to twelve (12) months of rent), owner's
protective liability insurance or any insurance required by any mortgagee of
Landlord; and Landlord may include the amount of the premiums for such insurance
in the total of the insurance premiums which Tenant is required to pay under the
terms hereof.

         Section 10.10. Landlord and Tenant each (i) hereby waives all claims
such party may have against the other to the extent such claims are covered by
insurance carried or required to be carried under this Article 10, and (ii)
shall cause their respective insurers to similarly waive all rights of recovery
against the other, and against the officers, employees, partners, agents and
representatives of the other, for loss of or damage to the property of the
waiving party or the property of others under its control, to the extent such
loss or damage is (or would have been) insured against under any insurance
policy carried (or required to be carried) by Landlord or Tenant under this
Article 10. Each of Tenant and Landlord shall obtain a clause or endorsement to
the applicable insurance policies carried by such party denying its insurer any
rights of subrogation against the other party.

                               ARTICLE 11 - REPAIR

         SECTION 11.1. Landlord agrees, at Landlord's sole expense, to maintain
and repair the structural elements of the building on the demised premises
throughout the life of the Lease, including foundations, exterior walls and
structural portions of the roof. Structural repairs and maintenance shall not be
deemed to include minor cracks or fissures in walls or floors, nor the
requirement of painting or caulking.

         SECTION 11.2. Tenant agrees during the demised term or any extension
thereof to maintain the interior of the building on the demised premises, and
every part thereof, except as to work to be performed by Landlord under SECTIONS
11.1. AND 11.3. Tenant further agrees to clean, inside and out, all of the glass
on the exterior of the building. If Tenant should fail to faithfully perform its
maintenance obligations hereunder then Landlord shall, upon having given notice
to Tenant of the need for said maintenance, have the right to perform, or cause
to be performed, said maintenance and Tenant shall on demand reimburse Landlord
for Landlord's costs of providing such maintenance. Landlord's reservation of
the right to enter upon the demised premises to perform any repairs or
maintenance or other work in, to, or about the demised premises which in the
first instance is the Tenant's obligation pursuant to this Lease shall not be
deemed to impose any obligation on Landlord to do so, nor shall Landlord be
rendered liable to

                                       12
<PAGE>

Tenant or any third party for the failure to do so, and Tenant shall not be
relieved from any obligation to indemnify Landlord as otherwise provided
elsewhere in this Lease.

         SECTION 11.3 Landlord shall provide the following services and Tenant
shall, in addition to all other payments required to be made under other
provisions of this Lease, on demand reimburse Landlord for Landlord's gross
costs of: (i) maintaining, repairing and replacing the roof membrane; (ii)
painting, maintaining and repairing the exterior of the building; (iii)
maintaining, repairing and replacing the elevator and elevator equipment room
(if any); (iv) maintenance and repair associated with the mechanical and
electrical rooms; (v) maintenance and repair of the trash enclosure utilized in
connection with the building; (vi) maintenance, repair and replacement of the
glass on the exterior of the building and (vii) any other maintenance and repair
other than that which Landlord is required to perform at Landlord's expense per
SECTION 11.1. Tenant shall also, on demand, reimburse Landlord for Landlord's
gross costs of maintaining, repairing and replacing the heating and air
conditioning equipment serving the demised premises, whether furnished by
Landlord or Tenant. Landlord's said gross costs as used in this SECTION 11.3.
shall include all costs and expenses of every kind or nature incurred by
Landlord in the performance of such maintenance, repair or replacements and
Landlord's determination of the amount of said costs and expenses will be final.

         Notwithstanding the provisions of Sections 11.3. and 18.3 hereof to the
contrary, Tenant's obligation to reimburse Landlord for (i) costs associated
with the replacement (as opposed to repairs and maintenance) of the roof
membrane and underlayment and the heating, ventilating and air-conditioning
units furnished by Landlord and (ii) the cost of any capital improvement
required to be made by Landlord pursuant to Article 11 and/or Article 18 of this
Lease during the demised term and required under good accounting practice to be
amortized, shall be limited to a proportionate share of such replacement costs
(the "Reimbursement Amounts") calculated as follows:

                (a) if such costs are incurred during the initial demised term
of this Lease, by multiplying such replacement costs by a fraction, the
numerator of which is the number of days in the original demised term and the
denominator of which is the number of days in the estimated useful life of the
replacement; and

                (b) if Landlord and Tenant agree to extend the term of this
Lease and if such costs are incurred during any such extended term of this
Lease, by multiplying such replacement costs by a fraction, the numerator of
which is the number of days in the demised term of this Lease (including any
extended term) and the denominator of which is the number of days in the
estimated useful life of the replacement.

                If a Reimbursement Amount has been determined under subsection
(a) above with respect to any replacement costs, and Landlord and Tenant
subsequently agree to extend the term of this Lease, Tenant shall also be
responsible for another Reimbursement Amount with respect to such replacement
costs determined by multiplying such replacement costs by a fraction, the
numerator of which is the number of days in the extended term of this Lease and
the denominator of which is the number of days in the estimated useful life of
the replacement.

                                       13
<PAGE>

         The foregoing limitation shall not apply to equipment furnished by
Tenant and maintained by Landlord. Tenant shall pay any Reimbursement Amounts,
as additional rent, monthly on a straight-line basis amortized over the
remaining demised term of the Lease using an interest rate equal to ten percent
(10%) per annum.

         The limitations on Tenant's liability for expenses hereunder shall in
no event apply to any costs for repairs or replacements occasioned by (x)
Tenant's negligent acts or omissions or those of its employees, contractors,
agents, invitees or servants, or (y) the particular nature of Tenant's business,
all of which costs shall be borne solely by Tenant.

         SECTION 11.4. If during the term of this Lease Landlord or Landlord's
insurance carrier requires the installation of an Ansul Fire Control System or
its equivalent, or any fire detection device, because of the nature of the
particular activities being carried on by Tenant in the demised premises, then
said system or device shall be installed at the sole cost of the Tenant within
the time specified.

                       ARTICLE 12 - FIXTURES & ALTERATIONS

         SECTION 12.1. All trade fixtures owned by Tenant and installed in the
demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the last day of
the demised term, all such fixtures shall become the property of Landlord,
unless Landlord elects to require their removal, in which case Tenant shall
promptly remove them and restore the demised premises to its condition prior to
such removal. Landlord may also, at Landlord's sole discretion, store such
fixtures at Tenant's expense.

         SECTION 12.2. Tenant shall not make any alterations, additions or
improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent shall not be unreasonably withheld so long as any such
alterations, additions or improvements do not affect the exterior of the
building or materially affect the sprinkler system and/or mechanical/electrical
systems or require removal or modification of improvements installed by
Landlord, and so long as Tenant notifies Landlord of any such alterations and
provides Landlord with plans therefor in advance, and which consent, if granted,
may be subject to such conditions as Landlord may deem appropriate. Tenant shall
be permitted to make cosmetic (such as interior painting) and non-structural
improvements and alterations without Landlord's consent so long as no permits
are required by the City of Menlo Park and such improvements and alterations
will not affect any structural or exterior portions of the building or affect
the building electrical, sprinkler, plumbing or HVAC systems. Any such
alterations, additions or improvements consented to by Landlord shall be made at
Tenant's sole cost and expense in accordance with the plans and specifications
therefor and Tenant agrees to provide Landlord with an "as built" set of plans
and specifications after any such work is completed. Tenant shall secure any

                                       14
<PAGE>

and all governmental permits, approvals or authorizations required in connection
with any such work, and shall hold Landlord harmless from any and all liability,
costs, damages, expenses (including attorneys' fees) and any and all liens
resulting therefrom. All alterations, decorations, additions and improvements
(and expressly including all light fixtures and floor coverings installed by
Tenant), except furniture, removable paneling, wall fixtures, trade fixtures,
appliances and equipment which do not become a part of the demised premises,
shall be deemed to belong to Tenant, but shall be deemed to have been attached
to the demised premises or the building and to have become the property of
Landlord upon the termination of the demised term. Upon the expiration or sooner
termination of the demised term hereof, Tenant shall, upon written demand by
Landlord, at Tenant's sole cost and expense, forthwith remove any alterations,
decorations, additions or improvements made by Tenant which were designated by
Landlord to be removed at the time of Landlord's approval of the plans and
specifications therefor, or any alterations, decorations, additions or
improvements made by Tenant without Landlord's consent and designated by
Landlord prior to the termination of the demised term to be removed, and Tenant
shall forthwith at its sole cost and expense repair any damage to the demised
premises or the building caused by such removal.

                              ARTICLE 13 - REMEDIES

         SECTION 13.1. Should Tenant default in the performance of any of its
obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after the date such payment is due, or should
Tenant default in the performance of any other obligations under this Lease and
such default continue for thirty (30) days after receipt of written notice from
Landlord specifying such default or beyond the time reasonably necessary to cure
if such default is of a nature to require more than thirty (30) days to remedy,
then, in addition to all other rights and remedies Landlord may have under this
Lease or under applicable law, Landlord shall have the following rights and
remedies:

         (1) The Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue the lease in effect after Tenant's breach
and abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the installation of guards, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at

                                       15
<PAGE>

the maximum legal rate. Landlord shall also have the right to repair, remodel
and renovate the demised premises at the expense of Tenant and as deemed
necessary by Landlord.

         (2) Landlord shall have the right to terminate Tenant's possession of
the demised premises, and if Tenant's right to possession of the demised
premises is terminated by Landlord by reason of a breach of this Lease by
Tenant, or by reason of the happening of an event of default, or by reason of
abandonment of the demised premises by Tenant, Tenant agrees to pay to Landlord
on demand (i) all unpaid rent earned at the time of termination, together with
interest on all unpaid installments from the times they were due to the date of
termination at the maximum legal rate; (ii) the amounts by which the unpaid rent
which would have been due and payable by Tenant since the date of termination
exceeds the amount of any rental loss that Tenant proves could have been
avoided, together with interest on said amounts from the dates they were due at
the maximum legal rate; (iii) the worth at the time of demand of the amount by
which the unpaid rent for the balance of the term of this Lease exceeds the
amount of rental loss that Tenant proves may reasonably be avoided, together
with interest on such amount at the maximum legal rate from the date of demand
until paid; (iv) all other amounts due Landlord from Tenant under the terms of
this Lease, or necessary to compensate Landlord for all detriment caused by
Tenant's failure to perform its obligations under this Lease. The right to
possession of the demised premises by Tenant should not be deemed terminated
until Landlord gives Tenant written notice of such termination or until Landlord
re-lets all or a portion of the demised premises. In the event that Landlord
seeks to recover the amount due, Landlord shall be entitled to recover the
amounts specified in paragraphs (a) (1), (a) (2) and (a) (4) of Section 1951.2
of the Civil Code of California as such section reads at the date of this Lease,
together with interest on said amounts at the maximum legal rate from the dates
they were due, computed as of the date of the award, together with the worth at
the time of the award of the amount by which the unpaid rent for the balance of
the term exceeds the amount of such rental loss that Tenant proves could
reasonably have been avoided. Landlord shall be required to mitigate damages by
making a good faith effort to re-let the demised premises.

         (3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.

         SECTION 13.2. Landlord shall in no event be in default in the
performance of any of its obligations hereunder unless and until Landlord shall
have failed to perform such obligations within thirty (30) days or such
additional times as is reasonably required to correct any such default after
notice by Tenant to the Landlord properly specifying wherein the Landlord has
failed to perform any such obligation.

                             ARTICLE 14 - BANKRUPTCY

         SECTION 14.1. Tenant shall give written notice to Landlord of its
intention to commence proceedings under any state or federal insolvency or
bankruptcy law, or any

                                       16
<PAGE>

comparable law that is now or hereafter may be in effect, whereby Tenant seeks
to be, or would be, discharged of its debts or the payment of its debts is
sought to be delayed, at least thirty (30) days prior to the commencement of
such proceedings.

         SECTION 14.2.     If any of the following events occur:
         -------------

         (1) The entry of an order for relief under Title 11 of the United
States Code as to Tenant or its executors, administrators or assigns, if any, or
the adjudication of Tenant or its executors, administrators or assigns, if any,
as insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act;

         (2) The appointment of a receiver, trustee or other custodian of the
property of Tenant by reason of the insolvency or inability of Tenant to pay its
debts;

         (3) The assignment of the property of Tenant for the benefit of
creditors;

         (4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter may
be in effect, whereby Tenant seeks to be, or would be, discharged of its debts
or the payment of its debts is sought to be delayed;

         (5) The failure of Tenant to give written notice to Landlord provided
for in SECTION 14.1. above;

         then Landlord may, at any time thereafter, in addition to any and all
other rights or remedies of Landlord under this Lease or under applicable law,
upon written notice to Tenant, terminate this Lease, and upon such notice this
Lease shall cease and terminate with the same force and effect as though the
date set forth in said notice were the date originally set forth herein and
fixed for the expiration of the demised term. Tenant shall thereupon vacate and
surrender the demised premises, but shall remain liable as herein provided.

                       ARTICLE 15 - SURRENDER OF PREMISES

         SECTION 15.1. Tenant shall, upon termination of the demised term, or
any earlier termination of this Lease, surrender to Landlord the demised
premises, including, without limitation, all building equipment and apparatus,
and fixtures (except as provided in SECTIONS 12.1. AND 12.2.) then upon the
demised premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as hereinbefore provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used by Tenant or its employees, agents,
invitees, or contractors in, at or upon the demised premises in accordance with
the provisions of SECTION 7.4.

                                       17

<PAGE>

                           ARTICLE 16 - EMINENT DOMAIN

         SECTION 16.1. If more than thirty-three percent (33%) of the floor area
of the building on the demised premises shall be taken under the power of
eminent domain and the portion not so taken will not be reasonably adequate for
the operation of Tenant's business after the Landlord completes such repairs or
alterations as the Landlord is obligated or elects to make, Tenant shall have
the right to elect either to terminate this Lease, or, subject to Landlord's
right to terminate the Lease pursuant to SECTION 16.4., to continue in
possession of the remainder of the demised premises and shall notify Landlord in
writing within ten (10) days after such taking of Tenant's election. In the
event less than thirty-three percent (33%) of the floor area of the building on
the demised premises shall be taken or Tenant elects to remain in possession, as
provided in the first sentence hereof, all of the terms herein provided shall
continue in effect, except that the base rent shall be reduced in the same
proportion that the floor area of the building on the demised premises taken
bears to the original floor area of the building on the demised premises, and
Landlord shall at its own cost and expense make all necessary repairs or
alterations to the building so as to constitute the portion of the building not
taken a complete architectural unit and the demised premises a complete unit for
the purposes allowed by this Lease, but such work shall not exceed the scope of
the work to be done by Landlord in originally constructing said building.

         SECTION 16.2. Each party waives the provisions of Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking.

         SECTION 16.3. All damages or awards for any taking under the power of
eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation which is to be computed on the basis of completely
depreciating such leasehold improvements during the initial term of this Lease,
and any award made to Tenant in excess of the then depreciated value of
leasehold improvements shall be payable to the Landlord.

         SECTION 16.4. If more than thirty-three percent (33%) of the floor
areas of the building on the demised premises shall be taken under power of
eminent domain, or if any part of the Parking and Accommodation Areas shall be
so taken, Landlord may, by written notice to Tenant delivered on or before the
date of surrendering possession to the public authority pursuant to such taking,
terminate this Lease as of such date.

         SECTION 16.5. If this Lease is terminated as provided in this Article,
the rent shall be paid up to the day that possession is so taken by public
authority and Landlord shall make a prorata refund of any rent and all deposits
paid by Tenant in advance and not yet earned.

                                       18
<PAGE>

                        ARTICLE 17 - REAL PROPERTY TAXES

         SECTION 17.1. Tenant shall reimburse Landlord for all real property
taxes, assessments and ongoing sewer fees applicable to the demised premises.
Taxes shall be prorated to lease years for purpose of making this computation.
Such payment shall be made by Tenant within thirty (30) days after receipt of
Landlord's written statement setting forth the amount of such computation
thereof. If the demised term of this Lease shall not expire concurrently with
the expiration date of the fiscal tax year, Tenant's liability for taxes for the
last partial lease year shall be prorated on an annual basis.

         SECTION 17.2. If the demised premises are not separately assessed,
Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.

         SECTION 17.3. Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Landlord.

         If any of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes attributable to
Tenant within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Tenant's property.

         SECTION 17.4. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs, replacements and maintenance not properly chargeable
to capital account under good accounting principles; interest and depreciation
of the actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord on account of governmental requirements to facilitate payment of a
parking charge by the general public for parking in the parking area, or both,
and other similar costs; and there shall be excluded (a) cost of construction of
such improvements which is properly chargeable to capital account and (b)
depreciation of the original cost of construction of all items not previously
mentioned in this sentence. If Landlord, on account of governmental
requirements, shall require the payment of a parking charge by the general
public for parking in the parking area, then during any period in which such a
charge is made the total revenue (after deducting excise and similar taxes
thereon and taxes, fees or surcharges imposed by any agency or instrumentality
of local, state or federal government) actually received in cash or its
equivalent by Landlord for such parking charge shall be credited against said
gross costs.

                                       19
<PAGE>

         SECTION 17.5. Notwithstanding the provisions of ARTICLE 17 hereinabove,
Tenant shall pay any increase in "real property taxes" resulting from any and
all improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.

         SECTION 17.6. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any tax (excluding income tax)
and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in whole
or in part for, or in addition to, any real property taxes, whether pursuant to
laws presently existing or enacted in the future.

                  ARTICLE 18 - PARKING AND ACCOMMODATION AREAS

         SECTION 18.1. Landlord grants to Tenant during the demised term the
non-exclusive right to use the parking facilities and other areas provided and
designated as "Parking and Accommodation Areas" on EXHIBIT "B" hereto for the
accommodation and parking of such automobiles of the Tenant, its officers,
agents, employees and its customers while working or visiting Tenant. Tenant
agrees that its officers, agents and employees will park their automobiles only
in the parking areas provided in the Parking and Accommodation Areas, and Tenant
specifically agrees that such officers, agents and employees will not park on
any public streets in the vicinity of the demised premises. Except as provided
in SECTION 17.4., Landlord shall not charge parking fees for such right to use
parking facilities.

         SECTION 18.2. All parking areas and facilities furnished by Landlord
including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right to construct, maintain
and operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to change the area, location and arrangement of
parking areas and facilities, to restrict employee parking to employee parking
areas, to construct surface, subterranean and/or elevated parking areas and
facilities, to establish and from time to time change the level of parking
surfaces, to close (if necessary) all or any portion of said areas or facilities
to such extent as may in the opinion of Landlord's counsel be legally sufficient
to prevent a dedication thereof or the accrual of any rights of any person or of
the public therein, and to do and perform such other acts in and to said areas
and improvements respectively as in the use of good business judgment the
Landlord shall determine to be advisable with a view to the improvement of the
convenience and use thereof by Tenant, other lessees, and their respective
employees and visitors.

                                       20
<PAGE>

         Notwithstanding the foregoing to the contrary, Landlord shall not
(unless necessary to comply with applicable legal requirements) make any changes
to the Parking and Accommodation Areas that will have a material adverse effect
on access to and from the demised premises. Landlord shall keep the Parking and
Accommodation Areas in good condition.

         SECTION 18.3. Tenant agrees during the demised term to pay to Landlord
an annual charge which shall be Landlord's actual gross costs of operating,
maintaining and/or replacing all of the areas and facilities mentioned in this
Article. The annual charge shall be an estimate computed on the basis of periods
of twelve (12) consecutive calendar months, commencing and ending on such dates
as may be designated by Landlord, and shall be paid in monthly installments on
the first day of each calendar month in the amount estimated by Landlord. Within
ninety (90) days after the end of each such annual period, Landlord will
determine (and furnish to Tenant a statement showing in reasonable detail) the
actual annual charge for such period and the amounts so estimated and paid
during such period shall be adjusted within such ninety (90) days (including
adjustments on a prorata basis of any partial such period at either end of the
demised term) and one party shall pay to the other on demand whatever amount is
necessary to effectuate such adjustment.

         Landlord's said gross costs shall consist of and include all costs and
expenses of every kind or nature incurred by Landlord in the operation,
maintenance and/or replacement of all of the areas, facilities and improvements
mentioned in this Article determined in accordance with good accounting practice
by an accountant employed by Landlord. The determination of such accountant
shall be conclusive. Without otherwise limiting the generality of the foregoing,
there shall be included in such gross costs public liability and property damage
insurance, landscape maintenance, maintenance of utilities, water, cleaning of
areas, facilities and improvements, operation of lighting, common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises, policing and sweeping of parking areas, supervising with
attendants, repairs, replacements and maintenance, and an amount equal to ten
percent (10%) of the total of all of the above for administration of the Parking
and Accommodation Areas.

         Tenant shall have the right once annually to inspect the books and
records of Landlord with respect to the operating and other costs referred to in
this Section 18.3. Such inspections shall be completed in Landlord's offices
within one hundred twenty (120) days after delivery of Landlord's annual report
for said year setting forth such costs and shall be performed by a certified
public accountant, and the cost thereof shall be paid by Tenant. Tenant shall
give Landlord no less than thirty (30) days' advance written notice of its
intent to inspect.

         SECTION 18.4. The Parking and Accommodation Areas included for the
purpose of this Article are those shown on EXHIBIT "B" outside of the building
area.

                                       21
<PAGE>

                           ARTICLE 19 - MISCELLANEOUS

         SECTION 19.1. Landlord and its designee shall have the right during
reasonable business hours following one (1) day advance notice to Tenant (except
in an emergency, when no notice shall be required) to enter the demised premises
except restricted areas as established by or on behalf of the Federal Government
for security purposes (and in emergencies at all times), (i) to inspect the
same, (ii) for any purpose connected with Landlord's rights or obligations under
this Lease and, (iii) for all other lawful purposes.

         SECTION 19.2. Tenant shall not be entitled to make repairs at
Landlord's expense, and Tenant waives the provisions of Civil Code Sections 1941
and 1942 with respect to Landlord's obligations for tenantability of the demised
premises and Tenant's right to make repairs and deduct the expenses of such
repairs from rent.

         SECTION 19.3. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the State of California as the same from
time to time exist. This Lease expresses the entire understanding and all
agreements of the parties hereto with each other and neither party hereto has
made or shall be bound by any agreement or any representation to the other party
which is not expressly set forth in this Lease.

         SECTION 19.4. If Tenant should hold over after the demised term and any
extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month at a rent double that provided for
under the monthly rental of the principal term of this Lease.

         SECTION 19.5. Tenant agrees to maintain all toilet and washroom
facilities within the demised premises in a neat, clean and sanitary condition.

         SECTION 19.6. Landlord covenants and agrees that Tenant, subject to the
terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.

         SECTION 19.7. Subject to ARTICLE 6, the terms and provisions hereof
shall be construed as running with the land and shall be binding upon and inure
to the benefit of heirs, executors, administrators, successors and assigns of
Landlord and Tenant.

         SECTION 19.8.

         A. Tenant shall promptly pay all sums of money with respect to any
labor, services, materials, supplies or equipment furnished or alleged to have
been furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within three (3) days of receipt thereof, give
notice to Landlord of such lien, and Tenant shall,

                                       22
<PAGE>

within thirty (30) days after receiving notice of the filing of the lien,
discharge such lien by payment of the amount due to the lien claimant. However,
Tenant may in good faith contest such lien provided that within such thirty (30)
day period Tenant provides Landlord with a surety bond from a company acceptable
to Landlord, protecting against said lien in an amount at least one and one-half
(1-1/2) times the amount claimed or secured as a lien or such greater amount as
may be required by applicable law; and provided further that Tenant, if it
should decide to contest such lien, shall agree to indemnify, defend and save
harmless Landlord from and against all costs arising from or in connection with
any proceeding with respect to such lien. Failure of Tenant to discharge the
lien, or, if contested, to provide such bond and indemnification, shall
constitute a default under this Lease and in, addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated, to discharge or
secure the release of any lien by paying the amount claimed to be due, and the
amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.

         B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.

         SECTION 19.9.

         A. Tenant shall deposit with Landlord a letter of credit in the amount
specified in SECTION 2.4.(B) hereof as a "Security Deposit". The Security
Deposit shall be held by Landlord as security for the faithful performance of
all the terms of this Lease to be observed and performed by Tenant. The Security
Deposit shall not be mortgaged, assigned, transferred or encumbered by Tenant
without the written consent of Landlord and any such act on the part of Tenant
shall be without force and effect and shall not be binding upon Landlord.

         B. If any of the rents herein reserved or any other sum payable by
Tenant to Landlord shall be overdue and unpaid, or should Landlord make payments
on behalf of Tenant, or should Tenant fail to perform any of the terms of this
Lease, then Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, apply the entire Security
Deposit, or so much thereof as may be necessary, to compensate Landlord toward
the payment of rent or additional rent, loss, or damage sustained by Landlord
due to such breach on the part of Tenant, and Tenant shall forthwith upon demand
restore said Security Deposit to the original sum deposited. Should Tenant
comply with all of said terms and promptly pay all of the rent and all other
sums payable by Tenant to Landlord, said Security Deposit shall be returned in
full to Tenant at the end of the demised term.

         C. In the event of bankruptcy or other similar proceedings listed in
ARTICLE 14 hereof, the Security Deposit shall be deemed to be applied first to
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.

                                       23
<PAGE>

         D. In the event Landlord delivers the Security Deposit to the purchaser
of Landlord's interest in the demised premises, Landlord, after written notice
to Tenant of said delivery, shall be discharged from any further liability with
respect to the Security Deposit. This provision shall also apply to any
subsequent transferees.

         SECTION 19.10. All notices, statements, demands, requests, consents,
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party or, if sent by overnight
carrier or United States certified mail, return receipt requested, postage
prepaid, and addressed as follows:

         If sent to Tenant, the same shall be addressed to the Tenant at 1450
ODDSTAD DRIVE, REDWOOD CITY, CALIFORNIA 94063, ATTENTION: VICE PRESIDENT OF
OPERATIONS, or at such other place as Tenant may from time to time designate by
notice to Landlord.

         If sent to Landlord, the same shall be addressed to Landlord at 60
HILLSDALE MALL, SAN MATEO, CALIFORNIA 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.

         Any such notice when sent by overnight carrier or certified mail as
above provided shall be deemed duly served on the third business day following
the date of such mailing.

         SECTION 19.11. As used in this Lease and when required by the context,
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.

         SECTION 19.12. In case of litigation with respect to the mutual rights,
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees actually incurred.

         SECTION 19.13. Each term and each provision of this instrument
performable by Tenant shall be construed to be both a covenant and a condition.

         SECTION 19.14. Except as otherwise expressly stated, each payment
provided herein to be made by Tenant to Landlord shall be in addition to and not
in substitution for the other payments to be made by Tenant to Landlord.

         SECTION 19.15. Time is and shall be of the essence of this Lease and
all of the terms, provisions, covenants and conditions hereof.

         SECTION 19.16. The Tenant warrants that it has not had any dealings
with any realtor, broker, or agent in connection with the negotiation of this
Lease excepting only BT Commercial representing Landlord and Spallino Reid
Corporate Real Estate Services representing Tenant, whom Landlord agrees to pay
whatever commission may be due. Each party agrees to hold the other harmless
from any cost, expense or liability for any compensation, commissions or charges
claimed by any realtor, broker,

                                       24
<PAGE>

or agent with respect to this Lease and/or the negotiation thereof with whom the
other party has or purportedly has dealt.

         SECTION 19.17.Tenant agrees that its interest in this Lease shall be
subordinate to any mortgage, deed of trust and/or other security indenture
hereafter placed upon the demised premises and to any and all advances made or
to be made thereunder and to the interest thereon made and all renewals,
replacements, and extensions thereof, but nothing herein contained shall be
deemed to alter or limit Tenant's rights as set forth in SECTION 19.6. Tenant
shall, at the request of Landlord or any mortgagee, trustee or holder of any
such security instrument, execute in writing an agreement subordinating its
rights under this Lease to the lien of such mortgage, deed of trust and/or other
security indenture. If any mortgagee, trustee or holder of such security
instrument elects to have the Tenant's interest in this Lease superior to any
such instrument by notice to Tenant, then this Lease should be deemed superior
to the lien of any such mortgage, deed of trust or security indenture whether
this Lease was executed before or after said mortgage, deed of trust and/or
security indenture. Tenant shall not be required to subordinate its interest
under this Lease to any other party unless Tenant receives a binding agreement
from such party confirming that Tenant's rights to use and occupy the demised
premises shall not be disturbed so long as Tenant is not in default after any
applicable cure or grace periods.

         SECTION 19.18. Landlord reserves the right during the last six months
of the demised term of this Lease or the last six months of any extension hereof
to enter the property during normal working hours following one (1) day advance
notice for the purpose of showing the demised premises (except restricted areas
established by, or on behalf of, the Federal Government for security purposes)
to prospective tenants or purchasers and to place signs (for the last year) on
the demised premises advertising the property for lease or sale.

         SECTION 19.19. The following terms as used in this Lease shall have the
following meaning:

         (a) "Unavoidable Delay" means any prevention, delay or stoppage due to
strike(s), lockout(s), labor dispute(s), act(s) of God, inability to obtain
labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other
conditions or causes beyond the reasonable control of the party obligated to
perform.

         IN WITNESS WHEREOF, the parties have executed this instrument.

TENANT:                                     LANDLORD:
IPRINT.COM, INC.,                           BOHANNON DEVELOPMENT COMPANY,
a Delaware corporation                      a California corporation

By:                                         By:                                .
   ---------------------------------           --------------------------------
           President                               Executive Vice President

By:                                         By:                                .
   ---------------------------------           --------------------------------
           Secretary                               Secretary

                                       25
<PAGE>

                                  BOHANNON PARK

                                   EXHIBIT "A"

                         DESCRIPTION OF DEMISED PREMISES

                                       FOR

                                    "IPRINT"

                             255 CONSTITUTION DRIVE
                                 MENLO PARK, CA.

         All that certain property situate in the City of Menlo Park, County of
San Mateo, State of California, described as follows:

         Commencing at the most Westerly corner of Parcel "B" as said corner is
shown on the map entitled "Parcel Map being a subdivision of Parcel 3 of Parcel
Map Rec. in Vol. 27 at Page 9, San Mateo County Records, Bohannon Park," which
Map was filed in the Office of the County Recorder of San Mateo County, State of
California on August 15, 1979, in volume 47 of Parcel Maps at Page 72.

         Thence from said point of commencement South 67(Degree) 17' East 28.50
feet and North 22 43' East 21.00 feet to the true point of the beginning.

         Thence North 22(Degree) 43' East 162.50 feet;
         Thence South 67(Degree) 17' East 144.00 feet;
         Thence South 22(Degree) 17' West 162.50 feet;
         and North 67(Degree) 17' West 144.00 feet

to the point of beginning.

Containing approximately 23,400 SQUARE FEET, more or less.

                                       26
<PAGE>

                                   EXHIBIT "B"

                            [MAP OF AREA OF PREMISES]

                                       27
<PAGE>

                                   EXHIBIT "C"

                     Provisions Relating to Construction of
                           Demised Premises Located at
                 255 Constitution Drive, Menlo Park, California

I        Landlord's Work

         Landlord shall perform, or cause to be performed, at its sole cost and
expense, the following work in good and workmanlike manner employing good
materials so as to conform to all building codes and regulations. The following
work, in addition to all improvements in the demised premises originally
constructed by Landlord, is herein referred to as "Landlord's Work".

         1.   Paint the interior of the demised premises;

         2.   Replace existing carpet in the demised premises with Landlord's
              building standard carpet;

         3.   Remodel one (1) men's and one (1) women's restrooms in accordance
              with ADA codes located on the south side of the building
              constituting the demised premises;

         4.   Remove demising wall between the existing loading area and
              research and development area of the building and replace the dock
              high doors with glass panel roll up doors; and

         5.   Provide necessary HVAC ducting capacity and lighting in the
              expanded research and development area.

         Tenant acknowledges that the glass roll up doors may be installed up to
ninety (90) days after commencement of the Lease (subject to availability), and
that installation of said roll up doors after commencement of the demised term
of this Lease shall not delay commencement of rent pursuant to the terms of
Article 1 of the Lease.

II       Tenant's Work

         All items of work which are not expressly made a part of Landlord's
Work in Part I above.

                                       28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]